Document:

Exhibit 10.2

 

EXECUTION COPY

 

PURCHASE AND SALE AGREEMENT

 

This Purchase and Sale Agreement (this “Purchase and Sale Agreement”) is made and entered into as of August 10, 2006 (the “Effective Date”), by and between Whitebox Advisors, LLC, a Delaware limited liability company, Whitebox Intermarket Partners LP, a British Virgin Islands limited partnership, Whitebox Diversified Convertible Arbitrage Partners, LP, a Cayman Islands limited partnership, Whitebox Convertible Arbitrage Partners, LP, a British Virgin Islands limited partnership, Pandora Select Partners, LP, a British Virgin Islands limited partnership, Guggenheim Portfolio XXXI, LLC, a Delaware limited liability company and HFR RVA Combined Master Trust, a Bermuda unit trust, and their affiliates (each a “Seller” and together “Sellers”); and Richardson Electronics, Ltd., a Delaware corporation, or its designee (“Purchaser,” and together
with Sellers, the “Parties”).  Capitalized terms used herein but not otherwise defined shall have the meaning given to such terms in that certain Indenture (the “Indenture”), dated as of November 21, 2005, by and among Purchaser, Law Debenture Trust Company of New York, a New York banking corporation, as Trustee (the “Trustee”) and J.P. Morgan Trust Company, National Association, a national banking association, as Registrar, Paying Agent and Conversion Agent.

 

WITNESSETH:

 

WHEREAS, pursuant to that certain Securities Purchase and Sale Agreement (the “Securities Purchase and Sale Agreement”) dated as of November 21, 2005, by and among Purchaser and the Buyers (as defined therein), Purchaser issued $25,000,000 in aggregate principal amount of 8.0% Convertible Senior Subordinated Notes due 2011 (the “Notes”); 

 

WHEREAS, the Notes are governed by the terms of the Indenture; 

 

WHEREAS, Sellers originally purchased and collectively are currently the beneficial owners of $8,000,000 in aggregate principal amount of the Notes (the “Whitebox Notes”); and 

 

WHEREAS, Sellers desire to sell the Whitebox Notes to Purchaser upon the terms and conditions stated herein (the “Transaction”).

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.     Transaction.  The Transaction shall be consummated 120 days from the Effective Date or such earlier date as may be requested by Buyer upon 10 days written notice to Sellers of such earlier date (the “Closing Date”). On the Closing Date, Purchaser shall pay the Closing Payment (as defined below) to Sellers and Sellers shall transfer and assign the Whitebox Notes to Purchaser.  

 

2.     Encumbrances.  The Whitebox Notes shall be transferred to Purchaser free and clear of any and all deficiencies in ownership, including but not limited to encumbrances, charges, claims, liens, pledges and security interests.

 

 

 

EXECUTION COPY

 

 

3.     Consideration for Purchase and Forbearance.  The total consideration (the “Consideration”) payable by Purchaser to Sellers in exchange for the Whitebox Notes and the Forbearance (as defined below) shall be the aggregate sum of $8,840,000, plus accrued interest at 8% as provided in Section 2.02 of the Indenture through the Closing Date, payable as follows:

 

	
             
 	
            a.
 	
            Execution Payment.  Purchaser shall pay the sum of $240,000 (the “Execution Payment”) to Sellers upon the execution of this Purchase and Sale Agreement.
 

 

	
             
 	
            b.
 	
            Closing Payment.  Purchaser shall pay the sum of $8,600,000, plus accrued interest at 8% as provided in Section 2.02 of the Indenture through the Closing Date and Sellers’ expenses and fees, as stated on an invoice provided to Purchaser prior to the Execution Date (the “Closing Payment”) to Sellers upon consummation of the Transaction in accordance with the terms of this Purchase and Sale Agreement.
 

 

The Execution Payment, Closing Payment and Waiver Fee (as defined below) will be paid to each Seller in the amounts listed by such Seller’s name in the attached Schedule 1. 

