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B&W Draft 1/31/96
SAFEWAY INC.
UNDERWRITING AGREEMENT
dated February , 1996
18,166,696 Shares
Common Stock, Par Value $0.01 Per Share
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February , 1996
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx, Read & Co. Inc.
Xxxxxxx, Xxxxx & Co.
Xxxxxxx Xxxxx & Co.
Xxxxxxx Xxxxxxxx Inc
Xxxxx Xxxxxx Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxx, Read & Co. Inc.
Xxxxxxx Xxxxx International
Xxxxxxx Xxxxx International Limited
Salomon Brothers International Limited
Xxxxx Xxxxxx Inc.
x/x Xxxxxx Xxxxxxx & Xx. Xxxxxxxxxxxxx Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
Certain stockholders and warrantholders of Safeway Inc., a Delaware
corporation (the "Company"), named in Schedule I hereto (the "Selling
Stockholders") severally propose to sell to the several Underwriters (as defined
below) 16,450,000 shares of the Common Stock, par value $0.01 per share, of the
Company (the "Firm Shares") and warrants (the "Firm Warrants") for the purchase
of an aggregate of 1,716,696 of Common Stock, par value $0.01 per share, of the
Company (the "Firm Warrant Shares").
It is understood and agreed to by all parties that, subject to the
conditions hereinafter stated, 13,160,000 Firm Shares (the "U.S. Firm Shares")
and Firm Warrants (the "U.S. Firm Warrants") to purchase 1,373,357 Firm Warrant
Shares (the "U.S. Firm Warrant Shares") will be sold to the several U.S.
Underwriters named in Schedule II hereto (the "U.S. Underwriters") in connection
with the offering and sale of such U.S. Firm Shares and U.S. Firm Warrant Shares
in the United States and Canada to United States and Canadian Persons (as such
terms are defined in the Agreement Between U.S. and International Underwriters
of even date herewith), and 3,290,000 Firm Shares (the "International Shares")
and Firm Warrants (the "International Warrants") to purchase 343,339 Firm
Warrant Shares (the "International
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Warrant Shares") will be sold to the several International Underwriters named in
Schedule III hereto (the "International Underwriters") in connection with the
offering and sale of such International Shares and International Warrant Shares
outside the United States and Canada to persons other than United States and
Canadian Persons. Xxxxxx Xxxxxxx & Co. Incorporated, Xxxxxx, Read & Co. Inc.,
Xxxxxxx, Xxxxx & Co., Xxxxxxx Xxxxx & Co., Salomon Brothers Inc and Xxxxx Xxxxxx
Inc. shall act as representatives (the "U.S. Representatives") of the several
U.S. Underwriters, and Xxxxxx Xxxxxxx & Co. International Limited, Xxxxxx, Read
& Co. Inc., Xxxxxxx, Xxxxx International Limited, Xxxxxxx Xxxxx International
Limited, Salomon Brothers International Limited and Xxxxx Xxxxxx Inc. shall act
as representatives (the "International Representatives") of the several
International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter referred to as the Underwriters.
The Selling Stockholders also severally propose to sell to the several
U.S. Underwriters an aggregate of not more than an additional 2,467,500 shares
of Common Stock, par value $0.01 per share, of the Company (the "Additional
Shares") and warrants (the "Additional Warrants") for the purchase of an
aggregate of not more than an additional 257,504 shares of Common Stock, par
value $0.01 per share, of the Company (the "Additional Warrant Shares"), each
Selling Stockholder selling up to the amount set forth opposite such Selling
Stockholder's name in Schedule I hereto, if and to the extent that the U.S.
Representatives shall have determined to exercise, on behalf of the U.S.
Underwriters, the right to purchase such Additional Shares and such Additional
Warrants granted to the U.S. Underwriters in Section 3 hereof.
The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the Shares, the Firm Warrants and the Additional Warrants are
hereinafter collectively referred to as the Warrants and the Firm Warrant Shares
and the Additional Warrant Shares are hereinafter collectively referred to as
the Warrant Shares. The Shares and the Warrant Shares are hereinafter
collectively referred to as the Securities. The shares of Common Stock, par
value $0.01 per share, of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the Common Stock.
All of the share numbers and other information in this Agreement give
effect to a two for one stock split of the Company's Common Stock on January 30,
1996.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Securities. The registration statement contains two forms of prospectuses to be
used in connection with the offering and sale of the Securities: the U.S.
prospectus, to be used in connection with the offering and sale of Securities in
the United States and Canada to United States and Canadian Persons, and the
international prospectus, to be used in connection with the offering and sale of
Securities outside the United States and Canada to persons other than United
States and Canadian Persons. The international prospectus is identical to the
U.S. prospectus except for the outside front cover page. The registration
statement as amended at the time it becomes effective, including the information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended
(the "Securities Act"), is hereinafter referred to as the "Registration
Statement." If the Company has filed an abbreviated registration statement to
register additional shares of Common Stock pursuant to Rule 462(b) under the
Securities Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462 Registration Statement. The U.S. prospectus and the international prospectus
in the respective forms first used to confirm sales of the Securities are
hereinafter collectively referred to as the Prospectus. All references herein to
the Registration Statement and the Prospectus include the documents incorporated
therein by reference.
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1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) Each part of the Registration Statement, when such
part became effective, did not contain and each such part, as amended
or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this paragraph
1(b) do not apply to statements or omissions in the Registration
Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act
and applicable rules and regulations of the Commission thereunder; and
no order preventing or suspending the use of any preliminary prospectus
has been issued by the Commission.
