Exhibit 1.1
[CONFORMED COPY]
CFP HOLDINGS, INC.
CFP GROUP, INC.
CUSTOM FOOD PRODUCTS, INC.
QF ACQUISITION CORP.
$115,000,000 115/8% SENIOR GUARANTEED NOTES DUE 2004
PURCHASE AGREEMENT
January 23, 1997
NationsBanc Capital Markets, Inc.
NationsBank Corporate Center, 7th Floor
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
CFP Holdings, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to NationsBanc Capital Markets, Inc. and Xxxxxxxxx, Lufkin &
Xxxxxxxx Securities Corporation (the "Initial Purchasers" and, individually,
each an "Initial Purchaser") an aggregate of $115,000,000 principal amount of
its 115/8% Senior Guaranteed Notes Due 2004 (the "Notes"). The Notes are to be
issued under an indenture (the "Indenture") dated as of January 28, 1997 among
the Company, CFP Group, Inc., a Delaware corporation (the "Parent Guarantor"),
Custom Food Products, Inc., a California corporation ("Custom Foods"), and QF
Acquisition Corp., a Delaware corporation ("QF Acquisition Corp."), as
guarantors (the "Subsidiary Guarantors" and, individually, each a "Subsidiary
Guarantor" and together with the Parent Guarantor, each a "Guarantor") and
United States Trust Company, as trustee (the "Trustee"). The obligations of the
Company under the Notes and the Indenture will be guaranteed by the Guarantors
on a senior unsecured basis pursuant to the terms of the Indenture (the
"Guarantees"). The Subsidiary Guarantors are wholly owned subsidiaries of the
Company and therefore all references to subsidiaries of the
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Company include the Subsidiary Guarantors. The Company is a wholly owned
subsidiary of the Parent Guarantor.
The sale of the Notes to the Initial Purchasers will be made without
registration of the Notes under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions from the registration
requirements of the Securities Act. You have advised the Company that you will
offer and sell the Notes purchased by you hereunder in accordance with Section 4
hereof as soon as you deem advisable. The Notes will have the benefit of certain
registration rights, pursuant to a Registration Rights Agreement, dated as of
January 28, 1997, among the Company, the Guarantors and the Initial Purchasers
(the "Registration Rights Agreement").
In connection with the sale of the Notes, the Company and the
Subsidiary Guarantors have prepared a preliminary offering memorandum, dated
January 7, 1997 (the "Preliminary Memorandum"), and a final offering memorandum,
dated January 23, 1997 (the "Final Memorandum"). Each of the Preliminary
Memorandum and the Final Memorandum sets forth certain information concerning
the Company, the Subsidiary Guarantors and the Notes. The Company and the
Subsidiary Guarantors hereby confirm that they have authorized the use of the
Preliminary Memorandum and the Final Memorandum, and any amendment or supplement
thereto, in connection with the offer and sale of the Notes by the Initial
Purchasers. Unless stated to the contrary, all references herein to the Final
Memorandum are to the Final Memorandum at the Execution Time (as defined below)
and are not meant to include any amendment or supplement subsequent to the
Execution Time.
1. Representations and Warranties. The Company and the Guarantors
jointly and severally represent and warrant to the Initial Purchasers as set
forth below in this Section 1.
(a) The Preliminary Memorandum, at the date thereof, did not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Final
Memorandum, at the date hereof, does not, and at the Closing Date (as
defined below) will not (and any amendment or supplement thereto, at the
date thereof and at the Closing Date, will not), contain any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the Company
and the Guarantors make no representation or warranty as to the
information contained in or omitted from the Preliminary Memorandum or the
Final Memorandum, or any amendment or supplement thereto, in reliance upon
and in conformity with information furnished in writing to the Company by
or on behalf of the Initial Purchasers specifically for inclusion therein.
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(b) Each of the Parent Guarantor, the Company and the subsidiaries
of the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction in which
it is chartered or organized and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or leases
material properties or conducts material business, except in such
jurisdictions in which the failure to so qualify, singly or in the
aggregate, would not have a Material Adverse Effect (as defined below).
(c) Each of the Parent Guarantor, the Company and the subsidiaries
of the Company has full power (corporate and other) to own or lease its
properties and conduct its business as described in the Final Memorandum;
and each of the Company, the Parent Guarantor and the Subsidiary
Guarantors has full power (corporate and other) to enter into this
Agreement and the Registration Rights Agreement and the Indenture
(including the Guarantees provided for therein) (collectively, the
"Offering Documents") and to carry out all the terms and provisions hereof
and thereof to be carried out by it.
(d) The Company, the Parent Guarantor and the Subsidiary Guarantors
have authorized, issued and outstanding capitalizations as set forth in
the Final Memorandum. All of the issued shares of capital stock of the
Company, the Parent Guarantor and the Subsidiary Guarantors have been duly
authorized and validly issued and are fully paid and nonassessable. All of
the capital stock of each of the Subsidiary Guarantors is owned of record
and beneficially by the Company, free and clear of any pledge, lien,
encumbrance, security interest, restriction on voting or transfer,
preemptive rights or other defect or claim of any third party, except as
otherwise set forth in the Final Memorandum. All of the capital stock of
the Company is owned of record and beneficially by the Parent Guarantor,
free and clear of any pledge, lien, encumbrance, security interest,
restriction on voting or transfer, preemptive rights or other defect or
claim of any third party, except as otherwise set forth in the Final
Memorandum. The capital stock of the Company, the Parent Guarantor and the
Subsidiary Guarantors conform to the descriptions thereof in the Final
Memorandum.
(e) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and, except for directors' qualifying shares and except
as otherwise set forth in the Final Memorandum are owned of record and
beneficially by the Company, either directly or through wholly owned
subsidiaries, free and clear of any pledge, lien, encumbrance, security
interest, restriction on voting or transfer, preemptive rights or other
defect or claim of any third party.
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(f) No subsidiary of the Company is prohibited, directly or
indirectly, from paying any dividends to the Company, from making any
other distribution on such subsidiary's capital stock, from repaying to
the Company any loans or advances to such subsidiary from the Company or
from transferring any of such subsidiary's property or assets to the
Company or any other subsidiary of the Company, except as described in or
contemplated by the Final Memorandum.
(g) Deloitte & Touche LLP, who have audited certain financial
statements of the Company and its consolidated subsidiaries and delivered
their reports with respect to the audited consolidated financial
statements and schedules in the Final Memorandum, are independent public
accountants within the meaning of the Securities Act and the applicable
rules and regulations thereunder.
(h) Ernst & Young LLP, who have certified certain financial
statements of the Quality Foods, L.P. ("Quality Foods") and delivered
their reports with respect to the audited consolidated financial
statements and schedules in the Final Memorandum, are independent public
accountants within the meaning of the Securities Act and the applicable
rules and regulations thereunder.
