SWY » Topics » RESTRICTIONS

This excerpt taken from the SWY 8-K filed Feb 28, 2006.

RESTRICTIONS

Section 3.1 - Repurchase of Restricted Shares.

(a) In the event of Employee’s Termination of Employment, the Company shall have the right and option, but not obligation, to purchase from Employee, or Employee’s personal representative, as the case may be, any or all of the Restricted Shares which are subject to such right and option as of the date of the Termination of Employment, at the lesser of (i) the per share purchase price paid by Employee for such Restricted Shares, or (ii) the then current Fair Market Value of such Restricted Shares. Such right and option shall be referred to herein as the “Repurchase Option.” The Company shall have the right to assign at any time the Repurchase Option, whether or not the Repurchase Option is then exercisable, to one or more persons as may be selected by the Company.

(b) The Company (or any assignee thereof) may exercise the Repurchase Option by delivering personally or by registered mail, to Employee (or Employee’s legal representative), within ninety (90) days of the Termination of Employment, a notice in writing indicating the Company’s (or such assignee’s) intention to exercise the Repurchase Option and

 

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setting forth a date for closing not later than thirty (30) days from the mailing of such notice. The closing shall take place at the Company’s (or such assignee’s) office. At the closing, the holder of the certificates for the Restricted Shares being transferred shall deliver the stock certificate or certificates evidencing the Restricted Shares, and the Company (or such assignee) shall deliver the purchase price therefor to Employee (or Employee’s legal representative).

(c) Payment of the purchase price for the Restricted Shares purchased by the Company (or an assignee of the Repurchase Option) upon the exercise of the Repurchase Option shall, at the option of the Company (or any such assignee), be made in cash, by check or cash equivalent, in immediately available funds. At its option, the Company (or such assignee) may elect to make payment for such Restricted Shares by wire transfer of immediately available funds to a bank located in the United States and selected by Employee (or Employee’s legal representative). The Company (or such assignee) shall avail itself of this option by a notice in writing to Employee (or such Employee’s legal representative) stating the Company (or such assignee) is ready to pay by wire transfer, and waiving the closing at the Company’s (or such assignee’s) office, and requesting Employee (or Employee’s legal representative) to provide the name and address of the bank to which such wire transfer shall be made.

(d) If the Company (or an assignee of the Repurchase Option) does not elect to exercise the Repurchase Option conferred above by giving the requisite notice within ninety (90) days following the date of the Termination of Employment, the Repurchase Option shall terminate. Following the termination of the Repurchase Option, the Restricted Shares will remain subject to the Stockholders’ Agreement.

Section 3.2 - Transferability of the Restricted Shares; Escrow.

(a) Except as provided herein, Employee (and Employee’s legal representative) shall not Dispose of the Restricted Shares subject to the Repurchase Option, or any interest or right with respect thereto. Neither the Restricted Shares subject to the Repurchase Option nor any interest or right therein or part thereof shall be liable for the debts, contracts, or engagements of Employee or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy) and any attempted disposition thereof shall be null and void and of no effect.

(b) Employee hereby authorizes and directs the Secretary of the Company, or such other person designated by the Company, to transfer the Restricted Shares as to which the Repurchase Option has been exercised pursuant to Section 3.1 from Employee (or Employee’s legal representative) to the Company (or the assignee of the Repurchase Option).

(c) To ensure the availability for delivery of Employee’s Restricted Shares upon repurchase by the Company (or the assignee of the Repurchase Option) pursuant to the Repurchase Option under Section 3.1, Employee hereby appoints the Secretary of the Company, or any other person designated by the Company as escrow agent, as Employee’s attorney-in-fact to sell, assign and transfer unto the Company (or such assignee), such Restricted Shares, if any, purchased by the Company (or such assignee) pursuant to the Repurchase Option and shall, upon execution of the Grant Notice, execute, deliver and deposit with the Secretary of the Company,

 

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or such other person designated by the Company, the share certificate(s) representing the Restricted Shares, together with the Assignment Separate from Certificate duly endorsed in blank, attached as Exhibit “C” to the Grant Notice, and the Joint Escrow Instructions of the Company and Employee attached as Exhibit “D” to the Grant Notice. The Restricted Shares and Assignment Separate from Certificate shall be held by the Secretary (or other escrow agent) in escrow, pursuant to Joint Escrow Instructions, until the Company (or such assignee) exercises the Repurchase Option as provided in Section 3.1, until such Restricted Shares (or portion thereof) are no longer subject to the Restrictions, or until such time as this Agreement no longer is in effect. As a further condition to the Company’s obligations under this Agreement, the spouse of Employee, if any, shall execute and deliver to the Company the Consent of Spouse attached as Exhibit “E” to the Grant Notice. At such time as the Restrictions lapse as to some or all of the Restricted Shares, the Secretary (or other escrow agent) shall promptly deliver to Employee (or Employee’s legal representative) the certificate or certificates representing the Restricted Shares that are no longer subject to the Restrictions in the Secretary’s (or other escrow agent’s) possession belonging to Employee, and at such time as there are no longer any Restricted Shares that are subject to the Restrictions, the Secretary (or other escrow agent) shall promptly deliver to Employee (or Employee’s legal representative) the certificate or certificates representing any remaining Restricted Shares in the escrow agent’s possession belonging to Employee, and the Secretary (or other escrow agent) shall be discharged of all further obligations hereunder.

