<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------
SCHEDULE 13D
(RULE 13D-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4)
FRED MEYER, INC.
(Name of Issuer)
Common Stock, $.01 Par Value
(Title of Class of Securities)
592907-10-9
(CUSIP Number)
Robert P. Bermingham
The Yucaipa Companies
10000 Santa Monica Boulevard, Fifth Floor
Los Angeles, California 90067
(310) 789-7200
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 6, 1999
(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(e), Rule 13d-1(f) or Rule 13d-1(g), check
the following box: [ ]
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
(Page 1 of 27 Pages)
<PAGE> 2
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 2 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
THE YUCAIPA COMPANIES
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 4,377,743
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
2,930,889
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
4,377,743
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,930,889
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,308,632
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE> 3
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 3 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
YUCAIPA ARIZONA PARTNERS, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 355,877
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
355,877
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
355,877
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE> 4
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 4 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
YUCAIPA SMITTY'S PARTNERS, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 391,109
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
391,109
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
391,109
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE> 5
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 5 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
YUCAIPA SMITTY'S PARTNERS II, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 177,940
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
177,940
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
177,940
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE> 6
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 6 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
YUCAIPA SSV PARTNERS, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,699,887
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,699,887
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,699,887
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE> 7
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 7 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
F4L EQUITY PARTNERS, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 2,352,925
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
2,352,925
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,352,925
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE> 8
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 8 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
FFL PARTNERS
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 226,358
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
226,358
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
226,358
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE> 9
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 9 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
RONALD W. BURKLE FOUNDATION
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 66,390
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
66,390
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
66,390
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
LESS THAN 0.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- --------------------------------------------------------------------------------
<PAGE> 10
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 10 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
YUCAIPA CAPITAL FUND
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 335,711
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
79,718
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
335,711
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
79,718
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
415,429
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE> 11
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 11 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
YUCAIPA/F4L PARTNERS
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 79,718
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
79,718
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
79,718
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE> 12
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 12 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
RONALD W. BURKLE
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
US
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 827,320
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
13,636,658
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
827,320
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
13,636,658
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,463,978
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE> 13
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 13 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
GNHT 1, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,071,900
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,071,900
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,071,900
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- --------------------------------------------------------------------------------
<PAGE> 14
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 14 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
GNHT 2, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 714,600
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
714,600
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
714,600
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- --------------------------------------------------------------------------------
<PAGE> 15
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 15 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
GNHT 3, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 714,600
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
714,600
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
714,600
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
00
- --------------------------------------------------------------------------------
<PAGE> 16
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 16 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
GNHT 4, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 714,600
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
714,600
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
714,600
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- --------------------------------------------------------------------------------
<PAGE> 17
SCHEDULE 13D
- -------------------------------- --------------------------------
CUSIP NO. 592907-10-9 PAGE 17 OF 27
- -------------------------------- --------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
GNHT 5, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 357,300
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
357,300
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
357,300
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- --------------------------------------------------------------------------------
<PAGE> 18
Item 1. Security and Issuer.
This Amendment No. 4 to Schedule 13D (this "Amendment") is being filed by
The Yucaipa Companies, a California general partnership ("Yucaipa"), Yucaipa
Arizona Partners, L.P., a California limited partnership ("Arizona Partners"),
Yucaipa Smitty's Partners, L.P., a California limited partnership ("Smitty's
Partners"), Yucaipa Smitty's Partners II, L.P., a California limited partnership
("Smitty's Partners II"), Yucaipa SSV Partners, L.P., a California limited
partnership ("SSV Partners"), F4L Equity Partners, L.P., a California limited
partnership ("F4L Equity Partners"), FFL Partners, a California general
partnership ("FFL Partners"), Yucaipa Capital Fund, a California limited
partnership ("Yucaipa Capital Fund"), Yucaipa/F4L Partners, a California general
partnership ("Yucaipa/F4L Partners"), and Ronald W. Burkle (collectively, the
"Original Reporting Persons"), GNHT 1, LLC, GNHT 2, LLC, GNHT 3, LLC, GNHT 4,
LLC and GNHT 5, LLC, each of which is a Delaware limited liability company
(collectively, the "LLCs") and Ronald W. Burkle Foundation, a California
non-profit corporation ("Foundation" and, together with the LLCs, the "New
Reporting Persons"). The Original Reporting Persons and the New Reporting
Persons are referred to collectively herein as the "Reporting Persons." This
Amendment No. 4 amends the Statement on Schedule 13D dated September 9, 1997
filed with the Securities and Exchange Commission (the "Commission") on
September 19, 1997, Amendment No. 1 thereto dated November 6, 1997 filed with
the Commission on November 17, 1997, Amendment No. 2 thereto dated March 10,
1998 filed with the Commission on March 20, 1998 and Amendment No. 3 thereto
dated October 18, 1998 filed with the Commission on November 2, 1998 (the
"Statement") by the Original Reporting Persons relating to the common stock, par
value $.01 per share (the "Common Stock"), of Fred Meyer, Inc., a Delaware
corporation ("Fred Meyer" or the "Company"), which has its principal executive
offices located at 3800 S.E. 22nd Avenue, Portland, Oregon 97202. This Amendment
No. 4 reflects certain transactions that have been effected by certain of the
Reporting Persons in respect of the Fred Meyer Common Stock, the deletion of
Fred Meyer/Smith's Foundation as a Reporting Person, and the addition of the New
Reporting Persons. Capitalized terms used herein that are not otherwise defined
shall have the meanings given to them in the Statement.
Item 2. Identity and Background.
The response to Item 2 is amended as follows:
Item 2(a) is restated in its entirety as follows:
(a) This statement is being filed jointly by the Reporting Persons.
Yucaipa is the sole general partner of each of Arizona Partners, Smitty's
Partners, Smitty's Partners II and SSV Partners. Ronald W. Burkle, Robert I.
Bernstein, Linda McLoughlin Figel, Patrick L. Graham, Lawrence K. Kalantari,
(Page 18 of 27)
<PAGE> 19
Darren W. Karst and Ira L. Tochner are the general partners of Yucaipa. Ronald
W. Burkle, Yucaipa Capital Advisors, Inc., a California corporation ("Yucaipa
Capital Advisors"), and George G. Golleher are the sole general partners of F4L
Equity Partners. Ronald W. Burkle is the sole executive officer, director and
controlling stockholder of Yucaipa Capital Advisors. Ronald W. Burkle, Joe
Burkle, Richard d'Abo, David Gammon, Greg Gammon, Larry Larkin, Rex H. Lewis,
Harold McIntire, Douglas L. McKenzie, Michael Saltman, Charles Smith, Darrel
Willoughby, Yucaipa Capital Partners, L.P., Yucaipa and Yucaipa Auto Partners,
L.P. are the sole general partners of FFL Partners. Ronald W. Burkle is the sole
general partner of each of Yucaipa Capital Partners, L.P. and Yucaipa Auto
Partners, L.P. Yucaipa Capital Advisors is the sole general partner of Yucaipa
Capital Fund. Yucaipa Capital Fund and Yucaipa are the sole partners of
Yucaipa/F4L Partners. Ronald W. Burkle and Kenneth J. Abdalla are the Chairman
of the Board and President, and the Secretary and Treasurer, respectively, and
each is a director, of the Foundation. Ronald W. Burkle is the Operating Manager
of the LLCs.
Item 2(b) is restated in its entirety as follows:
(b) The address of the principal business and principal office of Yucaipa,
Arizona Partners, Smitty's Partners, Smitty's Partners II, SSV Partners, F4L
Equity Partners, FFL Partners, Foundation, Yucaipa Capital Fund, Yucaipa/F4L
Partners, Yucaipa Capital Advisors, Yucaipa Capital Partners, L.P. and Yucaipa
Auto Partners, L.P. is c/o The Yucaipa Companies, 10000 Santa Monica Boulevard,
Fifth Floor, Los Angeles, California 90067. The business address of Ronald W.
Burkle, Robert I. Bernstein, Linda McLoughlin Figel, Patrick L. Graham, Lawrence
K. Kalantari, Darren W. Karst and Ira L. Tochner is c/o The Yucaipa Companies,
10000 Santa Monica Boulevard, Fifth Floor, Los Angeles, California 90067. The
business address of each of George G. Golleher, Harold McIntire and Darrel
Willoughby is c/o Ralphs Grocery Company, 1100 West Artesia Boulevard, Compton,
California 90220. The business address of each of Joe Burkle and David Gammon is
c/o Falley's, Inc., 3120 S. Kansas Avenue, Topeka, Kansas 66611. The business
address of Richard d'Abo is c/o Creative Cafe Wilshire, 640 San Vicente
Boulevard, Suite 70, Los Angeles, California 90048. The business address of Greg
Gammon is 15751 Golden Spur, Riverside, California 92504. The business address
of Larry Larkin is c/o Larkin Properties, 1700 E. Desert Inn Road, Suite 405,
Las Vegas, Nevada 89109. The business address of Rex H. Lewis is c/o Avante
Homes, 2325 A Renaissance Drive, Las Vegas, Nevada 89119. The business address
of Douglas L. McKenzie is c/o Big Sur Bottled Water, 21875 Rosehart Way,
Salinas, California 93921. The business address of Michael Saltman is c/o The
Vista Group, 2295 A Renaissance Drive, Las Vegas, Nevada 89119. The address of
Charles Smith is 3527 Copper Kettle Way, Orange, California 92867. The business
address of Kenneth J. Abdalla is c/o Waterton Management LLC, 10000 Santa Monica
Boulevard, Fifth Floor, Los Angeles, California 90067.
(Page 19 of 27)
<PAGE> 20
The address of the principal business and the principal office of each LLC is
10000 Santa Monica Boulevard, Fourth Floor, Los Angeles, California 90067.
Item 2(c) is restated in its entirety as follows:
The principal business of Yucaipa is acquiring, investing in and/or
managing supermarket and other companies. The principal business of Arizona
Partners, Smitty's Partners, Smitty's Partners II, SSV Partners, F4L Equity
Partners, FFL Partners, Yucaipa Capital Fund and Yucaipa FFL Partners is
investing in the Common Stock. The present principal occupation or employment of
each of Ronald W. Burkle, Robert I. Bernstein, Linda McLoughlin Figel, Patrick
L. Graham, Lawrence K. Kalantari, Darren W. Karst and Ira L. Tochner is as a
principal of The Yucaipa Companies LLC, a private investment group specializing
in supermarket companies and an affiliate of Yucaipa ("Yucaipa LLC"), the
address of which is 10000 Santa Monica Boulevard, Fifth Floor, Los Angeles,
California 90067. The principal business of each of Yucaipa Capital Advisors and
Yucaipa Capital Partners, L.P. is to own an interest in and manage certain
entities which invest in the Common Stock. The principal business of Yucaipa
Auto Partners, L.P. is to own an interest in and manage certain assets,
including entities which invest in the Common Stock. The present principal
occupation or employment of George G. Golleher and Harold McIntire is as the
President and Chief Operating Officer of Fred Meyer and the President of the
Food 4 Less Division of Ralphs Grocery Company, a Delaware corporation,
respectively. The present principal occupation or employment of David Gammon is
as Assistant to the President of Falley's, Inc. Joe Burkle is retired. The
present principal occupation or employment of Richard d'Abo is in the operations
of a post-production film company. The present principal occupation or
employment of Greg Gammon is as a salesman. Larry Larkin and Charles Smith are
retired. The present principal occupation or employment of Rex H. Lewis and
Michael Saltman is as a developer. The present principal occupation or
employment of Douglas L. McKenzie is as the President of Big Sur Bottled Water.
The present principal occupation or employment of Darrel Willoughby is as a
construction manager. The present principal occupation of Kenneth J. Abdalla is
as managing member of Waterton Management, LLC, a private investment firm. The
principal purpose of Foundation is as a not-for-profit charitable organization.
The principal business of each LLC is to invest in the Fred Meyer Common Stock.
Item 2(d) is restated in its entirety as follows:
None of the Reporting Persons, nor, to the best of their knowledge, any of
the individuals referred to in paragraph (a) above, has during the last five
years been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors).
Page 20 of 27)
<PAGE> 21
Item 2(e) is restated in its entirety as follows:
None of the Reporting Persons, nor, to the best of their knowledge, any of
the individuals referred to in paragraph (a) above, has during the last five
years been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item 2(f) is restated in its entirety as follows:
To the Reporting Persons' knowledge, each of the individuals referred to
in paragraph (a) above, other than Richard d'Abo is a United States citizen. To
the Reporting Persons' knowledge, Richard d'Abo is a citizen of the United
Kingdom.
Item 3. Source and Amount of Funds or Other Consideration.
There is no change to the information previously reported under Item 3.
Item 4. Purpose of Transaction.
There is no change to the information previously reported under Item 4.
Item 5. Interest in Securities of the Issuer.
The response to Item 5 is amended as follows:
Item 5(a) is restated in its entirety as follows:
(a) Arizona Partners owns 355,877 shares of Common Stock (approximately
0.2% of the total number of outstanding shares of Common Stock as of January 6,
1999); Smitty's Partners owns 391,109 shares of Common Stock (approximately 0.3%
of the total number of outstanding shares of Common Stock as of January 6,
1999); Smitty's Partners II owns 177,940 shares of Common Stock (approximately
0.1% of the total number of outstanding shares of Common Stock as of January 6,
1999); SSV Partners owns 1,699,887 shares of Common Stock (approximately 1.1% of
the total number of outstanding shares of Common Stock as of January 6, 1999);
Yucaipa owns 508,377 shares of Common Stock (approximately 0.3% of the total
number of outstanding shares of Common Stock as of January 6, 1999) and is the
record holder of a currently exercisable warrant entitling it to purchase up to
3,869,366 shares of Common Stock, which shares it may be deemed to beneficially
own pursuant to Section 13d-3(d)(1) of the Act; F4L Equity Partners owns
2,352,925 shares of Common Stock (approximately 1.5% of the total number of
outstanding shares of Common Stock as of January 6, 1999); FFL Partners owns
226,358
(Page 21 of 27)
<PAGE> 22
shares of Common Stock (approximately 0.1% of the total number of outstanding
shares of Common Stock as of January 6, 1999); Foundation owns 66,390 shares of
Common Stock (less than 0.1% of the total number of outstanding shares of Common
Stock as of January 6, 1999); Yucaipa Capital Fund owns 335,711 shares of Common
Stock (approximately 0.3% of the total number of outstanding shares of Common
Stock as of January 6, 1999); Yucaipa/F4L Partners owns 79,718 shares of Common
Stock (approximately 0.1% of the total number of outstanding shares of Common
Stock as of January 6, 1999); Ronald W. Burkle owns 827,320 shares of Common
Stock (approximately 0.5% of the total number of outstanding shares of Common
Stock as of January 6, 1999); GNHT 1, LLC owns 1,071,900 shares of Common Stock
(approximately 0.7% of the total number of outstanding shares of Common Stock as
of January 6, 1999); GNHT 2, LLC owns 714,600 shares of Common Stock
(approximately 0.5% of the total number of outstanding shares of Common Stock as
of January 6, 1999); GNHT 3, LLC owns 714,600 shares of Common Stock
(approximately 0.5% of the total number of outstanding shares of Common Stock as
of January 6, 1999); GNHT 4, LLC owns 714,600 shares of Common Stock
(approximately 0.5% of the total number of outstanding shares of Common Stock as
of January 6, 1999); and GNHT 5, LLC owns 357,300 shares of Common Stock
(approximately 0.2% of the total number of outstanding shares of Common Stock as
of January 6, 1999).
Item 5(b) is restated in its entirety as follows:
Each of Arizona Partners, Smitty's Partners, Smitty's Partners II and SSV
Partners, acting through their sole general partner, Yucaipa, have the sole
power to vote or direct the vote, and to dispose or to direct the disposition of
the shares of Common Stock beneficially owned by them. As a result, Yucaipa may
be deemed to beneficially own the shares of Common Stock directly owned by
Arizona Partners, Smitty's Partners, Smitty's Partners II and SSV Partners. Each
of Ronald W. Burkle, Robert I. Bernstein, Linda McLoughlin Figel, Patrick L.
Graham, Lawrence K. Kalantari, Darren W. Karst and Ira L. Tochner as a general
partner of Yucaipa, may be deemed to beneficially own the shares of Common Stock
beneficially owned by Yucaipa, Arizona Partners, Smitty's Partners, Smitty's
Partners II and SSV Partners, but disclaims any such ownership (except to the
extent of such individual's pecuniary interest therein), and the filing of this
statement shall not be construed as an admission that any of Messrs. Burkle,
Bernstein, Graham, Kalantari, Karst or Tochner or Ms. Figel is, for the purposes
of Section 13(d) or 13(g) of the Act, the beneficial owner of such securities.
