<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------
FORM 8-K
CURRENT REPORT,
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT -- February 26, 1997
(Date of Earliest Event Reported)
NEW WORLD COFFEE, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 000-27148 13-3690261
- ------------------------------ ------------------------ ------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation Identification No.)
379 WEST BROADWAY
NEW YORK, NEW YORK 10012
------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 343-0552
------------------------------
===============================================================================
<PAGE>
ITEM 5. OTHER EVENTS.
------------
On February 26, 1997, New World Coffee, Inc. (the "Company") completed
a $1.375 million private placement (the "Private Placement"). The Private
Placement consisted of the sale of 1,000,000 shares of common stock at $1.375
per share, par value $.001 per share (the "Common Stock"), of the Company. The
Company anticipates using the proceeds of the Private Placement for general
corporate purposes.
The Company has agreed to file a registration statement (the
"Registration Statement") by April 27, 1997, on behalf of the holders of the
Common Stock and to prepare and file with the Securities and Exchange Commission
such amendments and supplements to the Registration Statement as may be
necessary to keep the Registration Statement effective for a period of up to 120
days.
In the event the Company breaches its obligation to file the
Registration Statement by April 27, 1997, the Company shall pay to each private
placement investor, within five (5) days after demand by the private placement
investor, an amount equal to one percent (1%) of the amount paid by such private
placement investor to purchase their Common Stock in the Private Placement
during each month in which the Company has not filed the Registration Statement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
---------------------------------
EXHIBIT NO. DOCUMENT
- ----------- --------
4.1 Form of Subscription Agreement.
4.2 Form of Registration Rights Agreement.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEW WORLD COFFEE, INC.
By: /s/ Jerold Novack
---------------------------------------------
Name: Jerold Novack
Title: Vice President -- Finance
Date: March 13, 1997
3
<PAGE>
EXHIBIT 4.1
FORM OF SUBSCRIPTION AGREEMENT
February , 1996
New World Coffee, Inc.
379 West Broadway
New York, New York 10012
Gentlemen:
1. SUBSCRIPTION. The undersigned hereby subscribes for shares
--------------
of Common Stock (the "Stock") of New World Coffee, Inc., a Delaware corporation
(the
"Company).
2. ACCEPTANCE OF SUBSCRIPTION. The undersigned is tendering payment for the
--------------------------
subscribed for Stock by wire transfer in the amount of $ to the order of
Robert E. Levy, Esq. as Escrow Agent (the "Escrow Agent"). This Subscription
Agreement, the Investor Questionnaire, for U.S. citizens or residents an
Internal Revenue Service Form W-9, and the Registration Rights Agreement should
be delivered to New World Coffe at 379 West Broadway, New York, NY 10012,
Attention: Jerry Novack. If this subscription is rejected by the Company, the
amount tendered by the investor shall be promptly returned in full to the
undersigned by the Escrow Agent, without interest or deduction, and this
Subscription Agreement shall be null and void and of no further force or effect.
The Company shall have the right to reject this subscription, in whole or in
part.
3. REPRESENTATIONS AND WARRANTIES OF THE UNDERSIGNED. The undersigned hereby
-------------------------------------------------
represents and warrants to the Company as follows:
(a) The undersigned can bear the economic risk of this investment and can afford
a complete loss thereof. The undersigned (i) has sufficient liquid assets to pay
the full purchase price for the Stock, (ii) has adequate means of providing for
the undersigned's current and presently foreseeable, future financing needs,
(iii) has no present need for liquidity of the investment in the Stock, and (iv)
has ample liquid resources.
(b) The undersigned qualifies as an "Accredited Investor" as defined in Rule 501
of Regulation D, promulgated under the Securities Act of 1933, as amended (the
"Act").
(c) The undersigned and such other persons as the undersigned found it
necessary or advisable to consult, have sufficient knowledge and experience in
business and
<PAGE>
New World Coffee, Inc.
February , 1996
Page 2
financial matters to evaluate the risks of this investment and to make an
informed investment decision with respect thereto.
(d) The undersigned had the opportunity to ask questions of, and to receive
answers from, the Company and its representatives, with respect to the Company
and the terms and conditions of this offering. The undersigned and the
undersigned's representatives, if any, have been offered access to the books and
records of the Company. All materials and information requested by the
undersigned and the undersigned's representatives, if any, including any
information requested to verify any information furnished, have been made
available to the undersigned.
(e) The undersigned understands that the Stock has not been registered under the
Act, nor pursuant to the provisions of the securities or other laws of any other
applicable jurisdiction.
