FRED MEYER, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
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UNDERWRITING AGREEMENT
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September ___, 1996
Goldman, Sachs & Co.
Lehman Brothers Inc.
Salomon Brothers Inc
William Blair & Company, L.L.C.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
The stockholder named in Schedule II hereto (the "Selling Stockholder")
of Fred Meyer, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 3,600,000 shares (the "Firm Shares") and, at the election of the
Underwriters, up to an aggregate of 400,000 additional shares (the
"Optional Shares") of common stock, par value $.01 per share ("Stock"), of
the Company. The Firm Shares and the Optional Shares are herein
collectively called the "Shares."
1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) A registration statement on Form S-3 (File No.
333-______________) (the "Initial Registration Statement") in respect
of the Shares has been filed with the Securities and Exchange
Commission (the "Commission"); such Initial Registration Statement and
any post-effective amendment thereto, each in the form heretofore
delivered to you, and, excluding exhibits thereto but including all
documents incorporated by reference in the prospectus contained
therein, delivered to you for each of the other Underwriters, have been
declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b)
under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement or document incorporated by reference therein
has heretofore been filed with the Commission; and no stop order
suspending the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission (any preliminary
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prospectus included in the Initial Registration Statement or filed with
the Commission pursuant to Rule 424(a) of the rules and regulations of
the Commission under the Act, being hereinafter called a "Preliminary
Prospectus"; the various parts of the Initial Registration Statement
and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including (i) the information contained in the
form of final prospectus filed with the Commission pursuant to Rule
424(b) under the Act in accordance with Section 5(a) hereof and deemed
by virtue of Rule 430A under the Act to be part of the Initial
Registration Statement at the time it was declared effective or such
part of the Rule 462(b) Registration Statement, if any, became or
hereafter becomes effective, and (ii) the documents incorporated by
reference in the prospectus contained in the registration statement at
the time such part of the registration statement became effective, each
as amended at the time such part of the registration statement became
effective, being hereinafter called the "Registration Statement"; such
final prospectus, in the form first filed pursuant to Rule 424(b) under
the Act, being hereinafter called the "Prospectus"; any reference
herein to any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be; any reference
to any amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the
case may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section
13(a) or 15(d) of the Exchange Act after the effective date of the
Initial Registration Statement that is incorporated by reference in the
Registration Statement);
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder, and 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, in the
light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through you expressly for use therein or by the Selling
Stockholder expressly for use in the preparation of the answers therein
to Item 7 of Form S-3;
(iii) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the
Act or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder, and none of such documents contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder
and will 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
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statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through you
expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements
of the Act and the rules and regulations of the Commission thereunder
and do not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the
applicable filing date as to the Prospectus and any amendment or
supplement thereto, 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; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through you expressly for use therein or by the Selling Stockholder
expressly for use in the preparation of the answers therein to Item 7
of Form S-3;
(v) Neither the Company nor any of its subsidiaries (as defined in
Section 15 hereof) has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus which loss or interference is material to the general
affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a
whole; and, since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been
any change in the capital stock of the Company (other than due to (i)
the exercise of options under the Company's employee stock option or
bonus plans as in effect on the date hereof or (ii) the sale of Stock
to executive officers of the Company pursuant to the terms of their
employment contracts or arrangements) or any of its subsidiaries or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus;
(vi) All real property and buildings held under lease by the Company
and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material to the
Company and its subsidiaries taken as a whole and do not interfere with
the use made and proposed to be made of such property and buildings by
the Company and its subsidiaries; and the Company and its subsidiaries
have good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by them, in
each case free and clear of all liens, encumbrances and defects except
such as are not material and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries;
(vii) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, with
power and authority (corporate and other) to own their respective
properties and conduct their respective businesses as described in the
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Prospectus, and have been duly qualified as a foreign corporation for
the transaction of business and are in good standing under the laws of
each other jurisdiction in which they own or lease properties, or
conduct any business, so as to require such qualification, except where
the failure to so qualify would not have a material adverse effect upon
the Company and its subsidiaries taken as a whole;
(viii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description of the Stock
contained or incorporated by reference in the Prospectus; the pro forma
capitalization of the Company included in the Prospectus have been
prepared on the basis consistent with the Company's historical
financial statements and give effect to assumptions made on a
reasonable basis and present fairly the Repurchase (as hereinafter
defined), the September 1996 sale and leaseback transaction described
therein and the other transactions contemplated by the Prospectus and
this Agreement; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and (except for Fred Meyer
(HK) Limited, which is 80% owned by the Company) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims;
(ix) Neither the Company nor any of its subsidiaries is in violation
of its corporate charter or by-laws or in default under any agreement,
indenture or instrument, the effect of which violation or default would
be material to the Company and its subsidiaries taken as a whole; the
Company has all power and authority (corporate and other) necessary to
execute this Agreement and the Stock Repurchase Agreement, dated as of
September 4, 1996, by and between the Company and the Selling
