EXHIBIT 4.2
EXECUTION COPY
AFC ENTERPRISES, INC.
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
Purchase Agreement
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May 16, 1997
Xxxxxxx, Xxxxx & Co.
CIBC Wood Gundy Securities Corp.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
c/o Goldman, Sachs & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
AFC Enterprises, Inc., a Minnesota corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$175,000,000 principal amount of the Notes specified above (the "Securities").
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) A preliminary offering circular, dated April 30, 1997 (the
"Preliminary Offering Circular"), and an offering circular, dated May 16,
1997 (the "Offering Circular"), in each case including the international
supplement thereto, if any, has been prepared in connection with the
offering of the Securities. Any reference to the Preliminary Offering
Circular or the Offering Circular shall be deemed to refer to and include
any Additional Issuer Information (as defined in Section 5(f)) furnished by
the Company prior to the completion of the distribution of the Securities.
The Preliminary Offering Circular or the Offering Circular and any
amendments or supplements thereto did not and will not, as of their
respective dates, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by the Purchasers through
Xxxxxxx, Xxxxx
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& Co. expressly for use therein;
(b) AFC Properties, Inc. ("AFC Properties") is the sole subsidiary of the
Company;
(c) Neither the Company nor AFC Properties has sustained since the date
of the latest audited financial statements included in the Offering
Circular any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Offering Circular; and,
since the respective dates as of which information is given in the Offering
Circular, there has not been any change in the capital stock or long-term
debt of the Company or AFC Properties or any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and AFC
Properties, otherwise than as set forth or contemplated in the Offering
Circular;
(d) The Company and AFC Properties have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Offering
Circular or such as do not materially affect the value of such property and
do not interfere with the use made and proposed to be made of such property
by the Company and AFC Properties; and any real property and buildings held
under lease by the Company and AFC Properties are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and AFC Properties;
(e) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Minnesota, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Offering Circular, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and AFC
Properties has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Georgia;
(f) The Company has an authorized capitalization as set forth in the
Offering Circular, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable; and all of the issued shares of capital stock of AFC
Properties have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims, except for
equities arising under or pursuant to the Credit Agreement (as defined
herein);
(g) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Company entitled to the benefits
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provided by the indenture to be dated as of May 21, 1997 (the "Indenture"),
between the Company and U.S. Trust Company of New York, as Trustee (the
"Trustee"), under which they are to be issued, which will be substantially
in the form previously delivered to you; the Indenture has been duly
authorized and, when executed and delivered by the Company and the Trustee,
the Indenture will constitute a valid and legally binding instrument,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; and the Securities and the Indenture will conform to the
descriptions thereof in the Offering Circular and will be in substantially
the form previously delivered to you;
(h) None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds from the sale of the
Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations G, T, U, and X of the Board of Governors of the
Federal Reserve System;
(i) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company
in connection with the offering of the Securities;
(j) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities and this Agreement and
the consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the
Company or AFC Properties is a party or by which the Company or AFC
Properties is bound or to which any of the property or assets of the
Company or AFC Properties is subject, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or By-laws
of the Company or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or AFC
Properties or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of
the Securities or the consummation by the Company of the transactions
contemplated by this Agreement or the Indenture except for the filing of a
registration statement by the Company with the Securities and Exchange
Commission (the "Commission") pursuant to the United States Securities Act
of 1933, as amended (the "Act"), pursuant to Section 5(k) hereof and such
consents, approvals, authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Purchasers;
(k) Neither the Company nor AFC Properties is in violation of its
Certificate of Incorporation or By-laws or in default in the performance or
observance of any material obligation, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, or any other
material lease or other agreement or instrument to which it is a party
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or by which it or any of its properties may be bound;
(l) The statements set forth in the Offering Circular under the caption
"Description
of Notes" insofar as they purport to constitute a summary of the terms of
the Securities, under "Business - Trademarks and Licenses - Formula
Agreement" insofar as they purport to be a summary of the terms of the
Formula Agreement (as defined herein), under "Business - Litigation"
