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QUALITY FOOD CENTERS, INC.
(a Washington corporation)
4,500,000 Shares of Common Stock
U.S. PURCHASE AGREEMENT
Dated: March 13, 1997
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Table of Contents
Page
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U.S. PURCHASE AGREEMENT.................................................... 1
SECTION 1. Representations and Warranties........................... 5
(a) Representations and Warranties by the Company....... 5
(b) Officer's Certificates.............................. 15
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.......... 15
(a) Initial Securities.................................. 15
(b) Option Securities................................... 15
(c) Payment............................................. 16
(d) Denominations; Registration......................... 17
SECTION 3. Covenants of the Company................................. 17
(a) Compliance with Securities Regulations and Commission
Requests............................................ 17
(b) Filing of Amendments................................ 17
(c) Delivery of Registration Statements................. 18
(d) Delivery of Prospectuses............................ 18
(e) Continued Compliance with Securities Laws........... 18
(f) Blue Sky Qualifications............................. 19
(g) Rule 158............................................ 19
(h) Use of Proceeds..................................... 19
(i) Preparation of Prospectus Supplement................ 19
(j) Listing............................................. 19
(k) Restriction on Sale of Securities................... 19
(l) Reporting Requirements.............................. 20
SECTION 4. Payment of Expenses...................................... 20
(a) Expenses............................................ 20
(b) Termination of Agreement............................ 21
SECTION 5. Conditions of U.S. Underwriters' Obligations............. 21
(a) Effectiveness of Registration Statement............. 21
(b) Opinion of Xxxxx & Xxxxx P.L.L.C.................... 21
(c) Opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx............... 22
(d) Opinion of O'Melveny & Xxxxx LLP.................... 22
(e) Opinion of Xxxxxxxxx & Xxxxxxxxxxx, P.C............. 23
(f) Opinion of Counsel for U.S. Underwriters............ 23
(g) Officers' Certificate............................... 24
(h) Accountants' Comfort Letters........................ 24
(i) Bring-down Comfort Letter........................... 24
(j) Approval of Listing................................. 24
(k) Lock-up Agreements.................................. 24
(l) Consummation of Xxxxxx Merger....................... 24
(m) Effectiveness of New Credit Agreement............... 25
(n) Purchase of Notes................................... 25
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(o) Purchase of International Securities................ 25
(p) Conditions to Purchase of U.S. Option Securities.... 25
(q) Additional Documents................................ 26
(r) Termination of Agreement............................ 26
SECTION 6. Indemnification.......................................... 27
(a) Indemnification of U.S. Underwriters................ 27
(b) Indemnification of Company, Directors and Officers.. 28
(c) Actions against Parties; Notification............... 28
(d) Settlement without Consent if Failure to Reimburse.. 29
(e) Currency.............................................29
SECTION 7. Contribution............................................. 29
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery .............................................. 30
SECTION 9. Termination of Agreement................................. 31
(a) Termination; General................................ 31
(b) Liabilities......................................... 31
SECTION 10. Default by One or More of the U.S. Underwriters.......... 31
SECTION 11. Notices.................................................. 32
SECTION 12. Parties.................................................. 32
SECTION 13. GOVERNING LAW AND TIME................................... 33
SECTION 14. Effect of Headings....................................... 33
SCHEDULES
Schedule A - List of Underwriters.............................Sch A-1
Schedule B - Pricing Information..............................Sch B-1
Schedule C - List of Persons Subject to Lock-up...............Sch C-1
Schedule D - Persons Holding Shares with Registration Rights..Sch D-1
EXHIBITS
Exhibit A - Form of Opinion of Xxxxx & Xxxxx P.L.L.C..............A-1
Exhibit B - Form of Opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx.........B-1
Exhibit C - List of Subsidiaries..................................C-1
Exhibit D - Form of Opinion of Xxxxxxxxx & Xxxxxxxxxxx, P.C.......D-1
Exhibit E - Form of Lock-up Letter................................E-1
Exhibit F - Form of Parent Lock-up Letter.........................F-1
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QUALITY FOOD CENTERS, INC.
(a Washington corporation)
4,500,000 Shares of Common Stock
(Par Value $.001 Per Share)
U.S. PURCHASE AGREEMENT
March 13, 1997
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
SALOMON BROTHERS INC
XXXX XXXXXXXX INCORPORATED
as U.S. Representatives of the several U.S. Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Quality Food Centers, Inc., a Washington corporation (the "Company"),
confirms its agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated and each of the other Underwriters named in Schedule A hereto
(collectively, the "U.S. Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation, Salomon Brothers Inc and Xxxx Xxxxxxxx Incorporated are
acting as representatives (in such capacity, the "U.S. Representatives"), with
respect to the issue and sale by the Company and the purchase by the U.S.
Underwriters, acting severally and not jointly, of the respective numbers of
shares of Common Stock, par value $.001 per share, of the Company ("Common
Stock") set forth in said Schedule A, and with respect to the grant by the
Company to the U.S. Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of 540,000
additional shares of Common Stock to cover over-allotments, if any. The
aforesaid 3,600,000 shares of Common Stock (the "Initial U.S. Securities") to be
purchased by the U.S.
Underwriters and all or any part of the 540,000 shares of Common Stock subject
to the option described in Section 2(b) hereof (the "U.S. Option Securities")
are hereinafter sometimes called, collectively, the "U.S. Securities". This
Agreement is hereinafter sometimes called the "U.S. Purchase Agreement".
It is understood that the Company is 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")
through 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 this Agreement
and the International Purchase Agreement are hereinafter sometimes called,
collectively, the "Purchase Agreements" and, individually, a "Purchase
Agreement".
The Company understands that the U.S. Underwriters and the International
Underwriters will concurrently enter into an Intersyndicate Agreement of even
date herewith (the "Inter-syndicate Agreement") providing for the coordination
of certain transactions among the U.S. Underwriters and the International
Underwriters under the direction of Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx").
It is understood that the Company is concurrently entering into a Purchase
Agreement dated the date hereof (the "Debt Agreement") with Xxxxxxxxx, Lufkin &
Xxxxxxxx Securities Corporation, Xxxxxxx Xxxxx and BancAmerica Securities, Inc.,
as the initial purchasers (the "Initial Purchasers"), and Quality Food Holdings,
Inc., a Delaware corporation, (the "Holding Company"), and KU Acquisition
Corporation, a Washington corporation ("KUA") and the surviving corporation in
the merger with Xxxxx Xxxxxxxxx, Inc. ("KUI"), which Debt Agreement will also be
entered into by Xxxxxx Markets, Inc., a California corporation ("Xxxxxx") as of
Closing Time (as hereinafter defined), relating to the offering by the Company
of $150,000,000 aggregate principal amount of its 8.70% Senior Subordinated
Notes due 2007 (the "Notes"). The Notes are to be issued pursuant to an
indenture (the "Indenture") among the Company, as issuer of the Notes, the
Holding Company, KUA and Xxxxxx, as guarantors (each, a "Guarantor" and,
collectively, the "Guarantors"), and First
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Trust National Association, as trustee (the "Trustee"). The Guarantors will
jointly and severally guarantee, among other things, the punctual payment of the
principal of, premium, if any, and interest on the Notes and 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") pursuant to the Indenture and the
Registration Rights Agreement referred to below (each, a "Guarantee" and,
collectively, the "Guarantees"). In connection with the issuance and sale of the
Notes, the Company and the Guarantors will enter into a Registration Rights
Agreement (the "Registration Rights Agreement") with the Initial Purchasers.
