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EXHIBIT 1
25,000,000 Shares
SAFEWAY INC.
Common Stock, Par Value $0.01 Per Share
UNDERWRITING AGREEMENT
July -, 1998
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July -, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
ING Baring Xxxxxx Xxxx LLC
Xxxxxx Brothers Inc.
X.X. Xxxxxx Securities Inc.
Xxxxx Xxxxxx Inc.
Xxxxxxx Xxxxxx Read LLC
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx Sachs International
Xxxxxxx Xxxxx International
Xxxxxxxxx, Lufkin & Xxxxxxxx International
ING Baring Xxxxxx Xxxx LLC
Xxxxxx Brothers International (Europe)
X.X. Xxxxxx Securities Ltd.
Xxxxx Xxxxxx Inc.
UBS AG, acting through its division Warburg Dillon Read
c/o Morgan Xxxxxxx & Co. International 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) 21,701,424 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 3,298,576 shares 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,
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17,361,139 Firm Shares (the "U.S. Firm Shares") and Firm Warrants (the "U.S.
Firm Warrants") to purchase 2,638,861 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 4,340,285 Firm Shares (the "International Shares") and Firm Warrants (the
"International Warrants") to purchase 659,715 Firm Warrant Shares (the
"International 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, Xxxxxxx, Sachs & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, ING Baring
Xxxxxx Xxxx LLC, Xxxxxx Brothers Inc., X.X. Xxxxxx Securities Inc., Xxxxx Xxxxxx
Inc. and Warburg Dillon Read LLC shall act as representatives (the "U.S.
Representatives") of the several U.S. Underwriters, and Xxxxxx Xxxxxxx & Co.
International Limited, Xxxxxxx Sachs International, Xxxxxxx Xxxxx International,
Xxxxxxxxx, Lufkin & Xxxxxxxx International, ING Baring Xxxxxx Xxxx LLC, Xxxxxx
Brothers International (Europe), X.X. Xxxxxx Securities Ltd., Xxxxx Xxxxxx Inc.
and UBS AG, acting through its division Warburg Dillon Read, 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 3,255,214 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 494,786 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.
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
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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.
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
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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.
(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 having jurisdiction
over the Company is required for the performance by the Company of its
obligations under this Agreement, except such as may be required under
the Act and the rules and regulations thereunder, and the Exchange Act
and the rules and regulations thereunder, and 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 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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(l) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus.
(m) 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, and Warrant Shares
conform as to legal matters to the description of the Stock contained in
the Prospectus and the Warrants conform as to legal matters to the
description thereof contained in the Prospectus.
(n) 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.
(o) 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.
(p) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(q) 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.
(r) Other than as set forth in the Prospectus, 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.
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:
(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,
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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 assuming that such Underwriters have
purchased such Shares, Warrants and Warrant Shares in good faith and
without notice of any security interest, claims, liens, equities,
encumbrances or any other adverse claims within the meaning of the
Uniform Commercial Code.
(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 1998 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 $.50 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 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 3,255,214 Additional Shares
at the Share Purchase Price and up to
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494,786 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 and the Selling Stockholders 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, [PLEDGE,] sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase[, LEND,] 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) with respect to the Company only, enter into any swap or other
arrangement that transfers to another, 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 of the Prospectus, (C) option grants under stock option plans
in effect on the date of the Prospectus, (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 of the Prospectus, 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.
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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 in Federal or other
immediately available funds to an account designated by the Selling Stockholders
against delivery of such Firm Shares and Firm Warrants for the respective
accounts of the several Underwriters at 7 a.m., California time on July -, 1998,
or at such other time on the same or such other date, not later than -, 1998, as
shall be designated in writing by you. Payment of the Warrant Exercise Price for
Firm Warrant Shares shall be made in Federal or other immediately available
funds to an account designated by 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 in Federal or other immediately available
funds to an account designated by the Selling Stockholders against delivery of
such Additional Shares and Additional Warrants for the respective accounts of
the several Underwriters at 7 a.m., California time on the date specified in the
notice described in Section 3 or on such other date, in any event not later than
-, 1998, as shall be designated in writing by you. Payment of the Warrant
Exercise Price for Additional Warrant Shares shall be made in Federal or other
immediately available funds to an account designated by the Company on the same
such date. The time and date of such payment are hereinafter referred to as the
"Option Closing Date."
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 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 (subject to the provisions of Section 7 hereof), 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, 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 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:
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(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 does not
indicate the direction of the possible change 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 (the officer signing and
delivering such certificate may rely upon his or her knowledge as to
proceedings threatened).
