SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-15023
FRED MEYER, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-0798201
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3800 SE 22nd Avenue
Portland, Oregon 97202
(Address of principal executive offices) (Zip Code)
(503) 232-8844
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange on
Title of Class which registered
-------------- -----------------------
Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X
No ___ ---
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statement incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. ___
Aggregate market value of Common Stock held by nonaffiliates of the
Registrant at March 1, 1995: $526,316,280
Number of shares of Common Stock outstanding at March 1, 1995:
26,586,440
Documents Incorporated by Reference
------------------------------------
Part of Form 10-K into
Document which incorporated
- -------- ----------------------
Portions of 1994 Annual Report Parts II and IV
to Shareholders
Portions of Proxy Statement for Part III
1995 Annual Meeting of Shareholders <PAGE>
TABLE OF CONTENTS
------------------
Item of Form 10-K Page
- ----------------- ----
PART I
Item 1 - Business . . . . . . . . . . . . . . . . . . . . . . 1
Item 2 - Properties . . . . . . . . . . . . . . . . . . . . . 9
Item 3 - Legal Proceedings. . . . . . . . . . . . . . . . . . 10
Item 4 - Submission of Matters to a
Vote of Security Holders . . . . . . . . . . . . . . 10
Item 4(a) - Executive Officers of
the Registrant . . . . . . . . . . . . . . . . . . . 11
PART II
Item 5 - Market for the Registrant's Common Stock
and Related Stockholder Matters. . . . . . . . . . . 12
Item 6 - Selected Financial Data. . . . . . . . . . . . . . . 13
Item 7 - Management's Discussion and Analysis
of Financial Condition and Results
of Operations. . . . . . . . . . . . . . . . . . . . 13
Item 8 - Financial Statements and Supplementary Data. . . . . 13
Item 9 - Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . 13
PART III
Item 10 - Directors and Executive Officers
of the Registrant. . . . . . . . . . . . . . . . . . 13
Item 11 - Executive Compensation . . . . . . . . . . . . . . . 13
Item 12 - Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . 13
Item 13 - Certain Relationships and Related Transactions . . . 13
PART IV
Item 14 - Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . . . . . 14
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>
PART I
Item 1. Business.
- ------ ---------
General
-------
Fred Meyer, Inc. (the "Company") is a leading regional retailer of
a wide range of food, apparel, fine jewelry and products for the home. At
January 28, 1995, the Company operated 131 stores in Oregon, Washington,
Utah, Alaska, Idaho, Northern California, and Montana under the name "Fred
Meyer." Of these stores, 100 are free-standing, multidepartment stores,
averaging 140,814 square feet of retail space, that emphasize
one-stop-shopping for necessities and items of everyday use. Of the 100
multidepartment stores, 86 contain food and nonfood departments, and 14
contain nonfood departments only. The multidepartment stores with food
average 148,354 square feet. The Company's multidepartment stores accounted
for approximately 99 percent and 94 percent, respectively, of the Company's
total sales and operating income for the Company's 1994 fiscal year ended
January 28, 1995. Of the 31 specialty stores, 26 are jewelry stores located
in regional malls. The Company's multidepartment stores contain up to seven
departments which include food, the home, apparel, home electronics, fine
jewelry, health and beauty aids, and pharmacy. The Company's multidepartment
stores are unique in the Pacific Northwest in combining food with a wide
range of nonfood merchandise under one roof. For the 1994 fiscal year, food
and nonfood sales were 38.3 percent and 61.7 percent of total sales,
respectively.
The Company's principal business strategy is to operate
one-stop-shopping stores that provide convenient shopping for a broad
selection of products in one location. Stores are organized into distinct
departments that specialize in the sale of particular products. The Company
believes that its business strategy has generated high per-store sales
volume and frequent shopping by area residents, and that its departments
achieve such sales volume because they are located within one-stop-shopping
stores. The strength of the individual departments, with their breadth and
depth of product selection, national and private label brands, and emphasis
on products of everyday use, distinguishes the Company's stores from other
retailers and enables it to compete successfully with supermarkets,
drugstores, discount stores, mass merchandisers, department and specialty
stores. The Company promotes cross-shopping by providing convenient access
between departments, making each department a strong competitor in the
market for its products and by facilitating easy customer checkout through a
cash register system that allows customers to purchase merchandise from any
department at any checkout location ("common checkout").
During the past several years, the Company has committed
substantial capital and management resources to improve its
one-stop-shopping strategy, allowing it to better serve its customers and
respond to the many new competitors entering its markets. New competitors
in the past five years include Wal-Mart, Food 4 Less, Cub Foods, Home Depot,
HomeBase, Eagle, Sam's Club, Incredible Universe, Good Guys, and Circuit
City. During the same period, the Company also faced increased competition
from existing major national and regional retailers, including Safeway,
Albertson's, Price/Costco, Lamonts, Mervyn's, PayLess, Penneys, Carrs, QFC,
Kmart, Target, ShopKo, and Toys-R-Us. Notwithstanding the competitive
environment and a slowdown in economic conditions in some of the Company's
markets, the Company has been able to achieve total and comparable store
sales growth averaging 7.2 percent and 2.2 percent, respectively, over the
past five years (based on 52-week years). Total store sales for 1994
increased 5.0 percent, and comparable store sales decreased 2.0 percent over
the prior year. Sales growth in the last half of 1994, and continuing into
1995, has been negatively affected by a strike which started on August 18,
1994 involving a multiemployer group of unionized food stores in the greater
Portland, Oregon area, including 26 of the Company's stores, which were the
only stores picketed. At approximately the same time, a series of strikes
also began at the Company's Portland area distribution center, dairy plant,
trucking operations, and main office. These<PAGE>
strikes were settled during the period from September 23, 1994 to
November 13, 1994. For additional information regarding the strikes, see
"Employees" below and "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations."
During the past five years, the Company implemented common checkout
for the majority of its multidepartment stores to complement its storewide
merchandising efforts. The Company also remodeled 29 multidepartment stores
and redesigned and remodeled many food departments to include in-store
bakeries, delicatessens, and service fish markets to respond to customer
shopping preferences. Beginning in 1987, the Company implemented an
everyday low pricing strategy in its food operations. In 1989, the Company
reorganized its operating management structure and for each store designated
a store director responsible for store operations and profitability and
departmental cross-merchandising. In 1992 the Company augmented its store
management structure by establishing a regional management structure of six
regional management teams closely aligned with the stores in the regions.
Since 1990, management focused increased attention on the Company's
expenses. Through 1994 this focus decreased expenses as a percent of sales
by 2.18 percent for advertising, store labor, store occupancy, and corporate
support department expenses, offset in part by increases in information
services ("IS") expenses of .89 percent, resulting in a net decrease of 1.29
percent. 1994's results were negatively affected by the strikes in the
Portland area. The Company is continuing to pursue expense reductions as
part of its efforts to improve its financial performance.
The Company's capital expenditure budget for its 1995 fiscal year
is $257,000,000 compared with capital expenditures of approximately
$284,000,000 in 1994. Beginning in 1993, the Company implemented a plan to
increase new store development in its existing markets and to increase the
level of remodeling of existing stores. As a result, the Company plans to
open at least six new multidepartment stores and remodel between six and
nine existing stores in each of the five fiscal years beginning in 1995.
Total retail space increased by approximately 6.0 percent per year in 1993
and 1994. The Company constructed a new flow-through retail service center
in Chehalis, Washington in 1994 to distribute apparel, general merchandise,
and music products, and will be opening a food distribution facility near
Seattle, Washington in June 1995. In addition, the Company is continuing
its program to replace and upgrade its old IS system with new architecture
and application programs. The Company's new distribution facilities and new
IS system are designed to improve operations, permit better inventory
management and reduce distribution costs.
The Company was incorporated in Delaware in 1981, as a successor to
the business of a company which was incorporated in Oregon in 1923. The
Company's principal executive offices are located at 3800 SE 22nd Avenue,
Portland, Oregon 97202, and its telephone number is (503) 232-8844.
References in this Form 10-K to the Company mean Fred Meyer, Inc., including
its subsidiaries, unless the context requires otherwise.<PAGE>
The following table sets forth certain statistical information with
respect to the Company's operations for the periods indicated:
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------------------------------------
January 28, January 29, January 30, February 1, February 2,
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Percent of net sales:
Nonfood sales 61.7% 62.5% 63.3% 63.7% 64.3%
Food sales 38.3% 37.5% 36.7% 36.3% 35.7%
Sales per square foot of
selling space (weighted average) $304/4 $312 $304 $283 $269
Total stores sales growth 5.0%/4 4.4% 5.6% 9.2% 11.6%/1
Comparable store sales percentage increase:/2
Total Company (2.0%)/4 2.4% 3.0% 4.0% 3.6%/1
Food (3.0%)/4 3.4% 2.8% 4.5% 8.3%/1
Nonfood (1.4%)/4 1.9% 3.2% 3.8% 1.1%/1
Number of multidepartment stores:
Operated at end of period 100 97 94 94 94
Opened 5 5 2 3 5
Closed 2 2 2 3 6
Remodeled 7 7 5 3 7
Number of specialty stores:
Operated at end of period 31 30 29 28 28
Opened 3 2 4 -- --
Closed 2 1 3 -- 2
Remodeled -- -- -- -- --
Total number of stores:
Operated at end of period 131 127 123 122 122
Opened 8 7 6 3 5
Closed 4 3 5 3 8
Remodeled 7 7 5 3 7
Total retail square feet:
At beginning of period 13,423,000 12,646,000 12,679,000 12,213,000 11,743,000
Added by new stores opened 795,000 811,000 295,000 584,000 940,000
Added by remodeling
of existing stores 174,000 80,000 39,000 63,000 24,000
Less closed stores 198,000 114,000 367,000/3 181,000 494,000
At end of period 14,194,000 13,423,000 12,646,000 12,679,000 12,213,000
__________________
<FN>
1 Excludes 53rd week in the year ended February 3, 1990 for comparison purposes.
2 Includes only sales of stores operating throughout each of the periods compared.
3 Includes square footage for 30 restaurants that were converted to tenant space.
4 Affected by a series of labor disputes in the greater Portland, Oregon area in 1994.
</TABLE>
Business Strategy
-----------------
The Company's principal business strategy is to operate
one-stop-shopping stores that provide convenient shopping for a broad
selection of products in one location. Stores are organized into distinct
departments and sections within departments that specialize in the sale of
particular products. The Company promotes cross-shopping through convenient
access between departments, by making each department a strong competitor in
the market for the products it sells and by providing easy customer checkout
through its common checkout system that allows customers to purchase
merchandise from any department at any checkout location.
Breadth and Depth of Selection. In most of its stores, the Company
------------------------------
sells over 225,000 items, including a wide selection of food, apparel, and
products for the home, with an emphasis on necessities and items of everyday
use. The Company takes advantage of the stores' high and diverse customer
traffic to sell many categories of goods which are purchased on a<PAGE>
discretionary basis, such as fine jewelry, home electronics, and fashion
apparel. Within many categories of apparel, products for the home, fine
jewelry, and home electronics, the Company offers customers the breadth of
selection normally afforded by department or specialty stores. Its
selection of food and groceries is comparable to that of large supermarkets.
The Company emphasizes the sale of popular brands and its own private label
brands.
Multidepartment Stores. The Company's large stores are organized
----------------------
into departments and sections within departments that specialize in the sale
of particular products. The Company endeavors to create individual,
recognizable identities for each department through specialized design,
fixtures, and decor. In most stores, common checkout areas allow the
checkout of items from the Company's many departments at any cash register
and facilitates convenient shopping. Most of the Company's departments are
self-service, except in areas where special assistance is required, such as
service delicatessens, home electronics, fine jewelry, and pharmacy. Stores
consist of up to seven departments which are comprised of a variety of
specialty sections. Departments and specialty sections within the large
Fred Meyer stores include full-service food, pharmacy, nutrition,
housewares, domestics, paint and home decor items, plumbing and electrical
items, hardware and tools, building materials, garden, floral, sporting
goods, automotive, home office supplies and stationery, cards and books,
toys, basic and fashion apparel for all ages, shoes, home electronics, and
fine jewelry. Multidepartment stores that include food departments best
represent the Company's strategy. In more recent years the Company has been
adding food to previously nonfood multidepartment stores and replacing some
of its older nonfood stores with new full-service stores including food
departments.
Store and Regional Management. In 1989, the Company reorganized
-----------------------------
its operating management structure and for each store designated a store
director responsible for store operations and profitability and departmental
cross-merchandising. Departments within multidepartment stores are managed
by merchandising managers, who report to store directors. Each store
director and department manager is supported by a regional manager and other
senior managers who specialize in the market for products sold in the
stores. In 1992, the Company augmented its store management structure by
establishing regional management teams that work closely with the stores in
their region to enhance sales and profit opportunities. As a result of its
specialized management structure, the Company believes that each store and
each department within the store better serves its customers and is able to
respond quickly to market changes.
Location and Store Design. New store sites are determined based on
-------------------------
a review of information on demographics and the competitive environment for
the market area in which the proposed site is located. The Company's
expansion focus is in existing areas of operation, primarily in or near
well-populated residential areas. The Company determines store size and
designs stores with a view toward making each store a very convenient,
one-stop-shopping store in the area it serves. In 1992, the Company
standardized its store design with two basic sizes of approximately 145,000
square feet and 165,000 square feet. In 1994, a 125,000 square foot store
design was developed to facilitate entry into smaller markets. The Company
anticipates using a given prototype depending on the market to be served and
the size of the site being developed. The Company is flexible in its store
design where land sites require specialized designs.
Promotion and Advertising. The Company aggressively promotes sales
-------------------------
for all departments through weekly advertising, primarily in local and area
newspapers, radio and television. Advertising often features many
high-demand products at competitive prices. Sale items are usually items
regularly sold in the departments. The Company emphasizes everyday low
prices in its food departments and for certain nonfood items, and generally
offers promotional sale pricing in its nonfood departments. The Company
believes that it is known for competitive pricing and its customer-friendly
return policy.<PAGE>
Information Services. In 1991, the Company began a program to
--------------------
modernize its systems to better support its business. A new computer
network was installed, allowing every store to be linked with the main
office and distribution centers. In 1992, Quick Response inventory
management was initiated through the introduction of automatic replenishment
for certain goods and electronic data interchange systems with vendors. A
new pharmacy system was added in multidepartment stores. In 1993, the
Company continued Quick Response by installing a new distribution system and
by beginning the implementation of new inventory and merchandise management
systems. In 1994, the Company's Continuous Replenishment Program was
strengthened by the implementation of new jewelry, music and video, and item
performance systems. These modernized systems provide the Company with easy
access to actionable information for better inventory turnover and control,
reduced distribution costs, improved expense controls, and better customer
service. In 1995, the Company expects to begin rolling out its new
merchandising information system for nonfood departments, direct store
delivery system for food departments, and an upgrade of its store register
systems.
Retail Operations
-----------------
The Company's stores contain up to seven departments. Within each
department is a variety of merchandise sections operated like specialty
businesses. The following table sets forth the number of departments (and
lists certain of the sections within the Home and Apparel departments) in the
Company's 100 multidepartment stores at January 28, 1995:
Food. . . . . . . . . . . . . . . . . . . . . . . . . . 86
Nonfood . . . . . . . . . . . . . . . . . . . . . . . .100
The Home . . . . . . . . . . . . . . . . . . . . . .100
Housewares, Domestics, and Home Decor
Sporting Goods
Garden
Home Improvement and Automotive
Toys
Cards and Books
Variety and Seasonal
Home Electronics . . . . . . . . . . . . . . . . . .100
Apparel. . . . . . . . . . . . . . . . . . . . . . .100
Apparel
Cosmetics
Shoes
Pharmacy . . . . . . . . . . . . . . . . . . . . . . 99
Health and Beauty Aids . . . . . . . . . . . . . . .100
Fine Jewelry . . . . . . . . . . . . . . . . . . . . 87
The Food Department is typically the same size as free-standing
super food stores of competitors and carries a wide variety of national
brands together with the Company's private label brands of grocery items
which are Fred Meyer, President's Choice, and FMV (Fred Meyer Value).
Beginning in 1992, the Company implemented a program to increase sales of
its private label grocery items. As a result, sales of private
label grocery items as a percentage of total grocery sales have increased to
a current level of just over 20 percent from 12 percent in 1991. Private
label items generally are sold at lower prices to the customer and generate
higher margins for the Company than national brand products. The Company
also carries fresh produce, meat, dairy products, nutritional products,
bakery products, candy, and tobacco, all sold on a self-selection basis.
Most food departments contain a nutrition section that includes name brand
and generic natural foods, dairy products, juices, vitamins, supplements,
sugar-free and fat-free products, and meat substitutes. Certain items, such
as grains, nuts, fruits, and natural snacks, are also displayed in bulk to
enable customers to buy any amount and package their own purchases. In many
multidepartment stores, the Company operates in-store bakeries and service
departments that offer fresh seafood, delicatessen and meat products. The
Company's newer stores include sit-down<PAGE>
eating areas near in-store delicatessens and international take-out
departments. The following table sets forth the number of nutrition,
in-store bakery, and service departments at January 28, 1995:
Nutrition. . . . . . . . . . . . . . . . . . . . . . . 89
Bakery . . . . . . . . . . . . . . . . . . . . . . . . 83
Service Delicatessen . . . . . . . . . . . . . . . . . 83
Service Fish Market. . . . . . . . . . . . . . . . . . 61
Service Meat Market. . . . . . . . . . . . . . . . . . 34
The Home Department offers a wide selection of home decor,
housewares, small appliances, domestics, furniture, sporting goods, greeting
cards, books, floral products, power lawn mowers, garden tools, fertilizers
and chemicals, toys, seasonal and holiday merchandise, hardware, tools,
paint, building materials, plumbing and electrical fixtures, automotive
supplies, and related accessories. Some of the national brands featured are
Braun, Kitchen-Aid, Coleman, Rowenta, De Longhi, Glidden, and Weber. Home
improvement, garden and automotive sections feature many items for the
do-it-yourself customer. High quality private label products under our
Northwest Home, Turf King and Kraft King labels complement our national
brand offering.
The Apparel Department offers moderately priced national brand and
private label apparel, sportswear, cosmetics, accessories, and family and
active shoes. Major national brands carried by the apparel departments
include Levi's, Jockey, Maidenform, Vanity Fair, Nike, Reebok, Adidas,
Gotcha, Eastland, Union Bay, Columbia Sportswear, Capezio, Lee, Bali, and
Keds. High quality private label products such as Fred Bear, Katherine
Bishop, and KB & Co. labels complement our national brand offering.
The Company's private label sales in the Home and Apparel
categories represents 12-13 percent of these categories' sales, with a goal
of approximately 15 percent. The strategy employed in nonfood departments
is to use private label products as entry-level price points.
The Home Electronics Department offers the latest name-brand
high-technology merchandise, such as televisions, audio components,
camcorders, cellular phones, computers, computer software, and a large
selection of video games. Some of the national brands featured are SONY,
JBL, Pioneer, IBM, and Magnavox. It also offers a large selection of compact
discs, tapes, and for-sale video, and includes a photo-finishing section.
One-hour photo-finishing has also been added to selected locations.
The Pharmacy Department sells a full line of name brand and generic
prescription drugs dispensed by full-time licensed pharmacists and
participates with all major third party HMO and PPO plans.
The Health and Beauty Aids Department offers a wide selection of
national and private label brands of health and beauty aid products. It
also offers candy and confections and dietary food products.
The Fine Jewelry Department offers an extensive selection of bridal
jewelry and diamond fashion jewelry, including precious and semi-precious
stones. It also offers name brand watches and an assortment of 14-carat
gold chains and earrings.
Most of the Company's multidepartment stores open from 7:00 a.m. to
9:00 a.m. and close between 10:00 p.m. and 11:00 p.m., seven days a week,
including all holidays except Christmas. Most of the Company's multi-
department store locations have unaffiliated tenants which offer goods and
services complementing those offered by the Company, such as banks, optical
centers, coffee shops, restaurants, self-service laundries, insurance
agencies, and beauty and barber shops. The Company's specialty store hours
vary depending on location.<PAGE>
The Company honors most nationally recognized credit cards for
sales in all of its departments. In addition, the Company has its own
credit card program which is serviced by a national credit card processor
and is generally on a nonrecourse basis. Beginning in 1992, the Company
began accepting debit cards that do not require customer-activated personal
identification number ("PIN") pads.
Store Expansion and Development
-------------------------------
The Company enlarges, remodels, closes or sells stores in light of
their past performance or the Company's assessment of their potential. The
Company continually evaluates its position in its various market areas to
determine whether it should expand or consolidate its operations in those
areas. In 1989 and 1990, the Company opened a total of nine new
multidepartment stores and remodeled seventeen existing stores. In 1991 and
1992, new store openings, development, and remodeling activity declined to a
combined total of five new multidepartment stores and eight remodels while
the Company focused on reducing expenses and improving profitability.
Beginning in 1993, the Company implemented a plan to increase new store
development in its existing markets and to increase the level of remodeling
of existing stores. During 1993, the Company opened five new
multidepartment stores, one of which replaced an older store; closed two
multidepartment stores (including the one store that was replaced); and
remodeled seven stores. During 1994, the Company opened five new
multidepartment stores, closed two multidepartment stores, and remodeled
seven multidepartment stores. Generally, the Company plans to open at least
six new multidepartment stores and remodel between six and nine existing
stores in each of the five years beginning in 1995. In 1994, capital
expenditures for new store development and remodels were approximately
$172,000,000, compared with expenditures in 1993 of approximately
$156,000,000. A portion of this increase reflects spending for stores to
open in 1995. For 1995, the company anticipates its capital expenditures
for new store development and remodels will be approximately $192,000,000.
Total retail space increased 771,000 square feet during 1994,
representing an increase of approximately 5.7 percent. New multidepartment
store openings during the year 1994 were as follows:
<TABLE>
<CAPTION>
Total
Retail Space
Location Square Footage Opened
-------- -------------- ---------------
<S> <C> <C>
Soldotna, Alaska . . . . . . . . . . . 156,000 April, 1994
Brookings, Oregon. . . . . . . . . . . 142,000 April, 1994
East Vancouver, Washington . . . . . . 165,000 July, 1994
Boise, Idaho . . . . . . . . . . . . . 163,000 August, 1994
Bonney Lake (Seattle), Washington. . . 165,000 September, 1994
</TABLE>
Planned new multidepartment store openings during the year 1995 are as
follows:
<TABLE>
<CAPTION>
Total
Retail Space Planned
Location Square Footage Opening
-------- -------------- ---------------
<S> <C> <C>
Monroe, Washington . . . . . . . . . . 152,000 May, 1995
Lake City (Seattle), Washington. . . . 123,000 August, 1995
Renton (Seattle), Washington . . . . . 174,000 September, 1995
West Jordan (Salt Lake City), Utah . . 170,000 September, 1995
Salt Lake City, Utah . . . . . . . . . 173,000 September, 1995
Kennewick, Washington. . . . . . . . . 170,000 November, 1995
/TABLE
<PAGE>
Distribution and Processing
---------------------------
The Company operates a centralized distribution facility in a complex
at Clackamas, Oregon, near Portland, containing 1,528,000 square feet, and a
310,000 square-foot flow-through retail service center in Chehalis,
Washington. Approximately two-thirds of the merchandise the Company sells
is currently shipped from its Clackamas and Chehalis facilities, with the
balance shipped directly by vendors to the Company's stores or, in the case
of food products for its Idaho and Utah stores, purchased from a major
wholesale supplier.
As a result of its recent investment in IS systems and distribution
facility improvements, the Company has been able to establish EDI and
automated replenishment programs with many vendors. These "quick response"
capabilities are designed to improve inventory management and reduce
handling of inventory in the distribution process, which the Company
believes will result in lower markdowns and lower distribution costs.
The Company believes that its distribution and related IS systems
provide it with several advantages. First, they permit its stores to
maintain proper inventory levels for more than 190,000 items supplied
through its central distribution centers. Second, centralized purchasing
and distribution reduces the Company's cost of merchandise and related
transportation costs. Third, because distribution can be made to stores
frequently, the Company is able to reduce the in-store stockroom space and
maximize the square footage available for retail selling. Fourth, the
Company is able to lower its total level of inventory investment and related
financing costs.
The Company opened its new flow-through retail service center in
April, 1994 in Chehalis, Washington to serve as the centralized processing
facility for certain apparel, music, and other nonfood items. This facility
eliminates approximately 370,000 square feet of leased warehouse space,
including the Company's 122,000 square-foot Salt Lake City facility. It
will also allow the Company to meet its nonfood distribution center needs
past the year 2000. The Company's new Chehalis facility is designed to
minimize the required handling and processing of goods received from vendors
and distributed to the Company's stores. The Company believes that this
flow-through system will enable it to improve inventory management and to
further reduce the distribution costs for the goods shipped through this
facility. In June 1995 the Company expects to open a new 600,000
square-foot centralized food distribution facility in Puyallup, Washington,
near Seattle, to serve stores in the Puget Sound Region and Alaska. This
facility will significantly reduce the cost of transporting goods into the
Puget Sound and Alaska markets, and will afford the Company increased
forward-buying opportunities for its food operations.
The Company operates a large fleet of trucks for distribution of goods
to its retail stores and operates a central bakery and dairy.
Corporate Capital Expenditures
------------------------------
Total capital expenditures for 1994 were approximately
$284,000,000, which includes one store the Company purchased from one of its
lessors. The Company also completed construction of a new wing to its main
office complex, permitting consolidation of its corporate offices into one
facility from the three locations it previously occupied in the Portland,
Oregon area. In addition to the new store and remodel program, the Company
is initiating or continuing many capital projects aimed at improving
operating efficiencies, including improvements to its distribution centers,
central bakery, dairy plant, and continued IS enhancements. In 1995, the
Company estimates total capital expenditures to be $257,000,000.
During 1994, the Company incurred a charge of $15,978,000
($9,906,000 after a deferred tax benefit of $6,072,000) related to the
writedown of certain assets and other costs associated with the Company's
decision to exit the northern California market, except for two jewelry mall
locations.<PAGE>
Competition
-----------
The retail merchandising business is highly competitive and it is
projected to become more competitive in the years to come. Because of the
broad range of merchandise sold by the Company, it competes with many types
of retail companies, including national, regional, and local supermarkets,
discount stores, drug stores, conventional department stores and specialty
stores. The Company's competitive position in the retail business varies by
type of goods and the communities in which its stores are located. In the
last few years, many new competitors have entered the markets in which the
Company operates. New competitors in the past five years include Wal-Mart,
Food 4 Less, Cub Foods, Home Depot, HomeBase, Eagle, Sam's Club, Incredible
Universe, Good Guys, and Circuit City. During the same period, the Company
also faced increased competition from existing major national and regional
retailers, including Safeway, Albertson's, Costco, Lamonts, Mervyn's,
PayLess, Penneys, Carrs, QFC, Kmart, Target, ShopKo and Toys-R-Us.
Notwithstanding the competitive environment and a slowdown in economic
conditions in some of the Company's markets, the Company has been able to
achieve total and comparable store sales growth averaging 7.2 percent and
2.2 percent, respectively, over the past five years (based on 52-week
years). These averages were negatively affected by a series of labor
disputes in the greater Portland, Oregon area in 1994.
The Company emphasizes customer satisfaction, large selections of
high-quality popular products, and competitive pricing. In addition, the
Company believes that the convenience, attractiveness and cleanliness of its
stores, together with a sales staff knowledgeable in specialty areas,
enhances its retail sales efforts.
Employees
---------
The Company employs approximately 27,000 full- and part-time
employees. Approximately 50 percent of the Company's employees are
represented by 32 different labor unions (or locals). These employees are
covered by 110 different collective bargaining agreements, none of which
covers more than 2,600 employees. Approximately 34 percent of the
agreements will expire during 1995, including agreements covering employees
in both large metropolitan and smaller non-metropolitan areas where the
Company operates. The last work stoppages the Company experienced involved
the multiemployer bargaining unit for food clerks, checkers, and meatcutters
in Portland, Oregon, which lasted 88 days. At the same time, Company union
employees at its distribution facilities, trucking operation, dairy and a
small portion of its office employees went on strike. Coos Bay, Oregon
nonfood employees went on strike in late 1994 and returned to work on
January 14, 1995. There were no work stoppages in 1991, 1992 or 1993. The
Company believes that it has good relations with the many unions
representing its employees.
In 1995, the Company reached agreement on its contracts covering
nonfood and food workers in the Seattle/Tacoma area. While progress is
being made on remaining contracts which expire in 1995, and the Company is
optimistic about reaching agreements, no assurance can be given that the
parties will be able to reach a final conclusion without the occurrence of a
work stoppage.
Item 2. Properties.
- ------ ----------
As a part of the leveraged buyout transaction in which the Company
was incorporated in 1981, Fred Meyer Real Estate Properties, Ltd., whose
name was changed in 1991 to Real Estate Properties Limited Partnership
("Properties"), acquired the real estate assets of the corporation that was
the predecessor to the Company.<PAGE>
In 1986, the Company amended and restated 76 leases relating to 71
stores, its distribution center, and four other facilities. The leases
provide, among other things: (1) fixed rent expense in the aggregate for
accounting purposes over the initial term of the leases at levels below rent
expense under the prior leases for the fiscal year ended January 30, 1988;
(2) initial lease terms generally averaging 20 years; (3) future rent from
certain unrelated subtenants to be paid to the Company; and (4) seven
five-year renewal options under leases for the 36 leased properties owned by
Metropolitan Life Insurance Company (the "Institutional Investor") at rents
for the first five option periods below the average rents during the initial
term, and an option for the Company to purchase any of the leased properties
at the end of the initial term and at the end of each option period.
Properties sold to the Institutional Investor its interest in 36 of the 76
properties which were leased to the Company. The Institutional Investor is
also an investor in Properties and FMI Associates. At March 1, 1994, FMI
Associates beneficially owned approximately 38.0 percent of the Company's
common stock.
Twenty-four store locations and four other facilities are owned by
the Company and its subsidiaries. The balance of the Company's locations
are leased from the Institutional Investor, Properties or third parties.
All of the Company's stores and its distribution and processing facilities
are in good condition. Of the Company's 100 multidepartment stores, 88
percent have either been built or received a major remodel in the last ten
years. Additionally, the Company owns eighteen parcels of land. Thirteen
are being held for development of future stores, and three in California and
two in Washington are being held for sale.
The following table as of January 28, 1995, summarizes the
remaining lease years, assuming the exercise of all options, for store
locations and the Company's distribution facilities, warehouses, and plants.
<TABLE>
<CAPTION>
Distribution Facilities
Store Locations Warehouses & Plants
------------------------- ---------------------------
Remaining Number Square Ft. of % of Total Square Ft. of % of Total
of Lease Years Retail Space Square Ft. Facility Space Square Ft.
- ------------------- ------------ ---------- -------------- ----------
<S> <C> <C> <C> <C>
Less than 5 years 255,463 1.80% 100,104 4.14%
5 through 15 years 293,703 2.07% --- 0.00%
16 through 25 years 3,257,757 22.95% --- 0.00%
Over 25 years 7,001,877 49.33% 1,527,875 63.20%
---------- ------- --------- -------
Total Leased 10,808,800 76.15% 1,627,979 67.34%
---------- ------- --------- -------
Owned Properties 3,385,390 23.85% 789,414 32.66%
---------- ------- --------- -------
Total 14,194,190 100.00% 2,417,393 100.00%
========== ======= ========= =======
</TABLE>
Item 3. Legal Proceedings.
- ------ -----------------
The Company and its subsidiaries are parties to various legal
claims, actions, and complaints which have arisen in the ordinary course of
business. Although the Company is unable to predict with certainty whether it
will ultimately be successful in these legal proceedings or, if not, what the
impact might be, management presently believes that disposition of these
matters will not have a material adverse effect on the Company's consolidated
financial position or consolidated results of operations.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------ ---------------------------------------------------
Not applicable.
<PAGE>
Item 4(a). Executive Officers of the Registrant.
- --------- ------------------------------------
As of March 1, 1995, the executive officers of the Company were as
set forth below.
<TABLE>
<CAPTION>
Original
Date of
Name Age Position Employment
- ------------------ --- ------------------------------ ----------
<S> <C> <C> <C>
Robert G. Miller 50 Chairman of the Board and 1991
Chief Executive Officer
Cyril K. Green 63 President and Chief Operating 1947
Officer
R. Eric Baltzell 54 Senior Vice President, Stores 1962
Roger A. Cooke 46 Senior Vice President, 1992
General Counsel and Secretary
Edward A. Dayoob 55 Senior Vice President, 1973
Jewelry Group
Curt A. Lerew, III 47 Senior Vice President, Food Group 1991
Keith W. Lovett 51 Senior Vice President, 1992
Human Resources
Ronald J. McEvoy 47 Senior Vice President, 1991
Chief Information Officer
Norman O. Myhr 47 Senior Vice President, 1978
Sales Promotion and Marketing
Cheryl D. Perrin 56 Senior Vice President, 1976
Public Affairs
Mary F. Sammons 48 Senior Vice President, 1973
General Group
Kenneth Thrasher 45 Senior Vice President - Finance 1982
and Chief Financial Officer
Scott L. Wippel 41 Senior Vice President, 1992
Corporate Facilities
</TABLE>
The executive officers of the Company are elected annually for one
year and hold office until their successors are elected and qualified.
There are no family relationships among the executive officers of the
Company.
Mr. Miller became Chairman of the Board and Chief Executive Officer of
the Company in August of 1991. Prior to that time he was employed by
Albertson's, where his most recent positions were Executive Vice President
of Retail Operations from 1989 to 1991, and Senior Vice President and
Regional Manager from 1985 to 1989. Mr. Miller has more than 30 years of
experience in the retail food industry.
Mr. Green became President and Chief Operating Officer in 1972, and
has been with the Company since 1947. He has held many positions with the
Company prior to his election to President.
Mr. Baltzell served as Vice President, Food Operations of the Company
from 1982 until his election as Senior Vice President, Store Operations
Division in June 1989.
Mr. Cooke became Vice President, General Counsel and Secretary of the
Company in August 1992. He was elected Senior Vice President in April 1993.
From 1982 to 1992, he was an officer of Pan American World Airways, Inc.,
serving as Senior Vice President and General Counsel from 1990 to 1992.
From 1973 to 1980, he was associated with the law firm Simpson Thacher and
Bartlett.<PAGE>
Mr. Dayoob served as Vice President, Jewelry Division of the Company
from 1979 until his election as Senior Vice President, Photo Electronics and
Jewelry Division in June 1989. This Division was renamed the Home
Electronics and Jewelry Group in 1990. The Home Electronics Division was
merged into the General Group in 1993.
Mr. Lerew became Senior Vice President, Food Group in October 1991.
Prior to that time he was employed by Albertson's, where his most recent
positions were Senior Vice President and Regional Manager in 1991, Senior
Vice President of Corporate Merchandising from 1990 to 1991, and Vice
President, Western Washington Division, from 1987 to 1990. Mr. Lerew has
more than 30 years of experience in the retail food industry.
Mr. Lovett became Senior Vice President, Human Resources of the
Company in February of 1992. Prior to that time he was employed by Eagle
Food Centers, where he was Senior Vice President of Human Resources and Vice
President of Industrial Relations.
Mr. McEvoy became Senior Vice President, Chief Information Officer in
charge of the Company's Information Services in July 1991. For the year
prior to that, he worked for IBM United States as a business advisor in the
retail industry. From 1987 to 1990, he was Senior Vice President for
Management Information Systems (MIS) for J.B. Ivey. He held the same
position from 1983 to 1987 with John Wanamaker. He also held various MIS
and financial positions with Hecht's from 1969 to 1983.
Mr. Myhr served as Vice President, Sales Promotion of the Company from
1982 until his election as Senior Vice President, Strategic Marketing in
June 1989. He now serves as Senior Vice President, Sales Promotion and
Marketing.
Ms. Perrin served as Vice President, Government Affairs from 1985
until her election as Vice President, Public Affairs in 1988. She was
elected Senior Vice President, Public Affairs in April 1992.
Ms. Sammons served as Vice President within the Soft Goods Division of
the Company from 1980 until her election as Senior Vice President, Soft
Goods Division in January 1986. In June 1989, she was elected Senior Vice
President, General Merchandise Division. This Division was renamed the
General Group in 1990.
Mr. Thrasher served as Vice President, Corporate Treasurer of the
Company from 1982 until his election as Vice President - Finance, Chief
Financial Officer, and Secretary in June 1987. He was elected Senior Vice
President - Finance and Chief Financial Officer effective March 1989.
Mr. Wippel became Vice President, Corporate Facilities in June 1992.
He was elected Senior Vice President in April 1993. Prior to that, he was
employed by Albertson's, where his most recent positions were Vice President
of Real Estate from 1990 to 1992 and Director of Real Estate from 1988 to
1990.
PART II
Item 5. Market for the Registrant's Common Stock and Related
- ------ ----------------------------------------------------
Stockholder Matters.
-------------------
The information required by this item is included under "Common
Stock Information" on page 12 of the Company's 1994 Annual Report to
Shareholders and is incorporated herein by reference.<PAGE>
Item 6. Selected Financial Data.
- ------ -----------------------
The information required by this item is included under "Selected
Financial Data" on pages 8 and 9 of the Company's 1994 Annual Report to
Shareholders and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
- ------ -------------------------------------------------
Condition and Results of Operations.
-----------------------------------
The information required by this item is included under
"Management's Discussion and Analysis" on pages 10 through 12 of the
Company's 1994 Annual Report to Shareholders and is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data.
- ------ -------------------------------------------
The information required by this item is incorporated by reference
from the Company's 1994 Annual Report to Shareholders as listed in Item 14
of Part IV of this Report.
Item 9. Changes in and Disagreements with Accountants
- ------ ---------------------------------------------
on Accounting and Financial Disclosure.
--------------------------------------
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
- ------- --------------------------------------------------
Information with respect to directors of the Company is included
under "Election of Directors" in the Company's Proxy Statement for its 1995
Annual Meeting of Shareholders and is incorporated herein by reference.
Information with respect to executive officers of the Company is included
under Item 4(a) of Part I of this Report.
Item 11. Executive Compensation.
- ------- ----------------------
Information with respect to executive compensation is included
under "Executive Compensation" in the Company's Proxy Statement for its 1995
Annual Meeting of Shareholders and is incorporated herein by reference,
except for items appearing under the subheadings "Compensation Committee
Report on Executive Compensation" and "Comparison of Five Year Cumulative
Total Return" which are not incorporated herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- ------- --------------------------------------------------------------
Information with respect to security ownership of certain
beneficial owners and management is included under "Voting Securities and
Principal Shareholders" and "Election of Directors" in the Company's Proxy
Statement for its 1995 Annual Meeting of Shareholders and is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions.
- ------- ----------------------------------------------
Information required by this item is included under "Certain
Transactions" in the Company's Proxy Statement for its 1995 Annual Meeting
of Shareholders and is incorporated herein by reference.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
- ------- ----------------------------------------------------------------
(a)(1) Financial Statements.
--------------------
The following documents are included in the Company's 1994 Annual
Report to Shareholders at the pages indicated and are incorporated herein by
reference:
Page in 1994 Annual
Report to Shareholders
----------------------
Fred Meyer, Inc. and Subsidiaries:
Consolidated Balance Sheets -
January 28, 1995 and January 29, 1994 14-15
Statements of Consolidated Operations -
Years Ended January 28, 1995, January 29, 1994,
and January 30, 1993 13
Statements of Consolidated Cash Flows -
Years Ended January 28, 1995, January 29, 1994,
and January 30, 1993 16
Statements of Changes in Consolidated
Stockholders' Equity -
Years Ended January 30, 1993,
January 29, 1994, and January 28, 1995 17
Notes to Consolidated Financial Statements 18-23
Independent Auditors' Report 24
(a)(2) Financial Statement Schedules.
-----------------------------
All schedules are omitted as the required information is inapplicable or
is presented in the financial statements or related notes thereto.
(a)(3) Exhibits.
--------
3A Restated Certificate of Incorporation of Fred Meyer,
Inc. Incorporated by reference to Exhibit 3A to the
Company's Registration Statement on Form S-1,
Registration No. 33-8574.
3B Amended and Restated Bylaws of Fred Meyer, Inc.
Incorporated by reference to Exhibit 4B to the Company's
Registration Statement on Form S-8, Registration
No. 33-49638.
4A Specimen Stock Certificate. Incorporated by reference
to Exhibit 4C to the Company's Registration Statement on
Form S-3, Registration No. 33-67670.
4B Credit Agreement dated as of June 30, 1994, among Fred
Meyer, Inc., various banks named therein, and Bank of
America as Agent.
4C Term Promissory Notes in an original aggregate principal
amount of $70,000,000, including the Intercreditor
Agreement dated June 29, 1993 among the Company, and
various banks and financial institutions named therein.
Incorporated by reference to Exhibit 4E to the Company's
Registration Statement on Form S-3, Registration
No. 33-67670.
4D Note agreement dated as of June 1, 1994, in an original
aggregate principal amount of $57,500,000, among Fred
Meyer, Inc., and various life insurance companies.<PAGE>
4E Credit Agreement dated as of March 6, 1995, among Fred
Meyer, Inc., various financial institutions named
therein, and The Bank of Nova Scotia as Agent.
*10A-1 Fred Meyer, Inc. 1983 Stock Option Plan, as amended.
Incorporated by reference to Exhibit 10D to the
Company's Annual Report on Form 10-K for the year ended
January 28, 1989 (File No. 0-15023).
*10A-2 Fred Meyer, Inc. 1990 Stock Incentive Plan, as amended.
Incorporated by reference to Exhibit 28 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
August 18, 1990 (File No. 0-15023).
*10B Fred Meyer, Inc. Bonus Plan Description, as amended.
10C Assumption Agreement and Unconditional Guaranty of
Certain Obligations, dated December 11, 1981, among Fred
Meyer, Inc., The Predecessor Company, DTC Acquisition
Corporation, and Real Estate Properties Limited
Partnership (formerly Fred Meyer Real Estate Properties,
Ltd.). Incorporated by reference to Exhibit 10FF to the
Company's Registration Statement on Form S-1,
Registration No. 2-87139.
*10D Non-Employee Directors Stock Compensation Plan, adopted
November 17, 1992. Incorporated by reference to Exhibit
10F to the Company's Annual Report on Form 10-K for the
year ended January 30, 1993.
*10E Form of contract for Senior Executive Long-Term
Disability Program. Incorporated by reference to
Exhibit 10G to the Company's Annual Report on Form 10-K
for the year ended January 30, 1993.
*10F Fred Meyer Supplemental Income Plan dated January 1,
1994. Incorporated by reference to Exhibit 10H to the
Company's Annual Report on Form 10-K for the year ended
January 29, 1994.
*10G Employment Agreement between Fred Meyer, Inc. and
Robert G. Miller, as amended by Amendment No. 1.
*10H Indemnity Agreement. Incorporated by reference to
Exhibit 10I to the Company's Registration Statement on
Form S-1, Registration No. 33-8574.
10I Form of Lease Agreement for substantially identical
leases covering 36 stores and other locations leased by
Fred Meyer, Inc. (or a wholly owned subsidiary) from
Real Estate Properties Limited Partnership (formerly
Fred Meyer Real Estate Properties, Ltd.) including form
of Assignment of Master Lease wherein Fred Meyer Real
Estate Properties, Ltd. (now Real Estate Properties
Limited Partnership) assigned its interest to
Metropolitan Life Insurance Company and a First
Amendment to Lease Agreement, dated November 25, 1986,
with appendices containing certain nonstandard
provisions of the Lease Agreement and the First
Amendment; Collateral Matters Agreement and
Indemnification Agreement, each dated November 25, 1986,
between Fred Meyer, Inc. and Metropolitan Life Insurance
Company. Incorporated by reference to Exhibit 10I to
the Company's Annual Report on Form 10-K for the year
<PAGE>
ended January 31, 1987 (File No. 0-15023). Memorandum
of First Amendment to Lease Agreement, dated March 6,
1987, between Metropolitan Life Insurance Company
("Metropolitan"), Landlord and Fred Meyer, Inc., Tenant;
and Assignment of Master Lease, dated March 6, 1987,
between Real Estate Properties Limited Partnership
(formerly Fred Meyer Real Estate Properties, Ltd.)
(Assignor) and Metropolitan (Assignee) for Nampa, Idaho.
Incorporated by reference to Exhibit 10I to the
Company's Annual Report on Form 10-K for the year ended
January 30, 1988 (File No. 0-15023).
10J Form of Lease Agreement for substantially identical
leases covering 27 stores and other locations subleased
by Fred Meyer, Inc. (or a wholly owned subsidiary) from
Real Estate Properties Limited Partnership (formerly
Fred Meyer Real Estate Properties, Ltd.) with appendices
containing certain nonstandard provisions contained in
the Lease Agreement. Incorporated by reference to
Exhibit 10J to the Company's Annual Report on Form 10-K
for the year ended January 31, 1987 (File No. 0-15023).
Appendices containing certain additional nonstandard
provisions. Incorporated by reference to Exhibit 10J to
the Company's Annual Reports on Form 10-K for the years
ended January 28, 1989, February 3, 1990, and
February 2, 1991 (File No. 0-15023). Certain lease
modifications for Burien, Washington facility.
Incorporated by reference to Exhibit 10K to the
Company's Annual Report on Form 10-K for the year ended
January 30, 1993. Second Lease Modification Agreement
for Cornelius store, dated as of August 16, 1994; and
Second Lease Modification Agreement for Fairbanks store,
dated as of March 18, 1994.
10K Form of Sublease, dated May 1, 1984, Fred Meyer Real
Estate Properties, Ltd. (now Real Estate Properties
Limited Partnership), Lessor to Fred Meyer, Inc., Lessee
for the Stadium Parking Lot. Incorporated by reference
to Exhibit 10J(6) to the Company's Registration
Statement on Form S-1, Registration No. 33-8574.
10L Form of Sublease, dated May 1, 1984, Fred Meyer Real
Estate Properties, Ltd. (now Real Estate Properties
Limited Partnership), Lessor to Roundup Co., Lessee for
Photo Plant Parking Lot. Incorporated by reference to
Exhibit 10J(7) to the Company's Registration Statement
on Form S-1, Registration No. 33-8574.
10M Lease Agreement, dated October 22, 1986, including
Amendment, dated April 30, 1987, between Fred Meyer Real
Estate Properties, Ltd. (now Real Estate Properties
Limited Partnership), and Roundup Co. for Midway store.
Incorporated by reference to Exhibit 10N to the
Company's Annual Report on Form 10-K for the year ended
January 31, 1987 (File No. 0-15023).
10N Lease Agreement, dated February 1, 1990, relating to
additional property adjacent to Oak Grove store location
between REC Resolution Co. as successor in interest to
Vanoak Corporation, Lessor, and Fred Meyer, Inc.,
Lessee. Incorporated by reference to Exhibit 10P to the
Company's Annual Report on Form 10-K for the year ended
February 2, 1991 (File No. 0-15023).
10O Lease Agreement, dated February 19, 1987, including
Addendum, dated September 16, 1987, between Fred Meyer,
Inc., as Lessee, and REC Resolution Co. as successor in
<PAGE>
interest to Duane Company, as Lessor, for the Gateway
store. Incorporated by reference to Exhibit 10Q to the
Company's Annual Report on Form 10-K for the year ended
January 30, 1988 (File No. 0-15023). Addendum No. 2 to
Lease Agreement. Incorporated by reference to Exhibit
10Q to the Company's Annual Report on Form 10-K for the
year ended February 2, 1991 (File No. 0-15023).
10P Lease Agreement, dated December 12, 1988, between Fred
Meyer, Inc., as Lessee, and REC Resolution Co. as
successor in interest to Fifth Avenue Corporation, as
Lessor, for the Burlingame store. Incorporated by
reference to Exhibit 10S to the Company's Annual Report
on Form 10-K for the year ended January 28, 1989 (File
No. 0-15023).
10Q Lease Cancellation Agreement between the Company and
Real Estate Properties Limited Partnership, regarding
termination of the lease of the photo plant facility,
dated as of January 17, 1995.
10R Lease for Swan Island Parking Lot between the Company as
lessee and Real Estate Properties Limited Partnership as
lessor, dated November 16, 1994.
10S Lease Assignment Agreement between Real Estate
Properties Limited Partnership (REPL) as assignor, and
the Company as assignee, dated as of March 14, 1995,
pursuant to which the Company has agreed to purchase the
leasehold interest of REPL in the Hawthorne, Hazel Dell
and Raleigh Hills stores; and a related Real Estate
Purchase and Sale Agreement between REC Resolution Co.
as seller and the Company as purchaser, dated as of
March 14, 1995, pursuant to which the Company has agreed
to purchase the fee interest of REC Resolution Co., (an
affiliate of REPL) in the Hawthorne, Hazel Dell and
Raleigh Hills stores.
11 Computation of Earnings per Common Share.
13 Portions of the Annual Report to Shareholders of the
Company for the year ended January 28, 1995 are
incorporated by reference herein.
21 List of Subsidiaries. Incorporated by reference to
Exhibit 21 to the Company's Annual Report on Form 10-K
for the year ended January 29, 1994.
23 Consent of Deloitte & Touche LLP.
24 Powers of Attorney.
27 Financial Data Schedule.
- --------------
* This exhibit constitutes a management contract or compensatory
plan or arrangement.
(b) Reports on Form 8-K.
-------------------
No reports on Form 8-K were filed by the Company during the last
quarter of the year ended January 28, 1995.
<PAGE>
SIGNATURES
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.
FRED MEYER, INC.
Date: April 26, 1995 By KENNETH THRASHER
------------------------------
Kenneth Thrasher,
Chief Financial Officer,
Senior Vice President - Finance
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on April 26, 1995.
Signature Title
--------- -----
(1) Principal Executive Officer
ROBERT G. MILLER Chairman of the Board
- ------------------------------ and Chief Executive Officer
Robert G. Miller
(2) Principal Financial Officer
KENNETH THRASHER Chief Financial Officer,
- ------------------------------ Senior Vice President - Finance
Kenneth Thrasher
(3) Principal Accounting Officer
THOMAS R. HUGHES Vice President and Controller
- ------------------------------
Thomas R. Hughes
(4) Directors
* JEROME KOHLBERG, JR. Director
- ------------------------------
Jerome Kohlberg, Jr.<PAGE>
* PAUL E. RAETHER Director
- ------------------------------
Paul E. Raether
* SAUL A. FOX Director
- ------------------------------
Saul A. Fox
* MICHAEL W. MICHELSON Director
- ------------------------------
Michael W. Michelson
* ROGER S. MEIER Director
- ------------------------------
Roger S. Meier
* A.M. GLEASON Director
- ------------------------------
A.M. Gleason
* By KENNETH THRASHER
-------------------------
Kenneth Thrasher
As Attorney in Fact
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Page
Number Number
- ------- ----------
3A Restated Certificate of Incorporation of Fred Meyer,
Inc. Incorporated by reference to Exhibit 3A to the
Company's Registration Statement on Form S-1,
Registration No. 33-8574.
3B Amended and Restated Bylaws of Fred Meyer, Inc.
Incorporated by reference to Exhibit 4B to the Company's
Registration Statement on Form S-8, Registration
No. 33-49638.
4A Specimen Stock Certificate. Incorporated by reference
to Exhibit 4C to the Company's Registration Statement on
Form S-3, Registration No. 33-67670.
4B Credit Agreement dated as of June 30, 1994, among Fred
Meyer, Inc., various banks named therein, and Bank of
America as Agent.
4C Term Promissory Notes in an original aggregate principal
amount of $70,000,000, including the Intercreditor
Agreement dated June 29, 1993 among the Company, and
various banks and financial institutions named therein.
Incorporated by reference to Exhibit 4E to the Company's
Registration Statement on Form S-3, Registration
No. 33-67670.
4D Note agreement dated as of June 1, 1994, in an original
aggregate principal amount of $57,500,000, among Fred
Meyer, Inc., and various life insurance companies.
4E Credit Agreement dated as of March 6, 1995, among Fred
Meyer, Inc., various financial institutions named
therein, and The Bank of Nova Scotia as Agent.
*10A-1 Fred Meyer, Inc. 1983 Stock Option Plan, as amended.
Incorporated by reference to Exhibit 10D to the
Company's Annual Report on Form 10-K for the year ended
January 28, 1989 (File No. 0-15023).
*10A-2 Fred Meyer, Inc. 1990 Stock Incentive Plan, as amended.
Incorporated by reference to Exhibit 28 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
August 18, 1990 (File No. 0-15023).
*10B Fred Meyer, Inc. Bonus Plan Description, as amended.
10C Assumption Agreement and Unconditional Guaranty of
Certain Obligations, dated December 11, 1981, among Fred
Meyer, Inc., The Predecessor Company, DTC Acquisition
Corporation, and Real Estate Properties Limited
Partnership (formerly Fred Meyer Real Estate Properties,
Ltd.). Incorporated by reference to Exhibit 10FF to the
Company's Registration Statement on Form S-1,
Registration No. 2-87139.
<PAGE>
*10D Non-Employee Directors Stock Compensation Plan, adopted
November 17, 1992. Incorporated by reference to Exhibit
10F to the Company's Annual Report on Form 10-K for the
year ended January 30, 1993.
*10E Form of contract for Senior Executive Long-Term
Disability Program. Incorporated by reference to
Exhibit 10G to the Company's Annual Report on Form 10-K
for the year ended January 30, 1993.
*10F Fred Meyer Supplemental Income Plan dated January 1,
1994. Incorporated by reference to Exhibit 10H to the
Company's Annual Report on Form 10-K for the year ended
January 29, 1994.
*10G Employment Agreement between Fred Meyer, Inc. and
Robert G. Miller, as amended by Amendment No. 1.
*10H Indemnity Agreement. Incorporated by reference to
Exhibit 10I to the Company's Registration Statement on
Form S-1, Registration No. 33-8574.
10I Form of Lease Agreement for substantially identical
leases covering 36 stores and other locations leased by
Fred Meyer, Inc. (or a wholly owned subsidiary) from
Real Estate Properties Limited Partnership (formerly
Fred Meyer Real Estate Properties, Ltd.) including form
of Assignment of Master Lease wherein Fred Meyer Real
Estate Properties, Ltd. (now Real Estate Properties
Limited Partnership) assigned its interest to
Metropolitan Life Insurance Company and a First
Amendment to Lease Agreement, dated November 25, 1986,
with appendices containing certain nonstandard
provisions of the Lease Agreement and the First
Amendment; Collateral Matters Agreement and
Indemnification Agreement, each dated November 25, 1986,
between Fred Meyer, Inc. and Metropolitan Life Insurance
Company. Incorporated by reference to Exhibit 10I to
the Company's Annual Report on Form 10-K for the year
ended January 31, 1987 (File No. 0-15023). Memorandum
of First Amendment to Lease Agreement, dated March 6,
1987, between Metropolitan Life Insurance Company
("Metropolitan"), Landlord and Fred Meyer, Inc., Tenant;
and Assignment of Master Lease, dated March 6, 1987,
between Real Estate Properties Limited Partnership
(formerly Fred Meyer Real Estate Properties, Ltd.)
(Assignor) and Metropolitan (Assignee) for Nampa, Idaho.
Incorporated by reference to Exhibit 10I to the
Company's Annual Report on Form 10-K for the year ended
January 30, 1988 (File No. 0-15023).
10J Form of Lease Agreement for substantially identical
leases covering 27 stores and other locations subleased
by Fred Meyer, Inc. (or a wholly owned subsidiary) from
Real Estate Properties Limited Partnership (formerly
Fred Meyer Real Estate Properties, Ltd.) with appendices
containing certain nonstandard provisions contained in
the Lease Agreement. Incorporated by reference to
Exhibit 10J to the Company's Annual Report on Form 10-K
for the year ended January 31, 1987 (File No. 0-15023).
Appendices containing certain additional nonstandard
provisions. Incorporated by reference to
<PAGE>
Exhibit 10J to the Company's Annual Reports on Form 10-K
for the years ended January 28, 1989, February 3, 1990,
and February 2, 1991 (File No. 0-15023). Certain lease
modifications for Burien, Washington facility.
Incorporated by reference to Exhibit 10K to the
Company's Annual Report on Form 10-K for the year ended
January 30, 1993. Second Lease Modification Agreement
for Cornelius store, dated as of August 16, 1994; and
Second Lease Modification Agreement for Fairbanks store,
dated as of March 18, 1994.
10K Form of Sublease, dated May 1, 1984, Fred Meyer Real
Estate Properties, Ltd. (now Real Estate Properties
Limited Partnership), Lessor to Fred Meyer, Inc., Lessee
for the Stadium Parking Lot. Incorporated by reference
to Exhibit 10J(6) to the Company's Registration
Statement on Form S-1, Registration No. 33-8574.
10L Form of Sublease, dated May 1, 1984, Fred Meyer Real
Estate Properties, Ltd. (now Real Estate Properties
Limited Partnership), Lessor to Roundup Co., Lessee for
Photo Plant Parking Lot. Incorporated by reference to
Exhibit 10J(7) to the Company's Registration Statement
on Form S-1, Registration No. 33-8574.
10M Lease Agreement, dated October 22, 1986, including
Amendment, dated April 30, 1987, between Fred Meyer Real
Estate Properties, Ltd. (now Real Estate Properties
Limited Partnership), and Roundup Co. for Midway store.
Incorporated by reference to Exhibit 10N to the
Company's Annual Report on Form 10-K for the year ended
January 31, 1987 (File No. 0-15023).
10N Lease Agreement, dated February 1, 1990, relating to
additional property adjacent to Oak Grove store location
between REC Resolution Co. as successor in interest to
Vanoak Corporation, Lessor, and Fred Meyer, Inc.,
Lessee. Incorporated by reference to Exhibit 10P to the
Company's Annual Report on Form 10-K for the year ended
February 2, 1991 (File No. 0-15023).
10O Lease Agreement, dated February 19, 1987, including
Addendum, dated September 16, 1987, between Fred Meyer,
Inc., as Lessee, and REC Resolution Co. as successor in
interest to Duane Company, as Lessor, for the Gateway
store. Incorporated by reference to Exhibit 10Q to the
Company's Annual Report on Form 10-K for the year ended
January 30, 1988 (File No. 0-15023). Addendum No. 2 to
Lease Agreement. Incorporated by reference to Exhibit
10Q to the Company's Annual Report on Form 10-K for the
year ended February 2, 1991 (File No. 0-15023).
10P Lease Agreement, dated December 12, 1988, between Fred
Meyer, Inc., as Lessee, and REC Resolution Co. as
successor in interest to Fifth Avenue Corporation, as
Lessor, for the Burlingame store. Incorporated by
reference to Exhibit 10S to the Company's Annual Report
on Form 10-K for the year ended January 28, 1989 (File
No. 0-15023).
10Q Lease Cancellation Agreement between the Company and
Real Estate Properties Limited Partnership, regarding
termination of the lease of the photo plant facility,
dated as of January 17, 1995.
10R Lease for Swan Island Parking Lot between the Company as
lessee and Real Estate Properties Limited Partnership as
lessor, dated November 16, 1994.
<PAGE>
10S Lease Assignment Agreement between Real Estate
Properties Limited Partnership (REPL) as assignor, and
the Company as assignee, dated as of March 14, 1995,
pursuant to which the Company has agreed to purchase the
leasehold interest of REPL in the Hawthorne, Hazel Dell
and Raleigh Hills stores; and a related Real Estate
Purchase and Sale Agreement between REC Resolution Co.
as seller and the Company as purchaser, dated as of
March 14, 1995, pursuant to which the Company has agreed
to purchase the fee interest of REC Resolution Co., (an
affiliate of REPL) in the Hawthorne, Hazel Dell and
Raleigh Hills stores.
11 Computation of Earnings per Common Share.
13 Portions of the Annual Report to Shareholders of the
Company for the year ended January 28, 1995 are
incorporated by reference herein.
21 List of Subsidiaries. Incorporated by reference to
Exhibit 21 to the Company's Annual Report on Form 10-K
for the year ended January 29, 1994.
23 Consent of Deloitte & Touche LLP.
24 Powers of Attorney.
27 Financial Data Schedule.
- --------------
* This exhibit constitutes a management contract or compensatory
plan or arrangement.
EXHIBIT 4-B
=================================================================
CREDIT AGREEMENT
dated as of June 30, 1994
among
FRED MEYER, INC.,
VARIOUS FINANCIAL INSTITUTIONS
and
CONTINENTAL BANK,
as Agent
=================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . 1
1.2 Computations . . . . . . . . . . . . . . . . 9
1.3 Cross-References; Section Captions . . . . . 9
SECTION 2 COMMITMENTS OF THE LENDERS; TYPES OF LOANS;
BORROWING AND CONVERSION PROCEDURES.. . . . . . . 9
2.1 Commitments. . . . . . . . . . . . . . . . . 10
2.2 Various Types of Loans . . . . . . . . . . . 10
2.3 Borrowing Procedures . . . . . . . . . . . . 10
2.4 Continuation and Conversion Procedures . . . 11
2.5 Warranty upon Conversion or Continuation . . 11
2.6 Conditions . . . . . . . . . . . . . . . . . 11
2.7 Pro Rata Treatment . . . . . . . . . . . . . 11
2.8 Commitments Several. . . . . . . . . . . . . 11
2.9 Extension of Termination Date. . . . . . . . 12
SECTION 3 NOTES EVIDENCING LOANS. . . . . . . . . . . . . . . 12
3.1 Notes. . . . . . . . . . . . . . . . . . . . 12
3.2 Recordkeeping. . . . . . . . . . . . . . . . 12
SECTION 4 INTEREST. . . . . . . . . . . . . . . . . . . . . . 13
4.1 Interest Rates . . . . . . . . . . . . . . . 13
4.2 Interest Payment Dates . . . . . . . . . . . 13
4.3 Setting and Notice of Eurodollar Rates . . . 13
4.4 Computation of Interest. . . . . . . . . . . 14
SECTION 5 FEES. . . . . . . . . . . . . . . . . . . . . . . . 14
5.1 Facility Fee . . . . . . . . . . . . . . . . 14
5.2 Agent's Fee. . . . . . . . . . . . . . . . . 14
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS . . . . . . . . . . . . . . . . . . . 14
6.1 Reduction or Termination of the Commitments . 14
6.2 Prepayments . . . . . . . . . . . . . . . . . 14
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES . . 15
7.1 Making of Payments. . . . . . . . . . . . . . 15
7.2 Application of Certain Payments . . . . . . . 15
7.3 Due Date Extension. . . . . . . . . . . . . . 15
7.4 Setoff. . . . . . . . . . . . . . . . . . . . 15
7.5 Proration of Payments . . . . . . . . . . . . 16
7.6 Taxes . . . . . . . . . . . . . . . . . . . . 16
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS. . . . . . . . . . . . . . . . . . 18
8.1 Increased Costs. . . . . . . . . . . . . . . 18
8.2 Basis for Determining Interest Rate
Inadequate or Unfair . . . . . . . . . . . 19
8.3 Changes in Law Rendering Eurodollar
Loans Unlawful . . . . . . . . . . . . . . 20
8.4 Funding Losses . . . . . . . . . . . . . . . 20
8.5 Right of Lenders to Fund through
Other Offices. . . . . . . . . . . . . . . 21
<PAGE>
PAGE
8.6 Discretion of Lenders as to Manner
of Funding . . . . . . . . . . . . . . . . 21
8.7 Mitigation of Circumstances; Replacement
of Affected Lender or Objecting Lender . . 21
8.8 Conclusiveness of Statements; Survival of
Provisions . . . . . . . . . . . . . . . . 22
SECTION 9 WARRANTIES. . . . . . . . . . . . . . . . . . . . . 22
9.1 Organization, etc. . . . . . . . . . . . . . 22
9.2 Authorization; No Conflict . . . . . . . . . 22
9.3 Validity and Binding Nature. . . . . . . . . 23
9.4 Financial Information. . . . . . . . . . . . 23
9.5 No Material Adverse Change . . . . . . . . . 23
9.6 Litigation and Contingent Liabilities. . . . 23
9.7 Ownership of Properties; Liens . . . . . . . 24
9.8 Subsidiaries . . . . . . . . . . . . . . . . 24
9.9 Pension and Welfare Plans. . . . . . . . . . 24
9.10 Regulated Industry . . . . . . . . . . . . . 24
9.11 Regulations G, U and X . . . . . . . . . . . 24
9.12 Taxes. . . . . . . . . . . . . . . . . . . . 24
9.13 Environmental and Safety and Health Matters. 24
9.14 Compliance with Law. . . . . . . . . . . . . 25
9.15 Information. . . . . . . . . . . . . . . . . 25
SECTION 10 COVENANTS. . . . . . . . . . . . . . . . . . . . . 25
10.1 Reports, Certificates and Other Information. 25
10.1.1 Audit Report . . . . . . . . . . . . 25
10.1.2 Interim Reports. . . . . . . . . . . 26
10.1.3 Compliance Certificate . . . . . . . 26
10.1.4 Reports to SEC . . . . . . . . . . . 26
10.1.5 Notice of Default, Litigation
and ERISA Matters. . . . . . . . . 26
10.1.6 Subsidiaries . . . . . . . . . . . . 27
10.1.7 Other Information. . . . . . . . . . 27
10.2 Books, Records and Inspections . . . . . . . 27
10.3 Insurance. . . . . . . . . . . . . . . . . . 27
10.4 Compliance with Law; Payment of Taxes and
Liabilities. . . . . . . . . . . . . . . . 27
10.5 Maintenance of Existence, etc. . . . . . . . 28
10.6 Financial Ratios and Restrictions. . . . . . 28
10.6.1 Minimum Consolidated Tangible
Net Worth. . . . . . . . . . . . . 28
10.6.2 Long-Term Liabilities to Net
Worth Ratio. . . . . . . . . . . . 28
10.6.3 Fixed Charge Coverage Ratio. . . . . 28
10.7 Limitation on Liens. . . . . . . . . . . . . 28
10.8 Debt . . . . . . . . . . . . . . . . . . . . 30
10.9 Guaranties, Loans and Advances . . . . . . . 30
10.10 Mergers, Consolidations, Sales . . . . . . . 31
10.11 Company's and Subsidiaries' Stock. . . . . . 32
10.12 Unconditional Purchase Obligations . . . . . 32
10.13 Employee Benefit Plans . . . . . . . . . . . 32
10.14 Purchase or Redemption of Company's
Securities; Dividend Restriction . . . . . 32
10.15 Use of Proceeds. . . . . . . . . . . . . . . 33
<PAGE>
PAGE
SECTION 11 CONDITIONS OF LENDING. . . . . . . . . . . . . . . 33
11.1 Initial Loan . . . . . . . . . . . . . . . . 33
11.1.1 Notes. . . . . . . . . . . . . . . . 34
11.1.2 Resolutions. . . . . . . . . . . . . 34
11.1.3 Consents, etc. . . . . . . . . . . . 34
11.1.4 Incumbency and Signature
Certificates . . . . . . . . . . . 34
11.1.5 Opinion of Counsel for the Company . 34
11.1.6 Other. . . . . . . . . . . . . . . . 34
11.2 All Loans. . . . . . . . . . . . . . . . . . 34
11.2.1 No Default . . . . . . . . . . . . . 34
11.2.2 Confirmatory Certificate . . . . . . 35
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT . . . . . . . . 35
12.1 Events of Default. . . . . . . . . . . . . . 35
12.1.1 Non-Payment of the Loans, etc. . . . 35
12.1.2 Non-Payment of Other Debt. . . . . . 35
12.1.3 Other Material Obligations . . . . . 35
12.1.4 Bankruptcy, Insolvency, etc. . . . . 35
12.1.5 Non-Compliance with Provisions of
This Agreement . . . . . . . . . . 36
12.1.6 Warranties . . . . . . . . . . . . . 36
12.1.7 Pension Plans. . . . . . . . . . . . 36
12.1.8 Withdrawal Liability Under
Multiemployer Plans. . . . . . . . 36
12.1.9 Judgments and Attachments. . . . . . 36
12.1.10 Change in Control. . . . . . . . . . 37
12.2 Effect of Event of Default . . . . . . . . . 37
SECTION 13 THE AGENT. . . . . . . . . . . . . . . . . . . . . 37
13.1 Authorization. . . . . . . . . . . . . . . . 37
13.2 Indemnification. . . . . . . . . . . . . . . 37
13.3 Exculpation. . . . . . . . . . . . . . . . . 38
13.4 Credit Investigation . . . . . . . . . . . . 38
13.5 Agent and Affiliates . . . . . . . . . . . . 38
13.6 Action on Instructions of the
Required Lenders . . . . . . . . . . . . . 38
13.7 Funding Reliance . . . . . . . . . . . . . . 39
13.8 Resignation. . . . . . . . . . . . . . . . . 39
SECTION 14 GENERAL. . . . . . . . . . . . . . . . . . . . . . 40
14.1 Waiver; Amendments . . . . . . . . . . . . . 40
14.2 Confirmations. . . . . . . . . . . . . . . . 41
14.3 Notices. . . . . . . . . . . . . . . . . . . 41
14.4 Subsidiary References. . . . . . . . . . . . 41
14.5 Regulation U . . . . . . . . . . . . . . . . 41
14.6 Costs, Expenses and Taxes. . . . . . . . . . 41
14.7 Indemnification by the Company . . . . . . . 42
14.8 Successors and Assigns . . . . . . . . . . . 42
14.9 Assignments; Participations. . . . . . . . . 43
14.9.1 Assignments. . . . . . . . . . . . . 43
14.9.2 Participations . . . . . . . . . . . 44
14.10 Governing Law. . . . . . . . . . . . . . . . 45
14.11 Counterparts . . . . . . . . . . . . . . . . 45
14.12 Termination of Existing Credit Agreement . . 45
14.13 Forum Selection and Consent to Jurisdiction. 45
14.14 OREGON LEGAL NOTICE. . . . . . . . . . . . . 45
<PAGE>
SCHEDULE I Commitments and Percentages
SCHEDULE II Schedule of Subsidiaries
EXHIBIT A Form of Note (Section 3.1)
EXHIBIT B Form of Extension Request (Section 2.9)
EXHIBIT C Form of Opinion of Counsel for the
Company and the Guarantors (Section 11.1.5)
EXHIBIT D Form of Assignment Agreement
(Section 14.9)
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of June 30, 1994 (as amended
or otherwise modified from time to time, this "Agreement"), is
entered into among FRED MEYER, INC., a Delaware corporation (the
"Company"), the undersigned financial institutions (collectively
the "Lenders" and individually each a "Lender") and CONTINENTAL
BANK (in its individual capacity, together with its successors,
"Continental"), as agent for the Lenders.
In consideration of the mutual agreements herein contained,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1 DEFINITIONS AND INTERPRETATION.
1.1 Definitions. When used herein the following terms
-----------
shall have the following meanings (such definitions to be
applicable to both the singular and plural forms of such terms):
Affected Lender means any Lender that has given notice to
---------------
the Company (which has not been rescinded) of (i) any obligation
by the Company to pay any amount pursuant to Section 7.6 or 8.1
or (ii) the occurrence of any circumstance of the nature
described in Section 8.2 or 8.3.
Affected Loan - see Section 8.3.
-------------
Agent means Continental in its capacity as agent for the
-----
Lenders hereunder and any successor thereto in such capacity.
Agreement - see the Preamble.
---------
Alternate Reference Rate means at any time the greater of
------------------------
(a) the Federal Funds Rate plus 0.25% and (b) the Reference Rate.
Assets Purchase Agreement means the Assets Purchase
-------------------------
Agreement dated as of September 25, 1981, among the Company, FMI
Acquisition Corporation and Fred Meyer Real Estate Properties,
Ltd., as it may be amended from time to time.
Assignee - see Section 14.9.1.
--------
Assignment Agreement - see Section 14.9.1.
--------------------
<PAGE>
Business Day means any day (other than a Saturday or Sunday)
------------
on which banks are open for commercial banking business in
Chicago, Illinois and Portland, Oregon and, in the case of a
Business Day which relates to a Eurodollar Loan, on which
dealings are carried on in the interbank eurodollar market.
Capital Lease means any lease of property (whether real,
-------------
personal or mixed) which would, in accordance with GAAP, be
required to be classified and accounted for on the books of the
lessee as a capital lease.
Change in Control means the acquisition by any Person, or
-----------------
two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the SEC under the Securities
Exchange Act of 1934, as amended) of outstanding shares of voting
stock of the Company representing in excess of 50% of voting
control of Company, which Person or Persons have beneficial
ownership of less than 5% of the outstanding shares of voting
stock of the Company as of the date of this Agreement.
Commitment as to any Lender means the commitment of such
----------
Lender to make Loans hereunder, as adjusted from time to time
pursuant to Section 6.1 or Section 14.9. The amount of the
initial Commitment of each Lender is set forth on Schedule I.
Company - see the Preamble.
-------
Consolidated Long-Term Liabilities means, as of the date of
----------------------------------
any determination thereof, consolidated Debt for Borrowed Money
of the Company and its Subsidiaries, secured or unsecured, (i)
payable more than one year from such date, plus (ii) the Loans
and Capital Leases to the extent maturing in a year or less, plus
(iii) all other Debt for Borrowed Money not classified as current
liabilities in the Company's financial reporting.
Consolidated Net Tangible Net Worth means Consolidated
-----------------------------------
Tangible Net Worth less (unless otherwise taken into account in
determining consolidated net worth) the amounts of payments
(whether in cash or issuance of Debt) made to employees in
redemption of stock under Management Stock Agreements.
Consolidated Tangible Net Worth means the consolidated net
-------------------------------
worth of the Company and its Subsidiaries less (unless otherwise
deducted in determining consolidated net worth) the aggregate
amount of any intangible assets of the Company and its
Subsidiaries, including, without limitation, deferred financing
and organizational costs (net of amortization), goodwill,
franchises, licenses, patents, trademarks, trade names,
copyrights, service marks and brand names, but not subtracting
from consolidated net worth of the Company and its Subsidiaries
the unamortized amount of such intangible assets arising out of
<PAGE>
the Assets Purchase Agreement and the purchase of Grand Central,
Inc. in 1984, as shown on Company's audited consolidated
financial statement as at January 29, 1994 referred to in
subsection 4.3 (such amount with respect to future calculations
thereof to be determined in the same manner as the unamortized
amount ($5,523,000) shown on such financial statement dated
January 29, 1994).
Consolidated Total Assets means the total consolidated
-------------------------
assets of the Company and its Subsidiaries as shown on the most
recent consolidated balance sheet of the Company and its
Subsidiaries referred to in Section 9.4 or delivered to the
Lenders pursuant to Section 10.1.
Continental - see the Preamble.
-----------
Debt of any Person means, without duplication, (a) all
----
indebtedness of such Person for borrowed money, whether or not
evidenced by bonds, debentures, notes or similar instruments, (b)
all obligations of such Person as lessee under Capital Leases
which have been recorded as liabilities on a balance sheet of
such Person, (c) all obligations of such Person to pay the
deferred purchase price of property or services (other than
current accounts payable in the ordinary course of business), (d)
all indebtedness secured by a Lien on the property of such
Person, whether or not such indebtedness shall have been assumed
by such Person (it being understood that if such Person has not
assumed or otherwise become personally liable for any such
indebtedness, the amount of the Debt of such Person in connection
therewith shall be limited to the lesser of the face amount of
such indebtedness or the fair market value of all property of
such Person securing such indebtedness), (e) all obligations,
contingent or otherwise, with respect to the face amount of all
letters of credit (whether or not drawn) and banker's acceptances
issued for the account of such Person, (f) all obligations of
such Person in respect of Hedging Arrangements, (g) all
Suretyship Liabilities of such Person and (h) all Debt (as
defined above) of any partnership in which such Person is a
general partner. The amount of the Debt of any Person in respect
of Hedging Arrangements shall be deemed to be the unrealized net
loss position of such Person thereunder (determined for each
counterparty individually, but netted for all Hedging
Arrangements maintained with such counterparty).
Debt for Borrowed Money of any Person means all Debt of such
-----------------------
Person described in (without duplication) clauses (a), (b), (c),
(d) and, to the extent constituting a Suretyship Liability in
respect of Debt for Borrowed Money of another Person, (g) of the
definition of Debt.
Dollar and the sign "$" mean lawful money of the United
------
States of America.
<PAGE>
Effective Date - see Section 11.1.
--------------
Environmental Laws means the Resource Conservation and
------------------
Recovery Act of 1987, the Comprehensive Environmental Response,
Compensation and Liability Act, any so-called "Superfund" or
"Superlien" law, the Toxic Substances Control Act, and any other
federal, state or local statute, law, ordinance, code, rule,
regulation order or decree regulating or relating to, or imposing
liability or standards of conduct concerning, any hazardous
materials or other hazardous or toxic substance, as now or at any
time hereafter in effect.
ERISA means the Employee Retirement Income Security Act of
-----
1974, as amended, and any successor statute of similar import,
together with the regulations thereunder, in each case as in
effect from time to time. References to sections of ERISA also
refer to any successor sections.
ERISA Affiliate means any corporation, trade or business
---------------
that is, along with the Company, a member of a controlled group
of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Internal Revenue Code of 1986, as
amended, or section 4001 of ERISA.
Eurocurrency Reserve Percentage means, with respect to any
-------------------------------
Eurodollar Loan for any Interest Period, a percentage (expressed
as a decimal) equal to the daily average during such Interest
Period of the percentage in effect on each day of such Interest
Period, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor), for determining the aggregate
maximum reserve requirements applicable to "Eurocurrency
Liabilities" pursuant to Regulation D or any other then
applicable regulation of such Board of Governors which prescribes
reserve requirements applicable to "Eurocurrency Liabilities" as
presently defined in Regulation D.
Eurodollar Loan means any Loan which bears interest at a
---------------
rate determined by reference to the Eurodollar Rate (Reserve
Adjusted).
Eurodollar Office means with respect to any Lender the
-----------------
office or offices of such Lender which shall be making or
maintaining the Eurodollar Loans of such Lender hereunder or such
other office or offices through which such Lender determines its
Eurodollar Rate. A Eurodollar Office of any Lender may be, at
the option of such Lender, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan
---------------
for any Interest Period, the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the rates per annum
at which Dollar deposits in immediately available funds are
<PAGE>
offered to the Eurodollar Office of each Reference Lender two
Business Days prior to the beginning of such Interest Period by
major banks in the interbank eurodollar market as at or about
10:00 a.m., Chicago time, for delivery on the first day of such
Interest Period, for the number of days comprised therein and in
an amount equal or comparable to the amount of the Eurodollar
Loan of such Reference Lender for such Interest Period.
Eurodollar Rate (Reserve Adjusted) means, with respect to
----------------------------------
any Eurodollar Loan for any Interest Period, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
---------------
(Reserve Adjusted) 1-Eurocurrency
Reserve Percentage
Event of Default means any of the events described in
----------------
Section 12.1.
Existing Credit Agreement - see Section 11.1.
-------------------------
Extension Request - see Section 2.9.
-----------------
Federal Funds Rate means, for any day, the rate set forth in
------------------
the daily statistical release designated as the Composite 3:30
p.m. Quotations for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor publication, the "Composite 3:30
p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate". If such rate is not published in the Composite
3:30 p.m. Quotations for any Business Day, the rate for such day
will be the arithmetic mean of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m., New York
City time, on such day by each of three leading brokers of
Federal funds transactions in New York City, selected by the
Agent. The rate for any day which is not a Business Day shall be
the rate for the immediately preceding Business Day.
Fiscal Quarter means any fiscal quarter of a Fiscal Year.
--------------
Fiscal Year means the fiscal year of the Company and its
-----------
Subsidiaries, which period shall be the period of approximately
12 months ending on the Saturday closest to January 31 in each
year.
Fixed Charge Coverage Ratio means, as of the last day of any
---------------------------
Fiscal Quarter, the ratio of (a) the sum of the Company's
consolidated net earnings before interest expense, taxes,
depreciation and amortization for the period of four Fiscal
<PAGE>
Quarters ending on such day plus the Company's consolidated
rental expense on operating leases for such period to (b) the sum
of (i) the Company's consolidated interest expense for such
period plus (ii) the Company's consolidated rental expense on
operating leases for such period plus (iii) the amount classified
as the current portion of all long-term debt (excluding, if
applicable, the Loans) and lease obligations of the Company and
its Subsidiaries on a consolidated balance sheet prepared on such
day.
Floating Rate Loan means any Loan which bears interest at or
------------------
by reference to the Alternate Reference Rate.
GAAP means those generally accepted accounting principles as
----
in effect from time to time.
Group - see Section 2.2.
-----
Hedging Arrangement means any interest rate swap, cap or
-------------------
collar agreement, currency swap agreement, commodity swap
agreement or other arrangement designed to hedge interest rate
and/or currency risk or changes in commodity prices.
Interest Period means, with respect to any Eurodollar Loan,
---------------
the period commencing on and including the date such Loan is made
or is converted from a Floating Rate Loan, or on the last day of
the immediately preceding Interest Period for such Loan, and
ending on but excluding the day which is one, two, three or six
months thereafter, as the Company shall specify in the related
notice of borrowing, conversion or continuation pursuant to
Section 2.3 or 2.4; provided, however, that
(a) if an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall
end on the immediately succeeding Business Day (unless
such succeeding Business Day would be the first
Business Day of a calendar month, in which case such
Interest Period shall end on the immediately preceding
Business Day);
(b) if there exists no day in the appropriate subsequent
calendar month numerically corresponding to the first
day of such Interest Period, such Interest Period shall
end on the last Business Day of such month; and
(c) the Company may not select any Interest Period which
extends beyond the scheduled Termination Date.
Lender - see the Preamble.
------
Lien means, when used with respect to any Person, any
----
interest of any other Person in any real or personal property,
<PAGE>
asset or other right owned or being purchased or acquired by such
Person which secures payment or performance of any obligation and
shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a
matter of law, by judicial process or otherwise.
Loan - see Section 2.1.
----
Management Stock Agreement means any agreement between the
--------------------------
Company and key employees which provides for the sale of stock to
employees with repurchase rights of, and obligations in, the
Company.
Margin Stock means any "margin stock" as defined in
------------
Regulation U of the Board of Governors of the Federal Reserve
System.
Material Adverse Effect means a material adverse effect on
-----------------------
the ability of the Company to timely and fully perform any of its
payment or other material obligations under this Agreement or any
Note.
Material Subsidiary means any Subsidiary which either (a)
-------------------
has assets which constitute 5% or more of the consolidated assets
of the Company and its Subsidiaries or (b) has revenues during
its most recently-ended fiscal year which constitute more than 5%
of the consolidated revenues of the Company and its Subsidiaries
during the most recently-ended Fiscal Year.
Multiemployer Plan means a "multiemployer plan" as defined
------------------
in section 4001(a)(3) of ERISA which is maintained for employees
of the Company or any ERISA Affiliate of the Company or more.
Note - see Section 3.1.
----
Objecting Lender - see Section 2.9.
----------------
Occupational Safety and Health Law means the Occupational
----------------------------------
Safety and Health Act of 1970 and any other federal, state or
local statute, law, ordinance, code, rule, regulation, order or
decree regulating or relating to, or imposing liability or
standards of conduct concerning, employee health and/or safety,
as now or at any time hereafter in effect.
Participant - see Section 14.9.2.
-----------
<PAGE>
PBGC means the Pension Benefit Guaranty Corporation and any
----
entity succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined
------------
in section 3(2) of ERISA, which is subject to title IV of ERISA
(other than a Multiemployer Plan), and to which the Company or
any ERISA Affiliate may have any liability, including any
liability by reason of having been a substantial employer within
the meaning of section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
Percentage means as to any Lender the percentage which the
----------
amount of such Lender's Commitment is of the aggregate amount of
Commitments (or, if the Commitments have terminated, which the
principal amount of such Lender's outstanding Loans is of the
principal amount of all outstanding Loans). The Percentages of
the Lenders as of the Effective Date are set forth on Schedule I.
Person means any natural person, corporation, partnership,
------
trust, association, governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary or other
capacity.
Reference Lender means each of NationsBank, The Bank of New
----------------
York, The Bank of Nova Scotia and Continental.
Reference Rate means at any time the rate per annum then
--------------
most recently announced by Continental as its reference rate at
Chicago, Illinois.
Release means a "release", as such term is defined in
-------
CERCLA.
Required Lenders means Lenders having an aggregate
----------------
Percentage of 66-2/3% or more.
SEC means the Securities and Exchange Commission.
---
Subsidiary means, with respect to any Person, any
----------
corporation of which such Person and/or its other Subsidiaries
own, directly or indirectly, such number of outstanding shares as
have more than 50% of the ordinary voting power for the election
of directors. Unless the context otherwise requires, each
reference to Subsidiaries herein shall be a reference to
Subsidiaries of the Company.
<PAGE>
Suretyship Liability means any agreement, undertaking or
--------------------
other contractual arrangement by which any Person guarantees,
endorses or otherwise becomes or is contingently liable upon (by
direct or indirect agreement, contingent or otherwise, to provide
funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any
indebtedness, obligation or other liability (including accounts
payable) of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of
any other Person. The amount of any Person's obligation under
any Suretyship Liability shall (subject to any limitation set
forth therein) be deemed to be the principal amount of the
indebtedness, obligation or other liability guaranteed thereby.
Termination Date means June 30, 1999, as such date is
----------------
extended from time to time pursuant to Section 2.9 or such other
date on which the Commitments shall terminate pursuant to Section
6.1 or 12.2.
Type of Loan or Borrowing - see Section 2.2. The types of
-------------------------
Loans or borrowings under this Agreement are as follows:
Floating Rate Loans or borrowings and Eurodollar Loans or
borrowings.
Unmatured Event of Default means any event which if it
--------------------------
continues uncured will, with lapse of time or notice or lapse of
time and notice, constitute an Event of Default.
Welfare Plan means a "welfare plan", as such term is defined
------------
in section 3(1) of ERISA.
1.2 Computations; Changes in GAAP. Where the character or
-----------------------------
amount of any asset or liability or any item of income or expense
is required to be determined, or any consolidation or other
accounting computation is required to be made, for purposes of
this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this
Agreement, be made in accordance with GAAP. If any change in
accounting principles from those used in the preparation of the
audited financial statements referred to in Section 9.4 hereafter
occasioned by the promulgation of any rule, regulation,
pronouncement or opinion by or required by the Financial
Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with
similar functions) results in a change in the method of
calculation of financial covenants, standards or terms found in
Section 1 or 10, the parties hereto agree to enter into
negotiations in order to amend such provisions so as to equitably
reflect such changes with the desired result that the criteria
for evaluating the Company's financial condition shall be the
same after such change as if such change had not been made.
<PAGE>
1.3 Cross-References; Section Captions. A Section, an
----------------------------------
Exhibit or a Schedule is, unless otherwise stated, a reference to
a section hereof or an exhibit or schedule hereto, as the case
may be. Section captions are for convenience only and shall not
affect the interpretation of this Agreement.
SECTION 2 COMMITMENTS OF THE LENDERS; TYPES OF LOANS;
BORROWING AND CONVERSION PROCEDURES.
2.1 Commitments. Subject to the terms and conditions of
-----------
this Agreement, each of the Lenders, severally and for itself
alone, agrees to make loans to the Company on a revolving basis
(collectively the "Loans" and individually each a "Loan") from
time to time before the Termination Date in such Lender's
Percentage of such aggregate amounts as the Company may from time
to time request from all Lenders; provided, however, that (i) the
aggregate principal amount of all Loans which any Lender shall be
committed to have outstanding hereunder shall not at any time
exceed the amount of such Lender's Commitment; and (ii) the
aggregate principal amount of all Loans which all Lenders shall
be committed to have outstanding hereunder shall not at any time
exceed $400,000,000 (as such amount is reduced from time to time
pursuant to Section 6.1).
2.2 Various Types of Loans. Each Loan shall be either a
----------------------
Floating Rate Loan or a Eurodollar Loan (each a "type" of Loan),
as the Company shall specify in the related notice of borrowing
or conversion pursuant to Section 2.3 or 2.4. Eurodollar Loans
having the same Interest Period are sometimes called a "Group" or
collectively "Groups". Floating Rate Loans and Eurodollar Loans
may be outstanding at the same time, provided that (i) not more
than eight different Groups of Loans shall be outstanding at any
one time and (ii) the aggregate principal amount of each Group of
Loans shall at all times (including after giving effect to any
conversion or continuation of any Loans) be at least $10,000,000
and an integral multiple of $1,000,000.
2.3 Borrowing Procedures. The Company shall give written
--------------------
or telephonic notice to the Agent of each proposed borrowing not
later than (a) in the case of a Floating Rate borrowing, 11:00
a.m., Chicago time, on the proposed date of such borrowing, and
(b) in the case of a Eurodollar borrowing, 11:00 a.m., Chicago
time, at least three Business Days prior to the proposed date of
such borrowing. Each such notice shall be effective upon receipt
by the Agent and shall specify the date, amount and type of
borrowing and, in the case of a Eurodollar borrowing, the initial
Interest Period therefor. Promptly upon receipt of such notice,
the Agent shall advise each Lender thereof. Not later than
1:00 p.m., Chicago time, on the date of a proposed borrowing,
each Lender shall provide the Agent at the principal office of
the Agent in Chicago with immediately available funds covering
such Lender's Percentage of such borrowing and, subject to the
satisfaction of the conditions precedent set forth in Section 11
with respect to such borrowing, the Agent shall pay over such
funds to the Company on the requested borrowing date. Each
<PAGE>
borrowing shall be on a Business Day. Each borrowing shall be in
an aggregate amount of at least $1,000,000, in the case of
Floating Rate Loans, or $10,000,000, in the case of Eurodollar
Loans, and shall be in an integral multiple of $1,000,000.
2.4 Continuation and Conversion Procedures. Subject to the
--------------------------------------
provisions of the last sentence of Section 2.2, the Company may
convert all or any part of any outstanding Loan into a Loan of a
different type, or continue all or any part of any outstanding
Eurodollar Loan for a succeeding Interest Period beginning on the
last day of the current Interest Period for such Loan, by giving
written or telephonic notice to the Agent not later than (a) in
the case of conversion into a Floating Rate Loan, 11:00 a.m.,
Chicago time, on the proposed date of such conversion, and (b) in
the case of a conversion into or continuation of a Eurodollar
Loan, 11:00 a.m., Chicago time, at least three Business Days
prior to the proposed date of such conversion or continuation.
Each such notice shall be effective upon receipt by the Agent and
shall specify the date and amount of such conversion or
continuation, the Loan to be so converted or continued and, in
the case of a conversion into or continuation of a Eurodollar
Loan, the initial or subsequent Interest Period therefor, as
applicable. Promptly upon receipt of such notice, the Agent
shall advise each Lender thereof. Subject to Section 2.6, such
Loan shall be so converted or continued on the requested date of
conversion or continuation. Each conversion and continuation
shall be on a Business Day. If the Company fails to give timely
notice of continuation of a Eurodollar Loan, such Loan shall
automatically convert to a Floating Rate Loan on the last day of
the Interest Period therefor.
2.5 Warranty upon Conversion or Continuation. Each notice
----------------------------------------
of conversion or continuation pursuant to Section 2.4 shall
automatically constitute a warranty by the Company to the Agent
and each Lender to the effect that, on the date of such requested
conversion or continuation, no Event of Default or Unmatured
Event of Default shall exist.
2.6 Conditions. Notwithstanding any other provision of
----------
this Agreement, no Lender shall be obligated to make any Loan, or
to convert into or permit the continuation at the end of the
applicable Interest Period of any Eurodollar Loan, if an Event of
Default or Unmatured Event of Default exists.
2.7 Pro Rata Treatment. All borrowings, conversions and
------------------
repayments shall be effected so that after giving effect thereto
each Lender will have a pro rata share (according to its
Percentage) of all types and Groups of Loans.
2.8 Commitments Several. The failure of any Lender to make
-------------------
a requested Loan on any date shall not relieve any other Lender
of its obligation (if any) to make a Loan on such date, but no
Lender shall be responsible for the failure of any other Lender
to make any Loan to be made by such other Lender.
<PAGE>
2.9 Extension of Termination Date. On or before May 1 of
-----------------------------
each year, commencing on May 1, 1995, the Company may, at its
option, deliver to the Agent (which shall promptly notify each
Lender) a signed copy of an extension request (an "Extension
Request") in the form of Exhibit B, requesting an extension of
the Termination Date for a period of one year. On or before June
1 of each year that the Company has delivered an Extension
Request, each Lender shall have the right, in its sole and
absolute discretion, to deliver a written notice to the Agent
consenting to or rejecting the requested extension. If a Lender
has not given such notice to the Agent by June 1 of such year,
such Lender shall be deemed not to have consented to such
extension. If all Lenders consent to an Extension Request, the
Termination Date shall be extended for an additional year
effective on June 1 of the applicable year. If any Lender (an
"Objecting Lender") rejects, or is deemed not to have consented
to, an Extension Request by June 1 of the applicable year, the
Termination Date shall not be so extended; provided that if
Lenders with an aggregate Percentage of 20% or less are Objecting
Lenders, then the Termination Date shall be so extended if, on or
before June 30 of the applicable year, the Company (a) replaces
each Objecting Lender pursuant to Section 8.7 with Lenders (which
may be existing or new Lenders) which consent to the applicable
Extension Request or (b) to the extent all Objecting Lenders have
not been so replaced, by notice to the Agent and each Objecting
Lender, terminates the Commitments of all Objecting Lenders (and
concurrently pays to the Agent for the account of each Objecting
Lender all amounts owed to such Objecting Lender hereunder) and
reduces the aggregate amount of all of the Commitments by a
corresponding amount.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Lender shall be evidenced by
-----
a promissory note (as amended, supplemented, replaced or
otherwise modified from time to time, individually each a "Note"
and collectively for all Lenders the "Notes") substantially in
the form set forth in Exhibit A, with appropriate insertions,
dated the Effective Date (or such other date as shall be
satisfactory to the Agent), payable to the order of such Lender
in the principal amount of the Commitment of such Lender (or, if
less, in the aggregate unpaid principal amount of such Lender's
Loans) on the Termination Date.