(f) The undersigned is making the investment hereunder for the undersigned's own
account and not for the account of others and for investment purposes only and
not with a view to the distribution or resale thereof.
(g) The undersigned acknowledges that the certificates for the Stock which the
undersigned will receive shall contain a legend substantially as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF EITHER A REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM THE
REGISTRATION PROVISIONS OF THE ACT.
(h) The undersigned represents that the funds provided for this investment are
either separate property of the undersigned, community property over which the
undersigned has the right of control, or are otherwise funds as to which the
undersigned has the sole right of management.
<PAGE>
New World Coffee, Inc.
February , 1996
Page 3
(i) The undersigned understands the meaning and legal consequences of the
foregoing representations and warranties. Each such representation and warranty
shall survive the purchase of the Stock by the undersigned.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
----------------------------------------------
(a) The Company has been duly and validly incorporated and is validly existing
and in good standing as a corporation under the laws of the State of Delaware.
The Company has all requisite power and authority to enter into this
Subscription Agreement and to be bound by the provisions and conditions hereof.
(b) All corporate action required to be taken by the Company prior to the
issuance and sale of the Stock has been taken; and the Stock when issued shall
be duly and validly issued.
5. REGISTRATION RIGHTS. The parties acknowledge that simultaneously herewith
---------------------
they are entering into a Registration Rights Agreement providing for the
registration of the Stock under the Act under certain circumstances.
6. FURTHER DOCUMENTS. The parties agree to execute any and all such further
-------------------
instruments and documents, and to take any and all such further actions
reasonably required to effectuate this Subscription Agreement and the intent and
purposes hereof.
7. ASSIGNABILITY. This Subscription Agreement is not transferable or assignable
---------------
by the undersigned.
8. INDEMNIFICATION. The undersigned hereby agrees to indemnify and hold harmless
-----------------
the Company and its officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, demands, liabilities and expenses
incurred by each such person in connection with defending or investigating any
such claims or liabilities, whether or not resulting in any liability to such
person, to which any such indemnified party may become subject under the Act, or
under any other statute, at common law or otherwise, insofar as such losses,
claims, demands, liabilities and expenses (a) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact made by the
undersigned and contained in this Subscription Agreement or (b) arise out of or
are based upon any breach of any representation, warranty or agreement made by
the undersigned herein.
<PAGE>
New World Coffee, Inc.
February , 1996
Page 4
9. APPLICABLE LAW. This Subscription Agreement shall be governed by and
--------------
construed in accordance with the internal laws of the State of New York,
applicable to contracts made and to be performed wholly within that state,
without regard to the conflict of law rules thereof.
10. MODIFICATION. This Subscription Agreement may not be amended, modified or
------------
terminated except by an instrument in writing signed by all parties hereto.
11. COUNTERPARTS. This Subscription Agreement may be executed through the use of
------------
separate signature pages or in any number of counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on all
parties, notwithstanding that all parties are not signatories to the same
counterpart.
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement
this day of February, 1996.
Name of Investor:
Social Security or
Tax I.D. No.
ACCEPTED:
NEW WORLD COFFEE, INC.
By: Date:
Name:
Title:
<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered into as
of the __ day of February, 1996, by and between NEW WORLD COFFEE, INC., a
Delaware corporation (the "Company"), and (the "Shareholders").
R E C I T A L S
- - - - - - - -
WHEREAS, the Shareholders are acquiring shares of the common stock, par value
S.001 per share, of the Company (the "Shares"), pursuant to subscription
agreements by and between the Company and each Shareholder, dated as of February
, 1996 (each a "Purchase Agreement" and collectively, the "Purchase
Agreements"); and
WHEREAS, the Company desires to grant to the Shareholders certain registration
rights relating to the Shares and the Shareholders desire to obtain such
registration rights, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual premises, representations,
warranties and conditions set forth in this Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Definitions and References. For purposes of this Agreement, in addition to
--------------------------
the definitions set forth above and elsewhere herein, the following terms shall
have the following meanings:
(a) The term "Commission" shall mean the Securities and Exchange
Commission and any successor agency.
(b) The terms "register", "registered" and "registration" shall refer
to a registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act (as
hereinafter defined) and the declaration or ordering of effectiveness
of such registration statement or document.
