EXHIBIT 1
3,267,615 Shares
AFC ENTERPRISES, INC.
Common Stock
UNDERWRITING AGREEMENT
March 14, 2006
Credit Suisse Securities (USA) LLC
Xxx Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Dear Ladies and Gentlemen:
1. Introductory. The stockholders listed in Schedule A hereto ("SELLING
STOCKHOLDERS") propose severally to sell an aggregate of 2,842,615 outstanding
shares ("FIRM SECURITIES") of the Common Stock, par value $0.01 per share
("SECURITIES"), of AFC Enterprises, Inc., a Minnesota corporation ("COMPANY")
and the Selling Stockholders also propose to sell to the Underwriters, at the
option of the Underwriters, an aggregate of not more than 425,000 additional
outstanding shares ("Optional Securities") of the Company's Securities as set
forth below. The Firm Securities and the Optional Securities are herein
collectively called the ("OFFERED SECURITIES"). The Selling Stockholders hereby
agree with the Company and with the several Underwriters named in Schedule B
hereto ("UNDERWRITERS"), for whom Credit Suisse Securities (USA) LLC is acting
as representative (the "Representative") as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement on Form S-3 (No. 333-86914), including a
prospectus, relating to the Offered Securities has been filed with the
Securities and Exchange Commission ("COMMISSION") and has become effective.
"REGISTRATION STATEMENT" as of any time means such registration statement
in the form then filed with the Commission, including any amendment
thereto, any document incorporated by reference therein and any information
in a prospectus or prospectus supplement deemed to be a part thereof
pursuant to Rule 430A ("RULE 430A"), Rule 430B ("RULE 430B") or 430C ("RULE
430C") under the Securities Act of 1933 ("ACT") that has not been
superseded or modified. "REGISTRATION STATEMENT" without reference to a
time means the Registration Statement as of the time of the first contract
of sale for the Offered Securities, which time shall be considered the
"EFFECTIVE DATE" of the Registration Statement. "STATUTORY PROSPECTUS" as
of any time means the prospectus relating to the Offered Securities
included in the Registration Statement immediately prior to that time,
including any document incorporated by reference therein and any basic
prospectus or prospectus supplement deemed to be a part thereof that has
not been superseded or modified. "PROSPECTUS" means the Statutory
Prospectus that discloses the public offering price and other final terms
of the Offered Securities and otherwise satisfies Section 10(a) of the Act.
For purposes of the preceding two sentences, information contained in a
form of prospectus (including a prospectus supplement) that is deemed
retroactively to be a part of the Registration Statement pursuant to Rule
430A, 430B or 430C shall be considered to be included in the Statutory
Prospectus or the Prospectus as of the actual time that form of prospectus
is filed with the Commission pursuant to Rule 424(b) under the Act. "ISSUER
FREE WRITING PROSPECTUS" means any "issuer free writing prospectus," as
defined in Rule 433, relating to the Offered Securities in the form filed
or required to be filed with the Commission or, if not required to be
filed, in the form retained in the Company's records pursuant to Rule
433(g), in each case as specified in Schedule C to this Agreement.
"APPLICABLE TIME" means 6:00 p.m. (Eastern time) on the date of this
Agreement. No document has been or will be prepared or distributed in
reliance on Rule 434 of the Act.
(ii) On its Effective Date, the Registration Statement conformed in
all material respects to the requirements of the Act and the rules and
regulations of the Commission (the "RULES AND REGULATIONS") and did not
include any 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 not misleading, and on the date of this Agreement, the
Registration Statement and the Prospectus will conform in all material
respects to the requirements of the Act and the Rules and Regulations, and
neither of such documents will include any 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 the case of the Prospectus, in
the light of the circumstances under which they were made) not misleading,
except that the foregoing does not apply to statements in or omissions from
the Registration Statement or the Prospectus based upon written information
furnished to the Company by (i) an Underwriter through the Representative
specifically for use therein, it being understood and agreed that the only
such information is that described as such in Section 7(c) hereof or (ii)
the Selling Stockholders, if any specifically for use therein.
(iii) The Company at the time of the initial filing of the
Registration Statement and at the date of this Agreement was not and is not
an "ineligible issuer," as defined in Rule 405 under the Act, including (x)
the Company or any subsidiary in the preceding three years not having been
convicted of a felony or misdemeanor or having been made the subject of a
judicial or administrative decree or order as described in Rule 405 under
the Act and (y) the Company in the preceding three years not having been
the subject of a bankruptcy petition or insolvency or similar proceeding,
not having had a registration statement be the subject of a proceeding
under Section 8 of the Act and not being the subject of a proceeding under
Section 8A of the Act in connection with the offering of the Offered
Securities, all as described in Rule 405 under the Act.
(iv) As of the Applicable Time, the Issuer Free Writing Prospectuses
issued at or prior to the Applicable Time, the information relating to
pricing on Schedule D hereto, and the Statutory Prospectus (collectively,
the "GENERAL DISCLOSURE PACKAGE") did not include any 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, not misleading. The preceding sentence does not apply to
statements in or omissions from any prospectus included in the Registration
Statement or any Issuer Free Writing Prospectus based upon and in
conformity with written information furnished to the Company by (i) an
Underwriter through the Representative specifically for use therein, it
being understood and agreed that the only such information is that
described as such in Section 7(c) hereof or (ii) the Selling Stockholders,
if any specifically for use therein.
