<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 24, 1996
REGISTRATION NO. 333-18567
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
QUALITY FOOD CENTERS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
WASHINGTON 10112 N.E. 10TH STREET, 91-1330075
(State or other jurisdiction BELLEVUE, WASHINGTON 98004 (I.R.S. Employer Identification No.)
of incorporation or organization) TELEPHONE NUMBER (206) 455-7361
(address, including zip code, and
telephone number
including area code, of registrant's
principal executive offices)
</TABLE>
------------------------------
MARC W. EVANGER
VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND SECRETARY/TREASURER
QUALITY FOOD CENTERS, INC.
10112 N.E. 10TH STREET,
BELLEVUE, WASHINGTON 98004
(206) 455-3761
(Name, address, including zip code, and telephone number,
including area code, of agent of service)
------------------------------
PLEASE ADDRESS A COPY OF ALL COMMUNICATIONS TO:
JOHN B. TEHAN, ESQ.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
OFFERING PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PRICE PER UNIT AGGREGATE
SECURITIES TO BE REGISTERED REGISTERED(1)(2)(3) (2)(4)(5) OFFERING PRICE(5)
<S> <C> <C> <C>
Debt Securities.................................... $500,000,000 100% $500,000,000(6)
Preferred Stock....................................
Common Stock.......................................
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
Debt Securities.................................... $151,515(7)
Preferred Stock....................................
Common Stock.......................................
</TABLE>
(1) This Registration Statement also covers such indeterminate amount of Debt
Securities, Preferred Stock and Common Stock as may be issued in exchange
for, or upon conversion of, as the case may be, the Debt Securities or
Preferred Stock registered hereunder.
(2) Not specified as to each class of securities to be registered pursuant to
General Instruction II(D) to Form S-3 under the Securities Act of 1933, as
amended.
(3) The aggregate principal amount of the Debt Securities may be increased if
any Debt Securities are issued at an original issue discount by an amount
such that the gross proceeds to be received by the Registrant shall be equal
to the above amount to be registered. Any offering of Debt Securities
denominated other than in U.S. dollars will be treated as the equivalent of
U.S. dollars based on the exchange rate applicable to the purchase of such
Debt Securities at the time of initial offering.
(4) The proposed maximum offering price per unit will be determined from time to
time by the Registrant in connection with, and at the time of, the issuance
by the Registrant of the securities registered hereunder.
(5) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Rules and Regulations of the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
(6) No separate consideration will be received for any Debt Securities,
Preferred Stock and Common Stock registered hereunder that are issued in
exchange for, or upon conversion of, as the case may be, the Debt Securities
or Preferred Stock registered hereunder.
(7) Paid on December 23, 1996.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 24, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
$500,000,000
QUALITY FOOD CENTERS, INC.
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
---------------------
Quality Food Centers, Inc. ("QFC" or the "Company") may issue and sell from
time to time (i) unsecured debt securities in one or more series, which may be
either senior (the "Senior Debt Securities"), senior subordinated (the "Senior
Subordinated Debt Securities") or subordinated (the "Subordinated Debt
Securities"; the Senior Debt Securities, the Senior Subordinated Debt Securities
and the Subordinated Debt Securities being referred to collectively as the "Debt
Securities"), (ii) shares of preferred stock, $.001 par value per share, in one
or more series (the "Preferred Stock") and (iii) shares of common stock, $.001
par value per share (the "Common Stock") . The Debt Securities, Preferred Stock
and Common Stock (collectively, the "Securities") will be limited to
$500,000,000 aggregate public offering price.
The specific terms of the particular Securities to be issued will be set
forth in a supplement to this Prospectus (a "Prospectus Supplement") which will
be delivered together with this Prospectus, including, where applicable, (i) in
the case of Common Stock, the number of shares, (ii) in the case of Preferred
Stock, the specific designation, number of shares and liquidation value thereof
and the dividend, liquidation, redemption, voting and other rights, including
conversion or exchange rights, if any, and any other special terms and (iii) in
the case of Debt Securities, the specific designation, aggregate principal
amount, authorized denominations, maturity, interest rate (or manner of
calculation thereof) and time of payment of interest, if any, and redemption or
repayment terms, if any, the currency, currencies or currency unit or units in
which the Debt Securities shall be payable, whether such Debt Securities will be
subordinated, any other rights, including conversion or exchange rights, if any,
and any other special terms or covenants. The Prospectus Supplement will also
contain information regarding the initial public offering price, the net
proceeds to QFC and, where applicable, the United States Federal income tax
considerations relating to the Securities covered by the Prospectus Supplement.
QFC may sell Securities to or through one or more underwriters, and may also
sell Securities directly to other purchasers or through dealers or agents. See
"Plan of Distribution." The accompanying Prospectus Supplement sets forth the
names of any underwriters, dealers or agents involved in the sale of the
Securities in respect of which this Prospectus is being delivered, and any
applicable fee, commission or discount arrangements with them.
QFC's Common Stock is listed on the Nasdaq National Market under the symbol
"QFCI". The Prospectus Supplement will contain information about any listing on
a securities exchange or other trading market of the Securities covered by the
Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
The date of this Prospectus is , 1997
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR
IN THE PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS OR THE PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY QFC OR
BY ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS AND THE PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY OR THEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THOSE TO WHICH THEY RELATE. THE DELIVERY OF THIS PROSPECTUS OR THE PROSPECTUS
SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
AVAILABLE INFORMATION
QFC is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy and information statements and other information with the
Securities and Exchange Commission (the "SEC"). Such reports, proxy and
information statements and other information filed by QFC can be inspected and
copied at the public reference facilities of the SEC, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549, as well as at the following
SEC Regional Offices: Seven World Trade Center, New York, NY 10048; and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661-2511. Copies can be obtained from the SEC by mail at prescribed rates.
Requests should be directed to the SEC's Public Reference Section, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549. The Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of such site is http://www.sec.gov.
QFC has filed with the SEC a Registration Statement on Form S-3 (together
with all amendments and exhibits thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), covering the
Securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted from the Prospectus in accordance with the rules and regulations of the
SEC. For further information, reference is made to the Registration Statement.
------------------------
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are incorporated herein by reference:
(1) QFC's Annual Report on Form 10-K for the year ended December 30, 1995;
(2) QFC's Quarterly Reports on Form 10-Q for the twelve weeks ended March
23, 1996, the twelve weeks ended June 15, 1996 and the twelve weeks ended
September 7, 1996; and
(3) QFC's Current Report on Form 8-K dated November 12, 1996, as amended by
QFC's Current Report on Form 8-K/A filed on December 24, 1996.
All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Copies of the above documents (excluding exhibits to such documents, unless
such exhibits are specifically incorporated by reference therein) may be
obtained upon written or oral request without charge by each person to whom this
Prospectus is delivered from the Treasurer of QFC, 10112 N.E. 10th Street,
Bellevue, Washington 98004 (telephone number (206) 455-3761).
2
<PAGE>
THE COMPANY
QFC operates a chain of supermarkets in the Seattle/Puget Sound region in
the State of Washington. QFC began operations in 1954 with four stores and has
grown through acquisition and new store development to 64 stores today. QFC is
incorporated under the laws of the State of Washington and has its principal
executive offices at 10112 N.E. 10th Street, Bellevue, Washington 98004
(telephone number (206) 455-3761).
THE ACQUISITIONS
The statements made under this heading relating to the proposed acquisitions
of Hughes Markets, Inc. and Keith Uddenberg, Inc. (collectively, the
"Acquisitions") are summaries of the agreements described herein, do not purport
to be complete and are qualified in their entirety by reference to such
agreements, which have been filed as exhibits to the Registration Statement of
which this Prospectus is a part.
HUGHES MARKETS, INC.
HUGHES MERGER AGREEMENT. The Company, QHI Acquisition Corporation ("QHI"),
a California corporation and as of the date hereof, a wholly owned subsidiary of
the Company, and Hughes Markets, Inc. ("Hughes"), a California corporation,
entered into an Agreement and Plan of Merger, dated as of November 20, 1996 (the
"Hughes Merger Agreement"), pursuant to which QHI will be merged with and into
Hughes (the "Merger"), with Hughes continuing as the surviving corporation. The
aggregate consideration to be paid for all outstanding shares of capital stock
of Hughes will be approximately $360 million (the "Purchase Price") and will be
subject to increase for each week that the Merger is delayed past a certain
deadline because of a delay in obtaining the financing for the Merger, subject
to certain exceptions. In lieu of calling and convening a meeting of its
shareholders, Hughes has obtained the written consent of the requisite majority
of its shareholders for approval of the Hughes Merger Agreement and the
transactions contemplated thereby. Hughes is an independently owned supermarket
chain of 56 stores in southern California.
The respective obligations of the Company and Hughes to effect the Merger
are subject to the satisfaction of certain conditions, including but not limited
to (i) the termination or expiration of the relevant waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and (ii) the absence of any judicial order or legal restraint preventing the
consummation of the Merger. The obligations of the Company to effect the Merger
are further conditioned on, among others: (i) the execution and delivery in a
form reasonably satisfactory to the Company of all material agreements, and all
revisions, amendments and modifications thereto, relating to the construction by
Santee Dairy, Inc. ("Santee"), currently a 50% owned affiliate of Hughes, of a
new dairy plant (such agreements, as revised, amended or otherwise modified, the
"Santee Agreements"); (ii) the total capital cost of constructing Santee's new
plant not exceeding specified limits; and (iii) there not having occurred and be
continuing for at least ten consecutive trading days (x) a decline of 20% or
more in the Dow Jones Average of Industrial Stocks from the November 20, 1996
closing level, (y) an increase of the yield on the ten year U.S. Treasury notes
to 8.50% per annum or higher or (z) a similar material disruption in the capital
markets which makes it impracticable for the Company to obtain the necessary
financing for the Merger. Except to the extent set forth above in clause (iii),
the Company's obligations to consummate the Merger pursuant to the Hughes Merger
Agreement are not conditioned upon its ability to raise sufficient funds to do
so.