Pursuant to the Registration Rights Agreement, the Company and the Guarantors
will agree to use their reasonable best efforts to file with the Commission,
under the circumstances set forth therein and among other things, a registration
statement under the 1933 Act relating to the Exchange Offer.
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.
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
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Registration Rights Agreement, the Indenture, the New Credit Agreement, the
Guarantor Security Agreement and the Bank Guaranty are hereinafter sometimes
called, collectively, the "Guarantor Documents" and, individually, a "Guarantor
Document".
The sale of the Initial U.S. Securities to the U.S. Underwriters pursuant
to this Agreement and the sale of the Initial International Securities to the
International Underwriters pursuant to the International Purchase Agreement are
each conditioned upon, among other things, (i) the concurrent occurrence of the
other event and the concurrent purchase of the Notes by the Initial Purchasers
pursuant to the Debt Agreement, (ii) the effectiveness of the New Credit
Agreement prior to or concurrently therewith and (iii) the effectiveness of the
Xxxxxx Merger prior to or concurrently therewith.
The Company understands that the U.S. Underwriters propose to make a
public offering of the U.S. Securities as soon as the U.S. Representatives deem
advisable after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-18567) for the
registration of, among other things, the Securities under the Securities Act of
1933, as amended (the "1933 Act"). Such registration statement, including the
exhibits thereto, the schedules thereto, if any, and the documents incorporated
or deemed to be incorporated by reference therein pursuant to Item 12 of Form
S-3 under the 1933 Act, as amended at the time it became effective, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. Promptly after the
execution of this Agreement, the Company will file with the Commission pursuant
to Rule 424(b) of the 1933 Act Regulations a prospectus supplement relating to
the U.S. Securities (the "U.S. Prospectus Supplement") and a prospectus
supplement relating to the International Securities (the "International
Prospectus Supplement")(1), in each case together with the related prospectus
dated January 27, 1997 (the "Base Prospectus"), and has previously advised you
of all information (financial and other) set forth therein. The U.S. Prospectus
Supplement and the Base Prospectus, including all documents incorporated or
deemed to be incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, in the form first furnished to the U.S. Underwriters for use
in connection with the offering of the U.S. Securities, are hereinafter referred
to, collectively, as the "U.S. Prospectus." The International Prospectus
Supplement and the Base Prospectus, including all documents incorporated or
deemed to be incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, in the form first furnished to the International
Underwriters for use in connection with the offering of the International
Securities, are hereinafter referred to, collectively, as the "International
Prospectus." The U.S. Prospectus and the International Prospectus are
hereinafter sometimes referred to as,
--------
(1) Two forms of prospectus supplement are to be used in connection with the
offering and sale of the Securities, one relating to the U.S. Securities
and one relating to the International Securities. The International
Prospectus Supplement is identical to the U.S. Prospectus Supplement,
except for the front cover page, back cover page and the section captioned
"Underwriting."
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individually, a "Prospectus" and, collectively, the "Prospectuses." Each
prospectus supplement relating to the U.S. Securities used prior to the date of
this Agreement, together with the related base prospectus and all documents
incorporated or deemed to be incorporated by reference therein pursuant to Item
12 of Form S-3, are hereinafter referred to, collectively, as a "preliminary
U.S. prospectus". Each prospectus supplement relating to the International
Securities used prior to the date of this Agreement, together with the related
base prospectus and all documents incorporated or deemed to be incorporated by
reference therein pursuant to Item 12 of Form S-3, are hereinafter referred to,
collectively, as a "preliminary international prospectus". All preliminary U.S.
prospectuses and preliminary international prospectuses are hereinafter
sometimes referred to as, individually, a "preliminary prospectus" and,
collectively, the "preliminary prospectuses". For purposes of this Agreement,
all references to the Registration Statement, any preliminary prospectus, any
Prospectus or any amendments or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System ("XXXXX").
It is understood that any representation or warranty of the Company in
Section 1 hereof which relates to Xxxxxx is made to the best of the Company's
knowledge, with due inquiry by the Company.
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or any Prospectus (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 Registration Statement, any
preliminary prospectus or any Prospectus, as the case may be; and all references
in this Agreement to amendments or supplements to the Registration Statement,
any preliminary prospectus or any Prospectus shall be deemed to mean and include
the filing of any document under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), which is or is deemed to be incorporated by reference in the
Registration Statement, such preliminary prospectus or such Prospectus, as the
case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each U.S. Underwriter as of the date hereof, as of the Closing
Time referred to in Section 2(c) hereof, and as of each Date of Delivery (if
any) referred to in Section 2(b) hereof, and agrees with each U.S. Underwriter,
as follows:
(i) Compliance with Registration Requirements. The Company meets
the requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
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At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and 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
not misleading. Neither of the Prospectuses nor any amendments or
supplements thereto, at the respective times the Prospectuses or any such
amendments or supplements were issued and at the Closing Time (and, if any
Option Securities are purchased, at the Date of Delivery), included or
will include an untrue statement of a material fact or omitted or will
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration Statement or
Prospectuses made in reliance upon and in conformity with information
furnished to the Company in writing by any U.S. Underwriter or
International Underwriter through Xxxxxxx Xxxxx expressly for use in the
Registration Statement or Prospectuses or to any Statement of Eligibility
on Form T-1 under the Trust Indenture Act of 1939, as amended, of any
trustee filed as an exhibit to the Registration Statement.
Each preliminary prospectus and each prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when
so filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and each Prospectus delivered to the U.S.
Underwriters or International Underwriters, as the case may be, for use in
connection with the offering of the Securities was identical to the
electronically transmitted copy thereof filed with the Commission pursuant
to XXXXX, except to the extent permitted by Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the
Prospectuses, 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 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together with the other information in the Registration Statement and the
Prospectuses, at the time the Registration Statement became effective, at
the time the Prospectuses were issued and at the Closing Time (and if any
Option Securities are purchased, at the Date of Delivery), 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.
(iii) Independent Accountants. The accountants who audited the
financial statements and supporting schedules, if any, included in the
Registration Statement are independent certified public accountants as
required by the 1933 Act and the 1933 Act Regulations.
