SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities
Exchange Act of 1934
GIANT FOOD INC.
(Name of Subject Company)
Mark H. Berey, Michael W. Broomfield,
Winston doCarmo, Mark Iskander,
Pete L. Manos, Raymond A. Mason,
Roger D. Olson, Peter F. O'Malley,
David W. Rutstein, Barry F. Scher
and Constance M. Unseld
(Name of Person(s) Filing Statement)
Class A Common Stock (Non-Voting), $1.00 par value
(Title of Class of Securities)
374478105
(Cusip Number of Class of Securities)
David W. Rutstein, Esq.
6300 Sheriff Road
Landover, Maryland 20785
(301) 341-4100
(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person(s) filing statement)
Copy to:
Wayne K. Johnson, Esq.
Jorden Burt Boros Cicchetti Berenson & Johnson LLP
Suite 400 East
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007
(202) 965-8100
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This Amendment No. 1 amends and supplements Items 2, 3, 4, 5, 6, 8 and
9 of the Solicitation/Recommendation Statement on Schedule 14D-9 filed on May
19, 1998 (the "Schedule 14D-9") on behalf of Pete L. Manos, Constance M. Unseld,
Peter F. O'Malley, Raymond A. Mason, Michael W. Broomfield, David W. Rutstein,
Mark H. Berey, Roger D. Olson, Winston doCarmo, Barry F. Scher and Mark Iskander
(the "Director/Management Committee") relating to the tender offer by
Koninklijke Ahold N.V., a public company with limited liability incorporated
under the laws of The Netherlands (the "Purchaser"), to purchase for cash all of
the outstanding shares of Class A Common Stock (Non-Voting), par value $1.00 per
share (the "Shares"), of Giant Food Inc., a Delaware corporation (the
"Company"), at a price of $43.50 per Share, net to the seller in cash, without
interest thereon (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase, dated May 19, 1998
(the "Offer to Purchase"), and the related Letter of Transmittal and Notice of
Guaranteed Delivery (which, as may be amended and supplemented from time to
time, collectively constitute the "Offer"). The Offer is being made pursuant to
a Stock Purchase Agreement, dated as of May 19, 1998, between the Purchaser and
The 1224 Corporation ("1224") (the "Stock Purchase Agreement"). All capitalized
terms not defined herein are used as defined in the Schedule 14D-9.
ITEM 2. TENDER OFFER OF THE PURCHASER.
Item 2 of the Schedule 14D-9 is hereby amended by amending and
restating the first sentence of the first paragraph thereof to read as follows:
"This statement relates to a tender offer by Koninklijke Ahold
N.V., a public company with limited liability incorporated under the
laws of The Netherlands with its corporate seat in Zaandam
(Municipality Zanstaad) (the "Purchaser"), to purchase for cash all of
the outstanding Shares at a price of $43.50 per Share, net to the
seller in cash, without interest thereon (the "Offer Price"), upon the
terms and subject to the conditions set forth in the Purchaser's Offer
to Purchase, dated May 19, 1998 (the "Offer to Purchase"), and the
related Letter of Transmittal (which, as may be amended and
supplemented from time to time, together constitute the "Offer")."
Item 2 of the Schedule 14D-9 is hereby further amended by amending and
restating the third sentence of the second paragraph thereof and inserting
therein a new fourth sentence, to read together as follows:
"1224's obligation to sell the Class AC Shares to the Purchaser
pursuant to the Stock Purchase Agreement is conditioned upon, among
other things, the consummation of the Offer. Purchaser's obligation to
purchase the Class AC Shares pursuant to the Stock Purchase Agreement
is conditioned upon, among other things, that at any time on or after
the date of the Stock Purchase Agreement and at or before the time of
payment for the Class AC Shares thereunder, none of the Tender Offer
Conditions (as defined below) shall have occurred."
Item 2 of the Schedule 14D-9 is hereby further amended by deleting the
penultimate sentence of the second paragraph thereof.
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ITEM 3. IDENTITY AND BACKGROUND.
Item 3(b)(1)of the Schedule 14D-9 is hereby amended by amending and
restating in its entirety Annex A to the Schedule 14d-9 which is referred to in
such Item. Annex A, as so amended and restated, is attached hereto.
Item 3(b)(2)of the Schedule 14D-9 is hereby amended by amending and
restating the first paragraph thereof to read as follows:
"On May 19, 1998, 1224 and the Purchaser entered into the
Stock Purchase Agreement. Pursuant to the Stock Purchase Agreement,
1224 agreed to sell, and the Purchaser agreed to purchase, subject to
the terms and conditions thereof, all of the Class AC Shares at a price
of $43.00 per share. The Stock Purchase Agreement, however, provided
that if the Purchaser acquires, or enters into a binding agreement to
acquire, all of the Class AL Shares prior to the Expiration Date of the
Offer, the Offer Price of $43.00 per Share, net to the seller in cash,
would be increased to $43.50 per Share, net to the seller in cash.
Subsequent to the execution of the Stock Purchase Agreement, the
Purchaser and Sainsbury agreed, subject to agreement on documentation,
for the acquisition by the Purchaser of all of the Class AL Shares.
Thereafter, the Purchaser commenced the Offer at an Offer Price of
$43.50 per Share, net to the seller in cash. 1224 has agreed in the
Stock Purchase Agreement to tender pursuant to the Offer, upon the
terms and subject to the conditions set forth in the Stock Purchase
Agreement, all of the Shares owned by 1224. As more fully described
below, the obligation of the Purchaser to purchase the Class AC Shares
pursuant to the Stock Purchase Agreement is subject to the satisfaction
of the following conditions: the truth of 1224's representations and
warranties, the performance by 1224 of its covenants, no injunctions,
receipt of consents and approvals, the non-occurrence of any Tender
Offer Conditions, the resignation of the Directors of the Company
elected by 1224 and the approval of the Offer by the Board of Directors
of the Company. As more fully described below, the obligations of 1224
to sell the Class AC Shares is subject to the satisfaction of the
following conditions: the truth of the representations and warranties
of the Purchaser, the performance by the Purchaser of its covenants, no
injunctions, the expiration of waiting periods under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 ("HSR Act") and consummation
of the Offer."
Item 3(b)(2)of the Schedule 14D-9 is hereby further amended by deleting
the second sentences of the second paragraph thereof and inserting in lieu
thereof the following sentence:
"The Director/Management Committee has been further advised that the
Board of Directors of the Company met on May 28 and 29, 1998, and
unanimously determined that the Offer is in the best interests of the
Company and the holders of the Shares and recommended that the holders
of the Shares accept the Offer and tender their Shares to the Purchaser
pursuant to the Offer."
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Item 3(b)(2)of the Schedule 14D-9 is hereby further amended by
inserting after the second paragraph thereof the following discussion of
"Conditions of the Offer":
"Conditions of the Offer. The terms of the Offer provide that,
notwithstanding any other provision of the Offer or the Stock Purchase
Agreement, the Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the Securities
and Exchange Commission (the "Commission"), including Rule 14e-1(c)
under the Securities Exchange Act of 1934 (the "Exchange Act"), pay for
any Shares tendered pursuant to the Offer and may terminate or amend
the Offer and may postpone the acceptance of and payment for Shares (i)
if the Stock Purchase Agreement shall have been terminated in
accordance with its terms or the purchase and sale of the Class AC
Shares pursuant to the Stock Purchase Agreement shall not have been
consummated prior to or simultaneously with the consummation of the
purchase of the Shares pursuant to the Offer; or (ii) if, at any time
on or after May 19, 1998 and before the Expiration Date, any of the
following shall occur (each a "Tender Offer Condition"):
(a) there shall be threatened, instituted or pending
any action or proceeding by any government or governmental
authority or agency, domestic or foreign, or by any other
person, domestic or foreign, before any court or governmental
authority or agency, domestic or foreign, other than the
routine application of the waiting period provisions of the
HSR Act (including a request for additional information or
documentary material pursuant to 16 C.F.R. Sec.803.20) to the
purchase of the Class AC Shares pursuant to the Stock Purchase
Agreement, without consent of the Purchaser, (i) challenging
or seeking to, or which could reasonably be expected to make
illegal, impede, materially delay or otherwise directly or
indirectly restrain, prohibit or make more costly the
acquisition of the Class AC Shares or the Offer or seeking to
obtain material damages, (ii) seeking to prohibit or limit the
ownership or operation by the Purchaser of all, or, in the
sole judgment of the Purchaser, a portion that would
reasonably be expected to substantially impair or
substantially reduce the Purchaser's ability to control,
direct or manage on a day-to-day basis the business or affairs
of the Company or to substantially impair or substantially
reduce the overall benefits expected, as of the date of the
Stock Purchase Agreement, to be realized by the Purchaser from
the consummation of the transactions contemplated by the Stock
Purchase Agreement or would have a material adverse effect on
the business, properties, assets, liabilities, condition
(financial or otherwise), prospects, operations or results of
operations of the Purchaser and its subsidiaries taken as a
whole or the Company and its subsidiaries taken as a whole (a
"significant portion"), of the business or assets of the
Company or any of its subsidiaries or to compel the Purchaser
to dispose of or hold separately all, or, in the sole judgment
of the Purchaser, a significant portion of, the business or
assets of the Purchaser or the Company or any of its
subsidiaries, or seeking to impose any limitation on the
ability of the Purchaser to conduct such business or own such
assets which limitation, in the sole
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judgment of the Purchaser, would reasonably be expected to
substantially impair or substantially reduce the Purchaser's
ability to control, direct or manage on a day-to-day basis the
business or affairs of the Company or to substantially impair
or substantially reduce the overall benefits expected, as of
the date of the Stock Purchase Agreement, to be realized by
the Purchaser from the consummation of the transactions
contemplated by the Stock Purchase Agreement or would have a
material adverse effect on the business, properties, assets,
liabilities, condition (financial or otherwise), prospects,
operations or results of operations of the Purchaser and its
subsidiaries taken as a whole or the Company and its
subsidiaries taken as a whole, (iii) seeking to impose
limitations on the ability of the Purchaser effectively to
acquire, hold or exercise full rights of ownership of any