insofar as they purport to describe the legal proceedings discussed
therein, and under the captions "Certain Federal Income Tax Consequences"
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate and complete;
(m) Other than as set forth in the Offering Circular, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or future financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(n) The Company is not, and after giving effect to the offering and sale
of the Securities, will not be an "investment company", or an entity
"controlled" by an "investment company", as such terms are defined in the
United States Investment Company Act of 1940, as amended (the "Investment
Company Act");
(o) Assuming compliance by the Purchasers with the obligations set forth
in Section 3(c) hereof, neither the Company, nor any person acting on its
or their behalf has offered or sold the Securities by means of any general
solicitation or general advertising within the meaning of Rule 502(c) under
the Act or, with respect to Securities sold outside the United States to
non-U.S. persons (as defined in Rule 902 under the Act), by means of any
directed selling efforts within the meaning of Rule 902 under the
Securities Act and the Company, any affiliate of the Company and any person
acting on its or their behalf has complied with and will implement the
"offering restriction" within the meaning of such Rule 902;
(p) Within the preceding six months, neither the Company nor any other
person acting on behalf of the Company has offered or sold to any person
any Securities, or any securities of the same or a similar class as the
Securities, other that Securities offered or sold to the Purchasers
hereunder. The Company will take reasonable precautions designed to insure
that any offer or sale, direct or indirect, in the United States or to any
U.S. person (as defined in Rule 902 under the Act) of any Securities or any
substantially similar security issued by the Company, within six months
subsequent to the date on which the distribution of the Securities has been
completed (as notified to the Company by Xxxxxxx, Sachs & Co.), is made
under restrictions and other circumstances reasonably designed not to
affect the status of the offer and sale of the Securities in the United
States and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of
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the Securities Act;
(q) Neither the Company nor any of its affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba within
the meaning of Section 517.075, Florida Statutes; and
(r) Xxxxxx Xxxxxxxx LLP who have certified certain financial statements
of the Company and its subsidiaries, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder.
(s) The exchange and registration rights agreement to be dated as of May
21, 1997 (the "Registration Rights Agreement"), between the Company and the
Purchasers, has been duly authorized by the Company, when executed and
delivered by the Company (assuming the due authorization, execution and
delivery by the Purchasers), will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in accordance
with its terms except (i) that the enforcement thereof may be subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally, and to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law) and
the discretion of the court before which any proceeding therefor may be
brought and (ii) as any rights to indemnity or contribution thereunder may
be limited by applicable securities laws and public policy considerations.
(t) The credit agreement to be dated as of May 21, 1997 (the "Credit
Agreement"), between the Company and Xxxxxxx Sachs Credit Partners L.P., as
arranging and syndication agent, Canadian Imperial Bank of Commerce, as
administrative agent and certain other financial institutions identified
therein, has been duly authorized by the Company and, when executed and
delivered by the Company (assuming due authorization, execution and
delivery by the other parties thereto), will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms except (i) that the enforcement thereof may be
subject to bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law) and the discretion of the court before which any proceeding
therefor may be brought and (ii) as any rights to indemnity or contribution
thereunder may be limited by applicable securities laws and public policy
considerations.
(u) Each of the Information Technology Agreement, dated August 22, 1994
(the "IGS Agreement"), between IBM Global Services (formerly known as
Integrated Systems Solutions Corporation) and the Company, the Agreement,
dated July 2, 1979 (the "Formula Agreement"), as amended, among Xxxxx
Xxxxxxxx, et al., New Orleans Spice Company and the Company (as successor
to Biscuit Investments, Inc.) and the Company's chicken supply agreements
existing on the date hereof have been duly authorized, executed and
delivered by the Company and constitute (assuming due authorization,
execution and delivery by the other parties thereto) valid and legally
binding obligations of the Company.
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and
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sell to each of the Purchasers, and each of the Purchasers agrees, severally and
not jointly, to purchase from the Company, at a purchase price of 97.0% of the
principal amount thereof, plus accrued interest, if any, from May 21, 1997 to
the Time of Delivery hereunder, the principal amount of Securities set forth
opposite the name of such Purchaser in Schedule I hereto.
3. Upon the authorization by you of the release of the Securities, the
several Purchasers propose to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to (i) persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within the
meaning of Rule 144A under the Act in transactions meeting the requirements of
Rule 144A or, (ii) upon the terms and conditions set forth in Annex I to this
Agreement; and
(b) It is a QIB; and
(c) It will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to the methods
described in Rule 502(c) under the Act.