 

4.     Forbearance. In consideration of the payments described in Paragraph 3 above, each Seller agrees to permanently forebear from asserting any breaches, defaults, events of default, or right to acceleration or taking any other action seeking damages or repayment with respect to the Notes, the Indenture governing the Notes, the Securities Purchase and Sale Agreement through which the Notes were originally issued, or any related document (the “Forbearance”).  The Forbearance shall expressly include any directions to the Trustee under the Indenture governing the Notes to assert any breach, default, event of default or right to acceleration. 

 

5.     Confidentiality.  Each Party agrees to treat as confidential and not to disclose either the negotiation or existence of this Purchase and Sale Agreement; except to each Party’s agents that have need to know and have confidentiality obligations to such party and except by Sellers as may be required by law, rule or regulation; provided, however, that Purchaser will disclose publicly through a Form 8-K or other report filed with the Securities and Exchange Commission (the “SEC”) all material information Purchaser deems required or desirable to be disclosed.  Purchaser will disclose the existence and material terms of this Purchase and Sale Agreement no later than four (4) business days
after the Effective Date.

 

6.     No Other Purchaser Securities.  Each Seller represents that the Notes are the only Purchaser securities held by it or its affiliates and covenants and agrees that from the date of the Purchase and Sale Agreement until the one year anniversary of the Closing Date i) except pursuant to the Purchase and Sale Agreement, it, and its affiliates shall not sell any convertible securities issued by Purchaser (i.e., its 8% Notes and/or its 73⁄4% Notes due 2011) (“Convertible Securities”); and ii) it, and its affiliates, shall not purchase any Convertible Securities except to close any currently existing short positions; provided that, in the event that any Seller or its affiliates becomes a
holder of any such Convertible Securities inadvertently, Sellers shall provide written notice to Purchaser of such holdings, shall use commercially reasonable efforts to promptly liquidate its position in such Convertible Securities and for the period of time it remains a holder such Seller shall not assert any breaches, defaults, acceleration or events of default or the taking of any other action seeking repayment with respect to the Convertible Securities, the indentures governing such Convertible 

 

 

EXECUTION COPY

 

 

Securities or any related documents, and shall cause its affiliates to take or refrain from taking (as the case may be) all of the foregoing actions.  For any time after the one year anniversary of the Closing Date, Sellers, and their affiliates, shall not be restricted from holding Convertible Securities; provided that, for the period of time they (or any of their affiliates) hold any Convertible Securities, no Seller shall assert any breaches, defaults, acceleration or events of default or take any other action seeking penalties, damages or repayment with respect to the Convertible Securities, the indentures governing such Convertible Securities or any related documents and shall vote its interest in such purchaser securities in favor of a waiver of any such alleged breach, default, acceleration or event of
default, and shall cause its affiliates to take or refrain from taking (as the case may be) all of the foregoing actions.  The foregoing covenants shall not apply to any breach, default, acceleration or event of default based upon (i) any of the following Events of Default under Section 6.01 in the Indenture:

 

	
             
 	
            •
 	
            (1)  (default on interest),
 

	
             
 	
            •
 	
            (2)  (default on principal),
 

	
             
 	
            •
 	
            (3)  (failure to convert),
 

	
             
 	
            •
 	
            (4)  (failure to repurchase),
 

	
             
 	
            •
 	
            (7)  (failure to issue Additional Shares),
 

	
             
 	
            •
 	
            (10) (bankruptcy),
 

	
             
 	
            •
 	
            (13) (bankruptcy), or
 

	
             
 	
            •
 	
            (14) (failure to repurchase), 
 

 

or (ii) any of the following Events of Default under Section 6.01 in the indenture for Purchaser’s 73⁄4% Convertible Senior Subordinated Notes due 2011:

 

	
             
 	
            •
 	
            (1)  (default on interest),
 

	
             
 	
            •
 	
            (2)  (default on principal), 
 

	
             
 	
            •
 	
            (3)  (failure to convert),
 

	
             
 	
            •
 	
            (4)  (failure to repurchase),
 

	
             
 	
            •
 	
            (9)  (bankruptcy), or
 

	
             
 	
            •
 	
            (10) (bankruptcy).
 

