_______________________________________________________________________________
XXX. XXXXXX' ORIGINAL COOKIES, INC.
$40,000,000
Aggregate Principal Amount of
10% Series C Senior Notes due 2004
____________________________________
PURCHASE AGREEMENT
Dated as of August 13, 1998
____________________________________
Xxxxxxxxx & Company, Inc. BT Alex. Brown Incorporated
_______________________________________________________________________________
$40,000,000
Aggregate Principal Amount of
10.% Series C Senior Notes due 2004
of
XXX. XXXXXX' ORIGINAL COOKIES, INC.
PURCHASE AGREEMENT
August 13, 1998
XXXXXXXXX & COMPANY, INC.
BT ALEX. BROWN INCORPORATED
c/o Jefferies & Company, Inc.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Xxx. Xxxxxx' Original Cookies, Inc., a Delaware corporation (the .Company.),
proposes to issue and sell to Xxxxxxxxx & Company, Inc. (.Jefferies.) and BT
Xxxx. Xxxxx Incorporated (.BT.) (each, an .Initial Purchaser,. and,
collectively, the .Initial Purchasers.) an aggregate of $40,000,000 in principal
amount of its 10.% Series C Senior Notes due 2004 (the .Senior Notes.), subject
to the terms and conditions set forth herein. The Senior Notes are to be issued
pursuant to the provisions of an indenture (the .Indenture.), dated as of
November 26, 1997, and amended as of the Closing Date (as defined), among the
Company, the Guarantors (as defined) and The Bank of New York, as trustee (the
.Trustee.). The Senior Notes and the Exchange Notes (as defined) issuable in
exchange therefor are collectively referred to herein as the .Notes.. The Notes
will be guaranteed (together with any future guarantees of the Notes, the
.Guarantees.) by The Xxx. Xxxxxx' Brand, Inc., a Delaware corporation (.MFB.).
Upon consummation of the Great American Transactions (as defined), Great
American Cookie Company, Inc., a Delaware corporation (.Great American.) will
guarantee the Notes. As of the date of this agreement, the term .Guarantors.
refers to MFB, and upon consummation of the Great American Transactions, the
term .Guarantors. will also refer to Great American in the sections referred to
on the signature page to this agreement executed by Great American. Capitalized
terms used but not defined herein shall have the meanings given to such terms in
the Indenture.
Concurrently with the offering of the Senior Notes (the .Offering.), the
Company will (i) acquire all of the outstanding capital stock and subordinated
indebtedness of Cookies USA, Inc. a Delaware corporation (.Cookies USA.), and
pay certain liabilities of Great American (the .Great American Acquisition.),
(ii) finance the acquisition of a total of 29 Great American franchise stores
from two Great American franchisees (the .Franchise Acquisition.) and (iii)
finance a tender offer and consent solicitation (the .Great American Tender
Offer.) for all the outstanding $40 million aggregate amount of Great American's
10.% Senior Secured Notes due 2001 (the .Great American Senior Notes.). The
Great American Acquisition, the Franchise Acquisition and the Great American
Tender Offer are referred to herein as the .Great American Transactions..
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1. OFFERING CIRCULAR. The Senior Notes will be offered and sold to
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the Initial Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the .Securities
Act.). The Company and MFB have prepared an offering memorandum, dated August
13, 1998 (the .Offering Circular.), relating to the Senior Notes and the
Guarantees.
Upon original issuance thereof, and until such time as the same is no longer
required pursuant to the Indenture, the Senior Notes (and all securities issued
in exchange therefor, in substitution thereof or upon conversion thereof) shall
bear the following legend:
.THIS SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
.SECURITIES ACT.), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A .QUALIFIED INSTITUTIONAL BUYER. (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT)(A .QIB.), (B) IT IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT OR (C) IT IS AN INSTITUTIONAL .ACCREDITED INVESTOR. (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN
.ACCREDITED INVESTOR.), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (C) IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF THE SECURITIES
ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (E) TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH
CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS .OFFSHORE
TRANSACTION. AND .UNITED STATES. HAVE THE MEANINGS GIVEN TO
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THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING..
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
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representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers agree,
severally and not jointly, to purchase from the Company, the principal amounts
of Senior Notes set forth opposite the name of such Initial Purchaser on
SCHEDULE A hereto at a purchase price equal to 96.75% of the principal amount
thereof (the .Purchase Price.).
3. TERMS OF OFFERING. The Initial Purchasers have advised the
-----------------
Company that the Initial Purchasers will make offers (the .Exempt Resales.) of
the Senior Notes purchased hereunder on the terms set forth in the Offering
Circular, as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be .qualified institutional buyers. as defined
in Rule 144A under the Securities Act (.QIBs.) and (ii) not more than ten other
institutional .accredited investors,. as defined in Rule 501(a)(1),(2),(3) or
(7) of Regulation D under the Securities Act, that make certain representations
and agreements to the Company (each, an .Accredited Institution.)(such persons
specified in clauses (i) and (ii) being referred to herein as the .Eligible
Purchasers.). The Initial Purchasers will offer the Senior Notes to Eligible
Purchasers initially at a price equal to 100% of the principal amount thereof.
Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Senior Notes will have the
registration rights set forth in the registration rights agreement (the
.Registration Rights Agreement.), to be dated the Closing Date (as defined), in
substantially the form of EXHIBIT A hereto, for so long as such Senior Notes
constitute .Transfer Restricted Securities. (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company
and the Guarantors will agree to file with the Securities and Exchange
Commission (the .Commission.) under the circumstances set forth therein, (i) a
registration statement under the Securities Act (the .Exchange Offer
Registration Statement.) relating to the Company's 10.% Series C Senior Notes
due 2004, having terms identical to those of the Senior Notes (the .Exchange
Notes.), and guarantees of the Exchange Notes to be offered in exchange for the
Senior Notes (such offer to exchange being referred to as the .Exchange Offer.)
and the Guarantees thereof and (ii) if applicable, a shelf registration
statement pursuant to Rule 415 under the Securities Act (the .Shelf Registration
Statement. and, together with the Exchange Offer Registration Statement, the
.Registration Statements.) relating to the resale by certain holders of the
Senior Notes, and to use their best efforts to cause such Registration
Statements to be declared and remain effective and usable for the periods
specified in the Registration Rights Agreement and to consummate the Exchange
Offer. This Agreement, the Indenture, the Senior Notes, the Guarantees and the
Registration Rights Agreement are hereinafter sometimes referred to collectively
as the .Operative Documents..
