4,215,584 Shares
XXXX XXXXX, INC.
Common Stock
UNDERWRITING AGREEMENT
July 8, 1998
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The stockholders of Xxxx Xxxxx, Inc., a Delaware corporation (the
"Company"), named in Schedule I hereto (the "Selling Stockholders") severally
propose to sell to Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation ("DLJ")
an aggregate of 4,215,584 issued and outstanding shares of the common stock, par
value $.01 per share ("Common Stock"), of the Company (the "Shares"), each
Selling Stockholder selling the amount of Shares set forth opposite such Selling
Stockholder's name in Schedule I hereto.
SECTION 1. Registration Statement and Prospectus. The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-3, including a prospectus and a
prospectus supplement, relating to the Shares. The registration statement, as
amended at the time it became effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Act, is hereinafter referred to as the
"Registration Statement"; and the prospectus and the prospectus supplement in
the form first used to confirm sales of Shares is hereinafter referred to as the
"Prospectus" (including, in the case of all references to the Registration
Statement or the Prospectus, documents incorporated therein by reference). If
the Company has filed or is required pursuant to the terms hereof to file a
registration statement pursuant to Rule 462(b) under the Act registering
additional shares of Common Stock (a "Rule 462(b) Registration Statement"),
then, unless otherwise specified, any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462(b) Registration Statement.
The terms "supplement" and "amendment" or "amend" as used in this Agreement with
respect to the Registration Statement or the Prospectus shall include all
documents subsequently filed by the Company with the Commission pursuant to the
Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Exchange Act") that
are deemed to be incorporated by reference in the Prospectus.
SECTION 2. Agreements to Sell and Purchase and Lock-Up Agreements . On the
basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, (i) each Selling Stockholder agrees,
severally and not jointly, to sell to DLJ the number of Shares set forth
opposite such Selling Stockholder's name in Schedule I hereto and (ii) DLJ
agrees to purchase from each Selling Stockholder at a price per Share of $44.00
(the "Purchase Price") the number of Shares set forth opposite such Selling
Stockholder's name in Schedule I hereto.
The Company and each Selling Stockholder hereby agree not to (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers all or a portion of the economic consequences associated with the
ownership of any Common Stock (regardless of whether any of the transactions
described in clause (i) or (ii) is to be settled by the delivery of Common
Stock, or such other securities, in cash or otherwise), except to DLJ pursuant
to this Agreement, for a period of 90 days after the date of this Agreement
without the prior written consent of DLJ. Notwithstanding the foregoing, during
such period (i) the Company may grant stock options and make other stock awards
pursuant to the Company's existing stock option and stock incentive plans, (ii)
the Company may issue shares of Common Stock upon the exercise of any warrant or
the conversion of a security outstanding on the date hereof and may issue shares
of Common Stock pursuant to the terms of its existing stock option, stock
incentive and directors stock plans, (iii) the Company may issue shares of
Common Stock in connection with one or more mergers or acquisitions and (iv) the
Selling Stockholders may make bona fide gifts of shares of Common Stock provided
that prior to any such transfer the transferee shall agree in writing to comply
with the foregoing restrictions. The Company also agrees not to file any
registration statement with respect to any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock for
a period of 90 days after the date of this Agreement without the prior written
consent of DLJ, other than pursuant to the terms of its existing registration
rights agreements set forth on Exhibit I hereto. In addition, each Selling
Stockholder agrees that, for a period of 90 days after the date of this
Agreement without the prior written consent of DLJ, it will not make any demand
for, or exercise any right with respect to, the registration of any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock.
SECTION 3. Terms of Public Offering. The Selling Stockholders are advised
by you that DLJ proposes (i) to make a public offering of their respective
portions of the Shares as soon after the execution and delivery of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
SECTION 4. Delivery and Payment. The Shares shall be represented by
definitive certificates and shall be issued in such authorized denominations and
registered in such names as
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DLJ shall request no later than two business days prior to the Closing Date. The
Shares shall be delivered by or on behalf of the Selling Stockholders, with any
transfer taxes thereon duly paid by the respective Selling Stockholders, to DLJ
through the facilities of The Depository Trust Company ("DTC"), for the account
of DLJ, against payment to the Selling Stockholders of the Purchase Price
therefor by wire transfer of Federal or other funds immediately available in New
York City. The certificates representing the Shares shall be made available for
inspection not later than 9:30 a.m., New York City time, on the business day
prior to the Closing Date at the office of DTC or its designated custodian (the
"Designated Office"). The time and date of delivery and payment for the Shares
shall be 9:00 a.m., New York City time, on July 13, 1998 or such other time on
the same or such other date as DLJ, the Company and the Selling Stockholders
shall agree in writing. The time and date of delivery and payment for the Shares
are hereinafter referred to as the "Closing Date".
The documents to be delivered on the Closing Date on behalf of the parties
hereto pursuant to Section 9 of this Agreement shall be delivered at the offices
of Stoel Rives LLP, 000 XX Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxx 00000, and
the Shares shall be delivered at the Designated Office, all on the Closing Date.
SECTION 5. Agreements of the Company. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to confirm such advice
in writing, (i) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, (iii) when any amendment to the
Registration Statement becomes effective, (iv) if the Company is required to
file a Rule 462(b) Registration Statement after the effectiveness of this
Agreement, when the Rule 462(b) Registration Statement has become effective and
(v) of the happening of any event during the period referred to in Section 5(d)
below which makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires any additions to or changes
in the Registration Statement or the Prospectus in order to make the statements
therein not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will use
its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish to you, without charge, five signed copies of the
Registration Statement as first filed with the Commission and of each amendment
to it, including all exhibits and documents incorporated therein by reference,
and to furnish to you such number of conformed copies of the Registration
Statement as so filed and of each amendment to it, without exhibits but
including documents incorporated therein by reference, as you may reasonably
request.
