UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Smith's Food & Drug Centers, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Class B Common Stock, $0.01 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
83238810
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(CUSIP Number)
Roger A. Cooke, Senior Vice President
Fred Meyer, Inc.
3800 SE 22nd Avenue
Portland, OR 97242
(503) 232-8844
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
May 11, 1997
-------------------------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
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SCHEDULE 13D
------------
CUSIP No. 83238810 Page 2 of 6 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fred Meyer, Inc.
93-0798201
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2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3) SEC USE ONLY _____________________________________________________________
4) SOURCE OF FUNDS
OT
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5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7) SOLE VOTING POWER
NUMBER OF
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SHARES
8) SHARED VOTING POWER
BENEFICIALLY
2,256,955**
OWNED BY --------------------------------------------------
EACH 9) SOLE DISPOSITIVE POWER
REPORTING
--------------------------------------------------
PERSON
10) SHARED DISPOSITIVE POWER
WITH
2,256,955**
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11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,256,955**
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12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.8%**
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14) TYPE OF REPORTING PERSON*
CO
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
**Reporting Person disclaims beneficial ownership of all shares.
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Item 1. Security and Issuer
This Statement relates to shares of Class B Common Stock, $0.01 par value
("Common Stock") of Smith's Food & Drug Centers, Inc., a corporation organized
under the laws of Delaware ("Smith's"). Smith's principal executive offices are
located at 1550 South Redwood Road, Salt Lake City, Utah 84104.
Item 2. Identity and Background
This Statement is filed by Fred Meyer, Inc., a corporation organized under
the laws of Delaware ("Fred Meyer"), whose business address is 3800 SE 22nd
Avenue, Portland, OR 97202. Fred Meyer's principal business is retailing a wide
range of food, apparel, fine jewelry and products for the home. During the past
five years, Fred Meyer has not been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), nor has it been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Set forth below are the names, principal occupations and business addresses
of the executive officers and directors of Fred Meyer. Each executive officer
and director is a citizen of the United States of America. During the past five
years, none of the executive officers or directors has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Executive Officers of Fred Meyer:
<TABLE>
<CAPTION>
Name Position with Fred Meyer
- ---- ------------------------
<S> <C>
Robert G. Miller Chairman of the Board and Chief Executive Officer
Sammy K. Duncan Executive Vice President, Food Group
Kenneth Thrasher Executive Vice President and Chief Administrative
Officer
Mary F. Sammons Executive Vice President, Apparel, PEM and Home Group
Wayne W. Abbott Senior Vice President, Director of the Home Group
R. Eric Baltzell Senior Vice President, Director of Sales
David J. Campisi Senior Vice President, Director of Apparel Group
Roger A. Cooke Senior Vice President, Director of Legal Group and
General Counsel and Secretary
Edward A. Dayoob Senior Vice President, President, Fred Meyer Jewelers
Michael H. Don Senior Vice President, Chief Executive Officer,
Fred Meyer Jewelers
Laurel K. Hardt Senior Vice President, Director of IS Group and
Chief Information Officer
Joseph Intile Senior Vice President, Director of Distribution and
Logistics
David R. Jessick Senior Vice President, Director of Finance Group and
Chief Financial Officer
Craig E. Kattenberg Senior Vice President, Regional Store Sales
Keith W. Lovett Senior Vice President, Director of Human Resources
Group
Norman O. Myhr Senior Vice President, Director of Marketing and
Sales Promotion Group
Cheryl D. Perrin Senior Vice President, Director of Public Affairs
Division
Page 3 of 6
<PAGE>
Scott L. Wippel Senior Vice President, Director of Corporate
Facilities Group
</TABLE>
The business address of each executive officer is 3800 SE 22nd Avenue,
Portland, Oregon 97202.
Directors of Fred Meyer:
<TABLE>
<CAPTION>
Name Principal Occupation, Address of Employer and
Business Address of Director
- ---- ------------------------------------------------------
<S> <C>
Vivian A. Bull President, Linfield College
900 S.E. Baker Street, McMinnville, Oregon 97128-6894
James J. Curran* Retired Chairman of the Board and Chief Executive
Officer of First Interstate Bank, Northwest Region
A. M. Gleason* Retired Chief Executive Officer of PacifiCorp
David L. Johnson Chairman of the Board and Chief Executive Officer,
KinderCare Learning Centers, Inc.
2400 Presidents Drive, Montgomery, Alabama 36116
Roger S. Meier President, AMCO, Inc.
1211 SW Fifth Avenue, Ste 2900, Portland, Oregon 97204
Steven R. Rogel President and Chief Executive Officer,
Willamette Industries, Inc.
1300 S.W. Fifth Avenue, Suite 3800, Portland,
Oregon 97201
* Business address is 3800 SE 22nd Avenue, Portland, OR 97202
</TABLE>
Item 3. Source and Amount of Funds or Other Consideration
See Item 4 below.
Item 4. Purpose of Transaction
On May 11, 1997, Smith's and Fred Meyer entered into an Agreement and Plan
of Reorganization and Merger (the "Merger Agreement"), a copy of which is
attached hereto as Exhibit 7.4 and incorporated by reference herein. Pursuant to
the terms of the Merger Agreement, Smith's and Fred Meyer will form a Delaware
holding company ("Holdings"), Holdings will form two subsidiaries ("Smith's Sub"
and "Fred Sub") and, subject to certain conditions being satisfied or waived,
Smith's Sub would merge with and into Smith's and Fred Sub would merge with and
into Fred (the "Smith's Merger" and the "Fred Merger," and collectively, the
"Mergers"). Pursuant to the Mergers, (i) each outstanding share of Smith's Class
A Common Stock, $.01 par value, and each outstanding share of Smith's Class B
Common Stock, $.01 par value, would be converted into the right to receive 1.05
shares of Holdings Common Stock, $.01 par value ("Holdings Common Stock"), (ii)
each outstanding share of Smith's Series I Preferred Stock, $.01 par value,
would be converted into the right to receive $.33-1/3 in cash, and (iii) each
outstanding share of Fred Meyer Common Stock would be converted into the right
to receive one share of Holdings Common Stock. It is anticipated that the
Holdings Common Stock would trade on the New York Stock Exchange. Conditions to
the consummation of the Mergers include the receipt of regulatory approvals and
approval by the shareholders of Fred Meyer and Smith's.
Also on May 11, 1997, Fred Meyer entered into Voting Agreements (the
"Voting Agreements") with certain shareholders of Smith's ("Shareholders"),
pursuant to which, in consideration of the covenants and agreements of Fred
Meyer contained therein and in the Agreement, and as an inducement to Fred Meyer
to enter into the Merger Agreement, Shareholders agreed to vote at any meeting
of Smith's shareholders all of Shareholders' shares of Smith's voting securities
(i) in favor of approving the Merger Agreement and the transactions contemplated
thereby (the
Page 4 of 6
<PAGE>
"Reorganization"), (ii) against any other merger agreement or merger,
consolidation, combination, dissolution, liquidation or winding up by Smith's,
or any other acquisition proposal, and (iii) against any amendment to Smith's
certificate of incorporation or bylaws or other proposal or transaction that
would in any manner impede, frustrate, prevent, or nullify the Mergers. The
Voting Agreements also impose restrictions upon the transfer of the shares,
options and warrants subject to the Voting Agreements. A copy of the Voting
Agreements are included as Exhibits 7.1-7.3 to this Schedule 13D and are
specifically incorporated herein by reference.
The foregoing summaries of the Merger Agreement and the Voting Agreements
are qualified in their entirety by reference to the full agreements which are
filed as exhibits.
Other than the transactions contemplated by the Merger Agreement and Voting
Agreements, Fred Meyer has no plans or proposals required to be disclosed in
this Item 4.
Item 5. Interest in Securities of the Issuer
(a) - (c) By reason of the Voting Agreements, Fred Meyer may be deemed to
be the beneficial owner of 2,256,955 shares of Smith's Class B Common Stock,
2,730,319 shares of Class A Common Stock and 7,521,364 shares of Series I
Preferred Stock (collectively, the "Securities"). Fred Meyer disclaims
beneficial ownership of the Securities. The Securities represent approximately
18.8% of the outstanding shares of Class B Common Stock, approximately 71.7% of
the outstanding shares of Class A Common Stock, approximately 75.5% of the
outstanding shares of Series I Preferred Stock and approximately 70.0% of the
combined voting power of the outstanding stock of Smith's. Except as described
in this Schedule 13D, neither Fred Meyer nor, to the best knowledge of Fred
Meyer, any of the persons listed in Item 2 above beneficially owns any shares of
Smith's Class B Common Stock. Except as described in this Schedule 13D, neither
Fred Meyer nor, to the best of its knowledge, any of the persons listed in Item
2 above has effected any transactions in Smith's Class B Common Stock during the
past 60 days. By virtue of the limited nature of the Voting Agreements, Fred
Meyer expressly disclaims beneficial ownership of the Securities.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
See Item 4 with respect to the Merger Agreement and the Voting Agreements.
