Quality Food Centers, Inc.
8.70% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
March 13, 1997
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
BANCAMERICA SECURITIES, INC.
c/x Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies & Gentlemen:
Each of Quality Food Centers, Inc., a Washington corporation (the
"Company"), Quality Food Holdings, Inc., a Delaware corporation (the "Holding
Company"), Xxxxxx Markets, Inc. ("Xxxxxx"), a California corporation (effective
as of the Closing Date referred to herein), and KU Acquisition Corporation, a
Washington corporation ("KUA") and the surviving corporation in the merger with
Xxxxx Xxxxxxxxx, Inc. ("KUI") (the Holding Company, Xxxxxx and KUA are
hereinafter sometimes referred to as, collectively, the "Guarantors" and,
individually, a "Guarantor"), agrees with you as follows:
1. Issuance of Notes. The Company proposes to issue and sell to Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated and BancAmerica Securities, Inc. (each, a "Purchaser", and
collectively, the "Purchasers"), an aggregate of $150,000,000 principal amount
of the Company's 8.70% Senior Subordinated Notes due 2007 (the "Notes"). The
Notes are to be issued pursuant to an indenture (the "Indenture") to be dated as
of March 19, 1997 among the Company, the Guarantors and First Trust National
Association, as trustee (the "Trustee"). The Notes and the Series B Notes (as
defined below) to be issued in exchange therefor will be guaranteed
(collectively, the "Guarantees") on a senior subordinated basis by each of the
Guarantors.
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Indenture. The term "Notes" and "Series B Notes", as
used herein, shall include the Guarantees whenever the context permits. This
Purchase Agreement is hereinafter sometimes referred to as this "Agreement" or
the "Debt Agreement".
The Notes will be offered and sold to you pursuant to an exemption from
the registration requirements under the Securities Act of 1933, as amended (the
"1993 Act"). The Company and the Guarantors have prepared a preliminary offering
memorandum, dated February 18, 1997 (the "Preliminary Offering Memorandum"), and
a final offering memorandum, dated March 13, 1997 (the "Offering Memorandum"),
relating to the Company and the Guarantors and the Notes.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the 1933 Act, the Notes
(and all securities issued in exchange therefor or in substitution thereof)
shall bear a legend to the effect set forth in the Offering Memorandum under the
caption "Notice to Investors".
You have advised the Company that you will make offers (the "Exempt
Resales") of the Notes purchased hereunder on the terms set forth in the
Offering Memorandum, as amended or supplemented, solely to persons whom you
reasonably believe to be "qualified institutional buyers," as defined in Rule
144A under the 1933 Act ("QIBs"), and to a limited number of institutional
"accredited investors" referred to in Rule 501(a)(1), (2), (3) or (7) under the
1933 Act (each, an "Accredited Investor"). The QIBs and the Accredited Investors
are referred to herein as the "Eligible Purchasers." You will offer the Notes to
such Eligible Purchasers initially at a price equal to the percentage of the
principal amount thereof set forth in the table on the front cover of the
Offering Memorandum. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Notes will have the
registration rights set forth in the registration rights agreement relating
thereto (the "Registration Rights Agreement"), to be dated the Closing Date, in
substantially the form of Exhibit A hereto, for so long as such Notes constitute
"Transfer Restricted Securities" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Company and the
Guarantors will agree to use their reasonable best efforts to file with the
Securities and Exchange Commission (the "Commission"), under the circumstances
set forth therein, (i) a registration statement under the 1933 Act (the
"Exchange Offer Registration Statement") relating to the Company's 8.70% Senior
Subordinated Notes due 2007 (the "Series B Notes") to be offered in exchange for
the Notes (the "Exchange Offer"), and (ii) a shelf registration statement
pursuant to Rule 415 under the 1933 Act (the "Shelf Registration Statement")
relating to the resale by certain holders of the Notes, and to use their
reasonable best efforts to cause such Registration Statements to be declared
effective. The Notes and the Series B Notes are sometimes hereinafter referred
to, collectively, as the "Debt Securities".
It is understood that the Company is concurrently entering into a U.S.
Purchase Agreement dated the date hereof (the "U.S. Purchase Agreement")
providing for the offering by the Company of an aggregate of 3,600,000 shares of
Common Stock, par value $.001 per share (the "Common Stock"), of the Company
(the "Initial U.S. Securities") through arrangements with certain
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underwriters in the United States and Canada (the "U.S. Underwriters") for whom
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation, Salomon Brothers Inc and Xxxx Xxxxxxxx Incorporated are
acting as representatives (the "U.S. Representatives"), and the grant by the
Company to the U.S. Underwriters of an option to purchase all or any part of an
additional 540,000 shares of Common Stock (the "U.S. Option Securities") to
cover over-allotments, if any. The Initial U.S. Securities and the U.S. Option
Securities are hereinafter sometimes called, collectively, the "U.S.
Securities".
It is understood that the Company is also concurrently entering into an
International Purchase Agreement dated the date hereof (the "International
Purchase Agreement") providing for the offering by the Company of an aggregate
of 900,000 shares of Common Stock (the "Initial International Securities")
though arrangements with certain underwriters outside of the United States and
Canada (the "International Underwriters") for whom Xxxxxxx Xxxxx International,
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, Salomon Brothers
International Limited and Xxxx Xxxxxxxx Incorporated are acting as lead managers
(the "International Representatives"), and the grant by the Company to the
International Underwriters of an option to purchase all or any part of an
additional 135,000 shares of Common Stock (the "International Option
Securities") to cover over-allotments, if any. The Initial International
Securities and the International Option Securities are hereinafter sometimes
called, collectively, the "International Securities."
The U.S. Securities and the International Securities are hereinafter
sometimes called, collectively, the "Securities;" the Initial U.S. Securities
and the Initial International Securities are hereinafter sometimes called,
collectively, the "Initial Securities"; the U.S. Option Securities and the
International Option Securities are hereinafter sometimes called, collectively,
the "Option Securities;" the U.S. Underwriters and the International
Underwriters are hereinafter sometimes called, collectively, the "Underwriters"
and, individually, an "Underwriter;" the U.S Representatives and the
International Representatives are hereinafter sometimes called, collectively,
the "Representatives" and, individually, a "Representative;" and the U.S.
Purchase Agreement and the International Purchase Agreement are hereinafter
sometimes called, collectively, the "Purchase Agreements" and, individually, a
"Purchase Agreement".
The Company has also entered into Agreement and Plan of Merger dated as of
November 20, 1996, as amended (the "Xxxxxx Merger Agreement"), with QHI
Acquisition Corporation, a California corporation and wholly-owned subsidiary of
the Company ("QHI"), and Xxxxxx, pursuant to which QHI will merge with and into
Xxxxxx, with Xxxxxx as the surviving corporation and as a result of which Xxxxxx
will become a wholly-owned direct subsidiary of the Company (the "Xxxxxx
Merger").
The Company is currently a party to a Credit Agreement dated as of March
15, 1995 (the "Old Credit Agreement") among the Company, Bank of America
National Trust and Savings Association ("BofA"), as agent, Seattle First
National Bank, as swingline lender, Bank of America Illinois ("BAI"), as issuing
lender, and the other financial institutions party thereto.
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In connection with the transactions contemplated herein, the Company,
Quality Food, Inc., a Delaware corporation ("Parent"), and the Holding Company
will enter into an Amended and Restated Credit Agreement (the "New Credit
Agreement") with BofA, as Administrative Agent and Paying Agent, The Chase
Manhattan Bank, as Administrative Agent, and the other lenders party thereto
(collectively, the "Lenders"), amending and restating the Old Credit Agreement,
and, concurrently therewith, the security agreements previously executed with
respect to the Old Credit Agreement (the "Old Security Agreements") will be
terminated. In order to guarantee the Company's obligations under the New Credit
Agreement, the Holding Company, Xxxxxx and KUA (each, a "Bank Guarantor" and,
collectively, the "Bank Guarantors") will enter into a guaranty (the "Bank
Guaranty") pursuant to the New Credit Agreement. In order to secure their
respective obligations under the New Credit Agreement, the Company will enter
into a Pledge Agreement (the "Company Security Agreement") and the Parent will
enter into a Pledge Agreement (the "Guarantor Security Agreement"; the Company
Security Agreement and the Guarantor Security Agreement are hereinafter
sometimes called, collectively, the "Bank Security Agreements" and,
individually, a "Bank Security Agreement") pursuant to which each of them will
pledge the common stock of certain subsidiaries as collateral.
The Purchase Agreements, the Debt Agreement, the Registration Rights
Agreement, the Indenture, the Notes, the Series B Notes, the New Credit
Agreement, the Company Security Agreement and the Xxxxxx Merger Agreement are
hereinafter sometimes called, collectively, the "Company Documents" and,
individually, a "Company Document". The Debt Agreement, the Registration Rights
Agreement, the Indenture, the New Credit Agreement, the Guarantor Security
Agreements and the Bank Guaranty are hereinafter sometimes called, collectively,
the "Guarantor Documents" and, individually, a "Guarantor Document".