(v) Each Issuer Free Writing Prospectus, as of its issue date and at
all subsequent times through the completion of the public offer and sale of
the Offered Securities or until any earlier date that the Company notified
or notifies the Representative as described in the next sentence, did not,
does not and will not include any information that conflicted, conflicts or
will conflict with the information then contained in the Registration
Statement. If at any time following issuance of an Issuer Free Writing
Prospectus there occurred or occurs an event or development as a result of
which such Issuer Free Writing Prospectus conflicted or would conflict with
the information then contained in the Registration Statement or included or
would include an untrue statement of a material fact or omitted or would
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances prevailing at that subsequent
time, not misleading, (1) the Company has promptly notified or will
promptly notify the Representative and (2) the Company has promptly amended
or will promptly amend or supplement such Issuer Free Writing Prospectus to
eliminate or correct such conflict, untrue statement or omission. The
foregoing two sentences do not apply to statements in or omissions from any
Issuer Free Writing Prospectus based upon and in conformity with written
information furnished to the Company by (i) an Underwriter through the
Representative specifically for use therein, it being understood and agreed
that the only such information is that described as such in Section 7(c)
hereof or (ii) the Selling Stockholders, if any specifically for use
therein.
(vi) Neither the Company nor any of its subsidiaries (as defined in
Rule 405 of the rules and regulations promulgated under the Act;
hereinafter referred to as the "SUBSIDIARIES"), has sustained since the
date of the latest audited financial statements included in the General
Disclosure Package any loss or
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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 that, individually or in the
aggregate, would have a material adverse effect on the condition (financial
or other), business, properties or results of operations of the Company and
its subsidiaries taken as a whole ("MATERIAL ADVERSE EFFECT"), otherwise
than as set forth or contemplated in the General Disclosure Package; and,
since the respective dates as of which information is given in the
Registration Statement and the General Disclosure Package, there has not
been any change in the capital stock (except for any grant of stock options
consistent with past practice or any issuance of stock upon the exercise of
stock options outstanding as of the date hereof, in each case pursuant to
stock plans that have been described in the General Disclosure Package, and
except for any issuance of stock upon the exercise of warrants outstanding
as of the date hereof that have been described in the General Disclosure
Package) or long-term debt of the Company or any of its subsidiaries or any
material adverse change, or any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated
in the General Disclosure Package, and, except as disclosed in or
contemplated by the General Disclosure Package, there has been no dividend
or distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(vii) The Company and its subsidiaries 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 for liens granted pursuant to that certain
Second Amended and Restated Credit Agreement dated as of May 11, 2005, with
JPMorgan Chase Bank, N.A. and certain other financial institutions listed
on the signature pages thereto (the "CREDIT AGREEMENT") 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 its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as would not, individually or in
the aggregate, have a Material Adverse Effect and do not interfere with the
use made and proposed to be made of such property and buildings by the
Company and its subsidiaries.
(viii) 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 corporate power and authority to own its properties and conduct its
business as described in the General Disclosure Package, 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, except for such failures to be so qualified or in good
standing that would not, individually or in the aggregate, have a Material
Adverse Effect; and each subsidiary of the Company has been duly organized
and is validly existing as a corporation or other entity in good standing
under the laws of its jurisdiction of organization.
(ix) The Company has an authorized capitalization as set forth in the
General Disclosure Package, and the Offered Securities and all of the other
issued shares of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and conform to the
description of the Securities contained in the General Disclosure Package;
and all of the issued shares of capital stock of each subsidiary of the
Company 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 other than
those granted pursuant to the Credit Agreement.
(x) The offering and sale of the Offered Securities and the compliance
by the Company with all of the provisions of this Agreement and the
consummation of the transactions herein 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 any
of its subsidiaries 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 any of its subsidiaries is subject, except for such conflicts,
breaches, violations or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect, or (B) result in any violation
of the provisions of (x) the Articles of
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Incorporation or By-laws of the Company or (y) any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties, except for violations of any statute, order, rule or regulation
that would not, individually or in the aggregate, have a Material Adverse
Effect; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the offering and sale of the Offered Securities or the
consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Offered Securities
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 Offered Securities
by the Underwriters.
(xi) Neither the Company nor any of its subsidiaries is in violation
of its Articles of Incorporation or By-laws or in default in the
performance or observance of any obligation, agreement, 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 for such defaults
that would not, individually or in the aggregate, have a Material Adverse
Effect.
(xii) The statements in the Company's Form 8-A, as filed with the
Commission on February 21, 2001 together with the statements under the
heading "Capital Stock" in the Statutory Prospectus and the Prospectus
insofar as they purport to constitute a summary of the terms of the
Securities, and in the Statutory Prospectus and the Prospectus under the
caption "Underwriting", insofar as they purport to describe the provisions
of the laws and documents referred to therein, are accurate and complete in
all material respects.
(xiii) Other than as set forth in the General Disclosure Package,
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; and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(xiv) The Company is not and, after giving effect to the offering and
sale of the Offered Securities, will not be an "investment company", as
such term is defined in the Investment Company Act of 1940, as amended (the
"INVESTMENT COMPANY ACT").
(xv) The Company and its subsidiaries are in compliance with the
applicable requirements of the Federal Trade Commission (the "FTC") rules
governing franchising and all applicable provisions of federal, state,
local and other laws or regulations governing the business of a franchisor,
except for such failures to comply that would not, individually or in the
aggregate, have a Material Adverse Effect.
(xvi) Other than as set forth in the General Disclosure Package, the
Company and its subsidiaries own or possess valid licenses or other rights
to use all patents, trademarks, service marks, trade names, copyrights,
know-how, trade secrets and other intellectual property (collectively, the
"INTELLECTUAL PROPERTY") necessary to conduct and carry on the business of
the Company and its subsidiaries as described in the General Disclosure
Package, except as would not have a Material Adverse Effect, and the
Company and its subsidiaries have not received any charge, complaint,
claim, demand, or notice alleging any infringement or conflict with (and
the Company knows of no such infringement or conflict with) asserted rights
of others with respect to any Intellectual Property which, if determined
adversely to the Company or its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect.