Stockholder (the "Repurchase Agreement") and to perform its obligations
under such agreements; this Agreement and the Repurchase Agreement have
been duly authorized, executed and delivered by the Company; the
Repurchase Agreement constitutes a valid and legally binding obligation
of the Company enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and to
general principles of equity; the execution, delivery and performance
of this Agreement and the Repurchase Agreement and the consummation of
the transactions contemplated hereby and thereby (including, without
limitation, the repurchase by the Company of ________ shares of Stock
(the "Repurchase Shares") from the Selling Stockholder (the
"Repurchase")) will not conflict with, result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of
the Company or any of its subsidiaries pursuant to the terms of, or
constitute a default under, any material agreement, indenture or
instrument to which the Company or any of its subsidiaries is bound or
subject, or result in a violation of the corporate charter or by-laws
of the Company or any of its subsidiaries or any statute or any order,
rule or regulation of any court or governmental agency having
jurisdiction over the Company, any of its subsidiaries or their
property; and, except as required by the Act and applicable state
securities laws, no consent, authorization or order of, or filing or
registration with, any court or governmental agency is required for the
issue and sale of the Shares, the consummation of the Repurchase or the
execution, delivery and performance of this Agreement or the Repurchase
Agreement;
(x) Deloitte & Touche LLP, who have certified the financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
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(xi) The shares of Stock being sold by the Selling Stockholder
hereunder are validly authorized, issued and outstanding, fully paid
and non-assessable with no personal liability attaching to the
ownership thereof; none of such shares of Stock, when delivered to the
Underwriters, will be subject to any preemptive rights; the Stock to be
sold by the Selling Stockholder will conform to the description thereof
contained in the Prospectus; and no person or entity has any
registration rights (demand, piggy-back or other) with respect to the
Stock or the Registration Statement except for (i) the rights of the
Selling Stockholder being satisfied by the Registration Statement and
(ii) such registration rights as have been waived;
(xii) Except as described in the Prospectus, there is no material
litigation or governmental proceeding pending or, to the knowledge of
the Company, threatened or contemplated against the Company or any of
its subsidiaries which, if decided adverse to the Company or such
subsidiary, would result in any material adverse change in the
business, properties, financial condition, results of operations or
prospects of the Company and its subsidiaries taken as a whole or which
is required to be disclosed in the Prospectus;
(xiii) The financial statements included in or incorporated by
reference in any Preliminary Prospectus or the Prospectus present
fairly the financial condition and results of operations of the
entities purported to be shown thereby, at the dates and for the
periods indicated, and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout
the periods involved, except as otherwise specifically indicated
therein; the selected pro forma financial data included in the
Preliminary Prospectus or the Prospectus has been prepared on the basis
consistent with the historical results of operations information and
gives effect to assumptions made on a reasonable basis and present
fairly the Repurchase, the sale and leaseback transaction described
therein and the other transactions contemplated by the Prospectus and
this Agreement;
(xiv) There are no contracts or other documents which are required to
be filed as exhibits to the Registration Statement by the Act or by the
rules and regulations of the Commission thereunder which have not been
filed as exhibits to the Registration Statement or incorporated therein
by reference as required or otherwise permitted by such rules and
regulations;
(xv) As of the date hereof the Company is not, and as of each Time
of Delivery (as defined in Section 4) will not be, a "United States
real property holding corporation" as such term is used in the Internal
Revenue Code of 1986, as amended; and
(b) The Selling Stockholder represents and warrants to, and agrees
with, each of the Underwriters and the Company that:
(i) Such Selling Stockholder has all power and authority (partnership
and other) necessary to execute and deliver this Agreement and the
Repurchase Agreement and to perform its obligations under such
agreements; this Agreement and the Repurchase Agreement have been duly
authorized, executed and delivered by such Selling Stockholder; the
Repurchase Agreement constitutes a valid and legally binding obligation
of the Selling Stockholder enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally and to general principles of equity; the execution, delivery
and performance of this
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Agreement and the Repurchase Agreement by such Selling Stockholder will
not conflict with, result in the creation or imposition of any lien,
charge or encumbrance upon any shares of Stock to be sold by such
Selling Stockholder pursuant to the terms of, or constitute a default
under, any material agreement, indenture or instrument pursuant to the
terms of, or constitute a default under, any material agreement,
indenture or instrument, or result in a violation of the partnership
agreement of the Selling Stockholder or any statute or any order, rule
or regulation of any court or governmental agency having jurisdiction
over such Selling Stockholder or its property; except as required by
the Act and applicable state securities laws, no consent, authorization
or order of, or filing or registration with, any court or governmental
agency is required (or, if required, has been obtained) for the
execution, delivery and performance by such Selling Stockholder of this
Agreement and the Repurchase Agreement;
(ii) Such Selling Stockholder has good title to the Shares set forth
opposite such Selling Stockholder's name in Schedule II hereto; upon
the delivery of and payment for such Shares as contemplated herein, the
Underwriters will receive good title to the Shares purchased by them
from such Selling Stockholder, free and clear of any and all liens,
charges, encumbrances, preemptive rights and any other claim of any
third party;
(iii) Such Selling Stockholder and any affiliates of such Selling
Stockholder will not, directly or indirectly, offer, sell, contract to
sell or otherwise dispose of any shares of Stock, or any securities
convertible into, or exercisable or exchangeable for, shares of Stock,
or make any public announcement in respect of any of the foregoing,
within 90 days after the date of the Prospectus without the prior
written consent of Goldman, Sachs & Co., except for sales to the
Underwriters pursuant to this Agreement;
(iv) The information (other than the percent of shares owned, as to
which such Selling Stockholder makes no representation) pertaining to
such Selling Stockholder under the caption "The Selling Stockholder" in
the Prospectus is complete and accurate in all material respects; and,
the information pertaining to the Selling Stockholder and to Kohlberg
Kravis Roberts & Co., L.P. ("KKR") and KKR's affiliates under the
caption "Certain Transactions" incorporated by reference into the
Prospectus from the Company's Proxy Statement dated May 3, 1996 fairly
presents the information required to be set forth therein and contains
no material misstatement or omission.