4. DELIVERY AND PAYMENT.
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(a) Delivery of, and payment of the Purchase Price for, the Senior Notes and
payment by the Company of the Advisory Fee shall be made at the offices of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or such other location as may be mutually acceptable. Such
delivery and payments shall be made at 9:00 a.m. New York City time, on
August 24, 1998 or at such other time as shall be agreed upon by the
Initial Purchasers and the Company. The time and date of such
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delivery and the payments are herein called the .Closing Date..
(b) Senior Notes sold by the Initial Purchasers to QIBs will be represented by
one or more Senior Notes in definitive global form, registered in the name
of Cede & Co., as nominee of The Depository Trust Company (.DTC.), having
an aggregate principal amount corresponding to the aggregate principal
amount of the Senior Notes sold to such QIBs (collectively, the .Global
Note.). Senior Notes sold by the Initial Purchasers to Accredited
Institutions will be represented by one or more Senior Notes in definitive
form, registered in the name of such Accredited Institutions, having an
aggregate principal amount corresponding to the aggregate principal amount
of the Senior Notes sold to such Accredited Institutions (collectively, the
.Accredited Institution Note.). The Global Note and the Accredited
Institution Note shall be delivered by the Company to the Initial
Purchasers (or as the Initial Purchasers direct), in each case with any
transfer taxes thereon duly paid by the Company, against payment by the
Initial Purchasers of the Purchase Price thereof by wire transfer in same-
day funds to the order of the Company. The Global Note and the Accredited
Institution Note shall be made available to the Initial Purchasers for
inspection not later than 9:30 a.m., New York City time, on the business
day immediately preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY AND THE GUARANTORS. Each of the
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Company and the Guarantors hereby agrees with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by the Initial
Purchasers, confirm such advice in writing, (i) of the issuance by any
state securities commission of any stop order suspending the qualification
or exemption from qualification of any Senior Notes for offering or sale in
any jurisdiction designated by the Initial Purchasers pursuant to Section
5(e) hereof, or the initiation of any proceeding by any state securities
commission or any other federal or state regulatory authority for such
purpose and (ii) of the happening of any event during the period referred
to in Section 5(c) hereof that makes any statement of a material fact made
in the Offering Circular untrue or that requires any additions to or
changes in the Offering Circular in order to make the statements therein
not misleading. The Company shall use its best efforts to prevent the
issuance of any stop order or order suspending the qualification or
exemption of any Senior Notes under any state securities or Blue Sky laws
and, if at any time any state securities commission or other federal or
state regulatory authority shall issue an order suspending the
qualification or exemption of any Senior Notes under any state securities
or Blue Sky laws, the Company shall use its best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.
(b) At any time prior to the completion of Exempt Resales by the Initial
Purchasers, to furnish the Initial Purchasers as many copies of the
Offering Circular, and any amendments or supplements thereto, as the
Initial Purchasers may reasonably request. Subject to the Initial
Purchasers' compliance with their representations and warranties and
agreements set forth in Section 7 hereof, the Company consents to the use
of the Offering Circular, and any amendments and supplements thereto
required pursuant hereto, by the Initial Purchasers in connection with
Exempt Resales.
(c) At any time prior to the completion of Exempt Resales by the Initial
Purchasers and in connection with market-making activities of the Initial
Purchasers for so long as any Senior Notes are outstanding, (i) not to make
any amendment or supplement to the Offering Circular of which the Initial
Purchasers shall not previously have been advised or to which the Initial
Purchasers shall reasonably object (within five business days after
receiving a copy thereof) after being so advised and (ii) to prepare
promptly upon the Initial Purchasers' reasonable request, any amendment or
supplement to the Offering Circular which may be necessary or advisable in
connection with such Exempt Resales or such market-making activities.
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(d) If, during the period referred to in Section 5(c) hereof, any event shall
occur or condition shall exist as a result of which, in the opinion of
counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Circular in order to make the statements therein,
in the light of the circumstances when such Offering Circular is delivered
to an Eligible Purchaser, not misleading, or if, in the opinion of counsel
to the Initial Purchasers, it is necessary to amend or supplement the
Offering Circular to comply with any applicable law, forthwith to prepare
an appropriate amendment or supplement to such Offering Circular so that
the statements therein, as so amended or supplemented, will not, in the
light of the circumstances when it is so delivered, be misleading, or so
that such Offering Circular will comply with applicable law, and to furnish
to the Initial Purchasers and such other persons as the Initial Purchasers
may designate such number of copies thereof as the Initial Purchasers may
reasonably request.
(e) Prior to the sale of all Senior Notes pursuant to Exempt Resales as
contemplated hereby, to cooperate with the Initial Purchasers and counsel
to the Initial Purchasers in connection with the registration or
qualification of the Senior Notes for offer and sale to the Initial
Purchasers and pursuant to Exempt Resales under the securities or Blue Sky
laws of such jurisdictions as the Initial Purchasers may reasonably request
and to continue such qualification in effect so long as required for Exempt
Resales and to file such consents to service of process or other documents
as may be necessary in order to effect such registration or qualification;
provided that neither the Company nor the Guarantors shall be required in
connection therewith to register or qualify as a foreign corporation in any
jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation in
any jurisdiction in which it is not now so subject.
(f) So long as the Notes are outstanding, to furnish to the Initial Purchasers
as soon as available copies of all reports or other communications
furnished by the Company or any of the Guarantors to the holders of Notes
or furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company or any of the
Guarantors is listed and such other publicly available information
concerning the Company and/or its subsidiaries as the Initial Purchasers
may reasonably request.
(g) So long as any of the Senior Notes remain outstanding and during any period
in which the Company and the Guarantors are not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the .Exchange
Act.), to make available to any holder of Senior Notes in connection with
any sale thereof and any prospective purchaser of such Senior Notes from
such holder, the information (.Rule 144A Information.) required by Rule
144A(d)(4) under the Securities Act.