(c) To prepare the Prospectus, the form and substance of which shall be
satisfactory to you, and to file the Prospectus in such form with the Commission
within the applicable period specified in Rule 424(b) under the Act; during the
period specified in Section 5(d) below, not to file any further amendment to the
Registration Statement and not to make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or to which you
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shall reasonably object after being so advised; and, during such period, to
prepare and file with the Commission, promptly upon your reasonable request, any
amendment to the Registration Statement or amendment or supplement to the
Prospectus which may be necessary or advisable in connection with the
distribution of the Shares by you, and to use its best efforts to cause any such
amendment to the Registration Statement to become promptly effective.
(d) Prior to 10:00 a.m., New York City time, on the first business day
after the date of this Agreement and from time to time thereafter for such
period as in the opinion of counsel for DLJ a prospectus is required by law to
be delivered in connection with sales by DLJ or a dealer, to furnish in New York
City to DLJ and any dealer as many copies of the Prospectus (and of any
amendment or supplement to the Prospectus) and any documents incorporated
therein by reference as DLJ or such dealer may reasonably request.
(e) If during the period specified in Section 5(d), any event shall occur
or condition shall exist as a result of which, in the opinion of counsel for
DLJ, it becomes necessary to amend or supplement the Prospectus in order to make
the statements therein, in light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if, in the opinion of counsel for
DLJ, it is necessary to amend or supplement the Prospectus to comply with
applicable law, forthwith to prepare and file with the Commission an appropriate
amendment or supplement to the Prospectus so that the statements in the
Prospectus, as so amended or supplemented, will not in light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with applicable law, and to furnish to DLJ and to any dealer as many
copies thereof as DLJ or such dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate with you and
counsel for DLJ in connection with the registration or qualification of the
Shares for offer and sale by DLJ and by dealers under the state securities or
Blue Sky laws of such jurisdictions as you may request, to continue such
registration or qualification in effect so long as required for distribution of
the Shares and to file such consents to service of process or other documents as
may be necessary in order to effect such registration or qualification;
provided, however, that the Company shall not be required in connection
therewith 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 or taxation other than as to matters and
transactions relating to the Prospectus, the Registration Statement, any
preliminary prospectus or preliminary prospectus supplement or the offering or
sale of the Shares, in any jurisdiction in which it is not now so subject.
(g) To mail and make generally available to its stockholders as soon as
practicable an earnings statement that shall satisfy the provisions of Section
11(a) of the Act, and to advise you in writing when such statement has been so
made available.
(h) During the period of three years after the date of this Agreement, to
furnish to you as soon as available copies of all reports or other
communications furnished to the record holders of Common Stock or furnished to
or filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed and such other publicly available
information concerning the Company and its subsidiaries as you may reasonably
request.
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(i) During the period of five years after the date of this Agreement, to
mail as soon as reasonably practicable after the end of each fiscal year to the
record holders of its Common Stock a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
stockholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
independent certified public accountants.
(j) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company and,
except as otherwise provided in this Agreement, the Selling Stockholders under
this Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel, the Company's accountants and any Selling Stockholder's
counsel (in addition to the Company's counsel) in connection with the
registration and delivery of the Shares under the Act and all other fees and
expenses in connection with the preparation, printing, filing and distribution
of the Registration Statement (including financial statements and exhibits), any
preliminary prospectus or preliminary prospectus supplement, the Prospectus and
all amendments and supplements to any of the foregoing, including the mailing
and delivering of copies thereof to DLJ and dealers in the quantities specified
herein, (ii) all costs and expenses related to the transfer and delivery of the
Shares to DLJ (other than any transfer or other taxes payable thereon, which
shall be paid by the Selling Stockholders), (iii) all costs of printing or
producing this Agreement and any other agreements or documents in connection
with the offering, purchase, sale or delivery of the Shares, (iv) all expenses
in connection with the registration or qualification of the Shares for offer and
sale under the securities or Blue Sky laws of the several states and all costs
of printing or producing any Preliminary and Supplemental Blue Sky Memoranda in
connection therewith (including the filing fees and fees and disbursements of
counsel for DLJ in connection with such registration or qualification and
memoranda relating thereto), (v) the filing fees and disbursements of counsel
for DLJ in connection with the review and clearance of the offering of the
Shares by the National Association of Securities Dealers, Inc., (vi) the cost of
printing certificates representing the Shares, (vii) the costs and charges of
any transfer agent, registrar and/or depositary, and (viii) all other costs and
expenses incident to the performance of the obligations of the Company and the
Selling Stockholders hereunder for which provision is not otherwise made in this
Section. The provisions of this Section shall not supersede or otherwise affect
any agreement that the Company and the Selling Stockholders may otherwise have
for allocation of such expenses among themselves.
(k) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Closing Date and to satisfy all conditions precedent to the delivery of the
Shares.
(l) If the Registration Statement at the time of the effectiveness of this
Agreement does not cover all of the Shares, to file a Rule 462(b) Registration
Statement with the Commission registering the Shares not so covered in
compliance with Rule 462(b) by 10:00 p.m., New York City time, on the date of
this Agreement and to pay to the Commission the filing fee for such Rule
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462(b) Registration Statement at the time of the filing thereof or to give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
SECTION 6. Representations and Warranties of the Company. The Company
represents and warrants to DLJ that:
(a) The Registration Statement has become effective (other than any Rule
462(b) Registration Statement to be filed by the Company after the effectiveness
of this Agreement); any Rule 462(b) Registration Statement filed after the
effectiveness of this Agreement will become effective no later than 10:00 p.m.,
New York City time, on the date of this Agreement; and no stop order suspending
the effectiveness of the Registration Statement is in effect, and no proceedings
for such purpose are pending before or threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or will
comply when so filed in all material respects with the Exchange Act; (ii) the
Registration Statement (other than any Rule 462(b) Registration Statement to be
filed by the Company after the effectiveness of this Agreement), when it became
effective, did not contain and, as amended, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(iii) the Registration Statement (other than any Rule 462(b) Registration
Statement to be filed by the Company after the effectiveness of this Agreement)
and the Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Act, (iv) if the Company is required to
file a Rule 462(b) Registration Statement after the effectiveness of this
Agreement, such Rule 462(b) Registration Statement and any amendments thereto,
when they become effective (A) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (B) will comply in
all material respects with the Act and (v) the Prospectus does not contain and,
as amended or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that the representations and warranties set forth in this
paragraph do not apply to statements or omissions in the Registration Statement
or the Prospectus based upon information relating to DLJ furnished to the
Company in writing by DLJ expressly for use therein.