In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act
of 1982 with respect to the transactions herein contemplated, the Selling
Stockholder agrees to deliver to you prior to or at the First Time of
Delivery (as hereinafter defined) a properly completed and executed United
States Treasury Department Form W-9 (or other applicable form or statement
specified by Treasury Department regulations in lieu thereof).
2. Subject to the terms and conditions herein set forth, (a) the
Selling Stockholder agrees to sell to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from the
Selling Stockholder, at a purchase price per Share of $______, the number
of Firm Shares, as the case may be (to be adjusted by you so as to
eliminate fractional shares), determined by multiplying the aggregate
number of Firm Shares by a fraction, the numerator of which is the
aggregate number of Firm Shares to be purchased by such Underwriter as set
forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the aggregate number of Firm Shares to be purchased
by all the Underwriters hereunder and (b) in the event and to the extent
that the Underwriters shall exercise the election to purchase Optional
Shares as provided below, the Selling Stockholder agrees to sell to each of
the Underwriters, and
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each of the Underwriters agrees, severally and not jointly, to purchase
from the Selling Stockholder, at the purchase price per Share as set forth
in clause (a) of this Section 2, that portion of the number of Optional
Shares as to which such election shall have been exercised (to be adjusted
by you so as to eliminate fractional shares) determined by multiplying such
number of Optional Shares by a fraction the numerator of which is the
maximum number of Optional Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I
hereto and the denominator of which is the maximum number of the Optional
Shares which all of the Underwriters are entitled to purchase hereunder.
The Selling Stockholder hereby grants to the Underwriters the right to
purchase at their election up to 400,000 Optional Shares at the price per
Share set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to
purchase Optional Shares may be exercised only by written notice from you
to the Selling Stockholder, given within the period of 30 calendar days
after the date of this Agreement and setting forth the aggregate number of
Optional Shares to be purchased and the date on which such Optional Shares
are to be delivered, as determined by you but in no event earlier than the
First Time of Delivery (as defined in Section 4 hereof) or, unless you and
the Selling Stockholder otherwise agree in writing, earlier than two or
later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
4. Certificates in definitive form for the Firm Shares to be purchased
by each Underwriter hereunder, and in such denominations and registered in
such names as Goldman, Sachs & Co. may request upon at least twenty-four
hours' prior notice to the Selling Stockholder, shall be delivered by or on
behalf of the Selling Stockholder to you for the account of such
Underwriter, against payment by such Underwriter or on its behalf of the
purchase price therefor by wire transfer of immediately available funds
payable to an account designated by the Selling Stockholder.
The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 10:00 a.m., New York City time, on September __, 1996,
or such other time and date as you and the Selling Stockholder may agree
upon in writing, and, with respect to the Optional Shares, 10:00 a.m., New
York City time, on the date specified by you in the written notice given by
you of the Underwriters' election to purchase such Optional Shares, or such
other time and date as you and the Selling Stockholder may agree upon in
writing. Such time and date for delivery of the Firm Shares is herein
called the "First Time of Delivery," such time and date for delivery of the
Optional Shares, if not the First Time of Delivery, is herein called the
"Second Time of Delivery," and each such time and date of delivery is
herein called a "Time of Delivery." Such certificates will be made
available for checking and packaging at least twenty-four hours prior to
each Time of Delivery at the office of Goldman, Sachs & Co., 85 Broad
Street, New York, New York 10004 (the "Designated Office").
The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof will be delivered at the
offices of Stoel Rives LLP, Suite 2300, Standard Insurance Center, 900 SW
Fifth Avenue, Portland, Oregon 97204 (the "Closing Location"), and the
Shares will be delivered at the Designated Office, all at each Time of
Delivery. A meeting will be held at the Closing Location at 10:00 a.m., New
York City time, on the New York Business Day next preceding each Time of
Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review
by the parties hereto. "New York Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday
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which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than
the Commission's close of business on the second business day following
the execution and delivery of this Agreement, or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the Act; to
make no further amendment or any supplement to the Registration
Statement or Prospectus prior to the last Time of Delivery which shall
be disapproved by you promptly after reasonable notice thereof; to
advise you, promptly after it receives notice thereof, of the time when
the Registration Statement, or any amendment thereto, has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you copies thereof; to file
promptly all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of the Prospectus and for so long as the delivery of a prospectus
is required in connection with the offering or sale of the Shares; to
advise you, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Shares for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus
or for additional information; and, in the event of the issuance of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with copies of the Prospectus in
New York City in such quantities as you may reasonably request, and, if
the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the Prospectus in
connection with the offering or sale of the Shares and if at such time
any events shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, when such Prospectus is delivered, not
misleading, or, if for any reason it shall be necessary during such
same period to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus
in order to comply with the Act or the Exchange Act, to notify you and
upon your request to file such document and to prepare and furnish
without charge to each Underwriter and to any dealer in securities as
many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance, and in case any
Underwriter is
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required to deliver a prospectus in connection with sales of any of the
Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter,
to prepare and deliver to such Underwriter as many copies as you may
request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule
158(c)), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and