The sale of the Notes to you pursuant to this Agreement is conditioned
upon, among other things, (i) the concurrent purchase of the Initial U.S.
Securities and the Initial International Securities by the U.S. Underwriters and
the International Underwriters, respectively, (ii) the effectiveness of the New
Credit Agreement prior to or concurrently therewith, (iii) the concurrent
termination of the Old Credit Agreement and (iv) the effectiveness of the Xxxxxx
Merger prior to or concurrently therewith.
It is understood that any representation or warranty of the Company and
the Guarantors in Section 5 hereof which relates to Xxxxxx is made to the best
of the Company's and the Guarantors' knowledge, with due inquiry by the Company
and the Guarantors.
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Preliminary Offering Memorandum or the Offering Memorandum (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
or deemed to be incorporated by reference in the Preliminary Offering Memorandum
or the Offering Memorandum, as the case may be; and all references in this
Agreement to amendments or supplements to the Preliminary Offering Memorandum or
the Offering Memorandum shall be deemed to mean and include the filing of any
document under the Securities Exchange Act of 1934, as amended (the "1934
4
Act"), which is or is deemed to be incorporated by reference in the Preliminary
Offering Memorandum or the Offering Memorandum, as the case may be.
2. Agreements to Sell and Purchase. On the basis of the representations
and warranties contained in this Agreement, and subject to its terms and
conditions, the Company agrees to issue and sell to you, and each of the
Purchasers, severally but not jointly, agrees to purchase from the Company,
Notes in the respective principal amount set forth opposite its name on Schedule
I hereto. The purchase price for the Notes shall be 97.5% of their principal
amount.
3. Delivery and Payment. Delivery to the Purchasers of and payment for the
Notes shall be made at 9:00 a.m., New York City time, on March 19, 1997 (the
"Closing Date") at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other time or place as you and the
Company shall designate.
One or more Notes in definitive form, registered in the name of Cede &
Co., as nominee of The Depository Trust Company ("DTC"), having an aggregate
principal amount corresponding to the aggregate principal amount of the Notes
sold pursuant to Exempt Resales to QIBs (collectively, the "Master Note"), and
one or more Notes in definitive form registered in such other names as you may
request upon at least two business days' notice to the Company (the "Definitive
Notes"), having an aggregate principal amount corresponding to the aggregate
principal amount of the Notes sold pursuant to Exempt Resales to Accredited
Investors, shall be delivered by the Company to you (or as you direct), against
payment by you of the purchase price therefor by wire transfer of immediately
available funds to an account specified by the Company. The Master Note and
Definitive Notes shall be made available to you for inspection not later than
9:30 a.m., New York City time, on the business day immediately preceding the
Closing Date.
4. Agreements of the Company and the Guarantors. The Company and each of
the Guarantors, jointly and severally, agrees with each of you as follows:
(a) To advise you promptly and, if requested by any of the
Purchasers, confirm such advice in writing, (i) of the issuance by any
state securities commission of any stop order suspending the qualification
or exemption from qualification of any of the Notes for offering or sale
in any jurisdiction, or the initiation of any proceeding for such purpose
by any state securities commission or other regulatory authority, and (ii)
of the happening of any event that makes any statement of a material fact
made in the Offering Memorandum untrue or that requires the making of any
additions to or changes in the Offering Memorandum in order to make the
statements therein, in the light of the circumstances under which they are
made, not misleading. The Company and the Guarantors shall use their
reasonable best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any of the Notes under any
state securities or Blue Sky laws, and if at any time any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption of any of the Notes under any state
securities or Blue Sky laws, the Company and the Guarantors shall use
their best efforts to obtain the withdrawal or lifting of such order at
the earliest possible time.
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(b) To furnish you, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as you may reasonably request. The
Company and the Guarantors consent to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto, by you in connection with Exempt Resales.
(c) Not to amend or supplement the Preliminary Offering Memorandum
or the Offering Memorandum prior to the Closing Date unless you shall
previously have been advised thereof and shall not have objected thereto
after being furnished a copy thereof. The Company and the Guarantors shall
promptly prepare, upon your request, any amendment or supplement to the
Preliminary Offering Memorandum or the Offering Memorandum that may be
necessary or advisable in connection with Exempt Resales.
(d) If, after the date hereof and prior to consummation of any
Exempt Resales, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of your counsel, it
becomes necessary to amend or supplement the Offering Memorandum in order
to made the statements therein, in the light of the circumstances when the
Offering Memorandum is delivered to an Eligible Purchaser which is a
prospective purchaser, not misleading, or if it is necessary to amend or
supplement the Offering Memorandum to comply with applicable law,
forthwith to prepare an appropriate amendment or supplement to the
Offering Memorandum so that statements therein as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Offering Memorandum will comply
with applicable law.
(e) To cooperate with you and your counsel in connection with the
qualification of the Notes under the securities or Blue Sky laws of such
jurisdictions as you may reasonably request and to continue such
qualification in effect so long as required for the Exempt Resales;
provided, however, that neither the Company nor any of the Guarantors
shall be required in connection therewith to register or qualify as a
foreign corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or taxation,
other than as to matters and transactions relating to the Exempt Resales,
in any jurisdiction where it is not now so subject.
(f) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, to
pay all costs, expenses, fees and taxes incident to and in connection
with: (i) the preparation, printing, filing and distribution of the
Preliminary Offering Memorandum and the Offering Memorandum (including,
without limitation, financial statements and exhibits) and all amendments
and supplements thereto, (ii) the preparation (including, without
limitation, word processing and duplication costs) and delivery of this
Agreement and the other Company Documents and Guarantor Documents and all
preliminary and final Blue Sky memoranda and all other agreements,
memoranda, correspondence and other documents prepared and delivered in
connection herewith and with the Exempt Resales, (iii) the issuance and
delivery by the Company and the Guarantors of the Debt Securities, (iv)
the registration, qualification or
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exemption of the Debt Securities for offer and sale under the securities
or Blue Sky laws of the several states (including, without limitation, the
reasonable fees and disbursements of your counsel relating to such
registration, qualification or exemption), (v) furnishing such copies of
the Preliminary Offering Memorandum and the Offering Memorandum, and all
amendments and supplements thereto, as may be reasonably requested for use
in connection with Exempt Resales, (vi) the preparation of certificates
for the Debt Securities (including, without limitation, printing and
engraving thereof), (vii) the fees, disbursements and expenses of the
Company's and the Guarantors' counsel and accountants, (viii) all expenses
and listing fees in connection with the application for quotation of the
Notes in the National Association of Securities Dealers, Inc. ("NASD")
Automated Quotation System PORTAL ("PORTAL"), (ix) all fees and expenses
(including fees and expenses of counsel) of the Company and the Guarantors
in connection with approval of the Debt Securities by DTC for "book-entry"
transfer and (x) the performance by the Company and the Guarantors of
their other obligations under this Agreement and the other Company
Documents and Guarantor Documents.
(g) To use the proceeds from the sale of the Notes in the manner
described in the Offering Memorandum under the caption "Use of Proceeds."
(h) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury or similar laws against the holders of any
Debt Securities.
(i) To do and perform all things required to be done and performed
under this Agreement by them prior to or after the Closing Date and to
satisfy all conditions precedent on their part to the delivery of the
Notes.
(j) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the 1933
Act) that would be integrated with the sale of the Notes in a manner that
would require the registration under the 1933 Act of the sale to you or
Eligible Purchasers of the Notes.
(k) For so long as any of the Notes remains outstanding, to make
available to any QIB or beneficial owner of Notes in connection with any
sale thereof and any prospective purchaser of such Notes from such QIB or
beneficial owner, the information required by Rule 144A(d)(4) under the
1933 Act, unless (i) the Company and the Guarantors are subject to the
reporting requirements of Section 13 or 15(d) of the 1934 Act and (ii) as
a result, the requirements of Rule 144A(d)(4) under the 1933 Act are not
applicable with respect to sales or transfers of the Notes.
(l) To use reasonable best efforts to cause the Exchange Offer to be
made in the appropriate form to permit registration of the Series B Notes
to be offered in exchange for the Notes and to comply with all applicable
federal and state securities laws in connection with the Exchange Offer.
7
(m) To comply with all of its agreements set forth in the
Registration Rights Agreement, and all agreements set forth in the
representation letter with DTC relating to the approval of the Debt
Securities by DTC for "book-entry" transfer.
(n) To use their reasonable best efforts to effect the inclusion of
the Notes in PORTAL.
(o) During a period of three years following the date of this
Agreement, to deliver to each of you promptly upon their becoming
available, copies of all current, regular and periodic reports filed by
the Company, the Guarantors and, if the Reorganization occurs, the Parent
with the Commission or any securities exchange or with any governmental
authority succeeding to any of the Commission's functions.