(c) Each preliminary prospectus and preliminary prospectus supplement filed
as part of the registration statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the Act, complied when so
filed in all material respects with the Act, and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in any preliminary prospectus or preliminary prospectus
supplement based upon information relating to DLJ furnished to the Company in
writing by DLJ expressly for use therein.
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(d) Each of the Company and its subsidiaries has been duly incorporated, is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to carry
on its business as it is currently being conducted and to own, lease and operate
its properties, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(e) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens granted or issued by
the Company or any of its subsidiaries relating to or entitling any person to
purchase or otherwise to acquire any shares of the capital stock of the Company
or any of its subsidiaries, except as otherwise disclosed in the Registration
Statement.
(f) All the outstanding shares of capital stock of the Company (including
the Shares to be sold by the Selling Stockholders) have been duly authorized and
validly issued and are fully paid, non-assessable and not subject to any
preemptive or similar rights
(g) All of the outstanding shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable, and are owned by the Company, directly or indirectly through one
or more subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature, other than security interests
securing (i) the Company's senior credit facilities (the "Senior Credit
Facilities") consisting of a $1.625 billion term loan facility and a $1.875
billion revolving credit facility and (ii) the Company's lease facility (the
"Lease Facility") consisting of a $500 million facility.
(h) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(i) Neither the Company nor any of its subsidiaries is in violation of its
respective charter or by-laws or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound.
(j) The execution, delivery and performance of this Agreement by the
Company, the compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not (i) require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of the Company or any of its subsidiaries or any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to the Company and its subsidiaries, taken as a whole, to
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which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or their respective property is bound, (iii) violate
or conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
the Company, any of its subsidiaries or their respective property or (iv) result
in the suspension, termination or revocation of any Authorization (as defined
below) of the Company or any of its subsidiaries or any other impairment of the
rights of the holder of any such Authorization.
(k) There are no legal or governmental proceedings pending or threatened to
which the Company or any of its subsidiaries is or could be a party or to which
any of their respective property is or could be subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described; nor are there any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that are not
so described or filed or incorporated by reference therein as required or
otherwise permitted.
(l) Neither the Company nor any of its subsidiaries has violated any
provisions of the Employee Retirement Income Security Act of 1974, as amended,
or any provisions of the Foreign Corrupt Practices Act or the rules and
regulations promulgated thereunder, except for such violations which, singly or
in the aggregate, would not have a material adverse effect on the business,
prospects, financial condition or results of operation of the Company and its
subsidiaries, taken as a whole.
(m) Except as set forth in or contemplated in the Prospectus, each of the
Company and its subsidiaries (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations and the common law
relating to pollution or the protection of human health and safety, the
environment or hazardous or toxic substances, materials, constituents or wastes,
or pollutants or contaminants ("Environmental Laws"), (ii) has received and is
in compliance with all permits, licenses or other approvals required of them
under Environmental Laws to conduct their respective businesses and (iii) has
not received notice of any actual or potential liability for the investigation
or remediation of any disposal or release of hazardous or toxic substances,
materials, constituents or wastes, or pollutants or contaminants or any other
claim or demand under any Environmental Law, and there are no past or present
events, conditions, circumstances or activities which would reasonably be
expected to prevent compliance with or give rise to liability under any
Environmental Laws, except where such non-compliance with Environmental Laws,
failure to receive required permits, licenses or other approvals, or liability,
claim or demand would not, individually or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole. Neither
the Company nor any of its subsidiaries has been named as a "potentially
responsible party" under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any comparable state or local law
except as set forth in the Prospectus and except where the naming of the Company
or any of its subsidiaries as a "potentially responsible party" would not,
individually or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
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(n) In the ordinary course of their respective businesses, each of the
Company and its subsidiaries periodically reviews the effect of Environmental
Laws on the business, operations and properties of it and its subsidiaries,
respectively, in the course of which it identifies and evaluates associated
costs and liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws, or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties). On the
basis of such review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(o) Each of the Company and its subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each, an
"Authorization") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals as are necessary to own, lease, license and operate
its respective properties and to conduct its business, except where the failure
to have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole. Each such Authorization is valid and in full
force and effect and each of the Company and its subsidiaries is in compliance
with all the terms and conditions thereof and with the rules and regulations of
the authorities and governing bodies having jurisdiction with respect thereto;
and no event has occurred (including, without limitation, the receipt of any
notice from any authority or governing body) which allows or, after notice or
lapse of time or both, would allow, revocation, suspension or termination of any
such Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of its subsidiaries; except where such failure
to be valid and in full force and effect or to be in compliance, the occurrence
of any such event or the presence of any such restriction would not, singly or
in the aggregate, have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(p) This Agreement has been duly authorized, executed and delivered by the
Company.
(q) Deloitte & Touche LLP and Xxxxxx Xxxxxxxx LLP are independent public
accountants with respect to the Company and the Company's subsidiaries as
required by the Act.
(r) The consolidated financial statements included in or incorporated by
reference into the Registration Statement and the Prospectus, together with
related schedules and notes, present fairly the consolidated financial position,
results of operations and changes in financial position of the Company and its
subsidiaries on the basis stated therein at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; the supporting schedules, if any, included in the
Registration Statement present fairly in accordance with generally accepted
accounting principles the information required to be stated therein; and the
other financial and
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statistical information and data set forth in the Registration Statement and the
Prospectus are, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company.
