<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 5, 1996
REGISTRATION NO. 333-04355
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PRICE/COSTCO, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 33-0572969
(State of incorporation) (I.R.S. Employer
Identification Number)
</TABLE>
999 LAKE DRIVE
ISSAQUAH, WASHINGTON 98027
(206) 313-8100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
RICHARD J. OLIN
VICE PRESIDENT
PRICE/COSTCO, INC.
999 LAKE DRIVE
ISSAQUAH, WASHINGTON 98027
(206) 313-6469
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
DAVID R. WILSON JEFFREY H. COHEN
Foster Pepper & Shefelman NICK P. SAGGESE
1111 Third Avenue, Suite 3400 Skadden, Arps, Slate, Meagher & Flom
Seattle, Washington 98101 300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ___________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ___________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This Registration Statement is being filed with respect to the offering of
19,500,000 shares of common stock, $.01 par value (the "Common Stock"), of
Price/Costco, Inc., a Delaware corporation (the "Company"), owned by Fourcar
B.V. (the "Selling Stockholder") (and an additional 1,691,301 shares of Common
Stock owned by the Selling Stockholder upon exercise of the U.S. Underwriters'
over-allotment option) in an underwritten public offering.
The Registration Statement contains two separate prospectuses. The first
prospectus relates to a public offering in the U.S. and Canada of an aggregate
of 15,600,000 shares of Common Stock (the "U.S. Offering"). The second
prospectus relates to a concurrent offering outside the U.S. and Canada of an
aggregate of 3,900,000 shares of Common Stock (the "International Offering").
The prospectuses for the U.S. Offering and the International Offering will be
identical except for alternate front and back cover pages for the International
Offering, which alternate pages appear immediately after the prospectus for the
U.S. Offering.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 5, 1996
PROSPECTUS
JUNE , 1996
19,500,000 SHARES
PRICECOSTCO, INC.
COMMON STOCK
This Prospectus relates to 19,500,000 shares (the "Shares") of common stock,
$.01 par value (the "Common Stock") of Price/Costco, Inc., a Delaware
corporation (the "Company" or "PriceCostco"), owned by Fourcar B.V. (the
"Selling Stockholder"). The Company will not receive any of the proceeds from
sales of the Shares made hereunder. See "Use of Proceeds." Of the 19,500,000
Shares offered by the Selling Stockholder, 15,600,000 Shares are being offered
for sale in the United States and Canada by the U.S. Underwriters (the "U.S.
Offering") and 3,900,000 Shares are being offered for sale outside the U.S. and
Canada in a concurrent offering by the International Managers (the
"International Offering" and, together with the U.S. Offering, the "Offerings"),
subject to transfers between the U.S. Underwriters and the International
Managers. See "Underwriting."
The Common Stock is traded on the Nasdaq National Market under the symbol
"PCCW". On June 4, 1996, the last reported sale price of the Common Stock was
$20 1/4 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS TO
TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
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<S> <C> <C> <C>
Per Share..................................... $ $ $
Total(3)...................................... $ $ $
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</TABLE>
(1) THE COMPANY AND THE SELLING STOCKHOLDER HAVE AGREED TO INDEMNIFY THE SEVERAL
U.S. UNDERWRITERS AND INTERNATIONAL MANAGERS (COLLECTIVELY, THE
"UNDERWRITERS") AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933. SEE "UNDERWRITING."
(2) BEFORE DEDUCTING ESTIMATED EXPENSES PAYABLE BY THE SELLING STOCKHOLDER OF
$ .
(3) THE SELLING STOCKHOLDER HAS GRANTED THE U.S. UNDERWRITERS AN OPTION
EXERCISABLE WITHIN 30 DAYS AFTER THE DATE HEREOF TO PURCHASE UP TO 1,691,301
ADDITIONAL SHARES OF COMMON STOCK, ON THE SAME TERMS AND CONDITIONS AS SET
FORTH ABOVE, AT THE PRICE TO PUBLIC, LESS THE UNDERWRITING DISCOUNTS AND
COMMISSIONS, SOLELY TO COVER OVER-ALLOTMENTS, IF ANY. IF THE U.S.
UNDERWRITERS EXERCISE SUCH OPTION IN FULL, THE TOTAL PRICE TO PUBLIC,
UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO SELLING STOCKHOLDER
WILL BE $ , $ , AND $ , RESPECTIVELY. SEE "UNDERWRITING."
The Shares offered hereby are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by them and subject to various
prior conditions, including the right to reject any order in whole or in part.
It is expected that delivery of the Shares will be made in New York, New York on
or about June , 1996.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC
UBS SECURITIES
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street N.W., Washington, D.C. 20549 and at the Commission's regional offices at
7 World Trade Center, 13th Floor, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549. This Prospectus
does not contain all information set forth in the Registration Statement and the
exhibits thereto which the Company has filed with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), and to which
reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended September
3, 1995, the Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended November 26, 1995, February 18, 1996, and May 12, 1996 and the description
of the Common Stock contained in the Company's Registration Statement on Form
8-A, filed by the Company with the Commission, are hereby incorporated in this
Prospectus by reference.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to termination of the offering of the Shares offered hereby
shall be deemed to be incorporated by reference herein and to be a part hereof
from the date of the filing of such reports and documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a Prospectus is delivered, upon written or oral request of such person, a
copy of any document incorporated herein by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
in such documents). Requests should be directed to Richard J. Olin, Vice
President, Price/ Costco, Inc., 999 Lake Drive, Issaquah, Washington 98027,
telephone number (206) 313-6469.
2
<PAGE>
THE COMPANY
The Company operates, principally through subsidiaries, a chain of cash and
carry membership warehouses under the names "Costco Wholesale" and "Price Club".
The Company's business is based on the concept that offering members very low
prices on a limited selection of nationally branded and selected private label
products in a wide range of merchandise categories will produce rapid inventory
turnover and high sales volumes. This rapid inventory turnover, when combined
with operating efficiencies achieved by volume purchasing, efficient
distribution and reduced handling of merchandise in no-frills, self-service
warehouse facilities, enables the Company to operate profitably at significantly
lower gross margins than traditional wholesalers, discount retailers and
supermarkets.
The Company buys virtually all of its merchandise directly from
manufacturers for shipment either directly to the Company's selling warehouses
or to a consolidation point where various shipments are combined so as to
minimize freight and handling costs. As a result, the Company eliminates many of
the costs associated with multiple step distribution channels, which include
purchasing from distributors as opposed to manufacturers, use of central
receiving, storing and distributing warehouses and storage of merchandise in
locations off the sales floor. By providing this more cost effective means of
distributing goods, the Company meets the needs of business customers who
otherwise would pay a premium for small purchases and for the distribution
services of traditional wholesalers, and who cannot otherwise obtain the full
range of their product requirements from any single source. In addition, these
business members will often combine personal shopping with their business
purchases. The Company's merchandise selection is designed to appeal to both the
business and consumer requirements of its members by offering a wide range of
nationally branded and selected private label products, often in case, carton or
multiple-pack quantities, at low prices.
As of June 2, 1996, the Company operated 250 membership warehouses in 22
states (190 locations), nine Canadian provinces (55 locations), and the United
Kingdom (five locations, through a 60% owned subsidiary). In addition, the
Company operates 13 membership warehouses in Mexico through a joint venture in
which the Company has a 50% interest.
The Company is incorporated in the State of Delaware. The Company's offices
are located at 999 Lake Drive, Issaquah, Washington 98027, telephone (206)
313-8100.
USE OF PROCEEDS
All of the Shares offered hereby are being offered by the Selling
Stockholder. The Company will not receive any proceeds from the sale of the
Shares. See "Selling Stockholder."
SELLING STOCKHOLDER
Fourcar B.V., an indirect subsidiary of Carrefour S.A. ("Carrefour"), is the
owner of 21,191,301 shares of Common Stock (10.8% of the outstanding shares of
Common Stock) and is offering 19,500,000 shares of Common Stock pursuant to this
Prospectus, and has granted the U.S. Underwriters an option to acquire any or
all of its remaining 1,691,301 shares of Common Stock solely to cover
over-allotments. See "Underwriting." In the event the over-allotment option is
not exercised in full, the Selling Stockholder intends to sell the remainder of
its shares of Common Stock following completion of the Offerings pursuant to
Rule 144 under the Securities Act.
Daniel Bernard, Chief Executive Officer of Carrefour, has been a director of
the Company since June 1, 1994. Pursuant to an agreement between Carrefour and a
predecessor of the Company, the Company must use its best efforts to retain a
Carrefour representative on its Board of Directors so long as Carrefour
beneficially owns 10% or more of the outstanding Common Stock. Mr. Bernard
intends to resign from the Company's Board of Directors upon completion of the
Offerings.
The Selling Stockholder and the Company have agreed to pay 39.6% and 60.4%,
respectively, of the expenses of registration (other than underwriting discounts
and commissions, which will be paid by the Selling Stockholder) in connection
with the sale of the shares of Common Stock offered hereby.
3
<PAGE>
RECENT DEVELOPMENTS
For the four weeks ended June 2, 1996, net sales were $1.48 billion, an
increase of 10 percent from $1.34 billion in the same four-week period of the
prior fiscal year. On a comparable warehouse basis (sales from warehouses open
at least one year), sales increased 5 percent over the same period in the prior
year.
SELECTED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
The selected consolidated financial information of the Company presented in
the table below for each of the last five fiscal years and the balance sheet
data as of the end of each such year has been derived from audited consolidated
financial statements included in the documents incorporated by reference in this
Prospectus. The selected consolidated financial information of the Company
presented in the table below as of and for the 36 weeks ended May 7, 1995 and
May 12, 1996 is unaudited; however, in the opinion of management, all
adjustments, consisting only of normal recurring adjustments necessary for a
fair presentation of the results for such periods, have been included. The
results of operations for the 36 weeks ended May 12, 1996 may not be indicative
of results of operations to be expected for the full year. The table should be
read in conjunction with the Consolidated Financial Statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
September 3, 1995, and the Quarterly Reports on Form 10-Q for the fiscal
quarters ended November 26, 1995, February 18, 1996 and May 12, 1996
incorporated by reference herein. See "Incorporation of Certain Documents by
Reference."
<TABLE>
<CAPTION>
36 WEEKS ENDED
FISCAL YEARS(1) ----------------------
---------------------------------------------------------- MAY 7, MAY 12,
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales........................ $11,813,509 $13,820,380 $15,154,685 $16,160,911 $17,905,926 $11,998,719 $13,138,139
Gross profit (2)................. 1,057,686 1,254,917 1,403,532 1,498,020 1,680,078 1,123,157 1,267,108
Membership fees and other........ 228,742 276,998 309,129 319,732 341,360 234,764 245,608
Operating expenses (3)........... 952,259 1,156,493 1,347,832 1,457,613 1,588,106 1,067,629 1,187,461
Operating income................. 334,169 375,422 364,829 360,139 433,332 290,292 325,255
Other income (expense) (4)....... 7,872 (6,567) (28,366) (36,584) (65,128) (41,921) (49,081)
Provision for merger and
restructuring expenses (5)..... -- -- -- (120,000) -- -- --
Income from continuing
operations..................... $ 207,293 $ 223,022 $ 202,843 $ 110,898 $ 217,241 $ 145,913 $ 162,253
Discontinued operations (6)
Income (loss), net of tax...... 11,566 19,385 20,404 (40,766) -- -- --
Loss on disposal............... -- -- -- (182,500) (83,363) (83,363) --
Net income (loss)................ $ 218,859 $ 242,407 $ 223,247 $ (112,368) $ 133,878 $ 62,550 $ 162,253
Income (loss) per common and
common equivalent share
(fully diluted)
Continuing operations.......... $.93 $.98 $.92 $.51(5) $1.05 $.70 $.80
Discontinued operations (6)
Income (loss) net of tax..... .05 .08 .08 (.19) -- -- --
Loss on disposal............. -- -- -- (.83) (.37) (.37) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss).............. $.98 $1.06 $1.00 $(.51) $.68 $.33 $.80
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
OPERATING DATA
Warehouses open at end of
period......................... 140 170 200 221 240 233 249
Comparable warehouse sales
increase (decrease) (7)........ 10% 6% (3)% (3)% 2% 1% 5%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1, AUGUST 30, AUGUST 29, AUGUST 28, SEPTEMBER 3, MAY 7,
1991 1992 1993 1994 1995 1995 MAY 12, 1996
------------ ----------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital (deficit)..... $ 304,703 $ 281,592 $ 127,312 $(113,009) $ 9,381 $ (182,825) $ 77,243
Total assets.................. 2,986,094 3,576,543 3,930,799 4,235,659 4,437,419 4,311,217 4,760,593
Long-term debt (8)............ 500,440 813,976 812,576 795,492 1,094,615 794,204 1,232,457
Stockholders' equity (9)...... 1,429,703 1,593,943 1,796,728 1,684,960 1,530,744 1,459,854 1,678,382
Shares outstanding at end of
period (6).................. 219,612 216,020 217,074 217,795 195,164 194,923 195,865
</TABLE>
- ------------------------------
(1) The Company reports its financial position and results of operations
utilizing a 52- or 53-week fiscal year which ends on the Sunday nearest
August 31. Fiscal 1995 was a 53-week year; all other fiscal years presented
were 52 weeks.