shares of capital stock of the Company, which limitations, in
the sole judgment of the Purchaser, are significant or (iv)
seeking to require divestiture by the Purchaser of any shares
of capital stock of the Company;
(b) there shall be any action taken, or any statute,
rule, regulation, legislation, interpretation, judgment, order
or injunction proposed, enacted, enforced, promulgated,
amended, issued or deemed applicable to (i) the Purchaser, the
Company or any subsidiary of the Company or (ii) the Offer,
the acquisition of any shares of capital stock of the Company,
by any legislative body, court, government or governmental,
administrative or regulatory authority or agency, domestic or
foreign, other than the routine application of the waiting
period provisions of the HSR Act (including a request for
additional information or documentary materials pursuant to 16
C.F.R. Sec. 803.20) to the purchase of the Class AC Shares
pursuant to the Stock Purchase Agreement, which could
reasonably be expected to directly or indirectly, result in
any of the consequences referred to in clauses (i) through
(iv) of paragraph (a) above;
(c) any change shall have occurred or been threatened
(or any condition, event or development shall have occurred or
been threatened involving a prospective change), or the
Purchaser shall have become aware of any fact, that is
reasonably likely to have a Material Adverse Effect (as
defined below under "Stock Purchase Agreement -- Interim
Operations")on the Company;
(d) there shall have occurred (i) any general
suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the
over-the-counter market (excluding any coordinated trading
halt triggered solely as a result of a specified decrease in a
market index), (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United
States, The Netherlands or any other jurisdiction of
incorporation or organization of any bank or other financial
institution in any manner involved with the financing of the
purchase of the Class AC Shares pursuant to the Stock Purchase
Agreement or the Offer, (iii) any material limitation (whether
or not mandatory) by any U.S. Federal, state
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or foreign governmental authority or agency on the extension
of credit by banks or other lending institutions, (iv) a
commencement or escalation of a war or armed hostilities or
other national or international calamity directly or
indirectly involving the United States or The Netherlands or
(v) in the case of any of the foregoing existing at the time
of the commencement of the Offer, a material acceleration or
worsening thereof;
(e) any of the representations or warranties made by
1224 in the Stock Purchase Agreement (in the case of any
representations or warranties with respect to the Company,
without regard to the knowledge of 1224) that are qualified as
to materiality shall be untrue or incorrect in any respect or
any such representations and warranties that are not so
qualified shall be untrue or incorrect in any respect which
would have a Material Adverse Effect, in each case as of the
date of the Stock Purchase Agreement and the scheduled
expiration date of the Offer as if such representation or
warranty were made at the time of such determination and
except as to any such representation or warranty which speaks
as of a specific date or for a specific period, which must be
untrue or incorrect in the foregoing respects as of such
specific date or period;
(f) (i) the Board of Directors of the Company shall
have failed to approve or recommend the Offer, (ii) the Board
of Directors of the Company shall have withdrawn or modified
in a manner adverse to the Purchaser the approval or
recommendation of the Offer or approved or recommended any
Acquisition Proposal (as defined below under "Stock Purchase
Agreement -- No Solicitation"), (iii) any corporation,
partnership, person or other entity or group shall have
entered into a definitive agreement or an agreement in
principle with the Company with respect to any Acquisition
Proposal or (iv) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the things
set forth in clauses (ii) or (iii) of this paragraph (f);
(g) 1224 shall have failed to perform in any material
respect any obligation or to comply in any material respect
with any agreement or covenant of 1224 to be performed or
complied with by it under the Stock Purchase Agreement and, in
the case only of failures to perform any agreement or covenant
of 1224 described below under "Stock Purchase Agreement --
Interim Operations", such failure to perform would have a
Material Adverse Effect or materially adversely affect the
ability of the Purchaser to consummate the transactions
contemplated by the Stock Purchase Agreement or have a
material adverse effect on the value of the Company and its
subsidiaries taken as a whole; or
(h) the Company or any of its subsidiaries shall have
(i) failed to act in accordance with (b)(iii)(A) and (B) under
"Stock Purchase Agreement -- Interim Operations" and (b)(i)(B)
and (iv) under "Stock Purchase Agreement -- No Solicitation"
or (ii) taken any of the actions listed in (c)(iii)(A)-(O)
under "Stock Purchase
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Agreement -- Interim Operations" or (b)(i)(A) under "Stock
Purchase Agreement -- No Solicitation" below;
which, in the reasonable judgment of the Purchaser, in any such case
and regardless of the circumstances giving rise to any such condition,
makes it inadvisable to proceed with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of the
Purchaser and may be asserted by the Purchaser, or may be waived by the
Purchaser, in whole or in part at any time and from time to time in its
sole discretion. The failure by the Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination by the
Purchaser concerning the events described under "Conditions of the
Offer" will be final and binding upon all parties to the Stock Purchase
Agreement.
The conditions to the Offer contained in the Stock Purchase
Agreement included a condition that there be validly tendered and not
properly withdrawn prior to the Expiration Date a number of Shares
which constitutes at least 65% of the outstanding shares on a fully
diluted basis. Upon reaching agreement with Sainsbury on May 19, 1998
to acquire the Class AL Shares, the Purchaser agreed not to make this a
condition of the Offer."
Item 3(b)(2)of the Schedule 14D-9 is hereby further amended by
inserting after the discussion of "Stock Purchase Agreement -- Options," the
following discussion of "Conditions to Obligations":
"Conditions to Obligations. The obligation of the Purchaser to
purchase the Class AC Shares pursuant to the Stock Purchase Agreement
is subject to the satisfaction or waiver of a number of conditions
including: (i) the representations and warranties of 1224 contained in
the Stock Purchase Agreement being true and correct in all material
respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such
date and the representations and warranties of 1224 with respect to the
Company in the Stock Purchase Agreement being true and correct in all
material respects, without regard to the knowledge of 1224, on and as
of the Closing Date with the same effect as though such representations
and warranties had been made on such date; (ii) all of the agreements
of 1224 to be performed and all of the covenants of 1224 to be complied
with pursuant to the Stock Purchase Agreement prior to the Closing Date
shall have been duly performed or complied with, as applicable, in all
material respects; (iii) no preliminary or permanent injunction or
other order shall have been issued by any court or by any governmental
or regulatory agency, body or authority which prohibits the
consummation of the Offer, the purchase of the Class AC Shares or any
of the other transactions contemplated by the Stock Purchase Agreement;
(iv) all governmental and third-party consents, waivers and approvals,
if any, disclosed in any schedule to the Stock Purchase Agreement or
necessary to permit the consummation of the transactions contemplated
by the Stock Purchase Agreement shall have been received; all time
periods under the HSR Act applicable to the purchase of the Class AC
shares shall have
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expired or been terminated; and no governmental or other
instrumentality or agency shall have required that, in exchange for
approval of the transactions contemplated by the Stock Purchase
Agreement, the Purchaser, the Company or any of their respective
affiliates sell or otherwise dispose of, or hold separate particular
assets or categories of assets, or businesses, or withdraw from doing
business in a particular jurisdiction or take any other action that, in
the aggregate, in the sole judgment of the Purchaser, would reasonably
be expected to substantially impair or substantially reduce the
Purchaser's ability to control, direct or manage on a day-to-day basis
the business or affairs of the Company or to substantially impair or
substantially reduce the overall benefits expected, as of the date of
the Stock Purchase Agreement, to be realized by the Purchaser from the
consummation of the transactions contemplated by the Stock Purchase
Agreement or would have a material adverse effect on the business,
properties, assets, liabilities, condition (financial or otherwise),
prospects, operations or results of operations of the Purchaser and its
subsidiaries taken as a whole or the Company and its subsidiaries taken
as a whole; (v) at any time on or after the date of the Stock Purchase
Agreement and at or before the time of payment for the Class AC Shares
thereunder, none of the Tender Offer Conditions shall have occurred;
(vi) each of the persons elected by 1224 as a director of the Company
shall have delivered to the Purchaser a written resignation from such
position; and (vii) the Board of Directors of the Company shall have
recommended acceptance of the Offer by the holders of the Shares. The
obligation of 1224 to sell the Class AC Shares pursuant to the Stock
Purchase Agreement is also subject to the satisfaction or waiver of a
number of conditions including: (i) the representations and warranties
of the Purchaser contained in the Stock Purchase Agreement being true
and correct in all respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on
and as of such date; (ii) all of the agreements of the Purchaser to be
performed and all of the covenants of the Purchaser to be complied with
pursuant to the Stock Purchase Agreement prior to the Closing Date
shall have been duly performed or complied with, as applicable; (iii)
no preliminary or permanent injunction or other order shall have been
issued by any court or by any governmental or regulatory agency, body
or authority which prohibits the consummation of the Offer, the
purchase of the Class AC Shares or any of the other transactions
contemplated by the Stock Purchase Agreement; (iv) all applicable time
periods under the HSR Act shall have expired or been terminated; and
(v) the purchase of the Shares pursuant to the Offer shall be
consummated simultaneously with the purchase of the Class AC Shares
pursuant to the Stock Purchase Agreement."