(s) The pro forma financial statements of the Company and its subsidiaries
and the related notes thereto set forth and incorporated by reference in the
Registration Statement and the Prospectus have been prepared on a basis
consistent with the historical financial statements of the Company and its
subsidiaries, give effect to the assumptions used in the preparation thereof on
a reasonable basis and in good faith and present fairly the historical and
proposed transactions contemplated by the Registration Statement and the
Prospectus. The pro forma financial statements contained or incorporated by
reference in the Registration Statement and the Prospectus comply in all
material respects with the applicable requirements of Regulation S-X under the
Act and the pro forma adjustments have been properly applied to the historical
amounts in the compilation of those statements.
(t) The Company is not and, after giving effect to the offering and sale of
the Shares will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(u) Except as set forth in Exhibit I, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to file a registration statement under the Act with
respect to any securities of the Company or to require the Company to include
such securities with the Shares registered pursuant to the Registration
Statement.
(v) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change or any development involving
a prospective material adverse change in the condition, financial or otherwise,
or the earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there has not been any material adverse
change or any development involving a prospective material adverse change in the
capital stock or in the long-term debt of the Company or any of its subsidiaries
and (iii) neither the Company nor any of its subsidiaries has incurred any
material liability or obligation, direct or contingent.
(w) Each certificate signed by any officer of the Company and delivered to
DLJ or counsel for DLJ shall be deemed to be a representation and warranty by
the Company to DLJ as to the matters covered thereby.
(x) The Company and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries; and
any real property and buildings
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held under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries, in each case except
as described in the Prospectus.
(y) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names ("intellectual property") currently employed by
them in connection with the business now operated by them except where the
failure to own or possess or otherwise be able to acquire such intellectual
property would not, singly or in the aggregate, have a material adverse effect
on the business, prospects, financial condition or results of operation of the
Company and its subsidiaries, taken as a whole; and neither the Company nor any
of its subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of such intellectual property
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(z) The Company and each of its subsidiaries 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 of its subsidiaries (i) has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other material expenditures will have to be made in order to
continue such insurance or (ii) 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 at a cost that would not
have a material adverse effect on the business, prospects, financial conditions
or results of operations of the Company and its subsidiaries, taken as a whole.
(aa) No "nationally recognized statistical rating organization" (as such
term is defined for purposes of Rule 436(g)(2) under the Act) has indicated to
the Company that it is considering (i) the downgrading, suspension or withdrawal
of, or any review for a possible change that does not indicate the direction of
the possible change in, any rating assigned to the Company or any securities of
the Company or (ii) any change in the outlook for any rating of the Company or
any securities of the Company.
(bb) No relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its subsidiaries
on the other hand, which is required by the Act to be described in the
Registration Statement or the Prospectus which is not so described.
(cc) There is no (i) significant unfair labor practice complaint, grievance
or arbitration proceeding pending or threatened against the Company or any of
its subsidiaries before the National Labor Relations Board or any state or local
labor relations board, (ii) strike, labor dispute, slowdown or stoppage pending
or threatened against the Company or any of its subsidiaries or (iii)
11
union representation question existing with respect to the employees of the
Company and its subsidiaries, except for such actions specified in clause (i),
(ii) or (iii) above, which, singly or in the aggregate, would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(dd) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(ee) All material tax returns required to be filed by the Company and each
of its subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by the
Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
SECTION 7. Representations and Warranties of the Selling Stockholders. Each
Selling Stockholder, severally and not jointly, represents and warrants to DLJ
that:
(a) Such Selling Stockholder is the lawful owner of the Shares to be sold
by such Selling Stockholder pursuant to this Agreement and has, and on the
Closing Date will have, good and clear title to such Shares, free of all
restrictions on transfer, liens, encumbrances, security interests, equities and
claims whatsoever (subject to any lien created hereby).
(b) Such Selling Stockholder has, and on the Closing Date will have, full
legal right, power and authority, and all authorization and approval required by
law, to enter into this Agreement and to sell, assign, transfer and deliver the
Shares to be sold by such Selling Stockholder in the manner provided herein.
(c) This Agreement has been duly authorized, executed and delivered by or
on behalf of such Selling Stockholder.
(d) Upon delivery of and payment for the Shares to be sold by such Selling
Stockholder pursuant to this Agreement, good and clear title to such Shares will
pass to DLJ, free of all restrictions on transfer, liens, encumbrances, security
interests, equities and claims whatsoever.
(e) The execution, delivery and performance of this Agreement, the
compliance by such Selling Stockholder with all the provisions hereof and the
consummation of the transactions contemplated hereby will not (i) require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as may be required under the
Act and the securities or Blue Sky laws of the various states), (ii) conflict
with or
12
constitute a breach of any of the terms or provisions of, or a default under,
the organizational documents of such Selling Stockholder, if such Selling
Stockholder is not an individual, or any indenture, loan agreement, mortgage,
lease or other agreement or instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder or any property of such Selling
Stockholder is bound or (iii) violate or conflict with any applicable law or any
rule, regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over such Selling Stockholder or any property
of such Selling Stockholder, other than, in the case of clauses (ii) and (iii),
any conflict or violation that would not affect the validity of, or adversely
affect the Selling Stockholder's ability to consummate, the transactions
contemplated hereunder.
(f) The information in the Registration Statement under the caption
"Selling Stockholders" and furnished in writing to the Company by or on behalf
of such Selling Stockholder for inclusion therein does not, and will not on the
Closing Date, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(g) Such Selling Stockholder has not taken, and will not take, directly or
indirectly, any action designed to, or which might reasonably be expected to,
cause or result in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares pursuant to the
distribution contemplated by this Agreement, and other than as permitted by the
Act, such Selling Stockholder has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and sale
of the Shares.
(h) At any time during the period described in Section 5(d), if there is
any change in the information referred to in Section 7(h), such Selling
Stockholder will immediately notify you of such change.
(i) Each certificate signed by or on behalf of such Selling Stockholder and
delivered to DLJ or counsel for DLJ shall be deemed to be a representation and
warranty by such Selling Stockholder to DLJ as to the matters covered thereby.