(i) The consolidated financial statements (including the notes
thereto) and schedules of the Parent Guarantor, the Company and its
consolidated subsidiaries, and the financial statements (including the
notes thereto) of Quality Foods, set forth in the Final Memorandum fairly
present, respectively, the financial position of the Parent Guarantor, the
Company and its consolidated subsidiaries and of Quality Foods, and the
results of operations as of the dates and for the periods specified
therein; since the date of the latest of such financial statements, there
has been no change nor any development or event involving a prospective
change which has had a material adverse effect on (i) the business,
operations, properties, assets, liabilities, net worth, condition
(financial or otherwise) or prospects of the Company and its consolidated
subsidiaries, taken as a whole, as the case may be, or (ii) the ability of
the Company, the Parent Guarantor or the Subsidiary Guarantors to perform
any of their respective obligations under the Offering Documents or the
Notes ("Material Adverse Effect"); such financial statements and schedules
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved (except as
otherwise expressly noted in the Final Memorandum); the summary and
selected historical financial information included in the Final Memorandum
has been fairly extracted from the financial statements of the Company and
Quality Foods and fairly presents, on the basis stated in the Final
Memorandum, the information included therein; and the unaudited pro forma
financial statements included in the Final Memorandum comply in form in
all material respects with the applicable accounting
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requirements, which have been properly applied to the historical amounts
in the compilation of such statements.
(j) Subsequent to the respective dates as of which information is
given in the Final Memorandum, (i) the Parent Guarantor, the Company and
the subsidiaries of the Company have not incurred any material liability
or obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; (ii) each of the
Company and the Guarantors has not purchased any of its outstanding
capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock; and (iii) there has not
been any material change in the capital stock, short-term debt or
long-term debt of the Parent Guarantor, the Company and the subsidiaries
of the Company, except in each case as described in or contemplated by the
Final Memorandum.
(k) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances
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.
(l) The Offering Documents have been duly authorized by all
necessary corporate actions of the Company and the Guarantors, when duly
executed and delivered by the Company and the Guarantors and, as the case
may be, by the Trustee, and will constitute legal, valid and binding
obligations of such of the Company and the Guarantors as are a party
thereto, enforceable against the Company and the Guarantors in accordance
with their terms, except as the same may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally, including without limitation the effect of
statutory or other laws regarding fraudulent conveyances or transfers or
preferential transfers or (ii) general principles of equity, whether
considered at law or at equity, and except as rights to indemnity and
contribution may be limited by federal or state securities laws.
(m) The Notes have been duly authorized by all necessary corporate
action for issuance and sale pursuant to this Agreement and, when
executed, authenticated, issued and delivered in the manner provided for
in the Indenture and sold and paid for as provided in this Agreement, the
Notes will constitute legal, valid and binding obligations of the Company
and the Guarantors entitled to the benefits of the Indenture
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and enforceable against the Company and the Guarantors in accordance with
its terms, except as the same may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally, including without limitation the effect of statutory or
other laws regarding fraudulent conveyances or transfers or preferential
transfers or (ii) general principles of equity, whether considered at law
or at equity.
(n) The Guarantees have been duly authorized by all necessary
corporate action for issuance and sale pursuant to this Agreement and,
when the Notes are executed, authenticated, issued and delivered in the
manner provided for in the Indenture and sold and paid for as provided in
this Agreement, the Guarantees will constitute legal, valid and binding
obligations of the respective Guarantors entitled to the benefits of the
Indenture and enforceable against the Guarantors in accordance with its
terms, except as the same may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other laws regarding creditors'
rights generally, including without limitation the effect of statutory or
other laws regarding fraudulent conveyances or transfers or preferential
transfers or (ii) general principles of equity, whether considered at law
or at equity.
(o) The issuance, offering and sale of the Notes to the Initial
Purchasers by the Company pursuant to this Agreement, the compliance by
the Company and the Guarantors with the other provisions of this Agreement
and the other Offering Documents, the consummation of the other
transactions herein and therein contemplated and the consummation of the
Financial Transactions and the other transactions contemplated hereby and
in the Final Memorandum do not (i) require the consent, approval,
authorization, order, registration or qualification of or with any
governmental authority or court, except such as may be required under
state securities or blue sky laws or (ii) conflict with, result in a
breach or violation of, or constitute a default under, any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which
the Company or any of the subsidiaries of the Company, including the
Subsidiary Guarantors, is a party or by which the Company or any of the
subsidiaries of the Company, or any of their respective properties is
bound, or the charter or by-laws of the Company or any of the subsidiaries
of the Company, or any statute, rule or regulation or any judgment, order
or decree of any governmental authority or court or arbitrator applicable
to the Company or any of the subsidiaries of the Company.
(p) No legal or governmental proceedings or investigations are
pending to which the Parent Guarantor, the Company or any of the
subsidiaries of the Company, is a party or to which the property of the
Parent Guarantor, the Company or any of the subsidiaries of the Company,
is subject that are not described in the Final
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Memorandum, and no such proceedings or investigations, to the best
knowledge of the Company, have been threatened against the Parent
Guarantor, the Company or any of the subsidiaries of the Company, or with
respect to any of their respective properties, except in each case for
such proceedings or investigations that, if the subject of an unfavorable
decision, ruling or finding, would not, singly or in the aggregate, result
in a Material Adverse Effect.
(q) Neither the Parent Guarantor, the Company nor any of the
subsidiaries of the Company, is now or, after giving effect to the
issuance of the Notes and the execution, delivery and performance of the
Offering Documents and the consummation of the transactions contemplated
thereby will be (i) insolvent, (ii) left with unreasonably small capital
with which to engage in its anticipated businesses or (iii) incurring
debts beyond its ability to pay such debts as they become due.
(r) The Parent Guarantor, the Company and each of the subsidiaries
of the Company have good and marketable title in fee simple to all items
of real property and marketable title to all personal property owned by
each of them, in each case free and clear of any pledge, lien encumbrance,
security interest or other defect or claim of any third party, except (i)
for security interests granted by the Parent Guarantor, the Company and
each of the subsidiaries of the Company pursuant to the Credit Agreement
dated as of December 30, 1996 among the Parent Guarantor, the Company,
NationsBank of Texas, N.A., and the other parties thereto, (ii) such as do
not materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Parent Guarantor, the Company or such subsidiary, and (iii) as otherwise
set forth in the Final Memorandum. Any real property and buildings held
under lease by the Company or any such subsidiary are held under valid,
subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the use made or proposed to be made of
such property and buildings by the Company or such subsidiary.
(s) ERISA:
(i) Definitions:
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) that for purposes of Title IV of ERISA is
a member of the controlled group of the Company, or under
common control with the
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Company, within the meaning of Section 414 of the Internal
Revenue Code.