4
<PAGE>
(2) Gross profit is comprised of net sales less merchandise costs.
(3) Operating expenses include selling, general and administrative expenses,
preopening expenses and provision for estimated warehouse closing costs.
(4) Other income (expense) includes interest expense, interest income and other
income or expense.
(5) Includes provision for merger and restructuring expenses of $120,000 pre-tax
($80,000 or $.36 per share, after tax) related to the merger of The Price
Company and Costco Wholesale Corporation in October 1993. If such provision
for merger and restructuring expenses were excluded, income from continuing
operations for fiscal 1994 would have been $190,898 or $.87 per share.
(6) In the fourth quarter of fiscal 1994, the Company reported its non-club real
estate segment as a discontinued operation. All of the assets of the
non-club real estate segment, along with certain other assets, were included
in the spin-off of Price Enterprises. In connection with the decision to
discontinue the non-club real estate operations, the Company recorded
primarily non-cash charges of $80,500 pre-tax ($47,500 after tax or $.22 per
share) related to a change in calculating estimated losses for assets which
are considered to be economically impaired and of $182,500 ($15,250 of which
related to expenses of the transaction) for estimated loss on disposal of
Price Enterprises. In the second quarter of fiscal 1995, an additional
non-cash charge of $83,363 for the loss on disposal of Price Enterprises was
recorded to reflect the consummation of the spin-off transaction. The
additional charge on the spin-off of Price Enterprises reflected the
difference between the $15.25 per share estimated trading price of Price
Enterprises Common Stock (used to calculate the estimated loss in the fourth
quarter of fiscal 1994) and the average closing sales price of Price
Enterprises Common Stock during the 20 trading days commencing on the sixth
trading day following the closing of the spin-off on December 20, 1994
(which was approximately $12.16 per share) multiplied by the 27 million
shares which were exchanged or sold during the second quarter of fiscal
1995.
(7) Calculated based on sales from warehouses open at least one year.
(8) Long-term debt includes convertible subordinated debt and other long-term
debt, net of current portion.
(9) PriceCostco did not pay any dividends on its Common Stock during the periods
presented.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States Federal tax
consequences of the acquisition, ownership, and disposition of Common Stock by a
holder that, for United States Federal income tax purposes, is not a "United
States person" (a "Non-United States Holder"). This discussion is based upon the
United States Federal tax law now in effect, which is subject to change,
possibly retroactively. For purposes of this discussion, a "United States
person" means a citizen or resident of the United States; a corporation,
partnership, or other entity created or organized in the United States or under
the laws of the United States or of any political subdivision thereof; or an
estate or trust whose income is includible in gross income for United States
Federal income tax purposes regardless of its source. This discussion does not
consider any specific facts or circumstances that may apply to a particular
Non-United States Holder. Prospective investors are urged to consult their tax
advisors regarding the United States Federal tax consequences of acquiring,
holding, and disposing of Common Stock, as well as any tax consequences that may
arise under the laws of any foreign, state, local, or other taxing jurisdiction.
DIVIDENDS
Dividends paid to a Non-United States Holder will generally be subject to
withholding of United States Federal income tax at the rate of 30% unless the
dividend is effectively connected with the conduct of a trade or business within
the United States by the Non-United States Holder, in which case the dividend
will be subject to the United States Federal income tax on net income that
applies to United States persons generally (and, with respect to corporate
holders and under certain circumstances, the branch profits tax). Non-United
States Holders should consult any applicable income tax treaties, which may
provide for a lower rate of withholding or other rules different from those
described above. A Non-United States Holder may be required to satisfy certain
certification requirements in order to claim treaty benefits or otherwise claim
a reduction of or exemption from withholding under the foregoing rules.
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United States
Federal income tax on gain recognized on a sale or other disposition of Common
Stock unless (i) the gain is effectively connected with the conduct of a trade
or business within the United States by the Non-United States Holder, (ii) in
the case of a Non-United States Holder who is a nonresident alien individual and
holds the Common Stock as a
5
<PAGE>
capital asset, such holder is present in the United States for 183 or more days
in the taxable year and certain other requirements are met, or (iii) the
Non-United States Holder is subject to tax under the United States real property
holding company rules discussed below. Gain that is effectively connected with
the conduct of a trade or business within the United States by the Non-United
States Holder will be subject to the United States Federal income tax on net
income that applies to United States persons generally (and, with respect to
corporate holders and under certain circumstances, the branch profits tax) but
will not be subject to withholding. Non-United States Holders should consult
applicable treaties, which may provide for different rules.
The Company may be, or may subsequently become, treated as a United States
real property holding corporation for United States Federal income tax purposes
because of its ownership of substantial real estate assets in the United States.
If the Company were to be treated as a United States real property holding
corporation, then a Non-United States Holder who holds, directly or indirectly,
more than 5% of the Common Stock of the Company will be subject to United States
Federal income taxation on any gain realized from the sale or exchange of such
stock, unless an exemption is provided under an applicable treaty.
FEDERAL ESTATE TAXES
Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as specially defined for United States Federal estate tax purposes)
of the United States at the date of death will be included in such individual's
estate for United States Federal estate tax purposes, unless an applicable
estate tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Under temporary United States Treasury regulations, United States
information reporting requirements and backup withholding tax will generally not
apply to dividends paid on the Common Stock to a Non-United States Holder at an
address outside the United States. Payments by a United States office of a
broker of the proceeds of a sale of the Common Stock is subject to both backup
withholding at a rate of 31% and information reporting unless the holder
certifies its Non-United States Holder status under penalties of perjury or
otherwise establishes an exemption. Information reporting requirements (but not
backup withholding) will also apply to payments of the proceeds of sales of the
Common Stock by foreign offices of United States brokers, or foreign brokers
with certain types of relationships to the United States, unless the broker has
documentary evidence in its records that the holder is a Non-United States
Holder and certain other conditions are met, or the holder otherwise establishes
an exemption.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-United
States Holder's United States Federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.
These information reporting and backup withholding rules are under review by
the United States Treasury and their application to the Common Stock could be
changed by future regulations. The Internal Revenue Service recently issued
proposed Treasury Regulations concerning the withholding of tax and reporting
for certain amounts paid to non-resident individuals and foreign corporations.
The proposed Treasury Regulations, if adopted in their present form, would be
effective for payments made after December 31, 1997. Prospective investors
should consult their tax advisors concerning the potential adoption of such
proposed Treasury Regulations and the potential effect on their ownership of the
Common Stock.
6
<PAGE>
UNDERWRITING
Subject to the terms and conditions of an underwriting agreement (the
"Underwriting Agreement"), the U.S. Underwriters named below (the "U.S.
Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities Corporation,
Salomon Brothers Inc and UBS Securities LLC are acting as representatives (the
"U.S. Representatives"), and the international managers named below (the
"International Managers" and, together with the U.S. Underwriters, the
"Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities Corporation,
UBS Limited and Salomon Brothers International Limited are acting as
representatives (the "International Representatives" and, together with the U.S.
Representatives, the "Representatives"), have severally agreed to purchase from
the Selling Stockholder, and the Selling Stockholder has agreed to sell to the
Underwriters at the public offering price set forth on the cover page of this
Prospectus less the underwriting discounts and commissions, the Shares. The
respective number of Shares that each Underwriter has agreed to purchase is set
forth opposite its name below:
<TABLE>
<CAPTION>
U.S. UNDERWRITERS NUMBER OF SHARES
- ------------------------------------------------------------------------------------- -----------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation..................................
Salomon Brothers Inc.................................................................
UBS Securities LLC...................................................................
-----------------
U.S. Offering subtotal............................................................. 15,600,000
-----------------
<CAPTION>
INTERNATIONAL MANAGERS NUMBER OF SHARES
- ------------------------------------------------------------------------------------- -----------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation..................................
UBS Limited..........................................................................
Salomon Brothers International Limited...............................................
-----------------
International Offering subtotal.................................................... 3,900,000
-----------------
Total............................................................................ 19,500,000
-----------------
-----------------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to the approval of certain legal matters by
their counsel and to certain other conditions precedent. The Underwriting
Agreement also provides that the Company and the Selling Stockholder will
indemnify the Underwriters and certain persons controlling the Underwriters
against certain liabilities and expenses, including under the Securities Act, or
will contribute to payments the Underwriters are required to make in respect
thereof. The nature of the Underwriters' obligations under the Underwriting
Agreement is such that they are committed to purchase all of the Shares if they
purchase any of the Shares. The offering price and underwriting discounts and
commissions per share for the U.S. Offering and the International Offering are
identical.
The Underwriters have advised the Selling Stockholder that they propose to
offer the Shares to the public initially at the public offering price set forth
on the cover page of this Prospectus, and to certain dealers at such price less
a concession not in excess of $ per Share. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per Share to
certain other dealers. After the public offering of the Shares, the public
offering price, concession and reallowance may be changed by the Underwriters.
The Selling Stockholder has granted to the U.S. Underwriters an option to
purchase up to an aggregate of 1,691,301 additional shares of the Company's
Common Stock at the public offering price net of underwriting discounts and
commissions, solely to cover over-allotments. Such option may be exercised at
any time until 30 days after the date of this Prospectus. To the extent that the
U.S. Representatives exercise such option, each of the U.S. Underwriters will be
committed, subject to certain conditions, to purchase a number of option shares
proportionate to such U.S. Underwriter's initial commitment as indicated in the
preceding table.
The Company and the Selling Stockholder have agreed with the Underwriters,
subject to certain exceptions, not to, directly or indirectly, offer, sell,
contract to sell, grant any option to purchase or otherwise
7
<PAGE>
dispose of, without the prior written consent of the Representatives, any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for, or warrants, options or rights to purchase or acquire, Common
Stock or in any other manner transfer all or a portion of the economic
consequences associated with the ownership of any Common Stock, or enter into
any agreement to do any of the foregoing, for a period of 90 days after the date
of the Underwriting Agreement.