3.2 Recordkeeping. Each Lender shall record in its
-------------
records, or at its option on the schedule attached to its Note,
the date and amount of each Loan made by such Lender, each
repayment or conversion thereof and, in the case of each
Eurodollar Loan, the dates on which each Interest Period for
such Loan shall begin and end. The aggregate unpaid principal
amount so recorded shall be rebuttable presumptive evidence of
the principal amount owing and unpaid on such Note. The failure
to so record any such amount or any error in so recording any
such amount shall not, however, limit or otherwise affect the
obligations of the Company hereunder or under any Note to repay
<PAGE>
the principal amount of the Loans evidenced by such Note together
with all interest accruing thereon.
SECTION 4 INTEREST.
4.1 Interest Rates. The Company promises to pay interest
--------------
on the unpaid principal amount of each Loan for the period
commencing on and including the date of such Loan to but
excluding the date such Loan is paid in full, as follows:
(a) at all times while such Loan is a Floating Rate
Loan, at a rate per annum equal to the Alternate Reference
Rate from time to time in effect; and
(b) at all times while such Loan is a Eurodollar Loan,
at a rate per annum equal to the Eurodollar Rate (Reserve
Adjusted) applicable to each Interest Period for such Loan
plus 0.275%;
provided, however, that if any principal of any Loan is not paid
when due (by acceleration or otherwise), such principal shall
thereafter bear interest at a rate per annum equal to the sum of
the Alternate Reference Rate from time to time in effect plus 1%.
4.2 Interest Payment Dates. Accrued interest on each
----------------------
Floating Rate Loan shall be payable on the last day of each
January, April, July and October and at maturity. Accrued
interest on each Eurodollar Loan shall be payable on the last day
of each Interest Period relating to such Loan (and, in the case
of any Eurodollar Loan with an Interest Period exceeding three
months, on each three-month anniversary of the first day of such
Interest Period) and at maturity. After maturity, accrued
interest on all Loans shall be payable on demand.
4.3 Setting and Notice of Eurodollar Rates. The applicable
--------------------------------------
Eurodollar Rate for each Interest Period shall be determined by
the Agent, and notice thereof shall be given by the Agent
promptly to the Company and each Lender. Each determination of
the applicable Eurodollar Rate by the Agent shall be conclusive
and binding upon the parties hereto, in the absence of
demonstrable error. The Agent shall, upon written request of the
Company or any Lender, deliver to the Company or such Lender a
statement showing the computations used by the Agent in
determining any applicable Eurodollar Rate hereunder.
Each Reference Lender agrees to use reasonable efforts to
timely notify the Agent of its applicable rate for each Interest
Period (as contemplated in the definition of Eurodollar Rate).
If, as to any Interest Period, any Reference Lender is unable or
fails to notify the Agent of its applicable rate by 11:00 a.m.,
Chicago time, two Business Days before such Interest Period, then
the Eurodollar Rate shall be determined on the basis of the rate
of the other Reference Lenders.
<PAGE>
4.4 Computation of Interest. Interest shall be computed
-----------------------
for the actual number of days elapsed on the basis of a year of
360 days (or, in the case of Floating Rate Loans bearing interest
at the Reference Rate, 365 or 366 days, as appropriate). The
applicable interest rate for each Floating Rate Loan shall change
simultaneously with each change in the Reference Rate.
SECTION 5 FEES.
5.1 Facility Fee. The Company agrees to pay to the Agent
------------
for the account of each Lender a facility fee for the period from
and including the Effective Date to but excluding the Termination
Date in an amount equal to 0.15% per annum of the daily average
of the amount of such Lender's Commitment (whether used or
unused). Such facility fee shall be payable in arrears on the
last day of each calendar quarter and on the Termination Date for
any period then ending for which such facility fee shall not have
been theretofore paid. The facility fee shall be computed for
the actual number of days elapsed on the basis of a year of 360
days.
5.2 Agent's Fee. The Company agrees to pay to the Agent
-----------
for its own account such fees as are agreed to from time to time
by the Company and the Agent.
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS.
6.1 Reduction or Termination of the Commitments. The
-------------------------------------------
Company may from time to time on at least five Business Days'
prior written notice received by the Agent (which shall promptly
advise each Lender thereof) permanently reduce the amount of the
Commitments to an amount not less than the aggregate unpaid
principal amount of the Loans. Any such reduction shall be in an
amount that is an integral multiple of $10,000,000 and shall be
pro rata among the Lenders according to their respective
Percentages. The Company may at any time on like notice
terminate the Commitments upon payment in full of all Loans and
all other obligations of the Company hereunder.
6.2 Prepayments. The Company may from time to time prepay
-----------
the Loans in whole or in part, provided that (a) the Company
shall give the Agent (which shall promptly advise each Lender)
written notice thereof not later than 11:00 a.m., Chicago time,
on the date of such prepayment, in the case of Floating Rate
Loans, and not less than two Business Days prior to the date of
such prepayment, in the case of Eurodollar Loans, in each case
specifying the Loans to be prepaid and the date (which shall be a
Business Day) and amount of prepayment, (b) each partial
prepayment of Loans shall be in an aggregate principal amount of
at least $10,000,000 and an integral multiple of $1,000,000 and
(c) any prepayment of Eurodollar Loans on a day other than the
last day of an Interest Period therefor shall be subject to
Section 8.4. After giving effect to any prepayment of Eurodollar
<PAGE>
Loans, each Group of Eurodollar Loans shall be at least
$10,000,000 and an integral multiple of $1,000,000.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or
------------------
interest on the Notes, and of all fees, shall be made by the
Company to the Agent in immediately available funds at its office
in Chicago not later than noon, Chicago time, on the date due;
and funds received after that hour shall be deemed to have been
received by the Agent on the immediately following Business Day.
The Agent shall promptly remit to each Lender its share of all
such payments received in collected funds by the Agent for the
account of such Lender.
All payments under Sections 8.1 and 8.4 shall be made by the
Company directly to the Lender entitled thereto.
7.2 Application of Certain Payments. Each payment of
-------------------------------
principal shall be applied to such Loans as the Company shall
direct by notice to be received by the Agent on or before the
date of such payment or, in the absence of such notice, as the
Agent shall determine in its discretion. Concurrently with each
remittance to any Lender of its share of any such payment, the
Agent shall advise such Lender as to the application of such
payment.
7.3 Due Date Extension. If any payment of principal or
------------------
interest with respect to any of the Notes, or of any fee, falls
due on a day which is not a Business Day, then such due date
shall be extended to the immediately following Business Day
(unless, in the case of a Eurodollar Loan, such immediately
following Business Day is the first Business Day of a calendar
month, in which case such due date shall be the immediately
preceding Business Day), and, in the case of principal,
additional interest shall accrue and be payable for the period of
any such extension.
7.4 Setoff. The Company agrees that the Agent and each
------
Lender have all rights of set-off and bankers' lien provided by
applicable law, and in addition thereto, the Company agrees that
at any time any Unmatured Event of Default under Section 12.1.4
or any Event of Default exists, the Agent and each Lender may
apply to the payment of any obligations of the Company hereunder,
whether or not then due), any and all balances, credits,
deposits, accounts or moneys of the Company (excluding amounts
held in trust accounts for the benefit of Persons other than the
Company) then or thereafter with the Agent or such Lender.
7.5 Proration of Payments. If any Lender shall obtain by
---------------------
payment or other recovery (whether voluntary, involuntary, by
application of offset or otherwise) on account of principal of or
interest on any Note in excess of its pro rata share of payments
and other recoveries obtained by all Lenders on account of
<PAGE>
principal of and interest on all Notes (other than any non-pro
rata interest payment resulting from a Loan being an Affected
Loan or as a result of replacement of a Lender pursuant to
Section 8.7), such Lender shall purchase from the other Lenders
such participation in the Notes held by them as shall be
necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; provided,
however, that if all or any portion of the excess payment or
other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery.
7.6 Taxes.
-----
(a) All payments by the Company of principal, interest,
fees, indemnities and other amounts payable hereunder and under
the Notes shall be made to the recipient thereof without setoff
or counterclaim and free and clear of, and without withholding or
deduction for or on account of, any present or future Taxes
(other than Excluded Taxes) now or hereafter imposed on such
recipient or its income, property, assets or franchises (such
recipient's "Recipient Taxes"), except to the extent that such
withholding or deduction (i) is required by applicable law, (ii)
results from the breach by such recipient of its Exemption
Agreement (as defined below) or (iii) would not be required if
such recipient's Exemption Representation (as defined below) were
true. If any such withholding or deduction is required by
applicable law, the Company will:
(A) pay to the relevant authorities the full amount so
required to be withheld or deducted;
(B) promptly forward to the Agent an official receipt
or other documentation satisfactory to the Agent evidencing
such payment to such authorities; and
(C) except to the extent that such withholding or
deduction results from the breach, by the recipient of a
payment, of its Exemption Agreement or would not be required
if such recipient's Exemption Representation were true, pay
to the Agent for the account of the relevant recipient such
additional amount as is necessary to ensure that the net
amount actually received by such recipient will equal the
full amount such recipient would have received had no such
withholding or deduction been required.
For the purposes of this Section 7.6, (a) "Taxes" means, with
respect to any Person, taxes, assessments or other governmental
charges or levies imposed upon such Person, such Person's income
or any of such Person's properties, franchises or assets; and (b)
"Excluded Taxes" means, in the case of payments made to any
Lender or the Agent, all of the following: taxes imposed upon
the overall gross or net income or receipts of such Lender or the
Agent, franchise taxes imposed upon such Lender or the Agent with
respect to its gross or net income or receipts by the
jurisdiction under the laws of which such Lender or the Agent, as
the case may be, is organized or any political subdivision
thereof, and franchise taxes imposed upon such Lender or the
<PAGE>
Agent with respect to its gross or net income or receipts by the
jurisdiction in which such Lender's or the Agent's applicable
lending office is located or any political subdivision thereof.
(b) In consideration of the Company's agreements in clause
(a) of this Section 7.6, each Lender which is not organized under
the laws of the United States or a State thereof hereby agrees
(such Lender's "Exemption Agreement"), to the extent permitted by
applicable law (including any applicable double taxation treaty
of the jurisdiction of its incorporation and the jurisdiction in
which its Eurodollar Office is located), to execute and deliver
to the Company (i) on or before the first date on which any
payment is to be made to such Lender hereunder, a United States
Internal Revenue Service Form 1001 or 4224 (or successor form)
and, if reasonably requested by the Company, Internal Revenue
Service Form W-8 or W-9 (or successor form), as appropriate, in
each case properly completed and claiming a complete exemption,
from withholding or deduction for or on account of Recipient
Taxes of such Lender, and (ii) a new Form 1001 or 4224 (or
successor form) and, if reasonably requested by the Company,
Internal Revenue Service Form W-8 or W-9 (or successor form), as
appropriate, upon the expiration or obsolescence of any
previously delivered Form.
(c) Each Lender hereby represents and warrants (such
Lender's "Exemption Representation") to the Company that on the
Effective Date (or, if later, the date such Lender becomes a
party to this Agreement) it is entitled to receive payments of
principal of, and interest on, Loans made by such Lender without
withholding or deduction for or on account of such Lender's
Recipient Taxes imposed by the United States of America or any
political subdivision thereof.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the
---------------
adoption of any applicable law, rule or regulation, or any change
in any applicable law, rule or regulation (including, without
limitation, Regulation D of the Board of Governors of the Federal
Reserve System), or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any
Eurodollar Office of such Lender) with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency
(A) shall subject any Lender (or any Eurodollar Office
of such Lender) to any tax, duty or other charge with
respect to its Eurodollar Loans, its Note or its obligation
to make Eurodollar Loans, or shall change the basis of
taxation of payments to any Lender of the principal of or
interest on its Eurodollar Loans or any other amounts due
under this Agreement in respect of its Eurodollar Loans or
its obligation to make Eurodollar Loans (except for taxes
imposed on or measured by the overall gross or net income or
receipts of such Lender or its Eurodollar Office imposed by
<PAGE>
the jurisdiction, or any political subdivision thereof or
taxing authority therein, in which such Lender's principal
executive office or Eurodollar Office is located or in which
such Lender is incorporated); or
(B) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed
by the Board of Governors of the Federal Reserve System, but
excluding any reserve included in the determination of
interest rates pursuant to Section 4), special deposit or
similar requirement against assets of, deposits with or for
the account of, or credit extended by any Lender (or any
Eurodollar Office of such Lender); or
(C) shall impose on any Lender (or its Eurodollar
Office) any other condition affecting its Eurodollar Loans,
its Note or its obligation to make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to
(or in the case of Regulation D referred to above, to impose a
cost on) such Lender (or any Eurodollar Office of such Lender) of
making or maintaining any Eurodollar Loan, or to reduce the
amount of any sum received or receivable by such Lender (or its
Eurodollar Office) under this Agreement or under its Note with
respect thereto, then within 15 days after demand by such Lender
(which demand shall be accompanied by a statement setting forth
the basis of such demand, a copy of which shall be furnished to
the Agent), the Company shall pay directly to such Lender such
additional amount or amounts as will compensate such Lender for
such increased cost or such reduction.
(b) If, after the Effective Date, any Lender shall
reasonably determine that the adoption or phase-in of any
applicable law, rule or regulation regarding capital adequacy, or
any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance
by any Lender (or its Eurodollar Office) or any Person
controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's
or such controlling Person's capital as a consequence of such
Lender's obligations hereunder (including, without limitation,
such Lender's Commitment) to a level below that which such Lender
or such controlling Person could have achieved but for such
adoption, change or compliance (taking into consideration such
Lender's or such controlling Person's policies with respect to
capital adequacy) by an amount deemed by such Lender or such
controlling Person to be material, then from time to time, within
15 days after demand by such Lender (which demand shall be
accompanied by a statement setting forth the basis of such
demand, a copy of which shall be furnished to the Agent), the
Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling Person
for such reduction.
<PAGE>
8.2 Basis for Determining Interest Rate Inadequate or
-------------------------------------------------
Unfair. If with respect to any Interest Period:
- ------
(a) the Agent is advised by two or more Reference Lenders
that deposits in Dollars (in the applicable amounts) are not
being offered to such Reference Lenders in the relevant market
for such Interest Period, or the Agent otherwise reasonably
determines (which determination shall be binding and conclusive
on the Company) that by reason of circumstances affecting the
interbank eurodollar market adequate and reasonable means do not
exist for ascertaining the applicable Eurodollar Rate; or
(b) Lenders having an aggregate Percentage of 33% or more
advise the Agent that the Eurodollar Rate (Reserve Adjusted) as
determined by the Agent will not adequately and fairly reflect
the cost to such Lenders of maintaining or funding such Loans for
such Interest Period, or that the making or funding of Eurodollar
Loans has become impracticable as a result of an event occurring
after the date of this Agreement which in the reasonable opinion
of such Lenders materially affects such Loans,
then the Agent shall promptly notify the other parties thereof
and, so long as such circumstances shall continue, (i) no Lender
shall be under any obligation to make or convert into Eurodollar
Loans and (ii) on the last day of the current Interest Period for
each Eurodollar Loan, such Loan shall, unless then repaid in
full, automatically convert to a Floating Rate Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful.
--------------------------------------------------
In the event that any change in (including the adoption of any
new) applicable laws or regulations, or any change in the
interpretation of applicable laws or regulations by any
governmental or other regulatory body charged with the
administration thereof, should make it (or in the good faith
judgment of any Lender cause a substantial question as to whether
it is) unlawful for any Lender to make, maintain or fund
Eurodollar Loans, then such Lender shall promptly notify each of
the other parties hereto and, so long as such circumstances shall
continue, (a) such Lender shall have no obligation to make or
convert into Eurodollar Loans (but shall make Floating Rate Loans
concurrently with the making of or conversion into Eurodollar
Loans by the Lenders which are not so affected, in each case in
an amount equal to such Lender's Percentage of all Eurodollar
Loans which would be made or converted into at such time in the
absence of such circumstances) and (b) on the last day of the
current Interest Period for each Eurodollar Loan of such Lender
(or, in any event, if such Lender so requests, on such earlier
date as may be required by the relevant law, regulation or
interpretation), such Eurodollar Loan shall, unless then repaid
in full, automatically convert to a Floating Rate Loan. Each
Floating Rate Loan made by a Lender which, but for the
circumstances described in the foregoing sentence, would be a
Eurodollar Loan (an "Affected Loan") shall, notwithstanding any
other provision of this Agreement, remain outstanding for the
same period as the Group of Eurodollar Loans of which such
Affected Loan would be a part absent such circumstances.
<PAGE>
8.4 Funding Losses. The Company hereby agrees that upon
--------------
demand by any Lender (which demand shall be accompanied by a
statement setting forth the basis for the calculations of the
amount being claimed, a copy of which shall be furnished to the
Agent) the Company will indemnify such Lender against any net
loss or expense which such Lender may sustain or incur
(including, without limitation, any net loss or expense incurred
by reason of the liquidation or reemployment of deposits or other
funds acquired by such Lender to fund or maintain any Eurodollar
Loan, but excluding any loss of margin), as reasonably determined
by such Lender, as a result of (a) any payment or prepayment or
conversion of any Eurodollar Loan of such Lender on a date other
than the last day of an Interest Period for such Loan (including,
without limitation, any conversion pursuant to Section 8.3) or
(b) any failure of the Company to borrow or convert any Loans on
a date specified therefor in a notice of borrowing or conversion
pursuant to this Agreement (other than as a result of a default
by such Lender or the Agent). For this purpose, all notices to
the Agent pursuant to this Agreement shall be deemed to be
irrevocable.
8.5 Right of Lenders to Fund through Other Offices.
----------------------------------------------
Each Lender may, if it so elects, fulfill its commitment as to
any Eurodollar Loan by causing a foreign branch or affiliate of
such Lender to make such Loan, provided that in such event for
the purposes of this Agreement such Loan shall be deemed to have
been made by such Lender and the obligation of the Company to
repay such Loan shall nevertheless be to such Lender and shall be
deemed held by it, to the extent of such Loan, for the account of
such branch or affiliate.
8.6 Discretion of Lenders as to Manner of Funding.
---------------------------------------------
Notwithstanding any provision of this Agreement to the contrary,
each Lender shall be entitled to fund and maintain its funding of
all or any part of its Loans in any manner it sees fit, it being
understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Lender had
actually funded and maintained each Eurodollar Loan during each
Interest Period for such Loan through the purchase of deposits
having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the Eurodollar Rate for such
Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected
----------------------------------------------------
Lender or Objecting Lender. (a) Each Lender shall promptly
- --------------------------
notify the Company and the Agent of any event of which it has
knowledge which will result in, and will use reasonable
commercial efforts available to it (and not, in such Lender's
sole judgment, otherwise disadvantageous to such Lender) to
mitigate or avoid, (i) any obligation by the Company to pay any
amount pursuant to Section 7.6 or 8.1 (ii) the occurrence of any
circumstance of the nature described in Section 8.2 or 8.3 (and,
if any Lender has given notice of any such event described in
clause (i) or (ii) above and thereafter such event ceases to
<PAGE>
exist, such Lender shall promptly so notify the Company and the
Agent). Without limiting the foregoing, each Lender will
designate a different funding office if such designation will
avoid (or reduce the cost to the Company of) any event described
in clause (i) or (ii) of the preceding sentence and such
designation will not, in such Lender's reasonable judgment, be
otherwise disadvantageous to such Lender.
(b) At any time any Lender is an Affected Lender or an
Objecting Lender, the Company may replace such Lender as a party
to this Agreement with one or more other bank(s) or financial
institution(s) reasonably satisfactory to the Agent, such bank(s)
or financial institution(s) to have a Commitment or Commitments,
as the case may be, in such amounts as shall be reasonably
satisfactory to the Agent (and upon notice from the Company such
Affected Lender or Objecting Lender shall assign, without
recourse or warranty, its Commitment, its Loans, its Note and all
of its other rights and obligations hereunder to such replacement
bank(s) or other financial institution(s) for a purchase price
equal to the sum of the principal amount of the Loans so
assigned, all accrued and unpaid interest thereon, its ratable
share of all accrued and unpaid non-use fees, any amounts payable
under Section 8.4 as a result of such Lender receiving payment of
any Eurodollar Loan prior to the end of an Interest Period
therefor and all other obligations owed to such Affected Lender
or Objecting Lender hereunder).
8.8 Conclusiveness of Statements; Survival of Provisions.
----------------------------------------------------
Determinations and statements of any Lender pursuant to Section
8.1, 8.2, 8.3 or 8.4 shall be conclusive absent demonstrable
error. Lenders may use reasonable averaging and attribution
methods in determining compensation under Sections 8.1 and 8.4,
and the provisions of such Sections shall survive repayment of
the Loans, cancellation of the Notes and any termination of this
Agreement (provided that any claim for compensation by a Lender
under such Sections shall be made to the Company not later than
45 days after the later to occur of repayment in full of the
Loans and termination of the Commitments).
SECTION 9 WARRANTIES.
To induce the Agent and the Lenders to enter into this
Agreement and to induce the Lenders to make Loans hereunder, the
Company warrants to the Agent and the Lenders that:
9.1 Organization, etc. The Company is a corporation duly
-----------------
organized, validly existing and in good standing under the laws
of the State of Delaware; each Subsidiary is duly organized and
validly existing under the laws of the jurisdiction of its
organization; and the Company and each Subsidiary is duly
qualified to do business in each other jurisdiction where the
nature of its business makes such qualification necessary, except
where such failure to so qualify would not have a Material
Adverse Effect.
<PAGE>
9.2 Authorization; No Conflict. The execution and delivery
--------------------------
by the Company of this Agreement and each Note, the borrowings
hereunder, and the performance by the Company of its obligations
under this Agreement and each Note are within the corporate
powers of the Company, have been duly authorized by all necessary
corporate action on the part of the Company (including any
necessary shareholder action), have received all necessary
governmental approval, and do not and will not (a) violate any
provision of law, rule or regulation or any order, decree,
judgment or award which is binding on the Company or any
Subsidiary, (b) contravene or conflict with, or result in a
breach of, any provision of the Certificate of Incorporation, By-
Laws or other organizational documents of the Company or any
Subsidiary or of any agreement, indenture, instrument or other
document which is binding on the Company or any Subsidiary or (c)
result in, or require, the creation or imposition of any Lien on
any asset of the Company or any Subsidiary.
9.3 Validity and Binding Nature. This Agreement is, and
---------------------------
upon the execution and delivery thereof each Note will be, the
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
9.4 Financial Information. The Company's audited
---------------------
consolidated financial statements as at January 29, 1994 and
unaudited consolidated financial statements as at May 21, 1994,
copies of which have been furnished to the Lenders, have been
prepared in accordance with generally accepted accounting
principles (subject, in the case of such unaudited statements, to
the absence of footnotes and to normal year-end adjustments) and
fairly present the financial condition of the Company and its
Subsidiaries on a consolidated basis as of such dates and their
consolidated results of operations for the Fiscal Year and fiscal
period then ended.
9.5 No Material Adverse Change. Since the date of the
--------------------------
audited financial statements described in Section 9.4, there has
been no event or occurrence which has had or is reasonably likely
to have a Material Adverse Effect.
9.6 Litigation and Contingent Liabilities. Except as set
-------------------------------------
forth in the Company's Annual Report on Form 10-K for the Fiscal
Year ended January 29, 1994 and the Company's Quarterly Report on
Form 10-Q for the Fiscal Quarter ended May 21, 1994, no
litigation (including, without limitation, derivative actions),
arbitration proceeding or governmental proceeding is pending or,
to the Company's knowledge, threatened against the Company or any
Subsidiary which, if adversely decided, is reasonably likely to
result, either individually or collectively, in a Material
Adverse Effect. Other than any liability incident to such
litigation or proceedings, neither the Company nor any Subsidiary
has any material contingent liabilities not provided for or
disclosed in the financial statements referred to in Section 9.4.
<PAGE>
9.7 Ownership of Properties; Liens. Each of the Company
------------------------------
and each Subsidiary owns good and sufficient title to, or a
subsisting leasehold interest in, all of its properties and
assets, real and personal, tangible and intangible, of any nature
whatsoever, free and clear of all Liens, except as permitted
pursuant to Section 10.7.
9.8 Subsidiaries. Set forth on Schedule II is a complete
------------
and accurate list of name and jurisdiction of organization of
each Subsidiary of the Company and the percentage ownership
interest of the Company and its other Subsidiaries in each such
Subsidiary.
9.9 Pension and Welfare Plans. During the twelve
-------------------------
consecutive-month period prior to the date of the execution and
delivery of this Agreement or the making of any Loan hereunder,
no steps have been taken to terminate any Pension Plan, and no
contribution failure has occurred with respect to any Pension
Plan sufficient to give rise to a lien under Section 302(f) of
ERISA. No condition exists or event or transaction has occurred
with respect to any Pension Plan which could result in the
incurrence by the Company of any material liability, fine or
penalty.
9.10 Regulated Industry. Neither the Company nor any
------------------
Subsidiary is (a) an "investment company" or a company
"controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended, or (b) a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
9.11 Regulations G, U and X. Neither the Company nor any
----------------------
Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose
of purchasing or carrying Margin Stock, and no proceeds of any
Loan will be used for the purpose, whether immediate, incidental
or ultimate, of purchasing or carrying any Margin Stock or
maintaining or extending credit to others for such purpose.
9.12 Taxes. Each of the Company and each Subsidiary has
-----
filed all material tax returns and reports required by law to
have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing, except any such taxes or
charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves shall
have been set aside on its books.
9.13 Environmental and Safety and Health Matters. To the
-------------------------------------------
best of the knowledge of the Company, after inquiry it has deemed
appropriate, the Company and each Subsidiary is in compliance
<PAGE>
with all Environmental Laws and Occupational Safety and Health
Laws where failure to comply could have a Material Adverse
Effect. Neither the Company nor any Subsidiary has received
notice of any claims that any of them is not in compliance in all
material respects with any Environmental Law where failure to
comply could have a Material Adverse Effect.
9.14 Compliance with Law. Each of the Company and each
-------------------
Subsidiary is in compliance with all statutes, judicial and
administrative orders, permits and governmental rules and
regulations which are material to its business or the non-
compliance with which could result in any material fine, penalty
or liability.
9.15 Information. All information heretofore or
-----------
contemporaneously herewith furnished by the Company or any
Subsidiary to any Lender for purposes of or in connection with
this Agreement and the transactions contemplated hereby is, and
all information hereafter furnished by or on behalf of the
Company or any Subsidiary to any Lender pursuant hereto or in
connection herewith will be, true and accurate in every material
respect on the date as of which such information is dated or
certified, and such information, taken as a whole, does not and
will not omit to state any material fact necessary to make such
information, taken as a whole, not misleading.
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and
thereafter until all obligations hereunder and under the Notes
are paid in full, the Company agrees that, unless at any time the
Required Lenders shall otherwise expressly consent in writing, it
will:
10.1 Reports, Certificates and Other Information. Furnish
-------------------------------------------
to each Lender:
10.1.1 Audit Report. Promptly when available and in any
------------
event within 100 days after the close of each Fiscal Year, a copy
of the annual audit report of the Company and its Subsidiaries
for such Fiscal Year, including therein a consolidated balance
sheet of the Company and its Subsidiaries as of the end of such
Fiscal Year and consolidated statements of earnings and cash flow
of the Company and its Subsidiaries for such Fiscal Year
certified, without disclaimer of opinion and without
qualification as to going concern, by Deloitte & Touche or other
independent auditors of recognized national standing selected by
the Company, together with a certificate from such accountants to
the effect that, in making the examination necessary for the
signing of such annual report by such auditors, they have not
become aware of any Event of Default or Unmatured Event of
Default that has occurred and is continuing or, if they have
become aware of any such event, describing it in reasonable
detail.
<PAGE>
10.1.2 Interim Reports. Promptly when available and in any
---------------
event within 60 days after the end of each Fiscal Quarter (except
the last Fiscal Quarter of each Fiscal Year), a consolidated
balance sheet of the Company and its Subsidiaries as of the end
of such quarter, and consolidated statements of earnings and cash
flow for such quarter and for the period beginning with the first
day of such Fiscal Year and ending on the last day of such
quarter, together with a certificate of the President, the Chief
Financial Officer, the Controller or the Treasurer of the Company
to the effect that such financial statements fairly present the
financial condition and results of operations of the Company and
its Subsidiaries as of the date and periods indicated (subject to
normal year-end adjustments).
10.1.3 Compliance Certificate. Concurrently with each set
----------------------
of financial statements delivered pursuant to Section 10.1.1 and
10.1.2, a certificate of the President, the Chief Financial
Officer, the Controller or the Treasurer of the Company (a) to
the effect that such officer is not aware of any Event of Default
or Unmatured Event of Default that has occurred and is continuing
or, if there is any such event, describing it in reasonable
detail, and (b) containing a computation of each of the financial
ratios and restrictions set forth in Section 10.6.
10.1.4 Reports to SEC. Promptly upon the filing or sending
--------------
thereof, a copy of any annual, periodic or special report or
registration statement (inclusive of exhibits thereto) filed by
the Company or any Subsidiary with the SEC or any securities
exchange and of each communication from the Company or any
Subsidiary to shareholders generally.
10.1.5 Notice of Default, Litigation and ERISA Matters.
-----------------------------------------------
Immediately upon becoming aware of any of the following, written
notice describing the same and the steps being taken by the
Company or the Subsidiary affected thereby with respect thereto:
(a) the occurrence of an Event of Default or an Unmatured Event
of Default; (b) any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by the
Company to the Lenders which has been instituted or, to the
knowledge of the Company, is threatened against the Company or
any Subsidiary or to which any of the assets of any thereof is
subject which, if adversely determined, is reasonably likely to
have a Material Adverse Effect; (c) the institution of any steps
by the Company, any of its Subsidiaries or any other Person to
terminate any Pension Plan, or the failure to make a required
contribution to any Pension Plan if such failure is sufficient to
give rise to a lien under Section 302(f) of ERISA, or the taking
of any action with respect to a Pension Plan which could result
in the requirement that the Company furnish a bond or other
security to the PBGC or such Pension Plan, or the occurrence of
any event with respect to any Pension Plan which could result in
the incurrence by the Company of any material liability, fine or
penalty, or any material increase in the contingent liability of
the Company with respect to any post-retirement Welfare Plan
<PAGE>
benefit; and (d) any other event or occurrence which has had or
is reasonably likely to have a Material Adverse Effect.
10.1.6 Subsidiaries. Promptly from time to time a written
------------
report of any change in the list of its Subsidiaries.
10.1.7 Other Information. From time to time such other
-----------------
information concerning the Company and its Subsidiaries as any
Lender or the Agent may reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each
------------------------------
Subsidiary to keep, its books and records reflecting all of its
business affairs and transactions in accordance with sound
business practices sufficient to allow the preparation of the
Company's consolidated financial statements in accordance with
GAAP; and permit, and cause each Subsidiary to permit, any Lender
or the Agent or any representative thereof, at such Lender's or
the Agent's expense unless an Event of Default exists, during
reasonable business hours and on reasonable notice, to visit any
or all of its offices, to discuss its financial matters with its
officers and its independent auditors (and the Company hereby
authorizes such independent auditors to discuss such financial
matters with any Lender or the Agent or any representative
thereof), and to examine (and make copies of) any of its books or
other corporate records.
10.3 Insurance. Maintain, and cause each Subsidiary to
---------
maintain, with responsible and financially-sound insurance
companies or associations, insurance in such amounts and covering
such risks (and having such deductibles and self-insurance) as is
usually maintained by companies engaged in similar businesses and
owning similar properties similarly situated.
10.4 Compliance with Law; Payment of Taxes and Liabilities.
-----------------------------------------------------
(a) Comply, and cause each Subsidiary to comply, in all material
respects with all applicable laws, rules, regulations and orders
the non-compliance with which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect;
and (b) pay, and cause each Subsidiary to pay, prior to
delinquency, all taxes and other governmental charges against it
or any of its assets, provided, however, that the foregoing shall
not require the Company or any Subsidiary to pay any such tax or
charge so long as it shall contest the validity thereof in good
faith by appropriate proceedings and shall set aside on its books
adequate reserves with respect thereto.
10.5 Maintenance of Existence, etc. Maintain and preserve,
-----------------------------
and (subject to Section 10.10) cause each Subsidiary to maintain
and preserve, (a) its existence and good standing in the
jurisdiction of its organization and (b) its foreign
qualification in each other jurisdiction where the nature of its
business makes such qualification necessary (except in those
<PAGE>
instances in which the failure to be qualified or in good
standing will not have a Material Adverse Effect).
10.6 Financial Ratios and Restrictions.
---------------------------------
10.6.1 Minimum Consolidated Tangible Net Worth. Not at any
---------------------------------------
time permit Consolidated Tangible Net Worth to be less than the
sum of (a) $425,000,000 plus (b) 50% of the Company's cumulative
consolidated net earnings for all Fiscal Quarters ending after
January 30, 1994 (but disregarding any Fiscal Quarter in which
there is a loss) plus (c) 50% of the amount by which the
shareholders' equity of the Company is increased by the issuance
of capital stock (or the exercise of warrants or options in
respect thereof) after January 30, 1994.
10.6.2 Long-Term Liabilities to Net Worth Ratio. Not at
----------------------------------------
any time permit the ratio of Consolidated Long-Term Liabilities
to Consolidated Tangible Net Worth to exceed 1.5 to 1.
10.6.3 Fixed Charge Coverage Ratio. Not permit the Fixed
---------------------------
Charge Coverage Ratio as of the last day of any Fiscal Quarter to
be less than 1.4 to 1.
10.7 Limitation on Liens. Not, and not permit any Material
-------------------
Subsidiary to, create or permit to exist any Lien with respect to
any assets now owned or hereafter acquired, except:
(a) Liens existing on the date of this Agreement;
(b) Liens created by or resulting from any litigation or
legal proceeding which is currently being contested in
good faith by appropriate proceedings unless the
judgment secured thereby shall not have been stayed,
bonded or discharged within 60 days;
(c) Liens incidental to the normal conduct of business of
the Company or any Material Subsidiary or the ownership
of their respective assets and Liens to secure the
performance of bids, tenders or trade contracts,
materialmens' and mechanics' liens, and Liens to secure
statutory obligations, surety or appeal bonds or other Liens
of like general nature, in each case which are not incurred
in connection with the incurrence of Debt and which do not
in the aggregate impair the use of any such asset in the
operation of the business of the Company or any Material
Subsidiary or the value of any such asset for the purposes
of any such business;
(d) pledges or deposits to secure obligations under
workers' compensation and unemployment compensation
laws or similar legislation to secure public or
statutory obligations of the Company or any Material
Subsidiary;
<PAGE>
(e) any Lien (i) on assets (including Liens arising under
Capital Leases) imposed in connection with the
financing of all or part of the purchase price therefor
on the cost of the construction, extension or
improvement of any new or existing asset created
contemporaneously with, or within 270 days after, such
acquisition, completion of such construction, such
extension or such improvement, (ii) existing on assets
at the time of the acquisition thereof by the Company
or any Material Subsidiary, (iii) existing on assets or
the outstanding shares or Debt of a corporation at the
time such corporation is merged into or consolidated
with the Company or any Material Subsidiary or at the
time of a sale, lease or other disposition of the
assets or outstanding shares of Debt of a corporation
or firm as an entirety to the Company or any Material
Subsidiary, or (iv) arising in connection with the
purchase of inventory, supplies or services from trade
creditors on customary business terms; provided that
the amount secured by any Lien described in this clause
(e) shall not exceed the lesser of the fair market
value or cost of the related asset at the time of the
imposition of such Lien;
(f) Liens associated with any tenant's leasehold interest
in any asset of the Company or a Material Subsidiary
incurred solely in conjunction with leasing such asset;
(g) Liens for taxes or assessments or other governmental
charges on levies which either are not yet due and
payable or are currently being contested in good faith
by appropriate proceedings;
(h) Liens securing Debt of a Material Subsidiary owing to
the Company or another Material Subsidiary;
(i) the extension, renewal or replacement of any Lien
permitted by the foregoing clauses of this Section 10.7
in respect of the same asset subject to such Lien (but
without increase in the principal amount of the Debt
secured thereby);
(j) minor survey exceptions or minor encumbrances,
easements or reservations, or rights of others for
rights-of-way, utilities and other similar purposes, or
zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the
activities of the Company and its Material Subsidiaries
or which customarily exist on properties of Persons
engaged in similar activities and similarly situated
and which do not in any event materially impair their
use in the operation of the business of the Company and
its Material Subsidiaries; and
(k) Liens not otherwise permitted by the foregoing clauses
of this Section 10.7 so long as the sum, without
duplication, of (x) all obligations secured by such
Liens and (y) Debt of Material Subsidiaries permitted
<PAGE>
solely by clause (f) of Section 10.8 does not exceed
15% of Consolidated Total Assets.
10.8 Debt. Not permit any Material Subsidiary to incur or
----
permit to exist any Debt, except:
(a) Debt owed to the Company or to another Material
Subsidiary;
(b) Debt outstanding on the date hereof;
(c) Debt secured by Liens permitted by clause (e) of
Section 10.7;
(d) Debt outstanding when such entity becomes a Material
Subsidiary or is merged or consolidated with another
Material Subsidiary;
(e) Debt in respect of commercial letters of credit issued
to support the purchase of goods by the applicable
Material Subsidiary in the ordinary course of business;
and
(f) Debt not otherwise permitted by the foregoing clauses
of this Section 10.8 so long as the sum, without
duplication, of (x) all such Debt and (y) all
obligations secured by Liens permitted solely by
clause (k) of Section 10.7 does not exceed 15% of
Consolidated Total Assets.
10.9 Guaranties, Loans and Advances. Not, and not permit
------------------------------
any Material Subsidiary to, become or be a guarantor or surety
of, or otherwise become or be responsible in any manner (whether
by agreement to purchase any obligations, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or
services, or otherwise) with respect to, any undertaking of any
other Person or make or permit to exist any loans or advances to
any other Person, except for (i) the endorsement, in the ordinary
course of collection, of instruments payable to it or to its
order, (ii) loans or advances constituting indebtedness of
Subsidiaries to the Company or to other Subsidiaries or of the
Company to Subsidiaries, guaranties by the Company of the
obligations of Subsidiaries and guaranties by Subsidiaries of
obligations of the Company and of other Subsidiaries,
(iii) advances not to exceed, in the aggregate for Company and
all Material Subsidiaries at any one time outstanding, $100,000
to officers, employees, subcontractors or suppliers, (iv) loans
or advances to employees in connection with the purchase of the
Company's stock under Management Stock Agreements, (v) advances
to employees for moving and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business,
(vi) notes to the Company from Frontier Associates in the amount
of $5,000,000, (vii) guaranties provided for in Section 1.9 of
the Assets Purchase Agreement, (viii) continuing obligations of
the Company or any Subsidiary, not exceeding $9,000,000 in the
aggregate for the Company and all Subsidiaries payable during any
Fiscal Year, as assignor of any lease or other agreement which
<PAGE>
has been assigned to any other Person, (ix) guaranties by Company
or any Subsidiary of the performance of obligations of
Subsidiaries (other than obligations constituting Debt for
Borrowed Money except for obligations under Capital Leases)
entered into in the ordinary course of business, and (x) letters
of credit issued to Multiemployer Plans.
10.10 Mergers, Consolidations, Sales. Not, and not permit
------------------------------
any Material Subsidiary (or Subsidiary that would become a
Material Subsidiary as a result of such transaction) to, be a
party to any merger or consolidation, or, except in the ordinary
course of its business, sell, transfer, convey or lease all or
any substantial part of its assets or sell or assign with or
without recourse any receivables, except that (a) the Company may
be a party to a merger or consolidation if the Company is the
surviving corporation and no Event of Default or Unmatured Event
of Default exists or would result from such merger or
consolidation, and (b) any Subsidiary may be a party to a merger
or consolidation, or sell all or substantially all of its assets,
if the Company (directly or indirectly through its Subsidiaries)
maintains a percentage of ownership of the surviving or acquiring
corporation similar to its percentage of ownership of the prior
or selling Subsidiary and no Event of Default or Unmatured Event
of Default, exists or would result from such merger,
consolidation or sale. Notwithstanding the foregoing, the
Company or any Material Subsidiary may contribute all of the
stock of, or all or substantially all of the assets of, a
Material Subsidiary to a joint venture which is at least 50%
owned by the Company or a Material Subsidiary so long as (i) no
Event of Default or Unmatured Event of Default exists or would
result therefrom and (ii) the aggregate amount so contributed by
the Company or any Material Subsidiary in any Fiscal Year will
not exceed 5% of the assets of the Company and its Subsidiaries
as of the end of the preceding Fiscal Year.
10.11 Company's and Subsidiaries' Stock. Not permit any
---------------------------------
Subsidiary to purchase or otherwise acquire any shares of capital
stock of the Company; and not take any action, or permit any
Subsidiary to take any action, which will, so long as any shares
of capital stock or Debt of any corporation which is a Subsidiary
at the date of this Agreement are owned by the Company or any
Subsidiary, result in a decrease in the percentage of the
outstanding shares of capital stock of such corporation owned at
the date of this Agreement by the Company and its other
Subsidiaries, except that the Company or any Subsidiary may sell
or otherwise dispose of stock or ownership interests in any
Subsidiary that is not a Material Subsidiary for arms-length
consideration. Notwithstanding the foregoing, the Company or any
Material Subsidiary may contribute all of the stock of, or all or
substantially all of the assets of, a Material Subsidiary to a
joint venture which is at least 50% owned by the Company or a
Material Subsidiary so long as (i) no Event of Default or
Unmatured Event of Default exists or would result therefrom and
(ii) the aggregate amount so contributed by the Company or any
Material Subsidiary in any Fiscal Year will not exceed 5% of the
assets of the Company and its Subsidiaries as of the end of the
preceding Fiscal Year.
<PAGE>
10.12 Unconditional Purchase Obligations. Not, and not
----------------------------------
permit any Material Subsidiary to, enter into or be a party to
any contract for the purchase of materials, supplies or other
property or services, if such contract requires that payment be
made by it regardless of whether or not delivery is ever made of
such materials, supplies or other property or services.
10.13 Employee Benefit Plans. Maintain, and cause each
----------------------
Subsidiary to maintain, each Pension Plan in compliance in all
material respects with all applicable requirements of law and
regulations, and make all required contributions to Multiemployer
Plans.
10.14 Purchase or Redemption of Company's Securities;
-----------------------------------------------
Dividend Restriction. Not purchase or redeem any shares of
- --------------------
capital stock of the Company, declare or pay any dividends
thereon (other than stock dividends or cash dividends as provided
for below), make any distribution to stockholders or set aside
any funds for any such purpose, and not prepay, purchase, defease
or redeem, and not permit any Subsidiary to purchase, any
subordinated Debt of the Company; provided that, so long as no
Event of Default or Unmatured Event of Default exists or could
result therefrom, the Company may (a) redeem shares from
employees upon termination of employment or thereafter as
provided in the Management Stock Agreements in amounts paid in
cash (including amounts paid on account of principal of Debt
issued in redemption of such stock) not exceeding in any Fiscal
Year the greater of $10,000,000 or 5% of Consolidated Net
Tangible Net Worth as of the end of the preceding Fiscal Year;
(b) repurchase or redeem shares from persons upon the exercise of
stock options in amounts (including amounts paid on account of
principal of Debt issued in redemption of such stock) not
exceeding, in any Fiscal Quarter, the sum of $500,000 plus the
additional amount, if any, that, when added to the $500,000
amount, would cause the shareholders' equity of the Company
(measured at the end of the Fiscal Quarter in which such
redemption or repurchase takes place) to be not lower than at the
end of the immediately preceding quarter; and (c) pay cash
dividends to its shareholders or repurchase its stock in an
aggregate amount, in any Fiscal Year, not exceeding 40% of its
consolidated net earnings for the prior Fiscal Year.
10.15 Use of Proceeds. Use the proceeds of the Loans for
---------------
working capital and for other general corporate purposes; and not
use or permit any proceeds of any Loan to be used, either
directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of (a) "purchasing or carrying" any
Margin Stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, as amended from time to
time, or (b) purchasing or otherwise acquiring any stock of any
Person if such Person (or its board of directors) has (i)
announced that it will oppose such purchase or other acquisition
or (ii) commenced any litigation which alleges that such purchase
<PAGE>
or other acquisition violates, or will violate, any applicable
law.
SECTION 11 CONDITIONS OF LENDING.
The obligation of each Lender to make its Loans is subject
to the following conditions precedent:
11.1 Initial Loan. The obligation of each Lender to make
------------
its initial Loan is, in addition to the conditions precedent
specified in Section 11.2, subject to the conditions precedent
(and the date on which all such conditions precedent have been
satisfied or waived in writing by the Lenders is herein called
the "Effective Date") that the Agent shall have received (a)
evidence, reasonably satisfactory to the Agent, that all
obligations of the Company under the Credit Agreement (the
"Existing Credit Agreement") dated as of June 15, 1990 with
various financial institutions and Continental, as agent, have
been paid in full and (b) all of the following documents, each
duly executed and dated the Effective Date (or such other date as
shall be satisfactory to the Agent), in form and substance
satisfactory to the Agent, and each (except for the Notes, of
which only the originals shall be signed) in sufficient number of
signed counterparts to provide one for each Lender:
11.1.1 Notes. The Notes of the Company payable to
-----
the order of the Lenders.
11.1.2 Resolutions. Certified copies of resolutions of the
-----------
Board of Directors of the Company authorizing or ratifying the
execution, delivery and performance by the Company of this
Agreement, the Notes and the other documents to be executed by
the Company pursuant hereto.
11.1.3 Consents, etc. Certified copies of all
-------------
documents evidencing any consents and governmental approvals (if
any) required for the execution, delivery and performance by the
Company of this Agreement and the Notes.
11.1.4 Incumbency and Signature Certificates. An
-------------------------------------
incumbency and signature certificate of the Company certifying
the names of the officer or officers of the Company authorized to
sign this Agreement, the Notes and the other documents required
to be delivered by the Company in connection with this Agreement,
together with a sample of the true signature of each such officer
(it being understood that the Agent and each Lender may
conclusively rely on such certificate until formally advised by a
like certificate of any changes therein).
11.1.5 Opinion of Counsel for the Company. The opinion of
----------------------------------
Stoel Rives Boley Jones & Grey, counsel to the Company,
substantially in the form of Exhibit C.
<PAGE>
11.1.6 Other. Such other documents as the Agent or any
-----
Lender may reasonably request.
11.2 All Loans. The obligation of each Lender to make each
---------
Loan is subject to the following further conditions precedent
that:
11.2.1 No Default. (a) No Event of Default or
----------
Unmatured Event of Default has occurred and is continuing or will
result from the making of such Loan and (b) the warranties of the
Company contained in Section 9 (excluding Sections 9.6 and 9.8)
are true and correct in all material respects as of the date of
such requested Loan, with the same effect as though made on such
date.
11.2.2 Confirmatory Certificate. If requested by the Agent
------------------------
or any Lender, the Agent shall have received (in sufficient
counterparts to provide one to each Lender) a certificate dated
the date of such requested Loan and signed by a duly authorized
officer of the Company as to the matters set out in Section
11.2.1 (it being understood that each request by the Company for
the making of a Loan shall be deemed to constitute a warranty by
the Company that the conditions precedent set forth in Section
11.2.1 will be satisfied at the time of the making of such Loan),
together with such other documents as the Agent or any Lender may
reasonably request in support thereof.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following
-----------------
shall constitute an Event of Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the
-----------------------------
payment when due of any principal of any Loan; or default, and
continuance thereof for five days, in the payment when due of any
interest on any Loan or any fee or other amount payable by the
Company hereunder.
12.1.2 Non-Payment of Other Debt. Any default shall occur
-------------------------
under the terms applicable to any Debt of the Company or any
Subsidiary in an aggregate amount (for all Debt so affected)
exceeding $5,000,000 and such default shall (a) consist of the
failure to pay such Debt when due (subject to any applicable
grace period), whether by acceleration or otherwise, or (b)
accelerate the maturity of such Debt or permit the holder or
holders thereof, or any trustee or agent for such holder or
holders, to cause such Debt to become due and payable prior to
its expressed maturity.
12.1.3 Other Material Obligations. Default in the payment
--------------------------
when due of any obligation of $5,000,000 or more of the Company
<PAGE>
or any Subsidiary with respect to any material purchase or lease
of goods or services (except only to the extent that the
existence of any such default is being contested by the Company
or such Subsidiary in good faith and by appropriate proceedings
and appropriate reserves have been made in respect of such
default), and continuance of such default for 30 days after
notice thereof from the Agent or any Lender.
12.1.4 Bankruptcy, Insolvency, etc. The Company or any
---------------------------
Material Subsidiary becomes insolvent or generally fails to pay,
or admits in writing its inability or refusal to pay, debts as
they become due; or the Company or any Material Subsidiary
applies for, consents to, or acquiesces in the appointment of a
trustee, receiver or other custodian for the Company or such
Material Subsidiary or any property thereof, or makes a general
assignment for the benefit of creditors; or, in the absence of
such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any Material
Subsidiary or for a substantial part of the property of any
thereof and is not discharged within 60 days; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding
under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced in respect of the Company or
any Material Subsidiary, and if such case or proceeding is not
commenced by the Company or such Material Subsidiary, it is
consented to or acquiesced in by the Company or such Material
Subsidiary, or remains for 60 days undismissed; or the Company or
any Material Subsidiary takes any corporate action to authorize,
or in furtherance of, any of the foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement.
------------------------------------------------
Failure by the Company to comply with or to perform any provision
of this Agreement (and not constituting an Event of Default under
any of the other provisions of this Section 12) and continuance
of such failure for 30 days after notice thereof to the Company
from the Agent or any Lender.
12.1.6 Warranties. Any warranty made by the Company herein
----------
is breached or is false or misleading in any material respect, or
any schedule, certificate, financial statement, report, notice or
other writing furnished by the Company to the Agent or any Lender
is false or misleading in any material respect on the date as of
which the facts therein set forth are stated or certified.
12.1.7 Pension Plans. (i) Institution of any steps by the
-------------
Company or any other Person to terminate a Pension Plan if as a
result of such termination the Company could be required to make
a contribution to such Pension Plan, or could incur a liability
or obligation to such Pension Plan, in excess of $5,000,000, or
(ii) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under section 302(f) of
ERISA.
<PAGE>
12.1.8 Withdrawal Liability Under Multiemployer Plans. The
----------------------------------------------
Company or any ERISA Affiliate shall make a complete or partial
withdrawal from a Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall notify such withdrawing employer that
such employer has incurred a withdrawal liability in an annual
amount exceeding $5,000,000, unless and only for as long as such
liability shall be contested in good faith and such reserve or
other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor.
12.1.9 Judgments and Attachments. Any money judgment, writ
-------------------------
or warrant of attachment or similar process involving in any case
a final judgment in an amount in excess of $5,000,000 shall be
entered or filed against the Company or any Material Subsidiary
or any of their respective assets and shall remain unsatisfied,
undischarged, unvacated, unbonded or unstayed for a period of
60 days or in any event later than five days prior to the date of
any proposed sale thereunder.
12.1.10 Change in Control. Any Change in Control shall
-----------------
occur.
12.2 Effect of Event of Default. If any Event of Default
--------------------------
described in Section 12.1.4 shall occur, the Commitments (if they
have not theretofore terminated) shall immediately terminate and
the Notes and all other obligations hereunder shall become
immediately due and payable, all without presentment, demand,
protest or notice of any kind; and if any other Event of Default
occurs and is continuing, the Agent may, and upon written request
of the Required Lenders shall, by written notice to the Company
declare the Commitments (if they have not theretofore terminated)
to be terminated and/or declare all Notes and all other
obligations hereunder to be due and payable, whereupon the
Commitments (if they have not theretofore terminated) shall
immediately terminate and/or all Notes and all other obligations
hereunder shall become immediately due and payable, all without
presentment, demand, protest or other notice of any kind.
Notwithstanding the foregoing, the effect as an Event of Default
of any event described in Section 12.1.1 or Section 12.1.4 may be
waived by the written concurrence of all of the Lenders, and the
effect as an Event of Default of any other event described in
this Section 12 may be waived by the written concurrence of the
Required Lenders.
SECTION 13 THE AGENT.
13.1 Authorization. Each Lender authorizes the Agent to
-------------
act on behalf of such Lender to the extent provided herein or any
other document or instrument delivered hereunder or in connection
herewith, and to take such other action as may be reasonably
incidental thereto.
<PAGE>
13.2 Indemnification. Each Lender agrees to reimburse and
---------------
indemnify the Agent for, and hold the Agent harmless against, a
share (determined in accordance with such Lender's Percentage) of
any loss, damage, penalty, action, judgment, obligation, cost,
disbursement, liability or expense (including reasonable
attorneys' fees) which may at any time be incurred by the Agent
(and for which the Agent is not reimbursed by the Company)
arising out of or in connection with the performance of its
obligations or the exercise of its powers hereunder or any other
document or instrument delivered hereunder or in connection
herewith, as well as the costs and expenses of defending against
any claim against the Agent arising hereunder or thereunder,
provided that no Lender shall be liable for any of the foregoing
which are determined by a court of competent jurisdiction in a
final proceeding to have resulted solely from the Agent's gross
negligence or willful misconduct. The provisions of this
Section 13.2 shall survive repayment of the Loans, cancellation
of the Notes and any termination of this Agreement.
13.3 Exculpation. The Agent shall be entitled to rely upon
-----------
advice of counsel concerning legal matters, and upon this
Agreement and any schedule, certificate, statement, report,
notice or other writing which it believes to be genuine or to
have been presented by a proper person. Neither the Agent nor
any of its directors, officers, employees or agents shall (i) be
responsible for any recitals, representations or warranties
contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of, this Agreement or any other
instrument or document delivered hereunder or in connection
herewith, (ii) be responsible for the validity, genuineness,
perfection, effectiveness, enforceability, existence, value or
enforcement of any collateral security, (iii) be under any duty
to inquire into or pass upon any of the foregoing matters, or to
make any inquiry concerning the performance by the Company or any
other obligor of its obligations, or (iv) in any event, be liable
as such for any action taken or omitted by it or them, except for
its or their own gross negligence or willful misconduct. The
agency hereby created shall in no way impair or affect any of the
rights and powers of, or impose any duties or obligations upon,
the Agent in its individual capacity.
13.4 Credit Investigation. Each Lender acknowledges that
--------------------
it has made such inquiries and taken such care on its own behalf
as would have been the case had such Lender's Commitment been
granted and such Lender's Loans been made directly by such Lender
to the Company without the intervention of the Agent or any other
Lender. Each Lender agrees and acknowledges that the Agent makes
no representations or warranties about the creditworthiness of
the Company or any other party to this Agreement or with respect
to the legality, validity, sufficiency or enforceability of this
Agreement or any Note or the value of any security therefor.
13.5 Agent and Affiliates. The Agent in its individual
--------------------
capacity shall have the same rights and powers hereunder as any
other Lender and may exercise or refrain from exercising the same
<PAGE>
as though it were not the Agent, and the Agent and its affiliates
may accept deposits from and generally engage in any kind of
business with the Company or any affiliate thereof as if the
Agent were not the Agent hereunder.
13.6 Action on Instructions of the Required Lenders. As to
----------------------------------------------
any matters not expressly provided for by this Agreement
(including, without limitation, enforcement of this Agreement and
collection of the Loans), the Agent shall not be required to
exercise any discretion or take any action, but the Agent shall
in all cases be fully protected in acting or refraining from
acting upon the written instructions (i) from the Required
Lenders, except for instructions which under the express
provisions hereof must be received by the Agent from all Lenders,
and (ii) in the case of such instructions, from all Lenders. In
no event will the Agent be required to take any action which
exposes the Agent to personal liability or which is contrary to
this Agreement or applicable law. The relationship between the
Agent and the Lenders is and shall be that of agent and principal
only and nothing herein contained shall be construed to
constitute the Agent a trustee for any holder of a Note or of a
participation therein nor to impose on the Agent duties and
obligations other than those expressly provided for herein.
13.7 Funding Reliance. (a) Unless the Agent receives
----------------
notice from a Lender by 1:00 p.m., Chicago time, on the day of a
proposed borrowing that such Lender will not make available to
the Agent the amount which would constitute its Percentage of
such borrowing in accordance with Section 2.3, the Agent may
assume that such Lender has made such amount available to the
Agent and, in reliance upon such assumption, make a corresponding
amount available to the Company. If and to the extent such
Lender has not made any such amount available to the Agent, such
Lender and the Company jointly and severally agree to repay such
amount to the Agent forthwith on demand, together with interest
thereon (i) in the case of the Company, the interest rate
applicable to Loans comprising such borrowing and (ii) in the
case of such Lender, the Federal Funds Rate (or, beginning on the
third Business Day after demand, the rate set forth in clause (i)).
Nothing set forth in this clause (a) shall relieve any Lender of
any obligation it may have to make any Loan hereunder.
(b) Unless the Agent receives notice from the Company prior
to the due date for any payment hereunder that the Company does
not intend to make such payment, the Agent may assume that the
Company has made such payment and, in reliance upon such
assumption, make available to each Lender its share of such
payment. If and to the extent that the Company has not made any
such payment to the Agent, each Lender which received a share of
such payment shall repay such share (or the relevant portion
thereof) to the Agent forthwith on demand, together with interest
thereon at the Federal Funds Rate (or, beginning on the third
Business Day after demand, at the Alternate Reference Rate).
Nothing set forth in this clause (b) shall relieve the Company of
any obligation it may have to make any payment hereunder.
<PAGE>
13.8 Resignation. The Agent may resign as such at any time
-----------
upon at least 30 days' prior notice to the Company and the
Lenders. In the event of any such resignation, the Required
Lenders (with, so long as no Event of Default or Unmatured Event
of Default exists, the consent of the Company, which consent
shall not be unreasonably delayed or withheld) shall as promptly
as practicable appoint a successor Agent. If no successor shall
have been so appointed, and shall have accepted such appointment,
within 30 days after the giving of notice of such resignation,
then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a commercial bank organized under
the laws of the United States of America having a combined
capital, surplus and undivided profits of at least $500,000,000.
Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to
and become vested with all rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged
from all further duties and obligations under this Agreement.
After any resignation pursuant to this Section 13.8, the
provisions of this Section 13 shall inure to the benefit of the
retiring Agent as to any actions taken or omitted to be taken by
it while it was Agent hereunder.
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of the Agent
------------------
or any Lender in the exercise of any right, power or remedy shall
operate as a waiver thereof, nor shall any single or partial
exercise by any of them of any right, power or remedy preclude
other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of,
or consent with respect to, any provision of this Agreement or
the Notes shall in any event be effective unless the same shall
be in writing and signed and delivered by the Agent and signed
and delivered by Lenders having an aggregate Percentage of not
less than the aggregate Percentage expressly designated herein
with respect thereto or, in the absence of such designation as to
any provision of this Agreement or the Notes, by the Required
Lenders, and then any such amendment, modification, waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given. No amendment,
modification, waiver or consent shall (i) extend or increase the
amount of the Commitments, (ii) extend the date for payment of
any principal of or interest on the Loans or any fees payable
hereunder, (iii) reduce the principal amount of any Loan, the
rate of interest thereon or any fees payable hereunder, (iv)
change the definition of Required Lenders or otherwise reduce the
aggregate Percentage required to effect an amendment,
modification, waiver or consent or (v) amend this sentence
without, in each case, the consent of all Lenders. No provisions
of Section 13 shall be amended, modified or waived without the
written consent of the Agent.
14.2 Confirmations. The Company and each holder of a Note
-------------
agree from time to time, upon written request received by it from
the other, to confirm to the other in writing (with a copy of
<PAGE>
each such confirmation to the Agent) the aggregate unpaid
principal amount of the Loans then outstanding under such Note.
14.3 Notices. Except as otherwise provided in Sections 2.3
-------
and 2.4, all notices hereunder shall be in writing (including,
without limitation, facsimile transmission) and shall be sent to
the applicable party at its address shown below its signature
hereto or at such other address as such party may, by written
notice received by the other party, have designated as its
address for such purpose. Notices sent by facsimile transmission
shall be deemed to have been given when receipt is confirmed by
confirming transmission equipment or acknowledged by the
addressee; notices sent by mail shall be deemed to have been
given three Business Days after the date when sent by registered
or certified mail, postage prepaid; and notices sent by hand
delivery shall be deemed to have been given when received. For
purposes of Sections 2.3 and 2.4, the Agent shall be entitled to
rely on telephonic instructions from any person that the Agent in
good faith believes is an authorized officer or employee of the
Company, and the Company shall hold the Agent and each Lender
harmless from any loss, cost or expense resulting from any such
reliance.
14.4 Subsidiary References. The provisions of this
---------------------
Agreement relating to Subsidiaries shall apply only during such
times as the Company has one or more Subsidiaries.
14.5 Regulation U. Each Lender represents that it in good
------------
faith is not relying, either directly or indirectly, upon any
Margin Stock as collateral security for the extension or
maintenance by it of any credit provided for in this Agreement.
14.6 Costs, Expenses and Taxes. The Company agrees to pay
-------------------------
on demand all reasonable out-of-pocket costs and expenses of the
Agent (including the fees and charges of counsel for the Agent
and of local counsel, if any, who may be retained by said
counsel) in connection with the preparation, execution and
delivery of this Agreement and all other documents provided for
herein or delivered or to be delivered hereunder or in connection
herewith (including, without limitation, any amendment,
supplement or waiver to this Agreement or any such other
document). The Company further agrees to pay all reasonable out-
of-pocket costs and expenses (including reasonable attorneys'
fees, court costs and other legal expenses and allocated costs of
staff counsel) incurred by the Agent and each Lender after the
occurrence of an Event of Default in enforcing any right
hereunder or in connection with the negotiation of any
restructuring or "work-out" (whether or not consummated) of the
obligations of the Company hereunder. In addition, the Company
agrees to pay, and to save the Agent and the Lenders harmless
from all liability for, any stamp, transfer or other similar
taxes which may be payable in connection with the execution and
delivery of this Agreement, the borrowings hereunder, the
issuance of the Notes or the execution and delivery of any other
document provided for herein or delivered or to be delivered
<PAGE>
hereunder or in connection herewith. All obligations provided
for in this Section 14.6 shall survive repayment of the Loans,
cancellation of the Notes and any termination of this Agreement.
14.7 Indemnification by the Company. In consideration of
------------------------------
the execution and delivery of this Agreement by the Agent and the
Lenders and the agreement to extend the Commitments provided
hereunder, the Company hereby agrees to indemnify, exonerate and
hold the Agent, each Lender and each of the officers, directors,
employees and agents of the Agent and each Lender (collectively
the "Lender Parties" and individually each a "Lender Party") free
and harmless from and against any and all actions, causes of
action, suits, losses, liabilities, damages and expenses,
including, without limitation, reasonable attorneys' fees and
charges and allocated costs of staff counsel (collectively called
the "Indemnified Liabilities"), incurred by the Lender Parties or
any of them as a result of, or arising out of, or relating to,
(i) any tender offer, merger, purchase of stock, purchase of
assets or other similar transaction financed or proposed to be
financed in whole or in part, directly or indirectly, with the
proceeds of any of the Loans, (ii) the use, handling, release,
discharge, transportation, storage, treatment or disposal of any
"hazardous waste" or "hazardous material" (each as defined in any
applicable Environmental Law) at any real property owned or
leased by the Company or any Subsidiary or used by the Company or
any Subsidiary in its business or operations or (iii) the
enforcement of this Agreement or any Note by any of the Lender
Parties, except for any such Indemnified Liabilities arising on
account of any such Lender Party's bad faith, gross negligence or
willful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. All obligations provided for
in this Section 14.7 shall survive repayment of the Loans,
cancellation of the Notes and any termination of this Agreement.
14.8 Successors and Assigns. This Agreement shall
----------------------
be binding upon the Company, the Lenders and the Agent and their
respective successors and assigns, and shall inure to the benefit
of the Company, the Lenders and the Agent and the successors and
assigns of the Lenders and the Agent. The Company may not assign
its rights or obligations hereunder without the prior written
consent of all Lenders.
14.9 Assignments; Participations.
---------------------------
14.9.1 Assignments. Any Lender may, with the prior written
-----------
consents of the Company and the Agent (which consents shall not
be unreasonably delayed or withheld), at any time assign and
delegate to one or more commercial banks or other financial
institutions (any Person to whom such an assignment and
delegation is to be made being herein called an "Assignee"), all
or any fraction of such Lender's Loans and Commitment (which
assignment and delegation shall be of a constant, and not a
<PAGE>
varying, percentage of all the assigning Lender's Loans) in a
minimum aggregate amount equal to the lesser of (i) the assigning
Lender's remaining Commitment and (ii) $10,000,000; provided,
however, that (a) no assignment and delegation may be made to any
Person if, at the time of such assignment and delegation, the
Company would be obligated to pay any greater amount under
Section 7.6 or Section 8 to the Assignee than the Company is then
obligated to pay to the assigning Lender under such Section and
(b) the Company and the Agent shall be entitled to continue to
deal solely and directly with such Lender in connection with the
interests so assigned and delegated to an Assignee until the date
when all of the following conditions shall have been met:
(x) five Business Days (or such lesser period of time
as the Agent and the assigning Lender shall agree) shall
have passed after written notice of such assignment and
delegation, together with payment instructions, addresses
and related information with respect to such Assignee, shall
have been given to the Company and the Agent by such
assigning Lender and the Assignee,
(y) the assigning Lender and the Assignee shall have
executed and delivered to the Company and the Agent an
assignment agreement substantially in the form of Exhibit D
(an "Assignment Agreement"), together with any documents
required to be delivered thereunder, which Assignment
Agreement shall have been accepted by the Agent and the
Company, and
(z) the assigning Lender or the Assignee shall have
paid the Agent a processing fee of $2,500.
From and after the date on which the conditions described above
have been met, (x) such Assignee shall be deemed automatically to
have become a party hereto and, to the extent that rights and
obligations hereunder have been assigned and delegated to such
Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Lender hereunder, and (y) the
assigning Lender, to the extent that rights and obligations
hereunder have been assigned and delegated by it pursuant to such
Assignment Agreement, shall be released from its obligations
hereunder. Within five Business Days after effectiveness of any
assignment and delegation, the Company shall execute and deliver
to the Agent (for delivery to the Assignee and the Assignor, as
applicable) a new Note in the principal amount of the Assignee's
Commitment and, if the assigning Lender has retained a Commitment
hereunder, a replacement Note in the principal amount of the
Commitment retained by the assigning Lender (such Note to be in
exchange for, but not in payment of, the predecessor Note held by
such assigning Lender). Each such Note shall be dated the
effective date of such assignment. The assigning Lender shall
mark the predecessor Note "exchanged" and deliver it to the
Company. Accrued interest on that part of the predecessor Note
being assigned shall be paid as provided in the Assignment
Agreement. Accrued interest and fees on that part of the
predecessor Note not being assigned shall be paid to the
assigning Lender. Accrued interest and accrued fees shall be
paid at the same time or times provided in the predecessor Note
and in this Agreement. Any attempted assignment and delegation
<PAGE>
not made in accordance with this Section 14.9.1 shall be null and
void.
Notwithstanding the foregoing provisions of this Section
14.9.1 or any other provision of this Agreement, any Lender may
at any time assign all or any portion of its Loans and its Note
to a Federal Reserve Bank (but no such assignment shall release
any Lender from any of its obligations hereunder).
14.9.2 Participations. Any Lender may at any time sell to
--------------
one or more commercial banks or other Persons participating
interests in any Loan owing to such Lender, the Note held by such
Lender, the Commitment of such Lender or any other interest of
such Lender hereunder (any Person purchasing any such
participating interest being herein called a "Participant"). In
the event of a sale by a Lender of a participating interest to a
Participant, (x) such Lender shall remain the holder of its Note
for all purposes of this Agreement and (y) the Company and the
Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations
hereunder. No Participant shall have any direct or indirect
voting rights hereunder (except that a Lender may grant a
Participant rights with respect to any of the events described in
the penultimate sentence of Section 14.1). The Company agrees
that if amounts outstanding under this Agreement and the Notes
are due and payable (as a result of acceleration or otherwise),
each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this
Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender
under this Agreement or such Note; provided that such right of
setoff shall be subject to the obligation of each Participant to
share with the Lenders, and the Lenders agree to share with each
Participant, as provided in Section 7.5. The Company also agrees
that each Participant shall be entitled to the benefits of
Section 7.6 and Section 8 as if it were a Lender (provided that
no Participant shall receive any greater compensation pursuant to
such Sections than would have been paid to the participating
Lender if no participation had been sold).
14.10 Governing Law. This Agreement and each Note shall be
-------------
a contract made under and governed by the laws of the State of
Illinois applicable to contracts made and to be performed
entirely within the State of Illinois. Whenever possible each
provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of
this Agreement. All obligations of the Company and rights of the
Agent and the Lenders expressed herein or in the Notes shall be
in addition to and not in limitation of those provided by
applicable law.
<PAGE>
14.11 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by the different parties hereto on
separate counterparts and each such counterpart shall be deemed
to be an original, but all such counterparts shall together
constitute but one and the same Agreement. When counterparts
executed by all of the parties hereto shall have been lodged with
the Agent (or, in the case of any Lender as to which an executed
counterpart shall not have been so lodged, the Agent shall have
received confirmation from such Lender of execution of a
counterpart hereof by such Lender), this Agreement shall become
effective as of the date hereof, and at such time the Agent shall
notify the Company and each Lender.
14.12 Termination of Existing Credit Agreement. The
----------------------------------------
Company and all Lenders that are also "Banks" under and as
defined in the Existing Credit Agreement agree that the
"Commitments" under and as defined in the Existing Credit
Agreement shall be terminated in their entirety on the date of
the effectiveness of this Agreement.
14.13 Forum Selection and Consent to Jurisdiction. ANY
-------------------------------------------
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT OR NOTE, MAY BE BROUGHT AND
MAINTAINED IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS
TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH
ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE COMPANY
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
14.14 OREGON LEGAL NOTICE. WITHOUT LIMITING THE VALIDITY
-------------------
OF THE CHOICE OF ILLINOIS LAW PROVIDED HEREIN, UNDER OREGON LAW,
MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE LENDERS
AFTER THE EFFECTIVE DATE OF THE ACT SPECIFIED HEREIN CONCERNING
LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL,
FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED
BY THE LENDERS TO BE ENFORCEABLE. THE ACT SPECIFIED HEREIN MEANS
CHAPTER 967 OREGON LAWS 1989, THE EFFECTIVE DATE OF WHICH WAS
OCTOBER 3, 1989.
<PAGE>
Delivered at Chicago, Illinois, as of the day and year first
above written.
FRED MEYER, INC.
By MICHAEL H. DON
------------------------------
Vice President and Corporate
Treasurer
3800 S.E. 22nd Avenue
P.O. Box 42121
Portland, Oregon 97242
Attention: Michael H. Don
Vice President and
Corporate Treasurer
Facsimile: 503-797-5299
CONTINENTAL BANK, individually and
as Agent
By ELIZABETH M. NOLAN
------------------------------
Vice President
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Elizabeth M. Nolan
Vice President
Facsimile: 312-765-2080
BANK OF AMERICA
By /s/
------------------------------
Vice President
P.O. Box 37000 (94137)
San Francisco, California 94104
Attention: James R. MacGregor
Senior Vice President
Facsimile: 415-622-4585
THE BANK OF CALIFORNIA, N.A.
By /s/
------------------------------
Senior Vice President
P.O. Box 45000
San Francisco, California 94145
Attention: Thomas C. Ludlow
Vice President
Facsimile: 415-765-3146
<PAGE>
THE BANK OF NEW YORK
By ROBERT LOUK
------------------------------
Vice President
10990 Wilshire Boulevard,
Suite 1700
Los Angeles, CA 90024
Attention: Mr. Robert Louk
Vice President
Facsimile: 310-996-8667
THE BANK OF NOVA SCOTIA
By ERRETT HUMMEL
------------------------------
Account Officer
888 S.W. 5th Avenue, Suite 750
Portland, OR 97204-2098
Attention: Errett Hummel
Account Officer
Facsimile: 503-222-5502
BANK OF TOKYO, LTD.
By M.W. KRINGLEN
------------------------------
Vice President
2300 Pacwest Center
1211 S.W. 5th Avenue
Portland, OR 97204
Attention: Mr. M.W. Kringlen
Vice President
Facsimile: 503-227-5372
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A, "RABOBANK
NEDERLAND"
NEW YORK BRANCH
By ROBERT B. BENOIT
------------------------------
Senior Vice President
245 Park Avenue
36th Floor
New York, NY 10167
Attention: Ms. Marla Lerner
Facsimile: 212-916-7880
<PAGE>
CREDIT LYONNAIS LOS ANGELES BRANCH
By /s/
------------------------------
Vice President
515 South Flower Street
Los Angeles, CA 90071
Attention: Mr. Francois Coussot
Vice President
Facsimile: 213-623-3437
or
213-623-8067
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By /s/
------------------------------
Authorized Signatory
c/o Credit Lyonnais
Los Angeles Branch
515 South Flower Street
Los Angeles, CA 90071
Attention: Mr. Francois Coussot
Vice President
Facsimile: 213-623-3437
or
213-623-8067
FIRST INTERSTATE BANK OF
OREGON, N.A.
By MARCIA J. JANNER
------------------------------
Vice President
P.O. Box 3131
Portland, OR 97208-3131
Attention: Ms. Marcia J. Janner
Vice President
Facsimile: 503-225-4698
FIRST SECURITY BANK OF UTAH, N.A.
By D. KEVIN IMLAY
------------------------------
Vice President
15 East 100 South, 2nd FL.
Salt Lake City, Ut 84111
Attention: Mr. Kevin Imlay
Vice President
Facsimile: 801-246-5532
<PAGE>
THE FUJI BANK, LTD.
By /s/
------------------------------
General Manager
601 California Street
San Francisco, CA 94108
Attention: Mr. Michael Rogers
Vice President
Facsimile: 415-362-4613
THE HONG KONG AND SHANGHAI BANKING
CORPORATION LIMITED
By B. DANIEL DUTTON
------------------------------
Vice President
900 S.W. 5th Avenue, Suite 1550
Portland, OR 97204-1298
Attention: Mr. B. Daniel Dutton
Vice President
Facsimile: 503-242-2413
THE INDUSTRIAL BANK OF JAPAN, LTD.
By /s/
------------------------------
Deputy General Manager
555 California Street, Suite 1610
San Francisco, CA 94104
Attention: Mr. Clifford B. White
Vice President
Facsimile: 415-982-1917
KEY BANK OF WASHINGTON
By BARRY BOOHER
------------------------------
Vice President
P.O. Box 21145
Seattle, WA 98111-3145
Attention: Mr. Barry Booher
Vice President
Facsimile: 206-223-7834
<PAGE>
NATIONSBANK OF TEXAS, N.A.
By WILLIAM B. GUFFEY
------------------------------
Vice President
444 S. Flower Street, Suite 1500
Los Angeles, CA 90071
Attention: Mr. William B. Guffey
Vice President
Facsimile: 213-624-5815
SEATTLE FIRST NATIONAL BANK
By /s/
------------------------------
Asst. Vice President
701 Fifth Ave. - 12th Floor
Seattle, WA 98104
Attention: Mr. Gordon H. Gray
Vice President
Facsimile: 206-358-3113
UNITED STATES NATIONAL BANK
OF OREGON
By ANN C. SMITH
------------------------------
Vice President
P.O. Box 8837
Portland, OR 97208-8837
Attention: Ms. Ann C. Smith
Vice President
Facsimile: 503-275-5428
WEST ONE BANK, IDAHO
By JAMES C. AALBERG
------------------------------
Vice President
P.O. Box 2882 (97208)
234 S.W. Broadway
Portland, OR 97205
Attention: Mr. James C. Aalberg
Vice President
Facsimile: 503-248-6939
<PAGE>
<TABLE>
SCHEDULE I
COMMITMENTS AND PERCENTAGES
<CAPTION>
Lender Commitment Percentage
- ------ ---------- ----------
<S> <C> <C>
Bank of America $25,000,000 6.25%
The Bank of California, N.A. 15,000,000 3.75
The Bank of New York 25,000,000 6.25
The Bank of Nova Scotia 35,000,000 8.75
Bank of Tokyo, Ltd. 30,000,000 7.50
Continental Bank 30,000,000 7.50
Cooperatieve Centrale
Raiffeinsen-Boerenleenbank B.A. 25,000,000 6.25
Credit Lyonnais Los Angeles 12,000,000 3.00
Branch and Credit Lyonnais
Cayman Island Branch
First Interstate Bank 30,000,000 7.50
of Oregon, N.A.
First Security Bank
of Utah, N.A. 15,000,000 3.75
The Fuji Bank, Ltd. 12,000,000 3.00
The Hong Kong and
Shanghai Banking
Corporation Limited 25,000,000 6.25
The Industrial Bank
of Japan, Ltd. 12,000,000 3.00
Key Bank of Washington 12,000,000 3.00
NationsBank of Texas, N.A. 35,000,000 8.75
United States National 20,000,000 5.00
Bank of Oregon
Seattle First National Bank 30,000,000 7.50
West One Bank, Idaho 12,000,000 3.00
___________ ____
TOTAL $400,000,000 100%
/TABLE
<PAGE>
<TABLE>
SCHEDULE II
SCHEDULE OF SUBSIDIARIES
<CAPTION>
Percentage
Jurisdiction Owned By The
Of Company And
Subsidiary Organization Its Subsidiaries
---------- ------------ ----------------
<S> <C> <C>
B&B Stores, Inc. Montana 100%
B&B Pharmacy, Inc. Montana 100%
CB&S Advertising Agency, Inc. Oregon 100%
Distribution Trucking Company Oregon 100%
FM Holding Corporation Delaware 100%
Grand Central, Inc. Utah 100%
FM Retail Services, Inc. Washington 100%
Fred Meyer (HK) Limited Hong Kong 100%
Fred Meyer, Inc.
(a Washington Corporation) Washington 100%
Fred Meyer of Alaska, Inc. Alaska 100%
Fred Meyer of California, Inc. California 100%
Natur Glo, Inc. Oregon 100%
Roundup Co. Washington 100%
</TABLE>
<PAGE>
EXHIBIT A
FORM OF
NOTE
$__________ ___________, 199_
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned promises to pay to the
order of __________________ at the principal office of Continental
Bank (the "Agent"), in Chicago, Illinois, on the date set forth in
the Credit Agreement referred to below,
_______________________________________ Dollars ($__________) or, if
less, the aggregate unpaid amount of all Loans made by the payee to
the undersigned pursuant to the Credit Agreement (as shown in the
records of the payee or, at the payee's option, on the schedule
attached hereto and any continuation thereof).
The undersigned further promises to pay interest on the unpaid
principal amount of each Loan evidenced hereby from the date of such
Loan until such Loan is paid in full, payable at the rate(s) and at
the time(s) set forth in the Credit Agreement. Payments of both
principal and interest are to be made in lawful money of the United
States of America.
This Note evidences indebtedness incurred under, and is subject
to the terms and provisions of, the Credit Agreement, dated as of
June 30, 1994 (herein, as amended or otherwise modified from time to
time, called the "Credit Agreement"), among the undersigned, certain
financial institutions (including the payee) and the Agent, to which
Credit Agreement reference is hereby made for a statement of the
terms and provisions under which this Note may or must be paid prior
to its due date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees,
subject only to any limitation imposed by applicable law, to pay all
reasonable expenses, including reasonable attorneys' fees and legal
expenses, incurred by the holder of this Note in endeavoring to
collect any amounts payable hereunder which are not paid when due,
whether by acceleration or otherwise. Each of the Company and each
guarantor hereof waives demand, presentment, protest, diligence,
notice of dishonor and any other formality in connection with this
Note.
This Note is made under and governed by the internal
laws of the State of Illinois applicable to contracts made and to be
performed entirely within such State.
FRED MEYER, INC.
By ______________________________
Vice President and Corporate
Treasurer
<PAGE>
Schedule Attached to Note dated _______, 199_ of FRED MEYER, INC.
_________ payable to the order of ____________________________.
Date and Date and
Amount of Amount of
Loan or of Repayment or of
conversion from conversion into Unpaid
another type of another type of Interest Principal Notation
Loan Loan Period Balance Made by
1. FLOATING RATE LOANS
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
2. EURODOLLAR LOANS
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
<PAGE>
EXHIBIT B
FORM OF REQUEST FOR EXTENSION OF
TERMINATION DATE
[Date]
[Name and Address of Lender]
Pursuant to the Credit Agreement dated as of June 30, 1994
(the "Credit Agreement") among Fred Meyer, Inc. (the "Company"),
various financial institutions and Continental Bank, as Agent,
this represents the Company's request to extend the Termination
Date (as defined in the Credit Agreement) to June 30, ____.
Please indicate whether you consent to such extension of the
Termination Date by signing the attached copy of this Extension
Request in the space provided below and returning the same to the
undersigned by June 1, ____.
Very truly yours,
FRED MEYER, INC.
By: ___________________________
Title: ______________________
[Name of Lender]
Date:_______________
ACCEPTS ____
REJECTS ____
By:___________________________
Title: ____________________
<PAGE>
EXHIBIT C
FORM OF
OPINION OF COUNSEL
[Letterhead of Stoel Rives Boley Jones & Grey]
June , 1994
Continental Bank,
individually and as Agent, and
the other Lenders which are
parties to the Credit Agreement
referred to below
231 South LaSalle Street
Chicago, Illinois 60697
Re: Credit Agreement dated as of June 30 , 1994 among
Fred Meyer, Inc., various financial institutions
and Continental Bank, as Agent
-------------------------------------------------
Gentlemen:
We have acted as counsel to Fred Meyer, Inc., a
Delaware corporation (the "Company"), in connection with the
Credit Agreement dated as of June 30, 1994 among the Company,
various financial institutions (the "Lenders") and Continental
Bank, as Agent (the "Credit Agreement"), and the initial loans
made this date by the Lenders to the Company under the Credit
Agreement. This opinion letter is rendered to you pursuant to
Section 11.1.5 of the Credit Agreement. Unless otherwise defined
herein, capitalized terms used herein shall have the respective
meanings set forth in the Credit Agreement.
For the purpose of rendering our opinions herein, we
have examined (i) the Credit Agreement and the Notes, (ii)
certificates of public officials and of officers of the Company,
(iii) certified copies of the Company's Restated Certificate of
Incorporation and Amended and Restated Bylaws, (iv) board of
directors' resolutions of the Company authorizing the Company's
participation in the transactions contemplated by the Credit
Agreement, and (v) the agreements referred to as "material
agreements" in the attached Officer's Certificate of the Company
(the "Certificate"). We have also examined such other documents
and records, and have made such investigations of law, as we have
deemed necessary to enable us to render this opinion. As to the
accuracy of certain factual matters, we have relied on
certificates and written statements of officers of the Company
and factual representations made by the Company within the Credit
Agreement.
For purposes of this opinion, "actual knowledge" means
the conscious awareness of facts or other information by Gary R.
Barnum or MardiLyn Saathoff, the persons at this firm principally
<PAGE>
involved with the transactions contemplated by the Credit
Agreement.
Based on the foregoing and subject to the
qualifications below, we are of the opinion that:
(1) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power
and authority to own and operate its properties, to
carry on its business as described in the Company's
Annual Report on Form 10-K for the fiscal year ended
January 29, 1994, to enter into the Credit Agreement,
to issue the Notes and to carry out the transactions
contemplated thereby.
(2) The Credit Agreement and the Notes have been duly
authorized by all necessary corporate action on the
part of the Company, and the Credit Agreement and the
Notes have been duly executed and delivered by the
Company and constitute legally valid and binding
obligations of the Company, enforceable against the
Company in accordance with their respective terms.
(3) None of the execution and delivery by the Company of
the Credit Agreement, the consummation by the Company
of the transactions contemplated by the Credit
Agreement or compliance by the Company with the terms
and conditions of the Credit Agreement and the Notes
(a) conflicts with, results in a breach of, or
constitutes a default under any of the terms,
conditions or provisions of the Restated Certificate of
Incorporation or Amended and Restated Bylaws of the
Company or, to our actual knowledge, any "material
agreement" referred to in the Certificate or judicial
order by which the Company or any Subsidiary is bound,
or (b) to our actual knowledge, results in the creation
of any Lien upon any of the properties or assets of the
Company or any Subsidiary under any such agreement or
order.
(4) Neither the execution and delivery of the Credit
Agreement and the Notes nor the payment of the Notes
conflicts with any present federal statute binding on
the Company or any Delaware statute, rule or regulation
contained in or promulgated under the General
Corporation Law of the State of Delaware binding on the
Company.
(5) To our actual knowledge, no governmental consents,
approvals, authorizations, registrations, declarations
or filings are required by the Company in connection
with the extensions of credit under the Credit
Agreement.
(6) The Company is not an "investment company" as such term
is defined in the Investment Company Act of 1940, as
amended.
<PAGE>
For the purposes of our opinions set forth in
paragraphs (2) and (3), we have assumed that all amounts owed by
the Company under the existing Credit Agreement referred to in
Section 10.1(a) of the Credit Agreement have been paid and that
such existing Credit Agreement has been cancelled.
The opinions set forth above are subject to (a) the
effect of bankruptcy, insolvency, reorganization, moratorium, and
other similar laws generally affecting creditors' rights and (b)
the application of general principles of equity, including,
without limitations, the right to specific performance. A court
might not enforce certain covenants or allow acceleration of the
due date of the Notes if it concludes that such enforcement or
acceleration would be unreasonable or not undertaken in good
faith under the then existing circumstances, but the inclusion of
such remedies does not, in our opinion, affect the validity of
the Credit Agreement or the Notes. In addition, no opinion is
expressed herein as to Section 14.7 of the Credit Agreement.
We express no opinion as to (a) the enforceability
under certain circumstances of any provision imposing penalties,
late payment charges or increases in interest rate upon
delinquency in payment or the occurrence of Events of Default,
(b) the enforceability of any choice of law provision, (c) the
compliance with certain financial covenants under the "material
agreements" set forth in the Certificate, or (d) the compliance
with applicable anti-fraud provisions of federal or state
securities laws.
The opinions herein expressed are limited to the
matters governed by the laws of the United States of America and
the State of Oregon and, as to the opinions expressed in
paragraphs (1), (2), and (4) above, the General Corporation Law
of the State of Delaware, in each case as it exists at the date
hereof, and we express no opinion as to the law of any other
jurisdiction. In rendering the opinions set forth in paragraph
(2) above, we have assumed, as to matters purported to be
governed by the laws of the State of Illinois, that the laws of
the State of Oregon and the State of Illinois do not differ in
any material respect.
This opinion is rendered only to the Agent and the
Lenders and is solely for their benefit in connection with the
above transactions. This opinion may not be relied upon by the
Agent or any Lender for any other purpose or quoted to or relied
upon by any other person, firm or corporation for any purpose
without our prior written consent.
Very truly yours,
STOEL RIVES BOLEY JONES & GREY
By:
-----------------------------
Gary R. Barnum
<PAGE>
EXHIBIT D
FORM OF
ASSIGNMENT AGREEMENT
Date:_________________
To: Fred Meyer, Inc.
and
Continental Bank, as Agent
Re: Assignment under the Credit Agreement referred to below
-------------------------------------------------------
Gentlemen and Ladies:
We refer to Section 14.9 of the Credit Agreement dated as of
June 30, 1994 (as amended or otherwise modified, the "Credit
Agreement") among Fred Meyer, Inc. (the "Company"), various
financial institutions and Continental Bank, as agent (the
"Agent"). Unless otherwise defined herein or the context
otherwise requires, terms used herein have the meanings provided
in the Credit Agreement.
(the "Assignor") hereby sells and
assigns to (the "Assignee"), and the Assignee
hereby purchases and assumes from the Assignor, that interest in
and to the Assignor's rights and obligations under the Credit
Agreement as of the date hereof equal to % of all of the
Loans and Commitments, such sale, purchase, assignment and
assumption to be effective as of , 199 , or such
later date on which the Company and the Agent shall have
consented hereto (the "Effective Date"). After giving effect to
such sale, purchase, assignment and assumption, the Assignee's
Percentage for purposes of the Credit Agreement will be as set
forth opposite the Assignee's name on the signature pages hereof.
The Assignor hereby instructs the Agent to make all payments
from and after the Effective Date in respect of the interest
assigned hereby directly to the Assignee. The Assignor and the
Assignee agree that all interest and fees accrued up to, but not
including, the Effective Date are the property of the Assignor,
and not the Assignee. The Assignee agrees that, upon receipt of
any such interest or fees, the Assignee will promptly remit the
same to the Assignor.
The Assignee hereby confirms that it has received a copy of
the Credit Agreement and the exhibits related thereto, together
with copies of the documents which were required to be delivered
under the Credit Agreement as a condition to the making of the
initial Loans thereunder. The Assignee acknowledges and agrees
that it (i) has made and will continue to make such inquiries and
has taken and will take such care on its own behalf as would have
been the case had its Commitment been granted and its Loans been
made directly by the Assignee to the Company without the
intervention of the Agent, the Assignor or any other Lender and
(ii) has made and will continue to make, independently and
<PAGE>
without reliance upon the Agent, the Assignor or any other Lender
and based on such documents and information as it has deemed
appropriate, its own credit analysis and decisions relating to
the Credit Agreement. The Assignee further acknowledges and
agrees that neither the Agent nor the Assignor has made any
representation or warranty about the creditworthiness of the
Company or any other party to the Credit Agreement or with
respect to the legality, validity, sufficiency or enforceability
of the Credit Agreement or any Note or the value of any security
therefor. This assignment shall be made without recourse to the
Assignor.
The Assignor represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse
claim.
The Assignee represents and warrants to the Company and the
Agent that, as of the date hereof, the Company will not be
obligated to pay any greater amount under Section 7.6 or 8.1 of
the Credit Agreement than the Company is obligated to pay to the
Assignor under such Section.
Except as otherwise provided in the Credit Agreement,
effective as of the Effective Date:
(a) the Assignee (i) shall be deemed automatically to have
become a party to the Credit Agreement and have all the
rights and obligations of a "Lender" under the Credit
Agreement as if it were an original signatory thereto
to the extent specified in the second paragraph hereof;
and (ii) agrees to be bound by the terms and conditions
set forth in the Credit Agreement as if it were an
original signatory thereto; and
(b) the Assignor shall be released from its obligations
under the Credit Agreement to the extent specified in
the second paragraph hereof.
The Assignor and the Assignee hereby agree that the
[Assignor] [Assignee] will pay to the Agent the processing fee
referred to in Section 14.9 of the Credit Agreement. The payment
of the processing fee shall be a condition to the effectiveness
of this assignment.
The Assignee hereby advises each of you of the following
administrative details with respect to the assigned Loans and
Commitment:
(A) Address for Notices:
Institution Name:
Address:
Attention:
<PAGE>
Telephone:
Facsimile:
(B) Payment Instructions:
The Assignee has delivered to the Company and the Agent (or
is delivering to the Company and the Agent concurrently herewith)
the tax forms referred to in Section 7.6 of the Credit Agreement.
Please evidence your receipt hereof and consent to the sale,
assignment, purchase and assumption set forth herein by signing
and returning counterparts hereof to the Assignor and the
Assignee.
Percentage = % [ASSIGNEE]
By: ___________________________
Title:
[ASSIGNOR]
By: ___________________________
Title:
ACKNOWLEDGED AND CONSENTED TO
this ____ day of ________, 199_
CONTINENTAL BANK, as Agent
By: ___________________________
Title: _____________________
ACKNOWLEDGED AND CONSENTED TO
this _____ day of __________, 199__
FRED MEYER, INC.
By: ________________________________
Title: _________________________
EXHIBIT 4-D
FRED MEYER, INC.