the rules and regulations of the Commission thereunder (including at
the option of the Company Rule 158);
(e) Not to, directly or indirectly, offer, sell, contract to sell or
otherwise dispose of any shares of Stock, or any securities convertible
into, or exercisable or exchangeable for, shares of Stock, or make any
public announcement in respect of any of the foregoing, within 90 days
after the date of the Prospectus without the prior written consent of
Goldman, Sachs & Co., except for issuances of Stock pursuant to
employee stock option or bonus plans or other stock option agreements,
in each case as outstanding on the date of this Agreement;
(f) For a period of five years from the effective date of the
Registration Statement, to furnish to its stockholders as soon as
practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, stockholders'
equity and cash flow of the Company and its consolidated subsidiaries
certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to stockholders,
and deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished
to its stockholders generally or to the Commission);
(h) To use its best efforts to cause the Shares to be listed on the
New York Stock Exchange; and
(i) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on
the date of this Agreement, and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement,
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any Preliminary Prospectus and the Prospectus and amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or producing any
Agreement among Underwriters, this Agreement,the Blue Sky Memorandum and
any other documents in connection with the offering, purchase, sale and
delivery of the Shares; (iii) all expenses in connection with the
qualification of the Shares for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky Memorandum; (iv) the
filing fees incident to securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the
Shares; (v) the cost of preparing stock certificates; (vi) the cost and
charges of any transfer agent or registrar; and (vii) all other costs and
expenses incident to the performance of its obligation hereunder which are
not otherwise specifically provided for in this Section. Goldman, Sachs &
Co. agrees to pay New York State stock transfer tax incurred in connection
with the sale of Shares by the Selling Stockholder pursuant hereto, and the
Selling Stockholder agrees to reimburse Goldman, Sachs & Co. for associated
carrying costs if such tax payment is not rebated on the day of payment and
for any portion of such tax payment not rebated. It is understood, however,
that, except as provided in this Section, Section 8 and Section 11 hereof,
the Underwriters will pay all of their own costs and expenses, including
the fees of their counsel, stock transfer taxes on resale of any of the
Shares by them, and any advertising expenses connected with any offers they
may make.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their
discretion, to the condition that all representations and warranties and
other statements of the Company and of the Selling Stockholder herein are,
at and as of such Time of Delivery, true and correct, the condition that
the Company and the Selling Stockholder shall have performed all of its and
their obligations hereunder theretofore to be performed, and to the
following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; if the Company has elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall be
become effective by 10:00 P.M., Washington, D.C. time, on the date of
this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Latham & Watkins, counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated such Time of Delivery,
with respect to the incorporation of the Company, the validity of the
Shares being delivered at such Time of Delivery, the Registration
Statement, the Prospectus, and other related matters as you may
reasonably request, and such counsel shall have received such papers
and information as they may reasonably request to enable them to pass
upon such matters;
(c) Stoel Rives LLP, counsel for the Company, shall have furnished
to you their written opinion (a draft of such opinion is attached as
Annex II(a) hereto), dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and each of
Roundup Co., ______________ and Fred Meyer of Alaska, Inc. (the
"Principal Subsidiaries") have been duly incorporated and are
10
validly existing under the laws of their respective jurisdictions
of incorporation; the Company and each of the Principal
Subsidiaries is duly qualified to do business and in good standing
as a foreign corporation in all jurisdictions in which its
ownership of property or the conduct of its business requires such
qualification (except where the failure to so qualify would not
have a material adverse effect upon the Company and its
subsidiaries taken as a whole), and has all corporate power and
corporate authority necessary to own its properties and conduct the
businesses in which it is engaged as described in the Prospectus;
and all outstanding shares of capital stock of the Principal
Subsidiaries are owned of record and, to the best of such counsel's
knowledge, beneficially, by the Company directly, or indirectly
through wholly-owned subsidiaries, free and clear of any lien,
pledge and encumbrance or any claim of any third party known to
such counsel;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of
the Company have been duly and validly authorized and issued and
are fully paid and non-assessable, with no personal liability
attaching to the ownership thereof; the Stock conforms to the
description of the Company's common stock, par value $.01 per
share, contained or incorporated by reference in the Prospectus;
(iii) There are no preemptive or other rights to subscribe for or
to purchase, nor any restriction upon the transfer of, any of the
Shares, or any restriction upon the voting of the Shares, pursuant
to the Company's Certificate of Incorporation or By-laws or any
agreement or other outstanding instrument known to such counsel;
and, to the best of such counsel's knowledge, no person or entity
has any registration rights (demand, piggyback or other) with
respect to the Stock or the Registration Statement except for (i)
the rights of the Selling Stockholder being satisfied by the
Registration Statement and (ii) such registration rights as have
been waived;
(iv) The leases between the Company and Real Estate Properties
Limited Partnership ("Properties") are valid and subsisting leases,
enforceable against Properties in accordance with their respective
terms with such exceptions as are not material and do not interfere
with the use made of the properties leased thereby, except as such
enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforceability of the rights of creditors' generally;
(v) Such counsel does not know of any litigation or any
governmental proceeding pending or threatened against the Company
or any of its subsidiaries which is required to be disclosed in the
Prospectus which is not disclosed or which questions or challenges
the validity or seeks to enjoin the transactions contemplated by
this Agreement or the Repurchase Agreement;
(vi) Such counsel does not know of any contracts or other
documents which are required to be filed as exhibits to the
Registration Statement or incorporated by reference into the
