SHAREHOLDERS AGREEMENT, dated as of November 6, 1997, between XXXX
XXXXX, INC., a Delaware corporation ("Parent"), and Xxxx/Chilmark Fund L.P.
("Shareholder").
WHEREAS, Parent, Q-Acquisition Corp., a Washington corporation and a
wholly owned subsidiary of Parent ("Sub"), and Quality Food Centers, Inc., a
Washington corporation (the "Company"), propose to enter into an Agreement and
Plan of Merger dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement"; capitalized terms used but not defined
herein shall have the meanings set forth in the Merger Agreement) providing for
the merger of Sub with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in the Merger Agreement;
WHEREAS, Shareholder owns 3,975,000 shares of Common Stock, par value
$.001 per share, of the Company (the "Company Common Stock") (such shares of
Company Common Stock, together with any other shares of capital stock of the
Company acquired by such Stockholder after the date hereof and during the term
of this Agreement, being collectively referred to herein as the "Subject
Shares"); and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Parent has requested that Shareholder enter into this Agreement;
NOW, THEREFORE, to induce Parent to enter into, and in consideration
of its entering into, the Merger Agreement, and in consideration of the premises
and the representations, warranties and agreements contained herein, the parties
agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
hereby represents and warrants to Parent as of the date hereof in respect of
itself as follows:
(a) AUTHORITY. The Shareholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Shareholder and constitutes a valid and binding obligation
of the Shareholder enforceable in accordance with its terms. Except for
the Standstill Agreement, dated as of January 14, 1995 (the "Standstill
Agreement"), by and between the Company and Shareholder (the relevant
provisions of which have been waived by the Company to permit Shareholder
to enter into and perform this Agreement, as set forth in the agreement
between the Company and Shareholder dated November 6, 1997', the execution
and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both)
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under any provision of, any trust agreement, loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise, license, judgment, order, notice, decree,
statute, law, ordinance, rule or regulation applicable to the Shareholder
or to the Shareholder's property or assets.
(b) THE SUBJECT SHARES. The Shareholder is the record and beneficial
owner of, and has good and marketable title to, the Subject Shares, free
and clear of any Encumbrances. The Shareholder does not own, of record or
beneficially, any shares of capital stock of the Company other than the
Subject Shares. The Shareholder has the sole right to vote, and the sole
power of disposition with respect to, such Subject Shares, and none of such
Subject Shares is subject to any voting trust or other agreement,
arrangement or restriction with respect to the voting or disposition of
such Subject Shares, except for the Standstill Agreement and except as
contemplated by this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby represents
and warrants to Shareholder that Parent has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent,
and the consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of Parent. This
Agreement has been duly executed and delivered by Parent and constitutes a valid
and binding obligation of Parent enforceable in accordance with its terms. The
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time or both) under any provision of, the certificate of
incorporation or by-laws of Parent, any trust agreement, loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order, notice,
decree, statute, law, ordinance, rule or regulation applicable to Parent or to
Parent's property or assets.
3. COVENANTS OF SHAREHOLDER. Until the termination of this
Agreement in accordance with Section 7, Shareholder agrees as follows:
(a) At any meeting of shareholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Shareholder
shall be present (in person or by proxy) and shall vote (or cause to be
voted) the Subject Shares in favor of the Merger, the adoption by the
Company of the Merger Agreement and the approval of the terms thereof and
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each of the other transactions contemplated by the Merger Agreement.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Shareholder's vote, consent or other approval is sought, the Shareholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding-up of or by the
Company or any other takeover proposal (collectively, "Takeover Proposal")
or (ii) any amendment of the Company's certificate of incorporation or
by-laws or other proposal or transaction involving the Company or any of
its subsidiaries, which amendment or other proposal or transaction would in
any manner impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement or change in any manner the voting rights of any class of capital
stock of the Company. The Shareholder further agrees not to commit or
agree to take any action inconsistent with the foregoing.