Item 3(b)(2) of the Schedule 14D-9 is hereby further amended by
deleting the second sentence of the second paragraph of the discussion of "The
Offer" under the "Stock Purchase Agreement."
Item 3(b)(2) of the Schedule 14D-9 is hereby further amended by
inserting after the discussion of the "Stock Purchase Agreement" and before Item
4 the following discussions of the "Sainsbury Agreement," the "Confidentiality
Agreement" and the "Exclusivity Agreement":
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"Sainsbury Agreement. On May 19, 1998, the Purchaser and
Sainsbury announced an agreement, subject to agreement on
documentation, (i) for Sainsbury to sell, and for the Purchaser to
purchase, all of the Class AL Shares for an aggregate purchase price of
$100,000,000 on the terms and conditions to be agreed upon and (ii) for
Sainsbury to tender pursuant to the Offer, upon the terms and subject
to the conditions set forth in the Offer to Purchase, all of the Shares
owned by Sainsbury. Subsequently, the Purchaser entered into a Stock
Purchase Agreement dated as of May 27, 1998 with Sainsbury and JS Mass.
Securities Corp. ("JS Mass") (the "Sainsbury Agreement"), a
wholly-owned subsidiary of Sainsbury, to such effect.
The following is a summary of the material terms of the
Sainsbury Agreement. The summary is qualified in its entirety by
reference to the full text of the Sainsbury Agreement which has been
filed as Exhibit 4 hereto and which is incorporated herein by
reference.
Purchase of the Class AL Shares. Pursuant to the Sainsbury
Agreement, JS Mass has agreed, and Sainsbury has agreed to cause JS
Mass, to sell, and the Purchaser has agreed to purchase, subject to the
terms and conditions thereof, all of the Class AL Shares at an
aggregate price of $100,000,000. JS Mass has agreed in the Sainsbury
Agreement to tender pursuant to the Offer, upon the terms and subject
to the conditions set forth in the Sainsbury Agreement, all of the
Shares owned by JS Mass. As more fully described below, the obligation
of the Purchaser to purchase the Class AL Shares is subject to the
satisfaction of the following conditions: the truth of Sainsbury's and
JS Mass' representations and warranties, the performance by Sainsbury
and JS Mass of their respective covenants, no injunctions, receipt of
consents and approvals, the non-occurrence of the Tender Offer
Conditions, the resignation of the Directors of the Company elected by
Sainsbury, the consummation of the purchase of the Class AC Shares
pursuant to the Stock Purchase Agreement and the consummation of the
Offer. As more fully described below, the obligation of JS Mass to, and
of Sainsbury to cause JS Mass to, sell the Class AL Shares is subject
to the satisfaction of the following conditions: the truth of the
representations and warranties of the Purchaser, the performance by the
Purchaser of its covenants, no injunctions, the consummation of the
Offer and the consummation of the purchase of the Class AC Shares
pursuant to the Stock Purchase Agreement.
No Solicitation. The Sainsbury Agreement provides that
Sainsbury, JS Mass and each of their respective officers, directors and
employees shall, and shall instruct their respective agents to,
immediately cease any discussions or negotiations with any other
parties that may be ongoing with respect to any purchase of the Class
AL Shares or any Sainsbury Acquisition Proposal (as defined below).
Neither Sainsbury nor JS Mass shall, directly or indirectly, take (and
neither Sainsbury nor JS Mass shall authorize or permit its agents to
so take) any action to (i) encourage, solicit or initiate the making of
any offer to purchase the Class AL Shares or any Sainsbury Acquisition
Proposal, (ii) enter into any agreement with respect to any offer to
purchase the Class AL Shares or any Sainsbury Acquisition Proposal, or
(iii) participate in any way in discussions or negotiations with, or
furnish or disclose any
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information to, any person (other than the Purchaser) in connection
with, or take any other action to facilitate knowingly, or that such
person should have known would facilitate, any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead
to, any offer to purchase the Class AL Shares or any Sainsbury
Acquisition Proposal. "Sainsbury Acquisition Proposal" shall mean any
inquiry, proposal or offer from any person (other than the Purchaser)
relating to any direct or indirect acquisition or purchase of all or
any of the Class AL Shares, of a substantial amount of assets of the
Company or any of its subsidiaries or of more than 10% of any class of
equity securities of the Company or any of its subsidiaries, any tender
offer or exchange offer that if consummated would result in any person
beneficially owning more than 10% of any other class of equity
securities of the Company or any of its subsidiaries, any merger,
consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries, other
than the transactions contemplated by the Sainsbury Agreement, or any
other transaction involving the Company or any of its securities or
assets the consummation of which could reasonably be expected to
impede, interfere with, prevent or materially delay the Offer, the
acquisition of the Class AL Shares pursuant to the Sainsbury Agreement
or the acquisition of the Class AC Shares pursuant to the Stock
Purchase Agreement. In addition, the Sainsbury Agreement provides that
each of Sainsbury and JS Mass shall advise the Purchaser of any request
for information or of any offer to purchase the Class AL Shares or any
Sainsbury Acquisition Proposal, or any inquiry or proposal with respect
to any offer to purchase the Class AL Shares or any Sainsbury
Acquisition Proposal, the material terms and conditions of such
request, offer or Sainsbury Acquisition Proposal and of any material
changes thereto, and the identity of the entity or person making any
such inquiry or proposal.
Conditions to Obligations. The obligation of the Purchaser to
purchase the Class AL Shares pursuant to the Sainsbury Agreement is
subject to the satisfaction or waiver of a number of conditions
including: (i) the representations and warranties of Sainsbury and JS
Mass contained in the Sainsbury Agreement being true and correct in all
material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of
such date; (ii) all of the agreements of Sainsbury and JS Mass to be
performed and all of the covenants of Sainsbury and JS Mass to be
complied with pursuant to the Sainsbury Agreement prior to the Closing
Date shall have been duly performed or complied with, as applicable, in
all material respects; (iii) no preliminary or permanent injunction or
other order shall have been issued by any court or by any governmental
or regulatory agency, body or authority which prohibits the
consummation of the Offer, the purchase of the Class AL Shares or any
of the other transactions contemplated by the Sainsbury Agreement; (iv)
all governmental and third-party consents, waivers and approvals, if
any, specifically disclosed in the Sainsbury Agreement or necessary to
permit the consummation of the transactions contemplated by the
Sainsbury Agreement shall have been received; all time periods under
the HSR Act applicable to the purchase of the Class AC Shares under the
Stock Purchase Agreement shall have expired or been terminated; and no
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governmental or other instrumentality or agency shall have required
that, in exchange for approval of the transactions contemplated by the
Sainsbury Agreement, the Purchaser, the Company or any of their
respective affiliates sell or otherwise dispose of, or hold separate
particular assets or categories of assets, or businesses, or withdraw
from doing business in a particular jurisdiction or take any other
action that, in the aggregate, in the sole judgment of the Purchaser,
would reasonably be expected to substantially impair or substantially
reduce the Purchaser's ability to control, direct or manage on a
day-to-day basis the business or affairs of the Company or to
substantially impair or substantially reduce the overall benefits
expected, as of the date of the Sainsbury Agreement, to be realized by
the Purchaser from the consummation of the transactions contemplated by
the Stock Purchase Agreement or would have a material adverse effect on
the business, properties, assets, liabilities, condition (financial or
otherwise), prospects, operations or results of operations of the
Purchaser and its subsidiaries taken as a whole or the Company and its
subsidiaries taken as a whole; (v) at any time on or after the date of
the Sainsbury Agreement and at or before the time of payment for the
Class AL Shares thereunder, none of the Tender Offer Conditions shall
have occurred; (vi) each of the persons appointed by JS Mass as a
director of the Company shall have delivered to the Purchaser a written
resignation from such position; and (vii) the purchase of all of the
Class AC Shares pursuant to the Stock Purchase Agreement shall be
consummated simultaneously with the purchase of the Class AL Shares
pursuant to the Sainsbury Agreement; and (viii) the purchase of any
Shares tendered pursuant to the Offer and not withdrawn prior to the
expiration of the Offer shall be consummated simultaneously with the
purchase of the Class AL Shares pursuant to the Sainsbury Agreement.
The obligation of JS Mass to sell the Class AL Shares pursuant to the
Sainsbury Agreement is also subject to the satisfaction or waiver of a
number of conditions including: (i) the representations and warranties
of the Purchaser contained in the Sainsbury Agreement being true and
correct in all respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on
and as of such date; (ii) all of the agreements of the Purchaser to be
performed and all of the covenants of the Purchaser to be complied with
pursuant to the Sainsbury Agreement prior to the Closing Date shall
have been duly performed or complied with, as applicable; (iii) no
preliminary or permanent injunction or other order shall have been
issued by any court or by any governmental or regulatory agency, body
or authority which prohibits the consummation of the Offer, the
purchase of the Class AL Shares or any of the other transactions
contemplated by the Sainsbury Agreement; (iv) the purchase of the
Shares pursuant to the Offer shall be consummated simultaneously with
the purchase of the Class AL Shares pursuant to the Sainsbury
Agreement; and (v) the purchase of the Class AC Shares pursuant to the
Stock Purchase Agreement shall be consummated simultaneously with the
purchase of the Class AL Shares pursuant to the Sainsbury Agreement.
