<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the
Securities Exchange Act of 1934
---------------
Supermarkets General Holdings Corporation
(Name of Subject Company)
---------------
Koninklijke Ahold N.V. (Royal Ahold)
Croesus, Inc.
Ahold U.S.A., Inc.
Ahold Acquisition, Inc.
(Bidders)
---------------
$3.52 Cumulative Exchangeable Redeemable Preferred Stock, par value 0.01 per
share
(Title of Class of Securities)
---------------
86844620
(CUSIP Number of Class of Securities)
---------------
Mr. Paul P.J. Butzelaar
Koninklijke Ahold N.V.
Albert Heijnweg 1
1507 EH Zaandam, The Netherlands
011-31-75-659-5671
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
---------------
Copy to:
John M. Reiss, Esq.
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
(212) 819-8200
CALCULATION OF FILING FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount of
Transaction Filing
Valuation* Fee**
- ------------------------------------------------------------------------------
<S> <C>
$187,068,165.75 $37,413.63
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
* For purposes of calculating the filing fee only. This calculation assumes
the purchase of 4,890,671 Shares at a price of U.S. $38.25 net per Share in
cash.
** The amount of the filing fee, calculated in accordance with Rule 0-11 under
the Securities Exchange Act of 1934, as amended, equals 1/50 of one percent
of the aggregate of the Transaction Value.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or Schedule and the date of its filing.
Amount Previously Paid: _____________ Filing Party: _______________________
Form or Registration No.: ___________ Date Filed: _________________________
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14D-1
CUSIP No. 86844620
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Koninklijke Ahold N.V.
- ----------------------------------------------------------------------
<S> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
- ----------------------------------------------------------------------
3. SEC USE ONLY
- ----------------------------------------------------------------------
4. SOURCE OF FUNDS
N/A
- ----------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) [_]
- ----------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
The Netherlands
- ----------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- ----------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [_]
- ----------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.0%
- ----------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
</TABLE>
1
<PAGE>
SCHEDULE 14D-1
CUSIP No. 86844620
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Croesus, Inc.
- ----------------------------------------------------------------------
<S> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
- ----------------------------------------------------------------------
3. SEC USE ONLY
- ----------------------------------------------------------------------
4. SOURCE OF FUNDS
BK
- ----------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) [_]
- ----------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
- ----------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- ----------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [_]
- ----------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.0%
- ----------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
</TABLE>
2
<PAGE>
SCHEDULE 14D-1
CUSIP No. 86844620
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Ahold U.S.A., Inc.
- ------------------------------------------------------------------
<S> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
- ------------------------------------------------------------------
3. SEC USE ONLY
- ------------------------------------------------------------------
4. SOURCE OF FUNDS
AF
- ------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) [_]
- ------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
- ------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
0
- ------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [_]
- ------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.0%
- ------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
</TABLE>
3
<PAGE>
SCHEDULE 14D-1
CUSIP No. 86844620
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Ahold Acquisition, Inc.
- ------------------------------------------------------------------
<S> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
- ------------------------------------------------------------------
3. SEC USE ONLY
- ------------------------------------------------------------------
4. SOURCE OF FUNDS
AF
- ------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) [_]
- ------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
- ------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
0
- ------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [_]
- ------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.0%
- ------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
</TABLE>
4
<PAGE>
Item 1. Security and Subject Company.
(a) The name of the subject company is Supermarkets General Holdings
Corporation, a Delaware corporation (the "Company"). The address of its
principal executive offices is 200 Milik Street, Carteret, New Jersey 07008.
(b) This Statement relates to the offer by Ahold Acquisition, Inc., a
Delaware corporation (the "Purchaser"), to purchase all of the issued and
outstanding $3.52 cumulative exchangeable redeemable preferred stock, par
value $0.01 per share, of the Company (the "Shares") at a price of $38.25 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated March 15,
1999 (the "Offer to Purchase") and in the related Letter of Transmittal,
copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively. Information concerning the number of outstanding Shares and
consideration being offered therefor is set forth in the Introduction of the
Offer to Purchase and is incorporated herein by reference.
(c) The information concerning the principal markets in which the Shares are
traded and the market quotations for the Shares for each quarterly period
during the past two years set forth in Section 6--"Price Range of Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d), (g) This Statement is being filed by the Purchaser, Ahold U.S.A.,
Inc., a Delaware corporation ("Ahold U.S.A."), Croesus, Inc., a Delaware
corporation ("Croesus") and Koninklijke Ahold N.V. (also referred to as Royal
Ahold), a corporation organized under the laws of The Netherlands ("Parent").
The Purchaser is a direct wholly-owned subsidiary of Ahold U.S.A. and a
subsidiary of each of Croesus and Parent. Information concerning the principal
business and the address of the principal offices of the Purchaser, Ahold
U.S.A., Croesus and Parent is set forth in Section 8--"Certain Information
Concerning the Purchaser, Ahold U.S.A., Croesus and Parent" of the Offer to
Purchase and is incorporated herein by reference.
(e), (f) During the last five years, none of Parent, Croesus, Ahold U.S.A.
or the Purchaser, or to the best knowledge of Parent, Croesus, Ahold U.S.A.
and the Purchaser, none of the members of the Supervisory Board or the
Corporate Executive Board or the executive officers of Parent, and none of the
directors or executive officers of Croesus, Ahold U.S.A. or the Purchaser, has
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which any such
person was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
(a)-(b) The information set forth in the Introduction, Section 10--
"Background of the Offer; Contacts with the Company" and Section 11--"Purpose
of the Offer; Plans for the Company; Certain Agreements" of the Offer to
Purchase is incorporated herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a)-(c) The information set forth in Section 9--"Source and Amount of Funds"
of the Offer to Purchase is incorporated herein by reference.
5
<PAGE>
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a)-(g) The information set forth in the Introduction and Section 10--
"Background of the Offer; Contacts with the Company", Section 11--"Purpose of
the Offer; Plans for the Company; Certain Agreements", Section 12--"Dividends
and Distributions" and Section 13--"Effect of the Offer on the Market for the
Shares; Exchange Act Registration" of the Offer to Purchase is incorporated
herein by reference.
Item 6. Interest in Securities of the Subject Company.
(a)-(b) The information set forth in the Introduction, Section 8--"Certain
Information Concerning the Purchaser, Ahold U.S.A., Croesus and Parent" and
Section 10--"Background of the Offer; Contacts with the Company" and Schedule
I of the Offer to Purchase is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.
The information set forth in the Introduction, Section 10--"Background of
the Offer; Contacts with the Company", Section 11--"Purpose of the Offer;
Plans for the Company; Certain Agreements", Section 9--"Source and Amount of
Funds" and Section 15--"Certain Legal Matters; Regulatory Approvals" of the
Offer to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in Section 16--"Fees and Expenses" of the Offer to
Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
The information set forth in Section 8--"Certain Information Concerning the
Purchaser, Ahold U.S.A., Croesus and Parent" of the Offer to Purchase is
incorporated herein by reference.
Item 10. Additional Information.
(a) The information set forth in Section 11--"Purpose of the Offer; Plans
for the Company; Certain Agreements" of the Offer to Purchase is incorporated
herein by reference.
(b)-(c) The information set forth in Section 15--"Certain Legal Matters;
Regulatory Approvals" of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 13--"Effect of the Offer on the
Market for the Shares; Exchange Act Registration" of the Offer to Purchase is
incorporated herein by reference.
(e) Not applicable.
(f) The information set forth in the entire text of each of the Offer to
Purchase and the Letter of Transmittal, copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively, is incorporated herein by reference.
6
<PAGE>
Item 11. Material to be Filed as Exhibits.
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<C> <S>
Exhibit (a)(1) Offer to Purchase.
Exhibit (a)(2) Letter of Transmittal.
Exhibit (a)(3) Form of letter to brokers, dealers, commercial banks, trust
companies and other nominees.
Exhibit (a)(4) Form of letter to be used by brokers, dealers, commercial
banks, trust companies and nominees to their clients.
Exhibit (a)(5) Press Release, dated March 9, 1999 announcing the tender offer.
Exhibit (a)(6) Form of newspaper advertisement, dated March 15, 1999,
published in the Wall Street Journal.
Exhibit (a)(7) Notice of Guaranteed Delivery.
Exhibit (a)(8) Guidelines for Substitute Form W-9.
Exhibit (b)(1) Amended and Restated U.S.$1,000,000,000 Multicurrency Revolving
Credit Agreement, dated December 18, 1996, amended and restated
on September 7, 1998, by and between Koninklijke Ahold N.V.,
Ahold U.S.A., Inc., ABN AMRO Bank N.V., Chase Investment Bank
Limited and J.P. Morgan Securities Ltd. as Arrangers, The Chase
Manhattan Bank as Facility, Swing-Line, Letter of Credit and
Short Term Advances Agent, Chase Manhattan International
Limited as Multicurrency Facility Agent and certain financial
institutions named therein.
Exhibit (c)(1) Confidentiality Letter Agreement, dated as of December 30,
1998, between SMG-II Holdings Corporation and Koninklijke Ahold
N.V.
Exhibit (c)(2) Stockholders Agreement, dated as of March 9, 1999, by and among
Koninklijke Ahold N.V., Ahold Acquisition, Inc. and the
Stockholders listed on Exhibit 1 thereto.
Exhibit (c)(3) Agreement and Plan of Merger, dated as of March 9, 1999, by and
among Koninklijke Ahold N.V., Ahold Acquisition, Inc. and SMG-
II Holdings Corporation.
Exhibit (c)(4) Stock Purchase Agreement, dated as of March 9, 1999 by and
among Koninklijke Ahold N.V., Ahold Acquisition, Inc., SMG-II
Holdings Corporation and PTK Holdings, Inc.
</TABLE>
7
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: March 15, 1999 KONINKLIJKE AHOLD N.V.
By: /s/ R. G. Tobin
----------------------------------
Name: R.G. Tobin
Title: Executive Vice President
Dated: March 15, 1999 CROESUS, INC.
By: /s/ R. G. Tobin
----------------------------------
Name: R.G. Tobin
Title: Authorized Signatory
Dated: March 15, 1999 AHOLD U.S.A., INC.
By: /s/ R. G. Tobin
----------------------------------
Name: R. G. Tobin
Title: President and Chief
Executive Officer
Dated: March 15, 1999 AHOLD ACQUISITION, INC.
By: /s/ R. G. Tobin
----------------------------------
Name: R. G. Tobin
Title: President
8
<PAGE>
Offer to Purchase for Cash
All of the Outstanding Shares
of $3.52 Cumulative Exchangeable Redeemable Preferred Stock
of
Supermarkets General Holdings Corporation
at
$38.25 Net Per Share
by
Ahold Acquisition, Inc.
An Indirect Wholly-Owned Subsidiary of
Koninklijke Ahold N.V.
(Royal Ahold)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, APRIL 9, 1999 UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SHARES OF $3.52 CUMULATIVE EXCHANGEABLE REDEEMABLE PREFERRED STOCK
(THE "SHARES") OF SUPERMARKETS GENERAL HOLDINGS CORPORATION (THE "COMPANY")
WHICH, TOGETHER WITH SHARES PREVIOUSLY ACQUIRED BY KONINKLIJKE AHOLD N.V.
(ROYAL AHOLD) ("PARENT"), ANY DIRECT OR INDIRECT SUBSIDIARY OF PARENT
(INCLUDING AHOLD ACQUISITION, INC. (THE "PURCHASER")), THE COMPANY, OR ANY
DIRECT OR INDIRECT SUBSIDIARY OF THE COMPANY, REPRESENT AT LEAST 66 2/3% OF
ALL OF THE ISSUED AND OUTSTANDING SHARES ON A FULLY DILUTED BASIS (THE
"MINIMUM CONDITION"), (II) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE
WAITING PERIOD UNDER ANTITRUST LAWS DESCRIBED IN SECTION 15--"CERTAIN LEGAL
MATTERS; REGULATORY APPROVALS" AND (III) THE SATISFACTION OF CERTAIN OTHER
TERMS AND CONDITIONS DESCRIBED IN SECTION 14--"CONDITIONS OF THE OFFER".
THE OFFER IS AN INTEGRAL PART OF THE TRANSACTIONS CONTEMPLATED BY, AND IS
BEING MADE PURSUANT TO, THE AGREEMENT AND PLAN OF MERGER DATED MARCH 9, 1999
(THE "SMG-II MERGER AGREEMENT"), BY AND AMONG PARENT, THE PURCHASER AND SMG-II
HOLDINGS CORPORATION ("SMG-II"). SEE SECTION 11--"PURPOSE OF THE OFFER; PLANS
FOR THE COMPANY; CERTAIN AGREEMENTS".
SMG-II OWNS ALL OF THE ISSUED AND OUTSTANDING SHARES OF THE CAPITAL STOCK OF
THE COMPANY OTHER THAN THE SHARES AND, THROUGH THE COMPANY AND PTK HOLDINGS,
INC. ("PTK"), ALL OF THE ISSUED AND OUTSTANDING SHARES OF THE CAPITAL STOCK
(THE "PATHMARK STOCK") OF PATHMARK STORES, INC. PURSUANT TO THE SMG-II MERGER
AGREEMENT, PARENT WILL BE ACQUIRING ALL OF THE ISSUED AND OUTSTANDING SHARES
OF THE CAPITAL STOCK OF SMG-II THROUGH A MERGER OF THE PURCHASER WITH AND INTO
SMG-II (THE "SMG-II MERGER") FOR AN AGGREGATE CONSIDERATION OF $55,731,834
WHICH, WHEN AGGREGATED WITH THE TOTAL POTENTIAL CONSIDERATION PAYABLE BY THE
PURCHASER TO THE HOLDERS OF SHARES PURSUANT TO THE OFFER, EQUALS $242,800,000.
HOLDERS OF 84% OF ALL OF THE ISSUED AND OUTSTANDING SHARES OF THE CAPITAL
STOCK OF SMG-II HAVE AGREED TO VOTE IN FAVOR OF THE SMG-II MERGER.