4. (a) The Securities to be purchased by each Purchaser hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company, shall be delivered by or on behalf of the Company to
Xxxxxxx, Xxxxx & Co., through the facilities of The Depository Trust Company
("DTC"), for the account of such Purchaser, against payment by or on behalf of
such
Purchaser of the purchase price therefor by certified or official bank check or
checks, payable to the order of the Company in New York Clearing House (next
day) funds. The Company will cause the certificates representing the Securities
to be made available for checking and packaging at least twenty-four hours prior
to the Time of Delivery (as defined below) at the office of DTC (the "Designated
Office"). The Securities to be purchased by each Purchaser hereunder will be
represented by one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Xxxxxxx, Sachs & Co., for the account of each Purchaser, against
payment by or on behalf of such Purchaser of the purchase price therefor by
certified or official bank check or checks, payable to the order of the Company
in federal (same day) funds, by causing DTC to credit the Securities to the
account of Xxxxxxx, Xxxxx & Co. at DTC. The Company will cause the certificates
representing the Securities to be made available to Xxxxxxx, Sachs & Co. for
checking at least twenty-four hours prior to the Time of Delivery (as defined
below) at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:30 a.m.,
New York City time, on May 21, 1997 or such other time and date as Xxxxxxx,
Xxxxx & Co. and the Company may agree upon in writing. Such time and date are
herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on behalf of
the parties hereto pursuant to Section 7 hereof, including the cross-receipt for
the Securities and any additional documents requested by the Purchasers pursuant
to Section 7(j) hereof, will be delivered at such
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time and date at the offices of O'Melveny & Xxxxx LLP, 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, XX 00000, (the "Closing Location"), and the Securities will be delivered
at the Designated Office, all at the Time of Delivery. A meeting will be held
at the Closing Location at 12:00 p.m., New York City time, on the New York
Business Day next preceding the Time of Delivery, at which meeting the final
drafts of the documents to be delivered pursuant to the preceding sentence will
be available for review by the parties hereto. For the purposes of this Section
4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to make no
amendment or any supplement to the Offering Circular which shall be disapproved
by you promptly after reasonable notice thereof; and to furnish you with copies
thereof;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as you may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) To furnish the Purchasers with 4 copies of the Offering Circular and each
amendment or supplement thereto with the independent accountants' report(s) in
the Offering Circular, and any amendment or supplement containing amendments to
the financial statements covered by such report(s), signed by the accountants,
and additional copies thereof in such quantities as you may from time to time
reasonably request, and if, at any time prior to the expiration of nine months
after the date of the Offering Circular, any event shall have occurred as a
result of which the Offering Circular as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Offering Circular is
delivered, not misleading, or, if for any other reason it shall be necessary or
desirable during such same period to amend or supplement the Offering Circular,
to notify you and upon your request to prepare and furnish without charge to
each Purchaser and to any dealer in securities as many copies as you may from
time to time reasonably request of an amended Offering Circular or a supplement
to the Offering Circular which will correct such statement or omission or effect
such compliance;
(d) During the period beginning from the date hereof and continuing until the
date six months after the Time of Delivery, not to offer, sell contract to sell
or otherwise dispose of, except as provided hereunder any securities of the
Company that are substantially similar to the Securities;
(e) Not to be or become, at any time prior to the expiration of three years
after the Time of Delivery, an open-end investment company, unit investment
trust, closed-end investment company or face-amount certificate company that is
or is required to be registered under Section 8 of the Investment Company Act;
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(f) At any time when the Company is not subject to Section 13 or 15(d) of the
Exchange Act, for the benefit of holders from time to time of Securities, to
furnish at its expense, upon request, to holders of Securities and prospective
purchasers of securities information (the "Additional Issuer Information")
satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Act;
(g) If requested by you, to use its best efforts to cause such Securities to
be eligible for the PORTAL trading system of the National Association of
Securities Dealers, Inc.;
(h) To furnish to the holders of the Securities as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet and
statements of income, shareholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the date of the
Offering Circular), consolidated summary financial information of the Company
and its subsidiaries for such quarter in reasonable detail;
(i) During a period of five years from the date of the Offering Circular, to
furnish to you copies of all reports or other communications (financial or
other) furnished to stockholders of the Company, and to deliver to you (i) as
soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any securities exchange on which
the Securities or any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
(j) During the period of three years after the Time of Delivery, the Company
will not, and will not permit any of its "affiliates" (as defined in Rule 144
under the Securities Act) to, resell any of the Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by any of them;
(k) The Company shall file and use its best efforts to cause to be declared or
become effective under the Securities Act, on or prior to 60 days after the Time
of Delivery, a registration statement on Form S-4 providing for the registration
of (i) another series of debt securities of the Company, with terms identical in
all material respects to the Securities (the "Exchange Securities"), and the
exchange of the Securities for the Exchange Securities, all in a manner which
will permit persons who acquire the Exchange Securities to resell the Exchange
Securities pursuant to Section 4(1) of the Securities Act; and
(l) To use the net proceeds received by it from the sale of the Securities
pursuant to this Agreement in the manner specified in the Offering Circular
under the caption "Use of Proceeds".
