Common Stock Purchase Warrants - Safeway Inc. and SSI Equity Associates LP
VOID AFTER 5:00 P.M., NEW YORK CITY TIME, NOVEMBER 15, 2001
Certificate No. 4
SAFEWAY INC.
COMMON STOCK PURCHASE WARRANTS
CERTIFICATE FOR 23,405,953 WARRANTS TO PURCHASE
23,405,953 SHARES OF COMMON STOCK
OF SAFEWAY INC.
This certifies that, for value received, SSI Equity
Associates, L.P., or registered assigns (the "Holder") is entitled to purchase
from Safeway Inc., a Delaware corporation (the "Company"), at any time after
the date hereof and until 5:00 p.m., New York City time, on November 15, 2001,
at the purchase price of $1.00 per share, up to an aggregate of 23,405,953
shares of common stock, par value $.01 per share, of the Company (the "Common
Stock"), subject to adjustment as herein provided. In this warrant certificate
(the "Warrant Certificate"), the right to purchase each share of Common Stock
is referred to as a "Warrant"; the shares of Common Stock or, pursuant to the
terms hereof, other securities, issuable upon exercise of the Warrants are
referred to as the "Warrant Shares", and the purchase price of $1.00 per
Warrant Share, subject to adjustment as herein provided, is referred to as the
"Warrant Price".
The Warrants are subject to the following terms, conditions
and provisions:
SECTION 1. Registration; Transferability; Exchange of Warrant
Certificate.
1.1 Registration. The Company shall number and register
the Warrants in a register (the "Warrant Register") as they are issued by the
Company. The Company shall be entitled to treat the Holder of any Warrant as
the owner in fact thereof for all purposes and shall not be bound to recognize
any equitable or other claim to or interest in such Warrant on the part of any
other person, and shall not be liable for complying with a request by a
fiduciary or nominee of a fiduciary to register a transfer of any Warrant which
is registered in the name of such fiduciary or nominee.
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1.2 Transfer. Subject to compliance with Section 3
hereof, the Warrants shall be transferable only in the Warrant Register
maintained at the office of the Company in New York, New York (the "Office"),
upon presentation of this Warrant Certificate and proper evidence of
succession, assignment or authority to transfer. In all cases of transfer by
an attorney, the original power of attorney, duly approved, or a copy thereof,
duly certified, shall be deposited and remain with the Company. In case of
transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited and remain with the Company in
its discretion.
1.3 Exchange of Warrant Certificate. This Warrant
Certificate may be exchanged for another certificate or certificates entitling
the Holder to purchase a like aggregate number of Warrant Shares as this
Warrant Certificate then entitles the Holder to purchase. If the Holder
desires to exchange this Warrant Certificate, it shall make such request in
writing delivered to the Company, and shall surrender, properly endorsed, this
Warrant Certificate for exchange. Thereupon, the Company shall countersign and
deliver to the person entitled thereto a new Warrant certificate or
certificates, as the case may be, as so requested.
SECTION 2. Term of Warrants; Exercise of Warrants.
2.1 Term of Warrants. Subject to the terms of this
Warrant Certificate, the Holder shall have the right, which may be exercised at
any time from the date hereof until 5:00 p.m., New York City time, on November
15, 2001 (the "Expiration Date"), to purchase from the Company up to an
aggregate of 23,405,953 fully paid and nonassessable Warrant Shares, or such
other number of Warrant Shares which the Holder may at the time be entitled to
purchase in accordance with the provisions of this Warrant Certificate. Each
Warrant not exercised prior to 5:00 p.m., New York City time, on the Expiration
Date shall become void and all rights in respect thereof under this Warrant
Certificate shall cease as of such time.
2.2 Exercise of Warrants.
(a) The Warrants evidenced by this Warrant Certificate
may be exercised in whole or in part upon surrender to the Company at
its Office of this Warrant Certificate, together with the Form of
Election to Purchase attached hereto duly filed in and signed, and
upon payment to the Company of the Warrant Price (as determined in
accordance with the provisions of Section 7 hereof), for the number of
Warrant Shares in respect of which such Warrants are then exercised.
