-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VLEJVMCfVkImehUrpnV4ydlXr2pBArDRVmeaJcTHNAd/2e5uPTMdT1d6OHGUC+ee tdB3kxVPn9+KBYfTaZTXVQ== 0000912057-96-011631.txt : 19960606 0000912057-96-011631.hdr.sgml : 19960606 ACCESSION NUMBER: 0000912057-96-011631 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19960605 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE/COSTCO INC CENTRAL INDEX KEY: 0000909832 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 330572969 STATE OF INCORPORATION: CA FISCAL YEAR END: 0830 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-04355 FILM NUMBER: 96577260 BUSINESS ADDRESS: STREET 1: 4649 MORENA BOULEVARD CITY: SAN DIEGO STATE: CA ZIP: 92117 BUSINESS PHONE: 6195815350 MAIL ADDRESS: STREET 1: 4241 JUTLAND DRIVE #300 CITY: SAN DIEGO STATE: CA ZIP: 92117 S-3/A 1 S-3/A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 5, 1996 REGISTRATION NO. 333-04355 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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) DELAWARE 33-0572969 (State of incorporation) (I.R.S. Employer Identification Number)
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: 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
------------------------ 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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. 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. 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.
- ------------------------------------------------------------------------------------------------- PRICE UNDERWRITING PROCEEDS TO TO DISCOUNTS AND SELLING PUBLIC COMMISSIONS(1) STOCKHOLDER(2) - ------------------------------------------------------------------------------------------------- Per Share..................................... $ $ $ Total(3)...................................... $ $ $ - -------------------------------------------------------------------------------------------------
(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 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 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 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."
36 WEEKS ENDED FISCAL YEARS(1) ---------------------- ---------------------------------------------------------- MAY 7, MAY 12, 1991 1992 1993 1994 1995 1995 1996 ---------- ---------- ---------- ---------- ---------- ---------- ---------- (UNAUDITED) 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%
SEPTEMBER 1, AUGUST 30, AUGUST 29, AUGUST 28, SEPTEMBER 3, MAY 7, 1991 1992 1993 1994 1995 1995 MAY 12, 1996 ------------ ----------- ----------- ----------- ------------ ------------ ------------ 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
- ------------------------------ (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 (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 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 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:
U.S. UNDERWRITERS NUMBER OF SHARES - ------------------------------------------------------------------------------------- ----------------- Donaldson, Lufkin & Jenrette Securities Corporation.................................. Salomon Brothers Inc................................................................. UBS Securities LLC................................................................... ----------------- U.S. Offering subtotal............................................................. 15,600,000 ----------------- INTERNATIONAL MANAGERS NUMBER OF SHARES - ------------------------------------------------------------------------------------- ----------------- Donaldson, Lufkin & Jenrette Securities Corporation.................................. UBS Limited.......................................................................... Salomon Brothers International Limited............................................... ----------------- International Offering subtotal.................................................... 3,900,000 ----------------- Total............................................................................ 19,500,000 ----------------- -----------------
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 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 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 - -------------------------------------------------- -------------------------------------------------- - -------------------------------------------------- -------------------------------------------------- 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
PAGE 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
19,500,000 SHARES PRICECOSTCO, INC. COMMON STOCK ----------------- PROSPECTUS ----------------- DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION SALOMON BROTHERS INC UBS SECURITIES JUNE , 1996 - -------------------------------------------------- -------------------------------------------------- - -------------------------------------------------- -------------------------------------------------- INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR 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. [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.
- ------------------------------------------------------------------------------------------------- PRICE UNDERWRITING PROCEEDS TO TO DISCOUNTS AND SELLING PUBLIC COMMISSIONS(1) STOCKHOLDER(2) - ------------------------------------------------------------------------------------------------- Per Share..................................... $ . $ $ Total(3)...................................... $ $ $ - -------------------------------------------------------------------------------------------------
(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 [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
PAGE 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
19,500,000 SHARES PRICECOSTCO, INC. COMMON STOCK ----------------- PROSPECTUS ----------------- DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION UBS LIMITED SALOMON BROTHERS INTERNATIONAL LIMITED JUNE , 1996 - -------------------------------------------------- -------------------------------------------------- - -------------------------------------------------- -------------------------------------------------- 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: 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 --------- ---------
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 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. 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.
- ------------------------ * 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 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. /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
II-3 INDEX TO EXHIBITS
EXHIBIT DESCRIPTION PAGE - ----------- ------------------------------------------------------------------------------------------------ --------- 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)............................................................
II-4 EX-1.1 2 EXHIBIT 1.1 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." 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 2 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 3 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 4 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. 5 (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 6 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 7 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 8 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 9 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 10 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 11 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 12 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 13 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; 14 (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, 15 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 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 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 (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 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 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 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 SCHEDULE I
NUMBER OF FIRM SHARES U.S. UNDERWRITERS TO BE PURCHASED - ------------------------------------------------------------------------------------------------- --------------- Donaldson, Lufkin & Jenrette Securities Corporation.......................................................................... Salomon Brothers Inc............................................................................. UBS Securities LLC............................................................................... Total........................................................................................ 15,600,000
SCHEDULE II
NUMBER OF FIRM SHARES INTERNATIONAL MANAGERS TO BE PURCHASED - ------------------------------------------------------------------------------------------------- --------------- Donaldson, Lufkin & Jenrette Securities Corporation.......................................................................... UBS Limited...................................................................................... Salomon Brothers International Limited........................................................... Total........................................................................................ 3,900,000
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) EX-23.1 3 EXHIBIT 23.1 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 EX-23.3 4 EXHIBIT 23.3 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 -----END PRIVACY-ENHANCED MESSAGE-----