Each of F4L Equity Partners, FFL Partners, Yucaipa Capital Fund and Yucaipa/F4L
Partners, acting through its respective general partner(s), has the sole power
to vote or direct the vote, and to dispose or to direct the disposition, of the
shares of Common Stock beneficially owned by them. In addition, (i) Yucaipa may
be deemed to beneficially own the shares of Common Stock directly owned by FFL
Partners and Yucaipa/F4L Partners, but disclaims any such ownership (except to
the extent of its pecuniary interest
(Page 22 of 27)
<PAGE> 23
therein), (ii) Yucaipa Capital Fund may be deemed to beneficially own the shares
of Common Stock directly owned by Yucaipa/F4L Partners, but disclaims any such
ownership (except to the extent of its pecuniary interest therein), (iii) each
of Ronald W. Burkle, Robert I. Bernstein, Linda McLoughlin Figel, Patrick L.
Graham, Lawrence K. Kalantari, Darren W. Karst and Ira L. Tochner as a general
partner of Yucaipa, may be deemed to beneficially own the shares of Common Stock
directly owned by FFL Partners and Yucaipa/F4L Partners, but disclaims any such
ownership (except to the extent of such individual's pecuniary interest
therein), and the filing of this statement shall not be construed as an
admission that any of Messrs. Burkle, Bernstein, Graham, Kalantari, Karst or
Tochner or Ms. Figel is, for the purposes of Section 13(d) or 13(g) of the Act,
the beneficial owner of such securities, and (iv) Ronald W. Burkle may be deemed
to beneficially own the shares of Common Stock directly owned by F4L Equity
Partners, FFL Partners, Yucaipa Capital Fund, Yucaipa/F4L Partners, Foundation
and each of the LLCs, but disclaims any such ownership (except to the extent of
his pecuniary interest therein). Ronald W. Burkle has the sole power to vote or
direct the vote, and to dispose or to direct the disposition, of shares of
Common Stock beneficially held by him. Foundation, acting through its board of
directors, has the sole power to vote or direct the vote, and to dispose or
direct the disposition, of the shares of Common Stock beneficially owned by it.
Each LLC, acting through its operating manager Ronald W. Burkle, has the sole
power to vote or direct the vote, and to dispose or to direct the disposition,
of shares of Common Stock beneficially held by it.
Item 5(c) is restated in its entirety as follows:
(c) Except as described in Item 6 below, there have not been any
transactions in the Common Stock effected by or for the account of the Reporting
Persons during the past 60 days, except that on December 31, 1998, Yucaipa
donated a total of 102,906 shares to certain charitable organizations (including
66,390 shares transferred to Foundation), and SSV Partners transferred 200
shares to a charitable organization.
Item 5(e) is restated in its entirety as follows:
Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
Item 6 is amended to incorporate the following:
On January 5, 1999, Arizona Partners, Smitty's Partners, Smitty's Partners
II, SSV Partners, Yucaipa, F4L Equity Partners and FFL Partners (collectively,
the "Participating Partnerships") contributed 218,645 shares, 240,291 shares,
109,324 shares, 1,044,507 shares, 375,562 shares, 1,445,600 shares and 139,071
shares, respectively, of Common Stock to the LLCs in exchange for pro rata
interests as non-managing members of each of the LLCs. On the same date, each
LLC entered into a Purchase Agreement with Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill
(Page 23 of 27)
<PAGE> 24
Lynch") pursuant to which, on January 6, 1999, Merrill Lynch purchased from each
LLC certain debt securities known as Provisionally Redeemable Income Debt
Exchangeable for Stock(SM) ("PRIDES") due February 28, 2002. The amount payable
by the LLCs to Merrill Lynch or any subsequent holder of the PRIDES upon
maturity thereof is determined based on the market value of the Common Stock at
such time, and is payable in cash or shares of Common Stock at the option of
each LLC. The maximum number of shares deliverable (or the amount of cash
payable) upon maturity of the PRIDES by the LLCs in the aggregate is the
3,573,000 shares (or the fair market value thereof) contributed by the
Participating Partnerships to the LLCs. If, upon maturity of the PRIDES, the
fair market value of the Common Stock is greater than $55.50, the number of
shares deliverable (or the amount of cash payable) upon maturity of the PRIDES
is reduced pursuant to a formula contained therein.
The PRIDES contain numerous covenants, including without limitation
anti-dilution provisions that adjust the nature and amount of consideration
payable at maturity based on any dividend or distribution, stock split,
reclassification, merger, reorganization or certain other events that affect the
Common Stock prior to maturity; restrictions on the LLCs' ability to incur debt,
dispose of assets, engage in transactions with affiliates or take other actions
aside from the issuance and performance of the PRIDES and the ownership of the
Common Stock; customary events of default and acceleration provisions; and
rights of redemption upon certain extraordinary events.
The PRIDES will continue in place following the expected consummation of
the transactions contemplated by the Fred Meyer-Kroger Merger Agreement
(described in Amendment No. 3 to the Statement), and thereupon the stock of
Kroger acquired by the LLCs will be substituted for the Fred Meyer Common Stock
under the PRIDES.
The Purchase Agreements executed by the LLCs pursuant to which the PRIDES
were issued contain numerous representations, warranties and covenants by the
LLCs. In addition, pursuant to undertakings delivered by Ronald W. Burkle and
each LLC and Participating Partnership, upon issuance of the PRIDES, such
parties agreed for the benefit of Merrill Lynch not to effect sales or other
dispositions of the Common Stock for a period of 90 days from January 5, 1999,
and to limit such sales for a period of 22 trading prior to maturity of the
PRIDES.
The obligations of each LLC under the PRIDES are secured by a pledge of
the Common Stock owned by each LLC pursuant to a Security and Pledge Agreement
between each such LLC and Merrill Lynch. The Security and Pledge Agreement also
contains customary events of default and acceleration provisions.
The foregoing summary of the Purchase Agreements and the PRIDES is
qualified in its entirety by reference to the form of Purchase Agreement and
PRIDES certificate which is attached
(Page 24 of 27)
<PAGE> 25
hereto as an exhibit and incorporated herein by reference. Only the Purchase
Agreement and PRIDES certificate executed by GNHT 1, LLC is filed herewith,
because the Purchase Agreements and PRIDES certificates executed by each other
LLC were identical except for the number of shares of Common Stock subject to
each: GNHT 1, LLC issued 1,071,900 PRIDES covering a maximum of 1,071,900 shares
of Common Stock; GNHT 2, LLC, GNHT 3, LLC and GNHT 4, LLC each issued 714,600
PRIDES covering a maximum of 714,600 shares of Common Stock each; and GNHT 5,
LLC issued 357,300 PRIDES covering a maximum of 357,300 shares of Common Stock.
Item 7. Material to be Filed as Exhibits.
<TABLE>
<S> <C>
Exhibit 99.1 Form of Purchase Agreement, dated as of January 5, 1999, by
GNHT 1, LLC and Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Exhibit 99.2 Form of PRIDES Certificate issued by GNHT 1, LLC
Exhibit 99.3 Joint Filing Agreement
</TABLE>
(Page 25 of 27)
<PAGE> 26
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 15, 1999 Yucaipa Arizona Partners, L.P.
Yucaipa Smitty's Partners, L.P.
Yucaipa Smitty's Partners II, L.P.
Yucaipa SSV Partners, L.P.
FFL Partners
Yucaipa/F4L Partners
By: The Yucaipa Companies
Its General Partner
By: /s/ Ronald W. Burkle
------------------------------------------
Name: Ronald W. Burkle
Title: General Partner
Dated: January 15, 1999 The Yucaipa Companies
By: /s/ Ronald W. Burkle
------------------------------------------
Name: Ronald W. Burkle
Title: General Partner
Dated: January 15, 1999 F4L Equity Partners, L.P.
Yucaipa Capital Fund
By: Yucaipa Capital Advisors, Inc.
Its General Partner
By: /s/ Ronald W. Burkle
------------------------------------------
Name: Ronald W. Burkle
Title: President
Dated: January 15, 1999 Ronald W. Burkle Foundation
By: /s/ Ronald W. Burkle
------------------------------------------
Name: Ronald W. Burkle
Title: Chairman of the Board
Dated: January 15, 1999 GNHT 1, LLC
GNHT 2, LLC
GNHT 3, LLC
GNHT 4, LLC
GNHT 5, LLC
By: /s/ Ronald W. Burkle
------------------------------------------
Name: Ronald W. Burkle
Title: Operating Manager
(Page 26 of 27)
<PAGE> 27
Dated: January 15, 1999
/s/ Ronald W. Burkle
------------------------------------------
Ronald W. Burkle
(Page 27 of 27)
<PAGE> 28
EXHIBIT INDEX
Item 7. Material to be Filed as Exhibits.
<TABLE>
<S> <C>
Exhibit 99.1 Form of Purchase Agreement, dated as of January 5, 1999, by
GNHT 1, LLC and Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Exhibit 99.2 Form of PRIDES Certificate issued by GNHT 1, LLC
Exhibit 99.3 Joint Filing Agreement
</TABLE>
<PAGE> 1
EXHIBIT 99.1
================================================================================
GNHT 1, LLC
(a Delaware limited liability company)
PURCHASE AGREEMENT
Dated: January 5, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 1. Representations and Warranties...............................................................1
(a) Representations and Warranties by the Company..................................................1
(i) Good Standing of the Company......................................................2
(ii) Authorization of Agreement........................................................2
(iii) Authorization of the Securities...................................................2
(iv) Delivery of Fred Meyer Common Stock...............................................2
(v) Absence of Proceedings............................................................3
(vi) Absence of Defaults and Conflicts.................................................3
(vii) Absence of Further Requirements...................................................4
(viii) No Registration...................................................................4
(ix) Compliance with Security Covenants................................................5
(x) Investment Company Act of 1940....................................................5
(xi) Fred Meyer Documents..............................................................5
(xii) Use of Proceeds; No Debt..........................................................6
(b) Representations and Warranties by the Purchaser................................................6
(c) Officer's Certificates.........................................................................6
Section 2. Sale and Delivery to Purchaser; Closing......................................................6
(a) Securities.....................................................................................6
(b) Payment........................................................................................6
(c) Denominations; Registration....................................................................7
Section 3. Covenants....................................................................................7
(a) Purpose Statement..............................................................................7
(b) Compliance with Security Covenants.............................................................7
Section 4. Payment of Expenses..........................................................................7
Section 5. Conditions...................................................................................7
(a) Conditions of Purchaser's Obligations..........................................................7
(i) Opinion of Counsel for the Company................................................7
(ii) Opinion of Counsel for the Purchaser..............................................8
(iii) Company Manager's Certificate.....................................................8
(iv) Affiliate Agreements..............................................................8
(v) Delivery of Collateral............................................................8
(vi) Additional Documents..............................................................8
(b) Conditions of Company's Obligations............................................................8
(c) Termination of Agreement.......................................................................9
Section 6. Indemnification..............................................................................9
(a) Indemnification of the Purchaser by the Company................................................9
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
(b) Actions against Parties; Notification..........................................................9
(c) Settlement without Consent if Failure to Reimburse............................................10
Section 7. Contribution................................................................................10
Section 8. Representations, Warranties and Agreements to Survive Delivery..............................11
Section 9. Notices.....................................................................................11
Section 10. Parties....................................................................................11
Section 11. GOVERNING LAW AND TIME.....................................................................11
Section 12. Effect of Headings.........................................................................12
</TABLE>
ii
<PAGE> 4
GNHT 1, LLC
(a Delaware limited liability company)
PRIDESSM DUE FEBRUARY 28, 2002
Payable with Shares of Common Stock of Fred Meyer, Inc.
PURCHASE AGREEMENT
January 5, 1999
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
New York, New York 10281-1209
Ladies and Gentlemen:
GNHT 1, LLC, a Delaware limited liability company (the "Company"),
confirms its agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the "Purchaser" or "MLPF&S"), with respect to the issue and sale by the Company
and the purchase by the Purchaser of an aggregate of 1,071,900 of the Company's
Provisionally Redeemable Income Debt Exchangeable for StockSM, PRIDESSM Due
February 28, 2002 (each, a "PRIDES"). The aforesaid 1,071,900 PRIDES to be
purchased by the Purchaser are hereinafter called the "Securities."
The PRIDES will be payable at maturity by delivery of the Maturity
Consideration (as defined in the PRIDES Certificate), subject to the Company's
option to deliver cash with an equal value.
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to the Purchaser as of the date hereof and as of the
Closing Time referred to in Section 2(b) hereof and agrees with the Purchaser,
as follows:
- ------------------
SM Service Mark of Merrill Lynch & Co., Inc.
<PAGE> 5
(i) Good Standing of the Company. The Company has been duly
organized and is validly existing as a limited liability company in
good standing under the laws of the State of Delaware and has the
requisite organizational power and authority to enter into and perform
its obligations under this Agreement, the Security and Pledge Agreement
dated as of January 6, 1999 (the "Security and Pledge Agreement") among
the Company, the Purchaser and MLPF&S, as collateral agent, and the
Securities. All of the member's limited liability company interests in
the Company are owned by the parties listed on SCHEDULE A and such
interests are the only interests in the Company. The Company's Limited
Liability Company Agreement limits its activities to (a) acquiring,
owning, financing, selling, pledging and otherwise dealing with shares
of Common Stock, par value $0.01 per share (the "Fred Meyer Common
Stock", which term shall include all Reference Property, as defined in
the Securities), of Fred Meyer, Inc. ("Fred Meyer") (and any successor
to Fred Meyer) and any securities or other property distributed, issued
or received by way of dividend or otherwise as a result of or in
connection with the ownership of such shares of Fred Meyer Common Stock
or the securities or other property so distributed, issued or received
and to engage in all activities relating to the ownership of such
shares, securities or other property, including, without limitation,
exercising any voting rights with respect thereto; (b) making loans to
affiliates of the Company, receiving payment under such loans and
giving acquittances with respect to such loans for so long as the
Company is the holder of such loans and engaging in all activities
relating to the ownership of such loans; (c) investing and reinvesting
any cash at any time received by the Company; and (d) engaging in such
lawful activities and exercising such powers permitted by limited
liability companies under the laws of the State of Delaware that are
necessarily incident to or connected with the foregoing or necessary or
convenient to accomplish the foregoing and which are consistent with
the limitations set forth in the Company's Limited Liability Company
Agreement.
(ii) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Company.
(iii) Authorization of the Securities. The Securities have
been duly authorized by the Company for issuance and sale to the
Purchaser pursuant to this Agreement and the Security and Pledge
Agreement has been duly authorized by the Company, and, at the Closing
Time, the Securities and the Security and Pledge Agreement will have
been duly executed by the Company and, when delivered against payment
of the purchase price as provided in this Agreement, will constitute
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law).
2
<PAGE> 6
(iv) Delivery of Fred Meyer Common Stock. To the extent the
Company elects to deliver shares of Fred Meyer Common Stock on the
Maturity Date (as defined in the Securities), upon delivery of such
Fred Meyer Common Stock pursuant to this Agreement, the Security and
Pledge Agreement and the Securities, the holder thereof will have
acquired all rights, title and interest in and to such Fred Meyer
Common Stock, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; provided that the holder is
not an affiliate of Fred Meyer. At the date hereof and at the Closing
Time, the Company is the sole registered owner of and has all rights in
and to at least 1,071,900 shares of Fred Meyer Common Stock, free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity. The sale, transfer and delivery of the Fred Meyer
Common Stock by the Company as contemplated by the Securities is not,
and at the time of delivery of such Fred Meyer Common Stock will not
be, subject to any right of first refusal or similar rights of any
person pursuant to any contract to which the Company or any Affiliate
of the Company is a party or by which any of them is bound. As used
herein, "Affiliate" means, as to the Company, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with the Company. As used herein, "control" (including the
terms "controlled by" or "under common control with") means, as to any
Person, the possession, direct or indirect, of the power to vote ten
percent or more of the securities having ordinary voting power for the
election of directors or managers of such Person or to direct or cause
the direction of the management and policies of such Person, whether
through ownership of voting securities or by contract or otherwise. As
used herein, "Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency or
instrumentality thereof.
(v) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any Affiliate of the Company, which might, individually or
in the aggregate, reasonably be expected to materially and adversely
affect the consummation of the transactions contemplated by this
Agreement, the Security and Pledge Agreement or the Securities
(including the issuance and sale of the Securities and the delivery of
shares of Fred Meyer Common Stock pursuant thereto) or the performance
by the Company of its obligations hereunder or thereunder.