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(iv) Financial Statements. The financial statements of the Company,
the consolidated financial statements of Xxxxxx and the financial
statements of KUI included in the Registration Statement and the
Prospectuses, 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 Registration
Statement 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 Prospectuses
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 Registration Statement. The
pro forma financial statements and the related notes thereto included in
the Registration Statement and the Prospectuses 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 are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein. The Company's ratios
of earnings to fixed charges (actual and, if any, pro forma) included in
the Prospectuses and as an exhibit to the Registration Statement have been
calculated in compliance with Item 503(d) of Regulation S-K of the
Commission.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been
no material adverse change in the condition, financial or otherwise, or in
the 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 Time or at any time thereafter,
Xxxxxx and its subsidiaries.
(vi) 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
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and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus 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.
(vii) 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 Time, 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 Prospectuses 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 Registration
Statement, 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 in favor of the Lenders); all of
the issued and outstanding capital stock of Xxxxxx has been duly
authorized and validly issued, is fully paid and non-assessable and, at
the Closing Time 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 Hughes, KUA, 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
Prospectuses, 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 operations, net income
and assets (excluding from the computation of the foregoing amounts
attributable to Santee).
(viii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement or pursuant to
employee benefit plans or the exercise of options referred to in the
Prospectuses). The shares of issued and outstanding capital stock of the
Company have been duly authorized
8
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.
(ix) 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 Time, the Debt Agreement
will have been duly authorized, executed and delivered by Xxxxxx.
(x) Authorization and Description of Securities. The U.S. Securities
and the International Securities have been duly authorized for issuance
and sale to the U.S. Underwriters and the International Underwriters
pursuant to the U.S. Purchase Agreement and the International Purchase
Agreement, respectively, and, when issued and delivered by the Company
pursuant to the U.S. Purchase Agreement and the International Purchase
Agreement, respectively, against payment of the consideration set forth
therein, will be validly issued, fully paid and non-assessable; the Common
Stock conforms to all statements relating thereto contained in the
Prospectuses and the description of the Common Stock set forth in the
Prospectuses conforms to the rights set forth in the instruments defining
the same; no holder of the Securities will be subject to personal
liability by reason of being such a holder; and the issuance of the
Securities is not subject to the preemptive or other similar rights of any
securityholder of the Company.
(xi) Absence of Defaults and Conflicts. Neither the Company, the
Holding Company, the Parent, 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 Registration
Statement (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 Prospectuses 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
9
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 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.
(xii) 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
10
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 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.
(xiii) 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 is required to be disclosed in the
Registration Statement (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
Registration Statement, including ordinary routine litigation incidental
to the business, could not reasonably be expected to result in a Material
Adverse Effect.
(xiv) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectuses or the documents incorporated or deemed to be incorporated by
reference therein or to be filed as exhibits thereto which have not been
so described and filed as required.
(xv) 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
11
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 (if any) of termination statements under the UCC of the
State of Washington and any other appropriate jurisdictions terminating
the security interests created by the Old Security Agreements, and (F)
such as will 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.
(xvi) 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.
(xvii) 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 Prospectuses 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 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.
(xviii) 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.
12
(xix) 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 Agreements and the Debt Agreement,
respectively, and the application of the net proceeds therefrom as
described in the Prospectuses, 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").
(xx) Environmental Laws. Except as described in the Registration
Statement 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.
(xxi) 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.
(xxii) No Stabilization, Etc. Neither the Company, Xxxxxx nor KUA
has (i) taken, directly or indirectly, any action designed to, or that
might reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Securities or (ii) since the date of the earliest
preliminary prospectus (A) sold, bid for, purchased or paid any person any
compensation for soliciting purchases of the Securities or (B) paid or
agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
13
(xxiii) 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 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 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 Investor Agreements in connection with the
transactions contemplated by the Purchase Agreements. Schedule D 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.
(xxiv) New Credit Agreement. At or prior to the Closing Time, the
New Credit Agreement will have been duly authorized by the Company, Parent
and the Holding Company; at or prior to the Closing Time, 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.
(xxv) Bank Guaranty. At or prior to the Closing Time, the Bank
Guaranty will have been duly authorized by the Bank Guarantors; at or
prior to the Closing Time, 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.
(xxvi) Bank Security Agreements. At or prior to the Closing Time,
the Bank Security Agreements will have been duly authorized by the Company
and the Parent, respectively; at or prior to the Closing Time, 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.
(xxvii) Description of Documents. The Company Documents and the
Guarantor Documents will conform in all material respects to the
respective statements relating thereto
14
contained in the Prospectuses and will be in substantially the respective
forms filed or incorporated by reference as exhibits to the Registration
Statement.
(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 Time, 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 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 Time.
(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.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company, Xxxxxx, KUA or any of their respective subsidiaries delivered to the
U.S. Representatives or to counsel for the U.S. Underwriters shall be deemed a
representation and warranty by the Company to each U.S. Underwriter as to the
matters covered thereby.
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each U.S. Underwriter, severally and not jointly, and
each U.S. Underwriter, severally and not jointly, agrees to purchase from the
Company, at the price per share set forth in Schedule B, the number of Initial
U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter, plus any additional number of Initial U.S. Securities which such
U.S. Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the U.S. Underwriters,
severally and not jointly, to purchase up to an additional 540,000 shares of
Common Stock at the price per share set forth in Schedule B, less an amount per
share equal to any dividends or distributions declared by the Company and
payable on the Initial U.S. Securities but not payable on the U.S. Option
Securities. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time (but not
15
more than three times without the consent of the Company (which consent shall
not be unreasonably withheld)) only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial U.S. Securities upon notice by the U.S. Representatives to the Company
setting forth the number of U.S. Option Securities as to which the several U.S.
Underwriters are then exercising the option and the time and date of payment and
delivery for such U.S. Option Securities. Any such time and date of delivery (a
"Date of Delivery") shall be determined by the U.S. Representatives, but shall
not be later than seven full business days and not earlier than two full
business days after the exercise of said option unless otherwise agreed upon by
the U.S. Representatives and the Company, nor in any event prior to the Closing
Time, as hereinafter defined. If the option is exercised as to all or any
portion of the U.S. Option Securities, each of the U.S. Underwriters, acting
severally and not jointly, will purchase that proportion of the total number of
U.S. Option Securities then being purchased which the number of Initial U.S.
Securities set forth in Schedule A opposite the name of such U.S. Underwriter
bears to the total number of Initial U.S. Securities, subject in each case to
such adjustments as the U.S. Representatives in their discretion shall make to
eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial U.S. Securities shall be made at the offices of
Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at
such other place as shall be agreed upon by the U.S. Representatives and the
Company, at 9:00 A.M. (New York City time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (New York City time) on any given day) business day after
the date hereof (unless postponed in accordance with the provisions of Section
10), or such other time not later than ten business days after such date as
shall be agreed upon by the U.S. Representatives and the Company (such time and
date of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the U.S. Option Securities
are purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices or at the offices of Xxxxx & Wood LLP, Xxx Xxxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as shall be agreed upon
by the U.S. Representatives and the Company, on each Date of Delivery as
specified in the notice from the U.S. Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the U.S. Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each U.S. Underwriter has authorized the U.S. Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. Xxxxxxx Xxxxx, individually and not as a
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.