COMPOSITE CONFORMED COPY OF THE NOTE AGREEMENT
Re: $7,500,000 7.25% Senior Notes, Series A,
Due July 15, 1999,
$15,000,000 7.52% Senior Notes, Series B,
Due July 15, 2001,
$20,000,000 7.88% Senior Notes, Series C,
Due July 15, 2004
and
$15,000,000 7.98% Senior Notes, Series D,
Due July 15, 2007
_________________________________________
Series A PPN 593098 A@5
Series B PPN 593098 B*6
Series C PPN 593098 B@4
Series D PPN 593098 B#2
Closing Date: July 19, 1994
============================================================
Separate and several Note Agreements each dated as of
June 1, 1994, in the form attached hereto, were entered into
by Fred Meyer, Inc., a Delaware corporation, and each of the
institutions named below, respectively. Each of said Note
Agreements was executed on behalf of Fred Meyer, Inc. by
Michael H. Don, Vice President and Corporate Treasurer. The
separate Note Agreements were addressed to each of the
institutions as shown on Schedule I attached thereto and
were accepted by the officers of the respective institutions
as shown below.
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
By: /s/ Paul M. Chute
Managing Director
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By: /s/ Julia S. Tucker
Investment Officer
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By: /s/ Loren A. Haugland
Vice President
THE CANADA LIFE ASSURANCE COMPANY
By: /s/ Brian J. Lynch
Associate Treasurer
<PAGE>
CANADA LIFE INSURANCE COMPANY OF AMERICA
By: /s/ Brian J. Lynch
Assistant Treasurer
CANADA LIFE INSURANCE COMPANY OF NEW YORK
By: /s/ Brian J. Lynch
Assistant Treasurer
THE FRANKLIN LIFE INSURANCE COMPANY
By: /s/ Daniel C. Leimbach
Vice President
By: /s/ Elizabeth E. Arthur
Assistant Secretary
KNIGHTS OF COLUMBUS
By: /s/ Robert J. Lane
Assistant Supreme Secretary
SAFECO LIFE INSURANCE COMPANY
By: /s/ Ronald Spaulding
Vice President
THE SECURITY MUTUAL LIFE INSURANCE COMPANY OF LINCOLN,
NEBRASKA
By: /s/ Kevin W. Hammond
Vice President, Investments
STANDARD INSURANCE COMPANY
By: /s/ Vicki R. Chase
Vice President - Securities
WOODMEN ACCIDENT AND LIFE COMPANY
By: /s/ M.F. Wilder
Senior Vice President and Treasurer
MUTUAL TRUST LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By: /s/ Loren A. Haugland
Vice President
<PAGE>
SECURITY LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By: /s/ Loren A. Haugland
Vice President
NATIONAL TRAVELERS LIFE COMPANY
By: MIMLIC Asset Management Company
By: /s/ Loren A. Haugland
Vice President
COLORADO BANKERS LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By: /s/ Loren A. Haugland
Vice President
GUARANTEE RESERVE LIFE INSURANCE COMPANY
By: MIMLIC Asset Management Company
By: /s/ Loren A. Haugland
Vice President
<PAGE>
===============================================================
FRED MEYER, INC.
NOTE AGREEMENT
Dated as of June 1, 1994
Re:
$7,500,000 7.25% Senior Notes, Series A,
Due July 15, 1999,
$15,000,000 7.52% Senior Notes, Series B,
Due July 15, 2001,
$20,000,000 7.88% Senior Notes, Series C,
Due July 15, 2004
and
$15,000,000 7.98% Senior Notes, Series D,
Due July 15, 2007
===============================================================
<PAGE>
Table of Contents
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT . . . . . .1
Section 1.1. Description of Notes . . . . . . . . . . .1
Section 1.2. Commitment, Closing Date . . . . . . . . .2
Section 1.3. Other Agreements . . . . . . . . . . . . .3
SECTION 2. PREPAYMENT OF NOTES . . . . . . . . . . . . . .3
Section 2.1. Optional Prepayment with Premium . . . . .3
Section 2.2. Notice of Optional Prepayments . . . . . .3
Section 2.3. Application of Prepayments . . . . . . . .4
Section 2.4. Direct Payment . . . . . . . . . . . . . .4
SECTION 3. REPRESENTATIONS . . . . . . . . . . . . . . . .4
Section 3.1. Representations of the Company . . . . . .4
Section 3.2. Representations of the Purchaser . . . . .4
SECTION 4. CLOSING CONDITIONS. . . . . . . . . . . . . . .5
Section 4.1. Conditions . . . . . . . . . . . . . . . .5
Section 4.2. Waiver of Conditions . . . . . . . . . . .6
SECTION 5. COMPANY COVENANTS . . . . . . . . . . . . . . .7
Section 5.1. Corporate Existence, Etc . . . . . . . . .7
Section 5.2. Insurance. . . . . . . . . . . . . . . . .7
Section 5.3. Taxes, Claims for Labor and Materials;
Compliance with Laws . . . . . . . . . . .7
Section 5.4. Maintenance, Etc . . . . . . . . . . . . .8
Section 5.5. Nature of Business . . . . . . . . . . . .8
Section 5.6. Consolidated Adjusted Net Worth. . . . . .8
Section 5.7. Limitations on Indebtedness. . . . . . . .8
Section 5.8. Limitation on Liens. . . . . . . . . . . .9
Section 5.9. Mergers, Consolidations and Sales
of Assets. . . . . . . . . . . . . . . . 12
Section 5.10. Guaranties . . . . . . . . . . . . . . . 14
Section 5.11. Repurchase of Notes. . . . . . . . . . . 14
Section 5.12. Transactions with Affiliates . . . . . . 14
Section 5.13. Withdrawal from Multiemployer Plans
and Termination of Pension Plans . . . . 14
Section 5.14. Redesignation of Subsidiaries. . . . . . 15
Section 5.15. Reports and Rights of Inspection . . . . 15
Section 5.16. Dividends. . . . . . . . . . . . . . . . 18
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . 18
Section 6.1. Events of Default. . . . . . . . . . . . 18
Section 6.2. Notice to Holders. . . . . . . . . . . . 20
Section 6.3. Acceleration of Maturities . . . . . . . 20
Section 6.4. Rescission of Acceleration . . . . . . . 21
<PAGE>
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS. . . . . . . 22
Section 7.1. Consent Required . . . . . . . . . . . . 22
Section 7.2. Solicitation of Holders. . . . . . . . . 22
Section 7.3. Effect of Amendment or Waiver. . . . . . 22
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS. . . 22
Section 8.1. Definitions. . . . . . . . . . . . . . . 22
Section 8.2. Accounting Principles. . . . . . . . . . 30
Section 8.3. Directly or Indirectly . . . . . . . . . 30
SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . 30
Section 9.1. Registered Notes . . . . . . . . . . . . 30
Section 9.2. Exchange of Notes. . . . . . . . . . . . 31
Section 9.3. Loss, Theft, Etc. of Notes . . . . . . . 31
Section 9.4. Expenses, Stamp Tax Indemnity. . . . . . 31
Section 9.5. Powers and Rights Not Waived;
Remedies Cumulative. . . . . . . . . . . 32
Section 9.6. Notices. . . . . . . . . . . . . . . . . 32
Section 9.7. Successors and Assigns . . . . . . . . . 33
Section 9.8. Survival of Covenants and
Representations. . . . . . . . . . . . . 33
Section 9.9. Severability . . . . . . . . . . . . . . 33
Section 9.10. Changes in GAAP. . . . . . . . . . . . . 33
Section 9.11. Governing Law. . . . . . . . . . . . . . 33
Section 9.12. Submission to Jurisdiction.. . . . . . . 33
Section 9.13. Captions . . . . . . . . . . . . . . . . 34
Signature. . . . . . . . . . . . . . . . . . . . . . . . . . 35
ATTACHMENTS TO NOTE AGREEMENT:
Schedule I -- Names and Addresses of Purchasers and
Amounts of Commitments
Schedule II -- Description of Current Debt, Funded Debt
(including Capitalized Leases), Liens,
Subsidiaries and Pending Tax Matters
Exhibit A-1 -- Form of 7.25% Senior Note, Series A, due
July 15, 1999
Exhibit A-2 -- Form of 7.52% Senior Note, Series B, due
July 15, 2001
Exhibit A-3 -- Form of 7.88% Senior Note, Series C, due
July 15, 2004
Exhibit A-4 -- Form of 7.98% Senior Note, Series D, due
July 15, 2007
Exhibit B -- Representations and Warranties of the
Company
Exhibit C -- Description of Special Counsel's Closing
Opinion
<PAGE>
Exhibit D -- Description of Closing Opinion of Counsel
to the Company
Exhibit E -- Subordination Provisions Applicable to
Subordinated Indebtedness
<PAGE>
FRED MEYER, INC.
3800 S.E. 22nd Avenue
Portland, Oregon 97242
NOTE AGREEMENT
Re:
$7,500,000 7.25% Senior Notes, Series A,
Due July 15, 1999,
$15,000,000 7.52% Senior Notes, Series B,
Due July 15, 2001,
$20,000,000 7.88% Senior Notes, Series C,
Due July 15, 2004
and
$15,000,000 7.98% Senior Notes, Series D,
Due July 15, 2007
Dated as of
June 1, 1994
To the Purchaser named in Schedule I
hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
The undersigned, Fred Meyer, Inc., a Delaware
corporation (the "Company"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes. (a) The Company
will authorize the issue and sale of its 7.25% Senior Notes,
Series A, due July 15, 1999 (the "Series A Notes") in an
aggregate principal amount of $7,500,000, its 7.52% Senior
Notes, Series B, due July 15, 2001 (the "Series B Notes") in
an aggregate principal amount of $15,000,000, its 7.88%
Senior Notes, Series C, due July 15, 2004 (the "Series C
Notes") in an aggregate principal amount of $20,000,000, and
its 7.98% Senior Notes, Series D, due July 15, 2007 (the
"Series D Notes") in an aggregate principal amount of
$15,000,000. The Series A Notes, the Series B Notes, the
Series C Notes and the Series D Notes issued pursuant to
this Agreement and the other separate agreements referred to
in Section 1.3 are hereinafter collectively referred to as
the "Notes."
(b) The Series A Notes will be dated the date of
issue, will bear interest from such date at the rate of
7.25% per annum, payable semiannually in arrears on the
fifteenth day of January and July in each year (commencing
January 15, 1995) and at maturity and will bear
interest on overdue principal (including any overdue
optional prepayment of principal) and premium, if any, and
(to the extent legally enforceable) on any overdue
installment of interest at the Overdue Rate after the date
due, whether by acceleration or otherwise, until paid. The
Series A Notes shall mature on July 15, 1999 and shall be
substantially in the form attached hereto as Exhibit A-1.
<PAGE>
The Series B Notes will be dated the date of issue,
will bear interest from such date at the rate of 7.52% per
annum, payable semiannually in arrears on the fifteenth day
of January and July in each year (commencing January 15,
1995) and at maturity and will bear interest on overdue
principal (including any overdue optional prepayment of
principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest at the
Overdue Rate after the date due, whether by acceleration or
otherwise, until paid. The Series B Notes shall mature on
July 15, 2001 and shall be substantially in the form
attached hereto as Exhibit A-2.
The Series C Notes will be dated the date of issue,
will bear interest from such date at the rate of 7.88% per
annum, payable semiannually in arrears on the fifteenth day
of January and July in each year (commencing January 15,
1995) and at maturity and will bear interest on overdue
principal (including any overdue optional prepayment of
principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest at the
Overdue Rate after the date due, whether by acceleration or
otherwise, until paid. The Series C Notes shall mature on
July 15, 2004 and shall be substantially in the form
attached hereto as Exhibit A-3.
The Series D Notes will be dated the date of issue,
will bear interest from such date at the rate of 7.98% per
annum, payable semiannually in arrears on the fifteenth day
of January and July in each year (commencing January 15,
1995) and at maturity and will bear interest on overdue
principal (including any overdue optional prepayment of
principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest at the
Overdue Rate after the date due, whether by acceleration or
otherwise, until paid. The Series D Notes shall mature on
July 15, 2007 and shall be substantially in the form
attached hereto as Exhibit A-4.
Interest on the Notes shall be computed on the basis of
a 360-day year of twelve 30-day months. The Notes are not
subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on
the terms and conditions and in the amounts and with the
premium, if any, set forth in Section 2 of this Agreement.
You and the other purchasers named in Schedule I are
hereinafter sometimes referred to as the "Purchasers". The
terms which are capitalized herein shall have the meanings
set forth in Section 8.1 unless the context shall otherwise
require.
Section 1.2. Commitment, Closing Date. Subject to
the terms and conditions hereof and on the basis of the
representations and warranties hereinafter set forth, the
Company agrees to issue and sell to you, and you agree to
purchase from the Company, Notes of the series and in the
aggregate principal amount set forth opposite your name on
Schedule I hereto at a price of 100% of such principal
amount on the Closing Date hereafter mentioned.<PAGE>
Delivery of the Notes will be made at the offices of
Chapman and Cutler, 111 West Monroe Street, Chicago,
Illinois 60603, against payment therefor in Federal Reserve
or other funds current and immediately available at the
principal office of _______ in the amount of the purchase
price at 10:00 A.M., _______ time, on July 15, 1994 (the
"Closing Date"). The Notes delivered to you on the Closing
Date will be delivered to you in the form of a single
registered Note of each series of Notes to be purchased by
you, in the form attached hereto as Exhibit A-1, Exhibit
A-2, Exhibit A-3 or Exhibit A-4, as the case may be, for the
full amount of your purchase (unless different denominations
are specified by you), registered in your name or in the
name of such nominee, as may be specified in Schedule I
attached hereto.
Section 1.3. Other Agreements. Simultaneously with
the execution and delivery of this Agreement, the Company is
entering into similar agreements with the other Purchasers
under which such other Purchasers agree to purchase from the
Company the principal amount of Notes of the series set
opposite such Purchasers' names in Schedule I, and your
obligation and the obligations of the Company hereunder are
subject to the execution and delivery of the similar
agreements by the other Purchasers. This Agreement and said
similar agreements with the other Purchasers are herein
collectively referred to as the "Agreements". The
obligations of each Purchaser shall be several and not joint
and no Purchaser shall be liable or responsible for the acts
of any other Purchaser.
SECTION 2. PREPAYMENT OF NOTES.
No prepayment of the Notes may be made except to the
extent and in the manner provided in this Section.
Section 2.1. Optional Prepayment with Premium. Upon
compliance with Section 2.2, the Company shall have the
privilege, at any time and from time to time, of prepaying
the outstanding Notes, either in whole or in part (but if in
part then in a minimum principal amount of $1,000,000), by
payment of the principal amount of the Notes, or portion
thereof to be prepaid, and accrued interest thereon to the
date of such prepayment, together with a premium equal to
the Make-Whole Amount, determined as of two Business Days
prior to the date of such prepayment pursuant to this
Section 2.1. The Company shall not prepay the Notes of any
series pursuant to this Section 2.1 unless concurrently with
such prepayment the Company shall prepay the same proportion
of the Notes of each other series then outstanding so that
the aggregate principal amount of the Notes of each series
then prepaid bears the same relationship to the aggregate
unpaid principal amount of the Notes of such series
outstanding immediately prior to such prepayment as the
proportion of the Notes of each other series then to be
prepaid bears to the aggregate unpaid principal amount of
the Notes of such series outstanding immediately prior to
such prepayment.
<PAGE>
Section 2.2. Notice of Optional Prepayments. The
Company will give notice of any prepayment of the Notes
pursuant to Section 2.1 to each holder thereof not less than
30 days nor more than 60 days before the date fixed for such
optional prepayment specifying (a) such date, (b) the
principal amount of the holder's Notes to be prepaid on such
date, (c) that a premium may be payable, (d) the date when
such premium will be calculated, (e) the estimated premium,
and (f) the accrued interest applicable to the prepayment.
Such notice of prepayment shall also certify all facts,
if any, which are conditions precedent to any such prepayment.
Notice of prepayment having been so given, the aggregate
principal amount of the Notes specified in such notice,
together with accrued interest thereon and the premium,
if any, payable with respect thereto shall become due and
payable on the prepayment date specified in said notice.
Not later than two Business Days prior to the prepayment
date specified in such notice, the Company shall provide
each holder of a Note written notice of the premium, if
any, payable in connection with such prepayment and, whether
or not any premium is payable, a reasonably detailed
computation of the Make-Whole Amount.
Section 2.3. Application of Prepayments. All partial
prepayments in respect of the Notes of any series shall be
applied on all outstanding Notes of the same series ratably
in accordance with the unpaid principal amounts thereof.
Section 2.4. Direct Payment. Notwithstanding
anything to the contrary contained in this Agreement or the
Notes, in the case of any Note owned by you or your nominee
or owned by any subsequent Institutional Holder which has
given written notice to the Company requesting that the
provisions of this Section 2.4 shall apply, the Company will
punctually pay when due the principal thereof, interest
thereon and premium, if any, due with respect to said
principal, without any presentment thereof, directly to you,
to your nominee or to such subsequent Institutional Holder
at your address or your nominee's address set forth in
Schedule I hereto or such other address as you, your nominee
or such subsequent Institutional Holder may from time to
time designate in writing to the Company or, if a bank
account with a United States bank is designated for you or
your nominee on Schedule I hereto or in any written notice
to the Company from you, from your nominee or from any such
subsequent Institutional Holder, the Company will make such
payments in immediately available funds to such bank
account, no later than 11:00 a.m. Chicago, Illinois time on
the date due, marked for attention as indicated, or in such
other manner or to such other account in any United States
bank as you, your nominee or any such subsequent
Institutional Holder may from time to time direct in
writing. If for any reason whatsoever the Company does not
make any such payment by such 11:00 a.m. transmittal time,
such payment shall be deemed to have been made on the next
following Business Day and such payment shall bear interest
at the Overdue Rate.
<PAGE>
SECTION 3. REPRESENTATIONS.
Section 3.1. Representations of the Company. The
Company represents and warrants that all representations and
warranties set forth in Exhibit B are true and correct as of
the date hereof and are incorporated herein by reference
with the same force and effect as though herein set forth in
full.
Section 3.2. Representations of the Purchaser.
(a) You represent, and in entering into this Agreement the
Company understands, that you are acquiring the Notes for
the purpose of investment and not with a view to the
distribution thereof, and that you have no present intention
of selling, negotiating or otherwise disposing of the Notes;
it being understood, however, that the disposition of your
property shall at all times be and remain within your control.
(b) You further represent that either: (1) you are
acquiring the Notes with assets from your general account
and not with the assets of any separate account in which any
employee benefit plan has any interest; (2) no part of the
funds to be used by you to purchase the Notes constitutes
assets allocated to any separate account maintained by you
such that the application of such funds constitutes a
prohibited transaction under Section 406 of ERISA; or (3)
all or a part of such funds constitute assets of one or more
separate accounts, trusts or a commingled pension trust
maintained by you, and you have disclosed to the Company the
names of such employee benefit plans whose assets in such
separate account or accounts or pension trusts exceed 10% of
the total assets or are expected to exceed 10% of the total
assets of such account or accounts or trusts as of the date
of such purchase and the Company has advised you in writing
(and in making the representations set forth in this clause
(3) you are relying on such advice) that the Company is not
a party-in-interest nor are the Notes employer securities
with respect to the particular employee benefit plan
disclosed to the Company by you as aforesaid (for the
purpose of this clause (3), all employee benefit plans
maintained by the same employer or employee organization are
deemed to be a single plan). As used in this Section
3.2(b), the terms "separate account", "party-in-interest",
"employer securities" and "employee benefit plan" shall have
the respective meanings assigned to them in ERISA.
SECTION 4. CLOSING CONDITIONS.
Section 4.1. Conditions. Your obligation to purchase
the Notes on the Closing Date shall be subject to the
performance by the Company of its agreements hereunder which
by the terms hereof are to be performed at or prior to the
time of delivery of the Notes and to the following further
conditions precedent:
(a) Closing Certificate. You shall have received
a certificate dated the Closing Date, signed by the
President or a Vice President of the Company, the truth
and accuracy of which shall be a condition to your
<PAGE>
obligation to purchase the Notes proposed to be sold to
you and to the effect that (1) the representations and
warranties of the Company set forth in Exhibit B hereto
are true and correct on and with respect to the Closing
Date, (2) the Company has performed all of its
obligations hereunder which are to be performed on or
prior to the Closing Date, and (3) no Default or Event
of Default has occurred and is continuing.
(b) Legal Opinions. You shall have received from
Chapman and Cutler, who are acting as your special
counsel in this transaction, and from Stoel Rives Boley
Jones & Grey, counsel for the Company, their respective
opinions dated the Closing Date, in form and substance
satisfactory to you, and covering the matters set forth
in Exhibits C and D, respectively, hereto.
(c) Company's Existence and Authority. On or
prior to the Closing Date, you shall have received, in
form and substance reasonably satisfactory to you and
your special counsel, such documents and evidence with
respect to the Company as you may reasonably request in
order to establish the existence and good standing of
the Company and the authorization of the transactions
contemplated by this Agreement.
(d) Related Transactions. The Company shall have
consummated the sale of the entire principal amount of
the Notes scheduled to be sold on the Closing Date
pursuant to this Agreement and the other agreements
referred to in Section 1.3.
(e) Private Placement Number. On or prior to the
Closing Date, special counsel to the Purchasers shall
have duly made the appropriate filings with Standard &
Poor's CUSIP Service Bureau, as agent for the National
Association of Insurance Commissioners, in order to
obtain private placement numbers for each series of
Notes.
(f) Funding Instructions. At least three
Business Days prior to the Closing Date, you shall have
received written instructions executed by a Responsible
Officer of the Company directing the manner of the
payment of funds and setting forth (1) the name of the
transferee bank, (2) such transferee bank's ABA number,
(3) the account name and number into which the purchase
price for the Notes is to be deposited, and (4) the
name and telephone number of the account representative
responsible for verifying receipt of such funds.
(g) Special Counsel Fees. Concurrently with the
delivery of the Notes to you on the Closing Date, the
reasonable charges and disbursements of Chapman and
Cutler, your special counsel, shall have been paid by
the Company.
(h) Legality of Investment. The Notes to be
purchased by you shall be a legal investment for you
<PAGE>
under the laws of each jurisdiction to which you may be
subject (without resort to any so-called "basket
provisions" to such laws).
(i) Satisfactory Proceedings. All proceedings
taken in connection with the transactions contemplated
by this Agreement, and all documents necessary to the
consummation thereof, shall be satisfactory in form and
substance to you and your special counsel, and you
shall have received a copy (executed or certified as
may be appropriate) of all legal documents or
proceedings taken in connection with the consummation
of said transactions.
Section 4.2. Waiver of Conditions. If on the Closing
Date the Company fails to tender to you the Notes to be
issued to you on such date or if the conditions specified in
Section 4.1 have not been fulfilled, you may thereupon elect
to be relieved of all further obligations under this
Agreement. Without limiting the foregoing, if the
conditions specified in Section 4.1 have not been fulfilled,
you may waive compliance by the Company with any such
condition to such extent as you may in your sole discretion
determine. Nothing in this Section 4.2 shall operate to
relieve the Company of any of its obligations hereunder or
to waive any of your rights against the Company.
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long
as any amount remains unpaid on any Note:
Section 5.1. Corporate Existence, Etc. The Company
will preserve and keep in full force and effect, and will
cause each Restricted Subsidiary to preserve and keep in
full force and effect, its corporate existence and all
licenses and permits necessary to the proper conduct of its
business, provided that the foregoing shall not prevent any
transaction permitted by Section 5.9.
Section 5.2. Insurance. The Company will maintain,
and will cause each Restricted Subsidiary to maintain,
insurance coverage by financially sound and reputable
insurers and in such forms and amounts (including
deductibles) and against such risks as are (a) maintained by
prudent corporations of established reputation engaged in
the same or a similar business and owning and operating
similar properties and, in the case of the Company, having
as of the date of any determination thereof a "consolidated
net worth" determined in accordance with GAAP approximately
equal to the Consolidated Net Worth of the Company or (b)
consistent with the Company's insurance practices existing
on the Closing Date, including self-insurance, all as more
fully set forth in Schedule II hereto.
Section 5.3. Taxes, Claims for Labor and Materials;
Compliance with Laws.
<PAGE>
(a) The Company will promptly pay and discharge, and
will cause each Restricted Subsidiary promptly to pay and
discharge, all lawful taxes, assessments and governmental
charges or levies imposed upon the Company or such
Restricted Subsidiary, respectively, or upon or in respect
of all or any part of the property or business of the
Company or such Restricted Subsidiary, all trade accounts
payable in accordance with usual and customary business
terms, and all claims for work, labor or materials, which if
unpaid might become a Lien upon any property of the Company
or such Restricted Subsidiary; provided the Company or such
Restricted Subsidiary shall not be required to pay any such
tax, assessment, charge, levy, account payable or claim if
(1) the validity, applicability or amount thereof is being
contested in good faith by appropriate actions or
proceedings which will prevent the forfeiture or sale of any
property of the Company or such Restricted Subsidiary or any
material interference with the use thereof by the Company or
such Restricted Subsidiary, and (2) the Company or such
Restricted Subsidiary shall set aside, on its books,
reserves deemed by it to be adequate with respect thereto.
(b) The Company will promptly comply and will cause
each Restricted Subsidiary to promptly comply with all laws,
ordinances or governmental rules and regulations to which it
is subject, including, without limitation, the Occupational
Safety and Health Act of 1970, as amended, ERISA and all
Environmental Laws, the violation of which could materially
and adversely affect the properties, business, prospects,
profits or condition (financial or otherwise) of the Company
and its Restricted Subsidiaries or would result in any Lien
not permitted under Section 5.8.
Section 5.4. Maintenance, Etc. The Company will
maintain, preserve and keep, and will cause each Restricted
Subsidiary to maintain, preserve and keep, its properties
which are used or useful in the conduct of its business
(whether owned in fee or a leasehold interest) in good
repair and working order and from time to time will make all
necessary repairs, replacements, renewals and additions so
that at all times the efficiency thereof shall be
maintained.
Section 5.5. Nature of Business. Neither the Company
nor any Restricted Subsidiary will engage in or cease to
engage in any business if, as a result, the general nature
of the business, taken on a consolidated basis, which would
then be engaged in by the Company and its Restricted
Subsidiaries would be substantially changed from the
distribution, either at retail or wholesale, of apparel,
general merchandise and food and drug store products and in
connection therewith or in furtherance of and as a
supplement thereto operation of the businesses involved in
the manufacture, distribution or sale of food, consumer
products or services, and related businesses.
Section 5.6. Consolidated Adjusted Net Worth. The
Company will at all times keep and maintain Consolidated
Adjusted Net Worth at an amount not less than $400,000,000.
<PAGE>
Section 5.7. Limitations on Indebtedness. (a) The
Company will not create, assume, guarantee or otherwise
incur or in any manner be or become liable in respect of any
Funded Debt, and will not permit any Restricted Subsidiary
to, create, assume, guarantee or otherwise incur or in any
manner be or become liable in respect of any Indebtedness,
except:
(1) Funded Debt evidenced by the Notes;
(2) Funded Debt of the Company and Indebtedness
of Restricted Subsidiaries outstanding as of the
Closing Date and described on Schedule II hereto;
(3) Subordinated Funded Debt of the Company to a
Restricted Subsidiary;
(4) Indebtedness of a Restricted Subsidiary to
the Company or to a Predominantly-owned Restricted
Subsidiary; and
(5) additional Funded Debt of the Company and
Indebtedness of its Restricted Subsidiaries, provided
that at the time of creation, issuance, assumption,
guarantee or other incurrence thereof and after giving
effect thereto and to the application of the proceeds
thereof:
(i) in the case of the issuance of any Funded
Debt of the Company or a Restricted Subsidiary,
Consolidated Funded Debt shall not exceed 60% of
Consolidated Total Capitalization; provided that
notwithstanding the foregoing, the Company and its
Restricted Subsidiaries may incur Consolidated Funded
Debt exceeding 60% but in no event exceeding 65% of
Consolidated Total Capitalization ("Acquisition Funded
Debt") for a period of not more than four consecutive
fiscal quarters in any five consecutive fiscal year
period if, but only if, 100% of the net proceeds of
such Acquisition Funded Debt are applied to the
acquisition of assets or capital stock of any Person
engaged in one or more of the businesses engaged in
by the Company or a Restricted Subsidiary as described
in Section 5.5; and
(ii) in the case of the issuance of any Funded
Debt of the Company secured by Liens permitted by
Section 5.8(a)(11) or the issuance of Indebtedness of a
Restricted Subsidiary (other than Indebtedness of a
Restricted Subsidiary secured by Liens permitted by
Section 5.8(a)(8) or (10) and Indebtedness of a
corporation which becomes a Restricted Subsidiary after
the date hereof), the sum of (A) all Funded Debt of the
Company secured by Liens permitted by Section
5.8(a)(11), plus (B) the aggregate amount of all
Indebtedness of Restricted Subsidiaries incurred in
accordance with the provisions of this clause (ii)
shall not exceed 15% of Consolidated Total Assets.
<PAGE>
(b) Indebtedness issued or incurred in accordance with
the limitations of Section 5.7(a) may be renewed, extended
or refunded (without increase in principal amount remaining
unpaid at the time of such renewal, extension or refunding),
provided that at the time of such renewal, extension or
refunding and after giving effect thereto, no Event of
Default would exist.
(c) Any corporation which becomes a Restricted
Subsidiary after the date hereof shall for all purposes of
Section 5.7(a)(5)(i) be deemed to have created, assumed or
incurred at the time it becomes a Restricted Subsidiary all
Indebtedness of such corporation existing immediately after
it becomes a Restricted Subsidiary.
Section 5.8. Limitation on Liens. (a) The Company
will not, and will not permit any Restricted Subsidiary to,
create or incur, or suffer to be incurred or to exist, any
Lien on its or their property or assets, whether now owned
or hereafter acquired, or upon any income or profits
therefrom, except:
(1) Liens for property taxes or assessments or
other governmental charges or levies and Liens securing
claims or demands of mechanics and materialmen,
provided that payment thereof is not at the time
required by Section 5.3;
(2) Liens of or resulting from any litigation or
legal proceeding which are currently being contested in
good faith by appropriate proceedings unless the
judgment they secure shall not have been stayed, bonded
or discharged within 60 days;
(3) Liens incidental to the conduct of business
or the ownership of properties and assets (including
Liens in connection with workers' compensation,
unemployment insurance and other like laws,
warehousemen's and attorneys' liens and statutory
landlords' liens) and Liens to secure the performance
of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other
Liens of like general nature, in any such case incurred
in the ordinary course of business and not in
connection with the borrowing of money, which in any
such case would not materially and adversely affect the
properties, business, prospects, profits or condition
(financial or otherwise) of the Company and its Restricted
Subsidiaries, taken as a whole; provided in each case,
the obligation secured is not overdue or, if overdue,
is being contested in good faith by appropriate actions
or proceedings;
(4) minor survey exceptions or minor
encumbrances, easements or reservations, or rights of
others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct
of the activities of the Company and its Restricted
<PAGE>
Subsidiaries or which customarily exist on properties
of corporations engaged in similar activities and
similarly situated and which do not in any event
materially impair their use in the operation of the
business of the Company and its Restricted
Subsidiaries;
(5) Liens securing Indebtedness of a Restricted
Subsidiary to the Company or to another Restricted
Subsidiary;
(6) Liens existing as of the Closing Date and
either described in Note 6 to the consolidated
financial statements of the Company and its
Subsidiaries for the fiscal year ended January 29, 1994
or described on Schedule II hereto;
(7) Liens created or incurred under leases of
real property owned by the Company in which the Company
is the landlord, provided that (1) the rentals payable
under any such lease are for fair rental value, (2) any
such lease is entered into in (i) an "arm's-length"
transaction and (ii) the ordinary course of the
Company's business and (3) after giving effect to the
execution, extension or renewal of any such lease, no
Default or Event of Default would exist;
(8) Liens created or incurred after the Closing
Date given to secure the payment of the purchase price
incurred in connection with the acquisition or purchase
of real or personal property or the cost of
construction or improvements to real or personal
property, in any such case, useful and intended to be
used in carrying on the business of the Company or a
Restricted Subsidiary, provided that (i) the Lien shall
attach solely to the real or personal property
acquired, purchased, constructed or improved, (ii) such
Lien shall have been created or incurred within 270
days after the date of acquisition or purchase or the
date of completion of construction or improvement of
such real or personal property, as the case may be,
(iii) at the time of the imposition of the Lien, the
aggregate amount remaining unpaid on all Indebtedness
secured by Liens on such real or personal property, as
the case may be (whether or not assumed by the Company
or a Restricted Subsidiary) shall not exceed an amount
equal to the lesser of the total acquisition or
purchase price or cost of construction or improvement,
as the case may be, or fair market value of such real
or personal property (as determined in good faith by
the Board of Directors of the Company), and (iv) all
such Indebtedness shall have been incurred within the
applicable limitations provided in Section 5.7(a)(5);
(9) Liens affixed on real or personal property
(including without limitation outstanding shares of
capital stock and Indebtedness) of any entity at the
time such entity becomes a Restricted Subsidiary given
to secure the payment of the purchase price incurred in
<PAGE>
connection with the acquisition of such entity by the
Company or a Restricted Subsidiary; provided that (i)
the Lien shall attach solely to such real or personal
property, (ii) such Lien shall have been created or
incurred substantially concurrently with such
acquisition or purchase, (iii) at the time of
acquisition or purchase of such Restricted Subsidiary,
the aggregate amount of Indebtedness secured by Liens
on such real or personal property (whether or not
assumed by the Company or such Restricted Subsidiary)
shall not exceed an amount equal to the lesser of the
purchase price or fair market value of such real
property or such personal property (as determined in
good faith by the Board of Directors of the Company),
and (iv) all such Indebtedness shall have been incurred
within the applicable limitations provided in Section
5.7(a)(5);
(10) Liens on real or personal property existing
(i) at the time of acquisition thereof, whether or not
the Indebtedness secured thereby is assumed by the
Company or any such Restricted Subsidiary, or (ii) on
the property or outstanding shares of a corporation at
the time such corporation is merged into or
consolidated with the Company or any such Restricted
Subsidiary or at the time of a sale, lease or other
disposition of the properties or outstanding shares or
Indebtedness of a corporation or firm as an entirety to
the Company or any such Restricted Subsidiary; provided
that the amount of Indebtedness secured by such Liens
shall not exceed an amount equal to the lesser of the
acquisition or purchase price or fair market value of
such real or personal property; and provided further,
that all such Indebtedness shall have been incurred
within the limitations of Section 5.7(a)(5)(i);
(11) Liens created or incurred after the Closing
Date given to secure Indebtedness of the Company or any
Restricted Subsidiary in addition to the Liens
permitted by the preceding clauses (1) through (10)
hereof, provided that all Indebtedness secured by such
Liens shall have been incurred within the applicable
limitations provided in Section 5.7(a)(5); and
(12) Liens permitted by the preceding clause (5),
(6), (7), (8), (9), (10) or (11) of this Section 5.8
which have been extended or renewed in respect of the
same property theretofore subject to such Liens in
connection with the extension, renewal or refunding of
the Indebtedness secured thereby; provided that (i)
such extension, renewal or refunding of Indebtedness
shall be without increase in the principal amount
remaining unpaid as of the date of such extension,
renewal or refunding and (ii) such Liens shall attach
solely to the same such property.
(b) In the event that any property, asset or income or
profits therefrom is subjected to a Lien in violation of
this Section 5.8, the Company will make or cause to be made
<PAGE>
provision whereby the Notes will be secured equally and
ratably with all other obligations secured thereby and
concurrently therewith the Company shall furnish to the
holders of the Notes an opinion to such effect in scope and
form reasonably satisfactory to the holders of at least
66-2/3% of the principal amount of the Notes at the time
outstanding of Stoel Rives Boley Jones & Grey or another
independent counsel satisfactory to such holders, and in any
case the Notes shall have the benefit, to the full extent
that, and with such priority as, the holders may be entitled
thereto under applicable law, of an equitable Lien on such
property, asset, income or profits securing the Notes.
Section 5.9. Mergers, Consolidations and Sales of
Assets. (a) The Company will not, and will not permit any
Restricted Subsidiary to, consolidate with or be a party to
a merger with any other corporation, or sell, lease or
otherwise dispose of all or substantially all of its assets;
provided that:
(1) any Restricted Subsidiary may merge or
consolidate with or into the Company or any
Predominantly-owned Restricted Subsidiary so long as in
any merger or consolidation involving the Company, the
Company shall be the surviving or continuing
corporation;
(2) the Company may consolidate or merge with or
into any other corporation if (i) the corporation which
results from such consolidation or merger (the
"surviving corporation") is organized under the laws of
any state of the United States or the District of
Columbia, (ii) the due and punctual payment of the
principal of and premium, if any, and interest on all
of the Notes, according to their tenor, and the due and
punctual performance and observation of all of the
covenants in the Notes and this Agreement to be
performed or observed by the Company are expressly
assumed by the surviving corporation, by written
agreement reasonably satisfactory in scope and form to
the holders of 66-2/3% in aggregate principal amount of
the outstanding Notes (provided that execution by the
holders of the Notes of such agreement shall not be
required), and (iii) at the time of such consolidation
or merger and immediately after giving effect thereto,
(A) no Default or Event of Default would exist and (B)
the surviving corporation would be permitted by the
provisions of Section 5.7(a)(5) to incur at least $1.00
of additional Consolidated Funded Debt; and
(3) the Company may sell or otherwise dispose of
all or substantially all of its assets to any Person if
(i) the acquiring Person is a corporation organized
under the laws of any state of the United States or the
District of Columbia, (ii) the due and punctual payment
of the principal of and premium, if any, and interest
on all the Notes, according to their tenor, and the due
and punctual performance and observance of all of the
covenants in the Notes and in this Agreement to be
<PAGE>
performed or observed by the Company are expressly
assumed by the acquiring corporation, by written
agreement reasonably satisfactory in scope and form to
the holders of 66-2/3% in aggregate principal amount of
the outstanding Notes (provided that execution by the
holders of the Notes of such agreement shall not be
required), and (iii) at the time of such sale or
disposition and immediately after giving effect
thereto, (A) no Default or Event of Default would exist
and (B) the acquiring corporation would be permitted by
the provisions of Section 5.7(a)(5) to incur at least
$1.00 of additional Consolidated Funded Debt.
(b) The Company will not, and will not permit any
Restricted Subsidiary to, sell, lease, transfer, abandon or
otherwise dispose of (any such sale, lease, transfer,
abandonment or other disposition being herein referred to as
a "Transfer") any assets (including stock of any
Subsidiary); provided that the foregoing restrictions do not
apply to:
(1) Transfers in the ordinary course of business
for fair value and except as provided in Section
5.9(a); or
(2) the Transfer of assets of a Restricted
Subsidiary to the Company or a Predominantly-owned
Restricted Subsidiary; or
(3) the Transfer of any real or personal property
of the Company or a Restricted Subsidiary the book
value of which at the time of such Transfer shall be
less than $5,000,000; provided that in the opinion of a
Responsible Officer of the Company (i) the Transfer is
for fair value and is in the best interests of the
Company and (ii) such Transfer is not part of a plan by
the Company to divest itself of a substantial portion
of its assets inconsistent with the purposes of this
Section 5.9 (in which event such Transfer shall be made
within the limitations of Section 5.9(a)(3) or (b)(5));
or
(4) any Transfer of assets of the Company or a
Restricted Subsidiary whenever it is determined in the
good faith judgment of a Responsible Officer of the
Company that such assets are obsolete, worn-out or
without economic value to the Company or any of its
Restricted Subsidiaries; or
(5) any Transfer of such assets for cash or other
property to a Person or Persons if all of the following
conditions are met:
(i) the assets (valued at net book value) do not,
together with all other assets of the Company and its
Restricted Subsidiaries previously Transferred during
the same fiscal year in reliance upon this Section
5.9(b)(5), exceed 10% of Consolidated Total Assets
<PAGE>
determined as of the end of the immediately preceding
fiscal quarter;
(ii) in the good faith judgment of the Company's
Board of Directors, the Transfer is for fair value and
is in the best interests of the Company or such
Restricted Subsidiary;
(iii) immediately after the consummation of
the transaction and after giving effect thereto, (A) no
Default or Event of Default would exist, and (B) the
Company would be permitted by the provisions of Section
5.7(a)(5) to incur at least $1.00 of additional
Consolidated Funded Debt; and
(iv) in the case of any Transfer of all or
substantially all of the assets or stock of a
Subsidiary or of any Indebtedness of a Subsidiary,
immediately after the Transfer such Subsidiary shall
have no Indebtedness of or continuing Investment in the
capital stock of the Company or of any Subsidiary and
any such Indebtedness or Investment shall have been
discharged or acquired, as the case may be, by the
Company or a Subsidiary;
provided, however, that for purposes of the foregoing
calculation, there shall not be included any assets (or
portions of such assets) to the extent the proceeds are
applied within 12 months of the date of Transfer of
such assets to either (A) the acquisition of fixed
assets useful and intended to be used in the operation
of the Company and its Subsidiaries as described in
Section 5.5 and having a fair market value (as
determined in good faith by the Board of Directors of
the Company) at least equal to that of the assets so
Transferred and/or (B) the prepayment at any applicable
prepayment premium of Funded Debt (other than
Subordinated Funded Debt) of the Company. It is
understood and agreed by the Company that any such
proceeds paid and applied to the prepayment of the
Notes as hereinabove provided shall be prepaid as and
to the extent provided in Section 2.1.
Section 5.10. Guaranties. The Company will not, and
will not permit any Restricted Subsidiary to, become or be
liable in respect of any Guaranty of Indebtedness except
Guaranties of Indebtedness by the Company which are limited
in amount to a maximum principal amount, any interest
accrued thereon and any expenses incurred in connection
therewith or which constitute Guaranties of Indebtedness
incurred by any Restricted Subsidiary in compliance with the
provisions of this Agreement.
Section 5.11. Repurchase of Notes. Neither the
Company nor any Subsidiary or Affiliate which is controlled
by the Company, directly or indirectly, may repurchase or
make any offer to repurchase any Notes unless an offer has
been made to repurchase Notes, pro rata, from all holders of
the Notes at the same time and upon the same terms. In case
<PAGE>
the Company or any Subsidiary or Affiliate which is
controlled by the Company repurchases or otherwise acquires
any Notes, such Notes shall immediately thereafter be
cancelled and no Notes shall be issued in substitution
therefor. Without limiting the foregoing, upon the purchase
or other acquisition of any Notes by the Company, any
Subsidiary or any such Affiliate, such Notes shall no longer
be outstanding for purposes of any section of this Agreement
relating to the taking by the holders of the Notes of any
actions with respect hereto, including, without limitation,
Section 6.3, Section 6.4 and Section 7.1.
Section 5.12. Transactions with Affiliates. The
Company will not, and will not permit any Restricted
Subsidiary to, enter into or be a party to any transaction
or arrangement with any Affiliate (including, without
limitation, the purchase from, sale to or exchange of
property with, or the rendering of any service by or for,
any Affiliate), except in the ordinary course of and
pursuant to the reasonable requirements of the Company's or
such Restricted Subsidiary's business and upon fair and
reasonable terms which, when taken as a whole, are no less
favorable to the Company or such Restricted Subsidiary than
would obtain in a comparable arm's-length transaction with a
Person other than an Affiliate.
Section 5.13. Withdrawal from Multiemployer Plans and
Termination of Pension Plans. The Company will not and will
not permit any Subsidiary to withdraw from any Multiemployer
Plan if such withdrawal could result in withdrawal liability
(as described in Part I of Subtitle E of Title IV of ERISA)
or to terminate any Plan which in either case could materially
and adversely affect the financial condition of the Company
and its Restricted Subsidiaries or the ability of the Company
to perform its obligations under this Agreement or the Notes.
Section 5.14. Redesignation of Subsidiaries. The
Company may designate or redesignate any Unrestricted
Subsidiary as a Restricted Subsidiary by giving prompt
written notice to the holders of the Notes that the Board of
Directors of the Company has made such determination,
provided, however, that no Unrestricted Subsidiary may be
designated as a Restricted Subsidiary and no Restricted
Subsidiary which at any time from and after the Closing Date
had previously been designated as an Unrestricted Subsidiary
may be designated as an Unrestricted Subsidiary if, at the
time of such action and after giving effect thereto: (a)
the Company would not be permitted by the provisions of
Section 5.7(a)(5) to incur at least $1.00 of additional
Consolidated Funded Debt, or (b) a Default or Event of
Default would exist, and provided further, that any
Restricted Subsidiary which at any time from and after the
Closing Date had previously been designated as an
Unrestricted Subsidiary and which is to be designated an
Unrestricted Subsidiary may not thereafter be designated as
a Restricted Subsidiary for a period of at least 366 days
following the date of designation of such Restricted
Subsidiary as an Unrestricted Subsidiary.
<PAGE>
Section 5.15. Reports and Rights of Inspection.
(A) The Company will keep, and will cause each Restricted
Subsidiary to keep, proper books of record and account, on a
consolidated basis, in which full and correct entries will
be made of all dealings or transactions of, or in relation
to, the business and affairs of the Company and its
Subsidiaries, in accordance with GAAP consistently applied
(except for changes disclosed in the financial statements
furnished to you pursuant to this Section 5.15 and concurred
in by the independent public accountants referred to in
Section 5.15(b)), and will furnish to you so long as you are
the holder of any Note and to each other Institutional
Holder of the then outstanding Notes (in duplicate if so
specified below or otherwise requested):
(a) Quarterly Statements. As soon as available
and in any event within 90 days after the end of each
quarterly fiscal period (except the last) of each
fiscal year, copies of:
(1) a consolidated balance sheet of the Company
and its consolidated Subsidiaries as of the close of
such quarterly fiscal period, setting forth in
comparative form the consolidated figures for the
fiscal year then most recently ended,
(2) consolidated statements of operations of the
Company and its consolidated Subsidiaries for such
quarterly fiscal period and for the portion of the
fiscal year ending with such quarterly fiscal period,
in each case setting forth in comparative form the
consolidated figures for the corresponding periods of
the preceding fiscal year, and
(3) a consolidated statement of cash flows of the
Company and its consolidated Subsidiaries for the
portion of the fiscal year ending with such quarterly
fiscal period, setting forth in comparative form the
consolidated figures for the corresponding period of
the preceding fiscal year,
all in reasonable detail and certified (subject to
normal year-end adjustments) as to fairness of
presentation and consistency by a Responsible Officer
of the Company;
(b) Annual Statements. As soon as available and
in any event within 120 days after the close of each
fiscal year of the Company, copies of:
(1) a consolidated balance sheet of the Company
and its consolidated Subsidiaries as of the close of
such fiscal year, and
(2) consolidated statements of operations,
changes in stockholders' equity and cash flows of the
Company and its consolidated Subsidiaries for such
fiscal year,
in each case setting forth in comparative form the
consolidated figures for the preceding fiscal year, all
<PAGE>
in reasonable detail and accompanied by a report
thereon of a firm of independent public accountants of
recognized national standing selected by the Company to
the effect that the consolidated financial statements
present fairly, in all material respects, the
consolidated financial position of the Company and its
consolidated Subsidiaries as of the end of the fiscal
year being reported on and the consolidated results of
the operations and cash flows for said year in
conformity with GAAP and that the examination of such
accountants in connection with such financial
statements has been conducted in accordance with
generally accepted auditing standards and included such
tests of the accounting records and such other auditing
procedures as said accountants deemed necessary in the
circumstances;
(c) Audit Reports. Promptly upon receipt
thereof, one copy of each interim or special audit made
by independent accountants of the books of the Company
or any Restricted Subsidiary and any management letter
received from such accountants;
(d) SEC and Other Reports. Promptly upon their
becoming available, one copy of each financial
statement, report, notice or proxy statement sent by
the Company to its creditors and stockholders generally
and of each regular or periodic report, and any
registration statement or prospectus filed by the
Company or any Subsidiary with any securities exchange
or the Securities and Exchange Commission or any
successor agency, and copies of any orders in any
proceedings to which the Company or any of its
Subsidiaries is a party, issued by any governmental
agency, Federal or state, having jurisdiction over the
Company or any of its Subsidiaries;
(e) ERISA Reports. Promptly upon the occurrence
thereof, written notice of (1) a Reportable Event with
respect to any Plan for which the requirement of notice
to the PBGC within 30 days has not been waived
(provided that the loss of qualification of a Plan and
the failure to meet the minimum funding standard of
Section 412 of the Code or Section 302 of ERISA shall
be a Reportable Event for which notice must be given
regardless of the issuance of any waiver of the
reporting requirement by the PBGC); (2) the institution
of any steps by the Company, any ERISA Affiliate, the
PBGC or any other Person to terminate any Plan under
Sections 4041(c) or 4042 of ERISA; (3) the institution
of any steps by the Company or any ERISA Affiliate to
withdraw from any Plan which could result in a liability
to the Company; (4) a non-exempt "prohibited transaction"
within the meaning of Section 406 of ERISA in connection
with any Plan; (5) any material increase in the contingent
liability of the Company or any Restricted Subsidiary
with respect to any post-retirement welfare liability; or
(6) the taking of any action by, or the threatening of the
<PAGE>
taking of any action by, the Internal Revenue Service,
the Department of Labor or the PBGC with respect to any
of the foregoing;
(f) Officer's Certificates. Within the periods
provided in paragraphs (a) and (b) above, a certificate
of a Responsible Officer of the Company stating that
such officer has reviewed the provisions of this
Agreement and setting forth: (1) the information and
computations (in sufficient detail) required in order
to establish whether the Company was in compliance with
the requirements of Sections 5.6, 5.7, 5.8(a)(10) and
5.9(b)(5) at the end of the period covered by the
financial statements then being furnished, and (2)
whether there existed as of the date of such financial
statements and whether, to the best of such officer's
knowledge, there exists on the date of the certificate
or existed at any time during the period covered by
such financial statements any Default or Event of
Default and, if any such condition or event exists on
the date of the certificate, specifying the nature and
period of existence thereof and the action the Company
is taking and proposes to take with respect thereto;
(g) Accountant's Certificates. Within the period
provided in paragraph (b) above, a certificate of the
accountants who render an opinion with respect to such
financial statements, stating that they have reviewed
this Agreement and stating further whether, in making
their audit, such accountants have become aware of any
Default or Event of Default under any of the terms or
provisions of this Agreement insofar as any such terms
or provisions pertain to or involve accounting matters
or determinations, and if any such condition or event
then exists, specifying the nature and period of
existence thereof; and
(h) Requested Information. With reasonable
promptness, such other data and information as you or
any such Institutional Holder may reasonably request.
(B) Without limiting the foregoing, the Company will
permit you, so long as you are the holder of any Note, and
each Institutional Holder of the then outstanding Notes (or
such agents as either you or such Institutional Holder may
designate), to visit and inspect, under the Company's
guidance, any of the properties of the Company or any
Restricted Subsidiary, to examine all of their books of
account, records, reports and other papers, to make copies
and extracts therefrom and to discuss their respective
affairs, finances and accounts with their respective officers,
employees, and independent public accountants (and by this
provision the Company authorizes said accountants to discuss
with you the finances and affairs of the Company and its Restricted
Subsidiaries), all at such reasonable times and as often as
may be reasonably requested. Any visitation shall be at the
sole expense of you or such Institutional Holder, unless a
Default or Event of Default shall have occurred and be
<PAGE>
continuing or the holder of any Note or of any other
evidence of Indebtedness of the Company or any Restricted
Subsidiary gives any written notice or takes any other
action with respect to a claimed default, in which case, any
such visitation or inspection shall be at the sole expense
of the Company.
(C) If at any time Unrestricted Subsidiaries
constitute 5% or more of Consolidated Total Assets or
Unrestricted Subsidiaries contribute 5% or more of operating
income of the Company and its Subsidiaries, then and in such
event the Company shall for each quarterly and annual fiscal
period thereafter deliver the financial statements referred
to in clauses (a) and (b) of Section 5.15(A) on the basis of
the Company and its Restricted Subsidiaries.
Section 5.16. Dividends, Stock Purchases. The Company
will not except as hereinafter provided:
(a) declare or pay any dividends, either in cash
or property, on any shares of its capital stock of any
class (except dividends or other distributions payable
solely in shares of common stock of the Company);
(b) directly or indirectly, or through any
Subsidiary or through any Affiliate of the Company,
purchase, redeem or retire any shares of its capital
stock of any class or any warrants, rights or options
to purchase or acquire any shares of its capital stock
(other than in exchange for or out of the net cash
proceeds to the Company for the substantially
concurrent issue or sale of shares of common stock of
the Company or warrants, rights or options to purchase
or acquire any shares of its common stock); or
(c) make any other payment or distribution,
either directly or indirectly or through any
Subsidiary, in respect of its capital stock;
if after giving effect thereto, an Event of Default would
exist under Section 5.6, Section 5.7 or Section 5.9.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1. Events of Default. Any one or more of
the following shall constitute an "Event of Default" as such
term is used herein:
(a) Default shall occur in the payment of
interest on any Note when the same shall have become
due and such default shall continue for more than five
Business Days; or
(b) Default shall occur in the making of any
payment of the principal of any Note or premium, if
any, thereon at the expressed or any accelerated
maturity date or at any date fixed for prepayment; or
<PAGE>
(c) Default shall occur in the observance or
performance of any covenant or agreement contained in
Section 5.6 through Section 5.9 which is not remedied
within ten Business Days after the first day on which a
Responsible Officer of the Company first obtains
knowledge of such default; or
(d) Default shall occur in the observance or
performance of any other provision of this Agreement
which is not remedied within 30 days after the first
day on which a Responsible Officer of the Company first
obtains knowledge of such Default; provided that in the
case of any Default pursuant to this Section 6.1(d)
which cannot with due diligence be cured within such
30-day period, if the Company shall proceed promptly to
cure the same and thereafter prosecute the curing of
such Default with due diligence, the time within which
to cure such Default shall be extended for such period
as may be necessary to effect such cure but in no event
more than 60 additional days; or
(e) Default shall be made in the payment when due
(whether by lapse of time, by declaration, by call for
redemption or otherwise) of the principal of or
interest on any Indebtedness for borrowed money (other
than the Notes) under any indenture, agreement or other
instrument under which any Indebtedness for borrowed
money of the Company or any Restricted Subsidiary
aggregating in excess of $10,000,000 is outstanding and
such default or event shall occur at the maturity of,
or result in the acceleration of, such Indebtedness for
borrowed money of the Company or any Restricted
Subsidiary and such acceleration shall not have been
rescinded or annulled; or
(f) Default or the happening of any event shall
occur under any indenture, agreement or other
instrument under which any Indebtedness for borrowed
money (other than the Notes) of the Company or any
Restricted Subsidiary aggregating in excess of
$10,000,000 may be issued and such default or event
shall occur at the maturity of, or result in the
acceleration of, such Indebtedness for borrowed money
of the Company or any Restricted Subsidiary and such
acceleration shall not have been rescinded or annulled;
or
(g) Any representation or warranty made by the
Company herein, or made by the Company in any statement
or certificate furnished by the Company in connection
with the consummation of the issuance and delivery of
the Notes or furnished by the Company pursuant hereto,
is untrue in any material respect as of the date of the
issuance or making thereof; or
(h) Final judgment or judgments for the payment
of money aggregating in excess of $10,000,000 (net of
insurance proceeds to the extent the insurer has
acknowledged liability) is or are outstanding against
<PAGE>
the Company or any Material Restricted Subsidiary or
against any property or assets of either and any one
of such judgments has remained unpaid, unvacated,
unbonded or unstayed by appeal or otherwise for a
period of 60 days from the date of its entry; or
(i) A custodian, liquidator, trustee or receiver
is appointed for the Company or any Material Restricted
Subsidiary or for the major part of the property of
either and is not discharged within 60 days after such
appointment; or
(j) The Company or any Material Restricted
Subsidiary becomes insolvent or bankrupt, is generally
not paying its debts as they become due or makes an
assignment for the benefit of creditors, or the Company
or any Material Restricted Subsidiary applies for or
consents to the appointment of a custodian, liquidator,
trustee or receiver for the Company or such Material
Restricted Subsidiary or for the major part of the
property of either; or
(k) Bankruptcy, reorganization, arrangement or
insolvency proceedings, or other proceedings for relief
under any bankruptcy or similar law or laws for the
relief of debtors, are instituted by or against the
Company or any Material Restricted Subsidiary and, if
instituted against the Company or any Material
Restricted Subsidiary, are consented to or are not
dismissed within 60 days after such institution.
Section 6.2. Notice to Holders. When any Event of
Default described in the foregoing Section 6.1 has occurred,
or if the holder of any Note or of any other evidence of
Indebtedness for borrowed money of the Company gives any
notice or takes any other action with respect to a claimed
default, the Company agrees to give notice promptly and in
any event within five Business Days after a Responsible
Officer of the Company first obtains knowledge of such event
to all holders of the Notes then outstanding.
Section 6.3. Acceleration of Maturities. When any
Event of Default described in paragraph (a) or (b) of
Section 6.1 has happened and is continuing, any holder of
any Note may, by notice in writing sent to the Company in
the manner provided in Section 9.6, declare the entire
principal and all interest accrued on such Note to be, and
such Note shall thereupon become due and payable as
hereinafter provided, without any presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived. When any Event of Default described in
paragraphs (a) through (h), inclusive, of said Section 6.1
has happened and is continuing, the holder or holders of
66-2/3% or more of the principal amount of the Notes at the
time outstanding may, by notice in writing to the Company in
the manner provided in Section 9.6, declare the entire
principal and all interest accrued on all Notes to be, and
all Notes shall thereupon become due and payable as
hereinafter provided, without any presentment, demand,
<PAGE>
protest or other notice of any kind, all of which are hereby
expressly waived. The Notes declared due and payable
pursuant to foregoing sentences of this Section 6.3 shall be
and become due and payable five Business Days following
notice in writing sent to the Company in the manner provided
in Section 9.6 as provided in foregoing sentences of this
Section 6.3 (the "Acceleration Date"). When any Event of
Default described in paragraph (i), (j) or (k) of Section
6.1 has occurred, then all outstanding Notes shall
immediately become due and payable without presentment,
demand or notice of any kind. Upon the Notes becoming due
and payable as a result of any Event of Default as aforesaid,
the Company will forthwith pay to the holders of the Notes
the entire principal and interest accrued on the Notes and,
to the extent not prohibited by applicable law, an amount as
liquidated damages for the loss of the bargain evidenced
hereby (and not as a penalty) equal to the Make-Whole
Amount, determined as of the date on which the Notes shall
so become due and payable; provided, however, that if prior
to the Acceleration Date in respect of the occurrence of any
Event of Default described in paragraphs (a) through (h) of
Section 6.1, the provisions of Section 6.4(a), (b) and (c)
shall have been satisfied but the declaration of
acceleration of any Notes shall not have been rescinded and
annulled pursuant to the provisions of Section 6.4, then and
in such event the Company shall on the Acceleration Date pay
to the holders of the Notes which have not rescinded such
declaration of acceleration the entire principal and
interest accrued on such Notes, without payment of any Make-
Whole Amount. No course of dealing on the part of the
holder or holders of any Notes nor any delay or failure on
the part of any holder of Notes to exercise any right shall
operate as a waiver of such right or otherwise prejudice
such holder's rights, powers and remedies. The Company
further agrees, to the extent permitted by law, to pay to
the holder or holders of the Notes all costs and expenses
incurred by them in the collection of any Notes upon any
default hereunder or thereon, including reasonable
compensation to such holder's or holders' attorneys for all
services rendered in connection therewith.
Section 6.4. Rescission of Acceleration. The
provisions of Section 6.3 are subject to the condition that
if the principal of and accrued interest on (1) any
outstanding Note has been declared due and payable by reason
of the occurrence of any Event of Default described in
paragraph (a) or (b) of Section 6.1, the holder of such Note
may, by written instrument filed with the Company, rescind
and annul such declaration and the consequences thereof, and
(2) all of the outstanding Notes have been declared
immediately due and payable by reason of the occurrence of
any Event of Default described in paragraphs (c) through
(h), inclusive, of Section 6.1, the holders of 66-2/3% in
aggregate principal amount of the Notes then outstanding
may, by written instrument filed with the Company, rescind
and annul such declaration and the consequences thereof,
provided in each case that at the time such declaration is
annulled and rescinded:
<PAGE>
(a) no judgment or decree has been entered for
the payment of any monies due pursuant to the Notes or
this Agreement;
(b) all arrears of interest upon all the Notes
and all other sums payable under the Notes and under
this Agreement (except any principal, interest or
premium on the Notes which has become due and payable
solely by reason of such declaration under Section 6.3)
shall have been duly paid; and
(c) each and every other Default and Event of
Default shall have been made good, cured or waived
pursuant to Section 7.1;
and provided further, that no such rescission and annulment
shall extend to or affect any subsequent Default or Event of
Default or impair any right consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1. Consent Required. Any term, covenant,
agreement or condition of this Agreement may, with the
consent of the Company, be amended or compliance therewith
may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company
shall have obtained the consent in writing of the holders of
at least 66-2/3% in aggregate principal amount of
outstanding Notes; provided that without the written consent
of the holders of all of the Notes then outstanding, no such
amendment or waiver shall be effective (a) which will change
the time of payment of the principal of or the interest on
any Note or change the principal amount thereof or reduce
the rate of interest thereon, or (b) which will change any
of the provisions with respect to optional prepayments, or
(c) which will change the percentage of holders of the Notes
required to consent to any such amendment or waiver of any
of the provisions of this Section 7 or Section 6.
Section 7.2. Solicitation of Holders. So long as
there are any Notes outstanding, the Company will not
solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of
this Agreement or the Notes unless each holder of Notes
(irrespective of the amount of Notes then owned by it) shall
be informed thereof by the Company within 5 Business Days
following the initial inquiry with respect thereto by the
Company to any holder of the Notes and shall be afforded the
opportunity of considering the same and shall be supplied by
the Company with sufficient information to enable it to make
an informed decision with respect thereto. The Company will
not, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of Notes as
consideration for or as an inducement to entering into by
any holder of Notes of any waiver or amendment of any of the
terms and provisions of this Agreement or the Notes unless
such remuneration is concurrently offered, on the same
terms, ratably to the holders of all Notes then outstanding.
<PAGE>
Promptly and in any event within 30 days of the date of
execution and delivery of any such waiver or amendment, the
Company shall provide a true, correct and complete copy
thereof to each of the holders of the Notes.
Section 7.3. Effect of Amendment or Waiver. Any such
amendment or waiver shall apply equally to all of the
holders of the Notes and shall be binding upon them, upon
each future holder of any Note and upon the Company, whether
or not such Note shall have been marked to indicate such
amendment or waiver. No such amendment or waiver shall
extend to or affect any obligation not expressly amended or
waived or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1. Definitions. Unless the context
otherwise requires, the terms hereinafter set forth when
used herein shall have the following meanings and the
following definitions shall be equally applicable to both
the singular and plural forms of any of the terms herein
defined:
"Affiliate" shall mean any Person (other than a
Restricted Subsidiary) (a) which directly or indirectly
through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company,
(b) which beneficially owns or holds 10% or more of any
class of the Voting Stock of the Company or (c) 10% or more
of the Voting Stock (or in the case of a Person which is not
a corporation, 10% or more of the equity interest) of which
is beneficially owned or held by the Company or a
Subsidiary. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract
or otherwise.
"Business Day" shall mean any day other than a
Saturday, Sunday or other day on which banks in Portland,
Oregon or New York, New York are required by law to close or
are customarily closed.
"Capitalized Lease" shall mean any lease the obligation
for Rentals with respect to which is required to be
capitalized on a consolidated balance sheet of the lessee
and its subsidiaries in accordance with GAAP.
"Capitalized Rentals" of any Person shall mean as of
the date of any determination thereof the amount at which
the aggregate Rentals due and to become due under all
Capitalized Leases under which such Person is a lessee would
be reflected as a liability on a consolidated balance sheet
of such Person.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations from time to time promulgated
thereunder.
<PAGE>
"Company" shall mean Fred Meyer, Inc., a Delaware
corporation, and any Person who succeeds to all, or
substantially all, of the assets and business of Fred Meyer,
Inc.
"Consolidated Adjusted Net Worth" shall mean as of the
date of any determination thereof the arithmetic sum of:
(a) the amount of the capital stock accounts (net
of treasury stock, at cost, but including preferred
stock), plus (or minus in the case of a deficit) the
surplus and retained earnings of the Company and its
Restricted Subsidiaries as set forth in the
consolidated financial statements of the Company as at
the end of the fiscal quarter immediately preceding the
date of such determination,
MINUS
(b) the net book value, after deducting any
reserves applicable thereto, of all items of the
following character which are included in the assets of
the Company and its Restricted Subsidiaries, to wit:
(1) the incremental increase in an asset
resulting from any reappraisal, revaluation or write-up
of assets, other than an increase to the extent
permitted by GAAP, in any such case in connection with the
acquisition of an asset or business by the Company or
any of its Restricted Subsidiaries; and
(2) (i) unamortized debt discount and expense and
(ii) goodwill, patents, patent applications, permits,
trademarks, trade names, copyrights, licenses,
franchises, experimental expense, organizational
expense, research and development expense and such
other assets as are properly classified as "intangible
assets" the fair market value of which is in excess of
[$5,000,000] acquired by the Company or any of its
Restricted Subsidiaries after the Closing Date;
provided, however, that notwithstanding the foregoing,
the Company may include in any determination of
"Consolidated Adjusted Net Worth" the aggregate net
value of capitalized software, prepaid royalties,
patents, patent applications, trademarks, trade names,
and copyrights and other intellectual property the fair
market value of which is [$5,000,000] or less acquired
after the Closing Date;
all determined in accordance with GAAP.
"Consolidated Funded Debt" shall mean, as of the date
of any determination thereof, all Funded Debt of the Company
and its Restricted Subsidiaries, determined on a
consolidated basis eliminating intercompany items.
"Consolidated Total Assets" shall mean, as of the date
of any determination thereof, total assets of the Company
and its Restricted Subsidiaries determined on a consolidated
basis in accordance with GAAP.
<PAGE>
"Consolidated Total Capitalization" shall mean, as of
the date of any determination thereof, the sum of (a)
Consolidated Funded Debt plus (b) Consolidated Adjusted Net
Worth.
"Default" shall mean any event or condition the
occurrence of which would, with the lapse of time or the
giving of notice, or both, constitute an Event of Default.
"Environmental Law" shall mean any international,
federal, state or local statute, law, regulation, order,
consent decree, judgment, permit, license, code, covenant,
deed restriction, common law, treaty, convention, ordinance
or other requirement relating to public health, safety or
the environment, including, without limitation, those
relating to releases, discharges or emissions to air, water,
land or groundwater, to the withdrawal or use of
groundwater, to the use and handling of polychlorinated
biphenyls or asbestos, to the disposal, treatment, storage
or management of hazardous or solid waste, or Hazardous
Substances or crude oil, or any fraction thereof, or to
exposure to toxic or hazardous materials, to the handling,
transportation, discharge or release of gaseous or liquid
Hazardous Substances and any regulation, order, notice or
demand issued pursuant to such law, statute or ordinance, in
each case applicable to the property of the Company and its
Subsidiaries or the operation, construction or modification
of any thereof, including without limitation, the following:
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Solid Waste
Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, the Hazardous Materials Transportation
Act, as amended, the Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1976, the Safe Drinking
Water Control Act, the Clean Air Act of 1966, as amended,
the Toxic Substances Control Act of 1976, the Occupational
Safety and Health Act of 1977, as amended, the Emergency
Planning and Community Right-to-Know Act of 1986, the
National Environmental Policy Act of 1975, the Oil Pollution
Act of 1990 and any similar or implementing state law, and
any state statute and any further amendments to these laws
providing for financial responsibility for cleanup or other
actions with respect to the release or threatened release of
Hazardous Substances or crude oil, or any fraction thereof,
and all rules, regulations, guidance documents and
publications promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute
of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to
sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" shall mean any corporation, trade or
business that is, along with the Company, a member of a
controlled group of corporations or a controlled group of
<PAGE>
trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Event of Default" shall have the meaning set forth in
Section 6.1.
"Funded Debt" of any Person shall mean (a) all
Indebtedness of such Person for borrowed money or which has
been incurred in connection with the acquisition of assets
in each case having a final maturity of more than one year
from the date of origin thereof (or which is renewable or
extendible at the option of the obligor for a period or
periods more than one year from the date of origin),
including all payments in respect thereof that are required
to be made within one year from the date of any
determination of Funded Debt, whether or not the obligation
to make such payments shall constitute a current liability
of the obligor under GAAP, (b) all Capitalized Rentals of
such Person, and (c) all Guaranties by such Person of Funded
Debt of others.
"GAAP" shall mean generally accepted accounting
principles at the time.
"Guaranties" by any Person shall mean all obligations
(other than endorsements in the ordinary course of business
of negotiable instruments for deposit or collection) of such
Person guaranteeing, or in effect guaranteeing, any
Indebtedness, dividend or other obligation of any other
Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, all
obligations incurred through an agreement, contingent or
otherwise, by such Person: (a) to purchase such
Indebtedness or obligation or any property or assets
constituting security therefor, (b) to advance or supply
funds (1) for the purchase or payment of such Indebtedness
or obligation, or (2) to maintain working capital or any
balance sheet or income statement condition or otherwise to
advance or make available funds for the purchase or payment
of such Indebtedness or obligation, (c) to lease property
or to purchase Securities or other property or services
primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary
obligor to make payment of the Indebtedness or obligation,
or (d) otherwise to assure the owner of the Indebtedness
or obligation of the primary obligor against loss in respect
thereof; provided that (i) letters of credit issued for
the benefit of the Company or a Restricted Subsidiary and
used to finance the purchase of inventory or the construction
of improvements otherwise subject to a construction contract
and (ii) notes, bills and checks presented by the Company
or a Restricted Subsidiary to banks for collection or
deposit in the ordinary course of business upon customary
credit terms may be excluded from any determination of
"Guaranties". For the purposes of all computations made
under this Agreement, a Guaranty in respect of any
Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such
Indebtedness for borrowed money which has been guaranteed,
<PAGE>
and a Guaranty in respect of any other obligation or
liability or any dividend shall be deemed to be
Indebtedness equal to the maximum aggregate amount of
such obligation, liability or dividend.
"Hazardous Substance" shall mean any hazardous or toxic
material, substance or waste, pollutant or contaminant which
is regulated under any statute, law, ordinance, rule or
regulation of any local, state, regional or federal
authority having jurisdiction over the property of the
Company and its Subsidiaries or its use, including but not
limited to any material, substance or waste which is: (a)
defined as a hazardous substance under Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. Section
1317), as amended; (b) regulated as a hazardous waste under
Section 1004 or Section 3001 of the Federal Solid Waste
Disposal Act, as amended by the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.), as amended;
(c) defined as a hazardous substance under Section 101 of
the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.), as amended;
or (d) defined or regulated as a hazardous substance or
hazardous waste under any rules or regulations promulgated
under any of the foregoing statutes.
"Indebtedness" of any Person shall mean and include all
(a) obligations of such Person for borrowed money or which
have been incurred in connection with the acquisition of
property or assets, (b) obligations secured by any Lien upon
property or assets owned by such Person, even though such
Person has not assumed or become liable for the payment of
such obligations, provided that if such Person has not,
directly or indirectly, assumed or otherwise become liable
for the payment of such obligations, the amount of
Indebtedness included in any calculation shall not exceed
the net book value of the property or assets encumbered by
the related Lien, (c) obligations created or arising under
any conditional sale or other title retention agreement with
respect to property acquired by such Person, notwithstanding
the fact that the rights and remedies of the seller, lender
or lessor under such agreement in the event of default are
limited to repossession or sale of property, (d) Capitalized
Rentals and (e) Guaranties of obligations of others of the
character referred to in this definition; provided that in
no event shall:
(1) trade payables incurred in the ordinary
course of business by the Company or a Restricted
Subsidiary upon customary credit terms; and
(2) lease obligations of the Company or any
Restricted Subsidiary which do not constitute
Capitalized Rentals in accordance with GAAP be included
in any determination of "Indebtedness."
"Investments" shall mean all investments, in cash or by
delivery of property, made directly or indirectly in any
Person, whether by acquisition of shares of capital stock,
Indebtedness or other obligations or Securities or by loan,
<PAGE>
advance, capital contribution or otherwise; provided,
however, that "Investments" shall not mean or include
routine investments and property to be used or consumed in
the ordinary course of business.
"Institutional Holder" shall mean any of the following
Persons: (a) any bank, savings and loan association,
savings institution, trust company or national banking
association, acting for its own account or in a fiduciary
capacity, (b) any charitable foundation, (c) any insurance
company, (d) any fraternal benefit society, (e) any pension,
retirement or profit-sharing trust or fund within the
meaning of Title I of ERISA or for which any bank, trust
company, national banking association or investment adviser
registered under the Investment Advisers Act of 1940, as
amended, is acting as trustee or agent, (f) any investment
company or business development company, as defined in the
Investment Company Act of 1940, as amended, (g) any small
business investment company licensed under the Small
Business Investment Act of 1958, as amended, (h) any broker
or dealer registered under the Securities Exchange Act of
1934, as amended, or any investment adviser registered under
the Investment Adviser Act of 1940, as amended, (i) any
government, any public employees' pension or retirement
system, or any other government agency supervising the
investment of public funds, (j) any other entity all of the
equity owners of which are Institutional Holders or (k) any
other Person which may be within the definition of
"qualified institutional buyer" as such term is used in Rule
144A, as from time to time in effect, promulgated under the
Securities Act of 1933, as amended.
"Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, a Person other than the
owner of the property, whether such interest is based on the
common law, statute or contract, and including but not
limited to the security interest lien arising from a
mortgage, encumbrance, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security
purposes. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting real property. The
term "Lien" shall also include, with respect to stock,
stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements. For the purposes
of this Agreement, the Company or a Restricted Subsidiary
shall be deemed to be the owner of any property which it has
acquired or holds subject to a conditional sale agreement,
Capitalized Lease or other arrangement pursuant to which
title to the property has been retained by or vested in some
other Person for security purposes and such retention or
vesting shall constitute a Lien.
"Make-Whole Amount" shall mean in connection with any
prepayment or acceleration of the Notes of any series the
excess, if any, of (a) the aggregate present value as of the
date of such prepayment or payment of each dollar of
principal of the Notes of such series being prepaid or paid
<PAGE>
and the amount of interest (exclusive of interest accrued to
the date of prepayment or payment) that would have been
payable in respect of such dollar if such prepayment or
payment had not been made, determined by discounting such
amounts at the Reinvestment Rate (applied on a semiannual
basis) from the respective dates on which they would have
been payable, over (b) 100% of the principal amount of the
outstanding Notes of such series being prepaid or paid. If
the Reinvestment Rate (i) in the case of the Series A Notes
is equal to or higher than 7.25%, (ii) in the case of the
Series B Notes is equal to or higher than 7.52%, (iii) in
the case of the Series C Notes is equal to or higher than
7.88% or (iv) in the case of the Series D Notes is equal to
or higher than 7.98%, then the Make-Whole Amount with
respect to the Notes of such series shall be zero. For
purposes of any determination of the Make-Whole Amount:
"Reinvestment Rate" shall mean (1) the sum of .50%
plus the yield reported on page "USD" of the Bloomberg
Financial Markets Services Screen (or, if not
available, any other nationally recognized trading
screen reporting on-line intraday trading in United
States government Securities) at 11:00 a.m. (New York
City, New York time) for the United States government
Securities having a maturity (rounded to the nearest
month) corresponding with the maturity date of the
principal of the Notes of the series being prepaid or
paid or (2) in the event no nationally recognized
trading screen reporting on-line intraday trading in
the United States government Securities is available,
Reinvestment Rate shall mean the sum of .50% plus the
arithmetic mean of the yields for the two columns under
the heading "Week Ending" published in the Statistical
Release under the caption "Treasury Constant
Maturities" for the maturity (rounded to the nearest
month) corresponding to the maturity date of the
principal of the Notes of the series being prepaid or
paid. If no published maturity exactly corresponds to
the maturity date of the principal of the Notes of the
series being prepaid or paid, yields for the two
published maturities most closely corresponding to such
maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment
Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For the
purposes of calculating the "Reinvestment Rate", the
most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be
used.
"Statistical Release" shall mean the then most
recently published statistical release designated
"H.15(519)" or any successor publication which is
published weekly by the Federal Reserve System and
which establishes yields on actively traded U.S.
Government Securities adjusted to constant maturities
or, if such statistical release is not published at the
time of any determination hereunder, then such other
<PAGE>
reasonably comparable index which shall be designated
by the holders of 66-2/3% in aggregate principal amount
of the outstanding Notes.
"Material Restricted Subsidiary" shall mean any
Restricted Subsidiary the net worth (computed in accordance
with the definition of "Consolidated Adjusted Net Worth") of
which constitutes at least 2.5% of Consolidated Adjusted Net
Worth.
"Multiemployer Plan" shall have the same meaning as in
ERISA.
"Overdue Rate" shall mean (i) 8.25% per annum in the
case of the Series A Notes, (ii) 8.52% per annum in the case
of the Series B Notes, (iii) 8.88% per annum in the case of
the Series C Notes and (iv) 8.98% per annum in the case of
the Series D Notes.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation and any entity succeeding to any or all of its
functions under ERISA.
"Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, and a
government or agency or political subdivision thereof.
"Plan" shall mean a "pension plan," as such term is
defined in ERISA, established or maintained by the Company
or any ERISA Affiliate or as to which the Company or any
ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Predominantly-owned" when used in connection with any
Subsidiary shall mean a Subsidiary of which at least 80% of
the issued and outstanding shares of stock (except shares
required as directors' qualifying shares) shall be owned by
the Company and/or one or more of its Predominantly-owned
Subsidiaries.
"Purchasers" shall have the meaning set forth in
Section 1.1.
"Rentals" shall mean and include as of the date of any
determination thereof all fixed payments (including as such
all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the
property) payable by the Company or a Restricted Subsidiary,
as lessee or sublessee under a lease of real or personal
property, but shall be exclusive of any amounts required to
be paid by the Company or a Restricted Subsidiary (whether
or not designated as rents or additional rents) on account
of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called "percentage
leases" shall be computed solely on the basis of the minimum
rents, if any, required to be paid by the lessee regardless
of sales volume or gross revenues.
<PAGE>
"Reportable Event" shall have the same meaning as in
ERISA.
"Responsible Officer" shall mean the President, Chief
Financial Officer, Treasurer or Chief Accounting Officer of
the Company.
"Restricted Subsidiary" shall mean any Subsidiary (a)
which is organized under the laws of the United States or
any State thereof; (b) which conducts substantially all of
its business and has substantially all of its assets within
the United States; and (c) which is not designated as an
Unrestricted Subsidiary on Schedule II to this Agreement
or in accordance with Section 5.15.
"Security" shall have the same meaning as in Section
2(1) of the Securities Act of 1933, as amended.
"Subordinated Funded Debt" shall mean all Funded Debt
of the Company which is at all times evidenced by a written
instrument or instruments containing subordination
provisions substantially in the form set forth in Exhibit E
attached hereto, providing for the subordination thereof to
other Indebtedness of the Company, including, without
limitation, the Notes, or such other provisions as may be
approved in writing by the holders of not less than 66-2/3%
in aggregate principal amount of the outstanding Notes.
The term "subsidiary" shall mean as to any particular
parent corporation any corporation of which more than 50%
(by number of votes) of the Voting Stock shall be
beneficially owned, directly or indirectly, by such parent
corporation. The term "Subsidiary" shall mean a subsidiary
of the Company.
"Transfer" shall have the meaning assigned thereto in
Section 5.9(b).
"Unrestricted Subsidiary" shall mean any Subsidiary
which is designated as an Unrestricted Subsidiary in
Schedule II to this Agreement or in accordance with Section
5.15.
"Voting Stock" shall mean Securities of any class or
classes, the holders of which are ordinarily, in the absence
of contingencies, entitled to elect a majority of the
corporate directors (or Persons performing similar
functions).
Section 8.2. Accounting Principles. Where the
character or amount of any asset or liability or item of
income or expense is required to be determined or any
consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall
be done in accordance with GAAP, to the extent applicable,
except where such principles are inconsistent with the
requirements of this Agreement.
<PAGE>
Section 8.3. Directly or Indirectly. Where any
provision in this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking,
such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
SECTION 9. MISCELLANEOUS.
Section 9.1. Registered Notes. The Company shall
cause to be kept at its principal office a register for the
registration and transfer of the Notes, and the Company will
register or transfer or cause to be registered or
transferred, as hereinafter provided, any Note issued
pursuant to this Agreement.
At any time and from time to time the holder of any
Note which has been duly registered as hereinabove provided
may transfer such Note upon surrender thereof at the
principal office of the Company duly endorsed or accompanied
by a written instrument of transfer duly executed by the
holder of such Note or its attorney duly authorized in
writing.
Prior to the presentation to the Company of a duly
executed instrument of transfer and the Note (or, in the
event of loss, theft, mutilation or destruction of the Note,
presentation of a duly executed instrument of transfer in
compliance with Section 9.3 hereof), the Person in whose
name any Note shall be registered shall be deemed and
treated as the owner and holder thereof for all purposes of
this Agreement, notwithstanding any notice to the contrary.
Payment of or on account of the principal, premium, if any,
and interest on any Note shall be made to or upon the
written order of such holder.
Section 9.2. Exchange of Notes. At any time and from
time to time, upon not less than ten days' notice to that
effect given by the holder of any Note initially delivered
or of any Note substituted therefor pursuant to Section 9.1,
this Section 9.2 or Section 9.3, and, upon surrender of such
Note at its office, the Company will deliver in exchange
therefor, without expense to such holder, except as set
forth below, a Note for the same aggregate principal amount
as the then unpaid principal amount of the Note so
surrendered, or Notes in the denomination of $100,000 (or
such lesser amount as shall constitute 100% of the Notes of
such holder) or any amount in excess thereof as such holder
shall specify, dated as of the date to which interest has
been paid on the Note so surrendered or, if such surrender
is prior to the payment of any interest thereon, then dated
as of the date of issue, registered in the name of such
Person or Persons as may be designated by such holder, and
otherwise of the same form and tenor as the Notes so
surrendered for exchange. The Company may require the
payment of a sum sufficient to cover any stamp tax or
governmental charge imposed upon such exchange or transfer.
Section 9.3. Loss, Theft, Etc. of Notes. Upon
receipt of evidence satisfactory to the Company of the loss,
<PAGE>
theft, mutilation or destruction of any Note, and in the
case of any such loss, theft or destruction upon delivery of
a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Note,
the Company will make and deliver without expense to the
holder thereof, a new Note, of like tenor, in lieu of such
lost, stolen, destroyed or mutilated Note. If the Purchaser
or any subsequent Institutional Holder is the owner of any
such lost, stolen or destroyed Note, then the affidavit of
an authorized officer of such owner, setting forth the fact
of loss, theft or destruction and of its ownership of such
Note at the time of such loss, theft or destruction shall be
accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution
and delivery of a new Note other than the written agreement
of such owner to indemnify the Company.
Section 9.4. Expenses, Stamp Tax Indemnity. Whether
or not the transactions herein contemplated shall be
consummated, the Company agrees to pay directly all of your
out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the
transactions contemplated hereby, including but not limited
to the reasonable charges and disbursements of Chapman and
Cutler, your special counsel, in connection with the
preparation, execution and delivery of this Agreement and
the duplicating and printing costs and charges for shipping
the Notes, adequately insured to you at your home office
or at such other place as you may designate, and all such
expenses relating to any amendments, waivers or consents
initiated at the request of the Company at any time
or by action of the holders of the Notes during the
continuance of a Default or Event of Default (whether or
not the same are actually executed and delivered),
including, without limitation, any amendments, waivers, or
consents resulting from any work-out, renegotiation or
restructuring relating to the performance by the Company of
its obligations under this Agreement and the Notes; provided
however, that the Company shall be obligated to pay your
out-of-pocket expenses only if the Company fails to proceed
with the consummation of such transactions. The Company
also agrees to pay, within ten Business Days of receipt
thereof, supplemental statements of Chapman and Cutler for
disbursements unposted or not incurred as of the Closing
Date. The Company further agrees that it will pay and save
you harmless against any and all liability with respect to
stamp and other taxes, if any, which may be payable or which
may be determined to be payable in connection with the
execution and delivery of this Agreement or the Notes,
whether or not any Notes are then outstanding. The Company
agrees to protect and indemnify you against any liability
for any and all brokerage fees and commissions payable or
claimed to be payable to any Person (including BA
Securities, Inc.) in connection with the transactions
contemplated by this Agreement. You represent that you have
not retained any broker or finder to arrange for the offer,
sale or delivery of the Notes. Without limiting the
foregoing, the Company agrees to pay the cost of obtaining
<PAGE>
the private placement numbers for each series of Notes and
authorizes the submission of such information as may be
required by Standard & Poor's CUSIP Service Bureau for the
purpose of obtaining such number.
Section 9.5. Powers and Rights Not Waived; Remedies
Cumulative. No delay or failure on the part of the holder
of any Note in the exercise of any power or right shall
operate as a waiver thereof; nor shall any single or partial
exercise of the same preclude any other or further exercise
thereof, or the exercise of any other power or right, and
the rights and remedies of the holder of any Note are
cumulative to, and are not exclusive of, any rights or
remedies any such holder would otherwise have.
Section 9.6. Notices. All communications provided
for hereunder shall be in writing and, if to you, delivered
or mailed prepaid by registered or certified mail or
overnight air courier, or by facsimile communication, in
each case addressed to you at your address appearing on
Schedule I to this Agreement or such other address as you or
the subsequent holder of any Note initially issued to you
may designate to the Company in writing, and if to the
Company, delivered or mailed by registered or certified mail
or overnight air courier, or by facsimile communication
confirmed by registered or certified mail or overnight air
courier, to the Company at 3800 S.E. 22nd Avenue, Portland,
Oregon 97242, Attention: Vice President, Corporate
Treasurer, or to such other address as the Company may in
writing designate to you or to a subsequent holder of the
Note initially issued to you; provided, however, that a
notice to you by overnight air courier shall only be
effective if delivered to you at a street address designated
for such purpose in Schedule I, and a notice to you by
facsimile communication shall only be effective if made by
confirmed transmission to you at a telephone number
designated for such purpose in Schedule I, or, in
either case, as you or a subsequent holder of any Note
initially issued to you may designate to the Company in
writing.
Section 9.7. Successors and Assigns. This Agreement
shall be binding upon the Company and its successors and
assigns and shall inure to your benefit and to the benefit
of your successors and assigns, including each successive
holder or holders of any Notes.
Section 9.8. Survival of Covenants and
Representations. All covenants, representations and
warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in
connection with the Closing Date, shall survive the closing
and the delivery of this Agreement and the Notes.
Section 9.9. Severability. Should any part of this
Agreement for any reason be declared invalid or
unenforceable, such decision shall not affect the validity
or enforceability of any remaining portion, which remaining
portion shall remain in force and effect as if this
<PAGE>
Agreement had been executed with the invalid or
unenforceable portion thereof eliminated and it is hereby
declared the intention of the parties hereto that they would
have executed the remaining portion of this Agreement
without including therein any such part, parts or portion
which may, for any reason, be hereafter declared invalid or
unenforceable.
Section 9.10. Changes in GAAP. Each of the Purchasers
and each other holder of the Notes by its acceptance thereof
understands and agrees with the Company that in the event
that a change in GAAP occurs which is the sole cause of a
change in any of the calculations contemplated by this
Agreement, including without limitation, calculations with
regard to the covenants contained in Sections 5.6 through
5.9, then in such event the Purchasers and/or such holders,
as the case may be, and the Company shall undertake to amend
any affected provisions of this Agreement so as to preserve
the intent and purpose thereof and to accommodate such
change in GAAP and to enter into an amendment hereof to
reflect the same.
Section 9.11. Governing Law. This Agreement and the
Notes issued and sold hereunder shall be governed by and
construed in accordance with New York law, including all
matters of construction, validity and performance.
Section 9.12. Submission to Jurisdiction. Any legal
action or proceeding with respect to this Agreement or the
Notes or any document related thereto may be brought in the
courts of the State of New York or of the United States of
America for the Southern District of New York, and, by
execution and delivery of this Agreement, the Company hereby
accepts for itself and in respect of its property generally
and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts. The Company hereby irrevocably and
unconditionally waives any objection, including, without
limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens which it may now or
hereafter have to the bringing of any action or proceeding
in such respective jurisdiction.
Section 9.13. Captions. The descriptive headings of
the various Sections or parts of this Agreement are for
convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
The execution hereof by you shall constitute a contract
between us for the uses and purposes hereinabove set forth,
and this Agreement may be executed in any number of
<PAGE>
counterparts, each executed counterpart constituting an
original but all together only one agreement.
FRED MEYER, INC.
By ________________________________
Its Vice President and
Corporate Treasurer
Accepted as of _____________, 1994.
[VARIATION]
By ________________________________
Its<PAGE>
SCHEDULE I
----------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAMES AND ADDRESSES OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
PHOENIX HOME LIFE MUTUAL $15,000,000 Series D
INSURANCE COMPANY
One American Row
Hartford, Connecticut 06115
Attention: Private Placements Division
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.98%
Senior Notes, Series D, due 2007, PPN 593098 B# 2,
principal, premium or interest") to:
Chase Manhattan Bank (ABA #021 0000 21)
BNF-SSG Private Income Processing/AC-9009000200
for credit to: Phoenix Home Life Mutual Insurance
Company
Account Number G-05143
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 06-0493340
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAME AND ADDRESS OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
THE VARIABLE ANNUITY LIFE $8,000,000 Series B
INSURANCE COMPANY
c/o American General $4,000,000 Series C
Corporation
P. O. Box 3247
Houston, Texas 77253-3247*
Attention: Investment
Research Department, A37-01
Facsimile Number: (713) 831-1366
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.52%
Senior Notes, Series B, due 2001, PPN 593098 B* 6, principal
or interest" or "Fred Meyer, Inc., 7.88% Senior Notes,
Series C, due 2004, PPN 593098 B@ 4, principal, premium or
interest", as the case may be) to:
State Street Bank and Trust Company (ABA #011000028)
Boston, Massachusetts 02101
Re: The Variable Annuity Life Insurance Company
AC-0125-821-9
OBI=Description of payment
Fund Number PA 54
Notices
All notices of payment on or in respect of the Notes and
written confirmation of each such payment to:
The Variable Annuity Life Insurance Company and PA 54
c/o State Street Bank and Trust Company
State Street South
Ann Hutchinson Offices, 2nd Fl.
108 Myrtle Street
Two Newport Office Park
North Quincy, Massachusetts 02171
Facsimile Number: (617) 985-4923
Duplicate payment notices and all other correspondences to
be addressed as first provided above.
*In the event that notices/communications are sent by
courier (e.g., Federal Express) rather than U.S. Postal
Service, the address should be changed to: 2929 Allen
Parkway, Houston, Texas 77019, Attention: Private
Placements, A37-01.
<PAGE>
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 74-1625348
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAME AND ADDRESS OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
THE MINNESOTA MUTUAL $8,000,000 Series C
LIFE INSURANCE COMPANY
400 North Robert Street
St. Paul, Minnesota 55101
Attention: Investment Department
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.88%
Senior Notes, Series C, due 2004, PPN 593098 B@ 4,
principal, premium or interest") to:
The First Bank National Association (ABA #091000022)
Minneapolis, Minnesota
BNF The Minnesota Mutual Life Insurance Company
Account Number 1-801-10-00600-4
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-0417830
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAME AND ADDRESS OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
THE CANADA LIFE $6,000,000 Series A
ASSURANCE COMPANY
Investment Department, U-6
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attention: U.S. Private Placements
Telefacsimile: (416) 597-9678
Confirmation: (416) 597-1456, ext. 5117
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.25%
Senior Notes, Series A, due 1999, PPN 593098 A@ 5,
principal, premium or interest") to:
Ince & Co.
c/o Morgan Guaranty Trust Company of New York (ABA
#021000238)
Account Number 999-99-024
Attention: Custody Collection
for: The Canada Life Assurance Company
Trust Account Number 41233
Notices
All notices and communications to be addressed as first
provided above, except notices with respect to payments and
written confirmation of each such payment to be addressed:
Morgan Guaranty Trust Company
60 Wall Street
New York, New York 10260
Attention: Patricia Ewing
with duplicate notice to:
The Canada Life Assurance Company
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attention: Supervisor, Securities Accounting
Name of Nominee in which Notes are to be issued: Ince & Co.
Taxpayer I.D. Number: 38-0397420<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAME AND ADDRESS OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
CANADA LIFE INSURANCE COMPANY $1,000,000 Series A
OF AMERICA
c/o The Canada Life Assurance Company
Investment Department, U-6
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attention: U.S. Private Placements
Telefacsimile: (416) 597-9678
Confirmation: (416) 597-1456, ext. 5117
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.25%
Senior Notes, Series A, due 1999, PPN 593098 A@ 5,
principal, premium or interest") to:
Chemical Bank (ABA #021-000128)
Account Number 544-755-102
For benefit of F/A/O AR80-77249
Attention: Mr. Tom Finn
for: The Canada Life Insurance Company of America
(CLICA)
Trust Account AR80-77249
Notices
All notices and communications to be addressed as first
provided above, except notices with respect to payments and
written confirmation of each such payment to be addressed:
Chemical Bank
Institutional Client Services
4 New York Plaza-4th Floor
New York, New York 10004
Attention: Mr. Michael Roman
with duplicate notice to:
The Canada Life Assurance Company
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attention: Supervisor, Securities Accounting
Name of Nominee in which Notes are to be issued: Cummings &
Co.