(vi) Absence of Defaults and Conflicts. The execution,
delivery and performance by the Company of this Agreement, the Security
and Pledge Agreement and the Securities and the consummation by the
Company with its obligations hereunder and thereunder have been duly
authorized by all necessary action and do not and will not, whether
with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Company
Repayment Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to, any contract, indenture, mortgage,
deed of
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<PAGE> 7
trust, loan or credit agreement, note, lease or any other agreement or
instrument to which the Company or any of its Affiliates is a party or
by which it or any of them may be bound, including, without limitation,
the Voting Agreement, dated October 18, 1998 (the "Voting Agreement"),
among The Kroger Co. ("Kroger") and certain stockholders of Fred Meyer
(but subject to subsection (viii) below), or to which any of the
property or assets of the Company or any of its Affiliates is subject
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not, singly or in the aggregate, materially and
adversely affect the ability of the Company to perform its obligations
under this Agreement, the Security and Pledge Agreement and the
Securities), nor will such action result in any violation of the
provisions of the Limited Liability Company Agreement of the Company or
any of its Affiliates, or any applicable law, statute, rule or
regulation of any government or government instrumentality having
jurisdiction over the Company or any of its Affiliates or any of their
assets, properties or operations (other than any state securities or
"blue sky" law, statute, rule or regulation, as to which no
representation and warranty is made), or any applicable judgment,
order, writ or decree of any government, government instrumentality or
domestic court having jurisdiction over the Company or any of its
Affiliates or any of their assets, properties or operations (except in
all cases for such violations that would not, singly or in the
aggregate materially and adversely affect the ability of the Company to
perform its obligations under this Agreement, the Security and Pledge
Agreement and the Securities). As used herein, a "Company Repayment
Event" means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company or
any of its Affiliates.
(vii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the execution, delivery or
performance by the Company of its obligations under this Agreement, the
Security and Pledge Agreement or the Securities or the consummation by
the Company of the transactions contemplated herein or therein
(including the issuance and sale of the Securities and any delivery of
shares of Fred Meyer Common Stock pursuant thereto).
(viii) No Registration. The offer and sale of the PRIDES in
the manner contemplated by this Agreement, the Security and Pledge
Agreement and the Securities, and any delivery of the shares of Fred
Meyer Common Stock upon the maturity of the PRIDES, in accordance with
the terms hereunder and under the Securities, and the unrestricted
resale of such shares of Fred Meyer Common Stock by the holder of the
PRIDES, will be exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"). Upon any transfer
of shares of Fred Meyer Common Stock to the Holder of the PRIDES who is
not an affiliate of Fred Meyer at maturity of the PRIDES, such shares
shall be free of any restrictive legend or other transfer restriction
or any lien, claim, charge or other encumbrance in favor of any third
party and may be
4
<PAGE> 8
freely resold by the holder of the PRIDES without registration under
the 1933 Act. Notwithstanding the foregoing, the Purchaser acknowledges
that (i) the shares of Fred Meyer Common Stock subject to the PRIDES
and the Security and Pledge Agreement currently bear a legend referring
to the restrictions imposed under Rule 145 of the 1933 Act ("Rule 145
Legend"), (ii) Fred Meyer has entered into a merger agreement with
Kroger (the "Merger Agreement") pursuant to which a wholly-owned
subsidiary of Kroger will merge into Fred Meyer, subject to the
conditions to closing contained therein (the "Merger"), and all of the
outstanding shares of Fred Meyer Common Stock will be converted by
virtue of the Merger into shares of Kroger Common Stock to be
registered on Form S-4 under the 1933 Act, (iii) the shares of Fred
Meyer Common Stock subject to the PRIDES and the Security and Pledge
Agreement are subject to the terms and restrictions of, and must be
voted in accordance with, the Voting Agreement, a copy of which has
been provided to the Purchaser, (iv) the Company is an Affiliate of
Fred Meyer and therefore the Kroger Common Stock to be issued to the
Company in the Merger will bear a Rule 145 Legend, (v) unless the
Company has not been an affiliate of Fred Meyer or Kroger, as
applicable, during the three-month period prior to the Maturity Date,
Acceleration Date, Collateral Redemption Date, Major Transaction
Redemption Date, Redemption Date or Optional Redemption Date, the
Company will be unable on any such date to deliver Fred Meyer Common
Stock or Kroger Common Stock free of the Rule 145 Legend and (vi)
unless the Merger has become effective or the Merger Agreement has been
terminated prior to the Maturity Date, Acceleration Date, Collateral
Redemption Date, Major Transaction Redemption Date, Redemption Date or
Optional Redemption Date, the Company will be unable on any such date
to deliver Fred Meyer Common Stock free of the restrictions imposed by
the Voting Agreement. The Company covenants and agrees that, if the
Company is unable to deliver Fred Meyer Common Stock or Kroger Common
Stock free of (i) the Rule 145 Legend, the Company in lieu thereof will
deliver cash or will effect sales of the stock pursuant to Rule 145 in
accordance with the terms of the PRIDES and (ii) the restrictions
imposed by the Voting Agreement, the Company in lieu thereof will
deliver cash in accordance with the terms of the PRIDES.
(ix) Compliance with Security Covenants. As of the date
hereof the Company is, and as of the Closing Time the Company will be,
in full compliance with the Covenants contained in the PRIDES
Certificate.
(x) Investment Company Act of 1940. The Company is not an
"investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.
(xi) Fred Meyer Documents. To the Company's knowledge and
to the actual knowledge of Mr. Ronald W. Burkle, Fred Meyer's Annual
Report on Form 10-K for the year ended January 31, 1998, Quarterly
Reports on Form 10-Q for the periods ended May 23, 1998, August 15,
1998 and November 7, 1998 and all Current Reports on Form 8-K filed
since January 31, 1998 (the "Fred Meyer 1934 Act Documents") and the
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<PAGE> 9
information relating to Fred Meyer contained in the Registration
Statement on Form S-4 of Kroger as filed with the Securities and
Exchange Commission on November 6, 1998 (the "Form S-4"), as of their
respective dates, did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Since the
respective dates as of which information is given in the Fred Meyer
1934 Act Documents or in the Form S-4, except as otherwise stated
therein, to the Company's knowledge and to the actual knowledge of Mr.
Ronald W. Burkle, there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs
or business prospects of Fred Meyer and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business.
(xii) Use of Proceeds; No Debt. The proceeds received by
the Company upon the sale of the PRIDES will be reinvested in cash and
cash equivalents, consisting of treasury securities, short-term money
market instruments and the like, but not in any "security" as defined
in Section 3(10) of the Securities Exchange Act of 1934, as amended,
pending distribution of all or part of such proceeds to the Company's
members on a future date to be determined by the Company. The Company's
members, which consist of certain general and limited partnerships,
will in turn distribute any proceeds received by them from the Company
to their partners as a return of capital, less any amounts required to
be withheld for income tax purposes or to pay expenses of such
partnerships. The Company represents and warrants that substantially
all of the assets of all members of the Company other than FFL Partners
and The Yucaipa Companies consist of Fred Meyer Common Stock, and that
in excess of 65% of the assets of FFL Partners and The Yucaipa
Companies consist of Fred Meyer Common Stock and that neither the
Company nor any of its members have any outstanding Debt (as defined in
the PRIDES Certificate).
(b) Representations and Warranties by the Purchaser. The Purchaser
represents and warrants to the Company as of the date hereof and as of the
Closing Time referred to in Section 2(b) hereof that (i) it is a corporation
duly organized under the laws of the State of Delaware, (ii) this Agreement has
been duly authorized, executed and delivered by the Purchaser, and is the valid
and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms and (iii) the Purchaser is a "Qualified Institutional
Buyer" as defined in Rule 144A promulgated under the 1933 Act and is acquiring
the PRIDES for its own account (and not for the account of others) for
investment and not with a view to, or for offer or sale in connection with, the
public distribution thereof.
(c) Officer's Certificates. Any certificate signed by any officer of
the Company or any of its subsidiaries delivered to the Purchaser shall be
deemed a representation and warranty by the Company to the Purchaser as to the
matters covered thereby.
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<PAGE> 10
Section 2. Sale and Delivery to Purchaser; Closing.
(a) Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase
from the Company, at the price per PRIDES set forth in SCHEDULE B, the
Securities.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of Brown & Wood
LLP, One World Trade Center, New York, New York 10048, or at such other place as
shall be agreed upon by the Purchaser and the Company, at 9:00 A.M. (Eastern
time) on January 6, 1999, or such other time not later than ten business days
after such date as shall be agreed upon by the Purchaser and the Company (such
time and date of payment and delivery being herein called "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Purchaser of certificates for the Securities to be purchased by it.
(c) Denominations; Registration. Certificates for the Securities shall
be in such denominations and registered in such names as the Purchaser may
request in writing at least one full business day before the Closing Time. The
certificates for the Securities will be made available for examination and
packaging by the Purchaser in The City of New York not later than 10:00 A.M.
(Eastern time) on the business day prior to the Closing Time.
Section 3. Covenants.
(a) Purpose Statement. At or prior to Closing Time, the Company will
deliver to the Purchaser a duly executed purpose statement on Federal Reserve
Form T-4 of the Board of Governors of the Federal Reserve System.
(b) Compliance with Security Covenants. The Company will comply with
the Covenants contained in the PRIDES Certificate.
Section 4. Payment of Expenses.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement and the Security and Pledge Agreement,
including (i) the preparation and delivery to the Purchaser of this Agreement,
the Security and Pledge Agreement, the Securities and such other documents as
may be required in connection with the offering, purchase, sale, issuance or
delivery of the Securities, (ii) the preparation, issuance and delivery of the
certificates for the Securities to the Purchaser and (iii) the fees and
disbursements of the Company's counsel, accountants and other advisors.
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<PAGE> 11
Section 5. Conditions.
(a) Conditions of Purchaser's Obligations. The obligations of the
Purchaser hereunder are subject to the accuracy of the representations and
warranties of the Company contained in Section 1(a) hereof and to the accuracy
of the statements in certificates of any manager of the Company delivered
pursuant to the provisions hereof, to the performance by the Company of its
covenants and other obligations hereunder, and to the following further
conditions:
(i) Opinion of Counsel for the Company. At Closing Time,
the Purchaser shall have received the favorable opinion, dated as of
Closing Time, of Latham & Watkins, counsel for the Company, in form and
substance satisfactory to the Purchaser, to the effect set forth in
EXHIBIT A hereto. In giving such opinion, counsel may rely, as to all
matters governed by laws other than the law of the States of New York
or California, the General Corporation Law of the State of Delaware and
the federal law of the United States, upon the opinions of counsel
satisfactory to the Purchaser. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to
the extent they deem proper, upon certificates of public officials.
(ii) Opinion of Counsel for the Purchaser. At Closing Time,
the Purchaser shall have received the favorable opinion, dated as of
Closing Time, of Brown & Wood LLP, counsel for Purchaser, in form and
substance satisfactory to the Purchaser. In giving such opinion,
counsel may rely, as to all matters governed by laws other than the law
of the State of New York, the General Corporation Law of the State of
Delaware and the federal law of the United States, upon the opinions of
counsel satisfactory to the Purchaser. Such counsel may also state
that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of public
officials.
(iii) Company Manager's Certificate. The Purchaser shall
have received a certificate of a Manager of the Company, dated as of
Closing Time, to the effect that (i) the representations and warranties
in Section 1(a) hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time, and (ii) the
Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to Closing Time,
and (iii) since the date of this Agreement, there has been no material
adverse change in the condition (financial or otherwise) of the
Company, nor any debt or other obligations incurred by the Company and
its subsidiaries other than those contemplated by this Agreement, the
Security and Pledge Agreement and the Securities.
(iv) Affiliate Agreements. The Purchaser shall have
received from the Company and Affiliates of the Company identified in
SCHEDULE C the agreement set forth in EXHIBIT B.
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<PAGE> 12
(v) Delivery of Collateral. At Closing Time, the Company
shall have delivered the Collateral Amount under the Security and
Pledge Agreement.
(vi) Additional Documents. At Closing Time, counsel for the
Purchaser shall have been furnished with such documents and opinions as
they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order
to evidence the accuracy of any of the representations or warranties,
or the fulfillment of any of the conditions, contained herein; and all
proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be satisfactory in
form and substance to the Purchaser and counsel for the Purchaser.
(b) Conditions of Company's Obligations. The obligations of the Company
hereunder are subject to the accuracy of the representations and warranties of
the Purchaser contained in Section 1(b) hereof.
(c) Termination of Agreement. If any condition specified in subsection
(a) of this Section 5 shall not have been fulfilled when and as required to be
fulfilled, this Agreement may be terminated by the Purchaser by notice to the
Company at any time at or prior to Closing Time and such termination shall be
without liability of any party to any other party except as provided in Section
4.
Section 6. Indemnification.
(a) Indemnification of the Purchaser by the Company. The Company agrees
to indemnify and hold harmless the Purchaser and each person, if any, who
controls the Purchaser within the meaning of Section 15 of the 1933 Act or
Section 20 of the Securities Exchange Act of 1934 (the "1934 Act") as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any breach by the
Company of any representation or warranty or failure to comply with any
covenant contained herein or in the PRIDES Certificates or any Event of
Default under the Securities or the Security and Pledge Agreement;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such breach or default
referred to under (i) above; provided that (subject to subsection (c)
below) any such settlement is effected with the written consent of the
Company; and
(iii) subject to subsection (b) below, against any and all
expense whatsoever, as incurred (including the fees and disbursements
of counsel chosen by the Purchaser), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or
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<PAGE> 13
threatened, or any claim whatsoever based upon any such breach or
default referred to under (i) above, to the extent that any such
expense is not paid under (i) or (ii) above.
(b) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand commenced or asserted against it in respect of
which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. Upon receipt of such notice, the
indemnifying party, severally or jointly with any other indemnifying parties
receiving such notice, shall retain counsel reasonably satisfactory to such
indemnified party to represent such indemnified party and any others the
indemnifying party may designate in respect of such suit, action, proceeding,
claim or demand. In respect of any such suit, action, proceeding, claim or
demand, an indemnified party shall have the right to retain its own counsel, but
the fees and disbursements of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying parties and such indemnified party
shall have mutually agreed to the contrary, (ii) the indemnifying parties have
failed within a reasonable time to retain counsel reasonably satisfactory to
such indemnified party or (iii) the named parties in any such suit, action or
proceeding (including any impleaded parties) include both indemnifying parties
and indemnified parties and representation of both parties by the same counsel
would in the opinion of counsel be inappropriate due to actual or potential
differing interests between them. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(c) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) and 6(b)(ii) effected without its written consent if (i) such
settlement is entered into more than 60 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to
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<PAGE> 14
the date of such settlement for all such fees and expenses of counsel, other
than such fees and expenses of counsel that are being contested in good faith by
an indemnifying party.
Section 7. Contribution.
If the indemnification provided for in Sections 6(a) and 6(c) hereof is
for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then the Company and the Purchaser shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Purchaser on the other hand from the sale of the Securities
pursuant to this Agreement and the Security and Pledge Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Purchaser on the other hand in connection with the events which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
Notwithstanding the provisions of this Section 7(a), the Purchaser
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Securities purchased by it exceeds the amount of
any damages which the Purchaser have otherwise been required to pay by reason of
any such events.
The Company and the Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 7(a) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7(a). The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7(a) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Section 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, the Security and Pledge Agreement or in certificates of managers of
the Company submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the
Purchaser or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Purchaser.
Section 9. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Company
shall be directed to it at GNHT 1, LLC, 10000 Santa Monica Boulevard, Fourth
Floor, Los Angeles, CA 90067, fax: (310) 789-7201, attention: Robert Bermingham;
notices to the Purchaser shall be directed to them at Merrill
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<PAGE> 15
Lynch, Pierce, Fenner & Smith Incorporated, World Financial Center, North Tower,
5th Floor, New York, New York 10281, Attention: Equity Derivatives Group and
Equity Trading Counsel.
Section 10. Parties. This Agreement shall each inure to the benefit of
and be binding upon each of the Purchaser and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
parties hereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from the Purchaser shall be deemed to be a successor by
reason merely of such purchase.
Section 11. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF. SPECIFIED TIMES OF
DAY REFER TO NEW YORK CITY TIME.
Section 12. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
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<PAGE> 16
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Purchaser and the Company in accordance with its terms.
Very truly yours,
GNHT 1, LLC
By: /s/ RONALD W. BURKLE
------------------------------------
Name: Ronald W. Burkle
Title: Operating Manager
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ PETER HOFFMAN
----------------------------------
Authorized Signatory
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<PAGE> 17
SCHEDULE A
Owners of member's limited liability interests in the Company
The Yucaipa Companies
Yucaipa Arizona Partners, L.P.
Yucaipa Smitty's Partners, L.P.
Yucaipa Smitty's Partners II, L.P.