(p) For the period from the date of this Agreement through the
Closing Date, neither the Company nor any of the Guarantors will, without
the prior written consent of Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation, directly or indirectly, (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 any debt securities or guarantees of the
Company, any Guarantor or any of their respective subsidiaries or any
securities convertible into or exercisable or exchangeable for any such
debt securities or guarantees or file any registration statement under the
1933 Act with respect to any of the foregoing or (ii) enter into any swap
or other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequences of ownership of any such
debt securities or guarantees, whether any such transaction described in
(i) or (ii) above is to be settled by delivery of such debt securities or
guarantees, other securities, cash or otherwise. The foregoing sentence
shall not apply to bank borrowings or guarantees thereof made in the
ordinary course of business.
5. Representations and Warranties. (a) The Company and each of the
Guarantors, jointly and severally, represent and warrant to, and covenant and
agree with, each of you that:
(i) Offering Memorandum. The Preliminary Offering Memorandum and the
Offering Memorandum have been prepared in connection with the Exempt
Resales. The Preliminary Offering Memorandum and the Offering Memorandum
do not, and any supplement or amendment to any of them will not, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (i) shall not
apply to statements in or omissions from the Preliminary Offering
Memorandum and the Offering Memorandum (or any supplement or amendment
thereto) made in reliance upon and in conformity with information relating
to you furnished to the Company in writing by you expressly for use
therein. No stop order preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum, or any amendment or supplement
thereto, or any order asserting that any of the transactions contemplated
by this Agreement are subject to the registration
8
requirements of the 1933 Act, has been issued. Each of the Preliminary
Offering Memorandum and the Offering Memorandum and each amendment or
supplement thereto contains and will contain all the information specified
in, and meets and will meet the requirements of, Rule 144A(d)(4) under the
1933 Act.
(ii) Other Classes of Debt Securities. When the Notes are issued and
delivered pursuant to this Agreement, none of the Notes will be of the
same class (within the meaning of Rule 144A under the 0000 Xxx) as
securities of the Company or the Guarantors that are listed on a national
securities exchange registered under Section 6 of the 1933 Act or that are
quoted in a United States automated inter-dealer quotation system.
(iii) Officer's Certificates. Each certificate signed by an officer
of the Company or any of the Guarantors and delivered to any of the
Purchasers or counsel for the Purchasers shall be deemed to be a joint and
several representation and warranty by the Company and the Guarantors to
each Purchaser as to matters covered thereby.
(iv) No Registration Required. No registration under the 1933 Act of
the Notes or the Guarantees is required for the sale of the Notes to the
Purchasers as contemplated hereby or for the Exempt Resales assuming (i)
that the purchasers who buy the Notes in the Exempt Resales are either
QIBs or Accredited Investors and (ii) the accuracy of the Purchasers'
representations regarding the absence of general solicitation in
connection with the sale of Notes to the Purchasers and the Exempt Resales
contained herein. No form of general solicitation or general advertising
was used by the Company, the Guarantors or any of their respective
representatives in connection with the offer and sale of any of the Notes
or in connection with Exempt Resales, including, but not limited to,
articles, notices or other communications published in any newspaper,
magazine, or similar medium or broadcast over television or radio, or any
seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. No securities of the same class as
the Notes or the Guarantees have or will be issued and sold by the Company
or any of the Guarantors within the six-month period immediately prior to
and following the date hereof (other than the Series B Notes to be issued
in the Exchange Offer).
(v) ERISA Matters. The execution and delivery of the Company
Documents and the Guarantor Documents and the issuance and sale of the
Notes to be purchased by the Eligible Purchasers will not involve any
prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Internal Revenue Code of 1986. The representation made
by the Company and the Guarantors in the preceding sentence is made in
reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible
Purchasers as set forth in the Offering Memorandum under the Section
entitled "Notice to Investors."
(vi) No Material Adverse Change in Business. Since the date as of
which information is given in the Offering Memorandum, except as otherwise
stated therein, (A) there has been no material adverse change in the
condition, financial or otherwise, or in the
9
earnings, business affairs or business prospects of (1) the Company and
its subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business (a "Material Adverse Effect") or (2)
Xxxxxx and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, (B) there have been no
transactions entered into by the Company or any of its subsidiaries or
Xxxxxx or any of its subsidiaries, in each case other than those in the
ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise or Xxxxxx and
its subsidiaries considered as one enterprise, respectively; and (C) there
has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock. For purposes of this
Agreement, all references to "subsidiaries" of the Company shall include,
without limitation, in the case of any representation or warranty made or
deemed to have been made as of the Closing Date or at any time thereafter,
Xxxxxx and its subsidiaries.
(vii) Regulations G, T, U and X. Neither the Company, the Guarantors
nor any agent thereof acting on the behalf of any of them has taken, and
none of them will take, any action that might cause this Agreement or the
issuance or sale of the Notes to violate Regulation G (12 C.F.R. Part
207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221)
or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System or analogous foreign laws and regulations.
(viii) Independent Accountants. The accountants who audited the
financial statements and supporting schedules, if any, included in the
Offering Memorandum are independent certified public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(ix) Financial Statements. The financial statements of the Company,
the consolidated financial statements of Xxxxxx and the financial
statements of KUI included in the Offering Memorandum, in each case
together with the related schedules (if any) and notes, present fairly the
financial position of the Company, the financial position of Xxxxxx and
its consolidated subsidiaries, and the financial position of KUI,
respectively, at the dates indicated and the results of operations,
changes in stockholders' equity and cash flows of the Company, of Xxxxxx
and its consolidated subsidiaries, and of KUI, respectively, for the
periods specified; and said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods involved. The supporting
schedules, if any, included in the Offering Memorandum present fairly in
accordance with GAAP the information required to be stated therein. The
selected historical financial data and the summary historical financial
information included in the Offering Memorandum present fairly the
information shown therein and have been compiled on a basis consistent
with that of the Company's and Xxxxxx', as applicable, audited financial
statements included in the Offering Memorandum. The pro forma financial
statements and the related notes thereto included in the Offering
Memorandum present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof
10
are reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
(x) Good Standing of the Company. The Company has been duly
incorporated and is validly existing as a corporation authorized to
transact business in the corporate form and is in good standing under the
laws of the State of Washington and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Offering Memorandum and to enter into and perform its
obligations under the Company Documents; and the Company is not required
to qualify as a foreign corporation to transact business in any other
jurisdiction.
(xi) Good Standing of Subsidiaries. The only subsidiaries of Xxxxxx
are Xxxxxx Realty, Inc., Univar San Bernardino, Inc., and MM Foods, Inc.,
each of which is a California corporation. The only subsidiaries of the
Company are KUA, QHI, Second Story, Inc., a Washington corporation,
Parent, the Holding Company and, at the Closing Date, Xxxxxx and its
subsidiaries. Each of KUA, Hughes, Parent and the Holding Company has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Offering Memorandum and to
enter into and perform its obligation under the Guarantor Documents to
which it is or will be a party (if any), and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as otherwise disclosed in the
Offering Memorandum, all of the issued and outstanding capital stock of
each of KUA, Parent and the Holding Company has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity (except for
liens created by the Bank Security Agreements); all of the issued and
outstanding capital stock of Xxxxxx has been duly authorized and validly
issued, is fully paid and non-assessable and, on the Closing Date will be
owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
equity (except for liens created by the Bank Security Agreements); and
none of the outstanding shares of capital stock of KUA, Hughes, Parent or
the Holding Company was issued in violation of any preemptive or similar
rights. For the periods covered by the historical financial statements of
the Company included in the Offering Memorandum, the Company did not have
any subsidiaries whose financial statements were required to be
consolidated with those of the Company in accordance with GAAP. As of and
for its fiscal year ended in December of 1996, the aggregate sales,
operating income, net income and assets of the Company's subsidiaries
(excluding KUA) were less than 1% of the Company's total sales, operating
income, net income and assets. For the seven months ended September 29,
1996, subsidiaries of Xxxxxx (other than Santee Dairies, Inc., a
California corporation ("Santee")) accounted for less than 1% of Xxxxxx'
consolidated sales, income from
11
operations, net income and assets (excluding from the computation of the
foregoing amounts attributable to Santee).
(xii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Offering Memorandum in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to the Purchase Agreements or
pursuant to employee benefit plans or the exercise of options referred to
in the Offering Memorandum). The shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; and none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive or
other similar rights of any securityholder of the Company.
(xiii) Authorization of Purchase Agreements. Each of the U.S.
Purchase Agreement and the International Purchase Agreement has been duly
authorized, executed and delivered by the Company. The Debt Agreement has
been duly authorized, executed and delivered by the Company and the
Guarantors, other than Xxxxxx; at the Closing Date, the Debt Agreement
will have been duly authorized, executed and delivered by Xxxxxx.