(xvii) Each of KPMG LLP and Xxxxx Xxxxxxxx LLP, whose reports on the
consolidated financial statements of the Company and its subsidiaries are
filed with the Commission as part of the Registration Statement and General
Disclosure Package, are independent registered public accountants as
required by the Act and the Rules and Regulations.
(xviii) Except as disclosed in the General Disclosure Package, there
are no contracts, agreements
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or understandings between the Company and any person that would give rise
to a valid claim against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment.
(xix) Except as provided in that certain Stockholders Agreement dated
April 11, 1996, as amended by and among the Company, the Selling
Stockholders and certain other parties thereto, and that certain Letter
Agreement, dated April 25, 2002, by and among the Company, the Selling
Stockholders and certain other parties thereto (which is filed as Exhibit
4.10 to the Registration Statement), there are no contracts, agreements or
understandings between the Company and any person granting such person the
right to require the Company to file a registration statement under the Act
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Act.
(xx) The Securities are listed on the Nasdaq Stock Market's National
Market.
(xxi) This Agreement has been duly authorized, executed and delivered
by the Company.
(xxii) The financial statements included or incorporated by reference
in the Registration Statement and the Statutory Prospectus present fairly
the financial position of the Company and its consolidated subsidiaries as
of the dates shown and their results of operations and cash flows for the
periods shown, subject, in the case of unaudited financial statements, to
normal recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, be material) and the absence of notes to
such financial statements. The financial statements included or
incorporated by reference in the Registration Statement and the Statutory
Prospectus have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis.
(b) Each Selling Stockholder severally represents and warrants to, and
agrees with, the several Underwriters that:
(i) Such Selling Stockholder has and on each Closing Date hereinafter
mentioned will have valid and unencumbered title to the Offered Securities
to be delivered by such Selling Stockholder on each Closing Date and full
right, power and authority to enter into this Agreement and to sell,
assign, transfer and deliver the Offered Securities to be delivered by such
Selling Stockholder on each Closing Date hereunder; and upon the delivery
of and payment for the Offered Securities on each Closing Date hereunder
the several Underwriters will acquire valid and unencumbered title to the
Offered Securities to be delivered by such Selling Stockholder on each
Closing Date.
(ii) (A) the Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (B) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the foregoing does not apply to
statements in or omissions from the Registration Statement or the
Prospectus based upon written information furnished to the Company by any
Underwriter through the Representative specifically for use therein, it
being understood and agreed that the only such information is that
described as such in Section 7(c); and, solely with regard to each of the
Selling Stockholders, the foregoing applies only to the extent that any
statements in or omissions from the Registration Statement or the
Prospectus are based on written information furnished to the Company by
such Selling Stockholder specifically for use therein.
(iii) As of the Applicable Time, the General Disclosure Package did
not include any 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, not misleading. The
preceding sentence does not apply to statements in or omissions from any
prospectus included in the Registration Statement or any Issuer Free
Writing Prospectus based upon written information furnished to the Company
by an Underwriter through the Representative specifically for use therein,
it being understood and agreed
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that the only such information is that described as such in Section 7(c)
hereof; and, solely with regard to each of the Selling Stockholders, the
foregoing applies only to the extent that any statements in or omissions
from any such document are based on written information furnished to the
Company by such Selling Stockholder specifically for use therein.
(iv) Each Issuer Free Writing Prospectus as of its issue date and at
all subsequent times through the completion of the public offer and sale of
the Offered Securities or until any earlier date that the Company notified
or notifies the Representative as described in Section 2(a)(v), did not,
does not and will not include any information that conflicted, conflicts or
will conflict with the information then contained in the Registration
Statement. The preceding sentence does not apply to statements in or
omissions from any Issuer Free Writing Prospectus based upon written
information furnished to the Company by an Underwriter through the
Representative specifically for use therein, it being understood and agreed
that the only such information is that described as such in Section 7(c)
hereof; and, solely with regard to each of the Selling Stockholders, the
foregoing applies only to the extent that any statements in or omissions
from any Issuer Free Writing Prospectus are based on written information
furnished to the Company by such Selling Stockholder specifically for use
therein.
(v) Except as disclosed in the General Disclosure Package, there are
no contracts, agreements or understandings between such Selling Stockholder
and any person that would give rise to a valid claim against the Company or
any Underwriter for a brokerage commission, finder's fee or other like
payment.
(vi) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Stockholder; and the sale of the Offered
Securities to be sold by such Selling Stockholder hereunder and the
compliance by such Selling Stockholder with all of the provisions of 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 terms or provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which such Selling Stockholder is a party or by which such
Selling Stockholder is bound or to which any of the property or assets of
such Selling Stockholder is subject, except for conflicts, breaches,
violations or defaults that would not, individually or in the aggregate,
have a material adverse effect on the ability of such Selling Stockholder
to consummate the transactions contemplated by this Agreement, or (B)
result in any violation of (x) the provisions of the partnership agreement
of such Selling Stockholder, or (y) any statute, order, rule or regulation
of any court or governmental agency or body having jurisdiction over such
Selling Stockholder or the property of such Selling Stockholder, except for
violations of any statute, order, rule or regulation that would not,
individually or in the aggregate, have a material adverse effect on the
ability of such Selling Stockholder to consummate the transactions
contemplated by this Agreement.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, each Selling Stockholder agrees,
severally and not jointly, to sell to the Underwriters, and each Underwriter
agrees, severally and not jointly, to purchase from each Selling Stockholder, at
a purchase price of $13.88 per share, that number of Firm Securities (rounded up
or down, as determined by the Representative in its discretion, in order to
avoid fractions) obtained by multiplying the number of Firm Securities set forth
opposite the name of such Selling Stockholder in Schedule A hereto by a fraction
the numerator of which is the number of Firm Securities set forth opposite the
name of such Underwriter in Schedule B hereto and the denominator of which is
the total number of Firm Securities.