(h) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company and
the Guarantors under this Agreement, including (i) the fees, disbursements
and expenses of counsel to the Company and the Guarantors and accountants
of the Company and the Guarantors in connection with the sale and delivery
of the Senior Notes to the Initial Purchasers and pursuant to Exempt
Resales, and all other fees or expenses in connection with the preparation,
printing, filing and distribution of the Offering Circular and all
amendments and supplements to any of the foregoing (including financial
statements) specified in Section 5(b) and 5(c) hereof prior to or during
the period specified in Section 5(c) hereof, including the mailing and
delivery of copies thereof to the Initial Purchasers in the quantities
specified herein, (ii) all costs and expenses related to the transfer and
delivery of the Senior Notes to the Initial Purchasers and pursuant to
Exempt Resales, including any transfer or other taxes payable thereon,
(iii) all costs of printing or producing this Agreement, the other
Operative Documents
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and any other agreements or documents in connection with the offering,
purchase, sale or delivery of the Senior Notes, (iv) all expenses in
connection with the registration or qualification of the Senior Notes and
the Guarantees for offer and sale under the securities or Blue Sky laws of
the several states and all costs of printing or producing any Blue Sky
memoranda in connection therewith (including the filing fees and fees and
disbursements of counsel for the Initial Purchasers in connection with such
registration or qualification and memoranda relating thereto), (v) the cost
of printing certificates representing the Senior Notes and the Guarantees,
(vi) all expenses and listing fees in connection with the application for
quotation of the Senior Notes in the National Association of Securities
Dealers, Inc. (.NASD.) Automated Quotation System - PORTAL (.PORTAL.),
(vii) the fees and expenses of the Trustee and the Trustee's counsel in
connection with the Indenture, the Notes and the Guarantees, (viii) the
costs and charges of any transfer agent, registrar and/or depositary
(including DTC), (ix) any fees charged by rating agencies for the rating of
the Notes, (x) all costs and expenses of the Exchange Offer and any
Registration Statement, as set forth in the Registration Rights Agreement,
(xi) all out-of-pocket expenses incurred by Jefferies in connection with
its services rendered (including, without limitation, the fees and
disbursements of Jefferies' counsel, travel and lodging expenses, word
processing charges, messenger and duplicating services, facsimile expenses
and other customary expenditures) up to a maximum amount of $450,000 (which
maximum amount applies to all out-of-pocket expenses incurred by Jefferies
in connection with the Offering and the concurrent offering of Units by
Xxx. Xxxxxx' Holding Company, Inc.), and (xii) all other costs and expenses
incident to the performance of the obligations of the Company and the
Guarantors hereunder for which provision is not otherwise made in this
Section.
(i) To use its best efforts to effect the inclusion of the Senior Notes in
PORTAL and to maintain the listing of the Senior Notes on PORTAL for so
long as the Senior Notes are outstanding.
(j) To obtain the approval of DTC for .book-entry. transfer of the Notes, and
to comply with all of its agreements set forth in the representation
letters of the Company and the Guarantors to DTC relating to the approval
of the Notes by DTC for .book-entry. transfer.
(k) During the period beginning on the date hereof and continuing to and
including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Company or the
Guarantors or any warrants, rights or options to purchase or otherwise
acquire debt securities of the Company or the Guarantors substantially
similar to the Senior Notes and the Guarantees (other than (i) the Senior
Notes and the Guarantee and (ii) commercial paper issued in the ordinary
course of business), without the prior written consent of the Initial
Purchasers.
(l) Not to sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any security (as defined in the Securities Act) that would be
integrated with the sale of the Senior Notes to the Initial Purchasers or
pursuant to Exempt Resales in a manner that would require the registration
of any such sale of the Senior Notes under the Securities Act.
(m) To use its best efforts to do and perform all things required or necessary
to be done and performed under this Agreement by it prior to the Closing
Date and to satisfy all conditions precedent to the delivery of the Senior
Notes and the Guarantee.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
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GUARANTORS. As of the date hereof, each of the Company and MFB, jointly and
-----------
severally, represents and warrants to, and agrees with, the Initial Purchasers
that:
6
(a) The Offering Circular does not, as of the date thereof, and will not, as of
the Closing Date, and any supplement or amendment to the Offering Circular,
as of the date thereof and as of the Closing Date, will not, contain 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 light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained in
this paragraph (a) shall not apply to statements in or omissions from the
Offering Circular (or any supplement or amendment thereto) based upon
information relating to the Initial Purchasers furnished to the Company in
writing by the Initial Purchasers expressly for use therein (the .Initial
Purchasers' Information.). The parties hereto acknowledge and agree that
the Initial Purchasers' Information consists solely of the statements with
respect to stabilization set forth in the fifth full paragraph on page ii
and the statements set forth under the caption .Plan of Distribution. in
the Offering Circular. No stop order preventing the use of the Offering
Circular, or any amendment or supplement thereto, or any order asserting
that any of the transactions contemplated by this Agreement are subject to
the registration requirements of the Securities Act, has been issued.
(b) Each of the Company and Material Subsidiaries (i) has been duly
incorporated and validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation, (ii) has all requisite
corporate power and authority to carry on its business as described in the
Offering Circular and to own, lease and operate its properties, and (iii)
is duly qualified and in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature of its business or
its ownership or leasing of property requires such qualification, except
where the failure to be so qualified would not (i) have a material adverse
effect on the business, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, or (ii)
draw into question the validity of this Agreement or the other Operative
Documents (a .Material Adverse Effect.).
(c) All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights.
(d) The entities listed on SCHEDULE B hereto are the only subsidiaries, direct
or indirect, of the Company as of the date hereof and after giving effect
to the Great American Transactions. All of the outstanding shares of
capital stock of each of the Company.s Material Subsidiaries have been duly
authorized and validly issued and are, or will be, fully paid and non-
assessable, and are, or will be, owned by the Company, directly or
indirectly through one or more subsidiaries (other than 30% of the shares
of common stock of Pretzel Time), free and clear of any security interest,
claim, lien, encumbrance or adverse interest of any nature (each, a .Lien.)
other than Liens existing under the Amended and Restated Loan Agreement
between the Company and LaSalle National Bank, dated as of February 28,
1998, and the ancillary documents thereto. No subsidiary listed on
SCHEDULE B hereto, other than the Material Subsidiaries, is a .significant
subsidiary. of the Company (as such term is defined in Rule 1-02 of
Regulation S-X under the Securities Act).
(e) The Company and its subsidiaries do not have any ownership interest in any
joint venture.
(f) This Agreement has been or as of the Closing Date will have been duly
authorized, executed and delivered by the Company and the Guarantors.
(g) The Indenture has been or as of the Closing Date will have been duly
authorized by the Company and the Guarantors and, when the Indenture has
been duly executed and delivered by the Company and the Guarantors, the
Indenture will be a valid and binding agreement of the Company and the
7
Guarantors, enforceable against the Company and the Guarantors in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors.
rights generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(h) The Senior Notes have been or as of the Closing Date will have been duly
authorized and, when the Senior Notes have been issued, executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, the Senior Notes will be entitled to the benefits
of the Indenture and will be valid and binding obligations of the Company,
enforceable in accordance with their terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors. rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability. On the Closing Date, the Senior Notes
will conform as to legal matters to the description thereof contained in
the Offering Circular.