Agreement to Use Best Efforts. Pursuant to the Sainsbury
Agreement and subject to the terms and conditions thereof, each of
Sainsbury, JS Mass and the Purchaser shall, with respect to matters
within their respective control, cooperate and use their respective
best
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efforts to (i) take, or cause to be taken, all appropriate action, and
do, or cause to be done, all reasonable things necessary and proper
under applicable law to consummate the transactions contemplated by the
Sainsbury Agreement as promptly as practicable, (ii) obtain from any
governmental authority, regulatory organization or other
instrumentality or agency or any other third party any licenses,
permits, consents, waivers, approvals, authorizations, qualifications,
or orders required to be obtained or made by Sainsbury, JS Mass or the
Purchaser or any of their subsidiaries in connection with the
authorization, execution and delivery of the Sainsbury Agreement and
the consummation of the transactions contemplated therein, and (iii) as
promptly as practicable, make, or cause to be made, all filings
necessary, proper or advisable with respect to the Sainsbury Agreement
and the transactions contemplated therein under any applicable laws or
regulations. In addition, the Sainsbury Agreement provides that
Sainsbury, JS Mass and the Purchaser shall cooperate with each other in
connection with the making of all such filings, including providing
copies of all such documents to the non-filing party and its advisors
prior to filing and, if requested, to accept all reasonable additions,
deletions or changes suggested in connection therewith. Sainsbury, JS
Mass and the Purchaser shall use their respective best efforts to
furnish to each other all information required for any application or
other filing to be made pursuant to the rules and regulations of any
applicable law in connection with the transactions contemplated by the
Sainsbury Agreement. Notwithstanding anything to the contrary in this
paragraph, none of Sainsbury, JS Mass, the Purchaser or the Company or
any of their respective subsidiaries shall be required to sell or
otherwise dispose of, or hold separate (through the establishment of a
trust or otherwise) particular assets or categories of assets, or
business of the Purchaser, Sainsbury, JS Mass, the Company or any of
their affiliates or withdraw from doing business in a particular
jurisdiction or take any other action that, in the aggregate, in the
sole judgment of the Purchaser, would reasonably be expected to
substantially impair or substantially reduce the Purchaser's ability to
control, direct or manage on a day-to-day basis the business or affairs
of the Company or to substantially impair or reduce the overall
benefits expected, as of the date hereof, to be realized by the
Purchaser from the consummation of the transactions contemplated by the
Sainsbury Agreement or would have a material adverse effect on the
business, properties, assets, liabilities, condition (financial or
otherwise), prospects, operations or results of operations of the
Purchaser and its subsidiaries taken as a whole or the Company and its
subsidiaries taken as a whole.
Representations and Warranties. In the Sainsbury Agreement,
Sainsbury and JS Mass have made customary representations and
warranties to the Purchaser with respect to, among other things, their
organization, corporate authority, ownership of the Class AL Shares and
required consents and approvals.
Termination. If any precondition to the completion of the
transactions contemplated by the Sainsbury Agreement is not fulfilled
on or prior to December 31, 1998, then any party may terminate the
Sainsbury Agreement. In addition, the Sainsbury Agreement shall
terminate if the Stock Purchase Agreement or the Offer shall be
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<PAGE>
terminated pursuant to their respective terms prior to the purchase of
any Class AL Shares pursuant to the Sainsbury Agreement.
Other Agreements. Without the consent of Sainsbury and JS
Mass, the Purchaser shall not (a) reduce the number of Shares to be
purchased pursuant to the Offer, (b) reduce the Offer Price, (c) modify
or add to the Tender Offer Conditions in a manner that is materially
adverse to the holders of the Shares or (d) change the form of
consideration payable in the Offer. In addition, if the Purchaser
purchases any Shares pursuant to the Offer, it will waive all
unsatisfied conditions to the Purchaser's obligations to purchase the
Class AL Shares under the Sainsbury Agreement and will purchase the
Class AL Shares and if the Purchaser purchases the Class AL Shares
pursuant to the Sainsbury Agreement, it will waive all unsatisfied
Tender Offer Conditions and will purchase any Shares validly tendered
pursuant to the Offer and not withdrawn prior to the expiration of the
Offer.
Confidentiality Agreement. The following is a summary of the
Confidentiality Agreement dated as of February 2, 1998 between the
Purchaser and 1224 (the "Confidentiality Agreement"). The summary is
qualified in its entirety by reference to the full text of the
Confidentiality Agreement, a copy of which is filed as Exhibit 5 hereto
and which is incorporated herein by reference.
Under the Confidentiality Agreement, the Purchaser agreed to
use information furnished by 1224 and the Company that is not otherwise
generally available to the public (other than as a result of disclosure
by the Purchaser or its representatives) (the "Received Material")
exclusively for the purpose of evaluating an acquisition by the
Purchaser from 1224 of the Class AC Shares. In addition, the Purchaser
agreed not to disclose any of the Received Materials other than under
certain circumstances.
Exclusivity Agreement. The following is a summary of the
Letter Agreement dated April 27, 1998, between the Purchaser and 1224
regarding exclusivity (the "Exclusivity Agreement"). The summary is
qualified in its entirety by reference to the full text of the
Exclusivity Agreement, a copy of which is filed as Exhibit 6 hereto and
which is incorporated herein by reference.
Under the Exclusivity Agreement, 1224 agreed that from the
date of the Exclusivity Agreement until May 31, 1998, neither it nor
any of its agents would, directly or indirectly, take any action to
enter into, solicit or otherwise encourage (i) any proposal to acquire
any of the Class AC Shares, a substantial amount of the assets of the
Company or more than 10% of any class of equity securities, (ii) any
tender or exchange offer, or (iii) any merger, consolidation or similar
transaction. However, pursuant to the Exclusivity Agreement, 1224
could, in response to an unsolicited acquisition proposal from J
Sainsbury (USA) Holdings Inc. or any affiliate thereof (collectively
the "Sainsbury Group"), (i) enter into negotiations with the Sainsbury
Group if 1224 determined that the unsolicited proposal from the
Sainsbury Group was superior to the proposal of the Purchaser and that
failing to consider the proposal from the Sainsbury Group would be a
breach of
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fiduciary duty by the Board of Directors of 1224 and (ii) after notice
to the Purchaser, enter into an acquisition agreement with the
Sainsbury Group if 1224 and the Purchaser are unable to enter into a
stock purchase agreement meeting certain requirements."
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Item 4(a) of the Schedule 14D-9 ("BACKGROUND AND RECOMMENDATION")is hereby
amended by amending and restating the eighth through the penultimate paragraphs
thereof to read in their entirety as follows:
"Subsequent to such meeting, representatives of PaineWebber,
Wasserstein and Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), the financial advisor to the Purchaser, had several
conversations regarding the transaction. At a meeting on March 31,
1998, representatives of Merrill Lynch indicated to representatives of
PaineWebber and Wasserstein that the Purchaser would be willing to
offer $41.25 for the Class AC Shares and the Shares, subject to the
condition that the Purchaser is able to acquire the Class AL Shares
from Sainsbury. The representatives of PaineWebber and Wasserstein
stated that they believed their clients would not accept such an offer.
On April 7, 1998, representatives of Merrill Lynch met with
representatives of PaineWebber and Wasserstein, at which meeting
PaineWebber and Wasserstein made a presentation regarding the Company's
financial results, stock trading history, northern division and cost
savings initiatives. On April 15, 1998, meetings were held between
representatives of Sainsbury and Mr. O'Malley, the Chairman of the
Special Committee, and later that day between representatives of 1224
and Sainsbury at which Sainsbury advised that although it was content
to maintain its current investment in the Company, it was unwilling,
based on the current market price of approximately $38.00 for the
Shares, to purchase the Class AC Shares or any additional Shares.
On April 27, 1998, the Purchaser and 1224 executed an
exclusivity agreement pursuant to which 1224 agreed from the date of
such agreement until May 31, 1998, not to solicit or encourage any
proposal to acquire the Class AC Shares, any tender or exchange offer
for the Company's common shares, or any merger or similar transaction
involving the Company, except as otherwise specifically permitted
thereby. Subsequently on such date, at a meeting among the financial
advisors to the Purchaser, 1224 and the Special Committee,
representatives of Merrill Lynch indicated that the Purchaser would be
willing to increase the price it would pay for the Class AC Shares and
the Shares to $41.75 per share. The financial advisors to 1224 and the
Special Committee responded that such price was less than what 1224 and
the Special Committee were willing to accept. On April 28, 1998, Mr.
Zwartendijk proposed in a telephone call to Mr. Manos an increased
offer price of $42.00 per share.
On April 29, 1998, Messrs. Butzelaar and Rutstein, the legal
advisors to the Purchaser, 1224 and the Special Committee and a
representative of Merrill Lynch met to continue negotiation of the
draft agreements. During a portion of such meeting, Mr. Manos and Mr.
14
<PAGE>
Zwartendijk participated by conference telephone. After some discussion
between the parties, Mr. Zwartendijk and Mr. Manos agreed to a price of
$43.50 per share for the Class AC Shares and the Class A Shares but
conditioned upon the Purchaser's acquisition of the Class AL Shares
from Sainsbury and the approval by the Executive and Supervisory Boards
of the Purchaser, the Board of Directors of 1224 and the Special
Committee. It was agreed that Mr. van der Hoeven and Mr. Manos should
separately call Lord Sainsbury, the Chairman of Sainsbury, to arrange
separate meetings with him to discuss an acquisition by the Purchaser
of Sainsbury's interest in the Company. Subsequently, Mr. van der
Hoeven and Mr. Manos separately called Lord Sainsbury and arranged
separate meetings with him in London on May 5, 1998.
On May 4, 1998, Mr. van der Hoeven met with Mr. Manos and Mr.