"ERISA Event" means (a)(i) the occurrence of a
reportable event, within the meaning of Section 4043 of ERISA,
with respect to any Plan unless the 30-day notice requirement
with respect to such event has been waived by the PBGC, or
(ii) the requirements of subsection (1) of Section 4043(b) of
ERISA are met with respect to a contributing sponsor, as
defined in Section 4001(a)(13) of ERISA, of a Plan, and an
event described in paragraph (9), (10), (11), (12) or (13) of
Section 4043(c) of ERISA is reasonably expected to occur with
respect to such Plan within the following 30 days; (b) the
application for a minimum funding waiver with respect to a
Plan; (c) the provision by the administrator of any Plan of a
notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to
a plan amendment referred to in Section 4041(e) of ERISA); (d)
the cessation of operations at a facility of the Company or
any ERISA Affiliate in the circumstances described in Section
4062(e) of ERISA; (e) the withdrawal by the Company or any
ERISA Affiliate from a Multiple Employer Plan during a plan
year for which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (f) the conditions for imposition
of a lien under Section 302(f) of ERISA shall have been met
with respect to any Plan; (g) the adoption of an amendment to
a Plan requiring the provision of security to such Plan
pursuant to Section 307 of ERISA; or (h) the institution by
the PBGC of proceedings to terminate a Plan pursuant to
Section 4042 of ERISA, or the occurrence of any event or
condition described in Section 4042 of ERISA that constitutes
grounds for the termination of, or the appointment of a
trustee to administer, such Plan.
"Multiemployer Plan" means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, to which the Company
or any ERISA Affiliate is making or accruing an obligation to
make contributions, or has within any of the preceding five
plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means a single employer plan,
as defined in Section 4001(a)(15) of ERISA, that (a) is
maintained for employees of the Company or any ERISA Affiliate
and at least one trade or business (whether or not
incorporated) other than the Company and the ERISA Affiliates
or (b) was so maintained and in respect of
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which the Company or any ERISA Affiliate could have liability
under Section 4064 or 4069 of ERISA in the event such plan has
been or were to be terminated.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Plan" means a Single Employer Plan or a Multiple
Employer Plan.
"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is
maintained for employees of the Company or any ERISA Affiliate
and no trade or business (whether or not incorporated) other
than the Company and the ERISA Affiliates or (b) was so
maintained and in respect of which the Company or any ERISA
Affiliate could have liability under Section 4069 of ERISA in
the event such plan has been or were to be terminated.
"Underfunding" means, with respect to any Plan, the
excess, if any, of the "projected benefit obligations" (within
the meaning of Statement of Financial Accounting Standards 87)
under such Plan (determined using the actuarial assumptions
used for purposes of calculating funding requirements in the
most recent actuarial report for such plan) over the fair
market value of the assets held under the Plan.
"Withdrawal Liability" has the meaning specified in Part
I of Subtitle E of Title IV of ERISA.
(ii) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan.
(iii) The aggregate Underfunding with respect to all Plans
which have any Underfunding does not exceed $100,000.
(iv) Neither the Company nor any ERISA Affiliate has incurred
or is reasonably expected to incur any Withdrawal Liability.
(v) Neither the Company nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated,
within the meaning of Title IV of ERISA, and no such Multiemployer
Plan is reasonably expected to be in reorganization or to be
terminated, within the meaning of Title IV of ERISA.
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(t) No labor dispute with the employees of the Company, or any of
the subsidiaries of the Company, exists or to the best knowledge and
belief of the Company and its subsidiaries is threatened or imminent which
is likely to result in a Material Adverse Effect.
(u) The Company and the subsidiaries of the Company own or otherwise
possess the right to use all patents, trademarks, service marks, trade
names and copyrights, all applications and registrations for each of the
foregoing, and all other proprietary rights and confidential information
used in the conduct of their respective businesses as currently conducted;
and neither the Company nor any subsidiary of the Company has received any
notice, or is otherwise aware, of any infringement of or conflict with the
rights of any third party with respect to any of the foregoing which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(v) The Company and the subsidiaries of the Company are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which they are engaged and neither the Company nor any such subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
(w) The Parent Guarantor, the Company and the subsidiaries of the
Company possess all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and none of the Parent Guarantor, the
Company or any such subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(x) Environmental Matters:
(i) The Parent Guarantor, the Company and the subsidiaries of
the Company are and have been in compliance with all applicable
laws, statutes, ordinances, rules, regulations, orders, judgments,
decisions, decrees, standards, and requirements ("Legal
Requirements") relating to: human health and safety; pollution;
management, disposal or release of any chemical substance, product
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or waste; and protection, cleanup, remediation or corrective action
relating to the environment or natural resources ("Environmental
Law");
(ii) The Parent Guarantor, the Company and the subsidiaries of
the Company have obtained and are in compliance with the conditions
of all permits, licenses, approvals, authorizations, and variances
necessary under any Environmental Law for the continued conduct of
the business of the Company and each subsidiary of the Company, in
the manner now conducted ("Environmental Permits");
(iii) There are no past or present conditions or
circumstances, including but not limited to pending changes in any
Environmental Law or Environmental Permit, that are likely to
interfere with the conduct of the business of the Company or any
subsidiary of the Company, in the manner now conducted or which
would interfere with compliance with any Environmental Law or
Environmental Permit; and
(iv) There are no past or present conditions or circumstances
at, or arising out of, the business, assets and properties of the
Parent Guarantor, the Company or any subsidiary of the Company, or
any formerly leased, operated or owned businesses, assets or
properties of the Parent Guarantor, the Company or any subsidiary of
the Company, including but not limited to on-site or off-site
disposal or release of any chemical substance, product or waste,
which may give rise to: (A) liabilities or obligations for any
cleanup, remediation or corrective action under any Environmental
Law, (B) claims arising under any Environmental Law for personal
injury, property damage, or damage to natural resources, (C)
liabilities or obligations incurred to enable the Parent Guarantor,
the Company or any subsidiary of the Company, to comply with any
Environmental Law, or (D) fines or penalties arising under any
Environmental Law;
except in each case for any noncompliance or conditions or circumstances
that, singly or in the aggregate, would not result in a Material Adverse
Effect.
(y) No default exists, and no event has occurred which, with notice
or lapse of time or both, would constitute a default in the due
performance and observation of any term, covenant or condition of any
indenture, mortgage, deed of trust, lease or other agreement or instrument
to which the Parent Guarantor, the Company or any of the subsidiaries of
the Company is a party or by which the Parent Guarantor, the Company or
any of the subsidiaries of the Company, or any of their respective
properties, is bound which would have a Material Adverse Effect.
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(z) The Parent Guarantor, the Company and the Subsidiary Guarantors
have filed all foreign, federal, state and local tax returns that are
required to be filed or have requested extensions thereof and have paid
all taxes required to be paid by them and any other assessment, fine or
penalty levied against them, to the extent that any of the foregoing is
due and payable, other than those being contested in good faith and for
which adequate reserves have been provided or those currently payable
without penalty or interest and other than taxes of less than $250,000 in
the aggregate.