6. The Company covenants and agrees with the several Purchasers that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
issue of the Securities and all other expenses in connection with the
preparation, printing and filing of the Preliminary Offering Circular and the
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Offering Circular and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchasers and dealers; (ii) the cost of
printing or producing any Agreement among Purchasers, this Agreement, the
Indenture, the Blue Sky and Legal Investment Memoranda, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Securities; (iii) all expenses
in connection with the qualification of the Securities for offering and sale
under state securities laws as provided in Section 5(b) hereof, including the
reasonable fees and disbursements of counsel for the Purchasers in connection
with such qualification and in connection with the Blue Sky and legal investment
surveys; (iv) any fees charged by securities rating services for rating the
Securities; (v) the cost of preparing the Securities; (vi) the fees and expenses
of the Trustee and any agent of the Trustee and the fees and disbursements of
counsel for the Trustee in connection with the Indenture and the Securities;
(vii) any cost incurred in connection with the designation of the Securities for
trading in PORTAL and all other costs and expenses incident to the performance
of its obligations hereunder which are not otherwise specifically provided for
in this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 11 hereof, the Purchasers will pay all of their own
costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Securities by them, and any advertising expenses connected
with any offers they may make.
7. The obligations of the Purchasers hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of the Time of Delivery, true
and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) Cravath, Swaine & Xxxxx, counsel for the Purchasers, shall have furnished
to you such opinion or opinions, the form and substance satisfactory to you,
dated the Time of Delivery, with respect to such matters as you may reasonably
request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters;
(b) Xxxxx Xxxxxxx Xxxxxx Xxxxxxx & Xxxxxxxxx, counsel for the Company, shall
have furnished to you their written opinion, the form of which is attached as
Annex III(b) hereto, dated the Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company has been duly qualified for the transaction of business
and is in good standing under the laws of each jurisdiction set forth in
such opinion; and
(ii) AFC Properties has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Georgia.
In addition, such counsel shall state that they have participated in
conferences with officers and representatives of the Company, representatives of
the independent public accountants for the Company, independent consultants,
representatives of the Purchasers and counsel for the Purchasers at which
conferences inquiries of such officers, representatives and accountants were
made and, on the basis of the foregoing (without, except solely as stated in
such counsel's opinion, taking any action to verify independently the statements
made in the Offering Circular and without, except solely as stated in such
counsel's opinion, assuming any responsibility for the accuracy, completeness or
fairness of such statements), such counsel shall state that
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nothing has come to such counsel's attention that causes them to believe that
the Offering Circular and any further amendments or supplements thereto made by
the Company prior to the Time of Delivery (other than the financial statements
and other financial data (whether historical or prospective) contained in the
Offering Circular, as to which such counsel need express no opinion) contained
as of its date or contains as of the Time of Delivery an untrue statement of a
material fact or omitted or omits, as the case may be, to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(c) Xxxxxxx & XxXxxxxx, special counsel for the Company, shall have furnished
to you their written opinion, the form of which is attached as Annex III(c)
hereto, dated the Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Minnesota, with
power and authority to own its properties and conduct its business as
described in the Offering Circular;
(ii) The Company has an authorized capitalization as set forth in the
Offering Circular, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable;
(iii) This Agreement has been duly authorized, executed and delivered by
the Company;
(iv) The Securities have been duly authorized, executed, authenticated,
issued and delivered and constitute valid and legally binding obligations
of the Company entitled to the benefits provided by the Indenture subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles; and the Securities and the Indenture conform to
the descriptions thereof in the Offering Circular; the Securities have been
duly authorized by the Company; the temporary global Security has been duly
executed, authenticated, issued and delivered and constitutes a valid and
legally binding obligation of the Company entitled to the benefits provided
by the Indenture subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; the
Securities in definitive form, when executed, authenticated, issued and
delivered in exchange for the temporary global Security in accordance with
the terms of the Indenture, will have been duly executed, authenticated,
issued and delivered and will constitute valid and legally binding
obligations of the Company entitled to the benefits provided by the
Indenture subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
temporary global Security and the Indenture conform, and the Securities
will conform, to the descriptions thereof in the Offering Circular;
(v) Each of the Indenture and the Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and constitutes a
valid and legally binding instrument of the Company, enforceable against
the Company in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other
