SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________
SCHEDULE 13D
(RULE 13D-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
FRED MEYER, INC.
(Name of Issuer)
Common Stock, $.01 Par Value
(Title of Class of Securities)
592907-10-9
(CUSIP Number)
Robert P. Bermingham
The Yucaipa Companies
10000 Santa Monica Boulevard, Fifth Floor
Los Angeles, California 90067
(310) 789-7200
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 9, 1997
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box: [_]
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
(Continued on following pages)
(Page 1 of 14 Pages)
<PAGE>
- - ----------------------- ------------------
CUSIP NO. 592907-10-9 SCHEDULE 13D PAGE 2 OF 14
- - ----------------------- ------------------
- - ---------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
The Yucaipa Companies
- - ---------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [X]
(b) [_]
- - ---------------------------------------------------------------------------
SEC USE ONLY
3
- - ---------------------------------------------------------------------------
SOURCE OF FUNDS
4
NA
- - ---------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e)
[_]
- - ---------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- - ---------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 2,144,683
SHARES ----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
2,154,403
OWNED BY
----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 2,144,683
PERSON ----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
2,154,403
- - ---------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
4,299,086
- - ---------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- - ---------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
9.4%
- - ---------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
PN
- - ---------------------------------------------------------------------------
<PAGE>
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CUSIP NO. 592907-10-9 SCHEDULE 13D PAGE 3 OF 14
- - ----------------------- ------------------
- - ---------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
Yucaipa Arizona Partners, L.P.
- - ---------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [X]
(b) [_]
- - ---------------------------------------------------------------------------
SEC USE ONLY
3
- - ---------------------------------------------------------------------------
SOURCE OF FUNDS
4
NA
- - ---------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e)
[_]
- - ---------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- - ---------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 287,261
SHARES ----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 287,261
PERSON ----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- - ---------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
287,261
- - ---------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- - ---------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
0.7%
- - ---------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
PN
- - ---------------------------------------------------------------------------
<PAGE>
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CUSIP NO. 592907-10-9 SCHEDULE 13D PAGE 4 OF 14
- - ----------------------- ------------------
- - ---------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
Yucaipa Smitty's Partner's, L.P.
- - ---------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [X]
(b) [_]
- - ---------------------------------------------------------------------------
SEC USE ONLY
3
- - ---------------------------------------------------------------------------
SOURCE OF FUNDS
4
NA
- - ---------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e)
[_]
- - ---------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- - ---------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 315,700
SHARES ----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 315,700
PERSON ----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- - ---------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
315,700
- - ---------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- - ---------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
0.7%
- - ---------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
PN
- - ---------------------------------------------------------------------------
<PAGE>
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CUSIP NO. 592907-10-9 SCHEDULE 13D PAGE 5 OF 14
- - ----------------------- ------------------
- - ---------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
Yucaipa Smitty's Partners II, L.P.
- - ---------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [X]
(b) [_]
- - ---------------------------------------------------------------------------
SEC USE ONLY
3
- - ---------------------------------------------------------------------------
SOURCE OF FUNDS
4
NA
- - ---------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e)
[_]
- - ---------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- - ---------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 143,632
SHARES ----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 143,632
PERSON ----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- - ---------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
143,632
- - ---------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- - ---------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
0.3%
- - ---------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
PN
- - ---------------------------------------------------------------------------
<PAGE>
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CUSIP NO. 592907-10-9 SCHEDULE 13D PAGE 6 OF 14
- - ----------------------- ------------------
- - ---------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
Yucaipa SSV Partners, L.P.
- - ---------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [X]
(b) [_]
- - ---------------------------------------------------------------------------
SEC USE ONLY
3
- - ---------------------------------------------------------------------------
SOURCE OF FUNDS
4
NA
- - ---------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e)
[_]
- - ---------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- - ---------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 1,407,810
SHARES ----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 1,407,810
PERSON ----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- - ---------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,407,810
- - ---------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- - ---------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
3.2%
- - ---------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
PN
- - ---------------------------------------------------------------------------
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, par value $.01 per share
(the "Common Stock"), of Fred Meyer, Inc., a Delaware Corporation formerly
known as Meyer-Smith Holdco, Inc. (the "Company"). The principal executive
offices of the Company are located at 3800 SE 22nd Avenue, Portland, Oregon
97202.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is being filed jointly by (i) The Yucaipa Companies,
a California general partnership ("Yucaipa"), (ii) Yucaipa Arizona Partners,
L.P., California limited partnership ("Arizona Partners"), (iii) Yucaipa
Smitty's Partners, L.P., a California limited partnership ("Smitty's
Partners"), (iv) Yucaipa Smitty's Partners II, L.P., a California limited
partnership ("Smitty's Partners II") and (v) Yucaipa SSV Partners, L.P., a
California limited partnership ("SSV Partners" and, together with Yucaipa,
Arizona Partners, Smitty's Partners and Smitty's Partners II, the "Reporting
Persons"). Yucaipa is the sole general partner of each of Arizona Partners,
Smitty's Partners, Smitty's Partners II and SSV Partners. Ronald W. Burkle,
Patrick L. Graham, Ira L. Tochner, Robert I. Bernstein, Lawrence K.
Kalantari, Darren W. Karst and Linda McLoughlin Figel are the general
partners of Yucaipa.
(b) The address of the principal business and principal office of each
of the Reporting Persons is 10000 Santa Monica Boulevard, Fifth Floor, Los
Angeles, California 90067. The business address of Ronald W. Burkle, Patrick
L. Graham, Ira L. Tochner, Robert I. Bernstein, Lawrence K. Kalantari and
Linda McLoughlin Figel is 10000 Santa Monica Boulevard, Fifth Floor, Los
Angeles, California 90067. The business address of Darren W. Karst is 505
Railroad Avenue, Northlake, Illinois 60164.
(c) The principal business of Yucaipa is acquiring, investing in and/or
managing supermarket and other companies. The principal business of Arizona
Partners, Smitty's Partners, Smitty's Partners II and SSV Partners is
investing in the Common Stock of the Company. The present principal
occupation or employment of each of Ronald W. Burkle, Patrick L. Graham, Ira
L. Tochner, Robert I. Bernstein, Lawrence K. Kalantari and Linda McLoughlin
Figel is as a general partner of Yucaipa, a private investment group
specializing in supermarket companies, the address of which is 10000 Santa
Monica Boulevard, Fifth Floor, Los Angeles, California 90067. The present
principal occupation or employment of Darren W. Karst is as Executive Vice
President and Chief Financial Officer of Dominick's Finer Foods, Inc., a
supermarket operator, the address of which is 505 Railroad Avenue, Northlake,
Illinois 60164.
(d) None of the Reporting Persons, nor, to the best of their knowledge,
any of the individuals referred to in paragraph (a) above, has during the
last five years been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors).
(e) None of the Reporting Persons, nor, to the best of their knowledge,
any of the individuals referred to in paragraph (a) above, has during the
last five years been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to
such laws.
(f) Each of the individuals referred to in paragraph (a) above is a
United States citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The consideration for the shares of Common Stock acquired by the
Reporting Persons was Class B Common Stock, par value $.01 per share, of
Smiths's Food & Drug Centers, Inc., a Delaware corporation ("Smith's"), held
by the Reporting Persons prior to September 9, 1997. On September 9, 1997
(the "Closing Date"), pursuant to the Agreement and Plan of Reorganization
and Merger dated as of May 11, 1997 (the "Merger Agreement") among the
Company, FM Stores, Inc., a Delaware corporation formerly known as Fred
Meyer, Inc. ("FM Stores"), Smith's, Fred Meyer Merger Sub, Inc., a Delaware
corporation and wholly owned subsidiary of the Company ("Fred Meyer Merger
Sub"), and Smith Merger Sub, a Delaware corporation and wholly owned
subsidiary of the Company ("Smith's Merger Sub"), (i) Smith's Merger Sub
merged with and into Smith's and Fred Meyer Merger Sub merged with and into
FM Stores (together, the "Merger") with each of Smith's and FM Stores
surviving the respective merger and becoming a wholly owned subsidiary of the
Company, (ii) each outstanding share of Class A Common Stock, par value $.01
per share (the "Smith's Class A Common Stock"), and Class B Common Stock, par
value $.01 per share (the "Smith's Class B Common Stock"), of Smith's
(including shares held by each of the Reporting Persons) was converted into
1.05 shares of Common Stock of the Company and each outstanding share of
Series I Preferred Stock, par value $.01 per share, of Smith's was converted
into the right to receive in cash the amount of thirty-three and one-third
cents ($.33_) and (iii) each outstanding share of common stock, par value
$.01 per share, of FM Stores was converted into one share of Common Stock of
the Company.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Persons acquired the Common Stock for investment pursuant
to the Merger. A copy of the Merger Agreement is included as Exhibit 99.1 to
the Current Report on Form 8-K dated May 11, 1997 of Smith's, filed with the
Securities and Exchange Commission (the "Commission") on May 14, 1997.
The Reporting Persons intend to review their investment in the Company
from time to time and, depending upon the price and availability of the
Common Stock, subsequent developments affecting the Company, the Company's
business and prospects, other investment and business opportunities available
to the Reporting Persons, general stock market and economic conditions, tax
considerations and other factors deemed relevant, may decide to increase or
decrease the size of their investment in the Company.
Except as described herein and in Item 6 below, neither the Reporting
Persons, nor, to the best of their knowledge, any of the individuals referred
to in paragraph (a) of Item 2, has any present plan or proposal which relates
to, or could result in, any of the events referred to in paragraphs (a)
through (j), inclusive, of Item 4 of Schedule 13D. However, the Reporting
Persons will continue to review the business of the Company and, depending
upon one or more of the factors referred to above, may in the future propose
that the Company take one or more of such actions.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Arizona Partners owns 287,261 shares of Common Stock (approximately
0.7% of the total number of outstanding shares of Common Stock immediately
following the consummation of the Merger); Smitty's Partners owns 315,700
shares of Common Stock (approximately 0.7% of the total number of outstanding
shares of Common Stock immediately following the consummation of the Merger);
Smitty's Partners II owns 143,632 shares of Common Stock (approximately 0.3%
of the total number of outstanding shares of Common Stock immediately
following the consummation of the Merger); SSV Partners owns 1,407,810 shares
of Common Stock (approximately 3.2% of the total number of outstanding shares
of Common Stock immediately following the consummation of the Merger); and
Yucaipa owns 210,000 shares of Common Stock (approximately 0.5% of the total
number of outstanding shares of Common Stock immediately following the
consummation of the Merger) and is the record holder of a currently
exercisable warrant entitling it to purchase up to 1,934,683 shares of Common
Stock, which shares it may be deemed to beneficially own pursuant to Section
13d-3(d)(1) of the Act.
(b) Arizona Partners, Smitty's Partners, Smitty's Partners II and SSV
Partners, acting through their sole general partner, Yucaipa, have the sole
power to vote or direct the vote, and to dispose or to direct the disposition
of the shares of Common Stock beneficially owned by them. As a result,
Yucaipa may be deemed to beneficially own the shares of Common Stock directly
owned by Arizona Partners, Smitty's Partners, Smitty's Partners II and SSV
Partners. Each of Ronald W. Burkle, Patrick L. Graham, Robert I. Bernstein,
Lawrence K. Kalantari, Ira L. Tochner, Linda McLoughlin Figel and Darren W.
Karst, as a general partner of Yucaipa, may be deemed to beneficially own the
shares of Common Stock of the Company beneficially owned by the Reporting
Persons, but disclaims any such ownership (except to the extent of such
individual's pecuniary interest therein), and the filing of this statement
shall not be construed as an admission that any of Messrs. Burkle, Graham,
Bernstein, Kalantari, Tochner or Karst or Ms. Figel is, for the purposes of
Section 13(d) or 13(g) of the Act, the beneficial owner of such securities.
(c) Except as described in Item 4 above, there have not been any
transactions in the Common Stock effected by or for the account of the
Reporting Persons during the past 60 days.