(d) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Securities Act or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as applicable, and the rules and regulations of
the Commission thereunder, and none of such documents contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(e) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State
of Delaware, has the corporate power and authority to own its
properties and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in
the State of California and in each other jurisdiction in which such
qualification is required, except to the extent that the failure to be
so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
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(f) Each subsidiary, if any, of the Company which is a
"significant subsidiary" as defined in Rule 405 of Regulation C of the
Securities Act has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its
property and conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(g) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
(including, without limitation, the purchase and exercise by the
Underwriters of the Warrants) will not result in any violation of the
Restated Certificate of Incorporation or the By-Laws of the Company or
any agreement or other instrument (including, without limitation, the
Warrant Purchase Agreement dated as of November 28, 1986 between the
Company and SSI Equity Associates, L.P. (the "Warrant Purchase
Agreement")) binding upon the Company or any of its subsidiaries that
is material to the Company and its subsidiaries, taken as a whole, or
any statute or any order, rule or regulation of any governmental body,
agency or court having jurisdiction over the Company or any
subsidiaries, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement,
except the registration under the Securities Act of the Securities, and
except such as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of the
Securities.
(h) The accountants who have audited certain financial
statements included in the Registration Statement and the Prospectus
are independent public accountants as required by the Securities Act
and the rules and regulations thereunder.
(i) The financial statements (together with the related notes
thereto) included in the Registration Statement and the Prospectus
present fairly the financial position of the Company and its
consolidated subsidiaries as of and at the dates indicated and the
results of their operations for the periods specified, except as
otherwise disclosed therein; and except as otherwise stated therein or
in the Registration Statement and the Prospectus, said financial
statements have been prepared in conformity with generally accepted
accounting principles in the United States applied on a consistent
basis.
(j) This Agreement has been duly authorized, executed and
delivered by the Company.
(k) The shares of Common Stock (the "Merger Warrant Shares")
issuable upon exercise of warrants (the "Merger Warrants") issued
pursuant to a warrant agreement dated as of November 24, 1986, as
amended (the "Warrant Agreement") have been duly authorized and when
issued and delivered against payment therefor as provided in the Merger
Warrants and the Warrant Agreement, will be validly issued, fully paid
and non-assessable and the issuance of such shares will not be subject
to any preemptive rights.
(l) The Warrant Shares have been duly authorized and, when
issued and delivered in accordance with the terms of this Agreement and
the Warrants, will be validly issued, fully paid and non-assessable,
and the issuance of such shares will not be subject to any preemptive
rights.
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(m) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus.
(n) The shares of Common Stock (including the Shares to be
sold by the Selling Stockholders hereunder) and the Warrants have been
duly authorized and validly issued and are fully paid and
non-assessable; none of such Shares or Warrants, when delivered to the
Underwriters, will be subject to any preemptive rights; the Shares,
Warrants and Warrant Shares conform [as to legal matters] to the
description thereof contained in the Prospectus.
(o) The Warrants have been duly authorized, executed and
delivered by the Company and constitute valid and binding obligations
of the Company enforceable in accordance with their terms.
(p) Upon the Underwriters' purchase of the Warrants and
payment to the Company of the Warrant Exercise Price (as defined
herein), all of the requirements (whether under the Warrant Purchase
Agreement or otherwise) with respect to the Underwriters' exercise of
the Warrants for Warrant Shares will be satisfied, and the Company will
be unconditionally obligated to immediately issue duly and validly
authorized and issued, fully paid and nonassessable shares of Common
Stock in respect thereof.
(q) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(r) No labor dispute with the employees of the Company or any
of its subsidiaries exists or, to the best of the Company's knowledge,
is imminent which is reasonably likely to have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(s) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus.
(t) There are no legal or governmental proceedings pending or,
to the Company's knowledge, threatened, to which the Company or any of
its subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not
so described or any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
(u) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the
Government of Cuba or with any person or affiliate located in Cuba.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each of
the Selling Stockholders, severally and not jointly, represents and warrants to
and agrees with each of the Underwriters and the Company that:
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(a) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder.
(b) The execution and delivery by such Selling Stockholder of,
and the performance by such Selling Stockholder of its obligations
under, this Agreement will not result in any violation of any material
agreement or other instrument binding upon such Selling Stockholder or
any statute or any order, rule or regulation of any governmental body,
agency or court having jurisdiction over such Selling Stockholder, and
no consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by such
Selling Stockholder of its obligations under this Agreement, except the
registration under the Securities Act of the Securities, and except
such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Securities.
(c) Such Selling Stockholder has, and on the Closing Date and
any Option Closing Date (as defined in Section 5) will have, valid
title to all of the Shares or Warrants which may be sold by such
Selling Stockholder under this Agreement and the legal right and power,
and all authorization and approval required by law or other instruments
binding upon such Selling Stockholder, to enter into this Agreement and
to sell, transfer and deliver the Shares or Warrants to be sold by such
Selling Stockholder.
(d) Upon delivery of the Shares or Warrants to be sold by such
Selling Stockholder and payment therefor pursuant to this Agreement,
the Underwriters will hold such Shares or Warrants (including Warrant
Shares issued upon exercise of the Warrants after payment of the
exercise price therefor) free and clear of any security interests,
claims, liens, equities and other encumbrances.
(e) The information (other than the percent of shares owned,
as to which such Selling Stockholder makes no representation)
pertaining to such Selling Stockholder under the caption "Principal and
Selling Stockholders" in the Prospectus is complete and accurate in all
material respects, and any information pertaining to such Selling
Stockholder or its affiliates under the caption "Certain Relationships
and Transactions" incorporated by reference into the Prospectus from
the Company's 1995 Proxy Statement fairly presents the information
required to be set forth therein and contains no material misstatement
or omission.
Any certificate signed by any officer of the Company or by or on behalf
of any Selling Stockholder and delivered to the U.S. Representatives, the
International Representatives or to counsel for the Underwriters shall be deemed
a representation and warranty by the Company or such Selling Stockholder, as the
case may be, to each Underwriter as to the matters covered thereby.