 

For purposes of this Purchase and Sale Agreement, “affiliates” means any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, any of the Sellers.

 

7.     Event Of Default Waiver.  If any other holder(s) or the Trustee of the Notes issues a notice of default or acceleration with respect to the Notes, or otherwise seeks the repayment of the Notes after the Execution Date, each Seller shall vote its interests in the Whitebox Notes in favor of a waiver of default and shall otherwise use its best efforts to have any such default or event of default waived within the terms of the Indenture governing the Notes.

 

8.     Waiver of Defaults, If Any.  Each Seller hereby permanently waives any and all breaches, defaults and events of default with respect to the Notes, the Indenture governing the Notes, the Securities Purchase Agreement through which the Notes were originally issued, or any other 

 

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EXECUTION COPY

 

 

document related to the Notes which shall have been executed as of the Effective Date, and which may arise through the Closing Date (the “Waiver”).  In consideration of such Wavier, Purchaser shall pay each Seller 2% of the aggregate principal amount of the Whitebox Notes held by such Seller (or an aggregate of $160,000 to the Sellers) (“Waiver Fee”) upon execution of this Purchase and Sale Agreement.  In connection herewith, Sellers agrees to execute the certificate of waiver attached hereto as Exhibit A.

 

9.     Limitation on Purchaser Representations.  Each Seller acknowledges and agrees that, except as expressly set forth in Paragraph 13 below, Purchaser makes no representations or warranties of any kind.  Each Seller acknowledges and agrees that as of the Effective Date, the Closing Date, or any other date subsequent to the Effective Date of this Purchase and Sale Agreement, Purchaser may be in possession of material nonpublic information, and the Sellers expressly waives any and all remedies regarding Purchaser’s possession of material nonpublic information as such relates to this Purchase and Sale Agreement and the transactions contemplated thereby. 

 

10.  Remedies.  If any of the Parties fails, neglects or refuses to fulfill its obligations hereunder in accordance, the Parties shall be entitled to seek specific performance, damages and any other rights or remedies allowed by law.   

 

11.  Costs.  Purchaser and Sellers shall pay their own respective costs and expenses incidental to this Purchase and Sale Agreement and the transactions contemplated hereby, except for those fees and expenses covered under Paragraph 3.b above. 

 

12.  Sellers’ Representations.  In order to induce Purchaser to enter into this Purchase and Sale Agreement, each Seller makes the following representations and warranties, each of which representations and warranties is true and correct on the date hereof and shall be true and correct as of the Closing, if any:

 

	
             
 	
            a.
 	
            Seller is duly organized, validly existing and in good standing in the jurisdictions referenced in the preamble to this Purchase and Sale Agreement.
 

 

	
             
 	
            b.
 	
            Seller is duly authorized to execute, deliver and perform this Purchase and Sale Agreement and all documents and instruments and transactions contemplated hereby or incidental hereto.
 

 

	
             
 	
            c.
 	
            Seller (or Seller’s respective authorized representative) is a “qualified institutional buyers” within the meaning of Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and has evaluated the merits and risks of entering into this Purchase and Sale Agreement, without reliance upon any statements from representatives of the Purchaser other than the Purchaser’s representations and warranties contained in Paragraphs 9 and 13 and based on such information as Sellers have deemed appropriate, and made its own analysis and decision to enter into this Purchase and Sale Agreement in light of these risks and uncertainties.  Sellers have had the opportunity to consult with its accounting, tax, financial and legal advisors to be able to evaluate the risks involved in this Purchase and Sale Agreement and the terms
hereof and to make an informed decision with respect to 
 

 

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EXECUTION COPY

 

 

entering into this Purchase and Sale Agreement.   Sellers acknowledge that the Purchaser is relying on the truth and accuracy of the foregoing representations and warranties in entering into this Purchase and Sale Agreement.

 

	
             
 	
            d.
 	
