Document:

Exhibit 10.1

 

Exhibit 10.1

	 	 	 	 	 	 	 
	Number                     

	 	 	 	$                     
	 	 
	 

	 	 
	 	 
	 	 

GLASSMASTER COMPANY

Subordinated Convertible Debenture

	 	 	 	 	 	 	 
	 

	 	Issued:
	 	 
	 	 
	 

	 	 	 	 	 	 
	 

	 	Due:
	 	 
	 	 
	 

	 	 	 	 	 	 

     Glassmaster Company, a South Carolina corporation (“Corporation”), for value received,
promises to pay to ___(“Holder”) on ___, ___(unless previously paid at the option of the Corporation), the
sum of ___Dollars($___) and to pay interest
thereon from the date hereof at the rate of Prime plus ___ percent
( %) per annum, said rate to be adjusted annually on the anniversary date of this
Debenture, payable monthly on the last day of the month until the principal amount is paid in
full.

     This Debenture is subject to the terms and conditions and is entitled to the benefits herein
stated and Holder agrees to all such terms and conditions by the acceptance of this Debenture.

     All payments of interest shall be made by check of the Corporation payable to the holder
without presentment of this Debenture or endorsement of such payment. Payment of principal and
final payment of interest shall be made only on surrender of this Debenture at the registered
office of the Corporation. All checks shall be mailed to the Holder at the address appearing on the
books of the Corporation.

     The Corporation may, at its option, redeem this Debenture on thirty (30) days prior notice to
Holder, at any time after the expiration of two years from the issue date, at par, together with
all unpaid accrued interest to the date of redemption. Payment for such redemption may be made, at
the option of the Corporation, in full or in part, in the form of debentures of smaller
denomination having terms and maturity otherwise identical to those contained herein.

     The Corporation and each Holder of this Debenture, by acceptance hereof, agree that the
payment of the principal and interest on this Debenture is expressly subordinated in right of
payment to the payment of the principal of and interest on all existing or future obligations of
the Corporation for money borrowed from any bank, trust company, insurance company, or other
financial institution, engaged in the business of lending money (“Senior Indebtedness”).

     The
Holder is entitled to convert this Debenture into ___ fully-paid and
nonassessable shares of common stock of the Corporation, $.03 par value, pursuant to the terms and
conditions outlined below:

	 	1.	 	Conversion Price. Subject to the conditions set forth below, the price
at which shares may be acquired by conversion of principal of this Debenture is as
follows:

	 	A.	 	$1.50 per share after three (3) years
	 
	 	B.	 	$2.00 per share after five (5) years

	 	2.	 	Terms of Exercise The holder may purchase shares of common stock of the
Corporation pursuant to this Debenture at any time after the issuance of this Debenture
and until the principal amount of the Debenture has been fully paid.
	 
	 	3.	 	Exercise Conversion Rights The Holder shall exercise the conversion
rights represented herein by (i) delivering written notice of exercise to Corporation at
the principal office of the Corporation at least twenty (20) days before the intended
date of exercise; (ii) on the intended date of exercise, surrendering this Debenture to
the Corporation at the principal office of the Corporation; This conversion right may be
exercised by the Holder in whole or in part, but not as to a fractional share of the
Corporation’s common stock. In the case of a partial exercise of the purchase rights
evidenced by this Debenture, the Corporation

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	 	 	 	shall deliver to the holder a new Debenture
in similar form for the amount of the principal not applied to the shares acquired by
conversion.

	 	4.	 	Issuance of Shares The shares of common stock purchased by the Holder
pursuant to this Debenture will be deemed to be and will be issued to the Holder as of
the close of business on the date on which this Debenture is surrendered to the
Corporation.
	 
	 	5.	 	Reservation of Shares The Corporation covenants that, during the term
that this conversion right is exercisable, it will reserve from its authorized and
unissued common stock a sufficient number of shares of its common stock to provide for
the delivery of such conversion shares.
	 
	 	6.	 	Shareholders’ Rights This Debenture shall not entitle the Holder to any
voting rights or any other rights of a stockholder of the Corporation.
	 