(c) For purposes of this Agreement, the term "Registrable Stock" shall
mean (i) the Shares, (ii) any shares of the common stock of the
Company, par value $.001 per share (the "Common Stock") issued as (or
issuable upon the
1
-
<PAGE>
conversion or exercise of any warrant, right, option or other convertible
security which is issued as) a dividend or other distribution with
respect to, or in exchange for, or in replacement of, the Shares, and
(iii) any Common Stock issued by way of a stock split of the Shares. For
purposes of this Agreement, any Registrable Stock shall cease to be
Registrable Stock when (w) a registration statement covering such
Registrable Stock has been declared effective and such Registrable Stock
has been disposed of pursuant to such effective registration statement,
(x) such Registrable Stock is or may be sold pursuant to Rule 144 (or any
similar provision then in force) under the 1933 Act, (y) such Registrable
Stock has been otherwise transferred, no stop transfer order affecting
such stock is in effect and the Company has delivered new certificates or
other evidences of ownership for such Registrable Stock not bearing any
legend indicating that such shares have not been registered under the
1933 Act, or (z) such Registrable Stock is sold by a person in a
transaction in which the rights under the provisions of this Agreement
are not assigned.
(d) The term "Holder". shall mean the Shareholders or any transferee or
assignee thereof to whom the rights under this Agreement are assigned in
accordance with Section 9 hereof, provided that the Shareholders or such
---------
transferee or assignee shall then own the Registrable Stock.
(e) The term "1933 Act" shall mean the Securities Act of 1933, as
amended.
(f) An "affiliate of such Holder" shall mean a person who controls, is
controlled by or is under common control with such Holder, or the spouse
or children (or a trust exclusively for the benefit of the spouse and/or
children) of such Holder, or, in the case of a Holder that is a
partnership, its partners.
(g) The term "Person" shall mean an individual, corporation, partnership,
trust, limited liability company, unincorporated organization or
association or other entity, including any governmental entity.
(h) References in this Agreement to any rules, regulations or forms
promulgated by the Commission shall include rules, regulations and forms
succeeding to the functions thereof, whether or not bearing the same
designation.
2
-
<PAGE>
2. Required Registration.
(a) The Holders hereby request, and the Company hereby agrees that within
60 days after the date of the closing of all the Purchase Agreements, the
Company shall file a registration statement under the 1933 Act (or a
similar document pursuant to any other statute then in effect
corresponding to the 1933 Act) covering the registration of Registrable
Stock.
(b) The registration statement referred to in subsection (a) above shall
be a "shelf" registration statement under Rule 415 of the 1933 Act, and
the Company shall use its best efforts to maintain its effectiveness
until the earlier of (i) the date the distribution described in such
registration statement is completed; (ii) the date the Company is
eligible to and has filed an alternate registration statement which is
effective and which the Company will use its best effort to maintain
until the distribution described therein is completed; and (iii) the date
all Registrable Securities otherwise have been sold. The Company will use
its best efforts to cause the filed registration statement referred to in
subsection (a) above to become effective at the earliest possible time.
3. Obligations of the Company. Whenever required under Section 2 to use its best
efforts to effect the registration of any Registrable Stock, the Company shall,
as expeditiously as possible:
a) prepare and file with the Commission such amendments and supplements
to any registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for a period of not less than one hundred twenty (120) days or
such shorter period which will terminate when all Registrable Stock
covered by such registration statement has been sold (but not before the
expiration of the forty (40) or ninety (90) day period referred to in
Section 4(3) of the 1933 Act and Rule 174 thereunder, if applicable), and
comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of disposition
by the sellers thereof set forth in such registration statement;
(b) furnish to each Holder copies of such registration statement as filed
and each amendment and supplement thereto (in each case including all
exhibits thereto), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such
Holder may reasonably request in order to facilitate the disposition of
the Registrable Stock owned by such Holder;
(c) use its best efforts to register or qualify such Registrable Stock
under such other securities or blue sky laws of such jurisdictions as any
selling Holder
3
-
<PAGE>
reasonably requests and do any and all other acts which may be reasonably
necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the Registrable Stock owned by such
Holder; provided that the Company will not be required to (i) qualify
---------
generally to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(c) hereof, (ii) subject
itself to taxation in any such jurisdiction, or (iii) consent to general
service of process in any such jurisdiction;
(d) use its best efforts to cause the Registrable Stock covered by such
registration statement to be registered with or approved by such other
governmental agencies or other authorities as may be necessary by virtue
of the business and operations of the Company to enable the selling
Holders thereof to consummate the disposition of such Registrable Stock;
(e) notify each selling Holder of such Registrable Stock, at any time
when a prospectus relating thereto is required to be delivered under the
1933 Act (even if such time is after the period referred to in Section
3(a)), of the happening of any event as a result of which the prospectus
included in such registration statement contains an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances being made not misleading, and prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Stock, such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
in light of the circumstances being made not misleading;
(f) make available for inspection by any selling Holder and any attorney,
accountant or other agent retained by any such seller (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"),