3. AGREEMENTS TO SELL AND PURCHASE. Each Selling Stockholder, severally
and not jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Selling Stockholder (i) at $__________ a
Share (the "Share Purchase Price") and (ii) at $__________ a Warrant (the
"Warrant Purchase Price") (such Warrant Purchase Price representing the Share
Purchase Price less the exercise price of $1.00 per Warrant (the "Warrant
Exercise Price") for each Warrant Share), the number of Firm Shares or Firm
Warrants, as the case may be (subject to such adjustments to eliminate
fractional shares as you may determine), that bears the same proportion to the
number of Firm Shares or Firm Warrants, as the case may be, to be sold by such
Selling Stockholder as the number of Firm Shares and Firm Warrants,
respectively, set forth in
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Schedules II or III hereto opposite the name of such Underwriter bears to the
total number of Firm Shares and Firm Warrants, respectively.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Stockholders
agree to sell to the U.S. Underwriters the Additional Shares and the Additional
Warrants, as the case may be, and the U.S. Underwriters shall have a one-time
right to purchase, severally and not jointly, up to 2,467,500 Additional Shares
at the Share Purchase Price and up to 257,504 Additional Warrants at the Warrant
Purchase Price. If the U.S. Representatives, on behalf of the U.S. Underwriters,
elect to exercise such option, the U.S. Representatives shall so notify the
Selling Stockholders in writing not later than 30 days after the date of this
Agreement, which notice shall specify the number of Additional Shares and
Additional Warrants to be purchased by the U.S. Underwriters and the date on
which such Additional Shares and Additional Warrants are to be purchased. Such
date may be the same as the Closing Date (as defined below) but not earlier than
the Closing Date nor later than ten business days after the date of such notice.
Additional Shares and Additional Warrants may be purchased as provided in
Section 5 hereof solely for the purpose of covering over-allotments made in
connection with the offering of the Firm Shares and Firm Warrant Shares. If any
Additional Shares and Additional Warrants are to be purchased, each Selling
Stockholder agrees, severally and not jointly, to sell the number of Additional
Shares or Additional Warrants, as the case may be (subject to such adjustments
to eliminate fractional shares as the U.S. Representatives may determine) that
bears the same proportion to the total number of Additional Shares or Additional
Warrants to be sold as the number of Additional Shares or Additional Warrants
set forth in Schedule I opposite the names of such Selling Stockholders bears to
the total number of Additional Shares and Additional Warrants, and each U.S.
Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares or Additional Warrants, as the case may be (subject to such
adjustments to eliminate fractional shares as the U.S. Representatives may
determine) that bears the same proportion to the total number of Additional
Shares and Additional Warrants, as the case may be, to be purchased as the
number of U.S. Firm Shares and U.S. Firm Warrants, respectively, set forth in
Schedule II hereto opposite the name of such Underwriter bears to the total
number of U.S. Firm Shares and U.S. Firm Warrants, respectively.
At the Closing Date and the Option Closing Date, simultaneous with (i)
the purchase by the Underwriters of Firm Warrants or the purchase by the U.S.
Underwriters of Additional Warrants and (ii) the payment to the Company of the
Warrant Exercise Price, the Underwriters and U.S. Underwriters, respectively,
will be deemed to have exercised such Firm Warrants or Additional Warrants and
the Company will immediately issue to the Underwriters and U.S. Underwriters,
respectively, at the Closing Date and Option Closing Date, the related Firm
Warrant Shares and Additional Warrant Shares, as the case may be.
Each of the Company, the Selling Stockholders and certain directors and
executive officers of the Company hereby agrees that, without the prior written
consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it
will not, during a period of 90 days after the date of the Prospectus, (i)
offer, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock [or (ii) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences of ownership of the Common
Stock,] whether any such transaction [described in clause (i) or (ii) above] is
to be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Securities or
Warrants to be sold hereunder, (B) any shares of Common Stock issued by the
Company pursuant to stock option plans in effect on the date hereof, (C) option
grants under stock option plans in effect on the date hereof,
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(D) any agreement of the Company in connection with an acquisition of assets or
properties or any capital stock issuable pursuant to the terms of such an
agreement, (E) capital stock issuable upon the exercise of warrants outstanding
on the date hereof or (F) the cancellation of warrants. In addition, each
Selling Stockholder agrees that, without the prior written consent of Xxxxxx
Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it will not, during
the period ending 90 days after the date of the Prospectus, make any demand for,
or exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
4. TERMS OF PUBLIC OFFERING. The Company and the Selling Stockholders
are advised by you that the Underwriters propose to make a public offering of
their respective portions of the Securities as soon after the Registration
Statement and this Agreement have become effective as in your judgment is
advisable. The Company and the Selling Stockholders are further advised by you
that the Securities are to be offered to the public initially at $_____________
a share (the "Public Offering Price") and to certain dealers selected by you at
a price that represents a concession not in excess of $_____________ a share
under the Public Offering Price, and that any Underwriter may allow, and such
dealers may reallow, a concession, not in excess of $_____________ a share, to
any Underwriter or to certain other dealers.
5. PAYMENT AND DELIVERY. Payment for the Firm Shares and Firm Warrants
to be sold by each Selling Stockholder shall be made by certified or official
bank check or checks payable to the order of the Selling Stockholders in
_____________ Clearing House funds or similar next day funds at the office of
Xxxxxx & Xxxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 at 7:00
A.M., local time, on __________, 1996, or at such other time on the same or such
other date, not later than _______, 1996, as shall be designated in writing by
you. Payment of the Warrant Exercise Price for Firm Warrant Shares shall be made
by certified or official bank check or checks payable to the Company on the same
such date. The time and date of such payment are hereinafter referred to as the
"Closing Date."