The Selling Stockholders will deliver the Firm Securities to the
Representative for the accounts of the Underwriters, against payment of the
purchase price in Federal (same day) funds by wire transfer to an account or
accounts at a bank or banks acceptable to the Representative and specified by
the Selling Stockholders, at the office of King & Spalding LLP, Atlanta,
Georgia, at 9:00 A.M., New York time, on March 20, 2006, or at such other time
not later than seven full business days thereafter as the Representative and the
Selling Stockholders determine, such time being herein referred to as the "First
Closing Date". The certificates for the Firm Securities so to be delivered will
be in definitive form, in such denominations and registered in such names as the
Representative requests and will be made available for checking and packaging at
the above office of King & Spalding LLP at least 24 hours prior to the First
Closing Date.
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Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by the
Representative but shall be not later than five full business days after written
notice of election to purchase Optional Securities is given. The Selling
Stockholders will deliver the Optional Securities being purchased on each
Optional Closing Date to the Representative for the accounts of the several
Underwriters, against payment of the purchase price in Federal (same day) funds
by official bank check or checks or wire transfer to an account or accounts at a
bank or banks acceptable to the Representative and specified by the Selling
Stockholders, at the above office of King & Spalding LLP. The certificates for
the Optional Securities being purchased on each Optional Closing Date will be in
definitive form, in such denominations and registered in such names as the
Representative requests and upon reasonable notice prior to such Optional
Closing Date and will be made available for checking and packaging at the above
office of King & Spalding LLP at a reasonable time in advance of such Optional
Closing Date.
In addition, upon written notice from the Representative given to the
Company and the Selling Stockholders from time to time not more than 30 calendar
days subsequent to the date of the Prospectus, the Underwriters may purchase all
or less than all of the Optional Securities at the purchase price per Security
to be paid for the Firm Securities. The Selling Stockholders agree, severally
and not jointly, to sell to the Underwriters the respective numbers of Optional
Securities obtained by multiplying the number of Optional Securities specified
in such notice by a fraction the numerator of which is the number of shares set
forth opposite the names of such Selling Stockholders in Schedule A hereto under
the caption "Number of Optional Securities to be Sold" and the denominator of
which is the total number of Optional Securities (subject to adjustment by the
Representative to eliminate fractions). Such Optional Securities shall be
purchased from each Selling Stockholder for the account of each Underwriter in
the same proportion as the number of Firm Securities set forth opposite such
Underwriter's name bears to the total number of Firm Securities (subject to
adjustment by the Representative to eliminate fractions) and may be purchased by
the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall be
sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by the Representative to the Selling Stockholders.
4. Offering by Underwriters. It is understood that the several Underwriters
propose to offer the Offered Securities for sale to the public as set forth in
the General Disclosure Package.
5. Certain Agreements of the Company and the Selling Stockholders. (a) The
Company agrees with the several Underwriters and the Selling Stockholders that:
(i) The Company has filed or will file each Statutory Prospectus and
the Prospectus with the Commission pursuant to and in accordance with Rule
424(b) not later than the second business day following the earlier of the
date it is first used and the execution and delivery of this Agreement. The
Company will advise the Representative promptly of each such filing.
(ii) Until the distribution of the Offered Securities has been
completed, the Company will advise the Representative promptly of any
proposal to amend or supplement the Registration Statement or any Statutory
Prospectus and will afford the Representative a reasonable opportunity to
comment on any such proposed amendment or supplement; and the Company will
also advise the Representative promptly of the filing of any such amendment
or supplement and of the institution by the Commission of any stop order
proceedings in respect of the Registration Statement or suspending the use
of any Statutory Prospectus or the Prospectus or of the suspension of
qualification of the Offered Securities for offering or sale in any
jurisdiction or the initiation or the threatening of any proceeding for
such purpose or pursuant to Section 8A of the Act and will use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(iii) If, at any time when a prospectus relating to the Offered
Securities is (or but for the exemption in Rule 172 under the Act would be)
required to be delivered under the Act in connection with sales by any
Underwriter or dealer, any event occurs as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact
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necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Prospectus to comply with the Act, the Company will
promptly notify the Representative of such event and will promptly prepare
and file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither the Representative's consent to,
nor the Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6 hereof.
(iv) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
security holders an earnings statement covering a period of at least 12
months beginning after the Effective Date. For the purpose of the preceding
sentence, "AVAILABILITY DATE" means the 40th day after the end of the
fourth fiscal quarter following the fiscal quarter that includes such
Effective Date, except that, if such fourth fiscal quarter is the last
quarter of the Company's fiscal year, "AVAILABILITY DATE" means the 75th
day after the end of such fourth fiscal quarter.
(v) The Company will furnish to the Representative copies of each
Registration Statement two (2) of which will be signed and will include all
exhibits), each document in the General Disclosure Package, and, so long as
a prospectus relating to the Offered Securities is required to be delivered
under the Act in connection with sales by any Underwriter or dealer, the
Prospectus and all amendments and supplements to such documents, in each
case in such quantities as the Representative requests. The Prospectus
shall be so furnished on or prior to 3:00 P.M., New York time, on the
second business day following the later of the execution and delivery of
this Agreement. All other such documents shall be so furnished as soon as
available. The Company will pay the expenses of printing and distributing
to the Underwriters all such documents.