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laws of general applicability relating to or affecting creditors' rights
and to general equity principles;
(vi) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Securities or the consummation by
the Company of the transactions contemplated by this Agreement or the
Indenture, except such consents, approvals, authorizations, registrations
or qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Securities by
the Purchasers;
(vii) The statements set forth in the Offering Circular under the
caption "Description of Notes" insofar as they purport to constitute a
summary of the terms of the Securities and under the caption "Certain
Federal Income Taxation Consequences", insofar as they purport to describe
the provisions of the laws and documents referred to therein, are accurate
and complete in all material respects;
(viii) No registration of the Securities under the Act, and no
qualification of an indenture under the United States Trust Indenture Act
of 1939 with respect thereto, is required for the offer, sale and initial
resale of the Securities by the Purchasers in the manner contemplated by
this Agreement; and
(ix) The Company is not an "investment company" or an entity "controlled"
by an "investment company", as such terms are defined in the Investment
Company Act.
In addition, such counsel shall state that they have participated in
conferences with officers and representatives of the Company, representatives of
the independent public accountants for the Company, independent consultants,
representatives of the Purchasers and counsel for the Purchasers at which
conferences inquiries of such officers, representatives and accountants were
made and, on the basis of the foregoing (without, except solely as stated in
such counsel's opinion, taking any action to verify independently the statements
made in the Offering Circular and without, except solely as stated in such
counsel's opinion, assuming any responsibility for the accuracy, completeness or
fairness of such statements), such counsel shall state that nothing has come to
such counsel's attention that causes them to believe that the Offering Circular
and any further amendments or supplements thereto made by the Company prior to
the Time of Delivery (other than the financial statements and other financial
data (whether historical or prospective) contained in the Offering Circular, as
to which such counsel need express no opinion) contained as of its date or
contains as of the Time of Delivery an untrue statement of a material fact or
omitted or omits, as the case may be, to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(d) Xxxxxx X. Xxxxxxx, General Counsel of the Company, shall have furnished to
you his written opinion, the form of which is attached as Annex III(d) hereto,
dated the Time of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) The Company has been duly qualified for the transaction of business
and is in good standing under the laws of each U.S. jurisdiction in which
it owns or leases properties or conducts any business so as to require such
qualification, except where the failure to so
12
qualify would not result in a material adverse effect on the Company;
(ii) All of the issued shares of capital stock of AFC Properties have
been duly and validly authorized and issued, are fully paid and non-
assessable, and are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims, except for equities
or claims arising under or pursuant to the Credit Facility;
(iii) To the best of such counsel's knowledge, other than as set forth
in the Offering Circular, there are no legal or governmental proceedings
pending to which the Company or AFC Properties is a party or of which any
property of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or AFC Properties, would individually
or in the aggregate have a material adverse effect on the current or future
consolidated financial position, shareholders' equity or results of
operations of the Company and AFC Properties; and, to the best of such
counsel's knowledge, no such proceedings are threatened by governmental
authorities or threatened by others;
(iv) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, the
Registration Rights Agreement and this Agreement and the consummation of
the transactions herein and therein contemplated will not (a) conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or AFC
Properties is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or AFC
Properties is subject, (b) result in any violation of any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or AFC Properties or any of their
properties or (c) result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company, except in the case
of (a) or (b) above, such breaches, violations or defaults that would not
have a material adverse effect on the Company and AFC Properties;
(v) Neither the Company nor AFC Properties is (a) in violation of its
Certificate of Incorporation or By-laws or (b) in default in the
performance or observance of any obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound, except in the case of (b) above, such
defaults that would not have a material adverse effect on the Company and
AFC Properties;
(vi) Except as set forth in the Offering Circular, the IGS Agreement has
been duly executed and delivered and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms subject to applicable bankruptcy, insolvency and other laws
affecting the enforcement of creditors' rights generally, to general
equitable principles, to the fact that the availability of equitable
remedies is in the discretion of a court of competent jurisdiction and to
the fact that such counsel expresses no opinion as to the enforceability,
in any particular circumstance, of any provision of such agreement which
provides for the severability of illegal or unenforceable provisions; and
13
(vii) The statements set forth in the Offering Circular under the
caption "Business-Trademarks and Licenses- Formula Agreement" insofar as
they purport to be a summary of the terms of the Formula Agreement and
under the caption "Business- Litigation" insofar as they purport to
describe of the legal proceedings discussed therein, all accurate and
complete in all material respects.