Payment for any Additional Shares and Additional Warrants to be sold by
each Selling Stockholder shall be made by certified or official bank check or
checks payable to the order of the Selling Stockholders in _____________
Clearing House funds or similar next day funds at the office of Xxxxxx &
Xxxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 at 7:00 A.M.,
local time, on the date specified in the notice described in Section 3 or on
such other date, in any event not later than _________, 1996, as shall be
designated in writing by you. Payment of the Warrant Exercise Price for
Additional Warrant Shares shall be made by certified or official bank check or
checks payable to the order of the Company on the same such date. The time and
date of such payment are hereinafter referred to as the "Option Closing Date."
In the event that Xxxxxx Xxxxxxx & Co. Incorporated shall, as an
accommodation to the Selling Stockholders, arrange for payment for all or a
portion of the Shares or Warrants to be made to the Selling Stockholders by wire
transfer of immediately available funds, the Selling Stockholders agree to
reimburse Xxxxxx Xxxxxxx & Co. Incorporated for their reasonably estimated
overnight cost of funds in respect of such payment, such reimbursement to be
effected by wire transfer on the Closing Date or the Option Closing Date, as the
case may be, of immediately available funds.
Certificates for the Firm Shares, Firm Warrant Shares, Additional
Shares and Additional Warrant Shares shall be in definitive form and registered
in such names and in such denominations as you shall request in writing not
later than two full business days prior to the Closing Date or the Option
Closing Date, as the case may be. The certificates evidencing the Firm Shares,
Firm Warrant Shares, Additional Shares and Additional Warrant Shares shall be
delivered to you on the Closing Date or the Option Closing
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Date, as the case may be, for the respective accounts of the several
Underwriters, with any transfer taxes payable in connection with the transfer of
the Warrants and Securities to the Underwriters duly paid, against payment of
the Purchase Price, Warrant Purchase Price and Warrant Exercise Price therefor.
6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The several
obligations of the Selling Stockholders to sell the Shares and Warrants to the
Underwriters and the several obligations of the Underwriters, on the other
hand, to purchase and pay for the Shares and Warrants on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than [_______________] (New York time) on the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a
possible change that indicates possible negative implications,
in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
(ii) there shall not have occurred any change, or
any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Prospectus that,
in your judgment, is material and adverse and that makes it,
in your judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive
officer of the Company, to the effect set forth in clause (a)(i) above
and to the effect that the representations and warranties of the
Company contained in this Agreement are true and correct as of the
Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
(c) The Underwriters shall have received on the Closing
Date an opinion of Xxxxxx & Xxxxxxx, counsel for the Company, dated
the Closing Date, to the effect that:
(i) the Company has been duly incorporated and is
validly existing and in good standing under the laws of the
State of Delaware, with corporate power and authority to own
its properties and conduct its business as described in the
Prospectus;
(ii) the Company has authorized capital stock as
set forth in the Prospectus, and the Common Stock and Warrants
[and Merger Warrants] conform to the description thereof
contained in the Prospectus;
(iii) the Shares to be sold by the Selling
Stockholders pursuant to the Underwriting Agreement have been
duly authorized and validly issued and are fully paid and
non-assessable; the Warrant Shares to be issued and sold by
the Company pursuant
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to the terms of the Warrants have been duly authorized, and
when issued to and paid for by you and the other Underwriters
in accordance with the terms of the Warrants will be validly
issued, fully paid and non-assessable.
(iv) this Agreement has been duly authorized,
executed and delivered by the Company;
(v) the Warrants have been duly authorized,
executed and delivered by the Company and constitute valid and
binding obligations of the Company enforceable in accordance
with their terms.
(vi) the issue and sale of the Warrant Shares
being delivered at the Closing Date by the Company and the
performance by the Company of all its obligations under this
Agreement will not result in the violation by the Company of
its Restated Certificate of Incorporation or By-laws or any
applicable federal or California statute, rule or regulation
(other than federal securities laws, which are specifically
addressed elsewhere in such counsel's opinion, or state
securities laws, as to which such counsel need not express an
opinion) or result in a material breach or violation of any of
the terms or provisions of, or constitute a default under, any
of the indentures relating to the 9.30% Senior Secured
Debentures due 2007, 10% Senior Notes due 2002, 10% Senior
Subordinated Notes due 2001, 9.875% Senior Subordinated
Debentures due 2007, 9.65% Senior Subordinated Debentures due
2004 or 9.35% Senior Subordinated Notes due 1999, or the bank
credit agreement between the Company and a consortium of banks
led by Bankers Trust Company;
(vii) no consent, approval, authorization or order
of, or filing with, any federal or California court or
governmental agency or body is required for the issue and sale
of the Warrant Shares or the performance by the Company of all
its obligations under this Agreement except such as have been
obtained under the Securities Act and such as may be required
under state securities laws in connection with the purchase
and distribution of the Securities by the Underwriters as to
which counsel need not express an opinion;
(viii) each document incorporated by reference in
the Prospectus or any further amendment or supplement thereto
made by the Company prior to the Closing Date (other than the
financial statements and other financial and statistical data
and related schedules therein, as to which such counsel need
express no opinion), when it became effective or was filed
with the Commission, as the case may be, appeared on its face
to comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations
of the Commission thereunder;
(ix) the statements (A) in the Prospectus under
the captions "Certain United States Tax Consequences to
Non-United States Holders" and "Description of Capital Stock,"
in each case insofar as such statements constitute summaries
of legal matters, are accurate in all material respects;
(x) the Company is not an "investment company" as
such term is defined in the Investment Company Act of 1940, as
amended; and
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(xi) the Registration Statement and Prospectus
(except for financial statements, schedules and other
financial and statistical data included therein as to which
such counsel need not express any opinion) comply as to form
in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
In passing upon the compliance as to form of the Registration
Statement and the Prospectus, such counsel may assume that the
statements made and incorporated by reference therein are
correct and complete.