(d) Except as stated in this Item 5, to the best knowledge of the
Reporting Persons, no other person has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
shares of Common Stock owned by the Reporting Persons.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
In connection with the Merger, (i) Ronald W. Burkle was elected Chairman
of the Board of Directors of the Company, (ii) the Company and Yucaipa
entered into a Registration Rights Agreement and a Supplemental Warrant
Agreement as described below and (iii) the Company and The Yucaipa Companies
LLC, a Delaware limited liability company and an affiliate of Yucaipa
("Yucaipa LLC"), entered into a Management Services Agreement described
below.
THE MANAGEMENT SERVICES AGREEMENT
On the Closing Date, the Company entered into the Management Services
Agreement with Yucaipa LLC. Under the terms of the Management Services
Agreement, Yucaipa LLC, through its members, employees or other designated
representatives or agents, will provide the Company and its subsidiaries,
subject to the supervision of the Company's Board of Directors, management
consultation and advice and Mr. Burkle will serve as the Chairman of the
Company's Board of Directors.
During the term of the Management Services Agreement and for a period of
90 days from the later of (i) the date on which the Management Services
Agreement is terminated or (ii) the date on which Ronald W. Burkle ceases to
be the Chairman of the Company's Board of Directors, neither Yucaipa LLC nor
any of its affiliates, alone or with others, will, in any manner, without the
prior approval of the Company's Board of Directors, (a) enter into or agree
to enter into, singly or with any other person, any form of business
combination, acquisition, restructuring, recapitalization, liquidation or
other similar transaction relating to the Company or any subsidiary of the
Company, (b) hold, acquire, or offer or agree to acquire, become the
beneficial owner of or obtain any rights in respect of, in each case by
purchase or otherwise, any securities entitled to vote generally in the
election of directors of the Company, or any direct or indirect rights or
options to acquire any such securities or any securities convertible into or
exercisable for such securities, in excess of 15% of the Company's
outstanding voting securities, (c) participate in any proxy solicitation with
respect to such voting securities, (d) participate in or encourage the
formation of any partnership, syndicate, voting trust or other group which
owns or seeks or offers to acquire beneficial ownership of any such voting
securities or which seeks control of the Company or (d) otherwise act, alone
or in concert with others, to seek or offer to control or influence, in any
manner (except pursuant to the Management Services Agreement or through its
representatives on the Company's Board of Directors), the management, Board
of Directors or policies of the Company.
The foregoing summary of the Management Services Agreement is qualified
in its entirety by reference to the agreement which is attached hereto as
Exhibit 1.
THE SUPPLEMENTAL WARRANT AGREEMENT
On May 23, 1996, Smith's issued to Yucaipa warrants to purchase
1,842,555 shares of Class C Common Stock, par value $.01 per share (the
"Smith's Class C Common Stock"), of Smith's (the "Warrants") at an initial
exercise price of $50.00 per share. On the Closing Date, the Company
executed the Supplemental Warrant Agreement providing that any holder of a
Warrant will have the right until the expiration date thereof to exercise
such Warrant at the existing exercise price for the number of shares of
Common Stock of the Company to which a holder of the number of shares of
Smith's Class C Common Stock that would have otherwise been deliverable upon
the exercise of such Warrant would have been entitled pursuant to the Merger
Agreement if such Warrant had been exercised in full immediately prior to the
effective time of the Merger. One-half of the Warrants are exercisable at
the election of Yucaipa on or prior to May 23, 2005, and one-half of the
Warrants are exercisable at the election of Yucaipa on or prior to May 23,
2006. The Warrants are exercisable for an aggregate of 1,934,683 shares of
Common Stock of the Company at an exercise price of $50 for each 1.05 shares
of Common Stock of the Company, for an aggregate purchase price of
$92,127,750.
The foregoing summary of the Supplemental Warrant Agreement is qualified
in its entirety by reference to the agreement which is attached hereto as
Exhibit 2.
THE REGISTRATION RIGHTS AGREEMENT
On the Closing Date, the Company entered into the Registration Rights
Agreement with (i) Jeffrey P. Smith, Richard D. Smith, Fred L. Smith and
certain Smith family trusts, and (ii) the Reporting Persons, each of which
received shares of Common Stock of the Company in the Merger. Under the
terms of the Registration Rights Agreement, each of (i) the holders of a
majority of the Registrable Securities (as defined in the Registration Rights
Agreement) held by Yucaipa, its affiliates and transferees of the foregoing,
as a group (the "Yucaipa Holder Group"), and (ii) the holders of a majority
of the Registrable Securities held by Jeffrey Smith, Richard Smith, Fred
Smith, members of their respective families or any trust of which any of the
foregoing are beneficiaries, as a group (the "Smith Holder Group") will each
be entitled to two written requests (each, a "Demand Registration") upon the
Company for the registration under the Securities Act of 1933, as amended
(the "Securities Act") of all or part (but not less than one million
(1,000,000) shares) of their shares of Registrable Securities; provided,
however, that the Company will only be required to effect one Demand
Registration during any six-month period. Such Demand Registration may, at
the election of the demanding holders, be in the form of an underwritten
offering and such demanding holders will be entitled to select the
underwriters.
If at any time the Company proposes to file a registration statement
under the Securities Act with respect to an offering by the Company for its
own account or for the account of any holders of any class of common equity
securities (other than (i) a registration statement on Form S-4 or S-8 or
(ii) a registration statement filed in connection with a Demand Registration
or a Shelf Registration (as defined herein) or (iii) a registration statement
filed in connection with an offering of securities solely to existing
security holders of the Company), the Company will give notice of such
proposed filing to the holders of Registrable Securities who are parties to
the Registration Rights Agreement and their transferees and will offer such
holders the opportunity to register their Registrable Securities as part of
such registration (a "Piggyback Registration").
Upon the request of holders of a majority of the Registrable Securities
held by the Yucaipa Holder Group at any time, the Company will cause to be
filed with the Commission as promptly as practicable after such request, but
in no event later than 60 days thereafter, a shelf registration statement (a
"Shelf Registration") which will provide for resales of Registrable
Securities held by members of the Yucaipa Holder Group who have provided
information required by the Registration Rights Agreement. The Company
agreed to use its best efforts to have such Shelf Registration declared
effective and to keep such Shelf Registration continuously effective, for a
period of at least one year following the date on which it becomes effective
under the Securities Act; provided, however, that in no event will the
Company be required to keep the Shelf Registration in effect after the fifth
anniversary of the Closing Date.
In the event the Company is not able to fulfill all requests for the
Registrable Securities to be included in any Demand Registration or Piggyback
Registration, the Company will grant certain priority rights to the Smith
Holder Group and the Yucaipa Holder Group which enable the Smith Holder Group
and the Yucaipa Holder Group to have their Registrable Securities up to
certain designated amounts included in such registrations before certain
other stockholders of the Company having piggyback or other similar
registration rights are entitled to include their Registrable Securities in
such registrations, subject to the priority of that certain registration
rights agreement, dated December 11, 1981, by and among FMI Acquisition
Corporation (now FM Stores), FMI Associates Limited Partnership and certain
executive officers of FMI Acquisition Corporation, and the Assignment thereof
dated January 27, 1997.
The Company will be obligated to pay its expenses associated with
registration of the Registrable Securities, regardless of whether any
registration statement required by the Registration Rights Agreement becomes
effective. In addition, the Company will provide customary securities law
indemnification to any party who participates in any registration effected
under the Registration Rights Agreement.
The Registration Rights Agreement will terminate upon the earlier to
occur of (i) the mutual agreement by the parties thereto, (ii) with respect
to any holder, such holder ceasing to own any Registrable Securities,
(iii) the fifteenth anniversary of the Closing Date, or (iv) with respect to
the Yucaipa Holder Group or the Smith Holder Group, the date on which the
aggregate number of shares of outstanding Registrable Securities held by the
Yucaipa Holder Group or the Smith Holder Group, as applicable, is less than
20% of the Registrable Securities Shares originally held by the Yucaipa
Holder Group or the Smith Holder Group, as applicable, immediately following
the consummation of the transactions contemplated by the Merger Agreement
(except with respect to any holder that is an "affiliate" of the Company
within the meaning of the Securities Act).
The foregoing summary of the Registration Rights Agreement is qualified
in its entirety by reference to the agreement which is attached hereto as
Exhibit 3.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Management Services Agreement, dated as of
September 9, 1997, by and between Fred Meyer, Inc. and
The Yucaipa Companies LLC.
Exhibit 2. Supplemental Warrant Agreement, dated as
of September 9, 1997, by and between Fred Meyer, Inc. and
The Yucaipa Companies.
Exhibit 3. Registration Rights Agreement, dated as of
September 9, 1997, by and between the Company and the
parties listed on the signature pages thereto.
Exhibit 4. Joint Filing Agreement.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: September 19, 1997 Yucaipa Arizona Partners, L.P.
Yucaipa Smitty's Partners, L.P.
Yucaipa Smitty's Partners II, L.P.
Yucaipa SSV Partners, L.P.
By: The Yucaipa Companies
Its General Partner
By: /S/ LAWRENCE K. KALANTARI
Name: Lawrence K. Kalantari
Title: General Partner
Dated: September 19, 1997 The Yucaipa Companies
By: /S/ LAWRENCE K. KALANTARI
Name: Lawrence K. Kalantari
Title: General Partner
EXHIBIT INDEX
Exhibit 1. Management Services Agreement, dated as of
September 9, 1997, by and between Fred Meyer, Inc. and
The Yucaipa Companies LLC.
Exhibit 2. Supplemental Warrant Agreement, dated as
of September 9, 1997, by and between Fred Meyer, Inc. and
The Yucaipa Companies.
Exhibit 3. Registration Rights Agreement, dated as of
September 9, 1997, by and between the Company and the
parties listed on the signature pages thereto.
Exhibit 4. Joint Filing Agreement.
EXHIBIT 1
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") is made and
entered into as of September 9, 1997 by and between THE YUCAIPA COMPANIES LLC,
a Delaware limited liability company ("Yucaipa"), and Fred Meyer, Inc., a
Delaware corporation formerly known as Meyer-Smith Holdco, Inc. (the
"Company").
RECITALS
A. FM Stores, Inc., a Delaware corporation and predecessor to
Company formerly known as Fred Meyer, Inc. ("Fred Meyer Stores") is in the
business of operating multidepartment stores and specialty stores and is a
leading regional retailer of a wide range of food, apparel, fine jewelry and
products for the home;
B. Smith's Food & Drug Centers, Inc. ("Smith's") is in the business
of operating combination food and drug centers and is a leading regional
supermarket and drug store chain;
C. Fred Meyer Stores and Smith's, pursuant to the Agreement and
Plan of Reorganization and Merger, dated as of May 11, 1997 (the "Merger
Agreement"), have combined their operations through the mergers contemplated
therein (the "Mergers"), and each of them have become wholly-owned subsidiaries
of the Company;
D. Yucaipa is experienced in the management of supermarket
companies and has been providing certain general business and financial advice
and management services to Smith's;
E. The Company wishes to obtain the continuing benefits of
Yucaipa's advice and services following the consummation of the Mergers; and
F. In connection with the Mergers, Ronald W. Burkle has been
elected to serve as the Chairman of the Board of Directors of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties hereto and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned
parties agree as follows:
SECTION 1. MANAGEMENT SERVICES.
(a) Subject to the provisions of this Agreement, and subject to the
supervision of the Board of Directors of the Company (the "Board of
Directors"), Yucaipa, through its members, employees or other designated
representatives or agents, shall provide the Company with management
consultation and advice regarding strategic planning and development,
budgeting, future financing plans, selection and retention of management
employees, general business management and governmental affairs, and such other
similar management services as may be requested by the Board of Directors
and/or the Chief Executive Officer from time to time. As used herein, the
Company refers to the Company and its subsidiaries, as the context requires.
(b) Chairman of the Board of Directors. Ronald W. Burkle shall, if
he so elects, have the right to serve as Chairman of the Board of Directors of
the Company during his initial three year term as a director of the Company,
and shall have all rights and responsibilities customarily vested in a Chairman
of the Board of Directors, provided that he shall not receive any compensation
for serving in such capacity beyond the compensation paid to Yucaipa under this
Agreement.
(c) Best Practices. During the term of this Agreement the Company
will be afforded the opportunity to participate in the "Best Practices" program
as conducted by Yucaipa and certain of its affiliated businesses.