IN THE EVENT THAT THE MINIMUM CONDITION IS NOT MET, THE OFFER WILL EXPIRE
WITHOUT ANY OF THE SHARES BEING PURCHASED HEREUNDER AND THE PURCHASER WILL
INSTEAD ACQUIRE THE PATHMARK STOCK FROM PTK FOR A PURCHASE PRICE OF
$242,800,000. IN SUCH EVENT, THE ONLY MATERIAL ASSET OF THE COMPANY WOULD BE
THE OWNERSHIP OF ALL OF THE ISSUED AND OUTSTANDING SHARES OF THE CAPITAL STOCK
OF PTK, THE ONLY MATERIAL ASSET OF WHICH IN TURN WOULD BE THE NET AFTER TAX
PROCEEDS FROM THE SALE OF THE PATHMARK STOCK TO THE PURCHASER.
THE BOARD OF DIRECTORS OF THE COMPANY (TWO MEMBERS OF WHICH WERE ELECTED BY
THE HOLDERS OF THE SHARES, VOTING AS A SEPARATE CLASS) HAS UNANIMOUSLY
DETERMINED THAT EACH OF THE OFFER AND THE MERGER OF THE COMPANY WITH AND INTO
SMG-II AS CONTEMPLATED BY THE SMG-II MERGER AGREEMENT IS FAIR TO, AND IN THE
BEST INTERESTS OF, THE HOLDERS OF THE SHARES AND UNANIMOUSLY RECOMMENDS THAT
THE HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER.
---------------
IMPORTANT
Any stockholder desiring to tender all or any portion of the Shares owned by
such stockholder should either (i) complete and sign the Letter of Transmittal
or a facsimile thereof in accordance with the instructions in the Letter of
Transmittal and mail or deliver it together with the certificate(s) evidencing
tendered Shares, and any other required documents, to the Depositary or (ii)
tender such Shares pursuant to the procedures for book-entry transfer set
forth in Section 3--"Procedures for Tendering Shares" or (iii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such stockholder. Any stockholder whose Shares
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee must contact such broker, dealer, commercial bank, trust
company or other nominee if such stockholder desires to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer described in this Offer to
Purchase on a timely basis, may tender such Shares by following the procedures
for guaranteed delivery set forth in Section 3--"Procedures for Tendering
Shares".
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional
copies of this Offer to Purchase, the Letter of Transmittal or other related
tender offer materials may be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
---------------
The Dealer Managers for the Offer are:
Goldman, Sachs & Co.
---------------
The date of this Offer to Purchase is March 15, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION.............................................................. 1
THE TENDER OFFER.......................................................... 3
1. Terms of the Offer.................................................. 3
2. Acceptance for Payment and Payment for Shares....................... 4
3. Procedures for Tendering Shares..................................... 6
4. Withdrawal Rights................................................... 8
5. Certain United States Federal Income Tax Consequences............... 9
6. Price Range of Shares; Dividends.................................... 10
7. Certain Information Concerning the Company.......................... 10
8. Certain Information Concerning the Purchaser, Ahold U.S.A., Croesus
and Parent......................................................... 16
9. Source and Amount of Funds.......................................... 19
10. Background of the Offer............................................. 20
11. Purpose of the Offer; Plans for the Company; Certain Agreements..... 23
12. Dividends and Distributions......................................... 43
13. Effect of the Offer on the Market for the Shares; Exchange Act
Registration............................................................ 44
14. Conditions of the Offer............................................. 45
15. Certain Legal Matters; Regulatory Approvals......................... 46
16. Fees and Expenses................................................... 50
17. Miscellaneous....................................................... 50
SCHEDULE I
Information Concerning the Directors and Executive Officers of
Koninklijke Ahold N.V., Croesus, Inc., Ahold U.S.A., Inc. and Ahold
Acquisition, Inc.
</TABLE>
i
<PAGE>
To the Holders of the $3.52 Cumulative Exchangeable Redeemable Preferred Stock
of Supermarkets General Holdings Corporation:
INTRODUCTION
Ahold Acquisition, Inc., a Delaware corporation (the "Purchaser"), and an
indirect wholly-owned subsidiary of Koninklijke Ahold N.V. (Royal Ahold), a
public company with limited liability incorporated under the laws of The
Netherlands with its corporate seat in Zaandam (Municipality Zaanstad), The
Netherlands ("Parent"), hereby offers to purchase all of the issued and
outstanding shares of the $3.52 Cumulative Exchangeable Redeemable Preferred
Stock, par value $0.01 per share (the "Shares"), of Supermarkets General
Holdings Corporation, a Delaware corporation (the "Company"), at a price of
$38.25 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 this
Offer to Purchase and in the related Letter of Transmittal (which, as they may
be amended and supplemented from time to time, together constitute the
"Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. The Purchaser will pay all charges and expenses of Goldman, Sachs &
Co., as Dealer Managers (the "Dealer Managers"), Citibank, N.A., as depositary
(the "Depositary"), and Morrow & Co., Inc. as Information Agent (the
"Information Agent"), in each case incurred in connection with the Offer. See
Section 16--"Fees and Expenses".
The Offer is an integral part of the transactions contemplated by, and is
being made pursuant to, an Agreement and Plan of Merger, dated as of March 9,
1999 (the "SMG-II Merger Agreement"), by and among Parent, the Purchaser and
SMG-II Holdings Corporation, a Delaware corporation ("SMG-II"), pursuant to
which Parent will be acquiring all of the issued and outstanding shares of the
capital stock of SMG-II through the merger of the Purchaser with and into SMG-
II (the "SMG-II Merger"), subject to the terms and conditions contained in the
SMG-II Merger Agreement. The aggregate consideration for the acquisition of
all of the issued and outstanding shares of the capital stock of SMG-II is
$55,731,834 which, when aggregated with the total potential consideration
payable by the Purchaser to the holders of Shares pursuant to the Offer,
equals $242,800,000. The Purchaser has been informed that, as of March 9,
1999, SMG-II is the owner of all of the issued and outstanding shares of Class
A Common Stock and Class B Common Stock of the Company which shares represent,
together with the Shares, all of the issued and outstanding shares of the
capital stock of the Company.
The Offer is conditioned upon, among other things, there being validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of Shares which, together with Shares previously acquired by Parent,
any direct or indirect subsidiary of Parent (including the Purchaser), the
Company, or any direct or indirect subsidiary of the Company, represent at
least 66 2/3% of the Shares on a fully diluted basis (the "Minimum
Condition"). The Offer is also subject to other terms and conditions. See
Section 14--"Conditions of the Offer".
The Purchaser has been informed that, as of March 9, 1999, there were
4,890,671 Shares issued and outstanding and that no Shares were reserved for
issuance upon the exercise of outstanding options granted under the Company's
stock option plans or held in the Company's treasury. As a result, as of such
date, the Minimum Condition would be satisfied if 3,260,448 Shares were
tendered and not properly withdrawn prior to the expiration of the Offer.
The SMG-II Merger Agreement provides that, among other things, in the event
all of the conditions to the consummation of the SMG-II Merger (other than the
Minimum Condition and certain related conditions) have been satisfied or
waived, but the Minimum Condition or certain related conditions have not been
satisfied or waived, SMG-II is obligated, pursuant to
1
<PAGE>
the terms and conditions of a Stock Purchase Agreement, dated as of March 9,
1999 (the "Alternative Stock Purchase Agreement"), by and among SMG-II, PTK
Holdings, Inc. ("PTK"), a wholly-owned subsidiary of the Company, Parent and
the Purchaser, to cause PTK to sell all of the shares of the capital stock
(the "Pathmark Stock") of Pathmark Stores, Inc. ("Pathmark") to the Purchaser
for a purchase price, payable in cash, equal to $242,800,000. In such event,
the Offer will expire without any Shares being purchased hereunder, and the
only material asset of the Company would be its ownership of all of the shares
of the capital stock of PTK, the only material asset of which in turn would be
the net after tax proceeds from the sale of the Pathmark Stock to the
Purchaser pursuant to the Alternative Stock Purchase Agreement.
The SMG-II Merger Agreement provides that, promptly upon consummation of the
SMG-II Merger, Parent will cause the Company to be merged with and into SMG-II
(the "Company Merger"), pursuant to a Merger Agreement (the "Company Merger
Agreement") in the form attached as an exhibit to the SMG-II Merger Agreement
and to be entered into at such time by and between SMG-II and the Company. At
the effective time of the Company Merger (the "Effective Time"), each of the
Shares (other than Shares held by any subsidiary of the Company or in the
treasury of the Company, or held, directly or indirectly, by Parent or any
direct or indirect subsidiary of Parent (including the Shares acquired by the
Purchaser pursuant to the Offer), which Shares will be canceled, and other
than Shares, if any, held by stockholders who perfect their appraisal rights
under the Delaware General Corporation Law (the "DGCL")) will be converted
into the right to receive an amount in cash equal to $38.25. The Company
Merger Agreement is more fully described in Section 11--"Purpose of the Offer;
Plans for the Company; Certain Agreements". Under the DGCL, if the Purchaser
acquires, pursuant to the Offer or otherwise, at least 90% of the then
outstanding Shares, the Purchaser will be able to approve and effect the
Company Merger without a vote of the Company's stockholders. If, however, the
Purchaser does not acquire at least 90% of the then outstanding Shares
pursuant to the Offer or otherwise, a vote of the Company's stockholders to
effect the Company Merger is required under the DGCL and a longer period of
time will be required to effect the Company Merger. See Section 11--"Purpose
of the Offer; Plans for the Company; Certain Agreements".
The board of directors of the Company (the "Board of Directors"), two
members of which were elected by the holders of the Shares, voting separately
as a class, has unanimously determined that each of the Offer and the Company
Merger is fair to, and in the best interests of, the holders of the Shares and
unanimously recommends that the holders of the Shares accept the Offer and
tender their Shares pursuant to the Offer.
The consummation of the SMG-II Merger is subject to the satisfaction or
waiver of certain conditions set forth in the SMG-II Merger Agreement
including, without limitation, the Minimum Condition and the approval of the
SMG-II Merger by the holders of 66 2/3% of all of the issued and outstanding
shares of the capital stock of SMG-II, voting as one class, with each share
having one vote. Concurrently with the execution of the SMG-II Merger
Agreement and, as required by Parent and the Purchaser, Merrill Lynch Capital
Appreciation Partnership No. IX, L.P., ML Offshore LBO Partnership No. IX, ML
Employees LBO Partnership No. I, L.P., ML IBK Positions, Inc., Merchant
Banking L.P. No. 1, Merrill Lynch KECALP L.P. 1987, Merrill Lynch Capital
Appreciation Partnership No. B-X, L.P., ML Offshore LBO Partnership No. B-X,
MLCP Associates, L.P. No. II, Merchant Banking L.P. No. IV, Merrill Lynch
KECALP L.P. 1989, Merrill Lynch KECALP L.P. 1991, The Equitable Life Assurance
Society of the United States, Equitable Deal Flow Fund, L.P. and James L.
Donald (collectively, the "SMG-II Stockholders"), entered into a Stockholders
Agreement, dated March 9, 1999 (the "Stockholders Agreement") with Parent and
the Purchaser. Pursuant to the Stockholders Agreement, each of the SMG-II
Stockholders has (i) agreed to vote the shares of the capital stock of SMG-II
owned by it in favor of the SMG-II Merger and (ii) granted the Purchaser an
option to purchase, under certain circumstances, the shares of the capital
stock of SMG-II owned by it. The number of shares of the capital stock of SMG-
II owned collectively by the SMG-II Stockholders represents 84% of all of the
issued and outstanding shares of the capital stock of SMG-II.
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This Offer to Purchase and the Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
THE TENDER OFFER
1. Terms of the Offer. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and
conditions of any extension or amendment), the Purchaser will accept for
payment and pay for all Shares validly tendered prior to the Expiration Date
(as hereinafter defined) and not withdrawn in accordance with Section 4--
"Withdrawal Rights". The term "Expiration Date" means 12:00 Midnight, New York
City time, on Friday, April 9, 1999, unless and until the Purchaser, in its
sole discretion, shall have extended the period of time during which the Offer
is open, in which event the term "Expiration Date" shall mean the latest time
and date at which the Offer, as so extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the expiration or termination of any applicable waiting
period under the antitrust laws described in Section 15--"Certain Legal
Matters; Regulatory Approvals". The Offer is also subject to certain other
conditions set forth in Section 14--"Conditions of the Offer". If these or any
of the other conditions referred to in Section 14--"Conditions of the Offer"
are not satisfied or any of the events specified in Section 14--"Conditions of
the Offer" have occurred or are determined by the Purchaser to have occurred
prior to the Expiration Date, the Purchaser reserves the right (but is not
obligated) to (i) decline to purchase any of the Shares tendered in the Offer
and terminate the Offer, and return all tendered Shares to the tendering
stockholders, (ii) waive or amend any or all conditions to the Offer, to the
extent permitted by applicable law and subject to the provisions of the SMG-II
Merger Agreement and to complying with applicable rules and regulations of the
Securities and Exchange Commission (the "Commission"), (iii) purchase all
Shares validly tendered or (iv) subject to the limitations described below,
extend the Offer and, subject to the right of a tendering stockholder to
withdraw its Shares until the Expiration Date, retain the Shares which have
been tendered during the period or periods for which the Offer is extended,
provided, however, that, subject to the terms of the SMG-II Merger Agreement,
the Minimum Condition may be waived by the Purchaser in its sole discretion.
Subject to the applicable rules and regulations of the Commission and to
applicable law, the Purchaser expressly reserves the right, in its sole
discretion, at any time and from time to time, to extend for any reason the
period of time during which the Offer is open, including upon the occurrence
of any of the events specified in Section 14--"Conditions of the Offer", by
giving notice of such extension to the Depositary and by making a public
announcement thereof. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
rights of a tendering stockholder to withdraw its Shares. See Section 4--
"Withdrawal Rights".