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Inspector, as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, in connection with such registration statement. Records
or other information which the Company determines, in good faith, to be
confidential and which it notifies the Inspectors are confidential shall
not be disclosed by the Inspectors unless (i) the disclosure of such
Records or other information is necessary to avoid or correct a
misstatement or omission in the registration statement, or (ii) the
release of such Records or other information is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction. Each
selling Holder shall, upon learning that disclosure of such Records or
other information is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at the Company's expense, to
4
-
<PAGE>
5
-
<PAGE>
undertake appropriate action to prevent disclosure of the Records or
other information deemed confidential;
(g) furnish, at the request of any selling Holder, on the date that the
registration statement with respect to such shares of Registrable Stock
becomes effective, (1) a signed opinion, dated such date, of the legal
counsel representing the Company for the purposes of such registration,
addressed to the selling Holders as to such matters as such selling
Holders may reasonably request and as would be customary in such a
transaction; and (2) a letter dated such date, from the independent
certified public accountants of the Company, addressed to the selling
Holders and, if such accountants refuse to deliver such letter to such
Holder, then to the Company (i) stating that they are independent
certified public accountants within the meaning of the 1933 Act and that,
in the opinion of such accountants, the financial statements and other
financial data of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereto, comply as to form
in all material respects with the applicable accounting requirements of
the 1933 Act, and (ii) covering such other financial matters (including
information as to the period ending not more than five (5) business days
prior to the date of such letter) with respect to the registration in
respect of which such letter is being given as the selling Holders may
reasonably request and as would be customary in such a transaction;
(h) enter into customary agreements and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of
the Registrable Stock to be so included in the registration statement;
(i) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, but not later than eighteen
(18) months after the effective date of the registration statement, an
earnings statement covering the period of at least twelve (12) months
beginning with the first full month after the effective date of such
registration statement, which earnings statements shall satisfy the
provisions of Section ll(a) of the 1933 Act; and
(j) use its best efforts to cause all such Registrable Stock to be traded
on the National Association of Securities Dealers Automated Quotations
System.
The Company may require each selling Holder of Registrable Stock as to which any
registration is being effected to furnish to the Company such information
regarding the distribution of such Registrable Stock as the Company may from
time to time reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(e) hereof, such Holder
will forthwith
6
-
<PAGE>
7
-
<PAGE>
discontinue disposition of Registrable Stock pursuant to the registration
statement covering such Registrable Stock until such Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section 3(e)
hereof, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Stock current at the time of receipt of such notice. In the event the Company
shall give any such notice, the Company shall extend the period during which
such registration statement shall be maintained effective pursuant to this
Agreement (including the period referred to in Section 3(a)) by the number of
days during the period from and including the date of the giving of such notice
pursuant to Section 3(e) hereof to and including the date when each selling
Holder of Registrable Stock covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 3(e) hereof.
4. Incidental Registration. Commencing twelve (12) months after the
-----------------------
date of the closing of all the Purchase Agreements, if the Company
determines that it shall file a registration statement under the 1933 Act
(other than a registration statement on a Form S4 or S-8 or filed in
connection with an exchange offer or an offering of securities solely to
the Company's existing stockholders) on any form that would also permit
the registration of the Registrable Stock and such filing is to be on its
behalf and/or on behalf of selling holders of its securities for the
general registration of its common stock to be sold for cash, at each
such time the Company shall promptly give each Holder written notice of
such determination setting forth the date on which the Company proposes
to file such registration statement, which date shall be no earlier than
forty (40) days from the date of such notice, and advising each Holder of
its right to have Registrable Stock included in such registration. Upon
the written request of any Holder received by the Company no later than
twenty (20) days after the date of the Company's notice, the Company
shall use its best efforts to cause to be registered under the 1933 Act
all of the Registrable Stock that each such Holder has so requested to be
registered. If, in the written opinion of the managing underwriter or
underwriters (or, in the case of a non-underwritten offering, in the
written opinion of the placement agent, or if there is none, the
Company), the total amount of such securities to be so registered,
including such Registrable Stock, will exceed the maximum amount of the
Company's securities which can be marketed (i) at a price reasonably
related to the then current market value of such securities, or (ii)
without otherwise materially and adversely affecting the entire offering,
then the amount of Registrable Stock to be offered for the accounts of
Holders shall be reduced pro rata to the extent necessary to reduce the
total amount of securities to be included in such offering to the
recommended amount; provided, that if securities are being offered for
--------
the account of other Persons as well as the Company, such reduction shall
not represent a greater fraction of the number of securities intended to
be offered by Holders than the fraction of similar reductions imposed on
such other Persons other than the Company over the amount of securities
they intend to offer.