In addition, such counsel shall state that they have
participated in conferences with officers and other
representatives of the Company, representatives of the
independent public accountants for the Company, and your
representatives, at which the contents of the Registration
Statement and the Prospectus and related matters were
discussed and, although such counsel is not passing upon, and
does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the
Registration Statement and the Prospectus and such counsel has
not made any independent check or verification thereof (except
as set forth in paragraph (ix) above) during the course of
such participation (relying, in connection with such counsel's
determination as to materiality, to a large extent upon
statements as to matters of fact of officers and other
representatives of the Company), no facts came to such
counsels attention that caused such counsel to believe that
the Registration Statement, at the time it became effective,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or
that the Prospectus, as of its date or as of the Closing Date,
contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; it being understood that such
counsel need express no belief with respect to the financial
statements, schedules and other financial and statistical data
included in the Registration Statement or the Prospectus or
incorporated therein.
In rendering such opinion, such counsel may state
that they express an opinion only as to federal securities
laws, New York and California law and the General Corporation
Law of Delaware.
(d) Xxxxxxx X. Xxxx, Senior Vice President, General
Counsel and Secretary of the Company, shall have furnished to you his
written opinion, dated the Closing Date, in form and substance
satisfactory to you, to the effect that:
(i) the Company has been duly qualified as a
foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in
which its ownership or lease of substantial properties or the
conduct of its business require such qualification, and in
which failure to be so qualified and in good standing would
have a material adverse effect upon the Company and its
subsidiaries considered as a single enterprise;
(ii) each Significant Subsidiary of the Company
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its
jurisdiction of incorporation; has corporate power and
authority to own, lease and operate its properties and conduct
its business as described in the Prospectus; to the best of
his knowledge has been duly qualified as a foreign corporation
for the transaction of business
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and is in good standing under the laws of each other
jurisdiction in which its ownership or lease of substantial
properties or the conduct of its business require such
qualification, and in which failure to be so qualified and in
good standing would have a material adverse effect upon the
Company and its subsidiaries considered as a single
enterprise; and all of the issued and outstanding capital
stock of each such Significant Subsidiary has been duly
authorized and validly issued and is fully paid and
nonassessable, and the capital stock owned by the Company in
such subsidiary is owned by the Company free and clear of any
mortgage, pledge, lien, encumbrance, claim or equity;
(iii) to the best of such counsel's knowledge there
are no legal or governmental proceedings pending or threatened
to which the Company or any of its subsidiaries is a party or
of which any property of the Company or any of its
subsidiaries is the subject, required to be described in the
Prospectus, which are not described as required;
(iv) the issue and sale of the Warrant Shares
being delivered at the Closing Date by the Company and the
performance by the Company of all its obligations under this
Agreement and the issuance of the Merger Warrant Shares
pursuant to the exercise of the Merger Warrants, will not
conflict with or result in a material breach or violation of
any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument relating to indebtedness in
excess of $25 million to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject;
and
(v) the issued and outstanding shares of capital
stock of the Company and warrants to purchase capital stock of
the Company have been duly authorized and validly issued and
are fully paid and non-assessable.
(e) The Underwriters shall have received on the Closing
Date an opinion of Xxxxxx & Xxxxxxx, counsel for the Selling
Stockholders, dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized,
executed and delivered by or on behalf of each of the Selling
Stockholders;
(ii) each Selling Stockholder has full right,
power and authority to enter into the Underwriting Agreement;
the sale of the Shares or the Warrants, as applicable, by each
Selling Stockholder will not result in the violation by such
Selling Stockholder of its charter documents, if any, or any
federal or New York statute, rule or regulation known to such
counsel to be applicable to such Selling Stockholder (other
than federal securities laws which are specifically addressed
elsewhere in such counsel's opinion, or state securities laws
as to which such counsel need not express an opinion); no
consent, approval, authorization or order of, or filing with,
any federal or New York governmental body or agency is
required for the sale of the Shares or the Warrants, as
applicable, except such as have been obtained under the
Securities Act and except such as may be required under
securities laws of the various states in connection with the
purchase and distribution of the Securities by the
Underwriters, as to which such counsel need not express an
opinion;
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(iii) upon delivery of the Shares and Warrants and
payment therefor pursuant hereto, the Underwriters will hold
such Shares and Warrants (including the Warrant Shares issued
upon exercise of the Warrants after payment of the exercise
price therefor) free and clear of all liens, encumbrances,
equities or claims, assuming that such Underwriters have
purchased such Shares, Warrants and Warrant Shares in good
faith and without notice of any lien, encumbrance, equity or
claim or any other adverse claim within the meaning of the
Uniform Commercial Code;
(f) The Underwriters shall have received on the Closing
Date an opinion of Xxxxx & Wood, counsel for the Underwriters, dated
the Closing Date, covering the matters referred to in the first clause
of subparagraph (i), the second clause of subparagraph (iii),
subparagraph (iv) and subparagraph (xi) of paragraph (c) above.
With respect to subparagraph (xii) of paragraph (c) above,
Xxxxx & Xxxx may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement
and Prospectus and any amendments or supplements thereto (other than
the documents incorporated by reference) and review and discussion of
the contents thereof, but are without independent check or
verification, except as specified. With respect to paragraph (e)
above, Xxxxxx & Xxxxxxx may rely upon an opinion or opinions of
counsel for any Selling Stockholder and, to the extent such counsel
deems appropriate, upon the representations of each Selling
Stockholder contained herein and in other documents and instruments,
provided that (A) each such counsel for the Selling Stockholders is
satisfactory to your counsel, (B) a copy of each opinion so relied
upon is delivered to you and is in form and substance satisfactory to
your counsel, (C) copies of such other documents and instruments, if
any, shall be delivered to you and shall be in form and substance
satisfactory to your counsel and (D) Xxxxxx & Xxxxxxx shall state in
their opinion that they are justified in relying on each such other
opinion.