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(b) Payment of the Warrant Price for Warrant Shares upon
exercise of any Warrants may be made (i) in cash, (ii) by certified or
official bank check in immediately available funds, or (iii) by any
combination of (i) and (ii).
(c) Subject to Section 3 hereof, upon the surrender of
this Warrant Certificate and payment of the Warrant Price as
aforesaid, the Company shall cause to be issued and delivered with all
reasonable dispatch to or upon the written order of the Holder and in
such name or names as the Holder may designate a certificate or
certificates for the number of Warrant Shares so purchased. If
permitted by applicable law, such certificate or certificates shall be
deemed to have been issued and any person so designated to be named
therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of this Warrant
Certificate and payment of the Warrant Price, as aforesaid. The
rights of purchase represented by the Warrants shall be exercisable,
at the election of the Holder, either in full or from time to time in
part and, in the event that this Warrant Certificate is exercised in
respect of less than all the Warrant Shares purchasable on such
exercise at any time prior to the Expiration Date, a new certificate
evidencing the remaining Warrant or Warrants will be issued by the
Company.
2.3 Compliance with Government Regulations. The Company covenants
that if any Warrant Shares required to be reserved for purposes of exercise of
Warrants require, under any Federal or state law or applicable governing rule
or regulation of any national securities exchange, registration with or
approval of any governmental authority, or listing on any such national
securities exchange, before such Warrant Shares may be issued upon exercise,
the Company will in good faith and as expeditiously as possible endeavor to
cause such shares to be duly registered or approved by such governmental
authority or listed on the relevant national securities exchange, as the case
may be; provided, however, that in no event shall such Warrant Shares be
issued, and the Company is hereby authorized to suspend the exercise of all
Warrants, for the period during which such registration, approval or listing is
required but not in effect.
SECTION 3. Payment of Taxes. The Company will pay all
documentary stamp and other taxes, if any, attributable to the initial issuance
of Warrant Shares upon the exercise of Warrants; provided, however, that the
Company shall not be required to pay any tax or other governmental charge which
may be payable in respect of any transfer involved in the issue or delivery of
any Warrants, or certificates for Warrant Shares, in a name other than that of
the registered Holder of such Warrants, and the
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Company shall not register any such transfer or issue any such certificate
until such tax or governmental charge, if required, shall have been paid.
SECTION 4. Mutilated or Missing Warrants. In case this
Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company
may, in its discretion, issue and deliver in exchange and substitution for and
upon cancellation of this Warrant Certificate, if mutilated, or in lieu of and
in substitution for this Warrant Certificate, if lost, stolen or destroyed, a
new Warrant Certificate of like tenor and representing an equivalent right or
interest, but only upon, in the event this Warrant Certificate has been lost,
stolen or destroyed, receipt of evidence satisfactory to the Company of such
loss, theft or destruction. An applicant for such a substitute Warrant
Certificate shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe.
SECTION 5. Reservation of Warrant Shares; Purchase, Call and
Cancellation of Warrants.
5.1 Reservation of Warrant Shares. There have been
reserved, and the Company shall at all times keep reserved, out of its
authorized Common Stock, a number of shares of Common Stock (which will at all
times remain free of preemptive rights) sufficient to provide for the exercise
of the rights of purchase represented by the outstanding Warrants evidenced by
this Warrant Certificate. The Company or, if appointed, the transfer agent for
the Common Stock and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid (each, a "Transfer Agent") will be irrevocably authorized
and directed at all times to reserve such number of authorized shares as shall
be required for such purpose. The Company will keep a copy of this Warrant
Certificate on file with each Transfer Agent. The Company will furnish such
Transfer Agent a copy of all notices of adjustments and certificates related
thereto, transmitted to each Holder pursuant to Section 7.3 hereof. All
Warrant Certificates surrendered in the exercise of the rights thereby
evidenced shall be cancelled by the Company and retired.
5.2 Purchase of Warrants by the Company. The Company
shall have the right, except as limited by law, other agreements or herein, to
purchase or otherwise acquire Warrants evidenced hereby at such times, in such
manner and for such consideration as it may deem appropriate.
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5.3 Call of Warrants.