SECTION 8. Indemnification.
(a) (i) The Company agrees to indemnify and hold harmless DLJ, its
directors, its officers and each person, if any, who controls DLJ within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment
thereto), the Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus or preliminary prospectus supplement, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to
13
DLJ furnished in writing to the Company by DLJ for use therein; provided,
however, that the foregoing indemnity agreement with respect to any preliminary
prospectus or preliminary prospectus supplement shall not inure to the benefit
of DLJ if DLJ failed to deliver a Prospectus (as then amended or supplemented,
provided by the Company to DLJ in the requisite quantity and on a timely basis
to permit proper delivery on or prior to the Closing Date) to the person
asserting any losses, claims, damages and liabilities and judgments caused by
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus or preliminary prospectus supplement, or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in such Prospectus and such Prospectus was required by law to
be delivered at or prior to the written confirmation of sale to such person.
(ii) Each of the Selling Stockholders agrees, severally and not
jointly, to indemnify and hold harmless DLJ, its directors, officers and each
person, if any, who controls DLJ within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to DLJ (including the proviso) but only with reference to
information relating to such Selling Stockholder in its capacity as a Selling
Stockholder and furnished in writing by or on behalf of such Selling Stockholder
to the Company for inclusion in the Registration Statement (or any amendment
thereto), the Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus or preliminary prospectus supplement. Notwithstanding the
foregoing, the aggregate liability of any Selling Stockholder pursuant to this
Section 8(a) shall be limited to an amount equal to the total proceeds (before
deducting underwriting discounts and commissions and expenses) received by such
Selling Stockholder from DLJ for the sale of the Shares sold by such Selling
Stockholder hereunder.
The Company and the Selling Stockholders may enter into other agreements
amongst themselves with respect to the indemnity obligations hereunder, provided
that such agreements shall not affect the indemnification obligations of the
Company and the Selling Stockholders DLJ under this Agreement.
(b) DLJ agrees to indemnify and hold harmless the Company, its directors,
its officers who sign the Registration Statement, each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, each Selling Stockholder and each person, if any, who
controls such Selling Stockholder within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company and the Selling Stockholders to DLJ but only with reference to
information relating to DLJ furnished in writing to the Company by DLJ expressly
for use in the Registration Statement (or any amendment thereto), the Prospectus
(or any amendment or supplement thereto) or any preliminary prospectus or
preliminary prospectus supplement.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party shall assume the defense of such
14
action, including the employment of counsel reasonably satisfactory to the
indemnified party and the payment of all fees and expenses of such counsel, as
incurred (except that in the case of any action in respect of which indemnity
may be sought pursuant to both Sections 8(a) and 8(b), DLJ shall not be required
to assume the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
DLJ). Any indemnified party shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the indemnified party unless
(i) the employment of such counsel shall have been specifically authorized in
writing by the indemnifying party, (ii) the indemnifying party shall have failed
to assume the defense of such action or employ counsel reasonably satisfactory
to the indemnified party or (iii) the named parties to any such action
(including any impleaded parties) include both the indemnified party and the
indemnifying party, and the indemnified party shall have been advised by such
counsel that there may be one or more legal defenses available to it which are
different from or additional to those available to the indemnifying party (in
which case the indemnifying party shall not have the right to assume the defense
of such action on behalf of the indemnified party). In any such case, the
indemnifying party shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for (i) the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for DLJ, its officers and directors and all persons, if any, who
control DLJ within the meaning of either Section 15 of the Act or Section 20 of
the Exchange Act, (ii) the fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for the Company, its directors, its
officers who sign the Registration Statement and all persons, if any, who
control the Company within the meaning of either such Section and (iii) the fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) for all Selling Stockholders and all persons, if any, who control
any Selling Stockholder within the meaning of either such Section, and all such
fees and expenses shall be reimbursed as they are incurred. In the case of any
such separate firm for DLJ, its officers and directors and such control persons
of DLJ, such firm shall be designated in writing by DLJ. In the case of any such
separate firm for the Company and such directors, officers and control persons
of the Company, such firm shall be designated in writing by the Company. In the
case of any such separate firm for the Selling Stockholders and such control
persons of any Selling Stockholders, such firm shall be designated in writing by
the Selling Stockholders. The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment
15
(i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in the case of
the Company (x) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one hand
and DLJ on the other hand from the offering of the Shares or (y) if the
allocation provided by clause 8(d)(i)(x) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause 8(d)(i)(x) above but also the relative fault of
the Company and the Selling Stockholders on the one hand and DLJ on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations and (ii) in the case of any Selling Stockholder (x) in
such proportion as is appropriate to reflect the relative benefits received by
such Selling Stockholder on the one hand and DLJ on the other hand from the
offering of the Shares sold by such Selling Stockholder or (y) if the allocation
provided by clause 8(d)(ii)(x) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(ii)(x) above but also the relative fault of such Selling
Stockholder on the one hand and DLJ on the other hand in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received as between the Company and the
Selling Stockholders on the one hand and DLJ on the other hand shall be deemed
to be in the same proportion as the total net proceeds from the offering (after
deducting underwriting discounts and commissions, but before deducting expenses)
received by the Selling Stockholders, and the total underwriting discounts and
commissions received by DLJ, bear to the total price to the public of the
Shares. The relative fault as between the Company and the Selling Stockholders
on the one hand and DLJ on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Selling Stockholders on the one hand
or DLJ on the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and DLJ agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Xxxxxxx 0, XXX shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Shares
16
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which DLJ has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission and no Selling Stockholder shall be required to contribute any amount
in excess of the amount by which the total price at which the Shares of such
Selling Stockholder were offered to the public exceeds the amount of any damages
which such Selling Stockholder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission and no
Selling Stockholder shall be required to contribute in respect of any losses,
claims, damages, liabilities or judgments (or expenses incurred in connection
therewith) unless the same arise with respect to information relating to such
Selling Stockholder in its capacity as a Selling Stockholder furnished in
writing by or on behalf of the Selling Stockholder for inclusion in the
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus or preliminary
prospectus supplement. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(f) Each Selling Stockholder hereby designates Xxxx Xxxxx, Inc., 0000 X.X.