Pursuant to an Agreement Between U.S. Underwriters and International
Managers (the "Agreement Between U.S. Underwriters and International Managers"),
each U.S. Underwriter has represented and agreed that, with respect to the
Common Stock included in the U.S. Offering and with certain exceptions, (a) it
is not purchasing any Common Stock for the account of anyone other than a United
States or Canadian Person (as defined below) and (b) it has not offered or sold,
and will not offer or sell, directly or indirectly, any Common Stock or
distribute this Prospectus outside of the United States or Canada or to anyone
other than a United States or Canadian Person. Pursuant to the Agreement Between
U.S. Underwriters and International Managers, each International Manager has
represented and agreed that, with respect to the Common Stock included in the
International Offering and with certain exceptions, (a) it is not purchasing any
Common Stock for the account of any United States or Canadian Person and (b) it
has not offered or sold, and will not offer or sell, directly or indirectly, any
Common Stock or distribute this Prospectus within the United States or Canada or
to any United States or Canadian Person. The foregoing limitations do not apply
to stabilization transactions and to certain other transactions among the
International Managers and the U.S. Underwriters. As used herein, "United States
or Canadian Person" means any national or resident of the United States or
Canada or any corporation, pension, profit-sharing or other trust or other
entity organized under the laws of the United States or Canada or of any
political subdivision thereof (other than a branch located outside the United
States or Canada of any United States or Canadian Person) and includes any
United States or Canadian branch of a person who is not otherwise a United
States or Canadian person, and "United States" means the United States of
America, its territories, its possessions and all areas subject to its
jurisdiction.
Pursuant to the Agreement between U.S. Underwriters and International
Managers, sales may be made between U.S. Underwriters and the International
Managers of any number of shares of Common Stock to be purchased pursuant to the
Underwriting Agreement as may be mutually agreed. The per share price and
currency of settlement of any shares of Common Stock so sold shall be the public
offering price set forth on the cover page hereof, in United States dollars,
less an amount not greater than the per share amount of the concession to
dealers set forth above.
Pursuant to the Agreement Between U.S. Underwriters and International
Managers, each U.S. Underwriter has represented that it has not offered or sold,
and has agreed not to offer or sell, any Common Stock, directly or indirectly,
in Canada in contravention of the securities laws of Canada or any province or
territory thereof and has represented that any offer of Common Stock in Canada
will be made only pursuant to an exemption from the requirement to file a
prospectus in the province or territory of Canada in which such offer is made.
Each U.S. Underwriter has further agreed to send any dealer who purchases from
it any Common Stock a notice stating in substance that, by purchasing such
Common Stock, such dealer represents and agrees that it has not offered or sold,
and will not offer or sell, directly or indirectly, any of such Common Stock in
Canada in contravention of the securities laws of Canada or any province or
territory thereof and that any offer of Common Stock in Canada will be made only
pursuant to an exemption from the requirements to file a prospectus in the
province or territory of Canada in which such offer is made, and that such
dealer will deliver to any other dealer to whom it sells any of such Common
Stock a notice to the foregoing effect.
Pursuant to the Agreement Between U.S. Underwriters and International
Managers, each International Manager has represented and agreed that (i) it has
not offered or sold and during the period of six months from the date of this
Prospectus will not offer or sell any Common Stock to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public in the United Kingdom for the purposes of the
Public Offers of Securities Regulations 1995 of Great Britain (the
"Regulations"); (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act of 1986 of Great Britain and the
Regulations with respect to anything done by it in relation to the Common Stock
in, from or otherwise
8
<PAGE>
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Common Stock to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 of Great Britain or is a person to whom
the document may otherwise lawfully be issued or passed on.
No action has been taken in any jurisdiction by the Company, the Selling
Stockholder or the Underwriters that would permit a public offering of Common
Stock offered pursuant to the Offerings in any jurisdiction where action for
that purpose is required, other than the United States. The distribution of this
Prospectus and the offering or sale of the Common Stock offered hereby in
certain jurisdictions may be restricted by law. Accordingly, the Common Stock
offered hereby may not be offered or sold, directly or indirectly, and neither
this Prospectus nor any other offering material or advertisements in connection
with such Common Stock may be distributed or published, in or from any
jurisdiction, except under circumstances that will result in compliance with
applicable rules and regulations of any such jurisdiction. Such restrictions may
be set out in applicable Prospectus supplements. Persons into whose possession
this Prospectus comes are required by the Company, the Selling Stockholder and
the Underwriters to inform themselves about and to observe any applicable
restrictions. None of the Selling Stockholder, the Company or any of the
Underwriters accepts any legal responsibility for any violation by any person,
whether or not a prospective purchaser of Common Stock, of any of such
restrictions. This Prospectus does not constitute an offer of, or an invitation
to subscribe for purchase of, any shares of Common Stock and may not be used for
the purpose of an offer to, or solicitation by, anyone in any jurisdiction or in
any circumstances in which such offer or solicitation is not authorized or is
unlawful.
Certain of the Underwriters have performed investment banking services for
the Company, for which they received customary compensation. Hamilton E. James,
a Managing Director of DLJ, is a director of the Company.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby has been
passed upon for the Company by Foster Pepper & Shefelman, Seattle, Washington.
Certain legal matters in connection with the Offerings will be passed upon for
the Underwriters by Skadden, Arps, Slate, Meagher & Flom, Los Angeles,
California. Members of Foster Pepper & Shefelman own 6,667 shares of the
Company's Common Stock. Skadden, Arps, Slate, Meagher & Flom has from time to
time represented the Company on unrelated matters.
EXPERTS
The consolidated financial statements and schedules of the Company for each
of the three fiscal years in the period ended September 3, 1995, incorporated
herein by reference, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto. In those
reports, that firm states that with respect to The Price Company for fiscal year
1993, its opinion is based on the report of other independent auditors, namely
Ernst & Young LLP. The consolidated financial statements referred to above have
been incorporated herein by reference in reliance upon the reports of said firms
and upon the authority of those firms as experts in accounting and auditing.
With respect to the unaudited financial information of the Company for the
12-week period ended November 26, 1995, for the 12- and 24-week periods ended
February 18, 1996, and for the 12- and 36-week periods ended May 12, 1996,
incorporated herein by reference, Arthur Andersen LLP has applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate reports thereon and incorporated by
reference herein state that they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on that information should be restricted in light of
the limited nature of the review procedures applied. In addition, Arthur
Andersen LLP is not subject to the liability provisions of Section 11 of the
Securities Act for their reports on the unaudited interim financial information
because neither of those reports is a "report" or a "part" of this Prospectus
prepared or certified by Arthur Andersen LLP within the meaning of Sections 7 or
11 of the Securities Act.
9
<PAGE>
- --------------------------------------------------
--------------------------------------------------
- --------------------------------------------------
--------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information................................... 2
Incorporation of Certain Documents by Reference......... 2
The Company............................................. 3
Use of Proceeds......................................... 3
Selling Stockholder..................................... 3
Selected Financial and Operating Data................... 4
Certain United States Federal Tax Consequences to
Non-United States Holders.............................. 5
Underwriting............................................ 7
Legal Matters........................................... 9
Experts................................................. 9
</TABLE>
19,500,000 SHARES
PRICECOSTCO, INC.
COMMON STOCK
-----------------
PROSPECTUS
-----------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC
UBS SECURITIES
JUNE , 1996
- --------------------------------------------------
--------------------------------------------------
- --------------------------------------------------
--------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
SUBJECT TO COMPLETION, DATED JUNE 5, 1996
PROSPECTUS
JUNE , 1996
19,500,000 SHARES
PRICECOSTCO, INC.
COMMON STOCK
This Prospectus relates to 19,500,000 shares (the "Shares") of common stock,
$.01 par value (the "Common Stock") of Price/Costco, Inc., a Delaware
corporation (the "Company" or "PriceCostco"), owned by Fourcar B.V. (the
"Selling Stockholder"). The Company will not receive any of the proceeds from
sales of the Shares made hereunder. See "Use of Proceeds." Of the 19,500,000
Shares offered by the Selling Stockholder, 3,900,000 Shares are being offered
for sale outside the United States and Canada in an offering by the
International Managers (the "International Offering") and 15,600,000 Shares are
being offered for sale in the U.S. and Canada in a concurrent offering by the
U.S. Underwriters (the "U.S. Offering" and, together with the International
Offering, the "Offerings"), subject to transfers between the U.S. Underwriters
and the International Managers. See "Underwriting."
The Common Stock is traded on the Nasdaq National Market under the symbol
"PCCW". On June 4, 1996, the last reported sale price of the Common Stock was
$20 1/4 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS TO
TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share..................................... $ . $ $
Total(3)...................................... $ $ $
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) THE COMPANY AND THE SELLING STOCKHOLDER HAVE AGREED TO INDEMNIFY THE SEVERAL
U.S. UNDERWRITERS AND INTERNATIONAL MANAGERS (COLLECTIVELY, THE
"UNDERWRITERS") AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933. SEE "UNDERWRITING."
(2) BEFORE DEDUCTING ESTIMATED EXPENSES PAYABLE BY THE SELLING STOCKHOLDER OF
$ .
(3) THE SELLING STOCKHOLDER HAS GRANTED THE U.S. UNDERWRITERS AN OPTION
EXERCISABLE WITHIN 30 DAYS AFTER THE DATE HEREOF TO PURCHASE UP TO 1,691,301
ADDITIONAL SHARES OF COMMON STOCK, ON THE SAME TERMS AND CONDITIONS AS SET
FORTH ABOVE, AT THE PRICE TO PUBLIC, LESS THE UNDERWRITING DISCOUNTS AND
COMMISSIONS, SOLELY TO COVER OVER-ALLOTMENTS, IF ANY. IF THE U.S.
UNDERWRITERS EXERCISE SUCH OPTION IN FULL, THE TOTAL PRICE TO PUBLIC,
UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO SELLING STOCKHOLDER
WILL BE $ , $ , AND $ , RESPECTIVELY. SEE "UNDERWRITING."
The Shares offered hereby are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by them and subject to various
prior conditions, including the right to reject any order in whole or in part.
It is expected that delivery of the Shares will be made in New York, New York on
or about June , 1996.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
UBS LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
- --------------------------------------------------
--------------------------------------------------
- --------------------------------------------------
--------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information................................... 2
Incorporation of Certain Documents by Reference......... 2
The Company............................................. 3
Use of Proceeds......................................... 3
Selling Stockholder..................................... 3
Selected Financial and Operating Data................... 4
Certain United States Federal Tax Consequences to
Non-United States Holders.............................. 5
Underwriting............................................ 7
Legal Matters........................................... 9
Experts................................................. 9
</TABLE>
19,500,000 SHARES
PRICECOSTCO, INC.
COMMON STOCK
-----------------
PROSPECTUS
-----------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
UBS LIMITED
SALOMON BROTHERS
INTERNATIONAL LIMITED
JUNE , 1996
- --------------------------------------------------
--------------------------------------------------
- --------------------------------------------------
--------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses (not including underwriting commissions and fees) of issuance
and distribution of the securities, which will be paid 60.4% and 39.6% by the
Company and the Selling Stockholder, respectively, are estimated to be:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee....................... $ 148,431
Accounting Fees and Expenses.............................................. $ 20,000
Attorneys' Fees and Expenses.............................................. $ 20,000
Printing Expenses......................................................... $ 35,000
Blue Sky Filing Fees and Expenses (including attorneys' fees)............. $ 12,500
Miscellaneous Expenses.................................................... $ 4,069
Total................................................................. $ 240,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Certificate of Incorporation of the Company (the "Certificate
of Incorporation") and the Amended and Restated Bylaws of the Company (the
"Bylaws") provide for indemnification of present and former directors and
officers of the Company, The Price Company ("Price") and Costco Wholesale
Corporation ("Costco") and persons serving as directors, officers, employees or
agents of another corporation or entity at the request of the Company, Price or
Costco (each, an "Indemnified Party"), each to the fullest extent permitted by
the Delaware General Corporation Law (the "DGCL"). Section 145 of the DGCL
allows indemnification of specified persons by Delaware corporations, and
describes requirements and limitations on such powers of indemnification. The
Company has included in the Certificate of Incorporation and the Bylaws
provisions which require the Company to indemnify an Indemnified Party if the
standard of conduct and other requirements set forth therein and by the DGCL are
met.