Taxpayer I.D. Number: 38-2816473
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAME AND ADDRESS OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
CANADA LIFE INSURANCE COMPANY $500,000 Series A
OF NEW YORK
c/o The Canada Life Assurance Company
Investment Department, U-6
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attention: U.S. Private Placements
Telefacsimile: (416) 597-9678
Confirmation: (416) 597-1456, ext. 5117
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.25%
Senior Notes, Series A, due 1999, PPN 593098 A@ 5,
principal, premium or interest") to:
Ince & Co.
c/o Morgan Guaranty Trust Company of New York (ABA #021
000 238)
Account Number 999-99-024
Attention: Custody Collection
for: Canada Life Insurance Company of New York
Custody Account Number 33370
Notices
All notices and communications to be addressed as first
provided above, except notices with respect to payments and
written confirmation of each such payment to be addressed:
Morgan Guaranty Trust Company
15 Broad Street
New York, New York 10015
Attention: Custody Collection Department
with duplicate notice to:
The Canada Life Assurance Company
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attention: Supervisor, Securities Accounting
Name of Nominee in which Notes are to be issued: Ince & Co.
Taxpayer I.D. Number: 13-269-0792
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAMES AND ADDRESSES OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
THE FRANKLIN LIFE $3,000,000 Series B
INSURANCE COMPANY
One Franklin Square
Springfield, Illinois 62713
Attention: Investment Division
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.52%
Senior Notes, Series B, due 2001, PPN 593098 B* 6,
principal, premium or interest") to:
Morgan Guaranty Trust Company of New York (ABA #0210-
0023-8)
23 Wall Street
New York, New York 10015
Attention: Money Transfer Department
for credit to: The Franklin Life Insurance Company
Account Number 022-05-988
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 37-0281650<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAMES AND ADDRESSES OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
KNIGHTS OF COLUMBUS $3,000,000 Series B
One Columbus Plaza
New Haven, Connecticut 06507
Attention: Investment Department
Telecopier Number: (203) 772-0037
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.52%
Senior Notes, Series B, due 2001, PPN 593098 B* 6,
principal, premium or interest") to:
Morgan Guaranty Trust Company of New York (ABA
#021000238)
60 Wall Street
New York, New York 10260
for credit to: Knights of Columbus
MGT Receipts
Account Number 001-02-667
Notices
All notices and communications to be addressed as first
provided above, except notices with respect to payments and
written confirmation of each such payment to be addressed,
Attention: Accounting Department.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 060416470
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAMES AND ADDRESSES OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
SAFECO LIFE $3,000,000 Series C
INSURANCE COMPANY
(for the account of Safeco Life Annuity)
Investment Department, T-14 Safeco Plaza
Seattle, Washington 98185
Attention: Keith Bunch (206) 545-3111 or Ron Spaulding
Telecopier Number: (206) 545-3446
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.88%
Senior Notes, Series C, due 2004, PPN 593098 B@ 4,
principal, premium or interest") to:
US Trust/NYC/Trust (ABA #021001318)
for credit to: Safeco Life Annuity
Account Number 473633
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above with a copy
of all such notices and communications to be addressed:
Atwell & Co.
c/o U.S. Trust Company
P.O. Box 456, Wall Street Station
New York, New York 10005
Name of Nominee in which Notes are to be issued: Atwell &
Co.
Taxpayer I.D. Number: 3-6065575
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAME AND ADDRESS OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
THE SECURITY MUTUAL LIFE $1,000,000 Series B
INSURANCE COMPANY OF
LINCOLN, NEBRASKA
200 Centennial Mall North
Lincoln, Nebraska 68508
Attention: Investment Department
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.52%
Senior Notes, Series B, due 2001, PPN 593098 B* 6,
principal, premium or interest") to:
National Bank of Commerce (ABA #1040-00045)
13th and "O" Streets
Lincoln, Nebraska
for credit to: Security Mutual Life
Account Number 40-797-624
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 47-0293990
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAMES AND ADDRESSES OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
STANDARD INSURANCE COMPANY $1,000,000 Series C
P.O. Box 711
Portland, Oregon 97207
Attention: Securities Department
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.88%
Senior Notes, Series C, due 2004, PPN 593098 B@ 4,
principal, premium or interest") to:
First Interstate Bank of Oregon/First Port Trust (ABA
#123000123)
1300 S.W. Fifth Avenue, 10th Floor
Portland, Oregon 97201
Attention: B. Harvey, Trust Operations
for credit to: Standard Insurance Company
Account Number 450010
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: STANCO
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAMES AND ADDRESSES OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
WOODMEN ACCIDENT AND $1,000,000 Series C
LIFE COMPANY
P.O. Box 82288
Lincoln, Nebraska 68501
Attention: Securities Division
Telecopy Number: (402) 437-4392
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal funds (identifying each payment as
"Fred Meyer, Inc., 7.88% Senior Notes, Series C, due 2004,
PPN 593098 B@ 4, principal, premium or interest") to:
FirsTier Bank Lincoln, N.A. (ABA #1040-0003-2)
13 and M Streets
Lincoln, Nebraska 68508
for credit to: Woodmen Accident and Life Company
General Fund, Account Number 092-909
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above; provided,
however, all notices and communications delivered by
overnight courier shall be addressed as follows:
Woodmen Accident and Life Company
1526 K Street
Lincoln, Nebraska 68508
Attention: Securities Division
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 47-0339220
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAME AND ADDRESS OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
MUTUAL TRUST LIFE $1,000,000 Series C
INSURANCE COMPANY
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, Minnesota 55101
Attention: Client Administrator
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.88%
Senior Notes, Series C, due 2004, PPN 593098 B@ 4,
principal, premium or interest") to:
The Northern Trust Company (ABA #071000152)
Chicago, Illinois
for Credit Wire Account Number 5186041000
for further credit to: Mutual Trust Life Insurance
Company
Account Number 26-00621
Attention: MBS Department
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: ELL & Co.
Taxpayer I.D. Number: 36-1516780
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAME AND ADDRESS OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
SECURITY LIFE INSURANCE COMPANY $500,000 Series C
c/o MIMLIC Asset
Management Company
400 North Robert Street
St. Paul, Minnesota 55101
Attention: Investment Department
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.88%
Senior Notes, Series C, due 2004, PPN 593098 B@ 4,
principal, premium or interest") to:
First Bank N.A. (ABA #091-0000-22)
Minneapolis, Minnesota
for further credit to: First Trust N.A.
Account Number 180121167365
for credit to: Security Life Insurance Company
Account Number 10170060, TSU: 020
Attention: Peggy Sime (612) 244-0647
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: Var & Co.
Taxpayer I.D. Number: 41-0808596
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAME AND ADDRESS OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
NATIONAL TRAVELERS LIFE COMPANY $500,000 Series C
c/o MIMLIC Asset
Management Company
400 North Robert Street
St. Paul, Minnesota 55101
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.88%
Senior Notes, Series C, due 2004, PPN 593098 B@ 4,
principal, premium or interest") to:
First Bank N.A. (ABA #091-0000-22)
Minneapolis, Minnesota
for further credit to: First Trust N.A.
Account Number 180121167365
TSU: 020
for credit to: National Travelers Life Company
Account Number 12609110
Attention: Sheldon Sobro (612) 244-0648
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: Var & Co.
Taxpayer I.D. Number: 42-0432940
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAME AND ADDRESS OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
COLORADO BANKERS LIFE $500,000 Series C
INSURANCE COMPANY
c/o MIMLIC Asset
Management Company
400 North Robert Street
St. Paul, Minnesota 55101
Attention: Client Administrator
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.88%
Senior Notes, Series C, due 2004, PPN 593098 B@ 4,
principal, premium or interest") to:
Bankers Trust Company (ABA #021-001-003)
New York, New York
for credit to Account Number 01419540
for further credit to: Colorado Bankers
Life Insurance Company
Account Number 098125
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: Salkeld &
Co.
Taxpayer I.D. Number: 84-0674027
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SERIES
NAME AND ADDRESS OF NOTES TO BE OF
OF PURCHASERS PURCHASED NOTES
<S> <C> <C>
GUARANTEE RESERVE LIFE $500,000 Series C
INSURANCE COMPANY
c/o MIMLIC Asset
Management Company
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Client Administrator
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank
wire transfer of Federal or other immediately available
funds (identifying each payment as "Fred Meyer, Inc., 7.88%
Senior Notes, Series C, due 2004, PPN 593098 B@ 4,
principal, premium or interest") to:
Mercantile National Bank of Indiana (ABA #0719-12813)
Hammond, Indiana
for credit to: Guarantee Reserve Life Insurance
Company
Account Number 17-74040
Notices
All notices and communications, including notices with
respect to payments and written confirmation of each such
payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: GANT & CO
Taxpayer I.D. Number: 35-0815760
<PAGE>
SCHEDULE II
(to Note Agreement)
SUBSIDIARIES OF THE COMPANY
1. RESTRICTED SUBSIDIARIES:
<TABLE>
<CAPTION>
PERCENTAGE
OF VOTING
JURISDICTION STOCK OWNED BY
NAME OF OF COMPANY AND EACH
SUBSIDIARY INCORPORATION OTHER SUBSIDIARY
<S> <C> <C>
B&B Stores, Inc. Montana 100%
B&B Pharmacy, Inc. Montana 100%
CB&S Advertising Agency, Inc. Oregon 100%
Distribution Trucking Company Oregon 100%
FM Holding Corporation Delaware 100%
Grand Central, Inc. Utah 100%
FM Retail Services, Inc. Washington 100%
Fred Meyer, Inc.
(a Washington Corporation) Washington 100%
Fred Meyer of Alaska, Inc. Alaska 100%
Fred Meyer of California, Inc. California 100%
Natur Glo, Inc. Oregon 100%
Roundup Co. Washington 100%
</TABLE>
2. SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES):
<TABLE>
<CAPTION>
PERCENTAGE
OF VOTING
JURISDICTION STOCK OWNED BY
NAME OF OF COMPANY AND EACH
SUBSIDIARY INCORPORATION OTHER SUBSIDIARY
<S> <C> <C>
Fred Meyer (UK) Limited Hong Kong 100%
(inactive)
</TABLE>
<PAGE>
DESCRIPTION OF DEBT AND CAPITALIZED LEASES
1. Indebtedness of Restricted Subsidiaries outstanding on
the Closing Date and Liens (if any) securing any such
Indebtedness are as follows:
Roundup Co. Note and Trust Deed to $ 13,220,000
Nationwide Life
Fred Meyer of Alaska, Note and Trust Deed to $ 16,981,969
Inc. Nationwide Life
2. Funded Debt (other than Capitalized Rentals) of the
Company outstanding on the Closing Date and Liens (if
any) securing any such Funded Debt are as follows:
Unsecured Term Notes to Five Banks $ 70,000,000
Unsecured Zero Coupon Note to Prudential $ 28,335,620
Note and Trust Deed to Employers' Life $ 2,685,150
Note and Trust Deed to Nationwide Life $ 10,740,600
Unsecured Note to Rabobank $ 10,000,000
Unsecured Commercial Paper (as of July 8, 1994) $205,442,758
3. Capitalized Leases of the Company and its Restricted
Subsidiaries outstanding on the Closing Date and Liens
(if any) securing any such Capitalized Leases are as
follows:
Fred Meyer, Inc. to Duane Co. $ 6,950,000
Grand Central, Inc. to various investors $ 10,735,000
<PAGE>
DESCRIPTION OF INSURANCE
A. Liability Insurance: Subject to $2,000,000 self-
insurance retention; $50,000,000 limit
B. Workers Compensation Insurance: Self-insured in major
states (Oregon and Washington); insurance carried for
losses in excess of $350,000 per incident.
C. Property Insurance: Values insured to replacement cost
including business interruption. Deductibles per
incident range up to $1,000,000 with a variety of sub-
limits. Earthquake coverage subject to a deductible of
5% of values.
<PAGE>
EXHIBIT A-1
(to Note Agreement)
FRED MEYER, INC.
7.25% Senior Note, Series A,
Due July 15, 1999
PPN 593098 A@ 5
No. RA-__ July __, 1994
$
Fred Meyer, Inc., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to
or registered assigns
on the fifteenth day of July, 1999
the principal amount of
Dollars ($_______________)
and to pay interest (computed on the basis of a 360-day year
of twelve 30-day months) on the principal amount from time
to time remaining unpaid hereon at the rate of 7.25% per
annum from the date hereof until maturity, payable
semiannually on the fifteenth day of January and July in
each year (commencing on January 15, 1995) and at maturity.
The Company agrees to pay interest on overdue principal
(including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the
rate of 8.25% per annum after the due date, whether by
acceleration or otherwise, until paid.
Both the principal hereof and interest hereon are
payable at the principal office of the Company in Portland,
Oregon in coin or currency of the United States of America
which at the time of payment shall be legal tender for the
payment of public and private debts. If any amount of
principal, premium, if any, or interest on or in respect of
this Note becomes due and payable on any date which is not a
Business Day, such amount shall be payable on the
immediately preceding Business Day. "Business Day" means
any day other than a Saturday, Sunday or other day on which
banks in Portland, Oregon or New York, New York are required
by law to close or are customarily closed.
This Note is one of the 7.25% Senior Notes, Series A,
due July 15, 1999 (the "Notes") of the Company in the
aggregate principal amount of $7,500,000 which, together
with the Company's $15,000,000 aggregate principal amount of
7.52% Senior Notes, Series B, due July 15, 2001 (the "Series
B Notes"), the Company's $20,000,000 aggregate principal
amount of 7.88% Senior Notes, Series C, due July 15, 2004
(the "Series C Notes") and the Company's $15,000,000
<PAGE>
aggregate principal amount of 7.98% Senior Notes, Series D,
due July 15, 2007 (the "Series D Notes", said Series D
Notes together with the Series A Notes, the Series B
Notes and the Series C Notes are hereinafter referred to
collectively as the "Notes"), are issued or to be issued
under and pursuant to the terms and provisions of the
separate Note Agreements, each dated as of June 1, 1994
(the "Note Agreements"), entered into by the Company
with the original Purchasers therein referred to
and this Note and the holder hereof are entitled equally and
ratably with the holders of all other Notes outstanding
under the Note Agreements to all the benefits provided for
thereby or referred to therein. Reference is hereby made to
the Note Agreements for a statement of such rights and
benefits.
This Note and the other Notes outstanding under the
Note Agreements may be declared due prior to their expressed
maturity dates, in the events, on the terms and in the
manner and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption
at the option of the Company prior to their expressed
maturity dates except on the terms and conditions and in the
amounts and with the premium, if any, set forth in the Note
Agreements.
This Note is registered on the books of the Company and
is transferable only by surrender thereof at the principal
office of the Company duly endorsed or accompanied by a
written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly
authorized in writing. Payment of or on account of
principal, premium, if any, and interest on this Note shall
be made only to or upon the order in writing of the
registered holder.
This Note and said Note Agreements are governed by and
construed in accordance with the laws of New York, including
all matters of construction, validity and performance.
FRED MEYER, INC.
By ________________________________
Its Vice President and
Corporate Treasurer
<PAGE>
EXHIBIT A-2
(to Note Agreement)
FRED MEYER, INC.
7.52% Senior Note, Series B,
Due July 15, 2001
PPN 593098 B* 6
No. RB-__ July __, 1994
$
FRED MEYER, INC., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to
or registered assigns
on the fifteenth day of July, 2001
the principal amount of
Dollars ($_______________)
and to pay interest (computed on the basis of a 360-day year
of twelve 30-day months) on the principal amount from time
to time remaining unpaid hereon at the rate of 7.52% per
annum from the date hereof until maturity, payable
semiannually on the fifteenth day of January and July in
each year (commencing on January 15, 1995) and at maturity.
The Company agrees to pay interest on overdue principal
(including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the
rate of 8.52% per annum after the due date, whether by
acceleration or otherwise, until paid.
Both the principal hereof and interest hereon are
payable at the principal office of the Company in Portland,
Oregon in coin or currency of the United States of America
which at the time of payment shall be legal tender for the
payment of public and private debts. If any amount of
principal, premium, if any, or interest on or in respect of
this Note becomes due and payable on any date which is not a
Business Day, such amount shall be payable on the
immediately preceding Business Day. "Business Day" means
any day other than a Saturday, Sunday or other day on which
banks in Portland, Oregon or New York, New York are required
by law to close or are customarily closed.
This Note is one of the 7.52% Senior Notes, Series B,
due July 15, 2001 (the "Notes") of the Company in the
aggregate principal amount of $15,000,000 which, together
with the Company's $7,500,000 aggregate principal amount of
7.25% Senior Notes, Series A, due July 15, 1999 (the
"Series A Notes"), the Company's $20,000,000 aggregate
principal amount of 7.88% Senior Notes, Series C, due
July 15, 2004 (the "Series C Notes") and the Company's
$15,000,000 aggregate principal amount of 7.98% Senior
<PAGE>
Notes, Series D, due July 15, 2007 (the "Series D Notes",
said Series D Notes together with the Series A Notes,
the Series B Notes and the Series C Notes are hereinafter
referred to collectively as the "Notes"), are issued or
to be issued under and pursuant to the terms and provisions
of the separate Note Agreements, each dated as of June 1,
1994 (the "Note Agreements"), entered into by the Company
with the original Purchasers therein referred to and this
Note and the holder hereof are entitled equally and
ratably with the holders of all other Notes outstanding
under the Note Agreements to all the benefits provided for
thereby or referred to therein. Reference is hereby made to
the Note Agreements for a statement of such rights and
benefits.
This Note and the other Notes outstanding under the
Note Agreements may be declared due prior to their expressed
maturity dates, in the events, on the terms and in the
manner and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption
at the option of the Company prior to their expressed
maturity dates except on the terms and conditions and in the
amounts and with the premium, if any, set forth in the Note
Agreements.
This Note is registered on the books of the Company and
is transferable only by surrender thereof at the principal
office of the Company duly endorsed or accompanied by a
written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly
authorized in writing. Payment of or on account of
principal, premium, if any, and interest on this Note shall
be made only to or upon the order in writing of the
registered holder.
This Note and said Note Agreements are governed by and
construed in accordance with the laws of New York, including
all matters of construction, validity and performance.
FRED MEYER, INC.
By ________________________________
Its Vice President and
Corporate Treasurer
<PAGE>
EXHIBIT A-3
(to Note Agreement)
FRED MEYER, INC.
7.88% Senior Note, Series C,
Due July 15, 2004
PPN 593098 B@ 4
No. RC-__ July __, 1994
$
Fred Meyer, Inc., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to
or registered assigns
on the fifteenth day of July, 2004
the principal amount of
Dollars ($_______________)
and to pay interest (computed on the basis of a 360-day year
of twelve 30-day months) on the principal amount from time
to time remaining unpaid hereon at the rate of 7.88% per
annum from the date hereof until maturity, payable
semiannually on the fifteenth day of January and July in
each year (commencing on January 15, 1995) and at maturity.
The Company agrees to pay interest on overdue principal
(including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the
rate of 8.88% per annum after the due date, whether by
acceleration or otherwise, until paid.
Both the principal hereof and interest hereon are
payable at the principal office of the Company in Portland,
Oregon in coin or currency of the United States of America
which at the time of payment shall be legal tender for the
payment of public and private debts. If any amount of
principal, premium, if any, or interest on or in respect of
this Note becomes due and payable on any date which is not a
Business Day, such amount shall be payable on the
immediately preceding Business Day. "Business Day" means
any day other than a Saturday, Sunday or other day on which
banks in Portland, Oregon or New York, New York are required
by law to close or are customarily closed.
This Note is one of the 7.88% Senior Notes, Series C,
due July 15, 2004 (the "Notes") of the Company in the
aggregate principal amount of $20,000,000 which, together
with the Company's $7,500,000 aggregate principal amount of
7.25% Senior Notes, Series A, due July 15, 1999 (the
"Series A Notes"), the Company's $15,000,000 aggregate
principal amount of 7.52% Senior Notes, Series B, due
July 15, 2001 (the "Series B Notes") and the
Company's $15,000,000 aggregate principal amount of 7.98%
<PAGE>
Senior Notes, Series D, due July 15, 2007 (the "Series D
Notes", said Series D Notes together with the Series A
Notes, the Series B Notes and the Series C Notes are
hereinafter referred to collectively as the "Notes"), are
issued or to be issued under and pursuant to the terms and
provisions of the separate Note Agreements, each dated as of
June 1, 1994 (the "Note Agreements"), entered into by the
Company with the original Purchasers therein referred to and
this Note and the holder hereof are entitled equally and
ratably with the holders of all other Notes outstanding
under the Note Agreements to all the benefits provided for
thereby or referred to therein. Reference is hereby made to
the Note Agreements for a statement of such rights and
benefits.
This Note and the other Notes outstanding under the
Note Agreements may be declared due prior to their expressed
maturity dates, in the events, on the terms and in the
manner and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption
at the option of the Company prior to their expressed
maturity dates except on the terms and conditions and in the
amounts and with the premium, if any, set forth in the Note
Agreements.
This Note is registered on the books of the Company and
is transferable only by surrender thereof at the principal
office of the Company duly endorsed or accompanied by a
written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly
authorized in writing. Payment of or on account of
principal, premium, if any, and interest on this Note shall
be made only to or upon the order in writing of the
registered holder.
This Note and said Note Agreements are governed by and
construed in accordance with the laws of New York, including
all matters of construction, validity and performance.
FRED MEYER, INC.
By ________________________________
Its Vice President and
Corporate Treasurer
<PAGE>
EXHIBIT A-4
(to Note Agreement)
FRED MEYER, INC.
7.98% Senior Note, Series D,
Due July 15, 2007
PPN 593098 B# 2
No. RD-__ July __, 1994
$
FRED MEYER, INC., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to
or registered assigns
on the fifteenth day of July, 2007
the principal amount of
DOLLARS ($_______________)
and to pay interest (computed on the basis of a 360-day year
of twelve 30-day months) on the principal amount from time
to time remaining unpaid hereon at the rate of 7.98% per
annum from the date hereof until maturity, payable
semiannually on the fifteenth day of January and July in
each year (commencing on January 15, 1995) and at maturity.
The Company agrees to pay interest on overdue principal
(including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the
rate of 8.98% per annum after the due date, whether by
acceleration or otherwise, until paid.
Both the principal hereof and interest hereon are
payable at the principal office of the Company in Portland,
Oregon in coin or currency of the United States of America
which at the time of payment shall be legal tender for the
payment of public and private debts. If any amount of
principal, premium, if any, or interest on or in respect of
this Note becomes due and payable on any date which is not a
Business Day, such amount shall be payable on the
immediately preceding Business Day. "Business Day" means
any day other than a Saturday, Sunday or other day on which
banks in Portland, Oregon or New York, New York are required
by law to close or are customarily closed.
This Note is one of the 7.98% Senior Notes, Series D,
due July 15, 2007 (the "Notes") of the Company in the
aggregate principal amount of $15,000,000 which, together
with the Company's $7,500,000 aggregate principal amount of
7.25% Senior Notes, Series A, due July 15, 1999 (the
"Series A Notes"), the Company's $15,000,000 aggregate
principal amount of 7.52% Senior Notes, Series B, due
July 15, 2001 (the "Series B Notes") and the Company's
$20,000,000 aggregate principal amount of 7.88%
<PAGE>
Senior Notes, Series C, due July 15, 2004 (the
"Series C Notes", said Series C Notes together with the
Series A Notes, the Series B Notes and the Series D Notes
are hereinafter referred to collectively as the "Notes") are
issued or to be issued under and pursuant to the terms and
provisions of the separate Note Agreements, each dated as of
June 1, 1994 (the "Note Agreements"), entered into by the
Company with the original Purchasers therein referred to and
this Note and the holder hereof are entitled equally and
ratably with the holders of all other Notes outstanding
under the Note Agreements to all the benefits provided for
thereby or referred to therein. Reference is hereby made to
the Note Agreements for a statement of such rights and
benefits.
This Note and the other Notes outstanding under the
Note Agreements may be declared due prior to their expressed
maturity dates, in the events, on the terms and in the
manner and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption
at the option of the Company prior to their expressed
maturity dates except on the terms and conditions and in the
amounts and with the premium, if any, set forth in the Note
Agreements.
This Note is registered on the books of the Company and
is transferable only by surrender thereof at the principal
office of the Company duly endorsed or accompanied by a
written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly
authorized in writing. Payment of or on account of
principal, premium, if any, and interest on this Note shall
be made only to or upon the order in writing of the
registered holder.
This Note and said Note Agreements are governed by and
construed in accordance with the laws of New York, including
all matters of construction, validity and performance.
FRED MEYER, INC.
By ________________________________
Its Vice President and
Corporate Treasurer
<PAGE>
EXHIBIT B
(to Note Agreement)
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to you as follows:
1. Subsidiaries. Schedule II attached to the
Agreements states the name of each of the Company's
Subsidiaries, its jurisdiction of incorporation and the
percentage of its Voting Stock owned by the Company and/or
its Subsidiaries. Those Subsidiaries listed in Section 1 of
said Schedule II constitute Restricted Subsidiaries. The
Company and each Subsidiary has good and marketable title to
all of the shares it purports to own of the stock of each
Subsidiary, free and clear in each case of any Lien. All
such shares have been duly issued and are fully paid and
non-assessable.
2. Corporate Organization and Authority. The
Company, and each Restricted Subsidiary,
(a) is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation;
(b) has all requisite power and authority and all
necessary licenses and permits to own and operate its
properties and to carry on its business as now
conducted and as presently proposed to be conducted;
and
(c) is duly licensed or qualified and is in good
standing as a foreign corporation in each jurisdiction
wherein the nature of the business transacted by it or
the nature of the property owned or leased by it makes
such licensing or qualification necessary.
3. Business and Property. You have heretofore been
furnished with a copy of the Private Placement Memorandum
dated March 1994 (the "Memorandum") prepared by BA
Securities, Inc. which generally sets forth the business
conducted and proposed to be conducted by the Company and
its Subsidiaries and the principal properties of the Company
and its Subsidiaries.
4. Financial Statements. (a) The consolidated
balance sheets of the Company and its consolidated
Subsidiaries as of February 3, 1990, February 2, 1991,
February 1, 1992, January 30, 1993 and January 29, 1994, and
the related statements of consolidated operations, changes
in consolidated stockholders' equity and consolidated cash
flows for the fiscal years ended on said dates, each
accompanied by a report thereon containing an opinion
unqualified as to scope limitations imposed by the Company
and otherwise without qualification except as therein noted,
by Deloitte & Touche, have been prepared in accordance with
GAAP consistently applied except as therein noted, are
correct and complete and present fairly the financial
<PAGE>
position of the Company and its consolidated Subsidiaries as
of such dates and the results of their operations and their
cash flows for such periods.
(b) Since January 29, 1994, there has been no change
in the condition, financial or otherwise, of the Company and
its consolidated Subsidiaries as shown on the consolidated
balance sheet as of such date except changes in the ordinary
course of business, none of which individually or in the
aggregate has been materially adverse.
5. Indebtedness. Schedule II attached to the
Agreements correctly describes all Indebtedness of
Restricted Subsidiaries and all Funded Debt and Capitalized
Leases of the Company and its Restricted Subsidiaries
outstanding on the Closing Date.
6. Full Disclosure. Neither the financial statements
referred to in paragraph 4 hereof nor the Agreements, the
Memorandum or any other written statement furnished by the
Company to you in connection with the negotiation of the
sale of the Notes contains any untrue statement of a
material fact or omits a material fact necessary to make the
statements contained therein or herein not misleading.
There is no fact peculiar to the Company or its Subsidiaries
which the Company has not disclosed to you in writing which
materially affects adversely or, so far as the Company can
now foresee, will materially affect adversely the
properties, business, prospects, profits or condition
(financial or otherwise) of the Company and its Restricted
Subsidiaries, taken as a whole.
7. Pending Litigation. There are no proceedings
pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Restricted
Subsidiary in any court or before any governmental authority
or arbitration board or tribunal which involve the
possibility of materially and adversely affecting the
properties, business, prospects, profits or condition
(financial or otherwise) of the Company and its Restricted
Subsidiaries.
8. Title to Properties. The Company and each
Restricted Subsidiary has good and marketable title in fee
simple (or its equivalent under applicable law) to all
material parcels of real property and has good title to all
the other material items of property it purports to own,
including that reflected in the most recent balance sheet
referred to in paragraph 4 hereof, except as sold or
otherwise disposed of in the ordinary course of business and
except for Liens permitted by the Agreements.
9. Patents and Trademarks. The Company and each
Restricted Subsidiary owns or possesses all the patents,
trademarks, trade names, service marks, copyrights, licenses
and rights with respect to the foregoing necessary for the
present and planned future conduct of its business, without
any known conflict with the rights of others.
<PAGE>
10. Sale is Legal and Authorized. The sale of the
Notes and compliance by the Company with all of the
provisions of the Agreements and the Notes--
(a) are within the corporate powers of the
Company;
(b) will not violate any provisions of any law or
any order of any court or governmental authority or
agency and will not conflict with or result in any
breach of any of the terms, conditions or provisions
of, or constitute a default under, the Certificate
of Incorporation or By-laws of the Company or any
indenture or other agreement or instrument to
which the Company is a party or by which it may be
bound or result in the imposition of any Liens or
encumbrances on any property of the Company; and
(c) have been duly authorized by proper corporate
action on the part of the Company (no action by the
stockholders of the Company being required by law, by
the Certificate of Incorporation or By-laws of the
Company or otherwise), executed and delivered by the
Company and the Agreements and the Notes constitute the
legal, valid and binding obligations, contracts and
agreements of the Company enforceable in accordance
with their respective terms.
11. No Defaults. No Default or Event of Default has
occurred and is continuing. The Company is not in default
in the payment of principal or interest on any Indebtedness
for borrowed money and is not in default under any
instrument or instruments or agreements under and subject to
which any Indebtedness for borrowed money has been issued
and no event has occurred and is continuing under the
provisions of any such instrument or agreement which with
the lapse of time or the giving of notice, or both, would
constitute an event of default thereunder.
12. Governmental Consent. No approval, consent or
withholding of objection on the part of any regulatory body,
state, Federal or local, is necessary in connection with the
execution and delivery by the Company of the Agreements or
the issuance, sale or delivery of the Notes or compliance by
the Company with any of the provisions of the Agreements or
the Notes.
13. Taxes. All tax returns required to be filed by
the Company or any Restricted Subsidiary in any jurisdiction
have, in fact, been filed, and all taxes, assessments, fees
and other governmental charges upon the Company or any
Restricted Subsidiary or upon any of their respective
properties, income or franchises which are shown to be due
and payable in such returns have been paid. For all taxable
years ending on or before February 3, 1990, the Federal
income tax liability of the Company and its Restricted
Subsidiaries has been satisfied and either the period of
limitations on assessment of additional Federal income tax
has expired or the Company and its Restricted Subsidiaries
<PAGE>
have entered into an agreement with the Internal Revenue
Service closing conclusively the total tax liability for the
taxable year. The Company does not know of any proposed
additional tax assessment against it for which adequate
provision has not been made on its accounts, and no material
controversy in respect of additional Federal or state income
taxes due since said date is pending or to the knowledge of
the Company threatened. The provisions for taxes on the
books of the Company and each Restricted Subsidiary are
adequate for all open years, and for its current fiscal
period.
14. Use of Proceeds. The net proceeds from the sale
of the Notes will be used to refinance commercial paper and
other short-term Indebtedness (characterized on the
Company's balance sheet as Funded Debt in accordance with
GAAP). None of the transactions contemplated in the
Agreements (including, without limitation thereof, the use
of proceeds from the issuance of the Notes) will violate or
result in a violation of Section 7 of the Securities
Exchange Act of 1934, as amended, or any regulation issued
pursuant thereto, including, without limitation, Regulations
G, T and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II. Neither the Company nor any
Subsidiary owns or intends to carry or purchase any "margin
stock" within the meaning of said Regulation G. None of the
proceeds from the sale of the Notes will be used to
purchase, or refinance any borrowing the proceeds of which
were used to purchase, any "security" within the meaning of
the Securities Exchange Act of 1934, as amended.
15. Private Offering. Neither the Company, directly
or indirectly, nor any agent on its behalf has offered or
will offer the Notes or any similar Security to or has
solicited or will solicit an offer to acquire the Notes or
any similar Security from or has otherwise approached or
negotiated or will approach or negotiate in respect of the
Notes or any similar Security with any Person other than the
Purchasers and not more than 125 other institutional
investors, each of whom was offered a portion of the Notes
at private sale for investment. Neither the Company,
directly or indirectly, nor any agent on its behalf has
offered or will offer the Notes or any similar Security to
or has solicited or will solicit an offer to acquire the
Notes or any similar Security from any Person so as to bring
the issuance and sale of the Notes within the provisions of
Section 5 of the Securities Act of 1933, as amended.
16. ERISA. Based, to the extent relevant, upon the
accuracy of the representations of the Purchasers set forth
in Section 3.2(b) of the Agreements, the consummation of the
transactions provided for in the Agreements and compliance
by the Company with the provisions thereof and the Notes
issued thereunder will not involve any prohibited
transaction within the meaning of ERISA or Section 4975 of
the Internal Revenue Code of 1986, as amended. Each Plan
complies in all material respects with all applicable
statutes and governmental rules and regulations, and (a) no
Reportable Event has occurred and is continuing with respect
<PAGE>
to any Plan, (b) neither the Company nor any ERISA Affiliate
has withdrawn from any Plan or Multiemployer Plan or
instituted steps to do so, and (c) no steps have been
instituted to terminate any Plan. No condition exists or
event or transaction has occurred in connection with any
Plan which could result in the incurrence by the Company or
any ERISA Affiliate of any material liability, fine or
penalty. No Plan maintained by the Company or any ERISA
Affiliate, nor any trust created thereunder, has incurred
any "accumulated funding deficiency" as defined in Section
302 of ERISA nor does the present value of all benefits
vested under all Plans exceed, as of the last annual
valuation date, the value of the assets of the Plans
allocable to such vested benefits. Neither the Company nor
any ERISA Affiliate has any contingent liability with
respect to any post-retirement "welfare benefit plan" (as
such term is defined in ERISA) except as has been disclosed
to the Purchasers.
17. Compliance with Law. (a) Neither the Company nor
any Restricted Subsidiary (1) is in violation of any law,
ordinance, franchise, governmental rule or regulation to
which it is subject; or (2) has failed to obtain any
license, permit, franchise or other governmental
authorization necessary to the ownership of its property or
to the conduct of its business, which violation or failure
to obtain would materially affect adversely the business,
prospects, profits, properties or condition (financial
or otherwise) of the Company and its Restricted
Subsidiaries, taken as a whole, or impair the ability of the
Company to perform its obligations contained in the
Agreements or the Notes. Neither the Company nor any
Restricted Subsidiary is in default with respect to any
order of any court or governmental authority or arbitration
board or tribunal.
(b) Without limiting the provisions of clause (a) of
this paragraph 17, the Company and its Subsidiaries are in
compliance with all applicable Environmental Laws the
failure to comply with which would materially affect
adversely the properties, business, prospects, profits or
condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole, or the ability of the
Company to perform its obligations under the Agreements or
the Notes.
18. Investment Company Act. The Company is not, and
is not directly or indirectly controlled by or acting on
behalf of any Person which is, required to register as an
"investment company" under the Investment Company Act of
1940, as amended.
19. Foreign Assets Control Regulations, etc. The
Company and its Subsidiaries are not by reason of being a
"national" of "designated foreign country" or a "specially
designated national" within the meaning of the Regulations
of the Office of Foreign Assets Control, United States
Treasury Department (31 C.F.R., Subtitle B, Chapter V), or
for any other reason, subject to any restriction or
<PAGE>
prohibition under, or in violation of, any Federal statue or
Presidential Executive Order, or any rules or regulations of
any department, agency or administrative body promulgated
under any such statute or order, concerning trade or other
relations with any foreign country or any citizen or
national thereof or the ownership or operation of any
property.
<PAGE>
EXHIBIT C
(to Note Agreement)
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of Chapman and Cutler, special
counsel to the Purchasers, called for by Section 4.1 of the
Note Agreements, shall be dated the Closing Date and
addressed to the Purchasers, shall be satisfactory in form
and substance to the Purchasers and shall be to the effect
that:
1. The Company is a corporation, validly
existing and in good standing under the laws of the
State of Delaware and has the corporate power and the
corporate authority to execute and deliver the Note
Agreements and to issue the Notes.
2. The Note Agreements have been duly authorized
by all necessary corporate action on the part of the
Company, have been duly executed and delivered by the
Company and constitute the legal, valid and binding
contracts of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting
creditors' rights generally, and general principles of
equity (regardless of whether the application of such
principles is considered in a proceeding in equity or
at law).
3. The Notes have been duly authorized by all
necessary corporate action on the part of the Company,
have been duly executed and delivered by the Company
and constitute the legal, valid and binding obligations
of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights
generally, and general principles of equity (regardless
of whether the application of such principles is
considered in a proceeding in equity or at law).
4. The issuance, sale and delivery of the Notes
under the circumstances contemplated by the Note
Agreements does not, under existing law, require the
registration of the Notes under the Securities Act of
1933, as amended, or the qualification of an indenture
under the Trust Indenture Act of 1939, as amended.
The opinion of Chapman and Cutler shall also state that
the opinion of Stoel Rives Boley Jones & Grey is
satisfactory in scope and form to Chapman and Cutler and
that, in their opinion, the Purchasers are justified in
relying thereon.
In rendering the opinion set forth in paragraph 1
above, Chapman and Cutler may rely solely upon an
examination of the Certificate of Incorporation certified
by, and a certificate of good standing of the Company from,
the Secretary of State of the State of Delaware, the By-laws
of the Company and the general business corporation law of
the State of Delaware. The opinion of Chapman and Cutler is
limited to the laws of the State of New York, the general
business corporation law of the State of Delaware and the
Federal laws of the United States.
With respect to matters of fact upon which such opinion
is based, Chapman and Cutler may rely on appropriate
certificates of public officials and officers of the
Company.
<PAGE>
EXHIBIT D
(to Note Agreement)
DESCRIPTION OF CLOSING OPINION OF
COUNSEL TO THE COMPANY
The closing opinion of Stoel Rives Boley Jones & Grey,
counsel for the Company, which is called for by Section 4.1
of the Note Agreements, shall be dated the Closing Date and
addressed to the Purchasers, shall be satisfactory in scope
and form to the Purchasers and shall be to the effect that:
1. The Company is a corporation, duly
incorporated, validly existing and in good standing
under the laws of the State of Delaware, has the
corporate power and the corporate authority to execute
and perform the Note Agreements and to issue the Notes
and has the full corporate power and the corporate
authority to conduct the activities in which it is now
engaged and is in good standing or of current status as
a foreign corporation, as the case may be, in each
jurisdiction set forth in the certificate of the
Company attached to this opinion (the "Company
Certificate") as a jurisdiction where the Company has
material assets or conducts a material portion of its
business.
2. Each Subsidiary is a corporation duly
organized, validly existing and in good standing or of
current status, as the case may be, under the laws of
its jurisdiction of incorporation and is in good
standing or of current status as a foreign corporation,
as the case may be, in each jurisdiction set forth in
the Company Certificate as a jurisdiction where such
Subsidiary has material assets or conducts a material
portion of its business. All of the issued and
outstanding shares of capital stock of each such
Subsidiary are owned of record by the Company, by one
or more Subsidiaries, or by the Company and one or more
Subsidiaries.
3. Each Note Agreement has been duly authorized
by all necessary corporate action on the part of the
Company, has been duly executed and delivered by the
Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with
its terms, subject to bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting
creditors' rights generally, and general principles of
equity (regardless of whether the application of such
principles is considered in a proceeding in equity or
at law).
4. The Notes have been duly authorized by all
necessary corporate action on the part of the Company,
have been duly executed and delivered by the Company
and constitute the legal, valid and binding obligations
of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent
<PAGE>
conveyance or similar laws affecting creditors' rights
generally, and general principles of equity (regardless
of whether the application of such principles is
considered in a proceeding in equity or at law).
5. No approval, consent or withholding of
objection on the part of, or filing, registration or
qualification with, any governmental body, Federal,
state or local, is necessary in connection with the
execution and delivery of the Note Agreements or the Notes.
6. The issuance and sale of the Notes and the
execution, delivery and performance by the Company of
the Note Agreements do not conflict with or result in
any breach of any of the provisions of or constitute a
default under or result in the creation or imposition
of any Lien upon any of the property of the Company
pursuant to the provisions of the Certificate of
Incorporation or By-laws of the Company or any
agreement or other instrument listed as a "Material
Agreement" in the Company Certificate attached to this
opinion.
7. The issuance, sale and delivery of the Notes
under the circumstances contemplated by the Note
Agreements does not, under existing law, require the
registration of the Notes under the Securities Act of
1933, as amended, or the qualification of an indenture
under the Trust Indenture Act of 1939, as amended.
8. The issuance of the Notes and the use of the
proceeds of the sale of the Notes in accordance with
the provisions of and contemplated by the Note
Agreements do not violate or conflict with Regulation
G, T, U or X of the Board of Governors of the Federal
Reserve System.
9. There is no litigation pending or, to the
best knowledge of such counsel, threatened which in
such counsel's opinion could reasonably be expected to
have a materially adverse effect on the Company's
business or assets or which would impair the ability of
the Company to issue and deliver the Notes or to comply
with the provisions of the Note Agreements.
The opinion of Stoel Rives Boley Jones & Grey shall
cover such other matters relating to the sale of the Notes
as the Purchasers may reasonably request. With respect to
matters of fact on which such opinion is based, such counsel
shall be entitled to rely on appropriate certificates of
public officials and officers of the Company and, with
respect to the opinion numbered (7) upon, to the extent
relevant, the accuracy of the representations of the
Purchasers set forth in Section 3.2(a) of the Note
Agreements.
<PAGE>
EXHIBIT E
(to Note Agreement)
SUBORDINATION PROVISIONS APPLICABLE TO
SUBORDINATED FUNDED DEBT
(a) The indebtedness evidenced by the subordinated
notes*, any renewals or extensions thereof, premium, if any,
interest (including, without limitation, any such interest
accruing subsequent to the filing by or against the Company
of any proceeding brought under Chapter 11 of the Bankruptcy
Code (11 U.S.C. Section 100 et seq.)) and any fees, charges,
expenses or other sums payable under or in respect of the
agreements pursuant to which such subordinated notes were
issued, shall at all times be wholly and unconditionally
subordinate and junior in right of payment to all principal,
premium, if any, and interest (including, without
limitation, any such interest accruing subsequent to the
filing by or against the Company of any proceeding brought
under Chapter 11 of the Bankruptcy Code (11 U.S.C. Section
100 et seq.) whether or not such interest is allowed as a
claim pursuant to the provisions of such Chapter) and all
other fees, charges, expenses and other sums payable in
respect of (1) the Company's $7,500,000 aggregate principal
amount 7.25% Senior Notes, Series A, due July 15, 1999 (the
"Series A Notes"), the Company's $15,000,000 aggregate
principal amount 7.52% Senior Notes, Series B, due July 15,
2001 (the "Series B Notes"), the Company's $20,000,000
aggregate principal amount 7.88% Senior Notes, Series C, due
July 15, 2004 (the "Series C Notes") and the Company's
$15,000,000 aggregate principal amount 7.98% Senior Notes,
Series D, due June 15, 2007 (the "Series D Notes," said
Series D Notes together with the Series A Notes, the Series
B Notes and the Series C Notes being hereinafter
collectively referred to as the "Notes") issued pursuant to
the separate and several Note Agreements, each dated as of
June 1, 1994 between the Company and, respectively, Phoenix
Home Life Mutual Insurance Company, The Variable Annuity
Life Insurance Company, The Minnesota Mutual Life Insurance
Company, The Canada Life Assurance Company, Canada Life
Insurance Company of America, Canada Life Insurance Company
of New York, The Franklin Life Insurance Company, Knights of
Columbus, SAFECO Life Insurance Company, The Security Mutual
Life Insurance Company of Lincoln, Nebraska, Standard
Insurance Company, Woodmen Accident and Life Company, Mutual
Trust Life Insurance Company, Security Life Insurance
Company, National Travelers Life Company, Colorado Bankers
Life Insurance Company and Guarantee Reserve Life Insurance
Company, and (2) any other indebtedness for money borrowed
of the Company not expressed to be subordinate or junior to
any other indebtedness of the Company (the indebtedness
described in the preceding clauses (1) and (2) is
hereinafter called "Superior Indebtedness"), in the manner
and with the force and effect hereafter set forth:
____________________
* Or debentures or other designation as may be appropriate.
<PAGE>
(1) In the event of (i) any liquidation,
dissolution or other winding up of the Company,
voluntary or involuntary, (ii) any execution, sale,
receivership, insolvency, bankruptcy, liquidation,
readjustment, reorganization, composition or other
similar proceeding relative to the Company or its
property, (iii) any general assignment by the Company
for the benefit of creditors, or (iv) any distribution,
division, marshalling or application of any of the
properties or assets of the Company or the
proceeds thereof to creditors, voluntary or
involuntary, and whether or not involving legal
proceedings, then and in any event:
(A) all principal, premium, if any, any interest
and all other sums owing on all Superior Indebtedness
shall first be paid in full in cash before any payment
or distribution of any kind or character, whether in
cash, property or securities (other than in securities,
including equity securities, or other evidences of
indebtedness, the payment of which is unconditionally
subordinated to the payment of all Superior
Indebtedness which may at the time be outstanding)
shall be made on indebtedness evidenced by the
subordinated notes;
(B) all principal and interest on the
subordinated notes shall forthwith become due and
payable, and any payment or distribution of any kind or
character, whether in cash, property or securities
(other than securities, including equity securities or
other evidences of indebtedness, the payment of which
is unconditionally subordinated to the payment of all
Superior Indebtedness which may at the time be
outstanding), which would otherwise (but for the terms
hereof) be payable or deliverable in respect of the
subordinated notes, shall be paid or delivered directly
to the holders of the Superior Indebtedness, for
application to the payment of the Superior Indebtedness,
until all Superior Indebtedness shall have been paid in
full, and the holders of the subordinated notes at the
time outstanding irrevocably authorize, empower and direct
all receivers, trustees, liquidators, conservators,
fiscal agents and others having authority in the
premises to effect all such payments and deliveries;
(C) any payment or distribution of any kind or
character, whether in cash, property or securities
(other than in securities, including equity securities
or other evidences of indebtedness, the payment of
which is unconditionally subordinated to the payment of
all Superior Indebtedness which may at the time be
outstanding) which shall be made upon or in respect of
the subordinated notes shall be paid over to the
holders of Superior Indebtedness, pro rata, for
application and payment thereof unless and until such
Superior Indebtedness shall have been paid or satisfied
in full; and
<PAGE>
(D) notwithstanding the foregoing provisions, if
for any reason whatsoever any payment or distribution
of any kind or character, whether in cash, property or
securities (other than in securities, including equity
securities or other evidences of indebtedness, the
payment of which is unconditionally subordinated to the
payment of all Superior Indebtedness which may at the
time be outstanding), should be received by a holder of
the subordinated notes before all such Superior
Indebtedness is paid in full, such payment or
distribution shall be held in trust for the benefit of,
and shall be immediately paid or delivered by such
holder to, as the case may be, the holders of such
Superior Indebtedness remaining unpaid, or their
representative or representatives, for application to
the payment of all such Superior Indebtedness, pro
rata, unless and until such Superior Indebtedness shall
have been paid or satisfied in full.
(2) In the event that the subordinated notes are
declared or become due and payable because of the
occurrence of any event of default hereunder (or under
the agreement or indenture, as appropriate) or
otherwise than at the option of the Company, under
circumstances when the foregoing clause (1) shall not
be applicable, then each holder of any Superior
Indebtedness then outstanding shall have the right to
declare immediately due and payable all or any part of
the Superior Indebtedness owing and payable to such
holder and the holders of the subordinated notes shall
be entitled to payments only after there shall first
have been paid in full in cash all Superior
Indebtedness outstanding at the time the subordinated
notes so become due and payable because of any such
event.
(3) In case either (i) default in respect of the
payment of the principal of, premium if any, or
interest on any Superior Indebtedness, or (ii) any
other default on any Superior Indebtedness as a result
of which the holders thereof shall then be entitled to
accelerate such Superior Indebtedness shall in either
such case have occurred and be continuing with respect
to any Superior Indebtedness, unless and until all
Superior Indebtedness shall have been paid in full in
cash, the Company will not, and will not permit any
subsidiary to, directly or indirectly, make or agree to
make, and neither the holder nor any assignee or
successor holder of any subordinated notes will demand,
accept or receive, (A) any payment in cash, property,
securities (other than in securities, including equity
securities or other evidences of indebtedness, the
payment of which is unconditionally subordinated to the
payment of all Superior Indebtedness which may at the
time be outstanding) or otherwise, direct or indirect,
of or on account of any principal of, premium, if any,
interest or any other sum owing in respect of any
subordinated notes, or (B) any payment for the purpose
<PAGE>
of any redemption, purchase or other acquisition,
direct or indirect, of any subordinated notes, and no
such payments shall be due.
(b) If any payment or distribution of any kind or
character (whether in cash, securities or other property) or
any security shall be received by any holder of the
subordinated notes in contravention of any of the terms of
this Section ___, such payment or distribution or security
shall be held in trust for the benefit of, and shall be paid
over or delivered and transferred to, holders of the
Superior Indebtedness pro rata for application to the
payment of all Superior Indebtedness remaining unpaid, to
the extent necessary to pay all such Superior Indebtedness
in full in cash. In the event of the failure of any holder
of the subordinated notes to endorse or assign any such
payment, distribution or security, any holder of the
Superior Indebtedness or such holder's representative is
hereby irrevocably authorized to endorse or assign the same.
(c) The holder of each subordinated note undertakes
and agrees for the benefit of each holder of Superior
Indebtedness to execute, verify, deliver and file any proofs
of claim within 30 days before the expiration of the time to
file the same which any holder of Superior Indebtedness may
at any time require in order to prove and realize upon any
rights or claims pertaining to the subordinated notes and to
effectuate the full benefit of the subordination contained
herein; and upon failure of the holder of any subordinated
note so to do, any such holder of Superior Indebtedness
shall be deemed to be irrevocably appointed the agent and
attorney-in-fact of the holder of such note to execute,
verify, deliver and file any such proofs of claim.
(d) No right of any holder of any Superior
Indebtedness to enforce subordination as herein provided
shall at any time or in any way be affected or impaired by
any failure to act on the part of the Company or the holders
of Superior Indebtedness, or by any noncompliance by the
Company with any of the terms, provisions and covenants of
the subordinated notes or the agreement under which they are
issued, regardless of any knowledge thereof that any such
holder of Superior Indebtedness may have or be otherwise
charged with.
(e) No holder of any subordinated notes will sell,
assign, pledge, encumber or otherwise dispose of any of its
subordinated notes unless such sale, assignment, pledge,
encumbrance or disposition is made expressly subject to the
foregoing provisions.
(f) The Company agrees, for the benefit of the holders
of Superior Indebtedness, that in the event that any
subordinated note is declared due and payable before its
expressed maturity because of the occurrence of a default
hereunder, (1) the Company will give prompt notice in
writing of such happening to the holders of Superior
Indebtedness, (2) all Superior Indebtedness shall forthwith
become immediately due and payable upon demand, regardless
<PAGE>
of the expressed maturity thereof and (3) the holders of
such subordinated notes shall not be entitled to receive any
payment or distribution in respect thereof or applicable
thereto until all Superior Indebtedness at the time
outstanding shall have been paid in full.
(g) The subordination effected by the foregoing
provisions and the rights created thereby of the holders of
the Superior Indebtedness shall not be affected by (1) any
amendment of or addition or supplement to any Superior
Indebtedness or any instrument or agreement relating
thereto, (2) any exercise or non-exercise of any right,
power or remedy under or in respect of any Superior
Indebtedness or any instrument or agreement relating
thereto, or (3) the giving or denial of any waiver, consent,
release, indulgence, extension, renewal, modification or
delay or the taking or nontaking of any other action,
inaction or omission, in respect of any Superior
Indebtedness or any instrument or agreement relating thereto
or to any securities relating thereto or any guarantee
thereof, whether or not any holder of any subordinated notes
shall have had notice or knowledge of any of the foregoing.
EXHIBIT 4-E
=================================================================
CREDIT AGREEMENT
dated as of March 6, 1995
among
FRED MEYER, INC.,
VARIOUS FINANCIAL INSTITUTIONS
and
THE BANK OF NOVA SCOTIA,
as Agent
=================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
SECTION 1 DEFINITIONS AND INTERPRETATION. . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . 1
1.2 Computations; Changes in GAAP . . . . . . . . . . . 11
1.3 Cross-References; Section Caption . . . . . . . . . 11
SECTION 2 COMMITMENTS OF THE LENDERS; TYPES OF LOANS;
BORROWING AND CONVERSION PROCEDURES.. . . . . . . . 12
2.1 Syndicated Loans. . . . . . . . . . . . . . . . . . 12
2.1.1 Commitments. . . . . . . . . . . . . . . . 12
2.1.2 Types of Syndicated Loans. . . . . . . . . 12
2.1.3 Borrowing Procedures . . . . . . . . . . . 12
2.1.4 Continuation and Conversion Procedures . . 13
2.1.5 Warranty upon Conversion or Continuation . 13
2.1.6 Conditions . . . . . . . . . . . . . . . . 13
2.1.7 Pro Rata Treatment . . . . . . . . . . . . 13
2.1.8 Commitments Several. . . . . . . . . . . . 13
2.2 Competitive Bid Loans . . . . . . . . . . . . . . . 14
2.2.1 The Company May Request Offers . . . . . . 14
2.2.2 Types of Competitive Bid Loans . . . . . . 14
2.2.3 Bid Procedure. . . . . . . . . . . . . . . 14
2.2.4 Borrowing Procedure. . . . . . . . . . . . 18
2.2.5 Repayment of Competitive Bid Loans . . . . 18
2.2.6 No Effect on Commitment. . . . . . . . . . 18
2.3 Extension of Termination Date . . . . . . . . . . . 18
SECTION 3 NOTES EVIDENCING LOANS. . . . . . . . . . . . . . . 19
3.1 Notes . . . . . . . . . . . . . . . . . . . . . . . 19
3.1.1 Syndicated Loan Notes. . . . . . . . . . . 19
3.1.2 Competitive Bid Loan Notes . . . . . . . . 19
3.2 Recordkeeping . . . . . . . . . . . . . . . . . . . 19
SECTION 4 INTEREST. . . . . . . . . . . . . . . . . . . . . . 19
4.1 Interest Rates. . . . . . . . . . . . . . . . . . . 19
4.1.1 Syndicated Loans . . . . . . . . . . . . . 19
4.1.2 Competitive Bid Loans. . . . . . . . . . . 20
4.2 Interest Payment Dates. . . . . . . . . . . . . . . 20
4.3 Setting and Notice of Eurodollar Rates and
Eurodollar Competitive Bid Rates. . . . . . . . . . 20
4.4 Computation of Interest . . . . . . . . . . . . . . 21
SECTION 5 FEES. . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Facility Fee. . . . . . . . . . . . . . . . . . . . 21
5.2 Agent's Fee . . . . . . . . . . . . . . . . . . . . 21
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS . . . . . . . . . . . . . . . . . . . . 21
6.1 Reduction or Termination of the Commitments . . . . 21
6.2 Prepayments . . . . . . . . . . . . . . . . . . . . 22
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES . . 22
7.1 Making of Payments. . . . . . . . . . . . . . . . . 22
7.2 Application of Certain Payments . . . . . . . . . . 22
7.3 Due Date Extension. . . . . . . . . . . . . . . . . 22
7.4 Setoff. . . . . . . . . . . . . . . . . . . . . . . 23
<PAGE>
7.5 Proration of Payments on Syndicated Loans . . . . . 23
7.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS. . . . . . . . . . . . . . . . . . 25
8.1 Increased Costs . . . . . . . . . . . . . . . . . . 25
8.2 Basis for Determining Interest Rate Inadequate
or Unfair . . . . . . . . . . . . . . . . . . . . . 26
8.3 Changes in Law Rendering Eurodollar Loans
Unlawful. . . . . . . . . . . . . . . . . . . . . . 26
8.4 Funding Losses. . . . . . . . . . . . . . . . . . . 27
8.5 Right of Lenders to Fund through Other Offices. . . 27
8.6 Discretion of Lenders as to Manner of Funding . . . 27
8.7 Mitigation of Circumstances; Replacement of
Affected Lender or Objecting Lender . . . . . . . . 28
8.8 Conclusiveness of Statements; Survival of
Provisions. . . . . . . . . . . . . . . . . . . . . 28
SECTION 9 WARRANTIES. . . . . . . . . . . . . . . . . . . . . 29
9.1 Organization, etc . . . . . . . . . . . . . . . . . 29
9.2 Authorization; No Conflict. . . . . . . . . . . . . 29
9.3 Validity and Binding Nature . . . . . . . . . . . . 29
9.4 Financial Information . . . . . . . . . . . . . . . 29
9.5 No Material Adverse Change. . . . . . . . . . . . . 29
9.6 Litigation and Contingent Liabilities . . . . . . . 30
9.7 Ownership of Properties; Liens. . . . . . . . . . . 30
9.8 Subsidiaries. . . . . . . . . . . . . . . . . . . . 30
9.9 Pension and Welfare Plans . . . . . . . . . . . . . 30
9.10 Regulated Industry. . . . . . . . . . . . . . . . . 30
9.11 Regulations G, U and X. . . . . . . . . . . . . . . 30
9.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . 30
9.13 Environmental and Safety and Health Matters . . . . 31
9.14 Compliance with Law . . . . . . . . . . . . . . . . 31
9.15 Information . . . . . . . . . . . . . . . . . . . . 31
SECTION 10 COVENANTS. . . . . . . . . . . . . . . . . . . . . 31
10.1 Reports, Certificates and Other Information . . . . 31
10.1.1 Audit Report . . . . . . . . . . . . . . . 31
10.1.2 Interim Reports. . . . . . . . . . . . . . 32
10.1.3 Compliance Certificate . . . . . . . . . . 32
10.1.4 Reports to SEC . . . . . . . . . . . . . . 32
10.1.5 Notice of Default, Litigation and ERISA
Matters. . . . . . . . . . . . . . . . . . 32
10.1.6 Subsidiaries . . . . . . . . . . . . . . . 32
10.1.7 Other Information. . . . . . . . . . . . . 33
10.2 Books, Records and Inspections. . . . . . . . . . . 33
10.3 Insurance . . . . . . . . . . . . . . . . . . . . . 33
10.4 Compliance with Law; Payment of Taxes and
Liabilities . . . . . . . . . . . . . . . . . . . . 33
10.5 Maintenance of Existence, etc . . . . . . . . . . . 33
10.6 Financial Ratios and Restrictions . . . . . . . . . 33
10.6.1 Minimum Consolidated Tangible Net Worth. . 33
10.6.2 Long-Term Liabilities to Net Worth Ratio . 34
10.6.3 Fixed Charge Coverage Ratio. . . . . . . . 34
10.7 Limitation on Liens . . . . . . . . . . . . . . . . 34
10.8 Debt. . . . . . . . . . . . . . . . . . . . . . . . 35
10.9 Guaranties, Loans and Advances. . . . . . . . . . . 36
10.10 Mergers, Consolidations, Sales. . . . . . . . . . . 36
10.11 Company's and Subsidiaries' Stock . . . . . . . . . 37
<PAGE>
10.12 Unconditional Purchase Obligations. . . . . . . . . 37
10.13 Employee Benefit Plans. . . . . . . . . . . . . . . 37
10.14 Purchase or Redemption of Company's Securities;
Dividend Restriction. . . . . . . . . . . . . . . . 37
10.15 Use of Proceeds . . . . . . . . . . . . . . . . . . 38
SECTION 11 CONDITIONS OF LENDING . . . . . . . . . . . . . . . 38
11.1 Initial Loan. . . . . . . . . . . . . . . . . . . . 38
11.1.1 Notes. . . . . . . . . . . . . . . . . . . 38
11.1.2 Resolutions. . . . . . . . . . . . . . . . 38
11.1.3 Consents, etc. . . . . . . . . . . . . . . 38
11.1.4 Incumbency and Signature Certificates. . . 39
11.1.5 Opinion of Counsel for the Company . . . . 39
11.1.6 Other. . . . . . . . . . . . . . . . . . . 39
11.2 All Loans . . . . . . . . . . . . . . . . . . . . . 39
11.2.1 No Default . . . . . . . . . . . . . . . . 39
11.2.2 Confirmatory Certificate . . . . . . . . . 39
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT. . . . . . . . . 39
12.1 Events of Default . . . . . . . . . . . . . . . . . 39
12.1.1 Non-Payment of the Loans, etc. . . . . . . 39
12.1.2 Non-Payment of Other Debt. . . . . . . . . 39
12.1.3 Other Material Obligations . . . . . . . . 40
12.1.4 Bankruptcy, Insolvency, etc. . . . . . . . 40
12.1.5 Non-Compliance with Provisions of This
Agreement. . . . . . . . . . . . . . . . . 40
12.1.6 Warranties . . . . . . . . . . . . . . . . 40
12.1.7 Pension Plans. . . . . . . . . . . . . . . 40
12.1.8 Withdrawal Liability Under Multiemployer
Plans. . . . . . . . . . . . . . . . . . . 41
12.1.9 Judgments and Attachments. . . . . . . . . 41
12.1.10 Change in Control . . . . . . . . . . . . . 41
12.2 Effect of Event of Default. . . . . . . . . . . . . 41
SECTION 13 THE AGENT . . . . . . . . . . . . . . . . . . . . . 41
13.1 Authorization . . . . . . . . . . . . . . . . . . . 41
13.2 Indemnification . . . . . . . . . . . . . . . . . . 41
13.3 Exculpation . . . . . . . . . . . . . . . . . . . . 42
13.4 Credit Investigation. . . . . . . . . . . . . . . . 42
13.5 Agent and Affiliates. . . . . . . . . . . . . . . . 42
13.6 Action on Instructions of the Required Lenders. . . 42
13.7 Funding Reliance. . . . . . . . . . . . . . . . . . 43
13.8 Resignation . . . . . . . . . . . . . . . . . . . . 43
SECTION 14 GENERAL . . . . . . . . . . . . . . . . . . . . . . 44
14.1 Waiver; Amendments. . . . . . . . . . . . . . . . . 44
14.2 Confirmations . . . . . . . . . . . . . . . . . . . 44
14.3 Notices . . . . . . . . . . . . . . . . . . . . . . 44
14.4 Subsidiary References . . . . . . . . . . . . . . . 45
14.5 Regulation U. . . . . . . . . . . . . . . . . . . . 45
14.6 Costs, Expenses and Taxes . . . . . . . . . . . . . 45
14.7 Indemnification by the Company. . . . . . . . . . . 45
14.8 Successors and Assigns. . . . . . . . . . . . . . . 46
14.9 Assignments; Participations . . . . . . . . . . . . 46
14.9.1 Assignments. . . . . . . . . . . . . . . . 46
14.9.2 Participations . . . . . . . . . . . . . . 47
14.10 Governing Law . . . . . . . . . . . . . . . . . . . 48
14.11 Counterparts. . . . . . . . . . . . . . . . . . . . 48
14.12 Forum Selection and Consent to Jurisdiction . . . . 48
<PAGE>
14.13 Maximum Interest Rate . . . . . . . . . . . . . . . 49
14.14 Waiver of Jury Trial. . . . . . . . . . . . . . . . 49
14.15 Oregon Legal Notice . . . . . . . . . . . . . . . . 50
SCHEDULE I Commitments and Percentages
SCHEDULE II Schedule of Subsidiaries
EXHIBIT A Form of Competitive Bid Quote Request (Section 2.2.3)
EXHIBIT B Form of Invitation for Competitive
Bid Quotes (Section 2.2.3)
EXHIBIT C Form of Competitive Bid Quote (Section 2.2.3)
EXHIBIT D Form of Competitive Bid Loan
Acknowledgment (Section 2.2.3)
EXHIBIT E Form of Competitive Bid Loan
Confirmation (Section 2.2.3)
EXHIBIT F Form of Extension Request (Section 2.3)
EXHIBIT G Form of Syndicated Loan Note (Section 3.1)
EXHIBIT H Form of Competitive Bid Loan Note (Section 3.1)
EXHIBIT I Form of Opinion of Counsel for
the Company (Section 11.1.5)
EXHIBIT J Form of Assignment Agreement (Section 14.9.1)
<PAGE>
CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT, dated as of March 6, 1995 (as amended
or otherwise modified from time to time, this "Agreement"), is
entered into among FRED MEYER, INC., a Delaware corporation (the
"Company"), the undersigned financial institutions (collectively
the "Lenders" and individually each a "Lender") and THE BANK OF
NOVA SCOTIA, by and through its Portland, Oregon Branch (in its
individual capacity, together with its successors, "Scotiabank"),
as agent for the Lenders.
In consideration of the mutual agreements herein contained,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1 DEFINITIONS AND INTERPRETATION.
1.1 Definitions. When used herein the following terms
-----------
shall have the following meanings (such definitions to be
applicable to both the singular and plural forms of such terms):
Affected Lender means any Lender that has given notice to
the Company (which has not been rescinded) of (i) any obligation
by the Company to pay any amount pursuant to Section 7.6 or 8.1
or (ii) the occurrence of any circumstance of the nature
described in Section 8.2 or 8.3.
Affected Loan - see Section 8.3.
Agent means Scotiabank in its capacity as agent for the
Lenders hereunder and any successor thereto in such capacity.
Agreement - see the Preamble.
Alternate Base Rate means at any time the greater of (a) the
Federal Funds Rate plus 0.50% and (b) the Base Rate.
Alternate Base Rate Loan means any Loan which bears interest
at or by reference to the Alternate Base Rate.
Assets Purchase Agreement means the Assets Purchase
Agreement dated as of September 25, 1981, among the Company, FMI
Acquisition Corporation and Fred Meyer Real Estate Properties,
Ltd., as it may be amended from time to time.
Assignee - see Section 14.9.1.
Assignment Agreement - see Section 14.9.1.
Base Rate means at any time the rate per annum then most
recently announced by Scotiabank as its Base Rate at Portland,
Oregon.
Business Day means any day (other than a Saturday or Sunday)
on which banks are open for commercial banking business in New
<PAGE>
York, New York and Portland, Oregon and, in the case of a
Business Day which relates to a Eurodollar Loan or a Eurodollar
Competitive Bid Loan, on which dealings are carried on in the
London interbank market.
Capital Lease means any lease of property (whether real,
personal or mixed) which would, in accordance with GAAP, be
required to be classified and accounted for on the books of the
lessee as a capital lease.
Change in Control means the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the SEC under the Securities
Exchange Act of 1934, as amended) of outstanding shares of voting
stock of the Company representing in excess of 50% of voting
control of Company, which Person or Persons have beneficial
ownership of less than 5% of the outstanding shares of voting
stock of the Company as of the date of this Agreement.
Commitment as to any Lender means the commitment of such
Lender to make Syndicated Loans hereunder, as adjusted from time
to time pursuant to Section 2.2.2(b), Section 6.1 or Section
14.9. The amount of the initial Commitment of each Lender is set
forth on Schedule I.
Commitment Amount - see Section 2.1.1.
Company - see the Preamble.
Competitive Bid Borrowing - see Section 2.2.3.
Competitive Bid Loan - see Section 2.2.
Competitive Bid Loan Acknowledgment - see Section 2.2.3.
Competitive Bid Loan Confirmation - see Section 2.2.3.
Competitive Bid Loan Limit - see Section 2.2.3.
Competitive Bid Loan Note - see Section 3.1.2.
Competitive Bid Quote - see Section 2.2.3
Competitive Bid Quote Request - see Section 2.2.3.
Consolidated Long-Term Liabilities means, as of the date of
any determination thereof, consolidated Debt for Borrowed Money
of the Company and its Subsidiaries, secured or unsecured, (i)
payable more than one year from such date, plus (ii) Capital
Leases to the extent maturing in a year or less, plus (iii) all
other Debt for Borrowed Money not classified as current
liabilities in the Company's financial reporting.
Consolidated Net Tangible Net Worth means Consolidated
Tangible Net Worth less (unless otherwise taken into account in
determining consolidated net worth) the amounts of payments
(whether in cash or issuance of Debt) made to employees in
redemption of stock under Management Stock Agreements.
<PAGE>
Consolidated Tangible Net Worth means the consolidated net
worth of the Company and its Subsidiaries less (unless otherwise
deducted in determining consolidated net worth) the aggregate
amount of any intangible assets of the Company and its
Subsidiaries, including, without limitation, deferred financing
and organizational costs (net of amortization), goodwill,
franchises, licenses, patents, trademarks, trade names,
copyrights, service marks and brand names, but not subtracting
from consolidated net worth of the Company and its Subsidiaries
the unamortized amount of such intangible assets arising out of
the Assets Purchase Agreement and the purchase of Grand Central,
Inc. in 1984, as shown on Company's audited consolidated
financial statement as at January 29, 1994 referred to in
subsection 4.3 (such amount with respect to future calculations
thereof to be determined in the same manner as the unamortized
amount ($5,523,000) shown on such financial statement dated
January 29, 1994).
Consolidated Total Assets means the total consolidated
assets of the Company and its Subsidiaries as shown on the most
recent consolidated balance sheet of the Company and its
Subsidiaries referred to in Section 9.4 or delivered to the
Lenders pursuant to Section 10.1.
Debt of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, whether or not
evidenced by bonds, debentures, notes or similar instruments, (b)
all obligations of such Person as lessee under Capital Leases
which have been recorded as liabilities on a balance sheet of
such Person, (c) all obligations of such Person to pay the
deferred purchase price of property or services (other than
current accounts payable in the ordinary course of business), (d)
all indebtedness secured by a Lien on the property of such
Person, whether or not such indebtedness shall have been assumed
by such Person (it being understood that if such Person has not
assumed or otherwise become personally liable for any such
indebtedness, the amount of the Debt of such Person in connection
therewith shall be limited to the lesser of the face amount of
such indebtedness or the fair market value of all property of
such Person securing such indebtedness), (e) all obligations,
contingent or otherwise, with respect to the face amount of all
letters of credit (whether or not drawn) and banker's acceptances
issued for the account of such Person, (f) all obligations of
such Person in respect of Hedging Arrangements, (g) all
Suretyship Liabilities of such Person and (h) all Debt (as
defined above) of any partnership in which such Person is a
general partner. The amount of the Debt of any Person in respect
of Hedging Arrangements shall be deemed to be the unrealized net
loss position of such Person thereunder (determined for each
counterparty individually, but netted for all Hedging
Arrangements maintained with such counterparty).
Debt for Borrowed Money of any Person means all Debt of such
Person described in (without duplication) clauses (a), (b), (c),
(d) and, to the extent constituting a Suretyship Liability in
respect of Debt for Borrowed Money of another Person, (g) of the
definition of Debt.
<PAGE>
Dollar and the sign "$" mean lawful money of the United
States of America.
Effective Date - see Section 11.1.
Environmental Laws means the Resource Conservation and
Recovery Act of 1987, the Comprehensive Environmental Response,
Compensation and Liability Act, any so-called "Superfund" or
"Superlien" law, the Toxic Substances Control Act, and any other
federal, state or local statute, law, ordinance, code, rule,
regulation order or decree regulating or relating to, or imposing
liability or standards of conduct concerning, any hazardous
materials or other hazardous or toxic substance, as now or at any
time hereafter in effect.
ERISA means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import,
together with the regulations thereunder, in each case as in
effect from time to time. References to sections of ERISA also
refer to any successor sections.
ERISA Affiliate means any corporation, trade or business
that is, along with the Company, a member of a controlled group
of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Internal Revenue Code of 1986, as
amended, or section 4001 of ERISA.
Eurocurrency Reserve Percentage means, with respect to any
Eurodollar Loan or Eurodollar Competitive Bid Loan for any
Interest Period, a percentage (expressed as a decimal) equal to
the daily average during such Interest Period of the percentage
in effect on each day of such Interest Period, as prescribed by
the Board of Governors of the Federal Reserve System (or any
successor), for determining the aggregate maximum reserve
requirements applicable to "Eurocurrency Liabilities" pursuant to
Regulation D or any other then applicable regulation of such
Board of Governors which prescribes reserve requirements
applicable to "Eurocurrency Liabilities" as presently defined in
Regulation D.
Eurodollar Auction means a solicitation of Competitive Bid
Quotes setting forth Eurodollar Margins based on the Eurodollar
Competitive Bid Rate (Reserve Adjusted) pursuant to Section 2.2.
Eurodollar Competitive Bid Loans means Competitive Bid Loans
the interest rate on which are determined on the basis of
Eurodollar Competitive Bid Rates (Reserve Adjusted) pursuant to a
Eurodollar Auction.
Eurodollar Competitive Bid Rate means with respect to any
Eurodollar Competitive Bid Loan for any Interest Period, the
average (rounded upward, if necessary, to the next higher 1/16 of
1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to the Eurodollar Office
of each Reference Lender four Business Days prior to the
beginning of such Interest Period by major banks in the interbank
eurodollar market as at or about 8:00 a.m., Portland time, for
delivery on the first day of such Interest Period, for the number
of days comprised therein and in an amount equal or comparable to
<PAGE>
the amount of the Competitive Bid Borrowing for the Interest
Period.
Eurodollar Competitive Bid Rate (Reserve Adjusted) - means,
with respect to any Eurodollar Competitive Bid Loan for any
Interest Period, a rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined pursuant to the following
formula:
Eurodollar Competitive Bid Rate = Eurodollar Competitive Bid Rate
(Reserve Adjusted) ---------------------------------
1-Eurocurrency Reserve Percentage
Eurodollar Loan means any Loan which bears interest at a
rate determined by reference to the Eurodollar Rate (Reserve
Adjusted).
Eurodollar Margin - see Section 2.2.3(c).
Eurodollar Office means with respect to any Lender the
office or offices of such Lender which shall be making or
maintaining the Eurodollar Loans of such Lender hereunder or such
other office or offices through which such Lender determines its
Eurodollar Rate or Eurodollar Competitive Bid Rate. A Eurodollar
Office of any Lender may be, at the option of such Lender, either
a domestic or foreign office.
Eurodollar Rate means with respect to any Eurodollar Loan
for any Interest Period, the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the rates per annum
at which Dollar deposits in immediately available funds are
offered to the Eurodollar Office of each Reference Lender two
Business Days prior to the beginning of such Interest Period by
major banks in the interbank eurodollar market as at or about
8:00 a.m., Portland time, for delivery on the first day of such
Interest Period, for the number of days comprised therein and in
an amount equal or comparable to the amount of the Eurodollar
Loan of such Reference Lender for such Interest Period.
Eurodollar Rate (Reserve Adjusted) - means, with respect to
any Eurodollar Loan for any Interest Period, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) ------------------
1-Eurocurrency
Reserve Percentage
Event of Default means any of the events described in
Section 12.1.
Excluded Taxes - see Section 7.6
Exemption Agreement - see Section 7.6
Exemption Representation - see Section 7.6
<PAGE>
Extension Request - see Section 2.3.
Federal Funds Rate means, for any day, the rate set forth in
the daily statistical release designated as the Composite 3:30
p.m. Quotations for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor publication, the "Composite 3:30
p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate". If such rate is not published in the Composite
3:30 p.m. Quotations for any Business Day, the rate for such day
will be the arithmetic mean of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m., New York
City time, on such day by each of three leading brokers of
Federal funds transactions in New York City, selected by the
Agent. The rate for any day which is not a Business Day shall be
the rate for the immediately preceding Business Day.
Fiscal Quarter means any fiscal quarter of a Fiscal Year.
Fiscal Year means the fiscal year of the Company and its
Subsidiaries, which period shall be the period of approximately
12 months ending on the Saturday closest to January 31 in each
year.
Fixed Charge Coverage Ratio means, as of the last day of any
Fiscal Quarter, the ratio of (a) the sum of the Company's
consolidated net earnings before interest expense, taxes,
depreciation and amortization for the period of four Fiscal
Quarters ending on such day plus the Company's consolidated
rental expense on operating leases for such period to (b) the sum
of (i) the Company's consolidated interest expense for such
period plus (ii) the Company's consolidated rental expense on
operating leases for such period plus (iii) the amount classified
as the current portion of all long-term debt (excluding, if
applicable, the Loans) and lease obligations of the Company and
its Subsidiaries on a consolidated balance sheet prepared on such
day.
GAAP means those generally accepted accounting principles as
in effect from time to time in the United States of America.
Group - see Section 2.1.2.
Hedging Arrangement means any interest rate swap, cap or
collar agreement, currency swap agreement, commodity swap
agreement or other arrangement designed to hedge interest rate
and/or currency risk or changes in commodity prices.
Indemnified Liabilities - see Section 14.7
Interest Period means
(a) with respect to any Eurodollar Loan, the
period commencing on and including the date such Loan is
made or is converted from an Alternate Base Rate Loan, or on
the last day of the immediately preceding Interest Period
for such Loan, and ending on, but excluding, the numerically
corresponding day in the first, second, third or sixth
calendar month thereafter, as the Company shall specify in
<PAGE>
the related notice of borrowing, conversion or continuation
pursuant to Section 2.1.3 or 2.1.4; provided, however, that
(i) if an Interest Period would otherwise
end on a day which is not a Business Day, such
Interest Period shall end on the immediately
succeeding Business Day (unless such succeeding
Business Day would be the first Business Day of a
calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day);
(ii) each Interest Period that commences on
any day for which there is no numerically
corresponding day in the appropriate subsequent
calendar month shall end on the last Business Day of
the appropriate subsequent calendar month; and
(iii) the Company may not select any
Interest Period which extends beyond the scheduled
Termination Date;
(b) with respect to any Eurodollar Competitive
Bid Loan, the period commencing on and including the date
such Eurodollar Competitive Bid Loan is made and ending on,
but excluding, the numerically corresponding day in the
first, second, or third calendar month thereafter, as the
Company may select as provided in Section 2.2; provided,
however, that
(i) if an Interest Period would otherwise
end on a day which is not a Business Day, such
Interest Period shall end on the immediately
succeeding Business Day (unless such succeeding
Business Day would be the first Business Day of a
calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day);
(ii) each Interest Period that commences on
any day for which there is no numerically
corresponding day in the appropriate subsequent
calendar month shall end on the last Business Day of
the appropriate subsequent calendar month; and
(iii) the Company may not select any
Interest Period which extends beyond the scheduled
Termination Date; and
(c) with respect to any Set Rate Loan, the
period commencing on the date such Set Rate Loan is
made and ending on any Business Day at least seven and
no more than 90 days thereafter, as the Company may
select as provided in Section 2.2; provided, however,
that the Company may not select any Interest Period
which extends beyond the scheduled Termination Date.
Invitation for Competitive Bid Quote - see Section 2.2.3.
Lender - see the Preamble.
<PAGE>
Lender Party - see Section 14.7
Lien means, when used with respect to any Person, any
interest of any other Person in any real or personal property,
asset or other right owned or being purchased or acquired by such
Person which secures payment or performance of any obligation and
shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a
matter of law, by judicial process or otherwise.
Loans when used without a modifying adjective, means,
collectively, Syndicated Loans and Competitive Bid Loans.
Management Stock Agreement means any agreement between the
Company and key employees which provides for the sale of stock to
employees with repurchase rights of, and obligations in, the
Company.
Margin Stock means any "margin stock" as defined in
Regulation U of the Board of Governors of the Federal Reserve
System.
Material Adverse Effect means a material adverse effect on
the ability of the Company to timely and fully perform any of its
payment or other material obligations under this Agreement or any
Note.
Material Subsidiary means any Subsidiary which either (a)
has assets which constitute 5% or more of the consolidated assets
of the Company and its Subsidiaries or (b) has revenues during
its most recently-ended fiscal year which constitute more than 5%
of the consolidated revenues of the Company and its Subsidiaries
during the most recently-ended Fiscal Year.
Multiemployer Plan means a "multiemployer plan" as defined
in section 4001(a)(3) of ERISA which is maintained for employees
of the Company or any ERISA Affiliate of the Company or more.
New York means, unless otherwise stated, New York City, New
York, United States of America.
Notes when used without a modifying adjective, means,
collectively, Syndicated Loan Notes and Competitive Bid Loan
Notes.
Objecting Lender - see Section 2.3.
Occupational Safety and Health Law means the Occupational
Safety and Health Act of 1970 and any other federal, state or
local statute, law, ordinance, code, rule, regulation, order or
decree regulating or relating to, or imposing liability or
standards of conduct concerning, employee health and/or safety,
as now or at any time hereafter in effect.
Participant - see Section 14.9.2.
PBGC means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
<PAGE>
Pension Plan means a "pension plan", as such term is defined
in section 3(2) of ERISA, which is subject to title IV of ERISA
(other than a Multiemployer Plan), and to which the Company or
any ERISA Affiliate may have any liability, including any
liability by reason of having been a substantial employer within
the meaning of section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
Percentage means as to any Lender the percentage which the
amount of such Lender's Commitment is of the aggregate amount of
Commitments (or, if the Commitments have terminated, which the
principal amount of such Lender's outstanding Loans is of the
principal amount of all outstanding Loans). The Percentages of
the Lenders as of the Effective Date are set forth on Schedule I.
Person means any natural person, corporation, partnership,
trust, association, governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary or other
capacity.
Portland means Portland, Oregon, United States of America.
Quotation Date - see Section 2.2.3(a)(v)
Recipient Taxes - see Section 7.6
Reference Lender means each of First Interstate Bank of
Oregon, N.A. and Scotiabank.
Release means a "release", as such term is defined in
CERCLA.
Required Lenders means Lenders having an aggregate
Percentage of 66-2/3% or more.
Scotiabank - see the Preamble.
SEC means the Securities and Exchange Commission.
Set Rate - see Section 2.2.3(c)(iv).
Set Rate Auction means a solicitation of a Competitive Bid
Quote setting forth Set Rates pursuant to Section 2.2.
Set Rate Loans means Competitive Bid Loans the interest
rates on which are determined on the basis of Set Rates pursuant
to a Set Rate Auction.
Subsidiary means, with respect to any Person, any
corporation of which such Person and/or its other Subsidiaries
own, directly or indirectly, such number of outstanding shares as
have more than 50% of the ordinary voting power for the election
of directors. Unless the context otherwise requires, each
reference to Subsidiaries herein shall be a reference to
Subsidiaries of the Company.
<PAGE>
Suretyship Liability means any agreement, undertaking or
other contractual arrangement by which any Person guarantees,
endorses or otherwise becomes or is contingently liable upon (by
direct or indirect agreement, contingent or otherwise, to provide
funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any
indebtedness, obligation or other liability (including accounts
payable) of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of
any other Person. The amount of any Person's obligation under
any Suretyship Liability shall (subject to any limitation set
forth therein) be deemed to be the principal amount of the
indebtedness, obligation or other liability guaranteed thereby.
Syndicated Loan - see Section 2.1.1.
Syndicated Loan Note - see Section 3.1.1.
Taxes - see Section 7.6
Termination Date means 364 days after the Effective Date as
such date is extended from time to time pursuant to Section 2.3
or such other date on which the Commitments shall terminate
pursuant to Section 6.1 or 12.2.
Type of Competitive Bid Loan or Borrowing - see Section
2.2.2. The types of Competitive Bid Loans or borrowings under
this Agreement are as follows: Eurodollar Competitive Bid Loans
or borrowings and Set Rate Loans or borrowings.
Type of Syndicated Loan or Borrowing - see Section 2.1.2.
The types of Syndicated Loans or borrowings under this Agreement
are as follows: Alternate Base Rate Loans or borrowings and
Eurodollar Loans or borrowings.
Unmatured Event of Default means any event which if it
continues uncured will, with lapse of time or notice or lapse of
time and notice, constitute an Event of Default.
Welfare Plan means a "welfare plan", as such term is defined
in section 3(i) of ERISA.
1.2 Computations; Changes in GAAP. Where the character
-----------------------------
or amount of any asset or liability or any item of income or
expense is required to be determined, or any consolidation or
other accounting computation is required to be made, for purposes
of this Agreement, such determination or calculation shall, to
the extent applicable and except as otherwise specified in this
Agreement, be made in accordance with GAAP. If any change in
accounting principles from those used in the preparation of the
audited financial statements referred to in Section 9.4 hereafter
occasioned by the promulgation of any rule, regulation,
pronouncement or opinion by or required by the Financial
Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with
similar functions) results in a change in the method of
calculation of financial covenants, standards or terms found in
<PAGE>
Section 1 or 10, the parties hereto agree to enter into
negotiations in order to amend such provisions so as to equitably
reflect such changes with the desired result that the criteria
for evaluating the Company's financial condition shall be the
same after such change as if such change had not been made.
1.3 Cross-References; Section Captions. A Section, an
----------------------------------
Exhibit or a Schedule is, unless otherwise stated, a reference to
a section hereof or an exhibit or schedule hereto, as the case
may be. Section captions are for convenience only and shall not
affect the interpretation of this Agreement.
SECTION 2 COMMITMENTS OF THE LENDERS; TYPES OF LOANS;
BORROWING AND CONVERSION PROCEDURES.
2.1 Syndicated Loans.
----------------
2.1.1 Commitments. Subject to the terms and
-----------
conditions of this Agreement, each of the Lenders, severally and
for itself alone, agrees to make loans to the Company on a
revolving basis (collectively the "Syndicated Loans" and
individually each a "Syndicated Loan") from time to time before
the Termination Date in such Lender's Percentage of such
aggregate amounts as the Company may from time to time request
from all Lenders; provided, however, that (i) the aggregate
principal amount of all Syndicated Loans which any Lender shall
be committed to have outstanding hereunder shall not at any time
exceed the amount of such Lender's Commitment; and (ii) the
aggregate principal amount of all Syndicated Loans which all
Lenders shall be committed to have outstanding hereunder (the
"Commitment Amount") shall not at any time exceed $100,000,000
(as such amount is reduced from time to time pursuant to Section
6.1 and Section 2.2.2(b)).
2.1.2 Types of Syndicated Loans. Each Syndicated
-------------------------
Loan shall be either an Alternate Base Rate Loan or a Eurodollar
Loan (each a "type" of Syndicated Loan), as the Company shall
specify in the related notice of borrowing or conversion pursuant
to Section 2.1.3 or 2.1.4. Eurodollar Loans having the same
Interest Period are sometimes called a "Group" or collectively
"Groups". Alternate Base Rate Loans and Eurodollar Loans may be
outstanding at the same time, provided that (i) not more than
eight different Groups of Eurodollar Loans shall be outstanding
at any one time and (ii) the aggregate principal amount of each
Group of Eurodollar Loans shall at all times (including after
giving effect to any conversion or continuation of any Syndicated
Loans) be at least $5,000,000 and an integral multiple of
$1,000,000.
2.1.3 Borrowing Procedures. The Company shall give
--------------------
written or telephonic notice to the Agent of each proposed
borrowing not later than (a) in the case of an Alternate Base
Rate borrowing, 9:00 a.m., Portland time, on the proposed date of
such borrowing, and (b) in the case of a Eurodollar borrowing,
<PAGE>
9:00 a.m., Portland time, at least three Business Days prior to
the proposed date of such borrowing. Each such notice shall be
effective upon receipt by the Agent and shall specify the date,
amount and type of borrowing and, in the case of a Eurodollar
borrowing, the initial Interest Period therefor. Promptly upon
receipt of such notice, the Agent shall advise each Lender
thereof. (The Company shall deliver written confirmation of each
telephonic notice or send such confirmation by facsimile
transmission to the Agent as soon as practicable on the same day
such notice is given.) Not later than 12:00 noon, Portland time,
on the date of a proposed borrowing, each Lender shall provide
the Agent at the principal office of the Agent in Portland with
immediately available funds covering such Lender's Percentage of
such borrowing and, subject to the satisfaction of the conditions
precedent set forth in Section 11 with respect to such borrowing,
the Agent shall pay over such funds to the Company on the
requested borrowing date. Each borrowing shall be on a Business
Day. Each borrowing shall be in an aggregate amount of at least
$1,000,000, in the case of Alternate Base Rate Loans, or
$5,000,000, in the case of Eurodollar Loans, and shall be in an
integral multiple of $1,000,000.
2.1.4 Continuation and Conversion Procedures.
--------------------------------------
Subject to the provisions of the last sentence of Section 2.1.2,
the Company may convert all or any part of any outstanding
Syndicated Loan into a Syndicated Loan of a different type, or
continue all or any part of any outstanding Eurodollar Loan for a
succeeding Interest Period beginning on the last day of the
current Interest Period for such Syndicated Loan, by giving
written or telephonic notice to the Agent not later than (a) in
the case of conversion into an Alternate Base Rate Loan, 9:00
a.m., Portland time, on the proposed date of such conversion, and
(b) in the case of a conversion into or continuation of a
Eurodollar Loan, 9:00 a.m., Portland time, at least three
Business Days prior to the proposed date of such conversion or
continuation. Each such notice shall be effective upon receipt
by the Agent and shall specify the date and amount of such
conversion or continuation, the Loan to be so converted or
continued and, in the case of a conversion into or continuation
of a Eurodollar Loan, the initial or subsequent Interest Period
therefor, as applicable. Promptly upon receipt of such notice,
the Agent shall advise each Lender thereof. (The Company shall
deliver written confirmation of each telephonic notice or send
such confirmation by facsimile transmission to the Agent as soon
as practicable on the same day such notice is given.) Subject to
Section 2.1.6, such Loan shall be so converted or continued on
the requested date of conversion or continuation. Each
conversion and continuation shall be on a Business Day. If the
Company fails to give timely notice of continuation of a
Eurodollar Loan, such Loan shall automatically convert to an
Alternate Base Rate Loan on the last day of the Interest Period
therefor.
2.1.5 Warranty upon Conversion or Continuation.
----------------------------------------
Each notice of conversion or continuation pursuant to Section
2.1.4 shall automatically constitute a warranty by the Company to
the Agent and each Lender to the effect that, on the date of such
<PAGE>
requested conversion or continuation, no Event of Default or
Unmatured Event of Default shall exist.
2.1.6 Conditions. Notwithstanding any other
----------
provision of this Agreement, no Lender shall be obligated to make
any Syndicated Loan, or to convert into or permit the
continuation at the end of the applicable Interest Period of any
Eurodollar Loan, if an Event of Default or Unmatured Event of
Default exists.
2.1.7 Pro Rata Treatment. All borrowings,
------------------
conversions and repayments of Syndicated Loans shall be effected
so that after giving effect thereto each Lender will have a pro
rata share (according to its Percentage) of all types of
Syndicated Loans.
2.1.8 Commitments Several. The failure of any
-------------------
Lender to make a requested Syndicated Loan on any date shall not
relieve any other Lender of its obligation (if any) to make a
Syndicated Loan on such date, but no Lender shall be responsible
for the failure of any other Lender to make any Syndicated Loan
to be made by such other Lender.
2.2 Competitive Bid Loans.
---------------------
2.2.1 The Company May Request Offers. In addition
------------------------------
to borrowings of Syndicated Loans provided for in Section 2.1, at
any time prior to the Termination Date the Company may, as set
forth in this Section 2.2, request the Lenders to make offers to
make Competitive Bid Loans to the Company in Dollars. The
Lenders may, but shall have no obligation to, make such offers
and the Company may, but shall have no obligation to, accept any
such offers in the manner set forth in this Section 2.2.
2.2.2 Types of Competitive Bid Loans. Competitive
------------------------------
Bid Loans may be Eurodollar Competitive Bid Loans or Set Rate
Loans (each a "type" of Competitive Bid Loan), provided that:
(a) there may not be Interest Periods for
both Syndicated Loans and Competitive Bid Loans outstanding
at the same time which have expiration dates occurring on
more than 12 different dates; and
(b) the aggregate principal amount of all
Competitive Bid Loans, together with the aggregate principal
amount of all Syndicated Loans, at any one time outstanding
shall not exceed the Commitment Amount at such time.
2.2.3 Bid Procedure.
-------------
(a) When the Company wishes to request
offers to make Competitive Bid Loans, it shall give the
<PAGE>
Agent notice (a "Competitive Bid Quote Request") so as to be
received no later than 9:00 a.m. Portland time on (x) the
fourth Business Day prior to the date of borrowing proposed
therein, in the case of a Eurodollar Auction or (y) the
Business Day immediately preceding the date of borrowing
proposed therein, in the case of a Set Rate Auction (or, in
any such case, such other time and date as the Company and
the Agent may agree). Upon receipt of a Competitive Bid
Quote Request, the Agent shall promptly notify the Lenders
by an invitation for bid in substantially the form of
Exhibit B (an "Invitation for Competitive Bid Quotes"). The
Company may request offers to make Competitive Bid Loans for
up to three different Interest Periods in a single notice;
provided that the request for each separate Interest Period
shall be deemed to be a separate Competitive Bid Quote
Request for a separate borrowing (a "Competitive Bid
Borrowing"). Each Competitive Bid Quote Request shall be
substantially in the form of Exhibit A and shall specify as
to each Competitive Bid Borrowing:
(i) the proposed date of such
borrowing, which shall be a Business Day;
(ii) the amount of such Competitive Bid
Borrowing, which shall be at least $5,000,000 (or a
larger multiple of $1,000,000) but shall not cause
the limits specified in Section 2.2.2 hereof to be
violated;
(iii) the duration of the Interest
Period applicable thereto;
(iv) whether the Competitive Bid Quotes
requested for a particular Interest Period are
seeking quotes for Eurodollar Competitive Bid Loans
or Set Rate Loans; and
(v) if the Competitive Bid Quotes
requested are seeking quotes for Set Rate Loans, the
date on which the Competitive Bid Quotes are to be
submitted if the date is before the proposed date of
borrowing (the date on which such Competitive Bid
Quotes are to be submitted is called the "Quotation
Date").