(aa) Assuming the accuracy of the representations made by the
Initial Purchasers in Xxxxxxx 0, xxxx of the Company, the Guarantors, or
any Affiliate (as defined in Rule 501(b) of Regulation D under the
Securities Act ("Regulation D")) of the Company or the Guarantors, or any
person acting on its or their behalf has, directly or indirectly, made
offers or sales of any security, or solicited offers to buy any security,
under circumstances that would require the registration of the Notes under
the Securities Act.
(bb) Assuming the accuracy of the representations made by the
Initial Purchasers in Xxxxxxx 0, xxxx of the Company, the Guarantors, or
any Affiliate of the Company or the Guarantors, or any person acting on
its or their behalf has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection
with any offer or sale of the Notes.
(cc) The Notes satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(dd) The Company has been advised by the National Association of
Securities Dealers, Inc. (the "NASD") PORTAL Market ("PORTAL") that the
Notes have been designated PORTAL-eligible securities in accordance with
the rules and regulations of the NASD.
(ee) With respect to those Notes sold in reliance on Regulation S
under the Securities Act ("Regulation S"), (i) none of the Company, its
Affiliates, the Guarantors, or any person acting on its or their behalf
(other than the Initial Purchasers or their respective Affiliates, as to
whom the Company makes no representation) has engaged or will engage in
any directed selling efforts within the meaning of Regulation S and (ii)
each of the Company and its Affiliates, the Guarantors and any person
acting on its or their behalf (other than the Initial Purchasers or their
respective Affiliates) has complied with and will comply with the offering
restrictions requirement of Regulation S.
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(ff) Neither the Company nor any Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), without taking account of any
exemption arising out of the number of holders of the securities of the
Company or the Guarantors, as the case may be; and each of the Company and
the Guarantors will conduct its operations in a manner that will not
subject it to registration as an investment company under the Investment
Company Act.
(gg) None of the Company, the Guarantors or any Affiliate of the
Company or the Guarantors has taken, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company or the Guarantors
to facilitate the sale or resale of the Notes; nor has the Company or the
Guarantors or any Affiliate of the Company or the Guarantors paid or
agreed to pay to any person any compensation for soliciting another to
purchase any securities of the Company (except as contemplated by this
Agreement).
(hh) The information provided by the Company pursuant to Section
5(i) hereof will not, at the date thereof, contain any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(ii) Each certificate signed by any officer of the Company or of the
Guarantors and delivered to the Initial Purchasers or its counsel shall be
deemed to be a representation and warranty by the Company and the
Guarantors to the Initial Purchasers as to the matters covered thereby.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to the Initial Purchasers, and the Initial Purchasers agree
severally and not jointly to purchase in the respective amounts set forth in
Schedule 1 from the Company, at a purchase price of 97% of the principal amount
thereof, plus accrued interest, if any, from January 28, 1997 to the Closing
Date, $115,000,000 in principal amount of Notes.
3. Delivery and Payment. Delivery of and payment for the Notes shall
be made at 10:00 AM, New York City time, on January 28, 1997, or such later date
(not later than February 5, 1997) as the Initial Purchasers shall designate,
which date and time may be postponed by agreement between the Initial Purchasers
and the Company (such date and time of delivery and payment for the Notes being
herein called the "Closing Date"). Delivery of the Notes shall be made to the
Initial Purchasers against payment by the Initial Purchasers of the purchase
price thereof to or upon the order of the Company in immediately available
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funds. Delivery of the Notes shall be made at such location as the Initial
Purchasers shall reasonably designate at least one business day in advance of
the Closing Date and payment for the Notes shall be made at the offices of
Shearman & Sterling ("Counsel for the Initial Purchasers"), 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, with any transfer taxes payable in connection with
the transfer of the Notes fully paid, against payment of the purchase price
therefor. Certificates for the Notes shall be registered in such names and in
such denominations as the Initial Purchasers may request not less than two full
business days in advance of the Closing Date.
The Company agrees to have the Notes available for inspection,
checking and packaging by the Initial Purchasers in New York, New York, not
later than 1:00 PM on the business day prior to the Closing Date.
4. Offering of Notes. Each Initial Purchaser represents and warrants
to and agrees with the Company and the Guarantors that:
(a) It has not offered or sold, and will not offer or sell, any
Notes except to those it reasonably believes to be (i) "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act)
or (ii) other institutional "accredited investors" (as defined in Rule 501
of Regulation D) that, prior to their purchase of the Notes, deliver to
such Initial Purchaser a letter containing the representations and
agreements set forth in Annex A to the Final Memorandum or (iii) non-U.S.
persons outside the United States to whom it reasonably believes offers
and sales of the Notes may be made in reliance upon Regulation S in
transactions meeting the requirements of Regulation S.
(b) In connection with each sale described in Section 4(a), it has
taken or will take reasonable steps to ensure that the purchaser of such
Notes is aware that such sale is being made in reliance on an exception
from the registration requirements of the Securities Act.
(c) Neither of the Initial Purchasers nor any person acting on their
behalf has made or will make offers or sales of the Notes by means of any
form of general solicitation or general advertising (within the meaning of
Regulation D).
(d) With respect to Notes sold in reliance on Regulation S, the
Initial Purchasers have not offered or sold, and will not offer or sell,
any Notes by means of any directed selling efforts (as defined in Rule 902
of Regulation S) in the United States.
5. Agreements. The Company and the Guarantors jointly and severally
agree with the Initial Purchasers that:
15
(a) The Company and the Guarantors will furnish to the Initial
Purchasers and to Counsel for the Initial Purchasers, without charge,
during the period referred to in paragraph (c) below, as many copies of
the Final Memorandum and any amendments and supplements thereto as it may
reasonably request. The Company will pay the expenses of printing or other
production of all documents relating to the offering.
(b) Neither the Company nor the Guarantors will amend or supplement
the Final Memorandum without the prior written consent of the Initial
Purchasers.
(c) If at any time prior to the completion of the sale of the Notes
by the Initial Purchasers, any event occurs as a result of which the Final
Memorandum, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it should be necessary to
amend or supplement the Final Memorandum to comply with applicable law,
the Company and the Guarantors will promptly notify the Initial Purchasers
of the same and, subject to the requirements of paragraph (b) of this
Section 5, will prepare and provide to the Initial Purchasers pursuant to
paragraph (a) of this Section 5 an amendment or supplement which will
correct such statement or omission or effect such compliance.
(d) The Company will arrange for the qualification of the Notes for
sale by the Initial Purchasers under the laws of such jurisdictions as the
Initial Purchasers may designate and will maintain such qualifications in
effect so long as required for the sale of the Notes, provided, however,
that neither the Company nor the Guarantors shall be obligated to 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 in any jurisdiction in which it is not now so
subject or to subject itself to taxation in any such jurisdiction. The
Company will promptly advise the Initial Purchasers of the receipt by the
Company or the Guarantors of any notification with respect to the
suspension of the qualification of the Notes for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose.