(xiv) Absence of Defaults and Conflicts. Neither the Company,
Parent, the Holding Company, Xxxxxx nor KUA is in violation of its charter
or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease
or other agreement or instrument to which it is a party or by which it or
any of them may be bound, or to which any of its property or assets is
subject (collectively, "Agreements and Instruments", which term shall
include, without limitation, the Investor Agreements (as defined below),
the Company Documents and the Guarantor Documents), except for such
defaults under Agreements and Instruments (other than the New Credit
Agreement or the Indenture) that would not result in a Material Adverse
Effect; and the execution, delivery and performance of the Company
Documents and the Guarantor Documents and the consummation of the
transactions contemplated herein and therein and in the Offering
Memorandum (including, without limitation, (i) the issuance and sale of
the Securities and the Notes and the borrowing of funds under the New
Credit Agreement and the application of the proceeds therefrom as
described in the Offering Memorandum under the caption "Use of Proceeds"
and (ii) the consummation of the Xxxxxx Merger) and compliance by the
Company and the Guarantors with their respective obligations and
agreements under the Company Documents and the Guarantor Documents have
been duly authorized by all necessary corporate action and do not and will
not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance (other than liens on the Bank Collateral
(as defined below) created by the Bank Security Agreements in favor of the
Lenders) upon any property or assets of the Company, the Holding Company,
Parent, Xxxxxx or KUA pursuant to, any Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or encumbrances
under Agreements and Instruments, other than the New Credit Agreement, the
Indenture and the
12
Investor Agreements, that would not result in a Material Adverse Effect),
nor will such action result in any violation of the provisions of the
charter or by-laws of the Company, Parent, the Holding Company, Xxxxxx or
KUA or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company, Parent, the
Holding Company, Xxxxxx or KUA or any of their respective assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the issuer or obligor. No consents or
waivers from any other person are required for the execution, delivery and
performance of any of the Company Documents or the Guarantor Documents or
the consummation of any of the transactions contemplated hereby and
thereby, other than such consents and waivers as have been obtained (or,
in the case of the Registration Rights Agreement, will be obtained).
As used in this Agreement, the term "Investor Agreements" means (A)
the Standstill Agreement dated as of January 14, 1995 between the Company
and Xxxx/Chilmark Fund L.P. (the "Xxxx/Chilmark Standstill Agreement"),
(B) the Standstill Agreement dated as of January 14, 1995 between the
Company and Xxxxxx X. Xxxxx (the "Xxxxx Standstill Agreement"), (C) the
Investor Rights Agreement dated as of March 1, 1995 (the "Xxxxx Investor
Rights Agreement") between the Company and Xxxxxxx X. Xxxxx, Xxxxxxx X.
Xxxxx and Xxxxxxx X. Xxxxx, (D) the Investor Rights Agreement among the
Company, Xxxxxxx X. Xxxx, E. Xxxxxx Xxxx and the other persons party
thereto (the "Food Giant Investor Rights Agreement") and (E) the Investor
Rights Agreement dated February 14, 1997 among the Company and the other
persons party thereto (the "KUI Investor Rights Agreement;" and the term
"Common Stock Registration Rights Agreements" means the agreements
referred to in clauses (A), (C), (D) and (E) of this sentence.
(xv) Absence of Labor Dispute. There is (i) no unfair labor practice
complaint pending against the Company, Xxxxxx or KUA nor, to the best
knowledge of the Company, threatened against any of them, before the
National Labor Relations Board, any state or local labor relations board
or any foreign labor relations board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is
pending against the Company, Xxxxxx or KUA or, to the best knowledge of
the Company, threatened against any of them, which, individually or in the
aggregate, may reasonably be expected to result in a Material Adverse
Effect, (ii) no strike, labor dispute, slowdown or stoppage pending
against the Company, Xxxxxx or KUA nor, to the best knowledge of the
Company, threatened against the Company, Xxxxxx or KUA which, individually
or in the aggregate, may reasonably be expected to result in a Material
Adverse Effect, and (iii) to the best knowledge of the Company, no union
representation question existing with respect to the employees of the
Company, Xxxxxx or KUA and no union organizing activities are taking place
with respect to any such employees. Neither the Company, Xxxxxx nor KUA
has violated any federal, state or local law or foreign law relating to
discrimination in hiring, promotion or pay of employees, or any applicable
wage or hour laws, or any provision of the Employee
13
Retirement Income Security Act of 1974, as amended ("ERISA"), or the rules
and regulations thereunder, or analogous foreign laws and regulations,
which may reasonably be expected to result in a Material Adverse Effect.
The Company is not aware of any existing or imminent labor disturbance by
the employees of any principal suppliers, manufacturers, customers or
contractors of the Company, Xxxxxx or KUA, which, individually or in the
aggregate, may reasonably be expected to result in a Material Adverse
Effect.
(xvi) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company, Parent, the
Holding Company, Xxxxxx or KUA, which, if the Offering Memorandum were a
prospectus subject to the 1933 Act, would be required to be disclosed in
the Offering Memorandum (other than as disclosed therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in the Company Documents or the Guarantor Documents or the
performance by any of the parties thereto of their respective obligations
or agreements thereunder; and the aggregate of all pending legal or
governmental proceedings to which the Company, Parent, the Holding
Company, Xxxxxx or KUA is a party or of which any of their respective
property or assets is the subject which are not described in the Offering
Memorandum, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(xvii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the authorization, execution, delivery or
performance by the Company of any of the Company Documents or by any of
the Guarantors of any of the Guarantor Documents, for the performance by
Xxxxxx of the Xxxxxx Merger Agreement, for the offering, issuance or sale
of the Securities under the Purchase Agreements or of the Notes or the
Guarantees under the Debt Agreement, or for the consummation of the Xxxxxx
Merger or the other transactions contemplated by the Company Documents and
the Guarantor Documents, except (A) such as may have been obtained under
the 1933 Act or the 1933 Act Regulations in connection with the offering
of the Securities, (B) such as may be required under state securities
laws, (C) the filing of the appropriate agreement of merger and officers'
certificates of each of Xxxxxx and QHI relating to the approval of the
Xxxxxx Merger and a tax clearance certificate relating to Xxxxxx'
assumption of QHI's obligations to pay California franchise taxes (all as
provided for in Section 1103 of the California Corporations Code) with the
Secretary of State of the State of California in connection with the
Xxxxxx Merger, (D) the filing of financing statements and continuation
statements under the Uniform Commercial Code (the "UCC") of the States of
Washington and California in connection with the Bank Security Agreements,
(E) the filing of termination statements (if any) under the UCC of the
State of Washington and other appropriate jurisdictions terminating the
security interests created by the Old Security Agreements, and (F) such as
will
14
be required under the 1933 Act, the 1933 Act Regulations and the Trust
Indenture Act of 1939, as amended (the "1939 Act") in connection with the
Registration Rights Agreement.
(xviii) Possession of Licenses and Permits. The Company, Xxxxxx and
KUA possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them; the Company,
Xxxxxx and KUA are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company, Xxxxxx nor KUA has
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
(xix) Title to Property. The Company, Xxxxxx and KUA have good and
marketable title to all real property and improvements owned by them and
good title to all other properties owned by them, in each case, free and
clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described
in the Offering Memorandum or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by
them; all of the leases and subleases under which the Company, Xxxxxx or
KUA holds properties are valid, binding and in full force and effect, and
neither the Company, Xxxxxx or KUA has any notice of any claim of any sort
that has been asserted by anyone adverse to the rights of the Company,
Xxxxxx or KUA under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company, Xxxxxx or KUA to the
continued possession of the leased or subleased premises under any such
lease or sublease which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect; and no
default by the Company, Xxxxxx or KUA has occurred and is continuing under
any such lease or sublease, and no material defaults by the landlord or
sublessor, as the case may be, are existing under any such lease or
sublease which, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
(xx) Compliance with Cuba Act. To the extent that the Cuba Act is
applicable, the Company has complied with, and is and will be in
compliance with, the provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder (collectively,
the "Cuba Act") or is exempt therefrom.
(xxi) Investment Company Act. Neither the Company nor any of its
subsidiaries is and, upon the issuance and sale of the Securities and the
Notes pursuant to the Purchase
15
Agreements and the Debt Agreement, respectively, and the application of
the net proceeds therefrom as described in the Offering Memorandum, none
of them will be an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xxii) Environmental Laws. Except as described in the Offering
Memorandum and except as would not, singly or in the aggregate, result in
a Material Adverse Effect, (A) neither the Company, Xxxxxx nor KUA is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution
or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company, Xxxxxx and KUA have all permits,
authorizations and approvals required under any applicable Environmental
Laws and are each in compliance with their requirements, (C) there are no
pending or threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company, Xxxxxx or KUA and (D) there are no events or
circumstances that might reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company, Xxxxxx or KUA relating to Hazardous Materials or any
Environmental Laws.
(xxiii) Tax Returns. All tax returns required to be filed by the
Company, Xxxxxx or KUA, in all jurisdictions, have been so filed. All
taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities or that
are due and payable have been paid, other than those being contested in
good faith and for which adequate reserves have been provided or those
currently payable without penalty or interest. The Company knows of no
material proposed additional tax assessments against the Company, Xxxxxx
or KUA.