(i) The Exchange Notes have been or as of the Closing Date will have been duly
authorized by the Company. When the Exchange Notes are issued, executed
and authenticated in accordance with the terms of the Exchange Offer and
the Indenture, the Exchange Notes will be entitled to the benefits of the
Indenture and will be the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(j) The Guarantees to be endorsed on the Senior Notes by the Guarantors have
been duly authorized by the Guarantors and, when the Senior Notes have been
issued, executed and authenticated in accordance with the Indenture and
delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, the Guarantees of the Guarantors endorsed thereon
will be entitled to the benefits of the Indenture and will be the valid and
binding obligation of the Guarantors, enforceable against the Guarantors in
accordance with their terms, except as (i) the enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability. On the Closing Date, the Guarantees to be endorsed on the
Senior Notes will conform as to legal matters to the description thereof
contained in the Offering Circular.
(k) The Guarantees to be endorsed on the Exchange Notes by the Guarantors have
been or as of the Closing Date will have been duly authorized by the
Guarantors and, when the Exchange Notes have been issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Guarantees of the Guarantors endorsed thereon will be
entitled to the benefits of the Indenture and will be the valid and binding
obligation of the Guarantors, enforceable against the Guarantors in
accordance with their terms, except as (i) the enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability. When the Exchange Notes are issued, authenticated and
delivered, the Guarantees to be endorsed on the Exchange Notes will conform
as to legal matters to the description thereof in the Offering Circular.
(l) The Registration Rights Agreement has been or as of the Closing Date will
have been duly authorized by the Company and the Guarantors and, when the
Registration Rights Agreement has been duly executed and delivered by the
Company and the Guarantors, the Registration Rights Agreement will be a
8
valid and binding agreement of the Company and the Guarantors, enforceable
against the Company and the Guarantors in accordance with its terms, except
as (i) the enforceability thereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the
Registration Rights Agreement will conform as to legal matters to the
description thereof in the Offering Circular.
(m) Neither the Company nor any of its Material Subsidiaries is in violation of
its respective charter or bylaws or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to the Company and its Material Subsidiaries, taken as a whole, to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its Material Subsidiaries or their respective property
is, or will be, bound.
(n) The execution, delivery and performance of this Agreement and the other
Operative Documents by the Company and the Guarantors, compliance by the
Company and the Guarantors with all provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will not
(i) require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such
as may be required under the securities or Blue Sky laws of the various
states), (ii) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter or bylaws of the Company or
any of its Material Subsidiaries or any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is material to the
Company and its subsidiaries, taken as a whole, to which the Company or any
of its Material Subsidiaries is a party or by which the Company or any of
its Material Subsidiaries or their respective property is bound, or (iii)
violate or conflict with any applicable law or any rule, regulation,
judgment, order or decree of any court or any governmental body or agency
having jurisdiction over the Company, any of its Material Subsidiaries or
their respective property.
(o) There are no legal or governmental proceedings pending or threatened to
which the Company or any of its subsidiaries is or could be a party or to
which any of their respective property is, or could be, subject, which
might result, singly or in the aggregate, in a Material Adverse Effect.
(p) Neither the Company nor any of its subsidiaries has violated any foreign,
federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances
or wastes, pollutants or contaminants (.Environmental Laws.) or any
provisions of the Employee Retirement Income Security Act of 1974, as
amended (.ERISA.), or the rules and regulations promulgated thereunder,
except for such violations which, singly or in the aggregate, would not
have a Material Adverse Effect.
(q) There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on
operating activities and any potential liabilities to third parties) which
would, singly or in the aggregate, on the date hereof and after giving
effect to the Great American Transactions, have a Material Adverse Effect.
(r) Each of the Company and its subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each,
an .Authorization.) of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations
and all courts and
9
other tribunals, including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure
to have any such Authorization or to make any such filing or notice would
not, singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Company
and its subsidiaries is in compliance with all the terms and conditions
thereof and with the rules and regulations of the authorities and governing
bodies having jurisdiction with respect thereto; and no event has occurred
(including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of time
or both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of its subsidiaries; except where such
failure to be valid and in full force and effect or to be in compliance,
the occurrence of any such event or the presence of any such restriction
would not, singly or in the aggregate, have a Material Adverse Effect.
(s) All leases to which the Company and its subsidiaries are a party are valid,
subsisting and enforceable leases, and no default has, or will have,
occurred or is, or will be, continuing thereunder which could, singly or in
the aggregate, reasonably be expected to have a Material Adverse Effect or
materially and adversely affect the offering of the Senior Notes, and the
Company and its subsidiaries enjoy peaceful and undisturbed possession to
which any of them is a party as lessee (with such exceptions as do not
materially interfere with the use made by the Company or such subsidiary).
(t) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (.intellectual
property.) currently employed by them in connection with the business now
operated by them, except where the failure to own or possess or otherwise
be able to acquire such intellectual property would not, singly or in the
aggregate, have a Material Adverse Effect; and neither the Company nor any
of its subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of such intellectual
property which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect.
(u) Except as disclosed in the Offering Circular, no relationship, direct or
indirect, exists between or among the Company or any of its subsidiaries
except for Great American, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its
subsidiaries except for Great American, on the other hand, which would be
required by the Securities Act to be described in the Offering Circular if
the Offering Circular were a prospectus included in a registration
statement on Form S-1 filed with the Commission.
(v) The Company and each of its subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management.s general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management.s general
or specific authorization and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(w) All material tax returns required to be filed by the Company and each of
its subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes,
10
including withholding taxes, penalties and interest, assessments, fees and
other charges due pursuant to such returns or pursuant to any assessment
received by the Company or any of its subsidiaries have been, or will be,
paid, other than those being contested in good faith and for which adequate
reserves have been provided.
(x) All indebtedness of the Company and the Guarantors that will be repaid with
the proceeds of the issuance and sale of the Senior Notes was incurred, and
the indebtedness represented by the Senior Notes and the Guarantees is
being incurred, for proper purposes and in good faith, and each of the
Company and the Guarantors was at the time of the incurrence of such
indebtedness that will be repaid with the proceeds of the issuance and sale
of the Senior Notes, and will be on the Closing Date (after giving effect
to the application of the proceeds from the issuance of the Senior Notes),
solvent, and had at the time of the incurrence of such indebtedness that
will be repaid with the proceeds of the issuance and sale of the Senior
Notes, and will have on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Senior Notes),
sufficient capital for carrying on their respective business and were at
the time of the incurrence of such indebtedness that will be repaid with
the proceeds of the issuance and sale of the Senior Notes, and will be on
the Closing Date (after giving effect to the application of the proceeds
from the issuance of the Senior Notes), able to pay their respective debts
as they mature.