Except as otherwise provided in this Section 2.2.3(a), not
more than three Competitive Bid Quote Requests shall be
given within any six consecutive Business Days (or such
other number of days as the Company and the Agent may
agree).
(b) Each Lender may submit one or more
Competitive Bid Quotes ("Competitive Bid Quotes" and
individually, a "Competitive Bid Quote"), each containing an
offer to make a Competitive Bid Loan in response to any
Competitive Bid Quote Request; provided that, if the
Company's request under Section 2.2.3(a) specified more than
one Interest Period, such Lender may make a single
submission containing one or more Competitive Bid Quotes for
<PAGE>
each such Interest Period. Each Competitive Bid Quote must
be submitted to the Agent not later than (x) 2:00 p.m.
Portland time on the fourth Business Day prior to the
proposed date of borrowing, in the case of a Eurodollar
Auction or (y) 10:00 a.m. Portland time on the Quotation
Date, in the case of a Set Rate Auction (or, in any such
case, such other time and date as the Company and the Agent
may agree); provided that any Competitive Bid Quote may be
submitted by the Lender acting as Agent (or its Eurodollar
Office) only if the Lender acting as Agent (or such
Eurodollar Office) notifies the Company of the terms of the
offer contained therein no later than (x) 1:00 p.m. Portland
time on the fourth Business Day prior to the proposed date
of borrowing, in the case of a Eurodollar Auction or (y)
9:45 a.m. Portland time on the Quotation Date, in the case
of a Set Rate Auction.
(c) Each Competitive Bid Quote shall be
substantially in the form of Exhibit C and shall specify:
(i) the proposed date of borrowing and
the Interest Period therefor;
(ii) the principal amount of the
Competitive Bid Loan for which each such offer is
being made, which principal amount shall be at least
$5,000,000 (or a larger multiple of $1,000,00);
provided that the aggregate principal amount of all
Competitive Bid Loans for which a Lender submits
Competitive Bid Quotes (x) may be greater or less
than the Commitment of such Lender but (y) may not
exceed the principal amount of the Competitive Bid
Borrowing for a particular Interest Period for which
offers were requested;
(iii) in the case of a Eurodollar
Auction, the margin above or below the applicable
Eurodollar Competitive Bid Rate (Reserve Adjusted)
(the "Eurodollar Margin") offered for each such
Competitive Bid Loan, expressed as a percentage
(rounded upwards, if necessary, to the nearest
1/10,000th of 1%) to be added to or subtracted from
the applicable Eurodollar Competitive Bid Rate
(Reserve Adjusted);
(iv) in the case of a Set Rate Auction,
the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/10,000th of 1%) offered
for each such Competitive Bid Loan (the "Set Rate");
and
(v) the identity of the quoting Lender.
Unless otherwise agreed by the Agent and the Company, no
Competitive Bid Quote shall contain qualifying, conditional
or similar language or propose terms other than or in
addition to those set forth in the applicable Competitive
Bid Quote Request and, in particular, no Competitive Bid
Quote may be conditioned upon acceptance by the Company of
<PAGE>
all (or some specified minimum) of the principal amount of
the Competitive Bid Loan for which such Competitive Bid
Quote is being made, provided that the submission by any
Lender containing more than one Competitive Bid Quote may be
conditioned on the Company not accepting offers contained in
such submission that would result in such Lender making
Competitive Bid Loans pursuant thereto in excess of a
specified aggregate amount set forth in the Competitive Bid
Quote (the "Competitive Bid Loan Limit").
(d) The Agent shall (x) in the case of a Set
Rate Auction, as promptly as practicable after the
Competitive Bid Quote is submitted (but in any event not
later than 10:15 a.m. Portland time on the Quotation Date)
or (y) in the case of a Eurodollar Auction, by 4:00 p.m.
Portland time on the day a Competitive Bid Quote is
submitted, notify the Company of the terms (i) of any
Competitive Bid Quote submitted by a Lender that is in
accordance with Sections 2.2.3(b) and 2.2.3(c), and (ii) of
any Competitive Bid Quote that amends, modifies or is
otherwise inconsistent with a previous Competitive Bid Quote
submitted by such Lender with respect to the same
Competitive Bid Quote Request. Any such subsequent
Competitive Bid Quote shall be disregarded by the Agent
unless such subsequent Competitive Bid Quote is submitted
solely to correct a manifest error in such former Competitive
Bid Quote. The Agent's notice to the Company shall specify
(A) the aggregate principal amount of the Competitive Bid
Borrowing for which offers have been received and (B) the
respective principal amounts and Eurodollar Margins or Set
Rates, as the case may be, so offered by each Lender
(identifying the Lender that made each Competitive Bid
Quote).
(e) Not later than (x) 4:00 p.m. Portland
time on the third Business Day prior to the proposed date of
borrowing, in the case of a Eurodollar Auction, or (y) 11:00
a.m. Portland time on the Quotation Date, in the case of a
Set Rate Auction (or, in any such case, such other time and
date as the Company and the Agent may agree), the Company
shall notify the Agent of its acceptance or nonacceptance of
the offers so notified to it pursuant to Section 2.2.3(d)
(which notice shall be substantially in the form of Exhibit
D (a "Competitive Bid Loan Acknowledgment") and shall
specify the aggregate principal amount of offers from each
Lender for each Interest Period that are accepted, it being
understood that the failure of the Company to give such
notice by such time shall constitute nonacceptance) and the
Agent shall promptly notify each affected Lender. The
notice from the Agent shall be in substantially the form of
Exhibit E (a "Competitive Bid Loan Confirmation") and shall
also specify the aggregate principal amount of offers for
each Interest Period that were accepted and the lowest and
highest Eurodollar Margins and Set Rates that were accepted
for each Interest Period. The Company may accept any
Competitive Bid Quote in whole or in part (provided that any
Competitive Bid Quote accepted in part shall be at least
$5,000,000 or a larger multiple of $1,000,000, unless
otherwise required in order to pro rate Competitive Bid
<PAGE>
Quotations as set forth below in this Section 2.2.3(e));
provided that
(i) the aggregate principal amount of
each Competitive Bid Borrowing may not exceed the
applicable amount set forth in the related
Competitive Bid Quote Request;
(ii) the aggregate principal amount of
each Competitive Bid Borrowing shall be at least
$5,000,000 (or a larger multiple of $1,000,000) but
shall not cause the limits specified in Section 2.2.2
to be violated;
(iii) acceptance of offers for each
Interest Period may, subject to Section 2.2.3(e)(iv)
below, be made only in ascending order of Eurodollar
Margins or Set Rates, as the case may be, in each
case beginning with the lowest rate so offered;
(iv) the aggregate principal amount of
each Competitive Bid Borrowing from any Lender may
not exceed any applicable Competitive Bid Loan Limit
of such Lender.
If offers are made by two or more Lenders with the same
Eurodollar Margins or Set Rates, as the case may be, for a
greater aggregate principal amount than the amount in respect of
which offers are accepted for the related Interest Period, the
principal amount of Competitive Bid Loans in respect of which
such offers are accepted shall be allocated by the Agent
among such Lenders as nearly as possible in proportion to the
aggregate principal amount of such offers. Determinations by
the Company of the amounts of Competitive Bid Loans shall be
conclusive in the absence of manifest error.
2.2.4 Borrowing Procedure. Any Lender whose offer
-------------------
to make any Competitive Bid Loan has been accepted in accordance
with the terms and conditions of this Section 2.2 shall, not
later than 12:00 noon Portland time on the date specified for the
making of such Loan, make the amount of such Loan available to
the Agent in immediately available funds, for account of the
Company. The amount so received by the Agent shall, subject to
the terms and conditions of this Agreement, be made available to
the Company on such date by depositing the same, in immediately
available funds, in an account of the Company designated by the
Company.
2.2.5 Repayment of Competitive Bid Loans. The
----------------------------------
Company shall pay to the Agent for the account of each Lender
that makes any Competitive Bid Loan the principal amount of such
Competitive Bid Loan, and such Competitive Bid Loan shall mature,
on the last day of the Interest Period for such Competitive Bid
Loan.
2.2.6 No Effect on Commitment. The amount of
-----------------------
Competitive Bid Loans made by any Lender shall not reduce such
Lender's obligations under Section 2.1.
<PAGE>
2.3 Extension of Termination Date. During the period
-----------------------------
from and including the day which is 90 days before the
Termination Date to and including the day which is 60 days before
the Termination Date (other than a Termination Date pursuant to
Section 6.1 or 12.2), the Company may, at its option, deliver to
the Agent (which shall promptly notify each Lender) a signed copy
of an extension request (an "Extension Request") in the form of
Exhibit F, requesting an extension of the Termination Date for a
period of 364 days. On or before the day which is 30 days after
the Company has delivered an Extension Request, each Lender shall
have the right, in its sole and absolute discretion, to deliver a
written notice to the Agent consenting to or rejecting the
requested extension. If a Lender has not given such notice to
the Agent during such 30-day period, such Lender shall be deemed
not to have consented to such extension. If all Lenders consent
to an Extension Request, the Termination Date shall be extended
for an additional 364 days effective on the day following the
Termination Date. If any Lender (an "Objecting Lender") rejects,
or is deemed not to have consented to, an Extension Request
during the 30-day notice period, the Termination Date shall not
be so extended; provided that if Lenders with an aggregate
Percentage of less than 25% are Objecting Lenders, then the
Termination Date shall be so extended if, on or before the
Termination Date, the Company (a) replaces each Objecting Lender
pursuant to Section 8.7 with Lenders (which may be existing or
new Lenders) which consent to the applicable Extension Request or
(b) to the extent all Objecting Lenders have not been so
replaced, by notice to the Agent and each Objecting Lender,
terminates the Commitments of all Objecting Lenders (and
concurrently pays to the Agent for the account of each Objecting
Lender all amounts owed to such Objecting Lender hereunder) and
reduces the aggregate amount of all of the Commitments by a
corresponding amount.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Lender shall be evidenced by
-----
promissory notes as follows:
3.1.1 Syndicated Loan Notes. The Syndicated Loans
---------------------
of each Lender shall be evidenced by a promissory note (as
amended, supplemented, replaced or otherwise modified from time
to time, individually each a "Syndicated Loan Note" and
collectively for all Lenders the "Syndicated Loan Notes")
substantially in the form set forth in Exhibit G, with
appropriate insertions, dated the Effective Date (or such other
date as shall be satisfactory to the Agent), payable to the order
of such Lender in the principal amount of the Commitment of such
Lender (or, if less, in the aggregate unpaid principal amount of
such Lender's Loans).
3.1.2 Competitive Bid Loan Notes. The Competitive
--------------------------
Bid Loans of each Lender shall be evidenced by a promissory note
(as amended, supplemented, replaced or otherwise modified from
time to time, individually each a "Competitive Bid Loan Note" and
<PAGE>
collectively for all Lenders the "Competitive Bid Loan Notes")
substantially in the form set forth in Exhibit H, with
appropriate insertions, dated the Effective Date (or such other
date as shall be satisfactory to the Agent), payable to the order
of such Lender.
3.2 Recordkeeping. Each Lender shall record in its
-------------
records, or at its option on the schedules attached to its
Syndicated Loan Note and Competitive Bid Loan Note, the date and
amount of each Syndicated Loan and Competitive Bid Loan, as the
case may be, made by such Lender, each repayment or conversion
(if applicable) thereof and, in the case of each Eurodollar Loan
and Competitive Bid Loan, the dates on which each Interest Period
for such Loan shall begin and end. The aggregate unpaid
principal amount so recorded shall be rebuttable presumptive
evidence of the principal amount owing and unpaid on such Notes.
The failure to so record any such amount or any error in so
recording any such amount shall not, however, limit or otherwise
affect the obligations of the Company hereunder or under any
Syndicated Loan Note or Competitive Bid Loan Note to repay the
principal amount of the Syndicated Loans and Competitive Bid
Loans evidenced by such Notes together with all interest accruing
thereon.
SECTION 4 INTEREST.
4.1 Interest Rates. The Company promises to pay interest
--------------
on the unpaid principal amount of each Loan as follows:
4.1.1 Syndicated Loans. The Company promises to
----------------
pay interest on the unpaid principal amount of each Syndicated
Loan for the period commencing on and including the date of such
Syndicated Loan to but excluding the date such Syndicated Loan is
paid in full, as follows:
(a) at all times while such Syndicated Loan is an
Alternate Base Rate Loan, at a rate per annum equal to the
Alternate Base Rate from time to time in effect; and
(b) at all times while such Syndicated Loan is a
Eurodollar Loan, at a rate per annum equal to the Eurodollar
Rate (Reserve Adjusted) applicable to each Interest Period
for such Loan plus 0.305%.
4.1.2 Competitive Bid Loans. The Company promises
---------------------
to pay interest on the unpaid principal amount of each
Competitive Bid Loan for the period commencing on and including
the date of such Competitive Bid Loan to but excluding the date
such Competitive Bid Loan is paid in full, as follows:
(a) if such Competitive Bid Loan is a
Eurodollar Competitive Bid Loan, the Eurodollar Competitive
Bid Rate (Reserve Adjusted) for such Loan for the Interest
Period thereafter plus (or minus) the Eurodollar Margin
quoted by the Lender making such Loan in accordance with
Section 2.2; and
<PAGE>
(b) if such Competitive Bid Loan is a Set
Rate Loan, the Set Rate for such Loan for the Interest
Period therefor quoted by the Lender making such Loan in
accordance with Section 2.2.
Provided, however, that if any principal of any Loan is not paid
when due (by acceleration or otherwise), such principal shall
thereafter bear interest at a rate per annum equal to the sum of
the Alternate Base Rate from time to time in effect plus 1%.
4.2 Interest Payment Dates. Accrued interest on each
----------------------
Alternate Base Rate Loan shall be payable on the last day of each
January, April, July and October and at maturity. Accrued
interest on each Eurodollar Loan and Competitive Bid Loan shall
be payable on the last day of each Interest Period relating to
such Loan (and, in the case of any Eurodollar Loan with an
Interest Period exceeding three months, on each three-month
anniversary of the first day of such Interest Period) and at
maturity. After maturity, accrued interest on all Loans shall be
payable on demand.
4.3 Setting and Notice of Eurodollar Rates and Eurodollar
-----------------------------------------------------
Competitive Bid Rates. The applicable Eurodollar Rate and
- ---------------------
Eurodollar Competitive Bid Rate for each Interest Period shall be
determined by the Agent, and notice thereof shall be given by the
Agent promptly to the Company and each Lender. Each
determination of the applicable Eurodollar Rate or Eurodollar
Competitive Bid Rate by the Agent shall be conclusive and binding
upon the parties hereto, in the absence of demonstrable error.
The Agent shall, upon written request of the Company or any
Lender, deliver to the Company or such Lender a statement showing
the computations used by the Agent in determining any applicable
Eurodollar Rate or Eurodollar Competitive Bid Rate hereunder.
Each Reference Lender agrees to use reasonable efforts to
timely notify the Agent of its applicable rate for each Interest
Period (as contemplated in the definitions of Eurodollar Rate and
Eurodollar Competitive Bid Rate). If, as to any Interest Period,
any Reference Lender is unable or fails to notify the Agent of
its applicable Eurodollar Rate by 11:00 a.m., Portland time, two
Business Days before such Interest Period, or its applicable
Eurodollar Competitive Bid Rate by 11:00 a.m., Portland time,
four Business Days before such Interest Period, then the
Eurodollar Rate or Eurodollar Competitive Bid Rate, as the case
may be, shall be determined on the basis of the rate of the other
Reference Lender.
4.4 Computation of Interest. Interest shall be computed
-----------------------
for the actual number of days elapsed on the basis of a year of
360 days (or, in the case of Alternate Base Rate Loans bearing
interest at the Alternate Base Rate, 365 or 366 days, as
appropriate). The applicable interest rate for each Alternate
Base Rate Loan shall change simultaneously with each change in
the Alternate Base Rate.
<PAGE>
SECTION 5 FEES.
5.1 Facility Fee. The Company agrees to pay to the Agent
------------
for the account of each Lender a facility fee for the period from
and including the Effective Date to but excluding the Termination
Date in an amount equal to 0.120% per annum of the daily average
of the amount of such Lender's Commitment (whether used or
unused). Such facility fee shall be payable in arrears on the
last day of each calendar quarter and on the Termination Date for
any period then ending for which such facility fee shall not have
been theretofore paid. The facility fee shall be computed for
the actual number of days elapsed on the basis of a year of 360
days.
5.2 Agent's Fee. The Company agrees to pay to the Agent
-----------
for its own account such fees as are agreed to from time to time
by the Company and the Agent.
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS.
6.1 Reduction or Termination of the Commitments. The
-------------------------------------------
Company may from time to time on at least five Business Days'
prior written notice received by the Agent (which shall promptly
advise each Lender thereof) permanently reduce the Commitment
Amount to an amount not less than the aggregate unpaid principal
amount of the Loans. Any such reduction shall be in an amount
that is an integral multiple of $5,000,000 and shall be pro rata
among the Lenders according to their respective Percentages. The
Company may at any time on like notice terminate the Commitments
upon payment in full of all Loans and all other obligations of
the Company hereunder.
6.2 Prepayments. The Company may from time to time
-----------
prepay Syndicated Loans in whole or in part, provided that (a)
the Company shall give the Agent (which shall promptly advise
each Lender) written notice thereof not later than 11:00 a.m.,
Portland time, on the date of such prepayment, in the case of
Alternate Base Rate Loans, and not less than two Business Days
prior to the date of such prepayment, in the case of Eurodollar
Loans, in each case specifying the Syndicated Loans to be prepaid
and the date (which shall be a Business Day) and amount of
prepayment, (b) each partial prepayment of Syndicated Loans shall
be in an aggregate principal amount of at least $5,000,000 and an
integral multiple of $1,000,000 and (c) any prepayment of
Eurodollar Loans on a day other than the last day of an Interest
Period therefor shall be subject to Section 8.4. After giving
effect to any prepayment of Eurodollar Loans, each Group of
Eurodollar Loans shall be at least $5,000,000 and an integral
multiple of $1,000,000. Competitive Bid Loans shall not be
prepaid.
<PAGE>
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF;
TAXES.
7.1 Making of Payments. All payments of principal of or
------------------
interest on the Syndicated Loan Notes and Competitive Bid Loan
Notes, and of all fees, shall be made by the Company to the Agent
in immediately available funds at its office in Portland not
later than 12:00 noon, Portland time, on the date due; and funds
received after that hour shall be deemed to have been received by
the Agent on the immediately following Business Day. The Agent
shall promptly remit to each Lender its share of all payments on
Syndicated Loan Notes received in collected funds by the Agent
for the account of such Lender. The Agent shall promptly remit
to a Lender that made a Competitive Bid Loan all payments on the
applicable Competitive Bid Loan Note received in collected funds
by the Agent for the account of such Lender.
All payments under Sections 8.1 and 8.4 shall be made by the
Company directly to the Lender entitled thereto.
7.2 Application of Certain Payments. Each payment of
-------------------------------
principal shall be applied to such Syndicated Loans or
Competitive Bid Loans as the Company shall direct by notice to be
received by the Agent on or before the date of such payment. In
the absence of such notice, the Agent shall apply such payment
first to such Syndicated Loans then due as the Agent shall
determine in its discretion, and second, if all outstanding
Syndicated Loans then due have been paid in full, to all
outstanding Competitive Bid Loans, such payment to be prorated
among such Competitive Bid Loans based upon the ratio of the
principal amount of a Lender's outstanding Competitive Bid Loans
to the principal amount of all outstanding Competitive Bid Loans.
Concurrently with each remittance to any Lender of its share of
any such payment, the Agent shall advise such Lender as to the
application of such payment.
7.3 Due Date Extension. If any payment of principal or
------------------
interest with respect to any of the Notes, or of any fee, falls
due on a day which is not a Business Day, then such due date
shall be extended to the immediately following Business Day
(unless, in the case of a Eurodollar Loan or Eurodollar
Competitive Bid Loan, such immediately following Business Day is
the first Business Day of a calendar month, in which case such
due date shall be the immediately preceding Business Day), and,
in the case of principal, additional interest shall accrue and be
payable for the period of any such extension.
7.4 Setoff. The Company agrees that the Agent and each
------
Lender have all rights of set-off and bankers' lien provided by
applicable law, and in addition thereto, the Company agrees that
at any time any Unmatured Event of Default under Section 12.1.4
or any Event of Default exists, the Agent and each Lender may
apply to the payment of any obligations of the Company hereunder
(whether or not then due), any and all balances, credits,
deposits, accounts or moneys of the Company (excluding amounts
<PAGE>
held in trust accounts for the benefit of Persons other than the
Company) then or thereafter with the Agent or such Lender.
7.5 Proration of Payments on Syndicated Loans. If any
-----------------------------------------
Lender shall obtain by payment or other recovery (whether
voluntary, involuntary, by application of offset or otherwise) on
account of principal of or interest on any Syndicated Loan Note
in excess of its pro rata share of payments and other recoveries
obtained by all Lenders on account of principal of and interest
on all Syndicated Loan Notes (other than any non-pro rata
interest payment resulting from a Syndicated Loan being an
Affected Loan or as a result of replacement of a Lender pursuant
to Section 8.7), such Lender shall purchase from the other
Lenders such participation in the Syndicated Loan Notes held by
them as shall be necessary to cause such purchasing Lender to
share the excess payment or other recovery ratably with each of
them; provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such
purchasing Lender, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery.
7.6 Taxes.
-----
(a) All payments by the Company of principal, interest,
fees, indemnities and other amounts payable hereunder and under
the Notes shall be made to the recipient thereof without setoff
or counterclaim and free and clear of, and without withholding or
deduction for or on account of, any present or future Taxes
(other than Excluded Taxes) now or hereafter imposed on such
recipient or its income, property, assets or franchises (such
recipient's "Recipient Taxes"), except to the extent that such
withholding or deduction (i) is required by applicable law, (ii)
results from the breach by such recipient of its Exemption
Agreement (as defined below) or (iii) would not be required if
such recipient's Exemption Representation (as defined below) were
true. If any such withholding or deduction is required by
applicable law, the Company will:
(A) pay to the relevant authorities the full
amount so required to be withheld or deducted;
(B) promptly forward to the Agent an official
receipt or other documentation satisfactory to the Agent
evidencing such payment to such authorities; and
(C) except to the extent that such withholding or
deduction results from the breach, by the recipient of a
payment, of its Exemption Agreement or would not be required
if such recipient's Exemption Representation were true, pay
to the Agent for the account of the relevant recipient such
additional amount as is necessary to ensure that the net
amount actually received by such recipient will equal the
full amount such recipient would have received had no such
withholding or deduction been required.
For the purposes of this Section 7.6, (a) "Taxes" means, with
respect to any Person, taxes, assessments or other governmental
<PAGE>
charges or levies imposed upon such Person, such Person's income
or any of such Person's properties, franchises or assets; and (b)
"Excluded Taxes" means, in the case of payments made to any
Lender or the Agent, all of the following: taxes imposed upon the
overall gross or net income or receipts of such Lender or the
Agent, franchise taxes imposed upon such Lender or the Agent with
respect to its gross or net income or receipts by the
jurisdiction under the laws of which such Lender or the Agent, as
the case may be, is organized or any political subdivision
thereof, and franchise taxes imposed upon such Lender or the
Agent with respect to its gross or net income or receipts by the
jurisdiction in which such Lender's or the Agent's applicable
lending office is located or any political subdivision thereof.
(b) In consideration of the Company's agreements in
clause (a) of this Section 7.6, each Lender which is not
organized under the laws of the United States or a State thereof
hereby agrees (such Lender's "Exemption Agreement"), to the
extent permitted by applicable law (including any applicable
double taxation treaty of the jurisdiction of its incorporation
and the jurisdiction in which its Eurodollar Office is located),
to execute and deliver to the Company (i) on or before the first
date on which any payment is to be made to such Lender hereunder,
a United States Internal Revenue Service Form 1001 or 4224 (or
successor form) and, if reasonably requested by the Company,
Internal Revenue Service Form W-8 or W-9 (or successor form), as
appropriate, in each case properly completed and claiming a
complete exemption, from withholding or deduction for or on
account of Recipient Taxes of such Lender, and (ii) a new Form
1001 or 4224 (or successor form) and, if reasonably requested by
the Company, Internal Revenue Service Form W-8 or W-9 (or
successor form), as appropriate, upon the expiration or
obsolescence of any previously delivered Form.
(c) Each Lender hereby represents and warrants (such
Lender's "Exemption Representation") to the Company that on the
Effective Date (or, if later, the date such Lender becomes a
party to this Agreement) it is entitled to receive payments of
principal of, and interest on, Loans made by such Lender without
withholding or deduction for or on account of such Lender's
Recipient Taxes imposed by the United States of America or any
political subdivision thereof.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the
---------------
adoption of any applicable law, rule or regulation, or any change
in any applicable law, rule or regulation (including, without
limitation, Regulation D of the Board of Governors of the Federal
Reserve System), or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any
Eurodollar Office of such Lender) with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency
<PAGE>
(A) shall subject any Lender (or any Eurodollar
Office of such Lender) to any tax, duty or other charge with
respect to its Eurodollar Loans or Eurodollar Competitive
Bid Loans, its Notes or its obligation to make Eurodollar
Loans or Eurodollar Competitive Bid Loans, or shall change
the basis of taxation of payments to any Lender of the
principal of or interest on its Eurodollar Loans or
Eurodollar Competitive Bid Loans or any other amounts due
under this Agreement in respect of its Eurodollar Loans or
Eurodollar Competitive Bid Loans or its obligation to make
Eurodollar Loans or Eurodollar Competitive Bid Loans (except
for taxes imposed on or measured by the overall gross or net
income or receipts of such Lender or its Eurodollar Office
imposed by the jurisdiction, or any political subdivision
thereof or taxing authority therein, in which such Lender's
principal executive office or Eurodollar Office is located
or in which such Lender is incorporated); or
(B) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed
by the Board of Governors of the Federal Reserve System, but
excluding any reserve included in the determination of
interest rates pursuant to Section 4), special deposit or
similar requirement against assets of, deposits with or for
the account of, or credit extended by any Lender (or any
Eurodollar Office of such Lender); or
(C) shall impose on any Lender (or its Eurodollar
Office) any other condition affecting its Eurodollar Loans
or Eurodollar Competitive Bid Loans, its Notes or its
obligation to make Eurodollar Loans or Eurodollar
Competitive Bid Loans; and the result of any of the
foregoing is to increase the cost to (or in the case of
Regulation D referred to above, to impose a cost on) such
Lender (or any Eurodollar Office of such Lender) of making
or maintaining any Eurodollar Loan or Eurodollar Competitive
Bid Loan, or to reduce the amount of any sum received or
receivable by such Lender (or its Eurodollar Office) under
this Agreement or under its Notes with respect thereto, then
within 15 days after demand by such Lender (which demand
shall be accompanied by a statement setting forth the basis
of such demand, a copy of which shall be furnished to the
Agent), the Company shall pay directly to such Lender such
additional amount or amounts as will compensate such Lender
for such increased cost or such reduction.
(b) If, after the Effective Date, any Lender shall
reasonably determine that the adoption or phase-in of any
applicable law, rule or regulation regarding capital adequacy, or
any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance
by any Lender (or its Eurodollar Office) or any Person
controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's
or such controlling Person's capital as a consequence of such
<PAGE>
Lender's obligations hereunder (including, without limitation,
such Lender's Commitment) to a level below that which such Lender
or such controlling Person could have achieved but for such
adoption, change or compliance (taking into consideration such
Lender's or such controlling Person's policies with respect to
capital adequacy) by an amount deemed by such Lender or such
controlling Person to be material, then from time to time, within
15 days after demand by such Lender (which demand shall be
accompanied by a statement setting forth the basis of such
demand, a copy of which shall be furnished to the Agent), the
Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling Person
for such reduction.
8.2 Basis for Determining Interest Rate Inadequate or
-------------------------------------------------
Unfair. If with respect to any Interest Period:
- ------
(a) the Agent is advised by either Reference Lender that
deposits in Dollars (in the applicable amounts) are not being
offered to such Reference Lender in the relevant market for such
Interest Period, or the Agent otherwise reasonably determines
(which determination shall be binding and conclusive on the
Company) that by reason of circumstances affecting the interbank
eurodollar market adequate and reasonable means do not exist for
ascertaining the applicable Eurodollar Rate; or
(b) Lenders having an aggregate Percentage of 33% or more
advise the Agent that the Eurodollar Rate (Reserve Adjusted) as
determined by the Agent will not adequately and fairly reflect
the cost to such Lenders of maintaining or funding Eurodollar
Loans for such Interest Period, or that the making or funding of
Eurodollar Loans has become impracticable as a result of an event
occurring after the date of this Agreement which in the
reasonable opinion of such Lenders materially affects such Loans,
then the Agent shall promptly notify the other parties thereof
and, so long as such circumstances shall continue, (i) no Lender
shall be under any obligation to make or convert into Eurodollar
Loans and (ii) on the last day of the current Interest Period for
each Eurodollar Loan, such Loan shall, unless then repaid in
full, automatically convert to an Alternate Base Rate Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful.
--------------------------------------------------
In the event that any change in (including the adoption of any
new) applicable laws or regulations, or any change in the
interpretation of applicable laws or regulations by any
governmental or other regulatory body charged with the
administration thereof, should make it (or in the good faith
judgment of any Lender cause a substantial question as to whether
it is) unlawful for any Lender to make, maintain or fund
Eurodollar Loans, then such Lender shall promptly notify each of
the other parties hereto and, so long as such circumstances shall
continue, (a) such Lender shall have no obligation to make or
convert into Eurodollar Loans (but shall make Alternate Base Rate
Loans concurrently with the making of or conversion into
Eurodollar Loans by the Lenders which are not so affected, in
each case in an amount equal to such Lender's Percentage of all
<PAGE>
Eurodollar Loans which would be made or converted into at such
time in the absence of such circumstances) and (b) on the last
day of the current Interest Period for each Eurodollar Loan of
such Lender (or, in any event, if such Lender so requests, on
such earlier date as may be required by the relevant law,
regulation or interpretation), such Eurodollar Loan shall, unless
then repaid in full, automatically convert to an Alternate Base
Rate Loan. Each Alternate Base Rate Loan made by a Lender which,
but for the circumstances described in the foregoing sentence,
would be a Eurodollar Loan (an "Affected Loan") shall,
notwithstanding any other provision of this Agreement, remain
outstanding for the same period as the Group of Eurodollar Loans
of which such Affected Loan would be a part absent such
circumstances.
8.4 Funding Losses. The Company hereby agrees that upon
--------------
demand by any Lender (which demand shall be accompanied by a
statement setting forth the basis for the calculations of the
amount being claimed, a copy of which shall be furnished to the
Agent) the Company will indemnify such Lender against any net
loss or expense which such Lender may sustain or incur
(including, without limitation, any net loss or expense incurred
by reason of the liquidation or reemployment of deposits or other
funds acquired by such Lender to fund or maintain any Eurodollar
Loan or Eurodollar Competitive Bid Loan, but excluding any loss
of margin), as reasonably determined by such Lender, as a result
of (a) any payment or prepayment or conversion of any Eurodollar
Loan of such Lender (including, without limitation, any
conversion pursuant to Section 8.3) or (b) any failure of the
Company to borrow or convert any Eurodollar Loans on a date
specified therefor in a notice of borrowing or conversion
pursuant to this Agreement (other than as a result of a default
by such Lender or the Agent), or to borrow any Eurodollar
Competitive Bid Loan reflected in a Competitive Bid Loan
Acknowledgment (other than as a result of a default by such
Lender or the Agent). For this purpose, all notices to the Agent
pursuant to this Agreement shall be deemed to be irrevocable.
8.5 Right of Lenders to Fund through Other Offices. Each
----------------------------------------------
Lender may, if it so elects, fulfill its commitment as to any
Eurodollar Loan or Eurodollar Competitive Bid Loan by causing a
foreign branch or affiliate of such Lender to make such Loan,
provided that in such event for the purposes of this Agreement
such Loan shall be deemed to have been made by such Lender and
the obligation of the Company to repay such Loan shall
nevertheless be to such Lender and shall be deemed held by it, to
the extent of such Loan, for the account of such branch or
affiliate.
8.6 Discretion of Lenders as to Manner of Funding.
---------------------------------------------
Notwithstanding any provision of this Agreement to the contrary,
each Lender shall be entitled to fund and maintain its funding of
all or any part of its Loans in any manner it sees fit, it being
understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Lender had
actually funded and maintained each Eurodollar Loan and
<PAGE>
Eurodollar Competitive Bid Loan during each Interest Period for
such Loan through the purchase of deposits having a maturity
corresponding to such Interest Period and bearing an interest
rate equal to the Eurodollar Rate or the Eurodollar Competitive
Bid Rate, as the case may be, for such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected
----------------------------------------------------
Lender or Objecting Lender. (a) Each Lender shall promptly
- --------------------------
notify the Company and the Agent of any event of which it has
knowledge which will result in, and will use reasonable
commercial efforts available to it (and not, in such Lender's
sole judgment, otherwise disadvantageous to such Lender) to
mitigate or avoid, (i) any obligation by the Company to pay any
amount pursuant to Section 7.6 or 8.1 (ii) the occurrence of any
circumstance of the nature described in Section 8.2 or 8.3 (and,
if any Lender has given notice of any such event described in
clause (i) or (ii) above and thereafter such event ceases to
exist, such Lender shall promptly so notify the Company and the
Agent). Without limiting the foregoing, each Lender will
designate a different funding office if such designation will
avoid (or reduce the cost to the Company of) any event described
in clause (i) or (ii) of the preceding sentence and such
designation will not, in such Lender's reasonable judgment, be
otherwise disadvantageous to such Lender.
(b) At any time any Lender is an Affected Lender or an
Objecting Lender, the Company may replace such Lender as a party
to this Agreement with one or more other bank(s) or financial
institution(s) reasonably satisfactory to the Agent, such bank(s)
or financial institution(s) to have a Commitment or Commitments,
as the case may be, in such amounts as shall be reasonably
satisfactory to the Agent (and upon notice from the Company such
Affected Lender or Objecting Lender shall assign, without
recourse or warranty, its Commitment, its Loans, its Notes and
all of its other rights and obligations hereunder to such
replacement bank(s) or other financial institution(s) for a
purchase price equal to the sum of the principal amount of the
Loans so assigned, all accrued and unpaid interest thereon, its
ratable share of all accrued and unpaid non-use fees, any amounts
payable under Section 8.4 as a result of such Lender receiving
payment of any Eurodollar Loan prior to the end of an Interest
Period therefor and all other obligations owed to such Affected
Lender or Objecting Lender hereunder).
8.8 Conclusiveness of Statements; Survival of Provisions.
----------------------------------------------------
Determinations and statements of any Lender pursuant to Section
8.1, 8.2, 8.3 or 8.4 shall be conclusive absent demonstrable
error. Lenders may use reasonable averaging and attribution
methods in determining compensation under Sections 8.1 and 8.4,
and the provisions of such Sections shall survive repayment of
the Loans, cancellation of the Notes and any termination of this
Agreement (provided that any claim for compensation by a Lender
under such Sections shall be made to the Company not later than
45 days after the later to occur of repayment in full of the
Loans and termination of the Commitments).
<PAGE>
SECTION 9 WARRANTIES.
To induce the Agent and the Lenders to enter into this
Agreement and to induce the Lenders to make Loans hereunder, the
Company warrants to the Agent and the Lenders that:
9.1 Organization, etc. The Company is a corporation duly
------------------
organized, validly existing and in good standing under the laws
of the State of Delaware; each Subsidiary is duly organized and
validly existing under the laws of the jurisdiction of its
organization; and the Company and each Subsidiary is duly
qualified to do business in each other jurisdiction where the
nature of its business makes such qualification necessary, except
where such failure to so qualify would not have a Material
Adverse Effect.
9.2 Authorization; No Conflict. The execution and
--------------------------
delivery by the Company of this Agreement and each Note, the
borrowings hereunder, and the performance by the Company of its
obligations under this Agreement and each Note are within the
corporate powers of the Company, have been duly authorized by all
necessary corporate action on the part of the Company (including
any necessary shareholder action), have received all necessary
governmental approval, and do not and will not (a) violate any
provision of law, rule or regulation or any order, decree,
judgment or award which is binding on the Company or any
Subsidiary, (b) contravene or conflict with, or result in a
breach of, any provision of the Certificate of Incorporation,
Bylaws or other organizational documents of the Company or any
Subsidiary or of any agreement, indenture, instrument or other
document which is binding on the Company or any Subsidiary or (c)
result in, or require, the creation or imposition of any Lien on
any asset of the Company or any Subsidiary.
9.3 Validity and Binding Nature. This Agreement is, and
---------------------------
upon the execution and delivery thereof each Note will be, the
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
9.4 Financial Information. The Company's audited
---------------------
consolidated financial statements as at January 29, 1994 and
unaudited consolidated financial statements as at November 5,
1994, copies of which have been furnished to the Lenders, have
been prepared in accordance with generally accepted accounting
principles (subject, in the case of such unaudited statements, to
the absence of footnotes and to normal year-end adjustments) and
fairly present the financial condition of the Company and its
Subsidiaries on a consolidated basis as of such dates and their
consolidated results of operations for the Fiscal Year and fiscal
period then ended. The Company's confidential operating results
dated February 25, 1995 for the Fiscal Year ended January 28,
1995, copies of which have been furnished to the Lenders, were
prepared by the Company with the best information available as of
the date such report was prepared.
<PAGE>
9.5 No Material Adverse Change. Since the date of the
--------------------------
audited financial statements described in Section 9.4, there has
been no event or occurrence which has had or is reasonably likely
to have a Material Adverse Effect.
9.6 Litigation and Contingent Liabilities. Except as set
-------------------------------------
forth in the Company's Annual Report on Form 10-K for the Fiscal
Year ended January 29, 1994 and the Company's Quarterly Report on
Form 10-Q for the Fiscal Quarter ended November 5, 1994, no
litigation (including, without limitation, derivative actions),
arbitration proceeding or governmental proceeding is pending or,
to the Company's knowledge, threatened against the Company or any
Subsidiary which, if adversely decided, is reasonably likely to
result, either individually or collectively, in a Material
Adverse Effect. Other than any liability incident to such
litigation or proceedings, neither the Company nor any Subsidiary
has any material contingent liabilities not provided for or
disclosed in the financial statements referred to in Section 9.4.
9.7 Ownership of Properties; Liens. Each of the Company
------------------------------
and each Subsidiary owns good and sufficient title to, or a
subsisting leasehold interest in, all of its properties and
assets, real and personal, tangible and intangible, of any nature
whatsoever, free and clear of all Liens, except as permitted
pursuant to Section 10.7.
9.8 Subsidiaries. Set forth on Schedule II is a complete
------------
and accurate list of name and jurisdiction of organization of
each Subsidiary of the Company and the percentage ownership
interest of the Company and its other Subsidiaries in each such
Subsidiary.
9.9 Pension and Welfare Plans. During the twelve-
-------------------------
consecutive-month period prior to the date of the execution and
delivery of this Agreement or the making of any Loan hereunder,
no steps have been taken to terminate any Pension Plan, and no
contribution failure has occurred with respect to any Pension
Plan sufficient to give rise to a lien under Section 302(f) of
ERISA. No condition exists or event or transaction has occurred
with respect to any Pension Plan which could result in the
incurrence by the Company of any material liability, fine or
penalty.
9.10 Regulated Industry. Neither the Company nor any
------------------
Subsidiary is (a) an "investment company" or a company
"controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended, or (b) a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
<PAGE>
9.11 Regulations G, U and X. Neither the Company nor any
----------------------
Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose
of purchasing or carrying Margin Stock, and no proceeds of any
Loan will be used for the purpose, whether immediate, incidental
or ultimate, of purchasing or carrying any Margin Stock or
maintaining or extending credit to others for such purpose.
9.12 Taxes. Each of the Company and each Subsidiary has
-----
filed all material tax returns and reports required by law to
have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing, except any such taxes or
charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves shall
have been set aside on its books.
9.13 Environmental and Safety and Health Matters. To the
-------------------------------------------
best of the knowledge of the Company, after inquiry it has deemed
appropriate, the Company and each Subsidiary is in compliance
with all Environmental Laws and Occupational Safety and Health
Laws where failure to comply could have a Material Adverse
Effect. Neither the Company nor any Subsidiary has received
notice of any claims that any of them is not in compliance in all
material respects with any Environmental Law where failure to
comply could have a Material Adverse Effect.
9.14 Compliance with Law. Each of the Company and each
-------------------
Subsidiary is in compliance with all statutes, judicial and
administrative orders, permits and governmental rules and
regulations which are material to its business or the non-
compliance with which could result in any material fine, penalty
or liability.
9.15 Information. All information heretofore or
-----------
contemporaneously herewith furnished by the Company or any
Subsidiary to any Lender for purposes of or in connection with
this Agreement and the transactions contemplated hereby is, and
all information hereafter furnished by or on behalf of the
Company or any Subsidiary to any Lender pursuant hereto or in
connection herewith will be, true and accurate in every material
respect on the date as of which such information is dated or
certified, and such information, taken as a whole, does not and
will not omit to state any material fact necessary to make such
information, taken as a whole, not misleading.
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and
thereafter until all obligations hereunder and under the Notes
are paid in full, the Company agrees that, unless at any time the
Required Lenders shall otherwise expressly consent in writing, it
will:
<PAGE>
10.1 Reports, Certificates and Other Information. Furnish
-------------------------------------------
to each Lender:
10.1.1 Audit Report. Promptly when available and in
------------
any event within 100 days after the close of each Fiscal Year, a
copy of the annual audit report of the Company and its
Subsidiaries for such Fiscal Year, including therein a
consolidated balance sheet of the Company and its Subsidiaries as
of the end of such Fiscal Year and consolidated statements of
earnings and cash flow of the Company and its Subsidiaries for
such Fiscal Year certified, without disclaimer of opinion and
without qualification as to going concern, by Deloitte & Touche
or other independent auditors of recognized national standing
selected by the Company, together with a certificate from such
accountants to the effect that, in making the examination
necessary for the signing of such annual report by such auditors,
they have not become aware of any Event of Default or Unmatured
Event of Default that has occurred and is continuing or, if they
have become aware of any such event, describing it in reasonable
detail.
10.1.2 Interim Reports. Promptly when available and
---------------
in any event within 60 days after the end of each Fiscal Quarter
(except the last Fiscal Quarter of each Fiscal Year), a
consolidated balance sheet of the Company and its Subsidiaries as
of the end of such quarter, and consolidated statements of
earnings and cash flow for such quarter and for the period
beginning with the first day of such Fiscal Year and ending on
the last day of such quarter, together with a certificate of the
President, the Chief Financial Officer, the Controller or the
Treasurer of the Company to the effect that such financial
statements fairly present the financial condition and results of
operations of the Company and its Subsidiaries as of the date and
periods indicated (subject to normal year-end adjustments).
10.1.3 Compliance Certificate. Concurrently with
----------------------
each set of financial statements delivered pursuant to Section
10.1.1 and 10.1.2, a certificate of the President, the Chief
Financial Officer, the Controller or the Treasurer of the Company
(a) to the effect that such officer is not aware of any Event of
Default or Unmatured Event of Default that has occurred and is
continuing or, if there is any such event, describing it in
reasonable detail, and (b) containing a computation of each of
the financial ratios and restrictions set forth in Section 10.6.
10.1.4 Reports to SEC. Promptly upon the filing or
--------------
sending thereof, a copy of any annual, periodic or special report
or registration statement (inclusive of exhibits thereto) filed
by the Company or any Subsidiary with the SEC or any securities
exchange and of each communication from the Company or any
Subsidiary to shareholders generally.
<PAGE>
10.1.5 Notice of Default, Litigation and ERISA Matters.
-----------------------------------------------
Immediately upon becoming aware of any of the following, written
notice describing the same and the steps being taken by the Company
or the Subsidiary affected thereby with respect thereto: (a) the
occurrence of an Event of Default or an Unmatured Event of Default;
(b) any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by the Company to the Lenders
which has been instituted or, to the knowledge of the Company, is
threatened against the Company or any Subsidiary or to which any
of the assets of any thereof is subject which, if adversely
determined, is reasonably likely to have a Material Adverse Effect;
(c) the institution of any steps by the Company, any of its
Subsidiaries or any other Person to terminate any Pension Plan,
or the failure to make a required contribution to any Pension Plan
if such failure is sufficient to give rise to a lien under
Section 302(f) of ERISA, or the taking of any action with respect
to a Pension Plan which could result in the requirement that the
Company furnish a bond or other security to the PBGC or such
Pension Plan, or the occurrence of any event with respect to
any Pension Plan which could result in the incurrence by the
Company of any material liability, fine or penalty, or any material
increase in the contingent liability of the Company with respect
to any post-retirement Welfare Plan benefit; and (d) any other event
or occurrence which has had or is reasonably likely to have a
Material Adverse Effect.
10.1.6 Subsidiaries. Promptly from time to time a
------------
written report of any change in the list of its Subsidiaries.
10.1.7 Other Information. From time to time such
-----------------
other information concerning the Company and its Subsidiaries as
any Lender or the Agent may reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each
------------------------------
Subsidiary to keep, its books and records reflecting all of its
business affairs and transactions in accordance with sound
business practices sufficient to allow the preparation of the
Company's consolidated financial statements in accordance with
GAAP; and permit, and cause each Subsidiary to permit, any Lender
or the Agent or any representative thereof, at such Lender's or
the Agent's expense unless an Event of Default exists, during
reasonable business hours and on reasonable notice, to visit any
or all of its offices, to discuss its financial matters with its
officers and its independent auditors (and the Company hereby
authorizes such independent auditors to discuss such financial
matters with any Lender or the Agent or any representative
thereof), and to examine (and make copies of) any of its books or
other corporate records.
10.3 Insurance. Maintain, and cause each Subsidiary to
---------
maintain, with responsible and financially-sound insurance
companies or associations, insurance in such amounts and covering
<PAGE>
such risks (and having such deductibles and self-insurance) as is
usually maintained by companies engaged in similar businesses and
owning similar properties similarly situated.
10.4 Compliance with Law; Payment of Taxes and Liabilities.
-----------------------------------------------------
(a) Comply, and cause each Subsidiary to comply, in all material
respects with all applicable laws, rules, regulations and orders
the non-compliance with which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect;
and (b) pay, and cause each Subsidiary to pay, prior to delinquency,
all taxes and other governmental charges against it or any of its
assets, provided, however, that the foregoing shall not require
the Company or any Subsidiary to pay any such tax or charge so long
as it shall contest the validity thereof in good faith by appropriate
proceedings and shall set aside on its books adequate reserves
with respect thereto.
10.5 Maintenance of Existence, etc. Maintain and
------------------------------
preserve, and (subject to Section 10.10) cause each Subsidiary to
maintain and preserve, (a) its existence and good standing in the
jurisdiction of its organization and (b) its foreign
qualification in each other jurisdiction where the nature of its
business makes such qualification necessary (except in those
instances in which the failure to be qualified or in good
standing will not have a Material Adverse Effect).
10.6 Financial Ratios and Restrictions.
---------------------------------
10.6.1 Minimum Consolidated Tangible Net Worth. Not
---------------------------------------
at any time permit Consolidated Tangible Net Worth to be less
than the sum of (a) $425,000,000 plus (b) 50% of the Company's
cumulative consolidated net earnings for all Fiscal Quarters
ending after January 30, 1994 (but disregarding any Fiscal
Quarter in which there is a loss) plus (c) 50% of the amount by
which the shareholders' equity of the Company is increased by the
issuance of capital stock (or the exercise of warrants or options
in respect thereof) after January 30, 1994.
10.6.2 Long-Term Liabilities to Net Worth Ratio.
----------------------------------------
Not at any time permit the ratio of Consolidated Long-Term
Liabilities to Consolidated Tangible Net Worth to exceed 1.5
to 1.
10.6.3 Fixed Charge Coverage Ratio. Not permit the
---------------------------
Fixed Charge Coverage Ratio as of the last day of any Fiscal
Quarter to be less than 1.4 to 1.
10.7 Limitation on Liens. Not, and not permit any
-------------------
Material Subsidiary to, create or permit to exist any Lien with
respect to any assets now owned or hereafter acquired, except:
<PAGE>
(a) Liens existing on the date of this Agreement;
(b) Liens created by or resulting from any litigation or
legal proceeding which is currently being contested
in good faith by appropriate proceedings unless the
judgment secured thereby shall not have been stayed,
bonded or discharged within 60 days;
(c) Liens incidental to the normal conduct of business of
the Company or any Material Subsidiary or the
ownership of their respective assets, and Liens to
secure the performance of bids, tenders or trade
contracts, materialmens, and mechanics, liens, and
Liens to secure statutory obligations, surety or
appeal bonds, or other Liens of like general nature,
in each case which are not incurred in connection
with the incurrence of Debt and which do not in the
aggregate impair the use of any such asset in the
operation of the business of the Company or any
Material Subsidiary or the value of any such asset
for the purposes of any such business;
(d) pledges or deposits to secure obligations under
workers' compensation and unemployment compensation
laws or similar legislation to secure public or
statutory obligations of the Company or any Material
Subsidiary;
(e) any Lien (i) on assets (including Liens arising under
Capital Leases) imposed in connection with the
financing of all or part of the purchase price
therefor or on the cost of the construction,
extension or improvement of any new or existing
asset, provided that such Lien is created
contemporaneously with, or within 270 days after,
such acquisition, completion of such construction,
such extension or such improvement, (ii) existing on
assets at the time of the acquisition thereof by the
Company or any Material Subsidiary, (iii) existing on
assets or the outstanding shares or Debt of a
corporation at the time such corporation is merged
into or consolidated with the Company or any Material
Subsidiary or at the time of a sale, lease or other
disposition of the assets or outstanding shares or
Debt of a corporation or firm as an entirety to the
Company or any Material Subsidiary, or (iv) arising
in connection with the purchase of inventory,
supplies or services from trade creditors on
customary business terms; provided that the amount
secured by any Lien described in this clause (e)
shall not exceed the lesser of the fair market value
or cost of the related asset at the time of the
imposition of such Lien;
(f) Liens associated with any tenant's leasehold interest
in any asset of the Company or a Material Subsidiary
incurred solely in conjunction with leasing such
asset;
<PAGE>
(g) Liens for taxes or assessments or other governmental
charges or levies which either are not yet due and
payable or are currently being contested in good
faith by appropriate proceedings;
(h) Liens securing Debt of a Material Subsidiary owing to
the Company or another Material Subsidiary;
(i) the extension, renewal or replacement of any Lien
permitted by the foregoing clauses of this Section
10.7 in respect of the same asset subject to such
Lien (but without increase in the principal amount of
the Debt secured thereby);
(j) minor survey exceptions or minor encumbrances,
easements or reservations, or rights of others for
rights-of-way, utilities and other similar purposes,
or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of
the activities of the Company and its Material
Subsidiaries or which customarily exist on properties
of Persons engaged in similar activities and
similarly situated and which do not in any event
materially impair their use in the operation of the
business of the Company and its Material
Subsidiaries; and
(k) Liens not otherwise permitted by the foregoing
clauses of this Section 10.7 so long as the sum,
without duplication, of (x) all obligations secured
by such Liens and (y) Debt of Material Subsidiaries
permitted solely by clause (f) of Section 10.8 does
not exceed 15% of Consolidated Total Assets.
10.8 Debt. Not permit any Material Subsidiary to incur or
----
permit to exist any Debt, except:
(a) Debt owed to the Company or to another Material
Subsidiary;
(b) Debt outstanding on the date hereof;
(c) Debt secured by Liens permitted by clause (e) of
Section 10.7;
(d) Debt outstanding when such entity becomes a Material
Subsidiary or is merged or consolidated with another
Material Subsidiary;
(e) Debt in respect of commercial letters of credit
issued to support the purchase of goods by the
applicable Material Subsidiary in the ordinary course
of business; and
(f) Debt not otherwise permitted by the foregoing clauses
of this Section 10.8 so long as the sum, without
duplication, of (x) all such Debt and (y) all
<PAGE>
obligations secured by Liens permitted solely by
clause (k) of Section 10.7 does not exceed 15% of
Consolidated Total Assets.
10.9 Guaranties, Loans and Advances. Not, and not permit
------------------------------
any Material Subsidiary to, become or be a guarantor or surety
of, or otherwise become or be responsible in any manner (whether
by agreement to purchase any obligations, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or
services, or otherwise) with respect to, any undertaking of any
other Person or make or permit to exist any loans or advances to
any other Person, except for (i) the endorsement, in the ordinary
course of collection, of instruments payable to it or to its
order, (ii) loans or advances constituting indebtedness of
Subsidiaries to the Company or to other Subsidiaries or of the
Company to Subsidiaries, guaranties by the Company of the
obligations of Subsidiaries and guaranties by Subsidiaries of
obligations of the Company and of other Subsidiaries, (iii)
advances not to exceed, in the aggregate for Company and all
Material Subsidiaries at any one time outstanding, $100,000 to
officers, employees, subcontractors or suppliers, (iv) loans or
advances to employees in connection with the purchase of the
Company's stock under Management Stock Agreements, (v) advances
to employees for moving and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business, (vi)
notes to the Company from Frontier Associates in the amount of
$5,000,000, (vii) guaranties provided for in Section 1.9 of the
Assets Purchase Agreement, (viii) continuing obligations of the
Company or any Subsidiary, not exceeding $9,000,000 in the
aggregate for the Company and all Subsidiaries payable during any
Fiscal Year, as assignor of any lease or other agreement which
has been assigned to any other Person, (ix) guaranties by Company
or any Subsidiary of the performance of obligations of
Subsidiaries (other than obligations constituting Debt for
Borrowed Money except for obligations under Capital Leases)
entered into in the ordinary course of business, and (x) letters
of credit issued to Multiemployer Plans.
10.10 Mergers, Consolidations, Sales. Not, and not permit
------------------------------
any Material Subsidiary (or Subsidiary that would become a
Material Subsidiary as a result of such transaction) to, be a
party to any merger or consolidation, or, except in the ordinary
course of its business, sell, transfer, convey or lease all or
any substantial part of its assets or sell or assign with or
without recourse any receivables, except that (a) the Company may
be a party to a merger or consolidation if the Company is the
surviving corporation and no Event of Default or Unmatured Event
of Default exists or would result from such merger or
consolidation, and (b) any Subsidiary may be a party to a merger
or consolidation, or sell all or substantially all of its assets,
if the Company (directly or indirectly through its Subsidiaries)
maintains a percentage of ownership of the surviving or acquiring
corporation similar to its percentage of ownership of the prior
or selling Subsidiary and no Event of Default or Unmatured Event
of Default, exists or would result from such merger,
consolidation or sale. Notwithstanding the foregoing, the
<PAGE>
Company or any Material Subsidiary may contribute all of the
stock of, or all or substantially all of the assets of, a
Material Subsidiary to a joint venture which is at least 50%
owned by the Company or a Material Subsidiary so long as (i) no
Event of Default or Unmatured Event of Default exists or would
result therefrom and (ii) the aggregate amount so contributed by
the Company or any Material Subsidiary in any Fiscal Year will
not exceed 5% of the assets of the Company and its Subsidiaries
as of the end of the preceding Fiscal Year.
10.11 Company's and Subsidiaries' Stock. Not permit any
---------------------------------
Subsidiary to purchase or otherwise acquire any shares of capital
stock of the Company; and not take any action, or permit any
Subsidiary to take any action, which will, so long as any shares
of capital stock or Debt of any corporation which is a Subsidiary
at the date of this Agreement are owned by the Company or any
Subsidiary, result in a decrease in the percentage of the
outstanding shares of capital stock of such corporation owned at
the date of this Agreement by the Company and its other
Subsidiaries, except that the Company or any Subsidiary may sell
or otherwise dispose of stock or ownership interests in any
Subsidiary that is not a Material Subsidiary for arms-length
consideration. Notwithstanding the foregoing, the Company or any
Material Subsidiary may contribute all of the stock of, or all or
substantially all of the assets of, a Material Subsidiary to a
joint venture which is at least 50% owned by the Company or a
Material Subsidiary so long as (i) no Event of Default or
Unmatured Event of Default exists or would result therefrom and
(ii) the aggregate amount so contributed by the Company or any
Material Subsidiary in any Fiscal Year will not exceed 5% of the
assets of the Company and its Subsidiaries as of the end of the
preceding Fiscal Year.
10.12 Unconditional Purchase Obligations. Not, and not
----------------------------------
permit any Material Subsidiary to, enter into or be a party to
any contract for the purchase of materials, supplies or other
property or services, if such contract requires that payment be
made by it regardless of whether or not delivery is ever made of
such materials, supplies or other property or services.
10.13 Employee Benefit Plans. Maintain, and cause each
----------------------
Subsidiary to maintain, each Pension Plan in compliance in all
material respects with all applicable requirements of law and
regulations, and make all required contributions to Multiemployer
Plans.
10.14 Purchase or Redemption of Company's Securities;
-----------------------------------------------
Dividend Restriction. Not purchase or redeem any shares of
- --------------------
capital stock of the Company, declare or pay any dividends
thereon (other than stock dividends or cash dividends as provided
for below), make any distribution to stockholders or set aside
any funds for any such purpose, and not prepay, purchase, defease
or redeem, and not permit any Subsidiary to purchase, any
<PAGE>
subordinated Debt of the Company; provided that, so long as no
Event of Default or Unmatured Event of Default exists or could
result therefrom, the Company may (a) redeem shares from
employees upon termination of employment or thereafter as
provided in the Management Stock Agreements in amounts paid in
cash (including amounts paid on account of principal of Debt
issued in redemption of such stock) not exceeding in any Fiscal
Year the greater of $10,000,000 or 5% of Consolidated Net
Tangible Net Worth as of the end of the preceding Fiscal Year;
(b) repurchase or redeem shares from persons upon the exercise of
stock options in amounts (including amounts paid on account of
principal of Debt issued in redemption of such stock) not
exceeding, in any Fiscal Quarter, the sum of $500,000 plus the
additional amount, if any, that, when added to the $500,000
amount, would cause the shareholders' equity of the Company
(measured at the end of the Fiscal Quarter in which such
redemption or repurchase takes place) to be not lower than at the
end of the immediately preceding quarter; and (c) pay cash
dividends to its shareholders or repurchase its stock in an
aggregate amount, in any Fiscal Year, not exceeding 40% of its
consolidated net earnings for the prior Fiscal Year.
10.15 Use of Proceeds. Use the proceeds of the Loans for
---------------
working capital and for other general corporate purposes; and not
use or permit any proceeds of any Loan to be used, either
directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of (a) "purchasing or carrying" any
Margin Stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, as amended from time to
time, or (b) purchasing or otherwise acquiring any stock of any
Person if such Person (or its board of directors) has (i)
announced that it will oppose such purchase or other acquisition
or (ii) commenced any litigation which alleges that such purchase
or other acquisition violates, or will violate, any applicable
law.
SECTION 11 CONDITIONS OF LENDING.
The obligation of each Lender to make its Loans is subject
to the following conditions precedent:
11.1 Initial Loan. The obligation of each Lender to make
------------
its initial Loan is, in addition to the conditions precedent
specified in Section 11.2, subject to the conditions precedent
(and the date on which all such conditions precedent have been
satisfied or waived in writing by the Lenders is herein called
the "Effective Date") that the Agent shall have received
evidence, reasonably satisfactory to the Agent, that all of the
following documents, each duly executed and dated the Effective
Date (or such other date as shall be satisfactory to the Agent),
in form and substance satisfactory to the Agent, and each (except
for the Notes, of which only the originals shall be signed) in
sufficient number of signed counterparts to provide one for each
Lender:
<PAGE>
11.1.1 Notes. The Notes of the Company payable to
-----
the order of the Lenders.
11.1.2 Resolutions. Certified copies of resolutions
-----------
of the Board of Directors of the Company authorizing or ratifying
the execution, delivery and performance by the Company of this
Agreement, the Notes and the other documents to be executed by
the Company pursuant hereto.
11.1.3 Consents, etc. Certified copies of all
--------------
documents evidencing any consents and governmental approvals (if
any) required for the execution, delivery and performance by the
Company of this Agreement and the Notes.
11.1.4 Incumbency and Signature Certificates. An
-------------------------------------
incumbency and signature certificate of the Company certifying
the names of the officer or officers of the Company authorized to
sign this Agreement, the Notes and the other documents required
to be delivered by the Company in connection with this Agreement,
together with a sample of the true signature of each such officer
(it being understood that the Agent and each Lender may
conclusively rely on such certificate until formally advised by a
like certificate of any changes therein).
11.1.5 Opinion of Counsel for the Company. The
----------------------------------
opinion of Stoel Rives Boley Jones & Grey, counsel to the
Company, substantially in the form of Exhibit I.
11.1.6 Other. Such other documents as the Agent or
-----
any Lender may reasonably request.
11.2 All Loans. The obligation of each Lender to make
---------
each Loan is subject to the following further conditions
precedent that:
11.2.1 No Default. (a) No Event of Default or
----------
Unmatured Event of Default has occurred and is continuing or will
result from the making of such Loan and (b) the warranties of the
Company contained in Section 9 (excluding Sections 9.6 and 9.8)
are true and correct in all material respects as of the date of
such requested Loan, with the same effect as though made on such
date.
11.2.2 Confirmatory Certificate. If requested by
------------------------
the Agent or any Lender, the Agent shall have received (in
sufficient counterparts to provide one to each Lender) a
certificate dated the date of such requested Loan and signed by a
duly authorized officer of the Company as to the matters set out
in Section 11.2.1 (it being understood that each request by the
<PAGE>
Company for the making of a Loan shall be deemed to constitute a
warranty by the Company that the conditions precedent set forth
in Section 11.2.1 will be satisfied at the time of the making of
such Loan), together with such other documents as the Agent or
any Lender may reasonably request in support thereof.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall
-----------------
constitute an Event of Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in
------------------------------
the payment when due of any principal of any Loan; or default,
and continuance thereof for five days, in the payment when due of
any interest on any Loan or any fee or other amount payable by
the Company hereunder.
12.1.2 Non-Payment of Other Debt. Any default shall
-------------------------
occur under the terms applicable to any Debt of the Company or
any Subsidiary in an aggregate amount (for all Debt so affected)
exceeding $5,000,000 and such default shall (a) consist of the
failure to pay such Debt when due (subject to any applicable
grace period), whether by acceleration or otherwise, or (b)
accelerate the maturity of such Debt or permit the holder or
holders thereof, or any trustee or agent for such holder or
holders, to cause such Debt to become due and payable prior to
its expressed maturity.
12.1.3 Other Material Obligations. Default in the
--------------------------
payment when due of any obligation of $5,000,000 or more of the
Company or any Subsidiary with respect to any material purchase
or lease of goods or services (except only to the extent that the
existence of any such default is being contested by the Company
or such Subsidiary in good faith and by appropriate proceedings
and appropriate reserves have been made in respect of such
default), and continuance of such default for 30 days after
notice thereof from the Agent or any Lender.
12.1.4 Bankruptcy, Insolvency, etc. The Company or
----------------------------
any Material Subsidiary becomes insolvent or generally fails to
pay, or admits in writing its inability or refusal to pay, debts
as they become due; or the Company or any Material Subsidiary
applies for, consents to, or acquiesces in the appointment of a
trustee, receiver or other custodian for the Company or such
Material Subsidiary or any property thereof, or makes a general
assignment for the benefit of creditors; or, in the absence of
such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any Material
Subsidiary or for a substantial part of the property of any
thereof and is not discharged within 60 days; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding
under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced in respect of the Company or
any Material Subsidiary, and if such case or proceeding is not
<PAGE>
commenced by the Company or such Material Subsidiary, it is
consented to or acquiesced in by the Company or such Material
Subsidiary, or remains for 60 days undismissed; or the Company or
any Material Subsidiary takes any corporate action to authorize,
or in furtherance of, any of the foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement.
------------------------------------------------
Failure by the Company to comply with or to perform any provision
of this Agreement (and not constituting an Event of Default under
any of the other provisions of this Section 12) and continuance
of such failure for 30 days after notice thereof to the Company
from the Agent or any Lender.
12.1.6 Warranties. Any warranty made by the Company
----------
herein is breached or is false or misleading in any material
respect, or any schedule, certificate, financial statement,
report, notice or other writing furnished by the Company to the
Agent or any Lender is false or misleading in any material
respect on the date as of which the facts therein set forth are
stated or certified.
12.1.7 Pension Plans. (i) Institution of any steps
-------------
by the Company or any other Person to terminate a Pension Plan if
as a result of such termination the Company could be required to
make a contribution to such Pension Plan, or could incur a
liability or obligation to such Pension Plan, in excess of
$5,000,000, or (ii) a contribution failure occurs with respect to
any Pension Plan sufficient to give rise to a Lien under section
302(f) of ERISA.
12.1.8 Withdrawal Liability Under Multiemployer Plans.
----------------------------------------------
The Company or any ERISA Affiliate shall make a complete or partial
withdrawal from a Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall notify such withdrawing employer that such
employer has incurred a withdrawal liability in an annual amount
exceeding $5,000,000, unless and only for as long as such liability
shall be contested in good faith and such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been
made therefor.
12.1.9 Judgments and Attachments. Any money
-------------------------
judgment, writ or warrant of attachment or similar process
involving in any case a final judgment in an amount in excess of
$5,000,000 shall be entered or filed against the Company or any
Material Subsidiary or any of their respective assets and shall
remain unsatisfied, undischarged, unvacated, unbonded or unstayed
for a period of 60 days or in any event later than five days
prior to the date of any proposed sale thereunder.
12.1.10 Change in Control. Any Change in Control shall
-----------------
occur.
<PAGE>
12.2 Effect of Event of Default. If any Event of Default
--------------------------
described in Section 12.1.4 shall occur, the Commitments (if they
have not theretofore terminated) shall immediately terminate and
the Notes and all other obligations hereunder shall become
immediately due and payable, all without presentment, demand,
protest or notice of any kind; and if any other Event of Default
occurs and is continuing, the Agent may, and upon written request
of the Required Lenders shall, by written notice to the Company
declare the Commitments (if they have not theretofore terminated)
to be terminated and/or declare all Notes and all other
obligations hereunder to be due and payable, whereupon the
Commitments (if they have not theretofore terminated) shall
immediately terminate and/or all Notes and all other obligations
hereunder shall become immediately due and payable, all without
presentment, demand, protest or other notice of any kind.
Notwithstanding the foregoing, the effect as an Event of Default
of any event described in Section 12.1.1 or Section 12.1.4 may be
waived by the written concurrence of all of the Lenders, and the
effect as an Event of Default of any other event described in
this Section 12 may be waived by the written concurrence of the
Required Lenders.
SECTION 13 THE AGENT.
13.1 Authorization. Each Lender authorizes the Agent to
-------------
act on behalf of such Lender to the extent provided herein or in
any other document or instrument delivered hereunder or in
connection herewith, and to take such other action as may be
reasonably incidental thereto.
13.2 Indemnification. Each Lender agrees to reimburse and
---------------
indemnify the Agent for, and hold the Agent harmless against, a
share (determined in accordance with such Lender's Percentage) of
any loss, damage, penalty, action, judgment, obligation, cost,
disbursement, liability or expense (including reasonable
attorneys' fees) which may at any time be incurred by the Agent
(and for which the Agent is not reimbursed by the Company)
arising out of or in connection with the performance of its
obligations or the exercise of its powers hereunder or any other
document or instrument delivered hereunder or in connection
herewith, as well as the costs and expenses of defending against
any claim against the Agent arising hereunder or thereunder,
provided that no Lender shall be liable for any of the foregoing
which are determined by a court of competent jurisdiction in a
final proceeding to have resulted solely from the Agent's gross
negligence or willful misconduct. The provisions of this Section
13.2 shall survive repayment of the Loans, cancellation of the
Notes and any termination of this Agreement.
13.3 Exculpation. The Agent shall be entitled to rely
-----------
upon advice of counsel concerning legal matters, and upon this
Agreement and any schedule, certificate, statement, report,
notice or other writing which it believes to be genuine or to
have been presented by a proper person. Neither the Agent nor
<PAGE>
any of its directors, officers, employees or agents shall (i) be
responsible for any recitals, representations or warranties
contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of, this Agreement or any other
instrument or document delivered hereunder or in connection
herewith, (ii) be responsible for the validity, genuineness,
perfection, effectiveness, enforceability, existence, value or
enforcement of any collateral security, (iii) be under any duty
to inquire into or pass upon any of the foregoing matters, or to
make any inquiry concerning the performance by the Company or any
other obligor of its obligations, or (iv) in any event, be liable
as such for any action taken or omitted by it or them, except for
its or their own gross negligence or willful misconduct. The
agency hereby created shall in no way impair or affect any of the
rights and powers of, or impose any duties or obligations upon,
the Agent in its individual capacity.
13.4 Credit Investigation. Each Lender acknowledges that
--------------------
it has made such inquiries and taken such care on its own behalf
as would have been the case had such Lender's Commitment been
granted and such Lender's Loans been made directly by such Lender
to the Company without the intervention of the Agent or any other
Lender. Each Lender agrees and acknowledges that the Agent makes
no representations or warranties about the creditworthiness of
the Company or any other party to this Agreement or with respect
to the legality, validity, sufficiency or enforceability of this
Agreement or any Note or the value of any security therefor.
13.5 Agent and Affiliates. The Agent in its individual
--------------------
capacity shall have the same rights and powers hereunder as any
other Lender and may exercise or refrain from exercising the same
as though it were not the Agent, and the Agent and its affiliates
may accept deposits from and generally engage in any kind of
business with the Company or any affiliate thereof as if the
Agent were not the Agent hereunder.
13.6 Action on Instructions of the Required Lenders. As
----------------------------------------------
to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement of this Agreement and
collection of the Loans), the Agent shall not be required to
exercise any discretion or take any action, but the Agent shall
in all cases be fully protected in acting or refraining from
acting upon the written instructions (i) from the Required
Lenders, except for instructions which under the express
provisions hereof must be received by the Agent from all Lenders,
and (ii) in the case of such instructions, from all Lenders. In
no event will the Agent be required to take any action which
exposes the Agent to personal liability or which is contrary to
this Agreement or applicable law. The relationship between the
Agent and the Lenders is and shall be that of agent and principal
only and nothing herein contained shall be construed to
constitute the Agent a trustee for any holder of a Note or of a
participation therein nor to impose on the Agent duties and
obligations other than those expressly provided for herein.
<PAGE>
13.7 Funding Reliance. (a) Unless the Agent receives
----------------
notice from a Lender by 12:00 noon, Portland time, on the day of
a proposed borrowing that such Lender will not make available to
the Agent the amount which would constitute its Percentage of
such borrowing in accordance with Section 2.1.3, the Agent may
assume that such Lender has made such amount available to the
Agent and, in reliance upon such assumption, make a corresponding
amount available to the Company. If and to the extent such
Lender has not made any such amount available to the Agent, such
Lender and the Company jointly and severally agree to repay such
amount to the Agent forthwith on demand, together with interest
thereon (i) in the case of the Company, the interest rate
applicable to Loans comprising such borrowing and (ii) in the
case of such Lender, the Federal Funds Rate (or, beginning on the
third Business Day after demand, the rate set forth in clause
(i)). Nothing set forth in this clause (a) shall relieve any
Lender of any obligation it may have to make any Loan hereunder.
(b) Unless the Agent receives notice from the Company
prior to the due date for any payment hereunder that the Company
does not intend to make such payment, the Agent may assume that
the Company has made such payment and, in reliance upon such
assumption, make available to each Lender its share of such
payment. If and to the extent that the Company has not made any
such payment to the Agent, each Lender which received a share of
such payment shall repay such share (or the relevant portion
thereof) to the Agent forthwith on demand, together with interest
thereon at the Federal Funds Rate (or, beginning on the third
Business Day after demand, at the Alternate Base Rate). Nothing
set forth in this clause (b) shall relieve the Company of any
obligation it may have to make any payment hereunder.
13.8 Resignation. The Agent may resign as such at any
-----------
time upon at least 30 days' prior notice to the Company and the
Lenders. In the event of any such resignation, the Required
Lenders (with, so long as no Event of Default or Unmatured Event
of Default exists, the consent of the Company, which consent
shall not be unreasonably delayed or withheld) shall as promptly
as practicable appoint a successor Agent. If no successor shall
have been so appointed, and shall have accepted such appointment,
within 30 days after the giving of notice of such resignation,
then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a commercial bank organized under
the laws of the United States of America having a combined
capital, surplus and undivided profits of at least $500,000,000.
Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to
and become vested with all rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged
from all further duties and obligations under this Agreement.
After any resignation pursuant to this Section 13.8, the
provisions of this Section 13 shall inure to the benefit of the
retiring Agent as to any actions taken or omitted to be taken by
it while it was Agent hereunder.
<PAGE>
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of the
------------------
Agent or any Lender in the exercise of any right, power or remedy
shall operate as a waiver thereof, nor shall any single or
partial exercise by any of them of any right, power or remedy
preclude other or further exercise thereof, or the exercise of
any other right, power or remedy. No amendment, modification or
waiver of, or consent with respect to, any provision of this
Agreement or the Notes shall in any event be effective unless the
same shall be in writing and signed and delivered by the Agent
and signed and delivered by Lenders having an aggregate
Percentage of not less than the aggregate Percentage expressly
designated herein with respect thereto or, in the absence of such
designation as to any provision of this Agreement or the Notes,
by the Required Lenders, and then any such amendment,
modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
No amendment, modification, waiver or consent shall (i) extend or
increase the Commitment Amount, (ii) extend the date for payment
of any principal of or interest on the Loans or any fees payable
hereunder, (iii) reduce the principal amount of any Loan, the
rate of interest thereon or any fees payable hereunder, (iv)
change the definition of Required Lenders or otherwise reduce the
aggregate Percentage required to effect an amendment,
modification, waiver or consent or (v) amend this sentence
without, in each case, the consent of all Lenders. No provisions
of Section 13 shall be amended, modified or waived without the
written consent of the Agent.
14.2 Confirmations. The Company and each holder of a Note
-------------
agree from time to time, upon written request received by it from
the other, to confirm to the other in writing (with a copy of
each such confirmation to the Agent) the aggregate unpaid
principal amount of the Loans then outstanding under such Note.
14.3 Notices. Except as otherwise provided in Sections
-------
2.1.3 and 2.1.4, all notices hereunder shall be in writing
(including, without limitation, facsimile transmission) and shall
be sent to the applicable party at its address shown below its
signature hereto or at such other address as such party may, by
written notice received by the other party, have designated as
its address for such purpose. Notices sent by facsimile
transmission shall be deemed to have been given when receipt is
confirmed by confirming transmission equipment or acknowledged by
the addressee; notices sent by mail shall be deemed to have been
given three Business Days after the date when sent by registered
or certified mail, postage prepaid; and notices sent by hand
delivery shall be deemed to have been given when received. For
purposes of Sections 2.1.3 and 2.1.4, the Agent shall be entitled
to rely on telephonic instructions from any person that the Agent
in good faith believes is an authorized officer or employee of
the Company, and the Company shall hold the Agent and each Lender
harmless from any loss, cost or expense resulting from any such
reliance.
<PAGE>
14.4 Subsidiary References. The provisions of this
---------------------
Agreement relating to Subsidiaries shall apply only during such
times as the Company has one or more Subsidiaries.
14.5 Regulation U. Each Lender represents that it in good
------------
faith is not relying, either directly or indirectly, upon any
Margin Stock as collateral security for the extension or
maintenance by it of any credit provided for in this Agreement.
14.6 Costs, Expenses and Taxes. The Company agrees to pay
-------------------------
on demand all reasonable out-of-pocket costs and expenses of the
Agent (including the fees and charges of counsel for the Agent
and of local counsel, if any, who may be retained by said
counsel) in connection with the preparation, execution and
delivery of this Agreement and all other documents provided for
herein or delivered or to be delivered hereunder or in connection
herewith (including, without limitation, any amendment,
supplement or waiver to this Agreement or any such other
document). The Company further agrees to pay all reasonable
out-of-pocket costs and expenses (including reasonable attorneys'
fees, court costs and other legal expenses and allocated costs of
staff counsel) incurred by the Agent and each Lender after the
occurrence of an Event of Default in enforcing any right
hereunder or in connection with the negotiation of any
restructuring or "work-out" (whether or not consummated) of the
obligations of the Company hereunder. In addition, the Company
agrees to pay, and to save the Agent and the Lenders harmless
from all liability for, any stamp, transfer or other similar
taxes which may be payable in connection with the execution and
delivery of this Agreement, the borrowings hereunder, the
issuance of the Notes or the execution and delivery of any other
document provided for herein or delivered or to be delivered
hereunder or in connection herewith. All obligations provided
for in this Section 14.6 shall survive repayment of the Loans,
cancellation of the Notes and any termination of this Agreement.
14.7 Indemnification by the Company. In consideration of
------------------------------
the execution and delivery of this Agreement by the Agent and the
Lenders and the agreement to extend the Commitments provided
hereunder, the Company hereby agrees to indemnify, exonerate and
hold the Agent, each Lender and each of the officers, directors,
employees and agents of the Agent and each Lender (collectively
the "Lender Parties" and individually each a "Lender Party") free
and harmless from and against any and all actions, causes of
action, suits, losses, liabilities, damages and expenses,
including, without limitation, reasonable attorneys' fees and
charges and allocated costs of staff counsel (collectively called
the "Indemnified Liabilities"), incurred by the Lender Parties or
any of them as a result of, or arising out of, or relating to,
(i) any tender offer, merger, purchase of stock, purchase of
assets or other similar transaction financed or proposed to be
financed in whole or in part, directly or indirectly, with the
proceeds of any of the Loans, (ii) the use, handling, release,
discharge, transportation, storage, treatment or disposal of any
<PAGE>
"hazardous waste" or "hazardous material" (each as defined in any
applicable Environmental Law) at any real property owned or
leased by the Company or any Subsidiary or used by the Company or
any Subsidiary in its business or operations or (iii) the
enforcement of this Agreement or any Note by any of the Lender
Parties, except for any such Indemnified Liabilities arising on
account of any such Lender Party's bad faith, gross negligence or
willful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. All obligations provided for
in this Section 14.7 shall survive repayment of the Loans,
cancellation of the Notes and any termination of this Agreement.
14.8 Successors and Assigns. This Agreement shall be
----------------------
binding upon the Company, the Lenders and the Agent and their
respective successors and assigns, and shall inure to the benefit
of the Company, the Lenders and the Agent and the successors and
assigns of the Lenders and the Agent. The Company may not assign
its rights or obligations hereunder without the prior written
consent of all Lenders.
14.9 Assignments; Participations.
---------------------------
14.9.1 Assignments. Any Lender may, with the prior
-----------
written consents of the Company and the Agent (which consents
shall not be unreasonably delayed or withheld), at any time
assign and delegate to one or more commercial banks or other
financial institutions (any Person to whom such an assignment and
delegation is to be made being herein called an "Assignee"), all
or any fraction of such Lender's Syndicated Loans and Commitment
(which assignment and delegation shall be of a constant, and not
a varying, percentage of all the assigning Lender's Syndicated
Loans) in a minimum aggregate amount equal to the lesser of (i)
the assigning Lender's remaining Commitment and (ii) $5,000,000;
provided, however, that (a) no assignment and delegation may be
made to any Person if, at the time of such assignment and
delegation, the Company would be obligated to pay any greater
amount under Section 7.6 or Section 8 to the Assignee than the
Company is then obligated to pay to the assigning Lender under
such Section; (b) no assignment and delegation may be made to any
Person if the assigning Lender would be assigning and delegating
its entire Commitment and, at the time of such assignment and
delegation, the assigning Lender would have any Competitive Bid
Loan outstanding; and (c) the Company and the Agent shall be
entitled to continue to deal solely and directly with such Lender
in connection with the interests so assigned and delegated to an
Assignee until the date when all of the following conditions
shall have been met:
(x) five Business Days (or such lesser period of
time as the Agent and the assigning Lender shall agree)
shall have passed after written notice of such assignment
and delegation, together with payment instructions,
<PAGE>
addresses and related information with respect to such
Assignee, shall have been given to the Company and the Agent
by such assigning Lender and the Assignee,
(y) the assigning Lender and the Assignee shall
have executed and delivered to the Company and the Agent an
assignment agreement substantially in the form of Exhibit J
(an "Assignment Agreement"), together with any documents
required to be delivered thereunder, which Assignment
Agreement shall have been accepted by the Agent and the
Company, and
(z) the assigning Lender or the Assignee shall
have paid the Agent a processing fee of $2,500.
From and after the date on which the conditions described in
clause (c) above have been met, (x) such Assignee shall be deemed
automatically to have become a party hereto and, to the extent
that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement,
shall have the rights and obligations of a Lender hereunder, and
(y) the assigning Lender, to the extent that rights and
obligations hereunder have been assigned and delegated by it
pursuant to such Assignment Agreement, shall be released from its
obligations hereunder. Within five Business Days after
effectiveness of any assignment and delegation, the Company shall
execute and deliver to the Agent (for delivery to the Assignee
and the Assignor, as applicable) a new Syndicated Loan Note in
the principal amount of the Assignee's Commitment and, if the
assigning Lender has retained a Commitment hereunder, a
replacement Syndicated Loan Note in the principal amount of the
Commitment retained by the assigning Lender (such Syndicated Loan
Note to be in exchange for, but not in payment of, the
predecessor Syndicated Loan Note held by such assigning Lender).
Each such Syndicated Loan Note shall be dated the effective date
of such assignment. The assigning Lender shall mark the
predecessor Note "exchanged" and deliver it to the Company.
Accrued interest on that part of the predecessor Note being
assigned shall be paid as provided in the Assignment Agreement.
Accrued interest and fees on that part of the predecessor Note
not being assigned shall be paid to the assigning Lender.
Accrued interest and accrued fees shall be paid at the same time
or times provided in the predecessor Note and in this Agreement.
Any attempted assignment and delegation not made in accordance
with this Section 14.9.1 shall be null and void.
Notwithstanding the foregoing provisions of this Section
14.9.1 or any other provision of this Agreement, any Lender may
at any time assign all or any portion of its Syndicated Loans and
its Syndicated Loan Note to a Federal Reserve Bank (but no such
assignment shall release any Lender from any of its obligations
hereunder).
14.9.2 Participations. Any Lender may at any time
--------------
sell to one or more commercial banks or other Persons
participating interests in any Loan owing to such Lender, the
Note held by such Lender, the Commitment of such Lender or any
<PAGE>
other interest of such Lender hereunder (any Person purchasing
any such participating interest being herein called a
"Participant"). In the event of a sale by a Lender of a
participating interest to a Participant, (x) such Lender shall
remain the holder of its Note for all purposes of this Agreement
and (y) the Company and the Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's
rights and obligations hereunder. No Participant shall have any
direct or indirect voting rights hereunder (except that a Lender
may grant a Participant rights with respect to any of the events
described in the penultimate sentence of Section 14.1). The
Company agrees that if amounts outstanding under this Agreement
and the Notes are due and payable (as a result of acceleration or
otherwise), each Participant shall be deemed to have the right of
setoff in respect of its participating interest in amounts owing
under this Agreement and any Note to the same extent as if the
amount of its participating interest were owing directly to it as
a Lender under this Agreement or such Note; provided that such
right of setoff shall be subject to the obligation of each
Participant to share with the Lenders, and the Lenders agree to
share with each Participant, as provided in Section 7.5. The
Company also agrees that each Participant shall be entitled to
the benefits of Section 7.6 and Section 8 as if it were a Lender
(provided that no Participant shall receive any greater
compensation pursuant to such Sections than would have been paid
to the participating Lender if no participation had been sold).
14.10 Governing Law. THIS AGREEMENT AND EACH NOTE SHALL BE
-------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO THE CONFLICTS OF LAW
PRINCIPLES THEREOF. Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law,
such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
All obligations of the Company and rights of the Agent and the
Lenders expressed herein or in the Notes shall be in addition to
and not in limitation of those provided by applicable law.
14.11 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by the different parties hereto on
separate counterparts and each such counterpart shall be deemed
to be an original, but all such counterparts shall together
constitute but one and the same Agreement. When counterparts
executed by all of the parties hereto shall have been lodged with
the Agent (or, in the case of any Lender as to which an executed
counterpart shall not have been so lodged, the Agent shall have
received confirmation from such Lender of execution of a
counterpart hereof by such Lender), this Agreement shall become
effective as of the date hereof, and at such time the Agent shall
notify the Company and each Lender.
<PAGE>
14.12 Forum Selection and Consent to Jurisdiction. ANY
-------------------------------------------
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT OR ANY NOTE, MAY BE BROUGHT AND
MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.
THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF NEW YORK. THE COMPANY HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
14.13 Maximum Interest Rate. It is the express intention
---------------------
of the Agent, each Lender and the Company that nothing contained
in this Agreement, any Note, or in any other loan document shall
require the Company, or any other person obligated under this
Agreement or any Note to pay any interest (before or after an
Event of Default, as scheduled, compounded, or otherwise accrued
or charged) hereunder or under any Note at a rate exceeding the
maximum permissible rate under applicable law. If the Company
should pay or the Agent or any Lender should collect or receive
any interest in excess of the rate specified in the preceding
sentence, such payment shall be deemed to be the property of the
Company in all regards, and shall be held by the Agent or the
Lender, as the case may be, for the benefit of the Company, and
shall be repaid to the Company with interest accrued thereon from
the date of receipt by the Agent or the Lender, as the case may
be, to the date of repayment to the Company, at the overnight
Federal Funds Rate as determined by the Agent.
14.14 Waiver of Jury Trial. THE COMPANY, THE AGENT AND
--------------------
EACH LENDER HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY RELATED
DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH OR ARISING FROM OR RELATING TO
ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY.
14.15 Oregon Legal Notice. WITHOUT LIMITING THE VALIDITY
-------------------
OF THE CHOICE OF NEW YORK LAW PROVIDED HEREIN, UNDER OREGON LAW,
MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE LENDERS
AFTER THE EFFECTIVE DATE OF THE ACT SPECIFIED HEREIN CONCERNING
LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL,
<PAGE>
FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED
BY THE LENDERS TO BE ENFORCEABLE. THE ACT SPECIFIED HEREIN MEANS
CHAPTER 967 OREGON LAWS 1989, THE EFFECTIVE DATE OF WHICH WAS
OCTOBER 3, 1989.
Delivered at Portland, Oregon, as of the day and year first above written.
FRED MEYER, INC.
By MICHAEL H. DON
-----------------------------------
Vice President and Corporate
Treasurer
3800 S.E. 22nd Avenue
P.O. Box 42121
Portland, Oregon 97242
Attention: Michael H. Don
Vice President and
Corporate Treasurer
Facsimile: 503-797-5299
THE BANK OF NOVA SCOTIA,
individually and as Agent
By ERRETT HUMMEL
-----------------------------------
Title Relationship Manager
--------------------------------
888 S.W. Fifth Ave., Suite 750
Portland, Oregon 97204
Attention: Errett Hummel
Relationship Manager
Facsimile: 503-222-5502
FIRST INTERSTATE BANK OF
OREGON, N.A.
By MARCIA J. JANNER
------------------------------------
Marcia J. Jannner, Vice President
1300 S.W. Fifth Avenue, T-19
Portland, Oregon 97201
Attention: Marcia J. Janner
Vice President
Facsimile: 503-225-3162
<PAGE>
WEST ONE BANK, IDAHO
By JAMES C. AALBERG
-----------------------------------
James C. Aalberg, Vice President
P.O. Box 8247
Boise, Idaho 83733
Attention: Trudy Jackson
Assistant Vice President
Facsimile: 208-383-7563
CREDIT SUISSE
By DAVID WORTHINGTON
-----------------------------------
David Worthington
Title MSM
--------------------------------
By MARILOU PANELZUELA
-----------------------------------
Marilou Palenzuela
Title MSM
--------------------------------
633 W. Fifth St., 64th Floor
Los Angeles, California 90071
Attention: Rita Asa
Facsimile: 213-955-8245
BANQUE NATIONALE DE PARIS, by
and through its San Francisco,
California Agency
By KATHIE WOLFE
-----------------------------------
Title VP
--------------------------------
180 Montgomery Street
San Francisco, California 94104
Attention: Donald A. Hart
Treasurer
Facsimile: 415-989-9041<PAGE>
SCHEDULE I
COMMITMENTS AND PERCENTAGES
Lender Commitment Percentage
- ------ ---------- ----------
The Bank of Nova Scotia $ 35,000,000 35%
First Interstate Bank of Oregon, N.A. $ 20,000,000 20%
West One Bank, Idaho $ 15,000,000 15%
Credit Suisse $ 15,000,000 15%
Banque Nationale de Paris $ 15,000,000 15%
----------- ----
TOTAL $100,000,000 100%
<PAGE>
SCHEDULE II
SCHEDULE OF SUBSIDIARIES
Percentage
Jurisdiction Owned By The
Of Company and
Subsidiary Organization Its Subsidiaries
- ---------- ------------ ----------------
B&B Stores, Inc. Montana 100%
B&B Pharmacy, Inc. Montana 100%
CB&S Advertising Agency, Inc. Oregon 100%
Distribution Trucking Company Oregon 100%
FM Holding Corporation Delaware 100%
Grand Central, Inc. Utah 100%
FM Retail Services, Inc. Washington 100%
Fred Meyer (HK) Limited Hong Kong 100%
Fred Meyer, Inc.
(a Washington corporation) Washington 100%
Fred Meyer of Alaska, Inc. Alaska 100%
Fred Meyer of California, Inc. California 100%
Natur Glo, Inc. Oregon 100%
Roundup Co. Washington 100%
<PAGE>
EXHIBIT A
FORM OF
COMPETITIVE BID QUOTE REQUEST
_____________________, 19____
The Bank of Nova Scotia
888 S.W. Fifth Avenue, Suite 750
Portland, Oregon 97204
Attention: Jay Daughenbaugh
Facsimile: (503) 222-5502
Telephone: (503) 222-4396
This instrument constitutes a Competitive Bid Quote Request under,
and as defined by, the Credit Agreement dated as of March 6, 1995 (as
amended or modified and in effect from time to time, the "Credit
Agreement") among the undersigned Fred Meyer, Inc., a Delaware
corporation (the "Company"), the Lenders which are parties thereto, and
The Bank of Nova Scotia, as Agent. Terms not otherwise expressly
defined herein shall have the meanings set forth in the Credit Agreement.
The Company hereby requests Competitive Bid Loan(s), subject to the
terms of the Credit Agreement, as follows:
(a) Date of borrowing (the "Borrowing Date") (which is a Business
Day): _________________, 19___.<F1> Quotation Date for Set Rate
Loans if before the Borrowing Date: ________________, 19___.
(b) Aggregate principal amount of Competitive Bid Loans requested:
$_____________ ("Maximum Request").<F2>
(c) Number of Competitive Bid Loans requested and principal
amounts thereof: _________________ Competitive Bid Loan(s)
in the amount of $________________, $_______________ and
$________________, respectively.
___________________
<F1> At least one (1) Business Day after the delivery of this
Competitive Bid Quote Request in the case of a Set Rate Auction
and at least four (4) Business Days after delivery of this
Competitive Bid Quote Request in the case of a Eurodollar Auction.
<F2> Subject to the terms of the Credit Agreement, a minimum of
$5,000,000 and, for amounts in excess thereof, an integral multiple
of$1,000,000.<PAGE>
(d) Interest Period(s) and its/their maturity date(s):
Principal Amount<F3> Maturity Date<F4> Type of Loan<F5>
---------------- ------------- ------------
$
$
$
The Company hereby represents and warrants that immediately
following the making of the Competitive Bid Loan(s) requested above:
(1) the aggregate principal amount of all outstanding
Syndicated Loans will be $________________;
(2) the aggregate principal amount of all outstanding
Competitive Bid Loans will be $______________; and
(3) the sum of items (1) and (2) above will be $____________,
which is equal to or less than the Commitment Amount of
$_______________.
The Company further certifies and warrants that at the time hereof
the applicable conditions precedent under Section 11 have been satisfied.
The Company agrees that if prior to the time of the Competitive Bid
Loan related hereto, any matter certified to, confirmed, represented or
warranted herein by it will not be true and correct at such time as if
then made, it will immediately so notify the Agent.