(a) The Company shall have the right to call all (but not
less than all) of the Warrants evidenced hereby for redemption at a
cash price for each Warrant Share covered by such Warrants equal to
$1.00 upon no less than 90 days' written notice if, at the date of
such notice, the Securities and Exchange Commission has, under the
Securities Act of 1933, as amended, declared effective a registration
statement covering shares of the Common Stock and any shares of such
Common Stock have been sold and the Warrant Shares are to be sold
pursuant to such registration statement, or any subsequent
registration statement of a type contemplated by the Registration
Rights Agreement dated November 25, 1986, by and between the Company
and SSI Equity Associates, L.P., filed with the Securities and
Exchange Commission and declared effective; provided, however, that
(i) at the time such registration statement covering the Warrant
Shares becomes effective there shall exist an Active Public Trading
Market (as such term is defined below) in the shares of Common Stock,
and (ii) if at the date of such notice this Warrant shall be owned by
SSI Equity Associates, L.P. or any successor partnership it may be
called for redemption under the circumstances referred to in this
Section 5.3(a) only if the exercise of this Warrant shall then be
permissible under the terms of the Limited Partnership Agreement of
SSI Equity Associates, L.P. or such successor partnership.
(b) If a "Change of Ownership Transaction" (as said term is
defined below) occurs or is pending, the Company shall have the right
to call all (but not less than all) of the Warrants evidenced hereby,
upon written notice to the Holder at a cash price for each Warrant
equal to the greater of (x) $.075 or (y) the excess of (A) the fair
market value of one Warrant Share (or the fair market value of the
securities issuable upon exercise of the Warrants, if other than
Warrant Shares) over (B) the Warrant Price therefor; provided, that
upon notice from the Holder to the Company, the Company shall deliver,
or cause to be delivered, in lieu of cash, securities of the same
class for which Warrants would be, or would become, exercisable
pursuant to Section 7 hereof, having a fair market value (which shall
be the same value as was used to determine the fair market value of
one Warrant Share) equal to such excess, except that if as a result of
such Change of Ownership Transaction the Warrants (if not redeemed)
would not be immediately exercisable for cash or securities that have
an Active Public Trading Market (a "Non-Marketable Acquisition
Transaction") the Holder shall not have the option to request such
securities in lieu of cash if the distribution of such securities to
the Holder would require registration under the Securities Act. For
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purposes of determining the fair market value of one Warrant Share
pursuant to the preceding sentence, each Warrant Share shall be deemed
to have a fair market value equal to the value stated for the
consideration for which said Warrant Share is exchangeable in the
Change of Ownership Transaction or, in the event there is no such
stated value, the value, in the case of securities that have an Active
Public Trading Market, equal to the average closing sale price for the
30 trading days ending on the date immediately preceding the date of
consummation of the Change of Ownership Transaction (if such
securities are then publicly traded on a national securities exchange)
or the average closing bid price for the 30 trading days ending on the
date immediately preceding the date of consummation of the Change of
Ownership Transaction (if such securities are not then publicly traded
on a national securities exchange but are included in a national
quotation system). If the consideration for which said Warrant Share
is exchangeable is other than securities that have an Active Public
Trading Market and there is no stated value for the transaction, each
Warrant Share shall be deemed to have a fair market value as
determined by the Board of Directors of the Company, provided that any
such determination of fair market value shall be sent to the Holder at
least 30 days prior to the date of redemption, together with written
information as to the basis upon which the Board of Directors of the
Company made such determination. Such determination by the Board of
Directors shall be conclusive and undisputed unless objected to in
writing at least 10 days prior to the date of redemption by the
holders of a majority of the Warrants.