(e) On the date of the Offering Circular prior to the execution of this
Agreement and also at the Time of Delivery, Xxxxxx Xxxxxxxx LLP shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set forth in
Annex II hereto;
(f) (i) Neither the Company nor AFC Properties shall have sustained since the
date of the latest audited financial statements included in the Offering
Circular any loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Offering Circular, and (ii) since the respective
dates as of which information is given in the Offering Circular there shall not
have been any change in the capital stock or long-term debt of the Company or
AFC Properties or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Offering
Circular, the effect of which, in any such case described in Clause (i) or (ii),
is in the judgment of the Purchasers so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or the delivery of the
Securities on the terms and in the manner contemplated in this Agreement and in
the Offering Circular;
(g) On or after the date hereof (i) no downgrading shall have occurred in the
rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities;
(h) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a general moratorium on
commercial banking activities declared by either Federal or New York or State
authorities; or (iii) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency or
war, if the effect of any such event specified in this Clause (iii) in the
judgment of the Purchasers makes it impracticable or inadvisable to proceed with
the offering or the delivery of the Securities on the terms and in the manner
contemplated in the Offering Circular; or (iv) the occurrence of any material
adverse change in the existing, financial, political or economic conditions in
the United States or elsewhere which, in the judgment of the Representatives,
would materially and adversely affect the financial markets or the markets for
the Securities and other debt securities;
(i) The Securities have been designated for trading on PORTAL;
(j) The Company shall have furnished or caused to be furnished to you at the
Time of Delivery certificates of officers of the Company satisfactory to you as
to the accuracy of the representations
14
and warranties of the Company herein at and as of such Time of Delivery, as to
the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth in
subsection (f) of this Section and as to such other matters as you may
reasonably request.
(k) The Company and the lenders shall have entered into the Credit Agreement,
which shall be in full force and effect and the Company shall have a minimum of
$50 million of borrowing capacity thereunder.
8. (a) The Company will indemnify and hold harmless each Purchaser against
any losses, claims, damages or liabilities, joint or several, to which such
Purchaser may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Circular or the Offering
Circular, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact necessary
to make the statements therein not misleading, and will reimburse each Purchaser
for any legal or other expenses reasonably incurred by such Purchaser in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Offering Circular or the
Offering Circular or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Purchaser
through Xxxxxxx, Sachs & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Offering Circular, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Offering Circular or the Offering Circular
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Purchaser through Xxxxxxx,
Xxxxx & Co. expressly for use therein; and will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or (b)
above of notice of the commencement of any action, such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying party under
such subsection, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled
15
to participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. The indemnifying party shall not be required to
indemnify any indemnified party for any amount paid or payable by such
indemnified party in the settlement of any action, proceeding or investigation
without the written consent of the indemnifying party, which consent shall not
be unreasonably withheld. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act, by
or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchasers on the other from the offering
of the Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Purchasers on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Purchasers on
the other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Purchasers, in
each case as set forth in the Offering Circular. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Purchasers on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Purchasers agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by pro
rata allocation (even if the Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
16
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection
(d), no Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities purchased by it and
resold to investors were offered to investors exceeds the amount of any damages
which such Purchaser has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. The Purchasers'
obligations in this subsection (d) to contribute are several in proportion to
their respective purchase obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Purchaser
within the meaning of the Act; and the obligations of the Purchasers under this
Section 8 shall be in addition to any liability which the respective Purchasers
may otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within thirty-six hours after such default by
any Purchaser you do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Securities, or the Company notifies you that it has so arranged for the
purchase of such Securities, you or the Company shall have the right to postpone
the Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Offering Circular,
or in any other documents or arrangements, and the Company agrees to prepare
promptly any amendments to the Offering Circular which in your opinion may
thereby be made necessary. The term "Purchaser" as used in this Agreement shall
include any person substituted under this Section with like effect as if such
person had originally been a party to this Agreement with respect to such
Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities, then the Company shall have
the right to require each non-defaulting Purchaser to purchase the principal
amount of Securities which such Purchaser agreed to purchase hereunder and, in
addition, to require each non-defaulting Purchaser to purchase its pro rata
share (based on the principal amount of Securities which such Purchaser agreed
to purchase hereunder) of the Securities of such defaulting Purchaser or
Purchasers for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Purchaser from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the
17
aggregate principal amount of Securities which remains unpurchased exceeds one-
eleventh of the aggregate principal amount of all the Securities, or if the
Company shall not exercise the right described in subsection (b) above to
require non-defaulting Purchasers to purchase Securities of a defaulting
Purchaser or Purchasers, then this Agreement shall thereupon terminate, without
liability on the part of any non-defaulting Purchaser or the Company, except for
the expenses to be borne by the Company and the Purchasers as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Purchaser from liability
for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Purchasers, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof, the
Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Purchasers through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Purchasers in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to any Purchaser except as provided in Sections 6 and
8 hereof.
12. In all dealings hereunder, Xxxxxxx, Sachs & Co. shall act on behalf of
each of the Purchasers, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any Purchaser made
or given by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of the Purchasers.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you in care of Xxxxxxx, Sachs & Co., 00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration Department; and if to the
Company shall be delivered or sent by mail, telex or facsimile transmission to
the address of the Company set forth in the Offering Circular, Attention:
Secretary; provided, however, that any notice to a Purchaser pursuant to Section
8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission
to such Purchaser at its address set forth in its Purchasers' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit of,
the Purchasers, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities
18
from any Purchaser shall be deemed a successor or assign by reason merely of
such purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such respective counterparts shall together constitute one and the same
instrument.
19
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and each of the Representatives plus one for
each counsel counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
Very truly yours,
AFC Enterprises, Inc.
By: /s/ Xxxx X. Xxxx
-------------------------------------
Title: Director
Accepted as of the date hereof:
Xxxxxxx, Sachs & Co.
CIBC Wood Gundy Securities Corp.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
By: /s/ Xxxxxxx Sachs & Co.
Name: Xxxxxxxxxxx Xxxxxx
Title: Vice President
20
SCHEDULE I
PRINCIPAL
AMOUNT OF
SECURITIES
TO BE
PURCHASER PURCHASED
--------- ------------
Xxxxxxx, Sachs & Co. .................................... $ 87,500,000
CIBC Wood Gundy Securities Corp.......................... 43,750,000
Xxxxxxxxx, Xxxxxx and Xxxxxxxx Securities Corporation.... 43,750,000
------------
Total......................................... $175,000,000
============
1
ANNEX I
(1) The Securities have not been and will not be registered under the Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the Act or pursuant to an exemption from the registration requirements of the
Act. Each Purchaser represents that it has offered and sold the Securities, and
will offer and sell the Securities (i) as part of their distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering and the Time of Delivery, only in accordance with Rule 903 of
Regulation S or, Rule 144A or pursuant to Paragraph 2 of this Annex I under the
Act. Accordingly, each Purchaser agrees that neither it, its affiliates nor any
persons acting on its or their behalf has engaged or will engage in any directed
selling efforts with respect to the Securities, and it and they have complied
and will comply with the offering restrictions requirement of Regulation S.
Each Purchaser agrees that, at or prior to confirmation of sale of Securities
(other than a sale pursuant to Rule 144A) or pursuant to Paragraph 2 of this
Annex I, it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Securities from it
during the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered and sold
within the United States or to, or for the account or benefit of, U.S. persons
(i) as part of their distribution at any time or (ii) otherwise until 40 days
after the later of the commencement of the offering and the closing date,
except in either case in accordance with Regulation S (or Rule 144A if
available) under the Securities Act. Terms used above have the meaning given
to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not enter
into any contractual arrangement with respect to the distribution or delivery of
the Securities, except with its affiliates or with the prior written consent of
the Company.