            Seller is the sole legal and beneficial owner of and has good and valid title to the Whitebox Notes in the amount listed by such Seller’s name in the attached Schedule 1, free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto, except the Notes may be held by the Seller’s prime broker on behalf of the Seller in street name.  Sellers have not, in whole or in part, (i) assigned, transferred, hypothecated, pledged or otherwise disposed of its Whitebox Notes, or (ii) given any person or entity any transfer order, power of attorney or other authority of any nature whatsoever with respect to its Whitebox Notes.
 

 

13.  Purchaser’s Representations.  In order to induce Sellers to enter into this Purchase and Sale Agreement, Purchaser makes the following representations and warranties, each of which representations and warranties is true and correct on the date hereof and shall be true and correct as of the Closing, if any:

 

	
             
 	
            a.
 	
            Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.
 

 

	
             
 	
            b.
 	
            Purchaser is duly authorized to execute, deliver and perform this Purchase and Sale Agreement and all documents and instruments and transactions contemplated hereby or incidental hereto.
 

 

14.  Binding Agreement.  This Purchase and Sale Agreement shall be binding on and shall inure to the benefit of the Parties and to their respective heirs, administrators, executors, personal representatives, successors and assigns.

 

15.  Assignment.  Sellers may not assign their rights and interests hereunder without the prior written consent of Purchaser.  Purchaser may not assign its rights and interests hereunder without the prior written consent of Sellers, provided, however, that the Purchaser may assign its right to purchase the Whitebox Notes hereunder without the prior written consent of the Sellers.

 

16.  Jurisdiction.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Chicago for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it
under this Purchase and Sale Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any 

 

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EXECUTION COPY

 

 

provision of this Purchase and Sale Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

17.  Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been given on the date such notice is delivered personally or sent by registered or certified mail (postage pre-paid) or sent by facsimile, and addressed as set forth below:

 

	
             
 	
            a.
 	
            If to Purchaser:
 

 

Richardson Electronics, Ltd.

40W267 Keslinger Road

LaFox, Illinois  60147-0393

	
             
 	
            Telephone:
 	
            (630) 208-2200
 	
             

	
             
 	
            Facsimile:
 	
            (630) 208-2950
 	
             

	
             
 	
            Attention:
 	
            Legal Department
 

 

with a copy to:

 

Bryan Cave LLP

One Metropolitan Square

211 North Broadway, Suite 3600

St.  Louis, Missouri  63102-2750

	
             
 	
            Telephone:
 	
            (314) 259-2000
 	
             

	
             
 	
            Facsimile:  
 	
            (314) 259-2020
 	
             

	
             
 	
            Attention:
 	
            Brendan Johnson, Esq.
 

 

	
             
 	
            b.
 	
            If to Sellers:
 

 

Whitebox Advisors, LLC

3033 Excelsior Boulevard, Suite 300

Minneapolis, MN 55416

	
             
 	
            Telephone:
 	
            (612) 253-6001
 	
             

	
             
 	
            Facsimile:
 	
            (612) 253-6151
 	
             

	
             
 	
            Attention:
 	
            Legal Department
 

 

with a copy to:

 

	
             
 	
            Anthony, Ostlund & Baer, P.A.
 
	
             
 	
            90 South Seventh Street
 	
             

	
             
 	
            3600 Wells Faro Building
 	
             

	
             
 	
            Minneapolis, MN 55402
 	
             

	
             
 	
            Attn: Jeff Ross
 	
             

						

 

 

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EXECUTION COPY

 

 

Each of the Parties may change the address to which notices are to be addressed by giving the other Parties notice in the manner herein set forth.

 

18.   Entire Agreement.  This Purchase and Sale Agreement constitutes the entire undertaking between the Parties, and supersedes any and all prior agreements, arrangements and understandings between the Parties.  This Purchase and Sale Agreement may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any such change is sought.

 

19.  Governing Law, Etc. This Purchase and Sale Agreement shall be governed by, and construed and enforced in all respects in accordance with, the laws of the State of Illinois applicable to contracts made and to be performed entirely within such State, without giving effect to its conflicts of laws principles or rules.  Whenever possible, each provision of this Purchase and Sale Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Purchase and Sale Agreement shall be held to be prohibited or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Purchase and Sale Agreement.