Indemnified Parties are specifically indemnified in the Certificate of
Incorporation and the Bylaws (the "Indemnification Provisions") from expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with an action, suit or proceeding (i) by reason of the fact that
he or she is or was a director or officer of the Company, Price or Costco or
served as a director, officer, employee or agent at the request of the Company,
Price or Costco or (ii) by or in right of the Company, Price or Costco, provided
that indemnification is permitted only with judicial approval if the Indemnified
Party is adjudged to be liable to the Company. Such Indemnified Party must have
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the subject corporation and, with respect
to any criminal action or proceeding, must have had no reasonable cause to
believe his or her conduct was unlawful. Any indemnification must be authorized
based on a determination that the indemnification is proper as the applicable
standard of conduct has been met by the Indemnified Party. Such determination
will be made by a majority vote of a quorum of the Board consisting of directors
not a party to the suit, action or proceeding, by a written opinion of
independent legal counsel or by the stockholders. In the event that a
determination is made that a director or officer is not entitled to
indemnification under the Indemnification Provisions, the Indemnification
Provisions provide that the Indemnified Party may seek a judicial determination
of his or her rights to indemnification. The Indemnification Provisions further
provide that the Indemnified Party is entitled to indemnification for and
advancement of all expenses (including attorneys' fees) incurred in any
proceeding seeking to collect from the Company an indemnity claim or advancement
of expenses under the Indemnification Provisions whether or not such Indemnified
Party is successful.
The Company will pay expenses incurred by a director or officer of the
Company, or a former director or officer of Price of Costco, in advance of the
final disposition of an action, suit or proceeding, if he or she undertakes to
repay amounts advanced if it is ultimately determined that he or she is not
entitled to be
II-1
<PAGE>
indemnified by the Company. The Indemnification Provisions are expressly not
exclusive of any other rights of indemnification or advancement of expenses
pursuant to the Bylaws or any agreement, vote of the stockholders or
disinterested directors or pursuant to judicial direction.
The Company is authorized to purchase insurance on behalf of an Indemnified
Party for liabilities incurred, whether or not the Company would have the power
or obligation to indemnify him or her pursuant to the Certificate of
Incorporation or the DGCL. The Company has obtained such insurance.
The Company has entered into indemnification agreements with all of its
directors providing for the foregoing.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
5.1* Opinion of Foster Pepper & Shefelman.
15.1 Letter of Arthur Andersen LLP regarding unaudited interim financial information
(included in its consent filed as Exhibit 23.1).
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Foster Pepper & Shefelman (included in its opinion filed as Exhibit 5.1).
23.3 Consent of Ernst & Young LLP.
24.1* Power of Attorney.
</TABLE>
- ------------------------
* Previously Filed
ITEM 17. UNDERTAKINGS.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial BONA FIDE offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Issaquah, State of Washington, on the 4 day of June,
1996.
PRICE/COSTCO, INC.
By: /s/ JAMES D. SINEGAL
-----------------------------------
Its: President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on June 4, 1996.
<TABLE>
<C> <S>
/s/ JEFFREY H. BROTMAN*
- ------------------------------------ Chairman of the Board of Directors
Jeffrey H. Brotman
/s/ JAMES D. SINEGAL*
- ------------------------------------ President, Chief Executive Officer and Director
James D. Sinegal
/s/ RICHARD A. GALANTI*
- ------------------------------------ Executive Vice President, Chief Financial Officer and
Richard A. Galanti Director (Principal Financial Officer)
/s/ RICHARD D. DICERCHIO*
- ------------------------------------ Executive Vice President, COO--Merchandising and
Richard D. DiCerchio Director
/s/ DAVID S. PETTERSON*
- ------------------------------------ Senior Vice President and Corporate Controller
David S. Petterson (Principal Accounting Officer)
/s/ DANIEL BERNARD
- ------------------------------------ Director
Daniel Bernard
/s/ HAMILTON E. JAMES*
- ------------------------------------ Director
Hamilton E. James
/s/ RICHARD M. LIBENSON*
- ------------------------------------ Director
Richard M. Libenson
/s/ JOHN W. MEISENBACH*
- ------------------------------------ Director
John W. Meisenbach
/s/ FREDRICK O. PAULSELL, JR.*
- ------------------------------------ Director
Fredrick O. Paulsell, Jr.
/s/ JILL S. RUCKELSHAUS*
- ------------------------------------ Director
Jill S. Ruckelshaus
*By: /s/ JAMES D. SINEGAL
-------------------------------
James D. Sinegal
Attorney-in-Fact
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- ----------- ------------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
1.1 Form of Underwriting Agreement..................................................................
5.1 Opinion of Foster Pepper & Shefelman (previously filed)
15.1 Letter of Arthur Andersen LLP regarding unaudited interim financial information (included in its
consent filed as Exhibit 23.1).................................................................
23.1 Consent of Arthur Andersen LLP..................................................................
23.2 Consent of Foster Pepper & Shefelman (included in its opinion filed as Exhibit 5.1).............
23.3 Consent of Ernst & Young LLP....................................................................
24.1 Power of Attorney (previously filed)............................................................
</TABLE>
II-4
<PAGE>
19,500,000 SHARES
PRICE/COSTCO, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
June , 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC
UBS SECURITIES LLC
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INTERNATIONAL LIMITED
UBS LIMITED
As representatives of the several
International Managers named in
Schedule II hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
Moorgate Hall
155 Moorgate
London EC2M 6XB, England
Ladies and Gentlemen:
Fourcar B.V. (the "Selling Stockholder"), an indirect wholly owned
subsidiary of Carrefour S.A., proposes to sell an aggregate of 19,500,000 shares
(the "Firm Shares") of Common Stock, $.01 par value per share ("Common Stock"),
of Price/Costco, Inc., a Delaware corporation (the "Company").
It is understood that, subject to the conditions hereinafter stated,
15,600,000 Firm Shares (the "U.S. Firm Shares") will be sold to the several U.S.
Underwriters named in Schedule I hereto (the "U.S. Underwriters") in connection
with the offering and sale of such U.S. Firm Shares in the United States and
Canada to United States and Canadian Persons (as such terms are defined in the
Agreement Between U.S. Underwriters and International Managers of even date
herewith), and 3,900,000 Firm Shares (the "International Shares") will be sold
to the several International Managers named in Schedule II hereto (the
"International Managers") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), Salomon Brothers Inc and UBS Securities LLC shall act as
representatives (the "U.S. Representatives") of the several U.S. Underwriters,
and DLJ, UBS Limited and Salomon Brothers International Limited shall act as
representatives (the "International Representatives" and, together with the U.S.
Representatives, the "Representatives") of the several International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively referred to as the "Underwriters."
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The Selling Stockholder also proposes to sell to the several U.S.
Underwriters an aggregate of not more than 1,691,301 additional shares of Common
Stock (the "Additional Shares"), if requested by the U.S. Underwriters as
provided in Section 2 hereof. The Firm Shares and the Additional Shares are
herein collectively called the "Shares."
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively called the
"Act"), a registration statement on Form S-3 (No. 333-[ ]), including a
prospectus relating to the Shares, which may be amended. The registration
statement contains two prospectuses to be used in connection with the offering
and sale of the Shares: the U.S. prospectus, to be used in connection with the
offering and sale of Shares 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 Shares 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 and
back cover pages. The registration statement, as amended at the time when it
becomes effective or, if a post-effective amendment is filed with respect
thereto, as amended by such post-effective amendment at the time of its
effectiveness, including in each case any registration statement filed pursuant
to Rule 462(b) under the Act (the "Rule 462 Registration Statement") and all
documents incorporated or deemed to be incorporated by reference therein,
financial statements and exhibits and the information (if any) contained in a
prospectus that is deemed to be a part of the registration statement at the time
of its effectiveness pursuant to Rule 434 under the Act, is hereinafter referred
to as the "Registration Statement"; and the U.S. prospectus (including any
prospectus subject to completion meeting the requirements of Rule 434(c) under
the Act provided by the Company with any term sheet meeting the requirements of
Rule 434(c) as the prospectus provided to meet the requirement of Section 10(a)
of the Act) and the international prospectus, in the respective forms first used
to confirm sales of Shares, whether or not filed with the Commission pursuant to
Rule 424(b) under the Act, and including all documents incorporated or deemed to
be incorporated by reference therein, are hereinafter referred to as the
"Prospectus." As used herein, the term "Incorporated Documents" means the
documents that at the time are incorporated by reference in the registration
statement, the Registration Statement, any prospectus, the Prospectus or any
amendment or supplement thereto.
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations
and warranties contained in this Agreement, and subject to its terms and
conditions, the Selling Stockholder agrees to sell, and each U.S. Underwriter
agrees, severally and not jointly, to purchase from the Selling Stockholder at a
price per share of $ (the "Purchase Price"), the number of Firm Shares set
forth opposite the name of such U.S. Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Stockholder
agrees to sell, and each International Manager agrees, severally and not
jointly, to purchase from the Selling Stockholder at the Purchase Price, the
number of Firm Shares set forth opposite the name of such International Manager
in Schedule II hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to the terms and conditions hereof, the Selling
Stockholder agrees to sell to the U.S. Underwriters, and the U.S. Underwriters
shall have a right to purchase, severally and not jointly, from time to time, up
to the total number of Additional Shares at the Purchase Price. Additional
Shares may be purchased as provided in Section 4 hereof solely for the purpose
of covering over-allotments made in connection with the offering of the Firm
Shares. If any Additional Shares are to be purchased, each U.S. Underwriter,
severally and not jointly, agrees to purchase the number of Additional Shares
(subject to such adjustments to eliminate fractional shares as the U.S.
Representatives may determine) which bears the same proportion to the total
number of Additional Shares to be purchased as the number of Firm Shares set
forth opposite the name of such U.S. Underwriter in Schedule I hereto bears to
the total number of Firm Shares.
The Company and the Selling Stockholder eachhereby agrees not to, directly
or indirectly, offer, sell, contract to sell, grant any option to purchase, or
otherwise dispose of any shares of Common Stock or any
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securities convertible into or exercisable or exchangeable for, or warrants,
options or rights to purchase or acquire, Common Stock or in any other manner
transfer all or a portion of the economic consequences associated with the
ownership of any Common Stock, or enter into any agreement to do any of the
foregoing, except pursuant to this Agreement, for a period of 90 days after the
date of this Agreement, without the prior written consent of DLJ.
Notwithstanding the foregoing, during such period (i) the Company may grant
stock options pursuant to the Company's existing stock option plans and (ii) the
Company may issue shares of its Common Stock upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof.
3. TERMS OF PUBLIC OFFERING. The Company and the Selling Stockholder are
advised by you that the Underwriters propose (i) to make a public offering of
the Shares as soon after the effective date of the Registration Statement as in
your judgment is advisable and (ii) initially to offer the Shares upon the terms
set forth in the Prospectus.
Each U.S. Underwriter hereby makes to the Selling Stockholder and the
Company the representations and agreements of such U.S. Underwriter contained in
the fifth paragraph of Section 3 of the Agreement Between U.S. Underwriters and
International Managers of even date herewith. Each International Manager hereby
makes to the Company the representations and agreements of such International
Underwriter contained in the seventh, eighth, ninth and tenth paragraphs of
Section 3 of such Agreement.
4. DELIVERY AND PAYMENT. Delivery to the Underwriters of and payment for
the Firm Shares shall be made at 9:00 A.M., New York City time, on the third
business day (the "Closing Date") following the date of the initial public
offering, at such place as you shall designate. The Closing Date and the
location of delivery of and the form of payment for the Firm Shares may be
varied by agreement between you and the Selling Stockholder.
Delivery to the U.S. Underwriters of and payment for any Additional Shares
to be purchased by the U.S. Underwriters shall be made at such place as DLJ
shall designate at 9:00 A.M., New York City time, on the date specified in the
applicable exercise notice given by you pursuant to Section 2 (an "Option
Closing Date"). Any such Option Closing Date and the location of delivery of and
the form of payment for such Additional Shares may be varied by agreement
between you and the Selling Stockholder.