16
(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Representatives in The City of New
York not later than 10:00 A.M. (New York City time) on the business day prior to
the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each U.S.
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Company will notify the U.S. Representatives immediately, and confirm
the notice in writing, (i) when any Rule 462(b) Registration Statement and
any post-effective amendment to the Registration Statement or any Rule
462(b) Registration Statement shall become effective or any supplement to
any of the Prospectuses or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to any of the Prospectuses or for
additional information, and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
of any order preventing or suspending the use of any preliminary
prospectus or Prospectus, or of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the initiation
or threatening of any proceedings for any of such purposes. The Company
will promptly effect the filings necessary pursuant to Rule 424(b) of the
1933 Act Regulations and will take such steps as it deems necessary to
ascertain promptly whether the form of prospectus and/or prospectus
supplement transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will
promptly file such prospectus and/or prospectus supplement, as applicable.
The Company will make every reasonable effort to prevent the issuance of
any stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the U.S.
Representatives notice of its intention to file or prepare any further
amendment to the Registration Statement (including any filing under Rule
462(b)) or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to either of the Prospectuses, whether pursuant to the 1933 Act, the 1934
Act or otherwise, will furnish the U.S. Representatives with copies of any
such documents a reasonable amount of time prior to such proposed filing
or use, as the case may be, and will not file or use any such document to
which the U.S. Representatives or counsel for the U.S. Underwriters shall
object.
(c) Delivery of Registration Statements. The Company has furnished
or will deliver to the U.S. Representatives and counsel for the U.S.
Underwriters, without charge, signed copies of the Registration Statement
as originally filed and of each amendment thereto (including exhibits
filed therewith or incorporated by reference therein and documents
17
incorporated or deemed to be incorporated by reference therein) and signed
copies of all consents and certificates of experts, and will also deliver
to the U.S. Representatives, without charge, as many conformed copies of
the Registration Statement as originally filed and of each amendment
thereto (without exhibits) as the U.S. Underwriters may reasonably
request. The copies of the Registration Statement and each amendment
thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each U.S.
Underwriter, without charge, as many copies of each preliminary U.S.
prospectus as such U.S. Underwriter reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will furnish to each U.S. Underwriter, without
charge, during the period when the U.S. Prospectus is required to be
delivered under the 1933 Act or the 1934 Act, such number of copies of the
U.S. Prospectus (as amended or supplemented) as such U.S. Underwriter may
reasonably request. The U.S. Prospectus and any amendments or supplements
thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations so as to permit the completion of the
distribution of the Securities as contemplated in the Purchase Agreements
and in the Prospectuses. If at any time when a prospectus is required by
the 1933 Act to be delivered in connection with sales of the Securities
any event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the U.S. Underwriters or for the
Company, to amend the Registration Statement or to amend or supplement the
U.S. Prospectus in order that the U.S. Prospectus will not include any
untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at
any such time to amend the Registration Statement or amend or supplement
the U.S. Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or to
make the Registration Statement or the U.S. Prospectus comply with such
requirements (and, if appropriate, will make a corresponding amendment or
supplement to the International Prospectus), and the Company will furnish
to the U.S. Underwriters such number of copies of such amendment or
supplement as the U.S. Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its reasonable
best efforts, in cooperation with the U.S. Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws of
such states and other jurisdictions as the U.S. Representatives may
designate and to maintain such qualifications in effect for a period of
not less than one year from the date of this Agreement; provided, however,
that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign
18
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the date of this Agreement.
(g) Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities and the Notes in the manner
specified in the Prospectus Supplements under "Use of Proceeds".
(i) Preparation of Prospectus Supplement. Immediately following the
execution of this Agreement, the Company will prepare the U.S. Prospectus
Supplement and the International Prospectus Supplement, containing the
terms of the Securities, the plan of distribution thereof and such other
information as may be required by the 1933 Act or the 1933 Act Regulations
or as the U.S. Representatives and the Company deem appropriate, and will
file or transmit for filing with the Commission in accordance with Rule
424(b) of the 1933 Act Regulations copies of the Prospectuses (including
such Prospectus Supplements).
(j) Listing. The Securities have been approved for listing on the
New York Stock Exchange (the "NYSE"), subject only to official notice of
issuance.
(k) Restriction on Sale of Securities. Pursuant to Section 2.10 of
the KUI Investor Rights Agreement, the Company has duly notified, in the
manner required by such agreement, all Holders (as defined in such
agreement) that such Holders may not sell, make any short sale of or
otherwise dispose of any Registrable Securities (as defined in such
agreement) without the prior written consent of the Company for the period
of 90 days from the date of this Agreement, and the Company has given the
Holders a further notice specifying the exact date of this Agreement.
During a period of 90 days from the date of this Agreement, the Company
will not, without the prior written consent of Xxxxxxx Xxxxx, directly or
indirectly, (i) waive or modify the agreement of the Holders pursuant to
Section 2.10 of the KUI Investor Rights Agreement not to sell, make any
short sale of or otherwise dispose of any Registrable Securities, (ii)
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 share of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the
1933 Act with respect to any of the foregoing or (iii) enter into any swap
or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause
(ii) or (iii) above is to be settled by delivery
19
of Common Stock, other securities, cash or otherwise. Clauses (ii) and
(iii) of the foregoing sentence shall not apply to (A) the Securities to
be sold under the Purchase Agreements, (B) any shares of Common Stock
issued by the Company upon the exercise of any option outstanding on the
date hereof and referred to in the Prospectuses or (C) any shares of
Common Stock issued or options to purchase Common Stock granted pursuant
to existing employee benefit plans of the Company referred to in the
Prospectuses.
(l) Reporting Requirements. The Company, during the period when the
U.S. Prospectus is required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the 1934 Act Regulations.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all
expenses incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the word processing, reproduction and delivery to the
Underwriters of the Purchase Agreements, the Intersyndicate Agreement, the
Agreement Among Managers and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
Securities to the Underwriters and any transfers of Securities between the U.S.
Underwriters and International Underwriters pursuant to the Intersyndicate
Agreement, (iv) the fees and disbursements of the Company's counsel, accountants
and other advisors, (v) the qualification of the Securities under securities
laws in accordance with the provisions of Section 3(f) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the Underwriters
in connection therewith and in connection with the preparation of the Blue Sky
Survey and any Canadian "wrapper," (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus and each Prospectus and
any amendments or supplements thereto, (vii) the preparation, printing and
delivery to the Underwriters of copies of the Blue Sky Survey and any Canadian
"wrapper," (viii) the fees and expenses of any transfer agent or registrar for
the Securities, (ix) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review, if
any, by the National Association of Securities Dealers, Inc. (the "NASD") of the
terms of the sale of the Securities and (x) the fees and expenses incurred in
connection with the listing of the Securities on the NYSE.