(e) Whenever the Company or the Guarantors publish or make available
to the public (by filing with any regulatory authority or securities
exchange or by publishing a press release or otherwise) any information
that could reasonably be expected to be material in the context of the
issue of Notes under this Agreement, the same shall immediately notify the
Initial Purchasers as to the nature of such information or event. The
Company and the Guarantors will likewise notify the Initial Purchasers of
(i) any decrease in the rating of the Notes or any other debt securities
of the
16
Company or the Guarantors by any nationally recognized statistical rating
organization (as defined in Rule 436(g) under the Securities Act) or (ii)
any notice given of any intended or potential decrease in any such rating
or of a possible change in any such rating which does not indicate the
direction of the possible change, as soon as the Company or the Guarantor
becomes aware of any such decrease or notice. For a period of five years
after the Closing Time, the Company and the Guarantors will also deliver
to the Initial Purchasers, as soon as available and to the extent
individually prepared, and without request, copies of their respective
latest annual reports and quarterly statements and any reports of their
auditors thereon.
(f) The Company and the Guarantors will not, and will not permit any
of their Affiliates to, resell any Notes that have been acquired by any of
them.
(g) None of the Company, the Guarantors, any of their Affiliates, or
any person acting on their behalf will, directly or indirectly, make
offers or sales of any security, or solicit offers to buy any security,
under circumstances that would require the registration of the Notes under
the Securities Act.
(h) None of the Company, the Guarantors, any of their Affiliates, or
any person acting on their behalf will engage in connection with the
offering of the Notes (i) in any form of general solicitation or general
advertising (within the meaning of Regulation D), (ii) in any public
offering within the meaning of Section 4(2) of the Act or (iii) in any
directed selling efforts (as defined in Rule 902 under the Act and the
Securities and Exchange Commission's Release No. 33-6863) in the United
States in connection with the Notes proposed to be offered and sold
pursuant to Regulation S by the Initial Purchasers in connection with any
offer or sale of the Notes.
(i) The Company and the Guarantors will provide to each holder of
Notes and to each prospective purchaser (as designated by such holder) of
Notes, upon the request of such holder or prospective purchaser, any
information required to be provided by Rule 144A(d)(4) under the
Securities Act. This covenant is intended to be for the benefit of the
holders, and the prospective purchasers designated by such holders, from
time to time of Notes.
(j) The Company and the Guarantors will cooperate with the Initial
Purchasers and use their best efforts to (i) permit the Notes to be
eligible for clearance and settlement through The Depository Trust Company
and (ii) permit the Notes to be designated PORTAL-eligible securities in
accordance with the rules and regulations of the NASD.
17
6. Conditions to the Obligations of the Initial Purchasers. The
obligations of the Initial Purchasers to purchase the Notes shall be subject to
the accuracy of the representations and warranties on the part of the Company
and the Guarantors contained herein at the date and time that this Agreement is
executed and delivered by the parties hereto (the "Execution Time") and the
Closing Date, to the accuracy of the statements of the Company and the
Guarantors made in any certificates pursuant to the provisions hereof, to the
performance by the Company and the Guarantors of their obligations hereunder and
to the following additional conditions:
(a) The Company and the Guarantors shall have entered into a
Registration Rights Agreement with the Initial Purchasers in the form
attached hereto as Exhibit 1;
(b) The Company shall have furnished to the Initial Purchasers the
opinion of X'Xxxxxxxx Graev & Karabell, LLP, counsel for the Company, the
Parent Guarantor, Custom Foods and QF Acquisition Corp., dated the Closing
Date substantially to the effect that:
(i) each of the Parent Guarantor, the Company and the
subsidiaries of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the jurisdiction in which it is chartered or organized, with full
corporate power and authority to own or lease its properties and
conduct its business as described in the Final Memorandum, and is
duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction which requires
such qualification wherein it owns or leases properties or conducts
business, except where the failure to be so qualified, singly or in
the aggregate, would not have a Material Adverse Effect;
(ii) the Company has an authorized, issued and outstanding
capitalization as set forth in the Final Memorandum. All of the
issued shares of capital stock of the Company, the Parent Guarantor
and the Subsidiary Guarantors have been duly authorized and validly
issued and are fully paid and nonassessable. All of the capital
stock of each of the Subsidiary Guarantors is owned of record and
beneficially by the Company, free and clear of any pledge, lien,
encumbrance, security interest, restriction on voting or transfer,
preemptive rights or other defect or claim of any third party,
except as otherwise set forth in the Final Memorandum. All of the
capital stock of the Company is owned of record and beneficially by
the Parent Guarantor, free and clear of any pledge, lien,
encumbrance, security interest, restriction on voting or transfer,
preemptive rights or other defect or claim of any third party,
except as otherwise set forth in the Final Memorandum. The capital
stock of the Company, the Parent Guarantor and the Subsidiary
Guarantors conform to the descriptions thereof in the Final
Memorandum;
18
(iii) the issued shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and, except for directors'
qualifying shares and except as otherwise set forth in the Final
Memorandum are owned of record and beneficially by the Company,
either directly or through wholly owned subsidiaries, free and clear
of any pledge, lien, encumbrance, security interest, restriction on
voting or transfer, preemptive rights or other defect or claim of
any third party;
(iv) each of this Agreement, the Registration Rights Agreement
and the Indenture, including the Guarantees of the Parent Guarantor,
Custom Foods and QF Acquisition Corp. has been duly authorized,
executed and delivered by the Company, the Parent Guarantor, Custom
Foods and QF Acquisition Corp.; each of the Indenture, the
Guarantees of the Parent Guarantor, Custom Foods and QF Acquisition
Corp. and the Registration Rights Agreement constitutes a legal,
valid and binding instrument enforceable against the Company, the
Parent Guarantor, Custom Foods and QF Acquisition Corp. as the case
may be, in accordance with its terms; and the Notes have been duly
authorized and, when executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by the
Initial Purchasers pursuant to this Agreement, will constitute
legal, valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company in
accordance with their terms and the Guarantees of the Parent
Guarantor, Custom Foods and QF Acquisition Corp. will constitute
legal, valid and binding obligations of the respective Guarantor
entitled to the benefits of the Indenture and enforceable against
the respective Guarantor in accordance with their terms; except, in
each case, as the same may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally, including without limitation the effect
of statutory or other laws regarding fraudulent conveyances or
transfers or preferential transfers or (ii) general principles of
equity, whether considered at law or at equity, and except as rights
to indemnity and contribution may be limited by federal or state
securities laws;
(v) the statements set forth under the heading "Description of
Notes" in the Final Memorandum, insofar as such statements purport
to summarize certain provisions of the Notes, the Indenture and the
Registration Rights Agreement are accurate in all material respects;
(vi) no consent, approval, authorization or order of any
governmental authority or court is required for the consummation of
the transactions contemplated herein, except such as may be required
under the securities or blue
19
sky laws of any jurisdiction in connection with the purchase and
sale of the Notes by the Initial Purchasers;
(vii) assuming the accuracy of the representations and
warranties of the Initial Purchasers and compliance by it with its
agreements contained herein, neither the issuance, offering and sale
of the Notes to the Initial Purchasers by the Company pursuant to
this Agreement, the compliance by the Company, the Parent Guarantor,
Custom Foods and QF Acquisition Corp. with the other provisions of
this Agreement and the other Offering Documents, or the consummation
of the other transactions herein and therein contemplated will
conflict with, result in a breach or violation of, or constitute a
default under any statute, rule or regulation or the charter or
by-laws of the Company, the Parent Guarantor, Custom Foods or QF
Acquisition Corp., or the indentures, mortgages, deeds of trust,
leases or other agreements or instruments to which the Company, the
Parent Guarantor or any of the subsidiaries of the Company is a
party or by which the Company, the Parent Guarantor or any of the
subsidiaries of the Company or any of their respective properties is
bound as listed in Exhibit A to such opinion or any judgment, order
or decree known to such counsel to be applicable to the Company, the
Parent Guarantor or any of the subsidiaries of the Company or of any
governmental authority or court or arbitrator having jurisdiction
over the Company, the Parent Guarantor or any of the subsidiaries of
the Company;
(viii) assuming the accuracy of the representations and
warranties of the Initial Purchasers and compliance by it with its
agreements contained herein, no registration of the Notes under the
Securities Act is required, and no qualification of the Indenture
under the Trust Indenture Act of 1939 is necessary, for the offer
and sale by the Initial Purchasers of the Notes in the manner
contemplated by this Agreement; and
(ix) none of the Company, the Parent Guarantor, Custom Foods
or QF Acquisition Corp. is an "investment company" within the
meaning of the Investment Company Act without taking account of any
exemption arising out of the number of holders of securities of the
Company, the Parent Guarantor, Custom Foods or QF Acquisition Corp..