Certificates for the Shares shall be registered in such names and issued in
such denominations as you shall request in writing not later than two full
business days prior to the Closing Date or an Option Closing Date, as the case
may be. Such certificates shall be made available to you for inspection not
later than 9:30 A.M., New York City time, on the business day next preceding the
Closing Date or an Option Closing Date, as the case may be. Certificates in
definitive form evidencing the Shares shall be delivered to you or for your
account on the Closing Date or an Option Closing Date, as the case may be, with
any transfer taxes thereon duly paid by the Selling Stockholder, for the
respective accounts of the several Underwriters, against payment of the Purchase
Price therefor by wire transfer of same day funds to the account of the Selling
Stockholder, specified in writing at least two business days preceding the
Closing Date or an Option Closing Date, as the case may be.
5. AGREEMENTS OF THE COMPANY. The Company and, with respect to paragraph
(k) only, the Selling Stockholder, agree with you:
(a) To use its best efforts to cause the Registration Statement to
become effective at the earliest possible time. The Company will comply
fully and in a timely manner with the applicable provisions of Rule 424 and
Rule 434 under the Act.
(b) To advise you promptly and, if requested by you, confirm such advice
in writing, (i) if and when the Prospectus is sent for filing pursuant to
Rule 424 under the Act (including any term sheet within the meaning of Rule
434 under the Act), when the Registration Statement has become effective,
when any Rule 462 Registration Statement is filed and becomes effective, and
when any post-effective amendment to the Registration Statement becomes
effective, (ii) of the receipt of any comments from the Commission that
relate to the Registration Statement or requests by the Commission for
amendments to the Registration Statement or amendments or supplements to the
Prospectus or for additional
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information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, or of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by the
Commission or any state securities commission or other regulatory authority,
and (iv) of the happening of any event during the period referred to in
paragraph (e) below which makes any statement of a material fact made in the
Registration Statement (as amended or supplemented from time to time) untrue
or which requires the making of any additions to or changes in the
Registration Statement (as amended or supplemented from time to time) in
order to make the statements therein not misleading or that makes any
statement of a material fact made in the Prospectus (as amended or
supplemented from time to time) untrue or which requires the making of any
additions to or changes in the Prospectus (as amended or supplemented from
time to time) in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption of the Shares under any state securities or Blue Sky laws, the
Company shall use every reasonable effort to obtain the withdrawal or
lifting of such order at the earliest possible time.
(c) To furnish to you, without charge, four copies of the signed copy of
the Registration Statement as first filed with the Commission and of each
amendment to it, including all exhibits and Incorporated Documents, and to
furnish to you such number of conformed copies of the Registration Statement
as so filed and of each amendment to it, without exhibits, as you may
reasonably request.
(d) Not to file any amendment or supplement to the Registration
Statement or to make any amendment or supplement to the Prospectus, or to
file any document which, when filed, will be incorporated or deemed to be
incorporated by reference in the Registration Statement or the Prospectus
(including the issuance or filing of any term sheet within the meaning of
Rule 434 under the Act), in each case of which you shall not previously have
been advised or to which you shall reasonably object; and to prepare and
file with the Commission, promptly upon your reasonable request, any
amendment to the Registration Statement or supplement to the Prospectus
(including the issuance or filing of any term sheet within the meaning of
Rule 434 under the Act) which may be necessary or advisable in connection
with the distribution of the Securities by you, and to use its best efforts
to cause the same to become promptly effective.
(e) Promptly after the Registration Statement becomes effective, and
from time to time thereafter for such period as in your reasonable judgment
a prospectus is required by law to be delivered in connection with sales by
an Underwriter or a dealer, to furnish to each Underwriter and each dealer,
without charge, as many copies of the Prospectus (and of any amendment or
supplement to the Prospectus) as such Underwriter or such dealer may
reasonably request.
(f) If during the period specified in paragraph (e) any event shall
occur as a result of which, in the opinion of counsel for the Underwriters
it becomes necessary to amend or supplement the Prospectus in order to make
the statements therein, in the light of the circumstances existing when the
Prospectus is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with any law,
forthwith to prepare and file with the Commission an appropriate amendment
or supplement to the Prospectus so that the statements in the Prospectus, as
so amended or supplemented, will not in the light of the circumstances
existing when it is so delivered, be misleading, or so that the Prospectus
will comply with law, and to furnish to each Underwriter and to such dealers
as you shall specify, such number of copies thereof as such Underwriter or
such dealers may reasonably request.
(g) Prior to any public offering of the Shares, to cooperate with you
and counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters
and by dealers under the state securities or Blue Sky laws of such
jurisdictions as you may request, to continue such qualification in effect
so long as required for distribution of the Shares and to file such consents
to service of process or other documents as may be necessary in order to
effect such
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registration or qualification (provided that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in which
it is not so qualified nor to take any action that would subject it to
general consent to service of process in any jurisdiction in which it is not
now so subject).
(h) To make generally available to its security holders as soon as
reasonably practicable an earnings statement covering a period of at least
twelve months after the effective date of the Registration Statement (but in
no event commencing later than 90 days after such date) which shall satisfy
the provisions of Section 11(a) of the Act, and to advise you in writing
when such statement has been so made available.
(i) During the period of five years after the date of this Agreement,
(i) to mail as soon as reasonably practicable after the end of each fiscal
year to the record holders of its Common Stock a financial report of the
Company and its subsidiaries on a consolidated basis, all such financial
reports to include a consolidated balance sheet, a consolidated statement of
operations, a consolidated statement of cash flows and a consolidated
statement of shareholders' equity as of the end of and for such fiscal year,
together with comparable information as of the end of and for the preceding
year, certified by independent certified public accountants, and (ii) to
file with the Commission as soon as practicable after the end of each
quarterly period (except for the last quarterly period of each fiscal year),
a consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows as of the end of and for such period,
and for the period from the beginning of such year to the close of such
quarterly period, together with comparable information for the corresponding
periods of the preceding year.
(j) During the period referred to in paragraph (i), to furnish to you as
soon as available a copy of each report or other publicly available
information of the Company mailed to the holders of Common Stock or filed
with the Commission and such other publicly available information concerning
the Company and its subsidiaries as you may reasonably request.
(k) Whether or not the transactions contemplated hereby are consummated
or this Agreement is terminated, the Company and the Selling Stockholder,
jointly and severally, agree to pay all reasonable out-of-pocket costs,
expenses, fees and taxes incident to (i) the preparation, printing, filing
and distribution under the Act of the Registration Statement (including
financial statements and exhibits), each preliminary prospectus and all
amendments and supplements to any of them prior to or during the period
specified in paragraph (e), (ii) the printing and delivery of the Prospectus
and all amendments or supplements to it during the period specified in
paragraph (e), (iii) the printing and delivery of this Agreement, any
memoranda describing state securities or Blue Sky laws and all other
agreements, memoranda, correspondence and other documents printed and
delivered in connection with the offering of the Shares (including in each
case any disbursements of counsel for the Underwriters relating to such
printing and delivery), (iv) the registration or qualification of the Shares
for offer and sale under the securities or Blue Sky laws of the several
states (including in each case the reasonable fees and out-of-pocket
disbursements of counsel for the Underwriters relating to such registration
or qualification and memoranda relating thereto), (v) filings and clearance,
if any, with the National Association of Securities Dealers, Inc. in
connection with the offering (including the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith), (vi)
the quotation of the Shares on the Nasdaq National Market (the "NNM"), (vii)
furnishing such copies of the Registration Statement, the Prospectus and all
amendments and supplements thereto as may be requested for use in connection
with the offering or sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold, and (vii) the performance by the Selling
Stockholder of its other obligations under this Agreement. Notwithstanding
the foregoing, nothing contained in this Agreement shall affect, as between
the Company and the Selling Stockholder, any agreement which the Company and
the Selling Stockholder have made or may make regarding payment of any fees
and expenses related to the transactions contemplated by this Agreement.
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(l) To use its best efforts to maintain the inclusion of the Common
Stock on the NNM (or, alternatively, the New York Stock Exchange or the
American Stock Exchange) for a period of five years after the effective date
of the Registration Statement.
(m) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior
to the Closing Date and to satisfy all conditions precedent to the delivery
of the Shares.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each Underwriter and the Selling Stockholder that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect;
and, to the best of its knowledge, 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 Act 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 (b) do not apply
to statements or omissions in the Registration Statement or the Prospectus
based upon and in conformity with (x) information relating to any
Underwriter furnished to the Company in writing by or on behalf of such
Underwriter through you expressly for use therein or (y) any Selling
Stockholder Information (as defined in Section 11 hereof). The Company
acknowledges for all purposes under this Agreement (including this paragraph
and Section 8 hereof) that the statements with respect to price and
underwriting discount and the last paragraph all as set forth on the cover
page and in paragraphs one, three, six, seven, eight and nine under the
caption "Underwriting" in the Prospectus (the "Underwriting Information")
constitute the only written information furnished to the Company by or on
behalf of the Underwriters expressly for use in the Registration Statement,
the preliminary prospectus, or the Prospectus (or any amendment or
supplement to any of them) and that the Underwriters shall not be deemed to
have provided any other information (and therefore are not responsible for
any such statements or omissions). The Incorporated Documents, at the time
they were or hereafter are filed or last amended, as the case may be, with
the Commission, complied and will comply in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
"Exchange Act") and, when read together and with the other information in
the Prospectus, at the time the Registration Statement became or becomes
effective, will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were or are made, not misleading.
(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 Act, complied when so filed in all material
respects with the Act and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(d) The Company and each of its subsidiaries has been duly incorporated,
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to
carry on its business as it is currently being conducted and to own, lease
and operate its properties, and each is duly qualified and is in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or leasing
of property requires such qualification, except where the failure to be so
qualified could not
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reasonably be expected to have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole (a "Material Adverse Effect").
(e) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable, and are
owned by the Company, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature except as indicated in
Schedule III hereto.
(f) All the outstanding shares of capital stock of the Company,
including the Shares, have been duly authorized and validly issued and are
fully paid, non-assessable and not subject to any preemptive or similar
rights;
(g) The authorized capital stock of the Company, including the Common
Stock, conforms to the description thereof contained in or incorporated by
reference into the Prospectus.
(h) This Agreement has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms (except as rights to
indemnity and contribution hereunder may be limited by applicable law).
(i) Neither the Company nor any of its subsidiaries is in violation of
its respective charter or by-laws or in default in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or
any other evidence of indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of the Company and its
subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which it or any of its subsidiaries or their
respective property is bound.
(j) The execution, delivery and performance of this Agreement,
compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not require any
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body (except as such may
be required under the securities or Blue Sky laws of the various states) and
will not conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter or by-laws of the Company or
any of its subsidiaries or any agreement, indenture or other instrument to
which it or any of its subsidiaries is a party or by which it or any of its
subsidiaries or their respective property is bound, or violate or conflict
with any laws, administrative regulations or rulings or court decrees
applicable to the Company, any of its subsidiaries or their respective
property.
(k) Except as disclosed in the Registration Statement, there are no
material legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any of their respective
property is the subject, and, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated. No contract or document of
a character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement is not
so described or filed as required.
(l) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), nor
any federal or state law relating to discrimination in the hiring, promotion
or pay of employees nor any applicable federal or state wages and hours
laws, nor any provisions of the Employee Retirement Income Security Act or
the rules and regulations promulgated thereunder, which in each case could
reasonably be expected to result in any material adverse change in the
business, prospects, financial condition or results of operation of the
Company and its subsidiaries, taken as a whole (a "Material Adverse
Change").
(m) The Company and each of its subsidiaries has such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
("permits"), including, without limitation, under any
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applicable Environmental Laws, as are necessary to own, lease and operate
its respective properties and to conduct its business; the Company and each
of its subsidiaries has fulfilled and performed all of its material
obligations with respect to such permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the
rights of the holder of any such permit; and such permits contain no
restrictions that are materially burdensome to the Company or any of its
subsidiaries.