(vi) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as the
Representative designates and will continue such qualifications in effect
so long as required for the distribution.
(vii) For the period specified below (the "COMPANY LOCK-UP PERIOD"),
the Company will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Commission a
registration statement under the Act relating to, any additional shares of
its Securities or securities convertible into or exchangeable or
exercisable for any shares of its Securities, or publicly disclose the
intention to make any such offer, sale, pledge, disposition or filing,
without the prior written consent of the Representative, except (i)
issuances of Securities pursuant to the conversion or exchange of
convertible or exchangeable securities or the exercise of warrants or
options, in each case outstanding on the date hereof, (ii) grants of
employee stock options pursuant to the terms of a plan in effect on the
date hereof or a plan not in effect on the date hereof that would replace
an existing plan without increasing the shares currently issuable under all
plans existing as of the date hereof, (iii) issuances of Securities
pursuant to the exercise of such options, (iv) the exercise of any other
employee stock options outstanding on the date hereof and (v) the filing of
a Registration Statement on Form S-8 relating to employee benefit plans.
The initial Company Lock-Up Period will commence on the date hereof and
will continue and include the date 90 days after the date hereof or such
earlier date that the Representative consents to in writing; provided,
however, that if (1) during the last 17 days of the initial Company Lock-Up
Period, the Company releases earnings results or material news or a
material event relating to the Company occurs or (2) prior to the
expiration of the initial Company Lock-Up Period, the Company announces
that it will release earnings results during the 16-day period beginning on
the last day of the initial Company Lock-Up Period, then in each case the
Company Lock-Up Period will be extended until the expiration of the 18-day
period beginning on the date of release of the earnings results or the
occurrence of the material news or material event, as applicable, unless
the Representative waives, in writing, such extension. The Company will
provide the Representative with notice of any announcement described in
clause (2) of the preceding sentence that gives rise to an extension of the
Company Lock-Up Period.
(viii) The Company will pay all expenses incident to the performance
of the obligations of the Selling Stockholders and the obligations of the
Company under this Agreement, for any filing fees and other expenses
(including fees and disbursements of counsel, including counsel to the
Selling Stockholders)
8
incurred in connection with qualification of the Offered Securities for
sale under the laws of such jurisdictions as the Representative designates
and the printing of memoranda relating thereto, for the filing fee incident
to the review by the National Association of Securities Dealers, Inc. of
the Offered Securities, for any travel expenses of the Company's officers
and employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of the Offered
Securities, for any transfer taxes on the sale of the Offered Securities to
the Underwriters, for expenses incurred in distributing preliminary
prospectus supplements and the Prospectus (including any amendments and
supplements thereto) to the Underwriters and for expenses incurred for
preparing, printing and distributing any Issuer Free Writing Prospectuses
to investors or prospective investors.
(ix) For the period specified below (the "Selling Stockholder Lock-Up
Period"), each Selling Stockholder agrees not to offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any
additional shares of the Securities of the Company or securities
convertible into or exchangeable or exercisable for any shares of
Securities, enter into a transaction which would have the same effect, or
enter into any swap, hedge or other arrangement that transfers, in whole or
in part, any of the economic consequences of ownership of the Securities,
whether any such aforementioned transaction is to be settled by delivery of
the Securities or such other securities, in cash or otherwise, or publicly
disclose the intention to make any such offer, sale, pledge or disposition,
or enter into any such transaction, swap, hedge or other arrangement,
without, in each case, the prior written consent of the Representative,
except pursuant to the terms of this Agreement. The initial Selling
Stockholder Lock-Up Period will commence on the date hereof and will
continue and include the date 30 days after the date hereof or such earlier
date that the Representative consents to in writing; provided, however,
that if (1) during the last 17 days of the initial Selling Stockholder
Lock-Up Period, the Company releases earnings results or material news or a
material event relating to the Company occurs or (2) prior to the
expiration of the initial Selling Stockholder Lock-Up Period, the Company
announces that it will release earnings results during the 16 day period
beginning on the last day of the initial Selling Stockholder Lock-Up
Period, then in each case the Selling Stockholder Lock-Up Period will be
extended until the expiration of the 18 day period beginning on the date of
release of the earnings results or the occurrence of the material news or
material event, as applicable, unless the Representative waives, in
writing, such extension.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Underwriters shall have received letters on and as of the date of
this Agreement, in form and substance reasonably satisfactory to the
Underwriters, from KPMG LLP, independent public accountants, with respect to
certain financial statements and certain financial information contained in the
Registration Statement, the Prospectus and the General Disclosure Package.
(b) The Underwriters shall have received letters on and as of the date of
this Agreement and such Closing Date, in form and substance reasonably
satisfactory to the Underwriters, from Xxxxx Xxxxxxxx LLP, independent public
accountants, with respect to certain financial statements certain financial
information contained in the Registration Statement, the General Disclosure
Package and the Prospectus.
(c) The Prospectus shall have been filed with the Commission in accordance
with the Rules and Regulations and Section 5(a) of this Agreement. Prior to such
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose or pursuant
to Section 8A of the Act shall have been instituted or, to the knowledge of any
Selling Stockholder, the Company or the Representative, shall be contemplated by
the Commission.