00xx Xxxxxx, Xxxxxxxx, Xxxxxx 00000, Attention: Xxxxx X. Xxxxx, as its
authorized agent, upon which process may be served in any action which may be
instituted in any state or federal court in the State of New York by DLJ, any
director or officer of DLJ or any person controlling DLJ asserting a claim for
indemnification or contribution under or pursuant to this Section 8, and each
Selling Stockholder will accept the jurisdiction of such court in such action,
and waives, to the fullest extent permitted by applicable law, any defense based
upon lack of personal jurisdiction or venue. A copy of any such process shall be
sent or given to such Selling Stockholder, at the address for notices specified
in Section 12 hereof.
SECTION 9. Conditions of DLJ's Obligations. The obligation of DLJ to
purchase the Shares under this Agreement are subject to the satisfaction of each
of the following conditions:
(a) All the representations and warranties of the Company contained in this
Agreement shall be true and correct on the Closing Date with the same force and
effect as if made on and as of the Closing Date.
(b) If the Company is required to file a Rule 462(b) Registration Statement
after the effectiveness of this Agreement, such Rule 462(b) Registration
Statement shall have become effective by 10:00 p.m., New York City time, on the
date of this Agreement; and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending before or contemplated by
the Commission.
(c) You shall have received on the Closing Date a certificate dated the
Closing Date, signed by Xxxxxxx Xxxxxxxx and Xxxxx X. Xxxxx, in their capacities
as Executive Vice President
17
and Chief Administrative Officer and Senior Vice President and General Counsel,
respectively, of the Company, confirming the matters set forth in Sections 6(v),
9(a) and 9(b) and that the Company has complied with all of the agreements and
satisfied all of the conditions herein contained and required to be complied
with or satisfied by the Company on or prior to the Closing Date.
(d) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries, taken as
a whole, (ii) there shall not have been any change or any development involving
a prospective change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(d)(i),
9(d)(ii) or 9(d)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(e) All the representations and warranties of each Selling Stockholder
contained in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date and you shall
have received on the Closing Date a certificate dated the Closing Date from each
Selling Stockholder to such effect and to the effect that such Selling
Stockholder has complied with all of the agreements and satisfied all of the
conditions herein contained and required to be complied with or satisfied by
such Selling Stockholder on or prior to the Closing Date.
(f) You shall have received on the Closing Date an opinion (satisfactory to
you and counsel for DLJ), dated the Closing Date, of Stoel Rives LLP, counsel
for the Company, to the effect that:
(i) each of the Company and Xxxx Xxxxx Stores, Inc., Xxxxx'x Food &
Drug Centers, Inc., Quality Food Centers, Inc. and Food 4 Less Holdings,
Inc. (collectively, the "Principal Subsidiaries"), has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation and has the corporate power
and authority to carry on its business as described in the Prospectus and
to own, lease and operate its properties;
(ii) each of the Company and the Principal Subsidiaries is duly
qualified and is in good standing or validly existing, as the case may be,
as a foreign corporation under the laws of those jurisdictions designated
by an officer of the Company as material to the business of the Company and
its Principal Subsidiaries;
(iii) all the outstanding shares of capital stock of the Company
(including the Shares to be sold by the Selling Stockholders) have been
duly authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights;
18
(iv) all of the outstanding shares of capital stock of each of the
Principal Subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned by the Company, directly or
indirectly through one or more subsidiaries, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature, other
than security interests securing the Senior Credit Facilities and the Lease
Facility;
(v) this Agreement has been duly authorized, executed and delivered by
the Company;
(vi) the authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus;
(vii) the Registration Statement has become effective under the Act,
no stop order suspending its effectiveness has been issued and no
proceedings for that purpose are, to the best of such counsel's knowledge,
pending before or contemplated by the Commission;
(viii) the statements under the caption "Description of Capital Stock"
in the Prospectus, the caption "Certain Relationships and Related
Transactions" in the Company's Proxy Statement for the 1998 Annual Meeting
of Stockholders of the Company, and Item 15 of Part II of the Registration
Statement, insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings;
(ix) the execution, delivery and performance of this Agreement by the
Company, the compliance by the Company with all the provisions hereof and
the consummation of the transactions contemplated hereby will not (A)
require any consent, approval, authorization or other order of, or
qualification with, any governmental body or agency (except such as may be
required under the securities or Blue Sky laws of the various states) or,
to such counsel's knowledge, any court, (B) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the
charter or by-laws of the Company or any Principal Subsidiary or any
indenture, loan agreement, mortgage, lease or other agreement or instrument
designated by an officer of the Company as material to the business of the
Company and its Principal Subsidiaries, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
or their respective property is bound, or (C) violate or conflict with any
applicable law, rule or regulation, or, to such counsel's knowledge, any
judgment, order or decree of any court or any governmental body or agency
having jurisdiction over the Company, any of its subsidiaries or their
respective property.
(x) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries
19
is or could be a party or to which any of their respective property is or
could be subject that are required to be described in the Registration
Statement or the Prospectus and are not so described, or of any statutes,
regulations, contracts or other documents that are required to be described
in the Registration Statement or the Prospectus or to be filed as exhibits
to the Registration Statement that are not so described or filed as
required;
(xi) the Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(xii) to the best of such counsel's knowledge, there are no contracts,
agreements or understandings between the Company and any person (A)
granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company except as set forth on Exhibit I hereto or (B) to require the
Company to include such securities with the Shares registered pursuant to
the Registration Statement; and
(xiii) (A) each document, if any, filed pursuant to the Exchange Act
and incorporated by reference in the Prospectus (except for financial
statements and other financial data included therein as to which no opinion
need be expressed) complied when so filed as to form with the Exchange Act,
(B) the Registration Statement and the Prospectus and any supplement or
amendment thereto (except for the financial statements and other financial
data included therein as to which no opinion need be expressed) comply as
to form with the Act, (C) nothing has come to such counsel's attention that
has caused such counsel to believe that at the time the Registration
Statement became effective or on the date of this Agreement, the
Registration Statement and the prospectus and prospectus supplement
included therein (except for the financial statements and other financial
data as to which such counsel need not express any belief) contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (D) nothing has come to such counsel's attention that
has caused such counsel to believe that the Prospectus, as amended or
supplemented, if applicable (except for the financial statements and other
financial data, as aforesaid) contains any 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.