Rutstein at an industry conference to discuss the upcoming meetings
with Lord Sainsbury. At their May 5 meetings with Lord Sainsbury and
David Bremner, Deputy Group Chief Executive of Sainsbury, Mr. van der
Hoeven and Mr. Manos were each informed by Lord Sainsbury and Mr.
Bremner that Sainsbury was not interested in selling its interest in
the Company to the Purchaser at such time. After such meetings, Mr. van
der Hoeven,Mr. Manos and Mr. Rutstein met and Mr. Manos asked Mr. van
der Hoeven whether the Purchaser would be willing to drop its condition
that it acquire the Class AL Shares. Mr. van der Hoeven indicated that
he could not respond to such request without further discussions with
the Purchaser's Executive Board and Supervisory Board.
On May 12, Mr. Zwartendijk called Mr. Manos to inform him that
the Supervisory Board of the Purchaser had authorized the Purchaser to
proceed with an acquisition of the Class AC Shares and the Shares not
conditioned upon its acquisition of the Class AL Shares from Sainsbury
subject to approval of the final terms by the Executive Board of the
Purchaser. In such call, Mr. Zwartendijk further informed Mr. Manos
that the Purchaser was unwilling to pay the $43.50 per share price it
would have been willing to pay if Sainsbury had agreed to participate
in the transaction. In addition, Mr. Zwartendijk stated that the tender
offer would need to be subject to a 70% minimum tender condition. Mr.
Zwartendijk further informed Mr. Manos that if an agreement were
reached between the parties it would have to be approved by the
Executive Board of the Purchaser at a meeting scheduled to be held on
Monday, May 18, 1998. Mr. Manos indicated that he would have to discuss
Mr. Zwartendijk's proposal with the rest of the directors of 1224 and
with the Special Committee.
On May 13, 1998, Mr. Zwartendijk proposed to Mr. Manos a price
of $43.00 per share and a 65% minimum tender condition, subject to
approval, in the case of the Purchaser, by its Executive Board, and in
the case of 1224, by its Board of Directors, as well as the Special
Committee. On May 14, 1998, Mr. Manos phoned Mr. Zwartendijk and
indicated that the $43.00 per share price would be acceptable if the
Purchaser would agree that, if it were to acquire the Class AL Shares
during the pendency of the tender offer, the price to be paid for the
Class AC Shares and the Shares in the tender offer would be increased
to $43.50. On Friday, May 15, Mr. Butzelaar informed Mr. Rutstein by
telephone that Mr. Manos' proposal would be acceptable to the
Purchaser.
15
<PAGE>
During the period from May 13 through May 18, 1998, the
parties and their financial and legal advisors continued to negotiate
the terms of the proposed stock purchase agreement.
On May 18, 1998, the Board of Directors of 1224 reviewed the
terms of the proposed Stock Purchase Agreement. PaineWebber made a
presentation to the Board of Directors of 1224 and delivered its
opinion dated May 18, 1998 (which opinion was delivered prior to the
increase in the Offer Price from $43.00 to $43.50 per Share), that, as
of that date and based upon its review and analysis and subject to the
assumptions and qualification set forth therein, the $43.00 per share
cash consideration to be received by 1224 for the Class AC Shares is
fair to 1224 from a financial point of view. Upon consideration and
discussion of such presentation and opinion and other information
provided to it, the Board of Directors of 1224 (who are also the
holders of all the outstanding voting shares of 1224) unanimously
determined that the Purchaser's offer is fair to and in the best
interests of 1224 and the holders of the Shares and approved the
proposed Stock Purchase Agreement.
Later on May 18, 1998, the Special Committee met to review the
effect upon the Company and the holders of the Shares of the proposed
Stock Purchase Agreement. Wasserstein made a presentation to the
Special Committee and delivered its written opinion dated May 18, 1998
(which opinion was delivered prior to the increase in the Offer Price
from $43.00 to $43.50 per Share), that, as of that date and based upon
its review and analysis and subject to the assumptions and
qualifications contained therein, the $43.00 per share cash
consideration to be received by the holders of the Shares pursuant to
the Offer, is fair to such stockholders from a financial point of view.
Upon consideration and discussion of such presentation and opinion and
other information provided to it, the Special Committee unanimously
determined that the Offer is fair to and in the best interests of the
Company and the holders of the Shares and recommended to the Board of
Directors of the Company that it recommend acceptance of the Offer by
the holders of the Shares. 1224 advised the Purchaser of the action
taken by the Special Committee. On the morning of May 19, the Purchaser
and 1224 executed and delivered the Stock Purchase Agreement.
Subsequently, on May 19, 1998, Mr. van der Hoeven informed
Lord Sainsbury by telephone that the Purchaser would announce its
agreement to acquire the Class AC Shares and Offer later that day even
if Sainsbury did not expect to participate in the Offer or otherwise
sell its interest in the Company to the Purchaser. In response, Lord
Sainsbury informed Mr. van der Hoeven that Sainsbury would be willing
to tender its Shares into the Offer at the proposed price of $43.50 per
Share, if the Purchaser would agree to pay $100 million for the Class
AL Shares held by Sainsbury. Mr. van der Hoeven said that he would need
to consult with the other members of the Executive Board of the
Purchaser and its advisors. After discussing Sainsbury's proposal
regarding the purchase price for the Class AL Shares with other members
of the Executive Board and the Purchaser's financial and legal
advisors, Mr. van der Hoeven called Lord Sainsbury and accepted the
proposal, subject
16
<PAGE>
to documentation. As a result of Sainsbury's agreement to participate
in the transaction, the Purchaser increased the price to be paid for
the Class AC Shares pursuant to the Offer to $43.50 per Share and
agreed to waive the 65% minimum tender condition.
The Board of Directors of the Company (the "Board") met on May
28 and 29, 1998 to consider the Offer. The Board reviewed the terms of
the Offer and the provisions of the Stock Purchase Agreement and
received and considered the report of the Special Committee, in which
the Special Committee expressed its determination that the Offer is
fair to and in the best interests of the Company and the holders of the
Shares and recommended that the Board recommend acceptance of the Offer
by the holders of the Shares. The Special Committee reported that, in
reaching such determination and making such recommendation, it had the
benefit of the financial advice of Wasserstein, including Wasserstein's
written opinion dated May 18, 1998, as described above, which opinion
was confirmed by letter dated May 28, 1998 addressed to the Special
Committee. By unanimous vote of all the directors, the Board determined
that the Offer is in the best interests of the Company and the holders
of the Shares and recommended that the holders of the Shares accept the
Offer and tender their Shares to the Purchaser pursuant to the Offer. A
copy of Wasserstein's confirmation letter dated May 28, 1998, is
attached as Annex C to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, dated May 29, 1998, which has been mailed
to holders of the Shares.
Item 4(b) of the Schedule 14D-9 ("REASONS FOR RECOMMENDATION") is hereby
amended by amending and restating such Item to read in its entirety as follows:
"(b) REASONS FOR RECOMMENDATION. In reaching their conclusion
with respect to the Offer, the members of the Director/Management
Committee considered a number of factors. They evaluated the factors in
light of their knowledge of the business and operations of the Company
and their business judgment. In view of the wide variety of factors
considered in connection with their evaluation of the Offer, the
members of the Director/Management Committee did not find it
practicable to, and did not, quantify or otherwise attempt to assign
relative weights to the specific factors considered in reaching their
determination. The factors considered by the members of the
Director/Management Committee, each of which they believed supported
their recommendation, included the following:
(i) The Director/Management Committee considered that the
market price for the Shares prior to the Offer reflected to a
significant degree an anticipated takeover of the Company and that the
cash offer price of $43.00 per Share (which was subsequently increased
to $43.50 per Share) provided for in the Stock Purchase Agreement
represents a substantial premium over the historical trading prices for
the Shares.
(ii) The Director/Management Committee considered the written
opinion of PaineWebber, delivered to 1224 on May 18, 1998 (which
opinion was delivered prior to the increase in the Offer Price from
$43.00 to
17
<PAGE>
$43.50 per Share), that, as of that date and based upon its review and
analysis and subject to the assumptions and qualifications set forth
therein, the $43.00 per share cash consideration to be received by 1224
for the Class AC Shares is fair to 1224 from a financial point of view.
A copy of the written opinion dated May 18, 1998 of PaineWebber, which
sets forth the assumptions made, factors considered and scope of the
review undertaken by PaineWebber, is attached hereto as Annex B and is
incorporated herein by reference. Holders of Shares are urged to read
the full text of such opinion.
(iii) The Director/Management Committee considered (1) the
determination made by the Special Committee at its meeting held on May
18, 1998, that the Offer is fair to and in the best interests of the
Company and the holders of the Shares, (2) the recommendation by the
Special Committee that the Board of Directors of the Company recommend
acceptance of the Offer by the holders of the Shares, and (3) that the
Special Committee, in reaching such determination and recommendation,
had the benefit of the financial advice of Wasserstein, including
Wasserstein's written opinion dated May 18, 1998(which opinion was
delivered prior to the increase of the Offer Price from $43.00 to
$43.50) that, as of that date and based upon the review and subject to
the assumptions and limitations set forth therein, the cash
consideration to be received by the holders of the Shares pursuant to
the Offer is fair to the holders of the Shares from a financial point
of view. As described above, such opinion was confirmed by letter dated
May 28, 1998, a copy of which is attached as Annex C to the Company's
Schedule 14D-9 filed May 29, 1998 and mailed to holders of the Shares.