 

20.  Severability.  If any of the provisions of this Purchase and Sale Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any political body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate this entire Purchase and Sale Agreement.  Instead, this Purchase and Sale Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid, and an equitable adjustment shall be made and necessary provision added so as to give effect to the intention of the Parties as expressed in this Purchase and Sale Agreement at the time of execution of this Purchase and Sale Agreement.

21.  Further Assurances. From time to time, as and when requested by any of the Parties, each of the Parties shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions, as such requesting Party may reasonably deem necessary or desirable to consummate the transactions contemplated by this Purchase and Sale Agreement, including, but not limited to additional documentation as may be requested by the Trustee in connection with the delivery to the Trustee of the waiver that is attached hereto as Exhibit A.

 

22.  Counterparts.  This Purchase and Sale Agreement may be executed in two or more counterparts, each of which shall constitute an original.  

 

[Signature Page Follows]

 

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EXECUTION COPY

 

 

 

               IN WITNESS WHEREOF the parties hereto have executed and delivered this Purchase and Sale Agreement the day and year first above mentioned.

 

 

	
            Purchaser:

 

RICHARDSON ELECTRONICS, LTD.

 

By:        /s/ Edward J. Richardson        

Name:  Edward J. Richardson

Title:    Chairman of the Board 

& Chief Executive Officer
 	
            Sellers:

 

Whitebox Advisors, LLC

 

By:        /s/ Andrew Redleaf                

Name:
Andrew Redleaf

Title: Managing Member of the General Partner

 
 
	
             
 	
            Whitebox Intermarket Partners LP

Whitebox Intermarket Advisors, LLC

Whitebox Advisors, LLC

 

 

By:       /s/ Andrew
Redleaf                  

Name: Andrew Redleaf

Title: Managing Member of the General Partner

 
 
	
             
 	
            Whitebox Diversified Convertible Arbitrage Partners, LP

Whitebox Diversified Convertible Arbitrage Advisors, LLC

Whitebox Advisors, LLC

 

By:       /s/ Andrew Redleaf                  

Name: Andrew Redleaf

Title: Managing Member of the General Partner

 
 
	
             
 	
            Whitebox Convertible Arbitrage Partners, LP

Whitebox Convertible ArbitragE  Advisors, LLC

Whitebox Advisors, LLC

 

By:       /s/ Andrew Redleaf                  

Name: Andrew Redleaf

Title: Managing Member of the General Partner

 
 
	
             
 	
            Pandora Select Partners, LP

Pandora Select Advisors, LLC

Whitebox Advisors, LLC

 

By:       /s/ Andrew Redleaf                  

Name: Andrew Redleaf

Title: Managing Member of the General Partner

 
 

 

 

 

 

EXECUTION COPY

 

 

 

	
             
 	
            Guggenheim Portfolio XXXI, LLC

Guggenheim Advisors, LLC

Whitebox Advisors, LLC

 

By:       /s/ Andrew Redleaf                  

Name: Andrew Redleaf

Title: Managing Member of the General Partner

 
 
	
             
 	
            HFR RVA Combined Master Trust

HFR ASSET MANAGEMENT LLC

Whitebox Advisors, LLC

 

By:       /s/ Andrew Redleaf                  

Name: Andrew Redleaf

Title: Managing Member of the General Partner

 
 

 

 

 

9EX-10.1 FORMS OF GRANT CERTIFICATES

 

AFC ENTERPRISES, INC.

2006 INCENTIVE STOCK PLAN

RESTRICTED STOCK UNIT GRANT CERTIFICATE

FOR A NON-EMPLOYEE DIRECTOR

GRANT

     This Certificate evidences the grant by AFC Enterprises, Inc. (“Company”) of an award
(“Award”), in accordance with the AFC Enterprises, Inc. 2006 Incentive Stock Plan (the “Plan”) and
the terms and conditions below, of ______ restricted stock units (“Restricted Stock Units”) to
____________ (“Director”). Each Restricted Stock Unit represents the right to receive one
share of our common stock (“Stock”) as of the date on which the Restricted Stock Unit is payable.
This Award is granted effective as of _________ (the “Grant Date”).