The Hughes Merger Agreement contains customary representations, warranties
and covenants and provides for termination prior to closing under certain
circumstances. If the Hughes Merger Agreement is terminated (i) by mutual
consent of the parties, (ii) by either the Company or Hughes because the
shareholders of Hughes have not approved the Merger, or (iii) by the Company
because (x) the Board of
3
<PAGE>
Directors of Hughes withdraws its recommendation of the Merger or recommends the
acquisition of control of Hughes by a party other than the Company or any of its
subsidiaries (such party, a "Third Party" and such acquisition, a "Third Party
Acquisition"), (y) a Third Party acquires more than 25% of the common stock of
Hughes or (z) any of the Principal Stockholders (as defined below) breaches any
representation, warranty or covenant in the Principal Stockholders Agreement (as
defined below), and within 12 months Hughes effects a Third Party Acquisition,
then Hughes will pay to the Company a fee in the amount of $7.2 million.
PRINCIPAL STOCKHOLDERS AGREEMENT. Pursuant to the agreement, dated as of
November 20, 1996, by and among the Company and certain stockholders of Hughes
who hold approximately 91% of the common stock of Hughes (such stockholders, the
"Principal Stockholders"; such agreement, the "Principal Stockholders
Agreement"), the Principal Stockholders have agreed, among other things, (i) to
give their written consent to the Merger, to the execution and delivery by
Hughes of the Hughes Merger Agreement and the approval of the terms thereof and
to each of the other actions contemplated thereby and by the Principal
Stockholders Agreement; (ii) to vote all of their shares in favor of the Hughes
Merger Agreement and the transactions contemplated thereby at any meeting of
shareholders; and (iii) not to enter into any agreement to vote or to give their
written consent or any instructions inconsistent with clauses (i) or (ii). The
written consents of all Principal Stockholders approving the Hughes Merger
Agreement and the transactions contemplated thereby were delivered to the
Company by November 25, 1996.
KEITH UDDENBERG, INC.
KUI MERGER AGREEMENT. The Company, KU Acquisition Corporation ("KUA"), a
Washington corporation and wholly-owned subsidiary of the Company, and Keith
Uddenberg, Inc. ("KUI"), a Washington corporation, entered into an Agreement and
Plan of Merger, dated as of December 18, 1996 (the "KUI Merger Agreement"),
pursuant to which KUI will be merged with and into KUA (the "KUI Merger"), with
KUA continuing as the surviving corporation. The aggregate consideration to be
paid for all outstanding shares of capital stock of KUI will be approximately
$76.1 million, less any debt of KUI outstanding at the time of the KUI Merger,
plus working capital of KUI at the time of the KUI Merger, plus the appraised
fair market value of certain properties of KUI (which KUI estimates to have a
value of approximately $11.3 million), subject to certain further adjustments.
The consideration will be paid 50% in cash and 50% in Common Stock, based on a
fixed price per share of Common Stock of $39.075. The shareholders of KUI will
have the option of being paid entirely in cash. Prior to the KUI Merger, KUI
will distribute to its shareholders, in a "spin-off" transaction (the
"Spin-Off"), certain property, including assets unrelated to its grocery store
business, real estate owned by KUI and one grocery store. KUI operates 25 stores
in the western and southern Puget Sound region of the State of Washington.
The respective obligations of the Company and KUI to effect the KUI Merger
are subject to the satisfaction of certain conditions, including but not limited
to (i) the termination or expiration of the relevant waiting period under the
HSR Act, (ii) the absence of any judicial order or legal restraint preventing
the consummation of the KUI Merger and (iii) the qualification of the KUI Merger
as a tax-free reorganization under the Internal Revenue Code of 1986, as amended
(unless the shareholders of KUI elect to receive all cash consideration). The
KUI Merger Agreement includes provisions pursuant to which the parties may make
certain adjustments to cause the KUI Merger to qualify as a tax-free
reorganization, if possible. The obligations of the Company to effect the KUI
Merger are further conditioned on, among other things, receipt of an opinion of
counsel to the Company as to certain tax matters, including the qualification of
the Spin-Off as a tax-free transaction. The Company's obligation to consummate
the KUI Merger pursuant to the KUI Merger Agreement is not conditioned upon its
ability to raise sufficient funds to do so.
The KUI Merger Agreement contains customary representations, warranties and
covenants, including covenants of the Company intended to ensure the
qualification of the KUI Merger as a tax-free reorganization that may restrict
the disposition of the surviving corporation or its assets after the KUI
4
<PAGE>
Merger. The KUI Merger Agreement also provides for termination prior to closing
under certain circumstances.
In addition, at the time of the KUI Merger the Company expects to enter into
an Investors Rights Agreement granting to the former KUI shareholders certain
demand and piggyback registration rights.
FINANCING
The Company expects that the cash consideration payable in the Acquisitions
will be financed by any of the following: (i) borrowings under the Company's
credit facility, as it may be amended, (ii) proceeds of debt and/or equity
securities, or (iii) any combination of the foregoing.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
QFC for the periods indicated:
<TABLE>
<CAPTION>
FISCAL YEAR 36 WEEKS ENDED
- ----------------------------------------------------- SEPTEMBER 7, 1996
1991 1992 1993 1994 1995 -------------------
- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
22.43 22.70 17.64 15.71 3.30 3.28
</TABLE>
For purposes of these ratios, (i) earnings have been calculated by adding
interest expense and the estimated interest portion of rentals to earnings
before income taxes and (ii) fixed charges are comprised of interest expense and
the estimated interest portion of rentals.
USE OF PROCEEDS
The Securities may be offered by the Company from time to time as determined
by the Company. Unless otherwise indicated in the applicable Prospectus
Supplement, the net proceeds from the sale of the Securities will be added to
the Company's funds and will be used for general corporate purposes, including
development, acquisition or capital improvement of its stores and operations. If
the Acquisitions are consummated, the Company may use all or a portion of the
net proceeds from one or more series of the Securities to pay all or a portion
of the cash consideration payable in the Acquisitions. The Company may also use
borrowings under its credit facility, as it may be amended, to pay all or a
portion of such cash consideration and/or may use the proceeds from the sale of
other debt securities to pay all or a portion of such consideration.
DESCRIPTION OF DEBT SECURITIES
The Company may issue Debt Securities either separately, or together with,
or upon the conversion of or in exchange for, other Securities. The Debt
Securities are to be (i) senior unsecured obligations (the "Senior Debt
Securities") of the Company issued in one or more series under an Indenture (the
"Senior Indenture") to be entered into between the Company and the trustee to be
named therein (the "Senior Trustee"), (ii) senior subordinated unsecured
obligations (the "Senior Subordinated Debt Securities") of the Company issued in
one or more series under an Indenture (the Senior Subordinated Indenture") to be
entered into between the Company and the trustee to be named therein, or (iii)
subordinated unsecured obligations (the "Subordinated Debt Securities") of the
Company issued in one or more series under an Indenture (the "Subordinated
Indenture") to be entered into between the Company and the trustee to be named
therein (the "Subordinated Trustee"). The Senior Indenture, the Senior
Subordinated Indenture and the Subordinated Indenture are sometimes hereinafter
referred to, collectively, as the "Indentures" and, individually, as an
"Indenture"; and the Senior Trustee, Senior Subordinated Trustee and
Subordinated Trustee are sometimes hereinafter referred to, collectively, as the
"Trustees" or individually, as a "Trustee." The forms of the Indentures have
been filed as exhibits to the Registration Statement of which this Prospectus is
a part. The summary of certain provisions of the Indentures and the Debt
Securities set
5
<PAGE>
forth below and the summary of certain terms of a particular series of Debt
Securities set forth in the applicable Prospectus Supplement do not purport to
be complete and are subject to and are qualified in their entirety by reference
to all of the provisions of the Indentures, which provisions (including defined
terms) are incorporated herein by reference. Certain capitalized terms used
herein and not defined are defined in the Indentures. As used in this
"Description of Debt Securities," all references to the "Company" shall mean
Quality Food Centers, Inc., excluding, unless the context shall otherwise
require, its subsidiaries.
The following description of Debt Securities sets forth certain general
terms and provisions of the series of Debt Securities to which any Prospectus
Supplement may relate. Certain other specific terms of any particular series of
Debt Securities will be described in the applicable Prospectus Supplement. If so
indicated in the applicable Prospectus Supplement, the terms of the Debt
Securities offered thereby may differ from the terms set forth below.