Item 7. Material to be Filed as Exhibits
The following agreements are filed as exhibits:
7.1 Voting Agreement dated as of May 11, 1997 among Fred Meyer, Inc. and
Each of the Individuals and Entities Listed on the Signature Page
Thereto.
7.2 Voting Agreement dated as of May 11, 1997 between Fred Meyer, Inc. and
University of Utah.
7.3 Voting Agreement dated as of May 11, 1997 between Fred Meyer, Inc. and
Corporation of the President of the Church of Jesus Christ of
Latter-Day Saints.
Page 5 of 6
<PAGE>
7.4 Agreement and Plan of Reorganization and Merger by and between Smith's
Food & Drug Centers, Inc. and Fred Meyer, Inc., dated May 11, 1997.
(Incorporated by reference to Exhibit 99.1 of Fred Meyer, Inc.'s Form
8-K (File No. 1-11274) filed May 14, 1997).
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
FRED MEYER, INC.
May 20, 1997 By: ROGER A. COOKE
---------------- -------------------------------------
Date Roger A. Cooke, Sr. Vice President,
General Counsel and Secretary
Page 6 of 6
<PAGE>
EXHIBIT INDEX
Sequential
Ex. No. Description Page No.
- ------- ----------- --------
7.1 Voting Agreement dated as of May 11, 1997 among Fred Meyer,
Inc. and Each of the Individuals and Entities Listed on the
Signature Page Thereto.
7.2 Voting Agreement dated as of May 11, 1997 between Fred
Meyer, Inc. and University of Utah.
7.3 Voting Agreement dated as of May 11, 1997 between Fred
Meyer, Inc. and Corporation of the President of the Church
of Jesus Christ of Latter-Day Saints.
7.4 Agreement and Plan of Reorganization and Merger by and
between Smith's Food & Drug Centers, Inc. and Fred Meyer,
Inc., dated May 11, 1997. (Incorporated by reference to
Exhibit 99.1 of Fred Meyer, Inc.'s Form 8-K (File No.
1-11274) filed May 14, 1997).
EXECUTION COPY
- --------------------------------------------------------------------------------
VOTING AGREEMENT
among
FRED MEYER, INC.
and
EACH OF THE INDIVIDUALS AND ENTITIES
LISTED ON THE SIGNATURE PAGE HERETO
Dated as of May 11, 1997
- --------------------------------------------------------------------------------
<PAGE>
VOTING AGREEMENT (this "Agreement") dated as of May 11, 1997, among Fred
Meyer, Inc., a Delaware corporation ("Fred Meyer") and the individuals and
entities (other than the University of Utah and the Corporation of the President
of the Church of Jesus Christ of Latter-Day Saints (the "Other Stockholders"))
listed on Schedule A attached hereto and each of such individuals and entities
being a "Stockholder" and, collectively, the "Stockholders").
WHEREAS, Fred Meyer and Smith's Food & Drug Centers, Inc., a Delaware
corporation (the "Company"), propose to enter into an Agreement and Plan of
Reorganization and Merger dated as of the date hereof (as the same may be
amended or supplemented in a manner not adverse to the Stockholders, the
"Reorganization Agreement"; capitalized terms used but not defined herein shall
have the meanings set forth in the Reorganization Agreement) providing for the
formation of a new Delaware holding company, Meyer-Smith Holdco, Inc.
("Holdings"), the formation of two subsidiaries wholly-owned by Holdings ("Fred
Meyer Merger Sub, Inc." and "Smith's Merger Sub, Inc.") and the simultaneous
merger of Fred Meyer Merger Sub, Inc. with and into Fred Meyer and Smith's
Merger Sub, Inc. with and into the Company (the "Merger") so that each of Fred
Meyer and the Company become wholly-owned subsidiaries of Holdings, upon the
terms and subject to the conditions set forth in the Reorganization Agreement;
WHEREAS, pursuant to the Merger the Common Stock (as defined below) will be
converted into shares of common stock, par value $.01 per share, of Holdings and
each share of the Series I Preferred Stock (as defined below) shall be converted
into the right to receive thirty-three and one-third cents ($.33 1/3) (the
"Preferred Consideration)";
WHEREAS, simultaneously with the execution hereof, Fred Meyer is entering
into voting agreements (the "Other Voting Agreements", and together with this
Agreement, the "Voting Agreements") with the Other Stockholders, dated as of the
date hereof;
WHEREAS, immediately prior to the Effective Time, Fred Meyer will assign
each of the Voting Agreements and all of its rights, interests and obligations
hereunder and thereunder to Holdings;
WHEREAS, each Stockholder and each Other Stockholder owns beneficially and
(except as set forth on Schedule A attached hereto) of record (i) the number of
shares of Class A Common Stock, par value $.01 per share, of the Company (the
"Class A Common Stock"), of Class B Common Stock, par value $.01 per share, of
the Company (the "Class B Common Stock"), of Class C Common Stock, par value
$.01 per share, of the Company (the "Class C Common Stock" and, together with
the Class A Common Stock and the Class B Common Stock, the "Common Stock") and
of Series I Preferred Stock, par value $.01 per share, of the Company (the
"Series I Preferred Stock") set forth opposite his or its name on Schedule A
attached hereto (such shares of Common Stock and of Series I Preferred Stock,
together with any other shares of capital stock of the Company acquired
(including, without limitation, through the exercise of Options or Warrants or
by reason of any split, reclassification, stock dividend or other distribution
with respect to the capital stock of the Company) by such Stockholder or such
Other Stockholder after the date hereof and during the term of the Voting
Agreements, being collectively referred to herein as the "Subject Shares") and
(ii) options issued under any Stock
1
<PAGE>
Option Plan (the "Options") and warrants (the "Warrants") issued under the
Warrant Agreement, dated as of May 23, 1996, between the Company and The Yucaipa
Companies, a California general partnership (the "Partnership") (the "Warrant
Agreement") to acquire the number of shares of Common Stock or of Series I
Preferred Stock, if any, set forth opposite his or its name on Schedule A
attached hereto;
WHEREAS, the Common Stock and the Series I Preferred Stock set forth on
Schedule A attached hereto represent at least 50.1% of the voting power of the
issued and outstanding shares of capital stock of the Company entitled to vote
on each of the matters set forth in Section 3 hereof; and
WHEREAS, as a condition to its willingness to enter into the Reorganization
Agreement, Fred Meyer has required that the Other Stockholders enter into the
Other Voting Agreements and that each Stockholder enter into this Agreement.
NOW, THEREFORE, to induce Fred Meyer to enter into, and in consideration of
its entering into, the Reorganization Agreement, and in consideration of the
premises and the representations, warranties and agreements contained herein,
the parties agree as follows:
1. Representations and Warranties of each Stockholder. Each Stockholder
hereby, severally and not jointly, represents and warrants to Fred Meyer as of
the date hereof in respect of himself or itself as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder (or in the case of any Stockholder which is a
trust, by the trustee on behalf of such trust, or in the case of any
Stockholder which is a partnership by a general partner on behalf of such
partnership) and constitutes a valid and binding obligation of the
Stockholder enforceable in accordance with its terms. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of, or default (with or without notice or
lapse of time or both) under any provision of, any trust agreement, loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, license, judgment,
order, notice, decree, statute, law, ordinance, rule or regulation
applicable to the Stockholder or to the Stockholder's property or assets.
If the Stockholder is married and the Stockholder's Subject Shares, Option
or Warrants constitute community property or otherwise need spousal or
other approval for this Agreement to be legal, valid and binding, this
Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, the Stockholder's spouse, and
is enforceable against such spouse in accordance with its terms. No trust
which is a Stockholder requires the consent of any beneficiary to the
execution and delivery of this Agreement or to the consummation of the
transactions contemplated hereby.
2
<PAGE>
(b) The Subject Shares, Options and Warrants. The Stockholder is the
beneficial and (except as set forth on Schedule A attached hereto) record
owner of, and has good and marketable title to, the Subject Shares, Options
and Warrants set forth opposite such Stockholder's name on Schedule A
attached hereto, free and clear of any claims, liens, encumbrances and
security interests whatsoever (other than as set forth on Schedule A
attached hereto). The Stockholder does not own, of record or beneficially,
any shares of capital stock of the Company other than the Subject Shares
and the shares of Common Stock subject to any Options or Warrants set forth
opposite such Stockholder's name on Schedule A attached hereto. The
Stockholder has the sole right to vote such Subject Shares, and none of
such Subject Shares is subject to any voting trust or other agreement,
arrangement or restriction with respect to the voting of such Subject
Shares, except as contemplated by this Agreement or as otherwise set forth
on Schedule A attached hereto. The Partnership has not transferred, sold,
pledged, assigned or otherwise disposed of (including by gift)
(collectively, "Transfer") any Warrants issued to it pursuant to the
Warrant Agreement and the Warrants set forth opposite the Partnership's
name on Schedule A attached hereto constitute all of the Warrants issued
and outstanding under the Warrant Agreement.