	 	7.	 	Securities Registration This Debenture has not been registered under
the Securities Act of 1933 or the securities laws of any state, including the State of
South Carolina. The Holder hereby agrees that neither this Debenture nor any shares
acquired by the Holder pursuant to this Debenture will be sold, pledged, hypothecated,
encumbered or otherwise transferred without either (i) registration of such shares under
applicable federal and state securities laws; or (ii) an opinion of counsel for the
Corporation that registration of such shares is not required under applicable federal
and state laws. Stock certificates issued as a result of the exercise of this Debenture
shall contain a restrictive legend to the effect that shares evidenced by such
certificates have not been registered under the Securities Act of 1933 or the securities
laws of any state, including the State of South Carolina, and that the shares cannot be
sold, pledged, hypothecated, encumbered or otherwise transferred without an opinion of
counsel for the Corporation that registration is not required or registration of the
shares under applicable state and federal securities laws.

     Upon the occurrence of an Event of Default, as described below, and if
such default continues for, or is not cured within thirty (30) days after such
default occurs, then the outstanding principal and interest of this Debenture shall immediately,
without further action by the Holder, be due and payable, the Corporation waiving notice, demand,
or presentment.

     An Event of Default shall occur if the Corporation shall (i) fail to pay interest or principal
on this Debenture when due, (ii) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property, (iii) be generally unable to pay its debts as such debts become due, (iv)
make a general assignment for the benefit of its creditors, (v) commence a voluntary case under the
federal Bankruptcy Code, (vi) file a petition seeking to take advantage of any other law providing
for the relief of debtors, (vii) fail to controvert in a timely manner, or acquiesce in writing to
any petition filed against it in an involuntary case under such Bankruptcy Code, (viii)take any
corporate action for the purpose of effecting any of the foregoing; or if a proceeding or case
shall be commenced, without the application of consent of the Corporation, in any court of
competent jurisdiction, seeking any of the foregoing or such proceeding or case shall continue
undismissed, or unstayed for thirty (30) days, or if an order for relief against the Corporation is
entered in an involuntary case under such Bankruptcy Code.

     This Debenture is the obligation of the Corporation only, and no recourse shall be had for
payment of principal or interest against any shareholder, officer, or director of the Corporation,
either directly or through the Corporation, by virtue of any statutes or by enforcement of any
assessment, or otherwise, all such liability of shareholders, directors, and officers, as such,
being released by Holder.

     The Corporation may treat the record holder as the owner for all purposes including payment of
interest and principal, and no transfer of this Debenture shall be valid for any purpose until such
transfer shall have been recorded in the books of the Corporation. This Debenture is one of a duly
authorized issue of debentures of the Corporation issued on this date.

     This Debenture is non-transferable, except for legal transfers occurring by will or by the
laws of descent and distribution, and is exercisable, during the lifetime of the Holder, only by
him.

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     If all or any portion of the conversion rights in the Debenture are exercised subsequent to
any stock dividend, split-up, recapitalization, combination or exchange of shares, merger,
consolidation, acquisition of property or stock, separation, reorganization, or other similar
change or transaction of or by the Corporation, as a result of which shares of Common Stock shall
be changed into the same or different numbers of shares of the same or another class or classes,
Holder shall receive for the aggregate price payable upon exercise of the Debenture conversion
rights, the aggregate number of shares equal to the number he would have received on the date of
exercise had the shares been purchased for the same aggregate price at the date the Debenture was
issued, taking into consideration any such stock dividend, split-up, recapitalization, combination
or exchange of shares, merger, consolidation, acquisition of property or stock, separation,
reorganization, or other similar change or transaction; provided, however, that no fractional share
shall be required to be issued upon any such exercise, but the aggregate price paid shall be
appropriately reduced on account of any fractional share not issued.

     This Debenture shall be construed according to the laws of the State of South Carolina.

     DATED:                      ,                     

GLASSMASTER COMPANY

     Attest:

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By	 	 	 	 
	 

	 	 

	 	 	 	 

	 	 

Secretary

	 	 	 	 	 	 	 
	 

	 	Its	 	 	 	 
	 

	 	 
	 	 

	 	 