(d) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business, properties
or results of operations of the Company and its subsidiaries taken as one
9
enterprise which, in the judgment of a majority in interest of the Underwriters
including the Representative, is material and adverse and makes it impractical
or inadvisable to proceed with completion of the public offering or the sale of
and payment for the Offered Securities; (ii) any downgrading in the rating of
any debt securities or preferred stock of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Act), or any public announcement that any such organization has
under surveillance or review its rating of any debt securities or preferred
stock of the Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); (iii) any change in U.S. or international financial, political or
economic conditions or currency exchange rates or exchange controls as would, in
the judgment of a majority in interest of the Underwriters including the
Representative, be likely to prejudice materially the success of the proposed
issue, sale or distribution of the Offered Securities, whether in the primary
market or in respect of dealings in the secondary market; (iv) any material
suspension or material limitation of trading in securities generally on the New
York Stock Exchange or the Nasdaq Stock Market's National Market, or any setting
of minimum prices for trading on such exchange; (v) any suspension of trading of
any securities of the Company on any exchange or in the over- the-counter
market; (vi) any banking moratorium declared by U.S. Federal or New York
authorities; (vii) any major disruption of settlements of securities or
clearance services in the United States or (viii) any attack on, outbreak or
escalation of hostilities or act of terrorism involving the United States, any
declaration of war by Congress or any other national or international calamity
or emergency if, in the judgment of a majority in interest of the Underwriters
including the Representative, the effect of any such attack, outbreak,
escalation, act, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the public offering or the sale of and
payment for the Offered Securities.
(e) The Representative shall have received an opinion, dated such Closing
Date, of Xxxxx Xxxxxx, P.A., special counsel for the Company, 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 corporate power and authority to own its properties and conduct its
business as such properties and business are described in the General
Disclosure Package.
(ii) The Company has an authorized capitalization as set forth in the
General Disclosure Package and all of the Offered Securities being
delivered on such Closing Date have been duly and validly authorized and
issued and are fully paid and non-assessable; and the Offered Securities
conform to the description of the Securities contained in the General
Disclosure Package.
(iii) The Company 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, except for such failures to
be so qualified or in good standing that would not, individually or in the
aggregate, have a Material Adverse Effect (such counsel being entitled to
rely on certificates issued by the secretary of state or other public
official in such jurisdiction and oral confirmation of good standing from a
recognized corporate services company).
(iv) The offering and sale of the Offered Securities being delivered
on such Closing Date and the compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions
herein contemplated will not result in any violation of (x) the provisions
of the Articles of Incorporation or By-laws of the Company or (y) any
statute or any order, rule or regulation known to such counsel of any court
or governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties, except for such violations
of any statute, order, rule or regulation that would not, individually or
in the aggregate, result in a Material Adverse Effect. The opinion is
clause (y) above shall be limited to statutes, rules and regulations of
Minnesota government agencies or bodies having jurisdiction over the
Company or any of its subsidiaries or any of their properties and shall not
cover United States statutes, rules and regulations, including without
limitation federal securities laws.
10
(v) The statements in the Company's Form 8-A, including the filings
and other documents specifically incorporated by reference therein, as
filed with the Commission on February 21, 2001, insofar as they purport to
constitute a summary of the terms of the Offered Securities are accurate
and complete in all material respects.
(vi) This Agreement has been duly authorized, executed and delivered
by the Company.
The opinions set forth above shall be limited to the federal laws of the
United States of America (except as provided in paragraph (iv)) and the laws of
the State of Minnesota, as currently in effect. Such opinion shall contain
reasonable and customary qualifications and assumptions. With respect to matters
of fact relevant to such opinions, Xxxxx Xxxxxx, P.A. shall be entitled to rely
on certificates of officers of the Company.
(f) The Representative shall have received an opinion, dated such Closing
Date, of King & Spalding LLP, counsel for the Company, to the effect that:
(i) Each subsidiary of the Company has been duly organized and is
validly existing as a corporation or other entity in good standing under
the laws of its jurisdiction of organization; and all of the issued shares
of capital stock of each such subsidiary 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 liens granted pursuant to the
Credit Agreement (such counsel being entitled to rely in respect of matters
of fact in this clause upon certificates of officers of the Company or its
subsidiaries).
(ii) To such counsel's knowledge and other than as set forth in the
General Disclosure Package, 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
that is required to be disclosed in the Registration Statement that is not
adequately disclosed in the Registration Statement; and, to such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(iii) The offering and sale of the Offered Securities being delivered
on such Closing Date and the compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions
herein 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, (A) any of the agreements listed on Schedule 2 to such opinion (a
copy of which has been provided to the Underwriters through the
Representative), except for such conflicts, breaches, violations or
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect, (B) any statute, any rule, regulation or order of any
governmental agency or body or any court having jurisdiction over the
Company or any subsidiary of the Company or any of their properties or (C)
the charter or by-laws of the Company or any such subsidiary.
(iv) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the offering and sale of the Offered Securities or the
consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Offered Securities
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 Offered Securities
by the Underwriters.
(v) The statements set forth in the General Disclosure Package under
the caption "Underwriting", insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate and
complete in all material respects.
(vi) The Company is not and, after giving effect to the offering and
sale of the Offered Securities, will not be an "investment company", as
such term is defined in the Investment
11
Company Act.
(vii) The Registration Statement, each Statutory Prospectus and the
Prospectus and any further amendments and supplements thereto made by the
Company prior to such Closing Date (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the requirements
of the Act and the Rules and Regulations.
(viii) The Registration Statement was declared effective under the Act
as of the date and time specified in such opinion, each Statutory
Prospectus and the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) under the Act on the date specified therein and
each Issuer Free Writing Prospectus was filed with the Commission pursuant
to Rule 433 under the Act on the date specified therein, and, to such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose
or pursuant to Section 8A of the Act against the Company or in connection
with the offering of the Offered Securities is pending or threatened by the
Commission.