SECTION 2. MANAGEMENT FEES.
Commencing on the date hereof (the "Effective Date"), the Company
shall pay to Yucaipa an annual management fee, in consideration of the services
rendered by Yucaipa pursuant to Section 1 above, equal to Five Hundred Thousand
Dollars ($500,000.00), one-twelfth (1/12th) of which shall be payable in
advance on the first day of each calendar month; provided that a prorated
portion of such fee will be payable in advance on the Effective Date for the
partial month beginning on the Effective Date and ending on the last day of the
then current month.
SECTION 3. REIMBURSEMENT OF EXPENSES.
The Company shall reimburse Yucaipa for all of its reasonable out-of-
pocket costs and expenses incurred in connection with the performance of its
obligations under this Agreement. Yucaipa shall bill the Company for the
amount of all such costs and expenses monthly, and shall provide the Company
with a reasonable itemization of such costs and expenses.
SECTION 4. ADDITIONAL SERVICES.
In the event that, during the term of this Agreement, the Board of
Directors requests Yucaipa to provide (i) consulting services in connection
with any proposed acquisition or divestiture transaction or any debt or equity
financing or (ii) any other services not contemplated by Section 1 above,
Yucaipa shall be entitled to such additional compensation for such services as
may be agreed upon by Yucaipa and the Company (and approved by a majority of
the Company's disinterested directors).
SECTION 5. TERM OF AGREEMENT.
The term of this Agreement shall commence on the Effective Date and
continue for a period of five (5) years ending on the fifth anniversary of the
Effective Date.
SECTION 6. TERMINATION.
6.1 Termination by the Company. The Company may elect to terminate
this Agreement:
(a) at any time following a determination of the Board of Directors
to effect such a termination by giving Yucaipa at least ninety (90) days'
written notice of such termination;
(b) if Yucaipa shall fail to reasonably perform any material
covenant, agreement, term or provision of this Agreement to be kept, observed
or performed by it (other than any failure or alleged failure occasioned by or
resulting from force majeure, directly or indirectly) and such failure shall
continue for a period of sixty (60) days after written notice from the Company,
which notice shall describe the alleged failure with particularity; and
(c) at any time if, in connection with the performance of its duties
hereunder, Yucaipa or any of its members commits (or is grossly negligent in
its supervision or hiring of any employee or agent of Yucaipa who commits) any
act of fraud, dishonesty or gross negligence which is materially detrimental to
the business or reputation of the Company as reasonably determined by the Board
of Directors.
6.2 Termination by Yucaipa. Yucaipa may elect to terminate this
Agreement:
(a) if the Company shall fail to reasonably perform any material
covenant, agreement, term or provision of this Agreement to be kept, observed
or performed by it (other than any failure or alleged failure occasioned by or
resulting from force majeure, directly or indirectly) and such failure shall
continue for a period of sixty (60) days after written notice from Yucaipa,
which notice shall describe the alleged failure with particularity;
(b) if the Company shall fail to make any payment due to Yucaipa
hereunder, if such payment is not made in full within thirty (30) days after
written notice of such failure; or
(c) if Ronald W. Burkle ceases to be Chairman of the Board of
Directors, other than by reason of his death, disability, termination for Cause
or voluntary resignation. For purposes of the foregoing, "Cause" shall mean
the commission by Ronald W. Burkle of any act described in Section 6.1(c) or
any felony conviction.
6.3 Termination for Change of Control. This Agreement may be
terminated, at the election of either Yucaipa or the Company, if during the
term hereof there shall have been a change in control of the Company, which for
purposes of this Agreement shall be deemed to have occurred upon any of the
following events: (a) the acquisition after the Effective Date, in one or more
transactions, of "beneficial ownership" (within the meaning of Rule 13d-3(a)(1)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) by
any person (other than Yucaipa or any of its members or affiliates) or any
group of persons (excluding any group which includes Yucaipa or any of its
members or affiliates) who constitute a group (within the meaning of Section
13(d)(3) of the Exchange Act) of any securities of the Company such that, as a
result of such acquisition, such person or group beneficially owns (within the
meaning of Rule 13d-3(a)(1) under the Exchange Act) 40% or more of the
Company's then outstanding voting securities entitled to vote on a regular
basis for a majority of the Board of Directors; or (b) the sale of all or
substantially all of the assets or capital stock of the Company (including,
without limitation, by way of merger, consolidation, lease or transfer) in a
transaction or series of related transactions (excluding any sale to Yucaipa or
any of its members or affiliates). As used herein the term "affiliate" refers
to any person controlled by, or under common control with, the specified
person.
6.4 Payments upon Termination.
(a) In the event of any termination pursuant to Section 6.1(a),
Section 6.2 or Section 6.3, the Company shall pay, or cause to be paid, to
Yucaipa a cash termination payment in an amount equal to the greater of (i) Two
Million Five Hundred Thousand Dollars ($2,500,000) and (ii) twice the total
consulting fees that would have been earned by Yucaipa under Section 2 hereof
during the remaining term of this Agreement as if the Agreement had not been
terminated, without regard to any sums previously paid by the Company to
Yucaipa pursuant to Section 2 above.
(b) Such amount, if any, which shall be due Yucaipa pursuant to this
Section 6.4 in the event of any such termination shall be due and payable to
Yucaipa, in full, as of the date of such termination. The parties intend that
should the foregoing payments be determined to constitute liquidated damages,
such payments shall in all events be deemed reasonable.
6.5 Effect of Termination. Upon any such termination of this
Agreement the obligations of the parties hereunder shall also terminate, except
(i) the Company shall continue to be obligated to Yucaipa for any payments to
be received pursuant to Section 6.4(a), and for any unpaid fees or expenses
incurred prior to any such termination, (ii) the Company's obligations under
Section 7 hereof shall survive any such termination for the period of time
specified therein; and (iii) the provisions of Sections 8, 9 and 10 shall
survive any such termination.
SECTION 7. STANDSTILL.
Yucaipa agrees that during the term of this Agreement and for a
period of 90 days from the later of (i) the date on which this Agreement is
terminated or (ii) the date on which Ronald W. Burkle ceases to be the Chairman
of the Board of Directors, neither it nor any of its affiliates, alone or with
others, will in any manner, without the prior approval of the Company's Board
of Directors, (a) enter into or agreed to enter into, singly or with any other
person, any form of business combination, acquisition, restructuring,
recapitalization, liquidation or other similar transaction relating to the
Company or any subsidiary of the Company, (b) hold, acquire, or offer or agree
to acquire, become the beneficial owner of or obtain any rights in respect of,
in each case by purchase or otherwise, any securities entitled to vote
generally in the election of directors of the Company, or any direct or
indirect rights or options to acquire any such securities or any securities
convertible or exercisable into or exchangeable for such securities ("Voting
Securities") of the Company, in excess of 15% of the Company's outstanding
Voting Securities (including for these purposes any shares of Company Common
Stock acquired pursuant to the Mergers or upon the exercise of any currently
exercisable option or warrant), (c) make, or in any way participate in, any
solicitation of proxies with respect to any such Voting Securities (including
by the execution of action by written consent), become a participant in any
election contest with respect to the Company, seek to influence any person with
respect to any such Voting Securities, (d) participate in or encourage the
formation of any partnership, syndicate, voting trust or other group which owns
or seeks or offers to acquire beneficial ownership of any such Voting
Securities or which seeks control of the Company or has the purpose of
circumventing any provision of this Agreement, (e) otherwise act, alone or in
concert with other (including, without limitation, by providing financing for
another Person), to seek or to offer to control or influence, in any manner
(except pursuant to its services under this Agreement or through its
representatives on the Board of Directors, or policies of the Company, (f) make
any formal demand, request or proposal to amend, waive or terminate any
provision of this Section 7, (g) make any proposal or other communication or
take any other action that would compel the Company to make a public
announcement or disclosure thereof in respect of any matter referred to in this
Section 7 or (h) publicly propose or announce or otherwise publicly disclose an
intent to propose or that it is considering proposing any of the matters
referred to in this Section 7. Yucaipa shall be released from its obligations
hereunder in the event that the Company enters into an agreement which would
result in a Change of Control with any person other than Yucaipa or its
affiliates. As used herein the terms "beneficial ownership," "person" and
"group" shall have the meanings ascribed to such terms pursuant to Regulation
13D-G adopted by the SEC under the Securities Exchange Act of 1934, as amended,
and as in effect on the date hereof; provided, however, that for purposes of
determining beneficial ownership under this Section 7 any Voting Securities
issuable upon the exercise of any option or warrant shall only be included in
such determination to the extent of the number of such Voting Securities which
would be issuable under such option or warrant on a "net" or "cashless" basis
at such time. In addition, Yucaipa agrees that it will exercise any such
option or warrant on a "net" or "cashless" basis if and to the extent the
exercise on any other basis would result in its aggregate beneficial ownership
of Voting Securities exceeding 15% of the Company's outstanding Voting
Securities.
SECTION 8. CONFIDENTIALITY.
8.1 Definitions. For purposes of this Section:
(a) The term "Confidential Material" means all information,
whether oral, written or otherwise (including any information furnished prior
to the execution of this Agreement), furnished or otherwise disclosed by the
Company to Yucaipa and its affiliates or any of the Representatives (as defined
below), and all notes, reports, analyses, compilations, studies and other
materials prepared by Yucaipa or any of the Representatives (in whatever form
maintained, whether documentary, computer storage or otherwise) containing or
based upon, in whole or in part, any such information. The term "Confidential
Material" does not include information which is or becomes generally available
to the public other than as a result of a disclosure by Yucaipa or any of the
Representatives or becomes available to Yucaipa or any of the Representatives
on a non-confidential basis from any source that is not known by Yucaipa or
such Representative to be bound by an obligation of confidentiality to the
Company.
(b) The term "Representatives" shall mean any and all members,
partners, directors, officers, employees, agents, prospective financing
sources, affiliates or representatives (including representatives of advisors)
of Yucaipa.
8.2 Yucaipa and its affiliates and each of the Representatives
shall preserve the confidentiality of the Confidential Material and shall not
disclose any of the Confidential Material in any manner whatsoever; provided,
however, that (i) Yucaipa or its affiliates may make any disclosure of such
information to which the Company gives its prior written consent, (ii) Yucaipa
and its affiliates and the Representatives may make disclosures of such
information within the scope of their authority under this Agreement, and (iii)
any of such information may be disclosed to the Representatives who need to
know, and who are informed of the confidential nature of the Confidential
Material and of the terms of this Section and who agree to keep such
information confidential. In any event, Yucaipa and its affiliates shall
inform each of their Representatives which have, or will have, access to any or
all of the Confidential Material, of the existence and content of this
Agreement and will take all reasonable action necessary to cause such
Representatives to observe the confidentiality requirements of this Agreement.
In any event, Yucaipa shall be responsible for any breach of this Agreement by
any of its Representatives.
8.3 If Yucaipa or its affiliates or any of the Representatives
are requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand, any informal or
formal investigation by any government or governmental agency or authority or
otherwise) to disclose any Confidential Material or such person's opinion,
judgment, view or recommendation concerning the Company as developed from the
Confidential Material, Yucaipa agrees (i) to immediately notify the Company in
writing of the existence, terms and circumstances surrounding such a request,
(ii) to consult with the Company on the advisability of taking legally
available steps to resist or narrow such request and shall exercise its best
efforts to obtain reliable assurance that confidential treatment required
hereby will be accorded such Confidential Material, and (iii) if disclosure of
such information is required, to furnish only that portion of the Confidential
Material which, in the opinion of counsel to Yucaipa, Yucaipa is legally
compelled to disclose, and to cooperate with any action by the Company to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded the Confidential Material.
8.4 Yucaipa hereby acknowledges on behalf of itself and its
affiliates (and agrees to advise its affiliates and the Representatives who are
informed in accordance with the terms of this Section as to the matters which
are the subject of this Section), that the United States securities laws
prohibit any person who has received from an issuer material, non-public
information, including certain information that may be part of the Confidential
Material, while such information is non-public, from purchasing or selling
securities of such issuer or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities.
SECTION 9. INDEMNIFICATION.
(a) The Company (the "Indemnifying Party") agrees to indemnify and
hold harmless Yucaipa and each of its affiliates, members, partners, officers,
agents and the employees of each of them (each an "Indemnified Party" and
collectively, the "Indemnified Parties"), from and against all losses, claims,
damages or liabilities resulting from any claim, lawsuit or other proceeding by
any person to which any Indemnified Party may become subject which is related
to or arises out of the performance of the services to be provided hereunder
(or under the Merger Agreement), and will reimburse any Indemnified Party for
all reasonable out-of-pocket expenses (including reasonable counsel fees and
disbursements) incurred by such Indemnified Party in connection with
investigating or defending any such claim. Each Indemnifying Party further
agrees that the indemnification and reimbursement commitments herein shall
apply whether or not such Indemnified Party is a formal party to any such
lawsuit, claim or other proceedings. The foregoing provision is expressly
intended to cover reimbursement of reasonable legal and other expenses incurred
in a deposition or other discovery proceeding.
Notwithstanding the foregoing, the Indemnifying Party shall not be
liable to any Indemnified Party (a) in respect of any loss, claim, damage,
liability or expense to an Indemnified Party to the extent the same is
determined, in a final judgment by a court having jurisdiction, to have
resulted from the gross negligence or willful misconduct of such Indemnified
Party or any intentional, material breach by such Indemnified Party of its
obligations under this Agreement or (b) for any settlement effected by such
Indemnified Party without the written consent of such Indemnifying Party, which
consent shall not be unreasonably withheld.
In the event of the assertion against any Indemnified Party of any
such claim or the commencement of any such action or proceeding, each
Indemnifying Party shall be entitled to participate in such action or
proceeding and in the investigation of such claim and, after written notice
from such Indemnifying Party to such Indemnified Party, to assume the
investigation or defense of such claim, action or proceeding with counsel of
the Indemnifying Party's choice at the Indemnifying Party's expense; provided,
however, that such counsel shall be reasonably satisfactory to the Indemnified
Party. Notwithstanding anything to the contrary contained herein, the
Indemnifying Party may retain one firm of counsel to represent all Indemnified
Parties in such claim, action or proceeding; provided that the Indemnified
Party shall have the right to employ a single firm of separate counsel (and any
necessary local counsel) and to participate in the defense or investigation of
such claim, action or proceeding, and the Indemnifying Party shall bear the
expense of such separate counsel (and local counsel, if applicable), if (i) in
the written opinion of counsel to the Indemnified Party use of counsel of the
Indemnifying Party's choice could reasonably be expected to give rise to a
conflict of interest, (ii) the Indemnifying Party shall not have employed
counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party within a reasonable time after notice of the assertion of any
such claim or institution of any such action or proceeding or (iii) the
Indemnifying Party shall authorize the Indemnified Party to employ separate
counsel at the Indemnifying Party's expense.
(b) If for any reason (other than the gross negligence or
willful misconduct of an Indemnified Party referred to above) the foregoing
indemnification is unavailable to any Indemnified Party or insufficient to hold
it harmless as and to the extent contemplated by the preceding paragraph (a),
then the Indemnifying Party shall contribute to the amount paid or payable by
the Indemnified Party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative benefits received by
the Indemnifying Party and its affiliates, on the one hand, and the Indemnified
Party, as the case may be, on the other hand, as well as any other relevant
equitable considerations.
(c) Notwithstanding anything contained in this Section 9, each
Indemnified Party who is also a director, officer or employee of the Company
shall not be entitled to any greater indemnification under clause (a) of this
Section 9 and contribution under clause (b) of this Section 9 than such
Indemnified Party would otherwise be entitled to under the charter and by-laws
of the Company or any other indemnification agreement to which such Indemnified
Party is a signatory.
SECTION 10. NOTICES.
All notices, demands, requests, consents or approvals required or
permitted to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served and mailed,
registered or certified, return receipt requested, postage prepaid (or by a
substantially similar method), or delivered by a reputable overnight courier
service with charges prepaid, or transmitted by hand delivery, telegram, telex
or facsimile, addressed as set forth below, or such other address as such party
shall have specified most recently by written notice. Notice shall be deemed
given or delivered on the date of service or transmission if personally served
or transmitted by telegram, telex or facsimile. Notice otherwise sent as
provided herein shall be deemed given or delivered on the third business day
following the date mailed or on the next business day following the delivery of
such notice to a reputable overnight courier service.
If to Yucaipa: The Yucaipa Companies LLC
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
Attention: Ronald W. Burkle
If to the Company: Fred Meyer, Inc.
3800 S.E. 22nd Avenue
Portland, Oregon 97202
Attention: Robert G. Miller
with a copy to the General Counsel of the Company at the same address.
SECTION 11. MISCELLANEOUS.
11.1 Entire Agreement; Amendments. This Agreement contains all of
the terms and conditions agreed upon by the parties hereto in connection with
the subject matter hereof. This Agreement may not be amended, modified or
changed except by written instrument signed by all of the parties hereto.
11.2 Assignment; Successors. This Agreement shall not be assigned
and is not assignable by any party without the prior written consent of each of
the other parties hereto; provided, however, that Yucaipa may assign, without
the prior consent of the Company, its rights and obligations under this
Agreement to any partnership or limited liability company controlled by Ronald
W. Burkle, and provided further, that Yucaipa may assign the right to receive
any payment hereunder (but not its duties and obligations hereunder) to any
other person or entity. Subject to the preceding sentence, this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective permitted successors and assigns.
11.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal domestic laws of the State of New
York, without regard to the choice of law provisions thereof.
11.4 Attorneys' Fees. If any legal action is brought concerning any
matter relating to this Agreement, or by reason of any breach of any covenant,
condition or agreement referred to herein, the prevailing party shall be
entitled to have and recover from the other party to the action all costs and
expenses of suit, including attorneys' fees.
11.5 Relationship. Nothing in this Agreement shall constitute or be
construed to be a partnership or joint venture between the Company and Yucaipa.
To the extent appropriate to the duties and obligations hereunder, Yucaipa
shall be an independent contractor and none of its employees shall be deemed
employees of the Company by reason of this Agreement or the performance of its
duties hereunder. This Agreement is for the benefit of the Company and Yucaipa
and shall not create third party beneficiary rights.
11.6 Construction and Interpretation. This Agreement shall not be
construed for or against either party by reason of the authorship or alleged
authorship of any provision hereof or by reason of the status of the respective
parties. This Agreement shall be construed reasonably to carry out its intent
without presumption against or in favor of either party. The natural persons
executing this Agreement on behalf of each party have the full right, power and
authority to do and affirm the foregoing warranty on behalf of each party and
on their own behalf. The captions on sections are provided for purposes of
convenience and are not intended to limit, define the scope of or aid in
interpretation of any of the provisions hereof. References to a party or
parties shall refer to the Company or Yucaipa, or both, as the context may
require. All pronouns and singular or plural references as used herein shall
be deemed to have interchangeably (where the sense of the sentence requires) a
masculine, feminine or neuter, and/or singular or plural meaning, as the case
may be.
11.7 Severability. If any term, provision or condition of this
Agreement is determined by a court or other judicial or administrative tribunal
to be illegal, void or otherwise ineffective or not in accordance with public
policy, the remainder of this Agreement shall not be affected thereby and shall
remain in full force and effect and shall be construed in such manner so as to
preserve the validity hereof and the substance of the transactions herein
contemplated to the extent possible.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Management
Services Agreement to be duly executed as of the date first above written.
THE YUCAIPA COMPANIES LLC
By: /S/ RONALD W. BURKLE
Name: Ronald W. Burkle
Title: Managing Member
FRED MEYER, INC.
By: /S/ KENNETH THRASHER
Name: Kenneth Thrasher
Title: Executive Vice President
EXHIBIT 2
SUPPLEMENTAL WARRANT AGREEMENT
SUPPLEMENTAL WARRANT AGREEMENT (the "Agreement") dated as of September 9,
1997 among FRED MEYER, INC., a Delaware corporation formerly known as Meyer-
Smith Holdco, Inc. (the "Company"), and THE YUCAIPA COMPANIES, a California
general partnership, or its registered permitted assigns (the "Consultant").
WHEREAS, Smith's Food & Drug Centers, Inc., a Delaware corporation
("Smith's"), has become a wholly-owned subsidiary of the Company as a result of
the transactions (collectively, the "Merger") contemplated in the Agreement and
Plan of Reorganization and Merger dated as of May 11, 1997 between Smith's and
FM Stores, Inc., a Delaware corporation and predecessor to the Company formerly
known as Fred Meyer, Inc. ("Fred Meyer Stores").
WHEREAS, prior to the effective date of the Merger, Smith's was a party to
a Warrant Agreement dated May 23, 1996 (the "Warrant Agreement") between
Smith's and the Consultant pursuant to which Smith's issued 1,842,555 warrants
to purchase an aggregate of 1,842,555 shares of Class C Common Stock, $.01 par
value per share, of Smith's. Defined terms used herein and not otherwise
defined herein have the meanings set forth in the Warrant Agreement.
WHEREAS, pursuant to the terms of the Merger Agreement and the Warrant
Agreement, the Company is required to enter into a supplemental warrant
agreement to provide for the issuance of Common Stock, $.01 par value ("Common
Stock"), of the Company upon exercise of the warrants subject to the Warrant
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth in this Agreement, in the Warrant Agreement and in the Merger
Agreement, the parties hereto agree as follows:
SECTION 1. The Warrant Agreement is hereby amended such that, unless the
context requires otherwise, the following defined terms contained therein shall
have the meanings set forth below:
(a) "Class C Common Stock," "Class B Common Stock," or
"Common Stock" shall mean and refer to the Common Stock of the Company.
(b) "Company" shall mean and refer to Fred Meyer, Inc., a
Delaware corporation formerly known as Meyer-Smith Holdco, Inc.
(c) "Holder(s)" shall mean and refer to the registered
holder(s) of the Warrant Certificates or the New Warrant Certificates, as
defined below.
(d) "Merger Agreement" shall mean and refer to the Merger
Agreement dated as of May 11, 1997 by and between Smith's and Fred Meyer
Stores.
(e) "Registration Rights Agreement" shall mean and refer
to the Registration Rights Agreement dated as of September 9, 1997 by and
among the Company, Consultant and certain stockholders of the Company
named therein.
(f) "Warrant Shares" shall mean and refer to the Common
Stock of the Company issuable upon exercise of the Warrants.
(g) "Warrants" shall mean and refer to the 1,934,683
warrants, as described herein and in the Warrant Agreement, to purchase an
aggregate of 1,934,683 shares (subject to adjustment) of Common Stock of
the Company, pursuant hereto and pursuant to the Merger Agreement.
SECTION 2. All references to the "Standstill Agreement" shall be deleted.
SECTION 3. Subject to the terms and conditions of the Warrant Agreement,
the Company shall issue shares of its Common Stock as set forth in Section 3
hereof to Holders of Warrants upon exercise of such Warrants.
SECTION 4. The Warrants shall be exercisable initially for an aggregate
of 1,934,683 Warrant Shares at an Exercise Price of $47.61904 per share,
subject in each case to the adjustment provisions contained in the Warrant
Agreement.
The following proviso shall be added to the end of the third paragraph under
Section 5 of the Warrant Agreement:
"PROVIDED FURTHER, that any period of consecutive
trading days during which the Market Price of the Smith's
Class B Common Stock equaled or exceeded the Exercise Price
of the Warrants prior to consummation of the Mergers (as
defined in the Merger Agreement) shall count toward such 60-
day period."
SECTION 5. The parties hereto acknowledge that on September 8, 1997, the
Market Price of Smith's Class B Common Stock had exceeded the Exercise Price
then in effect for at least 60 consecutive trading days and as a result thereof
and in accordance with the terms of the Warrant Agreement the Exercise Period
in the case of the Series A Warrants expires at 5:00 p.m., Los Angeles time, on
May 23, 2005 and, in the case of the Series B Warrants expires at 5:00 p.m.,
Los Angeles time on May 23, 2006.
SECTION 6. On September 5, 1997, the Company announced a two-for-one
stock split of its Common Stock (the "Split"). Upon consummation of the Split,
the Exercise Price and Warrant Number shall be adjusted pursuant to the
provisions of Section 9 of the Warrant Agreement.
SECTION 7. Upon tender and delivery to the Company by any Holder of
Series A Warrant Certificates or Series B Warrant Certificates (as defined in
the Warrant Agreement) or both and upon cancellation thereof, the Company shall
issue and deliver new Series A Warrant Certificates ("New Series A Warrant
Certificates") and new Series B Warrant Certificates ("New Series B Warrant
Certificates" and together with the New Series A Warrant Certificates, the "New
Warrant Certificates"), respectively, evidencing the Warrants of such tendering
Holders. The New Warrant Certificates shall reflect the amendments to the
Warrant Certificates shall continue to be valid evidence of the Warrants, and
shall continue to be exercisable for the Common Stock of the Company pursuant
to the terms hereof and in the Warrant Agreement. The New Warrant Certificates
shall comply with and be subject to all of the terms and conditions of the
Warrant Agreement applicable to the Warrant Certificates.
SECTION 8. Section 5 of the Warrant Agreement is hereby amended by
deleting the second paragraph thereof.
SECTION 9. Section 8 of the Warrant Agreement is hereby amended by
deleting the second sentence of the first paragraph.
SECTION 10. Section 12 of the Warrant Agreement is hereby amended so that
notices shall be made as set forth therein to the Company at 3800 SE 22nd
Avenue, Portland, Oregon 97202, Attention: President, with a copy to the
General Counsel.
SECTION 11. Section 13 of the Warrant Agreement is hereby deleted.
SECTION 12. The Company hereby assumes all obligations of Smith's under
the Warrant Agreement and agrees to be bound by all of the provisions thereof,
as amended by this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
FRED MEYER, INC.
By: /S/ ROGER A. COOKE
Roger A. Cooke
Senior Vice President
THE YUCAIPA COMPANIES
By: /S/ RONALD W. BURKLE
Name: Ronald W. Burkle
Title: General Partner
EXHIBIT 3
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of September 9, 1997 by and among Fred Meyer, Inc., formerly
known as Meyer-Smith Holdco., Inc., a Delaware corporation (the "Company"), The
Yucaipa Companies, a California general partnership ("Yucaipa") and each of the
holders of the Company Common Stock (as hereinafter defined) executing this
Agreement (each a "Holder" and collectively, the "Holders").
WHEREAS, this Agreement is made pursuant to that certain Agreement
and Plan of Reorganization and Merger dated as of May 11, 1997 (the
"Reorganization Agreement") by and between Smith's Food & Drug Centers, Inc., a
Delaware corporation ("Smith") and Fred Meyer, Inc., a Delaware corporation
("Fred Meyer"), under which the execution and delivery of this Agreement is a
condition to the closing of the transactions contemplated thereby.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein have the meanings ascribed to them in the
Reorganization Agreement. In addition, the following capitalized terms shall
have the meanings ascribed to them below:
"Affiliate," as applied to any specified Person, shall mean any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person and, in the case of a Person
who is an individual, shall include (i) members of such specified Person's
immediate family (as defined in Instruction 2 of Item 404(a) of Regulation S-K
under the Securities Act) and (ii) trusts, the trustee and all beneficiaries of
which are such specified Person or members of such Person's immediate family as
determined in accordance with the foregoing clause (i). For the purposes of
this definition, "control," when used with respect to any Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Business Day" means any day that is not a Saturday, Sunday or a day
on which banking institutions in New York, New York or Los Angeles, California
are not required to be open.
"Company Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Deferral Period" is defined in Section 2.1.
"Demand Notice" is defined in Section 2.1.
"Demand Registration" is defined in Section 2.1.
"Demanding Holder" means any Holder initiating a registration request
in compliance with Section 2.1(a); provided that any action required or
permitted to be taken under this Agreement by any Demanding Holders shall be
taken by action of the holders of a majority of the Registrable Securities held
by such Demanding Holders.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Holders" means the holders of Company Common Stock and of the
Warrants who have executed this Agreement, and the transferees of each of them.
"Person" means an individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
"Piggyback Registration" is defined in Section 2.2.
"Piggyback Holder" is defined in Section 2.2.
"Prospectus" means the prospectus included in a Registration
Statement, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
"Public Distribution" shall mean any bona fide underwritten public
distribution of Stock pursuant to an effective registration statement under the
Securities Act or any other applicable law, or any bona fide public sale in an
open market transaction under Rule 144 of the Securities Act (or any successor
rule) if such sale is in compliance with the requirements of paragraphs (c),
(d), (e), (f) and (g) of such Rule (notwithstanding the provisions of paragraph
(k) of such Rule).
"Public Offering" shall mean any bona fide underwritten public
distribution of Stock pursuant to an effective registration statement under the
Securities Act or any other applicable law.
"Registrable Securities" means each share of Stock held by the
Holders, or acquired by the Holders after the date hereof, until (i) it has
been effectively registered under the Securities Act and disposed of by such
Holders pursuant to an effective registration statement, or (ii) it is sold by
such Holders pursuant to Rule 144 (or any similar provisions then in force)
under the Securities Act or (iii) it is freely transferable pursuant to Rule
144(k) (or any similar provision then in force) promulgated, and under the
Securities Act. "Registrable Securities" shall include all shares of Company
Common Stock issued or issuable upon exercise of the Warrants.
"Registration Statement" means any registration statement of the
Company relating to a Demand Registration pursuant to Section 2.1, a Piggyback
Registration pursuant to Section 2.2, or a Shelf Registration pursuant to
Section 2.3, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
"Restricted Registration" means any public offering of Registrable
Securities pursuant to a Registration Statement in which the aggregate number
of shares proposed to be offered by the Smith Group and the Yucaipa Group is
restricted by the managing underwriter(s) as contemplated by Sections 2.1(e)
and 2.2(b) hereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Selling Holder" means a Holder who sells or proposes to sell
Registrable Securities pursuant to a Registration Statement under the
Securities Act.
"Shelf Registration" or "Shelf Registration Statement" is defined in
Section 2.3.
"Smith Group" is defined in Section 2.1(a).
"Stock" means the following securities: (i) the Company Common Stock
or (ii) any security or other instrument (a) received as a dividend on, or
other payment made to the holders of, the Company Common Stock (or any other
security or instrument referred to in this definition) or (b) issued in
connection with a split of the Company Common Stock (or any other security or
instrument referred to in this definition) or as a result of any exchange or
reclassification of the Company Common Stock (or any other security or
instrument referred to in this definition), reorganization, consolidation,
merger or recapitalization.
"Underwritten Registration" or "Underwritten Offering" means a
registration in which Stock of the Company is sold to an underwriter for re-
offering to the public.
"Warrants" means the Smith's Warrants as modified pursuant to Section
2.1(e) of the Reorganization Agreement.
"Yucaipa Group" is defined in Section 2.1(a).
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1 DEMAND REGISTRATIONS.
(a) REQUEST FOR REGISTRATION. At any time and from time to time on
or after the Effective Time (as defined in the Reorganization Agreement), each
of (i) the holders of a majority of the Registrable Securities held by Yucaipa
and its Affiliates and transferees of any of the foregoing, as a group (the
"Yucaipa Group"), and (ii) the holders of a majority of the Registrable
Securities held by Jeffrey P. Smith, Richard D. Smith and Fred L. Smith or
members of their respective families, or any trust of which requests of the
Company for registration with the SEC, under and in accordance with the
provisions of the Securities Act, of all or part (but not less than one million
(1,000,000) shares of Registrable Securities) of their Registrable Securities
(a "Demand Registration") by giving written notice to the Company of such
demand (a "Demand Notice"), provided that the Company shall be required to
effect only one Demand Registration during any six-month period. Each such
Demand Notice will specify the number of Registrable Securities proposed to be
sold pursuant to such Demand Registration and will also specify the intended
method of disposition thereof.
Promptly after receipt of any Demand Notice, but in no event later
than 60 days after receipt of such Demand Notice, the Company shall file a
Registration Statement with the SEC with respect to the Registrable Securities
included in the Demand Notice and shall use its best efforts to have such
Registration Statement declared effective as promptly as practicable; PROVIDED,
HOWEVER, that the Company may postpone the filing of such Registration
Statement for a period of up to 90 days (the "Deferral Period") if the Board of
Directors reasonably determines that (i) such a filing would adversely affect
any proposed financing, acquisition, divestiture or other material transaction
by the Company or (ii) such a filing would otherwise represent an undue
hardship for the Company. The Company shall not be entitled to request more
than one such deferral with respect to any group of Holders requesting a Demand
Registration within any 365-day period. If the Company does elect to defer any
such Demand Registration, the Holders requesting such Demand Registration may,
at their election by written notice to the Company, (i) confirm their request
to proceed with such Demand Registration upon the expiration of the Deferral
Period or (ii) withdraw their request for such Demand Registration in which
case no such request for a Demand Registration shall be deemed to have occurred
for purposes of this Agreement.
The Company shall give written notice of any Demand Notice by any
Holder, which request complies with this Section 2.1(a), within 5 days after
the receipt thereof, to each Holder who did not initially join in such request.
Within 10 days after receipt of such notice, any such Holder may request in
writing that its Registrable Securities be included in such registration, and
the Company shall include in the Demand Registration the Registrable Securities
of each such Holder requested to be so included, subject to the provisions of
Section 2.1(e). Each such request shall specify the number of shares of
Registrable Securities proposed to be sold and the intended method of
disposition thereof.
(b) EFFECTIVE REGISTRATION. Except as provided in subsection (c)
below, a registration will not be deemed to have been effected as a Demand
Registration unless it has been declared effective by the SEC; provided that
if, after it has become effective, the offering of Registrable Securities
pursuant to such registration is or becomes the subject of any stop order,
injunction or other order or requirement of the SEC or any other governmental
or administrative agency, or if any court prevents or otherwise limits the sale
of Registrable Securities pursuant to the registration (for any reason other
than the acts or omissions of the Holders), such registration will be deemed
not to have been effected. If (i) a registration requested pursuant to this
Section 2.1 is deemed not to have been effected in accordance with the
provisions of the preceding sentence or (ii) the registration requested
pursuant to this Section 2.1 does not remain continuously effective for a
period of at least 90 days beyond the effective date thereof or until the
consummation of the distribution by the Holders of the Registrable Securities
included in such registration statement (the "Demand Registration Statement"),
then such Demand Registration Statement shall not count as a Demand
Registration that may be requested by the Demanding Holder(s) in question and
the Company shall continue to be obligated to effect a registration pursuant to
this Section 2.1.
(c) WITHDRAWAL. The Demanding Holders may withdraw all or any part
of the Registrable Securities from a Demand Registration at any time (whether
before or after the filing or effective date of the Demand Registration
Statement), and if all such Registrable Securities are withdrawn, to withdraw
the demand related thereto. If at any time a registration statement is filed
pursuant to a Demand Registration, and subsequently a sufficient number of
Registrable Securities are withdrawn from the Demand Registration so that such
Demand Registration Statement does not cover at least the required amounts
specified by Section 2.1(a), and an additional number of Registrable Securities
is not so included, the Company may (or shall, if requested by the Demanding
Holders) withdraw such Demand Registration Statement; provided that such
withdrawn registration statement will count as a Demand Registration unless the
Demanding Holders elect to bear the expenses associated with such withdrawn
registration statement. If the Demanding Holders elect to bear such expenses,
such expenses shall be borne by the Demanding Holder(s) whose withdrawal of
Registrable Securities resulted in such Demand Registration Statement not
covering the specified required amounts.
(d) SELECTION OF UNDERWRITER. If the Demanding Holders so elect,
the offering of Registrable Securities pursuant to a Demand Registration shall
be in the form of an Underwritten Offering. The Demanding Holders shall select
one or more nationally recognized firms of investment bankers to act as the
managing Underwriter or Underwriters in connection with such offering and shall
select any additional investment bankers and managers to be used in connection
with such offering; provided that such investment bankers and managers must be
reasonably satisfactory to the Company. The Company shall (together with all
Holders of Registrable Securities proposing to distribute such Registrable
Securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting in the manner set forth above.
(e) PRIORITY ON DEMAND REGISTRATIONS. If, in any Demand
Registration involving an Underwritten Offering the managing underwriter or
underwriters thereof advise the Demanding Holders or the Company in writing
that in its or their reasonable opinion the number of Registrable Securities
proposed to be sold in such Demand Registration exceeds the number that can be
sold in such offering or will adversely affect the success of such offering
(including, without limitation, an impact on the selling price or the number of
Registrable Securities that any participant may sell), the Company shall
include in such registration only the number of Registrable Securities, if any,
which in the opinion of such underwriter or underwriters can be sold without
having an adverse effect on the success of the offering and in accordance with
the following priority: (i) first, Registrable Securities held by Demanding
Holders in the group initially requesting such registration, allocated pro rata
among such group (based upon the number of Registrable Securities requested to
be included in such Demand Registration) and (ii) second, pro rata (based upon
the number of Registrable Securities requested to be included in such
registration by such Holders) among the other Holders of Registrable Securities
who have requested to include Registrable Securities in such registration. If
all Registrable Securities requested to be sold in the Underwritten Offering
are included therein, the Company may include other shares of Stock in such
offering in accordance with the following priority, but not to exceed the
number recommended by the managing underwriter or underwriters: (x) first, pro
rata among any other stockholders of the Company having piggyback or other
similar registration rights and (y) second, shares of Stock proposed to be sold
by or for the account of the Company. Notwithstanding the foregoing, if prior
to the filing of any Demand Registration Statement, the Company has received
Demand Notices from both the Smith Group and the Yucaipa Group, then the Smith
Group and the Yucaipa Group shall be permitted to include their Registrable
Securities in any such Demand Registration on an equal basis (i.e. each group
will be entitled to 50% of the remaining share allocation, or such greater
percentage as may be available if the other group elects not to fill its entire
50% allocation).
SECTION 2.2 PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PARTICIPATE IN REGISTRATION. If at any time the
Company proposes to file a registration statement under the Securities Act with
respect to an offering by the Company for its own account or for the account of
any holders of any class of common equity securities (other than (i) a
registration statement on Form S-4 or S-8 (or any substitute form that may be
adopted by the SEC) or (ii) a registration statement filed in connection with a
Demand Registration or a Shelf Registration or (iii) a registration statement
filed in connection with an offering of securities solely to the Company's
existing securityholders), then the Company shall give written notice of such
proposed filing to the Holders as soon as practicable (but in no event less
than 20 days before the anticipated filing date), and such notice shall offer
such Holder the opportunity to register such number of shares of Registrable
Securities as each such Holder may request, which request shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof (or, if the offering is a proposed
Underwritten Offering, that such Holder elects to have the number of
Registrable Securities so specified included in such Underwritten Offering) (a
"Piggyback Registration").
The Company shall use its best efforts to cause the managing
Underwriter or Underwriters of a proposed Underwritten Offering to permit the
Registrable Securities requested by the Holders thereof to be included in a
Piggyback Registration (the "Piggyback Holders") to be included on the same
terms and conditions as any similar securities of the Company or any other
securityholder included therein and to permit the sale or other disposition of
such Registrable Securities in accordance with the intended method of
distribution thereof.
No registration effected under this Section 2.2 and no failure to
effect a registration under this Section 2.2(a), shall relieve the Company of
its obligations pursuant to Section 2.1, and no failure to effect a
registration under this Section 2.2(a) and complete the sale of shares in
connection therewith shall relieve the Company of any other obligation under
this Agreement (including, without limitation, the Company's obligations under
Sections 3.2 and 4.1).
(b) PRIORITY ON PIGGYBACK REGISTRATIONS. Unless the registration
statement is being filed pursuant to a Demand Registration (in which case the
priority of piggyback rights shall be as provided in Section 2.1(e) above), if
the managing underwriter or underwriters advise the Company in writing that in
its or their reasonable opinion the number of equity securities of the Company
proposed to be sold in such registration (including Registrable Securities to
be included pursuant to subsection (a) above) will adversely affect the success
of such offering (including, without limitation, an impact on the selling price
or the number of equity securities of the Company that any participant may
sell), the Company shall include in such registration the number of equity
securities of the Company, if any, which in the opinion of such underwriter or
underwriters can be sold without having an adverse effect on the offering and
in accordance with the following priority: (i) first, the securities the
Company proposes to sell for its own account, (ii) second, any Registrable
Securities of the Smith Group and any Registrable Securities of the Yucaipa
Group, on an equal basis (as specified in Section 2.1(e) above), and (iii)
third, pro rata based on the number of Registrable Securities that each Holder
or other Person having similar rights shall have requested to be included
therein.
(c) WITHDRAWAL. The Piggyback Holders may withdraw all or any part
of the Registrable Securities from a Piggyback Registration at any time (before
but not after the effective date of such registration statement), by delivering
written notice of such withdrawal request to the Company, unless such Piggyback
Registration is underwritten, in which case Registrable Securities may not be
withdrawn after the effective date of the Registration Statement.
(d) TERMINATION OF REGISTRATION BY THE COMPANY. If the Company
shall determine for any reason (x) not to register or (y) to delay a
registration which includes Registrable Securities pursuant to this Section
2.2, the Company may, at its election, give written notice of such
determination to the Holders of the Registrable Securities and, thereupon (i)
in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses (as
defined below) in connection therewith), without prejudice, however, to the
rights, if any, of any Holder or Holders of Registrable Securities to request
that such registration be effected as a Demand Registration under Section 2.1,
and (ii) in the case of a delay in registering, shall be permitted to delay
registering any Registrable Securities for the same period as the delay in
registering such other shares.
SECTION 2.3 SHELF REGISTRATION.
(a) FILING AND EFFECTIVENESS. Upon the request of the Demanding
Holders in the Yucaipa Group at any time prior to the first anniversary of the
Effective Time, the Company shall cause to be filed with the SEC as promptly as
practicable after such request, but in no event later than 60 days thereafter,
a shelf registration statement pursuant to Rule 415 under the Securities Act (a
"Shelf Registration" or a "Shelf Registration Statement"), which Shelf
Registration Statement shall provide for resales of all Registrable Securities
held by members of the Yucaipa Group who shall have provided the information
required pursuant to Section 3.1(b). The Smith Group shall be afforded the
opportunity to include any Registrable Securities held by the Smith Group in
such Shelf Registration. The Company shall use its best efforts to have such
Shelf Registration declared effective and to keep such Shelf Registration
Statement continuously effective, supplemented and amended to the extent
necessary to ensure that it is available for resales of Registrable Securities
by such Holders, and to ensure that it conforms with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the
SEC as announced from time to time, for a period of at least one (1) year
following the date on which such Shelf Registration Statement becomes effective
under the Securities Act; provided, however, that, notwithstanding any other
provisions of this Agreement, with respect to any registrable Securities, the
Company shall not be obligated to effect any Shelf Registration Statement, or
keep any Shelf Registration Statement effective, at any time or for any period
after the fifth anniversary of the Effective Time. A request of the Demanding
Holders in the Yucaipa Group under this Section 2.3(a) shall be deemed to be a
request for a Demand Registration under Section 2.1 above.
(b) EFFECTIVE REGISTRATION. A registration will not be deemed to
have been effected as a Shelf Registration unless it has been declared
effective by the SEC and the Company has complied in all material respects with
its obligations under this Agreement with respect thereto; provided that if,
after it has become effective, the offering of Registrable Securities pursuant
to such registration is or becomes the subject of any stop order, injunction or
other order or requirement of the SEC or any other governmental or
administrative agency, or if any court prevents or otherwise limits the sale of
Registrable Securities pursuant to the registration (for any reason other than
the acts or omissions of the Holders), such registration will be deemed not to
have been effected. If (i) the Shelf Registration is deemed not to have been
effected in accordance with the provisions of the preceding sentence or (ii)
the Shelf Registration does not remain continuously effective for the period
described in subsection (a) above, then such Shelf Registration Statement shall
not count as a Shelf Registration and the Company shall continue to be
obligated to effect a registration pursuant to this Section 2.3.
(c) SUSPENSION. With respect to any Shelf Registration that has
been declared effective (i) the Company may suspend use of such Shelf
Registration at any time if the continued effectiveness thereof would require
the Company to disclose a material financing, acquisition or other corporate
transaction, which disclosure the Board of Directors of the Company shall have
determined in good faith is not in the best interests of the Company and its
stockholders, and (ii) the Company may suspend use of such Shelf Registration
during any period if each of the Company and the holders of a majority of the
Registrable Securities included in such Shelf Registration consents in writing
to such suspension for such period.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1 REGISTRATION PROCEDURES.
(a) GENERAL PROVISIONS. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Registrable Securities, the Company shall:
(1) prepare and file with the SEC a registration statement with
respect to such Registrable Securities within the time periods specified
herein, make all required filings with the NASD and use its best efforts
to cause such registration statement to become effective as promptly as
practicable (subject to the Company's right to withdraw the registration
statement under the circumstances described in Sections 2.1(c) or 2.2(d));
(2) promptly prepare and file with the SEC such amendments and post-
effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the applicable period set
forth in Sections 2.1, 2.2 or 2.3, as applicable, or such shorter period
as will terminate when all Registrable Securities covered by such
Registration Statement have been sold (subject to Section 2.3(c)); cause
the Prospectus to be supplemented by a required Prospectus supplement, and
as so supplemented to be filed pursuant to Rule 424 under the Securities
Act, and to comply fully with the applicable provision of Rules 424 and
430A under the Securities Act in a timely manner; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of distribution
by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(3) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for
the period specified in Sections 2.1, 2.2 or 2.3, as applicable (subject
to Section 2.3(c)); upon the occurrence of any event that would cause any
such Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be effective and
usable for resale of Registrable Securities during the period required by
this Agreement, the Company shall file promptly an appropriate amendment
to such Registration Statement, in the case of clause (A), correcting any
such misstatement or omission, and, in the case of either clause (A) or
(B), use its best efforts to cause such amendment to declared effective
and such Registration Statement and related Prospectus to become usable
for their intended purposes(s) as soon as practicable thereafter;
(4) provide (A) the Holders of Registrable Securities participating
in the registration, (B) the underwriters (which term, for purposes of
this Agreement, shall include a Person deemed to be an underwriter within
the meaning of Section 2(11) of the Securities Act), if any, of the
Registrable Securities to be registered, (C) the sale or placement agent
therefor, if any, (D) counsel for such underwriters or agent, and (E)
counsel for the Holders thereof, as selected by Holders of a majority of
the Registrable Securities covered by such registration statement, the
opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the SEC, and
each amendment or supplement thereto, and for a reasonable period prior to
the filing of such registration statement, and throughout the period
specified in Section 3.4(b) hereof, make available for inspection by the
parties referred to in (A) through (E) above such financial and other
information and books and records of the Company, provide access to
properties of the Company and cause the officers, directors, employees,
counsel and independent certified public accountants of the Company to
respond to such inquiries as shall be reasonably necessary to conduct a
reasonable investigation within the meaning of Section 11 of the
Securities Act;
(5) advise the underwriters, if any, and Selling Holders promptly
and, if requested by such Persons, to confirm such advice in writing, (A)
when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any Registration Statement
or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the SEC for amendments to the
Registration Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (C) of the issuance by the
SEC of any stop order suspending the effectiveness of the Registration
Statement under the Securities Act or of the suspension by any state
securities commission of the qualification of the Registrable Securities
for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, (D) of the existence of any
fact or the happening of any event that makes any statement of a material
fact made in the registration Statement, the Prospectus, any amendment or
supplement thereto, or any document incorporated by reference therein
untrue, or that requires the making of any additions to or changes in the
Registration Statement or the Prospectus in order to make the statements
therein not misleading. If at any time the SEC 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 from qualification of the
Registrable Securities under state securities or Blue Sky laws, the
Company shall use its best efforts to obtain the withdrawal or lifting of
such order at the earliest possible time;
(6) furnish to each Selling Holder named in any Registration
Statement or Prospectus and each of the underwriter(s) in connection with
such sale, if any, such number of copies of any Registration Statement or
Prospectus included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents incorporated
by reference after the initial filing of such Registration Statement and
all exhibits filed therewith), reasonably requested by such Person;
(7) if requested by any selling Holders or the underwriter(s) in
connection with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and such
underwriter(s), if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Registrable Securities, information with respect to
the principal amount of Registrable Securities being sold to such
underwriter(s), the purchase price being paid therefor and any other terms
of the offering of the Registrable Securities to be sold in such offering,
and make all required filing of such Prospectus supplement or post-
effective amendment as soon as practicable after the Company is notified
of the matters to be included in such Prospectus supplement or post-
effective amendment;
(8) deliver to each Selling Holder and each of the underwriter(s),
if any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company hereby consents to the use of
the Prospectus and any amendment or supplement thereto by each of the
Selling Holders and each of the underwriter(s), if any, in connection with
the offering and the sale of the Registrable Securities covered by the
Prospectus or any amendment or supplement thereto;
(9) in connection with any Underwritten Offering pursuant to a
Demand Registration, enter into an underwriting agreement with one or more
underwriter designated in accordance with this Agreement, such agreement
to be of the form, scope and substance as is customary in underwritten
offerings, and take all such other actions as are reasonably requested by
the managing underwriter(s) in order to expedite or facilitate the
disposition of such Registrable Securities and in such connections (i)
make such representations and warranties to the underwriters in form,
scope and substance as are customarily made by issuers to underwriters in
underwritten offerings with respect to the business of the Company; (ii)
obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriter(s)) addressed to the managing
underwriter(s) covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by the underwriters; (iii) obtain "comfort" letters
and updates thereof from the Company's independent certified public
accountants addressed to the underwriters, such "comfort" letters to be in
customary form and covering matters of the type customarily covered in
"comfort" letters in connection with underwritten offerings; (iv) deliver
such documents and certificates as may be reasonably requested by the
managing underwriter(s) to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Company. The above shall be done at each closing
under such underwriting or similar agreement;
(10) prior to any public offering of Registrable Securities,
cooperate with the Selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification
of the Registrable Securities under the securities or Blue Sky laws of
such jurisdictions as the Selling Holders or underwriter(s), if any, may
request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions or the Registrable Securities
covered by the applicable Registration Statement; provided, however, that
the Company shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or to taxation, except
as is required as a result of the Registration Statement, in any
jurisdiction where it is not now so subject;
(11) in connection with any sale of Registrable Securities that will
result in such securities no longer being Registrable Securities,
cooperate with the Selling Holders and the underwriter(s), if any, to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
restrictive legends; and to register such Registrable Securities in such
denominations and such names as the Selling Holders or the underwriter(s),
if any, may request at least two Business Days prior to such sale of
Registrable Securities;
(12) if requested by the Selling Holders, provide a CUSIP number for
all Registrable Securities not later than the effective date of the
Registration Statement covering such Registrable Securities and provide
the Company's transfer agent(s) and registrar(s) for the Registrable
Securities with printed certificates for the Registrable Securities;
(13) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of
the NASD), and use their best efforts to cause such Registration Statement
to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Selling Holders or
underwriters, if any, to consummate the disposition of such Registrable
Securities;
(14) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its
security holders, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 under the Securities Act
(which need not be audited) covering a period of at least twelve month
periods, but not more than eighteen months, beginning with the first month
of the Company's first quarter commencing after the effective date of the
Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act; and
(15) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange on which securities of
the same class issued by the Company are then listed if requested by the
Selling Holders holding a majority of the Registered Securities or the
managing underwriter(s), if any.
Each Selling Holder, upon receipt of any notice from the Company of
the happening of any event described in subsection (5)(B), (C), or (D) of
Section 3.1(a) or in Section 2.3(c) (a "Suspension Notice"), shall forthwith
discontinue disposition of the Registrable Securities pursuant to the
Registration Statement relating thereto until such Selling Holder receives
copies of the supplemented or amended Prospectus contemplated hereby or until
it is advised in writing (the "Advice") by the Company that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemented filings that are incorporated by reference in the Prospectus, and,
if so directed by the Company, such Selling Holder will, or will request the
managing underwriter or underwriters, if any, to deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Selling Holder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice. The period from the
date on which any Holder receives a Suspension Notice to the date on which any
Holder receives either the Advice or copies of the supplemented or amended
Prospectus contemplated hereby relating to such notice shall hereinafter be
referred to as the "Suspension Period." If the Company shall give any
Suspension Notice, (i) the Company shall use its best efforts and take such
actions as are reasonably necessary to render Advice and end the Suspension
Period as promptly as practicable and (ii) the time periods for which a
Registration Statement is required to be kept effective pursuant to Sections
2.1, 2.2 or 2.3, as the case may be, shall be extended by the number of days
during the period from and including the date of the giving of such Suspension
Notice to and including the date when each Selling Holder shall have received
(A) the copies of the supplemented or amended Prospectus contemplated by
Section 3.1(a) or (B) the Advice.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION. No Holder of
Registrable Securities may include any of its Registrable Securities in any
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 20 days after receipt of a request
therefor, such information as the Company may reasonably request specified in
item 507 of Regulation S-K under the Securities Act for use in connection with
any Registration Statement or Prospectus or preliminary Prospectus included
therein. Each Holder as to which any Registration Statement is being effected
agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such Holder not materially misleading.
SECTION 3.2 REGISTRATION EXPENSES.
(a) All expenses incident to the Company's performance of or
compliance with this Section 3.2 will be paid by the Company, regardless of
whether any registration statement required hereunder becomes effective,
including, without limitation:
(1) all registration and filing fees;
(2) fees and expenses of compliance with securities or blue sky laws
(including, without limitation, reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities and determination of their eligibility for investment under the
laws of such jurisdictions as the managing underwriters or Holders of
Registrable Securities being sold may designate);
(3) printing (including, without limitation, expenses of printing or
engraving certificates for the Registrable Securities in a form eligible
for trading on the New York Stock Exchange or for deposit with the
Depository Trust Company and of printing prospectuses), messenger,
telephone and delivery expenses;
(4) reasonable fees and disbursements of counsel for the Company;
(5) reasonable fees and disbursements of all independent certified
public accountants of the Company (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or
incident to such performance);
(6) fees and expenses of other Persons retained by the Company; and
(7) fees and expenses associated with any NASD filing required to be
made in connection with the registration of the Registrable Securities,
including, if applicable, the reasonable fees and expenses of any
"qualified independent underwriter" (and its counsel) that is required to
be retained in accordance with the rules and regulations of the NASD (all
such expenses being herein called "Registration Expenses").
(b) The Company will, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
Registrable Securities to be registered on Nasdaq or on each national
securities exchange on which similar securities issued by the Company are then
listed, rating agency fees and the fees and expenses of any Person, including
special experts, retained by the Company.
SECTION 3.3 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Holder
may participate in any Underwritten Registration hereunder unless such Holder
(i) agrees to sell its Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, underwriting agreements, hold-back agreements letters and
other documents customarily required under the terms of such underwriting
arrangements. Notwithstanding the foregoing, (x) no Selling Holder shall be
required to make any representations or warranties except those which relate
solely to such Holder and its intended method of distribution, and (y) the
liability of each such Holder to any underwriter under such underwriting
agreement will be limited to liability arising from misstatements or omissions
regarding such Holder and its intended method of distribution and any such
liability shall not exceed an amount equal to the amount of net proceeds such
Holder derives from such registration; provided, however, that in an offering
by the Company in which any Holder requests to be included in a Piggyback
Registration, the Company shall use its best efforts to arrange the terms of
the offering such that the provisions set forth in clauses (x) and (y) of this
Section 3.3 are true. Nothing in this Section 3.3 shall be construed to create
any additional rights regarding the registration of Registrable Securities in
any Person otherwise than as set forth herein.
SECTION 3.4 HOLD-BACK AGREEMENTS.
(a) RESTRICTIONS ON PUBLIC DISTRIBUTION BY HOLDER OF REGISTRABLE
SECURITIES. Upon the written request of the managing underwriter or
underwriters of a Public Offering, each Holder of Registrable Securities shall
not effect any Public Distribution of such securities, or any securities
convertible into or exchangeable or exercisable for such securities, including
a sale pursuant to Rule 144 under the Securities Act (except as part of such
Public Offering), during the 14-day period prior to, and during the 90-day
period following, the offering date for each Public Offering made pursuant to
such registration statement (as identified by such underwriter or underwriters
or the Company in good faith). The foregoing provisions shall not apply to any
Holder that is prevented by applicable statute or regulation from entering into
any such agreement; provided, however, that any such Holder shall undertake not
to effect any Public Distribution of the class of securities covered by such
registration statement (except as part of such Underwritten Offering) during
such period unless it has provided 60 days' prior written notice of such Public
Distribution to the managing underwriter.
(b) RESTRICTIONS ON PUBLIC DISTRIBUTION BY THE COMPANY AND OTHERS.
The Company agrees and it shall use its best efforts to cause its Affiliates
(other than Persons who are Holders hereunder) to agree: (1) not to effect any
Public Distribution of any securities being registered in accordance with
Article II hereof, or any securities convertible into or exchangeable or
exercisable for such securities, during the 14-day period prior to, and during
the 90-day period following, the offering date for each Public Offering made
pursuant to a registration statement filed under Article II hereof, if
requested in writing by the managing underwriters (except as part of such
Public Offering or pursuant to registrations in connection with mergers,
acquisitions, exchange offers, subscription offers, dividend reinvestment plans
or stock options or other employee benefit plans); and (2) to use its best
efforts to cause each Holder of its privately placed Registrable Securities
that are issued by the Company at any time on or after the date of this
Agreement to agree not to effect any Public Distribution, including a sale
pursuant to Rule 144 under the Securities Act, of any Registrable Securities
during the period set forth in clause (1) above (except as part of such Public
Offering, if and to the extent permitted).
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each Selling Holder, each person, if any, who
controls such Holder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) (hereinafter referred to as a "controlling
person"), the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (each an
"Indemnified Holder"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments, actions and expenses
(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 Holder) 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 any Registration Statement or
Prospectus (or any amendment or supplement thereto), or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by an untrue
statement or omission or alleged untrue statement or omission that is made in
reliance upon and in conformity with information relating to any of the Holders
furnished in writing to the Company by any of the Holders expressly for use
therein.
SECTION 4.2 INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES.
Each Selling Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company and its directors, officers and any person controlling
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) the Company and its respective officers, directors, partners,
employees, representatives and agents of each such person, to the same extent
as the foregoing indemnity from the Company to each of the Indemnified Holders,
but only with respect to losses, claims, damages, liabilities, judgments,
actions and expenses (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 the Company) 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 any
Registration Statement or Prospectus (or any amendment or supplement thereto),
or any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue statement
or omission is contained in any information relating to such Holder furnished
in writing by such Holder expressly for use in any Registration Statement or
Prospectus. In case any action or proceeding shall be brought against the
Company or its directors or officers or any such controlling person in respect
of which indemnity may be sought against a Holder of Registrable Securities,
such Holder shall have the rights and duties given the Company, and the Company
or its directors or officers or such controlling person shall have the rights
and duties given to each Holder by the preceding paragraph. Each Selling
Holder also agrees to indemnify and hold harmless each other Selling Holder or
underwriters participating in the distribution on substantially the same basis
as that of the indemnification of the Company provided in this section 4.2. In
no event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the proceeds received by such Holder upon the
sale of the Registrable Securities giving rise to such indemnification
obligation. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above with respect to information so furnished in writing by such Persons
specifically for inclusion in any Registration Statement or Prospectus.
SECTION 4.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person
entitled to indemnification hereunder (an "Indemnified Party") will (i)
promptly give notice of any claim, action or proceeding (including any
governmental or regulatory investigation or proceeding) or the commencement of
any such action or proceeding to the Person against whom such indemnity may be
sought (an "Indemnifying Party"); 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 has been prejudiced
in any material respect by such failure, and (ii) permit the Indemnifying Party
to assume the defense of such claim with counsel reasonably satisfactory to
such Indemnified Party; provided that the Indemnified Party shall have the
right to employ separate counsel and participate in the defense of such claim,
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (a) the Indemnifying Party has agreed to pay for such
fees and expenses, or (b) the Indemnifying Party shall have failed to assume
the defense of such claim and employ counsel reasonably satisfactory to such
Indemnified Party or (c) in the reasonable judgment of such Indemnified Party,
based upon advice of its counsel, a conflict of interest may exist between such
Indemnified Party and the Indemnifying Party with respect to such claims. If
such defense is not assumed by the Indemnifying Party, the Indemnifying Party
will not be subject to any liability for any settlement of any such claim
effected without the Indemnifying Party's prior written consent, which consent
shall not be unreasonably withheld. The Indemnifying Party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the Indemnifying Party agrees to indemnify and hold harmless any Indemnified
Party from and against any loss, claim damage, liability or expense by reason
of any settlement of any such claim or action. No Indemnifying Party shall,
without the prior written consent of each Indemnified Party, settle or
compromise or consent to the entry of 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 hereunder
(whether or not any Indemnified Party is a party thereto), unless such
settlement, compromise, consent or termination includes an unconditional
release of each Indemnified Party from all liability arising out of such
action, claim, litigation or proceeding. An Indemnifying Party who is not
entitled to, or elects not to, assume the defense of the claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such Indemnifying Party with respect to such claim, unless in
the reasonable judgment of any Indemnified Party a conflict of interest may
exist between such Indemnified Party and any other such Indemnified Parties
with respect to such Claim, in which event the Indemnifying Party shall be
obligated to pay the fees and expenses of such additional counsel or counsels.
SECTION 4.4 CONTRIBUTION. If the indemnification provided for in
this Article IV is unavailable to an Indemnified Party (other than by reason of
exceptions provided in those Sections) in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each applicable
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall have
a joint and severable obligation to contribute to the amount paid or payable by
such Indemnified Party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party, on the one hand, and of the Indemnified Party, on
the other, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the Indemnifying
Party, on the one hand, and of the Indemnified Party, on the other, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in the second paragraph of Section 4.1, any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 4.4 were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, 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 4.4, none of the Indemnified
Holders shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the net proceeds received by such Holder with respect to
the Registrable Securities exceeds the greater of (A) the amount paid by such
Holder for its Registrable Securities and (B) the amount of any damages which
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders' obligation to
contribute pursuant to this Section 4.4 are several in proportion to the
respective number of Registrable Securities held by each of the Holders
hereunder and not joint.
For purposes of this Article IV, each controlling person of a Holder
shall have the same rights to contribution as such Holder, and each officer,
director, and person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act shall
have the same rights to contribution as the Company, subject in each case to
the limitations set forth in the immediately preceding paragraph. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim for contribution may be made against another party or parties under this
Article IV, notify such party or parties from whom contribution may be sought,
but the omission to so notify such party or parties shall not relieve the party
or parties from who contribution may be sought from any obligation it or they
may have under this Article IV or otherwise except to the extent that it has
been prejudiced in any material respect by such failure. No party shall be
liable for contribution with respect to any action or claim settled without its
written consent; provided, however, that such written consent was not
unreasonably withheld.
SECTION 4.5 ADDITIONAL INDEMNITY. The indemnity, contribution and
expense reimbursement obligations under this Article IV shall be in addition to
any liability each Indemnifying Party may otherwise have; provided, however,
that any payment made by the Company which results in an Indemnified Party
receiving from any source(s) indemnification, contribution or reimbursement for
an amount in excess of the actual loss, liability or expense incurred by such
Indemnified Party, shall be refunded to the Company by the Indemnified Party
receiving such excess payment.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 RULE 144. The Company agrees it will file in a timely
manner all reports required to be filed by it pursuant to the Securities Act
and the Exchange Act and the rules and regulations adopted by the SEC
thereunder and will take such further action as any Holder of Registrable
Securities may reasonably request in order that such Holder may effect sales of
Registrable Securities without registration within the limitations of the
exemptions provided by Rule 144, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the SEC. At any
reasonable time and upon the request of a Holder of Registrable Securities, the
Company will furnish such Holder with such information as may be necessary to
enable the Holder to effect sales of Registrable Securities pursuant to Rule
144 under the Securities Act and will deliver to such Holder a written
statement as to whether it has complied with such information and requirements.
SECTION 5.2 SPECIFIC PERFORMANCE. Each Holder, in addition to being
entitled to exercise all rights provided herein or granted by law, including
recovery of liquidated or other damages, will be entitled to specific
performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at
law would be adequate.
SECTION 5.3 OTHER AGREEMENTS. Notwithstanding any other provisions
of this Agreement, the Company shall have no obligation to effect a
registration of any of the Registrable Securities hereunder if and to the
extent any such registration would limit the number of shares registered and
sold pursuant to, or otherwise conflict with the provisions of, the
Registration Rights Agreement, dated December 11, 1981, by and among FMI
Acquisition Corporation (now Fred Meyer, Inc.,), FMI Associates Limited
Partnership and certain executive officers of FMI Acquisition Corporation (now
Fred Meyer, Inc.,), and the Assignment thereof dated January 27, 1997 (the "FMI
Agreement"). By way of example only and without limiting the foregoing, if, in
connection with an Underwritten Offering, the underwriters of such offering
conclude that it would be inadvisable to register and sell the total number of
shares with respect to which registration has been requested under this
Agreement and the FMI Agreement, any reduction in the total number of shares to
be registered and sold shall first reduce the number of shares to be registered
and sold pursuant to this Agreement before the number of shares to be
registered and sold pursuant to the FMI Agreement shall be reduced. The
Company will not on or after the date of this Agreement enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof.
SECTION 5.4 CHARTER AMENDMENTS AFFECTING THE COMPANY'S COMMON STOCK.
The Company will not amend its Certificate of Incorporation in any respect that
would materially and adversely affect the rights of the Holders hereunder.
SECTION 5.5 AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to or departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of Holders of a majority of the outstanding shares of Registrable
Securities held by each of the Smith Group and the Yucaipa Group, respectively.
SECTION 5.6 NOTICES. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party to
the others shall be made in writing, by hand-delivery, telegraph, telex,
telecopier, registered first-class mail or air courier guaranteeing overnight
delivery as follows:
if to the Company, to:
Fred Meyer, Inc.
3800 SE 22nd Avenue
Portland, Oregon 97202
Attention: General Counsel
Fax: (503) 797-7138
if to any Holder:
to the address specified below such Holder's name on the
signature pages hereto;
or to such other place and with such other copies as any party hereto may
designate as to itself by written notice to the others. All such notices and
communications shall be deemed to have been duly given: at the time delivered
by hand, if personally delivered; five Business Days after being deposited in
the mail, postage prepaid, if mailed; when answered back, if telexed; when
receipt acknowledged, if telecopied: and on the next Business Day if timely
delivered to an air courier guaranteeing overnight delivery.
SECTION 5.7 SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent holders of Registrable Securities or of the Warrants,
provided that the Company may not assign its rights or obligations under this
Agreement to any other person or entity without the written consent of a
majority of the outstanding shares of Registrable Securities held by each of
the Smith Group and the Yucaipa Group, respectively.
SECTION 5.8 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
SECTION 5.9 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 5.10 GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, without
regard to the choice of law provisions thereof.
SECTION 5.11 SEVERABILITY. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
SECTION 5.12 ENTIRE AGREEMENT. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to
such subject matter.
SECTION 5.13 PRONOUNS. Whenever the context may require, any
pronouns used herein shall be deemed also to include the corresponding neuter,
masculine or feminine forms.
SECTION 5.14 ATTORNEY'S FEES. In any action or proceeding
brought to enforce any provision of this Agreement, the successful party shall
be entitled to recover reasonable attorney's fees in addition to its costs and
expenses and any other available remedy.
SECTION 5.15 SECURITIES HELD BY THE COMPANY OR ITS
SUBSIDIARIES. Whenever the consent or approval of Holders of a specified
percentage or Registrable Securities is required hereunder, Registrable
Securities held by the Company or its Subsidiaries shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
SECTION 5.16 FURTHER ASSURANCES. Each party shall cooperate
and take such action as may be reasonably requested by another party in order
to carry out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
SECTION 5.17 TERMINATION. Unless sooner terminated in
accordance with its terms or as otherwise herein provided, including
specifically in Section 2.3(a), this Agreement shall terminate upon the earlier
to occur of (i) the mutual agreement by the parties hereto, (ii) with respect
to any Holder, such Holder ceasing to own any Registrable Securities, (iii) the
fifteenth anniversary of the Effective Time, or (iv) with respect to the
Yucaipa Group or the Smith Group, the date on which the aggregate number of
shares of outstanding Registrable Securities held by the Yucaipa Group or the
Smith Group, as applicable, is less than 20% of the Registrable Shares
originally held by the Yucaipa Group or the Smith Group, as applicable,
following the consummation of the transactions contemplated by the
Reorganization Agreement; PROVIDED, that the foregoing clause (iv) shall not
apply as to any member of the Yucaipa Group or the Smith Group, as applicable,
if, as of such date, such member of the Yucaipa Group or the Smith Group, as
applicable, is an "affiliate" of the Company within the meaning of the
Securities Act.
(signature page follows)
IN WITNESS HEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
FRED MEYER, INC.
By: /S/ KENNETH THRASHER
Name: Kenneth Thrasher
Title: Executive Vice President
/S/ JEFFREY P. SMITH
JEFFREY P. SMITH
Address: 32 Burningtree Court
Las Vegas, Nevada 89117
/S/ FRED L. SMITH
FRED L. SMITH
Address:
/S/ RICHARD D. SMITH
RICHARD D. SMITH
Address:
TRUST FOR THE
CHILDREN OF JEFFREY P. SMITH
By: /S/ JEFFREY P. SMITH
Name: Jeffrey P. Smith
Title: Trustee
Address:
TRUST FOR THE
CHILDREN OF FRED L. SMITH
By: /S/ FRED L. SMITH
Name: Fred L. Smith
Title: Trustee
Address:
TRUST FOR THE
CHILDREN OF RICHARD D. SMITH
By: /S/ RICHARD D. SMITH
Name: Richard D. Smith
Title: Trustee
Address:
THE YUCAIPA COMPANIES
By: /S/ RONALD W. BURKLE
Name: Ronald W. Burkle
Title: General Partner
Address: 10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
FAX: (310) 798-7201
YUCAIPA SSV PARTNERS, L.P.
By: The Yucaipa Companies
Its: General Partner
By: /S/ RONALD W. BURKLE
Name: Ronald W. Burkle
Title: General Partner
Address: 10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
FAX: (310) 798-7201
YUCAIPA SMITTY'S PARTNERS, L.P.
By: The Yucaipa Companies
Its: General Partner
By: /S/ RONALD W. BURKLE
Name: Ronald W. Burkle
Title: General Partner
Address: 10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
FAX: (310) 798-7201
YUCAIPA SMITTY'S PARTNERS II, L.P.
By: The Yucaipa Companies
Title: General Partner
By: /S/ RONALD W. BURKLE
Name: Ronald W. Burkle
Title: General Partner
Address: 10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
FAX: (310) 798-7201
YUCAIPA ARIZONA PARTNERS, L.P.
By: The Yucaipa Companies
Its: General Partner
By: /S/ RONALD W. BURKLE
Name: Ronald W. Burkle
Title: General Partner
Address: 10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
FAX: (310) 798-7201
EXHIBIT 4
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f)(1) promulgated under the Securities
Exchange Act of 1934, as amended, the undersigned hereby agree to the joint
filing with all other Reporting Persons (as such term is defined in the
Schedule 13D referred to below) on behalf of each of them of a statement on
Schedule 13D (including amendments thereto) with respect to the Common Stock,
par value $.01 per share, of Fred Meyer, Inc., a Delaware corporation, and that
this Agreement may be included as an Exhibit to such joint filing.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of
September 19, 1997.
Yucaipa Arizona Partners, L.P.
Yucaipa Smitty's Partners, L.P.
Yucaipa Smitty's Partners II, L.P.
Yucaipa SSV Partners, L.P.
By: The Yucaipa Companies
Its General Partner
By: /S/ LAWRENCE K. KALANTARI
Name:Lawrence K. Kalantari
Title:General Partner
The Yucaipa Companies
By: /S/ LAWRENCE K. KALANTARI
Name:Lawrence K. Kalantari
Title:General Partner