THIS DEBENTURE AND THE SHARES INTO WHICH IT IS CONVERTIBLE HAVE NOT BEEN REGISTERED UNDER THE
FEDERAL SECURITIES ACT OF 1933, AS AMENDED(THE “ACT”), OR ANY STATE SECURITIES LAWS,
INCLUDING SOUTH CAROLINA STATUTES. THE SALE, ASSIGNMENT, PLEDGE OR OTHER TRANSFER OF ALL OR
ANY PART OF THIS DEBENTURE IS SUBJECT TO RESTRICTIONS AND PROHIBITIONS CONTAINED IN A
SUBSCRIPTION AGREEMENT. IN ADDITION, THE SALE, ASSIGNMENT, PLEDGE, OR OTHER TRANSFER OF ALL
OR ANY PART OF THIS DEBENTURE MAY BE SUBJECT TO A STOP TRANSFER ORDER PLACED BY GLASSMASTER
COMPANY WITH ITS REGISTRAR AND STOCK TRANSFER AGENT.

THIS DEBENTURE MAY NOT BE SOLD, PLEDGED, OFFERED FOR SALE OR OTHERWISE DISTRIBUTED OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR IN THE ABSENCE OF AN OPINION OF COUNSEL SATISFACTORY IN FORM AND
SUBSTANCE TO COUNSEL FOR GLASSMASTER COMPANY THAT SUCH TRANSACTION WILL NOT RESULT IN A
PROHIBITED TRANSACTION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS. MOREOVER, IF THE
DEBENTURE IS SOLD OR TRANSFERRED WITHIN TWELVE MONTHS FROM THE DATE HEREOF PURSUANT TO A
REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, SUCH SALE OR TRANSFER CAN ONLY BE MADE TO RESIDENTS OF THE STATE OF SOUTH
CAROLINA.

- 38 -EX-10.1 INDEMNIFICATION AGREEMENT/JOHN M. CRANOR

 

Exhibit 10.1

INDEMNIFICATION AGREEMENT

     THIS INDEMNIFICATION AGREEMENT,
dated as of November 28, 2006, is made by and between AFC
Enterprises, Inc., a Minnesota corporation (the “Company”), and John M. Cranor, III, a director of
the Company (“Director”).

     WHEREAS, Director is a member of the Board of Directors of the Company; and

     WHEREAS, it will be difficult to retain directors of the Company unless such directors are
adequately indemnified against liabilities incurred and claims made in performance of their duties
as directors of the Company; and

     WHEREAS, it is in the best interests of the Company to retain such directors by providing
adequate indemnification by means of indemnification agreements with individual directors.

     NOW, THEREFORE, in consideration of Director’s continued service as a director of the Company,
and as an inducement to Director to continue to serve as a director of the Company, the Company and
Director agree as follows:

     1. Indemnification. The Company agrees to indemnify and hold Director harmless from
and against any claims, liabilities, damages, judgments, penalties, fines or expenses of any type
whatsoever incurred by Director in or arising out of the status, capacities or activities of
Director as a director of the Company to the maximum extent permitted under Minnesota Statutes,
Section 302A.521 (attached hereto as Exhibit A) as in effect on the date hereof.

     2. Advances of Expenses. Subject to Director’s execution of a written affirmation,
satisfactory to the Company, of the Director’s good faith belief that the criteria for
indemnification have been satisfied and to repay all amounts advanced by the Company if it is
ultimately determined that the criteria for indemnification have not been satisfied, the Company
shall advance all expenses incurred by Director in connection with the investigation, defense,
settlement or appeal of any proceeding, action or investigation to which Director is a party or is
threatened to be made a party arising out of the status, capacities or activities of Director as a
director of the Company to the maximum extent permitted under Minnesota Statutes, Section 302.521,
subd. 3 as in effect on the date of this Agreement upon the determination by the Company that the
facts then known to those making the determination would not preclude indemnification under Section
502A.521, subd. 6 within 60 days after receipt of said written affirmation. Director shall have a
reasonable right to appear in person and to be represented by counsel.

     3. Other Rights of Directors. The right of Director to indemnification or
advance of expenses pursuant to this Agreement shall not be exclusive
of other rights Director may have (i) under applicable law, (ii) pursuant to other agreements between the Company and Director
or the Company’s Articles of Incorporation or Bylaws, or (iii) pursuant to any agreement with a
third party (by way of insurance, indemnification or otherwise).