Yucaipa SSV Partners, L.P.
F4L Equity Partners, L.P.
FFL Partners
Sch A-1
<PAGE> 18
SCHEDULE B
GNHT 1, LLC
PRIDES DUE FEBRUARY 28, 2002
1. The price of the Securities shall be $46.4813 per
PRIDES.
2. The "Initial Price" with respect to the Securities
shall be $55.50 per PRIDES.
3. The "Threshold Appreciation Price" with respect to
the Securities shall be $66.60 per PRIDES.
Sch B-1
<PAGE> 19
SCHEDULE C
Affiliates of the Company
Ronald W. Burkle
GNHT 2, LLC
GNHT 3, LLC
GNHT 4, LLC
GNHT 5, LLC
THE YUCAIPA COMPANIES
YUCAIPA ARIZONA PARTNERS, L.P.
YUCAIPA SMITTY'S PARTNERS, L.P.
YUCAIPA SMITTY'S PARTNERS II, L.P.
YUCAIPA SSV PARTNERS, L.P.
F4L EQUITY PARTNERS, L.P.
FFL PARTNERS
Sch C-1
<PAGE> 20
EXHIBIT A
[LATHAM & WATKINS LETTERHEAD]
January 6, 1999
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center
North Tower
New York, NY 10281-1209
Re: Purchase Agreements Related to the Issuance of
Provisionally Redeemable Income Debt Exchangeable for
Stock by each of GNHT 1, LLC, GNHT 2, LLC, GNHT 3,
LLC, GNHT 4, LLC and GNHT 5, LLC
Ladies and Gentlemen:
We have acted as special counsel to each of GNHT 1, LLC, a
Delaware limited liability company ("GNHT 1"), GNHT 2, LLC, a Delaware limited
liability company ("GNHT 2"), GNHT 3, LLC, a Delaware limited liability company
("GNHT 3"), GNHT 4, LLC, a Delaware limited liability company ("GNHT 4"), and
GNHT 5, LLC, a Delaware limited liability company ("GNHT 5" and, together with
GNHT 1, GNHT 2, GNHT 3 and GNHT 4, the "Companies" and each of GNHT 1, GNHT 2,
GNHT 3, GNHT 4 and GNHT 5 a "Company"), in connection with each Company's
issuance of Provisionally Redeemable Income Debt Exchangeable for Stock(SM)
("PRIDES") pursuant to those certain purchase agreements, dated as of January 5,
1999, between each Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Purchaser") (such agreements are, collectively, the "Purchase
Agreements" and each such agreement is, individually, a "Purchase Agreement").
This opinion is rendered to you pursuant to Section 5(a)(i) of
each of the Purchase Agreements. Capitalized terms defined in the Purchase
Agreements, used herein, and not otherwise defined herein shall have the
meanings given them in the Purchase Agreements.
__________________________
(SM) Service mark of Merrill Lynch & Co., Inc.
Exh A-1
<PAGE> 21
LATHAM & WATKINS
Merrill Lynch, Pierce, Fenner & Smith Incorporated
January 6, 1999
Page 2
As such counsel, we have examined such matters of fact and
questions of law as we have considered appropriate for purposes of rendering the
opinions expressed below, except where a statement is qualified as to knowledge
or awareness, in which case we have made no or limited inquiry as specified
below. We have examined, among other things, the following:
(a) each Purchase Agreement;
(b) the form of PRIDES Certificate to be issued pursuant to each Purchase
Agreement;
(c) the Security and Pledge Agreement related to each of the PRIDES (the
"Security and Pledge Agreements");
(d) the Limited Liability Company Agreement of each of the Companies (the
"Limited Liability Company Agreements"); and
(e) the written agreements, if any, identified to us by representatives of
each of the Companies as material to the applicable Company (the
"Material Agreements").
In our examination, we have assumed the genuineness of all
signatures (other than those of representatives of the Companies on the
documents referred to in (a) through (e) above), the authenticity of all
documents submitted to us as originals, and the conformity to authentic original
documents of all documents submitted to us as copies.
We have been furnished with, and with your consent have relied
upon, certificates of representatives of each of the Companies with respect to
certain factual matters. In addition, we have obtained and relied upon such
certificates and assurances from public officials as we have deemed necessary.
We assume, without independent investigation, the accuracy of all factual
matters set forth in the representations and warranties of the Companies under
the Purchase Agreements.
We are opining herein as to the effect on the subject
transaction only of the federal laws of the United States, the internal laws of
the State of New York and the Delaware Limited Liability Company Act, and we
express no opinion with respect to the applicability thereto, or the effect
thereon, of the laws of any other jurisdiction or, in the case of Delaware, any
other laws, or as to any matters of municipal law or the laws of any other local
agencies within any
Exh A-2
<PAGE> 22
LATHAM & WATKINS
Merrill Lynch, Pierce, Fenner & Smith Incorporated
January 6, 1999
Page 3
state. Various issues concerning substantive non-consolidation are addressed in
a separate opinion that we are providing to you concurrently herewith.
Our opinions set forth in paragraph 5 below are based upon our
consideration of only those statutes, rules and regulations which, in our
experience, are normally applicable to transactions of the type contemplated by
the documents referred to in (a) through (d) above. Whenever a statement herein
is qualified by "to our knowledge" or a similar phrase, it is intended to
indicate that those attorneys in this firm who have rendered legal services to
the Companies and their affiliates do not have current actual knowledge of the
inaccuracy of such statement. However, except as otherwise expressly indicated,
we have not undertaken any independent investigation to determine the accuracy
of any such statement, and no inference that we have any knowledge of any
matters pertaining to such statement should be drawn from our representation of
the Companies.
Subject to the foregoing and the other matters set forth
herein, it is our opinion that, as of the date hereof:
1. Each of the Companies has been duly formed and is validly
existing as a limited liability company and in good standing under the laws of
the State of Delaware, with the requisite organizational power and authority to
enter into the Purchase Agreement, the PRIDES and the Security and Pledge
Agreement to which it is a party and to perform its obligations thereunder.
2. All of the limited liability company interests in each of
the Companies held by the members set forth in the applicable Limited Liability
Company Agreement have been duly authorized and validly issued and were issued
in conformity with the terms and conditions of such Limited Liability Company
Agreement.
3. Each Company's execution, delivery and performance of the
applicable Purchase Agreement, Security and Pledge Agreement and Securities
issued pursuant to such Purchase Agreement have been duly authorized by all
necessary organizational action of the applicable Company, and such Purchase
Agreement, Security and Pledge Agreement and Securities have been duly executed
and delivered by such Company.
4. Each Purchase Agreement, Security and Pledge Agreement and
Securities issued pursuant to such Purchase Agreement constitute legally valid
and binding obligations of the applicable Company, enforceable against such
Company in accordance with their respective terms.
5. Each Company's execution and delivery of the Purchase
Agreement, the Security and Pledge Agreement and the Securities issued pursuant
to such Purchase Agreement,
Exh A-3
<PAGE> 23
LATHAM & WATKINS
Merrill Lynch, Pierce, Fenner & Smith Incorporated
January 6, 1999
Page 4
and the performance of the obligations of such Company thereunder (including the
issuance and sale of the Securities and any delivery of the Fred Meyer, Inc.
Common Stock in accordance with the terms thereof and limitations referenced
therein) do not (i) violate any statute, rule or regulation applicable to such
Company, (ii) violate the provisions of such Company's Limited Liability Company
Agreement, (iii) result in the breach of or a default under any of the Material
Agreements to which such Company is a party, or (iv) require any consents,
approvals, authorizations, registrations, declarations or filings by such
Company under any statute, rule or regulation applicable to such Company. No
opinion is expressed in clauses (i) and (iv) of this paragraph 5 as to the
application of any antifraud laws or federal or state securities laws.
The opinions expressed in paragraphs 4 and 5 do not include
any opinions with respect to the perfection or priority of any security interest
or lien, or compliance with laws relating to permissible rates of interest. The
opinions expressed in paragraph 4 above are further subject to the following
limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar
laws now or hereafter in effect relating to
or affecting the rights or remedies of
creditors;
(b) the effect of general principles of equity,
whether enforcement is considered in a
proceeding in equity or at law, and the
discretion of the court before which any
proceeding therefor may be brought;
(c) the unenforceability under certain
circumstances under law or court decisions
of provisions providing for the
indemnification of or contribution to a
party with respect to a liability where such
indemnification or contribution is contrary
to public policy; and
(d) the unenforceability of any provision
requiring payment of attorneys' fees except
to the extent that a court determines such
fees to be reasonable.
To the extent that the obligations of the Companies may be
dependent upon such matters, we assume for purposes of this opinion that: (i)
Purchaser is duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation; (ii) Purchaser has the requisite
corporate power and authority to execute and deliver the Purchase Agreements and
Security and Pledge Agreements and to perform its obligations thereunder; and
(iii) the Purchase Agreements and Security and Pledge Agreements have been duly
authorized, executed and delivered by Purchaser and constitute the legally valid
and binding obligations of Purchaser, enforceable against Purchaser in
accordance with their terms. We express no opinion as to compliance by any
parties to the Purchase Agreements or Security and Pledge Agreements with
Exh A-4
<PAGE> 24
LATHAM & WATKINS
Merrill Lynch, Pierce, Fenner & Smith Incorporated
January 6, 1999
Page 5
any state or federal laws or regulations applicable to the subject transactions
because of the nature of such party's business.
This opinion is rendered only to you and is solely for your
benefit in connection with the transactions covered hereby. This opinion may not
be relied upon by you for any other purpose, or furnished to, quoted to or
relied upon by any other person, firm or corporation for any purpose, without
our prior written consent.
Very truly yours,
/s/ LATHAM & WATKINS
Exh A-5
<PAGE> 25
EXHIBIT B
January 5, 1999
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: Purchase of PRIDES due February 28, 2002 of GNHT 1, LLC
Dear Sirs:
The undersigned understands that Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPF&S") proposes to enter into a Purchase Agreement (the
"Purchase Agreement") with GNHT 1, LLC (the "Company") providing for the
purchase of PRIDES due February 28, 2002 of the Company (the "Securities"),
exchangeable for the common stock, par value $0.01 per share of Fred Meyer, Inc.
("Fred Meyer") (the "Common Stock"). In recognition of the benefit that such a
purchase will confer upon the undersigned, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned represents, warrants and agrees with MLPF&S as follows:
(a) during the period of 90 days prior to the date of the Purchase
Agreement, the undersigned has sold no shares of Common Stock, and during a
period of 90 days from the date of the Purchase Agreement, the undersigned will
not, without the prior written consent of MLPF&S, directly or indirectly, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant for
the sale of, or otherwise dispose of or transfer any shares of any Reference
Security (as defined in the Securities) or any securities convertible into or
exchangeable or exercisable for any Reference Security, whether now owned or
hereafter acquired by the undersigned or with respect to which the undersigned
has or hereafter acquires the power of disposition, or file any registration
statement under the Securities Act of 1933, as amended ("the 1933 Act"), with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of any Reference Security,
whether any swap or transaction is to be settled by delivery of any Reference
Security or other securities, in cash or otherwise;
(b) during the 20 Trading Days immediately prior to, but not including,
the Second Trading Day preceding the Maturity Date, or any Redemption Date,
Major Transaction Redemption Date, Collateral Redemption Date, Redemption Date
or Optional Redemption Date, the undersigned will not buy any Reference
Security, or sell an amount of any Reference Security greater than the amount of
such Reference Security then constituting part of the Reference Property, other
than as expressly provided for by the terms of the PRIDES;
EXH B-1
<PAGE> 26
(c) for a period from and after the occurrence of any event or
circumstances that with the giving of notice and/or passage of time would
constitute an Event of Default under the PRIDES through the 10th Trading Day (as
defined in the PRIDES) after the occurrence of an Event of Default under the
PRIDES, the undersigned will not take any action that would operate to limit the
ability of MLPF&S to sell any Reference Security constituting part of the
Collateral under the Security and Pledge Agreement pursuant to Rules 144 and 145
promulgated under the 1933 Act;
(d) the undersigned have not concealed and will not conceal the
issuance of the PRIDES and the transactions contemplated by the Purchase
Agreement and the Security and Pledge Agreement (the "Transactions") or their
separate identities from any creditor or other interested party. The undersigned
have not removed or concealed, and will not remove or conceal, from any creditor
or other interested party any assets of any other entity and have not
participated and will not participate in removing or concealing the assets of
any other entity. The undersigned did not and will not contribute any cash,
securities (including the Fred Meyer Common Stock) or other property or
consummate the Transactions with any intent to hinder, delay or defraud any
creditor of the undersigned and/or the Company or any other interested party;
(e) each of the undersigned has engaged and will engage in business
transactions with the Company only on terms and conditions that it believes are
at arm's-length and commercially reasonable;
(f) none of the undersigned was or will be insolvent at the time the
Transactions were or will be consummated, and none of the undersigned was or
will be rendered insolvent or will be insolvent as a result thereof. None of the
undersigned has engaged or will engage in any business or transaction with the
Company after which the property remaining with such Members was or will be
unreasonably small in relation to its business. At the time of any transfer to
or for the benefit of the Company, none of the undersigned intended or will
intend to incur, and did incur or will incur, debts that were beyond the ability
of such undersigned to pay as they mature;
(g) none of the undersigned is a debtor in a proceeding under the
federal bankruptcy laws;
(h) when any of the undersigned effected or will effect any conveyance,
transfer or obligation to or for the benefit of the Company in respect of the
Transactions, such undersigned received or will receive fair consideration and
reasonably equivalent value in exchange for such conveyance, transfer or
obligation. The Company received or will receive fair consideration and
reasonably equivalent value in exchange for any conveyance, transfer or
obligation to or for the benefit of any of the undersigned in respect of the
Transactions;
(i) none of the undersigned is controlled by, controls, or is under
common control with, the Independent Manager;
(j) there is no agreement between the undersigned and the Company that
supplements or otherwise modifies the agreements of the undersigned and the
Company; and
(k) each of the parties to this Agreement agrees (i) that it will not
take any action in violation of Paragraph 6.1.6 of the Limited Liability Company
Agreement of GNHT 1, LLC; (ii) that it will not allow, permit or encourage any
of its Affiliates to take any action in violation of Paragraph 6.1.6 of the
EXH B-2
<PAGE> 27
Limited Liability Company Agreement of GNHT 1, LLC; and (iii) that it will not
encourage any person (x) to file an involuntary petition for relief under any
chapter of the federal bankruptcy laws against the Company or (y) to take any
other similar action against the Company under any other bankruptcy, insolvency
or receivership law, whether now in existence or hereafter in effect.
The undersigned agrees to deliver to MLPF&S the agreement of any
transferee of any Reference Security to be bound by the provisions of this
agreement.
_______________________________________
Ronald W. Burkle
THE YUCAIPA COMPANIES
By ___________________________________
Name:
Title:
YUCAIPA ARIZONA PARTNERS, L.P.
By ___________________________________
Name:
Title:
YUCAIPA SMITTY'S PARTNERS, L.P.
By ___________________________________
Name:
Title:
YUCAIPA SMITTY'S PARTNERS II, L.P.
By ___________________________________
Name:
Title:
YUCAIPA SSV PARTNERS, L.P.
By ___________________________________
Name:
Title:
EXH B-3
<PAGE> 28
F4L EQUITY PARTNERS, L.P.
By ___________________________________
Name:
Title:
FFL PARTNERS
By ___________________________________
Name:
Title:
GNHT 1, LLC
By ___________________________________
Name:
Title:
GNHT 2, LLC
By ___________________________________
Name:
Title:
GNHT 3, LLC
By ___________________________________
Name:
Title:
GNHT 4, LLC
By ___________________________________
Name:
Title:
GNHT 5, LLC
By ___________________________________
Name:
Title:
EXH B-4
<PAGE> 1
EXHIBIT 99.2
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"). BY ITS ACCEPTANCE OF THIS SECURITY, THE PURCHASER WILL
BE DEEMED (A) TO HAVE REPRESENTED TO GNHT 1, LLC (THE "COMPANY") THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A PROMULGATED UNDER THE
1933 ACT) AND IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT (AND NOT FOR THE
ACCOUNT OF OTHERS) FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, THE PUBLIC DISTRIBUTION HEREOF, (B) TO HAVE AGREED THAT ANY
RESALE OR OTHER TRANSFER OF THIS SECURITY WILL BE MADE ONLY IN A TRANSACTION
WHICH WOULD NOT RESULT IN A VIOLATION OF THE REQUIREMENTS OF THE 1933 ACT AND
(C) TO HAVE AGREED THAT THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF 1,071,900 PRIDES (AS
DEFINED BELOW). ANY RESALE OR OTHER TRANSFER OF THIS SECURITY WILL NOT BE
RECOGNIZED BY THE COMPANY FOR ANY PURPOSE, INCLUDING PAYMENT HEREUNDER, UNLESS
SUCH RESALE OR OTHER TRANSFER IS REGISTERED BY THE COMPANY IN ITS CORPORATE
RECORDS.