(y) The accountants, Xxxxxx Xxxxxxxx LLP, Deloitte & Touche LLP, Price
Waterhouse LLP and Xxxxxxxxx Xxxxx & Company, P.C., that have issued their
reports on the financial statements included in the Offering Circular are
independent public accountants with respect to the Company and Cookies USA,
as required by the Securities Act and the Exchange Act. The historical
financial statements and notes, set forth in the Offering Circular comply
as to form in all material respects with the requirements applicable to
registration statements on Form S-1 under the Securities Act, except for
(i) any schedules that would be required to be included in Part II of a
registration statement on Form S-1 under the Securities Act has not been
included and (ii) the historical financial statements of the eight stores
being purchased from entities controlled by Xxxxxx Xxxx have not been
included.
(z) The historical financial statements and notes forming part of the Offering
Circular (and any amendment or supplement thereto), present fairly the
consolidated financial position, results of operations and changes in
financial position of the Company and its subsidiaries at the respective
dates or for the respective periods to which they apply; such statements
and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed therein; and the other financial information set forth
in the Offering Circular (and any amendment or supplement thereto) are, in
all material respects, accurately presented and prepared on a basis
consistent with such financial statements and the books and records of the
Company; except that EBITDA and Adjusted EBITDA are not presented in such
historical financial statements.
(aa) The pro forma financial statements included in the Offering Circular have
been prepared on a basis consistent with the historical financial
statements of the Company and its subsidiaries and give effect to
assumptions used in the preparation thereof on a reasonable basis and in
good faith and present fairly the proposed transactions contemplated by the
Offering Circular; and such pro forma financial statements comply as to
form in all material respects with the requirements applicable to pro forma
financial statements included in registration statements on Form S-1 under
the Securities Act; except (i) that no separate columnar presentation was
made for the contemplated acquisition of the eight stores from entities
controlled by Xxxxxx Xxxx, (ii) that the transactions described as "Other
Recent Transactions" were not given complete pro forma treatment but rather
only Adjusted EBITDA was impacted, and (iii) that the Staff of the
Commission does not permit adjusted EBITDA to be included in registration
statements on Form S-1 or S-4 under the Securities Act. Except as set
forth in the proviso in the preceding sentence, the other pro forma
11
financial information included in the Offering Circular are, in all
material respects, accurately presented and prepared on a basis consistent
with the pro forma financial statements.
(ab) The Company is not and, after giving effect to the offering and sale of the
Senior Notes and the application of the net proceeds thereof as described
in the Offering Circular, will not be, an .investment company,. as such
term is defined in the Investment Company Act of 1940, as amended (the
.Investment Company Act.).
(ac) Other than the Registration Rights Agreement and the Registration Rights
Agreement, dated as of November 26, 1997, among the Company, MFB and the
Initial Purchasers, there are no contracts, agreements or understandings
between the Company or the Guarantors and any person granting such person
the right to require the Company or the Guarantors to file a registration
statement under the Securities Act with respect to any securities of the
Company or the Guarantors or to require the Company or the Guarantors to
include such securities with the Notes and Guarantees registered pursuant
to any Registration Statement.
(ad) Neither the Company nor any of its subsidiaries nor any agent thereof
acting on the behalf of them has taken, and none of them will take, any
action that might cause this Agreement or the issuance or sale of the
Senior Notes to violate Regulation T (12 C.F.R. Part 220), Regulation U (12
C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of
Governors of the Federal Reserve System.
(ae) Since the date as of which information is given in the Offering Circular
and other than as set forth in the Offering Circular (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement), (i) there has not occurred any material adverse change or any
development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Company and its subsidiaries, taken as a whole, (ii)
there has not been any material adverse change or any development involving
a prospective material adverse change in the capital stock or in the long-
term debt of the Company or any of its subsidiaries and (iii) neither the
Company nor any of its subsidiaries has incurred any material liability or
obligation, direct or contingent.
(af) The Offering Circular, as of its date, contains all the information
specified in, and meeting the requirements of, Rule 144A(d)(4) under the
Securities Act.
(ag) When the Senior Notes and the Guarantees are issued and delivered pursuant
to this Agreement, neither the Senior Notes nor the Guarantees will be of
the same class (within the meaning of Rule 144A under the Securities Act)
as any security (except for the Company's Series A and Series B 10.% Senior
Notes due 2004) of the Company or the Guarantors that is listed on a
national securities exchange registered under Section 6 of the Exchange Act
or that is quoted in a United States automated inter-dealer quotation
system.
(ah) No form of general solicitation or general advertising (as defined in
Regulation D under the Securities Act) was used by the Company, the
Guarantors or any of their respective representatives (other than the
Initial Purchasers, as to whom the Company and the Guarantors make no
representation) in connection with the offer and sale of the Senior Notes
contemplated hereby, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising. No securities (except for the Company's Series A and Series B
10.% Senior Notes due 2004) of the same class as the Senior Notes have been
issued and sold by the
12
Company within the six-month period immediately prior to the date hereof.
(ai) Prior to the effectiveness of any Registration Statement, the Indenture (as
it will be amended on the Closing Date) is not required to be qualified
under the TIA.
(aj) No registration under the Securities Act of the Senior Notes or the
Guarantees is required for the sale of the Senior Notes and the Guarantees
to the Initial Purchasers as contemplated hereby or for the Exempt Resales
assuming the accuracy of the Initial Purchasers' representations and
warranties and agreements set forth in Section 7 hereof.
(ak) Each certificate signed by any officer of the Company or the Guarantors and
delivered to the Initial Purchasers or counsel for the Initial Purchasers
shall be deemed to be a representation and warranty by the Company or the
Guarantors to the Initial Purchasers as to the matters covered thereby.
The Company and the Guarantors acknowledge that the Initial Purchasers and,
for purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Section 9 hereof, counsel to the Company and the Guarantors and
counsel to the Initial Purchasers will rely upon the accuracy and truth of
the foregoing representations and hereby consent to such reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of the
--------------------------------------------------
Initial Purchasers, severally and not jointly, represents and warrants to the
Company and the Guarantors, and agrees that:
(a) Such Initial Purchaser is either a QIB or an Accredited Institution, in
either case, with such knowledge and experience in financial and business
matters as is necessary in order to evaluate the merits and risks of an
investment in the Senior Notes.
(b) Such Initial Purchaser (i) is not acquiring the Senior Notes with a view to
any distribution thereof or with any present intention of offering or
selling any of the Senior Notes in a transaction that would violate the
Securities Act or the securities laws of any state of the United States or
any other applicable jurisdiction and (ii) will be reoffering and reselling
the Senior Notes only to (A) QIBs in reliance on the exemption from the
registration requirements of the Securities Act provided by Rule 144A and
(B) not more than ten Accredited Institutions that execute and deliver a
letter containing certain representations and agreements in the form
attached as Annex A to the Offering Circular.