(b) Termination of Agreement. If this Agreement is terminated by the U.S.
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) or (v) hereof, the Company shall reimburse the U.S. Underwriters for all
of their out-of-pocket expenses, including the reasonable fees and disbursements
of counsel for the U.S. Underwriters.
SECTION 5. Conditions of U.S. Underwriters' Obligations. The obligations
of the several U.S. Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof and
in certificates of any officer of the Company, Xxxxxx or any of their respective
subsidiaries delivered pursuant to the provisions hereof, to the performance
20
by the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness
of the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel to the
U.S. Underwriters. The Prospectuses shall have been filed or transmitted
for filing with the Commission pursuant to Rule 424(b) of the 1933 Act
Regulations within the prescribed time period, and prior to Closing Time
the Company shall have provided evidence satisfactory to the Underwriters
of such timely filing or transmittal.
(b) Opinion of Xxxxx & Gates P.L.L.C. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Xxxxx & Xxxxx P.L.L.C., counsel for the Company, in form
and substance satisfactory to counsel for the U.S. Underwriters, together
with signed or reproduced copies of such letter for each of the other U.S.
Underwriters, to the effect set forth in Exhibit A hereto and to such
further effect as counsel to the U.S. Underwriters 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 opinion pursuant to the
Purchase Agreements, 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 U.S. Representatives (which opinion shall be
dated and furnished to the U.S. Representatives at the Closing Time, shall
be satisfactory in form and substance to counsel for the U.S. Underwriters
and shall expressly state that the U.S. Underwriters 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
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, 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).
(c) Opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the Company, in
form and substance satisfactory to counsel for the U.S. Underwriters,
together with signed or reproduced copies of such letter for each of the
other U.S. Underwriters, to the effect set forth in Exhibit B hereto and
to such further effect as counsel for the U.S. Underwriters may reasonably
request.
21
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, (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 5(b) hereof or upon the opinion of
O'Melveny & Xxxxx LLP delivered pursuant to Section 5(d) hereof,
respectively and (C) that insofar as such opinion relates to matters
arising under the laws of the State of California, such counsel has relied
upon the opinion of O'Melveny & Xxxxx LLP delivered pursuant to Section
5(d) hereof. 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 U.S.
Representatives (which opinion shall be dated and furnished to the U.S.
Representatives at the Closing Time, shall be satisfactory in form and
substance to counsel for the U.S. Underwriters and shall expressly state
that the U.S. Underwriters 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 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, 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).
(d) Opinion of O'Melveny & Xxxxx LLP. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of
Closing Time, of O'Melveny & Xxxxx LLP, counsel for Xxxxxx, in form and
substance satisfactory to counsel for the U.S. Underwriters, together with
signed or reproduced copies of such letter for each of the other U.S.
Underwriters, to the effect set forth in Exhibit C hereto and to such
further effect as counsel to the U.S. Underwriters 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 the
Purchase Agreements, 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 U.S. Representatives (which opinion shall be
dated and furnished to the U.S. Representatives at the Closing Time, shall
be satisfactory in form and substance to counsel for the U.S. Underwriters
and shall expressly state that the U.S. Underwriters 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 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
22
or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law
(1991).
(e) Opinion of Xxxxxxxxx & Xxxxxxxxxxx, P.C. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as
of Closing Time, of Xxxxxxxxx & Xxxxxxxxxxx, P.C., counsel for the
Company, in form and substance satisfactory to counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters, to the effect set forth in Exhibit D
hereto and to such further effect as counsel to the U.S. Underwriters 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 U.S. Representatives (which
opinion shall be dated and furnished to the U.S. Representatives at the
Closing Time, shall be satisfactory in form and substance to counsel for
the U.S. Underwriters and shall expressly state that the U.S. Underwriters
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).
(f) Opinion of Counsel for U.S. Underwriters. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as
of Closing Time, of Xxxxx & Wood LLP, counsel for the U.S. Underwriters,
with respect to the incorporation and existence of the Company, the
Securities, the Purchase Agreements, the Registration Statement, the
Prospectuses and such other related matters as the U.S. Representatives
may request, together with signed or reproduced copies of such letter for
each of the U.S.
Underwriters.
(g) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise (including, without limitation, Xxxxxx and
KUA), whether or not arising in the ordinary course of business, and the
U.S. Representatives shall have received a certificate of the President or
a Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct
with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and
satisfied all
23
conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or are contemplated by the Commission.
(h) Accountants' Comfort Letters. At the time of the execution of
this Agreement, the U.S. Representatives 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 U.S. Representatives,
together with signed or reproduced copies of such letter or letters for
each of the other U.S. Underwriters, 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 Registration Statement and the Prospectuses.
(i) Bring-down Comfort Letters. At Closing Time, the U.S.
Representatives shall have received from each of Deloitte & Touche LLP and
Xxxxxx Xxxxxxxx LLP a letter or letters, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter or letters
furnished pursuant to subsection (h) of this Section, except that the
specified date referred to shall be a date not more than three business
days prior to Closing Time.
(j) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the NYSE, subject only to official notice of
issuance.
(k) Lock-up Agreements. Prior to the date of this Agreement, the
U.S. Representatives shall have received (A) an agreement substantially in
the form of Exhibit E hereto signed by the persons and entities listed on
Schedule C hereto and (B) an agreement substantially in the form of
Exhibit F signed by Parent.
(l) Consummation of Xxxxxx Merger. At the Closing Time, 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 Initial U.S. Securities by the U.S.
Underwriters, (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 Prospectuses, (ii) the Xxxxxx Merger shall have
become effective pursuant to the laws of the State of California and (iii)
Xxxxxx shall survive the Xxxxxx Merger and shall be a wholly-owned direct
subsidiary of the Company; and the Company shall have delivered to the
U.S. Underwriters evidence, in form and substance satisfactory to the U.S.
Underwriters, that the conditions specified in this paragraph shall have
been satisfied.
(m) Effectiveness of New Credit Agreement. At or prior to the
Closing Time, (1) the New Credit Agreement, the Bank Guaranty and the Bank
Security Agreements and all
24
ancillary instruments and agreements shall have been executed and
delivered by the parties thereto and shall be in form and substance
satisfactory to the U.S. Underwriters, and the Company shall have
furnished the U.S. Underwriters with copies thereof; and (2) all
conditions precedent to the effectiveness of the New Credit Agreement, and
(except for the delivery of notices of borrowings, officer's bring-down
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.
(n) Purchase of Notes. Concurrently with the purchase of the Initial
U.S. Securities by the U.S. Underwriters, the Company shall have issued,
and the Initial Purchasers shall have purchased and paid for, the Notes
being sold pursuant to the Debt Agreement.
(o) Purchase of International Securities. Concurrently with the
purchase of the Initial U.S. Securities by the U.S. Underwriters, the
International Underwriters shall have purchased and paid for the Initial
International Securities under the International Purchase Agreement.