IN WITNESS WHEREOF, the Company has caused this Competitive Bid
Quote Request to be executed and delivered by its duly authorized
officer this _____ day of _______________, 19____.
FRED MEYER, INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
___________________
<F3> Subject to the terms of the Credit Agreement, a minimum of
$5,000,000 and, for amounts in excess thereof, an integral
multiple of $1,000,000.
<F4> For each Interest Period for a Set Rate Loan, no earlier than
seven (7) days after the Borrowing Date requested herein, and
no later than the earlier of (a) ninety (90) days after such
Borrowing Date, and (b) the Termination Date. For each Interest
Period for a Eurodollar Competitive Bid Loan, subject to the
terms of the Credit Agreement, a period commencing on the
Borrowing Date requested herein and ending on, but excluding,
the numerically corresponding day in the first, second,
or third calendar thereafter; provided that the Interest Period
shall in no event extend beyond the Termination Date.
<F5> Set Rate Loan (SRL) or Eurodollar Competitive Bid Loan (ECL).<PAGE>
EXHIBIT B
FORM OF
INVITATION FOR COMPETITIVE BID QUOTES
_____________________, 19____
To: [Name of Lender]
Re: Invitation for Competitive Bid Quotes to
Fred Meyer, Inc. (the "Company")
Pursuant to Section 2.2.3 of the Credit Agreement dated as of
March 6, 1995 (as amended or modified and in effect from time to time,
the "Credit Agreement") among the Company, the Lenders which are parties
thereto, and the undersigned, as Agent, we are pleased on behalf of the
Company to invite you to submit Competitive Bid Quotes to the Company
for the following proposed Competitive Bid Loans:
Date of Borrowing: ________________________________, 19____
<TABLE>
<CAPTION>
Eurodollar
Competitive Bid Rate
Principal Amount Interest Period Type of Loan<F1> (Reserve Adjusted)<F2>
- ---------------- --------------- ---------------- ----------------------
<S> <C> <C> <C>
1.
2.
3.
</TABLE>
Your Competitive Bid Quote must comply with Section 2.2.3 of the
Credit Agreement and the foregoing terms in which the Competitive Bid
Quote Request was made. Terms not otherwise expressly defined herein
shall have the meaning set forth in the Credit Agreement.
Please respond to this invitation by no later than [10:00 a.m.<F3>/
2:00 p.m.<F4>] Portland time on __________________________, 19_____.
THE BANK OF NOVA SCOTIA, as Agent
By:_________________________________________
Authorized Officer
___________________
<F1> Set Rate Loan (SRL) or Eurodollar Competitive Bid Rate Loan (ECL).
<F2> Applicable to Eurodollar Competitive Bid Loans.
<F3> Set Rate Loan.
<F4> Eurodollar Competitive Bid Loan.<PAGE>
EXHIBIT C
FORM OF
COMPETITIVE BID QUOTE
COMPETITIVE BID QUOTE
FROM
_________________________<F1>
(Contact Person: _________________________)
(Telephone No.: ___________________)
The Bank of Nova Scotia
888 S.W. Fifth Avenue, Suite 750
Portland, Oregon 97205
Attention: Jay Daughenbaugh
Facsimile: (503) 222-5502
Telephone: (503) 222-4396
This instrument constitutes an irrevocable Competitive Bid Quote
for one or more Competitive Bid Loans under, and as defined by, the
Credit Agreement dated as of March 6, 1995 (as amended or modified and
in effect from time to time, the "Credit Agreement") among Fred Meyer,
Inc. a Delaware corporation (the "Company"), the various financial
institutions (including the undersigned (the "Lender")) which are
parties thereto, and The Bank of Nova Scotia, as Agent. Terms not
otherwise expressly defined herein shall have the meanings set forth in
the Credit Agreement.
(1) The Company's related Competitive Bid Quote Request inviting
this Competitive Bid Quote has requested Competitive Bid Loan(s),
subject to the terms of the Credit Agreement, in the aggregate principal
amount of $_______________ ("Maximum Request") with a date of borrowing
of ______________________, 19____ (the "Borrowing Date").
(2) The Lender hereby offers to make the following Competitive Bid
Loan(s) on the Borrowing Date provided that the Company may accept bids
for such Loans up to $_____________ in the aggregate ("Maximum Offer"):
___________________
<F1> Name of Lender Submitting Bid.<PAGE>
<TABLE>
Principal Amount<F2> Maturity Date Type Set Eurodollar
- -------------------- of Interest of Rate<F4> Competitive Bid
Period Loan<F3> -------- Rate (Reserve
------------- -------- Adjusted) +/-
Eurodollar Margin<F4>
---------------------
<S> <C> <C> <C> <C>
$
$
$
</TABLE>
(3) The Lender acknowledges that the offer(s) set forth above,
subject to the satisfaction of the applicable conditions set forth in
the Credit Agreement, irrevocably obligate(s) the Lender to make the
Competitive Bid Loan(s) for which any offer(s) are accepted by the
Company, in whole or in part, in accordance with the terms of the Credit
Agreement.
Dated: ______________________ _____________________________________<F5>
By: _________________________________
Name: _______________________________
Title: ______________________________
___________________
<F2> A minimum of $5,000,000, and, for amounts in excess thereof,
an integral multiple of $1,000,000 for each Competitive Bid Loan.
<F3> Set Rate Loan (SRL) or Eurodollar Competitive Bid Rate Loan (ECL).
<F4> Insert the rate of interest per annum (expressed to the nearest
1/10,000 of 1%).
<F5> Name of Lender submitting Competitive Bid Quote.<PAGE>
EXHIBIT D
FORM OF
COMPETITIVE BID LOAN
ACKNOWLEDGMENT
The Bank of Nova Scotia
888 S.W. Fifth Avenue, Suite 750
Portland, Oregon 97205
Attention: Jay Daughenbaugh
This instrument constitutes a Competitive Loan Acknowledgment
under, and as defined by, the Credit Agreement dated as of March 6, 1995
(as amended or modified and in effect from time to time, the "Credit
Agreement") among Fred Meyer, Inc., a Delaware corporation (the
"Company"), the Lenders which are parties thereto, and The Bank of Nova
Scotia, as Agent. Terms not otherwise expressly defined herein shall
have the meanings set forth in the Credit Agreement.
Pursuant to Section 2.2.3(e) of the Credit Agreement, the Company
hereby confirms its [acceptance of the Competitive Bid Quote]
[acceptance of a portion of the Competitive Bid Quote ("Portion")] dated
________________, 19____, for the Competitive Bid Loan(s) to take place
on ______________________, 19___, on the following terms:
A. Competitive Bid Loan.
--------------------
1. Principal Amount of
Competitive Bid Loan $____________________
2. Type of Competitive Bid Loan ____________________
3. Competitive Bid Loan
maturity date ____________, 19____
4. Amount of, and (a) Set Rate or
(b) Eurodollar Competitive Bid
Rate (Reserve Adjusted) +/-
Eurodollar Margin for, each Portion
[Bidding Lender] $__________ at _____%
[Bidding Lender] $__________ at _____%
[Bidding Lender] $__________ at _____%
B. Competitive Bid Loan.
--------------------
1. Principal Amount of
Competitive Bid Amount $___________________
2. Type of Competitive Bid Loan ___________________
3. Competitive Bid Loan
maturity date ___________, 19____
<PAGE>
4. Amount of, and (a) Set Rate or
(b) Eurodollar Competitive Bid
Rate (Reserve Adjusted) +/-
Eurodollar Margin for, each Portion
[Bidding Lender] $__________ at _____%
[Bidding Lender] $__________ at _____%
[Bidding Lender] $__________ at _____%
C. Competitive Bid Loan.<F1>
--------------------
1. Principal Amount of
Competitive Bid Loan $___________________
2. Type of Competitive Bid Loan ___________________
3. Competitive Bid Loan
maturity date ___________, 19____
4. Amount of, and (a) Set Rate or
(b) Eurodollar Competitive Bid Rate
(Reserve Adjusted) +/- Eurodollar
Margin for, each Portion
[Bidding Lender] $__________ at _____%
[Bidding Lender] $__________ at _____%
[Bidding Lender] $__________ at _____%
The Company hereby confirms to each Lender that the above-described
Competitive Bid Quote, or Portion(s) thereof, were accepted or rejected
in accordance with Section 2.2.3 of the Credit Agreement.
The Company hereby further certifies and warrants that at the time
hereof the applicable conditions precedent under Section 11 have been
satisfied.
The undersigned hereby confirms that the proposed Competitive Loan
is to be made available to it in accordance with Section 2.2.4 of the
Credit Agreement.
The Company hereby represents and warrants that immediately
following the making of the Competitive Bid Loan(s):
(1) the aggregate principal amount of all outstanding
Syndicated Loans will be $________________;
(2) the aggregate principal amount of all outstanding
Competitive Bid Loans will be $______________; and
(3) the sum of items (1) and (2) above will be
$_______________, which is equal to or less than the Commitment
Amount of $____________.
__________________
<F1> Repeat as necessary.<PAGE>
Except to the extent, if any, that prior to the time of the
Competitive Bid Loan related hereto the Agent has received written
notice to the contrary from the Company, each matter certified to in the
Competitive Bid Quote Request related hereto shall be deemed once again
to be certified as true and correct at the date of such Borrowing as if
then made.
The Company has caused this Competitive Bid Loan Acknowledgment to
be executed and delivered, and the certification and warranties
contained herein to be made, by its authorized officer this _____ day of
__________________________, 19____.
FRED MEYER, INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________<PAGE>
EXHIBIT E
FORM OF
COMPETITIVE BID LOAN
CONFIRMATION
______________________, 19____
To all Lenders Submitting Competitive Bid
Quotes Under the Credit Agreement.
This instrument constitutes a Competitive Loan Confirmation under,
and as defined by, the Credit Agreement dated as of March 6, 1995 (as
amended or modified and in effect from time to time, the "Credit
Agreement") among Fred Meyer, Inc., a Delaware corporation (the
"Company"), the Lenders which are parties thereto, and The Bank of Nova
Scotia, as Agent. Terms not otherwise expressly defined herein shall
have the meanings set forth in the Credit Agreement.
The Company delivered to the Lender a Competitive Bid Quote Request
on _________________, 19____, and the following Bid(s) were accepted on
_________________, 19___ (the "Competitive Bid Loan Acceptance Date") on
the following terms:
A. Competitive Bid Loan.
--------------------
1. Principal Amount of
Competitive Bid Loan $____________________
2. Type of Competitive Bid Loan ____________________
3. Competitive Bid Loan
maturity date ____________, 19____
4. Amount of, and (a) Set Rate or
(b) Eurodollar Competitive Bid
Rate (Reserve Adjusted) +/-
Eurodollar Margin for, each Portion
[Bidding Lender] $__________ at _____%
[Bidding Lender] $__________ at _____%
[Bidding Lender] $__________ at _____%
B. Competitive Bid Loan.
--------------------
1. Principal Amount of
Competitive Bid Amount $___________________
2. Type of Competitive Bid Loan ___________________
3. Competitive Bid Loan
maturity date ___________, 19____
<PAGE>
4. Amount of, and (a) Set Rate or
(b) Eurodollar Competitive Bid
Rate (Reserve Adjusted) +/-
Eurodollar Margin for, each Portion
[Bidding Lender] $__________ at _____%
[Bidding Lender] $__________ at _____%
[Bidding Lender] $__________ at _____%
C. Competitive Bid Loan.<F1>
--------------------
1. Principal Amount of
Competitive Bid Loan $___________________
2. Type of Competitive Bid Loan ___________________
3. Competitive Bid Loan
maturity date ___________, 19____
4. Amount of, and (a) Set Rate or
(b) Eurodollar Competitive Bid Rate
(Reserve Adjusted) +/- Eurodollar
Margin for, each Portion
[Bidding Lender] $__________ at _____%
[Bidding Lender] $__________ at _____%
[Bidding Lender] $__________ at _____%
D. The aggregate outstanding balance of all Competitive Bid Loans
is $____________________.<F2>
THE BANK OF NOVA SCOTIA, as Agent
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
___________________
<F1> Repeat as necessary.
<F2> After giving effect to the Competitive Bid Loan(s) being confirmed.<PAGE>
EXHIBIT F
FORM OF REQUEST FOR EXTENSION OF
TERMINATION DATE
[Date]
[Name and Address of Lender]
Pursuant to the Credit Agreement dated as of March 6, 1995 (as
amended or otherwise modified, the "Credit Agreement") among Fred Meyer,
Inc. (the "Company"), various financial institutions and The Bank of
Nova Scotia, by and through its Portland, Oregon Branch, as Agent, this
represents the Company's request to extend the Termination Date (as
defined in the Credit Agreement) by 364 days.
Please indicate whether you consent to such extension of the
Termination Date by signing the attached copy of this Extension Request
in the space provided below and returning the same to the undersigned
within 30 days of the date of this request.
Very truly yours,
FRED MEYER, INC.
By: ______________________________________
Title: ___________________________________
[Name of Lender]
Date: ____________________
ACCEPTS _______
REJECTS _______
By: _______________________________
Title:_____________________________
<PAGE>
EXHIBIT G
FORM OF
SYNDICATED LOAN NOTE
$_______________________ _________________, 199___
Portland, Oregon
FOR VALUE RECEIVED, FRED MEYER, INC., a Delaware corporation (the
"Company") promises to pay to the order of ___________________________
at the principal office of THE BANK OF NOVA SCOTIA (the "Agent") in
Portland, Oregon, on the date(s) set forth in the Credit Agreement
referred to below, ___________________ Dollars ($______________) or, if
less, the aggregate unpaid amount of all Syndicated Loans made by the
payee to the Company pursuant to the Credit Agreement (as shown in the
records of the payee or, at the payee's option, on the schedule attached
hereto).
The Company further promises to pay interest on the unpaid
principal amount of each Loan evidenced hereby from the date of such
Loan until such Loan is paid in full, payable at the rate(s) and at the
time(s) set forth in the Credit Agreement. Payments of both principal
and interest are to be made in lawful money of the United States of
America.
This Note evidences indebtedness incurred under, and is subject to
the terms and provisions of, the Credit Agreement, dated as of March 6,
1995 (herein, as amended or otherwise modified from time to time, called
the "Credit Agreement"), among the Company, certain financial
institutions (including the payee) and the Agent, to which Credit
Agreement reference is hereby made for a statement of the terms and
provisions under which this Note may or must be paid prior to its due
date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the Company further agrees, subject
only to any limitation imposed by applicable law, to pay all reasonable
expenses, including reasonable attorneys' fees and legal expenses,
incurred by the holder of this Note in endeavoring to collect any
amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise, and whether or not litigation is actually
commenced. In the event the holder of this Note is made a party to any
litigation because of the existence of the indebtedness evidenced by
this Note, the Company shall reimburse the holder for its costs and
reasonable attorneys' fees incurred with respect to such litigation. In
the event litigation is commenced by a party hereto to enforce or
interpret any provision of this Note, or to collect any amount due
hereunder, the prevailing party in such litigation shall be entitled to
receive, in addition to all other sums and relief, its reasonable costs
and attorneys' fees, incurred both at and in preparation for trial and
any appeal or review, such amount to be set by the court(s) before which
the matter is heard. The Company also agrees to pay any attorneys' fee
incurred by the holder of this Note in connection with any bankruptcy or
similar proceedings wherein the Company is the debtor. Except as set
forth in the Credit Agreement, each of the Company and each guarantor
hereof waives demand, presentment, protest, diligence, notice of
dishonor and any other formality in connection with this Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE CONFLICTS OF LAW
PRINCIPLES THEREOF.
FRED MEYER, INC.
By _______________________________________
Vice President and Corporate Treasurer
<PAGE>
Schedule attached to Note dated _____________________, 199____, of
FRED MEYER, INC. ________________ payable to the order of ______________
__________________________.
Date and Date and
Amount of Amount of
Loan or of Repayment or of
Conversion from Conversion into Unpaid
Another Type of Another Type of Interest Principal Notation
Loan Loan Period Balance Made by
1. ALTERNATE BASE RATE LOANS
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
2. EURODOLLAR LOANS
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
<PAGE>
EXHIBIT H
FORM OF
COMPETITIVE BID LOAN NOTE
$100,000,000 _________________, 199___
Portland, Oregon
FOR VALUE RECEIVED, FRED MEYER, INC., a Delaware corporation (the
"Company"), promises to pay to the order of ___________________________
at the principal office of THE BANK OF NOVA SCOTIA (the "Agent") in
Portland, Oregon, on the date(s) set forth in the Credit Agreement
referred to below, One Hundred Million and No/100 Dollars ($100,000,000)
or, if less, the aggregate unpaid amount of all Competitive Bid Loans
made by the payee to the Company pursuant to the Credit Agreement (as
shown in the records of the payee or, at the payee's option, on the
schedule attached hereto).
The Company further promises to pay interest on the unpaid
principal amount of each Loan evidenced hereby from the date of such
Loan until such Loan is paid in full, payable at the rate(s) and at the
time(s) set forth in the Credit Agreement. Payments of both principal
and interest are to be made in lawful money of the United States of
America.
This Note evidences indebtedness incurred under, and is subject to
the terms and provisions of, the Credit Agreement, dated as of March 6,
1995 (herein, as amended or otherwise modified from time to time, called
the "Credit Agreement"), among the Company, certain financial
institutions (including the payee) and the Agent, to which Credit
Agreement reference is hereby made for a statement of the terms and
provisions under which this Note may or must be paid prior to its due
date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the Company further agrees, subject
only to any limitation imposed by applicable law, to pay all reasonable
expenses, including reasonable attorneys' fees and legal expenses,
incurred by the holder of this Note in endeavoring to collect any
amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise, and whether or not litigation is actually
commenced. In the event the holder of this Note is made a party to any
litigation because of the existence of the indebtedness evidenced by
this Note, the Company shall reimburse the holder for its costs and
reasonable attorneys' fees incurred with respect to such litigation. In
the event litigation is commenced by a party hereto to enforce or
interpret any provision of this Note, or to collect any amount due
hereunder, the prevailing party in such litigation shall be entitled to
receive, in addition to all other sums and relief, its reasonable costs
and attorneys' fees, incurred both at and in preparation for trial and
any appeal or review, such amount to be set by the court(s) before which
the matter is heard. The Company also agrees to pay any attorneys' fee
incurred by the holder of this Note in connection with any bankruptcy or
similar proceedings wherein the Company is the debtor. Except as set
forth in the Credit Agreement, each of the Company and each guarantor
hereof waives demand, presentment, protest, diligence, notice of
dishonor and any other formality in connection with this Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE CONFLICTS OF LAW
PRINCIPLES THEREOF.
FRED MEYER, INC.
By _______________________________________
Vice President and Corporate Treasurer
<PAGE>
Schedule attached to Note dated _____________________, 199____, of FRED
MEYER, INC. $100,000,000 payable to the order of ______________________
__________________.
Date and Date and Unpaid
Amount of Amount of Principal Notation
Loan Repayment Balance Made by
1. SET RATE LOANS
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
2. EURODOLLAR COMPETITIVE BID LOANS
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
<PAGE>
EXHIBIT I
FORM OF
OPINION OF COUNSEL
[Letterhead of Stoel Rives Boley Jones & Grey]
March ____, 1995
The Bank of Nova Scotia, by and
through its Portland, Oregon Branch,
individually and as Agent, and
the other Lenders which are
parties to the Credit Agreement
referred to below
888 S.W. Fifth Avenue, Suite
750 Portland, Oregon 97204
Re: Credit Agreement dated as of March 6, 1995 among
Fred Meyer, Inc., various financial institutions
and The Bank of Nova Scotia, as Agent
------------------------------------------------
Gentlemen:
We have acted as counsel to Fred Meyer, Inc., a Delaware
corporation (the "Company"), in connection with the Credit Agreement
dated as of March 6, 1995 among the Company, various financial
institutions (the "Lenders") and The Bank of Nova Scotia, by and through
its Portland, Oregon Branch, as Agent (the "Credit Agreement"). This
opinion letter is rendered to you pursuant to Section 11.1.5 of the
Credit Agreement. Unless otherwise defined herein, capitalized terms
used herein shall have the respective meanings set forth in the Credit
Agreement.
For the purpose of rendering our opinions herein, we have examined
(i) the Credit Agreement and the Notes, (ii) certificates of public
officials and of officers of the Company, (iii) certified copies of the
Company's Restated Certificate of Incorporation and Amended and Restated
Bylaws, (iv) resolutions of the Company's Board of Directors authorizing
the Company's participation in the transactions contemplated by the
Credit Agreement, and (v) the agreements referred to as "material
agreements" in the attached Officer's Certificate of the Company (the
"Certificate"). We have also examined such other documents and records,
and have made such investigations of law, as we have deemed necessary to
enable us to render this opinion. As to the accuracy of certain factual
matters, we have relied on certificates and written statements of
officers of the Company and factual representations made by the Company
within the Credit Agreement.
For purposes of this opinion, "actual knowledge" means the
conscious awareness of facts or other information by Gary R. Barnum or
Katherine Fritchman, the persons at this firm principally involved with
the transactions contemplated by the Credit Agreement.
<PAGE>
Based on the foregoing and subject to the qualifications below, we
are of the opinion that:
(1) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power
and authority to own and operate its properties, to
carry on its business as described in the Company's
Annual Report on Form 10-K for the fiscal year ended
January 29, 1994, to enter into the Credit Agreement,
to issue the Notes and to carry out the transactions
contemplated thereby.
(2) The Credit Agreement and the Notes have been duly
authorized by all necessary corporate action on the
part of the Company, and the Credit Agreement and the
Notes have been duly executed and delivered by the
Company and constitute legal, valid and binding
obligations of the Company, enforceable against the
Company in accordance with their respective terms.
(3) None of the execution and delivery by the Company of
the Credit Agreement and the Notes, the consummation by
the Company of the transactions contemplated by the
Credit Agreement or compliance by the Company with the
terms and conditions of the Credit Agreement and the
Notes (a) conflicts with, results in a breach of, or
constitutes a default under any of the terms,
conditions or provisions of the Restated Certificate of
Incorporation or Amended and Restated Bylaws of the
Company or, to our actual knowledge, any "material
agreement" referred to in the Certificate or judicial
order by which the Company or any Subsidiary is bound,
or (b) to our actual knowledge, results in the creation
of any Lien upon any of the properties or assets of the
Company or any Subsidiary under any such agreement or
order.
(4) Neither the execution and delivery of the Credit
Agreement and the Notes nor the payment of the Notes
conflicts with any present federal statute binding on
the Company or any Delaware statute, rule or regulation
contained in or promulgated under the General
Corporation Law of the State of Delaware binding on the
Company.
(5) To our actual knowledge, no governmental consents,
approvals, authorizations, registrations, declarations
or filings are required by the Company in connection
with the extensions of credit under the Credit
Agreement.
(6) The Company is not an "investment company" as such term
is defined in the Investment Company Act of 1940, as
amended.
<PAGE>
The opinions set forth above are subject to (a) the effect
of bankruptcy, insolvency, reorganization, moratorium, and other
similar laws generally affecting creditors, rights and (b) the
application of general principles of equity, including, without
limitations, the right to specific performance. A court might
not enforce certain covenants or allow acceleration of the due
date of the Notes if it concludes that such enforcement or
acceleration would be unreasonable or not undertaken in good
faith under the then existing circumstances, but the inclusion of
such remedies does not, in our opinion, affect the validity of
the Credit Agreement or the Notes. In addition, no opinion is
expressed herein as to Section 14.7 of the Credit Agreement.
We express no opinion as to (a) the enforceability under
certain circumstances of any provision imposing penalties, late
payment charges or increases in interest rate upon delinquency in
payment or the occurrence of Events of Default, (b) the
enforceability of any choice of law provision, (c) the compliance
with certain financial covenants under the "material agreements"
set forth in the Certificate, or (d) the compliance with
applicable anti-fraud provisions of federal or state securities
laws.
The opinions herein expressed are limited to matters
governed by the laws of the United States of America and the
State of Oregon and, as to the opinions expressed in paragraphs
(1), (2), and (4) above, the General Corporation Law of the State
of Delaware, in each case as it exists at the date hereof, and we
express no opinion as to the law of any other jurisdiction. In
rendering the opinions set forth in paragraph (2) above, we have
assumed, as to matters purported to be governed by the laws of
the State of New York, that the laws of the State of Oregon and
the State of New York do not differ in any material respect.
This opinion is rendered only to the Agent and the Lenders
and is solely for their benefit in connection with the above
transactions. This opinion may not be relied upon by the Agent
or any Lender for any other purpose or quoted to or relied upon
by any other person, firm or corporation for any purpose without
our prior written consent.
Very truly yours,
STOEL RIVES BOLEY JONES & GREY
By _________________________________________
Gary R. Barnum
<PAGE>
EXHIBIT J
FORM OF
ASSIGNMENT AGREEMENT
Date:___________________
To: Fred Meyer, Inc.
and
The Bank of Nova Scotia, as Agent
Re: Assignment under the Credit Agreement referred to below
-------------------------------------------------------
Gentlemen and Ladies:
We refer to Section 14.9.1 of the Credit Agreement dated as
of March 6, 1995 (as amended or otherwise modified, the "Credit
Agreement") among Fred Meyer, Inc. (the "Company"), various
financial institutions and The Bank of Nova Scotia, by and
through its Portland, Oregon Branch, as agent (the "Agent").
Unless otherwise defined herein or the context otherwise
requires, terms used herein have the meanings provided in the
Credit Agreement.
____________________ (the "Assignor") hereby sells and
assigns to ______________ (the "Assignee"), and the Assignee
hereby purchases and assumes from the Assignor, that interest in
and to the Assignor's rights and obligations under the Credit
Agreement as of the date hereof equal to _______% of all of the
Syndicated Loans and Commitments, such sale, purchase, assignment
and assumption to be effective as of ___________________, 199_,
or such later date on which the Company and the Agent shall have
consented hereto (the "Effective Date"). After giving effect to
such sale, purchase, assignment and assumption, the Assignee's
Percentage for purposes of the Credit Agreement will be as set
forth opposite the Assignee's name on the signature pages hereof.
The Assignor hereby instructs the Agent to make all payments
from and after the Effective Date in respect of the interest
assigned hereby directly to the Assignee. The Assignor and the
Assignee agree that all interest and fees accrued up to, but not
including, the Effective Date are the property of the Assignor,
and not the Assignee. The Assignee agrees that, upon receipt of
any such interest or fees, the Assignee will promptly remit the
same to the Assignor.
The Assignee hereby confirms that it has received a copy of
the Credit Agreement and the exhibits and schedules related
thereto, together with copies of the documents which were
required to be delivered under the Credit Agreement as a
condition to the making of the initial Loans thereunder. The
Assignee acknowledges and agrees that it (i) has made and will
continue to make such inquiries and has taken and will take such
care on its own behalf as would have been the case had its
Commitment been granted and its Syndicated Loans been made
<PAGE>
directly by the Assignee to the Company without the intervention
of the Agent, the Assignor or any other Lender and (ii) has made
and will continue to make, independently and without reliance
upon the Agent, the Assignor or any other Lender and based on
such documents and information as it has deemed appropriate, its
own credit analysis and decisions relating to the Credit
Agreement. The Assignee further acknowledges and agrees that
neither the Agent nor the Assignor has made any representation or
warranty about the creditworthiness of the Company or any other
party to the Credit Agreement or with respect to the legality,
validity, sufficiency or enforceability of the Credit Agreement
or any Note or the value of any security therefor. This
assignment shall be made without recourse to the Assignor.
The Assignor represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse
claim.
The Assignee represents and warrants to the Company and the
Agent that, as of the date hereof, the Company will not be
obligated to pay any greater amount under Section 7.6 or 8.1 of
the Credit Agreement than the Company is obligated to pay to the
Assignor under such Section.
Except as otherwise provided in the Credit Agreement,
effective as of the Effective Date:
(a) the Assignee (i) shall be deemed automatically to have
become a party to the Credit Agreement and have all the
rights and obligations of a "Lender" under the Credit
Agreement as if it were an original signatory thereto
to the extent specified in the second paragraph hereof;
and (ii) agrees to be bound by the terms and conditions
set forth in the Credit Agreement as if it were an
original signatory thereto; and
(b) the Assignor shall be released from its obligations
under the Credit Agreement to the extent specified in
the second paragraph hereof.
The Assignor and the Assignee hereby agree that the
[Assignor] [Assignee] will pay to the Agent the processing fee
referred to in Section 14.9.1 of the Credit Agreement. The
payment of the processing fee shall be a condition to the
effectiveness of this assignment.
The Assignee hereby advises each of you of the following
administrative details with respect to the assigned Loans and
Commitment:
(A) Address for Notices:
Institution Name:
Address:
Attention:
<PAGE>
Telephone:
Facsimile:
(B) Payment Instructions:
The Assignee has delivered to the Company and the Agent (or
is delivering to the Company and the Agent concurrently herewith)
the tax forms referred to in Section 7.6 of the Credit Agreement.
Please evidence your receipt hereof and consent to the sale,
assignment, purchase and assumption set forth herein by signing
and returning counterparts hereof to the Assignor and the
Assignee.
Percentage = ____% [ASSIGNEE]
By:____________________________________
Title:
[ASSIGNOR]
By:____________________________________
Title:
ACKNOWLEDGED AND CONSENTED TO
this _____ day of ____________, 199_
THE BANK OF NOVA SCOTIA, as Agent
By:____________________________________
Title:_________________________________
ACKNOWLEDGED AND CONSENTED TO
this _____ day of ____________, 199_
FRED MEYER, INC.
By:____________________________________
Title:_________________________________
EXHIBIT 10-B
FRED MEYER, INC. BONUS PLAN DESCRIPTION
AS AMENDED TO JANUARY 28, 1995
INTRODUCTION:
The Fred Meyer, Inc. Bonus Plan compensates selected employees
based on goals and objectives determined periodically by the Company.
Under the Bonus Plan, bonuses are allocated based on programs
prescribed for each of two categories of participants: (1) Regional
and Store bonusable participants, and (2) all other bonusable
participants.
REGIONAL AND STORE BONUSABLE PARTICIPANTS PROGRAM:
Awards for regional and store bonusable participants are based
upon predetermined and preapproved objectives for store contribution
income and corporate pretax income. Each quarter and year the Company
sets objectives for sales, contribution income and pretax income based
upon the Company's projections, each region/store manager's projections
and historical results. These objectives are reviewed and approved by
the Company's Compensation Committee. The actual bonus awarded each
quarter and for the year is based on a predefined percentage of the
participant's regular salary for the year, as adjusted for actual
versus budgeted results. Budgeted results give rise to a target bonus,
while greater than budgeted results give rise to a larger bonus (up to
237.5 percent of target bonus), and lower than budgeted results will
result in a smaller bonus (as low as 0 percent of target bonus). A
portion of each participant's bonus is generally calculated on how well
the participant's area of responsibility does, and a smaller portion
is based on how well the Company does. The Company portion is capped
at 200 percent and the store/region portion is capped at 250 percent.
ALL OTHER BONUSABLE PARTICIPANTS PROGRAM:
The program applicable to all other management/ supervisory and
other bonusable participants not included in the regional and store
program is based on the following formula: The bonus paid is based on
the Company's objectives for sales, pretax income, and various
departmental budgets as prepared by the department's management, and
approved by the Compensation Committee. The bonus amount paid is
determined as a percentage of each participant's salary (target bonus),
adjusted upward or downward based on performance. Participants can
achieve a maximum of 200 percent of their target bonus for exceeding
their performance goals or a minimum of 0 percent of target bonus for
lower than predefined results. A portion of a participant's bonus is
generally based on his/her department's results, with the larger portion
based on the Company's pretax income results. Both the department and
Company portion is capped at 200 percent. Twenty percent of the target
bonus of the Chairman, the President and all Senior Vice Presidents is
deferred into the Company's Capital Bonus Plan. The Capital Bonus Plan
measures the return on assets invested in new stores and major remodels
to determine the actual payment of the deferred portion of the
participant's bonus. Payments are made after the second and third full
years' results under that Plan.
<PAGE>
YEAR-END REVIEW AND PAYMENT:
Bonuses are generally paid in April following the year in which
performance goals are measured. The Compensation Committee approves
the final amount of total bonuses to be paid and the amount paid to
executive officers prior to such payment. The Compensation Committee
of the Board of Directors can approve discretionary amounts resulting
from unusual circumstances affecting the Company.
SUPERIOR PERFORMANCE BONUS PLAN:
Vice Presidents, Senior Vice Presidents, the Chief Operating
Officer and Chief Executive Officer are eligible to receive stock
bonuses based on the Company achieving superior performance levels as
approved in advance by the Compensation Committee of the Board of
Directors. The number of shares paid as a bonus, which vest one-third
per year over a three-year period, is based on the ratio of shareholder
value added as a percent of total assets.
EXHIBIT 10G
EMPLOYMENT AGREEMENT
(AS AMENDED BY AMENDMENT NO. 1)
DATED: August 27, 1991
BETWEEN: FRED MEYER, INC.
3800 SE 22nd Avenue
Portland, OR 97242 "Company"
AND: ROBERT G. MILLER
4375 South Shore Boulevard
Lake Oswego, OR 97035 "Employee"
The parties agree as follows:
1. General.
-------
This Agreement sets forth the terms upon which
Employee shall be employed by the Company. Notwithstanding the
foregoing, the Company may terminate the Employee's employment
at any time, and Employee's employment hereunder will be
considered "at will," subject to the Company's providing the
benefits hereinafter specified in accordance with the terms
hereof.
2. Employment.
----------
Employee shall be employed by Company on a full-time
basis to perform duties as Chief Executive Officer and Chairman
of the Board of the Company.
3. Compensation and Disability Benefits.
------------------------------------
3.1 Salary. For services performed during the term
------
of Employee's employment with the Company, the Company shall
pay Employee an annual salary (prorated for any portion of a
year), payable in equal periodic installments not less than
<PAGE>
monthly, of $500,000, subject to annual review by the
Compensation Committee of the Board of Directors of the
Company.
3.2 Bonus. Employee will be eligible to participate
-----
in the Company's bonus plan on the same basis as other
executives. Employee's bonuses for the Company's 1994 fiscal
year and for fiscal years thereafter will be up to 100 percent
of his annual salary, to be determined upon the achievement of
financial objectives approved in advance by the Company's Board
of Directors.
3.3 Insurance/Profit Sharing. Employee shall be
------------------------
entitled to participate as an executive officer in all existing
Company insurance, profit sharing and other benefit plans in
which executive officers may participate, including the
Company's Excess Deferral Plan, on the same basis as other
executive officers of the Company.
3.4 Long Term Disability Benefits. The Company will
-----------------------------
provide to Employee the long term disability benefits described
in Appendix A to this Agreement. This benefit is in addition
to benefits under any group plan purchased by the Employee. In
the event of Total Disability as defined in Appendix A,
Employee's salary provided for in Paragraph 3.1, above, will be
continued during the elimination period.
3.5 Retiree Medical Benefits. After termination of
------------------------
Employee's employment for any reason after reaching age 55, the
Company will pay Employee or his present spouse if she survives
<PAGE>
him, as applicable, a medical supplement to the extent
determined as follows:
(a) The supplement shall compensate
for the premium value to Employee of
medical coverage comparable to that
provided under the Company's program
applicable to retirees generally (the Fred
Meyer Plan) during any period in which the
following applies:
(1) Neither Employee nor
his surviving spouse is eligible
for coverage under the Fred Meyer
Plan.
(2) Neither Employee nor
his surviving spouse is eligible
under a plan of a successor
employer for medical benefits
that are reasonably comparable to
benefits under the Fred Meyer
Plan.
(3) Employee is at least 55
years old.
(b) The supplement shall not exceed
the smallest of the following amounts, as
applicable, reduced by the employee cost
applicable at the time under the Fred Meyer
<PAGE>
Plan (references to Employee shall include
his present spouse):
(1) The cost of COBRA
continuation coverage available
from the Company that Employee
could have received by timely
election.
(2) The cost to Employee for
coverage if Employee had timely
exercised all available conversion
rights under the Company's medical
program for active employees.
(3) The cost to Employee of the
coverage actually in effect for
Employee from time to time to the
extent the coverage is reasonably
comparable to coverage under the Fred
Meyer Plan at the time.
(c) The supplement shall be paid only
with respect to benefits Employee would
have received under the Fred Meyer Plan if
Employee had terminated when eligible under
that Plan.
(d) The supplement shall be paid in
cash to Employee or his surviving spouse
or, at the Company's election, by direct
<PAGE>
payment of the appropriate portion of the
cost of coverage. The amount paid shall
constitute compensation income to Employee
or his surviving spouse, shall be reported
on IRS form W-2 and any applicable state
form, and shall be subject to all
applicable state and federal withholding as
non-qualified deferred compensation.
4. Severance.
---------
4.1 In the event Employee is terminated by the
Company for any reason other than for "cause," death or
permanent disability, employee shall be entitled to payment of
two years of compensation at Employees last determined salary
(payable on the Company's normal payroll dates and without
interest).
4.2 "Cause" is defined for the purposes of this
Agreement as (a) embezzlement or fraud against the Company; (b)
conviction of a felony which in the judgment of the Board of
Directors of the Company adversely affects the business or
reputation of the Company; (c) conduct in wanton and knowing
disregard of corporate policy; or (d) willful and continuous
failure, in the judgment of the Board of Directors, to perform
substantially the reasonably assigned duties with the Company
after written notice and reasonable opportunity to perform.
<PAGE>
5. Pension and Benefits.
--------------------
5.1 Normal Retirement Benefit. Employee's normal
-------------------------
retirement benefit shall be a pension starting at the end of
the first month after age 62 and continuing for Employee's life
equal to $10,805 per month. The benefit shall be reduced by 5
percent for each year by which Employee's total completed years
of employment is less than 14, as shown on the following
Schedule:
Accrued Benefit
---------------
Completed Years Employment Pension Amount
of Employment Year End per month at 62
- --------------- ---------- ---------------
2 8/31/93 $ 4,322
3 8/31/94 4,862
4 8/31/95 5,402
5 8/31/96 5,943
6 8/31/97 6,483
7 8/31/98 7,023
8 8/31/99 7,564
9 8/31/00 8,104
10 8/31/01 8,644
11 8/31/02 9,184
12 8/31/03 9,724
13 8/31/04 10,265
14 8/31/05 10,805
5.2 Early Retirement Benefit. If employment is
------------------------
terminated by Employee or Company for any reason before normal
retirement date, Employee may elect to receive the accrued
normal retirement benefit starting at the end of any month
after age 55. If benefits start before the end of the first
month after age 62, the amount from the Schedule in 5.1 shall
be reduced 5/12 of one percent for each month by which the
benefit starts early.
<PAGE>
5.3 Spouse's Death Benefit. If Employee dies
----------------------
leaving a surviving spouse to whom he is now married, the
spouse shall receive a monthly pension for her life as follows:
(a) If Employee had retired and was
receiving benefits or dies during the first
month for which benefits were to be paid,
one half of Employee's monthly benefit
shall continue to the spouse.
(b) If (a) does not apply, the spouse
may elect to start a benefit as of the end
of any month after the later of the date of
death or the date Employee would have
reached age 55. The benefit shall be one
half of the amount Employee would have
received if he had terminated just before
death and elected to start benefits at the
date benefits start to the spouse.
5.4 Additional Benefit. Retirement and Spouse's
------------------
death benefit under 5.1 through 5.3 shall be in addition to and
shall not reduce or be reduced by any benefits under the
Supplemental Income Plan, the Excess Deferral Plan, the Profit
Sharing Plan or any other plan maintained by the Company or an
affiliate.
<PAGE>
6. Miscellaneous Benefits.
----------------------
6.1 Club Membership. The Company shall pay the cost
---------------
of one club membership for Employee during the term of
Employee's employment with the Company.
6.2 Automobile. The Company will provide an
----------
automobile for Employee's use while he is employed by the
Company. The Company will also pay all operating expenses
associated with the automobile.
6.3 Vacation. Employee will be entitled to five
--------
weeks of vacation annually.
6.4 Medical Expenses. Beginning on the date
----------------
Employee commences employment with the Company, the Company
will provide reimbursement for medical expenses of Employee and
his dependents under the Company's medical reimbursement plan,
without any waiting or qualification period and without
exclusions for any existing conditions.
7. Successors and Assigns; Entire Agreement.
----------------------------------------
7.1 The rights and benefits of Employee under this
Agreement are personal to him and, except as may be set forth
herein, may not be transferred or assigned voluntarily or
involuntarily.
7.2 This Agreement shall be binding on the Company,
its successors and assigns, including any person acquiring
control of the Company's business and operations.
7.3 This Agreement contains the entire agreement and
understanding by and between the Employee and the Company with
<PAGE>
respect to the employment of Employee and the payments provided
for in this Agreement shall be in lieu of any other claims of
Employee relating to his employment or benefits, including
claims relating to termination of employment.
8. Applicable Law.
--------------
This Agreement shall be construed in accordance with
the laws of the State of Oregon.
AGREEMENT DATED AUGUST 27, 1991 EXECUTED AS FOLLOWS:
- ---------------------------------------------------
FRED MEYER, INC.
By KENNETH THRASHER, SR. V.P.
-------------------------------
ROBERT G. MILLER
----------------------------------
Robert G. Miller
AMENDMENT NO. 1 DATED AUGUST 1, 1994 EXECUTED AS FOLLOWS:
- --------------------------------------------------------
FRED MEYER, INC.
By ROGER A. COOKE
-------------------------------
Executed: July 14, 1994
ROBERT G. MILLER
----------------------------------
Robert G. Miller
Executed: July 19, 1994
EXHIBIT 10-J
SECOND LEASE MODIFICATION AGREEMENT
THIS SECOND LEASE MODIFICATION AGREEMENT ("Agreement") is
made and entered into this 16th day of August, 1994, by and
between REAL ESTATE PROPERTIES LIMITED PARTNERSHIP, an Oregon
limited partnership ("Landlord"), and FRED MEYER, INC., a
Delaware corporation, ("Tenant").
R E C I T A L S
This Agreement is made with reference to the following facts
and objectives:
A. As of October 22, 1986, Landlord (formerly Fred Meyer
Real Estate Properties, Ltd.) and Tenant entered into a lease for
the real property located at 2200 Baseline Street, Cornelius,
Oregon (the "Original Lease"), and more particularly described in
the lease. The Original Lease has been amended by Lease
Modification Agreement dated February 7, 1992. Such documents
are hereinafter collectively referred to as the "Lease".
B. Landlord and Tenant desire to amend and modify the
Lease as set forth below.
C. Capitalized terms not otherwise defined in this
Agreement shall have the same meaning as set forth in the Lease.
NOW, THEREFORE, in consideration of the foregoing facts and
for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Landlord and Tenant hereby amend
and modify the Lease as follows:
1. Term; Fixed Rent. Schedule A-2 to the Lease is hereby
---------------- ------------
deleted and Schedule A-2.1, attached hereto and incorporated
--------------
herein by reference, is substituted in lieu thereof.
2. Effective Date. The provisions of this Agreement shall
--------------
be effective as of May 1, 1994.
4. Ratification. Except as herein modified, the Lease is
------------
unchanged and remains in full force and effect.
5. Successors and Assigns. Each and all of the covenants,
----------------------
terms, agreements and obligations of this Agreement shall extend
to and bind and inure to the benefit of the successors and/or
assigns of said parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the respective dates set opposite their signatures
below, but this Agreement on behalf of such party shall be deemed
to have been dated as of the date first above written.
LANDLORD:
REAL ESTATE PROPERTIES
LIMITED PARTNERSHIP,
an Oregon limited partnership
By FMGP Associates,
an Oregon limited partnership,
Its General Partner
By FMGP Incorporated,
a Delaware corporation,
Its General Partner
Date: August 31, 1994 By DAVID W. RAMUS
--------- --------------------------------
David W. Ramus
--------------------------------
(typed or printed name)
Its Vice President
----------------------------
TENANT:
FRED MEYER, INC.,
a Delaware corporation
Date: August 9, 1994 By SCOTT L. WIPPEL
-------- --------------------------------
Scott L. Wippel
--------------------------------
(typed or printed name)
Its Senior Vice President
----------------------------
<PAGE>
SCHEDULE A-2.1
TO LEASE DATED OCTOBER 22, 1986, AS AMENDED,
BETWEEN REAL ESTATE PROPERTIES LIMITED PARTNERSHIP, LANDLORD,
AND FRED MEYER, INC., TENANT
1. Primary Term Expiration Date. December 30, 2012.
----------------------------
2. Annual Rent During Primary Term.
-------------------------------
2.1 Fixed Rent. The Fixed Rent shall be as follows:
Period Annual Fixed Rent
------ -----------------
1. 05/01/1994 - 12/31/1997 $475,000
2. 01/01/1998 - 12/31/2002 $484,462
3. 01/01/2003 - 12/31/2007 $494,872
4. 01/01/2008 - 12/31/2012 $506,323
2.2 Percentage Rent. One-half percent (1/2%) of sales
over Eighteen Million Dollars ($18 Million).
3. Renewal Options. Two (2) ten (10)-year Renewal Terms.
---------------
4. Annual Rent During Renewal Terms.
--------------------------------
4.1 Fixed Rent.
4.1.1 The Fixed Rent during the first Renewal Term
shall be Five Hundred Sixty Thousand Dollars ($560,000.00) plus
the amount of annual base rent paid under the Underlying Lease in
excess of Ninety-Four Thousand Six Hundred Forty-Seven Dollars
($94,647.00);
4.1.2 The Fixed Rent during the second Renewal
Term shall be Six Hundred Forty-Five Thousand Dollars
($645,000.00) plus the amount of annual base rent paid under the
Underlying Lease in excess of Ninety-Four Thousand Six Hundred
Forty-Seven Dollars ($94,647.00).
4.2 Percentage Rent. One-half percent (1/2%) of sales
over Eighteen Million Dollars ($18 Million).
EXHIBIT 10-J
SECOND LEASE MODIFICATION AGREEMENT
THIS SECOND LEASE MODIFICATION AGREEMENT ("Agreement") is
made and entered into this 13th day of April, 1994, by and
between REAL ESTATE PROPERTIES LIMITED PARTNERSHIP, an Oregon
limited partnership ("Landlord"), and FRED MEYER OF ALASKA, INC.,
an Alaska corporation ("Tenant").
R E C I T A L S
This Agreement is made with reference to the following facts
and objectives:
A. As of October 22, 1986, Landlord (formerly Fred Meyer
Real Estate Properties, Ltd.) and Tenant entered into a lease for
the real property located at 19 College Road, Fairbanks, Alaska
(the "Original Lease"), and more particularly described in the
lease. The Original Lease has been amended by Lease Modification
Agreement dated February 7, 1992. Such documents are hereinafter
collectively referred to as the "Lease".
B. Landlord and Tenant desire to amend and modify the
Lease as set forth below.
C. Capitalized terms not otherwise defined in this
Agreement shall have the same meaning as set forth in the Lease.
NOW, THEREFORE, in consideration of the foregoing facts and
for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Landlord and Tenant hereby amend
and modify the Lease as follows:
1. Term; Fixed Rent. Schedule A to the Lease is hereby
---------------- ----------
deleted and Schedule A-1, attached hereto and incorporated herein
------------
by reference, is substituted in lieu thereof.
2. Option to Cancel. At any time during the Primary Term,
----------------
Tenant shall have the option to cancel the Lease upon delivery of
written notice (the "Cancellation Notice") and payment of a lease
cancellation fee (the "Lease Cancellation Fee") calculated in
accordance with Schedule B attached hereto and incorporated
----------
herein. Upon Tenant's exercise of the option to cancel, the
Lease shall terminate on the last day of the eighteenth (18th)
full calendar month following delivery of the Cancellation Notice
(the "Early Termination Date"). The Lease Cancellation Fee shall
be due and payable on the Early Termination Date.
3. Effective Date. The provisions of this Agreement shall
--------------
be effective as of February 1, 1994.
<PAGE>
4. Ratification. Except as herein modified, the Lease is
------------
unchanged and remains in full force and effect.
5. Successors and Assigns. Each and all of the covenants,
----------------------
terms, agreements and obligations of this Agreement shall extend
to and bind and inure to the benefit of the successors and/or
assigns of said parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the respective dates set opposite their signatures
below, but this Agreement on behalf of such party shall be deemed
to have been dated as of the date first above written.
LANDLORD:
REAL ESTATE PROPERTIES
LIMITED PARTNERSHIP,
an Oregon limited partnership
By FMGP Associates,
an Oregon limited partnership,
Its General Partner
By FMGP Incorporated,
a Delaware corporation,
Its General Partner
Date: March 29, 1994 By PETER F. BECHEN
-------- --------------------------------
Peter F. Bechen
-----------------------------------
(typed or printed name)
Its Vice President
-------------------------------
TENANT:
FRED MEYER OF ALASKA, INC.,
an Alaska corporation
Date: April 13, 1994 By SCOTT L. WIPPEL
-------- -----------------------------------
Scott L. Wippel
-----------------------------------
(typed or printed name)
Its Senior Vice President
-------------------------------
Date: __________, 1994 By ________________________________
___________________________________
(typed or printed name)
Its _______________________________
<PAGE>
SCHEDULE A-1
TO LEASE DATED OCTOBER 22, 1986, AS AMENDED,
BETWEEN REAL ESTATE PROPERTIES LIMITED PARTNERSHIP, LANDLORD,
AND FRED MEYER OF ALASKA, INC., TENANT
1. Primary Term Expiration Date. June 29, 2009.
----------------------------
2. Annual Rent During Primary Term.
-------------------------------
2.1 Fixed Rent. Three Hundred Sixty-Two Thousand Nine
Hundred Sixty Dollars ($362,960.00).
2.2 Percentage Rent. None.
3. Renewal Options. One (1) ten (10)-year Renewal Term.
---------------
4. Annual Rent During Renewal Term.
-------------------------------
4.1 Fixed Rent. Four Hundred Fifty-Three Thousand
Seven Hundred Dollars ($453,700.00), plus the amount of annual
base rent paid under the Underlying Lease in excess of One
Hundred Nine Thousand Three Hundred Twenty-Two and 45/100 Dollars
($109,322.45). (This amount includes the adjustment to the Fixed
Rent, pursuant to Paragraph 5 below, that occurs on the
commencement of the Renewal Term; however, the Fixed Rent will
still adjust pursuant to Paragraph 5 below as a result of any
other adjustments in the base rent under the Underlying Lease
during the Renewal Term.)
4.2 Percentage Rent. None.
5. Adjustments To Fixed Rent. During the Primary Term and
-------------------------
the Renewal Term, if any, the Fixed Rent amount is subject to
adjustment on the same basis and in the same dollar amount of any
adjustment in the base rental required to be paid under the
Underlying Lease in effect as of February 1, 1994. (The Fixed
Rent shall not be adjusted as a result of any subsequent
modifications of the Underlying Lease.) For example, if the rent
under the Underlying Lease increased by Fifty Thousand Dollars
($50,000.00) per annum, then the Fixed Rent under the Lease would
increase by Fifty Thousand Dollars ($50,000.00).
<PAGE>
SCHEDULE B
TO LEASE DATED OCTOBER 22, 1986, AS AMENDED,
BETWEEN REAL ESTATE PROPERTIES LIMITED PARTNERSHIP, LANDLORD,
AND FRED MEYER OF ALASKA, INC., TENANT
LEASE CANCELLATION FEE SCHEDULE
EXHIBIT 10Q
LEASE CANCELLATION AGREEMENT
THIS LEASE CANCELLATION AGREEMENT (this "Agreement") is made
as of this 17th day of January, 1995, by and between REAL ESTATE
PROPERTIES LIMITED PARTNERSHIP, an Oregon limited partnership
("Lessor"), and FRED MEYER, INC., a Delaware ("Lessee").
RECITALS
This Agreement is entered into with reference to and upon
the basis of the following facts, understandings and agreements:
A. By a certain Lease Agreement dated October 22, 1986,
Lessor's predecessor demised to Lessee certain real property and
the improvements located thereon which real property is more
particularly described in Exhibit A, attached hereto and
---------
incorporated herein by reference (the "Property") Said Lease
Agreement was subsequently amended by Lease Modification
Agreement dated February 7, 1992. Said Lease Agreement, as
amended, is hereinafter referred to as the "Lease".
B. Lessor has entered into an agreement to sell the
Property to Walter W. McMonies, Jr. and Nancy E. Duhnkrack
(collectively "Buyer") which agreement is conditioned upon the
cancellation of the Lease and the investigation, and, if
necessary, remediation of certain environmental matters on the
Property.
C. Following negotiations, Lessor and Lessee have reached
agreement to terminate the Lease effective as of and concurrent
with the close of escrow transferring fee title to the Property
to the Buyer, provided that, and as a condition to termination,
Lessee performs certain environmental investigations and, if
necessary, remediation.
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, receipt of which is hereby
acknowledged, Lessor and Lessee hereby agree as follows:
1. Effective Date. This Agreement and each and every
--------------
provision hereof shall be effective as of the date first
hereinabove written (the "Effective Date").
2. Agreement to Cancel Lease.
-------------------------
(a) Subject to and on the terms and conditions herein
set forth, Lessor and Lessee hereby agree to cancel the Lease,
which cancellation shall be effective as of the date of Closing
of the sale of the Property by Lessor to Buyer (the "Closing
Date").
<PAGE>
(b) The cancellation of the Lease shall be
accomplished through an escrow (the "Escrow") which Lessor has
established or will establish with First American Title Insurance
Company (the "Escrow Holder") at 200 S. W. Market Street, Suite
1776, Portland, Oregon 97201-5786, Attention: Mitch Steeves.
(c) Cancellation of this Lease shall occur on the
Closing Date. In the event the Closing Date has not occurred
within ninety (90) days of the Effective Date, Lessee may
terminate this Agreement by delivering written notice thereof to
Lessor and the Lease shall remain in full force and effect,
without modification, and neither party shall have any further
liability hereunder.
3. Consideration. The consideration which Lessee shall
-------------
provide to Lessor for the cancellation of the Lease shall be Two
Hundred Seventy-Five Thousand Dollars ($275,000.00), which Lessee
shall pay to Lessor through Escrow on the Closing Date.
4. Remediation Condition. Termination of the Lease is
---------------------
expressly conditioned upon Lessee performing or causing to be
performed the environmental remediation specified in clauses (a)
through (c) below at the Property (collectively, the
"Remediation") to the satisfaction of Lessor:
(a) Remediation of all environmental contamination
disclosed in the Service Agreement dated August 31, 1994 between
Hahn and Associates, Inc. and Lessee, a copy of which is attached
hereto as Exhibit B and incorporated herein by reference (the
---------
"Hahn Agreement");
(b) Completion of additional investigations as
detailed in the Hahn Agreement, and remediation of any
environmental contamination disclosed by such additional
investigations; and
(c) Abatement of all asbestos in the building located
on the Property.
Upon completion of the Remediation, Lessee shall
deliver to Lessor the reports of its environmental consultants
showing that the Remediation has been completed in accordance
with the laws of the State of Oregon and with generally accepted
environmental practice in the State of Oregon. Lessor shall
forward such information to Buyer within thirty (30) days
following receipt by Lessor of such reports, and Lessor shall,
after consulting with Buyer, either approve or disapprove the
environmental condition of the Property. In the event Lessor
disapproves the environmental condition of the Property, Lessor
shall give Lessee written notice thereof, which notice shall
specify in reasonable detail the reason for such disapproval.
Failure to give written notice of disapproval within thirty-five
(35) days or receipt of such reports shall be deemed approval.
In the event of disapproval, termination of the Lease is
conditioned upon Lessee taking such steps or performing such
<PAGE>
additional remediation as is necessary to satisfy Lessor's
objections.
If at any time Lessee determines that completion of the
Remediation (or performance of any additional work requested by
Lessor based on review of the reports as provided above) to
Lessor's satisfaction would be too costly or difficult, Lessee
shall so notify Lessor, in which case this Agreement shall be
terminated, and the Lease shall continue in full force and effect
without modification; provided, however, that Lessor may preserve
this Agreement by notifying Lessee, within ten (10) days of
receipt of Lessee's termination notice, that Lessee waives the
condition specified in this Section 4, in which case the Lease
---------
shall be terminated in accordance with this Agreement despite the
nonsatisfaction of such condition.
5. Mutual General Releases; Reciprocal Indemnities.
-----------------------------------------------
As of the Closing Date, Lessor and Lessee each hereby waive,
release and discharge each other from any further obligation or
liability whatsoever under the Lease, whether known or unknown,
suspected or unsuspected, or foreseeable or unforeseeable.
The mutual releases given hereunder are intended to and
shall be full and general releases of any and all claims, rights,
demands, actions, causes of action, indebtedness, obligations,
damages, and liabilities of every kind, nature and character
whatsoever, whether or not known, suspected or claimed, of which
either party hereto ever had, now has, or may hereafter have
against the other by reason of any act, omission, matter, cause,
or thing, including but not limited to any act, omission, cause,
matter or thing directly or indirectly arising out of or in
connection with the Lease excepting the environmental condition
of the Property. Each of the parties hereto expressly waives any
benefits due to it under the provisions of any law which
provides, in pertinent part that a general release does not
extend to claims which the creditor does not know or suspect to
exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with
the debtor.
The parties understand that the facts in respect of which
the release made in this instrument is given may hereafter turn
out to be other than or different from the facts in that
connection now known or believed by the parties to be true; and
the parties hereby accept and assume the risk of all facts
turning out to be different and agree that this release shall be
and remain in all respects effective and not subject to
termination or recision by virtue of any such difference in
facts.
6. Successors and Assigns. This Agreement shall bind and
----------------------
inure to the benefit of each of the parties hereto and their
respective heirs, personal representatives, successors and
assigns.
<PAGE>
7. Governing Law. This Agreement and the rights and
-------------
obligations of the parties hereunder shall be construed and
governed in accordance with the laws of the State of Oregon.
8. Attorneys' Fees. In the event either party brings an
---------------
action at law or in equity to interpret, enforce, or seek redress
for the breach of this Agreement, the prevailing party in such
action shall be entitled to recover from the other its attorneys'
fees and all costs and fees (including expert witness fees and
all cost of appeal) incurred in said action in addition to all
other appropriate relief.
9. Integration; Modification; Waivers. This Agreement
----------------------------------
constitutes the complete agreement and understanding by and
between the parties with respect to the subject matter hereof and
supersedes any and all prior representations, understandings and
agreements, whether written or oral. This Agreement may be
modified only by an instrument in writing signed by each of the
parties hereto. No provision of this Agreement may be waived,
except in a writing signed by the party to be charged with
waiver.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the respective dates set opposite their signatures
below, but this Agreement on behalf of such party shall be deemed
to have been dated as of the date first above written.
LESSOR:
REAL ESTATE PROPERTIES LIMITED
PARTNERSHIP,
an Oregon limited partnership
By FMGP Associates,
an Oregon limited partnership,
its General Partner
By FMGP Incorporated,
a Delaware corporation
its General Partner
Date: January 18, 1995 By RICHARD P. BUONO
--------------------------------------
Richard P. Buono
--------------------------------------
(typed or printed name)
Its Vice President
-------------------------------------
<PAGE>
LESSEE:
FRED MEYER, INC.
a Delaware corporation
Date: January 17, 1995 By SCOTT L. WIPPEL
--------------------------------------
Scott L. Wippel
--------------------------------------
(typed or printed name)
Its Senior Vice President -
Corporate Facilities
-------------------------------------
Date: __________, 1995 By ______________________________________
_________________________________________
(typed or printed name)
Its _____________________________________
(Acknowledgments on next page)
<PAGE>
(Acknowledgment for Lessor)
STATE OF ______________ )
) ss.
County of _____________ )
On __________, 1995, before me, ___________________________,
Notary Public, personally appeared ____________________________
_____________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/
their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
________________________________________
Notary Public in and for said
County and State
My Commission Expires: _________________
(Acknowledgment for Lessee)
STATE OF ______________ )
) ss.
County of _____________ )
On __________, 1995, before me, ___________________________,
Notary Public, personally appeared ____________________________
_____________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/
their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
________________________________________
Notary Public in and for said
County and State
My Commission Expires: _________________
<PAGE>
EXHIBIT "A"
Legal Description
PARCEL I:
- --------
Beginning at the Southeast corner of Lot 19, Block 277, COUCH'S
ADDITION TO THE CITY OF PORTLAND; thence North 100.11 feet; thence
West 100 feet; thence South 100.11 feet; thence East 100 feet to the
beginning, being part of Lot 16, Block 276 and parts of Lots 19 and
20, Block 277, COUCH'S ADDITION TO THE CITY OF PORTLAND, and part of
Block 28, KINGS SECOND ADDITION TO THE CITY OF PORTLAND, in the City
of Portland, County of Multnomah and State of Oregon.
PARCEL II:
- ---------
The following described real property in the City of Portland, County
of Multnomah and State of Oregon, bounded and described as follows,
to wit:
Part of Lot 16, Block 276, COUCH'S ADDITION TO THE CITY OF PORTLAND,
according to plat filed in the Office of the County Clerk of
Multnomah County, Oregon by Board of School Trustees on the 9th day
of September, 1905, recorded in Volume 326, page 75, and tract
adjoining the said parcel of real property being otherwise described
by metes and bounds as follows:
Commencing on the East line of NW 20th Avenue, formerly N. 19th
Street in the City of Portland at the Southwest corner of the tract
of parcel of real property heretofore conveyed by the Board of School
Trustees, a corporation, to Frances A. Gill, said point being 176.25
feet South of the South line of NW Everett Street; running thence
East along the South line of the Frances A. Gill tract, 100 feet;
thence South parallel with the East line of NW 20th Avenue, 50 feet;
thence West parallel with the South line of NW Everett Street 100
feet to the East line of NW 20th Avenue; thence North along the East
line of NW 20th Avenue, 50 feet to the place of beginning.
PARCEL III:
- ----------
Lot 17, Block 276, Subdivision of Blocks 276, 277 and 278, COUCH'S
ADDITION TO THE CITY OF PORTLAND, in the City of Portland, County of
Multnomah and State of Oregon.
<PAGE>
EXHIBIT B
Copy of Agreement
Property No. 304-01/TW-2
Portland, Oregon
EXHIBIT 10R
LEASE
DATED: November 16, 1994
BETWEEN: REAL ESTATE PROPERTIES LIMITED PARTNERSHIP,
an Oregon limited partnership LANDLORD
AND: FRED MEYER, INC.,
a Delaware corporation TENANT
Tenant wishes to lease from Landlord the following
described property, hereinafter referred to as "the Premises":
Approximately 3,490 square feet of warehouse space
located in North Basin-Swan Island Warehouse, 3205 N. Webster,
Portland, Oregon 97217 and as further described on the attached
Exhibit A.
If the Premises consist of a portion but not all of a
building, the building housing the Premises is hereinafter
referred to as "the Building."
Landlord leases the Premises to Tenant for a term of 60
months commencing December 1, 1994 and continuing through
November 31, 1999 at a base rent of Two Thousand and No/100
Dollars ($2,000.00) per month.
Rent for the first month of the lease term has been paid upon
execution of this lease. All rent, including base rent together
with the charges, taxes and expenses to be paid to Landlord
specified in paragraphs 3 and 4 of this lease, is payable in
advance on the first day of each calendar month. If Landlord
consents, Tenant may occupy the Premises prior to such
commencement date upon payment of rent on a prorated basis and
compliance with all terms of this lease.
Delivery of possession shall occur when the Premises
are occupied by Tenant or are ready to be occupied by Tenant with
all work to be performed by Landlord substantially completed. No
notice shall be required from Landlord if the Premises are ready
on the date set for commencement of the term or on the first
business day thereafter. If Landlord is unable to deliver
possession of the Premises to Tenant because of strikes, acts of
God, or any other cause beyond Landlord's control, then Tenant
may take possession when Landlord notifies Tenant that the
Premises are ready for possession, and the term of this lease
shall commence on the first day of the first month following such
date and continue for the specified number of months thereafter,
notwithstanding the commencement and termination dates stated
above. Tenant shall owe no rent until the Premises are ready for
possession. Landlord shall have no liability for such delays in
delivery of possession, and neither party shall have the right to
terminate except that Landlord may cancel this lease without
liability if permission to construct, use, or furnish necessary
<PAGE>
utilities to the Premises is denied or revoked by any
governmental agency or public utility with such authority.
This lease is subject to the following additional terms
to which the parties agree:
1. Use of the Premises.
(a) Tenant shall use the Premises only for the purpose
of conducting the following business:
Truck maintenance and parking for trucks.
If such use is prevented by any law or governmental regulation,
Tenant may use the Premises for other reasonable uses.
(b) In connection with its use, Tenant shall at its
expense comply with all applicable laws, ordinances, and
regulations of any public authority, including those requiring
alteration of the Premises because of Tenant's specific use;
shall create no nuisance nor allow any objectionable liquid,
odor, or noise to be emitted from the Premises; shall store no
gasoline or other highly combustible materials on the Premises
which would violate any applicable fire code or regulation nor
conduct any operation that will increase Landlord's fire
insurance rates for the Premises; and shall not overload the
floors or electrical circuits of the Premises. Landlord shall
have the right to approve the installation of any power-driven
machinery by Tenant and may select a qualified electrician whose
opinion will control regarding electrical circuits and a
qualified engineer or architect whose opinion will control
regarding floor loads. Allowable ground floor load shall be 300
pounds per square foot.
(c) Tenant may erect a sign stating its name,
business, and product after first securing Landlord's written
approval of the size, color, design, wording, and location, and
all necessary governmental approvals. No signs shall be painted
on the Building or exceed the height of the Building. All signs
installed by Tenant shall be removed upon termination of this
lease with the sign location restored to its former state.
(d) Tenant shall make no alterations, additions, or
improvements to the Premises or change the color of the exterior
without Landlord's prior written consent and without a valid
building permit issued by the appropriate governmental agency.
Upon termination of this lease, any such alterations, additions,
or improvements (including without limitation all electrical,
lighting, plumbing, heating and air-conditioning equipment,
doors, windows, partitions, drapery, carpeting, shelving,
counters, and physically attached fixtures) shall at once become
part of the realty and belong to Landlord unless the terms of the
applicable consent provide otherwise, or Landlord requests that
part or all of the additions, alterations, or improvements be
removed. In such case, Tenant shall at its sole cost and expense
promptly remove the specified additions, alterations, or
improvements and repair and restore the Premises to its original
condition.
<PAGE>
2. Security Deposit.
Tenant has deposited with Landlord the sum of
$2,000.00, hereinafter referred to as "the Security Deposit," to
secure the faithful performance by Tenant of each term, covenant,
and condition of this lease. If Tenant shall at any time fail to
make any payment or fail to keep or perform any term, covenant,
and condition on its part to be made or performed or kept under
this lease, Landlord may, but shall not be obligated to and
without waiving or releasing Tenant from any obligation under
this lease, use, apply or retain the whole or any part of the
Security Deposit (i) to the extent of any sum due to Landlord; or
(ii) to make any required payment on Tenant's behalf; or (iii) to
compensate Landlord for any loss, damage, attorneys' fees, or
expense sustained by Landlord due to Tenant's default. In such
event, Tenant shall, within 5 days of written demand by Landlord,
remit to Landlord sufficient funds to restore the Security
Deposit to its original sum; Tenant's failure to do so shall be a
material breach of this lease. Landlord shall not be required to
keep the Security Deposit separate from its general funds, and
Tenant shall not be entitled to interest on such deposit. Should
Tenant comply with all of the terms, covenants, and conditions of
this lease and at the end of the term of this lease leave the
Premises in the condition required by this lease, then the
Security Deposit, less any sums owing to Landlord, shall be
returned to Tenant (or, at Landlord's option, to the last
assignee of Tenant's interests hereunder) within 30 days after
the termination of this lease and vacancy of the Premises by
Tenant.
3. Utility Charges; Maintenance.
(a) Tenant shall pay when due all charges for
electricity, natural gas, water, garbage collection, janitorial
service, sewer, and all other utilities of any kind furnished to
the Premises during the lease term. If charges are not
separately metered or stated, Landlord shall apportion the
utility charges on an equitable basis. Landlord shall have no
liability resulting from any interruption of utility services
caused by fire or other casualty, strike, riot, vandalism, the
making of necessary repairs or improvements, or any other cause
beyond Landlord's reasonable control. Tenant shall control the
temperature in the Premises to prevent freezing of any sprinkler
system.
(b) Landlord shall repair and maintain the roof,
gutters, downspouts, exterior walls, building structure,
foundation, exterior paved areas, and curbs of the Premises in
good condition. Except for such obligations of Landlord, Tenant
shall keep the Premises neatly maintained and in good order and
repair. Tenant's responsibility shall include maintenance and
repair of the electrical system, plumbing, drainpipes to sewers,
air-conditioning and heating systems, overhead and personnel
doors, and the replacement of all broken or cracked glass with
glass of the same quality. Tenant shall refrain from any
discharge that will damage the septic tank or sewers serving the
Premises.
<PAGE>
(c) If the Premises have a separate entrance, Tenant
shall keep the sidewalks abutting the Premises or the separate
entrance free and clear of snow, ice, debris, and obstructions of
every kind.
4. Taxes, Assessments, and Operating Expenses.
(a) In conjunction with monthly rent payments, Tenant
shall each month pay a sum representing Tenant's proportionate
share of real property taxes and operating expenses for the
Premises. Such amount shall annually be estimated by Landlord in
good faith to reflect actual or anticipated costs. Upon
termination of this lease or at periodic intervals during the
term hereof, Landlord shall compute its actual costs for such
expenses during such period. Any overpayment by Tenant shall be
credited to Tenant, and any deficiency shall be paid by Tenant
within 15 days after receipt of Landlord's statement. Landlord's
records of expenses for taxes and operating expenses may be
inspected by Tenant at reasonable times and intervals.
(b) Tenant's proportionate share of real property
taxes shall mean that percentage of the total assessment
affecting the Premises which is the same as the percentage which
the rentable area of the Premises bears to the total rentable
area of all buildings covered by the tax statement. Tenant's
proportionate share of operating expenses for the Building shall
be computed by dividing the rentable area of the Premises by the
total rentable area of the Building. If in Landlord's reasonable
judgment either of these methods of allocation results in an
inappropriate allocation to Tenant, Landlord shall select some
other reasonable method of determining Tenant's proportionate
share.
(c) Real property taxes charged to Tenant hereunder
shall include all general real property taxes assessed against
the Premises or payable during the lease term, installment
payments on Bancrofted special assessments, and any rent tax, tax
on Landlord's interest under this lease, or any tax in lieu of
the foregoing, whether or not any such tax is now in effect.
Tenant shall not, however, be obligated to pay any tax based upon
Landlord's net income.
(d) Operating expenses charged to Tenant hereunder
shall include all usual and necessary costs of operating and
maintaining the Premises, Building, and any surrounding common
areas including, but not limited to, the cost of all utilities or
services not paid directly by Tenant, property insurance,
property management, maintenance and repair of landscaping,
parking areas, and any other common facilities. Operating
expenses shall not include roof replacement or correction of
structural deficiencies of the Building.
5. Parking and Storage Areas.
(a) Tenant, its employees, and customers shall have
the exclusive right to use any private parking spaces immediately
adjacent to the Premises. Tenant shall control the use of such
parking spaces so that there will be no unreasonable interference
with the normal traffic flow, and shall permit no parking on any
<PAGE>
landscaped or unpaved surface. Under no circumstances shall
trucks serving the Premises be permitted to block streets.
(b) Tenant shall not store any materials, supplies, or
equipment outside in any unapproved or unscreened area. If
Tenant erects any visual barriers for storage areas, Landlord
shall have the right to approve the design and location. Trash
and garbage receptacles shall be kept covered at all times.
6. Tenant's Indemnification; Liability Insurance.
(a) Tenant shall not allow any liens to attach to the
Premises as a result of its activities. Tenant shall indemnify
and defend Landlord from any claim, liability, damage, or loss
arising out of any activity on the Premises by Tenant, its
agents, or invitees or resulting from Tenant's failure to comply
with any term of this lease.
(b) Tenant shall carry general liability insurance on
an occurrence basis with combined single limits of not less than
$1,000,000. Such insurance shall be provided by an insurance
carrier reasonably acceptable to Landlord and shall be evidenced
by a certificate delivered to Landlord stating that the coverage
will not be canceled or materially altered without 10 days'
advance written notice to Landlord. Landlord shall be named as
an additional insured on such policy.
7. Property Damage; Subrogation Waiver.
(a) If fire or other casualty causes damage to the
Building or the Premises in an amount exceeding 30 percent of the
full construction-replacement cost of the Building or Premises,
respectively, Landlord may elect to terminate this lease as of
the date of the damage by notice in writing to Tenant within 30
days after such date. Otherwise, Landlord shall promptly repair
the damage and restore the Premises to their former condition as
soon as practicable. Rent shall be reduced during the period to
the extent the Premises are not reasonably usable for the use
permitted by this lease because of such damage and required
repairs.
(b) Landlord shall be responsible for insuring the
Building, and Tenant shall be responsible for insuring its
personal property and trade fixtures located on the Premises.
(c) Neither party shall be liable to the other for any
loss or damage caused by water damage, sprinkler leakage, or any
of the risks covered by a standard fire insurance policy with
extended coverage and sprinkler leakage endorsements, and there
shall be no subrogated claim by one party's insurance carrier
against the other party arising out of any such loss.
8. Condemnation.
If a condemning authority takes the entire Premises or
a portion sufficient to render the remainder unsuitable for
Tenant's use, then either party may elect to terminate this lease
effective on the date that title passes to the condemning
authority. Otherwise, Landlord shall proceed as soon as
<PAGE>
practicable to restore the remaining Premises to a condition
comparable to that existing at the time of the taking. Rent
shall be abated during the period of restoration to the extent
the Premises are not reasonably usable by Tenant, and rent shall
be reduced for the remainder of the term in an amount equal to
the reduction in rental value of the Premises caused by the
taking. All condemnation proceeds shall belong to Landlord.
9. Assignment and Subletting.
(a) Tenant shall not assign its interest under this
lease nor sublet the Premises without first obtaining Landlord's
consent in writing. This provision shall apply to all transfers
by operation of law or through mergers and changes in control of
Tenant. No assignment shall relieve Tenant of its obligation to
pay rent or perform other obligations required by this lease and
no one assignment or subletting shall be a consent to any further
assignment or subletting.
(b) Subject to the above limitations on transfer of
Tenant's interest, this lease shall bind and inure to the benefit
of the parties, their respective heirs, successors, and assigns.
10. Default.
Any of the following shall constitute a default by
Tenant under this lease:
(a) Tenant's failure to pay rent or any other charge
under this lease within 10 days after it is due, or failure to
comply with any other term or condition within 20 days following
written notice from Landlord specifying the noncompliance. If
such noncompliance cannot be cured within the 20-day period, this
provision shall be satisfied if Tenant commences correction
within such period and thereafter proceeds in good faith and with
reasonable diligence to effect compliance as soon as possible.
(b) Tenant's insolvency; assignment for the benefit of
its creditors; Tenant's voluntary petition in bankruptcy or
adjudication as bankrupt, or the appointment of a receiver for
Tenant's properties.
11. Remedies for Default.
In case of default as described in paragraph 10 above,
Landlord shall have the right to the following remedies which are
intended to be cumulative and in addition to any other remedies
provided under applicable law:
(a) Terminate this lease without relieving Tenant from
its obligation to pay damages.
(b) Retake possession of the Premises by summary
proceedings or otherwise, in which case Tenant's liability to
Landlord for damages shall survive the tenancy. Landlord may,
after such retaking of possession, relet the Premises upon any
reasonable terms. No such reletting shall be construed as an
acceptance of a surrender of Tenant's leasehold interest.
<PAGE>
(c) Recover damages caused by Tenant's default which
shall include reasonable attorneys' fees at trial and on any
appeal therefrom. Landlord may sue periodically to recover
damages as they occur throughout the lease term, and no action
for accrued damages shall bar a later action for damages
subsequently accruing. Landlord may elect in any one action to
recover accrued damages plus damages attributable to the
remaining term of the lease equal to the difference between the
rent under this lease and the reasonable rental value of the
Premises for the remainder of the term, discounted to the time of
judgment at the rate of 6 percent per annum.
(d) Make any payment or perform any obligation
required of Tenant so as to cure Tenant's default, in which case
Landlord shall be entitled to recover all amounts so expended
from Tenant, plus interest at the rate of 10 percent per annum
from the date of the expenditure.
12. Surrender on Termination.
(a) On expiration or early termination of this lease,
Tenant shall deliver all keys to Landlord, have final utility
readings made on the date of move out, and surrender the Premises
clean and free of debris inside and out, with all mechanical,
electrical, and plumbing systems in good operating condition, all
signing removed and defacement corrected, and all repairs called
for under this lease completed. The Premises shall be delivered
in the same condition as at the commencement of the term, subject
only to depreciation and wear from ordinary use. Tenant shall
remove all of its furnishings and trade fixtures that remain its
property and restore all damage resulting from such removal.
Failure to remove said property shall be an abandonment of same,
and Landlord may dispose of it in any manner without liability.
(b) If Tenant fails to vacate the Premises when
required, including failure to remove all its personal property,
Landlord may elect either: (i) to treat Tenant as a tenant from
month to month, subject to all provisions of this lease except
the provision for term and at a base rental of 120 percent of
that specified in this lease; or (ii) to eject Tenant from the
Premises and recover damages caused by wrongful holdover.
13. Landlord's Liability.
(a) Landlord warrants that so long as Tenant complies
with all terms of this lease it shall be entitled to peaceable
and undisturbed possession of the Premises free from any eviction
or disturbance by Landlord or persons claiming through Landlord.
(b) All persons dealing with Pacific Realty
Associates, L.P. ("Partnership") must look solely to the property
and assets of Partnership for the payment of any claim against
Partnership or for the performance of any obligation of
Partnership as neither the general partner, limited partners,
employees, nor agents of Partnership assume any personal
liability for obligations entered into on behalf of Partnership
(or its predecessors in interest) and their respective properties
shall not be subject to the claims of any person in respect of
any such liability or obligation. As used herein, the words
<PAGE>
"property and assets of partnership" exclude any rights of
Partnership for the payment of capital contributions or other
obligations to it by the general partner or any limited partner
in such capacity.
14. Mortgage or Sale by Landlord; Estoppel Certificates.
(a) This lease is and shall be prior to any mortgage
or deed of trust ("Encumbrance") recorded after the date of this
lease and affecting the Building and the land upon which the
Building is located. However, if any lender holding an
Encumbrance secured by the Building and the land underlying the
Building requires that this lease be subordinate to the
Encumbrance, then Tenant agrees that this lease shall be
subordinate to the Encumbrance if the holder thereof agrees in
writing with Tenant that so long as Tenant performs its
obligations under this lease no foreclosure, deed given in lieu
of the foreclosure, or sale pursuant to the terms of the
Encumbrance, or other steps or procedures taken under the
Encumbrance shall affect Tenant's rights under this lease. If
the foregoing condition is met, Tenant shall execute the written
agreement and any other documents required by the holder of the
Encumbrance to accomplish the purposes of this paragraph.
(b) If the Building is sold as a result of foreclosure
of any Encumbrance thereon or otherwise transferred by Landlord
or any successor, Tenant shall attorn to the purchaser or
transferee, and the transferor shall have no further liability
hereunder.
(c) Either party shall within 20 days after notice
from the other execute and deliver to the other party a
certificate stating whether or not this lease has been modified
and is in full force and effect and specifying any modifications
or alleged breaches by the other party. The certificate shall
also state the amount of monthly base rent, the dates to which
rent has been paid in advance, and the amount of any security
deposit or prepaid rent. Failure to deliver the certificate
within the specified time shall be conclusive upon the party of
whom the certificate was requested that the lease is in full
force and effect and has not been modified except as may be
represented by the party requesting the certificate.
15. Disputes - Attorneys' Fees.
In the event of any litigation arising out of this
lease, the prevailing party shall be entitled to recover from the
other party, in addition to all other relief provided by law or
judgement, its reasonable costs and attorneys' fees incurred both
at and in preparation for trial and any appeal or review, such
amount to be as determined by the court(s) before which the
matter is heard. Disputes between the parties which are to be
litigated shall be tried before a judge without a jury.
16. Severability.
If any provision of this lease is held to be invalid,
unenforceable or illegal the remaining provisions shall not be
<PAGE>
affected and shall be enforced to the fullest extent permitted by
law.
17. Interest and Late Charges.
Rent not paid within 10 days of when due shall bear
interest from the date due until paid at the rate of 10 percent
per annum. Landlord may at its option impose a late charge of
$.05 for each $1.00 of rent for rent payments made more than 10
days late in addition to interest and other remedies available
for default.
18. General Provisions.
(a) Waiver by either party of strict performance of
any provision of this lease shall not be a waiver of nor
prejudice the party's right otherwise to require performance of
the same provision or any other provision.
(b) Subject to the limitations on transfer of Tenant's
interest, this lease shall bind and inure to the benefit of the
parties, their respective heirs, successors, and assigns.
(c) Landlord shall have the right to enter upon the
Premises at any time to determine Tenant's compliance with this
lease, to make necessary repairs to the Building or the Premises,
or to show the Premises to any prospective tenant or purchasers.
During the last two months of the term, Landlord may place and
maintain upon the Premises notices for leasing or sale of the
Premises.
(d) If this lease commences or terminates at a time
other than the beginning or end of one of the specified rental
periods, then the rent (including Tenant's share of real property
taxes, if any) shall be prorated as of such date, and in the
event of termination for reasons other than default all prepaid
rent shall be refunded to Tenant or paid on its account.
(e) Notices between the parties relating to this lease
shall be in writing, effective when delivered, or if mailed,
effective on the second day following mailing, postage prepaid,
to the address for the party stated in this lease or to such
other address as either party may specify by notice to the other.
Rent shall be payable to Landlord at the same address and in the
same manner.
19. Tenant Improvements.
The Premises shall be taken by Tenant in "as-is"
condition with existing improvements configured generally as
shown on the attached Exhibit A except that Tenant shall, at its
expense, install a fence as shown on Exhibit A.
<PAGE>
IN WITNESS WHEREOF, the duly authorized representatives
of the parties have executed this lease as of the day and year
first written above.
REAL ESTATE PROPERTIES LIMITED FRED MEYER, INC.,
PARTNERSHIP, an Oregon limited a Delaware corporation
partnership
By FMGP Associates, an Oregon
limited partnership, its
General Partner
By FMGP Incorporated, a
Delaware corporation,
its General Partner
By DAVID W. RAMUS By SCOTT L. WIPPEL
----------------------- ---------------------------
David W. Ramus Name _________________________
Vice President Title ________________________
By ______________________
Name ______________________
Title _____________________
Address for Notices/ Address for Legal Notices
Rent Payments to Landlord: to Tenant:
15115 S.W. Sequoia Parkway, ______________________________
Suite 200 ______________________________
Portland, Oregon 97224-7199 ______________________________
Address for Invoices
to Tenant:
______________________________
______________________________
______________________________
EXHIBIT 10S
=====================================================================
REAL ESTATE PURCHASE AND
SALE AGREEMENT
between
REC RESOLUTION COMPANY
SELLER
AND
FRED MEYER, INC.
PURCHASER
Concerning property known as the
Hazel Dell Fred Meyer Development in Vancouver, Washington,
the Hawthorne Fred Meyer Development in Portland, Oregon,
and the Raleigh Hills Fred Meyer Development in
Washington County, Oregon
=====================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. PURCHASE AND SALE OF THE PROPERTIES . . . . . . . . . . .1
2. TOTAL PURCHASE PRICE. . . . . . . . . . . . . . . . . . .2
3. EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . .2
4. PRECONDITIONS TO PURCHASER'S OBLIGATIONS. . . . . . . . .2
4.1 Investigations and Contingency Period. . . . . . . .2
4.2 Title. . . . . . . . . . . . . . . . . . . . . . . .2
4.3 Hazardous or Toxic Materials . . . . . . . . . . . .3
4.4 No Material Changes. . . . . . . . . . . . . . . . .4
5. CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . .4
6. LEGAL LOT . . . . . . . . . . . . . . . . . . . . . . . .4
7. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . .4
7.1 Closing Date . . . . . . . . . . . . . . . . . . . .4
7.2 Manner and Place of Closing. . . . . . . . . . . . .5
7.3 Prorations . . . . . . . . . . . . . . . . . . . . .5
7.4 Conveyance of Properties . . . . . . . . . . . . . .5
7.5 FIRPTA . . . . . . . . . . . . . . . . . . . . . . .5
7.6 Events of Closing. . . . . . . . . . . . . . . . . .5
7.7 Title Insurance. . . . . . . . . . . . . . . . . . .6
7.8 Lease. . . . . . . . . . . . . . . . . . . . . . . .6
8. REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . .6
8.1 Seller's Representations, Warranties
and Covenants. . . . . . . . . . . . . . . . . . . .6
8.2 Environmental Remediation - Raleigh Hills. . . . . .7
8.3 Purchaser's Representations and Warranties . . . . .9
9. CONDUCT UNTIL CLOSING; SELLER'S COOPERATION;
DISCLAIMER. . . . . . . . . . . . . . . . . . . . . . . .9
10. FAILURE TO CLOSE. . . . . . . . . . . . . . . . . . . . .9
10.1 Seller's Remedies. . . . . . . . . . . . . . . . . .9
10.2 Purchaser's Remedies . . . . . . . . . . . . . . . .9
11. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . .9
11.1 Binding Effect; Assignment . . . . . . . . . . . . .9
11.2 Time of Essence. . . . . . . . . . . . . . . . . . 10
11.3 Notices. . . . . . . . . . . . . . . . . . . . . . 10
11.4 Waiver . . . . . . . . . . . . . . . . . . . . . . 10
11.5 Attorneys' Fees. . . . . . . . . . . . . . . . . . 10
11.6 Prior Agreements . . . . . . . . . . . . . . . . . 10
11.7 Applicable Law . . . . . . . . . . . . . . . . . . 10
11.8 Brokers. . . . . . . . . . . . . . . . . . . . . . 11
11.9 Changes in Writing . . . . . . . . . . . . . . . . 11
11.10 Counterparts. . . . . . . . . . . . . . . . . . . 11
11.12 Survival. . . . . . . . . . . . . . . . . . . . . 11
11.13 Effect of Extensions and Modifications;
Backup Offers . . . . . . . . . . . . . . . . . . 11
11.14 Oregon Statutory Disclaimer . . . . . . . . . . . 11
<PAGE>
11.15 Disclaimer; Duty to Disclose. . . . . . . . . . . 11
11.16 Representations; Condition of Properties. . . . . 12
11.17 Related Agreement . . . . . . . . . . . . . . . . 12
11.18 Certain Obligations . . . . . . . . . . . . . . . 12
12. APPROVAL BY SELLER. . . . . . . . . . . . . . . . . . . 12
EXHIBIT A-1 Legal Description of Hawthorne Property
EXHIBIT A-2 Legal Description of Hazel Dell Property
EXHIBIT A-3 Legal Description of Raleigh Hills Property
EXHIBIT B - Reports
EXHIBIT C - Form of Lease Assignment
<PAGE>
REAL ESTATE PURCHASE AND SALE AGREEMENT
---------------------------------------
(Hawthorne, Hazel Dell and Raleigh Hills)
This REAL ESTATE PURCHASE AND SALE AGREEMENT (this
"Agreement"), dated as of March 10, 1995, between REC RESOLUTION
COMPANY, an Oregon corporation ("Seller"), and FRED MEYER, INC.,
a Delaware corporation, or its assign ("Purchaser"), recites and
provides as follows:
RECITALS
A. Seller, as successor to Fifth Avenue Corporation, owns
the real property located in Portland, Multnomah County, Oregon,
described in the attached Exhibit A-1 (the "Hawthorne Property").
The Hawthorne Property is currently leased by Seller to Real
Estate Properties Limited Partnership, an Oregon limited
partnership ("REPL"), pursuant to a lease agreement dated as of
February 5, 1963 (the "Hawthorne Master Lease"). REPL subleases
the Hawthorne Property to Fred Meyer, Inc., a Delaware
corporation, pursuant to a lease agreement dated as of
October 22, 1986 (the "Hawthorne Sublease").
B. Seller, as successor to Vanoak Corporation, owns the
real property located in Vancouver, Washington, described in the
attached Exhibit A-2 (the "Hazel Dell Property"). The Hazel Dell
Property is currently leased by Seller to REPL, pursuant to two
lease agreements dated as of October 2, 1962, and March 1, 1978
(collectively, the "Hazel Dell Master Lease"). REPL subleases
the Hazel Dell Property to Roundup Co., a Washington corporation,
pursuant to a lease agreement dated as of October 22, 1986 (the
"Hazel Dell Sublease").
C. Seller, as successor to Fourth Avenue Corporation, owns
the real property located in Washington County, Oregon, described
in the attached Exhibit A-3 (the "Raleigh Hills Property"). The
Raleigh Hills Property is currently leased by Seller to REPL,
pursuant to a lease agreement dated as of March 3, 1966 (the
"Raleigh Hills Master Lease"). REPL subleases the Raleigh Hills
Property to Purchaser pursuant to a lease agreement dated as of
October 22, 1986 (the "Raleigh Hills Sublease").
D. The Hawthorne Property, the Hazel Dell Property, and
the Raleigh Hills Property, together with all buildings and other
improvements located thereon and all rights and appurtenances
belonging thereto or in any way appertaining thereto and all
right, title and interest of Seller in and to any and all roads,
streets, alleys and ways, bounding such property are collectively
referred to herein as the "Properties." The Hawthorne Master
Lease, the Hazel Dell Master Lease and the Raleigh Hills Master
Lease are sometimes collectively referred to as the "Master
Leases." The Hawthorne Sublease, the Hazel Dell Sublease and the
Raleigh Hills Sublease are sometimes collectively referred to as
the "Subleases."
E. Seller desires to sell the Properties to Purchaser, and
Purchaser desires to purchase the Properties from Seller, on the
terms and conditions set forth in this Agreement.
<PAGE>
Agreements
NOW, THEREFORE, for value received and in consideration
of the mutual promises set forth in this Agreement, the parties
agree as follows:
1. PURCHASE AND SALE OF THE PROPERTIES. Seller agrees to
sell the Properties to Purchaser, and Purchaser agrees to
purchase the Properties from Seller, on the terms and conditions
set forth in this Agreement.
2. TOTAL PURCHASE PRICE. The total purchase price for the
Properties is FIFTEEN MILLION FOUR HUNDRED FIFTY THOUSAND DOLLARS
($15,450,000). The purchase price is allocated among the various
portions of the Properties as follows:
<TABLE>
<CAPTION>
Land Improvements Total
---- ------------ -----
<S> <C> <C> <C>
Hazel Dell Property $1,133,600.00 $1,866,400.00 $3,000,000.00
Hawthorne Property $1,119,588.00 $1,880,412.00 $3,000,000.00
Raleigh Hills Property $2,918,820.00 $6,531,180.00 $9,450,000.00
</TABLE>
3. EFFECTIVE DATE. The "Effective Date" for purposes of
this Agreement is the date that this Agreement is mutually
executed and delivered.
4. PRECONDITIONS TO PURCHASER'S OBLIGATIONS. The close of
escrow and Purchaser's obligation to purchase the Properties are
subject to the satisfaction, not later than the Closing Date
(unless otherwise provided), of the following conditions, and the
obligations of the parties with respect to such conditions are as
set forth in this Section 4. The conditions set forth in this
Section 4 are solely for the benefit of Purchaser and may be
waived only by Purchaser. Purchaser shall at all times have the
right to waive any condition. Such waiver or waivers shall be in
writing to Seller.
4.1 Investigations and Contingency Period. Purchaser
shall be satisfied, in its sole and absolute judgment, that the
Properties suit its needs (including, but not limited to, the
physical condition of the Properties, the zoning and other laws
and regulations applicable to the Properties, the available
access to public streets, utilities and infrastructure, and the
economic viability of the Purchaser's intended use) and Purchaser
shall have obtained such senior management and board of director
approvals of this transaction as Purchaser may deem necessary or
desirable. Purchaser shall have until the date 90 days after the
Effective Date (or until such earlier date as Purchaser may elect
in writing by waiving the right to terminate under this Section)
(the "Contingency Period") to determine whether the conditions
precedent set forth in this Section 4.1 have been satisfied or
waived. If Purchaser fails to notify Seller within the
<PAGE>
Contingency Period that such conditions are waived or satisfied,
then this Agreement shall terminate and neither party shall have
any further obligations hereunder.
4.2 Title. At closing Seller shall convey fee simple
title to the Properties by special warranty deeds, subject to no
encumbrances created or suffered by Seller other than
nondelinquent real property taxes, and other matters which may be
approved in writing by Purchaser in accordance with this Section.
(a) Title Report, Survey, Etc. Purchaser shall
within 10 days after the Effective Date obtain current
preliminary title reports on the Properties, from First American
Title Insurance Company ("Title Company"). Purchaser shall also,
as promptly as possible and in any event within 45 days after the
Effective Date, obtain current ALTA surveys of the Properties
meeting Purchaser's survey requirements. The cost of the
surveyor's work will be paid by Purchaser.