(2) Notwithstanding the foregoing, Securities in registered form may be
offered, sold and delivered by the Purchasers in the United States and to U.S.
persons pursuant to Section 3 of this Agreement without delivery of the written
statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
Securities will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their business or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995, (b) it has
complied, and will comply, with all applicable provisions of the Financial
2
Services Act of 1986 of Great Britain with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (c) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issuance of
the Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Xxx 0000 (Investment Advertisements) (Exemptions) Order 1996
of Great Britain or is a person to whom the document may otherwise lawfully be
issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver any of
the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action in required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with Xxxxxxx, Sachs & Co.'s express written consent and then only at its own
risk and expense.
ANNEX II
Pursuant to Section 7(e) of the Purchase Agreement, the accountants shall
furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries under rule 101 of the American Institute
of Certified Public Accountants' Code of Professional Conduct, and its
interpretations and rulings;
(ii) In our opinion, the consolidated financial statements and
financial statement schedules audited by us and included in the Offering
Circular comply as to form in all material respects with the applicable
requirements of the Exchange Act and the related published rules and
regulations;
(iii) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Offering
Circular agrees with the corresponding amounts (after restatements where
applicable) in the audited consolidated financial statements for such
five fiscal years;
(iv) On the basis of limited procedures not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Offering Circular, inquiries
of officials of the Company and its subsidiaries responsible for
financial and accounting matters and such other inquiries and procedures
as may be specified in such letter, nothing came to their attention that
caused them to believe that:
(A) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Offering Circular are not in conformity with generally accepted
accounting principles applied on the basis substantially consistent with
the basis for the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Offering Circular;
(B) any other unaudited income statement data and balance sheet items
included in the Offering Circular do not agree with the corresponding
items in the unaudited consolidated financial statements from which such
data and items were derived, and any such unaudited data and items were
not determined on a basis substantially consistent with the basis for the
corresponding amounts in the audited consolidated financial statements
included in the Offering Circular;
(C) the unaudited financial statements which were not included in the
Offering Circular but from which were derived any unaudited condensed
financial statements
2
referred to in Clause (A) and any unaudited income statement
data and balance sheet items included in the Offering Circular and
referred to in Clause (B) were not determined on a basis substantially
consistent with the basis for the audited consolidated financial
statements included in the Offering Circular;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Offering Circular do not comply as to form in
all material respects with the applicable accounting requirements or the
pro forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated capital
stock (other than issuances of capital stock upon exercise of options and
stock appreciation rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were
outstanding on the date of the latest financial statements included in
the Offering Circular) or any increase in the consolidated long-term debt
of the Company and its subsidiaries, or any decreases in consolidated net
current assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in the
latest balance sheet included in the Offering Circular except in each
case for changes, increases or decreases which the Offering Circular
discloses have occurred or may occur or which are described in such
letter; and
(F) for the period from the date of the latest financial statements
included in the Offering Circular to the specified date referred to in
Clause (E) there were any decreases in consolidated net revenues or
operating profit or the total or per share amounts of consolidated net
income or other items specified by the Representatives, or any increases
in any items specified by the Representatives, in each case as compared
with the comparable period of the preceding year and with any other
period of corresponding length specified by the Representatives, except
in each case for decreases or increases which the Offering Circular
discloses have occurred or may occur or which are described in such
letter; and
(v) In addition to the examination referred to in their report(s)
included in the Offering Circular and the limited procedures, inspection
of minute books, inquiries and other procedures referred to in paragraphs
(iii) and (iv) above, they have carried out certain specified procedures,
not constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Offering Circular, and have compared certain of such
amounts, percentages and financial information with the accounting
records of the Company and its subsidiaries and have found them to be in
agreement.
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and each of the Representatives plus one for
each counsel counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
Very truly yours,
AFC Enterprises, Inc.
By: /s/ Xxxx X. Xxxx
-------------------------------
Title: Director
Accepted as of the date hereof:
Xxxxxxx, Sachs & Co.
CIBC Wood Gundy Securities Corp.
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
By: /s/ Xxxxxxx Sachs & Co.
-----------------------
Name: Xxxxxxxxxxx Xxxxxx
Title: Vice President