GENERAL
The Debt Securities may be issued from time to time in one or more series of
Senior Debt Securities, Senior Subordinated Debt Securities and Subordinated
Debt Securities. The Indentures do not limit the aggregate principal amount of
Debt Securities which may be issued thereunder and provide that Debt Securities
of any series may be issued thereunder up to an aggregate principal amount which
may be authorized from time to time by the Company. Reference is made to the
applicable Prospectus Supplement relating to the series of Debt Securities
offered thereby for specific terms, including (where applicable): (1) the title
or designation of such Debt Securities; (2) any limit on the aggregate principal
amount of such Debt Securities; (3) the price or prices (which may be expressed
as a percentage of the principal amount thereof) at which such Debt Securities
will be issued; (4) the date or dates on which the principal of and premium, if
any, on such Debt Securities will be payable, or the method or methods, if any,
by which such date or dates will be determined; (5) the rate or rates (which may
be fixed or variable) at which such Debt Securities will bear interest, if any,
or the method or methods, if any, by which such rate or rates are to be
determined, the date or dates, if any, from which such interest will accrue, or
the method or methods, if any, by which such date or dates are to be determined,
and whether and under what circumstances Additional Amounts on such Debt
Securities will be payable, and the basis upon which interest will be calculated
if other than that of a 360-day year of twelve 30-day months; (6) the dates on
which such interest, if any, will be payable and the record dates therefor; (7)
the place or places where the principal of, premium, if any, and interest, if
any, on such Debt Securities will be payable and the place or places where such
Debt Securities may be surrendered for registration of transfer and exchange, if
other than The City of New York; (8) the date or dates on which, the period or
periods within which, the price or prices at which and the other terms and
conditions upon which such Debt Securities may be redeemed at the option of the
Company or are subject to repurchase at the option of the holders; (9) the terms
of any sinking fund or analogous provision; (10) if other than U.S. dollars, the
Currency for which the Debt Securities may be purchased and the Currency in
which the payment of principal thereof and premium, if any, and interest, if
any, thereon may be made, and the ability, if any, of the Company or the holders
of Debt Securities to have payments made in any Currency other than those in
which the Debt Securities are stated to be payable; (11) any addition to, or
modification or deletion of, any covenant or Event of Default with respect to
such Debt Securities; (12) whether any such Debt Securities are to be issuable
in registered or bearer form or both and, if in bearer form, the terms and
conditions relating thereto and any limitations on issuance of such Bearer
Securities (including in exchange for Registered Securities of the same series);
(13) whether any such Debt Securities will be issued in temporary or permanent
global form and, if so, the identity of the depositary for such global Debt
Securities; (14) whether and under what circumstances the Company will pay
Additional Amounts (as contemplated by the relevant Indenture) on such Debt
Securities to any holder who is a United States Alien (as defined in the
relevant Indenture, as such definition may be modified) in respect of any tax,
assessment or other governmental charge and, if so, whether the Company will
have the option to redeem such Debt Securities rather than pay such Additional
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Amounts; (15) the person to whom any interest on any Registered Securities of
the series shall be payable, if other than the person in whose name such
Registered Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, the manner in
which, or the person to whom, any interest on any Bearer Security of the series
shall be payable, if other than upon presentation and surrender of the coupons
appertaining thereto as they severally mature, and the extent to which, or the
manner in which, any interest payable on a temporary global Debt Security will
be paid if other than in the manner provided in the relevant Indenture; (16) the
portion of the principal amount of such Debt Securities which shall be payable
upon acceleration thereof if other than the full principal amount thereof; (17)
the authorized denominations in which such Debt Securities will be issuable, if
other than denominations of $1,000 and any integral multiple thereof (in the
case of Registered Securities) or $5,000 (in the case of Bearer Securities);
(18) the terms, if any, upon which such Debt Securities may be convertible into
or exchangeable for other Securities; (19) whether such Debt Securities will be
Senior Debt Securities, Senior Subordinated Debt Securities or Subordinated Debt
Securities; (20) whether the amount of payments of principal of, premium, if
any, and interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method or methods (any such Debt
Securities being hereinafter called "Indexed Securities") and the manner in
which such amounts will be determined; and (21) any other terms of such Debt
Securities.
As used in this Prospectus and any Prospectus Supplement relating to the
offering of any Debt Securities, references to the principal of and premium, if
any, and interest, if any, on such Debt Securities will be deemed to include
mention of the payment of Additional Amounts, if any, required by the terms of
such Debt Securities in such context.
Debt Securities may be issued as Original Issue Discount Securities to be
sold at a substantial discount below their principal amount. In the event of an
acceleration of the maturity of any Original Issue Discount Security, the amount
payable to the holder thereof upon such acceleration will be determined in the
manner described in the applicable Prospectus Supplement. Material federal
income tax and other considerations applicable to Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
If the purchase price of any Debt Securities is payable in a currency other
than U.S. dollars or if principal of, or premium, if any, or interest, if any,
on any of the Debt Securities is payable in any currency other than U.S.
dollars, the specific terms and other information with respect to such Debt
Securities and such foreign currency will be specified in the Prospectus
Supplement relating thereto.
Under the Indentures, the terms of the Debt Securities of any series may
differ and, unless otherwise provided in the applicable Prospectus Supplement,
the Company, without the consent of the holders of the Debt Securities of any
series, may reopen a previous series of Debt Securities and issue additional
Debt Securities of such series or establish additional terms of such series.
REGISTRATION, TRANSFER, PAYMENT AND PAYING AGENT
Unless otherwise indicated in the applicable Prospectus Supplement, each
series of Debt Securities will be issued in registered form only, without
coupons. The Indentures, however, provide that the Company may also issue Debt
Securities in bearer form only, or in both registered and bearer form. Bearer
Securities shall not be offered, sold, resold or delivered in connection with
their original issuance in the United States or to any United States person (as
defined below) other than offices located outside the United States of certain
United States financial institutions. As used herein, "United States person"
means any citizen or resident of the United States, any corporation, partnership
or other entity created or organized in or under the laws of the United States,
or any estate or trust, the income of which is subject to United States federal
income taxation regardless of its source, and "United States" means the United
States of America (including the states thereof and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction.
Purchasers of Bearer Securities will be subject to certification
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procedures and may be affected by certain limitations under United States tax
laws. Such procedures and limitations will be described in the Prospectus
Supplement relating to the offering of any Bearer Securities.
Unless otherwise indicated in the applicable Prospectus Supplement,
Registered Securities will be issued in denominations of $1,000 or any integral
multiple thereof, and Bearer Securities will be issued in denominations of
$5,000.
Unless otherwise indicated in the applicable Prospectus Supplement, the
principal, premium, if any, and interest, if any, of or on the Debt Securities
will be payable, and Debt Securities may be surrendered for registration of
transfer or exchange, at an office or agency to be maintained by the Company in
the Borough of Manhattan, The City of New York, provided that payments of
interest with respect to any Registered Security may be made at the option of
the Company by check mailed to the address of the person entitled thereto or by
transfer to an account maintained by the payee with a bank located in the United
States. No service charge shall be made for any registration of transfer or
exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of the principal of, premium, if any, and interest, if any, on Bearer Securities
will be made, subject to any applicable laws and regulations, at such office or
agency outside the United States as specified in the Prospectus Supplement and
as the Company may designate from time to time. Unless otherwise indicated in
the applicable Prospectus Supplement, payment of interest due on Bearer
Securities on any Interest Payment Date will be made only against surrender of
the coupon relating to such Interest Payment Date. Unless otherwise indicated in
the applicable Prospectus Supplement, no payment of principal, premium or
interest with respect to any Bearer Security will be made at any office or
agency in the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank located in the United
States; provided, however, that if amounts owing with respect to any Bearer
Securities shall be payable in U.S. dollars, payment with respect to any such
Bearer Securities may be made at the Corporate Trust Office of the applicable
Trustee or at any office or agency designated by the Company in the Borough of
Manhattan, The City of New York, if (but only if) payment of the full amount of
such principal, premium or interest at all offices outside of the United States
maintained for such purpose by the Company is illegal or effectively precluded
by exchange controls or similar restrictions.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company will not be required to (i) issue, register the transfer of or exchange
Debt Securities of any series during a period beginning at the opening of
business 15 days before any selection of Debt Securities of that series to be
redeemed and ending at the close of business on the day of that selection; (ii)
register the transfer of or exchange any Registered Security, or portion
thereof, called for redemption, except the unredeemed portion of any Registered
Security being redeemed in part; (iii) exchange any Bearer Security called for
redemption, except to exchange such Bearer Security for a Registered Security of
that series and like tenor that is simultaneously surrendered for redemption; or
(iv) issue, register the transfer of or exchange any Debt Security which has
been surrendered for repayment at the option of the holder, except the portion,
if any, of such Debt Security not to be so repaid.
RANKING OF DEBT SECURITIES
The Senior Debt Securities will be unsecured unsubordinated obligations of
the Company and will rank on a parity in right of payment with all other
unsecured and unsubordinated indebtedness of the Company. The Senior
Subordinated Debt Securities will be unsecured senior subordinated obligations
of the Company and will be subordinated in right of payment to all existing and
future Senior Indebtedness (as defined in the applicable Prospectus Supplement)
of the Company, including the Senior Debt Securities. The Subordinated Debt
Securities will be unsecured subordinated obligations of the Company and will be
subordinated in right of payment to all existing and future Senior Indebtedness
(as defined in
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the applicable Prospectus Supplement) of the Company, including the Senior Debt
Securities and the Senior Subordinated Debt Securities). See "--Subordination of
Senior Subordinated and Subordinated Debt Securities."
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with, or on behalf
of, a depositary (the "Depositary") identified in the Prospectus Supplement
relating to such series. Global Debt Securities may be issued in either
registered or bearer form and in either temporary or permanent form. Unless and
until it is exchanged in whole or in part for individual certificates evidencing
Debt Securities in definitive form, a global Debt Security may not be
transferred except as a whole by the Depositary for such global Debt Security to
a nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any global
Debt Securities and certain limitations and restrictions relating to any global
Bearer Securities will be described in the applicable Prospectus Supplement.
OUTSTANDING DEBT SECURITIES
In determining whether the holders of the requisite principal amount of
outstanding Debt Securities have given any request, demand, authorization,
direction, notice, consent or waiver under the relevant Indenture, (i) the
portion of the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding for such purposes shall be that portion of the
principal amount thereof that could be declared to be due and payable upon a
declaration of acceleration thereof pursuant to the terms of such Original Issue
Discount Security as of the date of such determination, (ii) the principal
amount of any Indexed Security that shall be deemed to be outstanding for such
purpose shall be the principal face amount of such Indexed Security determined
on the date of its original issuance, (iii) the principal amount of a Debt
Security denominated in a currency other than U.S. dollars shall be the U.S.
dollar equivalent, determined on the date of original issue of such Debt
Security, of the principal amount of such Debt Security and (iv) any Debt
Security owned by the Company or any obligor on such Debt Security or any
Affiliate of the Company or such other obligor shall be deemed not to be
outstanding.