The opinions of Xxxxxx & Xxxxxxx described in paragraphs (c)
and (e) above shall be rendered to the Underwriters at the request of
the Company or the Selling Stockholders, as the case may be, and shall
so state therein.
(g) The Underwriters shall have received on the Closing
Date a certificate, dated the Closing Date and signed on behalf of
each of the Selling Stockholders to the effect that the
representations and warranties of such Selling Stockholders herein are
true and correct on and as of the Closing Date and that such Selling
Stockholders have complied with all of the agreements and satisfied
all of the conditions on their part to be performed or satisfied
hereunder on or before the Closing Date.
(h) The Underwriters shall have received, on each of the
date hereof and the Closing Date, a letter dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from Deloitte & Touche LLP,
independent public accountants, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(i) The "lock-up" agreements, each substantially in the
form of Exhibit A hereto, between you and certain stockholders,
officers and directors of the Company relating to sales and
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certain other dispositions of shares of Common Stock or certain other
securities, delivered to you on or before the date hereof, shall be in
full force and effect on the Closing Date.
(j) At the date of this Agreement, the Company and the
Selling Stockholders shall have furnished for review by the U.S.
Representatives and the International Representatives copies of such
further information, certificates and documents as they may reasonably
request.
(k) Simultaneous with the purchase of the Firm Warrants
and any Additional Warrants and the payment of the Warrant Exercise
Price by the Underwriters, the Company will issue Warrant Shares.
The several obligations of the U.S. Underwriters to purchase
Additional Shares and Additional Warrants hereunder are subject to the
delivery to the U.S. Underwriters on the Option Closing Date of such
documents as they may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the
Additional Shares and Additional Warrant Shares and other matters
related thereto.
7. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with
each Underwriter as follows:
(a) To furnish to you, without charge, seven signed
copies of the Registration Statement (including exhibits thereto and
documents incorporated by reference) and to each Underwriter a copy of
the Registration Statement (without exhibits thereto but including
documents incorporated by reference) and to furnish to you in New York
City without charge prior to 5:00 p.m. local time on the business day
next succeeding the date of this Agreement, and during the period
mentioned in paragraph (c) below, as many copies of the Prospectus,
any documents incorporated therein by reference, and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request. The terms "supplement" and "amendment" or "amend"
as used in this Agreement shall include all documents subsequently
filed by the Company with the Commission pursuant to the Exchange Act
that are deemed to be incorporated be reference in the Prospectus.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
(c) If, during such period after the first date of the
public offering of the Securities as in the opinion of counsel for the
[Company and the] Underwriters the Prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, any
event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if, in the
opinion of counsel for the [Company and the] Underwriters, it is
necessary to amend or supplement the Prospectus to comply with
applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers
(whose names and addresses you will furnish to the Company) to which
Securities may have been sold by you on behalf of the Underwriters and
to any other dealers upon request, either amendments or supplements to
the Prospectus so that the
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statements in the Prospectus as so amended or supplemented will not,
in the light of the circumstances when the Prospectus is delivered to
a purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) To endeavor to qualify the Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as
you shall reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earnings statement
covering the twelve-month period ending ______________, 1997 that
satisfies the provisions of Section 11(a) of the Securities Act and
the rules and regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the registration and delivery of the
Securities under the Securities Act and all other fees or expenses in
connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments
and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof
to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) the cost of printing or producing any Blue Sky
memorandum in connection with the offer and sale of the Securities
under state securities laws and all expenses in connection with the
qualification of the Securities for offer and sale under state
securities laws as provided in Section 7(d) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection
with the Blue Sky memorandum, (iii) all filing fees and reasonable
disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering by the National
Association of Securities Dealers, Inc., (iv) the cost of printing
certificates representing the Securities, (v) the costs and charges of
any transfer agent, registrar or depositary, (vi) the costs and
expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the
offering, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations
with the prior approval of the Company, travel and lodging expense of
the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered [by the Company]
in connection with the road show, (vii) all other costs and expenses
of the Company in connection with the performance of its obligations
hereunder for which provision is not otherwise made in this Section,
and (viii) any other costs and expenses of others in connection with
the performance of the Company's obligations hereunder which have been
previously approved by the Company. Xxxxxx Xxxxxxx & Co. Incorporated
agrees to pay New York State stock transfer taxes incurred in
connection with the sale of the Securities pursuant hereto, if any,
and the Selling Stockholders agree to reimburse Xxxxxx Xxxxxxx & Co.
Incorporated for any associated carrying costs if such tax payment is
not rebated on the day of payment and for any portion of such tax
payment not rebated. It is understood, however, that except as
provided in this Section, Section 8 entitled "Indemnity and
Contribution", and the last paragraph of Section 10 below, the
Underwriters will pay all of their costs and expenses, including fees
and disbursements of their counsel, stock transfer taxes payable on
resale of any of the Securities by them, the costs and expenses of the
Underwriters relating to investor presentations
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on any "road shows" undertaken in connection with the marketing of the
Shares and any advertising expenses connected with any offers they may
make.
(g) Upon payment of the purchase price for any or all of
the Warrants to the Selling Stockholders, to deem any and all
requirements for the transfer of such Warrants to be satisfied.
(h) Simultaneous with the purchase from the Selling
Stockholders of, and payment for, the Firm Warrants and any Additional
Warrants and the payment to the Company of the Warrant Exercise Price
by the Underwriters, the Company will issue the Firm Warrant Shares
and any Additional Warrant Shares, respectively, all as contemplated
by this Agreement.
8. INDEMNITY AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Underwriter or any such
controlling person in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein; provided, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Securities, or any person controlling such Underwriter,
if a copy of the Prospectus (as then amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such Underwriter to such person, if required by law so
to have been delivered, at or prior to the written confirmation of the sale of
the Securities to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities. The Company reaffirms its indemnification of the
Selling Stockholders pursuant to that certain Registration Rights Agreement
entered into by the Company, KKR Associates, SSI Equity Associates and certain
other parties named therein, dated as of November 25, 1986 (the "Registration
Rights Agreement") and that certain Subscription Agreement entered into by the
Company and Xxxxx X. Xxxxxxx as of December 15, 1986 (the "Subscription
Agreement").