(c) For purposes hereof, (i) a "Change of Ownership
Transaction" means (A) a consolidation of the Company with, or a
merger of the Company into, another entity, (B) an exchange of all or
substantially all of the Common Stock for securities, cash or property
of another entity, or (C) a sale, transfer or lease to another entity
of all or substantially all of the assets of the Company, if, as a
result of any transaction described in the foregoing clauses (A), (B)
or (C), and after giving effect thereto, the holders of the Common
Stock will own less than 50% of the voting power of all classes of
stock having general voting rights of the resulting or acquiring
entity and such resulting or acquiring entity is not an "affiliate" of
the Company (as such term is defined in Rule 405 under the Securities
Act of 1933, as amended, at the date hereof), and (ii) an "Active
Public Trading Market" in the shares of Common Stock shall be deemed
to exist only if at least 25% of the issued and outstanding shares of
Common Stock has been publicly sold and continues to be freely
tradeable and the Common Stock is traded on a national securities
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exchange, or included in a national quotation system, or there are at
least three active market-makers with respect to the Common Stock who
are recognized investment bankers or securities dealers.
(d) The Company shall mail the notice of any call for
redemption pursuant to Section 5.3(a) or (b) hereof to the Holder
hereof not more than 120 days nor less than 90 days prior to the date
scheduled for redemption (the "Call Date"); provided, however, that if
the Company desires to call the Warrants for redemption pursuant to
Section 5.3(a) hereof, such notice shall be mailed not later than the
date the registration statement referred to therein shall have been
initially filed with the Securities and Exchange Commission. Such
notice shall state the Call Date and the place and price of such call.
The Holder shall continue to have the right to exercise the warrants
until 5:00 p.m., New York time, on the last business day preceding the
Call Date. The term "business day" as used herein shall mean any day
other than a Saturday, a Sunday or a day on which banking institutions
in New York, New York are not required to be open.
5.4 Cancellation of Warrants. In the event the Company
shall purchase or otherwise acquire Warrants, the same shall thereupon be
cancelled by it and retired. The Company shall cancel any warrant surrendered
for exchange, substitution, transfer or exercise in whole or in part.
SECTION 6. Warrant Price. Subject to adjustment as provided
in Section 7 hereof, the Warrant Price shall be $1.00 per Warrant Share.
SECTION 7. Adjustment of Warrant Price and Number of Warrant
Shares. The number and kind of securities purchasable upon the exercise of
each Warrant and the Warrant Price shall be subject to adjustment from time to
time upon the happening of certain events as hereinafter described.
7.1 Mandatory Adjustments. The number and kind of securities
purchasable upon the exercise of each Warrant and the Warrant Price shall be
subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend on its
outstanding Common Stock in shares of Common Stock or make a
distribution to all holders of its outstanding Common Stock in shares
of Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue by reclassification of its shares of
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Common Stock other securities of the Company (including any such
reclassification in connection with a consolidation or merger in which
the Company is the surviving corporation), the number of Warrant
Shares purchasable upon exercise of each Warrant immediately prior
thereto shall be adjusted so that the Holder of each Warrant upon
exercise thereof shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which he would have
owned or have been entitled to receive after the happening of any of
the events described above had such Warrant been exercised immediately
prior to the happening of such event or any record date with respect
thereto. An adjustment made pursuant to this paragraph (a) shall
become effective on the date of dividend payment, subdivision,
combination or issuance retroactive to the record date with respect
thereto, if any, for such event. Such adjustment shall be made
successively, whenever such an issuance is made.
(b) (i) In case the Company shall distribute to all holders
of its outstanding Common Stock evidences of its indebtedness or
assets or securities other than its Common Stock (excluding cash
distributions payable out of consolidated earnings or earned surplus
and dividends or distributions referred to in Section 7.1(a) above or
in Section 7.1(b)(ii) hereof) or rights, options or warrants to
subscribe for or purchase shares of Common Stock, or convertible or
exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock, then in each case the number of
Warrant Shares thereafter purchasable upon the exercise of each
Warrant shall be determined by multiplying the number of Warrant
Shares theretofore purchasable upon the exercise of each Warrant by a
fraction, of which the numerator shall be the then current Warrant
Price on the date of such distribution, and of which the denominator
shall be the then current Warrant Price, less the then fair value (as
determined by the Board of Directors of the Company, whose
determination shall be conclusive), up to the then current Warrant
Price less $.01, of the portion of the evidences of indebtedness,
assets, securities, rights, options, warrants or convertible or
exchangeable securities so distributed attributable to one share of
Common Stock.