Subject to the applicable rules and regulations of the Commission and to
applicable law, the Purchaser also expressly reserves the right, in its sole
discretion, at any time and from time to time, (i) to delay acceptance for
payment of, or, regardless of whether such Shares were theretofore accepted
for payment, payment for, any Shares pending receipt of any regulatory
approval specified in Section 15--"Certain Legal Matters; Regulatory
Approvals" or in order to comply in whole or in part with any other applicable
law, (ii) to terminate the Offer and not accept for payment any Shares if any
of the conditions referred to in Section 14--"Conditions of the Offer" are not
satisfied or any of the events specified in Section 14--"Conditions of the
Offer" have occurred and (iii) subject to the terms of the
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SMG-II Merger Agreement, to waive any condition, or otherwise amend the Offer
in any respect by giving oral or written notice of such delay, termination,
waiver or amendment to the Depositary and by making a public announcement
thereof.
The Purchaser reserves the right to modify the terms of the Offer, including
without limitation, except as provided below, to extend the Offer beyond any
scheduled expiration date, except that, without the written consent of SMG-II,
the Purchaser will not reduce the number of Shares sought in the Offer, reduce
the Offer Price, or modify, waive or add to the conditions of the Offer
referred to in Section 14--"Conditions of the Offer". The Purchaser currently
intends to extend the offer from time to time if and to the extent the
applicable waiting period under antitrust laws described in Section 15--
"Certain Legal Matters; Regulatory Approvals" has not expired or been
terminated on the Expiration Date.
The Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), requires the Purchaser
to pay the consideration offered or return the Shares tendered promptly after
the termination or withdrawal of the Offer, and (ii) the Purchaser may not
delay acceptance for payment of, or payment for (except as provided in clause
(i) of the first sentence of the second preceding paragraph), any Shares upon
the occurrence of any of the conditions specified in Section 14--"Conditions
of the Offer" without extending the period of time during which the Offer is
open.
During any such extension, all Shares previously tendered and not withdrawn
will remain subject to the Offer, subject to the right of a tendering
stockholder to withdraw its Shares. Any such extension, delay, termination,
waiver or amendment will be followed, as promptly as practicable, by public
announcement thereof, with such announcement in the case of an extension to be
made no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date. Subject to applicable law
(including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act), which
require that material changes be promptly disseminated to stockholders in a
manner reasonably designed to inform them of such changes and without limiting
the manner in which the Purchaser may choose to make any public announcement,
the Purchaser will have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a press release
to the Dow Jones News Service or as otherwise may be required by applicable
law.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Purchaser will extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act.
The Company has provided the Purchaser with the Company's list of holders of
the Shares and security position listings in respect of the Shares for the
purpose of disseminating the Offer to holders of Shares. This Offer to
Purchase, the related Letter of Transmittal and other relevant materials will
be mailed to record holders of Shares whose names appear on the Company's list
of holders of the Shares and will be furnished, for subsequent transmittal to
beneficial owners of Shares, to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the list of holders of the Shares or, if applicable, who are listed
as participants in the security position listing of The Depository Trust
Company.
2. Acceptance for Payment and Payment for Shares. Upon the terms and subject
to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), the
Purchaser will purchase, by accepting for payment, and will pay for, all
Shares validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4--"Withdrawal Rights") promptly after
the later to occur of (i) the Expiration Date and (ii) the receipt of all
necessary regulatory approvals specified in Section 15--"Certain Legal
Matters; Regulatory Approvals". Subject to applicable rules of the Commission
and the terms of the SMG-II
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<PAGE>
Merger Agreement, the Purchaser expressly reserves the right, in its
discretion, to delay acceptance for payment of, or payment for, Shares pending
receipt of any regulatory approvals specified in Section 15--"Certain Legal
Matters; Regulatory Approvals" or satisfaction or waiver of the Minimum
Condition. See Section 14--"Conditions of the Offer".
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) the certificates
evidencing such Shares (the "Share Certificates") or timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Shares into the
Depositary's account at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 3--"Procedures for
Tendering Shares", (ii) the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed with any required signature guarantees,
or an Agent's Message (as defined below) in connection with a book-entry
transfer and (iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from a participant (the "Participant")
in the Book-Entry Transfer Facility tendering the Shares that such Participant
has received and agrees to be bound by the terms of the Offer and that the
Purchaser may enforce such agreement against such participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if, as and when the Purchaser gives notice to the Depositary of the
Purchaser's acceptance for payment of such Shares. Payment for Shares accepted
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering stockholders for
the purpose of receiving payments from the Purchaser and transmitting payments
to such tendering stockholders whose Shares have been accepted for payment.
Under no circumstances will interest on the purchase price for Shares be paid
by the Purchaser, regardless of any delay in making such payment or extension
of the Expiration Date. Upon the deposit of funds with the Depositary for the
purpose of making payments to tendering stockholders, the Purchaser's
obligation to make such payment shall be satisfied, and tendering stockholders
must thereafter look solely to the Depositary for payment of amounts owed to
them by reason of the acceptance for payment of Shares pursuant to the Offer.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are
submitted evidencing more Shares than are tendered, Share Certificates
evidencing Shares not purchased will be returned, without expense to the
tendering stockholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedure set forth in Section 3-- "Procedures for Tendering
Shares", such Shares will be credited to an account maintained at the Book-
Entry Transfer Facility), as promptly as practicable following the expiration,
termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
to be paid per Share pursuant to the Offer, the Purchaser will pay such
increased consideration for all such Shares purchased pursuant to the Offer,
whether or not such Shares were tendered prior to such increase in
consideration.
The Purchaser reserves the right to assign to Parent, or to any other direct
or indirect wholly-owned subsidiary of Parent, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such
assignment will not relieve the Purchaser of its obligations under the Offer
and will in no way prejudice the rights of tendering stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
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<PAGE>
3. Procedures for Tendering Shares.
Valid Tender of Shares. In order for Shares to be validly tendered pursuant
to the Offer, the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message in connection with a book-entry delivery of Shares, and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either (i) the Share Certificates evidencing tendered
Shares must be received by the Depositary at such address or Shares must be
tendered pursuant to the procedure for book-entry transfer described below and
a Book-Entry Confirmation must be received by the Depositary, in each case
prior to the Expiration Date, or (ii) the tendering stockholder must comply
with the guaranteed delivery procedures described below.
The method of delivery of Share Certificates and all other required
documents, including delivery through the Book-Entry Transfer Facility, is at
the option and risk of the tendering stockholder, and the delivery will be
deemed made only when actually received by the Depositary. If delivery is by
mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to ensure timely
delivery.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Shares by causing the Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for transfer. In addition, Shares held through the Book-
Entry Transfer Facility must be tendered to the Depositary by means of
delivery of the Letter of Transmittal by Agent's Message. The term "Agent's
Message" means a message transmitted by the Book-Entry Transfer Facility to,
and received by, the Depositary and forming a part of the Book-Entry Transfer
Facility confirmation system that states that the Book-Entry Transfer Facility
has received an express acknowledgement from the Participant in the Book-Entry
Transfer Facility tendering such Shares that such Participant has received and
agrees to be bound by the terms of the Offer. In order to effect a valid
tender of Shares through the Book-Entry Transfer Facility, the Shares, along
with an Agent's Message and any other required documents, must, in any case,
be transmitted to, and received by, the Depositary prior to the Expiration
Date, or the tendering stockholder must comply with the guaranteed delivery
procedures described below. Delivery of documents or instructions to the Book-
Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's
procedures does not constitute delivery to the Depositary.
Signature Guarantee. Signatures on all Letters of Transmittal must be
guaranteed by a financial institution (including most banks, savings and loan
associations and brokerage houses) which is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"), unless the Shares tendered thereby are tendered (i)
by a registered holder of Shares who has not completed the box entitled
"Special Payment Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Share
Certificate not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then the Share Certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on the Share
Certificate, with the signature(s) on such Share Certificate or stock powers
guaranteed as described above. See Instructions 1, 5 and 7 to the Letter of
Transmittal.
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<PAGE>
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the
Depositary prior to the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, such Shares may nevertheless
be tendered if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary as provided below prior to the Expiration Date;
and
(iii) the Share Certificates for all tendered Shares, in proper form for
transfer, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantee
(or, in the case of a book-entry transfer, a Book-Entry Confirmation along
with an Agent's Message) and any other documents required by such Letter of
Transmittal, are received by the Depositary within three New York Stock
Exchange trading days after the date of execution of the Notice of
Guaranteed Delivery.
Any Notice of Guaranteed Delivery may be delivered by hand or transmitted by
hand or mail to the Depositary and must include a guarantee by an Eligible
Institution in the form set forth in the Notice of Guaranteed Delivery. In the
case of Shares held through the Book-Entry Transfer Facility, the Notice of
Guaranteed Delivery must be delivered to the Depositary by a Participant by
means of an Agent's Message via the confirmation system of the Book-Entry
Transfer Facility.
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will, in all cases, be made only after timely receipt by
the Depositary of (i) the Share Certificates evidencing such Shares or a Book-
Entry Confirmation of the delivery of such Shares, (ii) a properly completed
and duly executed Letter of Transmittal or facsimile thereof (or, in the case
of a book-entry transfer, an Agent's Message) and (iii) any other documents
required by the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, whose determination will
be final and binding on all parties. The Purchaser reserves the absolute right
to reject any or all tenders of any Shares determined by it not to be in
proper form or if the acceptance for payment of, or payment for, such Shares
may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser
also reserves the absolute right, in its sole discretion, to waive any of the
conditions of the Offer (subject to the terms of the SMG-II Merger Agreement)
or any defect or irregularity in any tender with respect to Shares of any
particular stockholder, whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed
to have been validly made until all defects and irregularities have been cured
or waived.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Appointment as Proxy. By executing a Letter of Transmittal (or delivering an
Agent's Message) as set forth above, a tendering stockholder irrevocably
appoints designees of the Purchaser as such stockholder's proxies, each with
full power of substitution, to the full extent of such stockholder's rights
with respect to the Shares tendered by such stockholder and accepted for
payment by the Purchaser (and any and all dividends, distributions, rights,
other Shares or other securities issued or issuable in respect of such Shares
on or after March 9, 1999). All such proxies shall be considered coupled with
7
<PAGE>
an interest in the tendered Shares. This appointment will be effective if,
when, and only to the extent that, the Purchaser accepts such Shares for
payment pursuant to the Offer. Upon such acceptance for payment, all prior
proxies given by such stockholder with respect to such Shares and other
securities will, without further action, be revoked, and no subsequent proxies
may be given. The designees of the Purchaser will, with respect to the Shares
and other securities for which the appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual, special, adjourned or postponed
meeting of the Company's stockholders, by written consent or otherwise, and
the Purchaser reserves the right to require that, in order for Shares or other
securities to be deemed validly tendered, immediately upon the Purchaser's
acceptance (for payment of such Shares), the Purchaser must be able to
exercise full voting rights with respect to such Shares and other securities.
Backup Withholding. To prevent United States federal backup withholding tax
with respect to payment to certain stockholders of the Offer Price purchased
pursuant to the Offer, each such stockholder must provide the Depositary with
such stockholder's correct taxpayer identification number and certify that
such stockholder is not subject to backup withholding tax by completing the
Substitute Form W-9 included as part of the Letter of Transmittal. If backup
withholding applies with respect to a stockholder or if a stockholder fails to
deliver a completed Substitute Form W-9 to the Depositary, the Depositary is
required to withhold 31% of any payments made to such stockholder. See Section
5--"Certain United States Federal Income Tax Consequences" of this Offer to
Purchase and Instruction 9 to the Letter of Transmittal.
The Purchaser's acceptance for payment of Shares tendered pursuant to the
Offer will constitute a binding agreement between the tendering stockholder
and the Purchaser upon the terms and subject to the conditions of the Offer.
4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after May 13, 1999,
or at such later time as may apply if the Offer is extended.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of Shares or is unable to accept Shares for payment pursuant to the Offer for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that
tendering stockholders are entitled to withdrawal rights as described in this
Section 4--"Withdrawal Rights". Any such delay will be an extension of the
Offer to the extent required by law.
For a withdrawal to be effective, a written notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase. Any such notice of withdrawal must
specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of the
Shares, if different from that of the person who tendered such Shares. If
Share Certificates evidencing Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such Share Certificates, the serial numbers shown on such Share Certificates
must be submitted to the Depositary and the signature(s) on the notice of
withdrawal must be guaranteed by an Eligible Institution, unless such Shares
have been tendered for the account of an Eligible Institution. Shares tendered
pursuant to the procedure for book-entry transfer as set forth in Section 3--
"Procedures for Tendering Shares", may be withdrawn only by means of the
withdrawal procedures made available by the Book-Entry Transfer Facility to
the Participants, must specify the name and number of the account at the Book-
Entry Transfer Facility to be credited with the withdrawn Shares and must
otherwise comply with the Book-Entry Transfer Facility's procedures.
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Withdrawals of tendered Shares may not be rescinded (without the Purchaser's
consent), and any Shares properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be
determined by the Purchaser, in its sole discretion, which determination will
be final and binding. None of Parent, the Purchaser, the Depositary, the
Information Agent, the Dealer Managers or any other person will be under any
duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
Any Shares properly withdrawn may be re-tendered at any time prior to the
Expiration Date by following any of the procedures described in Section 3--
"Procedures for Tendering Shares".
5. Certain United States Federal Income Tax Consequences. The receipt of
cash for Shares pursuant to the Offer or the Company Merger by a stockholder
that is a citizen or resident of the United States, a partnership or
corporation created in or under the laws of the United States or any state
thereof (including the District of Columbia), an estate, the income of which
is subject to United States federal income taxation regardless of its source
or a trust (i) the administration over which a United States court can
exercise primary supervision and (ii) all of the substantial decisions of
which one or more United States persons have the authority to control (a "U.S.
Holder") will be a taxable transaction for United States federal income tax
purposes and may also be a taxable transaction under applicable state, local
or foreign tax laws. In general, a U.S. Holder will recognize gain or loss for
United States federal income tax purposes equal to the difference, if any,
between the amount realized from the sale of Shares and such U.S. Holder's
adjusted tax basis in such Shares. Assuming that the Shares constitute a
capital asset in the hands of the U.S. Holder, such gain or loss will be
capital gain or loss and in the case of a noncorporate U.S. Holder, the
maximum marginal United States federal income tax rate applicable to such gain
will be lower than the maximum marginal United States federal income tax rate
applicable to ordinary income if such U.S. Holder's holding period for such
Shares exceeds one year.