Such counsel shall also state that they have no reason to believe
that at the Execution Time the Final Memorandum contained an untrue
statement of a material fact or omitted to state a material
20
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading or that the
Final Memorandum includes an untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of New York, the State of Delaware or the United States, to the extent
they deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to Counsel for the Initial Purchasers and (B) as to matters
of fact, to the extent they deem proper, on certificates of responsible
officers of the Company or Custom Foods and public officials.
Matters governed by California law may be opined upon by California
counsel satisfactory to Counsel to the Initial Purchasers.
All references in this Section 6(b) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the Closing Date.
(c) The Initial Purchasers shall have received from Counsel for the
Initial Purchasers such opinion or opinions, dated the Closing Date, with
respect to the issuance and sale of the Notes and other related matters as
the Initial Purchasers may reasonably require, and Company and the
Guarantors shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters;
(d) (i) the representations and warranties of the Company or the
Guarantors, as the case may be, in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the
same effect as if made on the Closing Date, and the Company or the
Guarantors, as the case may be, shall have complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date;
(ii) since the date of the most recent financial statements
included in the Final Memorandum, there shall have been no change nor any
development or event involving a prospective change constituting a
Material Adverse Effect; and
(iii) each of the Company and the Guarantors shall have
furnished to the Initial Purchasers a certificate of the Company or the
Guarantor, as the case may be, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company
or the Guarantor, as the case may be, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined the
Final Memorandum, any amendment or supplement to the Final Memorandum and
this Agreement and to the effect set forth in clauses (i) and (ii) above.
21
(e) At the Execution Time and at the Closing Date, Deloitte & Touche
LLP shall have furnished to the Initial Purchasers a letter or letters,
dated respectively as of the Execution Time and as of the Closing Date, in
form and substance satisfactory to the Initial Purchasers, confirming that
they are independent accountants within the meaning of the Securities Act
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the applicable rules and regulations thereunder and Rule 101 of the
Code of Professional Conduct of the American Institute of Certified Public
Accountants (the "AICPA") and substantially to the effect that:
(i) in their opinion the audited financial statements included
in the Final Memorandum and reported on by them comply in form in
all material respects with the applicable accounting requirements of
the Exchange Act and the related published rules and regulations
thereunder; and
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; their limited review in accordance with the standards
established by the AICPA of the unaudited interim financial
information; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such letter;
a reading of the minutes of the meetings of the stockholders,
directors and audit and compensation committees of the Company and
the subsidiaries; and inquiries of certain officials of the Company
who have responsibility for financial and accounting matters of the
Company and its subsidiaries as to transactions and events
subsequent to September 30, 1996, nothing came to their attention
which caused them to believe that:
(A) any unaudited financial statements included in the
Final Memorandum are not, in all material respects, in
conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included in the Final Memorandum;
or
(B) with respect to the period subsequent to September
30, 1996, there were any changes, at a specified date not more
than three business days prior to the date of the letter, in
the long-term debt or other long-term liabilities of the
Company and its subsidiaries or net investment of the Company
in Custom Foods, or decreases in total current assets or
increases in total current liabilities of the Company and its
subsidiaries as compared with the amounts shown on the
September 30, 1996
22
consolidated balance sheet included in the Final Memorandum,
or for the period from October 1, 1996 to such specified date
there were, as compared with the corresponding period in the
preceding year, any decreases in net sales, gross profit,
operating income or net income or any increases in interest
expense of the Company and its subsidiaries, except in all
instances for changes, decreases or increases set forth in
such letter, in which case the letter shall be accompanied by
an explanation by the Company as to the significance thereof
unless said explanation is not deemed necessary by the Initial
Purchasers; or
(C) the information included under the headings
"Selected Consolidated Financial Data" and
"Management--Executive Compensation" is not in conformity with
the disclosure requirements of Regulation S-K; or
(D) the unaudited pro forma financial statements do not
comply as to form in all material respects with the applicable
requirements of Rule 11-02 of Regulation S-X and that the pro
forma adjustments have not been properly applied to the
historical amounts in the compilation of the unaudited pro
forma; and
(iii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; their limited review in accordance with the standards
established by the AICPA of the unaudited interim financial
information; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the
stockholders, directors and audit and compensation committees of the
Company and its subsidiaries; and inquiries of certain officials of
the Company and its subsidiaries who have responsibility for
financial and accounting matters of the Company and its subsidiaries
as to transactions and events subsequent to December 31, 1996,
nothing came to their attention which caused them to believe that
with respect to the period subsequent to December 31, 1996, there
were any changes, at a specified date not more than three business
days prior to the date of the letter, in the short-term debt or the
long-term debt of the Company and its subsidiaries, preferred stock
of the Company and its subsidiaries or common stock of the Company
and its subsidiaries, or decreases in the accumulated deficit or in
the total stockholders' deficit of the Company and its subsidiaries
as compared with the amounts set forth in the Final Memorandum under
the caption "Capitalization" except in all instances for changes or
decreases set forth in such
23
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless
said explanation is not deemed necessary by the Initial Purchasers;
and
(iv) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of Quality Foods, the Company and the
subsidiaries of the Company) set forth in the Final Memorandum,
including without limitation the information set forth under the
captions "Offering Memorandum Summary," "Risk Factors," "The Quality
Foods Acquisition," "Use of Proceeds," "Capitalization," "Unaudited
Pro Forma Condensed Combined Financial Statements," "Unaudited Pro
Forma Condensed Combined Balance Sheet," "Unaudited Pro Forma
Condensed Combined Statement of Operations," "Selected Historical
Financial Data of CFP Holdings," "Management's Discussion and
Analysis," "Business," "Management," "Certain Transactions,"
"Description of Bank Credit Agreement" and "Description of Notes" in
the Final Memorandum, agrees with the accounting records of Quality
Foods, the Company and the subsidiaries of the Company, excluding
any questions of legal interpretation; and
(v) on the basis of a reading of the unaudited pro forma
financial statements (the "pro forma financial statements") included
in the Final Memorandum; carrying out certain specified procedures;
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters; and proving the
arithmetic accuracy of the application of the pro forma adjustments
to the historical amounts in the pro forma financial statements,
nothing came to their attention which caused them to believe that
the pro forma financial statements do not comply in form in all
material respects with the applicable accounting requirements of
Rule 11-02 of Regulation S-X or that the pro forma adjustments have
not been properly applied to the historical amounts in the
compilation of such statements.