(c) Xxxxxx & Xxxxxxx, counsel for the Company, shall have
furnished to you their written opinion dated the Closing Date, in form
and substance satisfactory to you, 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, lease and
operate 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 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 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 conformance
by the Company with the provisions of this
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Agreement will not result in the violation by the Company of its
Restated Certificate of Incorporation or By-laws or any federal,
New York or California statute, rule or regulation known to such
counsel to be applicable to the Company (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 9.35% Senior Subordinated Notes due 1999,
6.85% Senior Notes due 2004, 7.00% Senior Notes due 2007 or 7.45%
Senior Debentures due 2027, 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, New York or California court or
governmental agency or body is required for the issue of the
Warrant Shares or the sale of the Securities 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 such 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, schedules and other financial data included
or incorporated by reference 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. In passing upon the compliance as to form
of each of such documents, such counsel may assume that the
statements made and incorporated by reference therein are correct
and complete;
(ix) the statements 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;
(xi) the Registration Statement and Prospectus (except for
financial statements, schedules and other financial data included
or incorporated by reference therein, as to which such counsel
need express no opinion) comply as to form in all material
respects with the requirements for registration statements on
Form S-3 under 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; and
(xii) The Registration Statement has become effective
under the Securities Act and, to such counsel's knowledge, no
stop order suspending the effectiveness of the
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Registration Statement has been issued under the Securities Act
and no proceedings therefor have been initiated by the
Commission; and the Prospectus has been filed in accordance with
Rule 424(b) and 430A under the Securities Act.
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 counsel's attention that have caused such
counsel to believe that the Registration Statement (including the
documents incorporated by reference therein), 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 (including the documents
incorporated by reference therein), as of its date or as of the
Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits 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 data included in the Registration Statement or the
Prospectus or incorporated by reference 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 jurisdiction in which its
ownership or lease of substantial properties or the conduct of
its business require such qualification, and in which the 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) based solely on certificates from public officials,
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 and is
in good standing under the laws of each other jurisdiction in
which its ownership or lease of substantial
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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 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) Xxxxxx & Xxxxxxx, counsel for the Selling Stockholders, shall
have furnished to you their written opinion, dated the Closing Date, in
form and substance satisfactory to you, 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 partnership agreement 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 state securities laws in connection with the
purchase and distribution of the Securities by the Underwriters,
as to which such counsel need not express an opinion; and
(iii) upon delivery of the Shares and Warrants and payment
therefor pursuant hereto, the Underwriters will acquire such
Shares and Warrants (including the Warrant Shares issued upon
exercise of the Warrants after payment of the exercise price
therefor)
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free and clear of adverse claims within the meaning of the
Uniform Commercial Code as in effect in the State of New York,
assuming that such Underwriters have purchased such Shares,
Warrants and Warrant Shares pursuant to this agreement without
notice of any such adverse claim within the meaning of the
Uniform Commercial Code as in effect in the State of New York.
(f) The Underwriters shall have received on the Closing Date an
opinion of Xxxxx & Wood LLP, 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 and such counsel shall
have received such papers and information as they may reasonably request
to enable them to pass upon such matters.
With respect to subparagraph (xi) of paragraph (c) above, Xxxxx &
Wood 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 contained 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 of the Company
relating to sales and 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.
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(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.
(l) If the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement.
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
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
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
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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 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 September -, 1999 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
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and expenses of the Underwriters relating to investor presentations 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").
(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 thereto;
provided, however, that the foregoing indemnity agreement with respect to any
preliminary
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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 to the same extent as the indemnity from the Company to such
Underwriter in paragraph 8(a) above, 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 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
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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
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
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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, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (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 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
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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; provided, however, that no such
reimbursement shall be required with respect to a termination of this Agreement
by the Underwriters pursuant to Section 9 or Section 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:
SELLING STOCKHOLDERS
KKR Partners II, L.P.
By KKR Associates,
the General Partner
By:_____________________________________
Name: Xxxxx X. Xxxxxx, Xx.
Title: General Partner
SSI Associates, L.P.
By KKR Associates,
the General Partner
By:_____________________________________
Name: Xxxxx X. Xxxxxx, Xx.
Title: General Partner
SSI Equity Associates, L.P.
By SSI Partners, L.P.,
the General Partner
By:_____________________________________
Name: Xxxxxx X. Xxxxxxx
Title: General Partner
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Accepted as of the date hereof
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXXXX, SACHS & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
ING BARING XXXXXX XXXX LLC
XXXXXX BROTHERS INC.
X.X. XXXXXX SECURITIES INC.
XXXXX XXXXXX INC.