The foregoing discussion may not be applicable to certain types of
stockholders, including stockholders who acquired Shares pursuant to the
exercise of stock options or otherwise as compensation, holders that are not
U.S. Holders and stockholders that are otherwise subject to special tax rules,
such as financial institutions, insurance companies, dealers or traders in
securities or currencies, tax-exempt entities, persons that hold Shares as a
position in a "straddle" or as part of a "hedging" or "conversion" transaction
for tax purposes and persons that have a "functional currency" other than the
United States dollar ("Dollar").
Information Reporting and Backup Withholding Tax. United States information
reporting will apply to proceeds from the sale of Shares paid within the
United States to a U.S. Holder (other than an "exempt recipient"). As noted in
Section 3--"Procedures for Tendering Shares", a stockholder (other than an
"exempt recipient," including a corporation and a non-U.S. Holder that
provides appropriate certification (if the payor does not have actual
knowledge that such certificate is false)) that receives cash in exchange for
Shares may be subject to United States federal backup withholding tax at a
rate equal to 31%, unless such stockholder provides its taxpayer
identification number and certifies that such stockholder is not subject to
backup withholding tax by submitting a completed Substitute Form W-9 to the
Depositary. Accordingly, each stockholder should complete, sign and submit the
Substitute Form W-9 included as part of the Letter of Transmittal in order to
avoid the imposition of such backup withholding tax.
The United States federal income tax discussion set forth above is included
for general information and is based upon laws, regulations, rulings and
decisions now in effect, all of which are subject to change (possibly
retroactively). Stockholders are urged to consult their tax advisors with
respect to the
9
<PAGE>
specific tax consequences of the Offer to them, including the application and
effect of the alternative minimum tax and state, local and foreign tax laws.
6. Price Range of Shares; Dividends. The Shares have a liquidation
preference of $25.00 per Share and are entitled to cumulative quarterly
dividends at an annual rate of $3.52 per Share, when, as, and if declared by
the Board of Directors. The Company is currently in arrears on payment of 25
quarterly dividends on the Shares totaling $22 per Share and does not expect
to receive cash flow sufficient to permit payments of dividends on the Shares
in the foreseeable future.
Parent and the Purchaser have been advised that the Shares are traded on the
over-the-counter market on a limited and sporadic basis. The following table
sets forth, for the periods indicated, the high and low bid quotations per
Share as reported by Bloomberg L.P. Such quotations represent inter-dealer
quotations, without adjustment for retail markets, markdowns or commissions,
and do not necessarily represent actual transactions.
<TABLE>
<CAPTION>
Market Quotation
-----------------
High Low
-------- --------
<S> <C> <C>
1997 Fiscal Year:
First Quarter.......................................... $25.25 $20.00
Second Quarter......................................... 22.50 18.00
Third Quarter.......................................... 19.97 16.50
Fourth Quarter......................................... 24.75 15.00
1998 Fiscal Year:
First Quarter.......................................... 21.25 10.00
Second Quarter......................................... 33.25 20.88
Third Quarter.......................................... 29.00 19.00
Fourth Quarter......................................... 25.50 14.88
1999 Fiscal Year:
First Quarter (through March 8, 1999).................. 25.50 21.00
</TABLE>
On March 3, 1999, the last day on which the Shares were traded prior to the
public announcement of the Offer, the reported closing bid quotation of the
Shares on the over-the-counter market was $25.50 per Share. On March 10, 1999,
the last day on which the Shares were traded prior to the date of this Offer
to Purchase, the reported closing bid quotation of the Shares on the over-the-
counter market was $37.38 per Share. Holders are urged to obtain a current
market quotation for the Shares.
7. Certain Information Concerning the Company.
The Company. The information concerning the Company contained in this Offer
to Purchase, including financial information, has been taken from or is based
upon publicly available documents and records on file with the Commission and
other public sources. Neither Parent nor the Purchaser assumes any
responsibility for the accuracy or completeness of the information concerning
the Company contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Parent or the Purchaser.
The Company, through Pathmark, operates 132 supermarkets. Pathmark's
supermarkets are located in New Jersey, New York, Pennsylvania and Delaware
and consist of approximately 5.2 million selling square footage and
approximately 7.1 million total square footage. Of Pathmark's 132 stores, 129
are super centers, which are larger than the average size supermarket in the
United States. Pathmark provides full pharmacy service in 127 of its 132
stores. As of January, 1999, the Company employed approximately 28,000 people,
of whom approximately 20,500 were employed on a part-time
10
<PAGE>
basis. The address of the Company's principal executive offices is 200 Milik
Street, Carteret, New Jersey. The telephone number of the Company at such
offices is (732) 499-3000.
Corporate Structure. SMG-II owns all of the issued and outstanding shares of
the capital stock of the Company other than the Shares. SMG-II, through the
Company and PTK, owns all of the issued and outstanding shares of the capital
stock of Pathmark.
Capital Structure. The authorized capital of the Company consists of two
classes of common stock and one class of preferred stock: (i) the Class A
Common Stock, (ii) the Class B Common Stock and (iii) the Shares.
(a) The Common Stock.
Holders of the Class A Common Stock have voting rights. Holders of the Class
B Common Stock do not have voting rights. The Purchaser has been informed
that, as of March 9, 1999, there were issued and outstanding 650,675 shares of
Class A Common Stock and 320,000 shares of Class B Common Stock, all of which
shares of Class A Common Stock and Class B Common Stock were owned, as of
March 9, 1999, by SMG-II.
(b) The Shares.
The Purchaser has further been informed that, as of March 9, 1999, there
were 4,890,671 Shares issued and outstanding, and that no Shares were reserved
for issuance upon the exercise of outstanding options granted under the
Company's stock option plans or held in the Company's treasury.
Rank. The Shares, with respect to dividend rights and rights on liquidation,
winding up and dissolution, rank senior to the common stock of the Company and
will rank senior to any other stock issued by the Company. For so long as any
Shares are outstanding, the Company may not authorize or issue any class or
series of stock which ranks senior to the Shares without the affirmative vote
of the holders of at least 66 2/3% of the outstanding Shares, voting as a
separate class.
Dividends. Holders of Shares are entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available therefor,
dividends at the annual rate of $3.52 per share. Such dividends are cumulative
and are payable quarterly. The terms of the Shares provide that dividends on
the Shares may only be paid in cash. Accumulated unpaid dividends for any past
dividend periods may be declared by the Board of Directors and paid on any
date fixed by the Board of Directors, whether or not a regular dividend
payment date, to holders of record on the books of the Company on such record
date as may be fixed by the Board of Directors. Holders of Shares will not be
entitled to any dividends, whether payable in cash, property or stock, in
excess of the full cumulative dividends. No interest or sum of money in lieu
of interest shall be payable in respect of any accumulated unpaid dividends.
Redemption and Exchange. The Shares may be redeemed (to the extent the
Company has funds legally available therefor) at any time, in whole or in
part, at the Company's option, at $25 per share, together with all accrued and
unpaid dividends to the date fixed for redemption; provided, however, that no
partial redemptions of Shares may be made unless full cumulative dividends on
all Shares for all past dividend periods shall have been paid.
The Company must redeem on each of December 31, 2004, 2005 and 2006 an
amount equal to at least 20% of the greatest number of Shares issued and
outstanding at any time through December 31, 2004 at a redemption price of $25
per Share, plus all accrued and unpaid dividends to the date fixed for
redemption. The Company may, at its option, receive a credit against its
obligation to make these mandatory redemption payments in an amount equal to
$25 for each Share previously acquired by the Company and surrendered for
cancellation or optionally redeemed; provided that such amount was not
previously so credited. In the event of partial redemptions of Shares, the
Shares to
11
<PAGE>
be redeemed will be determined by lot or pro rata as may be determined by the
Board of Directors; provided, however, that the Board of Directors may redeem
all Shares held by any holders of a number of Shares not to exceed 100 as may
be specified by the Company. No partial optional redemptions of Shares may be
made unless full cumulative dividends on all Shares shall have been paid or
are contemporaneously declared and paid. On and after a redemption date,
unless the Company defaults in the payment of the redemption price, dividends
will cease to accrue on Shares called for redemption and all rights of holders
of such Shares will terminate except for the right to receive the redemption
price.
Shares will be exchangeable, at the Company's option, on any dividend
payment date, in whole or in part (in minimum increments of $25 million in
aggregate liquidation preference amount or integral multiples of $1 million in
excess of $25 million or any lesser amount then outstanding), for exchange
debentures having an aggregate principal amount equal to the total of $25 for
each full Share exchanged, plus an amount equal to all accrued but unpaid
dividends payable on such Share (at the rate of $1 principal amount of such
exchange debentures for each $1 of such accrued but unpaid dividends), with a
cash payment to be made in lieu of the issuance of fractional securities. In
the event such exchange would result in the issuance of an exchange debenture
in a principal amount which is less than $1,000 or which is not an integral
multiple of $1,000, each holder of Shares otherwise entitled to principal
amounts less than $1,000 of exchange debentures otherwise issuable upon
exchange of the Shares will be entitled to receive a cash payment in lieu
thereof equal to such person's proportionate interest in the net proceeds from
the sale or sales in the open market of the aggregate of all fractional
principal amounts each holder would otherwise have been entitled to receive in
exchange debentures. In the event of partial exchanges of exchange debentures
for Shares, the Shares to be exchanged will be determined by lot or pro rata
as may be determined by the Board of Directors, provided that the Board of
Directors may exchange all Shares held by holders of a number of Shares not to
exceed 100 as may be specified by the Company. On the date fixed for exchange,
the rights of holders of the Shares exchanged shall cease, except the right to
receive the exchange debentures in exchange for such Shares and cash or
additional exchange debentures in payment of accrued but unpaid dividends on
such Shares to the date of exchange.
Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, holders of Shares will be entitled
to receive an amount per Share equal to $25, plus any accrued and unpaid
dividends thereon to the date fixed for such liquidation, dissolution or
winding up, before any distribution is made on any common stock of the
Company. If the assets of the Company are not sufficient to pay the amounts
payable with respect to the Shares in full, the holders of the Shares will
share ratably in any distribution of assets of the Company in proportion to
the full liquidation preferences to which each is entitled. After payment of
the full amount of the liquidation preference to which they are entitled, the
holders of Shares will not be entitled to any further participation in any
distribution of assets of the Company. However, neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities, or
other consideration) of all or substantially all of the property or assets of
the Company, nor the consolidation or merger of the Company shall be deemed to
be a voluntary or involuntary liquidation, dissolution or winding up of the
Company, unless such voluntary sale, conveyance, exchange or transfer shall be
in connection with a plan of liquidation, dissolution or winding up of the
Company.
There is no requirement that funds be set aside to protect the liquidation
preference of the Shares, although such liquidation preference will be
substantially in excess of the par value of such Shares. There are no
restrictions upon the surplus of the Company solely because the liquidation
preference of the Shares exceeds the par value, and there are no remedies
available to holders of the Shares before or after the payment of any
dividend, other than in connection with the liquidation of the Company, solely
by reason of the fact that such dividend would reduce the surplus of the
Company to an amount less than the liquidation preference of the Shares.
12
<PAGE>
Voting Rights. Holders of the Shares have no voting rights except as
provided by law or as set forth below. In the event that six full quarterly
dividends (whether or not consecutive) on the Shares are in arrears, in whole
or in part, or if the Company shall have failed to fulfill any mandatory
redemption obligation with respect to the Shares for a period of 30 days, the
Board of Directors will be
(and, as of the date of the Offer, has been) increased by two directors, and
the holders of Shares, voting as a class, will be entitled to elect (and, as
of the date of the Offer, have elected) the additional directors to the
expanded Board of Directors. Such voting right will continue until such time
as all dividends accumulated on the Shares are paid in full and the Company
has fulfilled its mandatory redemption obligation. Any directors elected to
the Board of Directors by the holders of the Shares will serve one-year terms
(or until their successors have been elected and qualified), subject to
termination in the event that the Company has paid all accumulated dividends
or fulfilled its mandatory redemption obligations, as the case may be.
Under the DGCL, holders of Shares have the power to vote, as a class, on any
amendment to the Company's certificate of incorporation which increases or
decreases the par value of the Shares. The Company may not (a) amend, alter or
repeal any of the provisions of the Company's certificate of incorporation or
the by-laws of the Company so as to affect adversely the voting powers,
preferences or rights of the holders of the Shares (except that the
authorization or creation, or the increase in the authorized amount, of common
stock or any shares of any class ranking on parity with the Shares shall not
be deemed to affect adversely the voting powers, preferences or rights of the
holders of the Shares), (b) amend, modify or repeal any of the provisions of
the exchange debenture indenture, except for such amendments as would be
permitted under the terms of the exchange debenture indenture without the
consent of any holders of the exchange debentures, or (c) authorize or create,
or increase the authorized amount of, any senior securities of any class or
any security convertible into senior securities of any class; in each case,
without the vote or consent of the holders of at least 66 2/3% of the Shares
then outstanding, given in person or by proxy, either in writing or at a
meeting, voting or consenting separately as a class. In addition, the Company
shall not authorize, create or increase the authorized amount of any stock of
any class or any security convertible into or exchangeable for any shares of
securities ranking on a parity with the Shares without the vote or consent of
the holders of at least a majority of the Shares then outstanding, given in
person or by proxy, either in writing or at a meeting, voting or consenting
separately as a class. However, the voting provisions described in the
preceding two sentences do not apply if, at or prior to the time when the act
with respect to which such vote would otherwise be required shall be effected,
all outstanding Shares shall have been redeemed and sufficient funds shall
have been set aside or deposited in trust by the Company to effect such
redemption.
Financial Information. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the financial statements contained in the
Company's Annual Reports on Form 10-K for the fiscal years ended January 31,
1998 and February 1, 1997. More comprehensive financial information is
included in these reports and other documents filed by the Company with the
Commission. The financial information that follows is qualified in its
entirety by reference to these reports and other documents, including the
financial statements and related notes contained therein. These reports and
other documents may be inspected at, and copies may be obtained from, the same
places and in the manner set forth below under "Available Information".