REDEMPTION AND REPURCHASE
The Debt Securities of any series may be redeemable at the option of the
Company, may be subject to mandatory redemption pursuant to a sinking fund or
otherwise, or may be subject to repurchase by the Company at the option of the
holders, in each case upon the terms, at the times and at the prices set forth
in the applicable Prospectus Supplement.
CONVERSION AND EXCHANGE
The terms, if any, on which Debt Securities of any series are convertible
into or exchangeable for Common Stock, Preferred Stock or other Debt Securities
will be set forth in the applicable Prospectus Supplement. Such terms may
include provisions for conversion or exchange, either mandatory, at the option
of the holders or at the option of the Company.
CERTAIN COVENANTS OF THE COMPANY
The following covenant will be contained in each of the Indentures. Any
additional covenants applicable to any series of Debt Securities will be set
forth in the applicable Prospectus Supplement.
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MERGER, SHARE EXCHANGE AND SALE OF ASSETS. Each Indenture provides that the
Company will not, in any transaction or series of transactions, merge or enter
into a share exchange with, or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets as
to, any person or persons, and the Company will not permit any of its
Subsidiaries (as defined in the applicable Prospectus Supplement) to enter into
any such transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or other disposition of all or substantially all of the
properties and assets of the Company or the Company and its Subsidiaries, taken
as a whole, to any other person or persons, unless at the time of and after
giving effect thereto (a) either (i) if the transaction or series of
transactions is a merger or share exchange, the Company shall be the surviving
person of such merger or consolidation, or (ii) the person formed by such share
exchange or into which the Company or such Subsidiary is merged or to which the
properties and assets of the Company or such Subsidiary, as the case may be, are
transferred (any such surviving person or transferee person being the "Surviving
Entity") shall be a corporation organized and existing under the laws of the
United States of America, any state thereof or the District of Columbia and
shall expressly assume by a supplemental indenture executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, all of the obligations
of the Company under the relevant Debt Securities and Indenture; (b) immediately
after giving effect to such transaction, no Event of Default under such
Indenture, and no event which, after notice or lapse of time or both would
become an Event of Default under such Indenture, shall have happened and be
continuing; and (c) certain other conditions (including such as may be specified
in the applicable Prospectus Supplement) are met.
Upon any such merger, share exchange, sale, assignment, conveyance,
transfer, lease or other disposition in which the Company is not the continuing
corporation, the successor corporation formed by such consolidation or into
which the Company is merged or to which such sale, assignment, conveyance,
transfer, lease or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the relevant Indenture with the same effect as if such successor corporation had
been named as the Company therein and thereafter (except in the case of a lease)
the Company shall be released from its obligations under such Indenture and the
Debt Securities.
EVENTS OF DEFAULT
An Event of Default with respect to the Debt Securities of any series is
defined in the relevant Indenture as being: (i) default in the payment of any
interest on any of the Debt Securities of such series (or any Additional Amounts
payable in respect of such interest) when the same becomes due and payable and
continuance of such default for 30 days; (ii) default in the payment of any
principal of or premium, if any, on any Debt Security of such series (or any
Additional Amounts payable in respect of such principal or premium) when the
same becomes due and payable (whether at stated maturity, upon acceleration,
optional redemption, required purchase, scheduled principal payment or
otherwise); (iii) default in making any sinking fund payment or payment under
any analogous provision when due with respect to any Debt Security of such
series; (iv) default by the Company in the performance, or breach, of any other
covenant or warranty in the relevant Indenture (other than a covenant or
warranty included therein solely for the benefit of a series of Debt Securities
other than that series) or any Debt Security of such series which shall not have
been remedied for a period of 30 days after notice to the Company by the
relevant Trustee or the holders of not less than 25% in aggregate principal
amount of the Debt Securities of such series then outstanding; (v) certain
events of bankruptcy, insolvency or reorganization with respect to the Company
or any Significant Subsidiary (as defined in the applicable Prospectus
Supplement) of the Company; and (vi) any other Event of Default provided with
respect to Debt Securities of that series as described in the applicable
Prospectus Supplement. Each Indenture provides that the Trustee thereunder may
withhold notice to the holders of the Debt Securities of any series of the
occurrence of a default with respect to the Debt Securities of such series
(except a default in payment of principal, premium, if any, interest, if any, or
sinking fund payments, if any) if the Trustee considers it in the interest of
the holders to do so.
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Each Indenture provides that if an Event of Default (other than as specified
in clause (vi) above) with respect to any series of Debt Securities issued
thereunder shall have occurred and be continuing, either the relevant Trustee or
the holders of at least 25% in principal amount of the Debt Securities of such
series then outstanding may declare the principal of (or if any Debt Securities
of such series are Original Issue Discount Securities, such lesser amount as may
be specified in the terms thereof) and accrued and unpaid interest, if any, on
all of the Debt Securities of such series to be due and payable immediately;
and, if an Event of Default specified in clause (vi) above occurs and is
continuing, the principal of (or if any Debt Securities of such series are
Original Issue Discount Securities, such lesser amount as may be specified in
the terms thereof) and accrued and unpaid interest, if any, on all of the Debt
Securities of such series shall become due and payable immediately without any
declaration or other act on the part of the Trustee or the holders thereof. Upon
certain conditions such acceleration may be annulled by the holders of a
majority in principal amount of the Debt Securities of such series then
outstanding.
Subject to the provisions of the Trust Indenture Act of 1939 requiring each
Trustee, during an Event of Default under the relevant Indenture, to act with
the requisite standard of care, a Trustee is under no obligation to exercise any
of its rights or powers under the relevant Indenture at the request or direction
of any of the holders of Debt Securities of any series unless such holders have
offered such Trustee reasonable indemnity. Subject to the foregoing, holders of
a majority in principal amount of the then outstanding Debt Securities of any
series issued under an Indenture shall have the right, subject to certain
limitations, to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee under such Indenture with respect to
such series. Each Indenture requires the annual filing by the Company with the
relevant Trustee of a certificate as to whether or not the Company is in default
under the terms of such Indenture.
MODIFICATION, WAIVERS AND MEETINGS
Each Indenture contains provisions permitting the Company and the Trustee
thereunder, with the consent of the holders of a majority in principal amount of
the outstanding Debt Securities of each series issued under such Indenture and
affected by a modification or amendment, to modify or amend any of the
provisions of such Indenture or of the Debt Securities of such series or the
rights of the holders of the Debt Securities of such series under such
Indenture, provided that no such modification or amendment shall, among other
things, (i) change the stated maturity of the principal of, or premium, if any,
or any installment of interest, if any, on any Debt Securities issued under such
Indenture or reduce the principal amount thereof or any premium thereon, or
reduce the rate of interest thereon, or reduce the amount of principal of any
Original Issue Discount Securities that would be due and payable upon an
acceleration of the maturity thereof, or adversely affect any right of repayment
at the option of any holder, or change any place where, or the currency in
which, any Debt Securities issued under such Indenture are payable, or impair
the holder's right to institute suit to enforce the payment of any such Debt
Securities, or make any change that adversely affects the right, if any, to
convert or exchange such Debt Securities for other securities in accordance with
their terms, or (ii) reduce the aforesaid percentage of Debt Securities of any
series issued under such Indenture, the consent of the holders of which is
required for any such modification or amendment or the consent of whose holders
is required for any waiver (of compliance with certain provisions of such
Indenture or certain defaults thereunder and their consequences) or reduce the
requirements for a quorum or voting at a meeting of holders of such Debt
Securities or (iii) solely in the case of the Senior Subordinated Indenture and
the Subordinated Indenture, modify any of the provisions of the specific Article
in such Indenture relating to subordination of the Debt Securities issued under
such Indenture or the definition of Senior Indebtedness therein in a manner
adverse to the holders of the Debt Securities issued under such Indenture,
without in each such case obtaining the consent of the holder of each
outstanding Debt Security issued under such Indenture so affected. Each
Indenture also contains provisions permitting the Company and the relevant
Trustee, without the consent of the holders of any Debt Securities issued
thereunder, to modify or amend such Indenture in order to, among other things,
(a) add to the Events of Default or the covenants of the Company for the benefit
of the holders of all or
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any series of Debt Securities issued under such Indenture; (b) to add or change
any provisions of such Indenture to facilitate the issuance of Bearer
Securities; (c) to establish the form or terms of Debt Securities of any series
and any related coupons; (d) to cure any ambiguity or correct or supplement any
provision therein which may be inconsistent with other provisions therein, or to
make any other provisions with respect to matters or questions arising under
such Indenture which shall not adversely affect the interests of the holders of
any series of Debt Securities issued thereunder in any material respect; or (e)
to amend or supplement any provision contained in such Indenture, provided that
such amendment or supplement does not apply to any outstanding Debt Securities
issued prior to the date of such amendment or supplement and entitled to the
benefits of such provision.
The holders of a majority in aggregate principal amount of the outstanding
Debt Securities of any series may waive compliance by the Company with certain
restrictive provisions of the relevant Indenture. The Holders of a majority in
aggregate principal amount of the outstanding Debt Securities of any series may,
on behalf of all holders of Debt Securities of that series, waive any past
default under the applicable Indenture with respect to Debt Securities of that
series and its consequences, except a default in the payment of the principal
of, or premium, if any, or interest, if any, on any Debt Securities of such
series or in respect of a covenant or provision which cannot be modified or
amended without the consent of the holder of each outstanding Debt Securities of
such series affected.