(ii) In the event of a distribution by the Company
to all holders of its outstanding Common Stock of stock of a
subsidiary or securities convertible into or exercisable for such
stock, then in lieu of an adjustment in the number of Warrant Shares
purchasable upon the exercise of each Warrant, the Holder of each
Warrant, upon the exercise thereof at any time after such
distribution, shall be entitled to receive from the Company, such
subsidiary or
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both, as the Company shall determine, the stock or other securities to
which such Holder would have been entitled if such Holder had
exercised such Warrant immediately prior thereto.
(iii) The adjustment required by this Section 7.1(b)
shall be made whenever any such distribution is made, and shall become
effective on the date of distribution retroactive to the record date
for the determination of stockholders entitled to receive such
distribution.
(c) In case the Company shall after the date hereof sell and
issue shares of Common Stock, or rights, options, warrants or
convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock (all of the foregoing
being referred to in this Section 7.1(c) as "Shares") (excluding (i)
Shares issued in any of the transactions described in Section 7.1(a)
or (b) above, (ii) Shares issuable upon exercise of stock options
granted or to be granted to employees or directors of the Company or
its subsidiaries, other than pursuant to Shares included in clause
(iii) below, (iii) Shares issued to employees of the Company or its
subsidiaries pursuant to stock bonus or incentive compensation plans
or agreements approved by the stockholders of the Company, provided
that the number of Shares so excluded pursuant to this clause (iii)
and the immediately preceding clause (ii) shall not exceed in the
aggregate 28,000,000 Shares, subject to adjustment under the terms of
any such stock options, (iv) Shares issued pursuant to a dividend or
interest reinvestment plan, or (v) Shares issued to stockholders of
any corporation which is acquired by, merged into or becomes part of
the Company or a subsidiary of the Company in an arm's length
transaction), at a price per Share (determined, in the case of rights,
options, warrants or convertible or exchangeable securities, by
dividing (x) the total amount received or receivable by the Company in
consideration of the sale and issuance of such rights, options,
warrants or convertible or exchangeable securities, plus the total
consideration payable to the Company upon exercise or conversion or
exchange thereof, by (y) the total number of shares of Common Stock
covered by such rights, options, warrants or convertible or
exchangeable securities) lower than the then current Warrant Price in
effect immediately prior to such sale and issuance, then in each case
the number of Warrant Shares thereafter purchasable upon the exercise
of each Warrant shall be determined by multiplying the number of
Warrant Shares theretofore purchasable upon the exercise of each
Warrant by a fraction, the numerator of which shall be the total
number of shares of Common Stock outstanding immediately after such
sale and issuance and the
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denominator of which shall be an amount equal to the sum of (A) the
total number of shares of Common Stock outstanding immediately prior
to such sale and issuance plus (B) the number of shares of Common
Stock which the aggregate consideration received (determined as
provided below) for such sale or issuance would purchase at the
Warrant Price in effect immediately prior to such sale and issuance.
Such adjustment shall be made successively whenever such an issuance
is made. For the purposes of such adjustments, the shares of Common
Stock which the holder of any such rights, options, warrants, or
convertible or exchangeable securities shall be entitled to subscribe
for or purchase shall be deemed to be issued and outstanding as of the
date of such sale and issuance and the consideration received by the
Company therefor shall be deemed to be the consideration received by
the Company (plus any underwriting discounts or commissions in
connection therewith) for such rights, options, warrants or
convertible or exchangeable securities, plus the consideration or
premiums stated in such rights, options, warrants or convertible or
exchangeable securities to be paid for the shares of Common Stock
owned thereby. In case the Company shall sell and issue Shares for a
consideration consisting, in whole or in part, of property other than
cash or its equivalent, then in determining the "price per share of
Common Stock" and the "consideration received by the Company" for
purposes of the first sentence and the immediately preceding sentence
of this Section 7.1(c), the Board of Directors of the Company shall
determine, in its discretion, the fair value of said property, and
such determinations, if made in good faith, shall be binding on all
Holders. The determination of whether any adjustment is required
under this Section 7.1(c), by reason of the sale and issuance of any
rights, options, warrants or convertible or exchangeable securities
and the amount of such adjustment, if any, shall be made only at such
time and not at the subsequent time of issuance of Shares upon the
exercise of such rights to subscribe or purchase.