(p) Conditions to Purchase of U.S. Option Securities. In the event
that the U.S. Underwriters exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the U.S. Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company, Xxxxxx, or KUA
hereunder shall be true and correct as of each Date of Delivery and, at
the relevant Date of Delivery, the U.S. Representatives shall have
received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time
pursuant to Section 5(g) hereof remains true and correct as of such
Date of Delivery.
(ii) Opinions of Counsel for Company. The favorable opinions
of Xxxxx & Gates P.L.L.C., Xxxxxxx Xxxxxxxx & Xxxxxxxx, O'Melveny &
Xxxxx LLP and Xxxxxxxxx & Xxxxxxxxxxx, P.C., each in form and
substance satisfactory to counsel for the U.S. Underwriters, dated
such Date of Delivery (and, if applicable, accompanied by opinions
of local counsel dated such Date of Delivery), relating to the U.S.
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinions required by Sections
5(b), 5(c), 5(d) and 5(e) hereof, respectively.
(iii) Opinion of Counsel for U.S. Underwriters. The favorable
opinion of Xxxxx & Wood LLP, counsel for the U.S. Underwriters,
dated such Date of Delivery, relating to the U.S. Option Securities
to be purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(f) hereof.
25
(iv) Bring-down Comfort Letters. A letter or letters from each
of Deloitte & Touche LLP and Xxxxxx Xxxxxxxx LLP, in form and
substance satisfactory to the U.S. Representatives and dated such
Date of Delivery, substantially in the same form and substance as
the letters furnished to the U.S. Representatives pursuant to
Section 5(i) hereof, except that the "specified date" in the letter
or letters furnished pursuant to this paragraph shall be a date not
more than five days prior to such Date of Delivery.
(q) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished with
such documents and opinions as they may reasonably require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as
contemplated in the Purchase Agreements, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment
of any of the conditions, herein contained; and all proceedings taken by
the Company, Xxxxxx or KUA in connection with the issuance and sale of the
Securities as contemplated in the Purchase Agreements and the consummation
of the other transactions contemplated by the other Company Documents and
Guarantor Documents shall be satisfactory in form and substance to the
U.S. Representatives and counsel for the U.S.
Underwriters.
(r) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of U.S. Option Securities, on a Date of Delivery which is after
the Closing Time, the obligations of the several U.S. Underwriters to
purchase the relevant U.S. Option Securities, may be terminated by the
U.S. Representatives by notice to the Company at any time at or prior to
Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of U.S. Underwriters. The Company agrees to indemnify
and hold harmless each U.S. Underwriter and each person, if any, who controls
any U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
26
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or
Prospectus (or any amendment or supplement thereto); provided, further, that
such indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any U.S. Underwriter (or any persons controlling such U.S.
Underwriter) from whom the person asserting such loss, claim, damage or
liability purchased the U.S. Securities which are the subject thereof if such
person did not receive a copy of the Prospectus (or the Prospectus as amended or
supplemented) at or prior to the confirmation of the sale of such U.S.
Securities to such person in any case where the Company complied with its
obligations under Sections 3(b) and 3(d) hereof (and the Prospectus or any such
amended or supplemented Prospectus, as applicable, shall have been delivered by
the Company to such Underwriter 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 such preliminary prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented).
(b) Indemnification of Company, Directors and Officers. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such U.S.
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or such
Prospectus (or any amendment or supplement thereto).
27
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party.
Notwithstanding the foregoing, if it so elects within a reasonable time after
receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the defense of such
action with counsel chosen by it and approved by the indemnified parties
defendant in such action (which approval shall not be unreasonably withheld, it
being understood that, in the case of the indemnified parties under Section 6(a)
above, such approval shall be given by Xxxxxxx Xxxxx, Xxxxxx Xxxxxx & Xxxxx
Incorporated), unless such indemnified parties 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 such indemnifying
party, in which case such indemnifying party shall not be entitled to assume the
defense of such action. If an indemnifying party assumes the defense of such
action, the indemnifying party shall not be liable for any fees and expenses of
counsel for the indemnified parties incurred thereafter in connection with such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent 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 such
indemnified party in accordance with such request prior to the date of such
settlement.
28
(e) Currency. Any payment made by the Company pursuant to Section 6(a) or
7, or by any U.S. Underwriter pursuant to Section 6(b) or 7, which arises with
respect to any loss, liability, claim, damage or expense incurred in a currency
other than U.S. dollars shall be made by the Company or such U.S. Underwriter,
as the case may be, in such other currency or in such amount of U.S. dollars as
shall be necessary to enable the indemnified party to purchase the amount of
such other currency needed to satisfy such loss, liability, claim, damage or
expense, including any premiums and costs of exchange payable in connection with
conversion of U.S. dollars into the relevant currency.
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the U.S. Underwriters on the other hand from the offering of the U.S.
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) 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 Company on the one hand and of the U.S.
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the U.S.
Underwriters on the other hand in connection with the offering of the U.S.
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the U.S.
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus,
bear to the aggregate initial public offering price of the U.S. Securities as
set forth on such cover.
The relative fault of the Company on the one hand and the U.S.
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the U.S. Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the U.S. Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the U.S. Underwriters 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 above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
29
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of any 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.
For purposes of this Section 7, each person, if any, who controls a U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial U.S. Securities set forth
opposite their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company, Xxxxxx, KUA or any of their respective
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any U.S.
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the U.S. Underwriters and the
International Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The U.S. Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (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 Prospectuses, any
material adverse change in the condition, financial or otherwise, or in the
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 U.S. Representatives, impracticable
to market the U.S. Securities or to enforce contracts for the sale of the U.S.
Securities, 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
30
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.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the U.S. Underwriters. If one or
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the U.S. Securities which it or they are obligated to purchase under
this Agreement (the "Defaulted Securities"), the U.S. Representatives shall have
the right, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting U.S. Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the U.S.
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Initial Securities or Option Securities, as the case may be, to
be purchased on such date, each of the non-defaulting U.S. Underwriters
shall be obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting U.S.
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number
of Initial Securities or the Option Securities, as the case may be, to be
purchased on such date, this Agreement or, with respect to any Date of
Delivery which occurs after the Closing Time, the obligation of the U.S.
Underwriters to purchase and of the Company to sell the Option Securities
to be purchased and sold on such Date of Delivery shall terminate without
liability on the part of any non-defaulting U.S. Underwriter or the
Company, except to the extent set forth in Section 4.
No action taken pursuant to this Section shall relieve any defaulting U.S.
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a
31
termination of the obligation of the U.S. Underwriters to purchase and the
Company to sell the relevant Option Securities, as the case may be, either the
U.S. Representatives or the Company shall have the right to postpone Closing
Time or the relevant Date of Delivery, as the case may be, for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectuses or in any other documents or arrangements. As used
herein, the term "U.S. Underwriter" includes any person substituted for a U.S.
Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the U.S. Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Syndicate
Operations; and notices to the Company shall be directed to it at 00000 X.X.