(iv) The Director/Management Committee considered, as had the
Special Committee in making its determination and recommendation with
respect to the Offer, that (1) the sale of the Class AC Shares was
conditioned upon the consummation of the Offer to purchase the Shares,
with the same purchase price per share applicable to the Class AC
Shares and the Shares; (2) the Company's capital structure tended to
limit the attractiveness of the Company and the Shares to a strategic
buyer because acquiring a greater than 50% voting interest in the
Company and the ability to elect all of the directors of the Company
would require the acquisition of the voting securities owned by the
holder of the Class AC Shares and by the holder of the Class AL Shares;
(3) the Company's size tended to limit the number of potential
financial buyers of the Company, and the Shares would not likely be
attractive to such a buyer at a price per Share equal to or greater
than the Offer Price; and (4) the Stock Purchase Agreement did not
condition the Purchaser's obligation to purchase the Class AC Shares
and the Shares on the sale by Sainsbury of the Class AL Shares.
(v) The Director/Management Committee considered, as had the
Special Committee in making its determination and recommendation with
respect to the Offer, the Company's business, prospects, financial
condition, results of operations and current business strategy and the
nature of the Company's industry position, and the Director/Management
Committee considered its belief, as had the Special Committee its
belief, that (1) competition in the Washington, D.C. and Baltimore
metropolitan areas, where the majority of the Company's retail
18
<PAGE>
supermarkets are located, has increased considerably over the past
several years as additional supermarket chains and alternative format
competitors have entered the field; (2) the Company, in its stores in
Pennsylvania, New Jersey and Delaware, is faced with intense
competition from supermarket chains which are more established in those
areas and the Company's operations in these states have not yet become
profitable; (3) the Company's commitment to maintaining its current
market share throughout its area of operations by offering aggressive
promotions will put continuing pressure on profit margins and earnings;
and (4)such circumstances make it advisable that the Company become
part of and share the cost savings and efficiencies available to a
larger organization such as the Purchaser.
(vi) The Director/Management Committee considered, as had the
Special Committee in making its determination and recommendation with
respect to the Offer, the Purchaser's business reputation, its
relationship with its existing United States subsidiaries and its good
relationship with their management and employees, its ability to
finance the acquisition, and its present expectation, as subsequently
reflected in the Offer to Purchase and consistent with its past
acquisition practices, that, initially following the purchase of the
Class AC Shares and the Class AL Shares and the consummation of the
Offer, the business and operations of the Company will continue as they
are currently conducted without substantial change."
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Item 5 of the Schedule 14D-9 is hereby amended by inserting at the end
of the second paragraph thereof the following two sentences:
"If all of the shares of the Company's common stock are acquired at the
closing of the transactions described in this Statement, PaineWebber
will be entitled to a fee (less amounts previously paid and to be
credited against such fee)of approximately $6.8 million. On May 29,
1998, the Board of Directors of the Company, based on the
recommendation of the Special Committee, voted to cause the Company to
assume the obligations of 1224 under its agreement with PaineWebber."
Item 5 of the Schedule 14D-9 is hereby further amended by inserting at
the end of the third paragraph thereof the following sentence:
"If all of the shares of the Company's common stock are acquired at the
closing of the transactions described in this Statement, Wasserstein
will be entitled to a fee (less amounts previously paid and to be
credited against such fee)of approximately $6.8 million."
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
Item 6(a) of the Schedule 14D-9 is hereby amended by amending and
restating such Item to read in its entirety as follows:
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<PAGE>
"(a) Except as set forth in this Statement, no transactions in
Shares have been effected within the past 60 days by any member of the
Director/Management Committee or, to the best knowledge of such
members, by any affiliate of any of them.
On May 20, 1998, Alvin Dobbin, a director of the Company and
of 1224, exercised options to purchase 55,500 Shares at an average
exercise price per Share of $34.35 and sold all such Shares at a price
per Share of $42.75. Effective February 28, 1998, Mr. Dobbin retired
from his positions as an executive officer of the Company. He was
required to exercise his options to purchase Shares, if at all, within
90 days after retirement."
On May 27, 1998, J Sainsbury (USA) Holdings Inc., a
wholly-owned subsidiary of Sainsbury and the then record holder of all
the Class AL Shares and the Shares beneficially owned by Sainsbury,
merged with and into JS Mass. Securities Corp., another wholly-owned
subsidiary of Sainsbury, as a result of which JS Mass. Securities Corp.
became the owner of all the assets of J Sainsbury (USA) Holdings Inc.,
including the Class AL Shares and such Shares.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 of the Schedule 14D-9 is hereby amended by deleting the response
thereto and inserting in lieu thereof the following:
"The Company has stated in Item 7 ('CERTAIN NEGOTIATIONS AND
TRANSACTIONS BY THE SUBJECT COMPANY') of its
Solicitation/Recommendation Statement on Schedule 14D-9 filed May 29,
1998, as amended by Amendment No. 1 thereto filed June 10, 1998, as
follows:
'Item 7. Certain Negotiations and Transactions by the Subject Company.
(a) Except as set forth in this Statement, no negotiation is
being undertaken or is underway by the Company in response to the Offer
which relates to or would result in (i) an extraordinary transaction
such as a merger or reorganization, involving the Company or any
subsidiary of the Company; (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the
Company; (iii) a tender offer for or other acquisition of securities by
or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company. In its Offer to
Purchase, the Purchaser states: "Upon the acquisition . . . of the
Class AC Shares from [1224] and the Class AL Shares from Sainsbury, the
Purchaser would own 100% of the outstanding capital stock of the
Company entitled to vote. As a result, the Purchaser will be able to
cause the merger of a subsidiary of the Purchaser with and into the
Company. Any remaining holders of the Shares will not be entitled to
vote on such a merger. The Purchaser anticipates that it will take all
necessary and appropriate action to cause such a merger to become
effective as soon as reasonably practicable after its acquisition of
the Class AC Shares and the Class AL Shares. At the effective time of
such merger, each outstanding Share (other than those held by the
Purchaser or any subsidiary thereof) will be converted into
20
<PAGE>
the highest price paid per Share pursuant to the Offer without
interest." The Purchaser has recently proposed that it and the Company
now enter into an agreement pursuant to which, among other things, the
Purchaser would commit to effect a merger in which any Shares not
acquired pursuant to the Offer would be acquired by the Purchaser, for
the Offer Price, as promptly as practicable after consummation of the
Offer and the Purchaser's acquisition of the Class AC and the Class AL
Shares. The Company is discussing such proposal with the Purchaser.
However, there can be no assurance that the Company and the Purchaser
will agree to enter into such a merger agreement or that, following the
consummation of the Offer and the acquisition of the Class AC and Class
AL Shares, the Purchaser will seek to cause such a merger to become
effective or as to the timing of any such merger.
(b) Except as set forth in this Statement, there are no
transactions, Board resolutions, agreements in principle or signed
contracts in response to the Offer that relate to, or would result in,
one or more of the events referred to in Item 7(a) above.'"
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The information contained in Item 9 of the Schedule 14D-9 is hereby
amended by adding the following additional Exhibits:
Exhibit 4 -- Copy of the Stock Purchase Agreement dated as of May 27,
1998 among J Sainsbury plc, JS Mass. Securities Corp., and
Koninklijke Ahold N.V.(incorporated by reference to Exhibit
2 to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 dated May 29, 1998)
Exhibit 5 -- Confidentiality Agreement, as of February 2, 1998, between
Koninklijke Ahold N.V. and The 1224 Corporation
(incorporated by reference to Exhibit 3 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9
dated May 29, 1998)
Exhibit 6 -- Exclusivity Agreement, dated April 27, 1998, between
Koninklijke Ahold N.V. and The 1224 Corporation
(incorporated by reference to Exhibit 4 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9
dated May 29, 1998)
21
<PAGE>
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.
/s/ David W. Rutstein
David W. Rutstein
Pete L. Manos
Constance M. Unseld
Peter F. O'Malley
Raymond A. Mason
Michael W. Broomfield
Mark H. Berey
Roger D. Olson
Winston doCarmo
Barry F. Scher
Mark Iskander
By:/s/ David W. Rutstein
David W. Rutstein
Attorney-in-Fact
Dated: June 10, 1998
22
<PAGE>
ANNEX A
This Annex contains additional information with respect to contracts,
agreements, arrangements and understandings between members of the
Director/Management Committee and the Company, including information relating to
compensation by the Company of members of the Director/Management Committee who
are executive officers or other employees of the Company and ownership of
Company securities.
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid by
the Company in its fiscal year ended February 28, 1998 ("Fiscal Year 1998") and
the two prior fiscal years to members of the Director/Management Committee who
are executive officers or other employees of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
------------------------------------ OTHER ANNUAL
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY(2) BONUS COMPENSATION(1)
--------------------------- ----------- --------- -------- ---------------
<S> <C> <C> <C> <C>
Pete L. Manos.............................. 1998 $579,519 $150,000 $5,772
President & CEO 1997 $520,673 $260,000 $6,002
1996 $327,028 $260,000 $6,134
Michael W. Broomfield...................... 1998 0 $ 12,000 --
Chief Operating Officer 1997 0 --
1996 0 --
David W. Rutstein.......................... 1998 $291,571 $ 96,825 $5,772
Sr. V.P., Gen. Counsel, CAO & Secretary 1997 $264,654 $160,000 $6,002
1996 $252,720 $149,363 $6,134
Mark H. Berey.............................. 1998 $134,616 $ 39,066 --
Senior Vice President -- Finance,
Treasurer, 1997 -- -- --
Chief Financial Officer 1996 -- -- --
Rodger D. Olson............................ 1998 $194,480 $ 61,704 $5,772
Senior Vice President -- Labor Relations 1997 $181,436 $103,383 $6,002
and Personnel 1996 $165,948 $ 95,383 $6,134
Winston doCarmo............................ 1998 $152,029 $ 39,360 $5,772
Vice President -- Personnel 1997 $131,222 $ 65,188 $6,002
1996 $124,281 $ 50,188 $6,134
Barry F. Scher............................. 1998 $141,291 $ 37,549 $5,772
Vice President -- Public Affairs 1997 $133,064 $ 65,186 $6,002
1996 $126,049 $ 64,186 $6,134
Mark Iskander.............................. 1998 $ 11,250 -- --
Corporate Finance Department 1997 -- -- --
1996 -- -- --
</TABLE>
- ---------------
(1) Aggregate value of perquisites does not exceed the lesser of $50,000 or 10%
of the total amount of annual salary and bonus. Includes cash payments for
income taxes to each named officer on the value of the restricted shares and
the tax payment itself pursuant to the Company's NonQualified Executive
Stock Bonus Plan II.