XXXXXXX XXXXXX READ LLC
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:
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXXX SACHS INTERNATIONAL
XXXXXXX XXXXX INTERNATIONAL
XXXXXXXXX, LUFKIN & XXXXXXXX INTERNATIONAL
ING BARING XXXXXX XXXX LLC
XXXXXX BROTHERS INTERNATIONAL (EUROPE)
X.X. XXXXXX SECURITIES LTD.
XXXXX XXXXXX INC.
UBS AG, ACTING THROUGH ITS DIVISION WARBURG DILLON READ
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
TOTAL NUMBER OF TOTAL NUMBER OF (EXPRESSED AS
FIRM WARRANTS ADDITIONAL ADDITIONAL
TO BE SOLD SHARES TO BE WARRANT SHARES)
TOTAL NUMBER OF (EXPRESSED AS SOLD IF TO BE SOLD IF
FIRM SHARES TO FIRM WARRANT MAXIMUM MAXIMUM
SELLING STOCKHOLDERS BE SOLD SHARES) OPTION EXERCISED OPTION EXERCISED
-------------------- ------- ------- ---------------- ----------------
KKR Partners II, L.P.
SSI Associates, L.P.
SSI Equity Associates, L.P. 3,298,576 494,786
============ ========= =========== =======
TOTAL 21,701,424 3,298,576 3,255,214 494,786
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SCHEDULE II
TOTAL
NUMBER OF
ADDITIONAL
WARRANTS TO
TOTAL BE PURCHASED
TOTAL NUMBER OF EXPRESSED AS
NUMBER OF ADDITIONAL ADDITIONAL
TOTAL ADDITIONAL SHARES TO WARRANT
NUMBER OF WARRANTS TO BE PURCHASED SHARES) IF
U.S. FIRM U.S. FIRM IF MAXIMUM MAXIMUM
SHARES TO BE WARRANT OPTION OPTION
U.S. UNDERWRITERS PURCHASED SHARES) EXERCISED EXERCISED
----------------- --------- ------- --------- ---------
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXXXX, SACHS & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES
CORPORATION
ING BARING XXXXXX XXXX LLC
XXXXXX BROTHERS INC.
X.X. XXXXXX SECURITIES INC.
XXXXX XXXXXX INC.
XXXXXXX XXXXXX READ LLC
========== ========= ========= =======
TOTAL 17,361,139 2,638,861 3,255,214 494,786
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SCHEDULE III
TOTAL NUMBER OF
INTERNATIONAL
WARRANTS TO BE
PURCHASED
TOTAL NUMBER OF (EXPRESSED AS
INTERNATIONAL SHARES INTERNATIONAL
INTERNATIONAL UNDERWRITERS TO BE PURCHASED WARRANT SHARES)
-------------------------- --------------- ---------------
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXXX SACHS & INTERNATIONAL
XXXXXXX XXXXX INTERNATIONAL
XXXXXXXXX, LUFKIN & XXXXXXXX INTERNATIONAL
ING BARING XXXXXX XXXX LLC
XXXXXX BROTHERS INTERNATIONAL (EUROPE)
X.X. XXXXXX SECURITIES LTD.
XXXXX XXXXXX INC.
UBS AG, ACTING THROUGH ITS DIVISION WARBURG
DILLON READ
========= =======
TOTAL 4,340,285 659,715
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EXHIBIT A
[FORM OF LOCK-UP CONTRACT]
July -, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
ING Baring Xxxxxx Xxxx LLC
Xxxxxx Brothers Inc.
X.X. Xxxxxx Securities Inc.
Xxxxx Xxxxxx Inc.
Xxxxxxx Xxxxxx Read LLC
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx Sachs International
Xxxxxxx Xxxxx International
Xxxxxxxxx, Lufkin & Xxxxxxxx International
ING Baring Xxxxxx Xxxx LLC
Xxxxxx Brothers International (Europe)
X.X. Xxxxxx Securities Ltd.
Xxxxx Xxxxxx Inc.
UBS AG, acting through its division Warburg Dillon Read
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("Xxxxxx Xxxxxxx") proposes to enter into an Underwriting Agreement with Safeway
Inc., a Delaware corporation (the "Company") and Selling Stockholders named in
Schedule I thereto providing for the public offering (the "Public Offering") by
the several Underwriters, including Xxxxxx Xxxxxxx (the "Underwriters"), of
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25,000,000 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"), offer,
[pledge,] sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase[, lend] 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 whether any such transaction is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to the Shares to be sold pursuant to the
Public Offering or the SSI Warrants to be canceled, as described in the
Prospectus. 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.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
________________________________________
(Name)
________________________________________
(Address)
2