(d) No adjustment in the number of Warrant Shares purchasable
hereunder shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the number of
Warrant Shares purchasable upon the exercise of each Warrant;
provided, however, that any adjustments which by reason of this
Section 7.1(d) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations
shall be made to the nearest one-thousandth of a share.
(e) Whenever the number of Warrant Shares purchasable upon
the exercise of each Warrant is adjusted, as herein
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provided, the Warrant Price payable upon exercise of each Warrant
shall be adjusted by multiplying such Warrant Price immediately prior
to such adjustment by a fraction, of which the numerator shall be the
number of Warrant Shares purchasable upon the exercise of each Warrant
immediately prior to such adjustment, and of which the denominator
shall be the number of Warrant Shares purchasable immediately
thereafter.
(f) No adjustment in the number of Warrant Shares
purchasable upon the exercise of each Warrant need be made under
Section 7.1(b) hereof if the Company issues or distributes to each
Holder of Warrants the rights, options, warrants, convertible or
exchangeable securities, evidences of indebtedness, assets or
securities referred to in such paragraph which each Holder of Warrants
would have been entitled to receive had the Warrants been exercised
prior to the happening of such event or the record date with respect
thereto. No adjustment need be made for a change in the par value of
the Warrant Shares that does not affect the number of shares of Common
Stock outstanding after giving effect to such change.
(g) For the purposes of this Section 7.1, the term "shares
of Common Stock" shall mean (i) the class of stock designated as the
Common Stock of the Company at the date of this Warrant Certificate or
(ii) any other class of stock resulting from successive changes or
reclassifications of such shares consisting solely of changes in par
value, or from no par value to par value. In the event that at any
time, as a result of an adjustment made pursuant to Section 7.1(a)
above, the Holders shall become entitled to purchase any securities
other than shares of Common Stock, thereafter the number of such other
securities so purchasable upon exercise of each Warrant and the
Warrant Price of such securities shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares
contained in Section 7.1(a) through (e), inclusive, above, and the
provisions of Section 2 and Sections 7.2 through 7.4, inclusive, with
respect to the Warrant Shares, shall apply on like terms to any such
other securities.
(h) Upon the expiration of any rights, options, warrants or
conversion or exchange privileges which resulted in adjustments
pursuant to subsections (a), (b) or (c) of this Section 7.1, if any
thereof shall not have been exercised, the Warrant Price and the
number of shares of Common Stock purchasable upon the exercise of each
Warrant shall be readjusted and shall thereafter be such as it would
have been had it been originally adjusted (or had the
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original adjustment not been required, as the case may be) as if (A)
the only shares of Common Stock purchasable upon exercise of such
rights, options, warrants or conversion or exchange privileges were
the shares of Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion or exchange
privileges and (B) such shares of Common Stock so issued or sold, if
any, were issuable for the consideration actually received by the
Company for the issuance, sale or grant of all such rights, options,
warrants or conversion or exchange privileges whether or not
exercised; provided, that no such readjustment shall have the effect
of increasing the Warrant Price or decreasing the number of Warrant
Shares purchasable upon the exercise of each Warrant by an amount in
excess of the amount of the adjustment initially made in respect to
the issuance, sale or grant of such rights, options, warrants or
conversion or exchange privileges.
7.2 Voluntary Adjustment by the Company. The Company may at
its option, at any time during the term of the Warrants, reduce the then
current Warrant Price to any amount deemed appropriate by the Board of
Directors of the Company; provided that if the Company elects so to reduce the
then current Warrant Price, such reduction shall remain in effect for at least
a 15-day period, after which time the Company may, at its option, reinstate the
Warrant Price in effect prior to such reduction.