00xx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, attention of Xxxx X. Xxxxxxx.
SECTION 12. Parties. This Agreement shall each inure to the benefit of and
be binding upon the U.S. Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the U.S.
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the U.S. Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any U.S.
Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. 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. EXCEPT AS OTHERWISE EXPRESSLY
SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME AND
REFERENCES TO BUSINESS DAYS MEAN DAYS WHICH ARE BUSINESS DAYS IN NEW YORK CITY.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
32
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the U.S. Underwriters and the Company in accordance with its terms.
Very truly yours,
QUALITY FOOD CENTERS, INC.
By /s/ Xxxx Xxxxxxx
-------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
SALOMON BROTHERS INC
XXXX XXXXXXXX INCORPORATED
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By /s/ Xxxxxxx XxXxx
----------------------------------
Authorized Signatory
For themselves and as U.S. Representatives of the other U.S. Underwriters
named in Schedule A hereto.
33
SCHEDULE A
Number of
Initial
Name of U.S. Underwriter U.S. Securities
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated........................................ 675,000
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation........... 675,000
Salomon Brothers Inc.......................................... 675,000
Xxxx Xxxxxxxx Incorporated.................................... 375,000
Xxxx Xxxxxx Xxxxxxxx Inc...................................... 200,000
Xxxxxxx, Xxxxx & Co........................................... 200,000
X.X. Xxxxxx Securities Inc.................................... 200,000
Xxxxx Xxxxxx Inc.............................................. 200,000
Genesis Merchant Group Securities............................. 100,000
Xxxxxx Securities Co.......................................... 100,000
Xxxxx Xxxxxxx Inc............................................. 100,000
Xxxxx XxxXxxxxx Incorporated.................................. 100,000
---------
Total......................................................... 3,600,000
=========
Sch A - 1
SCHEDULE B
1. The initial public offering price per share for the U.S.
Securities shall be $39.00.
2. The purchase price per share for the U.S. Securities to be paid
by the several U.S. Underwriters shall be $37.34, being an amount equal to
the initial public offering price set forth above less $1.66 per share;
provided that the purchase price per share for any U.S. Option Securities
purchased upon the exercise of the over-allotment option described in
Section 2(b) of this Agreement shall be reduced by an amount per share
equal to any dividends or distributions declared by the Company and
payable on the Initial U.S. Securities but not payable on the U.S. Option
Securities.
Sch B - 1
SCHEDULE C
List of Persons and Entities
Subject to Lock-Up
Executive Officers and Directors of the Company
Xxxx X. Xxxxxxxxx, Xx.
Xxxx X. Xxxxxxx
Xxx Xxxxxxxxxxxx
Xxxxxxxxx Xxxxx
Xxxxxxx X. Xxxxx
Xxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxxxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxx Xxxx
Other Persons and Entities
Xxxxxxxx X. Xxxx
Xxxxx X. Xxxx
The Xxxxx and Xxxxxxx Xxxx Charitable Remainder Trust
(Trustees: Xxxxx X. Xxxxxx Pol, E. Xxxxxx Xxxx and Xxxxxxx X. Xxxx)
Xxxxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
The 1996 Xxxx Revocable Trust
(Trustees: Xxxxx X. Xxxx and Xxxxx X. Xxxxxx Pol)
Xxxx X. Xxxx
Xxxxx X. Xxxx
Xxxxxxx X. Xxxx
E. Xxxxxx Xxxx
Xxxxx X. Xxxx
Xxxxxxxxx X. Xxxx
Xxxxxxx X. Xxxxxx Pol
Xxxxx X. Xxxxxx Pol
Xxxxxx X. Xxxxxx Pol
Xxxxx X. Xxxxxx Xxx
Xxxx/Chilmark Fund L.P.
Xxxxxxx Xxxx
Sch C - 1
SCHEDULE D
Persons and Entities Holding Shares with Registration Rights
Shareholder Number of Shares
Pursuant to the Xxxx/Chilmark Standstill Agreement: 3,975,000
(1) Xxxx/Chilmark Fund L.P.
Pursuant to the Xxxxx Investors Rights Agreement: 752,941
(2) Xxxxxxx X. Xxxxx
(3) Xxxxxxx X. Xxxxx
(4) Xxxxxxx X. Xxxxx
Pursuant to the Food Giant Investors Rights Agreement: 120,000
(5) The Xxxxx and Xxxxxxx Xxxx Charitable Remainder Trust
(Trustees: Xxxxx X. Xxxxxx Pol, E. Xxxxxx Xxxx and
Xxxxxxx X. Xxxx)
(6) Xxxxxxx X. Xxxx
(7) E. Xxxxxx Xxxx
(8) Xxxxxxxxx X. Xxxx
(9) The 1996 Xxxx Revocable Trust
(Trustees: Xxxxx X. Xxxx and Xxxxx X. Xxxxxx Pol)
(10) Xxxx X. Xxxxxx
(11) Xxxx X. Xxxxxx
(12) Xxxxx X. Xxxxxx Pol
(13) Xxxxxxx X. Xxxxxx Pol
(14) Xxxxxxxx X. Xxxx
(15) Xxxxx X. Xxxx
(16) Xxxxx X. Xxxx
(00) Xxxx X. Xxxx
(00) Xxxxx X. Xxxx
(19) Xxxxxx X. Xxxxxx Pol
(20) Xxxxx X. Xxxxxx Pol
(21) Xxxxxx X. Xxxxxx
(22) Xxxxxxx X. Xxxxxx
(23) Xxxxxx X. Xxxxxx
(24) Xxxxxxxx X. Xxxxxx
Pursuant to the KUI Investors Rights Agreement: 904,646
Sch D - 1
(25) A. Xxxxx Xxxxxxxxx
(26) Xxxxxxx X. Xxxxxxxxx
(27) Xxxx Xxx Xxxxxxx Trust
(Trustee: Xxxx Xxx Xxxxxxx)
(28) Xxxx Xxxxxxx
(29) Xxxx Xxx Xxxxxxx Trust
(Trustees: Xxxx Xxx Xxxxxxx and Xxx Xxxxxx)
(30) Xxxxxxx Xxxxx Xxxxxxxxx Trust
(Trustees: Xxxx Xxxxx, Xxxxxxx Xxxxx Xxxxxxxxx and
Xxxx Xxx Xxxxxxx)
(31) Xxxxxx Xxxxxx Xxxxxx Trust
(Trustees: Xxxxxx Xxxxxx Xxxxxx, Xxxx Xxx Xxxxxxx
and Xxx Xxxxxx)
Total 5,752,587
=========
Sch D - 2
Exhibit A
FORM OF OPINION OF XXXXX & XXXXX P.L.L.C.
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
[to come]
A-1
Exhibit B
FORM OF OPINION OF XXXXXXX XXXXXXX & XXXXXXXX
TO BE DELIVERED PURSUANT TO
SECTION 5(c)
[to come]
B-1
Exhibit C
FORM OF OPINION OF O'MELVENY & XXXXX LLP
TO BE DELIVERED PURSUANT TO
SECTION 5(d)
[to come]
C-1
Exhibit D
FORM OF OPINION OF XXXXXXXXX & XXXXXXXXXXX, P.C.