(c) Such Initial Purchaser agrees that no form of general solicitation or
general advertising (within the meaning of Regulation D under the
Securities Act) has been or will be used by such Initial Purchaser or any
of its representatives in connection with the offer and sale of the Senior
Notes pursuant hereto, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(d) Such Initial Purchaser agrees that, in connection with Exempt Resales, such
Initial Purchaser will solicit offers to buy the Senior Notes only from,
and will offer to sell the Senior Notes only to, Eligible Purchasers. Each
Initial Purchaser further agrees that it will offer to sell the Senior
Notes only to, and will solicit offers to buy the Senior Notes only from
(i) Eligible Purchasers that the Initial Purchaser reasonably believes are
QIBs, and (ii) Accredited Institutions who make the representations
contained in, and execute and return to the Initial Purchasers, a
certificate in the form of Annex A attached to the Offering Circular, in
each case, that agree that (A) the Senior Notes purchased by them may be
resold, pledged or
13
otherwise transferred within the time period referred to under Rule 144(k)
(taking into account the provisions of Rule 144(d) under the Securities
Act, if applicable) under the Securities Act, as in effect on the date of
the transfer of such Senior Notes, only (1) to the Company or any of its
subsidiaries, (2) to a person whom the seller reasonably believes is a QIB
purchasing for its own account or for the account of a QIB in a transaction
meeting the requirements of Rule 144A under the Securities Act, (3) in an
offshore transaction (as defined in Rule 902 under the Securities Act)
meeting the requirements of Rule 904 of the Securities Act, (4) in a
transaction meeting the requirements of Rule 144 under the Securities Act,
(5) to an Accredited Institution that, prior to such transfer, furnishes
the Trustee a signed letter containing certain representations and
agreements relating to the registration of transfer of such Senior Note
(the form of which can be obtained from the Trustee) and, if such transfer
is in respect of an aggregate principal amount of Senior Notes less than
$250,000, an opinion of counsel acceptable to the Company that such
transfer is in compliance with the Securities Act, (6) in accordance with
another exemption from the registration requirements of the Securities Act
(and based upon an opinion of counsel acceptable to the Company) or (7)
pursuant to an effective registration statement and, in each case, in
accordance with the applicable securities laws of any state of the United
States or any other applicable jurisdiction and (B) they will deliver to
each person to whom such Senior Notes or an interest therein is transferred
a notice substantially to the effect of the foregoing.
The Initial Purchasers acknowledge that the Company and the Guarantors and,
for purposes of the opinions to be delivered to each Initial Purchaser
pursuant to Section 9 hereof, counsel to the Company and the Guarantors and
counsel to the Initial Purchasers will rely upon the accuracy and truth of
the foregoing representations and the Initial Purchasers hereby consent to
such reliance.
8. INDEMNIFICATION.
---------------
(a) The Company and the Guarantors agree, jointly and severally, to indemnify
and hold harmless each Initial Purchaser, its directors, its officers and
each person, if any, who controls such Initial Purchaser within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any
action, that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Offering Circular (or any
amendment or supplement thereto) or any Rule 144A Information provided by
the Company or the Guarantors to any holder or prospective purchaser of
Senior Notes pursuant to Section 5(h) hereof or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement
or omission based upon the Initial Purchasers' Information.
(b) Each Initial Purchaser agrees, severally and not jointly, to indemnify and
hold harmless the Company and the Guarantors, and their respective
directors and officers and each person, if any, who controls (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) the Company or the Guarantors, to the same extent as the foregoing
indemnity from the Company and the Guarantor to the Initial Purchasers but
only with reference to Initial Purchasers' Information.
(c) In case any action shall be commenced involving any person in respect of
which indemnity may be sought pursuant to Section 8(a) or 8(b) hereof (the
.indemnified party.), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the .indemnifying party.)
14
in writing, and the indemnifying party shall assume the defense of such
action, including the employment of counsel reasonably satisfactory to the
indemnified party and the payment of all fees and expenses of such counsel,
as incurred (except that, in the case of any action in respect of which
indemnity may be sought pursuant to both Sections 8(a) and 8(b) hereof, the
Initial Purchasers shall not be required to assume the defense of such
action pursuant to this Section 8(c), but may employ separate counsel and
participate in the defense thereof; however, the fees and expenses of such
counsel, except as provided below, shall be at the expense of the Initial
Purchasers). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the
indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action
or employ counsel reasonably satisfactory to the indemnified party within a
reasonable period of time after notice of the institution of such action or
(iii) the named parties to any such action (including any impleaded
parties) include both the indemnified party and the indemnifying party, and
the indemnified party shall have been advised by such counsel that there
may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case
the indemnifying party shall not have the right to assume the defense of
such action on behalf of the indemnified party). In any such case, the
indemnifying party shall not, in connection with any one action or separate
but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for
the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such
fees and expenses shall be reimbursed as they are incurred (upon written
request and presentation of reasonably satisfactory invoices). Such firm
shall be designated in writing by Xxxxxxxxx & Company, Inc., in the case of
the parties indemnified pursuant to Section 8(a) hereof, and by the
Company, in the case of parties indemnified pursuant to Section 8(b)
hereof. The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written
consent if the settlement is entered into more than twenty business days
after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expenses of counsel
(in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the
indemnifying party shall have received written notice of such settlement
and shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent to
the entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment includes
an unconditional release of the indemnified party from all liability on
claims that are or could have been the subject matter of such action.
(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities and judgments (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantors, on the one hand, and the Initial
Purchasers, on the other hand, from the offering of the Senior Notes or
(ii) if the allocation provided by clause 8(d)(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 8(d)(i) above but also the
relative fault of the Company and the Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The
15
relative benefits received by the Company and the Guarantors, on the one
hand, and the Initial Purchasers, on the other hand, shall be deemed to be
in the same proportion as the total net proceeds from the offering of the
Senior Notes (before deducting expenses) received by the Company, and the
total discounts and commissions received by the Initial Purchasers bear to
the total price to investors of the Senior Notes, in each case as set forth
in the table on the cover page of the Offering Circular. The relative
fault of the Company and the Guarantors, on the one hand, and the Initial
Purchasers, on the other hand, 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 or the Guarantors, on the one hand,
or the Initial Purchasers, on the other hand.
The Company and the Guarantors and the Initial Purchasers agree that
it would not be just and equitable if contribution pursuant to this Section
8(d) were determined by pro rata allocation (even if the Initial Purchasers
were treated as one entity for such purposes) or by any other method of
allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities or judgments referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses incurred by such indemnified party in connection
with investigating or defending any matter, including any action, that
could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, no Initial
Purchaser shall be required to contribute any amount in excess of the
amount by which the total price of the Senior Notes purchased by it were
sold to investors in Exempt Resales exceeds the amount of any damages which
such Initial Purchaser 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) hereof of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Senior Notes purchased by each of the Initial
Purchasers hereunder and not joint.