7.3 Notice of Adjustment. Whenever the number of Warrant
Shares purchasable upon the exercise of each Warrant or the Warrant Price of
such Warrant Shares is adjusted, as herein provided, the Company shall promptly
mail by first class mail, postage prepaid, to each Holder a notice of such
adjustment or adjustments and a certificate of an officer of the Company
accompanied by the report thereon by a firm of independent public accountants
selected by the Board of Directors of the Company (who may be the regular
accountants for the Company) setting forth the number of Warrant Shares
purchasable upon the exercise of each Warrant and the Warrant Price of such
Warrant Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such
adjustment was made. Such certificate shall be conclusive evidence of the
correctness of such adjustment.
7.4 No Adjustment for Dividends. Except as provided in
Section 7.1 hereof, no adjustment in respect of any dividends or other payments
or distributions made to holders of securities issuable upon exercise of
Warrants shall be made during the term of a Warrant or upon the exercise of a
Warrant.
7.5 Preservation of Purchase Rights Upon Merger,
Consolidation, etc. Subject to Section 5.3 hereof, in case of
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any consolidation of the Company with or merger of the Company into another
entity (whether or not the Company is the surviving corporation), or in the
case of any sale, transfer or lease to another of all or substantially all the
property of the Company, the Company or such successor or purchasing entity, as
the case shall be, shall deliver to the Holder an undertaking that the Holder
shall have the right thereafter upon payment of the Warrant Price in effect
immediately prior to such action to purchase upon exercise of each Warrant the
kind and amount of securities, cash and property which the Holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had such Warrant been exercised
immediately prior to such action. Upon the execution of such agreement, such
Warrant shall be exercisable only for such securities, cash and property. Such
agreement shall provide for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 7. The
provisions of this Section 7.5 shall similarly apply to successive
consolidations, mergers, sales, transfers or leases.
7.6 Statement on Warrants. Irrespective of any adjustments
in the Warrant Price or the number or kind of securities purchasable upon the
exercise of the Warrants, Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of shares as are stated
in the Warrants initially issuable pursuant to this Warrant Certificate.
SECTION 8. Fractional Interests. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same time
by the Holder, the exercise thereof shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the Warrants so
presented. If any fraction of a Warrant Share would, except for the provisions
of this Section 8, be issuable on the exercise of any Warrant (or specified
portion thereof) there will be paid in cash to the Holder of the Warrants an
amount per Warrant Share equal to the same fraction of the current market value
of a share of Common Stock. For purposes of this Section 8, the "current
market value" per share of Common Stock shall be (a) if the Common Stock is
then publicly traded on a national securities exchange, the closing sale price
of the Common Stock on such exchange on the last trading day prior to the date
of determination, (b) if the Common Stock is not then publicly traded on a
national securities exchange but is included in a national quotation system,
the closing bid price for the Common Stock on the last trading day prior to the
date of determination, and (c) if neither (a) nor (b) is applicable, as
determined in good faith by the Board of Directors of the Company.
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SECTION 9. No Rights as Stockholders; Notices to Holders.
Nothing contained in this Warrant Certificate shall be construed as conferring
upon the Holder or its transferees the right to vote or to receive dividends or
to consent or to receive notice as stockholders in respect of any meeting of
stockholders of the Company for the election of the directors of the Company or
any other matter, or any rights whatsoever as stockholders of the Company. If,
however, at any time prior to the expiration of the Warrants and prior to their
exercise, any of the following events shall occur:
(a) the Company shall declare any dividend payable
in cash or in any securities upon its shares of Common Stock or make
any distribution to the holders of its shares of Common Stock;
(b) the Company shall offer to all holders of its
shares of Common Stock any additional shares of Common Stock or
securities convertible into or exchangeable for shares of Common Stock
or any right to subscribe for or purchase any thereof;
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger, sale,
transfer or lease of all or substantially all of its property, assets
and business as an entirety) shall be proposed: or
(d) a proposed transaction, which, if consummated,
would permit the Company to call the Warrants pursuant to Section 5.3
hereof,
then in any one or more of said events, the Company shall give notice in
writing of such event to the Holder as provided in Section 11 hereof, such
giving of notice to be completed at least 20 days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the stockholders entitled to such dividend, distribution, or subscription
rights, or for the determination of the stockholders entitled to vote on such
proposed dissolution, liquidation or winding up. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to mail or receive such notice or any defect therein or in the mailing
thereof shall not affect the validity of any action taken in connection with
such dividend, distribution or subscription rights, or such proposed
dissolution, liquidation or winding up.