The Debt Instrument (as defined below) represented by this Certificate was
issued with Original Issue Discount ("OID") as defined in the United States
("US") Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, for
US Federal income tax purposes, the following terms apply to this Certificate:
<TABLE>
<S> <C>
Issue Price: $45.8153 per PRIDES
OID: $9.6847 per PRIDES
Issue Date: January 6, 1999
Yield to Maturity: 6.27 %
(compounded semiannually)
</TABLE>
No. 0001 1,071,900 PRIDES
GNHT 1, LLC
Provisionally Redeemable Income Debt Exchangeable for StockSM
PRIDESSM Due February 28, 2002
Zero Coupon
(Payable with Shares of Common Stock, par value
$.01 per share, of Fred Meyer, Inc.)
Principal Amount Per PRIDES: $55.50
This PRIDES Certificate evidences a duly authorized issue of secured
and unsubordinated indebtedness of GNHT 1, LLC, a Delaware limited liability
company (hereinafter called the "Company", which term includes any successor
corporation pursuant to the terms hereof),
- ----------
SM Service Mark of Merrill Lynch & Co., Inc.
<PAGE> 2
designated as Provisionally Redeemable Income Debt Exchangeable for Stock,
PRIDES Due February 28, 2002 (each, a "PRIDES").
The Company, for value received, hereby promises to pay and discharge
each PRIDES evidenced hereby on February 28, 2002 (the "Maturity Date") by
delivering to Merrill Lynch, Pierce, Fenner & Smith Incorporated or registered
assigns (the "Holder"), a percentage of the amount or number of each type of
Reference Security and other property then constituting part of the Reference
Property (as defined below) determined in accordance with the provisions set
forth below.
The PRIDES evidenced hereby shall not bear interest except as specified
below. OID shall accrue as specified herein. If the Maturity Consideration or
the Acceleration Amount or the Collateral Redemption Amount or the Major
Transaction Redemption Amount or the Redemption Amount or the Optional
Redemption Amount (as such terms are defined herein), or any portion thereof, is
not paid or delivered when due, then in each case the overdue amount shall bear
interest at the rate of 3-month U.S. dollar LIBOR as such rate appears on the
Reuters Money Rates Service (or such other service agreed upon by the Company
and the Holder) as of 11:00 a.m. London time on the second Business Day prior to
the commencement of each 90-day period plus 105 basis points per annum,
compounded every 90 days, which interest (to the fullest extent payment of such
interest shall be legally enforceable under applicable law) shall accrue from
and including the date such overdue amount was due to, but excluding, the date
payment of such amount, including interest thereon, has been made or duly
provided for. All such interest shall be payable on demand.
On the Maturity Date, the Company shall pay and discharge each PRIDES
evidenced hereby by delivering to the Holder: (a) if the Reference Property
Value (as defined below) is greater than or equal to $66.60 (the "Threshold
Appreciation Price"), 83[ ]% of the amount or number of each type of
Reference Security and other property constituting part of the Reference
Property, allocated as proportionately as practicable, (b) if the Reference
Property Value is less than the Threshold Appreciation Price but is greater than
$55.50 (the "Initial Price"), a percentage of the amount or number of each type
of Reference Security and other property constituting part of the Reference
Property, allocated as proportionately as practicable, so that the aggregate
Reference Property Value thereof is equal to the Initial Price and (c) if the
Reference Property Value is less than or equal to the Initial Price, 100% of the
amount or number of each type of Reference Security and other property
constituting part of the Reference Property. Notwithstanding the foregoing, the
Company may, at its option, which, if exercised, must be exercised with respect
to all of the PRIDES, upon written notice to the Holder given at least 25
Trading Days preceding the Maturity Date, in lieu of delivering the applicable
percentage of each type of Reference Security and other property constituting
part of the Reference Property on the Maturity Date, either (i) deliver to the
Holder cash in an amount (calculated to the nearest 1/100th of a dollar per
PRIDES or, if there is not a nearest 1/100th of a dollar, then to the next
higher 1/100th of a dollar) equal to the sum of (x) for any portion of the
Reference Property consisting of cash that is otherwise deliverable on the
Maturity Date, the amount of such cash, without interest thereon, (y) for any
portion of the Reference Property consisting of property other than cash or
Reference Securities that is otherwise deliverable on the Maturity Date, the
fair market value of such property (as determined by a nationally recognized
independent investment banking firm retained for this purpose by the Company) as
of the third Trading Day preceding the Maturity Date, and (z) for any portion of
the Reference Property consisting of a Reference Security (including Fred Meyer
Common Stock (as defined below)) that is otherwise deliverable on the Maturity
Date, an amount equal to the average Closing Price per unit of such Reference
Security on the 20 Trading Days immediately prior to, but not including, the
second
2
<PAGE> 3
Trading Day preceding the Maturity Date multiplied by the number of units of
such Reference Security constituting a part of the Reference Property, or (ii)
request Merrill Lynch, Pierce, Fenner & Smith Incorporated, as "Calculation
Agent," which term includes any successor thereto ("Merrill Lynch") to effect
sales, on behalf of the Company, of each Reference Security otherwise
deliverable to the Holder pursuant hereto (in accordance with the provisions of
Rules 144 and 145 promulgated under the Securities Act of 1933, if applicable)
on the 20 Trading Days immediately prior to, but not including, the second
Trading Day preceding the Maturity Date, allocated as proportionately as
practicable, and deliver the net proceeds of such sales, in lieu of the amount
of cash provided in clause (i) (z) of this sentence, together with the amount of
cash provided in clause (i)(x) and (y) of this sentence. The Company
acknowledges that in connection with any such sales, the Company will pay to
Merrill Lynch a reasonable and customary commission per unit of Reference
Security sold as agreed upon by the Company and Merrill Lynch. Such number or
amount of each type of Reference Security and other property constituting part
of the Reference Property (or, pursuant to the Company's option, the amount of
cash in lieu thereof) deliverable upon payment and discharge thereof on the
Maturity Date is hereinafter referred to as the "Maturity Consideration." The
Company acknowledges that any such Maturity Consideration shall be free of any
restrictive legend or other transfer restriction or any lien, claim, charge or
other encumbrance in favor of any third party and may be freely resold by the
holder of the PRIDES without registration under the 1933 Act.
All payments made hereunder shall, to the extent required by applicable
law, be subject to withholding or deduction for United States Federal, local and
foreign withholding or other taxes imposed upon such payments.
ADJUSTMENT OF REFERENCE PROPERTY
(a) Adjustment for Subdivisions, Splits, Combinations or
Reclassifications. If an issuer of a Reference Security shall:
(i) subdivide or split the outstanding units of such
Reference Security into a greater number of units;
(ii) combine the outstanding units of such Reference
Security into a smaller number of units; or
(iii) issue by reclassification of units of such Reference
Security any units of another security of such issuer;
then, in any such event, the Reference Property shall be adjusted to include the
number of units of such Reference Security and/or other security of such issuer
which a holder of units of such Reference Security would have owned or been
entitled to receive immediately following any event described above had such
holder held, immediately prior to such event, the number of units of such
Reference Security constituting part of the Reference Property immediately prior
to such event. Each such adjustment shall become effective immediately after the
effective date for such subdivision, split, combination or reclassification, as
the case may be. Each such adjustment shall be made successively.
(b) Adjustment for Issuance of Certain Rights or Warrants. If an issuer
of a Reference Security shall issue rights or warrants to all holders of such
Reference Security entitling them, for a
3
<PAGE> 4
period expiring prior to the fifteenth calendar day following the Maturity Date,
to subscribe for or purchase any of its securities or other property (other than
rights to purchase units of such Reference Security pursuant to a plan for the
reinvestment of dividends or interest), then in each such case, the Reference
Property shall be adjusted to include an amount in cash equal to the fair market
value (determined as described below), as of the fifth Business Day following
the date on which such rights or warrants are received by securityholders
entitled thereto (the "Receipt Date"), of each such right or warrant multiplied
by the product of (A) the number of such rights or warrants issued for each unit
of such Reference Security and (B) the number of units of such Reference
Security constituting part of the Reference Property on the date of issuance of
such rights or warrants, immediately prior to such issuance, without interest
thereon. For purposes of this paragraph (b), the fair market value of each such
right or warrant shall be determined by the Merrill Lynch and shall be the
quotient of (x) the highest net bid, as of approximately 10:00 A.M., New York
City time, on the fifth Business Day following the Receipt Date for settlement
three Business Days later, by a recognized securities dealer in The City of New
York selected by or on behalf of Merrill Lynch (from three (or such fewer number
of dealers as may be providing such bids) such recognized dealers selected by or
on behalf of Merrill Lynch), for the purchase by such quoting dealer of the
number of rights or warrants (the "Aggregate Number") that a holder of such
Reference Security would receive if such holder held, as of the record date for
determination of stockholders entitled to receive such rights or warrants, a
number of units of such Reference Security equal to the product of (1) the
aggregate number of PRIDES outstanding as of such record date and (2) the number
of units of such Reference Security constituting part of the Reference Property,
divided by (y) the Aggregate Number. Each such adjustment shall become effective
on the fifth Business Day following the Receipt Date of such rights or warrants.
If for any reason the Company is unable to obtain the required bid on the fifth
Business Day following the Receipt Date, it shall attempt to obtain such bid at
successive intervals of three months thereafter and on the third Trading Day
prior to the Maturity Date until it is able to obtain the required bid. From the
date of issuance of such rights or warrants until the required bid is obtained,
the Reference Property shall include the number of such rights or warrants
issued for each unit of such Reference Security multiplied by the number of
units of such Reference Security constituting part of the Reference Property on
the date of issuance of such rights or warrants, immediately prior to such
issuance, and such rights or warrants constituting part of the Reference
Property shall be deemed for purposes of the definition of Reference Property
Value to have a fair market value of zero.
(c) Adjustment for Distributions. If an issuer of a Reference Security
shall pay any stock or cash dividend or make any distribution to all holders of
such Reference Security of cash, securities or other property (excluding any
dividend or distribution described in paragraph (a) or (b) above) or shall issue
to all holders of such Reference Security rights or warrants to subscribe for or
purchase any of its securities or other property (excluding any rights or
warrants referred to in paragraph (b) above) (any of the foregoing being
referred to herein as "Distributed Assets"), then in each such case, the
Reference Property shall be adjusted to include, from and after such dividend,
distribution or issuance, (x) in respect of that portion, if any, of the
Distributed Assets consisting of cash, the amount of such Distributed Assets
consisting of cash received for each unit of such Reference Security multiplied
by the number of units of such Reference Security constituting part of the
Reference Property on the date of such dividend, distribution or issuance,
immediately prior to such dividend, distribution or issuance, together with
interest thereon from the date of receipt of such cash, compounded every 90
days, at a rate of 3-month U.S. dollar LIBOR as such rate appears on the Reuters
Money Rates Service (or such other service agreed upon by the Company and the
Holder) as of
4
<PAGE> 5
11:00 a.m. London time on the second Business Day prior to the commencement of
each 90-day period, plus (y) in respect of that portion, if any, of the
Distributed Assets which are other than cash, the number or amount of each type
of Distributed Assets other than cash received with respect to each unit of such
Reference Security multiplied by the number of units of such Reference Security
constituting part of the Reference Property on the date of such dividend,
distribution or issuance, immediately prior to such dividend, distribution or
issuance.
(d) Adjustment for Consolidation, Merger or Other Reorganization Event.
Subject to the provisions herein captioned "Non-stock Reference Property Event"
and "Major Transaction Event," in the event of (i) any consolidation or merger
of an issuer of a Reference Security with or into another entity (other than a
merger or consolidation in which such issuer is the continuing corporation and
in which the Reference Security outstanding immediately prior to the merger or
consolidation is not exchanged for cash, securities or other property of such
issuer or another entity), (ii) any statutory exchange of securities of an
issuer of a Reference Security with another entity (other than in connection
with a merger or acquisition) or (iii) any liquidation, dissolution, winding up
or bankruptcy of an issuer of a Reference Security (excluding any distribution
in such event referred to in paragraph (c) above) (any such event described in
clause (i), (ii) or (iii), a "Reorganization Event"), the Reference Property
shall be adjusted to include, from and after the effective date for such
Reorganization Event, in lieu of the number of units of such Reference Security
constituting part of the Reference Property immediately prior to the effective
date for such Reorganization Event, the amount or number of any cash, securities
and/or other property owned or received in such Reorganization Event with
respect to each unit of such Reference Security multiplied by the number of
units of such Reference Security constituting part of the Reference Property
immediately prior to the effective date for such Reorganization Event.
NOTICE OF ADJUSTMENTS AND CERTAIN OTHER EVENTS
(a) In case at any time while any of the PRIDES are outstanding the
Company receives notice that:
(i) an issuer of a Reference Security shall declare a stock
or cash dividend (or any other distribution) on or in respect of such
Reference Security to which paragraph (c) under the heading "Adjustment
of Reference Property" above shall apply;
(ii) an issuer of a Reference Security shall authorize the
issuance to all holders of such Reference Security of rights or
warrants to subscribe for or purchase units of such Reference Security
or of any other subscription rights or warrants;
(iii) there shall occur any conversion or reclassification
of any Reference Security (other than a subdivision or combination of
outstanding units of such Reference Security) or any consolidation,
merger or reorganization to which an issuer of a Reference Security is
a party and for which approval of any unitholders of such issuer is
required, or the sale or transfer of all or substantially all of the
assets of an issuer of a Reference Security; or
(iv) there shall occur the voluntary or involuntary
dissolution, liquidation, winding up or bankruptcy of an issuer of a
Reference Security.
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then the Company shall promptly cause to be delivered to the Calculation Agent
(as defined below) and shall promptly cause to be mailed to the Holders of
PRIDES at their last addresses as they shall appear in the Security Register of
the Company, at least 10 days before the date hereinafter specified (or the
earlier of the dates hereinafter specified, in the event that more than one is
specified), a notice stating (x) the date, if known by the Company, on which a
record is to be taken for the purpose of such dividend, distribution or grant of
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of such Reference Security of record to be entitled to such dividend,
distribution or grant of rights or warrants are to be determined, or (y) the
date, if known by the Company, on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation, winding up or bankruptcy is
expected to become effective.
(b) Within 10 Business Days following the occurrence of an event that
requires an adjustment to the Reference Property hereunder (or if the Company is
not aware of such occurrence, as soon as practicable after becoming so aware),
the Company shall provide written notice to the Calculation Agent and to the
Holders of the PRIDES of the occurrence of such event and a statement setting
forth in reasonable detail the amount or number of each type of Reference
Security and other property then constituting part of the Reference Property.
All determinations with respect to the Reference Property, except as
otherwise provided herein, will be made by the Calculation Agent and, absent a
determination by the Calculation Agent of a manifest error, will be conclusive
for all purposes and binding on the Company and Holders of the PRIDES.
The Company hereby warrants that upon payment and discharge of a PRIDES
on the Maturity Date pursuant to this PRIDES Certificate, the Holder shall
receive all rights held by the Company in the Maturity Consideration with which
such PRIDES is at such time payable and dischargeable pursuant to this PRIDES
Certificate, free and clear of any and all liens, claims, charges and
encumbrances. The sale, transfer and delivery of the Maturity Consideration by
the Company as contemplated by this PRIDES Certificate is not, and at the time
of delivery of such Maturity Consideration will not be, subject to any right of
first refusal or similar rights of any Person pursuant to any contract to which
the Company or any Affiliate of the Company is a party or by which any of them
is bound. The delivery of the Maturity Consideration upon the maturity of the
PRIDES, in accordance with the terms hereunder, and the unrestricted resale of
the Maturity Consideration by the holder of the PRIDES, will be exempt from the
registration requirements of the 1933 Act. Upon any transfer of Maturity
Consideration to the holder of the PRIDES at maturity of the PRIDES, such
Maturity Consideration shall be free of any restrictive legend or other transfer
restriction or any lien, claim, charge or other encumbrance in favor of any
third party and may be freely resold by the holder of the PRIDES without
registration under the 1933 Act.
On or prior to the twenty-fifth Trading Day preceding the Maturity
Date, the Company will notify the Holder as to whether the PRIDES will be paid
and discharged on the Maturity Date by delivery of (i) the applicable percentage
of each type of Reference Security and other property constituting part of the
Reference Property or (ii) cash, and if cash is to be delivered, whether the
Company has elected to request Merrill Lynch to effect sales of Reference
Securities, as agent on its behalf, as provided above.