The opinion of Stoel Rives LLP described in Section 9(f) above shall be
rendered to you at the request of the Company and shall so state therein.
(g) You shall have received on the Closing Date an opinion (satisfactory to
you and counsel for DLJ), dated the Closing Date, of Xxxxxxx, Singleton,
Jemison, Cobeaga & List, Chtd., counsel for the Selling Stockholders, to the
effect that:
20
(i) each Selling Stockholder is the lawful owner of the Shares to be
sold by such Selling Stockholder pursuant to this Agreement and has good
and clear title to such Shares, free of all restrictions on transfer,
liens, encumbrances, security interests, equities and claims whatsoever;
(ii) each Selling Stockholder has full legal right, power and
authority, and all authorization and approval required by law, to enter
into this Agreement and to sell, assign, transfer and deliver the Shares to
be sold by such Selling Stockholder in the manner provided herein;
(iii) this Agreement has been duly authorized, executed and delivered
by or on behalf of each Selling Stockholder;
(iv) upon delivery of and payment for the Shares to be sold by each
Selling Stockholder pursuant to this Agreement, good and clear title to
such Shares will pass to DLJ, free of all restrictions on transfer, liens,
encumbrances, security interests, equities and claims whatsoever; and
(v) the execution, delivery and performance of this Agreement, the
compliance by each Selling Stockholder with all the provisions hereof and
the consummation of the transactions contemplated hereby will not (A)
require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such
as may be required under the securities or Blue Sky laws of the various
states), (B) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the organizational documents of such
Selling Stockholder, if such Selling Stockholder is not an individual, or
any indenture, loan agreement, mortgage, lease or other agreement or
instrument to which such Selling Stockholder is a party or by which any
property of such Selling Stockholder is bound or (C) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree
of any court or any governmental body or agency having jurisdiction over
such Selling Stockholder or any property of such Selling Stockholder.
The opinions of counsel described in Section 9(g) above shall be rendered
to you at the request of the relevant Selling Stockholder and shall so state
therein.
(h) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Xxxxxx & Xxxxxxx, counsel for DLJ, in form and substance
reasonably satisfactory to you.
(i) You shall have received, on each of the date hereof and the Closing
Date, letters dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you, from Deloitte & Touche LLP and Xxxxxx
Xxxxxxxx LLP, independent public accountants, containing the information and
statements of the type ordinarily included in accountants' "comfort letters" to
Underwriters with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Registration
Statement and the Prospectus.
21
(j) The Company shall have delivered to you the agreements specified in
Section 2 hereof which agreements shall be in full force and effect on the
Closing Date.
(k) The Company and the Selling Stockholders shall not have failed on or
prior to the Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company or the
Selling Stockholders, as the case may be, on or prior to the Closing Date.
(l) You shall have received on the Closing Date, a certificate of each
Selling Stockholder who is not a U.S. Person (as defined under applicable U.S.
federal tax legislation) to the effect that such Selling Stockholder is not a
U.S. Person, which certificate may be in the form of a properly completed and
executed United States Treasury Department Form W-8 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
(m) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been given
of any potential or intended downgrading, suspension or withdrawal of, or of any
review (or of any potential or intended review) for a possible change that does
not indicate the direction of the possible change in, any rating of the Company
or any securities of the Company (including, without limitation, the placing of
any of the foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any "nationally
recognized statistical rating organization" as such term is defined for purposes
of Rule 436(g)(2) under the Act and (ii) there shall not have occurred any
change, nor shall any notice have been given of any potential or intended
change, in the outlook for any rating of the Company or any securities of the
Company by any such rating organization.
SECTION 10. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Company and the Selling Stockholders if any
of the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in your judgment, is material and adverse and, in your judgment, makes it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus, (ii) the suspension or material limitation of trading in
securities or other instruments on the New York Stock Exchange, the American
Stock Exchange, the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange, the Chicago Board of Trade or the Nasdaq National Market or limitation
on prices for securities or other instruments on any such exchange or the Nasdaq
National Market, (iii) the suspension of trading of any securities of the
Company on any exchange or in the over-the-counter market, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which in
your opinion materially and adversely affects, or will materially and adversely
affect, the business, prospects, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole, (v) the declaration of a
banking moratorium by either federal or New York State authorities or (vi)
22
the taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your opinion has a material
adverse effect on the financial markets in the United States.
SECTION 11. Agreements of the Selling Stockholders. Each Selling
Stockholder agrees with you and the Company:
(a) To pay or to cause to be paid all expenses required to be paid by the
Selling Stockholders hereunder, including, without limitation, all transfer
taxes payable in connection with the transfer of the Shares to be sold by such
Selling Stockholder to DLJ and other expenses to be paid under applicable
registration rights agreements with the Company.
(b) At any time during the period described in Section 5(d), if there is
any change in the information referred to in Section 7(h), such Selling
Stockholder will immediately notify you of such change.
(c) To do and perform all things to be done and performed by such Selling
Stockholder under this Agreement prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Shares to be sold by such Selling
Stockholder pursuant to this Agreement.