Each Indenture contains provisions for convening meetings of the holders of
Debt Securities of a series issued thereunder. A meeting may be called at any
time by the relevant Trustee, and also, upon request, by the Company or the
holders of at least 10% in principal amount of the outstanding Debt Securities
of such series, in any such case upon notice given in accordance with the
provisions of such Indenture. Except for any consent which must be given by the
holder of each outstanding Debt Security affected thereby, as described above,
any resolution presented at a meeting or adjourned meeting duly reconvened at
which a quorum (as described below) is present may be adopted by the affirmative
vote of the holders of a majority in principal amount of the outstanding Debt
Securities of that series; provided, however, that (i) any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action which may be made, given or taken by the holders of a
specified percentage, which is less than a majority, in principal amount of the
outstanding Debt Securities of a series and (ii) any resolution with respect to
any request, demand, authorization, direction, notice, consent, waiver or other
action which may be made, given or taken by the holders of a specified
percentage, which is more than a majority, in principal amount of the
outstanding Debt Securities of a series, may be adopted at a meeting or
adjourned meeting duly reconvened at which a quorum is present by the
affirmative vote of the holders of such specified percentage in principal amount
of the outstanding Debt Securities of that series. Any resolution passed or
decision taken at any meeting of holders of Debt Securities of any series duly
held in accordance with the relevant Indenture will be binding on all holders of
Debt Securities of that series and the related coupons. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
persons holding or representing a majority in principal amount of the
outstanding Debt Securities of a series, subject to certain exceptions.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Upon the direction of the Company, any Indenture shall cease to be of
further effect with respect to any series of Debt Securities issued thereunder
specified by the Company (subject to the survival of certain provisions thereof,
including the obligation to pay Additional Amounts to the extent described
below) when (i) either (A) all outstanding Debt Securities of such series and,
in the case of Bearer Securities, all coupons appertaining thereto, have been
delivered to the relevant Trustee for cancellation (subject to certain
exceptions) or (B) all Debt Securities of such series have become due and
payable or have been called for redemption and the Company has deposited with
the Trustee, in trust, funds in U.S. dollars or in such foreign currency in
which such Debt Securities are payable in an amount sufficient to pay the entire
indebtedness on such Debt Securities in respect of principal, premium, if any,
and interest, if any (and, to
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the extent that (x) the Debt Securities of such series provide for the payment
of Additional Amounts upon the occurrence of certain events of taxation,
assessment or governmental charge with respect to payments on such Debt
Securities and (y) the amount of any such Additional Amounts is at the time of
deposit reasonably determinable by the Company (in the exercise of its sole
discretion), any such Additional Amounts) to the date of such deposit (if such
Debt Securities have become due and payable) or to the date fixed for redemption
thereof, as the case may be, (ii) the Company has paid all other sums payable
under the Indenture with respect to the Debt Securities of such series, and
(iii) certain other conditions (including such as may be specified in the
applicable Prospectus Supplement) are met. If the Debt Securities of any such
series provide for the payment of Additional Amounts, the Company will remain
obligated, following such deposit, to pay Additional Amounts on such Debt
Securities to the extent that the amount thereof exceeds the amount deposited in
respect of such Additional Amounts as aforesaid.
Unless otherwise provided in the applicable Prospectus Supplement, the
Company may elect with respect to any series of Debt Securities either (a) to
defease and be discharged from any and all obligations with respect to such Debt
Securities (except for, among other things, the obligation to pay Additional
Amounts, if any, upon the occurrence of certain events of taxation, assessment
or governmental charge with respect to payments on such Debt Securities to the
extent that the amount thereof exceeds the amount deposited in respect of such
Additional Amounts as provided below, and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities, to hold moneys for payment in trust, and, if
applicable, to exchange or convert such Debt Securities into other securities in
accordance with their terms) ("defeasance"), or (b) to be released from its
obligations under certain covenants applicable to such Debt Securities (which
covenants will be described in the applicable Prospectus Supplement), and any
omission to comply with such obligations shall not constitute a default or an
Event of Default with respect to the Debt Securities of such series ("covenant
defeasance"), in either case upon the irrevocable deposit with the relevant
Trustee (or other qualifying trustee), in trust for such purpose, of an amount,
in U.S. dollars or in such foreign currency in which such Debt Securities are
payable at stated maturity, and/or Government Obligations (as defined in the
relevant Indenture) which through the payment of principal and interest in
accordance with their terms will provide money, in an amount sufficient to pay
the principal of and premium, if any, and interest, if any, on (and, to the
extent that (x) the Debt Securities of such series provide for the payment of
Additional Amounts and (y) the amount of any such Additional Amounts is at the
time of deposit reasonably determinable by the Company (in the exercise of its
sole discretion), any such Additional Amounts with respect to) such Debt
Securities, and any mandatory sinking fund or analogous payments thereon, on the
due dates therefor, whether upon maturity, redemption or otherwise.
Such defeasance or covenant defeasance shall only be effective if, among
other things, (i) the Company shall have delivered to the relevant Trustee an
opinion of counsel to the effect that the holders of the outstanding Debt
Securities of such series will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance or covenant defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such legal defeasance or
covenant defeasance had not occurred (in the case of defeasance, such opinion
must refer to and be based upon a ruling of the Internal Revenue Service or a
change in applicable federal income tax laws); (ii) no Event of Default or event
which, with notice or lapse of time or both, would constitute an Event of
Default under the relevant Indenture shall have occurred and be continuing on
the date of such deposit or, insofar as clause (vi) of the first paragraph under
"--Events of Default" is concerned, at any time during the period ending on the
123rd day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such period);
(iii) such defeasance or covenant defeasance shall not cause such Trustee to
have a conflicting interest with respect to any securities of the Company; (iv)
such defeasance or covenant defeasance shall not result in a breach or violation
of, or constitute a default under, such Indenture or any other material
agreement or instrument to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary is bound;
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(v) the Company shall have delivered to such Trustee an opinion of counsel to
the effect that after the 123rd day following the deposit, the trust funds will
not be subject to avoidance or recovery under any applicable bankruptcy laws;
and (vi) the Company shall have satisfied certain further conditions, including
delivery to the Trustee of an officers' certificate and an opinion of counsel,
each stating that all conditions precedent under such Indenture to such
defeasance or covenant defeasance, as the case may be, have been complied with.
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the holder of a Debt Security of such series is entitled to, and does, elect
pursuant to the applicable Indenture or the terms of such Debt Security to
receive payment in a currency other than that in which such deposit has been
made in respect of such Debt Security, or (b) a Conversion Event (as defined
below) occurs in respect of the foreign currency in which such deposit has been
made, the indebtedness represented by such Debt Security shall be deemed to have
been, and will be, fully discharged and satisfied through the payment of the
principal of, premium, if any, and interest, if any, on such Debt Security as
such Debt Security becomes due out of the proceeds yielded by converting the
amount so deposited in respect of such Debt Security into the currency in which
such Debt Security becomes payable as a result of such election or such
Conversion Event based on (x) in the case of payments made pursuant to clause
(a) above, the applicable market exchange rate for such foreign currency in
effect on the second business day prior to such payment date, or (y) with
respect to a Conversion Event, the applicable market exchange rate for such
foreign currency in effect (as nearly as feasible) at the time of the Conversion
Event.
"Conversion Event" means the cessation of use of (i) a foreign currency both
by the government of the country or the confederation which issued such foreign
currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community, (ii) the
ECU both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Union or (iii) any
currency unit or composite currency other than the ECU for the purposes for
which it was established.
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default (including any Event of Default with
respect to any covenant as to which such covenant defeasance is not applicable),
the amount of monies and/or Government Obligations deposited with the applicable
Trustee to effect such covenant defeasance may not be sufficient to pay amounts
due on such Debt Securities at the time of any acceleration resulting from such
Event of Default. However, the Company would remain liable to make payment of
such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions, if
any, permitting or restricting defeasance or covenant defeasance with respect to
the Debt Securities of a particular series.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.
REGARDING THE TRUSTEES
The Trust Indenture Act of 1939 contains limitations on the rights of a
trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases or to realize on certain property received by it in respect of
any such claims, as security or otherwise. Each Trustee is permitted to engage
in other transactions with the Company and its subsidiaries from time to time,
provided that if such Trustee acquires any conflicting interest it must
eliminate such conflict upon the occurrence of an Event of Default under the
relevant Indenture, or else resign.
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SUBORDINATION OF SENIOR SUBORDINATED AND SUBORDINATED DEBT SECURITIES
The payment of the principal of, premium, if any, and interest, if any, on
the Senior Subordinated Debt Securities and the Subordinated Debt Securities
will be subordinated, to the extent and in the manner set forth in the Senior
Subordinated Indenture and Subordinated Indenture, respectively, and as may be
further described in the applicable Prospectus Supplement, in right of payment
to the prior payment in full in cash or Cash Equivalents of all Senior
Indebtedness which may at any time and from time to time be outstanding.
Unless otherwise provided in the applicable Prospectus Supplement with
respect to an issue of Senior Subordinated Debt Securities or Subordinated Debt
Securities, in the event of any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relating to the Company or its assets, or
any liquidation, dissolution or other winding-up of the Company, whether
voluntary or involuntary, or any assignment for the benefit of creditors or
other marshalling of assets or liabilities of the Company, all Senior
Indebtedness of the Company must be paid in full or such payment must be
provided for before any payment or distribution (excluding the distribution of
certain permitted equity or subordinated securities) is made on account of the
principal, premium, if any, sinking fund, if any, or interest, if any, on any
Senior Subordinated Debt Securities or Subordinated Debt Securities, as the case
may be.