(xxiv) Absence of Registration Rights. There are no persons with
registration rights or other similar rights to have any securities (debt
or equity) (A) registered pursuant to the registration statement
registering the Securities under the 1933 Act or any of the registration
statements contemplated by the Registration Rights Agreement or included
in any of the offerings contemplated by the Purchase Agreements or the
Registration Rights Agreement or (B) except for such rights as are
accurately described in the prospectuses relating to the offering of the
Securities under "Shares Eligible for Future Sale," otherwise registered
by the Company under the 1933 Act (the rights referred to in clauses (A)
and (B), collectively, the "Rights"); and the Company has complied with
all of its obligations and agreements under the
16
Investor Agreements in connection with the transactions contemplated by
the Purchase Agreements. Schedule D to the Purchase Agreements contains a
true, complete, and correct listing of all persons with Rights, the Common
Stock Registration Rights Agreement under which such Rights arise and the
number of shares of Common Stock covered by each such Common Stock
Registration Rights Agreement.
(xxv) New Credit Agreement. At or prior to the Closing Date, the New
Credit Agreement will have been duly authorized by the Company, Parent and
the Holding Company; at or prior to the Closing Date, the New Credit
Agreement will have been duly executed and delivered by, and will be a
valid and binding agreement of, the Company, Parent and the Holding
Company, enforceable in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors'
rights generally or by general principles of equity, and all conditions
precedent to the effectiveness of the New Credit Agreement, and all
conditions precedent to the right of the Company to make borrowings under
the New Credit Agreement (other than delivery of borrowing requests,
bring-down officer's certificates or other customary documents required as
a condition to each borrowing), will have been satisfied or waived.
(xxvi) Bank Guaranty. At or prior to the Closing Date, the Bank
Guaranty will have been duly authorized by the Bank Guarantors; at or
prior to the Closing Date, the Bank Guaranty will have been duly executed
and delivered by, and will be the valid and binding agreements of, the
Bank Guarantors, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general principles of equity.
(xxvii) Bank Security Agreements. At or prior to the Closing Date,
the Bank Security Agreements will have been duly authorized by the Company
and the Parent, respectively; at or prior to the Closing Date, the Bank
Security Agreements will have been duly executed and delivered by, and
will be the valid and binding agreements of, the Company and the Parent,
enforceable in accordance with their terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or
by general principles of equity.
(xxviii) Xxxxxx Merger. The Xxxxxx Merger will become effective upon
the filing of the agreement of merger provided for in the Xxxxxx Merger
Agreement, an officers' certificate of each of Xxxxxx and QHI relating to
the approval of the Xxxxxx Merger and a tax clearance certificate relating
to Xxxxxx' assumption of QHI's obligations to pay California franchise
taxes (all as provided for in Section 1103 of the California Corporations
Code) (collectively, the "Merger Filing") with the Secretary of State of
the State of California. Prior to the Closing Date, the Merger Filing will
have been duly authorized, executed and delivered by the parties thereto,
will comply with all applicable requirements of the laws of the State of
California, and will have been duly filed in the appropriate governmental
offices in the State
17
of California. The Xxxxxx Merger will be effective prior to or
concurrently with the purchase of the Initial U.S. Securities by the U.S.
Underwriters, with Xxxxxx surviving the Xxxxxx Merger as a wholly-owned
direct subsidiary of the Company. The Company believes that all conditions
precedent to the effectiveness of the Xxxxxx Merger and to the obligations
of the parties to the Xxxxxx Merger Agreement which have not already been
satisfied will be satisfied or waived at or prior to the Closing Date.
(xxix) Authorization of Xxxxxx Merger Agreement. The Xxxxxx Merger
Agreement has been duly authorized, executed and delivered by and is a
valid and binding agreement of each of the Company, QHI and Xxxxxx.
(xxx) Incorporated Documents. The documents incorporated or deemed
to be incorporated by reference in the Offering Memorandum, at the time
they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder and, when read together with the other information
in the Offering Memorandum, at the time the Offering Memorandum was issued
and at the Closing Date, did not and will 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 the light of the
circumstances under which they were made, not misleading.
(xxxi) Description of Documents. The Company Documents and the
Guarantor Documents will conform in all material respects to the
respective statements relating thereto contained in the Offering
Memorandum.
(xxxii) Usury. The payment by the Company and the Guarantors of any
and all amounts which become due and payable under the Indenture, the
Notes, the Series B Notes, the Guarantees or the Registration Rights
Agreement, and their respective obligations to pay such amounts, do not
and will not violate any usury or similar law or regulation.
(xxxiii) Value of Assets, Etc. The present fair saleable value of
the assets of the Company and each of the Guarantors exceeds the amount
that will be required to be paid on or in respect of the existing debts
and other liabilities (including contingent liabilities) of each such
person as they become absolute and matured. The assets of the Company and
each of the Guarantors do not constitute unreasonably small capital to
carry out their businesses as conducted or as proposed to be conducted.
The Company does not, and no Guarantor intends to, nor do the Company or
any Guarantor believe that it will, incur debts beyond its ability to pay
such debts as they mature. Upon the issuance of the Notes and the
Guarantees, after giving effect to the other borrowings (and guarantees
thereof) to be made to finance the Xxxxxx Merger and to retire the
borrowings under the Old Credit Agreement, the present fair saleable value
of the assets of the Company and each of the Guarantors will exceed the
amount that will be required to be paid on or in respect of the existing
debts and other liabilities (including contingent liabilities) of such
person as they become absolute and matured. The assets of the Company and
each of the Guarantors, upon the issuance of the
18
Notes and the Guarantees and after giving effect to the other borrowings
(and guarantees thereof) to be made to finance the Xxxxxx Merger and to
retire the borrowings under the Old Credit Agreement, will not constitute
unreasonably small capital to carry out their businesses as not conducted,
including the capital needs of the Company and each of the Guarantors,
taking into account the projected capital requirements and capital
availability of the Company and each of the Guarantors.
(xxxiv) Indenture. The Indenture has been duly authorized by the
Company and each of the Guarantors, other than Xxxxxx; at the Closing
Date, the Indenture will have been duly authorized by Xxxxxx and duly
executed and delivered by, and will be a valid and binding agreement of,
the Company and each of the Guarantors, enforceable in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally, or by general principles of
equity.
(xxxv) Notes. The Notes have been duly authorized by the Company; on
the Closing Date, the Notes will have been duly executed by the Company
and authenticated by the Trustee and, when delivered pursuant to the Debt
Agreement against payment of the consideration set forth therein, will be
valid and binding obligations of the Company, enforceable in accordance
with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general
principles of equity, and will be entitled to the benefits of the
Indenture.
(xxxvi) Registration Rights Agreement. The Registration Rights
Agreement has been duly authorized by the Company and each of the
Guarantors other than Xxxxxx; at the Closing Date, the Registration Rights
Agreement will have been duly authorized by Xxxxxx and duly executed and
delivered by, and will be a valid and binding agreement of, the Company
and each of the Guarantors, enforceable in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditor's rights generally or by general principles of equity.
(xxxvii) Series B Notes. The Series B Notes have been duly
authorized by the Company and, when delivered in exchange for Notes in
accordance with the terms of the Indenture, the Registration Rights
Agreement and the Exchange Offer, will be valid and binding obligations of
the Company, enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general principles of equity, and will
be entitled to the benefits of the Indenture.
The Company and the Guarantors acknowledge that the Purchasers and, for
purposes of the opinions to be delivered to the Purchasers pursuant to Section 7
hereof, counsel to the Company and
19
the Guarantors and counsel to the Purchasers will rely upon the accuracy and
truth of the foregoing representations and hereby consent to such reliance.
(b) Each Purchaser represents and warrants, severally and not jointly, to
the Company, the Guarantors and the other Purchasers and agrees, severally and
not jointly, that:
(i) Such Purchaser is a QIB, with such knowledge and experience in
financial and business matters as are necessary in order to evaluate the
merits and risks of an investment in the Notes.
(ii) Such Purchaser (A) is not acquiring the Notes with a view to
any distribution thereof that would violate the 1933 Act or the securities
laws of any state of the United States or any other applicable
jurisdiction and (B) will be reoffering and reselling the Notes only to
QIBs in reliance on the exemption from the registration requirements of
the 1933 Act provided by Rule 144A and to Accredited Investors in a
private placement exempt from the registration requirements of the 1933
Act.