(b) Each Selling Stockholder agrees, severally and not
jointly, to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with
reference to information relating to such Selling Stockholder furnished in
writing by or on behalf of such Selling Stockholder expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements
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thereto; provided, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages or liabilities
purchased Securities, or any person controlling such Underwriter, if a copy of
the Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Securities to such person, and if the Prospectus (as to amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities. The Selling Stockholders reaffirm their
indemnification of the Company pursuant to the Registration Rights Agreement
and the Subscription Agreement.
(c) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, the Selling Stockholders, the
directors of the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company or any Selling
Stockholder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to paragraph (a), (b) or (c) of this Section
8, such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (a) the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, (b) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Company, its directors, its officers who
sign the Registration Statement and each person, if any, who controls the
Company within the meaning of either such Section and (c) the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Selling Stockholders and all persons, if any, who control any Selling
Stockholder within the meaning of either such Section, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the
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Underwriters and such control persons of Underwriters, such firm shall be
designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated. In the case of
any such separate firm for the Company, and such directors, officers and
control persons of the Company, such firm shall be designated in writing by the
Company. In the case of any such separate firm for the Selling Stockholders
and such controlling persons of Selling Stockholders, such firm shall be
designated in writing by the Selling Stockholders. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in
paragraph (a), (b) or (c) of this Section 8 is unavailable to an indemnified
party or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph, in lieu
of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party or parties on
the one hand and the indemnified party or parties on the other hand from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the indemnifying party or parties on the one hand
and of the indemnified party or parties on the other hand in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other hand in connection with the offering
of the Securities shall be deemed to be in the same respective proportions as
the net proceeds from the offering of the Securities received by the Selling
Stockholders and the total underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the table (including the
footnotes thereto) on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company and
the Selling Stockholders or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective number of Shares and Warrants they have purchased hereunder, and not
joint.
(f) The Company, the Selling Stockholders and the
Underwriters agree that it would not be just or equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation
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that does not take account of the equitable considerations referred to in
paragraph (e) of this Section 8. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission and no
Selling Stockholder shall be required to contribute any amount in excess of the
amount by which the proceeds received by such Selling Stockholder from the
Shares or Warrant Shares sold by it pursuant to this Agreement exceeds the
amount of any damages that such Selling Stockholder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in.equity.
(g) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company and the Selling Stockholders contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Underwriter or any
person controlling any Underwriter, any Selling Stockholder or any person
controlling any Selling Stockholder, or the Company, its officers or directors
or any person controlling the Company and (iii) acceptance of and payment for
any of the Securities.
9. TERMINATION. This Agreement shall be subject to termination
by notice given by you to the Company and the Selling Stockholders, if (a) after
the execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on or by, as
the case may be, the New York Stock Exchange, (ii) trading of any securities of
the Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
or California shall have been declared by either Federal or New York State or
California authorities, or (iv) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or
crisis that, in your judgment, is material and adverse and (b) in the case of
any of the events specified in clauses (a)(i) through (iv), such event, singly
or together with any other such event, makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
10. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares or
Warrants that it has or they have agreed to purchase hereunder on such date, and
the aggregate number of Shares and Warrants which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Shares and Warrants to be purchased on such date,
the other Underwriters shall be obligated severally in the proportions that the
aggregate number of Firm Shares and Firm Warrants set forth opposite their
respective names in Schedule II or III, as the case may be, bears to the
aggregate number of Firm Shares and Firm Warrants set forth opposite the names
of all such non-defaulting
19
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Underwriters, or in such other proportions as you may specify, to purchase the
Shares and Warrants which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event
shall the aggregate number of Shares and Warrants that any Underwriter has
agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 10 by an amount in excess of one-ninth of such aggregate number of
Shares and Warrants without the written consent of such Underwriter. If, on the
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Firm Shares or Firm Warrants and the aggregate number of Firm Shares and Firm
Warrants with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares and Firm Warrants to be purchased, and
arrangements satisfactory to you, the Company and the Selling Stockholders for
the purchase of such Firm Shares and Firm Warrants are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter, the Company or the Selling Stockholders. In
any such case either you or the Company or the Selling Stockholders shall have
the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement
and in the Prospectus or in any other documents or arrangements may be effected.
If, on the Option Closing Date, any U.S. Underwriter or Underwriters shall fail
or refuse to purchase Additional Shares or Additional Warrants and the aggregate
number of Additional Shares and Additional Warrants with respect to which such
default occurs is more than one-tenth of the aggregate number of Additional
Shares and Additional Warrants to be purchased, the non-defaulting U.S.
Underwriters shall have the option to (i) terminate their obligation hereunder
to purchase Additional Shares and Additional Warrants or (ii) purchase not less
than the number of Additional Shares and Additional Warrants that such
non-defaulting Underwriters would have been obligated to purchase in the absence
of such default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company or any
Selling Stockholder to comply with the terms or to fulfill any of the conditions
of this Agreement, or if for any reason the Company or any Selling Stockholder
shall be unable to perform its obligations under this Agreement, the Company and
the Selling Stockholders will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder. [Carve-out for termination by Underwriters
under Section 9 or 10]
11. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
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13. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
Very truly yours,
SAFEWAY INC.
By_______________________________
Name:
Title:
The Selling Stockholders named in
Schedule I hereto, acting
severally
By_______________________________
Accepted as of the date hereof
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXXX, READ & CO. INC.
XXXXXXX, XXXXX & CO.
XXXXXXX XXXXX XXXXXX, XXXXXX & XXXXX INCORPORATED
SALOMON BROTHERS INC
XXXXX XXXXXX INC.