(b) Title Approval Procedure.
(1) Within 20 days after receipt of all of
the title reports and surveys, Purchaser will review such
materials and notify Seller in writing of Purchaser's approval
(or disapproval) of any exceptions shown in the title reports,
other than an exception for current property taxes, and of such
surveys. Failure to notify Seller than an item is approved shall
be deemed to be disapproval of such item. In the event of such
disapproval: (i) Seller shall be obligated to remove (or commit
to remove) any disapproved lien or other financial encumbrance (a
"Lien"), at or prior to closing; and (ii) Seller agrees to exert
its best efforts to remove any other disapproved matter (but
Seller is not absolutely obligated to remove a disapproved matter
other than a Lien).
(2) Seller shall have 20 days from the date
that items are disapproved or deemed disapproved to eliminate any
disapproved title exceptions or survey matters (or as to any
Liens, to commit in writing to eliminate such Liens at or prior
to closing). If Seller is unable to eliminate a disapproved
title exception or survey matter within such twenty-day period,
despite Seller's best efforts to do so, either party may elect to
rescind this Agreement by notice to the other party within ten
days after the expiration of the twenty-day period. In such
event, all obligations of the parties under this Agreement shall
thereafter cease. Purchaser may preserve this Agreement,
however, if Purchaser notifies Seller within twenty days after
delivery of a notice of termination by Seller, that either:
(a) Purchaser waives its objection to the relevant
encumbrance(s); or (b) as to encumbrances that can be removed by
the payment of money, Purchaser intends at closing to pay the
amount necessary to remove such encumbrances. If Purchaser so
preserves this Agreement, this Agreement shall remain in full
force and effect, and Purchaser will receive a credit at closing
in the amount of any sum paid by Purchaser to remove such
encumbrances on title.
(3) As to any exceptions to title placed
of record or first identified after issuance of the preliminary
<PAGE>
title report or revealed by any supplemental report, there shall
be a 10-day period for Purchaser to review and approve or
disapprove such exceptions on the same basis as provided above.
(4) With respect to the Raleigh Hills
Property, the parties are aware that boundary line questions in
three locations have been identified on a preliminary survey.
Seller shall use its best efforts to resolve such questions to
the satisfaction of Purchaser and the title company, such that
the title company will issue extended coverage title insurance
insuring the surveyed border of the Property without exception
for boundary line matters or encroachments. Purchaser shall
cooperate in such efforts. Final resolution of such matters to
Purchaser's satisfaction is a condition to Purchaser's obligation
to close.
4.3 Hazardous or Toxic Materials. Exhibit B sets
forth a complete list of all written soils, environmental or
other reports or studies in Seller's possession concerning any
hazardous waste or hazardous substances (as defined in Section
8.1) on, in or under the Properties or any underground storage
tanks on the Properties (collectively, the "Reports"). In
addition, Seller has made available to Buyer for inspection other
documents ("Environmental Documents") relating to hazardous
substances on, in or under the Property as further described in
Exhibit B. Seller has provided or will promptly provide complete
copies of the Reports and any other such reports discovered by
Seller after the date hereof. During the Contingency Period,
Purchaser will cause to be conducted such investigations or
audits of the environmental condition of the Properties as
Purchaser deems prudent. Purchaser will on request provide to
Seller copies of any reports prepared by third parties in
connection with such investigations or audits. In the event
that, prior to the Closing Date, any hazardous substances in
amounts or of kinds that violate or could give rise to liability
under environmental laws (as defined in Section 8.1) are
discovered on, in, or under any of the Properties, or any
underground storage tanks are discovered on any of the
Properties, Purchaser may elect, within ten days after learning
of the discovery of such matter, to terminate this Agreement by
notice to the Seller; provided, however, that Seller may preserve
this Agreement by notifying Purchaser (within 10 days after
receipt of the Purchaser's termination notice) that Seller
commits at its expense to perform any remediation necessary to
correct the problem to the satisfaction of Purchaser (in
Purchaser's discretion) and any governmental agency with
jurisdiction over the Properties, and the parties thereafter
document such remediation commitment in a manner acceptable to
Purchaser. If this Agreement is so terminated, the parties shall
thereafter have no further obligations under this Agreement.
4.4 No Material Changes. At the Closing Date, there
shall have been no material adverse changes in the condition of
or legal requirements applicable to the Properties (provided that
the condemnation activities affecting the Hazel Dell Property
referenced in Section 5.2 of this Agreement shall not be deemed a
material adverse change).
<PAGE>
5. CONDEMNATION.
5.1 Subject to Section 5.2, if, prior to closing, any
part of the Properties is condemned or appropriated by public
authority or any party exercising the right of eminent domain, or
is threatened thereby, then this Agreement shall, at the election
of the Purchaser, become null and void. In the event the
Purchaser elects not to terminate this Agreement, the purchase
price shall not be affected, but Purchaser shall be entitled to
all proceeds of such award (or, if the award is made prior to
closing, Seller shall receive such proceeds but Purchaser shall
receive a credit against the purchase price in the net amount of
such proceeds). Seller will promptly notify Purchaser as to the
commencement of any such action or any communication from a
condemning authority that a condemnation or appropriation is
contemplated, and will cooperate with Purchaser in the response
to or defense of such actions, and permit Purchaser to
participate fully in, and approve any settlement of, any such
proceedings.
5.2 Purchaser acknowledges that proposals exist (1) to
close the access to the Hazel Dell Property from 78th Street, and
(2) to condemn a portion of the Hazel Dell Property in connection
with the construction of light rail facilities. Such
condemnation actions shall not constitute grounds to terminate
this Agreement. Purchaser and Seller agree to cooperate and
exert their best efforts to avoid closure of such access,
including, if Purchaser deems it appropriate, institution of
legal proceedings; provided, Seller shall not be required to
incur out of pocket costs in connection with such efforts.
Purchaser shall have the right to direct such efforts and
proceedings, and legal proceedings so instituted shall be at
Purchaser's expense. Proceeds from any such condemnation or
access closure shall be handled as provided in Section 5.1.
6. LEGAL LOT. If any of the Properties is not currently a
separate legal lot or lots and tax parcel(s), Seller (with the
cooperation of Purchaser) shall complete and obtain final
approval of any necessary plat, partition, lot line adjustment or
subdivision, so that as of closing the Property will be a
separate legal lot or lots and tax parcel or parcels. Any
conditions imposed in connection with such action must be
acceptable to Purchaser. The costs incurred will be paid by
Seller.
7. CLOSING.
7.1 Closing Date. This transaction will be closed
(the "Closing") on a date to be selected by Purchaser and
reasonably acceptable to Seller, but not later than 15 days after
expiration of the Contingency Period and not earlier than
March 1, 1995 (the "Closing Date").
7.2 Manner and Place of Closing. This transaction
will be closed by an escrow officer of First American Title
Insurance Company (or other Title Company selected pursuant to
Section 4.2) (the "Escrow Officer") at its office in Portland,
Oregon, or at such other place as the parties may mutually
select. Closing shall take place in the manner and in accordance
with the provisions set forth in this Agreement.
<PAGE>
7.3 Prorations. There shall be no prorations of taxes
or expenses, as Purchaser or Purchaser's subsidiary is under the
Subleases responsible for taxes and expenses, and is entitled to
all income derived from, the Properties, other than rent owing
under the Master Leases. Rent owing under the Master Leases
shall be prorated as of 12:01 a.m. on the Closing Date, with
Seller entitled to such rents through such time and Purchaser
entitled to such rents commencing on the Closing Date and
thereafter.
7.4 Conveyance of Properties. Conveyance of the
Properties shall be by statutory special warranty deeds. All
municipal, county, state and federal transfer and documentary
stamp taxes shall be paid by Seller at the time of closing. The
conveyance shall be free from all liens and encumbrances of any
kind, without exceptions, unless otherwise specified herein or
approved pursuant to Section 4.2, and except for the lien of real
estate taxes not yet payable, so as to convey to Purchaser good
and marketable title to all the Properties. The conveyance will
be free of all tenancies other than (1) the rights of REPL
pursuant to the Master Leases, and the occupancy of Fred Meyer,
Inc., or Roundup Co., pursuant to the Subleases; and (2)
subleases, rental agreements or licenses in which Fred Meyer,
Inc., or its subsidiary is the sublessor, landlord or licensor.
Seller shall also assign to Purchaser its interest as lessor
under the Master Leases, pursuant to a lease assignment in the
form of Exhibit C. In addition, the parties will execute a
cross-easement agreement with respect to certain adjacent
property owned by Seller, in the form of Exhibit D, which shall
be a permitted encumbrance on title.
7.5 FIRPTA. Seller shall deliver to Purchaser at
closing an affidavit that Seller is not a "foreign person" under
FIRPTA, in form satisfactory to Purchaser.
7.6 Events of Closing. Provided the Escrow Officer
has received the sums and is in a position to cause the title
insurance policy to be issued as described below, this
transaction will be closed on the Closing Date as follows:
(a) Purchaser shall pay the total purchase price
for the Properties in immediately available funds, adjusted for
the charges and credits set forth in this section.
(b) Any liens or other encumbrances on title
required by this Agreement to be paid or removed by Seller at
closing shall be paid and satisfied or removed of record at
Seller's expense.
(c) Seller shall convey the real property to
Purchaser by special warranty deed(s), subject to no encumbrances
created or suffered by Seller other than the encumbrances
accepted pursuant to Section 4.2 and the lien for real estate
taxes not yet payable.
(d) Title Company will commit to issue the policy
described in Section 7.7, upon recordation of the closing
documents.
<PAGE>
(e) The parties will execute any additional
documentation required with respect to the matters described in
Sections 7.4 and 7.5.
(f) The Escrow Officer will record the deed(s)
and the lease termination agreements, if any.
(g) The escrow fee shall be paid equally by the
parties. Any real estate excise or transfer tax will be paid by
Seller. The recording fees for the deeds will be paid by
Purchaser. Seller shall be charged with the premium (including
any sales or excise tax) for the title insurance policies to be
delivered to Purchaser, except that Purchaser shall be
responsible for the portion of the premium (including any sales
or excise tax) attributable to extended coverage if Purchaser
elects to obtain it, and for the cost of any endorsements
requested by Purchaser.
(h) There are no brokerage fees.
(i) If any other closing costs not specifically
provided for herein are due at closing of this transaction, each
party shall pay such closing costs as are normally and
customarily the responsibility of such party. In addition to any
other items required to be paid by either party pursuant to this
Agreement, each party shall pay its own attorneys' fees.
7.7 Title Insurance. As soon as possible after the
Closing Date, Seller shall cause the Title Company to furnish
Purchaser with a standard policy of title insurance in the amount
of the total purchase price for each property, in form acceptable
to Purchaser, subject only to exceptions for the matters accepted
by Purchaser pursuant to Section 4.2 or referenced in Section
7.4. At Purchaser's option, such policies shall be in ALTA
extended coverage form (full or partial), in which case Seller
and Purchaser will execute such affidavits as may be necessary to
obtain the extended coverage. Extra title premiums attributable
to extended coverage shall be Purchaser's expense.
7.8 Lease. If Purchaser elects to assign this
Agreement and the right to purchase the Properties to a third
party that will lease the Properties to Seller, the parties will
execute any additional documentation necessary to implement such
assignment and lease, provided that Seller shall not be required
to incur any additional expense or any material risk in
connection therewith.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
8.1 Seller's Representations, Warranties and
Covenants. Seller represents and warrants to Purchaser that:
(a) To the Seller's actual knowledge and without
independent investigation, and except as disclosed on the
Reports: (1) there are no hazardous substances (as defined
below) on, within, under or upon the Properties, in amounts or of
kinds that in their current condition pose a threat to human
health or the environment or pose a risk of liability under
environmental laws (provided, however, that due to the age of the
<PAGE>
improvements on the Properties, there may be asbestos containing
materials used in the construction of such improvements); and (2)
there are no underground storage tanks within the Properties.
Seller does hereby assign to Purchaser (effective at and as of
the Closing Date) any and all environmental warranties,
indemnification agreements and rights of action Seller may have
against third parties (if any) relating to the presence of any
such hazardous substances or underground tanks. As used in this
Agreement, the term "environmental laws" includes any and all
state, federal and local statutes, regulations, and ordinances to
which the Properties are subject and relating to the protection
of human health and the environment, as well as any judgments,
orders, injunctions, awards, decrees, covenants, conditions, or
other restrictions or standards relating to same; and the term
"hazardous substances" includes all hazardous and toxic
substances, wastes, or materials, including without limitation
all substances, wastes, and materials containing either
petroleum, including crude oil or any fraction thereof, or any of
the substances referenced in Section 101(14) of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601(14), and similar or comparable state or local laws.
(b) Except as disclosed to Purchaser in writing
(and other than the potential condemnation affecting the Hazel
Dell Property referenced in Section 5.2 above), Seller has
received no written notice of any condemnation, environmental,
zoning or other land-use regulation proceedings which would
detrimentally affect the use and operation of the Properties or
the value of the Properties, nor has Seller received notice of
any special assessment proceedings affecting the Properties.
(c) There is no litigation pending or to the
Seller's actual knowledge threatened against Seller that arises
out of the ownership of the Properties and would be binding on
the Purchaser or might detrimentally affect the use or operation
of the Properties for its intended purpose or the value of the
Properties or adversely affect the ability of Seller to perform
its obligations under this Agreement.
(d) The persons who have executed this Agreement
have been duly authorized to do so by Seller. All documents
delivered at closing will be executed by a duly authorized
person. Seller has a good and legal right to enter into this
Agreement and to perform all covenants of Seller contained in
this Agreement in accordance with its terms.
8.2 Environmental Remediation - Raleigh Hills. The
terms of this Section 8.2 shall apply only with respect to the
Raleigh Hills Property.
(a) The groundwater underneath the northeast
corner of the Raleigh Hills Property has been impacted by
petroleum related contamination that migrated from underground
storage tanks and related piping formerly located on Seller's
adjacent property (the "Flying A Property"). The scope of such
contamination (the "L.P. Bush Contamination") is set forth in the
environmental reports, studies and tests prepared by Hahn and
Associates (copies of which are in the possession of Joan Snyder
of Stoel Rives Boley Jones and Grey, Purchaser's counsel) and are
<PAGE>
listed on Exhibit B. L.P. Bush Company (the former tenant of the
Flying A Property) is remediating the ground water contamination
pursuant to a groundwater treatment plan also in the possession of
Joan Snyder. Seller covenants that Seller shall diligently use
its best efforts to complete or cause to be completed the
remediation of the L.P. Bush Contamination, in a manner complying
with all applicable laws, at no cost to Purchaser. Such
remediation shall initially be conducted by Neal Shaw, subject to
monitoring by Hahn and Associates, or shall be conducted by Geo
Engineers, Inc. or another environmental consulting firm and/or
contractor reasonably acceptable to Purchaser. Such remediation
will be "complete" when Purchaser receives (1) a certification
from the consultant that the remediation is complete; and (2) a
so-called "no further action" letter from the Oregon Department
of Environmental Quality (DEQ), in form and substance reasonably
acceptable to Purchaser, and not conditioned on or requiring the
imposition of use restrictions or other institutional controls on
the Raleigh Hills Property. Upon receipt of such certification
and letter, Seller's obligations under this subsection shall be
deemed satisfied.
(b) The soils and groundwater underneath the
southern portion of the Raleigh Hills Property adjacent to
property currently leased to Union Oil of California ("Unocal")
and owned by Seller (the "Unocal Property") may be impacted by
petroleum related contamination that has migrated or is migrating
from underground storage tanks and related piping located on the
Unocal Property. Unocal is currently studying whether such
contamination has occurred. Seller has previously provided
Purchaser with copies of reports Seller has received from Unocal
discussing Unocal's investigation of petroleum contamination on
the Unocal Property and the Raleigh Hills Property; such reports
are listed on Exhibit B. Seller covenants that it shall
undertake and complete or cause to be undertaken and completed
the remediation of any contamination of the Raleigh Hills
Property (or the groundwater underneath the Raleigh Hills
Property) from petroleum related contamination that may have
migrated from the Unocal Property as of the Closing Date, or that
migrates from the Unocal Property after the Closing Date (the
"Unocal Contamination"). Such remediation must be conducted by
Unocal under the supervision of Geo Engineers, Inc, or an
environmental consulting firm and/or contractor reasonably
acceptable to Purchaser. Such remediation will be "complete"
when Purchaser receives (1) a certification from the consultant
that the remediation is complete; and (2) a so-called "no further
action" letter from DEQ, in form and substance reasonably
acceptable to Purchaser, and not conditioned on or requiring the
imposition of use restrictions or other institutional controls on
the Raleigh Hills Property. Upon receipt of such certification
and letter, Seller's obligations under this subsection shall be
deemed satisfied.
(c) Seller shall have a nonexclusive right of
entry onto the Raleigh Hills Property after Closing in order to
perform remediation activities necessary to comply with Seller's
obligations under subsections 8.2(a) and (b) above, including
without limitation the installation of groundwater wells and
treatment systems. Seller's remediation activities on the
Raleigh Hills Property shall be undertaken in such a manner as to
<PAGE>
minimize interference with Purchaser's use and operation of the
Raleigh Hills Property, and the business operations of
Purchaser's tenants, and in any event shall not materially
restrict the access to, or the parking areas available for, any
building on the Raleigh Hills Property. All such activities
shall be conducted in strict accordance with applicable law.
Upon completion of its remediation activities (or, where
appropriate, any phase thereof), Seller shall restore or cause to
be restored the Raleigh Hills Property to substantially the
condition existing prior to such activities (including without
limitation proper capping and legal abandonment of any wells).
Seller shall indemnify, defend (with counsel reasonably approved
by Purchaser) and hold harmless Purchaser and its officers,
directors, employees, agents, successors and assigns from and
against any suits, actions, legal or administrative proceedings,
demands, claims, liabilities, fines, penalties, losses, injuries,
damages, costs (including the cost of complying with any judicial
or governmental order) and expenses (including attorneys' fees in
connection with any administrative proceeding, trial, appeal or
petition for review) arising out of or in any way connected with
Seller's remediation activities on the Raleigh Hills Property.
(d) With respect to environmental contamination
that is not covered by the provisions of subsections 8.2(a) and
(b) above, and except as limited by subsection 8.2(e) below with
respect to claims for diminution in value, nothing in this
Agreement either waives or alters any statutory or other remedy
at law available to any party.
(e) Purchaser hereby waives, releases, acquits
and forever discharges Seller and its officers, directors,
partners, employees, agents, and any other person acting on
behalf of Seller, from and against any and all claims, actions,
causes of action, demands, rights, damages expenses or
compensation whatsoever, for diminution in the value of the
Raleigh Hills Property caused by the presence of petroleum
related contamination in, on, underneath or adjacent to the
Raleigh Hills Property; provided, however, that such release of
claims for diminution in value shall not be construed to release
Seller from its obligations to complete the L.P. Bush
Contamination or the Unocal Contamination as set forth in
subsections 8.2(a) and (b) above. For purposes of this
paragraph, claims for diminution in value include claims arising
from difficulty of financing or selling the Raleigh Hills
Property.
(f) Seller shall not be in default of its
obligations set forth in subsections 8.2(a) and (b), in the event
Seller is unable to obtain the required no further action
letter(s) from DEQ becuase other governmental entities or other
third parties refuse to cooperate or to authorize Seller to take
the actions required by DEQ to obtain the no further action
letter(s).
8.3 Purchaser's Representations and Warranties.
Purchaser represents and warrants to Seller that the persons who
have executed this Agreement have been duly authorized to do so
by Purchaser (subject to the provisions of Section 4.1 and 12).
All documents delivered at closing will be executed by a duly
<PAGE>
authorized person. Purchaser has a good and legal right to enter
into this Agreement and to perform all covenants of Purchaser
contained in this Agreement in accordance with its terms.
9. CONDUCT UNTIL CLOSING; SELLER'S COOPERATION;
DISCLAIMER. From the date of this Agreement until the Closing
Date, Seller shall cause all liens on the Properties incurred by
Seller to be paid current, and will not further mortgage or
encumber the Properties or increase the amount of any current
indebtedness on the Properties. No provision of this Agreement
or previous (or subsequent) conduct or activities of the parties
will be construed: (i) as making either party an agent,
principal, partner or joint venturer with the other party, (ii)
as creating any express or implied obligation for Purchaser to
operate the Properties as a Fred Meyer retail facility or
otherwise, or (iii) as making either party responsible for
payment or reimbursement of any costs incurred by the other,
whether or not such development occurs (except as may be
expressly set forth herein or in its attached exhibits). WHETHER
AND HOW PURCHASER MAY DEVELOP, REDEVELOP OR OPERATE THE
PROPERTIES POST-CLOSING IS AT PURCHASER'S DISCRETION. SELLER
WILL NOT HAVE ANY CLAIM AGAINST (OR RIGHT TO RECOVER ANY DAMAGES
OR COSTS FROM) PURCHASER IN THE EVENT PURCHASER DOES NOT DEVELOP,
REDEVELOP OR CONTINUE TO OPERATE THE PROPERTIES.
10. FAILURE TO CLOSE.
10.1 Seller's Remedies. In the event that this
transaction fails to close on account of Purchaser's fault or
inability to close, and Purchaser has not exercised any right to
terminate or rescind this Agreement as provided herein, Purchaser
shall pay to Seller the sum of $25,000 as full liquidated
damages. SUCH AMOUNT HAS BEEN AGREED BY THE PARTIES TO BE
REASONABLE COMPENSATION AND THE EXCLUSIVE REMEDY FOR PURCHASER'S
DEFAULT, SINCE THE PRECISE AMOUNT OF SUCH COMPENSATION WOULD BE
DIFFICULT TO DETERMINE. Seller hereby waives any right to
specific enforcement of this Agreement, and any right to sue for
damages (including lost profits or consequential damages) other
than the liquidated damages provided for in this Section. The
parties are initialing this Section for purposes of acknowledging
and agreeing to such exclusive remedy and liquidated damages
provision.
Initials of: Seller DWR Purchaser SLW
----- -----
10.2 Purchaser's Remedies. In the event that the
transaction fails to close on account of Seller's fault or
Seller's inability to deliver title acceptable to Purchaser
pursuant to Section 4.2, Purchaser shall be entitled to such
remedies for breach of contract as may be available under
applicable law, including (without limitation) the remedy of
specific performance, collection of damages, recovery of costs
and attorneys' fees.
11. GENERAL PROVISIONS.
11.1 Binding Effect; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties, and
their respective heirs, personal representatives, successors, and
assigns. Purchaser reserves the right to assign the right to
purchase the Properties to any third party at closing. Purchaser
also reserves the right to assign the Agreement at or prior to
closing to an entity that will lease the Properties to Purchaser.
Unless otherwise agreed, however, no such assignment shall
release Purchaser from its obligations under this Agreement, or
increase Seller's obligations in any respect.
11.2 Time of Essence. Time is of the essence of each
and every provision of this Agreement.
11.3 Notices. All demands or notices required or
permitted to be given under this Agreement shall be in writing.
Notices may be served by certified or registered mail, postage
paid with return receipt requested; by facsimile, or other
telecommunication device capable of transmitting or creating a
written record (provided that a copy is also sent by U.S. Mail,
first class); or personally. Mailed notices shall be deemed
delivered five (5) days after mailing, properly addressed. Telex
or telecommunicated notices shall be deemed delivered when
receipt is either confirmed by confirming transmission equipment
or acknowledged by the addressee or its office. Personal
delivery shall be effective when accomplished. Unless a party
changes its address by giving notice to the other party as
provided herein, notices shall be delivered to the parties at the
following addresses:
Seller: REC RESOLUTION COMPANY
Suite 200
15115 SW Sequoia Parkway
Portland, OR 97224
Attn: Dave Ramus
Facsimile No.: (503) 624-7755
Purchaser: Fred Meyer, Inc.
P.O. Box 42121
Portland, Oregon 97242-0121
(Street Address -
3800 S.E. 22nd Avenue,
Portland, Oregon 97202)
Attn: Scott L. Wippel
Facsimile No.: (503) 797-3539
11.4 Waiver. Failure of either party at any time to
require performance of any provision of this Agreement shall not
limit the party's right to enforce the provision. Waiver of any
breach of any provision shall not be a waiver of any succeeding
breach of the provision or a waiver of the provision itself or
any other provision.
11.5 Attorneys' Fees. In the event suit or action is
instituted to interpret or enforce the terms of this Agreement or
to rescind this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge
reasonable as attorneys' fees at trial, on any appeal, and on any
petition for review, in addition to all other sums provided by
law.
11.6 Prior Agreements. This Agreement supersedes and
replaces all written and oral agreements previously made or
existing between the parties (including, without limitation, all
previous letters of intent and addenda thereto and all verbal
agreements and understandings).
11.7 Applicable Law. This Agreement shall be
construed, applied and enforced in accordance with the laws of
the State of Oregon (provided, as to the equitable remedies of
Purchaser with respect to the Hazel Dell Property, Washington law
shall apply).
11.8 Brokers. Each party will defend, indemnify, and
hold the other party harmless from any claim, loss, or liability
made or imposed by any other party claiming a commission or fee
in connection with this transaction and arising out of its own
conduct.
11.9 Changes in Writing. This Agreement and any of its
terms may only be changed, waived, discharged or terminated by a
written instrument signed by the party against whom enforcement
of the change, waiver, discharge or termination is sought.
11.10 Counterparts. This Agreement may be executed
simultaneously or in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and
the same Agreement.
11.11 Invalidity of Provisions. In the event any
provision of this Agreement is declared invalid or is
unenforceable for any reason, such provision shall be deleted
from such document and shall not invalidate any other provision
contained in the document.
11.12 Survival. All representations, warranties and
obligations of the parties in this Agreement shall survive the
Closing Date and delivery of the deed contemplated in this
Agreement and be fully enforceable thereafter.
11.13 Effect of Extensions and Modifications; Backup
Offers. Any amendment to this agreement (including any extension
of time for waiver of conditions or closing) shall be deemed to
be a modification of the continuing existing agreement, rather
than a rescission or termination of such agreement. Seller will
not accept any "backup", "standby" or other additional offers to
purchase the Properties without Purchaser's written consent. In
any event, any such additional offer shall be subordinate to this
Agreement as it may be extended or modified.
11.14 Oregon Statutory Disclaimer. The following
disclaimer applies to the Hawthorne Property and the Raleigh
Hills Property: THE PROPERTY DESCRIBED IN THIS INSTRUMENT MAY
NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING STRUCTURES.
THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH,
IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING
A RESIDENCE AND WHICH LIMIT LAWSUITS AGAINST FARMING OR FOREST
PRACTICES AS DEFINED IN ORS 30.930 IN ALL ZONES. BEFORE SIGNING
OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO
THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY
PLANNING DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE
PROTECTION FOR STRUCTURES.
11.15 Disclaimer; Duty to Disclose. As to any reports
or other materials provided by one party to the other party
herein, the party providing such reports or materials is not
warranting (and will not be liable or responsible for) the
accuracy, fitness or usability of such reports or materials or
any recommendations or conclusions stated therein. All
representations and warranties of the parties in this Agreement
are limited to the best of the party's actual knowledge, without
independent investigation or examination. If either party
obtains actual knowledge prior to the Closing Date of a fact
which would make any of the representations and warranties in
this Agreement false, such party will notify the other party of
such fact. A party will not be deemed in breach of a
representation or warranty in this Agreement or liable to the
other party for any claimed misrepresentation in this Agreement
after the Closing Date unless the party had actual knowledge on
the Closing Date that the representation or warranty was false
and failed to disclose to the other party the fact known to the
party which made the representation or warranty false.
11.16 Representations; Condition of Properties.
Purchaser or Purchaser's affiliate has heretofore operated and
occupied the Properties and has thoroughly and completely
examined and is fully aware of the physical condition of the
Properties as well as any governmental permits or approvals
required in connection with Purchaser's use of the Properties,
the suitability of the Properties for Purchaser's intended use,
the availability of utilities and services, the applicable
zoning, building, housing and other ordinances, restrictions,
laws, and regulations affecting the Properties or other matters.
Except as otherwise specifically set forth in this Agreement or
in any instrument delivered at Closing, Purchaser accepts the
land and property and all other aspects of the Properties in
their present condition, AS IS, without any representations or
warranties by Seller, expressed or implied. Purchaser
acknowledges that Purchaser has ascertained for itself the value
and condition of the Properties and Purchaser is not relying on,
nor has Purchaser been influenced by, any representation of
Seller regarding the value or condition of the Properties.
11.17 Related Agreement. Purchaser is party to a
Leasehold Assignment Agreement, dated on or about the date
hereof, pursuant to which Purchaser intends to acquire the
leasehold interest of REPL in the Properties (the "Related
Agreement"), which the parties thereto intend to close
simultaneously with closing under this Agreement. Purchaser's
obligation to close under this Agreement is subject to the
performance by REPL of REPL's obligations under the Related
Agreement, such that a simultaneous closing may occur. Seller's
obligation to close under this Agreement is subject to the
performance by Purchaser of Purchaser's obligations under the
Related Agreement, such that a simultaneous closing may occur.
11.18 Certain Obligations. Under the terms of the
Subleases, Purchaser is obligated to (i) maintain the Properties
(Paragraph 9.1) and (ii) cause the Properties to comply with all
legal requirements (Paragraph 6.2). In addition to Purchaser's
acknowledgment that it is accepting the Properties AS IS,
Purchaser hereby waives, releases, acquits and forever discharges
Seller and its officers, directors, partners, employees, agents,
and any other person acting on behalf of Seller, from any and all
claims, actions, causes of action, demands, rights, damages
expenses or compensation whatsoever, arising from any defects in
the Properties, to the extent such defects would have been
Purchaser's responsibility to remedy under the Subleases.
12. APPROVAL BY SELLER.
Seller will have until 5 p.m. (Pacific Time) on
March 21, 1995 in which to execute and return to Purchaser a
fully signed counterpart of this Agreement. Neither the delivery
of this Agreement to Seller for execution nor the delivery of any
signed Agreement to Purchaser will create a binding contract, or
contract by estoppel or otherwise, between the parties.
Purchaser will have 10 days after receipt of this Agreement
signed by Seller to execute and deliver or transmit (by facsimile
or otherwise) to Seller at its address hereunder a fully executed
counterpart of this Agreement, and if not executed and delivered
within such time period, this Agreement will be null and void and
neither party will thereafter have any obligation or liability to
the other party pursuant to this Agreement.
IN WITNESS WHEREOF, the parties have caused this
instrument to be duly executed as of the date set forth above.
SELLER: REC RESOLUTION COMPANY, an Oregon corporation
By: DAVID W. RAMUS
---------------------------------------
Title: David W. Ramus
-------------------------------
Date Executed: 3/13/95
-----------------------
PURCHASER: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
---------------------------------------
Scott L. Wippel, Senior Vice President
---------------------------------------
Date Executed: 3/14/95
-----------------------
EXHIBIT A-1
-----------
Legal Description - Hawthorne Property
PARCEL I:
- --------
Lots 1-16, inclusive, Block 1, SUNNYSIDE ADDITION, in the City of
Portland, County of Multnomah and State of Oregon. TOGETHER WITH
that portion vacated of SE Madison Street which inured thereto by
reason of Ordinance vacating SE Madison Street recorded
December 4, 1970 in Book 762, page 1551.
PARCEL II:
- ---------
Lots 1-16, inclusive, Block 2, SUNNYSIDE ADDITION, in the City of
Portland, County of Multnomah and State of Oregon.
EXCEPT the East 12 feet of Lots 8 and 9 of said Block 2, described
in deeds to the City of Portland, recorded October 16, 1962 in
Book 2139, page 424 and Book 2139, page 428.
TOGETHER WITH that portion of vacated SE Madison Street which
inured thereto by reason of Ordinance vacating SE Madison Street
recorded December 4, 1970 in Book 762, page 1551.
EXHIBIT A-2
-----------
Legal Description - Hazel Dell Property
PARCEL I
- --------
BEGINNING at an iron pipe set at the Northeast corner of Lot 20,
Alexander Tracts in the Northeast quarter of Section 10, Township
2 North, Range 1 East, Willamette Meridian; thence South 5 59'15"
West along the East line of said Lot 20 a distance of 111.00 feet
to a railroad spike marking the Southeast corner thereof; thence
South 88 degrees 17'00" West along the South line of said Lot 20,
a distance of 292.01 feet to the East right of way line of SR 5;
thence North 1 degree 43'00" West along the East right of way
line of said SR 5 a distance of 110.00 feet to the North line of
said Lot 20; thence North 88 degrees 17'00" East along the North
line of said Lot 20 a distance of 306.90 feet to the point of
beginning.
PARCEL II
- ---------
That portion of the Northeast quarter of the Northeast quarter of
Section 10, Township 2 North, Range 1 East of the Willamette
Meridian, in Clark County, Washington, described as follows:
BEGINNING at a point that is South 89 degrees 05' West 71.35 feet
and South 5 degrees 59'15" West 284.33 feet fron the Northeast
corner of said Section 10, said point of beginning also being
on the Westerly line of N.E. Highway 99; thence continuing South
5 degrees 59'l5" West along the Westerly line of said N.E.
Highway 99, a distance of 823.54 feet to the Northeast corner of
the Alexander Tract, according to the plat thereof, recorded in
Volume "E" of Plats, page 1 records of said County; thence South
88 degrees 17'00" West along the North line of said Alexander
tracts, a distance of 306.90 feet to the Easterly right of way
line of Primary State Highway No. 1 as conveyed to the State of
Washington by deed recorded under Auditor's File No. G 200257;
thence North 3 degrees 45' East along said Easterly right of way
line to an inner corner in said Easterly line; thence North
88 degrees 27'15" East 11.10 feet to the West line of that
tract conveyed to Vanoak Corporation by deed recorded under
Auditor's File No. G 628799; thence South 12 degrees 42'15"
East along the West line of said Vanoak tract, a distance
of 76.72 feet to the Southwest corner thereof; thence North
89 degrees 04' East along the South line of said Vanoak tract,
134.36 feet to the Southeast corner thereof; thence South
5 degrees 59'l5" West along the Southerly extension of the
East line of said Vanoak tract, 126.76 feet; thence South
84 degrees 00'45" East 180.00 feet to the point of beginning.
PARCEL III
- ----------
That certain portion of the Northeast quarter of the Northeast
quarter of Section 10, Township 2 North, Range 1 East, Willamette
Meridian in the County of Clark and State of Washington, more
particularly described as follows:
BEGINNING at a point that is South 46.88 feet and West 422.41
feet fron the Northeast corner of said Section 10, said point
being the intersection of the Southerly line of N.E. 78th Street
and the Easterly line of Primary State Highway No. 1 and running
thence South 12 degrees 42'15" East 96.71 feet; thence North
89 degrees 05' East 134.36 feet; thence North 5 degrees 59' East
98.26 feet to the Southerly line of N.E. 78th Street; thence
South 88 degrees 05'15" West, along said Street, 165.96 feet to the
point of beginning.
EXCEPTING from the above described Parcel III the North 10 feet
thereof conveyed to Clark County, Washington, a municipal
corporation by deed recorded June 17, 1985, as Auditor's File
No. 8506170112.
EXHIBIT A-3
-----------
Legal Description - Raleigh Hills Property
A tract of land located in Section 13, Township 1 South, Range 1
West of the Willamette Meridian, in the County of Washington and
State of Oregon, and more particularly described as follows:
Commencing at the intersection of the Southerly line of the
Beaverton Hillsdale Highway (County Road No. 669) and the West
line of the Northeast quarter of the said Section 13, which
intersection is on the Westerly line of that tract of land
conveyed to Harry M. Baker and wife by deed recorded in Deed Book
288, page 103, Washington County Deed Records; thence South
01 degrees 24'40" West along the Westerly line of the said Baker
tract a distance of 204.68 feet to the Southeast corner of that
tract of land conveyed to Portland Federal Savings and Loan
Association by that Warranty Deed recorded in Deed Book 459,
page 264, Washington County Deed Records, and the true point of
beginning of this description; thence South 01 degrees 24'40"
West along the West line of the said Baker tract a distance of
63.32 feet to the Southwest corner thereof; thence South 01
degrees 24'40" West along the West line of that tract of land
conveyed to George Krueger and wife by deed recorded in
Book 229, page 651, Washington County Deed Records, a distance
of 184.60 feet to an angle point therein and to the most
Easterly Southeast corner of that tract of land leased to
United States National Bank of Oregon, as described in that
Memorandum of Lease recorded in Book 646, page 295, Washington
County Deed Records; thence South 27 degrees 04'50" West along
the Southerly line thereof, a distance of 66.70 feet to the most
Southerly Southeast corner thereof; thence South 75 degrees 43'50"
West a distance of 60.00 feet to the Southwest corner thereof;
thence 155.22 feet along the arc of a 1,145.92 foot radius circular
curve to the left (long chord is 153.11 feet and bears South
41 degrees 50'43" East) to a point of compound curve; thence
168.03 feet along the arc of a 174.50 foot radius circular
curve to the left (long chord is 161.98 feet and bears South
72 degrees 32'32" East) to a point in the Northwesterly line
of SW Scholls Ferry Road, said point being South 56 degrees
16'30" West a distance of 23.33 feet from the Southwesterly line
of the said Krueger tract; thence Southwesterly along the
Northwesterly line of SW Scholls Ferry Road, South 56 degrees
16'30" West a distance of 74.38 feet to the most Easterly corner
of that tract of land conveyed to the State of Oregon by deed
recorded in Book 430, page 45, of the Washington County Deed
Records; thence South 61 degrees 21'30" West along the
Northwesterly line of the said State of Oregon tract a distance
of 293.40 feet to an angle point therein; thence North 77 degrees
08'30" West along the Northerly line, thereof, a distance of
64.00 feet to an angle point therein; thence South 56 degrees
16'30" West along the Northwesterly line thereof, a distance
of 40.00 feet to an angle point therein; thence South 04 degrees
41'30" West along the West line, thereof, a distance of 16.09 feet
to the most Easterly corner of that tract of land leased to the
Union Oil Company of California as described in that lease
recorded in Book 502, page 456, of the Washington County Deed
Records; thence North 33 degrees 43'30" West along the Northeasterly
line, thereof, a distance of 44.63 feet to the most Northerly
corner thereof; thence South 55 degrees 16'30" West along the
Northwesterly line thereof, a distance of 153.50 feet to the
most Westerly corner thereof; thence South 33 degrees 43'30"
East along the Southwesterly line, thereof, a distance of
5.84 feet to the most Easterly Northeast corner of that tract
of land conveyed to CAY, Incorporated, an Oregon corporation,
as described in Book 511, page 494 of the Washington County
Deed Records; thence along the Northeast line of the said
CAY, Incorporated tract 100.21 feet along the arc of a
100.00 foot radius circular curve to the right (long chord
is 96.07 feet and bears North 66 degrees 51'10" West) to a
point of tangency; thence North 38 degrees 08'40" West
along the East line of the said CAY, Incorporated tract, a
distance of 394.78 feet to an angle point therein; thence
North 88 degrees 39'20" West along the North line, thereof,
a distance of 87.05 feet to a point on the West line of
that tract of land conveyed to Hollywood Company as described
in Book 439, page 706 of the Washington County Deed Records;
thence North 01 degrees 41'20" East along the West line of the
said Hollywood Company tract a distance of 618.03 feet to the
South line of the said Beaverton Hillsdale Highway; thence South
88 degrees 32'40" East along said South line a distance of
710.00 feet to a point that is 100.00 feet West of the West line
of the Northeast quarter of the said Section 13; thence South
01 degrees 24'40" West parallel to and 100.00 feet West of
said Baker Westerly line a distance of 204.88 feet to the
Southwest corner of the said Portland Federal Savings and Loan
Association tract; thence South 88 degrees 32'40" East along the South
line of the said Portland Federal Savings and Loan Association
tract a distance of 100.00 feet to the true point of beginning of
this description.
EXCEPTING THEREFROM that portion as described in deed to
Washington County, a political subdivision of the State of
Oregon, recorded August 27, 1990 as Fee No. 90-46313.
EXHIBIT B
---------
RALEIGH HILLS FLYING A SERVICE STATION
7550 SW Beaverton-Hillsdale Highway
Portland, Oregon
1. A Report on Underground Storage Tank Decommissioning and
Soil Cleanup, dated March 1, 1993.
2. A Report on Third Quarter Groundwater Monitoring, dated
March 22, 1993.
3. A Report on Additional Subsurface Investigation, dated
January 21, 1994.
RALEIGH HILLS UNOCAL SERVICE STATION
l. Report of Remedial Action dated December 22, 1989.
2. Site Contamination Study dated November 9, 1990.
3. Drywell Removal Report dated July 15, 1992.
4. Results of Quarterly Ground Water Monitoring dated October
1992, February 1994, April 1994, and August 1994.
EXHIBIT C - LEASE ASSIGNMENT FORM
---------------------------------
RECORDING REQUESTED
BY AND WHEN RECORDED
RETURN TO:
_______________________
P.O. Box 42121
Portland, Oregon 97242
Attn: RTC MO/CLD
LEASE ASSIGNMENT AGREEMENT
This Lease Assignment Agreement (this "Agreement"), dated as
of _______________, between REC RESOLUTION COMPANY, an Oregon
corporation whose address is Suite 200, 15115 SW Sequoia Parkway,
Portland, OR 97224 ("Assignor"), and ______________________, a
Delaware corporation, whose address is ____________________
("Assignee"), recites and provides as follows:
FOR good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor hereby
sells, assigns, transfers, conveys and delivers to Assignee all
of Assignor's right, title and interest in and to each of the
lease agreements referenced on Exhibit A hereto (the "Lease
Agreements"). The rights conveyed hereby are referred to herein
as the "Leasehold Interests".
Assignee hereby accepts the foregoing assignment. Assignee
agrees to assume Assignor's obligations under the Lease
Agreements, provided, however, that Assignee does not assume, and
Assignor shall remain fully responsible for, and agrees to
discharge, any obligations or liabilities under such Lease
Agreements that either (i) are not disclosed on the face of the
copies of such Lease Agreements provided by Assignor to Assignee,
or (ii) accrued or arose from or out of a set of facts existing
prior to the date hereof ("Assignor's Liabilities"). Assignee
will indemnify, defend and hold harmless Assignor from and
against liabilities, costs, expenses and damages, including
attorneys' fees, arising from Assignee's failure to perform its
obligations hereunder, except for liabilities that arise from
Assignor's failure to perform its obligations hereunder or to
discharge Assignor's Liabilities. Assignee assumes no
liabilities or obligations of Assignor of any nature whatsoever,
whether or not accrued or affixed, absolute or contingent, known
or unknown, determined or determinable, or incurred prior to, on
or after the Closing Date.
Assignor represents, warrants and covenants to and with
Assignee that: (1) Assignor has good and indefeasible title to
the Leasehold Interests, subject to no encumbrances created or
suffered by Assignor other than the matters identified on Exhibit
B hereto; (2) Assignor has the full right, power and authority to
assign the Leasehold Interests to Assignee in accordance
herewith; and (3) Assignor will defend Assignee's right, title
and interest in and to the Leasehold Interests from and against
any claim by, through or under Assignor.
This Agreement shall bind and inure to the benefit of, and
be enforceable by, the parties hereto and their respective
successors, heirs, and permitted assigns. This Agreement may be
executed in any number of counterparts, all of which taken
together shall constitute one agreement binding on all the
parties. Each party agrees, at the request of the other party,
at any time and from time to time after the date hereof, to
execute and deliver all such further documents, and to take and
forbear from all such action, as may be reasonably necessary or
appropriate in order more effectively to perfect the transfers of
rights contemplated herein or otherwise to confirm or carry out
the provisions of this Agreement.
EXECUTED effective the date first written above.
[signature and acknowledgment forms]
EXHIBIT D - EASEMENT AGREEMENT
------------------------------
RECORDING REQUESTED |
BY AND WHEN RECORDED |
RETURN TO: |
|
FRED MEYER, INC. |
P.O. Box 42121 |
Portland, Oregon 97242 |
Attn: RTC MO/CLD |
=====================================================================
CROSS EASEMENT AGREEMENT
DATE: ___________________
PARTIES: __________________________, a Delaware corporation
("Buyer"), whose address is _________________, as owner
of the property described in Exhibit "A," attached
hereto and incorporated herein by this reference
("Buyer's Property");
AND: REC RESOLUTION COMPANY, an Oregon corporation ("REC"),
whose address is Suite 200, 15115 SW Sequoia Parkway,
Portland, OR 97224, as owner of the property described
in Exhibit "B," attached hereto and incorporated herein
by this reference ("REC's Property").
RECITALS:
The parties to this agreement intend to create permanent,
mutual, reciprocal easements and a mutual right-of-way for access
purposes. Such easements shall be appurtenant to and shall
benefit Buyer's Property and REC's Property. For purposes of
this agreement, references to "Property" mean Buyer's Property or
REC's Property, as the context may require. Buyer and REC, and
their respective successors and assigns, are sometimes referred
to as "Owners" for purposes of this Agreement. The parties
therefore agree as follows.
AGREEMENTS:
SECTION 1. GRANT OF EASEMENTS; ESTABLISHMENT OF RIGHT-OF-WAY
1.1 The parties hereby grant and convey to each other
permanent mutual reciprocal rights-of-way on, over, across, and
along the real property described in Exhibits "A-1" and "B-1",
attached hereto and incorporated herein by this reference. Such
easements shall form a continuous right-of-way as described in
Exhibits "A-1" and "B-1." Buyer hereby specifically grants to
REC such easement rights respecting the property described in
Exhibit "A-1," which shall be appurtenant to and benefit Parcel
B. REC reciprocally grants to Buyer such easement rights
respecting the property described in Exhibit "B-1," which shall
be appurtenant to and benefit Parcel A. The property subject to
the easements created hereby is sometimes referred to below as
the "Easement Property".
1.2 Such easements and right-of-way may be used for
vehicular and pedestrian ingress and egress purposes by the
parties to this agreement. Neither party shall have the right to
park, load or unload any vehicle in the right-of-way, other than
under emergency conditions. Use of the right-of-way shall be on
a regular, continuous, nonexclusive, nonpriority basis,
benefiting the parties, their successors, assigns, lessees,
mortgagees, invitees, guests, customers, agents and employees.
However, neither party's rights hereunder shall lapse in the
event of that party's failure to use the easement and right-of-
way on a continuous basis.
SECTION 3. MAINTENANCE AND REPAIR; TAXES AND INSURANCE
3.1 The cost of periodic maintenance and necessary repairs
to the Easement Property shall be borne exclusively by Buyer as
to the property described in attached Exhibit "A-1" and
exclusively by REC as to the property described in attached
Exhibit "B-1." Such maintenance and repairs shall be performed
by the respective parties on a prompt, diligent and regular basis
in accordance with the generally accepted street and road
maintenance standards then existing under the laws of Washington
County, Oregon, including but not limited to prompt patching or
filling of damage to the pavement and resurfacing at least every
10 years. Required maintenance shall include the removal of
snow, ice and debris as soon as practicable after their
occurrence.
3.2 Subject to paragraph 3.3 below, if a party fails to
perform any such necessary maintenance and repairs as required,
the other party, upon 15 days' prior written notice to the
nonperforming party, may cause such work to be done with a right
of reimbursement for all sums necessarily and properly expended
to remedy such failure. If the nonperforming party fails to pay
such reimbursement on demand, the party causing such work to be
done shall have the immediate right to record a lien against the
nonperforming party's property benefited by this agreement. The
parties agree that such lien shall be treated as a construction
lien pursuant to ORS Chapter 87, subject to foreclosure and
priority as set forth in the construction lien statutes.
3.3 If the Easement Property becomes impassable or ingress
or egress is unreasonably impeded or curtailed because of a
party's failure to maintain the Easement Property as required
herein, the other party may demand by written notice that
remedial work be performed immediately. If such work is not so
performed the other party shall have the rights of cure,
reimbursement and lien as set forth in paragraph 3.2.
3.4 Each party shall pay when due all real property taxes,
assessments or other charges against the land to which each party
holds fee title and which is part of the Easement Property.
There shall be no right of contribution from the other party for
such items.
SECTION 4. DECISION MAKING
Whenever the consent or approval of any Owner is required,
such consent or approval shall be exercised only in the following
manner. The Owners (if consisting of more than one [1] person)
of a Property shall agree among themselves and designate in
writing to the Owners and of the other Property a single person
who is entitled to cast the vote for that Property. If the
Owners of any such Property cannot agree who shall be entitled to
cast the single vote of that Property, or if the Owners fail to
designate the single person who is entitled to cast the vote for
that Property within thirty (30) days after receipt of request
for same from any Owner, then the Owner that owns the largest
portion of that Property shall be entitled to vote, and the
exercise of such right in good faith shall be binding on all
other Owners of that Property.
SECTION 5. CONDEMNATION
5.1 In the event that the Easement Property or any part
thereof is taken by power of eminent domain, or is conveyed under
threat of condemnation and such taking will render the Easement
Property unusable for vehicular ingress and egress, this
agreement shall terminate. If such taking does not render the
Easement Property so unusable, the obligations of a the parties
shall be abated to the extent of such taking, but this agreement
shall otherwise continue in full force and effect.
5.2 The net proceeds from a condemnation or taking shall be
allocated to the Owner of the property taken.
5.3 No Owner shall voluntarily agree to close the access
from the Easement Property to the adjoining public street without
the consent of all Owners. If any governmental authority, by
condemnation or otherwise, eliminates or reduces any access
between a public street and the Easement Property, the Owner
thereof shall make every reasonable effort to obtain alternative
access from such Owner's property to the public street.
SECTION 6. EFFECT OF THE AGREEMENT
The easement granted hereunder shall run with the land as to
all property burdened and benefited by such easement, including
any division or partition of such property. The rights,
covenants and obligations contained in this agreement shall bind,
burden and benefit each party's successors and assigns, lessees,
mortgagees (or beneficiaries under a deed of trust) as to REC's
Property or Buyer's Property, or any portion thereof, as the case
may be.
SECTION 7. MISCELLANEOUS
This Agreement sets forth the entire agreement of the
parties with respect to the subject matter hereof. This
Agreement may only be amended in writing signed by all Owners
(provided, if either REC's Property or Buyer's Property has more
than one Owner, then the person entitled to cast the Property's
vote under Section 6 shall be authorized to execute an amendment
on behalf of all Owners of such Property), and any such amendment
must be recorded in the real estate records of Washington County,
Oregon, in order to be effective.
[Signature Lines]
[Acknowledgments]
Exhibits: A Buyer's Property
A-1 Easement Property on Buyer's Property
B REC's Property
B-1 Easement Property on REC's Property
EXHIBIT 10S
=====================================================================
LEASEHOLD ASSIGNMENT
AGREEMENT
between
REAL ESTATE PROPERTIES LIMITED PARTNERSHIP
Assignor
AND
FRED MEYER, INC.
Assignee
Concerning the Assignor's leasehold interests in the
Hazel Dell Fred Meyer Development in Vancouver, Washington,
the Hawthorne Fred Meyer Development in Portland, Oregon, and
the Raleigh Hills Fred Meyer Development
in Washington County, Oregon
=====================================================================
TABLE OF CONTENTS
-----------------
Page
----
1. SALE AND ASSIGNMENT OF THE LEASEHOLD INTERESTS . . . . . . . .1
2. CONSIDERATION. . . . . . . . . . . . . . . . . . . . . . . . .2
3. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . .2
4. PRECONDITIONS TO ASSIGNEE'S OBLIGATIONS. . . . . . . . . . . .2
4.1 Investigations and Contingency Period . . . . . . . . . .2
4.2 Conveyance; Title Review. . . . . . . . . . . . . . . . .2
4.3 Hazardous or Toxic Materials. . . . . . . . . . . . . . .3
4.4 No Material Changes . . . . . . . . . . . . . . . . . . .4
5. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . .4
6. [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . .4
7. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
7.1 Closing Date. . . . . . . . . . . . . . . . . . . . . . .4
7.2 Manner and Place of Closing . . . . . . . . . . . . . . .4
7.3 Prorations. . . . . . . . . . . . . . . . . . . . . . . .5
7.4 Conveyance of Leasehold Interests . . . . . . . . . . . .5
7.5 FIRPTA. . . . . . . . . . . . . . . . . . . . . . . . . .5
7.6 Events of Closing . . . . . . . . . . . . . . . . . . . .5
7.7 Title Insurance . . . . . . . . . . . . . . . . . . . . .6
7.8 Lease . . . . . . . . . . . . . . . . . . . . . . . . . .6
8. REPRESENTATIONS, WARRANTIES AND COVENANTS. . . . . . . . . . .6
8.1 Assignor's Representations, Warranties
and Covenants . . . . . . . . . . . . . . . . . . . . . .6
8.2 Assignee's Representations and Warranties . . . . . . . .7
9. CONDUCT UNTIL CLOSING; ASSIGNOR'S COOPERATION;
DISCLAIMER . . . . . . . . . . . . . . . . . . . . . . . . . .7
10. FAILURE TO CLOSE . . . . . . . . . . . . . . . . . . . . . . .8
10.1 Assignor's Remedies . . . . . . . . . . . . . . . . . . .8
10.2 Assignee's Remedies . . . . . . . . . . . . . . . . . . .8
11. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . .8
11.1 Binding Effect; Assignment. . . . . . . . . . . . . . . .8
11.2 Time of Essence . . . . . . . . . . . . . . . . . . . . .8
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . .8
11.4 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . .9
11.5 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . .9
11.6 Prior Agreements. . . . . . . . . . . . . . . . . . . . .9
11.7 Applicable Law. . . . . . . . . . . . . . . . . . . . . .9
11.8 Brokers . . . . . . . . . . . . . . . . . . . . . . . . .9
11.9 Changes in Writing. . . . . . . . . . . . . . . . . . . .9
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . .9
11.12 Survival . . . . . . . . . . . . . . . . . . . . . . . .9
11.13 Effect of Extensions and Modifications;
Backup Offers. . . . . . . . . . . . . . . . . . . . . .9
11.14 Disclaimer; Duty to Disclose . . . . . . . . . . . . . 10
11.15 Representations; Condition of Properties . . . . . . . 10
11.16 Related Agreement. . . . . . . . . . . . . . . . . . . 10
11.17 Certain Obligations. . . . . . . . . . . . . . . . . . 10
11.18 Indemnity. . . . . . . . . . . . . . . . . . . . . . . 10
12. APPROVAL BY ASSIGNOR . . . . . . . . . . . . . . . . . . . . 11
EXHIBIT A-1 Legal Description of Hawthorne Property
EXHIBIT A-2 Legal Description of Hazel Dell Property
EXHIBIT A-3 Legal Description of Raleigh Hills Property
EXHIBIT B- Reports
EXHIBIT C- Form of Lease Assignment
LEASEHOLD ASSIGNMENT AGREEMENT
------------------------------
(Hawthorne, Hazel Dell and Raleigh Hills)
This LEASEHOLD ASSIGNMENT AGREEMENT (this "Agreement"),
dated as of March 10, 1995, between REAL ESTATE PROPERTIES
LIMITED PARTNERSHIP, an Oregon limited partnership ("Assignor"),
and FRED MEYER, INC., a Delaware corporation, or its assign
("Assignee"), recites and provides as follows:
RECITALS
A. Assignor currently leases the real property located in
Portland, Multnomah County, Oregon, described in the attached
Exhibit A-1 (the "Hawthorne Property") from REC Resolution
Company, Inc., an Oregon corporation ("REC"), pursuant to a lease
agreement dated as of February 5, 1963 (the "Hawthorne Master
Lease"). Assignor subleases the Hawthorne Property to Fred
Meyer, Inc., a Delaware corporation, pursuant to a lease
agreement dated as of October 22, 1986 (the "Hawthorne
Sublease").
B. Assignor currently leases the real property located in
Vancouver, Clark County, Washington, described in the attached
Exhibit A-2 (the "Hazel Dell Property") from REC, pursuant to two
lease agreements dated as of October 2, 1962, and March 1, 1978
(collectively, the "Hazel Dell Master Lease"). Assignor
subleases the Hazel Dell Property to Roundup Co., a Washington
corporation, pursuant to a lease agreement dated as of October 22,
1986 (the "Hazel Dell Sublease").
C Assignor currently leases the real property located in
Washington County, Oregon, described in the attached Exhibit A-3
(the "Raleigh Hills Property") from REC, pursuant to a lease
agreement dated as of March 3, 1966 (the "Raleigh Hills Master
Lease"). Assignor subleases the Hawthorne Property to Fred
Meyer, Inc., a Delaware corporation, pursuant to a lease
agreement dated as of October 22, 1986 (the "Raleigh Hills
Sublease").
D. The Hawthorne Property, the Hazel Dell Property, and
the Raleigh Hills Property, together with all buildings and other
improvements located thereon and all rights and appurtenances
belonging thereto or in any way appertaining thereto and all
right, title and interest of Assignor in and to any and all
roads, streets, alleys and ways, bounding such property are
collectively referred to herein as the "Properties." The
Hawthorne Master Lease, the Hazel Dell Master Lease and the
Raleigh Hills Master Lease are sometimes collectively referred to
as the "Master Leases." The Hawthorne Sublease, the Hazel Dell
Sublease and the Raleigh Hills Sublease are sometimes
collectively referred to as the "Subleases."
E. Assignor desires to sell and assign to Assignee the
Assignor's interests under the Master Leases and the Subleases to
Assignee, and Assignee desires to purchase and assume such
interests from Assignor, on the terms and conditions set forth in
this Agreement.
Agreements
NOW, THEREFORE, for value received and in consideration
of the mutual promises set forth in this Agreement, the parties
agree as follows:
1. SALE AND ASSIGNMENT OF THE LEASEHOLD INTERESTS.
Assignor agrees to sell and assign to Assignee, and Assignee
agrees to purchase and assume from Assignor, the interests of
Assignor as lessee under the Master Leases and the interests of
Assignor as sublessor under the Subleases, on the terms and
conditions set forth in this Agreement. The interests to be sold
and assigned pursuant to this Agreement are referred to below as
the "Leasehold Interests".
2. CONSIDERATION. The total cash consideration to be paid
by Assignee for the assignment of the Leasehold Interests is NINE
MILLION ONE HUNDRED THOUSAND DOLLARS ($9,100,000). The
consideration is allocated among the various portions of the
Leasehold Interests as follows:
<TABLE>
<CAPTION>
Land Improvements Total
---- ------------ -----
<S> <C> <C> <C>
Hazel Dell Property $1,133,600.00 $1,866,400.00 $3,000,000.00
Hawthorne Property $783,712.00 $1,316,288.00 $2,100,000.00
Raleigh Hills Property $1,235,480.00 $2,764,520.00 $4,000,000.00
</TABLE>
3. EFFECTIVE DATE. The "Effective Date" for purposes of
this Agreement is the date that this Agreement is mutually
executed and delivered.
4. PRECONDITIONS TO ASSIGNEE'S OBLIGATIONS. The close of
escrow and Assignee's obligation to purchase and assume the
Leasehold Interests are subject to the satisfaction, not later
than the Closing Date (unless otherwise provided), of the
following conditions, and the obligations of the parties with
respect to such conditions are as set forth in this Section 4.
The conditions set forth in this Section 4 are solely for the
benefit of Assignee and may be waived only by Assignee. Assignee
shall at all times have the right to waive any condition. Such
waiver or waivers shall be in writing to Assignor.
4.1 Investigations and Contingency Period. Assignee
shall be satisfied, in its sole and absolute judgment, that the
Leasehold Interests suit its needs and that the acquisition of
the Leasehold Interests can be financed in a manner acceptable to
Assignee, and Assignee shall have obtained such senior management
and board of director approvals of this transaction as Assignee
may deem necessary or desirable. Assignee shall have until the
date 90 days after the Effective Date (or until such earlier date
as Assignee may elect in writing by waiving the right to
terminate under this Section) (the "Contingency Period") to
determine whether the conditions precedent set forth in this
Section 4.1 have been satisfied or waived. If Assignee fails to
notify Assignor within the Contingency Period that such
conditions are waived or satisfied, then this Agreement shall
terminate and neither party shall have any further obligations
hereunder.
4.2 Conveyance; Title Review. At closing Assignor
shall assign and convey the Leasehold Interests to Assignee
pursuant to lease assignments in the form attached as Exhibit C.
(a) Title Report, Survey, Etc. Assignee shall
within 10 days after the Effective Date obtain current
preliminary title reports on the Leasehold Interests, from First
American Title Insurance Company ("Title Company"). Assignee
shall also, as promptly as possible and in any event within 45
days after the Effective Date, obtain current ALTA surveys of the
Properties meeting Assignee's survey requirements. The cost of
the surveyor's work will be paid by Assignee.
(b) Title Approval Procedure.
(1) Within 20 days after receipt of all of
the title reports and surveys, Assignee will review such
materials and notify Assignor in writing of Assignee's approval
(or disapproval) of any exceptions shown in the title reports,
other than an exception for current property taxes, and of such
surveys. Failure to notify Assignor than an item is approved
shall be deemed to be disapproval of such item. In the event of
such disapproval: (i) Assignor shall be obligated to remove (or
commit to remove) any disapproved lien or other financial
encumbrance (a "Lien"), at or prior to closing; and (ii) Assignor
agrees to exert its best efforts to remove any other disapproved
matter (but Assignor is not absolutely obligated to remove a
disapproved matter other than a Lien).
(2) Assignor shall have 20 days from the
date that items are disapproved or deemed disapproved to
eliminate any disapproved title exceptions or survey matters (or
as to any Liens, to commit in writing to eliminate such Liens at
or prior to closing). If Assignor is unable to eliminate a
disapproved title exception or survey matter within such
twenty-day period, despite Assignor's best efforts to do so,
either party may elect to rescind this Agreement by notice to the
other party within ten days after the expiration of the
twenty-day period. In such event, all obligations of the parties
under this Agreement shall thereafter cease. Assignee may
preserve this Agreement, however, if Assignee notifies Assignor
within twenty days after delivery of a notice of termination by
Assignor, that either: (a) Assignee waives its objection to the
relevant encumbrance(s); or (b) as to encumbrances that can be
removed by the payment of money, Assignee intends at closing to
pay the amount necessary to remove such encumbrances. If
Assignee so preserves this Agreement, this Agreement shall remain
in full force and effect, and Assignee will receive a credit at
closing in the amount of any sum paid by Assignee to remove such
encumbrances on title.
(3) As to any exceptions to title placed
of record or first identified after issuance of the preliminary
title report or revealed by any supplemental report, there shall
be a 10-day period for Assignee to review and approve or
disapprove such exceptions on the same basis as provided above.
(4) With respect to the Raleigh Hills
Property, the parties are aware that boundary line questions in
three locations have been identified on a preliminary survey.
Assignor shall use its best efforts to resolve such questions to
the satisfaction of Assignee and the title company, such that the
title company will issue extended coverage title insurance
insuring the surveyed border of the Property without exception
for boundary line matters or encroachments. Assignee shall
cooperate in such efforts. Final resolution of such matters to
Assignee's satisfaction is a condition to Assignee's obligation
to close.
(c) Master Leases. Within 10 days after the
Effective Date, Assignor shall deliver to Assignee true and
complete copies of the Master Leases together with all
amendments, supplements or addenda thereto. Assignee shall
review the Master Leases as part of its due diligence review
during the Contingency Period.
4.3 Hazardous or Toxic Materials. Exhibit B sets
forth a complete list of all written soils, environmental or
other reports or studies in Assignor's possession concerning any
hazardous waste or hazardous substances (as defined in Section
8.1) on, in or under the Properties or any underground storage
tanks on the Properties (collectively, the "Reports"). In
addition, Assignor has made available to Assignee for inspection
other documents ("Environmental Documents") relating to hazardous
substances on, in or under the Property as further described in
Exhibit B. Assignor has provided or will promptly provide
complete copies of the Reports and any other such reports
discovered by Assignor after the date hereof. During the
Contingency Period, Assignee will cause to be conducted such
investigations or audits of the environmental condition of the
Properties as Assignee deems prudent. Assignee will on request
provide to Assignor copies of any reports prepared by third
parties in connection with such investigations or audits. In the
event that, prior to the Closing Date, any hazardous substances
in amounts or of kinds that violate or could give rise to
liability under environmental laws (as defined in Section 8.1)
are discovered on, in, or under any of the Properties, or any
underground storage tanks are discovered on any of the
Properties, Assignee may elect, within ten days after learning of
the discovery of such matter, to terminate this Agreement by
notice to the Assignor; provided, however, that Assignor may
preserve this Agreement by notifying Assignee (within 10 days
after receipt of the Assignee's termination notice) that Assignor
commits at its expense to perform any remediation necessary to
correct the problem to the satisfaction of Assignee (in
Assignee's discretion) and any governmental agency with
jurisdiction over the Properties, and the parties thereafter
document such remediation commitment in a manner acceptable to
Assignee. If this Agreement is so terminated, the parties shall
thereafter have no further obligations under this Agreement.
4.4 No Material Changes. At the Closing Date, there
shall have been no material adverse changes in the condition of
or legal requirements applicable to the Properties (provided that
the condemnation activities affecting the Hazel Dell Property
referenced in Section 5.2 of this Agreement shall not be deemed a
material adverse change).
5. CONDEMNATION.
5.1 Subject to Section 5.2, if, prior to closing, any
part of the Property is condemned or appropriated by public
authority or any party exercising the right of eminent domain, or
is threatened thereby, then this Agreement shall, at the election
of the Assignee, become null and void. In the event the Assignee
elects not to terminate this Agreement, the consideration to be
paid by Assignor shall not be affected, but Assignee shall be
entitled to all proceeds of such award attributable to the
Leasehold Interests (or, if the award is made prior to closing,
Assignor shall receive such proceeds but Assignee shall receive a
credit against the consideration to be paid in the net amount of
such proceeds). Assignor will promptly notify Assignee as to the
commencement of any such action or any communication from a
condemning authority that a condemnation or appropriation is
contemplated, and will cooperate with Assignee in the response to
or defense of such actions, and permit Assignee to participate
fully in, and approve any settlement of, any such proceedings.
5.2 Assignee acknowledges that proposals exist (1) to
close the access to the Hazel Dell Property from 78th Street, and
(2) to condemn a portion of the Hazel Dell Property in connection
with the construction of light rail facilities. Such
condemnation actions shall not constitute grounds to terminate
this Agreement. Assignee and Assignor agree to cooperate and
exert their best efforts to avoid closure of such access,
including, if Assignee deems it appropriate, institution of legal
proceedings; provided, Assignor shall not be required to incur
out of pocket costs in connection with such efforts. Assignee
shall have the right to direct such efforts and proceedings, and
legal proceedings so instituted shall be at Assignee's expense.
Proceeds from any such condemnation or access closure shall be
handled as provided in Section 5.1.
6. [RESERVED]
7. CLOSING.
7.1 Closing Date. This transaction will be closed
(the "Closing") on a date to be selected by Assignee and
reasonably acceptable to Assignor, but not later than 15 days
after expiration of the Contingency Period and not earlier than
March 1, 1995 (the "Closing Date").
7.2 Manner and Place of Closing. This transaction
will be closed by an escrow officer of First American Title
Insurance Company (or other Title Company selected pursuant to
Section 4.2) (the "Escrow Officer") at its office in Portland,
Oregon, or at such other place as the parties may mutually
select. Closing shall take place in the manner and in accordance
with the provisions set forth in this Agreement.
7.3 Prorations. There shall be no prorations of taxes
or expenses, as Assignee or Assignee's subsidiary is under the
Subleases responsible for taxes and expenses, and is entitled to
all income derived from, the Properties other than rent owing
under the Master Leases and the Subleases. Rent owing under the
Master Leases and the Subleases shall be prorated as of 12:01
a.m. on the Closing Date, with Assignor entitled to the rents
under the Subleases and obligated with respect to the rents under
the Master Leases through such time, and with Assignee obligated
with respect to the rents under the Subleases through such time.
7.4 Conveyance of Leasehold Interests. Conveyance of
the Leasehold Interests shall be by delivery of lease assignment
agreements in the form attached as exhibit C. All municipal,
county, state and federal transfer and documentary stamp taxes,
if any, shall be paid by Assignor at the time of closing. The
assignment shall be free of encumbrances of any kind, without
exceptions, unless otherwise specified herein or approved
pursuant to Section 4.2, and except for the lien of real estate
taxes not yet payable, so as to convey to Assignee good and
marketable title to the Leasehold Interests. The conveyance will
be free of all tenancies other than (1) the occupancy of Fred
Meyer, Inc., or Roundup Co., pursuant to the Subleases; and (2)
subleases, rental agreements or licenses in which Fred Meyer,
Inc., or its subsidiary is the sublessor, landlord or licensor.
7.5 FIRPTA. Assignor shall deliver to Assignee at
closing an affidavit that Assignor is not a "foreign person"
under FIRPTA, in form satisfactory to Assignee.
7.6 Events of Closing. Provided the Escrow Officer
has received the sums and is in a position to cause the title
insurance policy to be issued as described below, this
transaction will be closed on the Closing Date as follows:
(a) Assignee shall pay the total cash
consideration for the Leasehold Interests in immediately
available funds, adjusted for the charges and credits set forth
in this section.
(b) Any liens or other encumbrances on title
required by this Agreement to be paid or removed by Assignor at
closing shall be paid and satisfied or removed of record at
Assignor's expense.
(c) Assignor and Assignee shall execute and
deliver the lease assignment agreements contemplated by Section
7.4.
(d) Title Company will commit to issue the policy
described in Section 7.7, upon recordation of the closing
documents.
(e) The parties will execute any additional
documentation required with respect to the matters described in
Sections 7.4 and 7.5.
(f) The Escrow Officer will record the lease
assignment agreement(s).
(g) The escrow fee shall be paid equally by the
parties. Any real estate excise or transfer tax will be paid by
Assignor. The recording fees for the lease assignment agreements
will be paid by Assignee. Assignor shall be charged with the
premium (including any sales or excise tax) for the title
insurance policies to be delivered to Assignee, except that
Assignee shall be responsible for the portion of the premium
(including any sales or excise tax) attributable to extended
coverage if Assignee elects to obtain it, and for the cost of any
endorsements requested by Assignee.
(h) There are no brokerage fees.
(i) If any other closing costs not specifically
provided for herein are due at closing of this transaction, each
party shall pay such closing costs as are normally and
customarily the responsibility of such party. In addition to any
other items required to be paid by either party pursuant to this
Agreement, each party shall pay its own attorneys' fees.
7.7 Title Insurance. As soon as possible after the
Closing Date, Assignor shall cause the Title Company to furnish
Assignee with a standard policy of title insurance in the amount
of the total cash consideration for each Leasehold Interest, in
form acceptable to Assignee, subject only to exceptions for the
matters accepted by Assignee pursuant to Section 4.2. At
Assignee's option, such policies shall be in ALTA extended
coverage form (full or partial), in which case Assignor and
Assignee will execute such affidavits as may be necessary to
obtain the extended coverage. Extra title premiums attributable
to extended coverage shall be Assignee's expense.
7.8 Lease. If Assignee elects to assign this
Agreement and the right to purchase the Leasehold Interests to a
third party that will lease the Properties to Assignor, the
parties will execute any additional documentation necessary to
implement such assignment and lease, provided that Assignor shall
not be required to incur any additional expense or any material
risk in connection therewith.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
8.1 Assignor's Representations, Warranties and
Covenants. Assignor represents and warrants to Assignee that:
(a) To the Assignor's actual knowledge and
without independent investigation, and except as disclosed on the
Reports: (1) there are no hazardous substances (as defined
below) on, within, under or upon the Properties, in amounts or of
kinds that in their current condition pose a threat to human
health or the environment or pose a risk of liability under
environmental laws (provided, however, that due to the age of the
improvements on the Properties, there may be asbestos containing
materials used in the construction of such improvements); and (2)
there are no underground storage tanks within the Properties.
Assignor does hereby assign to Assignee (effective at and as of
the Closing Date) any and all environmental warranties,
indemnification agreements and rights of action Assignor may have
against third parties (if any) relating to the presence of any
such hazardous substances or underground tanks. As used in this
Agreement, the term "environmental laws" includes any and all
state, federal and local statutes, regulations, and ordinances to
which the Properties are subject and relating to the protection
of human health and the environment, as well as any judgments,
orders, injunctions, awards, decrees, covenants, conditions, or
other restrictions or standards relating to same; and the term
"hazardous substances" includes all hazardous and toxic
substances, wastes, or materials, including without limitation
all substances, wastes, and materials containing either
petroleum, including crude oil or any fraction thereof, or any of
the substances referenced in Section 101(14) of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601(14), and similar or comparable state or local laws.
(b) Except as disclosed to Assignee in writing
(and other than the potential condemnation affecting the Hazel
Dell Property referenced in Section 5.2 above), Assignor has
received no written notice of any condemnation, environmental,
zoning or other land-use regulation proceedings which would
detrimentally affect the use and operation of the Properties or
the value of the Properties nor has Assignor received notice of
any special assessment proceedings affecting the Properties.
(c) There is no litigation pending or to the
Assignor's actual knowledge threatened against Assignor that
arises out of the ownership of the Leasehold Interests and would
be binding on the Assignee or might detrimentally affect the use
or operation of the Properties for their intended purpose or the
value of the Leasehold Interests or adversely affect the ability
of Assignor to perform its obligations under this Agreement.
(d) The persons who have executed this Agreement
have been duly authorized to do so by Assignor. All documents
delivered at closing will be executed by a duly authorized
person. Assignor has a good and legal right to enter into this
Agreement and to perform all covenants of Assignor contained in
this Agreement in accordance with its terms.
(e) The copies of the Master Leases provided to
Assignee by Assignor have been and/or will be true and complete.
There are no liabilities or obligations binding on holder of the
Leasehold Interests that are not reflected in the copies of the
Master Leases to be provided by Assignor. As of Closing,
Assignor's interest in the Master Leases, the Subleases and the
rentals due or to become due thereunder will be free of any
assignments, encumbrances or liens, except for encumbrances
accepted by Assignee pursuant to Section 4.2. No leasing or
brokerage fees or commissions of any nature whatsoever are
currently or shall become due or owing at or after Closing to any
person, firm, corporation, or entity with respect to the Master
Leases, the Subleases, or the Leasehold Interests.
8.2 Assignee's Representations and Warranties.
Assignee represents and warrants to Assignor that the persons who
have executed this Agreement have been duly authorized to do so
by Assignee (subject to the provisions of Section 4.1 and 12).
All documents delivered at closing will be executed by a duly
authorized person. Assignee has a good and legal right to enter
into this Agreement and to perform all covenants of Assignee
contained in this Agreement in accordance with its terms.
9. CONDUCT UNTIL CLOSING; ASSIGNOR'S COOPERATION;
DISCLAIMER. From the date of this Agreement until the Closing
Date, Assignor shall cause all liens on the Leasehold Interests
incurred by Assignor to be paid current, and will not further
mortgage or encumber the Leasehold Interests or increase the
amount of any current indebtedness on the Leasehold Interests.
No provision of this Agreement or previous (or subsequent)
conduct or activities of the parties will be construed: (i) as
making either party an agent, principal, partner or joint
venturer with the other party, (ii) as creating any express or
implied obligation for Assignee to operate the Properties as a
Fred Meyer retail facility or otherwise, or (iii) as making
either party responsible for payment or reimbursement of any
costs incurred by the other, whether or not such development
occurs (except as may be expressly set forth herein or in its
attached exhibits). WHETHER AND HOW ASSIGNEE MAY DEVELOP,
REDEVELOP OR OPERATE THE PROPERTIES POST-CLOSING IS AT ASSIGNEE'S
DISCRETION. ASSIGNOR WILL NOT HAVE ANY CLAIM AGAINST (OR RIGHT
TO RECOVER ANY DAMAGES OR COSTS FROM) ASSIGNEE IN THE EVENT
ASSIGNEE DOES NOT DEVELOP, REDEVELOP OR CONTINUE TO OPERATE THE
PROPERTIES.
10. FAILURE TO CLOSE.
10.1 Assignor's Remedies. In the event that this
transaction fails to close on account of Assignee's fault or
inability to close, and Assignee has not exercised any right to
terminate or rescind this Agreement as provided herein, Assignee
shall pay to Assignor the sum of $25,000 as full liquidated
damages. SUCH AMOUNT HAS BEEN AGREED BY THE PARTIES TO BE
REASONABLE COMPENSATION AND THE EXCLUSIVE REMEDY FOR Assignee'S
DEFAULT, SINCE THE PRECISE AMOUNT OF SUCH COMPENSATION WOULD BE
DIFFICULT TO DETERMINE. Assignor hereby waives any right to
specific enforcement of this Agreement, and any right to sue for
damages (including lost profits or consequential damages) other
than the liquidated damages provided for in this Section. The
parties are initialing this Section for purposes of acknowledging
and agreeing to such exclusive remedy and liquidated damages
provision.
Initials of: Assignor _____ Assignee _____
10.2 Assignee's Remedies. In the event that the
transaction fails to close on account of Assignor's fault or
Assignor's inability to deliver title acceptable to Assignee
pursuant to Section 4.2, Assignee shall be entitled to such
remedies for breach of contract as may be available under
applicable law, including (without limitation) the remedy of
specific performance, collection of damages, recovery of costs
and attorneys' fees.
11. GENERAL PROVISIONS.
11.1 Binding Effect; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties, and
their respective heirs, personal representatives, successors, and
assigns. Assignee reserves the right to assign the right to
purchase the Leasehold Interests to any third party at closing.
Assignee also reserves the right to assign the Agreement at or
prior to closing to an entity that will lease the Leasehold
Interests to Assignee. Unless otherwise agreed, however, no such
assignment shall release Assignee from its obligations under this
Agreement, or increase Assignor's obligations in any respect.
11.2 Time of Essence. Time is of the essence of each
and every provision of this Agreement.
11.3 Notices. All demands or notices required or
permitted to be given under this Agreement shall be in writing.
Notices may be served by certified or registered mail, postage
paid with return receipt requested; by facsimile, or other
telecommunication device capable of transmitting or creating a
written record (provided that a copy is also sent by U.S. Mail,
first class); or personally. Mailed notices shall be deemed
delivered five (5) days after mailing, properly addressed. Telex
or telecommunicated notices shall be deemed delivered when
receipt is either confirmed by confirming transmission equipment
or acknowledged by the addressee or its office. Personal
delivery shall be effective when accomplished. Unless a party
changes its address by giving notice to the other party as
provided herein, notices shall be delivered to the parties at the
following addresses:
Assignor: REAL ESTATE PROPERTIES LIMITED PARTNERSHIP
Suite 200
15115 SW Sequoia Parkway
Portland, OR 97224
Attn: Dave Ramus
Facsimile No. (503) 624-7755
Assignee: Fred Meyer, Inc.
P.O. Box 42121
Portland, Oregon 97242-0121
(Street Address - 3800 S.E. 22nd Avenue,
Portland, Oregon 97202)
Attn: Scott L. Wippel
Facsimile No.: (503) 797-3539
11.4 Waiver. Failure of either party at any time to
require performance of any provision of this Agreement shall not
limit the party's right to enforce the provision. Waiver of any
breach of any provision shall not be a waiver of any succeeding
breach of the provision or a waiver of the provision itself or
any other provision.
11.5 Attorneys' Fees. In the event suit or action is
instituted to interpret or enforce the terms of this Agreement or
to rescind this Agreement, the prevailing party shall be entitled
to recover from the other party such sum as the court may adjudge
reasonable as attorneys' fees at trial, on any appeal, and on any
petition for review, in addition to all other sums provided by
law.
11.6 Prior Agreements. This Agreement supersedes and
replaces all written and oral agreements previously made or
existing between the parties (including, without limitation, all
previous letters of intent and addenda thereto and all verbal
agreements and understandings).
11.7 Applicable Law. This Agreement shall be
construed, applied and enforced in accordance with the laws of
the State of Oregon (provided, as to the equitable remedies of
Assignee with respect to the Hazel Dell Property, Washington law
shall apply).
11.8 Brokers. Each party will defend, indemnify, and
hold the other party harmless from any claim, loss, or liability
made or imposed by any other party claiming a commission or fee
in connection with this transaction and arising out of its own
conduct.
11.9 Changes in Writing. This Agreement and any of its
terms may only be changed, waived, discharged or terminated by a
written instrument signed by the party against whom enforcement
of the change, waiver, discharge or termination is sought.
11.10 Counterparts. This Agreement may be executed
simultaneously or in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and
the same Agreement.
11.11 Invalidity of Provisions. In the event any
provision of this Agreement is declared invalid or is
unenforceable for any reason, such provision shall be deleted
from such document and shall not invalidate any other provision
contained in the document.
11.12 Survival. All representations, warranties
and obligations of the parties in this Agreement shall survive
the Closing Date and delivery of the lease assignment agreements
contemplated in this Agreement and be fully enforceable
thereafter.
11.13 Effect of Extensions and Modifications;
Backup Offers. Any amendment to this agreement (including any
extension of time for waiver of conditions or closing) shall be
deemed to be a modification of the continuing existing agreement,
rather than a rescission or termination of such agreement.
Assignor will not accept any "backup", "standby" or other
additional offers to purchase the Leasehold Interests without
Assignee's written consent. In any event, any such additional
offer shall be subordinate to this Agreement as it may be
extended or modified.
11.14 Disclaimer; Duty to Disclose. As to any
reports or other materials provided by one party to the other
party herein, the party providing such reports or materials is
not warranting (and will not be liable or responsible for) the
accuracy, fitness or usability of such reports or materials or
any recommendations or conclusions stated therein. All
representations and warranties of the parties in this Agreement
are limited to the best of the party's actual knowledge, without
independent investigation or examination. If either party
obtains actual knowledge prior to the Closing Date of a fact
which would make any of the representations and warranties in
this Agreement false, such party will notify the other party of
such fact. A party will not be deemed in breach of a
representation or warranty in this Agreement or liable to the
other party for any claimed misrepresentation in this Agreement
after the Closing Date unless the party had actual knowledge on
the Closing Date that the representation or warranty was false
and failed to disclose to the other party the fact known to the
party which made the representation or warranty false.
11.15 Representations; Condition of Properties.
Assignee or Assignee's affiliate has heretofore operated and
occupied the Properties and has thoroughly and completely
examined and is fully aware of the physical condition of the
Properties as well as any governmental permits or approvals
required in connection with Assignee's use of the Properties, the
suitability of the Properties for Assignee's intended use, the
availability of utilities and services, the applicable zoning,
building, housing and other ordinances, restrictions, laws, and
regulations affecting the Properties or other matters. Except as
otherwise specifically set forth in this Agreement or in any
instrument delivered at Closing, Assignee accepts the land and
property and all other aspects of the Properties in their present
condition, AS IS, without any representations or warranties by
Assignor, expressed or implied. Assignee acknowledges that
Assignee has ascertained for itself the value and condition of
the Properties and Assignee is not relying on, nor has Assignee
been influenced by, any representation of Assignor regarding the
value or condition of the Properties.
11.16 Related Agreement. Assignee is party to a
Real Estate Purchase and Sale Agreement, dated on or about the
date hereof, pursuant to which Assignee intends to acquire the
fee interest of REC in the Properties (the "Related Agreement"),
which the parties thereto intend to close simultaneously with
closing under this Agreement. Assignee's obligation to close
under this Agreement is subject to the performance by REC of
REC's obligations under the Related Agreement, such that a
simultaneous closing may occur. Assignor's obligation to close
under this Agreement is subject to the performance by Assignee of
Assignee's obligations under the Related Agreement, such that a
simultaneous closing may occur.
11.17 Certain Obligations. Under the terms of the
Subleases, Assignee is obligated to (i) maintain the Properties
(Paragraph 9.1) and (ii) cause the Properties to comply with all
legal requirements (Paragraph 6.2). In addition to Assignnee's
acknowledgment that it is accepting the Properties AS IS,
Assignee hereby waives, releases, acquits and forever discharges
Assignor and its officers, directors, partners, employees,
agents, and any other person acting on behalf of Assignor, from
any and all claims, actions, causes of action, demands, rights,
damages expenses or compensation whatsoever, arising from any
defects in the Properties, to the extent such defects would have
been Assignee's responsibility to remedy under the Subleases.
11.18 Indemnity. Paragraph 12.2 of each Sublease
requires Assignee to indemnify Assignor against claims for
injury to persons and damage to property occurring on the
Properties. The parties acknowledge that Assignee's indemnity
obligation to Assignor under Paragraph 12.2 of the Subleases
shall survive the assignment or termiantion of the Subleases or
both, and furhter agrees that such obligation shall extend to
REC, as if REC were the landlord under the Subleases.
12. APPROVAL BY ASSIGNOR.
Assignor will have until 5 p.m. (Pacific Time) on
March 21, 1995 in which to execute and return to Assignee a fully
signed counterpart of this Agreement. Neither the delivery of
this Agreement to Assignor for execution nor the delivery of any
signed Agreement to Assignee will create a binding contract, or
contract by estoppel or otherwise, between the parties. Assignee
will have 10 days after receipt of this Agreement signed by
Assignor to execute and deliver or transmit (by facsimile or
otherwise) to Assignor at its address hereunder a fully executed
counterpart of this Agreement, and if not executed and delivered
within such time period, this Agreement will be null and void and
neither party will thereafter have any obligation or liability to
the other party pursuant to this Agreement.
IN WITNESS WHEREOF, the parties have caused this
instrument to be duly executed as of the date set forth above.
Assignor: REAL ESTATE PROPERTIES LIMITED PARTNERSHIP,
an Oregon limited partnership, by FMGP
Associates, an Oregon limited partnership,
its general partner, by FMGP Incorporated,
a Delaware corporation, its general partner
By: DAVID W. RAMUS
----------------------------------------
Title: David W. Ramus
-------------------------------------
Date Executed: 3/13/95
-----------------------------
Assignee: FRED MEYER, INC., a Delaware corporation
By: SCOTT L. WIPPEL
----------------------------------------
Scott L. Wippel, Senior Vice President
----------------------------------------
Date Executed: 3/14/95
-----------------------------
EXHIBIT A-1
-----------
Legal Description - Hawthorne Property
PARCEL I:
- --------
Lots 1-16, inclusive, Block 1, SUNNYSIDE ADDITION, in the City of
Portland, County of Multnomah and State of Oregon. TOGETHER WITH
that portion vacated of SE Madison Street which inured thereto by
reason of Ordinance vacating SE Madison Street recorded
December 4, 1970 in Book 762, page 1551.
PARCEL II:
- ---------
Lots 1-16, inclusive, Block 2, SUNNYSIDE ADDITION, in the City of
Portland, County of Multnomah and State of Oregon.
EXCEPT the East 12 feet of Lots 8 and 9 of said Block 2, described
in deeds to the City of Portland, recorded October 16, 1962 in
Book 2139, page 424 and Book 2139, page 428.
TOGETHER WITH that portion of vacated SE Madison Street which
inured thereto by reason of Ordinance vacating SE Madison Street
recorded December 4, 1970 in Book 762, page 1551.
EXHIBIT A-2
-----------
Legal Description - Hazel Dell Property
PARCEL I
- --------
BEGINNING at an iron pipe set at the Northeast corner of Lot 20,
Alexander Tracts in the Northeast quarter of Section 10, Township
2 North, Range 1 East, Willamette Meridian; thence South 5 degrees
59'15" West along the East line of said Lot 20 a distance of
111.00 feet to a railroad spike marking the Southeast corner
thereof; thence South 88 degrees 17'00" West along the South
line of said Lot 20, a distance of 292.01 feet to the East right
of way line of SR 5; thence North 1 degree 43'00" West along
the East right of way line of said SR 5 a distance of 110.00 feet
to the North line of said Lot 20; thence North 88 degrees 17'00"
East along the North line of said Lot 20 a distance of 306.90 feet
to the point of beginning.
PARCEL II
- ---------
That portion of the Northeast quarter of the Northeast quarter of
Section 10, Township 2 North, Range 1 East of the Willamette
Meridian, in Clark County, Washington, described as follows:
BEGINNING at a point that is South 89 degrees 05' West 71.35 feet
and South 5 degrees 59'15" West 284.33 feet fron the Northeast
corner of said Section 10, said point of beginning also being
on the Westerly line of N.E. Highway 99; thence continuing South
5 degrees 59'l5" West along the Westerly line of said N.E.
Highway 99, a distance of 823.54 feet to the Northeast corner of
the Alexander Tract, according to the plat thereof, recorded in
Volume "E" of Plats, page 1 records of said County; thence South
88 degrees 17'00" West along the North line of said Alexander
tracts, a distance of 306.90 feet to the Easterly right of way
line of Primary State Highway No. 1 as conveyed to the State of
Washington by deed recorded under Auditor's File No. G 200257;
thence North 3 degrees 45' East along said Easterly right of way
line to an inner corner in said Easterly line; thence North 88
degrees 27'15" East 11.10 feet to the West line of that tract
conveyed to Vanoak Corporation by deed recorded under Auditor's
File No. G 628799; thence South 12 degrees 42'15" East along the
West line of said Vanoak tract, a distance of 76.72 feet to
the Southwest corner thereof; thence North 89 degrees 04' East
along the South line of said Vanoak tract, 134.36 feet to the
Southeast corner thereof; thence South 5 degrees 59'l5" West
along the Southerly extension of the East line of said Vanoak
tract, 126.76 feet; thence South 84 degrees 00'45" East 180.00
feet to the point of beginning.
PARCEL III
- ----------
That certain portion of the Northeast quarter of the Northeast
quarter of Section 10, Township 2 North, Range 1 East, Willamette
Meridian in the County of Clark and State of Washington, more
particularly described as follows:
BEGINNING at a point that is South 46.88 feet and West 422.41
feet fron the Northeast corner of said Section 10, said point
being the intersection of the Southerly line of N.E. 78th Street
and the Easterly line of Primary State Highway No. 1 and running
thence South 12 degrees 42'15" East 96.71 feet; thence North
89 degrees 05' East 134.36 feet; thence North 5 degrees 59' East
98.26 feet to the Southerly line of N.E. 78th Street; thence
South 88 degrees 05'15" West, along said Street, 165.96 feet to
the point of beginning.
EXCEPTING from the above described Parcel III the North 10 feet
thereof conveyed to Clark County, Washington, a municipal
corporation by deed recorded June 17, 1985, as Auditor's File
No. 8506170112.
EXHIBIT A-3
-----------
Legal Description - Raleigh Hills Property
A tract of land located in Section 13, Township 1 South, Range 1
West of the Willamette Meridian, in the County of Washington and
State of Oregon, and more particularly described as follows:
Commencing at the intersection of the Southerly line of the
Beaverton Hillsdale Highway (County Road No. 669) and the West
line of the Northeast quarter of the said Section 13, which
intersection is on the Westerly line of that tract of land
conveyed to Harry M. Baker and wife by deed recorded in Deed Book
288, page 103, Washington County Deed Records; thence South
01 degrees 24'40" West along the Westerly line of the said Baker
tract a distance of 204.68 feet to the Southeast corner of that
tract of land conveyed to Portland Federal Savings and Loan
Association by that Warranty Deed recorded in Deed Book 459,
page 264, Washington County Deed Records, and the true point of
beginning of this description; thence South 01 degrees 24'40"
West along the West line of the said Baker tract a distance of
63.32 feet to the Southwest corner thereof; thence South 01
degrees 24'40" West along the West line of that tract of land
conveyed to George Krueger and wife by deed recorded in
Book 229, page 651, Washington County Deed Records, a distance
of 184.60 feet to an angle point therein and to the most
Easterly Southeast corner of that tract of land leased to
United States National Bank of Oregon, as described in that
Memorandum of Lease recorded in Book 646, page 295, Washington
County Deed Records; thence South 27 degrees 04'50" West along
the Southerly line thereof, a distance of 66.70 feet to the most
Southerly Southeast corner thereof; thence South 75 degrees 43'50"
West a distance of 60.00 feet to the Southwest corner thereof;
thence 155.22 feet along the arc of a 1,145.92 foot radius circular
curve to the left (long chord is 153.11 feet and bears South
41 degrees 50'43" East) to a point of compound curve; thence
168.03 feet along the arc of a 174.50 foot radius circular
curve to the left (long chord is 161.98 feet and bears South
72 degrees 32'32" East) to a point in the Northwesterly line
of SW Scholls Ferry Road, said point being South 56 degrees
16'30" West a distance of 23.33 feet from the Southwesterly line
of the said Krueger tract; thence Southwesterly along the
Northwesterly line of SW Scholls Ferry Road, South 56 degrees
16'30" West a distance of 74.38 feet to the most Easterly corner
of that tract of land conveyed to the State of Oregon by deed
recorded in Book 430, page 45, of the Washington County Deed
Records; thence South 61 degrees 21'30" West along the
Northwesterly line of the said State of Oregon tract a distance
of 293.40 feet to an angle point therein; thence North 77 degrees
08'30" West along the Northerly line, thereof, a distance of
64.00 feet to an angle point therein; thence South 56 degrees
16'30" West along the Northwesterly line thereof, a distance
of 40.00 feet to an angle point therein; thence South 04 degrees
41'30" West along the West line, thereof, a distance of 16.09 feet
to the most Easterly corner of that tract of land leased to the
Union Oil Company of California as described in that lease
recorded in Book 502, page 456, of the Washington County Deed
Records; thence North 33 degrees 43'30" West along the Northeasterly
line, thereof, a distance of 44.63 feet to the most Northerly
corner thereof; thence South 55 degrees 16'30" West along the
Northwesterly line thereof, a distance of 153.50 feet to the
most Westerly corner thereof; thence South 33 degrees 43'30"
East along the Southwesterly line, thereof, a distance of
5.84 feet to the most Easterly Northeast corner of that tract
of land conveyed to CAY, Incorporated, an Oregon corporation,
as described in Book 511, page 494 of the Washington County
Deed Records; thence along the Northeast line of the said
CAY, Incorporated tract 100.21 feet along the arc of a
100.00 foot radius circular curve to the right (long chord
is 96.07 feet and bears North 66 degrees 51'10" West) to a
point of tangency; thence North 38 degrees 08'40" West along
the East line of the said CAY, Incorporated tract, a distance of
394.78 feet to an angle point therein; thence North 88 degrees
39'20" West along the North line, thereof, a distance of
87.05 feet to a point on the West line of that tract of land
conveyed to Hollywood Company as described in Book 439,
page 706 of the Washington County Deed Records; thence
North 01 degrees 41'20" East along the West line of the said
Hollywood Company tract a distance of 618.03 feet to the South
line of the said Beaverton Hillsdale Highway; thence South
88 degrees 32'40" East along said South line a distance of
710.00 feet to a point that is 100.00 feet West of the West line
of the Northeast quarter of the said Section 13; thence South
01 degrees 24'40" West parallel to and 100.00 feet West of
said Baker Westerly line a distance of 204.88 feet to the
Southwest corner of the said Portland Federal Savings and Loan
Association tract; thence South 88 degrees 32'40" East along the South
line of the said Portland Federal Savings and Loan Association
tract a distance of 100.00 feet to the true point of beginning of
this description.