All references in this Section 6(e) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the date of the
letter.
(f) At the Execution Time and at the Closing Date, Ernst & Young LLP shall
have furnished to the Initial Purchasers a letter or letters, dated respectively
as of the Execution Time and as of the Closing Date, in form and substance
satisfactory to the Initial Purchasers, confirming that they are independent
accountants within the meaning of the Securities Act and
24
the Exchange Act and the applicable rules and regulations thereunder and Rule
101 of the Code of Professional Conduct of the AICPA and stating in effect that:
(i) in their opinion the audited financial statements included
in the Final Memorandum and reported on by them comply in form in
all material respects with the applicable accounting requirements of
the Exchange Act and the related published rules and regulations
thereunder; and
(ii) on the basis of a reading of the latest unaudited
financial statements made available by Quality Foods; their limited
review in accordance with the standards established by the AICPA of
the unaudited interim financial information; carrying out certain
specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the meetings of
the partners and audit and compensation committees of Quality Foods
and the subsidiaries; and inquiries of certain officials of Quality
Foods who have responsibility for financial and accounting matters
of Quality Foods and its subsidiaries as to transactions and events
subsequent to December 31, 1995, nothing came to their attention
which caused them to believe that:
(A) any unaudited financial statements included in the
Final Memorandum are not, in all material respects, in
conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included in the Final Memorandum;
or
(B) with respect to the period subsequent to September
30, 1996, there were any changes, at a specified date not more
than three business days prior to the date of the letter, in
the long-term debt or other long-term liabilities of Quality
Foods or net investment of QF Acquisition Corporation in
Quality Foods, or decreases in total current assets or
increases in total current liabilities of Quality Foods as
compared with the amounts shown on the September 30, 1996
consolidated balance sheet included in the Final Memorandum,
or for the period from September 30, 1996 to such specified
date there were, as compared with the corresponding period in
the preceding year, any decreases in net sales, gross profit,
operating income or net income or any increases in interest
expense of Quality Foods, except in all instances for changes,
decreases or increases set forth in such letter, in which case
the letter shall be accompanied by an explanation by Quality
Foods as to the significance
25
thereof unless said explanation is not deemed necessary by the
Initial Purchasers; or
(C) the information included under the headings "Quality
Foods, L.P. Selected Consolidated Financial Data" is not in
conformity with the disclosure requirements of Regulation S-K;
and
(iii) on the basis of a reading of the latest unaudited
financial statements made available by Quality Foods; their limited
review in accordance with the standards established by the AICPA of
the unaudited interim financial information; carrying out certain
specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the meetings of
the board and audit and compensation committees of Quality Foods;
and inquiries of certain officials of Quality Foods who have
responsibility for financial and accounting matters of Quality Foods
as to transactions and events subsequent to September 30, 1996,
nothing came to their attention which caused them to believe that
with respect to the period subsequent to September 30, 1996, there
were any changes, at a specified date not more than three business
days prior to the date of the letter, in the short-term debt or the
long-term debt of Quality Foods, preferred stock of Quality Foods or
common stock of Quality Foods, or decreases in the accumulated
deficit or in the total partners' deficit of Quality Foods as
compared with the amounts set forth in the Final Memorandum under
the caption "Capitalization--Quality Foods," except in all instances
for changes or decreases set forth in such letter or in the Final
Memorandum, in which case the letter shall be accompanied by an
explanation by Quality Foods as to the significance thereof unless
said explanation is not deemed necessary by the Initial Purchasers;
and
(iv) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of Quality Foods, the Company and the
subsidiaries of the Company) set forth in the Final Memorandum,
including without limitation the information set forth under the
captions "Offering Memorandum Summary," "Risk Factors," "The Quality
Foods Acquisition," "Use of Proceeds," "Capitalization," "Selected
Historical Financial Data of Quality Foods," "Management's
Discussion and Analysis," "Business," "Management" and "Certain
Transactions" in the Final Memorandum, agrees with the accounting
records of Quality Foods, excluding any questions of legal
interpretation.
26
All references in this Section 6(f) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the date of the
letter.
(g) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Final Memorandum, there shall not have
been (i) any change or decrease specified in the letters referred to in
paragraphs (e) and (f) of this Section 6 or (ii) any change, or any
development involving a prospective change, in or affecting the business
or properties of the Company and the subsidiaries of the Company, whether
or not constituting a Material Adverse Effect, the effect of which, in any
case referred to in clause (i) or (ii) above, in the judgment of the
Initial Purchasers is to make impractical or inadvisable the marketing of
the Notes as contemplated by the Final Memorandum.
(h) The Initial Purchasers shall have received an opinion from
counsel to the Trustee, dated the Closing Date, addressed to the Initial
Purchasers and in form and substance satisfactory to Counsel for the
Initial Purchasers, to the effect that:
(i) the Trustee is a national banking association or state
chartered bank or trust company and is validly existing in good
standing under the laws of the jurisdiction in which it is
incorporated;
(ii) the Trustee has the power and authority to enter into the
Indenture and authenticate the Notes as Trustee under such
Indenture;
(iii) the Indenture has been duly authorized, executed and
delivered by the Trustee, as Trustee under such Indenture, and such
Indenture is valid and binding on such Trustee and enforceable
against the Trustee in accordance with its terms, subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect; and
(iv) the Notes have been duly authenticated and delivered by
the Trustee, as Trustee, under the Indenture.
(i) Prior to the Closing Date, the Company and the Subsidiary
Guarantors shall have furnished to the Initial Purchasers such further
information, certificates and documents as the Initial Purchasers may
reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects
27
reasonably satisfactory in form and substance to the Initial Purchasers and
Counsel for the Initial Purchasers, this Agreement and all obligations of the
Initial Purchasers hereunder may be canceled at, or at any time prior to, the
Closing Date by the Initial Purchasers. Notice of such cancellation shall be
given to the Company in writing or by telephone or telegraph confirmed in
writing.