(n) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the course
of which it identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Company has reasonably concluded
that such associated costs and liabilities could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(o) Except such as are not material to the business, prospects,
financial condition or results of operation of the Company and its
subsidiaries, taken as a whole, the Company and each of its subsidiaries has
good and marketable title, free and clear of all liens, claims, encumbrances
and restrictions (except liens for taxes not yet due and payable), to all
property and assets described in the Registration Statement as being owned
by it. All leases to which the Company or any of its subsidiaries is a party
are valid and binding and no default has occurred or is continuing
thereunder which could reasonably be expected to result in any Material
Adverse Change, and the Company and its subsidiaries enjoy peaceful and
undisturbed possession under all such leases to which any of them is a party
as lessee with such exceptions as do not materially interfere with the use
made or proposed to be made by the Company or such subsidiary.
(p) The Company and each of its subsidiaries maintains reasonably
adequate insurance.
(q) Arthur Andersen LLP are independent public accountants with respect
to the Company as required by the Act.
(r) The financial statements, together with related schedules and notes,
forming part of, or incorporated or deemed to be incorporated by reference
in, the Registration Statement and the Prospectus (and any amendment or
supplement thereto), present fairly the consolidated financial position,
results of operations and changes in financial position of the Company and
its subsidiaries at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes comply as
to form in all material respects with the requirements of the Act and have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set
forth in or incorporated or deemed to be incorporated by reference in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) is, in all material respects, accurately presented and prepared on
a basis consistent with such financial statements and the books and records
of the Company.
(s) The Company is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(t) No holder of any security of the Company (other than the Selling
Stockholder) has any right to require registration of shares of Common Stock
or any other security of the Company in this offering.
(u) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
(v) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens related to or
entitling any person to purchase or otherwise to acquire any
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shares of the capital stock of, or other ownership interest in, the Company
or any subsidiary thereof except as otherwise disclosed or incorporated by
reference in the Registration Statement or which have been granted pursuant
to the Company's stock option plans in amounts which are immaterial.
(w) There is (i) no significant unfair labor practice complaint pending
against the Company or any of its subsidiaries or, to the best knowledge of
the Company, threatened against any of them, before the National Labor
Relations Board or any state or local labor relations board, and no
significant grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company or any of
its subsidiaries or, to the best knowledge of the Company, threatened
against any of them, and (ii) no significant strike, labor dispute, slowdown
or stoppage pending against the Company or any of its subsidiaries or, to
the best knowledge of the Company, threatened against it or any of its
subsidiaries except for such actions specified in clause (i) or (ii) above,
which, singly or in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
(x) The Company, The Price Company and Costco Wholesale Corporation each
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(y) All material tax returns required to be filed by the Company and
each of its subsidiaries in any jurisdiction have been filed, other than
those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and
other charges due pursuant to such returns or pursuant to any assessment
received by the Company or any of its subsidiaries have been paid, other
than those being contested in good faith and for which adequate reserves
have been provided.
(z) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, the copyrights, know-how (including trade secrets and
other proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names presently employed by them in
connection with the business now operated by them, and neither the Company
nor any of its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could reasonably be expected to result in any
Material Adverse Change.
(aa) No bid or purchase by the Company, and no bid or purchase that
could be attributed to the Company (as a result of bids or purchases by an
"affiliated purchaser" within the meaning of Rule 10b-6 under the Exchange
Act for or of the Common Stock, any securities of the same class or series
as the Common Stock or any securities immediately convertible into or
exchangeable for or that represent any right to acquire Common Stock, is now
pending or in progress or will have commenced at any time prior to the
completion of the distribution of the Shares.
7. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER. The Selling
Stockholder represents and warrants to each Underwriter and the Company that:
(a) The execution, delivery and performance of this Agreement by the
Selling Stockholder and the sale of the Shares, the performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not (i) conflict with or result in a breach of any of the
terms or provisions, or constitute a default or cause an acceleration of any
obligation under, (A) the charter, bylaws or other organizational documents
of the Selling Stockholder or (B) any bond, note, debenture or other
evidence of indebtedness or any indenture, mortgage, deed of trust or other
material contract, lease, or other instrument to which the Selling
Stockholder is a party or by which the Selling Stockholder is bound, or to
which any of the property or assets of the Selling Stockholder is subject,
or (C) any
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order of any court or governmental agency or authority entered in any
proceeding to which the Selling Stockholder was or is a party or by which
the Selling Stockholder is bound or (ii) violate or conflict with any
applicable Dutch, French or U.S. federal, state or local law, rule,
administrative regulation or ordinance or administrative or court decree
applicable to the Selling Stockholder or its property, except in each such
case as would not, singly or in the aggregate, have a material adverse
effect on the business, results of operations, financial condition or
prospects of the Selling Stockholder.
(b) The Selling Stockholder has on the date of this Agreement and will
have at the Closing Date good and marketable title to the Shares to be sold
by the Selling Stockholder to the Underwriters, free and clear of any liens,
claims, encumbrances and restrictions on transfer other than pursuant to
this Agreement; and upon delivery to the Underwriters of the Shares to be
sold by the Selling Stockholder hereunder and payment of the Purchase Price
therefor by the Underwriters as herein contemplated, the Underwriters will
receive good and marketable title to the Shares purchased by them from the
Selling Stockholder, free and clear of any pledge, lien, encumbrance, claim
or equity.
(c) All authorizations, approvals and consents necessary for the
execution, delivery and performance by the Selling Stockholder of this
Agreement, and the sale and delivery by the Selling Stockholder to the
Underwriters of the Shares to be sold by the Selling Stockholder hereunder
(other than such authorizations, approvals or consents as may be necessary
under state securities or Blue Sky laws) have been obtained and are in full
force and effect; the Selling Stockholder has all requisite right, power and
authority to enter into and perform its obligations under this Agreement and
to sell, transfer and deliver the Shares to be sold by the Selling
Stockholder to the Underwriters hereunder; and this Agreement has been duly
authorized, executed and delivered by the Selling Stockholder and is a valid
and binding agreement of the Selling Stockholder enforceable in accordance
with its terms (except as rights to indemnity and contribution hereunder may
be limited by applicable law).
(d) The Selling Stockholder Information (as defined in Section 11
hereof) does not, and will not on the Closing Date, include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(e) The Selling Stockholder has not taken, and will not take, directly
or indirectly, any action designed to, or which might reasonably be expected
to, cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares
pursuant to the distribution contemplated by this Agreement, and, other than
as permitted by the Act, the Selling Stockholder has not distributed and
will not distribute any prospectus or other offering material in connection
with the offering and sale of the Shares.
(f) No stamp duty or similar tax or duty is payable by or on behalf of
the Underwriters in connection with the sale and delivery of the Shares by
the Selling Stockholder as contemplated by this Agreement.
(g) At any time during the period described in Section 5(e) hereof, if
there is any change in the Selling Stockholder Information, the Selling
Stockholder will promptly notify you and the Company of such change.
(h) The Selling Stockholder acknowledges for all purposes under this
Agreement that the Underwriting Information constitutes the only written
information furnished to the Company by or on behalf of the Underwriters for
use in the Registration Statement or the Prospectus (or any amendment or
supplement to them) and that the Underwriters shall not be deemed to have
provided any other information (and therefore are not responsible for any
such statement or omission).
8. INDEMNIFICATION.
(a) The Company and the Selling Stockholder (but in the case of the Selling
Stockholder, only with respect to claims and actions based on untrue statements
or omissions made in reliance upon and in conformity with the Selling
Stockholder Information), severally and not jointly, agree to indemnify and hold
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harmless (i) each of the Underwriters and (ii) each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
any of the Underwriters (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person"), and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any of the Underwriters or any controlling person (any person referred to in
clause (i), (ii) or (iii) may hereinafter be referred to as an "Indemnified
Person") to the fullest extent lawful, from and against any and all losses,
claims, damages, judgments, actions, costs, assessments, expenses and other
liabilities (collectively, "Liabilities"), including without limitation and as
incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, including the
reasonable fees and expenses of counsel to any Indemnified Person, directly or
indirectly caused by, related to, based upon, arising out of or in connection
with any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any supplement or amendment
thereto), or the Prospectus (including any amendment or supplement thereto) or
any preliminary prospectus, or any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading, except insofar as such Liabilities
are caused by an untrue statement or omission or alleged untrue statement or
omission that is made in reliance upon and in conformity with any Underwriting
Information. The Company shall notify you promptly of the institution, threat or
assertion of any claim, proceeding (including any governmental investigation) or
litigation in connection with the matters addressed by this Agreement which
involves the Company or an Indemnified Person.
(b) In case any action or proceeding (for all purposes of this Section 8,
including any governmental investigation) shall be brought or asserted against
any of the Indemnified Persons with respect to which indemnity may be sought
against the Company or the Selling Stockholder (each referred to respectively in
this Section 8(b) as an "indemnifying party"), such Indemnified Person promptly
shall notify the indemnifying party in writing (PROVIDED that the failure to
give such notice shall not relieve the indemnifying party of its obligations
pursuant to this Agreement, except to the extent that such indemnifying party
shall have been prejudiced in any material respect by such failure) and the
Company and the Selling Stockholder, as the case may be, shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Person and payment of all fees and expenses. Any Indemnified
Person shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the indemnifying
party agrees to pay such fees and expenses, or (ii) the indemnifying party fails
promptly to assume such defense or fails to employ counsel reasonably
satisfactory to such Indemnified Person, or (iii) the named parties to any such
action or proceeding (including any impleaded parties) include both such
Indemnified Person and the indemnifying party or an affiliate thereof, and
either (x) there may be one or more legal defenses available to such Indemnified
Person that are different from or additional to those available to the
indemnifying party or such affiliate or (y) a conflict may exist between such
Indemnified Person and the indemnifying party or such affiliate. In the event of
any of clause (i), (ii) and (iii) of the immediately preceding sentence, if such
Indemnified Person notifies the indemnifying party in writing, the indemnifying
party shall not have the right to assume the defense thereof and such
Indemnified Person shall have the right to employ its own counsel in any such
action and the reasonable fees and expenses of such counsel shall be paid, as
incurred, by the indemnifying party, regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder, it being understood, however, that the indemnifying party shall not,
in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for each such Indemnified Person. No indemnifying party shall be liable
for any settlement of any such action or proceeding effected without its prior
written consent, and the Company agrees to indemnify and hold harmless any
Indemnified Person from and against any Liabilities by reason of any settlement
of any action effected with the written consent of the Company. Notwithstanding
the immediately preceding sentence, if in any case where the fees and expenses
of counsel are at the expense of the indemnifying party and an Indemnified
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Person shall have requested the indemnifying party to reimburse the Indemnified
Person for such fees and expenses of counsel as incurred, such indemnifying
party agrees that it shall be liable for any settlement of any action effected
without its written consent if (i) such settlement is entered into more than ten
business days after the receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall have failed to reimburse the
Indemnified Person in accordance with such request for reimbursement prior to
the date of such settlement. No indemnifying party shall, without the prior
written consent of each Indemnified Person, settle or compromise or consent to
the entry of any judgment in or otherwise seek to terminate any pending or
threatened action, claim, litigation or proceeding in respect of which
indemnification or contribution may be sought pursuant hereto (whether or not
any Indemnified Person is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each Indemnified
Person from all Liabilities arising out of such action, claim, litigation or
proceeding.
(c) Each of the Underwriters agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Stockholder, their directors, the
officers of the Company who sign the Registration Statement, and any person
controlling (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) either the Company or the Selling Stockholder, to the same extent
as the foregoing indemnity from the Company and the Selling Stockholder to each
of the Indemnified Persons, but only with respect to claims and actions based on
any Underwriting Information. In case any action or proceeding (including any
governmental investigation) shall be brought or asserted against any of the
Company, the Selling Stockholder, any of their directors, any such officer, or
any such controlling person based on the Registration Statement, the Prospectus
or any preliminary prospectus in respect of which indemnity is sought against
any Underwriter pursuant to the foregoing sentence, such Underwriter shall have
the rights and duties given to the Company and the Selling Stockholder (except
that if the Company or the Selling Stockholder shall have assumed the defense
thereof, such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Underwriter), and
the Company, the Selling Stockholder, their directors, any such officers and
each such controlling person shall have the rights and duties given to each of
the Indemnified Person by Section 8(b) above.