2. Representations and Warranties of Fred Meyer. Fred Meyer hereby
represents and warrants to each Stockholder that Fred Meyer has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Fred Meyer, and the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action on the part of Fred
Meyer. This Agreement has been duly executed and delivered by Fred Meyer and
constitutes a valid and binding obligation of Fred Meyer enforceable in
accordance with its terms.
3. Covenants of each Stockholder. Until the termination of this Agreement
in accordance with Section 7 hereof, each Stockholder, severally and not
jointly, agrees as follows:
(a) Vote for the Merger. At any duly noticed meeting of stockholders
of the Company called to vote upon the Merger and the Reorganization
Agreement or at any adjournment thereof or in any other circumstances upon
which a vote, consent or other approval (including by written consent) with
respect to the Merger and the Reorganization Agreement is sought, the
Stockholder shall, including by initiating a written consent solicitation
if requested by Fred Meyer, vote (or cause to be voted) the Subject Shares
in favor of the Merger, the adoption by the Company of the Reorganization
Agreement and the approval of the terms thereof and, to the extent
presented to the stockholders of the Company for a vote, each of the other
transactions contemplated by the Reorganization Agreement. The Stockholder
hereby waives any appraisal rights granted pursuant to Section 262 of the
General Corporation Law of the State of Delaware (the "DGCL") (or any
successor provision) to which it may otherwise be entitled as a result of
the Merger or the other transactions contemplated by the Reorganization
Agreement.
3
<PAGE>
(b) Vote Against Acquisition Proposals. At any duly noticed meeting of
stockholders of the Company or at any adjournment thereof or in any other
circumstances upon which the Stockholder's vote, consent or other approval
is sought, the Stockholder shall be present (in person or by proxy) and
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Reorganization Agreement and the
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Acquisition Proposal as such term is defined
in the Reorganization Agreement relating to the Company (an "Acquisition
Proposal") or (ii) any amendment of the Company's certificate of
incorporation or by-laws or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or nullify the
Merger, the Reorganization Agreement or any of the other transactions
contemplated by the Reorganization Agreement or change in any manner the
voting rights of any class of capital stock of the Company. Subject to
Section 9, the Stockholder further agrees not to commit or agree to take
any action inconsistent with the foregoing.
(c) Transfer of Subject Shares, Options and Warrants. Except pursuant
to this Agreement and except as provided in the immediately succeeding
sentence of this Section 3(c), the Stockholder agrees not to (i) Transfer,
or enter into any contract, option or other arrangement (including any
profit sharing arrangement) with respect to the Transfer of, the Subject
Shares, any Option or Warrant or any shares of Common Stock subject to any
Option or Warrant to any person, other than pursuant to the terms of the
Merger, (ii) enter into any voting arrangement, whether by proxy,
power-of-attorney, voting agreement, voting trust or otherwise, in
connection with, directly or indirectly, any Acquisition Proposal or (iii)
convert (or cause to be converted) any of the Subject Shares consisting of
Class A Common Stock into Class B Common Stock, in whole or in part, and
agrees not to commit or agree to take any of the foregoing actions.
Notwithstanding the foregoing, the Stockholder shall have the right (i) for
estate planning purposes, to Transfer Subject Shares to a transferee if and
only if such Transfer will not result in the automatic conversion of Class
A Common Stock or Class C Common Stock to Class B Common Stock or the
reduction in the number of votes allocated to the Series I Preferred Stock
and only following the due execution and delivery to Fred Meyer by each
transferee of a legal, valid and binding counterpart to this Agreement and
(ii) to pledge such Subject Shares for purposes of securing customary
margin or similar loans (and other customary steps related thereto,
including transferring the certificate evidencing the shares into the name
of the lender or its nominee) if and only if, in the case of the Class A
Common Stock or the Series I Preferred Stock, such pledge will not result
in the automatic conversion of Class A Common Stock to Class B Common Stock
or the reduction in the number of votes allocated to the Series I Preferred
Stock and only following the delivery to Fred Meyer of an acknowledgment by
the pledgee of the existence of this Agreement.
(d) No Solicitation. During the term of this Agreement, the
Stockholder shall not, nor shall it permit any of its Affiliates or any
director, officer, employee, investment
4
<PAGE>
banker, attorney or other adviser or representative of any of the foregoing
to, (i) directly or indirectly, solicit, initiate or encourage the
submission of, any Acquisition Proposal or (ii) subject to the terms of
Section 9, directly or indirectly participate in any discussions or
negotiations regarding, or furnish to any person any information with
respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal.
(e) Stockholder Assistance. Until the Merger is consummated or the
Reorganization Agreement is terminated, the Stockholder shall use all
reasonable efforts to assist and cooperate with the other parties to
consummate and make effective, in the most expeditious manner practicable,
the Merger and the other transactions contemplated by the Reorganization
Agreement, subject, in each case to the requirements of applicable laws,
regulations, decrees or other judicial process and subject to the fiduciary
obligations of any such Stockholder who is also an officer or director of
the Company in his capacity as such.
(f) Treatment of Certain Stockholder Profits. (i) In the event that
the Reorganization Agreement shall have been terminated at any time
pursuant to Section 7.4(a) thereof or Section 7.4(d) thereof, or is
terminated, at any time after an Acquisition Proposal is made, pursuant to
Section 7.2(c) thereof (regardless of whether such termination is by Fred
Meyer or the Company), Section 7.4(b) thereof or Section 7.4(c) thereof,
and at the time of such termination less than 50.1% of the voting power of
the issued and outstanding shares of capital stock of the Company entitled
to vote on each of the matters set forth in Section 3 hereof is subject to
valid and binding Voting Agreements in full force and effect in all
respects. Each Stockholder shall pay to Fred Meyer on demand an amount
equal to all profit (determined in accordance with Section 3(f) (ii) of
such Stockholder from the consummation of any Acquisition Proposal (an
"Acquisition Transaction") within 18 months of such termination.
(ii) For purposes of this Section 3(f), the profit of any
Stockholder from any Acquisition Transaction shall equal (A) the aggregate
consideration received by such Stockholder (or which such Stockholder is
legally entitled to receive) pursuant to such Acquisition Transaction,
valuing any non-cash consideration (including any residual interest in the
Company) at its fair market value on the date of such consummation plus (B)
the fair market value, on the date of disposition, of all Subject Shares,
Options and Warrants of such Stockholder and shares of Common Stock
acquired by such Stockholder upon exercise of any Option or Warrant (less
the exercise price thereof) disposed of after the termination of the
Reorganization Agreement and prior to the date of such consummation less
(C) the fair market value of the aggregate consideration that would have
been issuable or payable to such Stockholder pursuant to the Reorganization
Agreement in effect on the date hereof, valued as of immediately prior to
the first public announcement of the termination of, or the intention of
Fred Meyer or the Company to terminate, the Reorganization Agreement, as if
the Merger had been consummated on the date of such public announcement.
For purposes of clause (C) above, the fair market value of the common stock
of Holdings that would have been
5
<PAGE>
received by the Stockholders pursuant to the Reorganization Agreement as
originally executed shall be deemed to be the fair market value of the
common stock, par value $.01 per share, of Fred Meyer.
(iii) For purposes of this Section 3(f), the fair market value of
any non-cash consideration consisting of:
(A) securities listed on a national securities exchange or
traded on the NASDAQ/NMS shall be equal to the average
closing price per share of such security as reported on the
composite trading system of such exchange or by NASDAQ/NMS
for the five trading days ending on the trading day
immediately prior to the date of value determination; and
(B) consideration which is other than cash or securities of the
form specified in clause (A) of this Section 3(f) (iii)
shall be determined by a nationally recognized independent
investment banking firm mutually agreed upon by the parties
within 10 business days of the event requiring selection of
such banking firm; provided, however, that if the parties
are unable to agree within two business days after the date
of such event as to the investment banking firm, then the
parties shall each select one firm, and those firms shall
select a third investment banking firm, which third firm
shall make such determination; provided further, that the
fees and expenses of such investment banking firm shall be
borne equally by Fred Meyer, on the one hand, and the
Stockholders, on the other hand. The determination of the
investment banking firm shall be binding upon the parties.
(iv) Any payment of profit under this Section 3(f) shall (x) if
paid in cash, be paid by wire transfer of same day funds to an account
designated by Fred Meyer and (y) if paid through a mutually agreed transfer
of securities, to the extent such transfer is permitted by applicable law
and the transfer of such securities to Fred Meyer would not adversely
impact Fred Meyer, or the value of such securities, be paid through
delivery of such securities, suitably endorsed for transfer.