The documents required to be delivered by this Section 6 will be
delivered at the office of Counsel for the Initial Purchasers, at 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the Closing Date.
7. Payment of Expenses. The Company shall, whether or not the
transactions contemplated by the Offering Documents are consummated, (i) pay all
expenses incident to the performance of its obligations and the obligations of
the Guarantors under the Offering Documents, including the fees and
disbursements of its accountants and counsel, the cost of printing or other
production and delivery of the Preliminary Memorandum, the Final Memorandum, all
amendments thereof and supplements thereto, the Offering Documents and all other
documents relating to the offering, the cost of preparing, printing, packaging
and delivering the Notes, the fees and disbursements, including fees of counsel,
incurred in compliance with Section 5(d), the fees and disbursements of the
Trustee and the fees of any agency that rates the Notes, the fees and expenses,
if any, incurred in connection with the admission of the Notes for trading in
the PORTAL system, (ii) pay the fees and expenses of Counsel for the Initial
Purchasers incurred in connection with the proposed purchase and resale of the
Notes and (iii) reimburse the Initial Purchasers as requested for all other
out-of-pocket expenses incurred by the Initial Purchasers in connection with the
proposed purchase and resale of the Notes.
8. Indemnification and Contribution. (a) The Company and each of the
Guarantors jointly and severally agree to indemnify and hold harmless the
Initial Purchasers, the directors, officers, employees and agents of the Initial
Purchasers and each person who controls the Initial Purchasers within the
meaning of either the Securities Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Securities Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Memorandum, the Final
Memorandum or any information provided by the Company or a Guarantor to any
holder or prospective purchaser of Notes pursuant to Section 5(i), or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and jointly and
severally agree to reimburse each such indemnified party, as incurred, for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such
28
loss, claim, damage, liability or action; provided, however, that the Company
and the Guarantors will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission (i)
made in the Preliminary Memorandum or the Final Memorandum, or in any amendment
thereof or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Initial Purchasers
specifically for inclusion therein or (ii) made in the Preliminary Memorandum if
a copy of the Final Memorandum was not delivered by or on behalf of the Initial
Purchasers to the person asserting any claim against the Initial Purchasers, the
Final Memorandum was required by law to have been so delivered by the Initial
Purchasers and the untrue statement contained in or omission from such
Preliminary Memorandum was corrected in the Final Memorandum. This indemnity
agreement will be in addition to any liability which the Company or the
Guarantors may otherwise have.
(b) The Initial Purchasers agree to indemnify and hold harmless the
Company and the Guarantors, the directors and officers of the Company and of the
Guarantors, and each person who controls the Company or the Guarantors within
the meaning of either the Securities Act or the Exchange Act, to the same extent
as the foregoing indemnity from the Company and each of the Guarantors to the
Initial Purchasers, but only with reference to written information relating to
the Initial Purchasers furnished to the Company by or on behalf of the Initial
Purchasers specifically for inclusion in the Preliminary Memorandum or the Final
Memorandum (or in any amendment or supplement thereto). This indemnity agreement
will be in addition to any liability which the Initial Purchasers may otherwise
have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees,
29
costs and expenses of such separate counsel if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and each of the Guarantors,
jointly and severally, and the Initial Purchasers agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and the Guarantors, on the one
hand, and the Initial Purchasers, on the other hand, may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on the one hand, and by the Initial Purchasers, on
the other hand, from the offering of the Notes; provided, however, that in no
case shall the Initial Purchasers be responsible for any amount in excess of the
purchase discount or commission applicable to the Notes purchased by the Initial
Purchasers hereunder. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Guarantors, on the
one hand, and the Initial Purchasers, on the other hand, shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and the Guarantors, on the one hand, and
of the Initial Purchasers, on the other hand, in connection with the statements
or omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company and the Guarantors
shall be deemed to be equal to the total net proceeds from the offering (before
deducting expenses), and benefits received by the Initial Purchasers shall be
deemed to be equal to the total purchase discounts and commissions received by
the Initial Purchasers from the Company in connection with the purchase of the
Notes hereunder. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company or the Guarantors or the Initial Purchasers. The Company and the
Guarantors and the Initial Purchasers agree that it would not be just and
30
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d), no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each person who controls the Initial Purchasers within the meaning of
either the Securities Act or the Exchange Act and each director, officer,
employee and agent of the Initial Purchasers shall have the same rights to
contribution as the Initial Purchasers, and each person who controls the Company
or the Guarantors within the meaning of either the Securities Act or the
Exchange Act and each officer and director of the Company or of the Guarantors,
as the case may be, shall have the same rights to contribution as the Company or
of the Guarantors, as the case may be, subject in each case to the applicable
terms and conditions of this paragraph (d).
9. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Initial Purchasers, by notice given to the
Company prior to delivery of and payment for the Notes, if prior to such time
(i) trading in securities generally on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market shall have been suspended or
limited or minimum prices shall have been established on such Exchange, (ii) a
banking moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the judgment of the Initial Purchasers, impracticable or inadvisable
to proceed with the offering or delivery of the Notes as contemplated by the
Final Memorandum.
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company and the Guarantors and of the Initial Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Initial Purchasers or the Company
or the Guarantors or any of the other persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Notes. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Initial Purchasers, will be
mailed, delivered or telecopied and confirmed to NationsBanc Capital Markets,
Inc., NationsBank Corporate Center, 7th Floor, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000; or, if sent to the Company or the Subsidiary
Guarantors, will be mailed, delivered or telecopied and confirmed to the Company
at 0000 Xxxx Xxxxxxx Xxxx., X.X. Xxx 0000, Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxx X. Ek, Vice President and Chief Financial Officer.
31
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the other
persons referred to in Section 8 hereof, and, except as expressly set forth in
Section 5(i) hereof, no other person will have any right or obligation
hereunder.
13. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
14. Business Day. For purposes of this Agreement, "business day"
means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on
which banking institutions in The City of New York, New York are authorized or
obligated by law, executive order or regulation to close.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this Agreement and your acceptance shall represent a binding agreement among the
Company, the Guarantors and the Initial Purchasers.
Very truly yours,
CFP HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Assistant Secretary
CFP GROUP, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Assistant Secretary
CUSTOM FOOD PRODUCTS, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Assistant Secretary
QF ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Assistant Secretary
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
NATIONSBANC CAPITAL MARKETS, INC.
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
By: NATIONSBANC CAPITAL MARKETS, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Director
34
SCHEDULE 1
INITIAL PURCHASERS
Initial Purchasers Principal Amount
------------------ ----------------
NationsBanc Capital Markets, Inc. ............................ 86,250,000
Xxxxxxxxx Lufkin & Xxxxxxxx Securities Corporation ........... 28,750,000
------------
Total ........................................................ $115,000,000
============