(d) If the indemnification provided for in this Section 8 is finally
determined by a court of competent jurisdiction to be unavailable to an
indemnified party in respect of any Liabilities referred to herein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such Liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other hand from the offering of the Shares 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 parties and the indemnified party, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholder, on the one hand, and the Underwriters (and their related
Indemnified Persons), on the other hand, shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Selling
Stockholder bear to the total underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the Prospectus. The relative
fault of the Company and the Selling Stockholder, 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 related to
information supplied by the Company or the Selling Stockholder, on the one hand,
or the Underwriters, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The indemnity and contribution obligations of the Company
and the Selling Stockholder set forth herein shall be in addition to any
liability or obligation the Company or the Selling Stockholder may otherwise
have to any Indemnified Person.
The Company, the Selling Stockholder and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 8(d)
were determined by PRO RATA allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
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immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, judgments, liabilities or
expenses 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 (nor any of its related Indemnified Persons) shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total underwriting discount applicable to the Shares purchased by such
Underwriter exceeds the amount of any damages or liabilities which such
Underwriter (and its related Indemnified Persons) has otherwise been required to
pay or incur 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 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(e) The provisions of this Section 8 shall not affect, as between the
Company and the Selling Stockholder, any agreement which the Company and the
Selling Stockholder have made or may make regarding indemnification or
contribution with respect to the transactions contemplated by this Agreement.
9. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase the Shares under this Agreement are subject to the
satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and the
Selling Stockholder contained in this Agreement shall be true and correct on
the Closing Date with the same force and effect as if made on and as of the
Closing Date.
(b) The Registration Statement shall have become effective (or, if a
post-effective amendment is required to be filed pursuant to Rule 430A under
the Act, such post effective amendment shall have become effective) and any
Rule 462 Registration Statement that has been filed shall have become
effective, and at the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or contemplated by the Commission, every request for additional
information on the part of the Commission shall have been complied with in
all material respects, and no stop order, suspending the sale of the Shares
in any jurisdiction referred to in Section 5(g) shall have been issued and
no proceeding for that purpose shall have been commenced or shall be pending
or threatened.
(c) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency,
body or official which would, as of the Closing Date, prevent the sale of
the Shares; no injunction, restraining order or order of any nature by a
U.S. federal or state court of competent jurisdiction shall have been issued
as of the Closing Date which would prevent the sale of the Shares; and,
except as disclosed in the Prospectus, on the Closing Date, no action, suit
or proceeding shall be pending against, or, to the knowledge of the Company
or the Selling Stockholder, threatened against, the Company or any of its
subsidiaries or the Selling Stockholder, respectively, before any court or
arbitrator or any governmental body, agency or official which, if adversely
determined, would interfere with or adversely affect the sale of the Shares
or could reasonably be expected to have a Material Adverse Effect, or in any
manner invalidate this Agreement or the sale of the Shares.
(d) (i) Since the date of the latest balance sheet included or
incorporated by reference in the Registration Statement and the Prospectus,
there shall not have been any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial
or otherwise, or in the earnings, affairs or business prospects, whether or
not arising in the ordinary course of business, of the Company, (ii) since
the date of the latest balance sheet included or incorporated by reference
in the Registration Statement and the Prospectus there shall not have been
any change, or any development involving a prospective material adverse
change, in the capital stock or in the long-term debt of the Company from
that set forth or incorporated by reference in the Registration Statement
and Prospectus, (iii) the Company and its subsidiaries shall have no
liability or obligation, direct or contingent, which is material to the
Company and its subsidiaries, taken as a whole, other than those reflected
or incorporated by reference in the Registration Statement and the
Prospectus and (iv) on the Closing
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Date you shall have received a certificate dated the Closing Date, signed by
the President and by the Chief Financial Officer of the Company, confirming
the matters set forth in paragraphs (a), (b), (c) and (d) of this Section 9.
(e) You shall have received a certificate of the Selling Stockholder,
dated the Closing Date, executed by the President or any Senior Vice
President and a principal financial or accounting officer of the Selling
Stockholder, confirming the matters relating to the Selling Stockholder set
forth in paragraph (a) and the last clause of paragraph (c) of this Section
9 and, to their knowledge, with respect to the first two clauses of
paragraph (c) of this Section 9.
(f) You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of:
(x) Foster, Pepper & Shefelman, counsel for the Company, to the
effect that:
(i) the Company and each of its subsidiaries that constitutes a
"Restricted Subsidiary" as defined in the Indenture, dated as of June
7, 1995, between the Company and American Bank National Association,
as Trustee (other than those organized under the laws of Canada or
any of the provinces of Canada (collectively, the "Canadian
Subsidiaries") and PriceCostco Europe (UK) Ltd.) (all of such
subsidiaries, the "Restricted Subsidiaries") has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority required to carry on its business as it
is currently being conducted and to own, lease and operate its
properties;
(ii) the Company and each of its Restricted Subsidiaries is duly
qualified and is in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect;
(iii) all of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's Restricted Subsidiaries
have been duly and validly authorized and issued and are fully paid
and non-assessable, and are owned by the Company, free and clear of
any security interest, claim, lien, encumbrance or adverse interest
of any nature, except as indicated in Schedule III hereto;
(iv) the Shares to be sold by the Selling Stockholder hereunder
have been duly authorized and validly issued and are fully paid and
non-assessable; and, to such counsel's knowledge, except as otherwise
set forth in the Prospectus, the sale of Shares by the Selling
Stockholder hereunder is not subject to any preemptive or similar
rights;
(v) the authorized capital stock of the Company, including the
Common Stock, conforms as to legal matters to the description thereof
contained or incorporated by reference in the Prospectus;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the Registration Statement has become effective under the
Act and, to the knowledge of such counsel, no stop order suspending
its effectiveness has been issued and no proceedings for that purpose
are pending before or contemplated by the Commission;
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(viii) the statements in Item 15 of Part II of the Registration
Statement, insofar as such statements constitute a summary of legal
matters, documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters,
documents and proceedings;
(ix) the Company has full power and authority to execute, deliver
and perform this Agreement; each document filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus, at the
time it was filed or last amended (except for financial statements,
the notes thereto and related schedules and other financial,
numerical, statistical or accounting data included or incorporated by
reference therein or omitted therefrom, as to which such counsel need
express no opinion), complied as to form to the applicable
requirements of the Exchange Act in all material respects;
(x) neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws and, to the best of
such counsel's knowledge, neither the Company nor any of its
subsidiaries is in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any other agreement, indenture
or instrument material to the conduct of the business of the Company
and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which it or any of its
subsidiaries or their respective property is bound;
(xi) the execution, delivery and performance of this Agreement
and compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not require
any consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body
(except such as may be required under the securities or Blue Sky laws
of the various states) and will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the
charter or by-laws of the Company or any of its subsidiaries or any
material agreement, indenture or other material instrument to which
the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or their respective properties is
bound and which is identified on a schedule attached to such opinion,
or violate or conflict with any laws, administrative regulations or
rulings or court decrees that are of the type that are, in the
experience of such counsel, applicable to the Company or any of its
subsidiaries or their respective properties and transactions of the
type contemplated hereby (other than securities or Blue Sky laws of
the various states);
(xii) such counsel does not know of any legal or governmental
proceeding pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of their respective property
is subject which is required to be described in the Registration
Statement or the Prospectus and is not so described, or of any
contract or other document which is required to be described in the
Registration Statement or the Prospectus or is required to be filed
as an exhibit to the Registration Statement which is not described or
filed as required;
(xiii) to the best of such counsel's knowledge, no holder of any
security of the Company other than the Selling Stockholder has any
right to require registration of shares of Common Stock or any other
security of the Company; and
(xiv) the Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
In addition, such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company and the
Selling Stockholder, representatives of the independent public accountants for
the Company, representatives of the Underwriters and counsel for the
Underwriters at which the contents of the Registration Statement, the Prospectus
and related matters were discussed and, although such counsel is not passing
upon, and does not assume any responsibility for, the accuracy,
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completeness or fairness of the statements contained in the Registration
Statement or the Prospectus and has made no independent check or verification
thereof, during the course of such participation (relying as to factual matters
underlying the determination of materiality to a large extent upon the
statements of officers and other representatives of the Company), on the basis
of the foregoing, no facts have come to such counsel's attention that caused
such counsel to believe that the Registration Statement, at the time such
Registration Statement or any post-effective amendment became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus as amended or supplemented, if applicable,
as of its date and the Closing Date, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Such counsel need express no belief with respect to the
financial statements, the notes thereto and related schedules and other
financial, statistical, numerical, and accounting data and financial forecasts
included in, or omitted from, the Registration Statement or the Prospectus; and
(y) Lapointe Rosenstein, Canadian counsel for the Company, to the effect
that:
(i) each of the Canadian Subsidiaries has been duly incorporated, is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority
required to carry on its business as it is currently being conducted and
to own, lease and operate its properties;
(ii) each of the Canadian Subsidiaries is duly qualified and is in
good standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure
to be so qualified could not reasonably be expected to have a Material
Adverse Effect; and
(iii) all of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's Canadian Subsidiaries have
been duly and validly authorized and issued and are fully paid and
non-assessable, and are owned by the Company, free and clear of any
security interest, claim, lien, encumbrance or adverse interest of any
nature.
The opinions of Foster, Pepper & Shefelman and Lapointe Rosenstein described
in paragraph (f) above shall be rendered to you at the request of the Company
and shall so state therein.
(g) You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of
Sokolow, Dunaud, Mercadier & Carreras, counsel to the Selling Stockholder,
to the effect that:
(i) this Agreement has been duly and validly authorized by all
necessary action by the Selling Stockholder and has been duly executed
and delivered by the Selling Stockholder;
(ii) the Selling Stockholder has full legal right, power and
authority, and any approval required by law (other than any approval
imposed by the applicable state securities or Blue Sky laws), to sell,
assign, transfer and deliver the Shares in the manner provided in this
Agreement;
(iii) immediately prior to the Closing Date, the Selling Stockholder
was the sole registered owner of the Shares;
(iv) [Form of opinion assuming physical delivery] assuming that each
of the Underwriters acquired its interest in the Shares to be sold by the
Selling Stockholder pursuant to this Agreement in good faith and without
notice of any adverse claim within the meaning of Section 8-302 of the
New York Uniform Commercial Code, upon delivery to the Representatives as
agents for the Underwriters of the Shares registered in the Underwriters'
names, the Underwriters will acquire all rights of the Selling
Stockholder in the Shares free and clear of any adverse claims, any lien
in favor of the Company, and any restrictions on transfer imposed by the
Company;
[Form of opinion assuming settlement through DTC] upon transfer
of the Shares to be sold by the Selling Stockholder pursuant to this
Agreement to [name of the Underwriter to whose
16
<PAGE>
securities account such Shares will be credited by DTC], and assuming
such person has purchased the Shares in good faith and without notice of
any adverse claim within the meaning of Section 8-302 of the New York
Uniform Commercial Code, such person will acquire all rights of the
Selling Stockholder in the Shares free and clear of any adverse claims,
any lien in favor of the Company, and any restrictions on transfer
imposed by the Company. "Transfer" of such Shares to [name of the
Underwriter to whose securities account at DTC the Shares will be
credited by DTC] will occur by the making by The Depository Trust
Company of appropriate entries transferring such Shares on its books and
records to the account of [name of the Underwriter to whose securities
account at DTC the Shares will be credited by DTC] at The Depository
Trust Company; and
(v) neither the sale of the Shares nor the consummation of the
transactions contemplated by this Agreement will (A) conflict with,
result in a breach or violation of, or constitute a default under the
terms of any indenture or other agreement or instrument of which such
counsel has knowledge to which the Selling Stockholder is a party or
bound, or any statute, rule or regulation to which the Selling
Stockholder is subject, or to which any of the properties of the Selling
Stockholder is subject, or any order of which such counsel has knowledge
of any court or governmental agency or body having jurisdiction over the
Selling Stockholder or any of its properties or (B) violate any of the
provisions of the charter, bylaws or other organizational documents of
the Selling Stockholder as in effect on the date of the opinion, except
that such counsel need express no opinion as to state securities or Blue
Sky laws or as to compliance with the antifraud provisions of Federal and
state securities laws.