Prospectus by the Act or by the rules and regulations of the
Commission thereunder which have not been filed as exhibits to the
Registration Statement or incorporated therein or in the Prospectus
by reference as required or otherwise permitted by such rules and
regulations;
(vii) To the best of such counsel's knowledge, neither the
Company nor any of its subsidiaries is in violation of its
corporate charter or by-laws;
11
(viii) The execution, delivery and performance of this Agreement
and the Repurchase Agreement by the Company (including, without
limitation, the purchase by the Company of the Repurchase Shares in
the Repurchase) will not conflict with, or result in the creation
or imposition of any lien, charge or encumbrance upon any of the
assets of the Company or any of its subsidiaries pursuant to the
terms of, or constitute a default under, any material agreement,
indenture or instrument known to such counsel, or result in a
violation of the corporate charter or by-laws of the Company or any
of its subsidiaries or any statute or any order, rule or regulation
of any court or governmental agency, known to such counsel, having
jurisdiction over the Company, any of its subsidiaries or their
property; and no consent, authorization or order of, or filing or
registration with, any court or governmental agency is required for
the execution, delivery and performance of this Agreement or the
Repurchase Agreement by the Company, except such as may be required
by the Act or state securities laws;
(ix) The Registration Statement is effective under the Act and,
to the knowledge of such counsel, no stop order suspending its
effectiveness has been issued and no proceeding for that purpose is
pending or threatened by the Commission;
(x) The Company has all power and authority (corporate and
other) necessary to execute this Agreement and the Repurchase
Agreement and to perform its obligations under such agreements; and
this Agreement has been duly authorized, executed and delivered by
the Company;
(xi) The Repurchase Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and legally
binding obligation of the Company enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and to generally principles of
equity;
(xii) The description of the Company's capital stock contained or
incorporated by reference in the Prospectus, insofar as such
description and statements constitute a summary of the legal
documents or other legal matters referred to therein, fairly and
accurately present the information called for by the Act with
respect to such documents and other matters;
(xiii) The documents incorporated by reference in the Prospectus
or any further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than the financial
statements, schedules and other financial data contained therein,
as to which such counsel need express no opinion), when they became
effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; and
(ix) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company
prior to such Time of Delivery (except that no opinion need be
expressed as to the financial statements, schedules and other
financial data contained therein) comply as to form in all material
respects with the requirements of the Act and the rules and
regulations of the Commission thereunder.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that (x) such counsel has acted as
corporate counsel to the Company on a regular
12
basis and has acted as counsel to the Company in connection with the
preparation of the Registration Statement and Prospectus; and (y)
although such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those covered by
their opinion in subsection (xi) of this Section 7(c), based on the
foregoing, no facts have come to the attention of such counsel which
lead them to believe that either the Registration Statement, at the
time such Registration Statement became effective, and any supplements
thereto made by the Company prior to such Time of Delivery, contained
an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, or any further
amendment or supplement thereto made by the Company prior to such Time
of Delivery, contains an untrue statement of a material fact or omits
to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading
except that such counsel need express no belief with respect to the
financial statements, schedules and other financial data included in
the Registration Statement or Prospectus.
(d) Stoel Rives LLP, counsel for the Selling Stockholder, shall have
furnished to you their written opinion (a draft of such opinion is
attached as Annex II(b) hereto), dated such Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) The Selling Stockholder has all power and authority
(partnership and other) necessary to execute and deliver this
Agreement and the Repurchase Agreement and to perform its
obligations under this Agreement and the Repurchase Agreement; this
Agreement and the Repurchase Agreement have been duly authorized,
executed and delivered by the Selling Stockholder; the Repurchase
Agreement constitutes a valid and legally binding obligation of the
Selling Stockholder enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and
remedies generally and to generally principles of equity; the
execution, delivery and performance of this Agreement and the
Repurchase Agreement by the Selling Stockholder will not conflict
with, result in the creation or imposition of any lien, charge or
encumbrance upon any shares of the Stock to be sold by the Selling
Stockholder pursuant to the terms of, or constitute a default
under, any material agreement, indenture or instrument known to
such counsel, or result in a violation of the partnership agreement
of the Selling Stockholder or any statute or any order, rule or
regulation of any court or governmental agency known to such
counsel having jurisdiction over the Selling Stockholder or its
property; except as required by the Act and applicable state
securities laws, no consent, authorization or order of, or filing
or registration with, any court or governmental agency is required
(or, if required, has been obtained) for the execution, delivery
and performance by the Selling Stockholder of this Agreement or the
Repurchase Agreement; and the Selling Stockholder has complied with
all provisions of the Repurchase Agreement to sell the Repurchase
Shares to the Company in the Repurchase;
(ii) Upon delivery by the Selling Stockholder pursuant to this
Agreement of certificates for the Shares set forth opposite to the
Selling Stockholder's named on Schedule II to this Agreement, and,
assuming the Underwriters are acquiring such Shares in good faith
without notice of any adverse claim, the Underwriters will have
acquired from the Selling Stockholder good title to such Shares,
free and clear of any and all liens, charges, encumbrances and any
other claims of any third party (other than those arising as a
result of action by the Underwriters); and
13
(iii) Nothing has come to our attention which causes us to
believe that the information pertaining to the Selling Stockholder
under the caption "The Selling Stockholder" in the Prospectus does
not fairly and accurately present the information set forth
therein, or causes us to believe that such information contains a
material misstatement or omission.