(2) Figures represent amounts paid during the fiscal year.
A-1
<PAGE>
LONG TERM COMPENSATION
<TABLE>
<CAPTION>
RESTRICTED ALL OTHER
STOCK OPTIONS/SAR LTIP COMPENSATION
NAME AND PRINCIPAL POSITION FISCAL YEAR AWARDS(3) AWARDS(#)(4) PAYOUTS (5)(6)
--------------------------- ----------- ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C>
Pete L. Manos............................. 1998 $9,027 32,500 0 $31,065
President & CEO 1997 $9,388 0 0 $36,320
1996 $9,596 102,500 0 $24,318
Michael W. Broomfield..................... 1998 0 35,000 0 --
Chief Operating Officer 1997 -- -- -- --
1996 -- -- -- --
David W. Rutstein......................... 1998 $9,027 17,500 0 $16,725
Sr. V.P. Gen. Counsel, CAO & Secretary 1997 $9,388 9,500 0 $20,273
1996 $9,596 9,500 0 $18,855
Mark H. Berey............................. 1998 0 37,500 0 $ 1,576
Senior Vice President -- Finance,
Treasurer, 1997 0 0 0 --
Chief Financial Officer 1996 0 0 0 --
Rodger D. Olson........................... 1998 $9,027 9,500 0 $13,516
Senior Vice President Labor Relations 1997 $9,388 9,500 0 $15,241
and Personnel 1996 $9,596 9,500 0 $14,194
Winston doCarmo........................... 1998 $9,027 7,500 0 $11,006
Vice President -- Personnel 1997 $9,388 7,500 0 $10,791
1996 $9,596 7,500 0 $ 9,853
Barry F. Scher............................ 1998 $9,027 7,500 0 $ 9,678
Vice President -- Public Affairs 1997 $9,388 7,500 0 $10,199
1996 $9,596 7,500 0 $ 9,739
Mark Iskander............................. 1998 0 0 0 --
Corporate Finance Department 1997 0 -- 0 --
1996 0 -- 0 --
</TABLE>
(3) Dividends are paid on the stock held under this plan.
Under this plan, the Company makes an annual contribution not exceeding the
greater of (i) $1,000,000 or (ii) six-tenths of one percent (0.60%) of the
pre-tax earnings of the Company. The Company's cash contributions are used to
purchase Class A Shares.
Distributions of those shares will be made to those participants who meet
any of the following conditions: (i) ten years' participation in the Plan; (2)
retirement after attainment of age 62; (3) abolition of the participant's job;
(4) total and complete disability or (5) death.
(4) All options granted to participants pursuant to those stock option plans are
issued at 100% of fair market value on the date issued and may be exercised,
on a graduated basis, after the later of one year from the date of grant or
two years' continued employment. All options terminate 10 years form their
date of issuance.
The Company receives no cash consideration for granting options. In order
to acquire shares, the optionee must pay the full purchase price of the shares
being exercised, plus appropriate withholding taxes. Optionee are not permitted
to receive cash for any excess of market value over option price. The Stock
Purchase Agreement provides that 1224 will use its reasonable best efforts to
cause the Company to arrange for the vesting of all options to be accelerated to
the Closing Date, at which time the options will be canceled and optionees will
receive from the Company cash in an amount equal to the difference between the
Offer Price and the exercise prices of the options.
(5) Includes Company matching contributions under the Company's Qualified
Tax-Deferred Savings Plan ("Qualified Plan") and the Company's Non-Qualified
Excess Benefits Savings Plan ("Non-Qualified Plan").
A-2
<PAGE>
Participants in the Qualified Plan and Non-Qualified Plan are permitted to
contribute portions of their compensation, subject to legal limitations for the
Qualified Plan and without legal limitations for the Non-Qualified Plan, for
which the Company contributes an amount in cash equal to the participant's
initial 3% pre-tax contribution. In addition, the Company provides supplemental
contributions (in the form of Class A Shares for the Qualified Plan) and the
Non-Qualified Plan to match participants' contributions (partially or totally)
in excess of 3% of salary up to 6% of salary. Such Company contributions are
limited to .4% of its pre-tax earnings.
In Fiscal Year 1998 the Company made matching contributions under the
Qualified Plan as follows: Mr. Manos $6,000, Mr.Rutstein $6,000, Mr. Olson
$6,000, Mr. doCarmo $6,000 and Mr. Scher $6,000. In Fiscal Year 1998 the Company
made matching contributions under the Non- Qualified Plan as follows: Mr. Manos
$25,065.65, Mr. Rutstein $10,724.81, Mr. Olson $5,169.75, Mr. doCarmo $2,146.61
and Mr. Scher $1,394.28.
(6) Includes premium payments under the Company's Split Dollar Insurance Program
in which participants are provided with permanent life insurance owned by
the Company. The Company pay for premiums and will recover amounts equal to
its investment in the insurance policies at the deaths of the participants.
During Fiscal Year 1998 the Company made insurance premium payments as
follows: Mr. Olson $2,346, Mr. doCarmo $2,860 and Mr. Scher $2,284.
A-3
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR(1)
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES
OPTIONS/SARS IN FY EXERCISE OF BASE EXPIRATION
NAME GRANTED(2) 1998 PRICE (S/SH) DATE
---- ------------ ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Pete L. Manos............................ 2,500 $32.88 03/03/07
30,000 4.31% $33.56 06/09/07
------
32,500
======
Michael W. Broomfield.................... 35,000(3)
David W. Rutstein........................ 2,500 $32.88 03/03/07
15,000 2.32% $33.56 06/09/07
------
17,500
======
Mark H. Berey............................ 35,000 $32.22 09/09/07
2,500 4.79% $33.97 12/01/07
------
37,500
======
Roger D. Olson........................... 2,500 $32.88 03/03/07
7,000 1.26% $33.56 06/09/07
------
9,500
======
Winston doCarmo.......................... 2,500 $32.88 03/03/07
5,000 $33.56 06/09/07
------
7,500
======
Berry F. Scher........................... 2,500 $32.88 03/03/07
5,000 $33.56 06/09/07
------
7,500
======
</TABLE>
- ---------------
(1) No SARs were awarded in the 1998 Fiscal Year.
(2) Options granted under the 1989 Non-Qualified Stock Option Plan have a term
of up to ten years as determined by the Stock Option Plan Committee
("Committee"). Options become exercisable after the later of one year from
date of grant or the completion of two years of continued employment. After
such date, optioned shares are exercisable only to the extent of one-fifth
of the total number of optioned shares per year. After the fourth year,
option grants are exercisable in full. The Committee may prescribe longer
time periods and additional requirement with respect to the exercise of an
option and may terminate unexercised options based on the performance of the
employee. The Company is required to withhold income taxes from income
realized by an employee on the exercise of an option. The Company will (i)
reduce the amount of stock issued to reflect the necessary withholding, (ii)
withhold the appropriate tax from other compensation due to the optionee, or
(iii) condition transfer of any stock to the employee on the payment to the
Company of the required taxes. The Stock Purchase Agreement provides that
1224 will use its reasonable best efforts to cause the Company to arrange
for the vesting of all options to be accelerated to the Closing Date, at
which time the options will be canceled and optionees will receive from the
Company cash in an amount equal to the difference between the Offer Price
A-4
<PAGE>
and the exercise prices of the options.
(3) The Company has agreed to grant 35,000 options to Mr. Broomfield.
POTENTIAL REALIZABLE VALUE OF ASSUMED
RATE OF STOCK PRICE APPRECIATION FOR
OPTION TERM (10 YEARS)
<TABLE>
<CAPTION>
NAME 0% GAIN(3) 5% GAIN(4)(5) 10% GAIN(4)(5)
---- ---------- ------------- --------------
<S> <C> <C> <C>
Pete L. Manos...................................... $0 $ 51,695 $ 131,006
0 633,171 1,604,580
-- -------- ----------
0 $684,866 $1,735,586
== ======== ==========
Michael W. Broomfield.............................. -- -- --
David W. Rutstein.................................. $0 $ 51,695 $ 131,006
0 316,586 802,290
-- -------- ----------
0 $368,281 933,296
== ======== ==========
Mark H. Berey...................................... $0 $709,204 $1,797,263
0 53,409 135,349
-- -------- ----------
0 $762,613 1,932,612
== ======== ==========
Rodger D. Olson.................................... $0 $ 51,695 $ 131,006
0 147,740 374,402
-- -------- ----------
0 $199,435 505,408
== ======== ==========
Winston doCarmo.................................... $0 $ 51,695 131,006
0 105,529 267,430
-- -------- ----------
0 $157,224 $ 398,436
== ======== ==========
Barry F. Scher..................................... $0 $ 51,695 131,006
0 105,529 267,430
-- -------- ----------
0 $157,224 $ 398,436
== ======== ==========
Mark Iskander...................................... $0
0 -- --
--
0
==
</TABLE>
- ---------------
(3) As shown in this column, no gain to the named officers or all optionee is
possible without appreciation in the price of the Company's stock, which
will benefit all shareholders.