4. Affiliate Letter; Tax Certificates. Each Stockholder (other than any
Stockholder holding only shares of Series I Preferred Stock) shall execute and
deliver an Affiliate Letter contemplated by the Reorganization Agreement and
such tax certificates as may reasonably be requested by tax counsel for Fred
Meyer or for the Company in connection with the rendering of the tax opinions
contemplated by the Reorganization Agreement
5. Further Assurances. Each Stockholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as Fred Meyer or Holdings may
reasonably request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
6
<PAGE>
6. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties, except that Fred Meyer may assign, in its
sole discretion, any or all of its rights, interests and obligations hereunder
to Holdings or to any direct or indirect wholly owned subsidiary of Fred Meyer.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective heirs,
successors and assigns.
7. Termination. This Agreement shall terminate upon the earlier of (a) the
18 month anniversary of the termination of the Reorganization Agreement or (b)
the Effective Time of the Merger; provided, however, that unless (x) the Company
is in material breach of its material obligations under the Reorganization
Agreement, (y) any Stockholder or any Other Stockholder is in material breach of
its material obligations under this Agreement or the Other Voting Agreements, as
the case may be or (z) a meeting of the Company's stockholders (or any
adjournment thereof) has been held to consider the Merger and the other
transactions contemplated by the Reorganization Agreement and the Smith's
Stockholder Approval was not obtained, this Agreement shall terminate at the
time the Reorganization Agreement is terminated (i) pursuant to Section 7.1 or
7.2(b) thereof, or (ii) by the Company (A) pursuant to Section 7.2(d) thereof or
(B) pursuant to Section 7.2(a) thereof (unless an Acquisition Proposal is
pending at the time of such termination) made) or (C) pursuant to Section 7.3
thereof. Notwithstanding the foregoing, Section 3(f) shall (if operative in
accordance with its terms) survive the termination of the Reorganization
Agreement for the period of time specified therein.
8. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by overnight courier (providing proof of
delivery) to Fred Meyer in accordance with the notification provision
contained in the Reorganization Agreement and to the Stockholders at their
respective addresses set forth on Schedule A attached hereto (or at such
other address for a party as shall be specified by like notice).
(c) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
(d) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that each party need not sign the same counterpart.
7
<PAGE>
(e) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto and other than Holdings, which is an
express beneficiary of this Agreement, any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware regardless of the
laws that might otherwise govern under applicable principles of conflicts
of law thereof.
(g) Public Announcements. Each Stockholder will consult with Fred
Meyer and use reasonable efforts to agree upon the text of any press
release, before issuing any press release or otherwise making public
statements with respect to the transactions contemplated by this Agreement
and the Reorganization Agreement and shall not issue any such press release
or make any such public statement without Fred Meyer's prior consent, which
consent shall not be unreasonably withheld, except as may be required by
applicable law (including requirements of stock exchanges and other similar
regulatory bodies).
(h) Severability. If any term, provision, covenant or restriction
herein, or the application thereof to any circumstance, shall, to any
extent, be held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions herein and the application thereof to any other circumstances,
shall remain in full force and effect, shall not in any way be affected,
impaired or invalidated, and shall be enforced to the fullest extent
permitted by law, and the parties hereto shall reasonably negotiate in good
faith a substitute term or provision that comes as close as possible to the
invalidated and unenforceable term or provision, and that puts each party
in a position as nearly comparable as possible to the position each such
party would have been in but for the finding of invalidity or
unenforceability, while remaining valid and enforceable.
9. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his capacity as such director or officer.
Each Stockholder signs solely in his capacity as the record holder and
beneficial owner of, or the trustee of a trust whose beneficiaries are the
beneficial owners of, or the general partner of a partnership which is the
beneficial owner of such Stockholder's Subject Shares or Options or Warrants and
nothing herein shall limit or affect any actions taken by a Stockholder in his
or its capacity as an officer or director of the Company to the extent
specifically permitted by the Reorganization Agreement. Nothing in this
Agreement shall be deemed to constitute a transfer of the beneficial ownership
of the Subject Shares by any Stockholder.
10. Enforcement. The parties agree, and the beneficiaries of each trust
which is a party hereto have agreed, that irreparable damage would occur in the
event that any of the
8
<PAGE>
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of Delaware or
in a Delaware state court, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties hereto
(i) consents to submit to the personal jurisdiction of any Federal court located
in the State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated hereby,
(ii) agrees that such party will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iii)
agrees that such party will not bring any action relating to this Agreement or
the transactions contemplated hereby in any court other than a Federal court
sitting in the state of Delaware or a Delaware state court, (iv) waives any
right to trial by jury with respect to any claim or proceeding related to or
arising out of this Agreement or any of the transactions contemplated hereby and
(v) appoints The Corporation Trust Corporation as such party's agent for service
of process in the State of Delaware.
11. Each Stockholder owning Series I Preferred Stock hereby acknowledges
that it will receive the Preferred Consideration in the Merger and hereby agrees
to accept the Preferred Consideration in exchange for the cancellation of its
Series I Preferred Stock and to take such further actions as Fred Meyer and the
Company may request to evidence such agreement.
(Signature page follows)
9
<PAGE>
IN WITNESS WHEREOF, Fred Meyer has caused this Agreement to be signed by
its officer thereunto duly authorized and each Stockholder has signed this
Agreement or has caused this Agreement to be signed by its officer thereunto
duly authorized, all as of the date first written above.
FRED MEYER, INC.
By: /S/ ROBERT G. MILLER
-------------------------------------
Name: Robert G. Miller
Title: Chief Executive Officer
and President
STOCKHOLDERS:
THE YUCAIPA COMPANIES
By: /S/ RONALD W. BURKLE
-------------------------------------
Name: Ronald W. Burkle
Title: General Partner
YUCAIPA ARIZONA PARTNERS, L.P.
YUCAIPA SMITTY'S PARTNERS, L.P.
YUCAIPA SMITTY'S PARTNERS II, L.P.
YUCAIPA SSV PARTNERS, L.P.
By: THE YUCAIPA COMPANIES
as the General Partner of each of
the entities listed above
By: /S/ RONALD W. BURKLE
--------------------------------
Name: Ronald W. Burkle
Title: General Partner
S-1
<PAGE>
/S/ JEFFREY P. SMITH
------------------------------------
JEFFREY P. SMITH
/S/ FRED L. SMITH
------------------------------------
FRED L. SMITH
/S/ RICHARD D. SMITH
------------------------------------
RICHARD D. SMITH
THE DEE GLENN MARITAL TRUST
By: /S/ JEFFREY P. SMITH
--------------------------------
Name: Jeffrey P. Smith
Title: Trustee
TRUST FOR THE CHILDREN OF JEFFREY P.
SMITH
By: /S/ JEFFREY P. SMITH
--------------------------------
Name: Jeffrey P. Smith
Title: Trustee
TRUST FOR THE CHILDREN OF FRED L.
SMITH
By: /S/ FRED L. SMITH
--------------------------------
Name: Fred L. Smith
Title: Trustee
TRUST FOR THE CHILDREN OF RICHARD D.
SMITH
By: /S/ RICHARD D. SMITH
--------------------------------
Name: Richard D. Smith
Title: Trustee
S-2
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Yucaipa Companies 200,000 1,842,555/1
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
Yucaipa Arizona Partners, L.P. 273,582
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
Yucaipa Smitty's Partners, L.P. 300,667
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
- --------------
1 No shares of Class C Common Stock have been issued. 1,842,555 shares of
non-voting Class C Common Stock are issuable upon exercise of the Yucaipa
Warrant.
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Yucaipa Smitty's Partners II, L.P. 136,793
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
Yucaipa SSV Partners, L.P. 1,340,772/2
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
University of Utah 2,267,731
c/o Treasurer
University of Utah
407 Park Building
Salt Lake City, UT 84112
- --------------
2 Of this total, 660,000 shares are pledged to Goldman, Sachs & Co. for
collateral purposes in connection with a margin account.
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Corporation of the President of the Church 2,000,010
of Jesus Christ of Latter-Day Saints
50 East North Temple
Salt Lake City UT 84150
Jeffrey P. Smith 648,666 5,141
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84101
Fred L. Smith 252,708
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84101
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Richard D. Smith
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
Dee Glen Smith Marital Trust I 224,287 3,253,623
c/o Ida W. Smith
1066 North East Capital Blvd.
Salt Lake City, UT 84103
Trust for the Children of Jeffrey P. Smith 560,353
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Trust for the Children of Fred L. Smith 560,353/3
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
Trust for the Children of Richard D. Smith 483,952
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
---------- --------- ---------- ---------- ---------
Total Shares 2,730,319 2,256,955 7,521,364 1,842,555
========== ========= ========== ========== =========
Total Voting Power 27,303,190 2,256,955 75,213,640
========== ========= ========== ========== =========
- --------------
3 The children of Fred L. Smith have individual trusts of shares of Class A
Common Stock. Fred L. Smith is the trustee and the trusts are as follows:
Fred Lloyd Smith Trust - 41,353 shares, Staci Elaine Smith Trust - 28,670
shares and Zachary Dee Smith Trust - 28,670 shares.