SECTION 12. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company, to Xxxx Xxxxx,
Inc., 0000 XX 00xx Xxxxxx, Xxxxxxxx, Xxxxxx 00000, Attention: Xxxxx X. Xxxxx,
(ii) if to any of the Selling Stockholders, to such Selling Stockholder at the
address set forth in Schedule II hereto and (iii) if to DLJ, to Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Syndicate Department, or in any case to such other address as
the person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Selling Stockholders and DLJ
set forth in or made pursuant to this Agreement shall remain operative and in
full force and effect, and will survive delivery of and payment for the Shares,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of DLJ, the officers or directors of DLJ, any person
controlling DLJ, the Company, the officers or directors of the Company, any
person controlling the Company, any Selling Stockholder or any person
controlling such Selling Stockholder, (ii) acceptance of the Shares and payment
for them hereunder and (iii) termination of this Agreement.
If for any reason the Shares are not delivered by or on behalf of any
Selling Stockholder as provided herein (other than as a result of any
termination of this Agreement pursuant to Section 10), the Selling Stockholders
agree, jointly and severally, to reimburse DLJ for all losses, claims, damages,
liabilities, judgments, costs and out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by DLJ. Notwithstanding any termination of
this Agreement, the Company shall be liable for all expenses which it has agreed
to pay pursuant to Section 5(j) hereof. The Selling Stockholders also agree,
jointly and severally, to reimburse DLJ, its directors and officers and any
persons controlling DLJ for any and all fees and expenses (including, without
23
limitation, the fees disbursements of counsel) incurred by them in connection
with enforcing their rights hereunder (including, without limitation, pursuant
to Section 8 hereof).
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Selling
Stockholders, DLJ, the DLJ's directors and officers, any controlling persons
referred to herein, the Company's directors and the Company's officers who sign
the Registration Statement and their respective successors and assigns, all as
and to the extent provided in this Agreement, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Shares from DLJ merely
because of such purchase.
This Agreement shall be governed and construed in accordance with the laws
of the State of New York.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
24
Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Selling Stockholders and DLJ.
Very truly yours,
XXXX XXXXX, INC.
By XXXXX X. XXXXX
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
XXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxx X. Xxxxx
Trust for the Children of Xxxxxxx X.
Xxxxx
By XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Attorney-in-Fact
The Xxxx Xxxxx Trust
By XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Attorney-in-Fact
The Xxxx Xxxxx Trust
By XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Attorney-in-Fact
The Xxxxxx Xxxxx Trust
By XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Attorney-in-Fact
XXXX XXXXXXX XXXXX
By XXXXXXX X. XXXXX as Attorney-in-Fact
-----------------------------------------
Xxxx Xxxxxxx Xxxxx
Trust for the Children of Xxxx Xxxxxxx
Xxxxx
By XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Attorney-in-Fact
The Xxxx Xxxxx Xxxxx Trust
By XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Attorney-in-Fact
The Xxxxx Xxxxxx Xxxxx Trust
By XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Attorney-in-Fact
The Xxxxxxx Xxx Xxxxx Trust
By XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Attorney-in-Fact
XXXXXX XXXXX
By XXXXXXX X. XXXXX as Attorney-in-Fact
-----------------------------------------
Xxxxxx Xxxxx
The Dee Xxxx Xxxxx Marital Trust
By XXXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Trustee
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
By XXX XXXXXX
----------------------------------
Name: Xxx Xxxxxx
Title: Managing Director
Schedule I
Selling Stockholders
Number of
Name Shares Being Sold
---- -----------------
Xxxxxxx X. Xxxxx 1,098,395
Trust for the Children of Xxxxxxx X. Xxxxx 941,389
The Xxxx Xxxxx Trust 80,771
The Xxxx Xxxxx Trust 102,904
The Xxxxxx Xxxxx Trust 102,904
Xxxx Xxxxxxx Xxxxx 424,548
Trust for the Children of Xxxx Xxxxxxx Xxxxx 941,390
The Xxxx Xxxxx Xxxxx Trust 69,472
The Xxxxx Xxxxxx Xxxxx Trust 48,164
The Xxxxxxx Xxx Xxxxx Trust 48,164
Xxxxxx Xxxxx 28,682
The Dee Xxxx Xxxxx Marital Trust 328,801
---------
Total 4,215,584
=========
Schedule II
Notice To Selling Stockholders
All communications to the Selling Stockholders pursuant to Section 12 of
the Underwriting Agreement will be mailed, delivered or telegraphed and
confirmed to the Selling Stockholders at their respective addresses set forth
below:
If to Xxxxxxx X. Xxxxx, Trust for the Children of Xxxxxxx X. Xxxxx, The Xxxx
Xxxxx Trust, The Xxxx Xxxxx Trust, Xxxx Xxxxxxx Xxxxx, Trust for the Children of
Xxxx Xxxxxxx Xxxxx, The Xxxx Xxxxx Xxxxx Trust, The Xxxxx Xxxxxx Xxxxx Trust or
The Xxxxxxx Xxx Xxxxx Trust, to:
c/x Xxxxx'x Food & Drug Centers, Inc.
0000 Xxxxx Xxxxxxx Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to The Xxxxxx Xxxxx Trust, to:
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
If to Xxxxxx Xxxxx, to:
0000 Xxxxxx Xxx
Xxx Xxxxx, Xxxxxx 00000
If to The Dee Xxxx Xxxxx Marital Trust, to:
c/o Xxx Xxxxx
0000 X. Xxxxxxx Xxxx.
Xxxx Xxxx Xxxx, Xxxx 00000
Exhibit I
Registration Rights Agreement, dated as of September 9, 1997, by and among Xxxx
Xxxxx, Inc. The Yucaipa Companies and the parties listed on the signature pages
thereto, as amended by that certain Amendment to Registration Rights Agreement,
dated as of March 10, 1998 by and among Xxxx Xxxxx, Inc., The Yucaipa Companies
and the parties listed on the signature pages thereto.
Registration Rights Agreement, dated as of March 9, 1998, by and between Xxxx
Xxxxx, Inc., Xxxx/Chilmark Fund, L.P. and Xxxxxx X. Xxxxx.
Registration Rights Agreement, dated as of March 10, 1998, by and among Xxxx
Xxxxx, Inc. and the parties listed on the signature pages thereto.