13
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
39 weeks ended(1) 52 weeks ended(2)
----------------------- -----------------------
October 31, November 1, January 31, February 1,
1998 1997 1998 1997
----------- ----------- ----------- -----------
(in millions)
<S> <C> <C> <C> <C>
Income Statement Data:
Sales........................ $2,739 $2,755 $3,696 $3,711
Cost of sales ............... 1,958 1,985 2,652 2,620
Gross profit................. 781 770 1,044 1,091
Depreciation and
amortization................ 59 62 84 89
Operating earnings (3)....... 96 78 119 127
Net loss (4)................. (25) (36) (57) (20)
Less: non-cash preferred
stock accretion and dividend
requirements................ (14) (14) (19) (19)
Net loss attributable to
common
stockholders (5)............ (39) (50) (76) (39)
EBITDA-FIFO (6).............. 154 142 202 237
Balance Sheet Data (at period
end):
Total assets................. $ 874 $ 957 $ 908 $1,017
Working capital deficiency... 59 113 107 176
Obligations under capital
leases (7) ................. 187 192 195 199
Long-term debt (7)........... 1,286 1,307 1,252 1,288
Cumulative exchangeable
redeemable preferred stock.. 109 107 107 105
Stockholder's deficiency..... (1,373) (1,308) (1,334) (1,258)
</TABLE>
- --------
(1) The consolidated financial information for the 39 week periods ended
October 31, 1998 and November 1, 1997 are unaudited.
(2) The Company's fiscal year ends on the Saturday nearest to January 31 of
the following calendar year.
(3) Operating earnings in the 52 weeks ended February 1, 1997 is net of a
restructuring charge of $9 million and a lease commitment charge of $9
million.
(4) Net loss includes a loss on early extinguishment of debt of $8 million in
the 39 weeks ended November 1, 1997, $8 million in the 52 weeks ended
January 31, 1998 and $1 million in the 52 weeks ended February 1, 1997.
(5) On February 4, 1991, the Company became a wholly-owned subsidiary of SMG-
II through the consummation of an exchange offer whereby the then existing
stockholders exchanged on a one-for-one basis shares of the Company's
common stock for shares of common stock of SMG-II. Since the Company is a
wholly-owned subsidiary, earnings (loss) per share information is not
presented.
(6) EBITDA-FIFO represents net earnings before interest expense, income taxes,
depreciation, amortization, the sale of real estate, the LIFO charge
(credit) and unusual transactions. EBITDA-FIFO is a widely accepted
financial indicator of a company's ability to service and/or incur debt
but should not be construed as an alternative to, or a better indicator
of, operating income or cash flows from operating activities, as
determined in accordance with generally accepted accounting principles.
(7) Including current maturities.
14
<PAGE>
Available Information. The Company is subject to the information and
reporting requirements of the Exchange Act and is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning
the Company's directors and officers, their remuneration, stock options
granted to them, the principal holders of the Company's securities, any
material interests of such persons in transactions with the Company and other
matters is required to be disclosed in reports filed with the Commission.
These reports and other information should be available for inspection at the
public reference facilities of the Commission located in Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and also should be available for
inspection and copying at prescribed rates at regional offices of the
Commission located at Seven World Trade Center, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this
material may also be obtained by mail, upon payment of the Commission's
customary fees, from the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. Electronic filings filed through the
Commission's Electronic Data Gathering, Analysis and Retrieval system
("EDGAR"), including those made by or in respect of the Company, are publicly
available through the Commission's home page on the Internet at
http://www.sec.gov.
Certain Projections for the Company.
In connection with the negotiation and execution of the SMG-II Merger
Agreement, the Company made available to Parent and the Purchaser certain non-
public information concerning Pathmark, including certain projected financial
information (the "Projections") for fiscal years ending January 30, 1999
through February 1, 2003. The Company does not in the ordinary course publicly
disclose projections as to future sales, earnings or other income statement
data, and the Projections were not prepared with a view to public disclosure.
The Company has advised Parent and the Purchaser that the Projections were
prepared by Pathmark's management based on numerous assumptions including,
among others, projections of revenues, gross profit, operating and other
expenses, depreciation and amortization, capital expenditure and working
capital requirements. The Projections do not give effect to the Offer or the
potential combined operations of Parent and the Company. Such information is
set forth below in this Offer to Purchase for the limited purpose of giving
the Company's stockholders access to financial projections prepared by
Pathmark's management that were made available to Parent and the Purchaser in
connection with the SMG-II Merger Agreement and the Offer.
PATHMARK STORES, INC.
PROJECTED FINANCIAL PERFORMANCE
<TABLE>
<CAPTION>
Quarterly Operating Plan Long Range Plan--
1999(1) Fiscal Years(1)
---------------------------------- ----------------------
Annual
Operating
Estimated Plan
Fiscal First Second Third Fourth Fiscal
Year Quarter Quarter Quarter Quarter Year
1998(1) 1999 1999 1999 1999 1999(1) 2000 2001 2002
----------------------------- ------- ------- --------- ------ ------ ------
(In millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Sales.................... $ 3,660 $902 $921 $926 $963 $3,712 $3,907 $4,139 $4,381
Cost of sales............ 2,612 643 658 666 683 2,650 2,788 2,958 3,132
--------- ------ ------ ------ ------ ------ ------ ------ ------
Gross profit............. 1,048 259 263 260 280 1,062 1,119 1,181 1,249
Depreciation and
amortization............ 78 18 19 19 19 75 78 82 86
Operating earnings....... 132 29 32 28 43 132 149 156 174
Net earnings (loss)...... (29) (11) (9) (13) 2 (31) (19) (20) 4
EBITDA-FIFO.............. 210 50 52 48 63 213 233 244 265
Balance Sheet Data (at period end):
Total assets............. $826 $834 $851 $864 $862 $862 $910 $964 $1,019
Obligations under capital
leases (2).............. 188 197 211 205 206 206 219 229 238
Long-term debt (2)....... 1,279 1,305 1,314 1,315 1,329 1,329 1,384 1,439 1,472
Stockholder's
deficiency.............. (1,133) (1,144) (1,153) (1,166) (1,164) (1,164) (1,183) (1,203) (1,199)
</TABLE>
- --------
(1) Pathmark's fiscal year ends on the Saturday nearest to January 31 of the
following calendar year. Fiscal years presented consist of 52 weeks,
except for 53 weeks in fiscal 2000. Fiscal quarters presented consist of
13 weeks.
(2) Including current maturities.
15
<PAGE>
CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
Certain matters discussed herein are forward-looking statements that involve
risks and uncertainties. Forward-looking statements include the information
set forth above in "Certain Projections for the Company". Such information has
been included in this Offer to Purchase for the limited purpose of giving the
Company's stockholders access to financial projections prepared by Pathmark's
management that were made available to Parent and the Purchaser. Such
information was prepared by the Company's management for internal use and not
with a view to publication. The Projections were based on assumptions
concerning Pathmark's business prospects in 1998 through 2002, including the
assumption that the Company would continue to operate under the same ownership
structure as then existed. The Projections were also based on certain reserve
and operating assumptions and also the assumption that no refinancing would
have occurred, although one would be necessary.
While presented with numerical specificity, the Projections were prepared by
the Company in the ordinary course, and are based upon a variety of estimates
and hypothetical assumptions, which may not be accurate, may not be realized,
and are also inherently subject to significant business, economic and
competitive uncertainties and contingencies, all of which are difficult to
predict, and most of which are beyond the control of the Company. Accordingly,
there can be no assurance that any of the Projections will be realized and the
actual results for the fiscal years 1999, 2000, 2001 and 2002 may vary
materially from those shown above.
In addition, the Projections were not prepared in accordance with generally
accepted accounting principles, and neither the Company's nor Parent's
independent accountants have examined or compiled any of the Projections or
expressed any conclusion or provided any other form of assurance with respect
to the Projections and accordingly assume no responsibility for the
Projections. The Projections were prepared with a limited degree of precision,
and were not prepared with a view to public disclosure or compliance with the
published guidelines of the Commission or the guidelines established by the
American Institute of Certified Public Accountants regarding projections,
which would require a more complete presentation of data than as shown below.
The inclusion of the Projections herein should not be regarded as a
representation by the Company, Parent and the Purchaser or any other person
that the projected results will be achieved. The Projections should be read in
conjunction with the historical financial information of the Company included
above. None of Parent, Purchaser, Croesus, Ahold U.S.A., the Company or any
other person assumes any responsibility for the accuracy or validity of the
foregoing Projections. Forward-looking statements also include those preceded
by, followed by or that include the words "believes", "expects", "anticipates"
or similar expressions. Such statements should be viewed with caution.
8. Certain Information Concerning the Purchaser, Ahold U.S.A., Croesus and
Parent.
The Purchaser. The Purchaser, a newly incorporated Delaware corporation, has
not conducted any business other than in connection with the Offer, the SMG-II
Merger Agreement and the Alternative Stock Purchase Agreement. All of the
issued and outstanding shares of capital stock of the Purchaser are
beneficially owned by Ahold U.S.A. The principal address of the Purchaser is
1013 Center Road, Wilmington, Delaware 19805. The telephone number of the
Purchaser at such office is (800) 927-9800.
Ahold U.S.A. and Croesus. Croesus, a Delaware corporation, is an indirect
wholly-owned subsidiary of Parent and the indirect owner of the Purchaser.
Croesus is the direct owner of Ahold U.S.A., which in turn coordinates
Parent's operations in the United States. Through acquisitions and internal
growth, Ahold U.S.A. has established itself as a leading food retailer in the
United States. Ahold U.S.A. operates 895 supermarkets (including seven
franchise stores) in fifteen states and in the District of Columbia. Ahold
U.S.A. has organized Parent's United States operations into five
independently-managed operating companies, each operating in a distinct
geographic region: The Stop & Shop Companies, Inc., which operates 193 stores
in Massachusetts, Connecticut, New York and Rhode Island; Giant Food Stores,
Inc., which operates 149 supermarkets in Pennsylvania,
16
<PAGE>
Virginia, West Virginia, Maryland, New Jersey, Long Island and the
metropolitan New York City area; BI-LO Inc., which operates 266 supermarkets
in North and South Carolina, Tennessee and Georgia; Tops Markets, Inc., which
operates 114 supermarkets in western New York, northwestern Pennsylvania and
the northeastern Ohio area; and Giant Food Inc., which operates 173
supermarkets in Washington, D.C., Maryland, Virginia, Delaware, New Jersey and
Pennsylvania. Prior to its acquisition by Parent in October 1998, Giant Food
Inc. was not related to Giant Food Stores, Inc. The principal address of Ahold
U.S.A. is One Atlanta Plaza, East Paces Ferry Road, Suite 2575, Atlanta,
Georgia 30326. The telephone number of Ahold U.S.A. at such offices is (404)
262-6050. The principal address of Croesus is 913 N. Market St., Suite 209,
Wilmington, Delaware 19801. The telephone number of Croesus at such offices is
(302) 576-2889.
Parent. Parent is a public company with limited liability incorporated under
the laws of The Netherlands with its corporate seat in Zaandam (municipality
Zaanstad), The Netherlands, with interests in food retailing in The
Netherlands, various other European countries, the United States, several
countries in Asia and in several countries in Latin America. Parent's common
shares are listed on the AEX-Stock Exchange and the Swiss Exchange. American
Depositary Shares representing Parent's common shares trade on the New York
Stock Exchange under the symbol "AHO". The principal executive offices of
Parent are located at Albert Heijnweg 1, 1507 EH Zaandam, The Netherlands. The
telephone number of Parent at such offices is 011-31-75-659-5648 (Investor
Relations).
Parent is subject to the informational and reporting requirements of the
Exchange Act applicable to foreign private issuers and is required to file
reports and other information with the Commission relating to its business,
financial condition and other matters. Additional information concerning
Parent is set forth in Parent's Annual Report on Form 20-F for the fiscal year
ended December 28, 1997 (the "Parent Annual Report") and other reports filed
with the Commission, which may be inspected at, and copies may be obtained
from, the same places and in the manner set forth with respect to information
concerning the Company in Section 7--"Certain Information Concerning the
Company" (except that since such reports are not filed through EDGAR, they are
not publicly available through the Commission's home page).
Set forth below are certain selected consolidated financial data with
respect to Parent and its consolidated subsidiaries for Parent's last three
fiscal years (collectively, the "Parent Financial Statements"), excerpted or
derived from the Parent Annual Report. The financial information set forth
below is derived from, and should be read in conjunction with, and is
qualified entirely by reference to, the Parent Financial Statements and notes
thereto prepared in accordance with Item 18 of Form 20-F and included in the
Parent Annual Report filed with the Commission, which is incorporated herein
by reference. The Parent Financial Statements and related notes may be
inspected at, and copies may be obtained from, the same places and in the
manner set forth in Section 7--"Certain Information Concerning the Company"
(except that since such reports are not filed through EDGAR, they are not
publicly available through the Commission's home page).
The Parent Financial Statements are presented in Dutch Guilders ("Guilders"
or "NLG") and are prepared in accordance with accounting principles generally
accepted in The Netherlands ("Dutch GAAP"), which (as described below) differ
in certain respects from generally accepted accounting principles in the
United States ("U.S. GAAP"). In addition, as a significant portion of Parent's
business is based in the United States, exchange rate fluctuations between the
Guilder and the Dollar are among the factors influencing year-to-year
comparability of consolidated earnings and equity. The weighted average rate
of the Guilder per Dollar utilized in the Parent Financial Statements was NLG
1.95 and NLG 1.69 for the fiscal years ended December 28, 1997 and December
29, 1996, respectively. The year-end rates of the Guilder per Dollar used in
the preparation of the Parent Financial Statements as of December 28, 1997 and
December 29, 1996 were NLG 2.00 and NLG 1.75, respectively. The rates used in
the preparation of the Parent Financial Statements may vary in certain minor
respects from the rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of
New York (the "Noon Buying Rate"). As of March 12, 1999, the Noon Buying Rate
was NLG 2.01 = U.S. $1.00. No representation is made that Guilders have been,
could have been or could be converted into Dollars at that or any other rate.
17
<PAGE>
KONINKLIJKE AHOLD N.V.