(e) At 10:00 a.m., New York City time, on the effective date of the
Registration Statement and the effective date of the most recently
filed post-effective amendment to the Registration Statement and also
at the Time of Delivery, Deloitte & Touche LLP shall have furnished to
you a letter or letters, dated the respective date of delivery thereof,
in form and substance satisfactory to you, to the effect set forth in
Annex I hereto (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex I(a) hereto and a
draft of the form of letter to be delivered on the effective date of
any post-effective amendment to the Registration Statement and as of
each Time of Delivery is attached as Annex I(b) hereto);
(f) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus
there shall not have been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in Clause (i) or (ii), is in your
judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(g) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a general
moratorium on commercial banking activities in New York or California
declared by either Federal or New York or California State authorities;
(iii) the outbreak or escalation of hostilities involving the United
States or the declaration by the United States of a national emergency
or war, if the effect of any such event specified in this clause (iii)
in your reasonable judgment makes it impractical or inadvisable to
proceed with the public offering or the delivery of the Shares being
delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus; or (iv) the occurrence of any material
adverse change in the existing financial, political or economic
conditions in the United States or elsewhere which, in your reasonable
judgment, would materially and adversely affect the financial markets
or the market for the Shares;
(h) The Shares to be sold by the Selling Stockholder at such Time of
Delivery shall have been duly listed, subject to notice of issuance, on
the New York Stock Exchange;
(i) The Company and the Selling Stockholder shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and of the Selling Stockholder, respectively,
satisfactory to you, as to the accuracy of the representations and
warranties of the Company and the Selling Stockholder, respectively,
herein at and as of such Time of Delivery, as to the performance by the
Company and the Selling Stockholder of all of their respective
obligations hereunder to be performed at or prior to such Time of
14
Delivery, and as to such other matters as you may reasonably request,
and the Company shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (f) of
this Section, and as to such other matters as you may reasonably
request;
(j) Each of the Company, the Selling Stockholder, Robert G. Miller,
Curt A. Lerew, III and Kenneth Thrasher shall have executed and
delivered to the Underwriters an agreement, in form and substance
satisfactory to you, providing that such entity or person will not,
directly or indirectly, offer, sell, contract to sell or otherwise
dispose of any shares of Stock, or any securities convertible into, or
exercisable or exchangeable for, shares of Stock, or make any public
announcement in respect of any of the foregoing, within 90 days after
the date of the Prospectus without the prior written consent of
Goldman, Sachs & Co.; provided, however, that the Company may make
issuances of Stock pursuant to employee stock option or bonus plans or
other stock option agreements, in each case as outstanding on the date
of this Agreement;
(k) Simultaneous with the purchase of the Firm Shares pursuant to
this Agreement, the Repurchase shall be consummated; and
(l) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of this Agreement.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending
any such action or claim as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through you expressly for use therein; and provided, further,
that as to any Preliminary Prospectus this indemnity agreement shall not
inure to the benefit of any Underwriter on account of any loss, claim,
damage, liability or action arising from the sale of Shares to any person
by that Underwriter if that Underwriter failed to send or give a copy of
the Prospectus, as the same may be amended or supplemented, to that person
within the time required by the Act, and the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact in such Preliminary Prospectus was corrected in the
Prospectus, unless such failure resulted from non compliance by the Company
with Section 5(c) hereof. The Company reaffirms its indemnification of the
Selling Stockholder pursuant to that certain Registration Rights Agreement
entered into by the Company and the Selling Stockholder, dated as of
December 11, 1981.
(b) The Selling Stockholder (subject to the limitation on indemnity
contained in the penultimate sentence of this Section 8(b)) will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions
15
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but
only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission (i) was made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Stockholder specifically for inclusion therein or (ii) relates to
information concerning the Selling Stockholder, KKR and KKR's affiliates
set forth under the caption "The Selling Stockholder" in any Preliminary
Prospectus and the Prospectus and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Selling Stockholder
shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in any Preliminary Prospectus, the Registration Statement or the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through you
expressly for use therein; and provided, further, that as to any
Preliminary Prospectus this indemnity agreement shall not inure to the
benefit of any Underwriter on account of any loss, claim, damage, liability
or action arising from the sale of Stock to any person by that Underwriter
if that Underwriter failed to send or give a copy of the Prospectus, as the
same may be amended or supplemented, to that person within the time
required by the Act, and the untrue statement or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
in such Preliminary Prospectus was corrected in the Prospectus, unless such
failure resulted from non-compliance by the Company with Section 5(c)
hereof. The aggregate liability of the Selling Stockholder to indemnify the
Underwriters pursuant to the foregoing indemnity agreement shall not exceed
the proceeds received by such Selling Stockholder from the Shares sold by
it pursuant to this Agreement. The Selling Stockholder reaffirms its
indemnification of the Company pursuant to that certain Registration Rights
Agreement entered into by the Selling Stockholder and the Company, dated as
of December 11, 1981.