Acting severally on behalf of themselves
and the several U.S. Underwriters
named in Schedule II hereto.
By Xxxxxx Xxxxxxx & Co. Incorporated
By_______________________________________________
Name:
Title:
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XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXX, READ & CO. INC.
XXXXXXX XXXXX INTERNATIONAL
XXXXXXX XXXXX INTERNATIONAL LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
XXXXX XXXXXX INC.
Acting severally on behalf of themselves
and the several International Underwriters
named in Schedule III hereto
By Xxxxxx Xxxxxxx & Co. International Limited
By_______________________________________________
Name:
Title:
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SCHEDULE I
TOTAL NUMBER
OF ADDITIONAL
WARRANTS
(EXPRESSED AS
TOTAL NUMBER TOTAL NUMBER ADDITIONAL
OF FIRM OF ADDITIONAL WARRANT
WARRANTS TO SHARES TO BE SHARES) TO BE
TOTAL NUMBER BE SOLD SOLD IF SOLD IF
OF FIRM (EXPRESSED AS MAXIMUM MAXIMUM
SHARES TO BE FIRM WARRANT OPTION OPTION
SELLING STOCKHOLDERS SOLD SHARES) EXERCISED EXERCISED
---- ------- --------- ---------
KKR Associates 16,250,000 2,437,500
SSI Equity Associates 1,716,696 257,504
Xxxxx X. Xxxxxxx 200,000 30,000
========== ========= ========= =======
TOTAL 16,450,000 1,716,696 2,467,500 257,504
========== ========= ========= =======
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SCHEDULE II
TOTAL
NUMBER OF
ADDITIONAL
TOTAL WARRANTS TO
NUMBER OF BE
U.S. FIRM TOTAL PURCHASED
WARRANTS TO NUMBER OF (EXPRESSED
BE ADDITIONAL AS
TOTAL PURCHASED SHARES TO ADDITIONAL
NUMBER OF (EXPRESSED BE WARRANT
U.S. FIRM AS U.S. PURCHASED SHARES) IF
SHARES TO FIRM IF MAXIMUM MAXIMUM
BE WARRANT OPTION OPTION
U.S. UNDERWRITERS PURCHASED SHARES) EXERCISED Exercised
--------- ------- --------- ---------
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXXX, READ & CO. INC.
XXXXXXX, XXXXX & CO.
XXXXXXX XXXXX XXXXXX, XXXXXX & XXXXX INCORPORATED
SALOMON BROTHERS INC
XXXXX XXXXXX INC.
[NAMES OF OTHER UNDERWRITERS]
Total 13,160,000 1,373,357 2,467,500 257,504
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SCHEDULE III
INTERNATIONAL UNDERWRITERS TOTAL NUMBER OF
INTERNATIONAL
WARRANTS TO BE
TOTAL NUMBER OF PURCHASED (EXPRESSED
INTERNATIONAL SHARES AS INTERNATIONAL
TO BE PURCHASED WARRANT SHARES)
--------------- ---------------
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXX, READ & CO. INC.
XXXXXXX XXXXX INTERNATIONAL
XXXXXXX XXXXX INTERNATIONAL LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
XXXXX XXXXXX INC.
[NAMES OF OTHER INTERNATIONAL UNDERWRITERS]
Total 3,290,000 343,339
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Exhibit A
[FORM OF LOCK-UP CONTRACT]
February , 1996
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx, Read & Co. Inc.
Xxxxxxx, Xxxxx & Co.
Xxxxxxx Xxxxx & Co.
Xxxxxxx Xxxxxxxx Inc
Xxxxx Xxxxxx Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxx, Read & Co. Inc.
Xxxxxxx Xxxxx International
Xxxxxxx Xxxxx International Limited
Salomon Brothers International Limited
Xxxxx Xxxxxx Inc.
x/x Xxxxxx Xxxxxxx & Xx. Xxxxxxxxxxxxx Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated, as
Representative of the several U.S. Underwriters named or to be named in Schedule
I, hereto (the "U.S. Underwriters") and of the several International
Underwriters named or to be named in Schedule II hereto (the "International
Underwriters"), propose to enter into an Underwriting Agreement with Safeway
Inc., a Delaware corporation (the "Company") providing for the public offering
(the "Public Offering") by the U.S. and International Underwriters (together,
the "Underwriters"), including yourselves, of _____________ shares (the
"Shares") of the Common Stock, par value $0.01 per share, of the Company (the
"Common Stock").
In consideration of the Underwriters' agreement to purchase and make
the Public Offering of the Shares, and for other good and valuable consideration
receipt of which is hereby acknowledged, the undersigned hereby agrees that,
without the prior written consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf
of the Underwriters, it will not, during a period of 90 days after the date of
the prospectus first used to confirm sales of Shares (the "Prospectus"), (1)
offer, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock [or (2) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences of ownership of the Common
Stock,] whether any such transaction [described in clause (1) or (2) above] is
to be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Shares to be sold
pursuant to the Public Offering, (B) any shares of Common Stock issued by the
Company pursuant to stock option plans in effect on the date hereof, (C) option
grants under stock option plans in effect on the date hereof, (D) any agreement
of the Company in connection with an acquisition of assets or properties or any
capital stock issuable pursuant to the
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terms of such an agreement, (E) capital stock issuable upon the exercise of
warrants outstanding on the date hereof or (F) the cancellation of warrants. In
addition, the undersigned agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 90 days after the date of the Prospectus, make any
demand for or exercise any right with respect to, the registration of any shares
of Common Stock or any security convertible into or exercisable or exchangeable
for Common Stock.
Very truly yours,
__________________________________
(Name)
__________________________________
(Address)
Accepted as of the date first set forth above:
XXXXXX XXXXXXX & CO. INCORPORATED
By_______________________________________________
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