(e) The remedies provided for in this Section 8 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations
---------------------------------------------
of the Initial Purchasers to purchase the Senior Notes under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and the Guarantors
contained in this Agreement shall be true and correct on the Closing Date
with the same force and effect as if made on and as of the Closing Date.
(b) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been
given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a
possible change that does not indicate the direction of the possible change
in, any rating of the Company or the Guarantors or any securities of the
Company or the Guarantors (including, without limitation, the placing of
any of the foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by Standard &
Poor's Ratings Group, a division of The XxXxxx-Xxxx Companies, Inc., or
Xxxxx'x Investors Service, Inc., (provided, that the foregoing shall not
include the Company's receiving a B2 rating with a negative outlook from
Xxxxx'x Investors Service, Inc.) (ii) there shall not have occurred
16
any change, nor shall notice have been given of any potential or intended
change, in the outlook for any rating of the Company or the Guarantors by
any such rating organization and (iii) no such rating organization shall
have given notice that it has assigned (or is considering assigning) a
lower rating to the Notes than that on which the Notes were marketed.
(c) Since the respective dates as of which information is given in the Offering
Circular other than as set forth in the Offering Circular (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement), (i) there shall not have occurred any change or any development
involving a prospective change in the condition, financial or otherwise, or
the earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there shall not have been any change
or any development involving a prospective change in the capital stock or
in the long-term debt of the Company or any of its subsidiaries and (iii)
neither the Company nor any of its subsidiaries shall have incurred any
liability or obligation, direct or contingent, the effect of which, in any
such case described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in your
judgment, is material and adverse and, in your judgment, makes it
impracticable to market the Senior Notes on the terms and in the manner
contemplated in the Offering Circular.
(d) The Initial Purchasers shall have received on the Closing Date a
certificate dated the Closing Date, signed by the President and the Chief
Financial Officer of the Company, confirming the matters set forth in
Sections 9(a), 9(b) and 9(c) hereof.
(e) The Initial Purchasers shall have received on the Closing Date an opinion
(in form and substance reasonably satisfactory to the Initial Purchasers
and counsel for the Initial Purchasers), dated the Closing Date, of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the Company and the
Guarantor, as to the matters set forth in Exhibit B hereto and such
additional matters or modifications as to which the parties hereto mutually
agree.
(f) The Initial Purchasers shall have received on the Closing Date an opinion
(in form and substance reasonably satisfactory to the Initial Purchasers
and counsel for the Initial Purchasers), dated the Closing Date, of Xxxxxxx
Xxxx, Esq., general counsel for the Company and the Guarantor, as to the
matters set forth in Exhibit C hereto and such additional matters and
modifications as to which the parties hereto mutually agree.
(g) The Initial Purchasers shall have received on the Closing Date an opinion,
dated the Closing Date, of Xxxxxx & Xxxxxxx, counsel for the Initial
Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers.
(h) The Initial Purchasers shall have received, at the time this Agreement is
executed and at the Closing Date, letters dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to the
Initial Purchasers from each of Xxxxxx Xxxxxxxx L.L.P., Deloitte & Touche
LLP, Price Waterhouse LLP and Xxxxxxxxx, Xxxxx & Company, P.C., independent
public accountants, containing the information and statements of the type
ordinarily included in accountants' .comfort letters. to the Initial
Purchasers with respect to the financial statements and certain financial
information contained in the Offering Circular.
(i) Concurrently with the issue and sale of the Senior Notes, the Great
American Transactions and the MFH Transactions (as defined in the Offering
Circular) shall be consummated on terms that conform in all material
respects to the description thereof in the Offering Circular, and the
Initial Purchasers
17
shall have received true and correct copies of all documents pertaining
thereto and evidence satisfactory to the Initial Purchasers of the
consummation thereof.
(j) The Senior Notes shall have been approved by the NASD for trading and duly
listed in PORTAL.
(k) The Initial Purchasers shall have received a counterpart, conformed as
executed, of the (i) first supplement to the Indenture, dated as of the
Closing Date, which shall have been entered into by the Company, MFB and
the Trustee and (ii) second supplement to the Indenture, dated as of the
Closing Date, which shall have been entered into by the Company, MFB, Great
American and the Trustee.
(l) The Company and the Guarantors shall have executed the Registration Rights
Agreement and the Initial Purchasers shall have received an original copy
thereof, duly executed by the Company and the Guarantor.
(m) Concurrently with the issue and sale of Senior Notes, Cookies USA shall be
merged with and into the Company, and the Company shall continue as the
surviving corporation of the merger. Satisfactory evidence that such merger
has taken place shall be provided to the Initial Purchasers and their
counsel.
(n) The Company shall not have failed at or prior to the Closing Date to
perform or comply with any of the agreements herein contained and required
to be performed or complied with by the Company at or prior to the Closing
Date.
(o) The Company shall have entered into Settlement Agreements and Waivers with
the stockholders of Deblan Corporation and Chocolate Chip Cookies of Texas,
Inc., plus a number of the remaining Great American franchisees so that, in
total, at least 80% of the Great American franchisees shall have executed
such Settlement Agreements and Waivers.
(p) The Initial Purchasers shall have delivered to the Company a letter of
representations in form satisfactory to the Company and the Initial
Purchasers.
(r) The Initial Purchasers shall have received on the Closing Date a
certificate, dated the Closing Date, signed by the Chief Financial Officer
of the Company, confirming that the Company is not in violation of the debt
incurrence covenant in the Indenture and setting forth the basis for such
conclusion.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement
------------------------------------------
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time prior to the Closing Date by the
Initial Purchasers by written notice to the Company if any of the following has
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States that, in the Initial Purchasers'
judgment, is material and adverse and, in the Initial Purchasers' judgment,
makes it impracticable to market the Senior Notes on the terms and in the manner
contemplated in the Offering Circular, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market or
limitation on prices for securities or other instruments on any such exchange or
the Nasdaq National Market, (iii) the declaration of a banking moratorium by
either federal or New York State authorities or (iv) the taking of any action by
any federal, state or local government or agency in
18
respect of its monetary or fiscal affairs which in the opinion of the Initial
Purchasers has a material adverse effect on the financial markets in the United
States.