</TABLE>
A-5
EXECUTION COPY
- --------------------------------------------------------------------------------
VOTING AGREEMENT
between
FRED MEYER, INC.
and
UNIVERSITY OF UTAH
Dated as of May 11, 1997
- --------------------------------------------------------------------------------
<PAGE>
VOTING AGREEMENT (this "Agreement") dated as of May 11, 1997, between Fred
Meyer, Inc., a Delaware corporation ("Fred Meyer"), and the University of Utah
(the "Stockholder").
WHEREAS, Fred Meyer and Smith's Food & Drug Centers, Inc., a Delaware
corporation (the "Company"), propose to enter into an Agreement and Plan of
Reorganization and Merger dated as of the date hereof (as the same may be
amended or supplemented in a manner not adverse to the Stockholder, the
"Reorganization Agreement"; capitalized terms used but not defined herein shall
have the meanings set forth in the Reorganization Agreement) providing for the
formation of a new Delaware holding company, Meyer-Smith Holdco, Inc.
("Holdings"), the formation of two subsidiaries wholly-owned by Holdings ("Fred
Meyer Merger Sub, Inc." and "Smith's Merger Sub, Inc.") and the simultaneous
merger of Fred Meyer Merger Sub, Inc. with and into Fred Meyer and Smith's
Merger Sub, Inc. with and into the Company (the "Merger") so that each of Fred
Meyer and the Company become wholly-owned subsidiaries of Holdings, upon the
terms and subject to the conditions set forth in the Reorganization Agreement;
WHEREAS, pursuant to the Merger the Common Stock (as defined below) will be
converted into shares of common stock, par value $.01 per share, of Holdings and
each share of the Series I Preferred Stock (as defined below) shall be converted
into the right to receive thirty-three and one-third cents ($.33 1/3) (the
"Preferred Consideration");
WHEREAS, simultaneously with the execution hereof, Fred Meyer is entering
into voting agreements (the "Other Voting Agreements", and together with this
Agreement, the "Voting Agreements"), with each of the other stockholders of the
Company named in Schedule A attached hereto (the "Other Stockholders" and
together with the Stockholder, the "Stockholders");
WHEREAS, immediately prior to the Effective Time, Fred Meyer will assign
each of the Voting Agreements and all of its rights, interests and obligations
hereunder and thereunder to Holdings;
WHEREAS , the Stockholder and each Other Stockholder owns beneficially and
(except as set forth on Schedule A attached hereto) of record the number of
shares of Class A Common Stock, par value $.01 per share, of the Company (the
"Class A Common Stock"), of Class B Common Stock, par value $.01 per share, of
the Company (the "Class B Common Stock"), of Class C Common Stock, par value
$.01 per share, of the Company (the "Class C Common Stock" and, together with
the Class A Common Stock and the Class B Common Stock, the "Common Stock") and
of Series I Preferred Stock, par value $.01 per share, of the Company (the
"Series I Preferred Stock") set forth opposite his or its name on Schedule A
attached hereto (such shares of Common Stock and of Series I Preferred Stock,
together with any other shares of capital stock of the Company acquired
(including, without limitation, through the exercise of Options or Warrants or
by reason of any split, reclassification, stock dividend or other distribution
with respect to the capital stock of the Company) by such Stockholder or such
Other Stockholder after the date hereof and during the term of the Voting
Agreements, being collectively referred to herein as the "Subject Shares");
2
<PAGE>
WHEREAS, the Common Stock and the Series I Preferred Stock set forth on
Schedule A attached hereto represent at least 50.1% of the voting power of the
issued and outstanding shares of capital stock of the Company entitled to vote
on each of the matters set forth in Section 3 hereof; and
WHEREAS, as a condition to its willingness to enter into the Reorganization
Agreement, Fred Meyer has required that the Other Stockholders enter into the
Other Voting Agreements and that the Stockholder enter into this Agreement;
NOW, THEREFORE, to induce Fred Meyer to enter into, and in consideration of
its entering into, the Reorganization Agreement, and in consideration of the
premises and the representations, warranties and agreements contained herein,
the parties agree as follows:
1. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Fred Meyer as of the date hereof in respect of
itself as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder (or in the case of a Stockholder which is a
trust, by the trustee on behalf of such trust or in the case of a
Stockholder which is a partnership, by a general partner on behalf of such
partnership) and constitutes a valid and binding obligation of the
Stockholder enforceable in accordance with its terms. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of, or default (with or without notice or
lapse of time or both) under any provision of, any trust agreement, loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, license, judgment,
order, notice, decree, statute, law, ordinance, rule or regulation
applicable to the Stockholder or to the Stockholder's property or assets.
No trust which is a Stockholder requires the consent of any beneficiary to
the execution and delivery of this Agreement or to the consummation of the
transactions contemplated hereby.
(b) The Subject Shares, Options and Warrants. The Stockholder is the
beneficial and (except as set forth on Schedule A attached hereto) record
owner of, and has good and marketable title to, the Subject Shares, options
and warrants set forth opposite the Stockholder's name on Schedule A
attached hereto, free and clear of any claims, liens, encumbrances and
security interests whatsoever (other than as set forth on Schedule A
attached hereto). The Stockholder does not own, of record or beneficially,
any shares of capital stock of the Company other than the Subject Shares
and the shares of Common Stock subject to any options or warrants set forth
opposite the Stockholder's name on Schedule A attached hereto. The
Stockholder has the sole right to vote such Subject Shares, and none of
such Subject Shares is subject to any voting trust or other agreement,
arrangement or restriction with respect to the voting of such Subject
Shares,
3
<PAGE>
except as contemplated by this Agreement or as otherwise set forth on
Schedule A attached hereto.
2. Representations and Warranties of Fred Meyer. Fred Meyer hereby
represents and warrants to the Stockholder that Fred Meyer has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Fred Meyer, and the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action on the part of Fred
Meyer. This Agreement has been duly executed and delivered by Fred Meyer and
constitutes a valid and binding obligation of Fred Meyer enforceable in
accordance with its terms.
3. Covenants of the Stockholder. Until the termination of this Agreement in
accordance with Section 7 hereof, the Stockholder agrees as follows:
(a) Vote for the Merger. At any duly noticed meeting of stockholders
of the Company called to vote upon the Merger and the Reorganization
Agreement or at any adjournment thereof or in any other circumstances upon
which a vote, consent or other approval (including by written consent) with
respect to the Merger and the Reorganization Agreement is sought, the
Stockholder shall, including by initiating a written consent solicitation
if requested by Fred Meyer, vote (or cause to be voted) the Subject Shares
in favor of the Merger, the adoption by the Company of the Reorganization
Agreement and the approval of the terms thereof and, to the extent
presented to the stockholders of the Company for a vote, each of the other
transactions contemplated by the Reorganization Agreement. The Stockholder
hereby waives any appraisal rights granted pursuant to Section 262 of the
General Corporation Law of the State of Delaware (the "DGCL") (or any
successor provision) to which it may otherwise be entitled as a result of
the Merger or the other transactions contemplated by the Reorganization
Agreement.
(b) Vote Against Acquisition Proposals. At any duly noticed meeting of
stockholders of the Company or at any adjournment thereof or in any other
circumstances upon which the Stockholder's vote, consent or other approval
is sought, the Stockholder shall be present (in person or by proxy) and
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Reorganization Agreement and the
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Acquisition Proposal as such term is defined
in the Reorganization Agreement relating to the Company (an "Acquisition
Proposal") or (ii) any amendment of the Company's certificate of
incorporation or by-laws or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or nullify the
Merger, the Reorganization Agreement or any of the other transactions
contemplated by the Reorganization Agreement or change in any manner the
voting rights of any class of
4
<PAGE>
capital stock of the Company. Subject to Section 9, the Stockholder further
agrees not to commit or agree to take any action inconsistent with the
foregoing.
(c) Transfer of Subject Shares, Options and Warrants. Except pursuant
to this Agreement and except as provided in the immediately succeeding
sentence of this Section 3(c), the Stockholder agrees not to (i) Transfer,
or enter into any contract, option or other arrangement (including any
profit sharing arrangement) with respect to the Transfer of, the Subject
Shares, any option or warrant or any shares of Common Stock subject to any
option or warrant to any person, other than pursuant to the terms of the
Merger, (ii) enter into any voting arrangement, whether by proxy,
power-of-attorney, voting agreement, voting trust or otherwise, in
connection with, directly or indirectly, any Acquisition Proposal or (iii)
convert (or cause to be converted) any of the Subject Shares consisting of
Class A Common Stock into Class B Common Stock, in whole or in part, and
agrees not to commit or agree to take any of the foregoing actions.