SECTION 10. Identity of Transfer Agent. Forthwith upon the
appointment of any Transfer Agent for the Warrant Shares, or any other
securities issuable upon the exercise of the
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Warrants, the Company will notify the Holder of the name and address of such
Transfer Agent.
SECTION 11. Notices. Any notice pursuant to this Warrant
Certificate by the Holder to the Company shall be in writing and shall be
delivered in person or by facsimile transmission, or mailed by first class
mail, postage prepaid to the Company, at Safeway Inc., Fourth and Jackson
Streets, Oakland, California 94660. Any notice pursuant to this agreement by
the Company to the Holder shall be in writing and shall be mailed first class,
postage prepaid, or otherwise delivered, to the Holder at its address on the
books of the Company.
Each party hereto may from time to time change the address to
which notices to it are to be delivered or mailed hereunder by notice to the
other party.
SECTION 12. Supplements and Amendments. The Company may from
time to time supplement or amend this Warrant Certificate without the approval
of the Holder in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provision herein or to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or desirable
and which shall not be inconsistent with the provisions of the Warrants and
which shall not adversely affect the interests of the Holder in any material
respect.
SECTION 13. Successors. All the covenants and provisions of
this Warrant Certificate by or for the benefit of the Company shall bind and
inure to the benefit of its successors and assigns hereunder.
SECTION 14. Merger or Consolidation of the Company. The
Company will not merge or consolidate with or into, or sell, transfer or lease
all or substantially all of its property to, any other corporation unless the
successor, transferee or lessee corporation, as the case may be (if not the
Company), shall expressly assume the due and punctual performance and
observance of each and every covenant and condition of this Warrant Certificate
to be performed and observed by the Company, subject to Sections 5.3 and 7.5
hereof.
SECTION 15. Applicable Law. This Warrant Certificate and
each Warrant issued hereunder shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to principles of
conflict of laws. The parties hereto agree to submit to the jurisdiction of
the courts of the State of New York in any action or proceeding arising out of
or relating to this Warrant Certificate and/or the Warrants evidenced hereby.
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SECTION 16. Benefits of this Warrant Certificate. Nothing in
this Warrant Certificate shall be construed to give to any person or entity
other than the Company and the Holder any legal or equitable right, remedy or
claim under this Warrant Certificate; but this Warrant Certificate shall be for
the sole and exclusive benefit of the Company and the Holder.
SECTION 17. Captions. The captions of the sections and
paragraphs of this Warrant Certificate have been inserted for convenience only
and shall have no substantive effect.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed this 8th day of February, 1996.
SAFEWAY INC.
By: /s/ Michael C. Ross
--------------------------------
Name: Michael C. Ross
Title: Senior Vice President
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[FORM OF ELECTION TO PURCHASE]
(To be executed upon exercise of Warrants)
To Safeway Inc.:
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the within Warrant Certificate for, and to
purchase thereunder, ______ shares of Common Stock, as provided for therein,
and requests that a certificate or certificates for such shares of Common Stock
be issued in the name of, and any cash for any fractional shares be paid to:
Name ____________________________
(Please print name,
address and Social
Security or other
taxation identification No.)
If said number of shares shall not be all the shares
purchasable under the within Warrant Certificate, the undersigned requests that
a new Warrant Certificate for the balance remaining of the shares purchasable
thereunder (less any fraction of a share paid in cash pursuant to the terms of
the Warrant Certificate) be issued to:
Name ____________________________
(Please print name,
address and Social
Security or other
taxation identification No.)
In full payment of the Warrant Price with respect to the
Warrants exercised hereby and transfer taxes, if any, the undersigned hereby
tenders payment of $______, payable as follows: (a) in cash, as to $______
and/or (b) by certified or official bank check, as to $___________.
Dated: __________________
______________________________
(Name, signature, address and
social security or other
taxation identification number
of Holder - signature must
conform in all respects to
name of Holder on the face of
Warrant Certificate or with
the name of assignee appearing
in the Warrant Register.)
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