Delivery of the Maturity Consideration in payment of the PRIDES
evidenced hereby on the Maturity Date will be made, upon surrender of this
PRIDES Certificate to the Company at its offices
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at 10000 Santa Monica Boulevard, Fourth Floor, Los Angeles CA 90067 (and, if the
Company elects to deliver cash in lieu of the Reference Property on the Maturity
Date, the amount of cash payable on the Maturity Date and will be made in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts).
No fractional units or script representing fractional units of any
Reference Security shall be delivered on the Maturity Date. The number of full
units of any Reference Security that shall be delivered upon payment and
discharge of the Holder's PRIDES shall be computed on the basis of the aggregate
number of PRIDES held by the Holder on the Maturity Date. In lieu of any
fractional unit of any Reference Security that would otherwise be deliverable
upon payment and discharge of any PRIDES, the Company shall make a cash payment
in respect of such fractional share in an amount equal to the value of such
fractional share at the Maturity Price.
The Company will pay any and all documentary, stamp, transfer or
similar taxes that may be payable in respect of the transfer and delivery of the
Maturity Consideration pursuant hereto; provided, however, that the Company
shall not be required to pay any such tax which may be payable in respect of any
transfer involved in the delivery of Maturity Consideration in a name other than
that in which the PRIDES so paid and discharged were registered, and no such
transfer or delivery shall be made unless and until the person requesting such
transfer has paid to the Company the amount of any such tax, or has established,
to the satisfaction of the Company, that such tax has been paid.
By purchasing the PRIDES evidenced by this PRIDES Certificate, the
Holder will be deemed to have agreed, and the Company hereby agrees:
(a) to treat, for all United States Federal, state and local tax
purposes, each PRIDES evidenced by this PRIDES Certificate as a unit (a "Unit")
consisting of (i) a zero coupon debt instrument (the "Debt Instrument") with a
fixed principal amount unconditionally payable on the Maturity Date equal to the
Principal Amount of the PRIDES issued with original issue discount and (ii) a
forward purchase contract (the "Forward Contract") pursuant to which the Holder
is irrevocably committed to use the principal payment due at maturity on the
Debt Instrument to purchase on the Maturity Date the Reference Property which
the Company is obligated to deliver at that time (subject to the Company's right
to deliver cash with an equal value in lieu of the Reference Property), which
treatment will require, among other things, each Holder that is subject to
United States Federal income tax in connection with its ownership of the PRIDES
to include currently in income amounts in respect of the accrued original issue
discount with respect to the PRIDES in accordance with the original issue
discount provisions of the Code.
(b) if the Holder purchased the PRIDES evidenced hereby in connection
with the original issuance thereof, (i) to assign $45.8153 (i.e., 98.57%) of the
initial purchase price of a PRIDES (i.e., the Principal Amount of a PRIDES) to
the Debt Instrument component and to assign $.6660 (i.e., 1.43%) of the initial
purchase price of a PRIDES to the Forward Contract component and (ii) to treat
such acquisition of the PRIDES by the Holder as a purchase of the Debt
Instrument by the Holder for $45.8153 and the making of an initial payment by
the Holder with respect to the Forward Contract of $.6660;
(c) if the Holder purchased the PRIDES evidenced hereby subsequent to
the original issuance thereof, the purchase price paid (or received) by the
Holder will be allocated by the Holder
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<PAGE> 8
between the Debt Instrument and the Forward Contract based upon their relative
fair market values (as determined on the date of acquisition or disposition);
and
(d) to file all United States Federal, state and local income,
franchise and estate tax returns consistent with the treatment of each PRIDES as
a Unit consisting of the Debt Instrument and the Forward Contract and the
allocation described in paragraph (b) or (c) above, as the case may be (in the
absence of any change or clarification in applicable law, by regulation or
otherwise, requiring a different characterization or treatment of the PRIDES).
The PRIDES are not subject to any sinking fund or other mandatory
redemption provisions. The PRIDES are not payable at the option of the Holder
prior to the Maturity Date.
Notwithstanding any provision contained herein or in any instrument
referring to this PRIDES Certificate, the total liability of the Company for
payments in the nature of interest hereunder shall not exceed interest at the
maximum rate permitted by the laws of the State of New York, if any, and any
amount paid as interest in excess of said maximum rate shall not be deemed to be
a payment of interest and shall be deemed to be a refund to the Holder. In
determining whether or not the rate of interest hereunder exceeds the maximum
rate permitted by the laws of the State of New York, the Company and the Holder
agree and intend that all sums paid hereunder which are deemed interest for the
purpose of determining usury shall be prorated, allocated or spread in equal
parts over the longest period of time permitted under the applicable laws of the
State of New York. Furthermore, the Company hereby covenants for the benefit of
the Holder hereof, to the extent permitted by applicable law, not to claim
voluntarily the benefits of any laws concerning usurious rates of interest
against the Holder.
COVENANTS
(a) Affirmative Covenants. While any of the PRIDES are outstanding, the
Company covenants and agrees that it will, subject to the provisions below under
"Assignment or Transfer to a Qualifying Entity":
(i) comply in all material respects with all applicable laws,
rules, regulations and orders, such compliance to include, without
limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon its
property, including the Collateral (as defined in the Security and
Pledge Agreement dated as of January 5, 1999 among the Company, the
initial Holder and Merrill Lynch, as Collateral Agent (the "Security
and Pledge Agreement")), except to the extent contested in good faith.
(ii) furnish to the Holder as soon as possible and in any
event within twenty days after any manager of the Company shall become
aware of the occurrence of each failure by the Company to comply with
or perform any agreement or obligation contained in this PRIDES
Certificate or Sections 4 or 7 of the Security and Pledge Agreement
continuing on the date of such statement, a statement of a manager of
the Company describing such failure and setting forth details of such
failure and the action which the Company has taken and proposes to take
with respect thereto.
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<PAGE> 9
(iii) preserve and maintain its existence, rights (charter and
statutory), powers, franchises and qualifications, and limit its
activities to those specifically authorized in its limited liability
company agreement.
(iv) at any reasonable time and from time to time, upon
reasonable notice, prior to the occurrence of an Event of Default under
the Security and Pledge Agreement, and upon any notice after the
occurrence of any such Event of Default until delivery of the
Collateral to the Holder to the extent required by the Security and
Pledge Agreement, permit the Holder or representatives thereof to
examine and make copies of and abstracts from the records and books of
account of, and visit the offices of, the Company, and to discuss the
affairs, finances and accounts of the Company with any of its managers.
(v) keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the
assets and business of the Company, including the Collateral, in
accordance with appropriate accounting principles consistently applied.
(vi) maintain arms'-length relationships with each of its
members.
(vii) within 90 days after each December 31, commencing
December 31, 2000, deliver to the Holder a balance sheet of the Company
as at the end of such year signed by the Operating Manager, together
with a certificate of the Operating Manager and the Independent Manager
certifying that the Company is, and during the prior year has been, in
full compliance with the terms and provisions of this PRIDES
Certificate (including the covenants contained herein) and of the
Security and Pledge Agreement.
(b) Negative Covenants. While any of the PRIDES are outstanding, the
Company covenants and agrees that it will not, subject to the provisions below
under "Assignment or Transfer to a Qualifying Entity":
(i) except for Permitted Activities and the transactions
otherwise contemplated by this PRIDES Certificate and the Security and
Pledge Agreement, sell, assign, transfer, exchange or otherwise dispose
of, or grant any option with respect to, or create, incur or suffer to
exist any lien, security interest or other charge or encumbrance, or
any other type of preferential arrangement, upon or with respect to any
of its properties, including the Collateral, whether now owned or
hereafter acquired, or assign any right to receive income, in each case
to secure or to provide for the payment of any Debt of any Person.
"Permitted Activities" shall mean activities of the Company directly
related to: (i) the ownership of the Collateral, (ii) the receipt of
the proceeds of the sale of the PRIDES, (iii) the receipt pursuant to
Section 5 of the Security and Pledge Agreement of distributions in
respect of the Collateral; (iv) the investment and reinvestment of
amounts received pursuant to (ii) and (iii) above or amounts received
from any such investment or reinvestment; (v) the dividend payment or
other distribution of amounts received pursuant to (ii), (iii) and (iv)
or any of its properties other than the Collateral; (vi) the payment of
its expenses related to the foregoing and the conduct of its business
in accordance with the provisions of its charter documents; and (vii)
such activities as are permitted and lawful that are necessarily
incident to or connected with the foregoing or necessary or convenient
to accomplish the foregoing and which are consistent with the
limitations set forth in its charter
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<PAGE> 10
documents. In connection with the Company's purposes as set forth
herein, the Company shall comply with the provisions of Article 10 of
its Limited Liability Company Agreement. "Debt" means, without
duplication, (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments,
(iii) obligations to pay the deferred purchase price of property or
services, (iv) obligations as lessee under leases which shall have been
or should be, in accordance with generally accepted accounting
principles, recorded as capital leases, and (v) obligations under
direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness
or obligations of others of the kinds referred to in clauses (i)
through (iv) above.
(ii) create or suffer to exist any Debt of the Company, other
than the Debt created under the PRIDES and the Security and Pledge
Agreement.
(iii) except for Permitted Activities and the transactions
otherwise contemplated by the PRIDES and the Security and Pledge
Agreement, declare or make any distribution of assets, properties,
cash, rights, obligations or securities on account of any member's
interest in the Company, or purchase, redeem or otherwise acquire for
value any member's interest in the Company or any warrants, rights or
options to acquire any such member's interest, now or hereafter
outstanding.
(iv) except for the transactions contemplated by the PRIDES
and the Security and Pledge Agreement, effect any dissolution or
liquidation, merge or consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets,
including the Collateral (whether now owned or hereafter acquired) to,
or acquire all or substantially all of the assets of, any Person.
(v) except for Permitted Activities and the transactions
otherwise contemplated by the PRIDES and the Security and Pledge
Agreement, own any property, incur or suffer to exist any liabilities,
make any investment or conduct any business other than the ownership of
the Collateral, the PRIDES and the Security and Pledge Agreement, and
the incurrence of the obligations pursuant to the PRIDES and the
Security and Pledge Agreement.
(c) Separate Existence. The Company acknowledges that Holder is
acquiring this PRIDES Certificate in reliance upon the Company's identity as a
legal entity that is separate from its members and the Affiliates of its
members. Therefore, from and after the date of execution and delivery of this
PRIDES Certificate, the Company covenants and agrees to take all reasonable
steps, including, without limitation, all steps that the Holder may from time to
time reasonably request, to maintain the Company's identity as a separate legal
entity and to make it manifest to third parties that the Company is an entity
with assets and liabilities distinct from those of its members and Affiliates of
its members and not just a division of its members or any of them. Without
limiting the generality of the foregoing and in addition to the other covenants
set forth herein, the Company covenants and agrees to:
(i) conduct its own business in its own name and, to the
extent the Company has any full-time employees, require that all
full-time employees of the Company identify
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<PAGE> 11
themselves as such and not as employees of any Affiliate (including,
without limitation, by means of providing appropriate managers and
employees with business or identification cards identifying such
managers and employees as the Company's managers and employees);
(ii) compensate all managers, employees, consultants and
agents directly, from the Company's bank accounts, for services
provided to the Company by such managers, employees, consultants and
agents, except to the extent that any manager, employee, consultant or
agent of the Company is also a manager or an employee, consultant or
agent of any Affiliate(s) and the compensation of such manager,
employee, consultant or agent is allocated between the Company and such
Affiliate(s) on a basis which reflects the services rendered to the
Company and such Affiliate(s);
(iii) have separate stationery, invoices and checks in its
own name;
(iv) conduct all transactions with each Affiliate strictly on
an arm's-length basis, allocate all overhead expenses (including,
without limitation, shared office space and telephone and other utility
charges) for items shared between the Company and such Affiliate on the
basis of actual use to the extent practicable and, to the extent such
allocation is not practicable, on a basis reasonably related to actual
use;
(v) observe all formalities as a distinct entity, and ensure
that all appropriate actions are duly authorized by its managers;
without limiting the generality of the foregoing, the Company's Limited
Liability Company Agreement shall at all times provide that action to
file a voluntary petition under the Federal Bankruptcy Code or consent
to the entry of an order for relief in an involuntary case under title
11 of the United States Code (the "Bankruptcy Code") as now or
hereafter in effect may be authorized only by unanimous vote of its
managers;
(vi) maintain the Company's books and records separate from
those of each Affiliate and otherwise include therein its own assets
rather than assets of any Affiliate;
(vii) prepare its financial statements separately from those
of each Affiliate and insure that any consolidated statements of any
Affiliate that include the Company have notes clearly indicating that
the Company is a separate entity and that the Collateral will be
available first and foremost to satisfy the claims of the Holder
pursuant to this PRIDES Certificate;
(viii) except as herein specifically otherwise provided, not
commingle funds or other assets, including the Collateral, of the
Company with those of any Affiliate and not maintain bank accounts or
other depository accounts to which any Affiliate is an account party,
into which any Affiliate makes deposits or from which any Affiliate has
the power to make withdrawals;
(ix) not permit any Affiliate to pay any of the Company's
operating expenses (except pursuant to allocation arrangements that
comply with the requirements of this clause (c));
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(x) except for the master or blanket policies covering the
Company and any Affiliate(s) or the property of the Company and such
Affiliate(s), the costs of which are allocated between the Company and
such Affiliate(s) on a reasonable basis, not permit the Company to be
named as an insured on the insurance policy covering the property of
any Affiliate or enter into an agreement with the holder of such policy
whereby in the event of a loss in connection with such property,
proceeds are paid to the Company; and
(xi) have at least one manager who is an Independent Manager
conforming to the Independence Criteria (as such terms are defined in
the Company's charter documents).
(xii) not hold out its credit or assets as being available to
satisfy the obligations of others;
(xiii) correct any known misunderstanding regarding its
separate identity;
(xiv) maintain adequate capital in light of its contemplated
business purpose, transactions and liabilities;
(xv) cause its Managers to meet at least annually or act
pursuant to written consent and keep minutes of such actions and
observe all other Delaware limited liability company formalities;
(xvi) not acquire any obligations or securities of any of
its members;
(xvii) not hold itself out, or permit to be held out, as
having agreed to pay or be liable for the debts of any of its members;
and
(xviii) cause the Independent Manager to act at all times with
respect to the Company in the best interests of the Company.
EVENTS OF DEFAULT
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(1) failure to deliver or pay the Maturity Consideration
on the Maturity Date; or
(2) failure to perform in any material respect any other
covenant of the Company contained herein and the continuance of any
such failure for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Holders of not less
than 50% in principal amount of PRIDES outstanding, a written notice
specifying such failure and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; provided that if a
Notice of Default is delivered that would otherwise result in the
occurrence of an Event of Default prior to the release of earnings
information which include at least 30 days of results of the combined
operations of Fred Meyer and The Kroger Co. ("Kroger"), the Company
will have 90 days to cure such failure rather than 60 days as
aforesaid; or
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(3) the occurrence of an Event of Default under the Security
and Pledge Agreement and notice of same given by registered or
certified mail, to the Company by the Holders of not less than 50% in
principal amount of PRIDES outstanding and stating that such notice is
a "Notice of Default" hereunder; or
(4) an involuntary case or other proceeding shall be commenced
against the Company seeking winding-up, liquidation, reorganization or
other similar relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and, such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or the
Company's assets shall become subject to the jurisdiction of a
bankruptcy court; or an order for relief shall be entered against the
Company under the Bankruptcy Code as now or hereafter in effect; or
(5) the Company shall commence a voluntary case under the
Bankruptcy Code or any other applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall consent to the entry
of an order for relief in an involuntary case under any such law, or
shall consent to or seek the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or
similar official) of the Company or for any substantial part of its
property, or shall fail generally to pay its debts as they become due
or shall take any corporate action in furtherance of any of the
foregoing.
If an Event of Default (other than an Event of Default specified in clause (4)
or (5) of the immediately preceding paragraph) occurs and is continuing, then
and in every such case, by a notice in writing to the Company, or if an Event of
Default specified in clause (4) or (5) of the immediately preceding paragraph
occurs, automatically, and without any declaration or other action on the part
of the Holder, (i) an Acceleration Date shall be deemed to have occurred
simultaneously with the occurrence of such Event of Default, (ii) the Company's
option to deliver cash in lieu of delivering the Reference Property as provided
herein shall terminate immediately and (iii) there shall become immediately
deliverable and payable by the Company a number or amount of each type of
Reference Security and other property constituting part of the Reference
Property, allocated as proportionately as practicable, having an aggregate value
equal to the Acceleration Value (the "Acceleration Amount").