In addition, the applicable Prospectus Supplement may provide that no
payment on account of the Senior Subordinated Debt Securities or Subordinated
Debt Securities offered thereby shall be made during the continuance of certain
defaults with respect to the Senior Indebtedness or certain designated Senior
Indebtedness of the Company.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets (excluding the distribution of certain permitted equity
or subordinated securities) of the Company is received by the Senior
Subordinated Trustee or the Subordinated Trustee or the holders of any of the
Senior Subordinated Debt Securities or Subordinated Debt Securities, as the case
may be, under the circumstances described above and before all Senior
Indebtedness is paid in full, such payment or distribution will be paid over to
the holders of such Senior Indebtedness or on their behalf for application to
the payment of all such Senior Indebtedness remaining unpaid until all such
Senior Indebtedness has been paid in full or such payment provided for, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness.
If the Company fails to make any payments on the Senior Subordinated Debt
Securities or the Subordinated Debt Securities of any series when due or within
any applicable grace period, whether or not on account of any payment blockage
provisions that may be set forth in the applicable Prospectus Supplement, such
failure would constitute an Event of Default under the relevant Indenture and
would enable the holders of such Debt Securities to accelerate the maturity
thereof. See "--Events of Default."
By reason of such subordination, in the event of any distribution of assets
of the Company upon dissolution, winding up, liquidation, reorganization or
other similar proceedings of the Company, (i) holders of Senior Indebtedness
will be entitled to be paid in full before payments may be made on the Senior
Subordinated Debt Securities or the Subordinated Debt Securities and the holders
of Senior Subordinated Debt Securities and Subordinated Debt Securities will be
required to pay over their share of such distribution to the holders of Senior
Indebtedness until such Senior Indebtedness is paid in full and (ii) creditors
of the Company who are neither holders of Senior Subordinated Debt Securities or
Subordinated Debt Securities nor holders of Senior Indebtedness may recover
less, ratably, than holders of Senior Indebtedness and may recover more,
ratably, than the holders of the Senior Subordinated Debt Securities and
Subordinated Debt Securities. Furthermore, such subordination may result in a
reduction or elimination of payments to the holders of Senior Subordinated Debt
Securities and Subordinated Debt Securities. The Senior Subordinated Indenture
and Subordinated Indenture provide that the subordination provisions thereof
will not apply to any money and securities held in trust pursuant to the
discharge,
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defeasance and covenant defeasance provisions of such Indenture (see
"--Discharge, Defeasance and Covenant Defeasance" above).
If this Prospectus is being delivered in connection with the offering of a
series of Senior Subordinated Debt Securities or Subordinated Debt Securities,
the accompanying Prospectus Supplement or the information incorporated by
reference herein will set forth the definition of Senior Indebtedness applicable
thereto and the approximate amount of such Senior Indebtedness outstanding as of
a recent date.
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DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain terms of a series of the Preferred
Stock offered by any Prospectus Supplement will be described in the Prospectus
Supplement relating to such series of the Preferred Stock. If so indicated in
the Prospectus Supplement, the terms of any such series may differ from the
terms set forth below. The following description of the Preferred Stock
summarizes certain provisions of the Articles of Incorporation of QFC (the
"Articles") and is subject to and qualified in its entirety by reference to the
Articles and any actual Articles of Amendment which will be filed with the SEC
promptly after any offering of such series of Preferred Stock.
GENERAL
The Articles authorize 1,000,000 shares of Preferred Stock and permits the
Board of Directors, without further shareholder authorization, to issue
Preferred Stock in one or more series and to fix the terms and provisions of
each series, including dividend rights and preferences over dividends on the
Common Stock; conversion rights, if any; voting rights, if any (in addition to
those provided by law); redemption rights, if any, and the terms of any sinking
fund therefor; and rights on liquidation, including preferences over the Common
Stock, which action could adversely affect the rights of holders of Common
Stock.
As of the date of this Prospectus, QFC has no shares of Preferred Stock
outstanding. QFC may amend from time to time, with shareholder approval, the
Articles to increase the number of authorized shares of Preferred Stock.
The Preferred Stock will have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in the Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference is
made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation of such Preferred Stock, the number of shares offered and the
liquidation value thereof; (ii) the price at which such Preferred Stock will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable, whether such dividends shall be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall commence
to accumulate; (iv) the liquidation preference thereof; (v) any redemption or
sinking fund provisions; (vi) any conversion or exchange provisions of such
Preferred Stock; and (vii) any additional dividend, liquidation, redemption,
sinking fund and other rights, preferences, limitations and restrictions of such
Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a particular
series of the Preferred Stock, each series of the Preferred Stock will rank on a
parity as to dividends and distributions in the event of a liquidation with each
other series of the Preferred Stock, if any. Holders of Preferred Stock will
have no preemptive rights to subscribe for or purchase shares of capital stock.
DIVIDEND RIGHTS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors, out of assets of QFC legally
available therefor, cash dividends at such rates and on such dates as are set
forth in the Prospectus Supplement relating to such series of the Preferred
Stock. Such rate may be fixed or variable or both. Each such dividend will be
payable to the holders of record as they appear on the stock books of QFC on
such record dates as will be fixed by the Board of Directors. Dividends on any
series of the Preferred Stock may be cumulative or noncumulative, as provided in
the Prospectus Supplement relating thereto. If the Board of Directors fails to
declare a dividend payable on a dividend payment date on any series of Preferred
Stock for which dividends are noncumulative, then the right to receive a
dividend in respect of the dividend period ending on such dividend payment date
will be
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lost, and QFC shall have no obligation to pay the dividend accrued for that
period, whether or not dividends are declared for any future period.
No full dividends will be declared or paid or set apart for payment on
preferred stock of any series ranking, as to dividends, on a parity with or
junior to any series of Preferred Stock for any period unless full dividends
have been or contemporaneously are declared and paid, or declared and a sum
sufficient for the payment thereof set apart for such payment on such series of
Preferred Stock for the then-current dividend period and, if such Preferred
Stock is cumulative, all other dividend periods terminating on or before the
date of payment of such full dividends. When dividends are not paid in full upon
any series of the Preferred Stock and any other preferred stock ranking on a
parity as to dividends with such series of the Preferred Stock, all dividends
declared upon such series of the Preferred Stock and any other preferred stock
ranking on a parity as to dividends will be declared PRO RATA so that the amount
of dividends declared per share on such series of the Preferred Stock and such
other preferred stock will in all cases bear to each other the same ratio that
accrued dividends, including, in the case of cumulative Preferred Stock,
accumulations, if any, in respect of prior dividend periods, per share on such
series of the Preferred Stock and such other preferred stock bear to each other.
Except as provided in the preceding sentence, unless full dividends, including,
in the case of cumulative Preferred Stock, accumulations, if any, in respect of
prior dividend periods, on all outstanding shares of any series of the Preferred
Stock have been paid or declared and set aside for payment, no dividends (other
than a dividend or distribution paid in shares of, or warrants, rights or
options exercisable for or convertible into, Common Stock or another stock
ranking junior to such series of the Preferred Stock as to dividends and upon
liquidation) will be declared or paid or set aside for payment or other
distributions made upon the Common Stock or any other stock of QFC ranking
junior to or on a parity with the Preferred Stock as to dividends or upon
liquidation, nor will any Common Stock or any other stock of QFC ranking junior
to or on a parity with such series of the Preferred Stock as to dividends or
upon liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by QFC (except by conversion
into or exchange for stock of QFC ranking junior to such series of the Preferred
Stock as to dividends and upon liquidation). No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments which may be in arrears.
Except as set forth in the Prospectus Supplement relating to a series of
Preferred Stock, the amount of dividends payable for each dividend period will
be computed by annualizing the applicable dividend rate and dividing by the
number of dividend periods in a year, except that the amount of dividends
payable for the initial dividend period or any period longer or shorter than a
full dividend period shall be computed on the basis of 30-day months and a
360-day year.
Each series of Preferred Stock will be entitled to dividends as described in
the Prospectus Supplement relating to such series, which may be based upon one
or more methods of determination. Different series of the Preferred Stock may be
entitled to dividends at different dividend rates or based upon different
methods of determination.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of QFC, the holders of each series of Preferred Stock will be
entitled to receive out of assets of QFC available for distribution to
shareholders, before any distribution of assets is made to holders of Common
Stock or any other class of stock ranking junior to such series of the Preferred
Stock upon liquidation, liquidating distributions in the amount set forth in the
Prospectus Supplement relating to such series of the Preferred Stock plus an
amount equal to accrued and unpaid dividends for the then-current dividend
period and, if such series of the Preferred Stock include cumulative rights to
dividends, for all dividend periods prior thereto. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of QFC, the amounts payable
with respect to the Preferred Stock of any series and any other shares of stock
of QFC ranking as to any such distribution on a parity with such series of the
Preferred Stock are not paid in full, the holders of the
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Preferred Stock of such series and of such other shares will share ratably in
any such distribution of assets of QFC in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are entitled, the holders
of such series of Preferred Stock will have no right or claim to any of the
remaining assets of QFC. Neither the sale of all or substantially all the
property or business of QFC nor the merger or share exchange of QFC with or into
any other corporation shall be deemed to be a dissolution, liquidation or
winding up, voluntary or involuntary, of QFC.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or in part, at
the option of QFC, and may be subject to mandatory redemption pursuant to a
sinking fund, in each case upon terms, at the times and at the redemption prices
set forth in the Prospectus Supplement relating to such series.
The Prospectus Supplement relating to a series of Preferred Stock which is
subject to mandatory redemption will specify the number of shares of such series
of Preferred Stock which will be redeemed by QFC in each year commencing after a
date to be specified, at a redemption price per share to be specified, together
with an amount equal to any accrued and unpaid (cumulative or non-cumulative, as
the case may be) dividends thereon to the date of redemption. The redemption
price may be payable in cash, capital stock or in cash received from the net
proceeds of the issuance of capital stock of QFC, as specified in the Prospectus
Supplement relating to such series of Preferred Stock.