(d) The Secretary, or other escrow agent, shall not be liable for any act he or she may do or omit to do with respect to holding the Restricted Shares in escrow and while acting in good faith and in the exercise of his or her judgment.

Section 3.3 - Legend.

(a) Except as provided in Section 3.3(b), the share certificate evidencing the Restricted Shares transferred hereunder shall be endorsed with the following legends (in addition to any legend required under applicable state securities laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND REPURCHASE RIGHTS HELD BY SAFEWAY INC. OR ITS ASSIGNEE(S) AS SET FORTH IN A RESTRICTED STOCK AGREEMENT BETWEEN SAFEWAY INC. AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. SUCH TRANSFER RESTRICTIONS AND REPURCHASE RIGHTS ARE BINDING ON TRANSFEREES OF THESE SHARES.

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED UNLESS (X) THE SALE OR TRANSFER IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND COMPLIES WITH APPLICABLE STATE SECURITIES LAWS, (Y) THE SALE OR TRANSFER IS IN COMPLIANCE WITH RULE 144 UNDER THE ACT AND COMPLIES WITH APPLICABLE STATE SECURITIES LAWS OR (Z) THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH COUNSEL AND

 

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OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY) STATING THAT THE SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER RESTRICTIONS SET FORTH IN A STOCKHOLDERS’ AGREEMENT BY AND AMONG SAFEWAY INC., THE COMPANY, THE STOCKHOLDER AND CERTAIN HOLDERS OF COMMON STOCK OF THE COMPANY. SUCH TRANSFER RESTRICTIONS AND REPURCHASE RIGHTS ARE BINDING ON TRANSFEREES OF THESE SHARES. A COPY OF SUCH AGREEMENT AS IN EFFECT FROM TIME TO TIME MAY BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.

(b) The share certificate evidencing the Restricted Shares that are not subject to Restrictions as of the Grant Date shall not be endorsed with the legend provided for in Section 3.3(a) relating to the Repurchase Option and any other Restrictions.

Section 3.4 - Lapse of Restrictions.

(a) Subject to the terms and conditions of the Plan, the Restrictions applicable to the Restricted Shares shall lapse in accordance with the Vesting Schedule set forth on the Grant Notice.

(b) Upon the lapse of the Restrictions on the Restricted Shares (or portion thereof), the Company and the escrow agent shall cause new certificates to be issued with respect to such Restricted Shares and delivered to Employee or his or her legal representative, free from the legend provided for in Section 3.3(a) relating to the Repurchase Option and any other Restrictions. At such time, the Company shall also deliver all other securities and property held in escrow pursuant to Sections 3.2 and 3.5 in respect of the number of shares of Common Stock as to which the Restrictions have then lapsed. Notwithstanding the foregoing, no such new certificate shall be delivered to Employee or his or her legal representative unless and until Employee or his or her legal representative shall have paid to the Company in cash the full amount of all federal and state withholding or other employment taxes applicable to the taxable income and wages of Employee resulting from the award of the Restricted Shares or the lapse of the Restrictions.

(c) Notwithstanding anything to the contrary in this Section 3.4, following the lapse of the Restrictions, the Restricted Shares will remain subject to the Stockholders’ Agreement.

Section 3.5 - Restrictions on Distributions, etc.

In the event of any dividend or other distribution (including ordinary cash dividends, and whether in the form of Common Stock, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-off, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer,

 

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exchange or other disposition of all or substantially all of the assets of Blackhawk, or exchange of Common Stock or other securities of Blackhawk, or issuance of warrants or other rights to purchase Common Stock or other securities of Blackhawk, or other similar transaction or event, then any new or additional or different shares or securities or property (including cash) which is paid, issued, exchanged or distributed in respect of Restricted Shares then subject to Restrictions shall be considered to be Restricted Shares and shall be subject to all of the Restrictions, unless the Administrator shall, in its discretion, otherwise provide.

ARTICLE IV.

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