The "Acceleration Value" means the sum of (a) the Principal Value and
(b) the Option Value.
As promptly as reasonably practicable after receipt of the information
on which the Acceleration Value is based (or, as the case may be, after failure
to receive any quotations within the prescribed time period) the Calculation
Agent shall deliver to the Company a notice (the "Acceleration Amount Notice")
specifying the Acceleration Amount required to be delivered to the Holders by
the Company. Holders will not be entitled to recover any amounts not expressly
provided for herein as a consequence of an Event of Default.
At any time after such a declaration of acceleration has been made or
an Event of Default specified in clause (4) or (5) of the third preceding
paragraph has occurred, and before a judgment or decree for payment of the money
due has been obtained by the Holder as hereinafter provided, the
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<PAGE> 14
Holders of not less than 50% in principal amount of PRIDES then outstanding, by
written notice to the Company, may rescind and annul such declaration or Event
of Default and its consequences if all Events of Default with respect to the
PRIDES evidenced hereby, other than the non-payment of the amount equal to the
Acceleration Value of all PRIDES evidenced hereby due solely by reason of such
declaration of acceleration or Event of Default specified in clause (4) or (5)
of the third preceding paragraph, have been cured or waived as provided below.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
The Holder may waive any past default hereunder and its consequences.
ASSIGNMENT OR TRANSFER TO A QUALIFYING ENTITY
The Company may not consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into any other corporation,
except as provided below. Notwithstanding anything to the contrary stated herein
or in the Purchase Agreement and the Security and Pledge Agreement (the
"Documents"), and so long as (A) no Event of Default under the PRIDES or the
Security and Pledge Agreement has occurred and currently exists and (B) there
has not occurred any event which with the passage of time or the giving of
notice would constitute an Event of Default under the PRIDES or the Pledge and
Security Agreement, this PRIDES Certificate and the rights and obligations
represented hereby, together with all rights and obligations under the Documents
and all rights of the Company with respect to the Collateral (as defined in the
Security and Pledge Agreement), may be (i) assigned by the Company to any
Qualifying Entity and/or (ii) transferred by operation of law to any Qualifying
Entity with which the Company merges; provided that, in any such case, (x) the
Qualifying Entity shall be a corporation or limited liability company organized
and existing under the laws of the State of Delaware and such successor
corporation or limited liability company shall expressly assume the due and
punctual payment of any amounts that shall become due and owing under the PRIDES
and the due and punctual performance and observance of all provisions of the
PRIDES, including, without limitation, all affirmative and negative covenants,
and the Security and Pledge Agreement by issuance of a new PRIDES Certificate
and execution of a supplement to the Pledge and Security Agreement and delivery
of such documents to the Collateral Agent and the Holder, (y) the Qualifying
Entity shall not, immediately after such assignment or transfer, as the case may
be, be in default in the performance of any such covenant or condition under the
PRIDES or the Security and Pledge Agreement, and (z) in either case (i) or (ii),
the Company provides an opinion of a nationally recognized law firm to the
effect that such transaction will have no adverse federal income tax
consequences to the Holder and restating the "substantive nonconsolidation" and
corporate legal opinions provided upon original issuance of the PRIDES in order
to confirm that such opinions apply to the Qualifying Entity. Further, the
parties hereto agree that, subject to the execution of definitive documentation
substantially consistent with the term sheet set forth on EXHIBIT B attached
hereto and mutually acceptable to the Company and the Holder, the Company or the
Qualifying Entity may, from time to time, receive and hold additional
contributed assets (the "Permitted Additional Assets") subject to or accompanied
by additional liabilities (the "Permitted Additional Liabilities") (an
"Additional Asset/Liability Transfer"). In the event of any proposed Additional
Asset/Liability Transfer, the parties hereto agree to negotiate in good faith to
reach agreement on the form and content of such definitive documentation.
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"Qualifying Entity" means any of GNHT 1, LLC, GNHT 2, LLC, GNHT 3, LLC,
GNHT 4, LLC and GNHT 5, LLC or any newly-formed limited liability company or
corporation whose activities are limited to Permitted Activities and ownership
of other passive financial investments.
EVENT REDEMPTION
"Tax Event" means that the Company shall have delivered to the Holder a
written confirmation (the "Tax Event Confirmation") to the Holder that the
Company has received an opinion (the "Tax Event Opinion") from a nationally
recognized law firm experienced in such matters (which may be counsel to the
Company or an Affiliate) to the effect that, as a result of (a) any amendment
to, or change in the laws (or any regulations thereunder) of the United States
or any taxing authority thereof or (b) any amendment to, or change (including a
change with a retroactive or delayed effective date) in, an interpretation or
application of such laws or regulations by any legislative body, court, United
States governmental agency or taxing authority or (c) any revenue ruling,
revenue procedure or official written notice or official written announcement
released by the U.S. Department of the Treasury enacted or promulgated or
released, or which interpretation is issued or which action is taken, on or
after the date of original issuance of the PRIDES, there is more than an
insubstantial risk that the issuance of the PRIDES by the Company or any other
transactions contemplated hereby would be treated as an actual, deemed or
constructive sale or exchange of the Reference Property for United States
federal income tax purposes. The Tax Event Confirmation shall (i) confirm the
receipt of the Tax Event Opinion by the Company and (ii) indicate with
specificity the particular event described in clause (a), (b) or (c) of this
paragraph that resulted in the occurrence of a Tax Event.
"Pooling Event" means that on or prior to the filing by Kroger with the
Securities and Exchange Commission (the "Commission") of the Quarterly Report on
Form 10-Q after the first filing of a Quarterly Report on Form 10-Q by Kroger
with the Commission that contains earnings information which includes at least
30 days of results of combined operations of Fred Meyer and Kroger, the Company
shall have delivered to the Holder a letter from a nationally recognized
independent accounting firm experienced in such matters to the effect that, (a)
as a result of (i) any amendment to, or change in the laws (or any rules or
regulations thereunder) of the United States or any authority thereof or therein
(including the Commission and accounting authorities) or (ii) any amendment to,
or change in, an interpretation or application of such laws, rules or
regulations by any legislative body, court, United States governmental agency or
accounting authority, enacted or promulgated, on or after the date of original
issuance of the PRIDES, there is more than an insubstantial risk that the
issuance of the PRIDES (whether taken alone or together with other transactions
in Fred Meyer Common Stock and common stock of Kroger), could cause the
combination of Fred Meyer and Kroger not to be accounted for as a pooling of
interests, and (b) the redemption of the PRIDES (whether taken alone or together
with the unwinding of other transactions) would permit such combination to be
accounted for as a pooling of interests.
"Governmental Order Event" means that the Company shall have delivered
to the Holder evidence of the issuance of a final ruling, decree, order or
injunction by a court or administrative body of competent jurisdiction requiring
the unwinding, reversal or rescission of the issuance of the PRIDES.
The Company shall have the option, exercisable in its sole discretion
at any time from and after the date on which a Tax Event or a Pooling Event or a
Governmental Order Event shall have
15
<PAGE> 16
occurred and be continuing, to accelerate settlement of its obligations
hereunder, in whole but not in part. In the event that the Company elects to
exercise such option, the Company shall deliver to the Holder a notice (the date
of such delivery being the "Event Notice Date") specifying the date of the
accelerated settlement, which date shall be at least 25 Trading Days after the
Event Notice Date (the "Redemption Date"). On the Redemption Date, there shall
become immediately deliverable and payable by the Company an amount in cash
equal to the Redemption Value (the "Redemption Amount").
NON-STOCK REFERENCE PROPERTY EVENT
In the event of any reorganization of an issuer of a Reference Security
or any consolidation, merger or acquisition of an issuer of a Reference Security
with, into or by another entity (each of such events, a "Transaction") that
results in any of the Reference Property being other than a Reference Security
consisting of common stock or American Depositary Receipts listed for trading
purposes on a national or regional securities exchange or major European
securities exchange or on the Nasdaq Stock Market or in the over-the-counter
market ("Non-Stock Reference Property"), the maturity of the PRIDES will be
accelerated in part, to the extent of the Non-Stock Percentage, to the Trading
Day immediately following the date such Non-Stock Reference Property is
distributed to holders of the related Reference Security (the "Collateral
Redemption Date") and there shall become deliverable and payable by the Company
to the Holder an amount in cash equal to the product of (a) the sum of the
Principal Value and the Bloomberg Option Value times (b) the Non-Stock
percentage (the "Collateral Redemption Amount"), and upon such payment, such
Non-Stock Reference Property shall no longer constitute Reference Property. For
purposes of this PRIDES Certificate, the "Non-Stock Percentage" shall mean a
ratio, expressed as a percentage, (x) the numerator of which is the Reference
Property Value of all Reference Property that is Non-Stock Reference Property
and (y) the denominator of which is the Reference Property Value of all
Reference Property.
MAJOR TRANSACTION EVENT
In the event of any Transaction or any other transaction in connection
with which all the Reference Securities constituting the Reference Property
immediately prior to the consolidation, merger or acquisition are exchanged for
cash or any other property ("Major Transaction Consideration") such that gain or
loss is recognized in whole or in part for Federal income tax purposes (a "Major
Transaction Event"), the maturity of the PRIDES will, at the option of the
Company, be accelerated in part, to the extent of the Taxable Percentage, to the
Trading Day immediately following the date such Major Transaction Consideration
is distributed to the holders of the Reference Security (the "Major Transaction
Redemption Date") and there shall become deliverable and payable by the Company
to the Holder an amount in cash equal to the product of (a) the sum of Principal
Value and the Bloomberg Option Value times (b) the Taxable Percentage (the
"Major Transaction Redemption Amount"), and upon such payment, Taxable Reference
property shall no longer constitute Reference Property. For purposes of this
PRIDES Certificate, the "Taxable Percentage" shall mean a ratio, expressed as a
percentage, (x) the numerator of which is the Reference Property Value of any
property (other than any property the receipt of which is tax-free for Federal
income tax purposes) receivable upon consummation of the Major Transaction Event
("Taxable Reference Property") and (y) the denominator of which is the Reference
Property Value of all Reference Property (including property receivable upon
consummation of the Major Transaction Event).
16
<PAGE> 17
OPTIONAL REDEMPTION
The Company shall have the option, exercisable in its sole discretion
at any time to accelerate settlement of its obligations hereunder, in whole but
not in part. In the event the Company elects to exercise such option, the
Company shall deliver to the Holder and the Calculation Agent a notice (the date
of such delivery being the "Optional Redemption Notice Date") specifying the
date of accelerated settlement, which date shall be at least 25 Trading Days
after the Optional Redemption Notice Date (the "Optional Redemption Date"). Upon
receipt of such notice, the Calculation Agent shall provide the Company with
indicative information regarding the methods and assumptions that would be used
to determine the Optional Redemption Option Value, and within two Business Days
after receipt of such indicative information the Company shall have the right to
rescind fully an optional redemption election and its consequences upon notice
to the Holder. On the Optional Redemption Date, there shall become immediately
due and payable by the Company an amount in cash equal to the Optional
Redemption Value (the "Optional Redemption Amount"); provided that the Company
shall have the right to partially rescind an optional redemption election and
its consequences on any date prior to the Optional Redemption Date, by giving
notice of such partial rescission to the Holder, whereupon (i) the maturity of
the PRIDES will be accelerated in part to the extent of the ratio, expressed as
a percentage, (x) the numerator of which is the number of full Trading Days in
the period from and including the second Trading Day after the Optional
Redemption Notice Date to and including the Trading Day on which notice of such
partial rescission is received by the Holder and (y) the denominator of which is
20 and (ii) the Optional Redemption Value shall be correspondingly adjusted to
reflect the partial acceleration.
PAYOUT FORMULA ADJUSTMENT
Immediately after Major Transaction Redemption Date, an Optional
Redemption Date that is rescinded in part and a Collateral Redemption Date, the
Threshold Appreciation Price and the Initial Price shall be adjusted to reflect
the amount of cash received with respect to each PRIDES on such date by the
Holder of this PRIDES Certificate.
DEFINITIONS
"Acceleration Date" means the date on which an Event of Default shall
have occurred.
"Affiliate" means, as to the Company, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with the
Company. As used herein, "control" (including the terms "controlled by" or
"under common control with") means, as to any Person, the possession, direct or
indirect, of the power to vote ten percent or more of the securities having
ordinary voting power for the election of directors of such Person or to direct
or cause the direction of the management and policies of such Person, whether
through ownership of voting securities or by contract or otherwise.
"Average Closing Price" per unit of Reference Security shall mean (a)
for purposes of determining the Acceleration Value, the mean of the Closing
Prices per unit of Reference Security on the 10 Trading Days immediately after
the Acceleration Date, (b) for purposes of determining the Bloomberg Option
Value, the mean of the Closing Prices per unit of Reference Security on the 20
Trading Days immediately prior to the Collateral Redemption Date and the Major
Transaction Redemption Date, as applicable, and (c) for purposes of determining
the Redemption Value, the
17
<PAGE> 18
mean of the Closing Prices per unit of Reference Security on the 20 Trading Days
immediately prior to the Valuation Date.
"Bloomberg Option Value" means an amount determined as the value on the
second Trading Day before the Collateral Redemption Date or the Major
Transaction Redemption Date of a put/call option combination embedded in the
PRIDES represented by this PRIDES Certificate utilizing (a) the Black-Scholes
method, (b) volatility for Reference Securities calculated by taking the
historical volatility based on the 100-Trading Day period ending on the
valuation date as reported on Bloomberg (function HVG (Reference Security)
<Equity > HVG <Go>) (c) a 365-day year, (d) the Average Closing Price per unit
of Reference Security, (e) a .40% per annum cost of borrowing Reference
Securities for hedging purposes, and (f) an interest rate of U.S. dollar LIBOR
with a maturity that most closely approximates the remaining term of the PRIDES,
as such rate appears on the Reuters Money Rates Service (or such other service
agreed upon by the Company and the Holder) as of 11:00 a.m. London time on the
second Business Day prior to the Valuation Date. As promptly as reasonably
practicable after computation of the Bloomberg Option Value, the Calculation
Agent shall deliver to the Company a notice specifying the Bloomberg Option
Value required to be delivered to the Holders by the Company.
"Business Day" means any day that is not a Saturday, a Sunday or a day
on which the NYSE, the Nasdaq Stock Market, or banking institutions or trust
companies in The City of New York are authorized or obligated by law or
executive order to close.
"Closing Price" means, with respect to any Reference Security on any
date of determination, the closing sale price (or, if no closing price is
reported, the last reported sale price) of such Reference Security on the NYSE
on such date or, if such Reference Security is not listed for trading on the
NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which such Reference Security is
so listed, or if such Reference Security is not so listed on a United States
national or regional securities exchange, as reported by the Nasdaq Stock
Market, or, if such Reference Security is not so reported, the last quoted bid
price for such Reference Security in the over-the-counter market as reported by
the National Quotation Bureau or similar organization, or, if such bid price is
not available, the market value of such Reference Security on such date as
determined by a nationally recognized independent investment banking firm
retained for this purpose by the Company.
"Fred Meyer" means Fred Meyer, a Delaware corporation.
"Fred Meyer Common Stock" means the common stock, par value $.01 per
share, of Fred Meyer.
"Maturity Price" means, with respect to any Reference Security, the
average Closing Price per unit of such Reference Security on the twenty Trading
Days immediately prior to, but not including, the second Trading Day preceding
the Maturity Date.
"Nasdaq Stock Market" means the Nasdaq Stock Market, a subsidiary of
the National Association of Securities Dealers, Inc.
"NYSE" means the New York Stock Exchange.
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<PAGE> 19
"Option Value" means an amount determined on the basis of quotations
obtained by the Calculation Agent from four nationally recognized independent
investment banking firms, two of which shall be selected by the Calculation
Agent and two selected by the Company (the "Independent Dealers") as follows.
Each quotation will be for the net amount that would be paid on the Valuation
Date to the relevant Independent Dealer in consideration of a put/call option
combination embedded in the PRIDES represented by this PRIDES Certificate
utilizing (a) the Black-Scholes method, (b) volatility for any Reference
Securities as determined by each Independent Dealer, (c) a 365-day year, (d) the
Average Closing Price per unit of Reference Security, (e) a .40% per annum cost
of borrowing Reference Securities for hedging purposes, and (f) an interest rate
of U.S. dollar LIBOR with a maturity that most closely approximates the
remaining term of the PRIDES, as such rate appears on the Reuters Money Rates
Service (or such other service agreed upon by the Company and the Holder) as of
11:00 a.m. London time on the second Business Day prior to the Valuation Date.
As soon as reasonably practicable following the Acceleration Date or the Event
Notice Date, as the case may be, the Calculation Agent will request each
Independent Dealer to provide its quotation as soon as reasonably practicable.