(iii) No form of general solicitation or general advertising has
been or will be used by such Purchaser or any of its representatives in
connection with the offer and sale of any of the Notes, including, but not
limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
(iv) It has solicited and will solicit offers for the Notes only
from, and has offered, sold and delivered and will offer, sell and deliver
the Notes as part of its initial offering only to, (A) persons whom it
reasonably believes to be QIBs purchasing for their own account or, if
such person is purchasing for one or more institutional accounts for which
it is acting as fiduciary or agent, only if such Purchaser reasonably
believes that each such account is a QIB over which such person exercises
sole investment discretion and to which notice has been given that such
sale or delivery is being made in reliance on Rule 144A, in each case in a
transaction complying with Rule 144A, and (B) a limited number of
Accredited Investors and, if any such Accredited Investor is buying for
one or more institutional accounts ("investor accounts") for which it is
acting as fiduciary or agent, each such investor account is an Accredited
Investor on a like basis and such Accredited Investor and each such
investor account, as the case may be, is purchasing Notes in an aggregate
principal amount of at least $100,000, and each such Accredited Investor
shall execute a letter in the form of Annex A attached to the Offering
Memorandum; and such Purchaser further acknowledges and agrees that the
Notes have not been registered under the 1933 Act or any other applicable
securities laws and, unless so registered, may be offered, sold, assigned,
transferred, pledged, encumbered or otherwise disposed of only (i) to the
Company, (ii) pursuant to a registration statement which has been declared
effective under the 1933 Act, (iii) to a person it reasonably believes is
a QIB that purchases for its own account or for the account of a QIB to
whom notice is given that the transfer is being made in reliance on Rule
144A, in each case in a
20
transaction meeting the requirements of Rule 144A, (iv) pursuant to offers
and sales to non-U.S. persons that occur outside the United States within
the meaning of Regulation S under the 1933 Act ("Regulation S") in
transactions which comply with Regulation S, (v) to an Accredited Investor
that is acquiring the Notes for its own account or for the account of such
an Accredited Investor, for investment purposes and not with a view to, or
for offer or sale in connection with, any distribution and violation of
the 1933 Act, or (vi) in a transaction meeting the requirements of Rule
144 or pursuant to any other available exemption from the registration
requirements under the 1933 Act and, in each case, in accordance with any
applicable securities laws of any state of the United States or any other
applicable jurisdiction; and such Purchaser will, and each subsequent
holder is required to, notify any purchaser from it of any Notes of the
resale restrictions set forth in clauses (i) through (vi) above.
(v) Such Purchaser also understands that the Company, the Guarantors
and, for purposes of the opinions to be delivered to you pursuant to
Section 7 hereof, counsel to the Company and the Guarantors and counsel to
the Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
6. Indemnification.
(a) The Company and the Guarantors, jointly and severally, agree to indemnify
and hold harmless (i) each of the Purchasers, (ii) each person, if any, who
controls (within the meaning of Section 15 of the 1933 Act or Section 20 of the
0000 Xxx) any of the Purchasers (any of the persons referred to in this clause
(ii) being hereinafter sometimes referred to as a "controlling person"), and
(iii) the respective officers, directors, partners, employees, representatives
and agents of any of the Purchasers or any controlling person (any person
referred to in clause (i), (ii) or (iii) being hereinafter sometimes referred to
as an "Indemnified Person") from and against any and all losses, claims,
damages, liabilities, judgments, actions and expenses (including without
limitation and as incurred, reimbursement of all reasonable costs of
investigating, preparing, settling, pursuing or defending any claim or action,
or any investigation or proceeding by any governmental agency or body, commenced
or threatened, including the reasonable fees and expenses of counsel to any
Indemnified Person) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum or
the Offering Memorandum (or any amendment or supplement thereto), or any
omission or alleged omission to state therein a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by an untrue statement or omission or alleged
untrue statement or omission that is made in reliance upon and in conformity
with information relating to such Purchaser furnished in writing to the Company
by such Purchaser expressly for use therein, and except that such indemnity with
respect to the Preliminary Offering Memorandum shall not inure to the benefit of
any Purchaser (or any person controlling such Purchaser) from whom the person
asserting such loss, claim, damage or liability purchased the Notes which are
the subject thereof if such person did not receive a copy of the Offering
Memorandum (or the Offering Memorandum as amended or supplemented) at or prior
to the confirmation of the sale of such Notes
21
to such person in any case where the Company complied with its obligations under
Sections 4(b) and 4(c) hereof (and any such amended or supplemented Offering
Memorandum, as applicable, shall have been delivered by the Company to such
Purchaser a reasonable amount of time prior to the mailing or delivery, as
applicable, of such confirmation) and any such untrue statement or omission or
alleged untrue statement or omission of a material fact contained in the
Preliminary Offering Memorandum was corrected in the Offering Memorandum (or the
Offering Memorandum as amended or supplemented). The Company and the Guarantors
shall notify you promptly of the institution, threat or assertion of any claim,
proceeding (including any governmental investigation) or litigation in
connection with the matters addressed by this Agreement which involves the
Company or any of the Guarantors or an Indemnified Person.
(b) In case any action or proceeding (including any governmental
investigation) shall be brought or asserted against any of the Indemnified
Persons with respect to which indemnity may be sought against the Company
or the Guarantors, such Indemnified Person shall promptly notify the
Company and the Guarantors in writing (provided, that the failure to give
such notice shall not relieve the Company or the Guarantors of any of
their respective obligations pursuant to this Agreement to the extent the
Company or the Guarantors are not materially prejudiced as a result
thereof and in any event shall not relieve the Company or the Guarantors
from any liability which any of them may have otherwise than on account of
this indemnity agreement). Such Indemnified Person shall have the right to
employ their own counsel in any such action and the fees and expenses of
such counsel shall be paid, as incurred, by the Company and the Guarantors
(regardless of whether it is ultimately determined that an Indemnified
Person is not entitled to indemnification hereunder). Notwithstanding the
foregoing, if they so elect within a reasonable time after receipt of
notice referred to above, the Company and the Guarantors, jointly with any
other indemnifying parties receiving such notice, may assume the defense
of such action with counsel chosen by the Company and approved by the
Indemnified Persons defendant in such action (which approval shall not be
unreasonably withheld, it being understood that in the case of the
Indemnified Persons under Section 6(a) above, such approval shall be given
by Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation), unless such
Indemnified Persons reasonably object to such assumption on the ground
that there may be legal defenses available to them which are different
from or in addition to those available to the Company and the Guarantors,
in which case the Company and the Guarantors shall not be entitled to
assume the defense of such action. If the Company and the Guarantors
assume the defense of such action, the Company and the Guarantors shall
not be liable for any fees and expenses of counsel for the Indemnified
Persons incurred thereafter in connection with such action. The Company
and the Guarantors shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any
local counsel) at any time for the Indemnified Persons, which firm
(together with any such local counsel) shall be designated by Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation. The Company and the Guarantors
shall be liable for any settlement of any such action or proceeding
effected with the Company's prior written consent, which consent will not
be unreasonably withheld, and
22
the Company and the Guarantors agree to indemnify and hold harmless any
Indemnified Person from and against any loss, claim, damage, liability or
expense by reason of any settlement of any action effected with the
written consent of the Company. Notwithstanding the immediately preceding
sentence, if at any time an Indemnified Person shall have requested an
indemnifying party to reimburse the Indemnified Person for fees and
expenses of counsel as contemplated by the second sentence of this
paragraph, each indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent or the
written consent of any other indemnifying party if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not
have reimbursed the Indemnified Person in accordance with such request
prior to the date of such settlement. The Company and the Guarantors shall
not, without the prior written consent of an Indemnified Person, settle or
compromise or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, claim, litigation or
proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not any Indemnified Person is a party
thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of such Indemnified Person from all
liability arising out of such action, claim, litigation or proceeding.
(c) Each of the Purchasers agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantors and any person
controlling (within the meaning of Section 15 of the 1933 Act or Xxxxxxx
00 xx xxx Xxxxxxxx 0000 Xxx) the Company or the Guarantors, and the
respective officers, directors, partners, employees, representatives and
agents of each such person, to the same extent as the foregoing indemnity
from the Company and the Guarantors to each of the Indemnified Persons,
but only with respect to claims and actions based on an untrue statement
or omission or alleged untrue statement or omission that is made in
reliance upon and in conformity with information relating to such
Purchaser furnished in writing by such Purchaser to the Company expressly
for use in the Preliminary Offering Memorandum or the Offering Memorandum
or any amendment or supplement thereto.
The paragraph on page (ii) regarding stabilization, the statements
to the effect that the Purchasers have informed the Company that they each
currently intend to make a market in the Notes and, if issued, the Series
B Notes, set forth under "Summary--The Notes Offering--Absence of Market
for the Notes" and in the first paragraph under "Risk Factors--Lack of
Public Market; Restrictions on Transferability", and the information in
the first four sentences of the fourth paragraph and the sixth paragraph
under "Plan of Distribution" constitute the only information furnished to
the Company or any of the Guarantors in writing by any Purchaser expressly
for use in the Preliminary Offering Memorandum or the Offering Memorandum,
or any amendment or supplement thereto.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or expenses referred to
23
herein, 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 expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and
the indemnified party on the other hand from the offering of the Notes or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party and the indemnified party, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantors, on the one hand, and the
Purchasers, on the other hand, shall be deemed to be in the same
proportion as the total proceeds from the offering of the Notes (net of
discounts and commissions but before deducting expenses) received by the
Company and the total discounts and commissions received by the Purchasers
bear to the total price to investors of the Notes, in each case as set
forth in the table on the cover page of the Offering Memorandum. The
relative fault of the Company and the Guarantors, on the one hand, and of
the Purchasers, 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
related to information supplied by the Company or any Guarantor, on the
one hand, or the Purchasers, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The indemnity and contribution
provisions set forth herein shall be in addition to any liability or
obligation the Company and the Guarantors may otherwise have to any
Indemnified Person.