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Fiscal year
-------------------------
1997 1996
------------ ------------
(in millions of Guilders,
except per share amounts)
<S> <C> <C> <C>
Consolidated Earnings Data
Amounts in accordance with Dutch GAAP:
Sales.......................................... 50,568 36,538
Net earnings(1)................................ 934 632
Net earnings per common share(2)............... 1.74 1.38
Approximate amounts in accordance with US GAAP:
Net earnings(1)................................ 712 517
Diluted net earnings per common share(3)....... 1.31 1.12
<CAPTION>
December 28, December 29,
1997 1996
------------ ------------
(in millions of Guilders)
<S> <C> <C> <C>
Consolidated Balance Sheet Data
Amounts in accordance with Dutch GAAP:
Total assets................................... 18,839 14,870
Long term borrowings(4)........................ 5,410 4,344
Stockholders' equity........................... 3,089 2,417
Approximate amounts in accordance with US GAAP:
Total assets................................... 25,507 20,565
Stockholders' equity........................... 9,593 8,114
</TABLE>
- --------
(1) Before dividends on Cumulative Preferred Financing Shares.
(2) Net earnings per common share is based on net earnings, after dividends on
preferred shares, divided by the weighted average number of common shares
outstanding as retroactively adjusted for stock splits and stock
dividends.
(3) Diluted net earnings per common share is based on net earnings after
dividends on preferred shares divided by the weighted average number of
diluted common shares outstanding, as adjusted for stock splits and stock
dividends.
(4) Includes long-term debt and the long-term portion of capitalized lease
commitments.
The differences between Dutch GAAP and U.S. GAAP which materially affect
Parent's reported net earnings and stockholders' equity are explained below.
Goodwill: Under Dutch GAAP, the amount of goodwill included in the price of
acquired companies is deducted from stockholders' equity (and minority
interest when applicable) in the year of acquisition. Under U.S. GAAP,
goodwill is capitalized and amortized over the estimated life, not to exceed
40 years.
Pension cost: Under Dutch GAAP, pension costs are based on actual computed
contributions to foundations. Under U.S. GAAP, pension costs are computed in
accordance with the provisions of Statement of Financial Accounting Standard
No. 87, "Employer's Accounting for Pensions" and include current service
costs, interest costs and amortization of prior service costs.
Revaluation of Ahold Vastgoed bv: Under Dutch GAAP, the assets of Ahold
Vastgoed bv, a real estate subsidiary of Parent were revalued on October 10,
1988. The resulting unrealized gain (net of taxes) was added to the
revaluation reserve, which is part of stockholders' equity. Upon selling
revalued real estate, the relevant part of the revaluation reserve is
considered realized and transferred
18
<PAGE>
to the respective company's statement of earnings. The revaluation amount is
depreciated over the life of the related asset. Such one-time revaluations are
not allowed under U.S. GAAP.
Recent Developments. On March 9, 1999, Parent announced the results for its
53-week fiscal year ended January 3, 1999. For such fiscal year, Parent
reported consolidated net earnings of NLG 1,206 million on total sales of NLG
58,364 million, consolidated net earnings per common share of NLG 2.06,
consolidated total assets of NLG 25,180 million, consolidated long-term
borrowings of NLG 8,646 million and stockholders' equity of NLG 3,422 million.
During the last five years, none of Parent, Croesus, Ahold U.S.A., the
Purchaser or to the best of their knowledge, any of the persons listed in
Schedule I hereto (i) has been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors) or (ii) was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
Except as described in this Offer to Purchase (i) none of Parent, Croesus,
Ahold U.S.A., the Purchaser or to the best of their knowledge, any of the
persons listed in Schedule I to this Offer to Purchase or any associate or
majority-owned subsidiary of Parent, Croesus, Ahold U.S.A., or the Purchaser
beneficially owns or has any right to acquire, directly or indirectly, any
equity securities of the Company and (ii) none of Parent, Croesus, Ahold
U.S.A., the Purchaser or to the best of their knowledge, any of the persons or
entities referred to above or any director, executive officer or subsidiary of
any of the foregoing has effected any transaction in such equity securities
during the past 60 days. The Purchaser and Parent disclaim beneficial
ownership of any Shares owned by any pension plans of Parent or the Purchaser
or any affiliate of Parent or the Purchaser.
Except as described in this Offer to Purchase, none of Parent, Croesus,
Ahold U.S.A., the Purchaser or to the best of their knowledge, any of the
persons listed in Schedule I to this Offer to Purchase has any contract,
arrangement, understanding or relationship with any other person with respect
to any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting
of such securities, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, since
November 26, 1998, none of Parent, Croesus, Ahold U.S.A., the Purchaser or to
the best of their knowledge, any of the persons listed on Schedule I hereto
has had any business relationship or transaction with the Company or any of
its executive officers, directors or affiliates that is required to be
reported under the rules and regulations of the Commission applicable to the
Offer. Except as set forth in this Offer to Purchase, since November 26, 1998,
there have been no contacts, negotiations or transactions between any of
Parent, Croesus, Ahold U.S.A., the Purchaser or any of their subsidiaries or,
to the best knowledge of Parent, Croesus, Ahold U.S.A., or the Purchaser, any
of the persons listed in Schedule I to this Offer to Purchase, on the one
hand, and the Company or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets.
9. Source and Amount of Funds. The Offer is not conditioned upon any
financing arrangements. The amount of funds required by the Purchaser to
purchase all of the outstanding Shares pursuant to the Offer, to consummate
each of the SMG-II Merger and the Company Merger and to pay related fees and
expenses is expected to be approximately $245 million. The Purchaser intends
to obtain such funds primarily from a capital contribution by Ahold U.S.A.,
which in turn will obtain such funds from either a capital contribution by, or
a loan from, Croesus. Croesus currently expects to obtain the necessary funds
for such capital contribution or for such loan from cash on hand. To the
extent that cash on hand is not sufficient, Croesus intends to borrow under an
Amended and Restated U.S. $1.0 billion Multicurrency Revolving Credit Facility
Agreement (the "Credit Facility"),
19
<PAGE>
dated December 18, 1996, and amended and restated September 7, 1998, by and
between Parent, Croesus (formerly known as Ahold U.S.A.), ABN AMRO Bank N.V.,
Chase Investment Bank Limited and J.P. Morgan Securities Ltd. as Arrangers,
The Chase Manhattan Bank as Facility, Swing-Line, Letter of Credit and Short
Term Advances Agent, Chase Manhattan International Limited as Multicurrency
Facility Agent and certain financial institutions named therein.
The Credit Facility provides for an unsecured loan facility in an aggregate
amount of up to U.S.$1.0 billion. The Credit Facility expires on December 18,
2003. The Credit Facility may be used by Parent for general corporate purposes
including working capital and the refinancing of certain other facilities and
the amounts available for borrowing under the Credit Facility vary from time
to time. Revolving credit advances under the Credit Facility will bear
interest at a rate per annum equal to LIBOR plus 10 basis points. The Credit
Facility contains certain restrictions on, among other things, the creation of
liens and certain financial covenants which require Parent to maintain a
specified ratio of operating earnings before income taxes plus net interest
expense to net interest expense. The Credit Facility also contains certain
events of default including (i) the liquidation or bankruptcy of Parent or any
of its material subsidiaries, (ii) changes in the character of its business
and (iii) the lease, sale or disposition of all or any substantial part of its
assets. In addition, Parent has agreed to pay the Chase Manhattan Bank certain
fees and to reimburse each of the agents and arrangers for certain expenses
and to provide certain indemnities, as is customary for commitments of the
type described therein. The foregoing summary of the Credit Facility is
qualified in its entirety by reference to the text of the Credit Facility, a
copy of which has been filed as an exhibit to the Tender Offer Statement on
Schedule 14D-1 relating to the Offer which the Purchaser has filed with the
Commission (the "Schedule 14D-1"). The Credit Facility may be inspected at,
and copies may be obtained from, the same places and in the manner set forth
in Section 7--"Certain Information Concerning the Company".
The margin regulations promulgated by the Federal Reserve Board place
restrictions on the amount of credit that may be extended for the purposes of
purchasing margin stock if such credit is secured directly or indirectly by
margin stock. The Purchaser believes that the financing of the acquisition of
the Shares will be in full compliance with, or not subject to, the margin
regulations.
In addition, based on publicly available information, Parent estimates that
approximately an additional $1.3 billion may be necessary to repay or purchase
existing long-term indebtedness of the Company which becomes due and payable
during the period from the consummation of the Offer and the SMG-II Merger
until the 90th day after consummation of the Offer and the SMG-II Merger.
Parent believes it will be able to renegotiate or refinance such indebtedness
on satisfactory terms. Parent currently is considering financing a portion of
such indebtedness through an equity offering and to refinance the balance of
such indebtedness through the incurrence of debt.
10. Background of the Offer.
On April 15, 1997, Mr. Zwartendijk, at the time the President and Chief
Executive Officer of Ahold U.S.A. and Mr. Allan S. Noddle, at the time the
Chief Executive Officer of Ahold U.S.A. Support Services, Inc., met with Mr.
James L. Donald, the President and Chief Executive Officer of Pathmark, in New
York City to discuss a possible acquisition by Parent, in whole or in part, of
Pathmark, but concluded that such acquisition was not feasible in the near
future. On the following day, Messrs. Zwartendijk and Noddle discussed the
same issue with representatives of Merrill Lynch Capital Partners, in their
capacity as majority shareholders of SMG-II, and reached the same conclusion.
On November 26, 1998, Mr. A. Michael Meurs, the Chief Financial Officer of
Parent, had a telephone conversation with a representative of Merrill Lynch &
Co., in its capacity as financial advisor to SMG-II ("Merrill Lynch"), in
which Mr. Meurs, on behalf of Parent, expressed an interest in acquiring
Pathmark.
20
<PAGE>
Parent has been informed that in December of 1998, management of Pathmark
and Merrill Lynch began contacting a number of potential buyers regarding a
potential sale of SMG-II and that some of the potential buyers executed
confidentiality agreements with SMG-II and received confidential information
regarding Pathmark.
During the three day period commencing on December 3, 1998, Mr. Robert G.
Tobin, an Executive Vice President of Parent, had several meetings with Mr.
Donald in Carlsbad, California to discuss a possible acquisition of Pathmark
by Parent.
On December 17, 1998, a representative of Merrill Lynch gave a presentation
about Pathmark to executives of Parent at its corporate head office in
Zaandam, The Netherlands.
On December 30, 1998, Parent and SMG-II signed a confidentiality agreement
regarding information to be made available to Parent, its affiliates,
representatives and agents in connection with the evaluation of a proposed
acquisition of Pathmark.
On January 4, 1999, Mr. Donald met with Mr. Tobin to discuss various aspects
of Parent's operations.
On January 18, 1999, representatives of Merrill Lynch gave another
presentation to executives of Parent in Zaandam, The Netherlands about the
capitalization and financial condition of Pathmark and its parent holding
companies.
On January 24, 1999, Mr. William Grize, the President and Chief Executive
Officer of The Stop & Shop Companies, Mr. Cees H. van der Hoeven, the
President and Chief Executive Officer of Parent, and Mr. Tobin met with Mr.
Donald at a trade conference in Orlando, Florida and discussed a proposed
acquisition of Pathmark by Parent. Mr. Van der Hoeven gave Mr. Donald an
overview of Parent's worldwide strategy. He explained the vision of building a
collective group of best-of-breed companies, supported by the global network
of internal benchmarking, best practice and knowledge transfer. Mr. Tobin also
explained to Mr. Donald Parent's strategy in the United States and together
with Mr. Grize, discussed the Stop & Shop acquisition which took place in 1996
and advantages of belonging to the worldwide operations of Parent. At the end
of this meeting, Mr. Tobin delivered a non-binding letter of interest to Mr.
Donald proposing to purchase all of the capital stock of Pathmark from PTK for
an aggregate purchase price of approximately $200 million, payable at Parent's
option in cash or in Parent stock, and the assumption of the existing
indebtedness of Pathmark.
During the week of January 25, 1999, Parent, its counsel and other agents
conducted a due diligence review of Pathmark in New Jersey.
On February 5, 1999, Mr. Donald countersigned, on behalf of Pathmark, a
limited exclusivity letter prepared by Parent, pursuant to which Pathmark
agreed, until February 18, 1999, not to solicit additional bids for the
purchase of Pathmark, to inform Parent of the release of information
concerning Pathmark to existing potential purchasers and not to engage in
negotiations regarding the terms and conditions of a purchase of Pathmark with
any existing potential purchasers. Pathmark further agreed that if, on or
prior to February 18, 1999, Parent delivered a draft of an acquisition
agreement containing reasonable and customary terms, Pathmark would, effective
from the date of such delivery, also cease to provide further information to
existing potential purchasers until March 1, 1999.
On February 9, 1999, SMG-II's counsel communicated to Parent and its counsel
that, due to tax and regulatory considerations, SMG-II preferred to consummate
the sale of Pathmark through the purchase by Parent of the capital stock of
SMG-II. SMG-II's counsel informed Parent and its counsel that this structure
would result in significantly greater after-tax returns available for
distribution to both the holders of Shares and to the holders of SMG-II's
capital stock. Parent voiced its strong
21
<PAGE>
objections to this change in the transaction structure at that time. On the
following day, SMG-II's counsel distributed a memorandum to Parent and its
counsel which, among other things, proposed that Parent acquire the capital
stock of SMG-II in return for cash and that SMG-II make a tender offer for the
Shares.
On February 15, 1999, Mr. Meurs, in a teleconference with a representative
of Merrill Lynch, confirmed Parent's willingness to acquire the capital stock
of SMG-II and the Shares instead of the capital stock of Pathmark, on the
condition that SMG-II or its stockholders make the tender offer for the Shares
prior to such acquisition. Parent also conditioned the acceptance of the new
acquisition structure upon the acquisition in the tender offer of at least 66
2/3% of the Shares. Parent further advised Merrill Lynch that it would be the
sole responsibility of SMG-II and the Company to determine the allocation of
the purchase price among the stockholders of SMG-II and the holders of the
Shares. Parent also advised Merrill Lynch that, while it was amenable to the
changed structure, it would only proceed if PTK agreed to sell Pathmark in the
event the tender offer was not successful, in order to provide greater deal
certainty to Parent. Parent also informed Merrill Lynch that it would proceed
with the changed structure only if shareholders of SMG-II holding such number
of shares of the capital stock of SMG-II as is necessary to approve the SMG-II
Merger Agreement would enter into an agreement with Parent whereby they agree
to vote their shares of the capital stock of SMG-II in favor of the SMG-II
Merger and also grant an option to Parent to purchase such shares under
certain circumstances. In addition, Mr. Meurs informed Merrill Lynch and SMG-
II of a possible downward adjustment to the purchase price in the amount of
$40,000,000 as a result of Parent's due diligence.