If fewer than all the outstanding shares of any series of the Preferred
Stock are to be redeemed, whether by mandatory or optional redemption, the
selection of the shares to be redeemed will be determined by lot or PRO RATA as
may be determined by the Board of Directors or by any other method which may be
determined by the Board of Directors to be equitable. From and after the date of
redemption (unless default shall be made by QFC in providing for the payment of
the redemption price), dividends shall cease to accrue on the shares of
Preferred Stock called for redemption and, subject to compliance with Section
23B.06.030(3) of the Washington Business Corporation Act (the "Washington
Business Corporation Act") all rights of the holders thereof (except the right
to receive the redemption price) shall cease.
In the event that full dividends, including accumulations in the case of
cumulative Preferred Stock, on any series of the Preferred Stock have not been
paid, such series of the Preferred Stock may not be redeemed in part and QFC may
not purchase or acquire any shares of such series of the Preferred Stock
otherwise than pursuant to a purchase or exchange offer made on the same terms
to all holders of such series of the Preferred Stock.
CONVERSION OR EXCHANGE RIGHTS
The Prospectus Supplement for any series of the Preferred Stock will state
the terms, if any, on which shares of such series are convertible into, or
exchangeable for, securities of QFC or another person.
VOTING RIGHTS
The Prospectus Supplement for any series of the Preferred Stock will state
the voting rights, if any, including any voting rights expressly required by
applicable law, of the holders of any such series of Preferred Stock.
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DESCRIPTION OF COMMON STOCK
The following description of the terms of the Common Stock summarizes
certain provisions of the Washington Business Corporation Act and the Articles
and is subject to and qualified in its entirety by reference to such provisions
and documents.
GENERAL
The Articles currently authorize the issuance of up to 60,000,000 shares of
Common Stock. The holders of Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors out of any funds lawfully
available therefor and, in the event of liquidation or distribution of assets,
are entitled to participate ratably in the distribution of such assets remaining
after payment of liabilities, in each case subject to any preferential rights
granted to any series of Preferred Stock that may then be outstanding. The
Common Stock does not have any preemptive rights. The issued and outstanding
shares of Common Stock are fully paid and nonassessable.
Holders of the shares of Common Stock are entitled to vote in person or by
proxy at all meetings of shareholders of the Company for the election of
directors and for other purposes. Such holders have one vote for each share of
Common Stock held by them. In voting for directors, the Common Stock does not
have cumulative voting rights. The Company's directors are divided into three
classes of approximately equal size and are elected for staggered terms of three
years, with one such class being elected at each annual meeting of shareholders.
PROVISIONS AFFECTING ACQUISITION OF THE COMPANY
Except as otherwise described below (and in addition to any voting rights
granted to or held by holders of Preferred Stock) the approval of any merger,
share exchange, sale, lease, exchange or disposition of all or substantially all
of QFC's property, otherwise than in the usual and regular course of business,
or proposal to dissolve, requires the affirmative vote of the holders of not
less than a majority of the outstanding shares of voting stock. In addition, the
Articles provide that (i) any merger, consolidation, combination or
reorganization of the Company with or into any person who, together with its
affiliates or associates or any group of persons that has agreed to act
together, is or becomes the beneficial owner of five percent or more of the
Company's outstanding voting stock who did not, on March 4, 1987, own five
percent or more of the Company's voting stock (an "Interested Person"), (ii) any
sale, lease, exchange, transfer, liquidation or other disposition of more than
ten percent of the Fair Market Value (as defined in the Articles) of the total
consolidated assets of the Company to an Interested Person, (iii) any sale,
lease, exchange, transfer, liquidation or other disposition of more than ten
percent of the Fair Market Value of the total consolidated assets of an
Interested Person to the Company, (iv) any issuance or transfer of any
securities of the Company (other than by way of a pro rata distribution to all
shareholders) to an Interested Person which, when aggregated with all prior
issuances and transfers to such Interested Person of securities of the Company
during the preceding 365 days, constitutes five percent or more of the
outstanding shares of any class or series of securities of the Company, (v) any
acquisition by the Company of one percent or more of any outstanding class or
series of debt or equity securities of an Interested Person, (vi) any
recapitalization or reorganization that would have the effect of increasing the
voting power of an Interested Person and (vii) any agreement or other
arrangement for any of the foregoing transactions (collectively, a "Business
Combination"), must be approved by the vote of at least 66 2/3% of the
outstanding voting stock of the Company, unless the proposed Business
Combination is (a) approved by a majority of the directors ("Continuing
Directors") who are unaffiliated with such Interested Person and are not such
Interested Person and who were directors before such Interested Person became an
Interested Person or who were elected or nominated by a majority of the
Continuing Directors or (b) structured to provide for payment of cash or other
consideration to the Company's shareholders in a manner which satisfies certain
requirements of the Articles (the "Fair Price Requirements").
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The Fair Price Requirements provide that a Business Combination must provide
for an offer to all holders of each class of equity securities of either cash or
the same type of consideration used by the Interested Person to acquire the
largest number of shares of such class previously acquired by the Interested
Person, and that the value of the consideration must be at least equal to the
highest of (i) the highest price paid by the Interested Person within 18 months
before the date of announcement of the proposed Business Combination (the
"Announcement Date") or in the transaction or series of transactions in which
such person became an Interested Person, (ii) the higher of the Fair Market
Value per share of such class on the Announcement Date or the date on which such
person became an Interested Person and (iii) if applicable, the redemption price
per share of such class or the amount per share such class is entitled to
receive upon liquidation of the Company. The Fair Price Requirements are further
conditioned on approval by the affirmative vote of the holders of a majority of
the Disinterested Shares (as defined in the Articles).
The Articles provide that the provisions of the Articles (i) requiring super
majority approval of Business Combinations involving Interested Persons, (ii)
defining the number of directors of the Company and the classification, election
and removal thereof, (iii) eliminating cumulative voting and preemptive rights,
(iv) providing for indemnification and limitation of liability of directors and
officers, (v) establishing procedures for calling special meetings of
shareholders and for handling shareholder proposals and (vi) establishing the
Company's authorized capital stock, may not be amended without approval (a) by a
majority of the authorized number of directors and, if an Interested Person
exists, by a majority of Continuing Directors or (b) by holders of at least
66 2/3% of the Company's outstanding voting stock.
The foregoing provisions of the Articles as well as the staggered terms for
directors and the availability of Preferred Stock for issuance without
shareholder approval may deter any potential unfriendly offers or other efforts
to obtain control of the Company that are not approved by the Board of Directors
and could thereby deprive the shareholders of opportunities to realize a premium
on their Common Stock and could make removal of incumbent management more
difficult. On the other hand, these provisions may induce any persons seeking
control of the Company or a business combination with the Company to negotiate
terms acceptable to the Board of Directors.
Washington law contains certain provisions that may have the effect of
delaying or discouraging a hostile takeover of the Company. Chapter 23B.19 of
the Washington Business Corporation Act prohibits a "Target Corporation" (as
defined in the Act), with certain exceptions, from engaging in certain
significant business transactions with an "Acquiring Person" (defined generally
as a person who acquires 10% or more of the corporation's voting securities
without the prior approval of the corporation's board of directors) for a period
of five years after such acquisition. The prohibited transactions include, among
others, a merger or share exchange with, disposition of assets to, or issuance
or redemption of stock to or from, the Acquiring Person, or a reclassification
of securities that has the effect of increasing the proportionate share of the
outstanding securities held by the Acquiring Person. An Acquiring Person may
avoid the prohibition against effecting certain significant business
transactions with the Target Corporation if the per share consideration paid to
holders of outstanding shares of common stock and other classes of stock of the
Target Corporation meets certain minimum criteria or if the board of directors
of the Target Corporation, at the time of the share acquisition, approves the
proposed significant business transaction. These provisions may have the effect
of delaying, deterring or preventing a change in control of the Company.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock of the Company is
ChaseMellon Shareholder Services.
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PLAN OF DISTRIBUTION
GENERAL
QFC may sell the Securities being offered hereby: (i) directly to
purchasers, (ii) through agents, (iii) through underwriters, (iv) through
dealers or (v) through a combination of any such methods of sale.
The distribution of the Securities may be effected from time to time in one
or more transactions either (i) at a fixed price or prices, which may be
changed; (ii) at market prices prevailing at the time of sale; (iii) at prices
related to such prevailing market prices; or (iv) at negotiated prices.
Offers to purchase Securities may be solicited directly by QFC or by agents
designated by QFC from time to time. Any such agent, which may be deemed to be
an underwriter, as such term is defined in the Securities Act, involved in the
offer or sale of the Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by QFC to such agent will be set
forth, in the Prospectus Supplement. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment. Agents may engage in transactions with, or
perform services for, QFC and/or certain affiliates thereof in the ordinary
course of business. An agent may resell a Security purchased by it as principal
to another broker-dealer at a discount.
If an underwriter or underwriters are utilized in the sale, QFC will execute
an underwriting agreement with such underwriters and the names of the
underwriters and the terms of the transaction will be set forth in the
Prospectus Supplement which will be used by the underwriters to make resales of
the Securities.
Except as otherwise indicated in the applicable Prospectus Supplement, if a
dealer is utilized in the sale of the Securities in respect of which this
Prospectus is delivered, QFC will sell such Securities to the dealer, as
principal. The dealer may then resell such Securities to the public at varying
prices to be determined by such dealer at the time of resale.
Underwriters, dealers, agents and other persons may be entitled, under
agreements which may be entered into with QFC, to indemnification against, or
contribution with respect to, certain civil liabilities under the Securities
Act.