Such opinion letter shall also state that such counsel has
participated in conferences with officers and other representatives of the
Company and its subsidiaries, representatives of the independent registered
public accountants for the Company and its subsidiaries, representatives of
the Underwriters and counsel for the Underwriters, at which conferences the
contents of the Registration Statement, the General Disclosure Package and
the Prospectus were discussed and, although such counsel are not passing
upon, and do not assume any responsibility for, the accuracy, completeness
or fairness of the statements contained in the Registration Statement, the
General Disclosure Package or the Prospectus, except for those referenced
in Subsection (v) of this Section 6(f), on the basis of the foregoing,
nothing has come to such counsel's attention that would lead them to
believe that the Registration Statement or any further amendment made
thereto by the Company prior to such Closing Date (other than the financial
statements and related schedules and other financial data included therein,
as to which such counsel need make no statement), as of the Effective Date,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus (other than the
financial statements and related schedules and other financial data
included therein, as to which such counsel need make no statement), as of
its date or as of such Closing Date, included or includes an untrue
statement of a material fact or omitted or omits 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 and such counsel
have no reason to believe that the documents specified in a schedule to
such counsel's letter, consisting of those included in the General
Disclosure Package (other than the financial statements and related
Schedules and other financial data included therein, as to which such
counsel need make no statement) as of the Applicable Time and as of such
Closing Date, contained any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Such counsel does not know of any amendment to the Registration
Statement required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration Statement
or required to be described in the Registration Statement or the Prospectus
which are not filed or described as required.
(g) The Representative shall have received an opinion, dated as of such
Closing Date, of O'Melveny & Xxxxx LLP counsel for each Selling Stockholder
substantially in the form set forth in Exhibit A hereto.
(h) The Representative shall have received from Xxxxxx Xxxxxx & Xxxxxxx
LLP, counsel for the Underwriters, such opinion or opinions, dated such Closing
Date, in such form and scope as the Representative may require, and the Selling
Stockholders and the Company shall have furnished to such counsel such documents
as they request for the purpose of enabling them to pass upon such matters. In
12
rendering such opinion, Xxxxxx Xxxxxx & Xxxxxxx LLP may rely as to the
incorporation of the Company and all other matters governed by Minnesota law
upon the opinion of Xxxxx Xxxxxx, P.A. referred to above.
(i) The Representative shall have received a certificate, dated such
Closing Date, of the Company signed by the President or any Vice President and a
principal financial or accounting officer of the Company in which such officers,
to the best of their knowledge after reasonable investigation, shall state that:
the representations and warranties of the Company in this Agreement are true and
correct; the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
such Closing Date; no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission; and, subsequent to the
date of the most recent financial statements incorporated in the General
Disclosure Package, there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of operations of
the Company and its subsidiaries taken as a whole, except as set forth in the
General Disclosure Package or as described in such certificate.
(j) To avoid a 28% backup withholding tax, each Selling Stockholder will
deliver to the Underwriters a properly completed and executed US Treasury
Department Form W-9 or other applicable form or statement specified by Treasury
Department Regulation in lieu thereof.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, members, directors, officers and
its affiliates and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter 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 any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, each Statutory Prospectus, the Prospectus, any
Issuer Free Writing Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company will 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 in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representative specifically for use therein, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below.
(b) The Selling Stockholders, jointly and severally, will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter 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 any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
each Statutory Prospectus, the Prospectus, any Issuer Free Writing Prospectus,
or any amendment or supplement thereto, or any related preliminary prospectus,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Selling
Stockholders will 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 in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by an Underwriter through the
Representative specifically for use therein, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below; provided, further, that
the Selling Stockholders shall only be subject to such liability to the extent
that the untrue statement or alleged untrue
13
statement or omission or alleged omission is based upon written information
provided by such Selling Stockholder expressly for use in any of such documents
or is contained in a representation or warranty given by such Selling
Stockholder in this Agreement; and provided, further, that the liability under
this subsection of each Selling Stockholder shall be limited to an amount equal
to the aggregate net proceeds to such Selling Stockholder from the sale of
Securities sold by such Selling Stockholder hereunder.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, and each
Selling Stockholder, its directors and officers and each person, if any, who
controls such Selling Stockholders against any losses, claims, damages or
liabilities to which the Company or such Selling Stockholder 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 any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, each Statutory Prospectus, the Prospectus, any
Issuer Free Writing Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein 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 reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representative specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Company and
each Selling Stockholder in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the following information in the Statutory Prospectus
and the Prospectus furnished on behalf of each Underwriter: the information
contained in the 4th, 10th and 11th paragraphs under the caption "Underwriting".
(d) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the failure to so notify the indemnifying party shall
not relieve it from any liability that it may have under subsection (a), (b) or
(c) above except to the extent that it has been materially prejudiced (through
the forfeiture of substantive rights or defense) by such failure; and provided
further that the failure to notify the indemnifying party shall not relieve it
from any liability that it may have to an indemnified party otherwise than under
subsection (a), (b) or (c) above. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may 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 will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement (i) includes an unconditional release
of such indemnified party from all liability on any claims that are the subject
matter of such action 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 an
indemnified party.
(e) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b) or
(c) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other from the offering of the Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Stockholders on
the one hand and the Underwriters on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from
14
the offering (before deducting expenses) received by the Selling Stockholders
bear to the total underwriting discounts and commissions received by the
Underwriters. 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, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (e). Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under this
Section shall be in addition to any liability which the Company and the Selling
Stockholders may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
8. [RESERVED]
9. Free Writing Prospectus. The Company represents and agrees that, unless
it obtains the prior consent of the Representative, and each Underwriter
represents and agrees that, unless it obtains the prior consent of the Company
and the Representative, it has not made and will not make any offer relating to
the Offered Securities that would constitute an Issuer Free Writing Prospectus,
or that would otherwise constitute a "free writing prospectus," as defined in
Rule 405, required to be filed with the Commission. Any such free writing
prospectus consented to by the Company and the Representative is hereinafter
referred to as a "PERMITTED FREE WRITING PROSPECTUS." The Company represents
that it has treated and agrees that it will treat each Permitted Free Writing
Prospectus as an "issuer free writing prospectus," as defined in Rule 433, and
has complied and will comply with the requirements of Rules 164 and 433
applicable to any Permitted Free Writing Prospectus, including timely Commission
filing where required, legending and record keeping.
10. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company, the Selling Stockholders, and the Underwriters
pursuant to Section 7 shall remain in effect, and if any Offered Securities have
been purchased hereunder the representations and warranties in Section 2 and all
obligations under Section 5 shall also remain in effect. If the purchase of the
Offered Securities by the Underwriters is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to Section 8
or the occurrence of any event specified in clause (iii), (iv), (v), (vi) or
(vii) of Section 6(d), the Company will reimburse the Underwriters for all out-
of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Offered Securities.
11. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or sent via facsimile and
confirmed to the Representative, Credit Suisse Securities (USA) LLC,
15
Attention: LCD-IBD, or, if sent to the Company, will be mailed, delivered or
sent via facsimile and confirmed to it at AFC Enterprises, Inc., 0000 Xxxxxxxxx
Xxxxxxxxx XX, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, Attention: General Counsel
(facsimile no. (000) 000-0000), or, if sent to the Selling Stockholders or any
of them, will be mailed, delivered or sent via facsimile and confirmed to it at
the address and facsimile number listed below such Selling Stockholder's name on
Schedule A; provided, however, that any notice to an Underwriter pursuant to
Section 7 will be mailed, delivered or telegraphed and confirmed to such
Underwriter.
12. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective personal representatives and
successors and the officers and directors and controlling persons referred to in
Section 7, and no other person will have any right or obligation hereunder.
13. Representation. The Representative will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representative will be binding
upon all the Underwriters.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. Absence of Fiduciary Relationship. Each of the Company and the Selling
Stockholders acknowledges and agrees that:
(a) the Representative has been retained solely to act as an underwriter in
connection with the sale of the Offered Securities and that no fiduciary,
advisory or agency relationship between the Company or the Selling Stockholders,
on the one hand, and the Representative, on the other, has been created in
respect of any of the transactions contemplated by this Agreement or the
Prospectus irrespective of whether the Representative has advised or is advising
the Company or the Selling Stockholders on other matters;
(b) the price of the Offered Securities set forth in this Agreement was
established by the Company and the Selling Stockholders following discussions
and arm's-length negotiations with the Representative and the Company and the
Selling Stockholders are capable of evaluating and understanding and understand
and accept the terms, risks and conditions of the transactions contemplated by
this Agreement;
(c) the Company and the Selling Stockholders have been advised that the
Representative and its affiliates are engaged in a broad range of transactions
which may involve interests that differ from those of the Company of the Selling
Stockholders and that the Representative has no obligation to disclose such
interests and transactions to the Company or the Selling Stockholders by virtue
of any fiduciary, advisory or agency relationship; and
(d) the Company and the Selling Stockholders waive, to the fullest extent
permitted by law, any claims they may have against the Representative for breach
of fiduciary duty or alleged breach of fiduciary duty and agree that the
Representative shall have no liability (whether direct or indirect) to the
Company or the Selling Stockholders in respect of such a fiduciary duty claim or
to any person asserting a fiduciary duty claim on behalf of or in right of the
Company or the Selling Stockholders, including stockholders, employees or
creditors of the Company or the Selling Stockholders.
16. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
If the foregoing is in accordance with the Representative's understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement among the Selling
Stockholders, the Company and the several Underwriters in accordance with its
terms.
16
Very truly yours,
FS EQUITY PARTNERS IV, L.P.
By: FS Capital Partners, LLC,
its General Partner
By: /s/ Xxxx X. Xxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
FS EQUITY PARTNERS INTERNATIONAL, L.P.,
By: FS & Co. International, L.P.,
its General Partner
By: FS International Holdings Limited,
its General Partner
By: /s/ Xxxx X. Xxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
FS EQUITY PARTNERS III, L.P., a Delaware
limited partnership
By: FS Capital Partners, L.P.,
its General Partner
By: FS Holdings, Inc.,
its General Partner
By: /s/ Xxxx X. Xxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
17
AFC Enterprises, Inc.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
------------------------------------------
Title: Senior Vice President and General Counsel
-----------------------------------------
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
the Representative
By: /s/ Xxx Xxxxxxxx
------------------------------------
Name: Xxx Xxxxxxxx
----------------------------------
Title: Managing Director
---------------------------------
18
SCHEDULE A
Number of Firm Securities Number of Optional
Selling Stockholder to be Sold Securities to be Sold
---------------------------------------- ------------------------- ---------------------
FS Equity Partners III, L.P.
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000 2,446,900 365,836
FS Equity Partners International, L.P.
c/o Xxxxx-Xxxxx & Company, Ltd.
West Wind Building
P.O. Box 1111
Grand Cayman, Cayman Islands,
British West Indies 98,306 14,698
FS Equity Partners IV, L.P.
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000 297,409 44,466
--------- -------
TOTAL 2,842,615 425,000
========= =======
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SCHEDULE B
Number of Firm Securities Number of Optional
Underwriters to be Purchased Securities to be Purchased
------------ ------------------------- --------------------------
TOTAL 2,842,615 425,000
========= =======
20
SCHEDULE C
Issuer Free Writing Prospectuses
None.
21
Schedule D
Pricing Information
Price to Investors: As to each investor in the Offered Securities, the price per
share paid by such investor and the number of shares purchased by such investor.
Number of Offered Securities: 2,842,615 shares
22