On February 16, 1999, Mr. Marc A. Strassler, Senior Vice President,
Secretary and General Counsel of SMG-II, sent a notice to Mr. Van der Hoeven,
informing the latter of continuing discussions with other potential bidders
concerning the sale of Pathmark (as permitted by the exclusivity agreement).
On February 18, 1999, Mr. Meurs and representatives of Merrill Lynch
discussed in a telephone conference the impact of the various transaction fees
to be paid by Pathmark on the purchase price. Mr. Meurs informed Merrill Lynch
that Parent was considering a further reduction of the purchase price by
$10,000,000. During this telephone call, the parties agreed to commence
negotiation of the documentation for the proposed transaction.
On February 23, 1999, counsel for Parent delivered the initial drafts of the
transaction documents. The initial structure proposed in such documents was a
purchase of the stock of SMG-II from the holders of the capital stock of SMG-
II, with survival of representations and warranties and the holders of capital
stock of SMG-II indemnifying Parent for breach of their representations and
warranties. SMG-II, Merrill Lynch and SMG-II's counsel voiced strong
objections to such a structure and informed Parent that due to the fact that
both the Company and Pathmark are reporting companies and that SMG-II has 83
stockholders, SMG-II would be willing to enter only into a "public company
type" merger agreement with no survival of representations and indemnification
obligations. On March 2, 1999, counsel for Parent delivered revised drafts of
the transaction documentation reflecting a "public company merger" structure
to SMG-II, Merrill Lynch and counsel for SMG-II and negotiations commenced
shortly thereafter.
On March 4, 1999, a representative of Merrill Lynch and Mr. Meurs had a
telephone conversation during which they discussed structural issues in
connection with the acquisition. Mr. Meurs agreed that Parent, through the
Purchaser, would make the tender offer for the Shares.
On March 7, 1999, a teleconference was held among Mr. Meurs, certain other
executives of Parent and representatives of Merrill Lynch in which Merrill
Lynch confirmed that the Board of Directors of each of SMG-II, the Company and
PTK was scheduled to meet on March 8, 1999 to consider and
22
<PAGE>
take action on any proposals regarding the sale of SMG-II. Merrill Lynch
advised that it expected such boards of directors to consider several
competing bids.
On March 8, 1999, Mr. Meurs and certain other executives of Parent called
representatives of Merrill Lynch to inform them of Parent's decision to
increase the proposed purchase price to $250,000,000. The same was later
confirmed in writing by Mr. Meurs.
A meeting of the Board of Directors of each of SMG-II, the Company and PTK
was held on March 8, 1999 to consider the proposed transaction and to evaluate
the bids made in connection with the proposed transaction. At such meeting the
Board of Directors of SMG-II reviewed, with the advice and assistance of
Merrill Lynch and its counsel, the terms and conditions of the proposed
transactions and the bids and transaction documents submitted in connection
therewith. After such review, the Board of Directors of SMG-II approved the
bid submitted by Parent. Shortly thereafter, the Board of Directors of the
Company reviewed the proposed terms of the Offer and the Company Merger. At
such meeting, the full board of directors (including the two directors
nominated by the holders of Shares) debated the allocation of the overall
purchase price among the holders of the Shares and the SMG-II Stockholders and
thereafter agreed on the Offer Price.
On March 8, 1999, a representative of Merrill Lynch called Mr. Meurs to
inform Parent that the offer of Parent was accepted and that the board of
directors of each of SMG-II and the Company had agreed on an allocation of the
purchase price among the holders of the Shares and the SMG-II Stockholders,
after deductions for a certain "stay put" bonus to be paid to Mr. Donald
pursuant to the sale and transition agreement with Mr. Donald.
Following approval by the board of directors of each of SMG-II, the Company
and PTK, the SMG-II Merger Agreement and the Stock Purchase Agreement, by and
among Parent, the Purchaser and PTK were executed and delivered on March 9,
1999. SMG-II Stockholders holding sufficient number of shares to approve the
SMG-II Merger, Parent and the Purchaser executed and delivered the
Stockholders Agreement on March 9, 1999. The transaction was publicly
announced through a joint press release by Parent and SMG-II on March 9, 1999.
11. Purpose of the Offer; Plans for the Company; Certain Agreements.
Purpose of the Offer. The purpose of the Offer, the SMG-II Merger and the
Company Merger is, collectively, to enable Parent to acquire the entire equity
interest in SMG-II, the Company, PTK and Pathmark. Upon consummation of the
SMG-II Merger, the Company will become an indirect wholly-owned subsidiary of
each of Parent and Croesus and a direct wholly-owned subsidiary of Ahold
U.S.A. In the event that the Minimum Condition is not satisfied or waived, the
Purchaser will acquire the entire equity interest of Pathmark. Upon
consummation of the transactions contemplated by the Alternative Stock
Purchase Agreement, Pathmark would become a wholly-owned subsidiary of the
Purchaser and an indirect wholly-owned subsidiary of each of Parent and
Croesus.
Plans for the Company. It is currently expected that, initially following
the SMG-II Merger and the Company Merger (or, alternatively, the consummation
of transactions contemplated by the Alternative Stock Purchase Agreement), the
business and operations of each of the Company and Pathmark will generally
continue as each of them is currently being conducted, except that Parent
anticipates integrating its Edwards supermarkets in New Jersey, New York City
and Long Island into Pathmark. Parent currently intends to cause Pathmark's
operations to continue to be run and managed by Pathmark's existing executive
officers. Parent will continue to evaluate all aspects of the business,
operations, capitalization and management of Pathmark during the pendency of
the Offer and after the
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<PAGE>
consummation of the Offer, the SMG-II Merger and the Company Merger and will
take such further actions as it deems appropriate under the circumstances then
existing. Parent intends to seek additional information about Pathmark during
this period. Thereafter, Parent intends to review such information as part of
a comprehensive review of Pathmark's business, operations, capitalization and
management with a view to optimizing Pathmark's potential in conjunction with
Parent's other operations and maximizing the synergies that are expected to
result therefrom.
Except as otherwise discussed in this Offer to Purchase, Parent has no
present plans or proposals that would result in any extraordinary corporate
transaction, such as a merger, reorganization, liquidation involving the
Company or Pathmark or any of their respective subsidiaries, or sale or
transfer of a material amount of assets of the Company or Pathmark or any of
their respective subsidiaries or in any other material changes to the
Company's or Pathmark's capitalization, dividend policy, corporate structure,
business or composition of the Board of Directors, the board of directors of
Pathmark or the management of Pathmark, except that Parent intends to review
the composition of the boards of directors of each of the subsidiaries of SMG-
II and cause the election to such boards of certain of its representatives.
SMG-II Merger Agreement. The following is a summary of the material terms of
the SMG-II Merger Agreement. The summary is qualified in its entirety by
reference to the SMG-II Merger Agreement which is incorporated herein by
reference and a copy of which has been filed with the Commission as an exhibit
to the Schedule 14D-1. The SMG-II Merger Agreement may be inspected at, and
copies may be obtained from, the same places and in the manner set forth in
Section 7.
The Offer. The SMG-II Merger Agreement provides that the Purchaser will
commence the Offer and that the obligation of the Purchaser to consummate the
Offer and to accept for payment and to pay for any Shares tendered pursuant to
the Offer shall be subject to only those conditions set forth in Section 14--
"Conditions of the Offer". The Purchaser may not amend, change or waive any of
the conditions described in Section 14--"Conditions of the Offer" without the
prior written consent of SMG-II.
In the SMG-II Merger Agreement, SMG-II consented to the Offer and
represented that the Board of Directors has (i) determined by unanimous vote
that each of the Offer and the Company Merger, upon the terms and conditions
of the SMG-II Merger Agreement, is fair to, and in the best interests of, the
holders of Shares, (ii) approved the Offer and the Company Merger in
accordance with the provisions of the DGCL and (iii) recommended acceptance of
the Offer.
The SMG-II Merger. The SMG-II Merger Agreement provides that, subject to the
terms and conditions thereof, and in accordance with the DGCL, the Purchaser
shall be merged with and into SMG-II as soon as practicable following the
satisfaction or waiver of the conditions set forth in the SMG-II Merger
Agreement, which conditions are described below. Following the SMG-II Merger,
the separate corporate existence of the Purchaser will cease and SMG-II will
continue as the surviving corporation (the "Surviving SMG-II Corporation").
In the SMG-II Merger, on the date and at the time when the SMG-II Merger
shall become effective (the "Effective Time") each outstanding share of Class
A Common Stock, par value $0.01 per share (the "Class A Common Stock"), of
SMG-II, each issued and outstanding share of Class B Common Stock, par value
$0.01 per share (the "Class B Common Stock"), of SMG-II, each issued and
outstanding share of Series A Cumulative Convertible Preferred Stock, par
value $0.01 per share (the "Series A Preferred Stock"), of SMG-II, each issued
and outstanding share of Series B Cumulative Convertible Preferred Stock, par
value $0.01 per share (the "Series B Preferred Stock"), of SMG-II, and each
issued and outstanding share of Series C Cumulative Convertible Preferred
Stock, par value $0.01 per share (the "Series C Preferred Stock" and, together
with the Class A Common Stock, the
24
<PAGE>
Class B Common Stock, the Series A Preferred Stock and the Series B Preferred
Stock, collectively, the "SMG-II Stock") (other than shares of SMG-II Stock
held by any subsidiary of SMG-II or in the treasury of SMG-II, or by Parent,
the Purchaser or any other subsidiary of Parent, which shares of SMG-II Stock
will be cancelled, and other shares of SMG-II Stock, if any, held by
stockholders who perfect their appraisal rights under the DGCL) will by virtue
of the SMG-II Merger Agreement and without any action by the holder thereof,
be converted into the right to receive, in the case of Class A Common Stock
and Class B Common Stock, $5.315 in cash and in the case of Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock, $113.353 in cash
(such amount, with respect to each such share of SMG-II Stock, the "Applicable
Merger Consideration") payable to the holder thereof, without interest
thereon.
At the Effective Time, each share of common stock, par value $0.01 per
share, of the Purchaser then issued and outstanding will, by virtue of the
SMG-II Merger and without any action on the part of the holder thereof, be
converted into one fully paid and non-assessable share of common stock of the
Surviving SMG-II Corporation.
If Parent so elects, the SMG-II Merger may alternatively be structured with
Purchaser as the Surviving SMG-II Corporation or so that any direct or
indirect subsidiary of Parent is merged with and into SMG-II or SMG-II is
merged with and into any such other subsidiary (an "Alternative Structure").
In the event of such an election, the Parent, the Purchaser and SMG-II shall
execute an appropriate amendment to the SMG-II Merger Agreement in order to
reflect such election. If Parent elects to use an Alternative Structure, the
inaccuracy of any representation or warranty of SMG-II which is premised on
the assumption that Purchaser shall be merged with and into SMG-II and SMG-II
shall be the Surviving SMG-II Corporation, which representation or warranty
becomes inaccurate solely as a result of the use of such Alternative
Structure, shall not be deemed to be a breach of such representation or
warranty.
The SMG-II Merger Agreement provides that the respective obligations of
Parent and the Purchaser, on the one hand, and SMG-II, on the other hand, to
effect the SMG-II Merger are subject to the satisfaction or waiver (subject to
applicable law) at or prior to the closing of the transactions contemplated by
the SMG-II Merger Agreement (the "SMG-II Merger Closing") of each of the
following conditions: (i) the SMG-II Merger Agreement and the SMG-II Merger
shall have been approved and adopted by holders of two-thirds of SMG-II Stock
(voting as one class, with each share of SMG-II Stock having one (1) vote);
(ii) any waiting period (and any extension thereof) under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act") applicable to the SMG-II Merger shall
have expired or been terminated; (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, restrains, enjoins or
restricts the consummation of the SMG-II Merger or the Offer and which is in
effect at the SMG-II Merger Closing; provided, however, that, in the case of a
decree, injunction or other order, each of the parties shall have used all
reasonable efforts to prevent the entry of any such injunction or other order
and to appeal as promptly as possible any decree, injunction or other order
that may be entered; and (iv) no statute, rule, regulation, executive order,
decree or order of any kind shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which prohibits, restrains,
enjoins or restricts the consummation of the Offer or the SMG-II Merger or has
the effect of making the SMG-II Merger or the Offer illegal. The obligations
of the Parent and the Purchaser to effect the SMG-II Merger are further
subject to the satisfaction or waiver (subject to applicable law) at or prior
to the SMG-II Merger Closing of the following additional conditions: (i) each
representation or warranty of SMG-II contained in the SMG-II Merger Agreement
that is subject to, or qualified by, "material adverse effect", "material
adverse change" or other materiality qualification shall be true and correct,
in each case as if such representation or warranty was made at the SMG-II
Merger Closing, and any representation or warranty that is not so qualified
shall be true and correct in any respect which would otherwise have a material
adverse effect on the business, properties, assets, liabilities, results of
operations or condition (financial or otherwise) (a "Condition") of SMG-II and
its subsidiaries taken as a whole, in each case
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as if such representation or warranty was made at the SMG-II Merger Closing
except as to any representation or warranty which speaks as of a specific date
or for a specific period, which must be true and correct in the foregoing
respects as of such specific date or period, and Parent shall have received a
certificate signed by an executive officer of SMG-II, dated as of the date of
the SMG-II Merger Closing (the "SMG-II Merger Closing Date"), to such effect;
(ii) SMG-II shall have performed in all material respects all obligations and
complied in all material respects with all agreements and covenants to be
performed or complied with by it under the SMG-II Merger Agreement and, in the
case only of failures to perform any such agreement or covenant of SMG-II,
such failure to perform did not or would not have a material adverse effect on
the Condition of SMG-II and its subsidiaries taken as a whole or materially
adversely affect the ability of Parent or the Purchaser to consummate the
transactions contemplated by the SMG-II Merger Agreement or have a material
adverse effect on the value of SMG-II and its subsidiaries taken as a whole
and Parent shall have received a certificate signed by an executive officer of
SMG-II, dated the SMG-II Merger Closing Date, to such effect; (iii) the
conditions of the Offer set forth in Section 14--"Conditions of the Offer"
including, without limitation, the Minimum Condition shall have been fulfilled
without any waiver thereof; (iv) holders of SMG-II Stock representing in the
aggregate not more than 5% of the amount that would be payable by Parent or
the Purchaser pursuant to the terms of the SMG-II Merger if there would be no
dissenting holders of SMG-II Stock (the "SMG-II Dissenting Stockholders")
shall (x) have perfected their appraisal rights under the DGCL or (y) be
entitled after the SMG-II Merger Closing to so perfect their appraisal rights;
(v) the Stockholders Agreement, dated as of February 4, 1991, by and among
SMG-II and its stockholders (the "Shareholders Agreement") shall have been
terminated; (vi) since the date of the SMG-II Merger Agreement, no event shall
have occurred such that there would be a material adverse change in the
Condition of SMG-II and its subsidiaries taken as a whole; and (vii) Parent
shall have received an irrevocable letter from SMG-II, signed by an executive
officer of SMG-II stating that all of the conditions to the obligations of
SMG-II to effect the SMG-II Merger set forth in Article VII of the SMG-II
Merger Agreement have been satisfied or waived. The obligations of SMG-II to
effect the SMG-II Merger are further subject to the satisfaction at or prior
to the SMG-II Merger Closing of the following additional conditions: (i) the
representations and warranties of Parent and the Purchaser contained in the
SMG-II Merger Agreement shall be true and correct in all material respects as
if such representations and warranties were made at the SMG-II Merger Closing
Date, and SMG-II shall have received a certificate signed by an executive
officer of Parent, dated the SMG-II Merger Closing Date, to such effect; and
(ii) each of Parent and the Purchaser shall have performed in all material
respects all obligations and complied in all material respects with all
agreements and covenants to be performed and complied with by it under the
SMG-II Merger Agreement, and SMG-II shall have received a certificate signed
by an executive officer of Parent, dated the SMG-II Merger Closing Date, to
such effect.