(h) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Skadden, Arps, Slate, Meagher & Flom, counsel for the
Underwriters, in form and substance reasonably satisfactory to you.
(i) You shall have received letters on and as of the date hereof as well
as on and as of the Closing Date, in form and substance satisfactory to you,
from Arthur Andersen LLP, independent public accountants, with respect to
the financial statements and certain financial information contained or
incorporated by reference in the Registration Statement and the Prospectus
and substantially in the form and substance of the letter delivered to you
by Arthur Andersen LLP on the date of this Agreement.
(j) The Company and the Selling Stockholder shall not have failed in any
material respect at or prior to the Closing Date to perform or comply with
any of the agreements herein contained and required to be performed or
complied with by the Company at or prior to the Closing Date.
(k) Prior to the Closing Date, the Company and the Selling Stockholder
shall have furnished to you such further information, certificates and
documents as you may reasonably request.
(l) The several obligations of the U.S. Underwriters to purchase any
Additional Shares hereunder are subject to satisfaction on and as of each
Option Closing Date of the conditions set forth in paragraphs (a) through
(k) except that the opinions called for in paragraphs (f), (g) and (h) and
the letters referred to in paragraph (i) shall be revised to reflect the
sale of the Additional Shares.
(m) Anything herein to the contrary notwithstanding, the respective
closings under this Agreement of the issuance and sale of the U.S. Firm
Shares and the International Shares to the U.S. Underwriters and the
International Managers, respectively, are hereby expressly made conditional
on one another.
10. EFFECTIVE DATE OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the later of (i) execution of this Agreement and (ii) when
notification of the effectiveness of the Registration Statement (or, if a post
effective amendment is required to be filed pursuant to Rule 430A under the Act,
such post effective amendment) has been released by the Commission.
This Agreement may be terminated at any time prior to the Closing Date by
you by written notice to the Company and the Selling Stockholder if any of the
following has occurred: (i) since the respective dates as of
17
<PAGE>
which information is given in the Registration Statement and the Prospectus, any
adverse change or development involving a prospective adverse change in the
condition, financial or otherwise, of the Company or any of its subsidiaries or
the earnings, affairs, or business prospects of the Company or any of its
subsidiaries, whether or not arising in the ordinary course of business, which
would, in your judgment, make it impracticable or inadvisable to market the
Shares on the terms and in the manner contemplated in the Prospectus or to
enforce contracts for the sale of the Shares, (ii) any outbreak or escalation of
hostilities or other national or international calamity or crisis or change in
economic conditions or in the financial markets of the United States or
elsewhere that, in your judgment, is material and adverse and would, in your
judgment, make it impracticable or inadvisable to market the Shares on the terms
and in the manner contemplated in the Prospectus or to enforce contracts for the
sale of the Shares, (iii) the suspension or material limitation of trading in
securities on the New York Stock Exchange, the American Stock Exchange or the
NNM or limitation on prices for securities on any such exchange or the NNM, (iv)
the enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your judgment materially and adversely affects, or will materially and
adversely affect, the business or operations of the Company or any subsidiary of
the Company, (v) the declaration of a banking moratorium by either federal or
New York State authorities or (vi) the taking of any action by any federal,
state or local government or agency in respect of its monetary or fiscal affairs
which in your judgment has a material adverse effect on the financial markets in
the United States.
If on the Closing Date or any Option Closing Date, as the case may be, any
of the Underwriters shall fail or refuse to purchase Firm Shares or Additional
Shares, as the case may be, which it has agreed to purchase hereunder on such
date, and the aggregate amount of Firm Shares or Additional Shares, as the case
may be, that such defaulting Underwriters agreed but failed or refused to
purchase does not exceed 10% of the total number of Shares to be purchased on
such date by all of the Underwriters, each non-defaulting Underwriter shall be
obligated severally, in the proportion which the number of Firm Shares set forth
opposite its name in Schedules I and II hereto bears to the total number of Firm
Shares which all the non-defaulting Underwriters, as the case may be, have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, that such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase on such date; provided that in no event shall the number of Firm Shares
or Additional Shares, as the case may be, that any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 10
by an amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If,
on the Closing Date or on the Option Closing Date, as the case may be, any of
the Underwriters shall fail or refuse to purchase the Firm Shares or the
Additional Shares, as the case may be, and the aggregate number of Shares with
respect to such default exceeds 10% of such total number of the Shares to be
purchased on such date by all Underwriters and arrangements satisfactory to the
other Underwriters, the Selling Stockholder and the Company for the purchase of
such Shares are not made within 48 hours after such default, this Agreement
shall terminate without liability on the part of the non-defaulting
Underwriters, the Selling Stockholder or the Company, except as otherwise
provided in this Section 10. In any such case that does not result in
termination of this Agreement, the Underwriters, the Selling Stockholder or the
Company may postpone the Closing Date or the Option Closing Date, as the case
may be, for not longer than seven (7) days, in order that the required changes,
if any, in the Registration Statement and the Prospectus or any other documents
or arrangements may be effected. Any action taken under this paragraph shall not
relieve a defaulting Underwriter from liability in respect of any default by any
such Underwriter under this Agreement.
11. AGREEMENTS OF THE SELLING STOCKHOLDER. The Selling Stockholder agrees
with each Underwriter and the Company:
(a) To take all reasonable actions in cooperation with the Company and
the Underwriters to do and perform all things to be done by it pursuant to
this Agreement prior to the Closing Date or reasonably requested by the
Company in connection herewith and to satisfy all conditions precedent to
the delivery of the Shares to be sold by it pursuant to this Agreement.
18
<PAGE>
(b) Prior to any public offering of the Shares to be sold by it to the
Underwriters pursuant to this Agreement, it will cooperate with the
Underwriters and counsel for the Underwriters in connection with the
registration or qualification of any such Shares for offer and sale by the
Underwriters and by dealers under the securities or Blue Sky laws of such
jurisdictions as the Underwriters may reasonably request, and will continue
such qualification in effect so long as reasonably required for distribution
of any such Shares and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided, however, that it shall not be required to take any
action that would subject it to the general service of process in any
jurisdiction where it is not now so subject.
(c) It agrees to deliver to the Underwriters prior to or at the Closing
Date, if applicable, a properly completed and executed United States
Treasury Department Form W-9 (or other form as may be required by law).
(d) The Selling Stockholder acknowledges for all purposes under this
Agreement (including Section 8 hereof) that the information under the
caption "Selling Stockholder" set forth in the Prospectus has been furnished
by the Selling Stockholder in writing expressly for use in the Registration
Statement and the Prospectus (such information constituting the "Selling
Stockholder Information").
12. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, to Price/Costco,
Inc., 999 Lake Drive, Issaquah, Washington 98027, Attention: Richard Olin, with
a copy to Foster, Pepper & Shefelman, Suite 3400, 1111 Third Avenue, Seattle,
Washington 98101, Attention: David R. Wilson, (b) if to any Underwriter or to
you, c/o Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue,
New York, New York 10172, Attention: Syndicate Department, with a copy to
Skadden, Arps, Slate, Meagher & Flom, 300 South Grand Avenue, Suite 3400, Los
Angeles, California 90071, Attention: Jeffrey H. Cohen, and (c) if the Selling
Stockholder, to Fourcar B.V. c/o Mr. Yves Sisteron, 602 North Crescent Drive,
Beverly Hills, California 90210, with a copy to Sokolow, Dunaud, Mercadier &
Carreras, 1211 Avenue of the Americas, New York, New York 10036, Attention:
Jean-Franois Carreras, or in any case to such other address as the person to be
notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Selling Stockholder, their
respective officers and directors and of the Underwriters set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Shares, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter or by or on behalf of the Company or the Selling Stockholder,
the officers or directors of the Company or the Selling Stockholder or any
controlling person of the Company or the Selling Stockholder, (ii) acceptance of
the Shares and payment for them hereunder and (iii) termination of this
Agreement.
If this Agreement shall be terminated by the Underwriters because of any
failure or refusal on the part of the Company or the Selling Stockholder to
comply with the terms or to fulfill any of the conditions of this Agreement, the
party whose failure or refusal to comply with such terms or fulfill such
conditions shall reimburse the Underwriters for all out-of-pocket expenses
(including the fees and disbursements of counsel) reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is made solely for
the benefit of and shall be binding upon the Company, the Selling Stockholder,
the Underwriters, any indemnified party referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND
PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
19
<PAGE>
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE COMPANY AND THE SELLING STOCKHOLDER
HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW
YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY SUIT,
ACTION OR PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS
CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL
JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. EACH OF THE
COMPANY AND THE SELLING STOCKHOLDER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
Any determination that any provision of this Agreement may be, or is,
unenforceable shall not affect the enforceability of the remainder of this
Agreement.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement between
the Company, the Selling Stockholder and the several Underwriters.
Very truly yours,
PRICE/COSTCO, INC.
By:
---------------------------------------------------------------------------
Name:
Title
FOURCAR B.V.
By:
---------------------------------------------------------------------------
Name:
Title:
20
<PAGE>
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC
UBS SECURITIES LLC
Acting on severally on behalf of
themselves and as representatives of
the several U.S. Underwriters named in
Schedule I hereto:
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
- ---------------------------------
Name:
Its:
21
<PAGE>
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
UBS LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
Acting on severally on behalf of
themselves and as representatives of
the several International Managers named in
Schedule II hereto:
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
- ---------------------------------
Name:
Its:
22
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
FIRM SHARES
U.S. UNDERWRITERS TO BE PURCHASED
- ------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Donaldson, Lufkin & Jenrette
Securities Corporation..........................................................................
Salomon Brothers Inc.............................................................................
UBS Securities LLC...............................................................................
Total........................................................................................ 15,600,000
</TABLE>
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
NUMBER OF
FIRM SHARES
INTERNATIONAL MANAGERS TO BE PURCHASED
- ------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Donaldson, Lufkin & Jenrette
Securities Corporation..........................................................................
UBS Limited......................................................................................
Salomon Brothers International Limited...........................................................
Total........................................................................................ 3,900,000
</TABLE>
<PAGE>
SCHEDULE III
C.A.S.E.L. International Inc. (91% -- Costco)
Pricesub Inc. (P) (Joint Venture with Ivanhoe, Inc.)
PriceCostco Europe (UK) Ltd. (C)
(European Operations)
(60% Costco Wholesale International)
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3, of our report dated
October 25, 1995, included in Price/Costco, Inc.'s Form 10-K for the 53-week
period ended September 3, 1995, and to all references to our firm included in
this Registration Statement.
We are aware that Price/Costco, Inc. has incorporated by reference in this
Registration Statement its Form 10-Q filings for the 12-week period ended
November 26, 1995, for the 12- and 24-week periods ended February 18, 1996, and
for the 12- and 36-week periods ended May 12, 1996. These filings include our
reports dated December 18, 1995, March 20, 1996, and June 4,1996, covering the
unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933, these reports are not considered a
part of the Registration Statement prepared or certified by our firm or reports
prepared or certified by our firm within the meaning of Sections 7 and 11 of the
Act.
ARTHUR ANDERSEN LLP
Seattle, Washington
June 4, 1996
<PAGE>
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Price/Costco, Inc.
and to the incorporation by reference therein of our report dated November 19,
1993, with respect to the consolidated financial statements and schedules of The
Price Company (not presented separately) included in the Annual Report (Form
10-K) of Price/Costco, Inc. for the year ended September 3, 1995 filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
San Diego, California
June 4, 1996