(c) Each Underwriter will indemnify and hold harmless the Company and
the Selling Stockholder against any losses, claims, damages or liabilities
to which the Company or such Selling Stockholder may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
such Underwriter through you expressly for use therein; and will reimburse
the Company and the Selling Stockholder for any legal or other expenses
reasonably incurred by the Company or such Selling Stockholder in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party
16
shall not relieve it from any liability which it may have to any
indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party (which shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by
such indemnified party, in connection with the defense thereof other than
reasonable costs of investigation.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
the Selling Stockholder on the one hand and the Underwriters on the other
from the offering of the Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subjection
(d) above, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of the Company and the Selling Stockholder on the one hand
and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Selling Stockholder on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Shares purchased under this Agreement (before deducting
expenses) received by the Selling Stockholder bears to the total
underwriting discounts and commissions received by the Underwriters with
respect to the Shares purchased under this Agreement, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Selling Stockholder on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Stockholder and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
subsection (e) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this subsection (e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages
or liabilities (or actions in respect thereof) referred to above in this
subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), (i) no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and (ii) the
Selling Stockholder shall not be required to contribute any amount in
excess of the amount by which proceeds received by such Selling Stockholder
from the Shares
17
sold by it pursuant to this Agreement exceeds that amount of any damages
which such Selling Stockholder has otherwise paid or become liable to pay
by reason of any untrue statement or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Stockholder under
this Section 8 shall be in addition to any liability which the Company and
the Selling Stockholder may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters
under this Section 8 shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and
Selling Stockholder and to each person, if any, who controls the Company or
the Selling Stockholder within the meaning of the Act.
(g) In addition to any obligations otherwise provided for in this
Section 8, the Company hereby agrees to hold harmless and indemnify each
Underwriter for any United States income taxes which such Underwriter
becomes obligated to pay by virtue of the Company being deemed to be a
"United States real property holding corporation" under the Internal
Revenue Code of 1986, as amended.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery,
you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange
for the purchase of such Shares, then the Selling Stockholder shall be
entitled to a further period of thirty-six hours within which to procure
another party or other parties satisfactory to you to purchase such Shares
on such terms. In the event that, within the respective prescribed periods,
you notify the Selling Stockholder that you have so arranged for the
purchase of such Shares, or the Selling Stockholder notifies you that it
has so arranged for the purchase of such Shares, you or the Selling
Stockholder shall have the right to postpone such Time of Delivery for a
period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus,
or in any other documents or arrangements, and the Company agrees to file
promptly any amendments to the Registration Statement or the Prospectus
which in your opinion may thereby be made necessary. The term "Underwriter"
as used in this Agreement shall include any person substituted under this
Section with like effect as if such person had originally been a party to
this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Selling
Stockholder as provided in subsection (a) above, the aggregate number of
such Shares which remains unpurchased does not exceed one-eleventh of the
aggregate number of all the Shares to be purchased at such Time of
Delivery, then the Selling Stockholder shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro
rata share (based on the number of Shares which such Underwriter agreed to
purchase hereunder) of the Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing
herein shall relieve a defaulting Underwriter from liability for its
default.
18
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Selling
Stockholder as provided in subsection (a) above, the aggregate number of
such Shares which remains unpurchased exceeds one-eleventh of the aggregate
number of all the Shares to be purchased at such Time of Delivery, or if
the Selling Stockholder shall not exercise the right described in
subsection (b) above to require non-defaulting Underwriters to purchase
Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Selling Stockholder to sell the
Optional Shares) shall thereupon terminate, without liability on the part
of any non-defaulting Underwriter or the Company or the Selling
Stockholder, except for the expenses to be borne by the Company, the
Selling Stockholder and the Underwriters as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability for
its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Stockholder and the
several Underwriters, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain in
full force and effect, regardless of any investigation (or any statement as
to the results thereof) made by or on behalf of any Underwriter or any
controlling person of any Underwriter, or the Company, or the Selling
Stockholder, or any officer or director or controlling person of the
Company, or any controlling person of the Selling Stockholder, and shall
survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Stockholder shall then be under any
liability to any Underwriter except as provided in Section 6 and Section 8
hereof; but, if for any other reason any Shares are not delivered by or on
behalf of the Selling Stockholder or the Company as provided herein, the
Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for
the purchase, sale and delivery of the Shares not so delivered, but the
Company and the Selling Stockholder shall then be under no further
liability to any Underwriter in respect of the Shares not so delivered,
except as provided in Section 6 and Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter
made or given by you jointly or by Goldman, Sachs & Co. on behalf of you;
and in all dealings with the Selling Stockholder hereunder, you and the
Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Stockholder made or given by
any or all attorneys-in-fact for such Selling Stockholder, if any.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail to
you in care of Goldman, Sachs & Co., at 85 Broad Street, New York, New York
10004, Attention: Registration Department; if to the Selling Stockholder
shall be delivered or sent by mail, telex or facsimile transmission to
counsel for such Selling Stockholder at its address set forth in Schedule
II hereto; and if to the Company shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any
notice to an Underwriter pursuant to Section 8(d) hereof shall be delivered
or sent by mail, telex or facsimile transmission to such Underwriter at its
address set forth in its Underwriters' Questionnaire or telex constituting
such Questionnaire, which address will be supplied to the Company or the
Selling Stockholder by you upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
19
13. This Agreement shall be binding upon, and enure solely to the
benefit of, the Underwriters, the Company and the Selling Stockholder and,
to the extent provided in Sections 8 and 10 hereof, the officers and
directors of the Company and each person who controls the Company, the
Selling Stockholder or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. No
purchaser of any of the Shares from any Underwriter shall be deemed a
successor assign by reason merely of such purchase.
14. No partner of the Selling Stockholder or any successor general
partner of the Selling Stockholder shall have any personal liability for
the performance of any of the Selling Stockholder's obligations hereunder,
and any liability or obligation of the Selling Stockholder arising
hereunder shall be limited to and satisfied only out of the property of the
Selling Stockholder.