	 	 	 	 	 
	 	 	AFC ENTERPRISES, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:
	 	Chief Executive Officer
	 

	 	 	 	 

TERMS AND CONDITIONS

     § 1 Plan and Grant Certificate. This Award is subject to all of the terms and
conditions in this Certificate and in the Plan (including, without limitation, the provisions of
Sections 13 and 14 of the Plan that (a) provide for adjustment upon a change in capitalization
(including stock splits) of the Company or upon certain corporate transactions and (b) address a
sale, merger or change in control of the Company); provided, however, that if a term of the Plan
would cause this Award to be subject to Section 409A of the Code, such term is not incorporated by
reference. If a determination is made that any term or condition in this Certificate is
inconsistent with the Plan, the Plan will control. All of the capitalized terms not otherwise
defined in this Certificate will have the same meaning in this Certificate as in the Plan. A copy
of the Plan will be available to Director at the Company’s executive offices upon written request
to the Secretary of the Company.

     § 2 Stockholder Rights. Restricted Stock Units are not actual shares of Stock but the
Restricted Stock Units will be held in an account (“Account”) in book-entry form. Director will
have no direct or secured claim in any specific assets of the Company and until the settlement of
the Award will be a general and unsecured creditor of the Company.

 

 

     Director will have no rights as a stockholder with respect to any Restricted Stock Units.

     § 3 Vesting and Forfeiture.

          (a) Director will vest in the Restricted Stock Units as follows on each of the vesting dates
described below, provided Director continuously serves on the Company’s board of directors from the
Grant Date through the applicable vesting date:

     (i) ___Restricted Stock Units will vest on ___, 200_,

     (ii) ___Restricted Stock Units will vest on ___, 200_,

     (iii) ___Restricted Stock Units will vest on ___, 200_, and

     (iv) ___Restricted Stock Units will vest on ___, 200_.

If Director’s board service terminates before a vesting date, Director will forfeit rights with
respect to all unvested Restricted Stock Units.

          (b) Director shall vest with respect to 100% of the Restricted Stock Units if Director has a
separation from service by reason of death or disability within the meaning of Section
409A(a)(2)(A)(ii).

          (c) Director will forfeit any Restricted Stock Units if, before they are settled, Director’s
board service ends because:

     (i) Director materially fails to substantially perform Director’s duties;

     (ii) Director engages in illegal or grossly negligent conduct that is materially
injurious to the Company or any Affiliate or Subsidiary;

     (iii) Director materially violates any law or regulation governing the Company or any
Affiliate or Subsidiary;

     (iv) Director commits a material act of fraud or dishonesty which has had or is likely
to have a material adverse effect upon the Company’s (Affiliates’ or Subsidiaries’)
operations or financial conditions;

     (v) Director materially breaches the terms of any other agreement with the Company or
any Affiliate or Subsidiary; or

     (vi) Director breaches any term of the Plan or this Award.

Also, if Director has a separation from service for any reason other than those listed above and
the Company subsequently discovers that Director actively concealed an act, event or failure that
is within those listed above and the Company could not have discovered that act, event or failure
through reasonable diligence before such

2

 

separation, Director will be required to repay to the Company the full value Director received
under this Award.

     § 4 Settlement of Restricted Stock Units. Subject to the provisions of § 7 below, the
Company will issue to Director a stock certificate representing the number of shares of Stock equal
to the number of vested Restricted Stock Units as soon as practicable after Director has a
separation from service within the meaning of Section 409A(a)(2)(A)(i) of the Code.

     § 5 Nontransferable. Except as expressly authorized by the Committee, no rights
granted under this Award shall be transferable by Director other than by will or by the laws of
descent and distribution, and the rights granted under this Award shall be exercisable during
Director’s lifetime only by Director. Any attempt to sell, pledge, assign, hypothecate, transfer
or otherwise dispose of this Award in contravention of this Award and the Plan shall be null and
void and shall have no effect. Director’s legal representative and the person or persons, if any,
to whom this Award is transferred by will or by the laws of descent and distribution or through a
Committee authorization shall be treated after Director’s death the same as Director under this
Award.