8
-
<PAGE>
5. Holdback Agreement - Restrictions on Public Sale by Holder. To the extent
----------------------------------------------------------
not inconsistent with applicable law, each Holder whose Registrable Stock is
included in a registration statement agrees not to effect any public sale or
distribution of the issue being registered or a similar security of the Company,
or any securities convertible into or exchangeable or exercisable for such
securities, including a sale pursuant to Rule 144 under the 1933 Act, during the
fourteen (14) days prior to, and during the ninety-(90) day period beginning on,
the effective date of such registration statement (except as part of the
registration), if and to the extent requested by the Company in the case of a
non-underwritten public offering or if and to the extent requested by the
managing underwriter or underwriters in the case of an underwritten public
offering.
6. Expenses of Registration. All expenses incurred in connection with each
------------------------
registration pursuant to Sections 2 and 4 of this Agreement, excluding
underwriters' discounts and commissions, but including, without limitation, all
registration, filing and qualification fees, word processing, duplicating,
printers' and accounting fees (including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance), exchange listing fees or National Association of Securities Dealers
fees, messenger and delivery expenses, all fees and expenses of complying with
securities or blue sky laws, fees and disbursements of counsel for the Company,
and the reasonable fees and disbursements of one (1) counsel for the selling
Holders shall be paid by the Company. The selling Holders shall bear and pay the
underwriting commissions and discounts applicable to the Registrable Stock
offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Agreement.
7. Payments for Failure to File Registration Statement. In the event the
---------------------------------------------------
Company breaches its obligation set forth is Section 2(a) of this Agreement, the
Company shall pay to each Shareholder, within five (5) days after demand by such
Shareholder, an amount equal to one (1%) percent per month of the amount paid by
such Shareholder pursuant to the Purchase Agreement to acquire the Shares during
each month following the expiration of the sixty (60) day period specified in
Section 2(a) of this Agreement in which the Company has not filed a registration
statement with respect to the Shares held by such Shareholder.
8. Indemnification and Contribution.
--------------------------------
(a) Indemnification by the Company. The Company agrees to indemnify, to
------------------------------
the full extent permitted by law, each Holder, its officers, directors
and agents and each Person who controls such Holder (within the meaning
of the 1933 Act) against all losses, claims, damages, liabilities and
expenses caused by any untrue or alleged untrue statement of material
fact contained in any registration statement, prospectus or preliminary
prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein (in case of a prospectus or preliminary prospectus, in
the light of the circumstances under which they were made) not
misleading.
(b) Indemnification by Holders. In connection with any registration
--------------------------
statement in which a Holder is participating, each such Holder will
furnish to the Company in writing such information with respect to such
Holder as the Company reasonably requests for use in connection with any
such registration statement or prospectus and agrees to indemnify, to the
extent permitted by law, the Company, its directors and officers and each
Person who controls the Company (within the meaning of the 1933 Act)
against any losses, claims, damages, liabilities and expenses resulting
from any untrue or alleged untrue statement of material fact
9
-
<PAGE>
or any omission or alleged omission of a material fact required to be
stated in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or necessary
to make the statements therein (in the case of a prospectus or
preliminary prospectus, in the light of the circumstances under which
they were made) not misleading, to the extent, but only to the extent,
that such untrue statement or omission is contained in any information
with respect to such Holder so furnished in writing by such Holder.