The Company, the Guarantors and the Purchasers agree that it would
not be just and equitable if contribution pursuant to this Section 6(d)
were determined by pro rata allocation (even if the Purchasers were
treated as one entity for such purpose) 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 expenses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Xxxxxxx 0, xxxx of the
Purchasers shall be required to contribute any amount in excess of the
amount by which the total discounts and commissions received by such
Purchaser with respect to the Notes exceeds the amount of any damages
which such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Purchasers' obligations to contribute pursuant to this Section 6(d) are
several in proportion to the respective principal amount of Notes
purchased by each of the Purchasers hereunder and not joint.
24
7. Conditions of Purchasers' Obligations. The several obligations of the
Purchasers under this Agreement are subject to the satisfaction of each of the
following conditions:
(a) All of the representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct on the
date hereof and on the Closing Date with the same force and effect as if
made on and as of the date hereof and the Closing Date, respectively. The
Company and the Guarantors shall have performed or complied with all of
the agreements herein contained and required to be performed or complied
with by them at or prior to the Closing Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Purchasers not later than 10:00 a.m., New York City
time, on the date following the date of this Agreement or at such later
date and time as to which you may agree, and no stop order suspending the
qualification or exemption from qualification of any of the Notes or
Guarantees in any jurisdiction referred to in Section 4(e) shall have been
issued and no proceeding for that purpose shall have been commenced or
shall be pending or threatened.
(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance of any of
the Notes; no action, suit or proceeding shall be pending against or
affecting or, to the knowledge of the Company or any Guarantor, threatened
against, the Company, any Guarantor or any of their respective
subsidiaries before any court or arbitrator or any governmental body,
agency or official that, if adversely determined, would prohibit,
interfere with or adversely affect the issuance of the Notes or would have
a Material Adverse Effect; and no stop order preventing the use of the
Offering Memorandum, or any amendment or supplement thereto, or any order
asserting that any of the transactions contemplated by this Agreement are
subject to the registration requirements of the 1933 Act shall have been
issued.
(d) At the Closing Date, (A) there have been no transactions entered
into by the Company and its subsidiaries (including, without limitation,
Xxxxxx, KUA and Santee) in each case other than those in the ordinary
course of business, which are material with respect to the Company and its
subsidiaries (including, without limitation, Xxxxxx, KUA and Santee)
considered as one enterprise; and (B) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(e) You shall have received a certificate, dated the Closing Date,
signed by the President or any Vice President and the principal financial
or accounting officer of the Company confirming, as of the Closing Date,
the matters set forth in paragraphs (a), (b), (c) and (d) of this Section
7.
(f) On the Closing Date, the Purchasers shall have received the
favorable opinion, dated as of Closing Date, of Xxxxx & Xxxxx P.L.L.C.,
counsel for the Company, in form and
25
substance satisfactory to counsel for the Purchasers, to the effect set
forth in Exhibit B hereto and to such further effect as counsel to the
Purchasers may reasonably request.
In rendering such opinion, such counsel shall state (A) that such
opinion is limited to matters arising under the laws of the State of
Washington, and (B) that, in rendering their opinions pursuant to this
Agreement, Xxxxxxx Xxxxxxx & Xxxxxxxx and Xxxxx & Xxxx LLP each may rely
upon such opinion, as if it were addressed to them, as to all matters
arising under the laws of the State of Washington. In rendering such
opinion, Xxxxx & Gates P.L.L.C. may rely (i) as to matters involving the
application of the laws of any other state upon the opinion of local
counsel satisfactory to the Purchasers (which opinion shall be dated and
furnished to the Purchasers at the Closing Date, shall be satisfactory in
form and substance to counsel for the Purchasers and shall expressly state
that the Purchasers may rely on such opinion as if it were addressed to
them), provided that Xxxxx & Xxxxx P.L.L.C. shall state in their opinion
that they believe that they and the Purchasers are justified in relying
upon such opinion and (ii) as to matters of fact (but not as to legal
conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company, Xxxxxx, Santee and KUA and public
officials. Such opinion shall not state that it is to be governed or
qualified by, or that it is otherwise subject to, any treatise, written
policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law
(1991).
(g) On the Closing Date, the Purchasers shall have received the
favorable opinion, dated as of Closing Date, of Xxxxxxx Xxxxxxx &
Xxxxxxxx, counsel for the Company, in form and substance satisfactory to
counsel for the Purchasers, to the effect set forth in Exhibit C hereto
and to such further effect as counsel for the Purchasers may reasonably
request.
In rendering such opinion, such counsel shall state (A) that such
opinion is limited to matters arising under the laws of the State of New
York, the General Corporation Law of the State of Delaware and the federal
laws of the United States of America and (B) that insofar as such opinion
relates to matters arising under the laws of the States of Washington or
California, such counsel has relied upon the opinion of Xxxxx & Gates
P.L.L.C. delivered pursuant to Section 7(f) hereof or upon the opinion of
O'Melveny & Xxxxx LLP delivered pursuant to Section 7(h) hereof,
respectively. In rendering such opinion, Xxxxxxx Xxxxxxx & Xxxxxxxx may
rely (i) as to matters involving the application of the laws of any other
state upon the opinion of local counsel satisfactory to the Purchasers
(which opinion shall be dated and furnished to the Purchasers on the
Closing Date, shall be satisfactory in form and substance to counsel for
the Purchasers and shall expressly state that the Purchasers may rely on
such opinion as if it were addressed to them), provided that Xxxxxxx
Xxxxxxx & Xxxxxxxx shall state in their opinion that they believe that
they and the Purchasers are justified in relying upon such opinion and
(ii) as to matters of fact (but not as to legal conclusions), to the
extent they deem proper, on certificates of responsible officers of the
Company, Xxxxxx, Santee and KUA and public officials. Such opinion shall
not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document
relating to legal
26
opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
(h) On the Closing Date, the Purchasers shall have received the
favorable opinion, dated as of Closing Date, of O'Melveny & Xxxxx LLP,
counsel for Xxxxxx, in form and substance satisfactory to counsel for the
Purchasers, to the effect set forth in Exhibit D hereto and to such
further effect as counsel to the Purchasers may reasonably request.
In rendering such opinion, such counsel shall state (A) that such
opinion is limited to matters arising under the laws of the State of
California and (B) that, in rendering their opinions pursuant to this
Agreement, Xxxxxxx Xxxxxxx & Xxxxxxxx and Xxxxx & Xxxx LLP may rely upon
such opinion, as if it were addressed to them, as to all matters arising
under the laws of the State of California. In rendering such opinion,
O'Melveny & Xxxxx LLP may rely (i) as to matters involving the application
of the laws of any other state upon the opinion of local counsel
satisfactory to the Purchasers (which opinion shall be dated and furnished
to the Purchasers on the Closing Date, shall be satisfactory in form and
substance to counsel for the Purchasers and shall expressly state that the
Purchasers may rely on such opinion as if it were addressed to them),
provided that O'Melveny & Xxxxx LLP shall state in their opinion that they
believe that they and the Purchasers are justified in relying upon such
opinion and (ii) as to matters of fact (but not as to legal conclusions),
to the extent they deem proper, on certificates of responsible officers of
the Company, Xxxxxx and Santee and public officials. Such opinion shall
not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
(i) On the Closing Date, the Purchasers shall have received the
favorable opinion, dated as of Closing Date, of Xxxxxxxxx & Xxxxxxxxxxx,
P.C., counsel for the Company, in form and substance satisfactory to
counsel for the Purchasers, to the effect set forth in Exhibit E hereto
and to such further effect as counsel to the Purchasers may reasonably
request.
In rendering such opinion, such counsel shall state that such
opinion is limited to matters arising under the laws of the State of
Illinois and the General Corporation Law of the State of Delaware. In
rendering such opinion, Xxxxxxxxx & Xxxxxxxxxxx, P.C. may rely (i) as to
matters involving the application of the laws of any other state upon the
opinion of local counsel satisfactory to the Purchasers (which opinion
shall be dated and furnished to the Purchasers at the Closing Date, shall
be satisfactory in form and substance to counsel for the Purchasers and
shall expressly state that the Purchasers may rely on such opinion as if
it were addressed to them), provided that Xxxxxxxxx & Xxxxxxxxxxx, P.C.
shall state in their opinion that they believe that they and the U.S.
Underwriters are justified in relying upon such opinion and (ii) as to
matters of fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of the Company, Xxxxxx and
Santee and public officials. Such opinion shall not state that it is to be
governed or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section
of Business Law (1991).
27
(j) You shall have received an opinion, dated the Closing Date, of
Xxxxx & Xxxx LLP, your counsel, in form and substance reasonable
satisfactory to you, covering such matters as are customarily covered in
such opinions.
(k) Xxxxx & Wood LLP shall have been furnished with such documents
and opinions, in addition to those set forth above, as they may reasonable
require for the purpose of enabling them to review or pass upon the
matters referred to in this Section 7 and in order to evidence the
accuracy, completeness or satisfaction in all material respects of any of
the representations, warranties or conditions herein contained.