Notwithstanding the foregoing, the Stockholder shall have the right (i) for
estate planning purposes, to Transfer Subject Shares to a transferee if and
only if such Transfer will not result in the automatic conversion of Class
A Common Stock or Class C Common Stock to Class B Common Stock or the
reduction in the number of votes allocated to the Series I Preferred Stock
and only following the due execution and delivery to Fred Meyer by each
transferee of a legal, valid and binding counterpart to this Agreement and
(ii) to pledge such Subject Shares for purposes of securing customary
margin or similar loans (and other customary steps related thereto,
including transferring the certificate evidencing the shares into the name
of the lender or its nominee) if and only if, in the case of the Class A
Common Stock or the Series I Preferred Stock, such pledge will not result
in the automatic conversion of Class A Common Stock to Class B Common Stock
or the reduction in the number of votes allocated to the Series I Preferred
Stock and only following the delivery to Fred Meyer of an acknowledgment by
the pledgee of the existence of this Agreement.
(d) No Solicitation. During the term of this Agreement, the
Stockholder shall not, nor shall it permit any of its Affiliates or any
director, officer, employee, investment banker, attorney or other adviser
or representative of any of the foregoing to, (i) directly or indirectly
solicit, initiate or encourage the submission of, any Acquisition Proposal
or (ii) subject to the terms of Section 9, directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Acquisition Proposal.
(e) Stockholder Assistance. Until the Merger is consummated or the
Reorganization Agreement is terminated, the Stockholder shall use all
reasonable efforts to assist and cooperate with the other parties to
consummate and make effective, in the most expeditious manner practicable,
the Merger and the other transactions contemplated by the Reorganization
Agreement, subject, in each case to the requirements of applicable laws,
regulations, decrees or other judicial process and subject to the fiduciary
obligations of any of the Stockholders who is also an officer or director
of the Company in his capacity as such.
5
<PAGE>
4. Confidentiality. The Stockholder hereby agrees to be bound, to the same
extent as the Company is bound, by the terms and conditions of the
Confidentiality Agreement, dated as of March 26, 1997 by and between Fred Meyer
and the Company.
5. Further Assurances. The Stockholder will, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as Fred Meyer or Holdings may
reasonably request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
6. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties, except that Fred Meyer may assign, in its
sole discretion, any or all of its rights, interests and obligations hereunder
to Holdings or to any direct or indirect wholly owned subsidiary of Fred Meyer.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective heirs,
successors and assigns.
7. Termination. This Agreement shall terminate upon the earlier of (a) the
18 month anniversary of the termination of the Reorganization Agreement or (b)
the Effective Time of the Merger; provided, however, that unless (x) the Company
is in material breach of its material obligations under the Reorganization
Agreement, (y) the Stockholder or any Other Stockholder is in material breach of
its material obligations under this Agreement or the Other Voting Agreements, as
the case may be or (z) a meeting of the Company's stockholders (or any
adjournment thereof) has been held to consider the Merger and the other
transactions contemplated by the Reorganization Agreement and the Smith's
Stockholder Approval was not obtained, this Agreement shall terminate at the
time the Reorganization Agreement is terminated (i) pursuant to Section 7.1 or
7.2(b) thereof, or (ii) by the Company (A) pursuant to Section 7.2(d) thereof or
(B) pursuant to Section 7.2(a) thereof (unless an Acquisition Proposal is
pending at the time of such termination) or (C) pursuant to Section 7.3 thereof.
8. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by overnight courier (providing proof of
delivery) to Fred Meyer in accordance with the notification provision
contained in the Reorganization Agreement and to the Stockholder at its
address set forth on Schedule A attached hereto (or at such other address
for a party as shall be specified by like notice).
(c) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words
6
<PAGE>
"include", "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation".
(d) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that each party need not sign the same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto and other than Holdings, which is an
express beneficiary of this Agreement, any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware regardless of the
laws that might otherwise govern under applicable principles of conflicts
of law thereof.
(g) Public Announcements. The Stockholder will consult with Fred Meyer
and use reasonable efforts to agree upon the text of any press release,
before issuing any press release or otherwise making public statements with
respect to the transactions contemplated by this Agreement and the
Reorganization Agreement and shall not issue any such press release or make
any such public statement without Fred Meyer's prior consent, which consent
shall not be unreasonably withheld, except as may be required by applicable
law (including requirements of stock exchanges and other similar regulatory
bodies).
(h) Severability. If any term, provision, covenant or restriction
herein, or the application thereof to any circumstance, shall, to any
extent, be held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions herein and the application thereof to any other circumstances,
shall remain in full force and effect, shall not in any way be affected,
impaired or invalidated, and shall be enforced to the fullest extent
permitted by law, and the parties hereto shall reasonably negotiate in good
faith a substitute term or provision that comes as close as possible to the
invalidated and unenforceable term or provision, and that puts each party
in a position as nearly comparable as possible to the position each such
party would have been in but for the finding of invalidity or
unenforceability, while remaining valid and enforceable.
9. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his capacity as such director or officer.
The Stockholder signs solely in its capacity as the record holder and beneficial
owner of, or the trustee of a trust whose beneficiaries are the beneficial
owners of, or the general partner of a partnership which is the
7
<PAGE>
beneficial owner of the Stockholder's Subject Shares or Options or Warrants and
nothing herein shall limit or affect any actions taken by the Stockholder in its
capacity as an officer or director of the Company to the extent specifically
permitted by the Reorganization Agreement. Nothing in this Agreement shall be
deemed to constitute a transfer of the beneficial ownership of the Subject
Shares by the Stockholder.
10. Enforcement. The parties agree, and the beneficiaries of each trust
which is a party hereto have agreed, that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that such party will not
bring any action relating to this Agreement or the transactions contemplated
hereby in any court other than a Federal court sitting in the state of Delaware
or a Delaware state court, (iv) waives any right to trial by jury with respect
to any claim or proceeding related to or arising out of this Agreement or any of
the transactions contemplated hereby and (v) appoints The Corporation Trust
Corporation as such party's agent for service of process in the State of
Delaware.
11. The Stockholder hereby acknowledges that it will receive the Preferred
Consideration in the Merger and hereby agrees to accept the Preferred
Consideration in exchange for the cancellation of its Series I Preferred Stock
and to take such further actions as Fred Meyer and the Company may request to
evidence such agreement.
(Signature page follows)
8
<PAGE>
IN WITNESS WHEREOF, each of Fred Meyer and the Stockholder has caused this
Agreement to be signed by its officer thereunto duly authorized and the
Stockholder as of the date first written above.
FRED MEYER, INC.
By: ROBERT G. MILLER
-------------------------------------
Name: Robert G. Miller
Title: Chief Executive Officer and
President
UNIVERSITY OF UTAH
By: THOMAS G. NYCUM
-------------------------------------
Name: Thomas G. Nycum
Title: Vice President for Administrative
Services
9
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Yucaipa Companies 200,000 1,842,555/1
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
Yucaipa Arizona Partners, L.P. 273,582
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
Yucaipa Smitty's Partners, L.P. 300,667
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
- --------------
1 No shares of Class C Common Stock have been issued. 1,842,555 shares of
non-voting Class C Common Stock are issuable upon exercise of the Yucaipa
Warrant.
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Yucaipa Smitty's Partners II, L.P. 136,793
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
Yucaipa SSV Partners, L.P. 1,340,772/2
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
University of Utah 2,267,731
c/o Treasurer
University of Utah
407 Park Building
Salt Lake City, UT 84112
- --------------
2 Of this total, 660,000 shares are pledged to Goldman, Sachs & Co. for
collateral purposes in connection with a margin account.
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Corporation of the President of the Church 2,000,010
of Jesus Christ of Latter-Day Saints
50 East North Temple
Salt Lake City UT 84150
Jeffrey P. Smith 648,666 5,141
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84101
Fred L. Smith 252,708
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84101
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Richard D. Smith
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
Dee Glen Smith Marital Trust I 224,287 3,253,623
c/o Ida W. Smith
1066 North East Capital Blvd.
Salt Lake City, UT 84103
Trust for the Children of Jeffrey P. Smith 560,353
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Trust for the Children of Fred L. Smith 560,353/3
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
Trust for the Children of Richard D. Smith 483,952
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
---------- --------- ---------- ---------- ---------
Total Shares 2,730,319 2,256,955 7,521,364 1,842,555
========== ========= ========== ========== =========
Total Voting Power 27,303,190 2,256,955 75,213,640
========== ========= ========== ========== =========
- --------------
3 The children of Fred L. Smith have individual trusts of shares of Class A
Common Stock. Fred L. Smith is the trustee and the trusts are as follows:
Fred Lloyd Smith Trust - 41,353 shares, Staci Elaine Smith Trust - 28,670
shares and Zachary Dee Smith Trust - 28,670 shares.