TO BE DELIVERED PURSUANT TO SECTION 5(e)
[to come]
D-1
Exhibit E
January __, 1997
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
SALOMON BROTHERS INC
XXXX XXXXXXXX INCORPORATED
as U.S. Representatives of the several
U.S. Underwriters to be named in the
within-mentioned U.S. Purchase Agreement
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
XXXXXXX XXXXX INTERNATIONAL
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
SALOMON BROTHERS INTERNATIONAL LIMITED
XXXX XXXXXXXX INCORPORATED
as International Representatives of the several
International Underwriters to be named in the
within-mentioned International Purchase Agreement
c/o Merrill Xxxxx International
Ropemaker Place
00 Xxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Re: Proposed Public Offering by Quality Food Centers, Inc.
Ladies and Gentlemen:
The undersigned, a stockholder and, if applicable, an officer and/or
director of Quality Food Centers, Inc., a Washington corporation (the
"Company"), understands that Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation ("DLJ"), Salomon Brothers Inc and Xxxx Xxxxxxxx Incorporated, as the
U.S. representatives of the several U.S. underwriters (the "U.S. Underwriters")
to be named in the U.S.
E-1
Purchase Agreement hereinafter referred to, and Xxxxxxx Xxxxx International,
DLJ, Salomon Brothers International Limited and Xxxx Xxxxxxxx Incorporated, as
the international representatives of the several international underwriters (the
"International Underwriters") to be named in the International Purchase
Agreement hereinafter referred to, propose to enter into a U.S. Purchase
Agreement (the "U.S. Purchase Agreement") and an International Purchase
Agreement, respectively, with the Company, providing for the public offering
(the "Stock Offering") of shares of the Company's common stock, par value $.001
per share (the "Common Stock").
In recognition of the benefit that the Stock Offering will confer upon the
undersigned as a stockholder and, if applicable, an officer and/or director of
the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
U.S. Underwriter and each International Underwriter that, during a period of 90
days from the date of the U.S. Purchase Agreement, the undersigned will not,
without the prior written consent of Xxxxxxx Xxxxx, 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 dispose of or transfer, any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file or cause to be filed any registration statement under the Securities Act of
1933, as amended, with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of Common
Stock, whether any such swap or other transaction referred to in clause (i) or
(ii) above is to be settled by delivery of Common Stock, other securities, in
cash or otherwise; provided that, notwithstanding the foregoing, the undersigned
may transfer shares of Common Stock to members of the undersigned's immediate
family and to privately-held corporations, partnerships, trusts and other
entities which are "affiliates" (as defined in Rule 405 under the Securities Act
of 1933) of the undersigned, so long as any such transferee delivers to Xxxxxxx
Xxxxx, prior to such transfer, a written agreement in form and substance
satisfactory to Xxxxxxx Xxxxx, signed by the transferee, in which the transferee
agrees to comply with the terms and provisions set forth in this agreement.
This agreement shall lapse and become null and void if the closing date of
the Stock Offering shall not have occurred on or before May 1, 1997.
In the event that the Company is a party to or is involved in any merger,
consolidation, share exchange or other transaction and, in connection therewith,
the Common Stock is converted into or exchanged for common stock or other
securities of any other person or entity, then all references in this Agreement
to Common Stock shall be deemed to mean and refer to such common stock and other
securities of such other person or entity, as applicable, and this agreement
shall be applicable to such common stock and other securities.
E-2
This agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
Signature:_______________________________
Print Name:______________________________
E-3
Exhibit F
March __, 1997
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
SALOMON BROTHERS INC
XXXX XXXXXXXX INCORPORATED
as U.S. Representatives of the several
U.S. Underwriters to be named in the
within-mentioned U.S. Purchase Agreement
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
XXXXXXX XXXXX INTERNATIONAL
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
SALOMON BROTHERS INTERNATIONAL LIMITED
XXXX XXXXXXXX INCORPORATED
as International Representatives of the several
International Underwriters to be named in the
within-mentioned International Purchase Agreement
c/o Merrill Xxxxx International
Ropemaker Place
00 Xxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Re: Proposed Public Offering by Quality Food Centers, Inc.
Ladies and Gentlemen:
The undersigned, Quality Food, Inc., a Delaware corporation ("QFI"),
understands that Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx"), Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation ("DLJ"), Salomon Brothers Inc and Xxxx Xxxxxxxx Incorporated, as the
U.S. representatives of the several U.S. underwriters (the "U.S. Underwriters")
to be named in the U.S. Purchase Agreement hereinafter referred to, and Xxxxxxx
Xxxxx International, DLJ, Salomon Brothers International Limited and Xxxx
Xxxxxxxx Incorporated,
F-1
as the international representatives of the several international underwriters
(the "International Underwriters") to be named in the International Purchase
Agreement hereinafter referred to, propose to enter into a U.S. Purchase
Agreement (the "U.S. Purchase Agreement") and an International Purchase
Agreement, respectively, with Quality Food Centers, Inc., a Washington
corporation (the "Company"), providing for the public offering (the "Stock
Offering") of shares of the Company's common stock, par value $.001 per share
(the "Company Common Stock").
In recognition of the benefit that the Stock Offering will confer upon the
undersigned as a company affiliated with the Company, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each U.S. Underwriter and each
International Underwriter that, if the Reorganization (as defined in the U.S.
Purchase Agreement) occurs at any time during a period of 90 days from the date
of the U.S. Purchase Agreement (such period, the "Lockup Period"), the
undersigned will not, without the prior written consent of Xxxxxxx Xxxxx,
directly or indirectly, for the duration of such Lockup Period (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 dispose of or transfer, any shares of the common stock of
QFI (the "QFI Common Stock") or any securities convertible into or exchangeable
or exercisable for QFI Common Stock, or file or cause to be filed any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of QFI Common Stock, whether
any such swap or other transaction referred to in clause (i) or (ii) above is to
be settled by delivery of QFI Common Stock, other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) any shares of QFI
Common Stock issued upon the exercise of any option which, in connection with
the Reorganization, was issued by QFI to replace an option granted by the
Company and outstanding on the date of the U.S. Purchase Agreement to purchase a
like number of shares of Company Common Stock or (B) any shares of QFI Common
Stock issued or options to purchase QFI Common Stock granted pursuant to
employee benefit plans of QFI which are established in connection with the
Reorganization and replace substantially similar employee benefit plans of the
Company which were existing on the date of the U.S. Purchase Agreement and are
referred to in the prospectus relating to the Stock Offering.
This agreement shall lapse and become null and void if the closing date of
the Stock Offering shall not have occurred on or before May 1, 1997.
F-2
This agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
QUALITY FOOD, INC.
By:______________________________________
Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
F-3