(c) Except as provided in the immediately succeeding sentence of this
Section 3(c), the Shareholder agrees not to (i) sell, transfer, pledge,
assign or otherwise dispose of (including by gift) (collectively,
"Transfer"), or enter into any contract, option or other arrangement
(including any profit-sharing arrangement) with respect to the Transfer of,
the Subject Shares to any person other than pursuant to the terms of the
Merger or (ii) enter into any voting arrangement, whether by proxy, voting
agreement or otherwise, in connection with, directly or indirectly, any
Takeover Proposal and agrees not to commit or agree to take any of the
foregoing actions.
(d) During the term of this Agreement, the Shareholder shall not, nor
shall it permit any of its affiliates or any director, officer, employee,
investment banker, attorney or other adviser or representative of the
Shareholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or
may reasonably be expected to lead to, any Takeover Proposal.
Notwithstanding the foregoing provisions of this Section 3(d), Shareholder
and all other persons described in the first sentence of this
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Section 3(d), shall be entitled to take all actions and to exercise all
rights with respect to any Transaction as the Company may take or exercise
pursuant to Section 5.4 of the Merger Agreement; PROVIDED, that the
Company, in connection with such actions and the exercise of such rights,
complies with Section 5.4 of the Merger Agreement.
(e) Until after the Merger is consummated or the Merger Agreement is
terminated, the Shareholder shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement.
4. AFFILIATE LETTER. Shareholder shall execute and deliver the
agreement contemplated by the last sentence of Section 5.11(a) of the Merger
Agreement.
5. FURTHER ASSURANCES. Shareholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as Parent may reasonably request for
the purpose of effectively carrying out the transactions contemplated by this
Agreement.
6. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
7. TERMINATION. This Agreement shall terminate upon the earlier of (a)
the termination of the Merger Agreement, (b) the withdrawal, modification or
amendment by the Board of Directors of the Company in any respect adverse to
Parent or Sub of its approval or recommendation of the Merger Agreement, the
Merger or any of the transactions contemplated by the Merger Agreement or (c)
the Effective Time.
8. WAIVER OF APPRAISAL AND DISSENTER'S RIGHTS. Until the termination
of this Agreement in accordance with Section 7, Shareholder hereby waives and
agrees not to exercise any rights of appraisal or rights to dissent from the
Merger that
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Shareholder may have with respect to Shareholder's Subject Shares.
9. GENERAL PROVISIONS.
(a) AMENDMENTS. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) NOTICE. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to Parent in accordance
with Section 8.2 of the Merger Agreement and to the Shareholders at their
respective addresses set forth on Schedule A attached hereto (or at such
other address for a party as shall be specified by like notice).
(c) INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
(d) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when two or more of the counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that each party need not sign the same counterpart.
(e) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
(f) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware regardless
of the laws that might otherwise govern under applicable principles of
conflicts of law thereof.
10. SHAREHOLDER CAPACITY. No designee of Shareholder who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in its
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capacity as such director or officer. Shareholder signs solely in his capacity
as the record holder and beneficial owner of Shareholder's Subject Shares and
nothing herein shall limit or affect any actions taken by any designee of
Shareholder in his or her capacity as an officer or director of the Company to
the extent specifically permitted by the Merger Agreement.
11. ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court; (iii) agrees that such party will not
bring any action relating to this Agreement or the transactions contemplated
hereby in any court other than a Federal court sitting in the state of Delaware
or a Delaware state court and (iv) waives any right to trial by jury with
respect to any claim or proceeding related to or arising out of this Agreement
or any of the transactions contemplated hereby.
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IN WITNESS WHEREOF, Parent has caused this Agreement to be signed by
its officer thereunto duly authorized and the Shareholder has signed this
Agreement, all as of the date first written above.
XXXX XXXXX, INC.
By:
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Name:
Title:
SHAREHOLDER:
XXXX/CHILMARK FUND L.P.
By: ZC Limited Partnership,
general partner
By: ZC Partnership,
general partner
By: ZC Inc., general partner
By:
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Name:
Title:
