UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 4, 1998
FRED MEYER, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13339 91-1826443
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
3800 SE 22nd Avenue, Portland, Oregon 97202
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(Address of principal executive offices) (Zip Code)
(503) 232-8844
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(Registrant's telephone number, including area code)
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Item 5. Other Events
Underwriting Agreement
On March 4, 1998, in connection with the effective Registration Statement
on Form S-3 (Registration No. 333-44537), Fred Meyer Inc. entered into an
Underwriting Agreement with Salomon Smith Barney, Salomon Brothers Inc,
Donaldson, Lufkin & Jenrette, BT Alex. Brown, Chase Securities, Inc., Goldman,
Sachs & Co., Morgan Stanley Dean Witter, First Chicago Capital Markets, Inc.,
NationsBanc Montgomery Securities LLC, and Societe Generale Securities
Corporation.
The Underwriting Agreement is incorporated by reference in Registration No.
333-44537 as Exhibit No. 1.1.
Form of First Supplemental Indenture
The Form of First Supplemental Indenture, in connection with the effective
Registration Statement on Form S-3 (Registration No. 333-44537) is incorporated
by reference therein as Exhibit 4.2.
Item 7. Financial Statements and Exhibits
(c) Exhibits
1.1 Underwriting Agreement
4.2 Form of First Supplemental Indenture
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: March 9, 1998
FRED MEYER, INC.
By: DAVID R. JESSICK
-------------------------------------
David R. Jessick
Senior Vice President and Chief
Financial Officer
2
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EXHIBIT INDEX
Exhibit No. Description Sequential Page No.
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1.1 Underwriting Agreement
4.2 Form of First Supplemental Indenture
Fred Meyer, Inc.
$250,000,000 7.150% Notes Due March 1, 2003
$750,000,000 7.375% Notes Due March 1, 2005
$750,000,000 7.450% Notes Due March 1, 2008
Underwriting Agreement
New York, New York
March 4, 1998
Salomon Smith Barney
Salomon Brothers Inc
Donaldson Lufkin & Jenrette
Securities Corporation
BT Alex. Brown Incorporated
Chase Securities Inc.
Goldman Sachs & Co.
Morgan Stanley & Co. Incorporated
First Chicago Capital Markets, Inc.
NationsBanc Montgomery Securities LLC
Societe Generale Securities Corporation
As Representatives of the several Underwriters,
c/o Salomon Brothers Inc
7 World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Fred Meyer, Inc., a Delaware corporation (the "Company"), proposes to
sell to the several underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, $250,000,000 principal amount of its 7.150% Notes due March 1,
2003 (the "Notes due 2003"), $750,000,000 principal amount of its 7.375% Notes
Due March 1, 2005 (the "Notes due 2005") and $750,000,000 principal amount of
its 7.450% Notes Due March 1, 2008 (the Notes due 2008 and, together with the
Notes due 2003 and Notes due 2005, the "Notes"), each to be issued under an
indenture (the "Base Indenture") to be dated as of March 11, 1998, among the
Company, the Guarantors (as defined herein) and The First National Bank of
Chicago, as trustee (the "Trustee"), as supplemented by the First Supplemental
Indenture (the "Supplemental Indenture") to be dated as of March 11, 1998, among
the Company, the Guarantors and the Trustee. The Base Indenture, as supplemented
by the Supplemental Indenture, is sometimes referred to herein as the
"Indenture." The Notes will be guaranteed, on a senior unsecured basis, pursuant
to the terms of the Indenture (the "Guarantee" and, together with the Notes, the
"Securities") by
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the persons listed on Annex A hereto (each, a "Guarantor," and collectively, the
"Guarantors" and, collectively with the Company, the "Issuers"); provided,
however, that each of QFC and the QFC Subsidiaries and Food 4 Less and the Food
4 Less Subsidiaries are not executing this Agreement as of the date hereof but
will execute an instrument in substantially the form attached hereto as Exhibit
A pursuant to which they will become a party to this Agreement as a Guarantor
upon the consummation of the Mergers (it being understood that upon becoming a
party to this Agreement, each of QFC and the QFC Subsidiaries and Food 4 Less
and the Food 4 Less Subsidiaries shall be deemed to have made all the
representations and warranties set forth herein and shall be subject to all the
agreements made and obligations set forth herein). The Securities are being
offered by the Issuers and are being purchased by the Underwriters in connection
with the Mergers. To the extent there are no additional Underwriters listed on
Schedule I other than you, the term "Representatives" as used herein shall mean
you, as Underwriters, and the terms "Representatives" and "Underwriters" shall
mean either the singular or plural as the context requires. Any reference herein
to the "Registration Statement", a "Preliminary Prospectus" or the "Prospectus"
shall be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act which were filed under the
Exchange Act on or before the Effective Date of the Registration Statement or
the issue date of such Preliminary Prospectus or the Prospectus, as the case may
be; and any reference herein to the terms "amend," "amendment" or "supplement"
with respect to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any document
under the Exchange Act after the Effective Date of the Registration Statement,
or the issue date of any Preliminary Prospectus or the Prospectus, as the case
may be, deemed to be incorporated therein by reference. Certain terms used
herein are defined in Section 17 hereof.
1. Representations and Warranties. Each of the Issuers, jointly and
severally, represent and warrant to, and agree with (both before and after
giving effect to the Mergers), each Underwriter as set forth below in this
Section 1 as of the Effective Time with respect to such Issuer.
(a) The Company and the transactions contemplated by this Agreement
meet the requirements for use of Form S-3 under the Act ("Form S-3") and
has prepared and filed with the Commission a registration statement (file
number 333-44537) on Form S-3, including a related Preliminary Prospectus,
for the registration under the Act of the offering and sale of the
Securities. The Company may have filed one or more amendments thereto,
including a related Preliminary Prospectus, each of which has previously
been furnished to you. The Company will next file with the Commission one
of the following: (1) prior to the Effective Date of such Registration
Statement, a further amendment to such Registration Statement, including
the form of final Prospectus, (2) after the Effective Date of such
registration statement, a final Prospectus in accordance with Rules 430A
and 424(b), or (3) a final Prospectus in accordance with Rules 415 and
424(b). In the case of clause (2), the Issuers have included in such
Registration Statement, as amended at the Effective Date, all information
(other than
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Rule 430A Information) required by the Act and the rules thereunder to be
included in such registration statement and the Prospectus. As filed, such
amendment and form of final Prospectus, or such final Prospectus, shall
contain all Rule 430A Information or all information required by Rule
424(b)(2) under the Act, as applicable, together with all other such
required information, and, except to the extent the Representatives shall
agree in writing to a modification, shall be in all substantive respects in
the form furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to the
Execution Time, will be included or made therein. If the Registration
Statement contains the undertaking specified by Regulation S-K Item 512(a),
the Registration Statement, at the Execution Time, meets the requirements
set forth in Rule 415(a)(1)(x).
(b) On the Effective Date, the Registration Statement did or will, and
when the Prospectus is first filed (if required) in accordance with Rule
424(b) and on the Closing Date, the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act, the Exchange Act and the Trust Indenture Act and
the respective rules thereunder; on the Effective Date and at the Execution
Time, the Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading; on the Effective Date and on the Closing Date the Indenture did
or will comply in all material respects with the requirements of the Trust
Indenture Act and the rules thereunder; and, on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), will not, and on the date
of any filing pursuant to Rule 424(b) and on the Closing Date and any
settlement date, the Prospectus (together with any supplement thereto) will
not, include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Issuers make no representations or warranties
as to (i) that part of the Registration Statement which shall constitute
the Statement of Eligibility and Qualification (Form T-1) under the Trust
Indenture Act of the Trustee or (ii) the information contained in or
omitted from the Registration Statement or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished herein or in writing to the Issuers by or on behalf of any
Underwriter through the Representatives specifically for inclusion in the
Registration Statement or the Prospectus (or any supplement thereto).
(c) Each of the Issuers and their respective subsidiaries has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized
with full corporate power and authority to own or lease, as the case may
be, and to operate its properties and conduct its business as described in
the Prospectus, as well as to issue and sell the Securities and to enter
into each of the Transaction Documents, and is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
each jurisdiction which
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requires such qualification except for those in which the failure to be so
qualified would not have a material adverse effect on the business,
condition (financial or other), results of operations or prospects of the
Company and its subsidiaries, taken as a whole (after giving effect to the
Mergers), whether or not arising from transactions in the ordinary course
of business (a "Material Adverse Effect").
(d) All the outstanding shares of capital stock of each direct or
indirect subsidiary of the Company (the "Subsidiaries") have been duly and
validly authorized and issued and are fully paid and nonassessable, and,
except as otherwise set forth in the Prospectus, all outstanding shares of
capital stock of each of the Subsidiaries are owned by the Company either
directly or through wholly owned subsidiaries free and clear of any
perfected security interest or any other security interests, claims, liens
or encumbrances (other than security interests securing the New Bank
Facilities).
(e) The Company's authorized equity capitalization is as set forth in
the Prospectus.
(f) There is no franchise, contract or other document required to be
described in the Registration Statement or Prospectus, or to be filed as an
exhibit thereto, which is not described or filed as required.
(g) The execution, delivery and performance of this Agreement have
been duly authorized by each of the Issuers and this Agreement has been
duly executed and delivered by each of the Issuers. This Agreement conforms
in all material respects to the description thereof contained in the
Prospectus.
(h) Each of the Base Indenture, the Supplemental Indenture, the Notes
and the Guarantees have been duly and validly authorized and, in the case
of the Base Indenture and the Supplemental Indenture, when duly executed
and delivered by the Trustee, and in the case of the Securities, when duly
issued, authenticated and delivered in accordance with the terms of the
Indenture, endorsed by each Guarantor and paid for in accordance with the
terms of this Agreement, (A) each of the Base Indenture and the
Supplemental Indenture will constitute a valid and binding agreement of the
Issuers enforceable against the Issuers in accordance with its terms, (B)
the Notes will be validly issued and outstanding and will constitute valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms and entitled to the benefits of the Indenture
and (C) the Guarantees will constitute valid and binding obligations of the
Guarantors enforceable against the Guarantors in accordance with their
terms, in each case, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, moratorium, reorganization or other similar laws and
court decisions relating to or affecting the rights of creditors generally
or of general principles of equity (whether considered in a proceeding in
equity or at law). The Notes, the Guarantees, the Indenture and the New
Bank Facilities conform in all material respects to the descriptions
thereof contained in the Prospectus.
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(i) None of the Issuers is and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will be an "investment company" as defined in
the Investment Company Act of 1940, as amended.
(j) No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
issue and sale of the Securities hereunder or the execution, delivery or
performance of each of the Transaction Documents by any of the Issuers or
the consummation by the Issuers of the transactions contemplated in the
Transaction Documents, except such as have been obtained under the Act and
such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated herein and in the Prospectus.
(k) Neither the issue and sale of the Securities, nor the execution,
delivery or performance of any of the Transaction Documents, nor the
consummation of any of the transactions therein contemplated nor the
fulfillment of the terms therein will conflict with, result in a breach or
violation of, or imposition of any lien, charge or encumbrance upon any
property or assets of any of the Issuers or their respective subsidiaries
pursuant to, (i) the charter or by-laws of any of the Issuers or their
respective subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which any of the Issuers
or their respective subsidiaries is a party or bound or to which any of
their respective properties is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to any of the Issuers or
their respective subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over any of the Issuers or their respective subsidiaries or
any of their respective properties.
(l) Except as set forth in the Prospectus and the Registration
Statement, no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(m) The financial statements and schedules of each of the Company and
its consolidated subsidiaries, QFC and its consolidated subsidiaries, Food
4 Less and its consolidated subsidiaries, Keith Uddenberg, Inc. ("KUI") and
its consolidated subsidiaries, Hughes Markets, Inc. ("Hughes") and its
consolidated subsidiaries and Smith's Food & Drug Centers, Inc. ("Smith's")
and its consolidated subsidiaries in the Prospectus present fairly in all
material respects the financial condition, results of operations and cash
flows of the Company and its consolidated subsidiaries, QFC and its
consolidated subsidiaries, Food 4 Less and its consolidated subsidiaries,
KUI and its consolidated subsidiaries, Hughes and its consolidated
subsidiaries and Smith's and its consolidated subsidiaries, as applicable,
as of the dates and for the periods indicated, comply as to form with the
applicable accounting requirements of the Act and have been prepared in
conformity with generally accepted accounting principles applied on a
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consistent basis throughout the periods involved (except as otherwise noted
therein). The selected financial data set forth under the caption "Summary
of Selected Historical Financial and Other Data" in the Prospectus fairly
present, on the basis stated in the Prospectus, the information included
therein. The pro forma financial statements in the Prospectus and the
Registration Statement include assumptions that provide a reasonable basis
for presenting the significant effects directly attributable to the
transactions and events described therein, the related pro forma
adjustments give appropriate effect to those assumptions, and the pro forma
adjustments reflect the proper application of those adjustments to the
historical financial statement amounts in the pro forma financial
statements. The pro forma financial statements in the Prospectus and the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of Regulation S-X under the Act and the
pro forma adjustments have been properly applied to the historical amounts
in the compilation of those statements.
(n) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving any of
the Issuers or their respective subsidiaries or any of their respective
properties is pending or, to the best knowledge of any of the Issuers,
threatened that (i) could reasonably be expected to have a material adverse
effect on the performance of this Agreement or the consummation of any of
the transactions contemplated in the Transaction Documents or in the
Mergers or (ii) could reasonably be expected to have a Material Adverse
Effect, except as set forth in or contemplated in the Prospectus (exclusive
of any supplement thereto).
(o) Each of the Issuers and their respective subsidiaries have good
and marketable title to all items of real property and good title to all
material personal property owned by each of them, in each case free and
clear of any security interests, liens, encumbrances, equities, claims and
other defects, except such as do not materially and adversely affect the
value of such property and do not interfere with the use made or proposed
to be made of such property by such Issuer or such subsidiary, and each of
the Issuers and their respective subsidiaries have valid, subsisting and
enforceable leases for the properties described in the Prospectus as leased
by them, with exceptions in each case as are not material and do not
interfere with the business of the Company and its subsidiaries, taken as a
whole, in each case except as described in or contemplated by the
Prospectus (exclusive of any supplement thereto).
(p) None of the Issuers or any of their respective subsidiaries is in
violation or default of (i) any provision of its charter or bylaws, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject, or (iii) any statute, law, rule, regulation, judgment,
order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over
any of the Issuers or any of their respective subsidiaries or any of their
respective properties, as applicable, except (in the case of each of (i),
(ii), and (iii)) such as would not have a Material Adverse
<PAGE>
Effect.
(q) Deloitte & Touche LLP, who has certified certain financial
statements included in the Prospectus, are independent public accountants
with respect to the Company, QFC and KUI within the meaning of the Act and
the applicable published rules and regulations thereunder and Arthur
Andersen LLP, who has certified certain financial information included in
the Prospectus, are independent accountants with respect to Food 4 Less and
Hughes within the meaning of the Act and the applicable published rules and
regulations thereunder and Ernst & Young LLP, who has certified certain
financial information included in the Prospectus, are independent
accountants with respect to Smith's within the meaning of the Act and the
applicable published rules and regulations thereunder.
(r) There are no transfer taxes or other similar fees or charges under
Federal law or the laws of any state, or any political subdivision thereof,
required to be paid in connection with the execution and delivery of this
Agreement or the issuance or sale by the Issuers of the Securities.
(s) Except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto), the Company has filed all foreign,
federal, state and local tax returns that are required to be filed or has
requested extensions thereof (except in any case in which the failure so to
file would not have a Material Adverse Effect,) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a Material Adverse Effect.
(t) Except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto), no labor problem or dispute with the
employees of the Issuers or any of their respective subsidiaries exists or
is, to the best knowledge of the Issuers, threatened or imminent, and the
Issuers are not aware of any existing or imminent labor disturbance by the
employees of any of the Issuers' or any of their respective subsidiaries'
principal suppliers, contractors or customers, that would have a Material
Adverse Effect.
(u) No Subsidiary is currently or will be after giving effect to the
Mergers and the related transactions contemplated thereby, prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such Subsidiary's capital stock, from
repaying to the Company any loans or advances to such Subsidiary from the
Company or from transferring any of such Subsidiary's property or assets to
the Company or any other Subsidiary of the Company, except as described in
or contemplated by the Prospectus (exclusive of any supplement thereto).
(v) Except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto), the Issuers and each of their
respective subsidiaries possess all
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licenses, certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, except for those the failure of which
to possess would not have a Material Adverse Effect, and none of the
Issuers or any of their respective Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.
(w) The Issuers and each of their respective subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(x) None of the Issuers have taken, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected
to cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(y) Except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto), each of the Issuers and their
respective subsidiaries are (i) in compliance with any and all applicable
foreign, federal, state and local laws and regulations and the common law
relating to pollution or the protection of human health and safety, the
environment or hazardous or toxic substances, materials, constituents or
wastes, or pollutants or contaminants ("Environmental Laws"), (ii) have
received and are in compliance with all permits, licenses or other
approvals required of them under Environmental Laws to conduct their
respective businesses and (iii) have not received notice of any actual or
potential liability for the investigation or remediation of any disposal or
release of hazardous or toxic substances, materials, constituents or
wastes, or pollutants or contaminants or any other claim or demand under
any Environmental Law, and there are no past or present events, conditions,
circumstances or activities which would reasonably be expected to prevent
compliance with or give rise to liability under any Environmental Law,
except where such non-compliance with Environmental Laws, failure to
receive required permits, licenses or other approvals, or liability, claim
or demand would not, individually or in the aggregate, have a Material
Adverse Effect. Except as set forth in the Prospectus, none of the Issuers
or any of their respective subsidiaries has been named as a "potentially
responsible party" under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or any comparable
state or local law.
(z) In the ordinary course of their respective businesses, each of the
Issuers
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and their respective subsidiaries periodically reviews the effect of
Environmental Laws on the business, operations and properties of it and its
subsidiaries, in the course of which it identifies and evaluates associated
costs and liabilities (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws, or any permit, license or approval, any
related constraints on operating activities and any potential liabilities
to third parties). On the basis of such review, the Issuers have reasonably
concluded that such associated costs and liabilities would not, singly or
in the aggregate, have a Material Adverse Effect.
(aa) Each of the Issuers and their respective subsidiaries has
fulfilled its obligations, if any, under the minimum funding standards of
Section 302 of the United States Employee Retirement Income Security Act of
1974 ("ERISA") and the regulations and published interpretations thereunder
with respect to each plan (as defined in Section 3(3) of ERISA and such
regulations and published interpretations) in which employees of the
Issuers or any of their respective subsidiaries are eligible to participate
or with respect to which the Issuers or any of their respective
subsidiaries could incur liability (a "Plan") and each such Plan is in
compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations. The
Issuers and their respective subsidiaries have not incurred, and are not
reasonably likely to incur, any unpaid liability to the Pension Benefit
Guaranty Corporation (other than for the payment of premiums in the
ordinary course) or to any such Plan under Title IV of ERISA.
(bb) The Guarantors listed on Annex A attached hereto are all the
subsidiaries of the Company (after giving effect to the Mergers) as of the
Closing Date (other than Insignificant Subsidiaries) (the "Subsidiaries").
(cc) The Issuers and each of their respective subsidiaries own,
possess, license or have other rights to use, on reasonable terms, all
patents, patent applications, trade and service marks, trade and service
mark registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") necessary for the conduct of
their respective businesses as now conducted or as proposed in the
Prospectus to be conducted, except for such Intellectual Property the
failure of which to own, possess, license or have other rights to use,
would not have a Material Adverse Effect. Except as set forth in the
Prospectus (a) there are no rights of third parties to any such
Intellectual Property; (b) there is no material infringement by third
parties of any such Intellectual Property; (c) there is no pending or, to
the best knowledge of the Issuers, threatened action, suit, proceeding or
claim by others challenging the Issuers' or any of their respective
subsidiaries' rights in or to any such Intellectual Property, and the
Issuers are unaware of any facts which would form a reasonable basis for
any such claim; (d) there is no pending or, to the best knowledge of the
Issuers, threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property, and
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the Issuers are unaware of any facts which would form a reasonable basis
for any such claim; (e) there is no pending or, to the best knowledge of
the Issuers, threatened action, suit, proceeding or claim by others that
the Issuers or any of their respective subsidiaries infringes or otherwise
violates any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Issuers are unaware of any other fact
which would form a reasonable basis for any such claim; (f) there is no
U.S. patent or published U.S. patent application which contains claims that
dominate or may dominate any Intellectual Property described in the
Prospectus as being owned by or licensed to the Issuers or any of their
respective subsidiaries or that interferes with the issued or pending
claims of any such Intellectual Property; and (g) there is no prior art of
which the Issuers are aware that may render any U.S. patent held by the
Issuers or any of their respective subsidiaries invalid or any U.S. patent
application held by the Issuers or any of their respective subsidiaries
unpatentable which has not been disclosed to the U.S. Patent and Trademark
Office except for patents which, if held invalid, would not have a Material
Adverse Effect.
(dd) Except as disclosed in the Registration Statement and the
Prospectus, the Company (i) does not have any material lending or other
relationship with any bank or lending affiliate of Salomon Smith Barney
Holdings Inc. and (ii) does not intend to use any of the proceeds from the
sale of the Securities hereunder to repay any outstanding debt owed to any
affiliate of Salomon Smith Barney Holding Inc.
(ee) The Company is in compliance with the Commission's staff legal
bulletin No. 5 dated October 8, 1997 related to Year 2000 compliance.
Any certificate signed by any officer of any Issuer and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by such
Issuer, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of 98.560% of the
principal amount thereof in the case of the Notes due 2003, at 98.358% of the
principal amount thereof in the case of the Notes due 2005 and at 98.122% of the
principal amount thereof in the case of the Notes due 2008, at the Closing Date,
the principal amount of the Notes set forth opposite such Underwriter's name in
Schedule I hereto, and the Guarantors hereby agree to issue the Guarantees. The
purchase and sale of each of the Notes due 2003, the Notes due 2005 and the
Notes due 2008 are conditioned upon the purchase and sale of each of the other.
3. Delivery and Payment. Delivery of and payment for the Securities
shall be made at 10:00 AM, New York City time, on March 11, 1998, or at such
time on such later date not more than three Business Days after the foregoing
date as the Representatives shall designate, which date and time may be
postponed by agreement between the Representatives and
<PAGE>
the Company or as provided in Section 9 hereof (such date and time of delivery
and payment for the Securities being herein called the "Closing Date"). Delivery
of the Securities shall be made to the Representatives for the respective
accounts of the several Underwriters against payment by the several Underwriters
through the Representatives of the purchase price thereof to or upon the order
of the Company by wire transfer payable in same-day funds to an account
specified by the Company. Delivery of the Securities shall be made through the
facilities of The Depository Trust Company unless the Representatives shall
otherwise instruct.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements. Each of the Issuers, jointly and severally, agrees with
the several Underwriters that:
(a) The Issuers will use their best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities, the Issuers will not file any amendment of the Registration
Statement or supplement to the Prospectus or any Rule 462(b) Registration
Statement unless the Company has furnished you a copy for your review prior
to filing and will not file any such proposed amendment or supplement to
which you reasonably object. Subject to the foregoing sentence, if filing
of the Prospectus is otherwise required under Rule 424(b), the Issuers will
cause the Prospectus, properly completed, and any supplement thereto to be
filed with the Commission pursuant to the applicable paragraph of Rule
424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company will
promptly advise the Representatives (1) when the Registration Statement, if
not effective at the Execution Time, shall have become effective, (2) when
the Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any Rule
462(b) Registration Statement shall have been filed with the Commission,
(3) when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have been filed or become
effective, (4) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Prospectus or for any additional
information, (5) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (6) of
the receipt by any Issuer of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for such
purpose. The Issuers will use their best efforts to prevent the issuance of
any such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any
<PAGE>
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall be
necessary to amend the Registration Statement or supplement the Prospectus
to comply with the Act or the Exchange Act or the respective rules
thereunder, the Issuers promptly will (1) notify the Representatives of
such event; (2) prepare and file with the Commission, subject to the second
sentence of paragraph (a) of this Section 5, an amendment or supplement
which will correct such statement or omission or effect such compliance;
and (3) supply any supplemented Prospectus to you in such quantities as you
may reasonably request.
(c) As soon as practicable, the Company will make generally available
to their security holders and to the Representatives an earnings statement
or statements of the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Issuers will furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and to each other Underwriter a copy
of the Registration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter or dealer may be required by the
Act, as many copies of each Preliminary Prospectus and the Prospectus and
any supplement thereto as the Representatives may reasonably request. The
Issuers will pay the expenses of printing or other production of all
documents relating to the offering.
(e) The Issuers will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in effect
so long as required for the distribution of the Securities and will pay any
fee of the National Association of Securities Dealers, Inc., in connection
with its review of the offering; provided that in no event shall any Issuer
be obligated to do business in any jurisdiction where it is not now so
qualified or to take any action that would subject it to service of process
in suits, other than those arising out of the offering or sale of the
Securities in any jurisdiction where it is not now so subject.
(f) The Issuers will not, without the prior written consent of Salomon
Smith Barney, for a period of 75 days following the Execution Time, offer,
sell or contract to sell, or otherwise dispose of (or enter into any
transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the Issuers or
any affiliate of the Issuers or any person in privity with any Issuer (or
any affiliate of any Issuer)) directly or indirectly, or announce the
offering of, any debt securities issued or guaranteed by the Issuers (other
than the Securities and commercial paper issued from time to time and other
than in connection with the New Bank Facilities or other bank lines of
credit).
(g) The Issuers will not take, directly or indirectly, any action
designed to or
<PAGE>
which has constituted or which might reasonably be expected to cause or
result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of any of the Issuers to
facilitate the sale or resale of the Securities.
(h) The Company will apply the net proceeds from the offerings of the
Notes in the manner described in the "Use of Proceeds" section of the
Prospectus.
(i) The Company will cooperate with the Representatives and use its
best efforts to permit the Notes to be eligible for clearance and
settlement through the Depository Trust Company.
6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Securities shall be subject to the accuracy
of the representations and warranties on the part of the Issuers contained
herein as of the Execution Time and the Closing Date, to the accuracy of the
statements of the Issuers made in any certificates pursuant to the provisions
hereof, to the performance by the Issuers of their respective obligations
hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 PM New York City time, on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (ii) 9:30 AM on the Business Day following
the day on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such date; if
filing of the Prospectus, or any supplement thereto, is required pursuant
to Rule 424(b), the Prospectus, and any such supplement, will be filed in
the manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted
or threatened.
(b) The Issuers shall have furnished to the Representatives the
opinion of Stoel Rives LLP, counsel for the Company and the subsidiaries of
the Company other than QFC, the QFC subsidiaries, Food 4 Less and the Food
4 Less Subsidiaries, dated the Closing Date and addressed to the
Representatives, to the effect that
(i) each of the Issuers has been duly incorporated and is validly
existing as a corporation in good standing or of current status, as
the case may be, under the laws of the jurisdiction in which it is
chartered or organized, with full corporate power and authority to own
or lease, as the case may be, and to operate its properties and
conduct its business as described in the Prospectus, and to issue and
sell the Securities and to enter into each of the Transaction
Documents and is duly qualified to do business as a foreign
corporation and is in good standing or current status, as the case may
be, under the laws of those jurisdictions designated as material on an
attached officer's certificate;
<PAGE>
(ii) all the outstanding shares of capital stock of each Guarantor
have been duly and validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of the Guarantors
are owned of record by the Company either directly or through wholly
owned subsidiaries and, to the knowledge of such counsel, as to all
Guarantors other than FFL and the FFL Subsidiaries, free and clear of
any perfected security interest (other than security interests
securing the New Bank Facilities);
(iii) the Company's authorized equity capitalization is as set forth
in the Prospectus and the Securities, the Indenture and the New Bank
Facilities conform in all material respects to the descriptions
thereof contained in the Prospectus;
(iv) each of the Base Indenture and the Supplemental Indenture has
been duly authorized, executed and delivered by each of the Issuers,
and constitutes a legal, valid and binding instrument enforceable
against each of the Issuers in accordance with its terms (subject, as
to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect); the Notes
and the Guarantees are in the form contemplated by the Indenture and
have been duly and validly authorized and, when the Notes are executed
and authenticated in accordance with the provisions of the Indenture
and endorsed by each Guarantor and delivered to and paid for by
Underwriters pursuant to this Agreement, (A) the Notes will constitute
legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their terms and entitled to the
benefits of the Indenture and (B) the Guarantees will constitute
legal, valid and binding obligations of each of the Guarantors
enforceable against each of the Guarantors in accordance with their
terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization or other similar laws and court
decisions relating to or affecting the rights of creditors generally
or of general principles of equity (whether considered in a proceeding
in equity or at law);
(v) this Agreement has been duly authorized, executed and delivered by
each of the Issuers;
(vi) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Issuers or any of their respective subsidiaries or their respective
properties of a character required to be disclosed therein (other than
with respect to FFL and the FFL subsidiaries) or which could result in
the prevention of the transactions contemplated by the Transaction
Documents, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit to the Registration
Statement, which is not described or filed as required;
<PAGE>
(vii) the Registration Statement has become effective under the Act;
any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the
time period required by Rule 424(b); to the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that purpose have been
instituted or threatened and the Registration Statement and the
Prospectus (including those documents incorporated by reference
therein) (other than the financial statements and other financial
information contained or incorporated by reference therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act, the
Exchange Act and the Trust Indenture Act and the respective rules
thereunder (it being understood that in passing upon compliance as to
form of the Registration Statement and Prospectus (including the
incorporated documents), such counsel may assume that the statements
made therein are correct and complete);
(viii) none of the Issuers are nor, after giving effect to the
offering and sale of the Securities and the application of the net
proceeds therefrom as described in the Prospectus, will be an
"investment company" as defined in the Investment Company Act of 1940,
as amended;
(ix) no consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with
the transactions contemplated herein and in the other Transaction
Documents, except such as have been obtained under the Act and such as
may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated in this Agreement and in the
Prospectus;
(x) the execution and delivery of the Transaction Documents by the
Issuers, the issuance and sale of the Notes pursuant to this Agreement
and the making of the Guarantees pursuant to the Indenture will not
result in a breach or violation of, or imposition of any lien, charge
or encumbrance upon any property or assets of any of the Issuers or
their respective subsidiaries (other than the stock pledges securing
the New Bank Facilities), pursuant to, (i) the charter or by-laws of
any of the Issuers or their respective subsidiaries, (ii) the terms of
the contracts identified on an annex to such opinion identified as
material to the Company and its subsidiaries, taken as a whole, or
(iii) any statute, law, rule, regulation, or, to the knowledge of such
counsel, any judgment, order or decree applicable to any of the
Issuers or their respective subsidiaries, of any court, regulatory
body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over any of the Issuers or their
respective subsidiaries or any of its or their properties, which
breach or violation or imposition of a lien would, in the case of
clause (ii) or (iii) above, have a Material Adverse Effect;
<PAGE>
(xi) except as set forth in the Prospectus and the Registration
Statement, to the knowledge of such counsel, no holders of securities
of the Company have rights to the registration of such securities
under the Registration Statement.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company and its
subsidiaries, representatives of the independent public accountants for the
Company and its subsidiaries, and representatives of the Underwriters, at
which the contents of the Registration Statement and Prospectus were
discussed, and although such counsel are not passing upon, and do not
assume any responsibility for, the accuracy, completeness or fairness of
the statements contained therein and have not made any independent check or
verification thereof (except with respect to its opinion in paragraph
(iii)), during the course of such participation (relying as to materiality
to a large extent on the representations of officers and other
representatives of the Company and the Guarantors), no facts have come to
the attention of such counsel which caused them to believe that on the
Effective Date or at the Execution Time the Registration Statement contains
or contained any untrue statement of a material fact or omitted or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus as of its date
and on the Closing Date includes any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (in each case, other than the financial statements, including
the notes thereto, financial data and supporting schedules and other
statistical data contained or incorporated by reference therein, as to
which such counsel need express no opinion).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of Oregon or the Federal laws of the United States, to the extent they deem
proper and specified in such opinion, upon the opinion of other counsel of
good standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters, (B) as to the opinions set forth in
paragraphs (i), (ii), (iv), (v) (as to authorization), (vi), (vii) (as to
compliance as to form), and (x) (with respect to subclauses (i) and (ii)
therein), to the extent they relate to FFL and the FFL Subsidiaries and to
the extent such counsel deem proper and specified in such opinion, upon the
opinion of Latham & Watkins, counsel for FFL and the FFL Subsidiaries, and
(C) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Issuers and public officials. References to
the Prospectus in this paragraph (b) include any supplements thereto at the
Closing Date. The opinion or opinions of such counsel shall be rendered to
the Underwriters at the request of the Company and shall so state therein.
(c) The Issuers shall have furnished to the Representatives the
opinion of Latham & Watkins, special counsel for Food 4 Less and the Food 4
Less Subsidiaries (other than Falley's (as defined herein)), dated the
Closing Date and addressed to the Representatives, to the effect that:
<PAGE>
(i) each of Food 4 Less and the Food 4 Less Subsidiaries (other than
Falley's) has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its state of
incorporation, with full corporate power and authority to own or
lease, as the case may be, and to operate its properties and conduct
its business as described in the Prospectus, and to make its Guarantee
and to enter into each of the Transaction Documents and is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of those jurisdictions designated as material
on an attached officer's certificate;
(ii) all the outstanding shares of capital stock of each of Food 4
Less and the Food 4 Less Subsidiaries (other than Falley's) have been
duly authorized and validly issued and are fully paid and
nonassessable, and, all of the outstanding shares of capital stock of
the Food 4 Less Subsidiaries (other than Falley's) are owned of record
by Food 4 Less either directly or through wholly owned subsidiaries;
(iii) each of this Agreement, the Base Indenture, the Supplemental
Indenture and the Guarantees has been duly authorized by each of Food
4 Less and the Food 4 Less Subsidiaries (other than Falley's);
(iv) to the knowledge of such counsel, except with respect to the
terms of the Settlement Agreement (as defined in the Prospectus) as it
addresses the State Claims (as defined in the Prospectus) as described
in the Prospectus, there is no pending or threatened action, suit or
proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving Food 4 Less or the Food 4 Less
Subsidiaries or their respective properties that seeks to restrain,
enjoin or prevent the consummation of or otherwise challenge the
transactions contemplated by the Transaction Documents, and there is
no contract or other document to which Food 4 Less or any of the Food
4 Less Subsidiaries is a party or by which it is bound that is of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit to the Registration
Statement, which is not described or filed as required;
(v) the sections of the Prospectus described on a schedule to such
opinion and the documents incorporated by reference into the
Registration Statement and the Prospectus that were filed by Food 4
Less (other than the financial statements and other financial
information contained or incorporated by reference therein, as to
which such counsel need express no opinion) (the "Food 4 Less
Sections") comply as to form in all material respects with the
applicable requirements of the Act and the Exchange Act and the
respective rules thereunder (it being understood that in passing upon
compliance as to form of the Food 4 Less Sections, such counsel may
assume that the statements made therein are correct and complete);
(vi) the execution and delivery of the Transaction Documents by each
of Food 4 Less and the Food 4 Less Subsidiaries (other than Falley's)
and the making of
<PAGE>
the Guarantees by Food 4 Less and the Food 4 Less Subsidiaries (other
than Falley's) pursuant to the Indenture will not result in a breach
or violation of, or imposition of any lien, charge or encumbrance
(other than stock pledges securing the New Bank Facilities) upon any
property or assets of any of Food 4 Less or the Food 4 Less
Subsidiaries (other than Falley's) pursuant to, (i) the charter or
by-laws of any of Food 4 Less or the Food 4 Less Subsidiaries (other
than Falley's) or, (ii) the terms of the contracts identified on an
annex to such opinion identified as material to Food 4 Less and the
Food 4 Less Subsidiaries, taken as a whole, which breach or violation
or imposition of a lien would, in the case of clause (ii) above, have
a Material Adverse Effect;
In addition, such counsel shall state that in its limited capacity as
special counsel to Food 4 Less, it has participated in conferences with
officers and other representatives of Food 4 Less and the Company, counsel
to the Company, representatives of the independent public accountants for
Food 4 Less and the Company, and your representatives, at which the Food 4
Less Sections were discussed, and although its review was limited strictly
to the Food 4 Less Sections and it is not passing upon, and does not assume
any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Food 4 Less Sections and has not made any
independent check or verification thereof, during the course of such
participation, no facts came to such counsel's attention that caused it to
believe that the Food 4 Less Sections, as of the date of the Prospectus
Supplement and on the Closing Date, and taken as a description of the
historical operations of Food 4 Less prior to the Mergers, contained or
will contain an untrue statement of a material fact or omitted or will omit
to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; it being
understood that such counsel expresses no belief with respect to (i) the
financial statements, financial statement schedules and other financial
data included or incorporated by reference in the Food 4 Less Sections or
(ii) any other contents of the Registration Statement or Prospectus other
than the Food 4 Less Sections.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of California or the Federal laws of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters, and (B) as to matters of
fact, to the extent they deem proper, on certificates of responsible
officers of Food 4 Less and public officials. References to the Prospectus
in this paragraph (c) include any supplements thereto at the Closing Date.
The opinion or opinions of such counsel shall be rendered to the
Underwriters at the request of the Company and shall so state therein.
(d) The Issuers shall have furnished to the Representatives the
opinion of Squadron, Ellenoff, Plesent, Sheinfeld & Sorhin, special New
York counsel for the Issuers, dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) each of the Base Indenture and the Supplemental Indenture
constitutes a
<PAGE>
legal, valid and binding instrument enforceable against each of the
Issuers in accordance with its terms (subject, as to the enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from
time to time in effect); when the Notes are executed and authenticated
in accordance with the provisions of the Indenture and endorsed by
each Guarantor and delivered to and paid for by Underwriters pursuant
to this Agreement, (A) the Notes will constitute legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms and entitled to the benefits of the
Indenture and (B) the Guarantees will constitute legal, valid and
binding obligations of each of the Guarantors enforceable against each
of the Guarantors in accordance with their terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, moratorium,
reorganization or other similar laws and court decisions relating to
or affecting the rights of creditors generally or of general
principles of equity (whether considered in a proceeding in equity or
at law);
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of New York or the Federal laws of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of fact,
to the extent they deem proper, on certificates of responsible officers of
the Issuers and public officials. References to the Prospectus in this
paragraph (d) include any supplements thereto at the Closing Date. The
opinion or opinions of such counsel shall be rendered to the Underwriters
at the request of the Company and shall so state therein.
(e) The Issuers shall have furnished to the Representatives, the
opinion of Clutter, Hinkel & Aadalen, LLP, special Kansas counsel to
Falley's, Inc. ("Falley's"), dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) Falley's has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Kansas, with full
corporate power and authority to own or lease, as the case may be, and
to operate its properties and conduct its business as described in the
Prospectus, and to make its Guarantee and to enter into each of the
Transaction Documents;
(ii) all of the outstanding shares of capital stock of Falley's has
been duly authorized and validly issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus,
all outstanding shares of capital stock of Falley's are owned of
record by Food 4 Less either directly or through wholly owned
subsidiaries;
(iii) this Agreement, the Base Indenture, the Supplemental Indenture
and the Guarantee have been duly authorized by Falley's;
<PAGE>
(iv) the execution and delivery of the Transaction Documents by
Falley's and the making of the Guarantee by Falley's will not result
in a breach or violation of, or imposition of any lien, charge or
encumbrance (other than stock pledges securing the New Bank
Facilities) upon any property or assets of Falley's, pursuant to the
charter or by-laws of Falley's.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of Kansas or the Federal laws of the United States, to the extent they deem
proper and specified in such opinion, upon the opinion of other counsel of
good standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of Falley's and
public officials. References to the Prospectus in this paragraph (e)
include any supplements thereto at the Closing Date. The opinion or
opinions of such counsel shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
(f) The Representatives shall have received from Cahill Gordon &
Reindel, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Indenture, the Registration
Statement, the Prospectus (together with any supplement thereto) and other
related matters as the Representatives may reasonably require, and the
Issuers shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(g) The Issuers shall have furnished to the Representatives a
certificate of the Company, QFC and Food 4 Less signed by the Chairman of
the Board, the President or a Senior Vice President and the principal
financial or accounting officer of the Company, QFC and Food 4 Less, as
applicable, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplements to the Prospectus and this Agreement and that:
(i) the representations and warranties of, in the case of the
certificate of the Company, the Issuers, and in the case of the
certificate of QFC and Food 4 Less, QFC and the QFC Subsidiaries and
Food 4 Less and the Food 4 Less Subsidiaries, respectively, in this
Agreement are true and correct on and as of the Closing Date with the
same effect as if made on the Closing Date and the Issuers and QFC and
the QFC Subsidiaries and Food 4 Less and Food 4 Less Subsidiaries, as
applicable, have complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have
been instituted or, to such officers' knowledge, threatened; and
<PAGE>
(iii) since the dates of the most recent financial statements in the
Prospectus of each of the Company, QFC and Food 4 Less, (exclusive of
any supplement thereto), there has been no material adverse change in
the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(h) At the Execution Time and at the Closing Date, Deloitte & Touche
LLP (with respect to the Company and QFC) and Arthur Andersen LLP (with
respect to Food 4 Less and Hughes) shall have furnished to the
Representatives comfort letters, dated respectively as of the Execution
Time and as of the Closing Date, in form and substance satisfactory to the
Representatives.
(i) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in
the letter or letters referred to in paragraph (h) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto), the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the sole judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to proceed
with the offering or delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto).
(j) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Issuers' debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act) or any notice given of any intended
or potential decrease in any such rating or of a possible change in any
such rating that does not indicate the direction of the possible change.
(k) Prior to the Closing Date, the Issuers shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
(l) The Mergers shall have been consummated on the terms contemplated
by each of the Merger Agreements (as in effect at the Execution Time), and
each of QFC and the QFC Subsidiaries and Food 4 Less and the Food 4 Less
Subsidiaries shall have become parties to this Agreement as Guarantors
pursuant to an instrument in substantially the form attached hereto as
Exhibit A.
(m) The Representatives shall have received true and correct executed
copies
<PAGE>
of the New Bank Facilities, the New Bank Facilities shall be in form and
substance reasonably satisfactory to the Representatives and all conditions
to the initial borrowings thereunder shall have been satisfied in all
material respects.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Stoel Rives LLP, counsel for the Company, at 900 SW
Fifth Avenue, Suite 2300, Portland, Oregon, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of any of the Issuers to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, each of the Issuers, jointly and severally,
agree to reimburse the Underwriters severally through Salomon Smith Barney on
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel for the Underwriters) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) Each of the Issuers, jointly
and severally, agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person
who controls any Underwriter within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement for the registration of the Securities as originally filed or in any
amendment thereof, or in any Preliminary Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, in light of the circumstances under which they were made)
not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Issuers will not be liable in
any such case to the extent that any such loss, claim, damage or liability
<PAGE>
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter through the Representatives specifically for inclusion therein;
provided, further, however, that with respect to any untrue statement or
omission of a material fact made in any Preliminary Prospectus, the indemnity
agreement contained in this Section 8(a) shall not inure to the benefit of any
Underwriter (or any of the directors, officers, employees and agents of such
Underwriter or any person who controls such Underwriter within the meaning of
either the Act or the Exchange Act) from whom the person asserting any such
loss, claim, damage or liability purchased the Securities concerned, to the
extent that any such loss, claim, damage or liability of such Underwriter occurs
under circumstances where it shall have been determined by a court of competent
jurisdiction by final and nonappealable judgment that (x) the Company had
previously furnished copies of the Prospectus to the Underwriters, (y) the
untrue statement or omission of a material fact contained in the Preliminary
Prospectus was corrected in the Prospectus and (z) there was not sent or given
to such person, at or prior to the written confirmation of the sale of such
Securities to such person, a copy of the Prospectus, in any case where such
delivery was required by the Act. This indemnity agreement will be in addition
to any liability which the Issuers may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Issuers, each of their directors, each of their officers who
signs the Registration Statement, and each person who controls any of the
Issuers within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity to each Underwriter, but only with reference
to written information relating to such Underwriter furnished to the Company by
or on behalf of such Underwriter through the Representatives specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any Underwriter
may otherwise have. The Issuers acknowledge that the (i) statements set forth
regarding delivery of the Securities on the cover page and the legend in block
capital letters related to stabilization, syndicate covering transactions and
penalty bids on the second page and (ii) the third and fifth paragraphs under
the heading "Underwriting" in any Preliminary Prospectus and the Prospectus
constitute the only information furnished in writing by or on behalf of the
several Underwriters for inclusion in any Preliminary Prospectus or the
Prospectus.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to
<PAGE>
represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be responsible
for the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Issuers jointly and severally on the one
hand and the Underwriters severally on the other agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Issuers and one or more of the Underwriters
may be subject in such proportion as is appropriate to reflect the relative
benefits received by the Issuers on the one hand and by the Underwriters on the
other from the offering of the Securities; provided, however, that in no case
shall any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for any
amount in excess of the underwriting discount or commission applicable to the
Securities purchased by such Underwriter hereunder. If the allocation provided
by the immediately preceding sentence is unavailable for any reason, the Issuers
jointly and severally on the one hand and the Underwriters severally on the
other shall contribute in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Issuers on the one
hand and of the Underwriters on the other in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Issuers shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses) received by
it, and benefits received by the Underwriters shall be deemed to be equal to the
total underwriting discounts and commissions, in each case as set forth on the
cover page
<PAGE>
of the Prospectus. Relative fault shall be determined by reference to, among
other things, whether any untrue or any alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information provided by the Issuers on the one hand or the Underwriters on the
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Issuers and the Underwriters agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d), no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person who controls an Underwriter within the meaning of either the Act or
the Exchange Act and each director, officer, employee and agent of an
Underwriter shall have the same rights to contribution as such Underwriter, and
each person who controls any of the Issuers within the meaning of either the Act
or the Exchange Act, each officer of the Issuers who shall have signed the
Registration Statement and each director of the any of the Issuers shall have
the same rights to contribution as any of the Issuers subject in each case to
the applicable terms and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Notes due 2003, the Notes due 2005 or
the Notes due 2008 agreed to be purchased by such Underwriter or Underwriters
hereunder and such failure to purchase shall constitute a default in the
performance of its or their obligations under this Agreement, the remaining
Underwriters shall be obligated severally to take up and pay for (in the
respective proportions which the principal amount of Notes due 2003, the Notes
due 2005 or Notes due 2008, as the case may be, set forth opposite their names
in Schedule I hereto bears to the aggregate principal amount of Notes due 2003,
the Notes due 2005 or Notes due 2008, as the case may be, set forth opposite the
names of all the remaining Underwriters) the Notes due 2003, Notes due 2005 or
Notes due 2008, as the case may be, which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
that the aggregate principal amount of the Notes due 2003, the Notes due 2005 or
the Notes due 2008 which the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate principal amount of the
Notes due 2003, 10% of the aggregate principal amount of the Notes due 2005 or
10% of the aggregate principal amount of the Notes due 2008, as the case may be,
set forth in Schedule I hereto, the remaining Underwriters shall have the right
to purchase all, but shall not be under any obligation to purchase any, of the
Notes, and if such nondefaulting Underwriters do not purchase all the Notes,
this Agreement will terminate without liability to any nondefaulting Underwriter
or to any Issuer. In the event of a default by any Underwriter as set forth in
this Section 9, the Closing Date shall be postponed for such period, not
exceeding five Business Days, as the Representatives shall determine in order
that the required changes in the Registration Statement and the Prospectus or in
any other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Issuers and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
<PAGE>
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Common Stock shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such exchange, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the sole judgment of the Representatives, impractical or inadvisable to
proceed with the offering or delivery of the Securities as contemplated by the
Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Issuers or their respective officers and of the Underwriters set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or the Issuers or
any of the officers, directors or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 7, 8, 12, 13 and 14 hereof shall survive the termination
or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to the Salomon Smith Barney General Counsel (fax no.:
(212) 783-1752) and confirmed to the General Counsel, Salomon Smith Barney, at 7
World Trade Center, New York, New York, 10048, Attention: General Counsel; or,
if sent to the Company, will be mailed, delivered or telefaxed to Fred Meyer,
P.O. Box 42121, 3800 S.E. 22nd Ave., Portland, Oregon, 97242-0121, Telecopy No.
(503) 797-5299.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York without regard to
principles of conflicts of law.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience
only and shall not affect the construction hereof.
<PAGE>
17. Definitions. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean, with respect to a party to this
Agreement, the date and time that this Agreement (or an instrument
providing that such party agrees to become a party to this Agreement) is
executed and delivered by such party.
"Food 4 Less" means Food 4 Less Holdings, Inc., a Delaware
corporation.
"Food 4 Less Merger Agreement" means the Agreement and Plan of Merger
dated as of November 6, 1997 among Food 4 Less Holdings, Inc., FFL
Acquisition Corp. and Fred Meyer, Inc., as amended, as in effect at the
Execution Time.
"Food 4 Less Subsidiaries" means the direct and indirect subsidiaries
of Food 4 Less.
"Insignificant Subsidiary" means any inactive or otherwise immaterial
direct or indirect subsidiaries of the Company; provided that the assets
and pre-tax income of, and the Company's net investment in, such
Insignificant Subsidiaries on an individual and a combined basis will not
exceed three percent (3%) of the Company's consolidated pre-tax income or
assets, as applicable.
"Merger Agreements" means the QFC Merger Agreement and the FFL Merger
Agreement.
"Mergers" shall mean (i) the merger of Q-Acquisition Corp., a
Washington corporation, with and into QFC with QFC becoming a wholly owned
direct subsidiary of the Company, pursuant to the QFC Merger Agreement and
(ii) the merger of FFL Acquisition Corp., a Delaware corporation, with and
into Food 4 Less with Food 4 Less becoming a wholly owned direct subsidiary
of the Company, pursuant to the Food 4 Less
<PAGE>
Merger Agreement.
"New Bank Facilities" means (i) the Loan Agreement to be entered into
on the Closing Date among the Company, the Guarantors, Bankers Trust
Company, as Administrative Agent, The Chase Manhattan Bank, as Syndication
Agent, and the other lenders party thereto, and (ii) the Participation
Agreement to be entered into on the Closing Date among the Company, as
lessee, FMS Trust 1997-1, as lessor, Wilmington Trust Company, as owner
trustee, Bankers Trust Company, as Administrative Agent, The Chase
Manhattan Bank, as Syndication Agent, and the other investors and lenders
party thereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) above and any preliminary supplemental
prospectus filed with the Commission pursuant to Rule 424, including the
Prospectus Supplement dated February 17, 1998.
"Prospectus" shall mean the prospectus relating to the Securities,
including the Prospectus Supplement dated as of March 4, 1998, that is
first filed pursuant to Rule 424(b) after the Execution Time or, if no
filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"QFC" means Quality Food Centers, Inc., a Washington corporation.
"QFC Merger Agreement" means that the Agreement and Plan of Merger
dated as of November 6, 1997 among Quality Food Centers, Inc.,
Q-Acquisition Corp. and Fred Meyer, Inc., as amended, as in effect at the
Execution time.
"QFC Subsidiaries" means the direct and indirect subsidiaries of QFC.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b) Registration
Statement, as the case may be. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as provided
by Rule 430A.
"Rule 424", "Rule 430A", "Rule 462" and "Rule 415" refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
<PAGE>
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the initial registration statement.
"Transaction Documents" shall mean, collectively, this Agreement, the
Base Indenture, the Supplemental Indenture and the New Bank Facilities.
"Salomon Smith Barney" shall mean Smith Barney Inc. or Salomon
Brothers Inc. to the extent that any such party is a signatory to this
Agreement.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
[Signature Page Follows]
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Issuers
and the several Underwriters.
Very truly yours,
FRED MEYER, INC.
By: DAVID R. JESSICK
-------------------------------------
Name: David R. Jessick
Title: Senior Vice President and
Chief Financial Officer
B&B STORES, INC.
B&B PHARMACY, INC.
CB&S ADVERTISING AGENCY, INC.
DISTRIBUTION TRUCKING COMPANY
FM, INC.
FM HOLDING CORPORATION
FRED MEYER JEWELERS, INC.
FM RETAIL SERVICES, INC.
FRED MEYER OF ALASKA, INC.
FRED MEYER OF CALIFORNIA, INC.
FRED MEYER STORES, INC.
GRAND CENTRAL, INC.
JH PROPERTIES, INC.
MERKSAMER JEWELERS, INC.
ROUNDUP CO.
SMITH'S FOOD & DRUG CENTERS, INC.
COMPARE, INC.
SAINT LAWRENCE HOLDING COMPANY
SMITH'S BEVERAGE OF WYOMING, INC.
SMITTY'S EQUIPMENT LEASING, INC.
SMITTY'S SUPERMARKETS, INC.
SMITTY'S SUPER VALU, INC.
By: KENNETH THRASHER
-------------------------------------
Name: Kenneth Thrasher
Title: Vice President
<PAGE>
WESTERN PROPERTY INVESTMENT
GROUP, INC.
By: KENNETH THRASHER
-------------------------------------
Name: Kenneth Thrasher
Title: Vice President
TREASURE VALLEY LAND
COMPANY, L.C.
By: Smith's Food & Drug Centers, Inc.,
its member
By: KENNETH THRASHER
-------------------------------------
Name: Kenneth Thrasher
Title: Executive Vice President
RICHIES, INC.
By: ROGER A. COOKE
-------------------------------------
Name: Roger A. Cooke
Title: Vice President
<PAGE>
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
Salomon Smith Barney
Donaldson Lufkin & Jenrette
Securities Corporation
BT Alex. Brown Incorporated
Chase Securities Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated.
First Chicago Capital Markets, Inc.
NationsBanc Montgomery Securities LLC
Societe Generale Securities Corporation
By: Salomon Brothers Inc
By: CHAD A. LEAT
------------------------------
Name: Chad A. Leat
Title: Managing Director
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
Principal Amount Principal Amount Principal Amount
of Notes due 2003 of Notes due 2005 of Notes due 2008
Underwriters to be Purchased to be Purchased to be Purchased
- ------------ ----------------- ----------------- -----------------
<S> <C> <C> <C>
Salomon Brothers Inc....................... $ 60,417,000 $181,250,000 $181,250,000
Donaldson Lufkin & Jenrette
Securities Corporation................. 60,417,000 181,250,000 181,250,000
BT Alex. Brown Incorporated................ 60,417,000 181,250,000 181,250,000
Chase Securities Inc....................... 25,000,000 75,000,000 75,000,000
Goldman, Sachs & Co........................ 12,500,000 37,500,000 37,500,000
Morgan Stanley & Co. Incorporated.......... 12,500,000 37,500,000 37,500,000
First Chicago Capital Markets, Inc. ....... 6,250,000 18,750,000 18,750,000
NationsBanc Montgomery Securities, LLC..... 6,250,000 18,750,000 18,750,000
Societe Generale Securities Corporation.... 6,249,000 18,750,000 18,750,000
Total...................................... $250,000,000 $750,000,000 $750,000,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANNEX A
-------
Guarantors
----------
State Where States Where
Subsidiary Incorporated Qualified
- ---------- ------------ ---------
<S> <C> <C>
B&B Stores, Inc. Montana None
B&B Pharmacy, Inc. Montana None
CB&S Advertising Agency, Inc. Oregon None
Distribution Trucking Company Oregon Idaho, Utah
FM, Inc. Utah None
FM Holding Corporation Delaware None
Fred Meyer Jewelers, Inc. Delaware Arizona, California,
Oregon, Washington
FM Retail Services, Inc. Washington None
Fred Meyer of Alaska, Inc. Alaska None
Fred Meyer of California, Inc. California None
Fred Meyer Stores, Inc. Delaware Idaho, Oregon
Grand Central, Inc. Utah Idaho, Oregon
JH Properties, Inc. Washington None
Merksamer Jewelers, Inc. California Illinois, Indiana,
Iowa, Kansas, Maryland,
Michigan, Missouri,
Ohio, Virginia,
Wisconsin, Washington
Roundup Co. Washington Oregon
Smith's Food & Drug Centers, Inc. Delaware Arizona, California,
Idaho, Nevada, New
Mexico, Texas,
Utah, Wyoming
Compare, Inc. Delaware Arizona
Richie's, Inc. Texas None
Saint Lawrence Holding Company Delaware Arizona
Smith's Beverage of Wyoming, Inc. Wyoming None
Smitty's Equipment Leasing, Inc. Delaware Arizona
Smitty's Supermarkets, Inc. Delaware Arizona
Smitty's Super Valu, Inc. Delaware Arizona
Treasure Valley Land Company, L.C. Idaho None
Western Property Investment Group, Inc. California None
Quality Food Centers, Inc. Washington Oregon, Connecticut
Hughes Markets, Inc. California None
<PAGE>
State Where States Where
Subsidiary Incorporated Qualified
- ---------- ------------ ---------
Hughes Realty, Inc. California None
KU Acquisition Corporation Washington None
QFC Sub, Inc. Washington None
Quality Food, Inc. Delaware None
Quality Food Holdings, Inc. Delaware None
Second Story, Inc. Washington None
Food 4 Less Holdings, Inc. Delaware California
Alpha Beta Company California None
Bay Area Warehouse Stores, Inc. California None
Bell Markets, Inc. California None
Cala Co. Delaware California
Cala Foods, Inc. California None
Crawford Stores, Inc. California None
Falley's, Inc. Kansas Missouri, Texas
Food 4 Less GM, Inc. California None
Food 4 Less Merchandising, Inc. California None
Food 4 Less of California, Inc. California None
Food 4 Less of Southern California, Inc. Delaware California
Ralphs Grocery Company Delaware California
</TABLE>
<PAGE>
Exhibit A
---------
Fred Meyer, Inc.
$250,000,000 7.150% Notes Due 2003
$750,000,000 7.375% Notes Due 2005
$750,000.000 7.450% Notes Due 2008
Joinder Agreement
New York, New York
March [ ], 1998
Salomon Smith Barney
Salomon Brothers Inc
Donaldson Lufkin & Jenrette
Securities Corporation
BT Alex. Brown Incorporated
Chase Securities Inc.
Goldman Sachs & Co.
Morgan Stanley & Co. Incorporated
First Chicago Capital Markets, Inc.
NationsBanc Montgomery Securities LLC
Societe Generale Securities Corporation
As Representatives of the several Underwriters,
c/o Salomon Brothers Inc
7 World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Reference is hereby made to that certain underwriting agreement (the
"Underwriting Agreement") dated as of March 4, 1998 among Fred Meyer, Inc., a
Delaware corporation (the "Company"), the guarantors named therein (the
"Guarantors") and Salomon Smith Barney, Salomon Brothers Inc, Donaldson Lufkin &
Jenrette Securities Corporation, BT Alex. Brown Incorporated, Chase Securities
Inc., Goldman Sachs & Co., Morgan Stanley & Co. Incorporated, First Chicago
Capital Markets, Inc., NationsBanc Montgomery Securities LLC, and Societe
Generale Securities Corporation. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the
Underwriting Agreement.
<PAGE>
Each of the undersigned hereby acknowledges that it has received and
reviewed a copy of the Underwriting Agreement, and acknowledges and agrees to
(i) join and become a party to the Underwriting Agreement as a Guarantor as
indicated by its signature below and to execute and deliver the Base Indenture
and the Supplemental Indenture and to deliver a notation of its Guarantee to be
endorsed on each Note authenticated under the Indenture; (ii) be bound by all
covenants, agreements and acknowledgments attributable to a Guarantor in the
Underwriting Agreement; and (iii) perform all obligations and duties required of
a Guarantor pursuant to the Underwriting Agreement. Each of the undersigned
hereby makes as of the date hereof all of the representations and warranties of
a Guarantor in the Underwriting Agreement.
The jurisdiction of incorporation of each of the undersigned is as set
forth on Annex A hereto.
This Joinder Agreement will be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed within the State of New York without regard to principles of conflicts
of law.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Joinder
Agreement to be duly executed and delivered in New York, New York, by its proper
and duly authorized officer as of the date set forth above.
QUALITY FOOD CENTERS, INC.
HUGHES MARKETS, INC.
HUGHES REALTY, INC.
KU ACQUISITION CORPORATION
QFC SUB, INC.
QUALITY FOOD, INC.
QUALITY FOOD HOLDINGS, INC.
SECOND STORY, INC.
FOOD 4 LESS HOLDINGS, INC.
ALPHA BETA COMPANY
BAY AREA WAREHOUSE STORES, INC.
BELL MARKETS, INC.
CALA CO.
CALA FOODS, INC.
CRAWFORD STORES, INC.
FALLEY'S, INC.
FOOD 4 LESS GM, INC.
FOOD 4 LESS MERCHANDISING, INC.
FOOD 4 LESS OF CALIFORNIA, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
RALPHS GROCERY COMPANY
By:
-------------------------------------
Name:
Title:
<PAGE>
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
Salomon Smith Barney
Donaldson Lufkin & Jenrette
Securities Corporation
BT Alex. Brown Incorporated
Chase Securities Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated.
First Chicago Capital Markets, Inc.
NationsBanc Montgomery Securities LLC
Societe Generale Securities Corporation
By: Salomon Brothers Inc
By:
------------------------------
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
<PAGE>
<TABLE>
<CAPTION>
Annex A
-------
Subsidiary State of Incorporation States Where Qualified
- ---------- ---------------------- ----------------------
<S> <C> <C>
Quality Food Centers, Inc. Washington Oregon, Connecticut
Hughes Markets, Inc. California None
Hughes Realty, Inc. California None
KU Acquisition Corporation Washington None
QFC Sub, Inc. Washington None
Quality Food, Inc. Delaware None
Quality Food Holdings, Inc. Delaware None
Second Story, Inc. Washington None
Food 4 Less Holdings, Inc. Delaware California
Alpha Beta Company California None
Bay Area Warehouse Stores, Inc. California None
Bell Markets, Inc. California None
Cala Co. Delaware California
Cala Foods, Inc. California None
Crawford Stores, Inc. California None
Falley's, Inc. Kansas Missouri, Texas
Food 4 Less GM, Inc. California None
Food 4 Less Merchandising, Inc. California None
Food 4 Less of California, Inc. California None
Food 4 Less of Southern California, Inc. Delaware California
Ralphs Grocery Company Delaware California
</TABLE>
FRED MEYER, INC., as Issuer
THE GUARANTORS PARTY HERETO FROM TIME TO TIME
and
THE FIRST NATIONAL BANK OF CHICAGO, as Trustee
---------------
First Supplemental Indenture
Dated as of March 11, 1998
---------------
7.150% Notes due March 1, 2003,
7.375% Notes due March 1, 2005
and
7.450% Notes due 2008
<PAGE>
FIRST SUPPLEMENTAL INDENTURE (this "First Supplemental Indenture"), dated
as of March 11, 1998, among Fred Meyer, Inc., a Delaware corporation (the
"Company" or the "Issuer"); the companies listed on the signature pages hereto
that are, directly or indirectly, wholly-owned subsidiaries of the Company (the
"Guarantors"); and The First National Bank of Chicago, a national banking
association, as trustee under the Indenture referred to below (the "Trustee").
RECITALS:
WHEREAS the Company and the Guarantors have heretofore executed and
delivered to the Trustee an Indenture (as such may be amended, supplemented or
modified from time to time, the "Indenture"), dated as of March 11, 1998,
providing for the issuance from time to time of an unlimited amount of debt
securities in one or more series under the Indenture (the "Securities");
WHEREAS the Company and the Guarantors desire and have requested the
Trustee to join them in the execution and delivery of this First Supplemental
Indenture in order to establish and provide for the issuance by the Company of
three series of Securities designated as the Company's 7.150% Notes due March 1,
2003 (the "2003 Notes"), the 7.375% Notes due March 1, 2005 (the "2005 Notes")
and the 7.450% Notes due March 1, 2008 (the "2008 Notes" and, together with the
2003 Notes and the 2005 Notes, the "Notes"), respectively, in the aggregate
principal amount of $250,000,000, in the case of the 2003 Notes, $750,000,000 in
the case of the 2005 Notes, and $750,000,000, in the case of the 2008 Notes,
each series to be guaranteed by each of the Guarantors, on the terms set forth
herein; and
WHEREAS pursuant to Section 901 of the Indenture, the Trustee, the Company
and the Guarantors are authorized to execute and deliver this First Supplemental
Indenture;
WHEREAS, the conditions set forth in the Indenture for the execution and
delivery of this First Supplemental Indenture have been complied with; and
WHEREAS, all things necessary to make this First Supplemental Indenture a
valid agreement of the Company, the Guarantors and the Trustee, in accordance
with its terms, and a valid amendment of, and supplement to, the Indenture have
been done;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Company, the Guarantors and the Trustee mutually covenant and agree for the
equal and ratable benefit of the holders of the Notes, that the Indenture is
supplemented and amended, to the extent and for the purposes expressed herein,
as follows:
2
<PAGE>
Section 1. SCOPE AND TERMS OF THIS FIRST SUPPLEMENTAL INDENTURE.
1.1 Scope
The changes, modifications and supplements to the Indenture effected by
this First Supplemental Indenture shall only be applicable with respect to, and
govern the terms of, the Notes issued by the Company and guaranteed by the
Guarantors, which shall be limited in original aggregate principal amount to
$250,000,000 in the case of the 2003 Notes, $750,000,000 in the case of the 2005
Notes and $750,000,000 in the case of the 2008 Notes, and shall not apply to any
other Securities that may be issued under the Indenture unless a supplemental
indenture with respect to such other Securities specifically incorporates such
changes, modifications and supplements.
Pursuant to this First Supplemental Indenture, there is hereby created and
designated three series of Securities under the Indenture entitled "7.150% Notes
due March 1, 2003, 7.375% Notes due March 1, 2005, and 7.450% Notes due March 1,
2008." The 2003 Notes, the 2005 Notes and the 2008 Notes shall be in the forms
of Exhibit A-1, A-2 and A-3 hereto, respectively. The Notes shall be guaranteed
by each of the Guarantors as provided in such form and in the Indenture. The
Guarantees to be endorsed on the Notes shall be in substantially the form set
forth in Exhibit B hereto.
1.2 Terms of the 2003 Notes
The 2003 Notes shall have a Stated Maturity of March 1, 2003. The 2003
Notes shall be issued in denominations of $1,000 and integral multiples of
$1,000. The 2003 Notes shall bear interest from the Issue Date; the Interest
Payment Dates for the 2003 Notes shall be March 1 and September 1 of each year,
commencing September 1, 1998, and the Regular Record Dates with respect to such
Interest Payment Dates shall be the preceding February 15 and August 15,
respectively. The 2003 Notes shall be redeemable as provided in the form of 2003
Note attached hereto as Exhibit A-1. The defeasance and covenant defeasance
provisions of Article Thirteen of the Indenture shall be applicable to the 2003
Notes. The covenants in Section 3 of this First Supplemental Indenture shall be
subject to covenant defeasance as provided in Section 1303 of the Indenture.
1.3 Terms of the 2005 Notes
The 2005 Notes shall have a Stated Maturity of March 1, 2005. The 2005
Notes shall be issued in denominations of $1,000 and integral multiples of
$1,000. The 2005 Notes shall bear interest from the Issue Date; the Interest
Payment Dates for the 2005 Notes shall be March 1 and September 1 of each year,
commencing September 1, 1998, and the Regular Record Dates with respect to such
Interest Payment Dates shall be the preceding February 15 and August 15,
respectively. The 2005 Notes shall be redeemable as provided in the form of 2005
Note attached hereto as Exhibit A-2. The defeasance and covenant
3
<PAGE>
defeasance provisions of Article Thirteen of the Indenture shall be applicable
to the 2005 Notes. The covenants in Section 3 of this First Supplemental
Indenture shall be subject to covenant defeasance as provided in Section 1303 of
the Indenture.
1.4 Terms of the 2008 Notes
The 2008 Notes shall have a Stated Maturity of March 1, 2008. The 2008
Notes shall be issued in denominations of $1,000 and integral multiples of
$1,000. The 2008 Notes shall bear interest from the Issue Date; the Interest
Payment Dates for the 2008 Notes shall be March 1 and September 1 of each year,
commencing September 1, 1998, and the Regular Record Dates with respect to such
Interest Payment Dates shall be the preceding February 15 and August 15,
respectively. The 2008 Notes shall be redeemable as provided in the form of 2008
Note attached hereto as Exhibit A-3. The defeasance and covenant defeasance
provisions of Article Thirteen of the Indenture shall be applicable to the 2008
Notes. The covenants in Section 3 of this First Supplemental Indenture shall be
subject to covenant defeasance as provided in Section 1303 of the Indenture.
4
<PAGE>
1.5 Payment of Principal and Interest
Principal and interest on the Notes will be payable, the transfer of the
Notes will be registrable and the Notes may be presented for exchange, at the
office or agency of the Company maintained for such purpose (which initially
will be at the corporate trust office of the Trustee located at c/o First
Chicago Trust Company of New York, 14 Wall Street, 8th Floor - Window 2, New
York, New York 10005).
Section 2. CERTAIN DEFINITIONS.
For all purposes of this First Supplemental Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Section have the meanings assigned to
them in this Section and include the plural as well as the singular;
(2) capitalized terms used but not defined herein have the meanings
ascribed to such terms in the Indenture;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" or "GAAP" with respect to any
computation required or permitted hereunder shall mean, with respect to the
covenants contained in Sections 3.1 and 3.2 and the defined terms used
therein, GAAP as in effect on the date hereof, and otherwise such
accounting principles as are generally accepted at the date of such
computation;
(4) unless the context otherwise requires, any reference to a
"Section" refers to a Section of this First Supplemental Indenture; and
(5) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this First Supplemental Indenture as a whole and
not to any particular Article, Section or other subdivision.
"Attributable Liens" means in connection with a sale and lease-back
transaction, the lesser of (i) the fair market value of the assets subject to
such transaction and (ii) the present value (discounted at a rate per annum
equal to the average interest borne by all outstanding Securities issued under
the Indenture (which may include Securities in addition to the Notes) determined
on a weighted average basis and compounded semiannually) of the obligations of
the lessee for rental payments normally characterized as basic rent during the
term of the related lease.
5
<PAGE>
"Capital Lease" means any Indebtedness represented by a lease obligation of
a Person incurred with respect to real property or equipment acquired or leased
by such Person and used in its business that is required to be recorded as a
capital lease in accordance with GAAP.
"Company Bank Credit Facilities" means the Loan Agreement, among the
Company, the lenders party thereto, Bankers Trust Company, as Administrative
Agent, and The Chase Manhattan Bank, as Syndication Agent (and the documents
related thereto), dated March 11, 1998, as such agreement may be amended
(including any amendment and restatement), supplemented or modified from time to
time, including any replacement or refinancing thereof in the commercial bank
market (including any such replacement or refinancing that increases the amount
thereof).
"Company Bank Lease Facility" means the Participation Agreement among
Wilmington Trust Company, as owner trustee, FMS Trust, as lessor, the Company,
as Lessee, the investors party thereto, Bankers Trust Company, as Administrative
Agent, and The Chase Manhattan Bank, as Syndication (and the documents relating
thereto), dated March 11, 1998, as such agreement may be amended (including any
amendment and restatement), supplemented or modified from time to time,
including any replacement or refinancing thereof in the commercial bank market
(including any such replacement or refinancing that increases the amount
thereof).
"Consolidated Net Tangible Assets" means as of any particular time the
aggregate amount of assets of the Company and the Subsidiaries after deducting
therefrom (i) all current liabilities of the Company and the Subsidiaries,
except for (a) notes and loans payable, (b) current maturities of long-term debt
(including debt having a maturity of less than 12 months from the date of
determination but which by its terms is renewable or extendable beyond 12 months
from the date of determination at the option of the obligor) and (c) current
maturities of obligations under Capital Leases, and (ii) goodwill, trademarks,
patents, minority interests of others and other intangible assets, all as set
forth on the most recent balance sheet of the Company and its consolidated
Subsidiaries and computed in accordance with GAAP.
"Exempted Debt" means the sum of the following as of the date of
determination: (i) Indebtedness of the Company and the Subsidiaries secured by
Liens not otherwise permitted by the first sentence of Section 3.1, and (ii)
Attributable Liens of the Company and the Subsidiaries in respect of sale and
lease-back transactions entered into after the Issue Date, other than sale and
lease-back transactions permitted by Section 3.2. For purposes of determining
whether or not a sale and lease-back transaction is "permitted" by Section 3.2,
the last paragraph of Section 3.1 (creating an exception for Exempted Debt) will
be disregarded.
"Funded Debt" means any Indebtedness maturing by its terms more than 12
months from the date of determination, including any Indebtedness maturing less
than 12 months
6
<PAGE>
from the date of determination that is renewable or extendable at the option of
the obligor to a date later than 12 months from the date of determination.
"Indebtedness" means, with respect to any Person, without duplication, (i)
any Obligation of such Person relating to any indebtedness of such Person (A)
for borrowed money (whether or not the recourse of the lender is to the whole of
the assets of such Person or only to a portion thereof), (B) evidenced by notes,
debentures or similar instruments (including purchase money obligations) given
in connection with the acquisition of any property or assets (other than trade
accounts payable for inventory or similar property acquired in the ordinary
course of business), including securities, for the payment of which such Person
is liable, directly or indirectly, or the payment of which is secured by a lien,
charge or encumbrance on property or assets of such Person, (C) for goods,
materials or services purchased in the ordinary course of business (other than
trade accounts payable arising in the ordinary course of business), (D) with
respect to letters of credit or bankers' acceptances issued for the account or
such Person or performance, surety or similar bonds, (E) for the payment of
money relating to a Capital Lease obligation or (F) under interest rate caps or
similar agreements and foreign exchange contracts or agreements; (ii) any
liability of others of the kind described in the preceding clause (i), which
such Person has guaranteed or which is otherwise its legal liability; and (iii)
any and all deferrals, renewals, extensions and refunding of, or amendments,
modifications or supplements to, any liability of the kind described in any of
the preceding clauses (i) or (ii).
"Issue Date" means the date of the original issuance of the Notes.
"Lien" means any lien, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof and any agreement to give any security interest).
"Obligation" of any Person with respect to any specified Indebtedness means
any obligation of such Person to pay principal, premium, interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to such Person, whether or not a claim for such
post-petition interest is allowed in such proceeding), penalties, reimbursement
or indemnification amounts, fees, expenses or other amounts relating to such
Indebtedness.
"Permitted Liens" means (i) Liens securing Indebtedness arising under the
Company Bank Credit Facilities and the Company Bank Lease Facility; provided,
however, that such Liens do not extend to or cover any property or assets of the
Company or the Subsidiaries other than the capital stock of any Subsidiary and
any proceeds thereof; (ii) Liens on any asset of the Company or any Subsidiary,
or any joint venture to which the Company or any of the Subsidiaries is a party,
created solely to secure obligations incurred to finance the refurbishment,
improvement or construction of such asset, which obligations are incurred no
later than 12 months after completion of such refurbishment, improvement or
construction, and all renewals, extensions, refinancings, replacements or
refundings of such obligations;
7
<PAGE>
(iii)(a) Liens given to secure the payment of the purchase price incurred in
connection with the acquisition (including acquisition through merger or
consolidation) of property (including shares of stock), including Capital Lease
transactions in connection with any such acquisition, and (b) Liens existing on
property (including shares of stock) at the time of acquisition by the Company
or a Subsidiary whether or not such existing Liens were given to secure the
payment of the purchase price of the property to which they attach so long as
such Liens do not extend to any other asset or property of the Company or the
Subsidiaries; provided, however, that, with respect to clause (a), the Liens
shall be given within 12 months after such acquisition and shall attach solely
to the property acquired or purchased and any improvements then or thereafter
placed thereon; (iv) Liens in favor of customs and revenues arising as a matter
of law to secure payment of custom duties in connection with the importation of
goods; (v) Liens upon specific items of inventory or other goods and proceeds of
any Person securing such Person's obligations in respect of bankers' acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods; (vi) Liens securing
reimbursement obligations with respect to letters of credit that encumber
documents and other property relating to such letters of credit and the products
and proceeds thereof; (vii) Liens encumbering customary initial deposits and
margin deposits and other Liens in the ordinary course of business, in each case
securing Indebtedness of the Company under interest swap obligations and
currency agreements and forward contract, option, futures contracts, futures
options or similar agreements or arrangements designed to protect the Company
from fluctuations in interest rates, currencies or the price of commodities;
(viii) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by the Company or any of
the Subsidiaries in the ordinary course of business; (ix) Liens in favor of the
Company or any Subsidiary; and (x) Liens to secure Indebtedness of joint
ventures in which the Company or any Subsidiary has an interest, to the extent
such Liens are solely on property or assets of, or equity interests in, such
joint ventures.
"Significant Subsidiary" means, at any date of determination, (i) any
Subsidiary that, together with its Subsidiaries (a) for the most recent fiscal
year of the Company accounted for more than 10.0% of the consolidated revenues
of the Company and the Subsidiaries or (b) as of the end of such fiscal year,
owned more than 10.0% of the consolidated assets of the Company and the
Subsidiaries, and (ii) for purposes of Section 501 of the Indenture any other
Subsidiary that when aggregated with all other Subsidiaries that are not
otherwise Significant Subsidiaries and as to which any event described in (7),
(8), or (9) of Section 501 of the Indenture has occurred, together with their
respective Subsidiaries, would constitute a Significant Subsidiary pursuant to
clause (i) of this sentence, all as set forth on the consolidated financial
statements of the Company and the Subsidiaries for such year prepared in
conformity with GAAP. For purposes of Section 1010 of the Indenture and Section
3.3 hereof, "Significant Subsidiary" shall include (i) any Subsidiary that would
constitute a Significant Subsidiary pursuant to clause (i) of the previous
sentence and (ii) all other Subsidiaries that are not Significant Subsidiaries
pursuant to clause (i) of the previous sentence if all such Subsidiaries in the
aggregate, together with their respective Subsidiaries, would constitute a
Significant Subsidiary pursuant to clause (i) of the previous sentence,
8
<PAGE>
provided, however, that, in the case of clauses (i) and (ii) of this sentence,
the 10.0% threshold in clause (i) of the previous sentence shall be 3.0%, all as
set forth on the consolidated financial statements of the Company and the
Subsidiaries for such year prepared in conformity with GAAP.
Section 3. COVENANTS
3.1 Limitation on Liens.
The Company will not, nor will it permit any of the Subsidiaries to,
directly or indirectly, create, incur or suffer to exist any Lien on any of
their respective properties or assets, whether now owned or hereafter acquired,
or any proceeds therefrom or upon any income or profits therefrom, in order to
secure any Indebtedness, without contemporaneously therewith effectively
providing that the Notes shall be equally and ratably secured with respect to
all such Indebtedness until such time as all such Indebtedness is no longer
secured by such Lien, except:
(i) Liens existing as of the Issue Date;
(ii) Liens granted after the Issue Date on any assets or properties of the
Company or any of the Subsidiaries created in favor of the holders of the
Notes;
(iii) Liens securing Indebtedness of the Company or any of the Subsidiaries
that are incurred to extend, renew or refinance Indebtedness which is
secured by Liens permitted to be incurred under this Section 3.1; provided,
however, that such Liens do not extend to or cover any property or assets
of the Company or any of the Subsidiaries other than the property or assets
securing the Indebtedness being refinanced and the principal amount of such
Indebtedness does not exceed the principal amount of the Indebtedness being
refinanced;
(iv) Permitted Liens; and
(v) Liens created in substitution of or as replacements for any Liens
permitted by the preceding clauses (i) through (iv), provided that, based
on a good faith determination of an officer of the Company, the property or
asset encumbered under any such substitute or replacement Lien is
substantially similar in nature to the property or asset encumbered by the
otherwise permitted Lien that is being replaced.
Notwithstanding the foregoing, the Company or any Subsidiary may, without
securing any of the Notes, create, incur or suffer to exist Liens that would
otherwise be subject to the restriction set forth in the preceding paragraph if,
after giving effect thereto and at the time of determination, Exempted Debt does
not exceed 10% of Consolidated Net Tangible Assets.
9
<PAGE>
3.2 Limitation on Sale and Lease-Back Transactions.
The Company will not, nor will it permit any of the Subsidiaries to, enter
into any sale and lease-back transaction for the sale and leasing back of any
property or asset, whether now owned or hereafter acquired, of the Company or
any of the Subsidiaries (except such transactions (i) entered into prior to the
Issue Date or (ii) for the sale and leasing back of any property or asset by a
Subsidiary of the Company to the Company or (iii) involving leases for less than
three years or (iv) in which the lease for the property or assets is entered
into within 120 days after the later of the date of acquisition, completion of
construction or commencement of full operations of such property or asset),
unless
(a) the Company or such Subsidiary would be entitled under Section 3.1 to
create, incur or suffer to exist a Lien on the property or asset to be
leased in an amount at least equal to the Attributable Liens in respect of
such transaction without equally and ratably securing the Notes, or
(b) the proceeds of the sale of the assets to be leased are at least equal
to their fair market value and the proceeds are applied within 180 days of
such sale to the purchase or acquisition (or in the case of real property,
the construction) of assets or to the repayment of Funded Debt of the
Company or a Subsidiary.
3.3 Additional Guarantors.
If at a time when there are Guarantees outstanding the Company or any of
the Guarantors transfers or causes to be transferred, in one transaction or a
series of related transactions, any property to any Subsidiary of the Company
that is not a Guarantor, or if at a time when there are Guarantees outstanding
the Company or any of the Guarantors shall organize, acquire or otherwise invest
in another Person that becomes a Subsidiary of the Company and such Subsidiary
is a Significant Subsidiary or such Subsidiary becomes a guarantor of the
Company Bank Credit Facilities, the Company Bank Lease Facility or any future
refinancings thereof, then the Company shall cause such transferee or acquired
or other Subsidiary to (i) execute and deliver to the Trustee a supplemental
indenture in form reasonably satisfactory to the Trustee pursuant to which such
Subsidiary shall unconditionally guarantee all of the Company's obligations
under the Notes and the Indenture on the terms set forth in the Indenture and
(ii) deliver to the Trustee an Opinion of Counsel that such supplemental
indenture has been duly authorized, executed and delivered by such Subsidiary
and constitutes a legal, valid, binding and enforceable obligation of such
Subsidiary. Thereafter, such Subsidiary shall be a Guarantor for all purposes of
the Indenture (as it relates to the Notes) and the Notes.
This Section 3.3, as it relates to the Notes, is intended to supersede
Section 1010 of the Indenture.
10
<PAGE>
Section 4. RELEASE OF GUARANTEES.
Upon (i) the release by the lenders under the Company Bank Credit
Facilities and the Company Bank Lease Facility and related documents of all
payment obligations with respect thereto of a Guarantor (whether or not a
Default or an Event of Default has occurred and is continuing) (provided that,
with respect to the Company Bank Lease Facility, any Guarantor who has use of
leased property financed under the Company Bank Lease Facility may remain liable
under the Company Bank Lease Facility) or (ii) the sale or disposition (whether
by merger, stock purchase, asset sale or otherwise) of a Guarantor (or
substantially all of its assets) to a Person other than the Company or a
Guarantor, which is otherwise in compliance with the Indenture, such Guarantor
(in the event of such a release of such Guarantor or a sale or disposition of
such Guarantor) or the Person acquiring such assets (in the event of sale or
disposition of all or substantially all the assets of such Guarantor) shall be
deemed automatically and unconditionally released and discharged from all of its
obligations under its Guarantee; provided, however, that any such termination
shall occur only to the extent that all obligations of such Guarantor under all
of its guarantees of, and under all of its pledges of assets or other security
interests that secure, Indebtedness of the Company (other than pledges in favor
of the Company Bank Credit Facilities and the Company Bank Lease Facility
contemplated under clause (i) of the definition of "Permitted Liens") shall also
terminate upon such release, sale or transfer; provided, further, however, with
respect to any such termination pursuant to clause (i) above, in the event that
the Company Bank Credit Facilities or the Company Bank Lease Facility or any
future refinancings thereof are subsequently guaranteed by any Subsidiary of the
Company, the Company shall cause such Subsidiary to unconditionally guarantee
all of the Company's obligations under the Notes and the Indenture on the terms
set forth in the Indenture and execute and deliver such further documents as
described in Section 3.3.
This Section 4, as it relates to the Notes, is intended to supersede
Section 1403 of the Indenture.
Section 5. BOOK-ENTRY SECURITY.
The 2003 Notes, the 2005 Notes and the 2008 Notes will be represented by
one or more Book-Entry Securities that will be deposited with, or on behalf of,
DTC and registered in the name of Cede & Co., the nominee of DTC. Unless and
until it is exchanged in whole or in part for a certificate issued in definitive
registered form, a Book-Entry Security may not be transferred except as a whole
(i) by DTC to a nominee of DTC, (ii) by a nominee of DTC to DTC or another
nominee of DTC or (iii) by DTC or any such nominee to a successor depositary or
a nominee of such successor depositary.
11
<PAGE>
Section 6. SUCCESSORS AND ASSIGNS.
This First Supplemental Indenture shall be binding upon the Company and the
Guarantors and their respective successors and assigns and shall enure to the
benefit of the Trustee and the Holders and the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges conferred upon
that party in the Indenture and this First Supplemental Indenture and in the
Notes shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of the Indenture. This First
Supplemental Indenture shall be binding upon the Trustee and its successors and
assigns.
This First Supplemental Indenture shall be binding upon the Trustee and its
successors and assigns.
Section 7. RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURES PART OF INDENTURE.
Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This First Supplemental Indenture shall
form a part of the Indenture for all purposes, and every holder of Notes
heretofore or hereafter authenticated and delivered shall be bound hereby.
Section 8. GOVERNING LAW.
THIS FIRST SUPPLEMENTAL INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
Section 9. TRUSTEE MAKES NO REPRESENTATION.
The Trustee makes no representation as to the validity or sufficiency of
this First Supplemental Indenture.
Section 10. COUNTERPARTS.
This First Supplemental Indenture may be executed in any number of
counterparts and by telecopier, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
12
<PAGE>
Section 11. DUPLICATE ORIGINALS.
The parties may sign any number of copies of this First Supplemental
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
Section 12. EFFECT OF HEADINGS.
The Section headings herein are for convenience only and shall not affect
the construction thereof.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed as of the date first above written.
COMPANY: FRED MEYER, INC.
By:
-------------------------------------
David R. Jessick
Senior Vice President Finance and
Chief Financial Officer
14
<PAGE>
GUARANTORS: Fred Meyer Stores, Inc.
Smith's Food & Drug Centers, Inc.
By:
-------------------------------------
Kenneth Thrasher
Executive Vice President
B&B Stores, Inc.
B&B Pharmacy, Inc.
CB&S Advertising Agency, Inc.
Distribution Trucking Company
FM, Inc.
FM Holding Corporation
Grand Central, Inc.
FM Retail Services, Inc.
Fred Meyer of Alaska, Inc.
Fred Meyer of California, Inc.
Fred Meyer Jewelers, Inc.
Merksamer Jewelers, Inc.
Roundup Co.
JH Properties, Inc.
Compare, Inc.
Saint Lawrence Holding Company
Smith's Beverage of Wyoming, Inc.
Smitty's Supermarkets, Inc.
Smitty's Equipment Leasing, Inc.
Smitty's Super Valu, Inc.
Western Property Investment
Group, Inc.
Quality Food Centers, Inc.
Hughes Markets, Inc.
Hughes Realty, Inc.
KU Acquisition Corporation
Second Story, Inc.
Quality Food, Inc.
Quality Food Holdings, Inc.
QFC Sub, Inc.
Food 4 Less Holdings, Inc.
Ralphs Grocery Company
Alpha Beta Company
Bay Area Warehouse Stores, Inc.
Bell Markets, Inc.
Cala Co.
15
<PAGE>
GUARANTORS: Cala Foods, Inc.
Crawford Stores, Inc.
Falley's, Inc.
Food 4 Less of California, Inc.
Food 4 Less of Southern California, Inc.
Food 4 Less Merchandising, Inc.
Food 4 Less GM, Inc.
By:
-------------------------------------
Kenneth Thrasher
Vice President
Treasure Valley Land Company, L.C.
By: Smith's Food and Drug Centers, Inc.
its member
By:
-------------------------------------
Kenneth Thrasher
Executive Vice President
Richie's, Inc.
By:
-------------------------------------
Roger A. Cooke
Vice President
16
<PAGE>
TRUSTEE: THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
-------------------------------------
John R. Prendiville
Vice President
17
<PAGE>
EXHIBIT A-1
FORM OF 7.150% NOTE DUE MARCH 1, 2003
THIS SECURITY IS A BOOK-ENTRY SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ITS NOMINEE TO A SUCCESSOR DEPOSITARY OR ITS NOMINEE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
FRED MEYER, INC.
7.150% Notes due March 1, 2003
No. $
CUSIP No. 592907AC3
Fred Meyer, Inc., a corporation duly organized and existing under the laws
of Delaware (herein called the "Company," which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of _____
Dollars on March 1, 2003, and to pay interest thereon from March 11, 1998 or
from the most recent Interest Payment Date (as defined below) to which interest
has been paid or duly provided for, semi-annually on March 1 and September 1 in
each year (each, an "Interest Payment Date"), commencing September 1, 1998, at
the rate of 7.150% per annum, until the principal hereof is paid or made
available for payment and at the rate of 7.150% per annum on any overdue
principal and premium and (to the extent that the payment of such interest shall
be legally enforceable) on any overdue installment of interest. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided
18
<PAGE>
in such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
February 15 or August 15 (whether or not a Business Day) (each, a "Regular
Record Date"), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for and interest on
such defaulted interest will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan in the City of New York, New York, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register or by wire transfer to an account maintained by the Person
entitled thereto as specified in the Security Register, provided that such
Person shall have given the Trustee written wire instructions.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
19
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
FRED MEYER, INC.
By:
-------------------------------------
Name: David R. Jessick
Title: Senior Vice President and
Chief Financial Officer
Attest:
--------------------------
Name: Roger A. Cooke
Title: Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION:
Dated:
--------------------------
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
------------------------------
Authorized Signatory
20
<PAGE>
[REVERSE OF SECURITY]
1. Indenture. This Security is one of a duly authorized issue of securities
of the Company designated as its 7.150% Notes due March 1, 2003 (herein called
the "Securities"), issued under an Indenture, dated as of March 11, 1998 (herein
called the "Indenture"), as supplemented by the First Supplemental Indenture,
dated as of March 11, 1998, among the Company, the Guarantors and The First
National Bank of Chicago, as Trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Guarantors, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are authenticated and delivered. This
Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $250,000,000.
All capitalized terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
The terms of the Securities include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. ss.ss. 77aaa-77bbb, the "TIA"), as amended. Notwithstanding anything to
the contrary herein, the Securities are subject to all such terms, and Holders
of Securities are referred to the Indenture and the TIA for a statement of such
terms.
No reference herein to the Indenture and no provisions of this Security or
of the Indenture shall alter or impair the obligation of the Company or any
Guarantor, which is absolute and unconditional, to pay the principal or,
premium, if any, and interest on this Security at the times, place, and rate,
and in the coin or currency, herein prescribed.
2. Redemption. The Securities are redeemable, as a whole or in part, at the
option of the Company, at any time or from time to time, on at least 30 but not
more than 60 days prior notice mailed to the registered address of each Holder
of Securities, at a redemption price equal to the greater of (i) 100% of the
principal amount of the Securities to be redeemed or (ii) the sum of the present
values of the Remaining Scheduled Payments discounted, on a semiannual basis
(assuming a 360-day year consisting of twelve 30 day months), at the Treasury
Rate plus 50 basis points, plus in the case of each of clause (i) and (ii)
accrued interest to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity (computed as of the
second Business Day immediately preceding such redemption date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
21
<PAGE>
"Comparable Treasury Issue" means the fixed rate United States Treasury
security selected by an Independent Investment Banker as having a maturity most
comparable to the remaining term of the Securities (and which are not callable
prior to maturity) to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practices, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Securities, "Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities," or (ii) if such release (or any successor release) is
not published or does not contain such prices on such Business Day, (A) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest or lowest of such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 3:30 p.m., New York City time on the third
Business Day preceding such redemption date.
"Reference Treasury Dealer" means each of Salomon Brothers Inc, Donaldson,
Lufkin & Jenrette Securities Corporation, BT Alex. Brown Incorporated, Chase
Securities Inc., Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, First
Chicago Capital Markets, Inc., NationsBanc Montgomery Securities LLC and Societe
Generale Securities Corporation and their respective successors; provided,
however, that if any of the foregoing shall cease (either directly or through an
affiliate) to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company may substitute therefor another
nationally recognized investment banking firm that is a Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to each Security to be
redeemed, the remaining scheduled payments of the principal thereof and interest
thereon that would be due after the related redemption date but for such
redemption; provided, however, that, if such redemption date is not an Interest
Payment Date, the amount of the next succeeding scheduled interest payment
thereon will be reduced by the amount of interest accrued thereon to such
redemption date.
In the event of redemption of this Security in part only, a new Security or
Securities and of like tenor for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
22
<PAGE>
3. Defeasance. The Indenture contains provisions for defeasance at any time
of the entire indebtedness of this Security or certain restrictive covenants and
Events of Default with respect to this Security, in each case upon compliance
with certain conditions set forth in the Indenture.
4. Defaults and Remedies. If an Event of Default with respect to Securities
shall occur and be continuing, the principal and premium (if any) of the
Securities, plus all accrued and unpaid interest, may be declared due and
payable in the manner and with the effect provided in the Indenture.
5. Amendments and Waivers. The Indenture permits, with certain exceptions
as therein provided, the amendment thereof and the modification of the rights
and obligations of the Company and the Guarantors and the rights of the Holders
of the Securities of each series to be affected under the Indenture at any time
by the Company, the Guarantors and the Trustee with the consent of the Holders
of a majority in principal amount of the Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the Securities of
each series at the time Outstanding, on behalf of the Holders of all Securities
of such series, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
6. Denominations, Transfer and Exchange. As provided in the Indenture and
subject to certain limitations therein set forth, the transfer of this Security
is registrable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal of and any premium and interest on this Security are
payable, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities of like tenor, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
23
<PAGE>
7. Persons Deemed Owners. Prior to due presentment of this Security for
registration of transfer, the Company, the Guarantors, the Trustee and any agent
of the Company, the Guarantors, or the Trustee may treat the Person in whose
name this Security is registered as the owner hereof for all purposes, whether
or not this Security be overdue, and the Company, the Guarantors, the Trustee or
any such agent shall not be affected by notice to the contrary.
8. Governing Law. THE INDENTURE, THE FIRST SUPPLEMENTAL INDENTURE, THIS
SECURITY AND ANY GUARANTEE ENDORSED HEREON SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
24
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form
below:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address, and zip code)
and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date: _____________________ Your signature: _________________________
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee: ___________________________________________________________
<PAGE>
EXHIBIT A-2
FORM OF 7.375% NOTE DUE MARCH 1, 2005
THIS SECURITY IS A BOOK-ENTRY SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ITS NOMINEE TO A SUCCESSOR DEPOSITARY OR ITS NOMINEE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
FRED MEYER, INC.
7.375% Notes due March 1, 2005
No. $
CUSIP No. 592907AA7
Fred Meyer, Inc., a corporation duly organized and existing under the laws
of Delaware (herein called the "Company," which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of _____
Dollars on March 1, 2005, and to pay interest thereon from March 11, 1998 or
from the most recent Interest Payment Date (as defined below) to which interest
has been paid or duly provided for, semi-annually on March 1 and September 1 in
each year (each, an "Interest Payment Date"), commencing September 1, 1998, at
the rate of 7.375% per annum, until the principal hereof is paid or made
available for payment and at the rate of 7.375% per annum on any overdue
principal and premium and (to the extent that the payment of such interest shall
be legally enforceable) on any overdue installment of interest. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided
26
<PAGE>
in such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
February 15 or August 15 (whether or not a Business Day) (each, a "Regular
Record Date"), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for and interest on
such defaulted interest will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan in the City of New York, New York, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register or by wire transfer to an account maintained by the Person
entitled thereto as specified in the Security Register, provided that such
Person shall have given the Trustee written wire instructions.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
27
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
FRED MEYER, INC.
By:
-------------------------------------
Name: David R. Jessick
Title: Senior Vice President and
Chief Financial Officer
Attest:
--------------------------
Name: Roger A. Cooke
Title: Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION:
Dated:
--------------------------
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
------------------------------
Authorized Signatory
28
<PAGE>
[REVERSE OF SECURITY]
1. Indenture. This Security is one of a duly authorized issue of securities
of the Company designated as its 7.375% Notes due March 1, 2005 (herein called
the "Securities"), issued under an Indenture, dated as of March 11, 1998 (herein
called the "Indenture"), as supplemented by the First Supplemental Indenture,
dated as of March 11, 1998, among the Company, the Guarantors and The First
National Bank of Chicago, as Trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Guarantors, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are authenticated and delivered. This
Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $750,000,000.
All capitalized terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
The terms of the Securities include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. ss.ss. 77aaa-77bbb, the "TIA"), as amended. Notwithstanding anything to
the contrary herein, the Securities are subject to all such terms, and Holders
of Securities are referred to the Indenture and the TIA for a statement of such
terms.
No reference herein to the Indenture and no provisions of this Security or
of the Indenture shall alter or impair the obligation of the Company or any
Guarantor, which is absolute and unconditional, to pay the principal or,
premium, if any, and interest on this Security at the times, place, and rate,
and in the coin or currency, herein prescribed.
2. Redemption. The Securities are redeemable, as a whole or in part, at the
option of the Company, at any time or from time to time, on at least 30 but not
more than 60 days prior notice mailed to the registered address of each Holder
of Securities, at a redemption price equal to the greater of (i) 100% of the
principal amount of the Securities to be redeemed or (ii) the sum of the present
values of the Remaining Scheduled Payments discounted, on a semiannual basis
(assuming a 360-day year consisting of twelve 30 day months), at the Treasury
Rate plus 50 basis points, plus in the case of each of clause (i) and (ii)
accrued interest to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity (computed as of the
second Business Day immediately preceding such redemption date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
29
<PAGE>
"Comparable Treasury Issue" means the fixed rate United States Treasury
security selected by an Independent Investment Banker as having a maturity most
comparable to the remaining term of the Securities (and which are not callable
prior to maturity) to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practices, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Securities, "Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities," or (ii) if such release (or any successor release) is
not published or does not contain such prices on such Business Day, (A) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest or lowest of such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 3:30 p.m., New York City time on the third
Business Day preceding such redemption date.
"Reference Treasury Dealer" means each of Salomon Brothers Inc, Donaldson,
Lufkin & Jenrette Securities Corporation, BT Alex. Brown Incorporated, Chase
Securities Inc., Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, First
Chicago Capital Markets, Inc., NationsBanc Montgomery Securities LLC and Societe
Generale Securities Corporation and their respective successors; provided,
however, that if any of the foregoing shall cease (either directly or through an
affiliate) to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company may substitute therefor another
nationally recognized investment banking firm that is a Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to each Security to be
redeemed, the remaining scheduled payments of the principal thereof and interest
thereon that would be due after the related redemption date but for such
redemption; provided, however, that, if such redemption date is not an Interest
Payment Date, the amount of the next succeeding scheduled interest payment
thereon will be reduced by the amount of interest accrued thereon to such
redemption date.
In the event of redemption of this Security in part only, a new Security or
Securities and of like tenor for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
30
<PAGE>
3. Defeasance. The Indenture contains provisions for defeasance at any time
of the entire indebtedness of this Security or certain restrictive covenants and
Events of Default with respect to this Security, in each case upon compliance
with certain conditions set forth in the Indenture.
4. Defaults and Remedies. If an Event of Default with respect to Securities
shall occur and be continuing, the principal and premium (if any) of the
Securities, plus all accrued and unpaid interest, may be declared due and
payable in the manner and with the effect provided in the Indenture.
5. Amendments and Waivers. The Indenture permits, with certain exceptions
as therein provided, the amendment thereof and the modification of the rights
and obligations of the Company and the Guarantors and the rights of the Holders
of the Securities of each series to be affected under the Indenture at any time
by the Company, the Guarantors and the Trustee with the consent of the Holders
of a majority in principal amount of the Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the Securities of
each series at the time Outstanding, on behalf of the Holders of all Securities
of such series, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
6. Denominations, Transfer and Exchange. As provided in the Indenture and
subject to certain limitations therein set forth, the transfer of this Security
is registrable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal of and any premium and interest on this Security are
payable, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities of like tenor, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
31
<PAGE>
7. Persons Deemed Owners. Prior to due presentment of this Security for
registration of transfer, the Company, the Guarantors, the Trustee and any agent
of the Company, the Guarantors, or the Trustee may treat the Person in whose
name this Security is registered as the owner hereof for all purposes, whether
or not this Security be overdue, and the Company, the Guarantors, the Trustee or
any such agent shall not be affected by notice to the contrary.
8. Governing Law. THE INDENTURE, THE FIRST SUPPLEMENTAL INDENTURE, THIS
SECURITY AND ANY GUARANTEE ENDORSED HEREON SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
32
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form
below:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address, and zip code)
and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date: _____________________ Your signature: _________________________
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee: ___________________________________________________________
33
<PAGE>
EXHIBIT A-3
FORM OF 7.450% NOTE DUE MARCH 1, 2008
THIS SECURITY IS A BOOK-ENTRY SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ITS NOMINEE TO A SUCCESSOR DEPOSITARY OR ITS NOMINEE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
FRED MEYER, INC.
7.450% Notes due March 1, 2008
No. $
CUSIP No. 592907AB5
Fred Meyer, Inc., a corporation duly organized and existing under the laws
of Delaware (herein called the "Company," which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of _____
Dollars on March 1, 2008, and to pay interest thereon from March 11, 1998 or
from the most recent Interest Payment Date (as defined below) to which interest
has been paid or duly provided for, semi-annually on March 1 and September 1 in
each year (each, an "Interest Payment Date"), commencing September 1, 1998, at
the rate of 7.450% per annum, until the principal hereof is paid or made
available for payment and at the rate of 7.450% per annum on any overdue
principal and premium and (to the extent that the payment of such interest shall
be legally enforceable) on any overdue installment of interest. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided
34
<PAGE>
in such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
February 15 or August 15 (whether or not a Business Day) (each, a "Regular
Record Date"), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for and interest on
such defaulted interest will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan in the City of New York, New York, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register or by wire transfer to an account maintained by the Person
entitled thereto as specified in the Security Register, provided that such
Person shall have given the Trustee written wire instructions.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
35
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
FRED MEYER, INC.
By:
-------------------------------------
Name: David R. Jessick
Title: Senior Vice President and
Chief Financial Officer
Attest:
--------------------------
Name: Roger A. Cooke
Title: Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION:
Dated:
---------------------------
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
------------------------------
Authorized Signatory
36
<PAGE>
[REVERSE OF SECURITY]
1. Indenture. This Security is one of a duly authorized issue of securities
of the Company designated as its 7.450% Notes due March 1, 2008 (herein called
the "Securities"), issued under an Indenture, dated as of March 11, 1998 (herein
called the "Indenture"), as supplemented by the First Supplemental Indenture,
dated as of March 11, 1998, among the Company, the Guarantors and The First
National Bank of Chicago, as Trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Guarantors, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are authenticated and delivered. This
Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $750,000,000.
All capitalized terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
The terms of the Securities include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. ss.ss. 77aaa-77bbb, the "TIA"), as amended. Notwithstanding anything to
the contrary herein, the Securities are subject to all such terms, and Holders
of Securities are referred to the Indenture and the TIA for a statement of such
terms.
No reference herein to the Indenture and no provisions of this Security or
of the Indenture shall alter or impair the obligation of the Company or any
Guarantor, which is absolute and unconditional, to pay the principal or,
premium, if any, and interest on this Security at the times, place, and rate,
and in the coin or currency, herein prescribed.
2. Redemption. The Securities are redeemable, as a whole or in part, at the
option of the Company, at any time or from time to time, on at least 30 but not
more than 60 days prior notice mailed to the registered address of each Holder
of Securities, at a redemption price equal to the greater of (i) 100% of the
principal amount of the Securities to be redeemed or (ii) the sum of the present
values of the Remaining Scheduled Payments discounted, on a semiannual basis
(assuming a 360-day year consisting of twelve 30 day months), at the Treasury
Rate plus 50 basis points, plus in the case of each of clause (i) and (ii)
accrued interest to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity (computed as of the
second Business Day immediately preceding such redemption date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
37
<PAGE>
"Comparable Treasury Issue" means the fixed rate United States Treasury
security selected by an Independent Investment Banker as having a maturity most
comparable to the remaining term of the Securities (and which are not callable
prior to maturity) to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practices, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Securities, "Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities," or (ii) if such release (or any successor release) is
not published or does not contain such prices on such Business Day, (A) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest or lowest of such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 3:30 p.m., New York City time on the third
Business Day preceding such redemption date.
"Reference Treasury Dealer" means each of Salomon Brothers Inc, Donaldson,
Lufkin & Jenrette Securities Corporation, BT Alex. Brown Incorporated, Chase
Securities Inc., Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, First
Chicago Capital Markets, Inc., NationsBanc Montgomery Securities LLC and Societe
Generale Securities Corporation and their respective successors; provided,
however, that if any of the foregoing shall cease (either directly or through an
affiliate) to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company may substitute therefor another
nationally recognized investment banking firm that is a Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to each Security to be
redeemed, the remaining scheduled payments of the principal thereof and interest
thereon that would be due after the related redemption date but for such
redemption; provided, however, that, if such redemption date is not an Interest
Payment Date, the amount of the next succeeding scheduled interest payment
thereon will be reduced by the amount of interest accrued thereon to such
redemption date.
In the event of redemption of this Security in part only, a new Security or
Securities and of like tenor for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
38
<PAGE>
3. Defeasance. The Indenture contains provisions for defeasance at any time
of the entire indebtedness of this Security or certain restrictive covenants and
Events of Default with respect to this Security, in each case upon compliance
with certain conditions set forth in the Indenture.
4. Defaults and Remedies. If an Event of Default with respect to Securities
shall occur and be continuing, the principal and premium (if any) of the
Securities, plus all accrued and unpaid interest, may be declared due and
payable in the manner and with the effect provided in the Indenture.
5. Amendments and Waivers. The Indenture permits, with certain exceptions
as therein provided, the amendment thereof and the modification of the rights
and obligations of the Company and the Guarantors and the rights of the Holders
of the Securities of each series to be affected under the Indenture at any time
by the Company, the Guarantors and the Trustee with the consent of the Holders
of a majority in principal amount of the Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the Securities of
each series at the time Outstanding, on behalf of the Holders of all Securities
of such series, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
6. Denominations, Transfer and Exchange. As provided in the Indenture and
subject to certain limitations therein set forth, the transfer of this Security
is registrable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal of and any premium and interest on this Security are
payable, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities of like tenor, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
39
<PAGE>
7. Persons Deemed Owners. Prior to due presentment of this Security for
registration of transfer, the Company, the Guarantors, the Trustee and any agent
of the Company, the Guarantors, or the Trustee may treat the Person in whose
name this Security is registered as the owner hereof for all purposes, whether
or not this Security be overdue, and the Company, the Guarantors, the Trustee or
any such agent shall not be affected by notice to the contrary.
8. Governing Law. THE INDENTURE, THE FIRST SUPPLEMENTAL INDENTURE, THIS
SECURITY AND ANY GUARANTEE ENDORSED HEREON SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
40
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form
below:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address, and zip code)
and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date: _____________________ Your signature: _________________________
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee: ___________________________________________________________
41
<PAGE>
EXHIBIT B
FORM OF NOTATION ON SECURITY RELATING TO GUARANTEE
The undersigned (the "Guarantors") have unconditionally guaranteed, jointly
and severally (such guarantee by each Guarantor being referred to herein as the
"Guarantee") (i) the due and punctual payment of the principal of and interest
on the Securities, whether at maturity, by acceleration or otherwise, the due
and punctual payment of interest on the overdue principal and interest, if any,
on the Securities, to the extent lawful, and the due and punctual performance of
all other obligations of the Company to the Holders or the Trustee all in
accordance with the terms set forth in Article Fourteen of the Indenture and
(ii) in case of any extension of time of payment or renewal of any Securities or
any of such other obligations that the same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise.
No past, present or future stockholder, officer, director, employee or
incorporator, as such, of any of the Guarantors shall have any liability under
the Guarantee by reason of such person's status as a stockholder, officer,
director, employee or incorporator. Each holder of a Security by accepting a
Security waives and releases all such liability. This waiver and release are
part of the consideration for the issuance of the Guarantees.
Each holder of a Security by accepting a Security agrees that any Guarantor
named below shall have no further liability with respect to its Guarantee if
such Guarantor otherwise ceases to be liable in respect of its Guarantee in
accordance with the terms of the Indenture.
The Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Securities upon which the Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
Fred Meyer Stores, Inc.
Smith's Food & Drug Centers, Inc.
By:
-------------------------------------
Kenneth Thrasher
Executive Vice President
By:
-------------------------------------
David R. Jessick
Senior Vice President and Chief
Financial Officer
<PAGE>
B&B Stores, Inc.
B&B Pharmacy, Inc.
CB&S Advertising Agency, Inc.
Distribution Trucking Company
FM, Inc.
FM Holding Corporation
Grand Central, Inc.
FM Retail Services, Inc.
Fred Meyer of Alaska, Inc.
Fred Meyer of California, Inc.
Fred Meyer Jewelers, Inc.
Merksamer Jewelers, Inc.
Roundup Co.
JH Properties, Inc.
Compare, Inc.
Saint Lawrence Holding Company
Smith's Beverage of Wyoming, Inc.
Smitty's Supermarkets, Inc.
Smitty's Equipment Leasing, Inc.
Smitty's Super Valu, Inc.
Western Property Investment
Group, Inc.
By:
-------------------------------------
Kenneth Thrasher
Vice President
By:
-------------------------------------
Roger A. Cooke
Vice President and Secretary
Treasure Valley Land Company, L.C.
By: Smith's Food and Drug Centers, Inc.
its member
By:
-------------------------------------
Kenneth Thrasher
Executive Vice President
By:
-------------------------------------
David R. Jessick
Senior Vice President and Chief
Financial Officer
<PAGE>
Richie's, Inc.
By:
-------------------------------------
Dale Schier
President
By:
-------------------------------------
Roger A. Cooke
Vice President and Secretary
44
<PAGE>
Quality Food Centers, Inc.
Quality Food, Inc.
Quality Food Holdings, Inc.
Hughes Markets, Inc.
Hughes Realty, Inc.
KU Acquisition Corporation
Second Story, Inc.
QFC Sub, Inc.
Food 4 Less Holdings, Inc.
Ralphs Grocery Company
Alpha Beta Company
Bay Area Warehouse Stores, Inc.
Bell Markets, Inc.
Cala Co.
Cala Foods, Inc.
Crawford Stores, Inc.
Falley's, Inc.
Food 4 Less of California, Inc.
Food 4 Less of Southern California, Inc.
Food 4 Less Merchandising, Inc.
Food 4 Less GM, Inc.
By:
-------------------------------------
Kenneth Thrasher
Vice President
By:
-------------------------------------
David R. Jessick
Vice President
45