(l) At the time of the execution of this Agreement, the Purchasers
shall have received from each of Deloitte & Touche LLP and Xxxxxx Xxxxxxxx
LLP a letter or letters dated such date, in form and substance
satisfactory to the Purchasers, containing statements and information of
the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information of the Company, KUI and Xxxxxx, as applicable,
contained in the Offering Memorandum.
(m) On the Closing Date, the Purchasers shall have received from
each of Deloitte & Touche LLP and Xxxxxx Xxxxxxxx LLP a letter or letters,
dated as of the Closing Date, to the effect that they reaffirm the
statements made in the letter or letters furnished pursuant to subsection
(l) of this Section, except that the specified date referred to shall be a
date not more than three business days prior to the Closing Date.
(n) On the Closing Date, each condition to the closing contemplated
by the Xxxxxx Merger Agreement shall have been satisfied or waived. There
shall exist at and as of the Closing Date (after giving effect to the
transactions contemplated by the Purchase Agreements and the Debt
Agreement) no conditions that would constitute a default (or an event that
with notice or lapse of time, or both, would constitute a default) under
the Xxxxxx Merger Agreement. Prior to or concurrently with the purchase of
the Notes by the Purchasers, (i) the Company shall have consummated the
Xxxxxx Merger pursuant to the Xxxxxx Merger Agreement and on terms that
conform to the description thereof in the Offering Memorandum, (ii) the
Xxxxxx Merger shall have become effective pursuant to the laws of the
State of California; (iii) Xxxxxx shall survive the Xxxxxx Merger and
shall be a wholly-owned direct subsidiary of the Company and (iv) Xxxxxx
shall have executed a copy of and become a party to this Agreement and the
Company shall have delivered to the Purchasers evidence, in form and
substance satisfactory to the Purchasers that the conditions specified in
this paragraph shall have been satisfied.
(o) At or prior to the Closing Date, (i) the New Credit Agreement,
the Bank Guaranty and the Bank Security Agreements and all ancillary
instruments and agreements shall have been executed and delivered by the
parties thereto and shall be in form and substance satisfactory to the
Purchasers, and the Company shall have furnished the Purchasers with
copies thereof; and (ii) all conditions precedent to the effectiveness of
the New Credit Agreement, and (except for the delivery of notices of
borrowings, officer's bring-down
28
certificates and other customary documentation required as a condition to
a borrowing) all conditions precedent to the right of the Company to make
borrowings under the New Credit Agreement, shall have been satisfied or
waived and the New Credit Agreement shall be effective.
(p) Concurrently with the purchase of the Notes by the Purchasers,
the Underwriters shall have purchased and paid for the Initial Securities
under the Purchase Agreements.
All opinions, certificates, letters and other documents required by this
Section 7 to be delivered to you will be in compliance with the provisions
hereof only if they are reasonably satisfactory in form and substance to you.
The Company and the Guarantors will furnish the Purchasers with such conformed
copies or photocopies of such opinions, certificates, letters and other
documents as they shall reasonably request.
8. Defaults. If, on the Closing Date, any one or more of the Purchasers
shall fail or refuse to purchase the Notes that it or they have agreed to
purchase hereunder on the Closing Date, and the aggregate principal amount of
Notes that such defaulting Purchaser or Purchasers, as the case may be, agreed
but failed or refused to purchase does not exceed 10% of the total principal
amount of the Notes that all of the Purchasers are obligated to purchase on the
Closing Date, each non-defaulting Purchaser shall be obligated, severally and
not jointly, in the proportion which the principal amount of Notes set forth
opposite its name in Schedule I hereto bears to the aggregate principal amount
of Notes which all the non-defaulting Purchasers have agreed to purchase, or in
such other proportion as you may specify, to purchase the aggregate principal
amount of Notes that such defaulting Purchaser or Purchasers, as the case may
be, agreed but failed or refused to purchase. If, on the Closing Date, any one
or more of the Purchasers shall fail or refuse to purchase Notes in an aggregate
principal amount that exceeds 10% of such total principal amount and
arrangements satisfactory to the non-defaulting Purchaser or Purchasers, as the
case may be, and the Company for the purchase of such Notes are not made within
24 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Purchaser or the Company and the Guarantors,
except as otherwise provided in Section 9. In any such case that does not result
in termination of this Agreement, the Purchasers or the Company may postpone the
Closing Date for not longer than seven days, in order that the required changes,
if any, in the Offering Memorandum or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve a defaulting
Purchaser from liability in respect of any default by such Purchaser under this
Agreement.
9. Effective Date of Agreement and Termination. This Agreement shall
become effective upon the execution hereof.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by notice to the Company if any of the following has occurred: (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Offering Memorandum,
any material adverse change in the condition, financial or otherwise, or in the
29
earnings, business affairs or business prospects of (1) the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business or (2) Xxxxxx and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business or (ii) if
there has occurred any material adverse change in the financial markets in the
United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Purchasers, impracticable to market
the Notes or to enforce contracts for the sale of the Notes, or (iii) if trading
in any securities of the Company has been suspended or materially limited by the
Commission or the Nasdaq National Market, or if trading generally on the
American Stock Exchange, the New York Stock Exchange, the London Stock Exchange
or the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by the Nasdaq National
Market or by order of the Commission, the National Association of Securities
Dealers, Inc. or any other governmental authority, or (iv) if a banking
moratorium has been declared by either Federal or New York authorities, or (v)
if the rating assigned by any nationally recognized statistical rating
organization to the Notes or any other debt securities of the Company shall have
been lowered or if any such rating agency shall have publicly announced that it
has placed the Notes or any other debt securities of the Company on what is
commonly termed a "watch list" for a possible downgrading.
The indemnities and contribution provisions and the other agreements,
representations and warranties of the Company and the Guarantors, their
respective officers and directors and of the Purchasers 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 Notes, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any of the Purchasers or by or on behalf of the Company or any of the
Guarantors, the officers or directors of the Company or any of the Guarantors or
controlling person of the Company or any of the Guarantors, (ii) acceptance of
the Notes and payment for them hereunder and (iii) termination of this
Agreement.
If this Agreement shall be terminated by the Purchasers pursuant to
clauses (i) or (v) of the second paragraph of this Section 9 or because of the
failure or refusal on the part of the Company or any Guarantor to comply with
the terms or to fulfill any of the conditions of this Agreement, the Company and
the Guarantors agree, jointly and severally, to reimburse you for all
out-of-pocket expenses (including the fees and disbursements of counsel)
incurred by you. Notwithstanding any termination of this Agreement, the Company
and the Guarantors shall be liable, jointly and severally, for all expenses
which they have agreed to pay pursuant to Section 4(f) 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 Guarantors, the
Purchasers, any Indemnified Person referred to herein and their respective
successors and assigns and, in the case of natural persons, their heirs and
legal representatives, 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 terms "successors
30
and assigns" shall not include a purchaser of any of the Notes from any of the
Purchasers merely because of such purchase.
10. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company or any Guarantor,
to it at 00000 X.X. 00xx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxx X. Xxxxxxx, with a copy to Xxxx X. Xxxxx, Xxxxxxx Xxxxxxx &
Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (b) if to the
Purchasers, c/x Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, 000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxx Xxxxx, with a copy to Xxx
Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, 000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 and with a copy to Xxxxxx Xxxxxxxxx, Xxxxx & Xxxx LLP, Xxx
Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or in any case to such other
address as the person to be notified may have requested in writing.
Anything herein to the contrary notwithstanding, the representations,
warranties, covenants and agreements of the Company and the Guarantors set forth
herein are joint and several.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SUCH STATE.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
31
Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Guarantors and the Purchasers.
Very truly yours,
QUALITY FOOD CENTERS, INC.
By: /s/ Xxxx Xxxxxxx
-----------------------------
Name:
Title:
QUALITY FOOD HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxx
-----------------------------
Name:
Title:
XXXXXX MARKETS, INC.
(Effective on and as of the Closing
Date referred to herein.)
By: /s/ Xxxx Xxxxxxx
-----------------------------
Name:
Title:
KU ACQUISITION CORPORATION
By: /s/ Xxxx Xxxxxxx
-----------------------------
Name:
Title:
32
Accepted and agreed to as of
the date first above written:
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES
CORPORATION
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
BANCAMERICA SECURITIES, INC.
By: XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES
CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Authorized Signatory
33
SCHEDULE I
Principal Amount
----------------
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation................................ $75,000,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated....................... 60,000,000
BancAmerica Securities, Inc.................... 15,000,000
------------
Total $150,000,000
============
Sch I-1
EXHIBIT A
Form of Registration Rights Agreements
Sch I-2
EXHIBIT B
Form of Xxxxx & Gates Opinion
EXHIBIT C
Form of Xxxxxxx Xxxxxxx Opinion
EXHIBIT D
Form of O'Melveny & Xxxxx Opinion
EXHIBIT E
Form of Xxxxxxxxx & Xxxxxxxxxxx Opinion