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     4. Absolute Right to Indemnification and Advances of Expenses. The Company agrees
that it shall not, and the Company hereby waives all rights that it has or may have to, refuse to
indemnify or advance expenses, or withhold payment of amounts for which Director is indemnified
hereunder, or for advance of expenses to Director, based on any breach or alleged breach of any of
the provisions of this Agreement by Director or for any other reason whatsoever. In the event
Director is required to bring any action to enforce Director’s rights or to collect monies due to
Director under this Agreement, and is successful in such action, the Company shall reimburse
Director for all of Director’s legal fees and expenses in bringing and pursuing such action.

     5. Amendments to Minnesota Statutes or Company’s Articles of Incorporation or Bylaws.
The Company represents that its Bylaws provide for indemnification of Director to the maximum
extent permitted by Minnesota Statutes, Section 302A.521 as in effect on the date hereof and to the
maximum extent required by this Agreement. The Company shall not amend its Articles of
Incorporation or Bylaws to reduce or eliminate the Director’s right to indemnification or advances
provided for under this Agreement. Any amendments to the Articles of Incorporation or Bylaws of
the Company made subsequent to the date of this Agreement which reduce or eliminate rights of
persons entitled to indemnification or advances under such Articles of Incorporation or Bylaws
shall not limit the rights of Director pursuant to this Agreement. If the Minnesota Statutes, the
Articles of Incorporation or the Bylaws of the Company are amended so as to provide for greater
indemnification rights or benefits, and Director shall be entitled to such greater rights or
benefits, and Director shall be entitled to such greater rights and benefits immediately upon such
amendment. Subsequent amendments to the Minnesota Statutes or other applicable law shall in no way
reduce Director’s rights under this Agreement.

     6. Maintenance of Insurance. The Company represents that it presently has in force
and effect directors and officers insurance under a Directors’ and Officers’ Liability Insurance
Policies including Company Reimbursement issued by XL Specialty Insurance Company. (Policy No.
ELU088117-06) covering certain liabilities which may be incurred by its officers and directors.
The Company may maintain in effect, for the benefit of Director, directors’ and officers’ insurance
providing such coverage as may, from time to time, be determined by the Board of Directors of the
Company, in their absolute discretion.

     7. Notification. Promptly after receipt by Director of the Company of any
notice or document respecting the commencement of any action, suit, proceeding or investigation naming or
involving Director and relating to any matter concerning which
Director may be entitled to indemnification or advances pursuant to this Agreement, the party receiving notice will
notify the other of the receipt of same, but the failure by Director to so notify the Company shall
not relieve the Company from any obligation under this Agreement or otherwise.

     8. Amendment. This Agreement may be amended at any time by written instrument
executed by the Company and Director.

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     9. Notices. All notices and other communications between the parties with respect to
this Agreement must be made in writing and shall be deemed to have been fully delivered as of the
date on which they are hand delivered or deposited in the United States mail for delivery by
registered or certified mail, postage and fees prepaid.

     10. Binding Effect. Due to the personal nature of the services to be rendered by
Director, Director may not assign this Agreement. Subject to the foregoing, the provisions of this
Agreement are binding upon and inure to the benefit of (i) Director and Director’s respective
heirs, legal representatives and administrators, and (ii) the Company and its successors,
transferees and assigns.

     11. Survival. The obligations of the Company to Director as provided in this
Agreement shall survive and continue after Director has ceased to be a director of the Company.

     12. Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.

     13. Arbitration. Any dispute or controversy arising under or in connection with this
Agreement shall be discussed between the parties in a good faith effort to arrive at a mutual
settlement of any such controversy. If, notwithstanding the parties’ good faith efforts, a dispute
remains unresolved for a period of 45 days after initial notice from one party to the other of the
dispute, the parties shall submit such dispute to arbitration in accordance with the rules of the
American Arbitration Association, and judgment upon the award may be entered in any court having
jurisdiction over the controversy. The costs of the proceeding shall be paid by the Company.
Unless otherwise agreed upon, the place of arbitration proceedings shall be Fulton County, Georgia.

     14. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above
written.

	 	 	 	 	 
	 

	 	AFC ENTERPRISES, INC.
	 
	 	 	 	 
	 

	 	By:	 	 /s/ Kenneth L. Keymer
	 

	 	 	 	 
	 

	 	 	 	Kenneth L. Keymer, Chief Executive Officer
	 
	 	 	 	 
	 
	 	/s/ John M. Cranor, III	 	 
	 

	 	 
	 
	 	John M. Cranor, III, Director

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