The Calculation Agent shall compute the Option Value upon receipt of each
Independent Dealer's quotation, provided that if quotations are not promptly
received from four of the Independent Dealers, the Calculation Agent or the
Company, whichever selected the Independent Dealers that failed to provide a
quotation, shall select additional Independent Dealers so as to obtain four
quotations. When four quotations are provided, the Option Value shall be the
arithmetic mean of the two quotations remaining after disregarding the highest
and lowest quotations. (For this purpose, if more than one quotation has the
same highest or lowest value, then one of such quotations shall be disregarded.)
As promptly as reasonably practicable after receipt of the quotations on which
the Option Value is based, the Calculation Agent shall deliver to the Company a
notice specifying the Acceleration Value or the Redemption Value required to be
delivered to the Holders by the Company.
"Optional Redemption Option Value" means the net amount determined by
the Calculation Agent using commercially reasonable methods for an amount that
would be paid on the Valuation Date to the Calculation Agent in consideration of
a put/call option combination embedded in the PRIDES represented by this PRIDES
Certificate. As promptly as reasonably practicable after determination of the
Optional Redemption Option Value, the Calculation Agent shall deliver to the
Company a notice specifying the Optional Redemption Value required to be
delivered to the Holders by the Company.
"Optional Redemption Value" means the sum of (a) the Principal Value
and (b) the Optional Redemption Option Value.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency or instrumentality thereof.
"Principal Value" means the net present value of the Principal Amount
of the PRIDES evidenced by this PRIDES Certificate as of the Valuation Date
computed by the Calculation Agent on a semi-annual basis using an interest rate
of U.S. dollar LIBOR with a maturity that most closely approximates the
remaining term of the PRIDES, as such rate appears on the Reuters Money Rates
Service (or such other service agreed upon by the Company and the Holder) as of
11:00 a.m. London time on the second Business Day prior to the Valuation Date
plus 105 basis points.
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<PAGE> 20
"Redemption Value" means the sum of (a) the Principal Value and (b) the
Option Value.
"Reference Property" initially means one share of Fred Meyer Common
Stock and shall be subject to adjustment from time to time prior to the Maturity
Date to reflect the addition or substitution of any cash, securities and/or
other property as provided for above.
"Reference Property Value" means, subject to the provisions hereof, the
sum of (i) for any portion of the Reference Property consisting of cash, the
amount of such cash, (ii) for any portion of the Reference Property consisting
of property other than cash or Reference Securities, the fair market value of
such property (as determined by a nationally recognized independent investment
banking firm mutually acceptable to the Calculation Agent and the Company
retained for this purpose) as of the third Trading Day preceding the Maturity
Date and (iii) for any portion of the Reference Property consisting of a
Reference Security (including Fred Meyer Common Stock), an amount equal to the
average Closing Price on the 20 Trading Days immediately prior to, but not
including, the second Trading Day preceding the Maturity Date multiplied by the
number of units of such Reference Security constituting part of the Reference
Property
"Reference Security" means, at any time, any security (as defined in
Section 2(1) of the 1933 Act) then constituting part of the Reference Property.
"Trading Day" means, with respect to any Reference Security the Closing
Price of which is being determined, a day on which such Reference Security (i)
is not suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (ii) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of such Reference Security.
"Valuation Date" means the Acceleration Date, the Major Transaction
Redemption Date, the Collateral Redemption Date, the Redemption Date or the
Optional Redemption Date, as applicable.
Each PRIDES Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company duly
executed by, the Holder thereof or such Holder's attorney duly authorized in
writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in New York, New York or by a member
firm of a national securities exchange. This PRIDES Certificate, and any PRIDES
Certificate or Certificates issued upon transfer or exchange hereof, is issuable
only in fully registered form, without coupons.
A PRIDES Certificate shall be dated the date of its execution by the
Company. Each PRIDES Certificate delivered upon any transfer or exchange for or
in lieu of the whole or any part of this PRIDES Certificate shall evidence the
same debt and be entitled to the same benefits as the PRIDES Certificate or part
thereof surrendered upon such registration of transfer or exchange and shall
carry all the rights to interest accrued and unpaid and to accrue that were
carried by the whole or such part of this PRIDES Certificate, as the case may
be. Notwithstanding anything to the contrary herein contained, such new PRIDES
Certificate shall be dated so that neither gain nor loss of interest shall
result from such transfer or exchange.
20
<PAGE> 21
No service or other charge shall be made to a Holder for any
registration of transfer or exchange of this PRIDES Certificate, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of this PRIDES Certificate.
Neither this PRIDES Certificate, nor any interest therein, may be sold,
assigned or transferred to a Prohibited Person. "Prohibited Person" means any
Person (i) that beneficially owns more than 5% of the voting stock of Fred Meyer
or of any successor entity (including, without limitation, any entity the
capital stock of which is issued to holders of Fred Meyer Common Stock upon a
consolidation or merger involving Fred Meyer) or (ii) that is adverse to the
Company or any Affiliate of the Company in any material pending legal proceeding
or (iii) that is not a "United States person" under section 7701 of the Internal
Revenue Code of 1986, as amended, unless such person provides the Company with
an agreement in the form of EXHIBIT A.
If this PRIDES Certificate is issued upon the transfer, exchange or
replacement of another PRIDES Certificate that does not bear a legend (the
"Legend") setting forth restrictions on transfer that are intended to ensure
compliance with the 1933 Act, the PRIDES Certificate so issued shall not bear
the Legend. If this PRIDES Certificate is issued upon the transfer, exchange or
replacement of another PRIDES Certificate that bears the Legend, or if a request
is made to remove the Legend on this PRIDES Certificate, the PRIDES Certificate
so issued shall bear the Legend, or the Legend shall not be removed, as the case
may be, unless there is delivered to the Company such satisfactory evidence as
may be required by the Company in its reasonable judgment, which may include an
opinion of counsel, that neither the Legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof are exempt from or
are not subject to the registration requirements under the 1933 Act. Upon
provision of such satisfactory evidence, the Company shall deliver a PRIDES
Certificate that does not bear the Legend.
In case this PRIDES Certificate shall at any time become mutilated or
destroyed or stolen or lost and this PRIDES Certificate or evidence of the loss,
theft or destruction hereof (together with the indemnity hereinafter referred to
and such other documents or proof as may be required in the premises) shall be
delivered to the Company, a new PRIDES Certificate of like tenor will be issued
by the Company in exchange for this PRIDES Certificate so mutilated, or in lieu
of the destroyed or stolen or lost PRIDES Certificate, only upon receipt of
evidence satisfactory to the Company that such PRIDES Certificate was destroyed
or stolen or lost, and, if required, upon receipt also of indemnity satisfactory
to the Company. All expenses and reasonable charges associated with procuring
such indemnity and with the preparation, authentication and delivery of a new
PRIDES Certificate shall be borne by the Holder of this PRIDES Certificate
mutilated, destroyed, stolen or lost.
No provision contained in this PRIDES Certificate shall alter or impair
the obligation of the Company, which is absolute and unconditional, to deliver
or pay the Maturity Consideration, Acceleration Amount, Collateral Redemption
Amount, Major Transaction Redemption Amount, Redemption Amount or Optional
Redemption Amount (and interest on any overdue Maturity Consideration,
Acceleration Amount, Collateral Redemption Amount, Major Transaction Redemption
Amount, Redemption Amount or Optional Redemption Amount) in respect of the
PRIDES evidenced hereby at the times, place and rate, and in the manner, herein
prescribed.
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<PAGE> 22
Any action by the Holder of this PRIDES Certificate shall bind all
future Holders of this PRIDES Certificate, and of any PRIDES Certificate issued
in exchange or substitution herefor or in place hereof, in respect of anything
done or permitted by the Company in pursuance of such action.
Prior to the due presentment of this PRIDES Certificate for
registration of transfer in accordance with restrictions set forth above, the
Company and any agent of the Company may treat the Holder in whose name this
PRIDES Certificate is registered as the owner hereof for all purposes, whether
or not this PRIDES Certificate be overdue, and neither the Company nor any such
agent shall be affected by notice to the contrary.
Any notices required to be delivered to the Company by the Holder
hereof shall be directed to 10000 Santa Monica Boulevard, Fourth Floor, Los
Angeles, California 90067, telephone: (310) 284-7475, Attention: Robert
Bermingham, or such other address as the Company may inform the Holder hereof
from time to time, with a copy to the Collateral Agent at Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Risk and Credit Control, 300 Davidson Avenue, 2
East, Somerset, New Jersey 08873, telephone: (732) 627-5467, Attention: Dawn
Kazim, and a copy to Merrill Lynch, Pierce, Fenner & Smith Incorporated, at
World Financial Center, North Tower, 5th Floor, New York, New York 10281,
telephone: (212) 449-6763, Attention: Paul Pepe.
This PRIDES Certificate shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York. The Company and
any agent of the Company may treat the person in whose name this PRIDES
Certificate is registered as the owner of the PRIDES evidenced hereby for the
purpose of receiving payment as herein provided and for all other purposes,
whether or not the PRIDES be overdue, and neither the Company nor any such agent
shall be affected by notice to the contrary.
All covenants and agreements in this PRIDES Certificate by the Company
shall bind its successors and assigns, whether or not so expressed.
22
<PAGE> 23
IN WITNESS WHEREOF, GNHT 1, LLC has caused this instrument to be duly
executed under its corporate seal.
Dated: January 6, 1999
GNHT 1, LLC
By: /s/ RONALD W. BURKLE
-----------------------------
Name: Ronald W. Burkle
Title: Operating Manager
23
<PAGE> 24
Exhibit A
[Form of Letter to be Delivered by Foreign Assignee to Company]
[Date]
Ladies and Gentlemen:
Reference is hereby made to the "Provisionally Redeemable Income Debt
Exchangeable for Stock PRIDES Due February 28, 2002" (the "PRIDES"), originally
issued by GNHT 1, LLC (the "Company") to Merrill Lynch, Pierce, Fenner & Smith
Incorporated on January 6, 1999, as evidenced by a written certificate of even
date thereof (the "PRIDES Certificate").
In consideration for (i) the Company granting hereby its consent to the
sale, assignment, or transfer of the PRIDES Certificate (the "Assignment") by
Merrill Lynch, Pierce, Fenner & Smith Incorporated to _______________ (the
"Assignee"), (ii) the Company not withholding or deducting, in accordance with
applicable law United States federal withholding taxes in respect of original
issue discount or other interest accruing on the PRIDES by reason of an
applicable exemption as described below, and (iii) for other good and valuable
consideration, the Assignee hereby represents and warrants to the Company as
follows:
A. As of the date of the consummation of the Assignment (the
"Assignment Date"), the Assignee will be eligible to claim a
complete exemption from the imposition of United Stated
federal withholding taxes in respect of original issue
discount or other interest accruing on the PRIDES by reason of
either the availability of (x) the portfolio interest
exemption under section 881(c) of the Code or (y) treaty
benefits under the [specify relevant tax treaty].
B. The Assignee shall on the Assignment Date, and from time to
time thereafter as may be required by applicable law, provide
the Company with an accurate, complete and duly executed
Internal Revenue Service Forms 1001 and W-8, or any successor
form prescribed by the Internal Revenue Service, certifying
that the Assignee is entitled to claim a complete exemption
from the imposition of United States federal withholding taxes
in respect of original issue discount or other interest
accruing on the PRIDES pursuant to either (x) the portfolio
interest exemption under section 881(c) of the Code or (y)
treaty benefits under the [specify relevant tax treaty].
C. The Assignee shall indemnify the Company, and hold the Company
harmless from, any United States federal withholding tax
liability (including any interest, additions to tax, and
penalties) determined to be due to the Internal Revenue
Service with respect to original issue discount or interest on
the PRIDES during the Assignee's holding period. The
obligation of the Holder to indemnify the Company in respect
of such United States federal withholding taxes shall continue
in full force and effect
24
<PAGE> 25
beyond the final settlement of the PRIDES and until 30 days
following the expiration of all applicable statutory periods
of limitation for the assessment of such taxes.
D. This Agreement shall be governed by and construed in
accordance with the laws of the Sate of New York without
reference to the conflict of laws provisions thereof. Any
legal action or proceeding with respect to this Agreement may
be brought in the courts of the State of New York or of the
United States for the Southern District or New York, and by
execution and delivery of this Agreement, each of the Company
and the Assignee consents for itself and in respect of its
property, to the nonexclusive jurisdiction of those courts.
Each of the Company and the Assignee irrevocably waives any
objection, including any objection to the laying of venue or
based on the grounds of forum non conveniens, which it may now
or hereafter have to the bringing of any action or proceeding
in such jurisdiction in respect of this Agreement. The Company
and the Assignee each waive personal service of any summons,
complaint or other process, which may be made by any other
means permitted by New York law.
Sincerely,
------------------------------------
[Name of Assignee]
By_________________________________
Accepted
GNHT 1, LLC
By: ___________________________
Name:
Title:
- ----------------
Date
25
<PAGE> 26
Exhibit B
ADDITIONAL ASSET AND LIABILITY TRANSFER TERM SHEET
Permitted Additional Assets........ Three permitted forms of passive financial
investments:
1. Treasury bills must comprise at least
32% of the Permitted Additional Assets;
2. Other liquid marketable securities
(debt or equity) may comprise no more
than 64% of the Permitted Additional
Assets, with 1. and 2. totaling at
least 96%; and
3. Other passive financial investments,
including partnership interests may,
comprise no more than 4% of the
Permitted Additional Assets.
Permitted Additional Liabilities... Subject to the tests set forth below, any
liability of fixed amount, provided it is
either unsecured or is secured by some or
all of the Permitted Additional Assets,
subject to arrangements mutually
acceptable to the Company and the Holder
regarding the priority of the liens
thereby created.
Maximum Additional Liabilities.... Not to exceed 75% of aggregate Reference
Property Value on the date of transfer of
liabilities and at all times going
forward.
Minimum Ratio of Additional Assets
to Additional Liabilities.......... 125% on date of contribution and at all
times going forward.
Interest Rate or Coupon on
Additional Liabilities............. Permitted, provided on-going compliance
with requirements set forth herein and in
the PRIDES.
Maturity........................... No minimum maturity.
Conditions Precedent............... 1. Restatement of substantive
nonconsolidation opinion provided upon
original issuance of the PRIDES;
2. Compliance letter with PRIDES upon
incurrence of Additional Liabilities;
and
3. Unaudited financial statements of the
Company and compliance letter on a
quarterly basis
26
<PAGE> 27
so long as Permitted Additional
Liabilities are outstanding.
Subordination...................... Express subordination to all obligations
under the PRIDES Certificates.
Cross Default...................... Any default under the Permitted Additional
Liabilities will be an Event of Default
under the PRIDES.
Mark Provisions.................... Permitted Additional Assets will be marked
to market daily.
27
<PAGE> 1
EXHIBIT 99.3
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f)(1) promulgated under the Securities
Exchange Act of 1934, as amended, the undersigned hereby agree to the joint
filing with all other Reporting Persons (as such term is defined in the Schedule
13D referred to below) on behalf of each of them of a statement on Schedule 13D
(including amendments thereto) with respect to the Common Stock, par value $.01
per share, of Fred Meyer, Inc., a Delaware corporation, and that this Agreement
may be included as an Exhibit to such joint filing.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of
January 15, 1999.
<PAGE> 2
Yucaipa Arizona Partners, L.P.
Yucaipa Smitty's Partners, L.P.
Yucaipa Smitty's Partners II, L.P.
Yucaipa SSV Partners, L.P.
FFL Partners
Yucaipa/F4L Partners
By: The Yucaipa Companies
Its General Partner
By: /s/ Ronald W. Burkle
------------------------------------------
Name: Ronald W. Burkle
Title: General Partner
The Yucaipa Companies
By: /s/ Ronald W. Burkle
------------------------------------------
Name: Ronald W. Burkle
Title: General Partner
F4L Equity Partners, L.P.
Yucaipa Capital Fund
By: Yucaipa Capital Advisors, Inc.
Its General Partner
By: /s/ Ronald W. Burkle
------------------------------------------
Name: Ronald W. Burkle
Title: President
Ronald W. Burkle Foundation
By: /s/ Ronald W. Burkle
------------------------------------------
Name: Ronald W. Burkle
Title: Chairman of the Board
GNHT 1, LLC
GNHT 2, LLC
GNHT 3, LLC
GNHT 4, LLC
GNHT 5, LLC
By: /s/ Ronald W. Burkle
------------------------------------------
Name: Ronald W. Burkle
Title: Operating Manager
By: /s/ Ronald W. Burkle
------------------------------------------
Name: Ronald W. Burkle