If on the Closing Date any one or more of the Initial Purchasers shall fail or
refuse to purchase the Senior Notes which it or they have agreed to purchase
hereunder on such date and the aggregate principal amount of the Senior Notes
which such defaulting Initial Purchaser or Initial Purchasers, as the case may
be, agreed but failed or refused to purchase is not more than one-tenth of the
aggregate principal amount of the Senior Notes to be purchased on such date by
all Initial Purchasers, each non-defaulting Initial Purchaser shall be obligated
severally, in the proportion which the principal amount of the Senior Notes set
forth opposite its name in SCHEDULE A bears to the aggregate principal amount of
the Senior Notes which all the non-defaulting Initial Purchasers, as the case
may be, have agreed to purchase, or in such other proportion as you may specify,
to purchase the Senior Notes which such defaulting Initial Purchaser or Initial
Purchasers, as the case may be, agreed but failed or refused to purchase on such
date; provided that in no event shall the aggregate principal amount of the
Senior Notes which any Initial Purchaser has agreed to purchase pursuant to
Section 2 hereof be increased pursuant to this Section 10 by an amount in excess
of one-ninth of such principal amount of the Senior Notes without the written
consent of such Initial Purchaser. If on the Closing Date any Initial Purchaser
or Initial Purchasers shall fail or refuse to purchase the Senior Notes and the
aggregate principal amount of the Senior Notes with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of the
Senior Notes to be purchased by all Initial Purchasers and arrangements
satisfactory to the Initial Purchasers and the Company for purchase of such
Senior Notes are not made within 48 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Initial
Purchaser and the Company. In any such case which does not result in
termination of this Agreement, either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Offering Circular or any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Initial Purchaser from liability in
respect of any default of any such Initial Purchaser under this Agreement.
11. MISCELLANEOUS. Notices given pursuant to any provision of this
-------------
Agreement shall be addressed as follows: (i) if to the Company or the
Guarantors, to Xxx. Xxxxxx' Original Cookies, Inc., 0000 Xxxx Xxxxxxxxxx
Xxxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, ATTN: Legal Department, and (ii) if to the
Initial Purchasers, to Xxxxxxxxx & Company, Inc., 00000 Xxxxx Xxxxxx Xxxxxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Syndicate Department, or in any case
to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Guarantors and the Initial
Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Senior Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any Initial Purchaser, the officers
or directors of any Initial Purchaser, any person controlling any Initial
Purchaser, the Company, the Guarantors, the officers or directors of the Company
or the Guarantor, or any person controlling the Company or the Guarantors, (ii)
acceptance of the Senior Notes and payment for them hereunder and (iii)
termination of this Agreement.
If for any reason the Senior Notes are not delivered by or on behalf of the
Company as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 10 hereof), the Company and the Guarantors,
jointly and severally, agree to reimburse the Initial Purchasers for all out-of-
pocket expenses (including the fees and disbursements of counsel) incurred by
them. Notwithstanding any termination of this Agreement, the Company shall be
liable for all expenses which it
19
has agreed to pay pursuant to Section 5(i) hereof. The Company and the Guarantor
also agree, jointly and severally, to reimburse each Initial Purchaser and its
officers, directors and each person, if any, who controls such Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act for any and all fees and expenses (including, without limitation,
the fees and expenses of counsel) incurred by it in connection with enforcing
its rights under this Agreement (including, without limitation, its rights under
this Section 8).
Except as otherwise provided, this Agreement has been and is made solely for
the benefit of and shall be binding upon the Company, the Guarantors, the
Initial Purchasers, the Initial Purchasers' directors and officers, any
controlling persons referred to herein, the directors of the Company and the
Guarantors and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term .successors and assigns. shall
not include a purchaser of any of the Senior Notes from the Initial Purchasers
merely because of such purchase.
This Agreement shall be governed and construed in accordance with the internal
laws of the State of New York.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among the
Company, the Guarantors and the Initial Purchasers.
Very truly yours,
Xxx. Xxxxxx' Original Cookies, Inc.
By: _________________________________
Name:
Title:
The Xxx. Xxxxxx' Brand, Inc.
By: _________________________________
Name:
Title:
20
The foregoing Purchase Agreement is hereby agreed
to and accepted as of the consummation of the
Great American Transactions, it being understood
that the provisions thereof applicable to and
binding upon the Guarantors, including the
agreements, representations and warranties of the
Guarantors in Sections 5 and 6 of the foregoing
Purchase Agreement, and the indemnification
provisions of Section 8 of the foregoing Purchase
Agreement, shall be applicable to and binding upon
Great American Cookie Company, Inc. as of and
effective immediately upon consummation of the
Great American Transactions.
Great American Cookie Company, Inc.
By: ___________________________________
Name:
Title:
21
Xxxxxx and accepted as of the date first above written:
XXXXXXXXX & COMPANY, INC.
By: ___________________________________
Name:
Title:
BT ALEX. BROWN INCORPORATED
By: ___________________________________
Name:
Title:
SCHEDULE A
Principal Amount of
Initial Purchasers Notes
---------------------------------------------------- ---------------------
Xxxxxxxxx & Company, Inc............................ 28,000,000
BT Xxxx. Xxxxx Incorporated......................... 12,000,000
---------------------
TOTAL $40,000,000
S-1
SCHEDULE B
SUBSIDIARIES OF THE COMPANY
Airport Cookies, Inc.
Fairfield Foods, Inc.
Xxx. Xxxxxx Cookies (Canada) Ltd.
Xxx. Xxxxxx Cookies Australia
Xxx. Xxxxxx Limited
Pretzel Time, Inc.
Great American Cookie Company, Inc. (simultaneously upon consummation of the
Great American Transactions)
S-2
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
A-1
EXHIBIT B
FORM OF OPINION OF XXXXXXX, ARPS, SLATE, XXXXXXX & XXXX LLP
A-2
EXHIBIT C
FORM OF OPINION OF IN HOUSE COUNSEL TO THE COMPANY
(i) All of the outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned by the Company, free and clear of
any Lien.
(ii) Neither the Company nor any of its subsidiaries is in violation of
its respective charter or by-laws and, to the best of such counsel's knowledge
after due inquiry, neither the Company nor any of its subsidiaries is in default
in the performance of any obligation, agreement, covenant or condition contained
in any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its subsidiaries, taken as a
whole, to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries or their respective property is bound.
(iii) After due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is or could be a party or to which any of their respective
property is or could be subject, which might result, singly or in the aggregate,
in a Material Adverse Effect.
(iv) To the best of such counsel's knowledge after due inquiry, there are
no contracts, agreements or understandings between the Company or the Guarantors
and any person granting such person the right to require the Company or the
Guarantors to file a registration statement under the Securities Act with
respect to any securities of the Company or the Guarantors or to require the
Company or the Guarantor to include such securities with the Notes and
Guarantees registered pursuant to any Registration Statement.
A-3