Each underwriter, dealer and agent participating in the distribution of any
Securities that are issuable as Bearer Securities will agree that it will not
offer, sell or deliver, directly or indirectly, Bearer Securities in the United
States or to United States persons (other than qualifying financial
institutions) in connection with the original issuance of such Debt Securities.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement, QFC may authorize agents and
underwriters to solicit offers by certain institutions to purchase Securities
from QFC at the public offering price set forth in the Prospectus Supplement
pursuant to Delayed Delivery Contracts (the "Contracts") providing for payment
and delivery on the date stated in the Prospectus Supplement. Each Contract will
be for an amount not less than, and unless QFC otherwise agrees, the aggregate
principal amount of Securities sold pursuant to Contracts shall be not less nor
more than, the respective amounts stated in the Prospectus Supplement.
Institutions with whom Contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and other institutions, but
shall in all cases be subject to the approval of QFC. Contracts will be not
subject to any conditions except that the purchase by an institution of the
Securities covered by its Contract shall not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which such
institution is subject. A commission indicated in the Prospectus Supplement will
be paid to underwriters and agents soliciting purchases of Securities pursuant
to Contracts accepted by QFC.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered are set forth in the accompanying Prospectus Supplement.
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EXPERTS
The financial statements of QFC incorporated by reference in QFC's Annual
Report on Form 10-K for the year ended December 30, 1995 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report which is
incorporated herein by reference, and such financial statements are incorporated
by reference herein in reliance upon the report of Deloitte & Touche LLP given
upon the authority of that firm as experts in accounting and auditing.
The financial statements of Hughes Markets, Inc. incorporated by reference
in this Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
LEGAL MATTERS
The legality of the Securities to be offered hereby will be passed upon for
QFC by Simpson Thacher & Bartlett (a partnership which includes professional
corporations), 425 Lexington Avenue, New York, New York 10017, in respect of New
York law, and by Bogle & Gates P.L.L.C., Seattle, Washington, in respect of
Washington law.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee..................... $ 151,515
Printing and Distributing Registration Statement, Prospectus,
Prospectus Supplement, Underwriting Agreement, Securities and
Miscellaneous Material.......................................... *
Accountants' Fees and Expenses.................................... *
Legal Fees and Expenses........................................... *
Blue Sky Fees and Expenses........................................ *
Rating Agency Fees................................................
Miscellaneous Expenses............................................ *
Total....................................................... $
---------
---------
</TABLE>
- ------------------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 23B.08.510 through 23B.08.600, as amended, of the Washington
Business Corporation Act provide that a Washington corporation may indemnify,
among others, its officers, directors, employees and agents under the
circumstances described in the statute. QFC's Bylaws contain indemnification
provisions substantially similar to Sections 23B.08.510 through 23B.08.600 of
the Washington Business Corporation Act. Article IX of the Articles of
Incorporation of QFC provides for indemnification of QFC directors and officers
as follows:
"Section 1. INDEMNIFICATION. The Corporation shall indemnify, in the
manner and to the full extent permitted by law, any person (or the estate of
any person) who was or is a party to, or is threatened to be made a party to
any threatened, pending or complete action, suit or proceeding, whether or
not by or in the right of the Corporation, and whether civil, criminal,
administrative, investigative or otherwise, by reason of the fact that such
person is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The Corporation may, to the full extent
permitted by law, purchase and maintain insurance on behalf of any such
person against any liability which may be asserted against such person. To
the full extent permitted by law, the indemnification provided herein shall
include expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement, and, in the manner provided by law, any such expenses
may be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding. The indemnification provided herein shall not be
deemed to limit the right of the Corporation to indemnify any other person
for any such expense to the full extent permitted by law, nor shall it be
deemed exclusive of any other rights to which any person seeking
indemnification from the Corporation may be entitled under any agreement,
vote of shareholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office.
"Section 2. LIMITATION ON LIABILITY OF DIRECTORS. No director of the
Corporation shall be personally liable to the Corporation or its
shareholders for monetary damages for his conduct as a director, except for
(i) acts or omissions that involve intentional misconduct or a knowing
violation of law by the director, (ii) approval of distributions or loans in
violation of RCW 23B.08.310, or (iii) any
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<PAGE>
transaction from which the director will personally receive a benefit in
money, property or services to which the director is not legally entitled.
If the Washington Business Corporation Act is hereafter amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Washington
Business Corporation Act, as so amended. Any amendment to or repeal of this
Article shall not adversely affect any right or protection of a director of
the Corporation for or with respect to any such acts or omissions of such
director occurring prior to such amendment or repeal."
The directors and officers of QFC are covered by insurance policies
indemnifying against certain liabilities, including certain liabilities arising
under the Securities Act of 1933, which might be incurred by them in such
capacities and against which they cannot be indemnified by QFC.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
*1 Form of Underwriting Agreement.
2(a) Agreement and Plan of Merger, dated as of November 20, 1996, among the
Company, QHI Acquisition Corporation and Hughes Markets, Inc.
2(b) Principal Stockholders Agreement, dated as of November 20, 1996, among QFC
and certain stockholders of Hughes Markets, Inc.
2(c) Agreement and Plan of Merger, dated as of December 18, 1996, among QFC, KU
Acquisition Corporation, Keith Uddenberg, Inc. and the shareholders named
therein.
2(d) Form of Investors Rights Agreement to be entered into by and among QFC and
certain shareholders of Keith Uddenberg, Inc.
4(a) Form of Indenture with respect to Senior Debt Securities.
4(b) Form of Indenture with respect to Senior Subordinated Debt Securities.
4(c) Form of Indenture with respect to Subordinated Debt Securities.
4(d) The form or forms of any series of Debt Securities or Preferred Stock, and
the Articles of Amendment for any series of Preferred Stock, and certificates
evidencing Common Stock registered hereunder will be filed as an exhibit to a
Current Report of QFC on Form 8-K and incorporated herein by reference.
4(e) Articles of Incorporation of QFC (incorporated by reference to QFC's Annual
Report on Form 10-K filed March 29, 1991).
4(f) Amended and Restated Bylaws of QFC (incorporated by reference to QFC's Annual
Report on Form 10-K filed March 20, 1996).
**5(a) Opinion of Simpson Thacher & Bartlett.
**5(b) Opinion of Bogle & Gates P.L.L.C.
12 Computation of Ratios of Earnings to Fixed Charges.
***23(a) Consent of Deloitte & Touche LLP.
23(b) Consent of Simpson Thacher & Bartlett (contained in the opinion filed as
Exhibit 5(a)).
23(c) Consent of Bogle & Gates P.L.L.C. (contained in the opinion filed as Exhibit
5(b)).
***23(d) Consent of Arthur Andersen LLP.
24 Power of Attorney (included on signature page).
**25(a) Statement of Eligibility of Senior Debt Trustee on Form T-1.
**25(b) Statement of Eligibility of Senior Subordinated Debt Trustee on Form T-1.
**25(c) Statement of Eligibility of Subordinated Debt Trustee on Form T-1.
</TABLE>
- ------------------------
* To be filed by a Current Report on Form 8-K and incorporated herein by
reference.
** To be filed by amendment.
*** Filed herewith.
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<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
PROVIDED, HOWEVER, that paragraphs (i) and (ii) above do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question
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<PAGE>
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Quality Food
Centers, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Bellevue and State of
Washington, on the 24th day of December, 1996.
QUALITY FOOD CENTERS, INC.
BY /S/ MARC W. EVANGER
------------------------------------------
(Marc W. Evanger, VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed below by the
following persons in the capacities and on the date indicated.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Dan Kourkoumelis and Marc W. Evanger, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for such person and in such person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and any
additional Registration Statement or amendment thereto pursuant to Rule 462(b)
under the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully and to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ --------------------------------------------------------- ----------------------
<C> <S> <C>
CHRISTOPHER A. SINCLAIR*
--------------------------------- President, Chief Executive Officer and Director December 24, 1996
Christopher A. Sinclair (Principal Executive Officer)
DAN KOURKOUMELIS*
--------------------------------- President, Chief Executive Officer and Director December 24, 1996
Dan Kourkoumelis
/s/ MARC W. EVANGER
--------------------------------- Vice President and Chief Financial Officer (Principal December 24, 1996
Marc W. Evanger Financial and Accounting Officer)
STUART M. SLOAN*
--------------------------------- Chairman of the Board of Directors December 24, 1996
Stuart M. Sloan
JOHN W. CREIGHTON, JR.*
--------------------------------- Director December 24, 1996
John W. Creighton, Jr.
MARC H. RAPAPORT*
--------------------------------- Director December 24, 1996
Marc H. Rapaport
RONALD A. WEINSTEIN*
--------------------------------- Director December 24, 1996
Ronald A. Weinstein
MAURICE F. OLSON*
--------------------------------- Director December 24, 1996
Maurice F. Olson
SAMUEL ZELL*
--------------------------------- Director December 24, 1996
Samuel Zell
SHELI Z. ROSENBERG*
--------------------------------- Director December 24, 1996
Sheli Z. Rosenberg
</TABLE>
/s/ MARC W. EVANGER
---------------------------------
(Marc W. Evanger,
*By: ATTORNEY-IN-FACT
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<PAGE>
EXHIBIT 23(A)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-18567 of Quality Food Centers, Inc. on Form S-3
of our report dated March 20, 1996, incorporated by reference in the Annual
Report on Form 10-K of Quality Food Centers, Inc. for the year ended December
30, 1995, and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Seattle, Washington
December 24, 1996
<PAGE>
EXHIBIT 23(D)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report for Hughes Markets, Inc.
and subsidiaries dated May 10, 1996 incorporated by reference in Quality Food
Centers, Inc.'s previously filed Form 8-K/A and to all references to our firm
included in this Registration Statement.
ARTHUR ANDERSEN LLP
Los Angeles, California
December 20, 1996