EXCEPTING THEREFROM that portion as described in deed to
Washington County, a political subdivision of the State of
Oregon, recorded August 27, 1990 as Fee No. 90-46313.
EXHIBIT B
---------
RALEIGH HILLS FLYING A SERVICE STATION
7550 SW Beaverton-Hillsdale Highway
Portland, Oregon
1. A Report on Underground Storage Tank Decommissioning and
Soil Cleanup, dated March 1, 1993.
2. A Report on Third Quarter Groundwater Monitoring, dated
March 22, 1993.
3. A Report on Additional Subsurface Investigation, dated
January 21, 1994.
RALEIGH HILLS UNOCAL SERVICE STATION
l. Report of Remedial Action dated December 22, 1989.
2. Site Contamination Study dated November 9, 1990.
3. Drywell Removal Report dated July 15, 1992.
4. Results of Quarterly Ground Water Monitoring dated October
1992, February 1994, April 1994, and August 1994.
EXHIBIT C - LEASE ASSIGNMENT FORM
---------------------------------
RECORDING REQUESTED |
BY AND WHEN RECORDED |
RETURN TO: |
|
_______________________ |
P.O. Box 42121 |
Portland, Oregon 97242 |
Attn: RTC MO/CLD |
LEASE ASSIGNMENT AGREEMENT
This Lease Assignment Agreement (this "Agreement"), dated as
of _______________, between REAL ESTATE PROPERTIES LIMITED PARTNERSHIP,
an Oregon corporation whose address is Suite 200, 15115 SW Sequoia
Parkway, Portland, OR 97224 ("Assignor"), and ______________________,
a Delaware corporation, whose address is ___________________________
("Assignee"), recites and provides as follows:
FOR good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor hereby
sells, assigns, transfers, conveys and delivers to Assignee all
of Assignor's right, title and interest in and to each of the
lease agreements referenced on Exhibit A hereto (the "Lease
Agreements"). The rights conveyed hereby are referred to herein
as the "Leasehold Interests".
Assignee hereby accepts the foregoing assignment. Assignee
agrees to assume Assignor's obligations under the Lease
Agreements, provided, however, that Assignee does not assume, and
Assignor shall remain fully responsible for, and agrees to
discharge, any obligations or liabilities under such Lease
Agreements that either (i) are not disclosed on the face of the
copies of such Lease Agreements provided by Assignor to Assignee,
or (ii) accrued or arose from or out of a set of facts existing
prior to the date hereof ("Assignor's Liabilities"). Assignee
will indemnify, defend and hold harmless Assignor from and
against liabilities, costs, expenses and damages, including
attorneys' fees, arising from Assignee's failure to perform its
obligations hereunder, except for liabilities that arise from
Assignor's failure to perform its obligations hereunder or to
discharge Assignor's Liabilities. Assignee assumes no
liabilities or obligations of Assignor of any nature whatsoever,
whether or not accrued or affixed, absolute or contingent, known
or unknown, determined or determinable, or incurred prior to, on
or after the Closing Date.
Assignor represents, warrants and covenants to and with
Assignee that: (1) Assignor has good and indefeasible title to
the Leasehold Interests, subject to no encumbrances created or
suffered by Assignor other than the matters identified on Exhibit
B hereto; (2) Assignor has the full right, power and authority to
assign the Leasehold Interests to Assignee in accordance
herewith; and (3) Assignor will defend Assignee's right, title
and interest in and to the Leasehold Interests from and against
any claim by, through or under Assignor.
This Agreement shall bind and inure to the benefit of, and
be enforceable by, the parties hereto and their respective
successors, heirs, and permitted assigns. This Agreement may be
executed in any number of counterparts, all of which taken
together shall constitute one agreement binding on all the
parties. Each party agrees, at the request of the other party,
at any time and from time to time after the date hereof, to
execute and deliver all such further documents, and to take and
forbear from all such action, as may be reasonably necessary or
appropriate in order more effectively to perfect the transfers of
rights contemplated herein or otherwise to confirm or carry out
the provisions of this Agreement.
EXECUTED effective the date first written above.
[signature and acknowledgment forms]
<TABLE>
EXHIBIT 11
FRED MEYER, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(in thousands, except per share amounts)
(unaudited)
<CAPTION>
52 Weeks Ended
------------------------------
Jan. 28, Jan. 29, Jan. 30,
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Weighted average number
of shares outstanding. . . . . . . . . . 26,514 25,878 24,874
Weighted average number
of shares under option . . . . . . . . . 3,452 4,032 4,108
Shares assumed to have
been purchased under the
treasury stock method. . . . . . . . . . (1,341) (1,535) (1,536)
----- ----- -----
Weighted average number
of common and common
equivalent shares outstanding. . . . . . 28,625 28,375 27,446
====== ====== ======
Net income before the effect
of an accounting change. . . . . . . . . $7,168 $70,904 $60,587
Effect of an accounting change . . . . . . --- (2,588) ---
----- ------ ------
Net income (loss). . . . . . . . . . . . . $7,168 $68,316 $60,587
===== ====== ======
Earnings per common share on:
Net income before the effect
of an accounting change. . . . . . . . $.25 $2.50 $2.21
Effect of an accounting change . . . . . --- (0.09) ---
--- ---- ----
Net Income . . . . . . . . . . . . . . . . $.25 $2.41 $2.21
=== ==== ====
</TABLE>
EXHIBIT 13
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA (1995-1992) (page 1 of 3)
Fiscal Year Ended
-------------------------------------------------------------
(In thousands, except per-share data and January 28, January 29, January 30, February 1,
statistical information) 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales . . . . . . . . . . . . . . . . . . . . $3,128,432 $2,979,082 $2,853,962 $2,702,721
Gross margin. . . . . . . . . . . . . . . . . . . 866,034 890,375/5 857,086 809,900
Operating and administrative expenses . . . . . . 823,742 761,627 752,004 731,892
Writedown of California assets/restructuring
charge (reversal) . . . . . . . . . . . . . . . 15,978/3 -- -- (8,289)/8
Income from operations. . . . . . . . . . . . . . 26,314/4 128,748/5 105,082 86,297/9
Interest expense, net of interest income/1. . . . 14,753 8,246 8,912 15,302
Income (loss) before income taxes . . . . . . . . 11,561/4 120,502 96,170 70,995/8,9
Provision for (benefit from) income taxes . . . . 4,393/4 49,598/6 35,583 25,768
Net income (loss) before cumulative effect of
accounting change or extraordinary item . . . . 7,168/4 70,904/5,6 60,587 45,227/8,9
Cumulative effect of accounting change. . . . . . -- (2,588)/7 -- --
Extraordinary item. . . . . . . . . . . . . . . . -- -- -- --
---------- ---------- ---------- ----------
Net income (loss) . . . . . . . . . . . . . . . . $ 7,168/4 $ 68,316/5,6,7 $ 60,587 $ 45,227/8,9
========== ========== ========== ==========
Earnings (loss) per common share:
Net income (loss) before cumulative effect of
accounting change or extraordinary item . . . $.25/4 $2.50/5,6 $2.21 $1.80/8,9
Cumulative effect of accounting change. . . . . -- (.09)/7 -- --
Extraordinary item. . . . . . . . . . . . . . . -- -- -- --
---- ----- ----- -----
Net income (loss) . . . . . . . . . . . . . . . $.25/4 $2.41/5,6,7 $2.21 $1.80/8,9
==== ===== ===== =====
BALANCE SHEET DATA
Total assets. . . . . . . . . . . . . . . . . . . $1,562,672 $1,326,076 $1,081,627 $974,780
Capitalization:
Long-term debt. . . . . . . . . . . . . . . . . $540,166 $321,398 $195,837 $240,968
Lease obligations . . . . . . . . . . . . . . . 63,229 65,955 70,313 67,387
Stockholders' equity. . . . . . . . . . . . . . 538,620 527,686 450,128 335,154
---------- ---------- ---------- --------
Total . . . . . . . . . . . . . . . . . . . . $1,142,015 $915,039 $716,278 $643,509
========== ========== ========== ========
STATISTICAL INFORMATION
Percent of net sales:
Nonfood sales . . . . . . . . . . . . . . . . . 61.7% 62.5% 63.3% 63.7%
Food sales. . . . . . . . . . . . . . . . . . . 38.3% 37.5% 36.7% 36.3%
Total stores sales growth . . . . . . . . . . . . 5.0% 4.4% 5.6% 9.2%
Comparable stores sales percentage
increase (decrease)/2 . . . . . . . . . . . . . (2.0)% 2.4% 3.0% 4.0%
Long-term debt as a percent of
total capitalization. . . . . . . . . . . . . . 52.8% 42.3% 37.2% 47.9%
Net income (loss) as a percent of net sales . . . .2%/4 2.3%/5,6,7 2.1% 1.7%
Number of multidepartment and specialty stores
opened during year. . . . . . . . . . . . . . . 8 7 6 3
Number of multidepartment and specialty stores
closed during year. . . . . . . . . . . . . . . 4 3 5 3
Number of multidepartment and specialty stores
operated at end of year . . . . . . . . . . . . 131 127 123 122
Total retail square feet at end of year . . . . . 14,194,000 13,423,000 12,646,000 12,679,000
Selling square feet at end of year. . . . . . . . 10,490,000 9,999,000 9,471,000 9,657,000
Sales per selling square foot
(weighted average). . . . . . . . . . . . . . . $304 $312 $304 $283
Common shares outstanding (weighted average). . . 28,625,000 28,375,000 27,446,000 25,182,000
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA (1991-1988) (page 2 of 3)
Fiscal Year Ended
-----------------------------------------------------------
(In thousands, except per-share data and February 2, February 3, January 28, January 30,
statistical information) 1991 1990 1989 1988
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales . . . . . . . . . . . . . . . . . . . . $2,476,055 $2,284,535 $2,073,544 $1,847,843
Gross margin. . . . . . . . . . . . . . . . . . . 741,720 671,044 610,415 547,157
Operating and administrative expenses . . . . . . 674,212 620,953 544,225 485,822
Writedown of California assets/restructuring
charge (reversal) . . . . . . . . . . . . . . . -- 49,277/8 -- --
Income from operations. . . . . . . . . . . . . . 67,508 814/11 66,190 61,335
Interest expense, net of interest income/1. . . . 15,974 13,947 9,291 7,449
Income (loss) before income taxes . . . . . . . . 51,534 (13,133)/11 56,899 53,886
Provision for (benefit from) income taxes . . . . 17,951 (6,285) 20,238 21,850
Net income (loss) before cumulative effect of
accounting change or extraordinary item . . . . 33,583 (6,848)/11 36,661 32,036
Cumulative effect of accounting change. . . . . . -- -- -- --
Extraordinary item. . . . . . . . . . . . . . . . -- -- -- --
---------- ---------- ---------- ----------
Net income (loss) . . . . . . . . . . . . . . . . $ 33,583 $ (6,848)/11 $ 36,661 $ 32,036
========== ========== ========== ==========
Earnings (loss) per common share:
Net income (loss) before cumulative effect of
accounting change or extraordinary item . . . $1.37 $(.28)/11 $1.50 $1.31
Cumulative effect of accounting change. . . . . -- -- -- --
Extraordinary item. . . . . . . . . . . . . . . -- -- -- --
----- ----- ----- -----
Net income (loss) . . . . . . . . . . . . . . . $1.37 $(.28)/11 $1.50 $1.31
===== ===== ===== =====
BALANCE SHEET DATA
Total assets. . . . . . . . . . . . . . . . . . . $905,756 $796,894 $686,806 $626,522
Capitalization:
Long-term debt. . . . . . . . . . . . . . . . . $232,881 $188,441 $ 92,180 $ 87,730
Lease obligations . . . . . . . . . . . . . . . 67,664 66,393 50,774 46,904
Stockholders' equity. . . . . . . . . . . . . . 285,299 251,546 258,188 221,056
-------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . . $585,844 $506,380 $401,142 $355,690
======== ======== ======== ========
STATISTICAL INFORMATION
Percent of net sales:
Nonfood sales . . . . . . . . . . . . . . . . . 64.3% 66.8% 68.2% 67.6%
Food sales. . . . . . . . . . . . . . . . . . . 35.7% 33.2% 31.8% 32.4%
Total stores sales growth . . . . . . . . . . . . 11.6%/10 8.4%/10 12.2% 9.5%
Comparable stores sales percentage
increase (decrease)/2 . . . . . . . . . . . . . 3.6%/10 4.5%/10 7.9% 6.6%
Long-term debt as a percent of
total capitalization. . . . . . . . . . . . . . 51.3% 50.3% 35.6% 37.9%
Net income (loss) as a percent of net sales . . . 1.4% (.3)%/11 1.8% 1.7%
Number of multidepartment and specialty stores
opened during year. . . . . . . . . . . . . . . 5 15 14 8
Number of multidepartment and specialty stores
closed during year. . . . . . . . . . . . . . . 8 2 1 2
Number of multidepartment and specialty stores
operated at end of year . . . . . . . . . . . . 122 125 112 99
Total retail square feet at end of year . . . . . 12,213,000 11,743,000 10,925,000 10,494,000
Selling square feet at end of year. . . . . . . . 9,361,000 9,056,000 8,388,000 8,064,000
Sales per selling square foot
(weighted average). . . . . . . . . . . . . . . $269 $261/10 $253 $239
Common shares outstanding (weighted average). . . 24,500,000 24,801,000 24,470,000 24,403,000
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA (1987-1985) (page 3 of 3)
Fiscal Year Ended
-------------------------------------------
(In thousands, except per-share data and January 31, February 1, February 2,
statistical information) 1987 1986 1985
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net sales . . . . . . . . . . . . . . . . . . . . $1,688,208 $1,583,796 $1,449,108
Gross margin. . . . . . . . . . . . . . . . . . . 487,829 447,960 395,419
Operating and administrative expenses . . . . . . 430,469 397,841 354,914
Writedown of California assets/restructuring
charge (reversal) . . . . . . . . . . . . . . . -- -- --
Income from operations. . . . . . . . . . . . . . 57,360 50,119 40,505
Interest expense, net of interest income/1. . . . 11,945 17,652 19,565
Income (loss) before income taxes . . . . . . . . 45,415 32,467 20,940
Provision for (benefit from) income taxes . . . . 21,350 13,000 8,000
Net income (loss) before cumulative effect of
accounting change or extraordinary item . . . . 24,065 19,467 12,940
Cumulative effect of accounting change. . . . . . -- -- --
Extraordinary item. . . . . . . . . . . . . . . . (1,530)/12 -- 2,649/14
---------- ---------- ----------
Net income (loss) . . . . . . . . . . . . . . . . $ 22,535 $ 19,467 $ 15,589
========== ========== ==========
Earnings (loss) per common share:
Net income (loss) before cumulative effect of
accounting change or extraordinary item . . . $1.15 $1.06 $.73
Cumulative effect of accounting change. . . . . -- -- --
Extraordinary item. . . . . . . . . . . . . . . (.07)/12 -- .15/14
----- ----- ----
Net income (loss) . . . . . . . . . . . . . . . $1.08 $1.06 $.88
===== ===== ====
BALANCE SHEET DATA
Total assets. . . . . . . . . . . . . . . . . . . $533,986 $568,531 $538,847
Capitalization:
Long-term debt. . . . . . . . . . . . . . . . . $ 76,874 $130,940 $175,375
Lease obligations . . . . . . . . . . . . . . . 36,093 89,236 89,297
Stockholders' equity. . . . . . . . . . . . . . 186,692 98,395 78,584
-------- -------- --------
Total . . . . . . . . . . . . . . . . . . . . $299,659 $318,571 $343,256
======== ======== ========
STATISTICAL INFORMATION
Percent of net sales:
Nonfood sales . . . . . . . . . . . . . . . . . 66.1% 65.6% 63.5%
Food sales. . . . . . . . . . . . . . . . . . . 33.9% 34.4% 36.5%
Total stores sales growth . . . . . . . . . . . . 6.6% 11.2%/13 17.3%/13
Comparable stores sales percentage
increase (decrease)/2 . . . . . . . . . . . . . 4.3% 4.1%/13 4.4%/13
Long-term debt as a percent of
total capitalization. . . . . . . . . . . . . . 37.7% 69.1% 77.1%
Net income (loss) as a percent of net sales . . . 1.3% 1.2% 1.1%
Number of multidepartment and specialty stores
opened during year. . . . . . . . . . . . . . . 1 4 23/15
Number of multidepartment and specialty stores
closed during year. . . . . . . . . . . . . . . 1 1 1
Number of multidepartment and specialty stores
operated at end of year . . . . . . . . . . . . 93 93 90
Total retail square feet at end of year . . . . . 9,738,000 9,536,000 8,919,000
Selling square feet at end of year. . . . . . . . 7,497,000 7,309,000 6,772,000
Sales per selling square foot
(weighted average). . . . . . . . . . . . . . . $228 $228 $226/13
Common shares outstanding (weighted average). . . 20,870,000 18,355,000 17,790,000
- ----------------------------------------------------------------------------------------------------
<FN>
/1 Interest income was $885, $707, $544, $517, $467, $482, $336, $350, $1,679, $2,983, and $3,090.
Excludes interest expense related to occupancy.
/2 Includes only sales of stores operating throughout each of the periods compared.
/3 In 1994, the Company recorded a pretax charge of $15,978 to writedown to their estimated net
realizable value one multidepartment store and three land parcels in California.
/4 Excluding the writedown of California assets of $15,978, income from operations, income before
income taxes, provision for income taxes, net income and earnings per common share would be
$42,292; $27,539; $10,465; $17,074; and $.60, respectively; and net income as a percent of
sales would be .6%.
/5 Includes a nonrecurring LIFO credit of $6,178.
/6 Includes $3,588 from the resolution of an IRS audit, ($2,286) related to the LIFO credit, and
a 38% tax rate.
/7 Effect of adopting Statement of Financial Accounting Standards No. 109 relating to income taxes.
/8 In 1989, the Company took a pretax charge of $49,277 related to closing some of its stores and
for conversion of its management information systems from Honeywell to IBM. In 1991, the Company
reversed $8,289 of this charge based on a decision not to close as many stores as previously
provided for.
/9 Excluding the benefit from the restructuring charge reversal of $8,289 and a charge against
expenses for previously capitalized software development costs of $8,748, income from operations,
net income, and earnings per common share would be $86,756; $45,516; and $1.81, respectively.
/10 Excludes 53rd week in the fiscal year ended February 3, 1990.
/11 Excluding the restructuring charge of $49,277, income from operations, net income, earnings per
common share, and net income as a percent of net sales would be $50,091; $24,197; $.98; and 1.1%,
respectively.
/12 Prepayment costs of $1,530 ($.07 per share) from early extinguishment of 17% Senior and
Subordinated Notes, net of taxes.
/13 Excludes 53rd week in the fiscal year ended February 2, 1985.
/14 Extraordinary gain of $2,649 ($.15 per share) arising from the disposition of a limited
partnership interest in Properties.
/15 Includes 21 nonfood stores acquired from Grand Central, Inc.
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion summarizes Fred Meyer, Inc.'s (the "Company")
operating results for the fiscal year ended January 28, 1995 ("1994")
compared with the fiscal year ended January 29, 1994 ("1993") and for
1993 compared with the fiscal year ended January 30, 1993 ("1992").
Also included are discussions of the Company's liquidity, capital
resources, effect of LIFO, effect of inflation, recent accounting
changes, stock data, and dividend policy. This discussion and analysis
should be read in conjunction with the Company's consolidated financial
statements.
RESULTS OF OPERATIONS--1994 COMPARED WITH 1993
Net sales for 1994 increased $149,350,000 or 5.0% over 1993. This increase
reflects openings of five full-size multidepartment stores, three jewelry
stores in malls, and the addition of food to four nonfood stores, offset by
the closure of two multidepartment stores and two specialty stores.
Comparable store sales decreased 2.0% for 1994, with food comparable store
sales down 3.0% and nonfood comparable store sales decreasing 1.4%. This
decrease reflects the effect of an 88-day food industry strike in the
greater Portland, Oregon and Vancouver, Washington area, in which the
Company's stores were the only stores picketed, plus strikes at the
Company's Portland area distribution center, trucking operations, dairy and
main office. These labor disputes were all settled early in the fourth
quarter. Excluding the stores affected by the strikes, total comparable
store sales increased 1.5%, with food comparable store sales up 1.7% and
nonfood comparable store sales up 1.3%. Food sales as a percent of net sales
were 38.3% and 37.5%, respectively, for 1994 and 1993. The increase in food
sales as a percent of net sales was primarily due to an increase in the
number of the Company's stores that sell food.
Gross margin as a percent of net sales was 27.7% in 1994 compared with 29.9%
in 1993. This decrease is primarily due to the impact of the strikes and
high markdowns that were taken during the promotional Christmas period.
1993's gross margin was favorably affected by a one-time LIFO credit of
$6,178,000.
Operating and administrative expenses increased 8.2% to $823,742,000 in 1994
from $761,627,000 in 1993, and as a percent of net sales were 26.3% in 1994
compared with 25.6% in 1993. Expenses as a percent of sales increased in the
areas of labor and fixed costs due to lower sales volumes in the stores
affected by the strikes.
The Company recognized a $15,978,000 charge to its 1994 operating results
reflecting its decision to exit the California market except for its two
jewelry locations. The charge represents a writedown of assets to their
estimated realizable value for the assumed sale of the Company's one
multidepartment store and three land parcels in California.
Net interest expense was $14,753,000 for 1994 and $8,246,000 for 1993, an
increase of 78.9%. This increase reflects higher interest rates, and
increased debt due to an increased capital spending plan for accelerated
growth, and the strikes.
The effective tax rate was 38.0% for 1994 and 41.2% for 1993. The
effective tax rate for 1993 was 38.0% when excluding the impact of a tax
settlement.
Net income was $7,168,000 for 1994 and $68,316,000 for 1993. This decrease
is primarily the result of the above-mentioned strikes. Excluding the effect
of the writedown of California assets, 1994 net income was $17,074,000.
RESULTS OF OPERATIONS--1993 COMPARED WITH 1992
Net sales for 1993 increased $125,120,000 or 4.4% over 1992. This increase
reflects sales growth at existing stores, inflation, openings of five
full-size multidepartment stores and two specialty stores in malls, and
adding food to two nonfood stores. This increase was offset by the closure
of two multidepartment stores without food departments and one specialty
store. Comparable store sales increased 2.4% for 1993. Food sales as a
percent of net sales were 37.5% and 36.7%, respectively, for 1993 and 1992.
The increase in food sales as a percent of net sales was primarily due to an
increase in the number of the Company's stores that sell food. Food
comparable store sales increased 3.4% and nonfood comparable store sales
increased 1.9%.
Gross margin as a percent of net sales was 29.9% in 1993 compared with 30.0%
in 1992. The LIFO charge decreased from $4,167,000 in 1992 to $2,890,000 in
1993, primarily as a result of lower inflation rates. Additionally, 1993's
gross margin was favorably affected by a one-time LIFO credit of $6,178,000.
Excluding the effect of this one-time LIFO credit, 1993 gross margin as a
percent of net sales was 29.7%. Gross margins decreased primarily due to
lower nonfood pricing as a result of the Company's expense control efforts,
start-up costs associated with expansion of its soft goods and hardlines
distribution capabilities, and soft apparel sales.
[Graphic Bar Chart
Graph Title: SG&A Expenses as a Percent of Sales
X-Axis Information: 1990-1994
Y-Axis Information: 20-28%
Specific Data Points: 1990 1991 1992 1993 1994
----- ------ ----- ----- ------
27.23 26.76* 26.35 25.57 26.33*
* Excludes nonrecurring items.]
[Graphic Bar Chart
Graph Title: Income from Operations
X-Axis Information: 1990-1994
Y-Axis Information: $0-$125 (dollars in millions)
Specific Data Points: 1990 1991 1992 1993 1994
----- ----- ----- ----- -----
67.5 86.8* 105.1 122.6* 42.3*
* Excludes nonrecurring items.]
[Graphic Bar Chart
Graph Title: Net Income as a Percent of Net Sales
X-Axis Information: 1990-1994
Y-Axis Information: 0.0-2.5%
Specific Data Points: 1990 1991 1992 1993 1994
---- ---- ---- ---- ----
1.4 1.7* 2.1 2.4* 0.6*
* Excludes nonrecurring items.]
Operating and administrative expenses as a percent of net sales decreased to
25.6% in 1993 compared with 26.3% in 1992. This expense ratio decrease was
primarily related to lower store occupancy costs, corporate overhead
expenses, and advertising costs as a percent of net sales. Total operating
and administrative expenses increased 1.3% to $761,627,000 in 1993 from
$752,004,000 in 1992.
Net interest expense was $8,246,000 for 1993 and $8,912,000 for 1992, a 7.5%
decrease. The decrease primarily reflects lower interest rates.
The effective tax rate was 41.2% for 1993 and 37.0% for 1992. This increase
is the result of an accrual of $3,588,000 for amounts related to paid and
anticipated taxes which may be required as a result of the resolution of an
IRS audit, taxes on the one-time LIFO credit, and the higher federal
statutory tax rates applied retroactively from January 30, 1993. Excluding
the impact of the tax audit settlement, the effective tax rate for 1993 was
38.0%.
Before reflecting three nonrecurring accounting adjustments and an
accounting change in 1993, net income increased 17.0% to $70,881,000; and
earnings per share were $2.50 for 1993, assuming a 38% tax rate for 1993
versus 37% in 1992. On a reported basis, net income for 1993 increased 12.8%
to $68,316,000 from $60,587,000 in 1992, after reflecting the accounting
change and three accounting adjustments that resulted in a reduction in net
income of $2,565,000 and $.09 in earnings per share in 1993. Reported
earnings per share were $2.41 for 1993 based on 28,375,000 shares
outstanding, compared with $2.21 for the prior year's period based on
27,446,000 shares outstanding.
LIQUIDITY AND CAPITAL RESOURCES
The Company funded its working capital and capital expenditure needs in 1994
through internally generated cash flow, supplemented by borrowings under
committed and uncommitted bank lines of credit and unrated commercial paper.
During 1992, the Company sold 2,000,000 shares of common stock in a public
offering, resulting in net proceeds to the Company of $46,558,000. On
June 29, 1993 and August 2, 1993, the Company issued an aggregate of
$70,000,000 of five-year floating rate notes to a group of five banks. At
the Company's option, the notes will bear interest at a spread above LIBOR
or certificate of deposit rates. Proceeds from the public offering and
floating rate notes were used to reduce commercial paper borrowings. On
June 1, 1994, the Company issued an aggregate of $57,500,000 of senior notes
to a group of life insurance companies. The notes mature on July 15 of 1999,
2001, 2004, and 2007 and bear interest rates of between 7.25% and 7.98%.
The Company entered into a new credit facility in 1994 with several domestic
and foreign banks for a committed line of credit which provides for
borrowings of up to $400,000,000. This agreement continues through June 30,
1999, at which time the agreement terminates and any outstanding amounts
must be paid in full. In addition to this committed credit facility, the
Company had $45,000,000 of uncommitted money market lines of credit with
several foreign banks and had $130,000,000 of uncommitted money market lines
of credit with banks who are in the committed credit facility. The bank
lines of credit and unrated commercial paper are used primarily for seasonal
inventory requirements, new store construction and financing, existing store
remodeling, acquisition of land, and major projects such as MIS development.
At January 28, 1995 the Company had unrated commercial paper outstanding in
the amount of approximately $324,921,000, borrowings under uncommitted
borrowing facilities of $35,000,000, and a total of approximately
$40,079,000 available for borrowings that would be supported by its
committed credit facilities. On March 6, 1995, the Company entered into a
new 364-day credit facility with several domestic and foreign banks for an
additional committed line of credit which provides for borrowings of up to
$100,000,000. After 364 days, the agreement terminates and any outstanding
amounts must be paid in full unless extended.
The Company has entered into interest rate swap and cap agreements to reduce
the impact of changes in interest rates on its floating rate long-term debt.
At January 28, 1995, the Company had outstanding six interest rate contracts
with commercial banks, having a total notional principal amount of
$100,000,000. Three of these agreements effectively fix the Company's
interest rate on unrated commercial paper, floating rate facilities, and
uncommitted lines of credit at rates between 4.625% and 7.595% on a notional
principal amount of $50,000,000. These contracts expire in 1996, 1997, and
1998. The remaining three agreements effectively limit the maximum interest
rate the Company will pay at rates between 5.0% and 9.0% on notional
principal amounts totaling $50,000,000. These three agreements mature in
1996, 1998 and 1999. The Company is exposed to credit loss in the event of
nonperformance by the other parties to the interest rate swap agreements.
However, the Company does not anticipate nonperformance by the
counterparties.
[Graphic Bar Chart
Graph Title: Net Earnings Per Common Share
X-Axis Information: 1990-1994
Y-Axis Information: $0.00-$2.50 (in dollars)
Specific Data Points: 1990 1991 1992 1993 1994
---- ----- ---- ----- ----
1.37 1.81* 2.21 2.50* .60*
* Excludes nonrecurring items.]
[Graphic Bar Chart
Graph Title: Stockholders' Equity
X-Axis Information: 1990-1994
Y-Axis Information: $0-$600 (dollars in millions)
Specific Data Points: 1990 1991 1992 1993 1994
----- ----- ----- ----- -----
285.3 335.2 450.1 527.7 538.6]
[Graphic Bar Chart
Graph Title: Store Square Footage at Year-End
X-Axis Information: 1990-1994
Y-Axis Information: 0-15 (square feet in millions)
Specific Data Points: 1990 1991 1992 1993 1994
---- ---- ---- ---- ----
12.2 12.7 12.6 13.4 14.2]
During 1994, the Company opened five new multidepartment stores and closed
two multidepartment stores. Seven stores underwent major remodels, four of
which included the addition of new food departments to previously nonfood
stores. Also in 1994, the Company completed construction of an addition to
its corporate offices and a flow-through retail service center in Chehalis,
Washington to distribute apparel, general merchandise, and music products.
Other capital projects in 1994 included improvements to the main
distribution center, central bakery, and dairy plants and continuation
of the Company's MIS improvement program. The Company began construction of
six additional multidepartment stores, and a new food distribution center
near Seattle, Washington which are scheduled to open in 1995. At least seven
major remodels are planned for completion in 1995, three of which will
include the addition of food departments. The Company believes that a
combination of cash flow from operations and borrowings under its expanded
credit facilities will permit it to finance its capital expenditure
requirements for 1995, budgeted at $257,000,000. If the Company determines
that it is preferable, it may fund its capital expenditure requirements by
mortgaging facilities, entering into sale and leaseback transactions, or by
issuing additional debt or equity.
EFFECT OF LIFO
During each year, the Company estimates annual LIFO expense for the year
based on estimates of three factors: inflation rates (calculated by
reference to the Department Stores Inventory Price Index published by the
Bureau of Labor Statistics for soft goods and jewelry and to internally
generated indices based on Company purchases during the year for all other
departments), expected inventory levels, and expected markup levels (after
reflecting permanent markdowns and cash discounts). At year-end, the Company
makes the final adjustment reflecting the difference between the Company's
prior quarterly estimates and actual LIFO expense for the year.
EFFECT OF INFLATION
While management believes that some portion of the increase in sales is due
to inflation, it is difficult to segregate and to measure the effects of
inflation because of changes in the types of merchandise sold year-to-year
and other pricing and competitive influences. By attempting to control costs
and efficiently utilize resources, the Company strives to minimize the
effects of inflation on its operations.
RECENT ACCOUNTING CHANGES
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 109, Accounting for Income
Taxes. This Statement requires companies to adjust deferred tax liabilities
and assets for changes in tax rates and other tax law provisions in the
period the new tax law is enacted and to recognize certain deferred tax
liabilities. The Company adopted this accounting standard for its fiscal
year beginning January 31, 1993. As a result of the adoption of this
accounting standard, the Company recorded a charge to earnings of $2,588,000
to provide for book and tax basis differences of certain capital assets,
inventory, and depreciation arising in connection with the Company being
taken private in 1981 and the Company's acquisition of Grand Central, Inc.
in 1984.
COMMON STOCK INFORMATION
The Company's common stock began trading on the New York Stock Exchange
(NYSE) under the symbol "FMY" on September 9, 1992. Prior to that it was
quoted in the NASDAQ National Market System under the symbol "MEYR." At
January 28, 1995, the Company had 1,300 shareholders of record. After
becoming privately held in 1981, the Company began trading publicly after
its initial public offering on October 23, 1986. On April 14, 1992 the
Company increased the number of shares outstanding with the sale of an
additional 2,000,000 shares of its common stock in a public offering, in
addition to 2,000,000 shares sold by a major stockholder. In 1993 a major
stockholder sold 3,450,000 shares in a public offering, including
approximately 505,000 shares resulting from the exercise of a stock option.
The Company has not paid dividends since its incorporation in 1981, and it
is the current policy of the Board of Directors that all available cash flow
be used for reinvestment in the business of the Company and for the
reduction of debt.
<TABLE>
<CAPTION>
Price Ranges of Common Stock
---------------------------------------------------
1994 1993 1992
--------------- ---------------- ---------------
Fiscal Quarter High Low High Low High Low
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First $421/2 $355/8 $337/8 $277/8 $291/4 $231/2
Second 383/4 35 355/8 291/4 271/2 223/4
Third 373/8 311/4 37 31 291/2 243/4
Fourth 353/4 291/4 381/2 341/2 337/8 29
- ----------------------------------------------------------------------
</TABLE>
[Graphic Bar Chart
Graph Title: Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) as a Percent of Sales
X-Axis Information: 1990-1994
Y-Axis Information: 0.00-7.00%
Specific Data Points: 1990 1991 1992 1993 1994
----- ----- ----- ----- -----
4.40 5.29* 6.44 6.88* 4.70*
* Excludes nonrecurring items.]
[Graphic Bar Chart
Graph Title: Fixed Charge Coverage Ratio
X-Axis Information: 1990-1994
Y-Axis Information: 0.0-2.5
Specific Data Points: 1990 1991 1992 1993 1994
---- ----- ---- ----- -----
1.76 1.84* 2.23 2.44* 1.91*
* Excludes nonrecurring items.]
[Graphic Bar Chart
Graph Title: Long-Term Debt as Percent of Total Capitalization
X-Axis Information: 1990-1994
Y-Axis Information: 0.0-60.0%
Specific Data Points: 1990 1991 1992 1993 1994
---- ---- ---- ---- ----
51.3 47.9 37.2 42.3 52.8
* Excludes nonrecurring items.]
<TABLE>
<CAPTION>
STATEMENTS OF CONSOLIDATED OPERATIONS
Fiscal Year Ended
---------------------------------------
January 28, January 29, January 30,
(In thousands, except per-share data) 1995 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales. . . . . . . . . . . . . . . . . . . . $3,128,432 $2,979,082 $2,853,962
--------------------------------------
Cost of Goods Sold:
General. . . . . . . . . . . . . . . . . . . . . 2,255,732 2,082,989 1,991,187
Related party lease (Note 3) . . . . . . . . . . 5,579 5,579 5,579
Interest related to occupancy (Note 5) . . . . . 1,087 139 110
--------------------------------------
Total cost of goods sold . . . . . . . . . . . . 2,262,398 2,088,707 1,996,876
--------------------------------------
Gross Margin . . . . . . . . . . . . . . . . . . 866,034 890,375 857,086
Operating and Administrative Expenses:
General. . . . . . . . . . . . . . . . . . . . . 754,875 692,354 680,885
Related party leases (Notes 3 and 8) . . . . . . 57,036 57,942 59,876
Interest related to occupancy (Note 5) . . . . . 11,831 11,331 11,243
--------------------------------------
Total operating and administrative expenses. . . 823,742 761,627 752,004
--------------------------------------
Writedown of California Assets (Note 4). . . . . 15,978 -- --
--------------------------------------
Income From Operations . . . . . . . . . . . . . 26,314 128,748 105,082
Interest Expense, Net of interest income of
$885, $707, and $544 . . . . . . . . . . . . . 14,753 8,246 8,912
--------------------------------------
Income Before Income Taxes . . . . . . . . . . . 11,561 120,502 96,170
Provision For Income Taxes (Note 6). . . . . . . 4,393 49,598 35,583
--------------------------------------
Net Income Before Cumulative Effect of
Accounting Change 7,168 70,904 60,587
Cumulative Effect of Accounting Change
(Notes 2 and 6). . . . . . . . . . . . . . . . -- (2,588) --
--------------------------------------
Net Income . . . . . . . . . . . . . . . . . . . $ 7,168 $ 68,316 $ 60,587
========== ========== ==========
Earnings Per Common Share:
Net income before cumulative effect of
accounting change. . . . . . . . . . . . . . . $.25 $2.50 $2.21
Cumulative effect of accounting change . . . . . -- (.09) --
--------------------------------
Net Income . . . . . . . . . . . . . . . . . . . $.25 $2.41 $2.21
==== ===== =====
Weighted Average Number of Common
Shares Outstanding 28,625 28,375 27,446
====== ====== ======
- ----------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
ASSETS January 28, January 29,
(In thousands) 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents. . . . . . . . . . $ 34,868 $ 34,054
Receivables (Note 2) . . . . . . . . . . . . 20,025 19,406
Inventories (Note 2) . . . . . . . . . . . . 514,473 477,568
Prepaid expenses and other . . . . . . . . . 42,092 44,168
Income taxes receivable. . . . . . . . . . . 15,021 --
Current portion of deferred taxes (Note 6) . 15,116 7,828
-----------------------------
Total current assets . . . . . . . . . . . . 641,595 583,024
-----------------------------
Property and Equipment:
Buildings, fixtures and equipment. . . . . . 1,164,953 950,952
Property held under capital leases (Note 8). 18,209 19,818
Land . . . . . . . . . . . . . . . . . . . . 159,393 120,913
-----------------------------
Total property and equipment . . . . . . . . 1,342,555 1,091,683
Less accumulated depreciation
and amortization . . . . . . . . . . . . . 446,116 372,345
-----------------------------
Property and equipment--net. . . . . . . . . 896,439 719,338
-----------------------------
Other Assets:
Goodwill--net (Note 2) . . . . . . . . . . . 5,215 5,523
Other. . . . . . . . . . . . . . . . . . . . 19,423 18,191
-----------------------------
Total other assets . . . . . . . . . . . . . 24,638 23,714
-----------------------------
Total assets . . . . . . . . . . . . . . . . $1,562,672 $1,326,076
========== ==========
- ---------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY January 28, January 29,
(In thousands) 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities:
Outstanding checks (Note 2). . . . . . . . . $ 81,341 $ 72,373
Accounts payable . . . . . . . . . . . . . . 230,703 223,841
Current portion of long-term debt and
lease obligations (Notes 5 and 8). . . . . 1,623 1,749
Income taxes payable . . . . . . . . . . . . -- 18,660
Accrued expenses:
Compensation . . . . . . . . . . . . . . . . 43,119 41,100
Insurance and other. . . . . . . . . . . . . 35,295 32,564
-----------------------------
Total current liabilities. . . . . . . . . . 392,081 390,287
-----------------------------
Long-term Debt (Note 5). . . . . . . . . . . 540,166 321,398
-----------------------------
Capital Lease Obligations (Note 8) . . . . . 13,823 14,895
-----------------------------
Deferred Lease Transactions (Note 8) . . . . 45,655 48,254
-----------------------------
Deferred Income Taxes (Note 6) . . . . . . . 22,258 18,496
-----------------------------
Other Long-term Liabilities
(Notes 8 and 10) . . . . . . . . . . . . . 10,069 5,060
-----------------------------
Commitments and Contingencies (Notes 2,
8, and 12) . . . . . . . . . . . . . . . .
-----------------------------
Stockholders' Equity (Note 7):
Preferred stock, $.01 par value (authorized,
5,000 shares; outstanding, none) . . . . . -- --
Common stock, $.01 par value (authorized,
100,000 shares; issued, 1994--26,858
shares, and 1993--26,705 shares;
outstanding, 1994--26,568 shares, and
1993--26,415 shares) . . . . . . . . . . . 268 267
Additional paid-in capital . . . . . . . . . 197,087 193,719
Unearned compensation. . . . . . . . . . . . (130) (527)
Treasury stock--290 shares . . . . . . . . . (3,896) (3,896)
Retained earnings. . . . . . . . . . . . . . 345,291 338,123
-----------------------------
Total stockholders' equity . . . . . . . . . 538,620 527,686
-----------------------------
Total liabilities and stockholders' equity . $1,562,672 $1,326,076
========== ==========
- ---------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CONSOLIDATED CASH FLOWS
Fiscal Year Ended
---------------------------------------
January 28, January 29, January 30,
(In thousands) 1995 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income. . . . . . . . . . . . . . . . . . . $ 7,168 $ 68,316 $ 60,587
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property
and equipment . . . . . . . . . . . . . . . 89,474 70,547 66,958
Writedown of California assets. . . . . . . . 15,978 -- --
Deferred lease transactions . . . . . . . . . (2,599) 3,469 4,768
Deferred income taxes . . . . . . . . . . . . (3,526) (5,708) (189)
Other liabilities . . . . . . . . . . . . . . (347) 721 1,533
Inventories . . . . . . . . . . . . . . . . . (37,358) (51,490) (22,803)
Other current assets. . . . . . . . . . . . . 1,552 71 (16,281)
Accounts payable and accrued expenses . . . . 11,613 37,124 32,854
Income taxes. . . . . . . . . . . . . . . . . (33,681) 3,242 13,687
Other . . . . . . . . . . . . . . . . . . . . 1,766 (8,164) 45
--------------------------------------
Net cash provided by operating activities . . . 50,040 118,128 141,159
--------------------------------------
Cash Flows from Financing Activities:
Proceeds from stock offering. . . . . . . . . . -- -- 45,608
Issuance of other common stock--net . . . . . . 3,369 8,647 8,779
Collection of notes receivable. . . . . . . . . 364 264 1,092
Increase in notes receivable. . . . . . . . . . (213) (1,402) (114)
Increase (decrease) in outstanding checks . . . 8,968 1,962 (11,960)
Long-term financing:
Borrowings. . . . . . . . . . . . . . . . . . 258,871 126,310 2,941
Repayments. . . . . . . . . . . . . . . . . . (40,093) (1,015) (51,761)
--------------------------------------
Net cash provided by (used in)
financing activities. . . . . . . . . . . . . 231,266 134,766 (5,415)
--------------------------------------
Cash Flows from Investing Activities:
Net purchases of investment securities. . . . . (935) (1,745) (3,705)
Purchases of property and equipment . . . . . . (284,193) (253,920) (144,628)
Proceeds from sale of property and equipment. . 4,636 4,941 14,485
--------------------------------------
Net cash used for investing activities. . . . . (280,492) (250,724) (133,848)
--------------------------------------
Net Increase in Cash and Cash Equivalents
for the Year. . . . . . . . . . . . . . . . . 814 2,170 1,896
Cash and Cash Equivalents, Beginning of Year. . 34,054 31,884 29,988
--------------------------------------
Cash and Cash Equivalents, End of Year. . . . . $ 34,868 $ 34,054 $ 31,884
========= ========= ==========
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for:
Interest (including interest capitalized of
$2,520, $1,689, and $406) . . . . . . . . . $31,022 $17,984 $18,193
Income taxes. . . . . . . . . . . . . . . . . 40,757 53,197 21,514
- ----------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY
Common Stock
------------------- Additional
Number of Paid-in Unearned Treasury Retained
(In thousands) Shares Amount Capital Compensation Stock Earnings Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, February 1, 1992. . . . . . . . . . . . 22,918 $232 $130,912 $(1,439) $(3,771) $209,220 $335,154
Issuance/purchase of common stock:
Stock issuance . . . . . . . . . . . . . . . . . 2,000 20 45,588 -- -- -- 45,608
Stock options exercised. . . . . . . . . . . . . 649 6 6,773 -- -- -- 6,779
Stock awards . . . . . . . . . . . . . . . . . . -- -- 2 -- -- -- 2
Stock bonuses/sale . . . . . . . . . . . . . . . 9 1 247 (248) -- -- --
Treasury stock . . . . . . . . . . . . . . . . . (4) -- -- -- (125) -- (125)
Tax benefit from stock options . . . . . . . . . -- -- 1,558 -- -- -- 1,558
Amortization of unearned compensation. . . . . . -- -- -- 565 -- -- 565
Net income . . . . . . . . . . . . . . . . . . . -- -- -- -- -- 60,587 60,587
--------------------------------------------------------------------------------
Balance, January 30, 1993. . . . . . . . . . . . 25,572 259 185,080 (1,122) (3,896) 269,807 450,128
Issuance of common stock:
Stock options exercised. . . . . . . . . . . . . 843 8 7,185 -- -- -- 7,193
Tax benefits from stock options. . . . . . . . . -- -- 1,454 -- -- -- 1,454
Amortization of unearned compensation. . . . . . -- -- -- 595 -- -- 595
Net income . . . . . . . . . . . . . . . . . . . -- -- -- -- -- 68,316 68,316
-------------------------------------------------------------------------------
Balance, January 29, 1994. . . . . . . . . . . . 26,415 267 193,719 (527) (3,896) 338,123 527,686
Issuance of common stock:
Stock options exercised. . . . . . . . . . . . . 153 1 2,611 -- -- -- 2,612
Tax benefits from stock options. . . . . . . . . -- -- 757 -- -- -- 757
Amortization of unearned compensation. . . . . . -- -- -- 397 -- -- 397
Net income . . . . . . . . . . . . . . . . . . . -- -- -- -- -- 7,168 7,168
-------------------------------------------------------------------------------
Balance, January 28, 1995. . . . . . . . . . . . 26,568 $268 $197,087 $(130) $(3,896) $345,291 $538,620
====== ==== ======== ====== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY
Fred Meyer, Inc., a Delaware corporation, and its subsidiaries (the
"Company") operate a chain of 131 retail stores offering a wide range of
food, products for the home, apparel, fine jewelry, and home improvement
items, with emphasis on necessities and items of everyday use. The stores
are located in Oregon, Washington, Utah, Alaska, Idaho, northern California,
and Montana and include 100 free-standing, multidepartment stores and 31
specialty stores.
On December 11, 1981, the Company and a related newly formed Oregon limited
partnership, Fred Meyer Real Estate Properties, Ltd. whose name was changed
in 1991 to Real Estate Properties Limited Partnership ("Properties")
purchased substantially all of the assets and the business of Fred Meyer,
Inc., an Oregon corporation, and its wholly owned subsidiaries (the
"Predecessor Company"). The Company acquired the operating business and
certain assets and assumed certain liabilities of the Predecessor Company,
and Properties acquired all of the Predecessor Company's interests in real
property and assumed the indebtedness thereon. The Predecessor Company
ceased operations immediately after the sale and the Company began
operations on December 12, 1981.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation--The accompanying financial statements include
the consolidated accounts of the Company and its subsidiaries. All
significant intercompany transactions and balances have been eliminated.
Fiscal Year--The Company's fiscal year is generally 52 weeks, but
periodically consists of 53 weeks, because the fiscal year ends on the
Saturday closest to January 31. Fiscal years 1994, 1993, and 1992 ended on
January 28, 1995, January 29, 1994, and January 30, 1993, respectively.
Unless otherwise stated, references to years in this report relate to fiscal
years rather than to calendar years.
Segment Reporting--The Company's operations consist of one segment, retail
sales.
Cash and Cash Equivalents--The Company considers all highly liquid debt and
equity instruments purchased with an original maturity of three months or
less to be cash equivalents.
Receivables--Receivables are reported net of allowances for potential
uncollected accounts of $1,255,000 and $632,000 at January 28, 1995 and
January 29, 1994, respectively.
Inventories--Inventories consist principally of items held for sale in its
retail operations and substantially all inventories are stated at the lower
of last-in, first-out (LIFO) cost or market. If the first-in, first-out
method, which approximates replacement cost, had been used in determining
inventory values, they would have been $54,876,000, and $51,675,000 higher
at January 28, 1995 and January 29, 1994, respectively.
Property and Equipment--Property and equipment is stated at cost.
Depreciation on buildings and equipment is provided using the straight-line
method over the estimated useful lives of the related assets of three to 31
years. Amortization of property under capital leases is provided using the
straight-line method over the related lease terms of 24 to 52 years.
Goodwill--Goodwill is being amortized on a straight-line basis over 30
years. Management periodically evaluates the recoverability of goodwill
based upon current and anticipated net income and undiscounted future cash
flows. Accumulated amortization was $4,044,000 and $3,736,000 at January 28,
1995 and January 29, 1994, respectively.
Investment Securities--As of January 28, 1995, the Company adopted SFAS No.
115, Accounting for Certain Investments in Debt and Equity Securities. SFAS
No. 115 requires the classification of securities at acquisition into one of
three categories: held to maturity, available for sale, or trading. At
January 28, 1995, the carrying value of all debt and equity securities
approximated their aggregate fair value. Debt securities are classified as
held to maturity and are included in Other Assets. Equity securities are
classified as trading securities and are included in Cash and Cash Equivalents.
Outstanding Checks--Checks that have not yet cleared the bank and that are
issued against bank accounts with a zero bank balance are included in
current liabilities.
Pre-opening Costs--All noncapital expenditures incurred in connection with
the opening of new or acquired stores and other facilities or remodeling of
existing stores are expensed as incurred.
Income Taxes--Deferred income taxes are provided for those items included in
the determination of income or loss in different periods for financial
reporting and income tax purposes. Targeted jobs and other tax credits are
recognized in the year realized.
Effective January 31, 1993, the Company adopted SFAS No. 109, Accounting for
Income Taxes. Accordingly, the Company has changed its method of accounting
for income taxes from the deferred method used in prior years to the method
prescribed by SFAS No. 109. Under SFAS No. 109, deferred income taxes are
recognized for the tax consequences in future years of differences between
the tax bases of assets and liabilities and their financial reporting
amounts at each year-end based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect
taxable income. Income tax expense is the tax payable for the period and the
change during the period in deferred tax assets and liabilities. Prior
years' financial statements have not been restated for the accounting change
(see Note 6).
Earnings Per Common Share--Fully diluted earnings per common share are
computed by dividing net income by the weighted average number of common and
common equivalent shares outstanding. Weighted average shares reflect the
dilutive effect of the outstanding stock options (ranging in exercise price
from $3.24 to $41.25 per share), which was determined using the treasury
stock method.
Reclassifications--Certain prior year amounts have been reclassified to
conform to current year presentation. The reclassifications have no effect
on reported net income.
3. RELATED-PARTY TRANSACTIONS
At January 28, 1995, the Company leased or subleased, under operating
leases, 24 store locations, and other miscellaneous property from Properties
and its wholly owned subsidiaries, which have certain common ownership with the
Company. Payments under these leases and those terminated during the
year were $19,734,000, $21,290,000, and $23,368,000 in 1994, 1993, and 1992,
respectively. The Company also leases 35 store locations and a distribution
center from an institutional investor, who is a major beneficial shareholder
of the Company's stock. Rents paid to this shareholder on these properties
were $46,070,000, $39,573,000, and $38,476,000 in 1994, 1993, and 1992,
respectively.
Total rents included in operating and administrative expenses for locations
leased or subleased from related parties were based on the average rental
paid during the primary term of the leases. This does not include the
Company's main distribution center, which is included in cost of goods sold.
On October 30, 1992, the Company purchased property totaling $3,000,000 from
Properties and its wholly owned subsidiaries which have certain common
ownership with the Company. Prior to this purchase, the Company paid rent on
this property of $393,000 in 1992.
4. WRITEDOWN OF CALIFORNIA ASSETS
During 1994, the Company incurred a charge of $15,978,000 ($9,906,000 after
a deferred tax benefit of $6,072,000) related to the writedown of certain
assets and other costs associated with the Company's decision to exit the
northern California market except for two mall jewelry locations.
5. LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt consisted of the following (in thousands):
1994 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Commercial paper with maturities through July 1995,
classified as long-term, interest rates of 5.35% to 6.75%
at January 28, 1995. . . . . . . . . . . . . . . . . . . . . . . . $324,921 $160,911
Uncommitted bank borrowings, due January 30, 1995,
interest rates of 5.80% to 5.83% at January 28, 1995 . . . . . . . 35,000 --
Long-term notes secured by trust deeds, due through
2012, fixed interest rates from 9.00% to 9.52% . . . . . . . . . . 43,298 43,943
Long-term notes, unsecured:
Due 1997 through 1998, interest rate is periodically reset,
7.00% at January 28, 1995. . . . . . . . . . . . . . . . . . . . 70,000 70,000
Due 1996, fixed interest rate of 7.74% . . . . . . . . . . . . . . 10,000 10,000
Senior notes, due 1999 through 2007, fixed interest rates
from 7.25% to 7.98%. . . . . . . . . . . . . . . . . . . . . . . . 57,500 --
Zero coupon notes, fixed interest rate of 9.30%. . . . . . . . . . . -- 37,024
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197 269
-------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540,916 322,147
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . (750) (749)
-------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $540,166 $321,398
======== ========
- -----------------------------------------------------------------------------------------
</TABLE>
The Company has the ability to support commercial paper, uncommitted bank
borrowings, and other debt on a long-term basis through its Credit Agreement
and therefore, based upon management's intent, has classified $359,921,000
of these borrowings as long-term debt.
On June 30, 1994, the Company entered into a new expanded Credit Agreement
with Bank of America as agent, which now provides for, among other things:
(1) a revolving credit commitment of $400,000,000 with payment of the unpaid
balance at June 30, 1999; (2) interest at a spread over LIBOR on such
borrowings or various other pricing options; and (3) a facility fee of .15%
of the amount of the commitment. The Agreement requires the maintenance of
specified ratios and restricts the amounts of cash dividends paid. At
January 28, 1995, $2,867,000 of retained earnings was available for payment
of dividends or repurchase of Company stock in the following year, based on
40% of net income for the year ended January 28, 1995.
After year end, the Company entered into a separate, additional bank Credit
Agreement with The Bank of Nova Scotia as agent. The facility provides for
$100,000,000 of additional committed borrowing capacity with an ultimate
maturity in March 1996. This facility may be extended upon request of the
Company and acceptance by the participating banks. The terms and covenants
contained in the facility are substantially similar to those contained in
the $400,000,000 Credit Agreement, but with a facility fee of .12%.
The Company has established uncommitted lines of credit with international
banks for $45,000,000 and has uncommitted bid lines of credit with certain
banks within its committed bank group for $130,000,000. These lines, which
generally have terms of one year, allow the Company to borrow from the banks
at mutually agreed upon rates, usually below the rates offered under the
1994 Credit Agreement. The Company has unrated commercial paper programs
with maturities ranging from one to 270 days in amounts up to a maximum of
$400,000,000. The Company also has available letters of credit lines for
$32,500,000, of which $13,908,000 had been issued at January 28, 1995.
In 1990 and 1991, the Company financed the land and building portions of
three new stores with an insurance company. The notes require regular
payments based on a 25-year amortization and can be called by the insurance
company or repaid by the Company, without premium, after 10 years.
During 1993, the Company placed $70,000,000 of unsecured, five-year notes
with five domestic and international banks. The floating rate notes bear
interest at a spread over LIBOR or other pricing indices at the Company's
option for durations of one month to six months. Interest on the notes is
paid quarterly.
During 1994, the Company placed $57,500,000 of senior notes with several
life insurance companies. The notes become due at various times between 1999
and 2007. Interest is paid semiannually.
The Company has entered into interest rate swap and cap agreements to reduce
the impact of changes in interest rates on its floating rate long-term debt.
At January 28, 1995, the Company had outstanding six interest rate contracts
with commercial banks, having a total notional principal amount of
$100,000,000. Three of these agreements effectively fix the Company's
interest rate on unrated commercial paper, floating rate facilities, and
uncommitted lines of credit at rates between 4.625% and 7.595% on a notional
principal amount of $50,000,000. These contracts expire in 1996, 1997, and
1998. The remaining three agreements effectively limit the maximum interest
rate the Company will pay at rates between 5.0% and 9.0% on notional
principal amounts totaling $50,000,000. These three agreements mature in
1996, 1998, and 1999. The Company is exposed to credit loss in the event of
nonperformance by the other parties to the interest rate swap agreements.
However, the Company does not anticipate nonperformance by the counterparties.
After 1990, the Company changed its primary method of financing land and
buildings from leasing to ownership. In order to consistently reflect the
financial cost of the investment in real estate under different financial
arrangements, the Company reclassifies interest associated with stores and
distribution centers into the operating and administrative expenses and cost
of goods sold in its financial statements.
Annual estimated long-term debt maturities for the five fiscal years
subsequent to January 28, 1995 are: 1995, $750,000; 1996, $10,793,000; 1997,
$11,366,000; 1998, $60,447,000; 1999, $368,455,000; and thereafter,
$89,105,000.
6. INCOME TAXES
<TABLE>
<CAPTION>
The provision for income taxes includes the following (in thousands):
1994 1993 1992
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Current . . . . . . . . . . . . . . . . . . . $7,919 $57,894 $35,772
Deferred. . . . . . . . . . . . . . . . . . . (3,526) (8,296) (189)
--------------------------
Total . . . . . . . . . . . . . . . . . . . . $4,393 $49,598 $35,583
====== ======= =======
- -------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
A reconciliation between the statutory federal income tax rate to the
provision for income taxes is as follows (in thousands):
1994 1993 1992
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes at the statutory rate. . $4,046 $42,176 $32,698
Settlement of certain IRS audits. . . . . . . -- 3,588 --
Deferred income taxes increase in
statutory rate. . . . . . . . . . . . . . . -- 219 --
State income taxes. . . . . . . . . . . . . . 347 3,615 2,885
Targeted jobs and other tax credits . . . . . (1,194) (926) (1,180)
Other, net. . . . . . . . . . . . . . . . . . 1,194 926 1,180
--------------------------
Provision for income taxes. . . . . . . . . . $4,393 $49,598 $35,583
====== ======= =======
- -------------------------------------------------------------------------
</TABLE>
As a result of the adoption of SFAS 109, 1993 consolidated net income was
decreased by $2,588,000 (see Note 2).
<TABLE>
<CAPTION>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
January 28, 1995 and January 29, 1994 are as follows (in thousands):
1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Capitalized inventory costs . . . . . . . . . . . . $ 6,851 $ 6,332
Accrued expenses. . . . . . . . . . . . . . . . . . 19,328 17,710
Restructuring related charges . . . . . . . . . . . 9,481 4,154
Deferred lease transactions . . . . . . . . . . . . 17,349 18,337
AMT credit. . . . . . . . . . . . . . . . . . . . . 5,110 --
Other . . . . . . . . . . . . . . . . . . . . . . . 7,864 6,860
--------------------
Total deferred tax assets . . . . . . . . . . . . 65,983 53,393
--------------------
Deferred tax liabilities:
Accumulated depreciation. . . . . . . . . . . . . . 50,502 41,712
Prepaid expenses. . . . . . . . . . . . . . . . . . 12,212 12,785
LIFO inventory. . . . . . . . . . . . . . . . . . . 10,411 9,564
--------------------
Total deferred tax liabilities. . . . . . . . . . 73,125 64,061
--------------------
Net deferred income taxes . . . . . . . . . . . . . . $ 7,142 $ 10,668
--------------------
Current deferred income taxes--asset. . . . . . . . . $(15,116) $( 7,828)
Noncurrent deferred income taxes--liability . . . . . 22,258 18,496
--------------------
Net deferred income taxes . . . . . . . . . . . . . . $ 7,142 $ 10,668
======== ========
- ---------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
In 1992, under the prior method of accounting, the deferred income tax
provision included the following (in thousands):
1992
- ---------------------------------------------------------------
<S> <C>
Depreciation. . . . . . . . . . . . . . . . . . . . . $ 3,122
Restructuring charge. . . . . . . . . . . . . . . . . 4,073
Rental expense. . . . . . . . . . . . . . . . . . . . (1,827)
Purchase discounts received in advance. . . . . . . . (1,177)
Computer system development costs capitalized . . . . (6,516)
Other . . . . . . . . . . . . . . . . . . . . . . . . 2,136
-------
Total deferred income tax benefit . . . . . . . . . . $ (189)
=======
- ---------------------------------------------------------------
</TABLE>
7. STOCKHOLDERS' EQUITY
Stock Incentive Plans--At January 28, 1995, 2,373,015 shares of common stock
were reserved for issuance to employees, including officers and directors,
and nonemployee agents, consultants, and advisors, under stock incentive
plans. These plans provide for the granting of incentive stock options,
nonqualified stock options, stock bonuses, stock appreciation rights, cash
bonus rights, and performance units.
Under the terms of the plans, the option price is determined by the Board of
Directors at the time the option is granted. The option price for incentive
stock options cannot be less than the fair value of the Company's stock on
the day prior to the date of grant. Nonqualified stock options may not be
granted at less than 50% of the fair value on the day prior to the date of
grant.
<TABLE>
<CAPTION>
Stock Options--Activity under the plans was as follows (in thousands, except
per share data):
Option Price
(Market Price at Date of Grant)
----------------------------------
Shares Per Share Total
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares under option:
Balance, January 30, 1993. . . . . . . . . . . 1,825 $12.125-30.875 $34,331
Options granted. . . . . . . . . . . . . . . 706 30.625-36.750 23,265
Options exercised. . . . . . . . . . . . . . (339) 12.125-27.250 (5,856)
Options cancelled. . . . . . . . . . . . . . (39) 12.125-32.750 (1,089)
----- -------
Balance, January 29, 1994. . . . . . . . . . . 2,153 12.125-36.750 50,651
Options granted. . . . . . . . . . . . . . . 404 29.625-41.250 14,629
Options exercised. . . . . . . . . . . . . . (152) 12.125-32.750 (2,612)
Options cancelled. . . . . . . . . . . . . . (47) 14.250-41.250 (1,611)
----- -------
Balance, January 28, 1995. . . . . . . . . . . 2,358 12.125-41.250 $61,057
===== =======
Shares exercisable, January 28, 1995 . . . . 1,315 12.125-36.750
Shares available for option:
January 29, 1994 . . . . . . . . . . . . . . . 372
January 28, 1995 . . . . . . . . . . . . . . . 15
- ------------------------------------------------------------------------------------
</TABLE>
Other Option--The Company's principal stockholder, FMI Associates, holds an
option, which expires in 1996, that initially allowed for a purchase of up
to 2,364,300 shares of the Company's common stock at $3.24 per share for an
aggregate of $7,668,000. In 1992, 292,792 shares were exercised, resulting
in a balance of 2,071,508 shares for an aggregate of $6,718,404. In 1993,
505,067 shares were exercised, resulting in a balance of 1,566,441 shares
for an aggregate of $5,080,349. No shares under the option were exercised
in 1994.
Management Bonus--In 1992, the Company awarded a stock bonus to a corporate
officer for 5,000 shares totaling $124,000. Shares issued vest annually over
five years.
Nonemployee Directors Stock Compensation Plan--In 1992, the Company
purchased 4,016 shares of its common stock at market prices for the benefit
of two of its nonemployee directors in lieu of a portion of current and
future board of director fee payments. The shares total $125,000 and vest
annually over five years.
8. LEASES
The Company leases or subleases a substantial portion of the real property
used in its operations.
At October 22, 1986, the leases and subleases for a distribution center, 71
store locations, and certain other properties were amended and restated to
provide, among other things, an initial lease term of 20 years for 36
locations (with cash rents of $38,476,000 for the first seven years and
$46,070,000 for the remaining 13 years). The average rent over the primary
lease term is charged to rent expense.
As a result of the above transaction: (1) five previously capitalized leases
qualified as operating leases, resulting in a decrease in property held
under capital leases and capital lease obligations of $53,678,000 and
$72,160,000 respectively, with the resulting $18,482,000 gain deferred and
amortized over the 20-year lease period; and (2) the difference between the
amount of the cash rent paid and the expense charged to operations on the 36
locations described above is included in deferred lease transactions.
In 1992, the Company amended leases for nine store locations, with cash rent
escalating over the term of the leases. The difference between cash rent
paid and the expense charged to operations is included in deferred lease
transactions. The average rent over the primary lease term, which is lower
than the prior rents paid, is charged to rent expense.
At January 28, 1995, deferred lease transactions consisted of $10,856,000
unamortized gain on capital leases, $33,971,000 of excess of rent expense
over cash rents for the aforementioned leases, and unamortized deferred gain
on a sale-leaseback transaction of $828,000.
The lease terms of certain operating leases require the payment of executory
costs such as property taxes, utilities, insurance, and maintenance. Certain
leases provide for percentage rents. Portions of the properties are
subleased to others for periods of from one to 20 years.
<TABLE>
<CAPTION>
At January 28, 1995, minimum rentals under noncancelable leases for future
fiscal years were (in thousands):
Operating Capitalized Less Net
Fiscal Year Leases Leases Subleases Rentals
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995. . . . . . . . . . . . . . . . . . $ 82,826 $ 1,808 $ 6,856 $ 77,778
1996. . . . . . . . . . . . . . . . . . 78,106 1,808 4,912 75,002
1997. . . . . . . . . . . . . . . . . . 76,498 1,848 4,125 74,221
1998. . . . . . . . . . . . . . . . . . 74,878 1,969 3,058 73,789
1999. . . . . . . . . . . . . . . . . . 73,693 1,969 2,319 73,343
2000 and thereafter . . . . . . . . . . 615,004 30,800 16,699 629,105
---------- ------- ------- ----------
Total . . . . . . . . . . . . . . . . . $1,001,005 40,202 $37,969 $1,003,238
========== ======= ==========
Less imputed interest . . . . . . . . . (26,272)
-------
Present value of minimum
rental payments . . . . . . . . . . . 13,930
Less current portion. . . . . . . . . . (107)
-------
Capitalized lease obligations . . . . . $13,823
=======
- -------------------------------------------------------------------------------------------
</TABLE>
As of January 28, 1995, the leases for nine store locations and certain
equipment were accounted for as capital leases. The amounts representing
interest expense on these capital lease obligations were included in
operating and administrative expenses and were $1,848,000, $2,112,000, and
$2,261,000 in 1994, 1993, and 1992, respectively.
Accumulated amortization of property under capital leases was $6,098,000,
$6,072,000, and $7,708,000 at January 28, 1995, January 29, 1994, and
January 30, 1993, respectively.
<TABLE>
<CAPTION>
Rent expense under operating leases including executory costs, and payments
under capital leases were as follows (in thousands):
1994 1993 1992
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross rent expense. . . . . . . . . . . . . . . . $101,163 $104,892 $113,894
Rent income from subleases. . . . . . . . . . . . (12,803) (11,582) (10,332)
------------------------------------
Net rent expense. . . . . . . . . . . . . . . . . 88,360 93,310 103,562
Payments under capital leases . . . . . . . . . . 1,947 2,178 2,370
------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . $ 90,307 $ 95,488 $105,932
======== ======== ========
- ---------------------------------------------------------------------------------------
</TABLE>
Included in gross rent expense for 1994, 1993 and 1992 were contingent rents
of $1,421,000, $1,650,000, and $1,845,000, respectively.
In 1989, the Company incurred a restructuring charge in connection with
management's decision to replace or close certain stores and to convert the
Company's MIS hardware from Honeywell to IBM. The decision to close certain
stores was subsequently reassessed by management, and in 1991 revisions were
made to the amounts accrued. At January 28, 1995, included in other
long-term liabilities, were future net rentals under noncancelable leases
for closed stores and for outdated computer hardware as follows (in thousands):
<TABLE>
<CAPTION>
Less
Estimated Estimated
Subleases/ Net
Fiscal Year Leases Discounts Rentals
- -------------------------------------------------------------------------
<S> <C> <C> <C>
1995. . . . . . . . . . . . . . . . . . $ 1,590 $ 824 $ 766
1996. . . . . . . . . . . . . . . . . . 1,492 824 668
1997. . . . . . . . . . . . . . . . . . 1,344 830 514
1998. . . . . . . . . . . . . . . . . . 1,344 830 514
1999. . . . . . . . . . . . . . . . . . 1,332 830 502
2000 and thereafter . . . . . . . . . . 7,441 5,889 1,552
------- ------- ------
Total . . . . . . . . . . . . . . . . . $14,543 $10,027 $4,516
======= ======= ======
</TABLE>
9. EMPLOYEE BENEFIT PLANS
Employees' Profit-sharing Plan--Profit-sharing contributions under this
Plan, which covers the Company's nonunion employees, are made to a trust
fund held by a third-party trustee. Contributions are based on the Company's
pretax income, as defined, at rates determined by the Board of Directors and
are not to exceed amounts deductible under applicable provisions of the
Internal Revenue Code. In 1994, the Company added a 1% basic contribution to
all eligible employees' accounts each year subject to normal plan vesting.
The Company expensed $5,891,000, $3,944,000, and $3,248,000 in 1994, 1993,
and 1992, respectively for these contributions.
Multi-employer Pension Plan--The Company contributes to multi-employer
pension plan trusts at specified rates in accordance with collective
bargaining agreements. Contributions to the trusts were $8,498,000,
$9,667,000, and $9,157,000 in 1994, 1993, and 1992, respectively. The
Company's relative positions in these plans with respect to the actuarial
present value of the accumulated benefit obligation and the projected
benefit obligation, net assets available for benefits, and the assumed rates
of return used by the plans are not determinable.
Employee Stock Purchase Plan--In April 1992, the Company implemented a
noncontributory employee stock purchase plan. The plan allows employees to
purchase stock in the Company via payroll deductions. The Company pays all
brokerage fees associated with the purchase of the stock. The plan is
available to all employees over age 18 who have completed six months of
continuous employment with the Company.
Supplemental Retirement Program--In January 1994, the Company implemented a
supplemental retirement program for senior management, selected vice
presidents, and selected key individuals. Program provisions are as follows:
Senior Management--The plan is funded with life insurance contracts on the
lives of the participants. The Company is the owner of the contracts and
makes annual contributions of $25,000 per participant. Total contributions
were $325,000 in 1994 and 1993. Retirement age under the plan is normally 62
with an alternative age of 65, at which point the Company will make 15
annual benefit payments to the executive.
Selected Vice Presidents and Selected Key Individuals--The Company will
contribute annually a percentage of each participant's gross salary. The
plan is funded with life insurance contracts on participants 54 years old
and younger and variable annuity contracts for participants 55 years old and
older. Each participant is the owner of his/her respective contract.
10. OTHER POSTRETIREMENT BENEFITS
For employees who qualified prior to January 1, 1994, the Company sponsored
a retiree health plan for postretirement health care coverage with
eligibility requirements and benefits varying by region of the Company.
Under this plan, the Company contributes 100% of the premiums for retired
salaried employees qualifying under eligibility requirements which specify
minimum age and years of continuous service at age 60 with 25 years of
service, age 62 with 20 years of service, and age 65 with 15 years of service.
For retired salaried and hourly employees between the ages of 62 to 65 years
and having completed minimum continuous service of 15 years, the retiree
pays premiums at current employee rates.
As of January 1, 1994, the Company changed the eligibility requirements and
benefits available under the retiree health plan. For all salaried and
non-union hourly employees in all regions who retire after January 1, 1994,
eligibility requirements changed to a minimum of 60 years of age with 10
years of continuous service. Under the revised plan, the retiree pays
premiums at current employee rates.
<TABLE>
<CAPTION>
The following table sets forth the plan's funded status, reconciled with the
amount shown in the Company's balance sheet:
January 28, 1995 January 29, 1994
- -------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Current retirees. . . . . . . . . . . . . . . . . $ 1,231,478 $ 1,415,454
Fully eligible plan participants. . . . . . . . . 656,973 715,869
Other active plan participants. . . . . . . . . . 2,331,405 2,902,136
-----------------------------------
Accumulated postretirement benefit obligation
in excess of plan assets. . . . . . . . . . . . . 4,219,856 5,033,459
Unrecognized transition obligation,
transition date 1/31/93 and 2/1/92. . . . . . . . (1,420,100) (1,503,635)
Unrecognized prior service cost . . . . . . . . . (366,138) (407,792)
Unrecognized net gain/(loss). . . . . . . . . . . 657,774 (841,184)
-----------------------------------
Accrued postretirement benefit cost . . . . . . . $ 3,091,392 $ 2,280,848
===================================
Net periodic postretirement benefit cost included
the following components:
Service cost--benefits attributed to service
during the period . . . . . . . . . . . . . $353,305 $297,804
Interest cost on accumulated postretirement
benefit obligation. . . . . . . . . . . . . 372,483 462,477
Amortization of transition obligation
over 20 years . . . . . . . . . . . . . . . 125,189 125,783
Amortization of unrecognized loss . . . . . . 27,897 25,551
-----------------------------------
Net periodic postretirement benefit cost. . . . . $878,874 $911,615
===================================
- -------------------------------------------------------------------------------------
</TABLE>
The assumed health care cost trend rates used in measuring the accumulated
postretirement benefit obligation were as follows:
Under Medicare Retirement Age--8% for one year, then grading down to 4.5%
over the next seven years
Medicare Retirement Age and Over--7% for one year, then grading down to 4.5%
over the next five years
The health care cost trend rate assumption has a significant effect on the
amounts reported. To illustrate, increasing the assumed health care cost
trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of January 28, 1995 and the
aggregate of the service and interest cost components of the net periodic
postretirement benefit cost for 1994 as follows:
- ------------------------------------------------------------------------------
Increase in accumulated postretirement benefit obligation. . . . . . $707,931
Increase in service and interest costs . . . . . . . . . . . . . . . 154,060
- ------------------------------------------------------------------------------
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8%.
11. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments has been determined by the
Company using available market information and valuation methodologies as
shown below. The use of different assumptions and/or estimation
methodologies may have a material effect on the estimated fair value
amounts. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that the Company could actually realize.
Management is not aware of any factors that would significantly change the
estimated fair value amounts shown below. A comprehensive revaluation for
purposes of these financial statements has not been performed since
January 28, 1995, and current estimates of fair value may differ from the
amounts presented herein. There are no financial instruments that
potentially subject the Company to concentrations of credit risk.
<TABLE>
<CAPTION>
The estimated fair values of the Company's financial instruments are as
follows (in thousands):
January 28, 1995
--------------------
Carrying Estimated
Amount Fair Value
- ------------------------------------------------------------------------------
<S> <C> <C>
Financial assets:
Cash and cash equivalents. . . . . . . . . . . . . . . $ 34,868 $ 34,868
Receivables. . . . . . . . . . . . . . . . . . . . . . 20,025 20,025
Prepaid expenses and other . . . . . . . . . . . . . . 42,092 42,092
Other long-term assets . . . . . . . . . . . . . . . . 19,423 19,370
Financial liabilities:
Outstanding checks . . . . . . . . . . . . . . . . . . 81,341 81,341
Accounts payable . . . . . . . . . . . . . . . . . . . 230,703 230,703
Long-term debt and interest rate agreements. . . . . . 540,916 539,068
- ------------------------------------------------------------------------------
</TABLE>
Cash and Cash Equivalents, Receivables, Prepaid Expenses and Other--The
carrying amounts of these items are a reasonable estimate of their fair
value.
Other Long-term Assets--The fair value of debt and equity investments
(primarily municipal securities) is estimated using quoted market prices.
Outstanding Checks and Accounts Payable--The carrying amounts of these items
are a reasonable estimate of their fair value.
Long-term Debt and Interest Rate Agreements--The fair value of notes,
mortgages, and real estate assessments payable is estimated by discounting
expected future cash flows. The discount rate used is the rate currently
available to the Company for issuance of debt with similar terms and
remaining maturities. For commercial paper and bid lines of credit under the
revolving credit agreement (see Note 5), the carrying amounts are a
reasonable estimate of their fair value.
The fair value of interest rate swap and cap agreements is the estimated
amount at which they could be settled. At January 28, 1995, the Company
could settle these agreements for a $3,851,000 gain, which is included in
the estimated fair value of long-term debt.
12. COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are parties to various legal claims,
actions, and complaints, certain of which involve material amounts. Although
the Company is unable to predict with certainty whether or not it will
ultimately be successful in these legal proceedings or, if not, what the
impact might be, management presently believes that disposition of these
matters will not have a material adverse effect on the Company's
consolidated financial position or consolidated results of operations.
<TABLE>
<CAPTION>
13. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
1994 Fiscal Quarters 1993 Fiscal Quarters
(In thousands, except -------------------------------------------- ---------------------------------------------
per-share data) Fourth Third Second First Fourth Third Second First
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . $831,997 $626,804 $737,284 $932,347 $807,777 $644,527 $674,719 $852,059
Gross margin. . . . . . . . . . . . 220,508/1 152,358 221,733 271,435 247,492/3 189,897 206,863/4 246,123
Income (loss) from operations . . . 18,511/1 (54,799)/2 33,746 28,856 50,775/3 17,900 35,567/4 24,506
Net income (loss) before cumulative
effect of accounting change . . . 8,568/1 (36,579)/2 19,193 15,986 30,034/3 9,897 16,962/4,5 14,011
Cumulative effect of accounting
change. . . . . . . . . . . . . . -- -- -- -- -- -- -- (2,588)/6
Net income (loss) . . . . . . . . . 8,568/1 (36,579)/2 19,193 15,986 30,034/3 9,897 16,962/4,5 11,423/6
======== ======= ========= ======== ======== ======== ======== ========
Earnings (loss) per common share:
Net income (loss) before cumulative
effect of accounting change . . . $.30/1 $(1.28)/2 $.67 $.56 $1.05/3 $.35 $.60/4,5 $ .50
Cumulative effect of accounting
change. . . . . . . . . . . . . . -- -- -- -- -- -- -- (.09)/6
---- ------ ---- ---- ----- ---- ---- -----
Net income (loss) . . . . . . . . . $.30/1 $(1.28)/2 $.67 $.56 $1.05/3 $.35 $.60/4,5 $ .41/6
==== ====== ==== ==== ===== ==== ==== =====
Weighted average number of shares
outstanding . . . . . . . . . . . 28,510 28,556 28,676 28,725 28,571 28,495 28,338 28,165
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
/1 The LIFO adjustment in the fourth quarter of 1994 increased gross margin
and income from operations by $2,549; net income by $1,580; and earnings
per common share by $.06.
/2 The writedown of California assets in the third quarter of 1994
decreased income from operations by $15,978; net income by $9,906;
and earnings per common share by $.35.
/3 The LIFO adjustment in the fourth quarter of 1993 increased gross margin
and income from operations by $4,493; net income by $2,786; and earnings
per common share by $.10.
/4 In the second quarter of 1993, a change in the LIFO computation
increased gross margin by $6,178; net income by $3,892; and earnings
per common share by $.14.
/5 In the second quarter of 1993, resolution of certain IRS audits and a
charge for recently enacted federal statutory tax rates, applied
retroactively to January 31, 1993, decreased net income by $4,368 and
earnings per common share by $.15.
/6 In the first quarter of 1993, the Company adopted SFAS No. 109 which
decreased net income by $2,588 and earnings per common share by $.09.
</TABLE>
MANAGEMENT'S REPORT ON RESPONSIBILITY FOR FINANCIAL STATEMENTS
The management of Fred Meyer, Inc. has the responsibility for preparing the
accompanying financial statements and for their integrity and objectivity.
The statements were prepared in accordance with generally accepted
accounting principles. The financial statements include amounts that are
based on management's best estimates and judgments. Management also prepared
other information in the annual report and is responsible for its accuracy
and consistency with the financial statements.
The Company's financial statements have been audited by Deloitte & Touche
LLP, independent auditors. Management has made available to Deloitte &
Touche LLP all the Company's financial records and related data, as well as
the minutes of shareholders' and directors' meetings.
Management has established and maintains an internal control structure that
provides reasonable assurance as to the integrity and reliability of the
financial statements, the protection of assets from unauthorized use or
disposition and the prevention and detection of fraudulent financial
reporting. The internal control structure provides for the appropriate
division of responsibility, which is monitored for compliance.
The Company maintains an internal auditing program that assesses the
effectiveness of the internal control structure and recommends improvements.
Deloitte & Touche LLP also considered the internal control structure in
connection with its audit. Management has considered the internal auditors'
and Deloitte & Touche LLP's recommendations concerning the Company's
internal control structure and has taken the appropriate actions to respond
to these recommendations.
The Company's principles of business conduct address, among other things,
potential conflicts of interests and compliance with laws, including those
relating to financial disclosure and the confidentiality of proprietary
information.
The Board of Directors pursues its responsibility for the quality of the
Company's financial reporting primarily through its Audit Committee, which
is comprised of outside directors. The Audit Committee meets approximately
three times a year with management, the corporate internal audit manager,
and the independent auditors to ensure that each is meeting its
responsibilities and to discuss matters concerning internal controls and
accounting and financial reporting. The corporate internal audit manager and
independent auditors have unrestricted access to the Audit Committee.
KENNETH THRASHER
Kenneth Thrasher
Senior Vice President, Finance and Chief Financial Officer
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of Fred Meyer, Inc.:
We have audited the accompanying consolidated balance sheets of Fred Meyer,
Inc. and subsidiaries as of January 28, 1995 and January 29, 1994, and the
related statements of consolidated operations, changes in consolidated
stockholders' equity, and consolidated cash flows for each of the three
fiscal years in the period ended January 28, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Fred Meyer, Inc. and
subsidiaries at January 28, 1995 and January 29, 1994, and the results of
their operations and their cash flows for each of the three fiscal years in
the period ended January 28, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note 6 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in the fiscal year
ended January 29, 1994.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Portland, Oregon
March 6, 1995
DIRECTORS
Saul A. Fox/3 (41, 1986)*
General Partner,
Kohlberg Kravis Roberts & Co.
San Francisco, California
A.M. Gleason/1 (64, 1992)
Vice Chairman of the Board
PacifiCorp (diversified public utility)
Portland, Oregon
Jerome Kohlberg, Jr. (69, 1981)
General Partner,
Kohlberg & Co.
New York, New York
Roger S. Meier/1,2,3 (69, 1985)
President,
AMCO, Inc. (investment enterprise)
Portland, Oregon
Michael W. Michelson/2,3 (43, 1981)
General Partner,
Kohlberg Kravis Roberts & Co.
San Francisco, California
Robert G. Miller/2 (50, 1991)
Chairman of the Board and
Chief Executive Officer
Fred Meyer, Inc.
Portland, Oregon
Paul E. Raether (48, 1986)
General Partner,
Kohlberg Kravis Roberts & Co.
New York, New York
/1 Audit Committee
/2 Executive Committee
/3 Compensation Committee
* Age as of March 1, 1995 and year joined Board
MANAGEMENT COMMITTEE
Robert G. Miller (50, 1991)*
Chairman of the Board and
Chief Executive Officer
Cyril K. Green (63, 1947)
President and Chief Operating Officer
R. Eric Baltzell (54, 1962)
Senior Vice President, Stores
Roger A. Cooke (46, 1992)
Senior Vice President, General Counsel
and Secretary
Edward A. Dayoob (55, 1973)
Senior Vice President, Jewelry Group
Curt A. Lerew, III (47, 1991)
Senior Vice President, Food Group
Keith W. Lovett (51, 1992)
Senior Vice President, Human Resources
Ronald J. McEvoy (47, 1991)
Senior Vice President,
Chief Information Officer
Norman O. Myhr (47, 1978)
Senior Vice President, Sales Promotion
and Marketing
Cheryl D. Perrin (56, 1976)
Senior Vice President, Public Affairs
Mary F. Sammons (48, 1973)
Senior Vice President, General Group
Kenneth Thrasher (45, 1982)
Senior Vice President, Finance and
Chief Financial Officer
Scott L. Wippel (41, 1992)
Senior Vice President, Corporate Facilities
* Age as of March 1, 1995 and year joined Fred Meyer
SHAREHOLDER INFORMATION
Annual Meeting
The Annual Meeting of Shareholders will be held at 1:00 p.m. on Tuesday,
June 27, 1995 at the Red Lion Inn (East), Jantzen Beach, 909 N. Hayden
Island Drive, Portland, Oregon.
Stock Listing
Fred Meyer, Inc.'s common stock is traded on the New York Stock Exchange
(NYSE). The ticker symbol is FMY and the Dow Jones newspaper quotation is
under FredMeyer or FrMeyer.
Form 10-K
A copy of the company's Form 10-K, as filed with the Securities and Exchange
Commission, may be obtained at no cost by writing: Shareholder Relations,
Fred Meyer, Inc., P.O. Box 42121, Portland, Oregon 97242.
Independent Auditors
Deloitte & Touche LLP
Portland, Oregon
Transfer Agent and Registrar
Chemical Trust Company of California
Securityholder Relations Department
50 California Street, 10th Floor
San Francisco, California 94111
Toll-free telephone: 1-800-647-4273
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement Nos. 33-13912, 33-22572, 33-31798, 33-36163, and 33-49638
all on Form S-8 and Registration Statement No. 33-51177 on Form S-3,
of our reports dated March 6, 1995 (our report on the financial
statement expresses an unqualified opinion and includes an
explanatory paragraph relating to a change in method of accounting
for income taxes in the fiscal year ended January 29, 1994),
appearing in and incorporated by reference in the Annual Report on
Form 10-K of Fred Meyer, Inc. for the year ended January 28, 1995.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
April 26, 1995
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, an
officer and/or director of Fred Meyer, Inc., a Delaware
corporation (the "Company"), does hereby constitute and appoint
Robert G. Miller, Kenneth Thrasher and Roger A. Cooke, and each
of them, his true and lawful attorney and agent, to do any and
all acts and things and execute in his name as an officer or
director of the Company the Annual Report on Form 10-K for the
year ended January 28, 1995 and any and all amendments thereto,
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission; and the undersigned does hereby ratify and
confirm all that said attorneys and agents and each of them shall
do or cause to be done by virtue hereof. Any one of said
attorneys or agents shall have, and may exercise, all powers
conferred.
IN WITNESS WHEREOF, the undersigned has executed this
Power of Attorney this 10th day of April, 1995.
SAUL A. FOX
----------------------------------
Saul A. Fox
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, an
officer and/or director of Fred Meyer, Inc., a Delaware
corporation (the "Company"), does hereby constitute and appoint
Robert G. Miller, Kenneth Thrasher and Roger A. Cooke, and each
of them, his true and lawful attorney and agent, to do any and
all acts and things and execute in his name as an officer or
director of the Company the Annual Report on Form 10-K for the
year ended January 28, 1995 and any and all amendments thereto,
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission; and the undersigned does hereby ratify and
confirm all that said attorneys and agents and each of them shall
do or cause to be done by virtue hereof. Any one of said
attorneys or agents shall have, and may exercise, all powers
conferred.
IN WITNESS WHEREOF, the undersigned has executed this
Power of Attorney this 10th day of April, 1995.
A. M. GLEASON
----------------------------------
A. M. Gleason
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, an
officer and/or director of Fred Meyer, Inc., a Delaware
corporation (the "Company"), does hereby constitute and appoint
Robert G. Miller, Kenneth Thrasher and Roger A. Cooke, and each
of them, his true and lawful attorney and agent, to do any and
all acts and things and execute in his name as an officer or
director of the Company the Annual Report on Form 10-K for the
year ended January 28, 1995 and any and all amendments thereto,
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission; and the undersigned does hereby ratify and
confirm all that said attorneys and agents and each of them shall
do or cause to be done by virtue hereof. Any one of said
attorneys or agents shall have, and may exercise, all powers
conferred.
IN WITNESS WHEREOF, the undersigned has executed this
Power of Attorney this 12th day of April, 1995.
JEROME KOHLBERG,JR.
----------------------------------
Jerome Kohlberg, Jr.
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, an
officer and/or director of Fred Meyer, Inc., a Delaware
corporation (the "Company"), does hereby constitute and appoint
Robert G. Miller, Kenneth Thrasher and Roger A. Cooke, and each
of them, his true and lawful attorney and agent, to do any and
all acts and things and execute in his name as an officer or
director of the Company the Annual Report on Form 10-K for the
year ended January 28, 1995 and any and all amendments thereto,
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission; and the undersigned does hereby ratify and
confirm all that said attorneys and agents and each of them shall
do or cause to be done by virtue hereof. Any one of said
attorneys or agents shall have, and may exercise, all powers
conferred.
IN WITNESS WHEREOF, the undersigned has executed this
Power of Attorney this 12th day of April, 1995.
ROBERT G. MILLER
----------------------------------
Robert G. Miller
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, an
officer and/or director of Fred Meyer, Inc., a Delaware
corporation (the "Company"), does hereby constitute and appoint
Robert G. Miller, Kenneth Thrasher and Roger A. Cooke, and each
of them, his true and lawful attorney and agent, to do any and
all acts and things and execute in his name as an officer or
director of the Company the Annual Report on Form 10-K for the
year ended January 28, 1995 and any and all amendments thereto,
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission; and the undersigned does hereby ratify and
confirm all that said attorneys and agents and each of them shall
do or cause to be done by virtue hereof. Any one of said
attorneys or agents shall have, and may exercise, all powers
conferred.
IN WITNESS WHEREOF, the undersigned has executed this
Power of Attorney this 12th day of April, 1995.
ROGER S. MEIER
----------------------------------
Roger S. Meier
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, an
officer and/or director of Fred Meyer, Inc., a Delaware
corporation (the "Company"), does hereby constitute and appoint
Robert G. Miller, Kenneth Thrasher and Roger A. Cooke, and each
of them, his true and lawful attorney and agent, to do any and
all acts and things and execute in his name as an officer or
director of the Company the Annual Report on Form 10-K for the
year ended January 28, 1995 and any and all amendments thereto,
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission; and the undersigned does hereby ratify and
confirm all that said attorneys and agents and each of them shall
do or cause to be done by virtue hereof. Any one of said
attorneys or agents shall have, and may exercise, all powers
conferred.
IN WITNESS WHEREOF, the undersigned has executed this
Power of Attorney this 12th day of April, 1995.
MICHAEL W. MICHELSON
----------------------------------
Michael W. Michelson
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned, an
officer and/or director of Fred Meyer, Inc., a Delaware
corporation (the "Company"), does hereby constitute and appoint
Robert G. Miller, Kenneth Thrasher and Roger A. Cooke, and each
of them, his true and lawful attorney and agent, to do any and
all acts and things and execute in his name as an officer or
director of the Company the Annual Report on Form 10-K for the
year ended January 28, 1995 and any and all amendments thereto,
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission; and the undersigned does hereby ratify and
confirm all that said attorneys and agents and each of them shall
do or cause to be done by virtue hereof. Any one of said
attorneys or agents shall have, and may exercise, all powers
conferred.
IN WITNESS WHEREOF, the undersigned has executed this
Power of Attorney this 10th day of April, 1995.
PAUL E. RAETHER
----------------------------------
Paul E. Raether
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> JAN-28-1995
<CASH> 34,868
<SECURITIES> 0
<RECEIVABLES> 20,025
<ALLOWANCES> 0
<INVENTORY> 514,473
<CURRENT-ASSETS> 641,595
<PP&E> 1,342,555
<DEPRECIATION> 446,116
<TOTAL-ASSETS> 1,562,672
<CURRENT-LIABILITIES> 392,081
<BONDS> 540,166
<COMMON> 268
0
0
<OTHER-SE> 538,352
<TOTAL-LIABILITY-AND-EQUITY> 1,562,672
<SALES> 3,128,432
<TOTAL-REVENUES> 3,128,432
<CGS> 2,262,398
<TOTAL-COSTS> 823,742
<OTHER-EXPENSES> 15,978
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,753
<INCOME-PRETAX> 11,561
<INCOME-TAX> 4,393
<INCOME-CONTINUING> 7,168
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,168
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