</TABLE>
A-5
EXECUTION COPY
- --------------------------------------------------------------------------------
VOTING AGREEMENT
between
FRED MEYER, INC.
and
CORPORATION OF THE PRESIDENT OF THE CHURCH
OF JESUS CHRIST OF LATTER-DAY SAINTS
Dated as of May 11, 1997
- --------------------------------------------------------------------------------
<PAGE>
VOTING AGREEMENT (this "Agreement") dated as of May 11, 1997, between Fred
Meyer, Inc., a Delaware corporation ("Fred Meyer "), and the Corporation of the
President of the Church of Jesus Christ of Latter-Day Saints (the
"Stockholder").
WHEREAS, Fred Meyer and Smith's Food & Drug Centers, Inc., a Delaware
corporation (the "Company"), propose to enter into an Agreement and Plan of
Reorganization and Merger dated as of the date hereof (as the same may be
amended or supplemented in a manner not adverse to the Stockholder, the
"Reorganization Agreement"; capitalized terms used but not defined herein shall
have the meanings set forth in the Reorganization Agreement) providing for the
formation of a new Delaware holding company, Meyer-Smith Holdco, Inc.
("Holdings"), the formation of two subsidiaries wholly-owned by Holdings ("Fred
Meyer Merger Sub, Inc." and "Smith's Merger Sub, Inc.") and the simultaneous
merger of Fred Meyer Merger Sub, Inc. with and into Fred Meyer and Smith's
Merger Sub, Inc. with and into the Company (the "Merger") so that each of Fred
Meyer and the Company become wholly-owned subsidiaries of Holdings, upon the
terms and subject to the conditions set forth in the Reorganization Agreement;
WHEREAS, pursuant to the Merger the Common Stock (as defined below) will be
converted into shares of common stock, par value $.01 per share, of Holdings and
each share of the Series I Preferred Stock (as defined below) shall be converted
into the right to receive thirty-three and one-third cents ($.33 1/3) (the
"Preferred Consideration");
WHEREAS, simultaneously with the execution hereof, Fred Meyer is entering
into voting agreements (the "Other Voting Agreements", and together with this
Agreement, the "Voting Agreements") with each of the other stockholders of the
Company named in Schedule A attached hereto (the "Other Stockholders" and
together with the Stockholder, the "Stockholders") dated as of the date hereof;
WHEREAS, immediately prior to the Effective Time, Fred Meyer will assign
each of the Voting Agreements and all of its rights, interests and obligations
hereunder and thereunder to Holdings;
WHEREAS, the Stockholder and each Other Stockholder owns beneficially and
(except as set forth on Schedule A attached hereto) of record the number of
shares of Class A Common Stock, par value $.01 per share, of the Company (the
"Class A Common Stock"), of Class B Common Stock, par value $.01 per share, of
the Company (the "Class B Common Stock"), of Class C Common Stock, par value
$.01 per share, of the Company (the "Class C Common Stock" and, together with
the Class A Common Stock and the Class B Common Stock, the "Common Stock") and
of Series I Preferred Stock, par value $.01 per share, of the Company (the
"Series I Preferred Stock") set forth opposite his or its name on Schedule A
attached hereto (such shares of Common Stock and of Series I Preferred Stock,
together with any other shares of capital stock of the Company acquired
(including, without limitation, through the exercise of Options or Warrants or
by reason of any split, reclassification, stock dividend or other distribution
with respect to the capital stock of the Company) by the Stockholder or such
Other Stockholder after the date hereof and during the term of the Voting
Agreements, being collectively referred to herein as the "Subject Shares");
2
<PAGE>
WHEREAS, the Common Stock and the Series I Preferred Stock set forth on
Schedule A attached hereto represent at least 50.1% of the voting power of the
issued and outstanding shares of capital stock of the Company entitled to vote
on each of the matters set forth in Section 3 hereof; and
WHEREAS, as a condition to its willingness to enter into the Reorganization
Agreement, Fred Meyer has required that each of the Other Stockholders enter
into the Other Voting Agreements and that the Stockholder enter into this
Agreement;
NOW, THEREFORE, to induce Fred Meyer to enter into, and in consideration of
its entering into, the Reorganization Agreement, and in consideration of the
premises and the representations, warranties and agreements contained herein,
the parties agree as follows:
1. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Fred Meyer as of the date hereof in respect of
itself as follows:
(a) Authority. The Stockholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Stockholder (or in the case of a Stockholder which is a
trust, by the trustee on behalf of such trust, or in the case of a
Stockholder which is a partnership by a general partner on behalf of such
partnership) and constitutes a valid and binding obligation of the
Stockholder enforceable in accordance with its terms. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of, or default (with or without notice or
lapse of time or both) under any provision of, any trust agreement, loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, license, judgment,
order, notice, decree, statute, law, ordinance, rule or regulation
applicable to the Stockholder or to the Stockholder's property or assets.
No trust which is a Stockholder requires the consent of any beneficiary to
the execution and delivery of this Agreement or to the consummation of the
transactions contemplated hereby.
(b) The Subject Shares, Options and Warrants. The Stockholder is the
beneficial and (except as set forth on Schedule A attached hereto) record
owner of, and has good and marketable title to, the Subject Shares, options
and warrants set forth opposite its name on Schedule A attached hereto,
free and clear of any claims, liens, encumbrances and security interests
whatsoever (other than as set forth on Schedule A attached hereto). The
Stockholder does not own, of record or beneficially, any shares of capital
stock of the Company other than the Subject Shares and the shares of Common
Stock subject to any options or warrants set forth opposite the
Stockholder's name on Schedule A attached hereto. The Stockholder has the
sole right to vote such Subject Shares, and none of such Subject Shares is
subject to any voting trust or other agreement, arrangement or restriction
with respect to the voting of such Subject shares, except as contemplated
by this Agreement or as otherwise set forth on Schedule A attached hereto.
3
<PAGE>
2. Representations and Warranties of Fred Meyer. Fred Meyer hereby
represents and warrants to the Stockholder that Fred Meyer has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Fred Meyer, and the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action on the part of Fred
Meyer. This Agreement has been duly executed and delivered by Fred Meyer and
constitutes a valid and binding obligation of Fred Meyer enforceable in
accordance with its terms.
3. Covenants of the Stockholder. Until the termination of this Agreement in
accordance with Section 7 hereof, the Stockholder agrees as follows:
(a) Vote for the Merger. At any duly noticed meeting of stockholders
of the Company called to vote upon the Merger and the Reorganization
Agreement or at any adjournment thereof or in any other circumstances upon
which a vote, consent or other approval (including by written consent) with
respect to the Merger and the Reorganization Agreement is sought, the
Stockholder shall, including by initiating a written consent solicitation
if requested by Fred Meyer, vote (or cause to be voted) the Subject Shares
in favor of the Merger, the adoption by the Company of the Reorganization
Agreement and the approval of the terms thereof and, to the extent
presented to the stockholders of the Company for a vote, each of the other
transactions contemplated by the Reorganization Agreement. The Stockholder
hereby waives any appraisal rights granted pursuant to Section 262 of the
General Corporation Law of the State of Delaware (the "DGCL") (or any
successor provision) to which it may otherwise be entitled as a result of
the Merger or the other transactions contemplated by the Reorganization
Agreement.
(b) Vote Against Acquisition Proposals. At any duly noticed meeting of
stockholders of the Company or at any adjournment thereof or in any other
circumstances upon which the Stockholder's vote, consent or other approval
is sought, the Stockholder shall be present (in person or by proxy) and
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Reorganization Agreement and the
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Acquisition Proposal as such term is defined
in the Reorganization Agreement relating to the Company (an "Acquisition
Proposal") or (ii) any amendment of the Company's certificate of
incorporation or by-laws or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or nullify the
Merger, the Reorganization Agreement or any of the other transactions
contemplated by the Reorganization Agreement or change in any manner the
voting rights of any class of capital stock of the Company. Subject to
Section 9, the Stockholder further agrees not to commit or agree to take
any action inconsistent with the foregoing.
4
<PAGE>
(c) Transfer of Subject Shares, Options and Warrants . Except pursuant
to this Agreement and except as provided in the immediately succeeding
sentence of this Section 3(c), the Stockholder agrees not to (i) Transfer,
or enter into any contract, option or other arrangement (including any
profit sharing arrangement) with respect to the Transfer of, the Subject
Shares, any option or warrant or any shares of Common Stock, subject to any
option or warrant to any person other than pursuant to the terms of the
Merger, (ii) enter into any voting arrangement, whether by proxy,
power-of-attorney, voting agreement, voting trust or otherwise, in
connection with, directly or indirectly, any Acquisition Proposal or (iii)
convert (or cause to be converted) any of the Subject Shares consisting of
Class A Common Stock into Class B Common Stock, in whole or in part, and
agrees not to commit or agree to take any of the foregoing actions.