Notwithstanding the foregoing, the liability of each such Holder under
this Section 8(b) shall be limited to an amount equal to the initial
public offering price of the Registrable Stock sold by such Holder,
unless such liability arises out of or is based on willful misconduct
of such Holder.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
--------------------------------------
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such Person of any written notice
of the commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which such Person will claim
indemnification or contribution pursuant to this Agreement and, unless in
the reasonable judgment of such indemnified party, a conflict of interest
may exist between such indemnified party and the indemnifying party with
respect to such claim, permit the indemnifying party to assume the
defense of such claims with counsel reasonably satisfactory to such
indemnified party. Whether or not such defense is assumed by the
indemnifying party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but such consent
will not be unreasonably withheld). Failure by such Person to provide
said notice to the indemnifying party shall itself not create liability
except to the extent of any injury caused thereby. No indemnifying party
will consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. If the indemnifying
party is not entitled to, or elects not to, assume the defense of a
claim, it will not be obligated to pay the fees and expenses of more than
one (1) counsel with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other such indemnified parties
with respect to such claim, in which event the indemnifying party shall
be obligated to pay the fees and expenses of such additional counsel or
counsels.
d) Contribution. If for any reason the indemnity provided for in this
--------------
Section 8 is unavailable to, or is insufficient to hold harmless, an
indemnified party, then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such
losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the
other, or (ii) if the allocation provided by clause (i) above is not
permitted by
10
--
<PAGE>
applicable law, or provides a lesser sum to the indemnified party than
the amount hereinafter calculated, in such proportion as is appropriate
to reflect not only the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other but also
the relative fault of the indemnifying party and the indemnified party
as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact,
has been made by, or relates to information supplied by, such
indemnifying party or indemnified parties; and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result
of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth
in Section 8(c), any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled
to contribution from any Person who was not guilty of such fraudulent
misrepresentation.
If indemnification is available under this Section 8, the indemnifying
parties shall indemnify each indemnified party to the full extent
provided in Sections 8(a) and (b) without regard to the relative fault of
said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 8.
9. Rule 144. The Company covenants that it will file the reports
----------
required to be filed by it under the 1933 Act and the Securities Exchange Act of
1934, as amended, and the rules and regulations adopted by the Commission
thereunder; and it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Stock without registration under the 1933 Act within the
limitation of the exemptions provided by (a) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
10. Transfer of Registration Rights. The registration rights of any Holder
-------------------------------
under this Agreement with respect to any Registrable Stock may be transferred to
any transferee of such Registrable Stock; provided that such transfer may
---------
otherwise be effected in accordance with
11
--
<PAGE>
applicable securities laws; provided further, that the transferring Holder shall
------------------
give the Company written notice at or prior to the time of such transfer stating
the name and address of the transferee and identifying the securities with
respect to which the rights under this Agreement are being transferred; provided
--------
further, that such transferee shall agree in writing, in form and substance
- -------
satisfactory to the Company, to be bound as a Holder by the provisions of this
Agreement; and provided further, that such assignment shall be effective only if
----------------
immediately following such transfer the further disposition of such securities
by such transferee is restricted under the 1933 Act. Except as set forth in this
Section 10, no transfer of Registrable Stock shall cause such Registrable Stock
to lose such status.
11. Miscellaneous:
--------------
(a) Remedies. Each Holder, in addition to being entitled to exercise all
--------
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive (to the extent permitted by law) the
defense in any action for specific performance that a remedy of law would
be adequate.
(b) Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given unless the
Company has obtained the written consent of the Holders of at least a
majority of the Registrable Stock then outstanding affected by such
amendment, modification, supplement, waiver or departure.
(c) Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of
the parties hereto. Nothing in this Agreement, express or implied, is
intended to confer upon any Person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
(d) Governing Law. This Agreement shall be governed by and construed in
---------------
accordance with the internal laws of the State of New York applicable to
contracts made and to be performed wholly within that state, without
regard to the conflict of law rules thereof.
(e) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12
--
<PAGE>
(f) Headings. The headings in this Agreement are used for convenience of
--------
reference only and are not to be considered in construing or interpreting
this Agreement.
(g) Notices. Any notice required or permitted under this Agreement shall
-------
be given in writing and shall be delivered in person or by telecopy or by
overnight courier guaranteeing no later than second business day
delivery, directed to (i) the Company at the address set forth below its
signature hereof or (ii) to a Holder at the address therefor as set forth
in the Company's records. Any party may change its address for notice by
giving ten (10) days advance written notice to the other parties. Every
notice or other communication hereunder shall be deemed to have been duly
given or served on the date on which personally delivered, or on the date
actually received, if sent by telecopy or overnight courier service, with
receipt acknowledged.
(h) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall not
be in any way impaired thereby, it being intended that all of the rights
and privileges of the Holders shall be enforceable to the fullest extent
permitted by law.
(i) Entire Agreement. This Agreement is intended by the parties as a final
----------------
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings other than those set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
13
--
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
NEW WORLD COFFEE, INC.
By:
Name:
Title:
379 West Broadway
New York, New York 10012
[OTHER PARTIES]
By:
14
--