     § 6 Beneficiary Designation. Director may name a Beneficiary or Beneficiaries to
receive Restricted Stock Units which are settled after Director’s death. If Director dies without
naming a Beneficiary, the Restricted Stock Units subject to this Award will be converted to shares
of Stock and distributed to Director’s surviving spouse or, if Director does not have a surviving
spouse, to Director’s estate.

     § 7 Withholding. The Company will take whatever action it deems necessary to satisfy
applicable federal, state and other withholding requirements.

     § 8 Rule 16b-3. The Company shall have the right to amend this Restricted Stock Unit
grant, to withhold or otherwise restrict the transfer of the shares of Restricted Stock to Director
as the Company deems appropriate in order to satisfy any condition or requirement under Rule 16b-3
to the extent Section 16 of the 1934 Act might be applicable to the grant or transfer.

     § 9 Other Laws. The Company may refuse to transfer shares of Stock to Director if the
Company acting in its absolute discretion determines that the transfer of such shares might violate
any applicable law or regulation.

     § 10 No Right to Continue Service. Neither the Plan, this Certificate, nor any
related material shall give Director the right to continue in board service with the Company or
adversely affect the right of the Company at any time to terminate Director’s service for reasons
described in § 3(c).

     § 11 Governing Law. The Plan and this Certificate are governed by the laws of the
State of Georgia.

     § 12 Binding Effect. This Certificate is binding upon the Company and Director and
their respective heirs, executors, administrators and successors.

     § 13 Headings and Sections. The headings contained in this Certificate are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Certificate. Any references to sections (§) in this Certificate shall be to sections (§) of this
Certificate unless otherwise expressly stated as part of such reference.

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AFC ENTERPRISES, INC.

2006 INCENTIVE STOCK PLAN

RESTRICTED STOCK UNIT GRANT CERTIFICATE

[EMPLOYEE]

GRANT

     This Certificate evidences the grant by AFC Enterprises, Inc. (“Company”) of an award
(“Award”), in accordance with the AFC Enterprises, Inc. 2006 Incentive Stock Plan (the “Plan”) and
the terms and conditions below, of ___restricted stock units (“Restricted Stock Units”) to
___(“Employee”). Each Restricted Stock Unit represents the right to receive one
share of our common stock (“Stock”) as of the date on which the Restricted Stock Unit is payable.
This Award is granted effective as of ___(the “Grant Date”).

	 	 	 	 	 	 	 
	 	 	AFC ENTERPRISES, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 

	 	 	 	 	 	 

TERMS AND CONDITIONS

     § 1 Plan and Grant Certificate. This Award is subject to all of the terms and
conditions in this Certificate and in the Plan (including, without limitation, the provisions of
Sections 13 and 14 of the Plan that (a) provide for adjustment upon a change in capitalization
(including stock splits) of the Company or upon certain corporate transactions and (b) address a
sale, merger or change in control of the Company); provided, however, that if a term of the Plan
would cause this Award to be subject to Section 409A of the Code, such term is not incorporated by
reference. If a determination is made that any term or condition in this Certificate is
inconsistent with the Plan, the Plan will control. All of the capitalized terms not otherwise
defined in this Certificate will have the same meaning in this Certificate as in the Plan. A copy
of the Plan will be available to Employee at the Company’s executive offices upon written request
to the Secretary of the Company.

     § 2 Stockholder Rights. Restricted Stock Units are not actual shares of Stock but the
Restricted Stock Units will be held in an account (“Account”) in book-entry form. Employee will
have no direct or secured claim in any specific assets of the Company and until the settlement of
the Award will be a general and unsecured creditor of the Company.

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     Employee will have no rights as a stockholder with respect to any Restricted Stock Units.

     § 3 Vesting and Forfeiture.