Notwithstanding the foregoing, the Stockholder shall have the right (i) for
estate planning purposes, to Transfer Subject Shares to a transferee if and
only if such Transfer will not result in the automatic conversion of Class
A Common Stock or Class C Common Stock to Class B Common Stock or the
reduction in the number of votes allocated to the Series I Preferred Stock
and only following the due execution and delivery to Fred Meyer by each
transferee of a legal, valid and binding counterpart to this Agreement and
(ii) to pledge such Subject Shares for purposes of securing customary
margin or similar loans (and other customary steps related thereto,
including transferring the certificate evidencing the shares into the name
of the lender or its nominee) if and only if, in the case of the Class A
Common Stock or the Series I Preferred Stock, such pledge will not result
in the automatic conversion of Class A Common Stock to Class B Common Stock
or the reduction in the number of votes allocated to the Series I Preferred
Stock and only following the delivery to Fred Meyer of an acknowledgment by
the pledgee of the existence of this Agreement.
(d) No Solicitation. During the term of this Agreement, the
Stockholder shall not, nor shall it permit any of its Affiliates or any
director, officer, employee, investment banker, attorney or other adviser
or representative of any of the foregoing to, (i) directly or indirectly
solicit, initiate or encourage the submission of, any Acquisition Proposal
or (ii) subject to the terms of Section 9, directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Acquisition Proposal.
(e) Stockholder Assistance. Until the Merger is consummated or the
Reorganization Agreement is terminated, the Stockholder shall use all
reasonable efforts to assist and cooperate with the other parties to
consummate and make effective, in the most expeditious manner practicable,
the Merger and the other transactions contemplated by the Reorganization
Agreement, subject, in each case to the requirements of applicable laws,
regulations, decrees or other judicial process and subject to the fiduciary
obligations of any such Stockholder who is also an officer or director of
the Company in his capacity as such.
5
<PAGE>
4. Confidentiality. The Stockholder hereby agrees to be bound, to the same
extent as the Company is bound, by the terms and conditions of the
Confidentiality Agreement, dated as of March 26, 1997 by and between Fred Meyer
and the Company
5. Further Assurances. The Stockholder will, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as Fred Meyer or Holdings may
reasonably request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
6. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties, except that Fred Meyer may assign, in its
sole discretion, any or all of its rights, interests and obligations hereunder
to Holdings or to any direct or indirect wholly owned subsidiary of Fred Meyer.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective heirs,
successors and assigns.
7. Termination. This Agreement shall terminate upon the earlier of (a) the
18 month anniversary of the termination of the Reorganization Agreement or (b)
the Effective Time of the Merger; provided, however, that unless (x) the Company
is in material breach of its material obligations under the Reorganization
Agreement, (y) the Stockholder or any Other Stockholder is in material breach of
its material obligations under this Agreement or the Other Voting Agreements, as
the case may be or (z) a meeting of the Company's stockholders (or any
adjournment thereof) has been held to consider the Merger and the other
transactions contemplated by the Reorganization Agreement and the Smith's
Stockholder Approval was not obtained, this Agreement shall terminate at the
time the Reorganization Agreement is terminated (i) pursuant to Section 7.1 or
7.2(b) thereof, or (ii) by the Company (A) pursuant to Section 7.2(d) thereof or
(B) pursuant to Section 7.2(a) thereof (unless an Acquisition Proposal is
pending at the time of such termination) or (C) pursuant to Section 7.3 thereof.
8. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by overnight courier (providing proof of
delivery) to Fred Meyer in accordance with the notification provision
contained in the Reorganization Agreement and to the Stockholder at its
address set forth on Schedule A attached hereto (or at such other address
for a party as shall be specified by like notice).
(c) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words
6
<PAGE>
"include", "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation".
(d) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that each party need not sign the same counterpart.
(e) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto and other than Holdings, which is an
express beneficiary of this Agreement, any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware regardless of the
laws that might otherwise govern under applicable principles of conflicts
of law thereof.
(g) Public Announcements. The Stockholder will consult with Fred Meyer
and use reasonable efforts to agree upon the text of any press release,
before issuing any press release or otherwise making public statements with
respect to the transactions contemplated by this Agreement and the
Reorganization Agreement and shall not issue any such press release or make
any such public statement without Fred Meyer's prior consent, which consent
shall not be unreasonably withheld, except as may be required by applicable
law (including requirements of stock exchanges and other similar regulatory
bodies).
(h) Severability. If any term, provision, covenant or restriction
herein, or the application thereof to any circumstance, shall, to any
extent, be held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions herein and the application thereof to any other circumstances,
shall remain in full force and effect, shall not in any way be affected,
impaired or invalidated, and shall be enforced to the fullest extent
permitted by law, and the parties hereto shall reasonably negotiate in good
faith a substitute term or provision that comes as close as possible to the
invalidated and unenforceable term or provision, and that puts each party
in a position as nearly comparable as possible to the position each such
party would have been in but for the finding of invalidity or
unenforceability, while remaining valid and enforceable.
9. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his capacity as such director or officer.
The Stockholder signs solely in its capacity as the record holder and beneficial
owner of, or the trustee of a trust whose beneficiaries are the beneficial
owners of, or the general partner of a partnership which is the
7
<PAGE>
beneficial owner of its Stockholder's Subject Shares or Options or Warrants and
nothing herein shall limit or affect any actions taken by the Stockholder in its
capacity as an officer or director of the Company to the extent specifically
permitted by the Reorganization Agreement. Nothing in this Agreement shall be
deemed to constitute a transfer of the beneficial ownership of the Subject
Shares by the Stockholder.
10. Enforcement. The parties agree, and the beneficiaries of each trust
which is a party hereto have agreed, that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that such party will not
bring any action relating to this Agreement or the transactions contemplated
hereby in any court other than a Federal court sitting in the state of Delaware
or a Delaware state court, (iv) waives any right to trial by jury with respect
to any claim or proceeding related to or arising out of this Agreement or any of
the transactions contemplated hereby and (v) appoints The Corporation Trust
Corporation as such party's agent for service of process in the State of
Delaware.
11. The Stockholder hereby acknowledges that it will receive the Preferred
Consideration in the Merger and hereby agrees to accept the Preferred
Consideration in exchange for the cancellation of its Series I Preferred Stock
and to take such further actions as Fred Meyer and the Company may request to
evidence such agreement.
(Signature page follows)
8
<PAGE>
IN WITNESS WHEREOF, each of Fred Meyer and the Stockholder has caused this
Agreement to be signed by its officer thereunto duly authorized as of the date
first written above.
FRED MEYER, INC.
By: ROBERT G. MILLER
-------------------------------------
Name: Robert G. Miller
Title: Chief Executive Officer and
President
CORPORATION OF THE PRESIDENT OF THE
CHURCH OF JESUS CHRIST OF LATTER-DAY
SAINTS
By: ROGER G. CLARKE
-------------------------------------
Name: Roger G. Clarke
Title: Authorized Agent
9
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Yucaipa Companies 200,000 1,842,555/1
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
Yucaipa Arizona Partners, L.P. 273,582
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
Yucaipa Smitty's Partners, L.P. 300,667
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
- --------------
1 No shares of Class C Common Stock have been issued. 1,842,555 shares of
non-voting Class C Common Stock are issuable upon exercise of the Yucaipa
Warrant.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Yucaipa Smitty's Partners II, L.P. 136,793
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
Yucaipa SSV Partners, L.P. 1,340,772/2
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
5th Floor
Los Angeles, CA 90067
University of Utah 2,267,731
c/o Treasurer
University of Utah
407 Park Building
Salt Lake City, UT 84112
- --------------
2 Of this total, 660,000 shares are pledged to Goldman, Sachs & Co. for
collateral purposes in connection with a margin account.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Corporation of the President of the Church 2,000,010
of Jesus Christ of Latter-Day Saints
50 East North Temple
Salt Lake City UT 84150
Jeffrey P. Smith 648,666 5,141
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84101
Fred L. Smith 252,708
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84101
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Richard D. Smith
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
Dee Glen Smith Marital Trust I 224,287 3,253,623
c/o Ida W. Smith
1066 North East Capital Blvd.
Salt Lake City, UT 84103
Trust for the Children of Jeffrey P. Smith 560,353
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A/1
Shares of Shares of
Shares of Shares of Shares of capital stock capital stock
Class A Class B Series I subject to subject to
Name Common Stock Common Stock Preferred Stock Options Warrants
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Trust for the Children of Fred L. Smith 560,353/3
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
Trust for the Children of Richard D. Smith 483,952
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
---------- --------- ---------- ---------- ---------
Total Shares 2,730,319 2,256,955 7,521,364 1,842,555
========== ========= ========== ========== =========
Total Voting Power 27,303,190 2,256,955 75,213,640
========== ========= ========== ========== =========
- --------------
3 The children of Fred L. Smith have individual trusts of shares of Class A
Common Stock. Fred L. Smith is the trustee and the trusts are as follows:
Fred Lloyd Smith Trust - 41,353 shares, Staci Elaine Smith Trust - 28,670
shares and Zachary Dee Smith Trust - 28,670 shares.
</TABLE>
14
