-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DfOzqyJkOfGbmbIqWnB8c7rliVctg/p/N+hL6x2uPAjjvPUR0a0qwpmZ8Z2AWRE3 NFxVJNH9Vl1sMGNv70ONzA== 0000950150-99-000043.txt : 19990118 0000950150-99-000043.hdr.sgml : 19990118 ACCESSION NUMBER: 0000950150-99-000043 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19990115 GROUP MEMBERS: F4L EQUITY PARTNERS, L.P. GROUP MEMBERS: FFL PARTNERS GROUP MEMBERS: GNHT 1, LLC GROUP MEMBERS: GNHT 2, LLC GROUP MEMBERS: GNHT 3, LLC GROUP MEMBERS: GNHT 4, LLC GROUP MEMBERS: GNHT 5, LLC GROUP MEMBERS: RONALD W. BURKLE GROUP MEMBERS: RONALD W. BURKLE FOUNDATION GROUP MEMBERS: YUCAIPA ARIZONA PARTNERS, L.P. GROUP MEMBERS: YUCAIPA CAPITAL FUND GROUP MEMBERS: YUCAIPA COMPANIES GROUP MEMBERS: YUCAIPA SMITTY'S PARTNERS II, L.P. GROUP MEMBERS: YUCAIPA SMITTY'S PARTNERS, L.P. GROUP MEMBERS: YUCAIPA SSV PARTNERS, L.P. GROUP MEMBERS: YUCAIPA/F4L PARTNERS SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MEYER FRED INC CENTRAL INDEX KEY: 0000701169 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 930798201 STATE OF INCORPORATION: DE FISCAL YEAR END: 0201 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-33269 FILM NUMBER: 99507343 BUSINESS ADDRESS: STREET 1: 3800 SE 22ND AVE CITY: PORTLAND STATE: OR ZIP: 97202 BUSINESS PHONE: 5032328844 MAIL ADDRESS: STREET 1: PO BOX 42121 CITY: PORTLAND STATE: OR ZIP: 97242 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: YUCAIPA COMPANIES CENTRAL INDEX KEY: 0001015905 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 10000 STREET 2: 10000 SANTA MONICA BOULEVARD 5TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: 3107897800 SC 13D/A 1 AMENDMENT NO. 4 TO SCHEDULE 13-D 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) 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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) 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) 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) 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) 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) 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) 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) 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. 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
(Page 25 of 27) 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) 27 Dated: January 15, 1999 /s/ Ronald W. Burkle ------------------------------------------ Ronald W. Burkle (Page 27 of 27) 28 EXHIBIT INDEX Item 7. Material to be Filed as Exhibits. 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
EX-99.1 2 FORM OF PURCHASE AGREEMENT 1 EXHIBIT 99.1 ================================================================================ GNHT 1, LLC (a Delaware limited liability company) PURCHASE AGREEMENT Dated: January 5, 1999 ================================================================================ 2 TABLE OF CONTENTS
PAGE ---- 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
i 3 (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
ii 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. 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 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 3 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 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 5 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. 6 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. 7 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. 8 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 9 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 10 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 11 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. 12 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 13 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 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 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 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 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 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 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 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 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 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 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 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 EX-99.2 3 FORM OF PRIDES CERTIFICATE 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: Issue Price: $45.8153 per PRIDES OID: $9.6847 per PRIDES Issue Date: January 6, 1999 Yield to Maturity: 6.27 % (compounded semiannually)
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. 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 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 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 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. 5 6 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 6 7 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 7 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. 8 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 9 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 10 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)); 11 12 (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 12 13 (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 13 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. 14 15 "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 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 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 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) HVG ) (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. 18 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. 19 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 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. 21 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 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 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 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 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 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 EX-99.3 4 JOINT FILING AGREEMENT 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. 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 -----END PRIVACY-ENHANCED MESSAGE-----