          (a) Employee will be vested in 3/12th of the Restricted Stock Units on the Grant
Date. Employee will vest in the balance of the Restricted Stock Units as follows on each of the
vesting dates described below:

          (i) 1/12th of the Restricted Stock Units will vest on August 25, 2006,

          (ii) 1/12th of the Restricted Stock Units will vest on September 25, 2006,

          (iii) 1/12th of the Restricted Stock Units will vest on October 25, 2006,

          (iv) 1/12th of the Restricted Stock Units will vest on November 25, 2006,

          (v) 1/12th of the Restricted Stock Units will vest on December 25, 2006,

          (vi) 1/12th of the Restricted Stock Units will vest on January 25, 2007,

          (vii) 1/12th of the Restricted Stock Units will vest on February 25, 2007,

          (viii) 1/12th of the Restricted Stock Units will vest on March 25, 2007, and

          (ix) 1/12th of the Restricted Stock Units will vest on April 25, 2007.

If Employee’s employment terminates before a vesting date, Employee will forfeit rights with
respect to all unvested Restricted Stock Units.

          (b) Employee shall vest with respect to 100% of the Restricted Stock Units if Employee has a
separation from service by reason of death or disability within the meaning of Section
409A(a)(2)(A)(ii).

     § 4 Settlement of Restricted Stock Units. Subject to the provisions of § 7 below, the
Company will issue to Employee a stock certificate representing the number of shares of Stock equal
to the number of vested Restricted Stock Units as soon as practicable after Employee has separation
from service within the meaning of Section 409A(a)(2)(A)(i) of the Code.

5

 

     § 5 Nontransferable. Except as expressly authorized by the Committee, no rights
granted under this Award shall be transferable by Employee other than by will or by the laws of
descent and distribution, and the rights granted under this Award shall be exercisable during
Employee’s lifetime only by Employee. Any attempt to sell, pledge, assign, hypothecate, transfer
or otherwise dispose of this Award in contravention of this Award and the Plan shall be null and
void and shall have no effect. Employee’s legal representative and the person or persons, if any,
to whom this Award is transferred by will or by the laws of descent and distribution or through a
Committee authorization shall be treated after Employee’s death the same as Employee under this
Award.

     § 6 Beneficiary Designation. Employee may name a Beneficiary or Beneficiaries to
receive Restricted Stock Units which are settled after Employee’s death. If Employee dies without
naming a Beneficiary, the Restricted Stock Units subject to this Award will be converted to shares
of Stock and distributed to Employee’s surviving spouse or, if Employee does not have a surviving
spouse, to Employee’s estate.

     § 7 Withholding. The Company will take whatever action it deems necessary to satisfy
applicable federal, state and other withholding requirements.

     § 8 Rule 16b-3. The Company shall have the right to amend this Restricted Stock Unit
grant, to withhold or otherwise restrict the transfer of the shares of Restricted Stock to Employee
as the Company deems appropriate in order to satisfy any condition or requirement under Rule 16b-3
to the extent Section 16 of the 1934 Act might be applicable to the grant or transfer.

     § 9 Other Laws. The Company may refuse to transfer shares of Restricted Stock to
Employee if the Company acting in its absolute discretion determines that the transfer of such
shares might violate any applicable law or regulation.

     § 10 No Right to Continue Employment. Neither the Plan, this Certificate, nor any
related material shall give Employee the right to continue in employment with the Company, any
Parent, Subsidiary or Affiliate or to adversely affect the right of the Company, any Parent,
Subsidiary or Affiliate to terminate Employee’s employment with or without Cause at any time
subject to the terms of any written employment agreement to which Employee and the Company are
parties.

     § 11 Governing Law. The Plan and this Certificate are governed by the laws of the
State of Georgia.

     § 12 Binding Effect. This Certificate is binding upon the Company and Employee and
their respective heirs, executors, administrators and successors.

     § 13 Headings and Sections. The headings contained in this Certificate are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Certificate. Any references to sections (§) in this Certificate shall be to sections (§) of this
Certificate unless otherwise expressly stated as part of such reference.

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