15. Time shall be of the essence of this Agreement. As used herein, (a)
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business and (b) the term "subsidiary" shall
have the meaning provided by Rule 405 under the Act.
16. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
17. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be
an original, but all such counterparts shall together constitute one and
the same instrument.
(Signature Page Follows)
20
If the foregoing is in accordance with your understanding, please sign
and return to us ten counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters,
the Company and the Selling Stockholder. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant
to the authority set forth in a form of Agreement among Underwriters the
form of which shall be submitted to the Company and the Selling Stockholder
for examination, upon request, but without warranty on your part as to the
authority of the signers thereof.
Very truly yours,
FRED MEYER, INC.
By:______________________________
Roger A. Cooke
Senior Vice President
"SELLING STOCKHOLDER"
FMI ASSOCIATES LIMITED PARTNERSHIP
By: KKR Associates, General Partner
By:_______________________________
Michael W. Michelson
General Partner
Accepted as of the date hereof
at New York, New York.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
SALOMON BROTHERS INC
WILLIAM BLAIR & COMPANY, L.L.C.
By: ...........................
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
21
SCHEDULE I
Total
Number of
Firm Shares Total
of Stock Number of
to be Optional Shares
Underwriter Purchased to be Purchased
----------- --------- ---------------
Goldman, Sachs & Co.
Lehman Brothers Inc.
Salomon Brothers Inc
William Blair & Company, L.L.C.
22
SCHEDULE II
Total
Number of Total
Firm Shares Number of
of Stock Optional Shares
Selling Stockholder to be Sold to be Sold
------------------- ---------- ----------
FMI Associates Limited
Partnership(a)
- ---------------
(a) The Selling Stockholder is represented by Stoel Rives LLP, 900 S.W.
Fifth Street, Suite 2300, Portland, Oregon 97204.
23
ANNEX I
Pursuant to Section 7(e) of the Underwriting Agreement, Deloitte & Touche
LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements audited by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Act or the Exchange Act, as
applicable, and, in each case, the related published rules and regulations
thereunder;
(iii) The selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus agrees
with the corresponding amounts in the audited consolidated financial
statements for such five fiscal years which were included or incorporated
by reference in the Company's Annual Report on Form 10-K for such fiscal
year or otherwise incorporated by reference in the Prospectus;
(iv) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the latest available interim consolidated financial statements
of the Company and its subsidiaries, inspection of the minute books of the
Company since the date of the latest audited financial statements included
or incorporated by reference in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) as of the date of the latest available unaudited interim
condensed consolidated financial statements of the Company for any
period subsequent to the date of the latest consolidated financial
statements included or incorporated by reference in the Prospectus, if
any, there has been any change in the consolidated capital stock (other
than due to issuances of capital stock upon exercise of options and
warrants, in each case as were outstanding on the date of the latest
audited financial statements included or incorporated by reference in
the Prospectus), any increase in the consolidated long-term debt of the
Company and its subsidiaries or any decrease in consolidated working
capital, net assets or stockholders' equity, and for the period from
the date of the latest audited consolidated financial statements
included or incorporated by reference in the Prospectus, there has been
any decrease in consolidated net sales, gross margin, income from
operations or net income as compared with the comparable period of the
preceding year, except in each case for changes, decreases or increases
which the Prospectus discloses have occurred or may occur or which are
described in such letter;
(B) as of a specified date not more than five days prior to the
date of such letter, there has been any change in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and warrants, in each case as were outstanding on the date of
the latest audited financial statements included or incorporated by
A-1
reference in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries or decrease in
consolidated working capital, net assets or stockholders'
equity, or any increases or decreases in any other items specified by
the representatives, in each case as compared with amounts showing in
the latest consolidated balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes, increases
or decreases which the Prospectus discloses have occurred or may occur
or which are described in such letter; and
(C) for the period from the date of the latest consolidated
financial statements included or incorporated by reference in the
Prospectus to the specified date referred to in Clause (B) there was
any decrease in consolidated net sales, gross margin, income from
operations or net income, or any increases or decreases in any other
items specified by the representatives, in each case as compared with
the comparable period of the preceding year and any other period of
corresponding length specified by the representatives, except in each
case for decreases or increases which the Prospectus discloses have
occurred or may occur or which are described in such letter.
(v) In addition to the audits referred to in their report included or
incorporated by reference in the Prospectus and the inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(iv) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to the Company and its subsidiaries, which appear
or are incorporated by reference in the Prospectus, or in Part II of, or in
exhibits and schedules to, the Registration Statement specified by the
representatives, or in documents incorporated by reference in the
Prospectus specified by the representatives, which procedures consist
principally of comparing such amounts, percentages and financial
information with the corresponding amounts, percentages and financial
information included in or derived from the accounting records of the
Company and its subsidiaries and the accountant's shall have found such
amounts, percentages and financial information to be in agreement.
A-2
ANNEX I(A)
Form of Letter of Deloitte & Touche LLP Delivered
Prior to Execution of Agreement
A-3
ANNEX I(B)
Form of Letter of Deloitte & Touche LLP Delivered
at each Time of Delivery
A-4
ANNEX II(A)
Form of Opinion of Stoel Rives LLP, Counsel to the Company
A-5
ANNEX II(B)
Form of Opinion of Stoel Rives LLP, Counsel to the Selling Stockholder
A-6