(4) The price of Class A Shares at the end of the ten-year term of the option
grant at a 5% annual appreciation would be $53.56 and $54.67, and at a 10%
annual appreciation would be $85.28 and $87.05. These appreciation rates are
the result of calculations required by the Securities and Exchange
Commission's rules, and therefore are not intended to forecast future
appreciation, if any, in the stock price of the Company.
(5) The gain is calculated form the exercise price of the options listed above,
$32.88 and $33.56 based on the grant date of the options. Option grants are
at 100% of market value on the date of grant.
A-5
<PAGE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION SAR/VALUES(1)
<TABLE>
<CAPTION>
SHARES ACQUIRED
ON EXERCISE SARS EXERC'D VALUE REALIZED
NAME (#) (#) ($)
---- ------------------ ------------ --------------
<S> <C> <C> <C>
Pete L. Manos.................................... 0 0 0
David W. Rutstein................................ 0 0 0
Mark H. Berey.................................... 0 0 0
Rodger D. Olson.................................. 0 0 0
Winston doCarmo.................................. 0 0 0
Barry F. Scher................................... 0 0 0
Mark Iskander.................................... 0 0 0
</TABLE>
<TABLE>
<CAPTION>
VALUE OF VALUE OF
NUMBER OF NUMBER OF UNEXERC'D UNEXERC'D
UNEXERC'D UNEXERC'D IN-THE-MONEY IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS OPTIONS/SARS OPTIONS/SARS
AT FY-END AT FY-END AT FY-END($) AT FY-END($)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Pete L. Manos......................... 82,500 107,500 $670,276 $529,699
David W. Rutstein..................... 29,000 36,500 $312,785 $195,709
Mark H. Berey......................... 35,000 2,500 $143,238 $ 5,856
Roger D. Olson........................ 31,500 28,500 $350,291 $173,689
Winston doCarmo....................... 28,000 22,500 $315,990 $138,986
Barry F. Scher........................ 25,000 22,500 $270,982 $138,986
Mark Iskander......................... -- -- -- --
</TABLE>
- ---------------
(1) Value is before taxes. The dollar values are computed by determining the
difference between the fair market value of the underlying common stock and
the exercise price at fiscal year end.
A-6
<PAGE>
PENSION TABLE
Pension Plan:
The Company maintains a tax-qualified defined benefit pension plan for
approximately 2,500 salaried employees. The following table provides an example
of benefits at the normal retirement age of 65 payable as a life annuity:
ESTIMATED ANNUAL BENEFITS
------------------------------
PENSION FROM RETIREMENT PLAN
FOR FOLLOWING NUMBER OF YEARS
HIGHEST FIVE OF CREDITED SERVICE*
YEAR AVERAGE ------------------------------
EARNINGS 10 20 30
- ------------ -------- -------- --------
40,000.... $ 3,844 $ 8,087 $ 12,731
70,000.... 7,894 16,487 25,781
100,000... 11,944 24,887 38,831
150,000... 18,694 38,887 60,581
200,000... 25,444 52,887 82,331
250,000... 32,194 66,887 104,081
300,000... 38,944 80,887 125,801
350,000... 45,694 94,887 147,581
400,000... 52,444 108,887 169,331
500,000... 65,944 136,887 212,831
600,000... 79,444 164,887 256,331
700,000... 92,944 192,887 299,831
800,000... 106,444 220,887 343,331
- ---------------
* The amounts shown include benefits payable from the Supplemental Retirement
Arrangements.
A participant's annual pension payable to him/her as of his/her normal
retirement date will be equal to:
(i) .85% of "final average earnings" plus .50% of that portion
of final average earnings in excess of "covered compensation"
times number of years of credited service not to exceed 15,
plus
(ii) 1 .05% of final average earnings plus .50% of that
portion of final average earnings in excess of "covered
compensation" times number of years of credited service over
15, not to exceed 15, plus
(iii) .50% of final average earnings times years of credited
service over 30.
For purposes of determining plan benefits, earnings are the gross cash
compensation provided to a participant, including overtime and bonuses.
Early retirement benefits are payable under the Pension Plan.
Generally, the payment of benefits will be in the form of a straight-life
annuity for participants who are not married and a joint and survivor annuity
for those who are married.
A-7
<PAGE>
The number of years of credited service of the executive officers and other
employees listed in the remuneration table under the Retirement Plan, determined
as of February 28, 1998 are: Mr. Manos, 27 years; Mr. Rutstein, 20 years; Mr.
Olson, 27 years; Mr. doCarmo, 27 years; Mr. Scher, 27 years.
Supplemental Retirement Arrangements:
An unfunded non-qualified pension plan, the Excess Benefit Savings Plan,
provides a make-up benefit for those executives who are impacted by the
compensation limitations of Section 401(a)(17) of the Internal Revenue Code and
by the maximum benefit limitations of Section 415 of the Internal Revenue Code.
A provision of this plan also provides that certain officers are entitled to a
make-up benefit equal to 60% of their earnings averaged over the five years
prior to retirement, less amounts payable from the Retirement Plan (including
non-qualified pension plan benefits described above), the Profit Sharing and
Thrift Plans, and from social security.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Officers of the corporation have contracts that provide benefits in the
event of job loss after change in control, or severance. Subject to the
satisfaction of several requirements; (1) an officer who loses his/her job
within two years of a change in control will receive for a period of 24 months;
or (2) an officer who is terminated will receive severance for a period of one
month per year of service to the Company, (but not more than 24 months nor less
than 3 months and only until retirement age or said retirement benefits are
paid):
A. Base salary continued at the rate in effect on the date prior to
termination;
B. Bonus continuation based on the average bonus percentage paid during the
three prior years under the Company's executive bonus plan; and
C. Medical and life insurance coverage comparable to that provided to other
officers who remain in the employ of the Company.
If any of the events had occurred on February 28, 1998, the following
individuals would have been entitled to receive the following amounts:
CHANGE IN
CONTROL SEVERANCE
--------- ---------
Pete L. Manos......................................... 1,651,650 1,651,650
Michael W. Broomfield................................. 664,000 332,000
David W. Rutstein..................................... 875,800 729,833
Mark H. Berey......................................... 718,132 359,066
Roger D. Olson........................................ 568,512 568,512
Winston doCarmo....................................... 427,296 427,296
Barry F.Scher......................................... 396,282 396,282
Mark Iskander......................................... -- --
SECURITY OWNERSHIP
The following table sets forth the number of each class of equity
securities of the Company beneficially owned by each director, executive officer
and other employees of the Company who is also a member of the
Director/Management Committee as of May 1, 1998.
A-8
<PAGE>
<TABLE>
<CAPTION>
NUMBER NATURE OF
TITLE OF SHARES BENEFICIAL PERCENT
NAME AND TITLE CLASS OF STOCK OWNED OWNERSHIP OF CLASS
-------------- -------------- ------- ---------- --------
<S> <C> <C> <C> <C>
Pete L. Manos.......................... Common Stock A 157,208(1) Direct and .2605%
President, Chief Executive Officer, (Non-voting) Indirect
Director
Constance M. Unseld.................... Common Stock A 1,000 Direct .0017%
Director (Non-Voting)
Peter F. O'Malley...................... Common Stock A 2,000 Indirect .0033%
Director (Non-Voting)
Raymond A. Mason....................... Common Stock A 1,000 Direct .0017%
Director (Non-Voting)
Michael W. Broomfield.................. Common Stock A --
Chief Operating Officer (Non-Voting)
David W. Rutstein...................... Common Stock A 129,382(2) Direct and .2144%
Sr. Vice President -- (Non-Voting) Indirect
General Counsel, Chief Administrative
Officer, Secretary
Mark H. Berey.......................... Common Stock A 37,500(3) Direct .0621%
Senior Vice President-Finance, (Non-Voting)
Treasurer, Chief Financial Officer
Roger D. Olson......................... Common Stock A 67,644(4) Direct and .1120%
Sr. Vice President -- Labor Relations (Non-Voting) Indirect
and Personnel
Winston doCarmo........................ Common Stock A 56,773(5) Direct .0940%
Vice President -- Personnel (Non-Voting)
Barry F. Scher......................... Common Stock A 45,340(6) Direct .0751%
Vice President -- Public Affairs (Non-Voting)
Mark Iskander.......................... Common Stock A --
Corporate Finance Department (Non-Voting)
</TABLE>
- ---------------
NOTES:
(1) Includes 118,500 shares acquirable under stock option plans within sixty
days. Mr. Manos disclaims beneficial ownership of the Class AC shares held
by 1224 except for 100 shares.
(2) Includes 41,500 shares acquirable under stock option plans within sixty
days. Mr. Rutstein disclaims beneficial ownership of the Class AC shares
held by 1224 except for 100 shares.
(3) Includes 35,000 shares acquirable under stock option plans within sixty
days.
(4) Includes 24,900 shares acquirable under stock option plans within sixty
days. Mr. Olson disclaims beneficial ownership of the Class AC shares held
by 1224 except for 100 shares.
(5) Includes 35,500 shares acquirable under stock option plans within sixty
days.
(6) Includes 32,500 shares acquirable under stock option plans within sixty
days.
A-9