SMG-II's Board of Directors and Officers. The SMG-II Merger Agreement
provides that at the Effective Time, the directors of the Purchaser
immediately prior to the Effective Time shall be the directors of the
Surviving SMG-II Corporation, each of such directors to hold office, subject
to the applicable provisions of the Certificate of Incorporation and By-Laws
of the Surviving SMG-II Corporation, until the next annual stockholders'
meeting of the Surviving SMG-II Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Purchaser immediately prior to the Effective Time
shall, subject to the applicable provisions of the Certificate of
Incorporation and By-Laws of the Surviving SMG-II Corporation, be the officers
of the Surviving SMG-II Corporation until their respective successors shall be
duly elected or appointed and qualified.
SMG-II Meeting. Pursuant to the SMG-II Merger Agreement, promptly after the
execution of the SMG-II Merger Agreement, SMG-II, acting through the board of
directors of SMG-II, shall, in accordance with applicable law, (i) call a
special meeting of its stockholders (the "Special Meeting") for the purpose of
voting upon the SMG-II Merger Agreement and the SMG-II Merger or (ii) use its
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reasonable efforts to solicit in writing the consent to the SMG-II Merger
Agreement and the SMG-II Merger from all holders of the SMG-II Stock. SMG-II
has agreed that it shall include in its proxy solicitation or, as the case may
be, consent solicitation the recommendation of the board of directors of SMG-
II that stockholders of SMG-II approve and adopt the SMG-II Merger Agreement
and approve the SMG-II Merger and take all other lawful action necessary and
advisable to secure the vote or, as the case may be, consent of holders of 66
2/3% of SMG-II Stock (voting as one class, with each share having one vote) in
favor of the SMG-II Merger and the SMG-II Merger Agreement.
Interim Operations. The SMG-II Merger Agreement provides that, except as
contemplated by the SMG-II Merger Agreement, during the period from the date
of the SMG-II Merger Agreement until the Effective Time, each of SMG-II and
its subsidiaries will conduct its operations according to its ordinary course
of business, consistent with past practice, and will use best efforts to (i)
preserve intact its business organization, (ii) maintain its material rights
and franchises, (iii) keep available the services of its officers and
employees, (iv) maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with them and
(v) take measures to reduce to zero any excess loss account (as determined in
accordance with Treasury Regulations 1.1502-14, 1.1502-19 and 1.1502-32)
reflected on the books and records of SMG-II and its subsidiaries or as
subsequently determined by SMG-II. Without limiting the generality of and in
addition to the foregoing, and except as otherwise contemplated by the SMG-II
Merger Agreement, prior to the time specified in the preceding sentence, SMG-
II shall not, and it shall cause each of its subsidiaries not to, without the
prior written consent of Parent: (a) amend its certificate of incorporation or
by-laws or other organizational documents in any way; (b) authorize for
issuance, issue, sell, deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class or any
other securities other than shares of Class A Common Stock issuable pursuant
to the terms of existing management options; (c) split, combine or reclassify
any shares of its capital stock, declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock or redeem or otherwise acquire any of
its securities; (d) (A) pledge or otherwise encumber shares of its capital
stock; (B) except in the ordinary course of business consistent with past
practices: (1) incur, assume or prepay any obligations with respect to any
long-term debt, letters of credit or short-term debt, other than indebtedness
(x) incurred, assumed or prepaid under Pathmark's working capital facility,
(y) that is mandatorily prepayable in accordance with its terms and (z) that
is intercompany indebtedness by and among SMG-II and its subsidiaries (other
than the Company or Pathmark Risk Management Corporation) ("PRMC"); (2)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for any material obligations of any
Person except wholly-owned subsidiaries; or (3) make any material loans,
advances or capital contributions to, or investments in, any other Person; or
(C) mortgage or pledge any of its assets or create or permit to exist any
material lien thereupon that secures indebtedness for borrowed money; (e)
except as required by law or existing written agreements, enter into, adopt or
materially amend any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreements, trusts, plans, funds or other
arrangements of or for the benefit or welfare of any employee of SMG-II and
its subsidiaries, or (except for normal increases in the ordinary course of
business that are consistent with past practices) increase in any manner the
compensation or fringe benefits of any such employee or pay any benefit not
required by any existing plan and arrangement (including, without limitation,
the granting of stock options, stock appreciation rights, shares of restricted
stock or performance units) or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing; (f) transfer, sell, lease, license
or dispose of any lines of business, subsidiaries, divisions, operating units
or facilities outside the ordinary course of business or enter into any
material commitment or transaction outside the ordinary course of business
other than any such transactions between or among SMG-II and its subsidiaries
(other than the Company or PRMC); (g) other than any such transactions between
or among any of SMG-II and its
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subsidiaries (other than the Company or, except with respect to any
transaction intended to reduce to zero any excess loss account, PRMC), acquire
or agree to acquire, by merging or consolidating with, by purchasing an equity
interest in or a portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets of any other person (other than the purchase of assets in the ordinary
course of business and consistent with past practice), in each case where such
action would be material to the Condition of SMG-II and its subsidiaries taken
as a whole; (h) except as may be required by law or existing written
contractual or collective bargaining agreements or in connection with the
termination of any employee, take any action to terminate or materially amend
in a manner adverse to SMG-II or any of its subsidiaries, any of its pension
plans or retiree medical plans with respect to or for the benefit of any
employee of SMG-II or its subsidiaries; (i) materially modify, amend or
terminate any significant contract to which it is a party or waive any of its
material rights or claims except in the ordinary course of business consistent
with past practice; (j) effect any material change in any of its methods of
accounting, except as may be required by law or generally accepted accounting
principles; (k) (A) take any action, engage in any transaction or enter into
any agreement which would cause any of the representations or warranties set
forth in Article III of the SMG-II Merger Agreement that are subject to, or
qualified by, a "material adverse effect", "material adverse change" or other
materiality qualification to be untrue as of the Effective Time, or any such
representations and warranties that are not so qualified to be untrue in any
respect which would have a material adverse effect on the Condition of SMG-II
and its subsidiaries taken as a whole or (B) purchase or acquire, or offer to
purchase or acquire, any shares of capital stock of SMG-II; (l) take any
action, including, without limitation, the adoption of any stockholder rights
plan or amendments to the Certificate of Incorporation of SMG-II, which would,
directly or indirectly, restrict or impair the ability of Parent to vote, or
otherwise to exercise the rights and receive the benefits of a stockholder
with respect to, securities of SMG-II that may be acquired or controlled by
Parent or the Purchaser or permit any stockholder to acquire securities of
SMG-II on a basis not available to Parent in the event that Parent were to
acquire securities of SMG-II; and (m) enter into a legally binding commitment
with respect to, or any agreement to take, any of the foregoing actions.
Notwithstanding anything else provided in the foregoing paragraph to the
contrary, the following are permitted under the SMG-II Merger Agreement: (1)
the acquisition of direct or indirect interests in real property intended for
the operation of stores of Pathmark or any of its subsidiaries (other than
PRMC), the improvement of real property, the remodeling of stores of Pathmark
or any of its subsidiaries (other than PRMC) and the obtaining of financing
therefor in the ordinary course of business consistent with past practice, (2)
the negotiation and entering into by Pathmark or any of its subsidiaries
(other than PRMC) of amendments to existing leases for real property in the
ordinary course of business, (3) the negotiation in good faith and entering
into new collective bargaining agreements by Pathmark that replace agreements
that have expired or will expire pursuant to their terms within 90 days from
the date of the commencement of negotiations, (4) the marketing and sale of
certain real estate not used in the supermarket business by Pathmark or any of
its subsidiaries (other than PRMC), provided that no such sale (other than a
sale pursuant to a binding agreement to which SMG-II was a party on March 9,
1999) shall be agreed to without the prior adequate consultation with Parent,
(5) entering into amendments to the Credit Agreement among Pathmark, various
banks, and The Chase Manhattan Bank, as Agent, dated as of June 30, 1997, as
amended and restated (the "Pathmark Credit Agreement"), to modify covenants as
required (other than modifications, except for a possible increase in the
interest rate, which will make any one or more covenants more restrictive) and
(6) entering into an agreement implementing the amendments to the First
Amended and Restated Supply Agreement dated January 29, 1998, by and between
Pathmark and C&S Wholesale Grocers, Inc. (the "Supply Agreement") agreed to in
a memorandum of understanding effective December 27, 1998 by and between
Pathmark and C&S Wholesale Grocers, Inc.
No Solicitation. The SMG-II Merger Agreement provides that SMG-II shall not,
and SMG-II shall cause each of its subsidiaries not to, directly or
indirectly, take (or authorize or permit their respective
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officers, directors, employees, representatives, consultants, investment
bankers, attorneys, accountants or other agents or affiliates, to so take) any
action to (i) solicit, initiate or encourage the submission of any Acquisition
Proposal (as defined below), (ii) enter into an agreement of merger or other
business combination or an agreement for the sale or other disposition by SMG-
II or any of its subsidiaries of a material amount of assets or a sale of
shares of capital stock whether by merger or other business combination or
tender or exchange offer or (iii) participate in any way in discussions or
negotiations with, or, furnish any information to, any Person (other than
Parent or the Purchaser) in connection with, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Acquisition Proposal. For purposes
of the SMG-II Merger Agreement, "Acquisition Proposal" means any proposed
merger or other business combination, sale or other disposition of any
material amount of assets, sale of shares of capital stock, tender offer or
exchange offer or similar transactions involving SMG-II or any of its
subsidiaries. The SMG-II Merger Agreement provides that the board of directors
of SMG-II shall not take any action to withdraw or modify in a manner adverse
to Parent or the Purchaser, or take a position inconsistent with, its
approvals or recommendation of the SMG-II Merger or the SMG-II Merger
Agreement or to recommend another Acquisition Proposal and shall not resolve
to do any of the foregoing. In addition to the obligations of SMG-II set forth
previously in this paragraph, SMG-II has agreed that it will, and will cause
each of its subsidiaries to, promptly advise Parent of any request for
information or of any Acquisition Proposal, or any proposal with respect to
any Acquisition Proposal, the material terms and conditions of such
Acquisition Proposal, and the identity of the person making any such
Acquisition Proposal or inquiry. Immediately following the execution of the
SMG-II Merger Agreement, SMG-II shall, and shall cause each of its
subsidiaries and each of their respective officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants or
other agents or affiliates to, cease any existing discussions or negotiations
with any parties previously conducted with respect to any Acquisition Proposal
and request each person which has previously executed a confidentiality
agreement in connection with its consideration of acquiring SMG-II or any of
its subsidiaries or any portion thereof to return all confidential information
heretofore furnished to such person by or on behalf of SMG-II or any of its
subsidiaries.
Directors' and Officers' Insurance and Indemnification. Parent has agreed in
the SMG-II Merger Agreement that the certificate of incorporation and the by-
laws of the Surviving SMG-II Corporation shall contain the provisions with
respect to indemnification and exculpation from liability set forth in SMG-
II's Certificate of Incorporation and By-Laws on March 9, 1999, which
provisions shall not be amended, repealed or otherwise modified for a period
of six years from the Effective Time in any manner that would adversely affect
the rights of individuals, who, on or prior to the Effective Time, were
directors, officers, employees or agents of SMG-II unless such modification is
required by law. Parent also has agreed that all rights of indemnification now
existing in favor of any director, officer, employee, or agent of the
subsidiaries of SMG-II as provided in their respective charters or by-laws on
date of the SMG-II Merger Agreement shall survive the SMG-II Merger and shall
continue in full force and effect for a period of six years from the Effective
Date. In addition, pursuant to the SMG-II Merger Agreement, the Surviving SMG-
II Corporation shall for the six year period commencing on the Effective Time
either (a) maintain in effect SMG-II's current directors' and officers'
liability insurance covering those persons who are currently covered on the
date of the SMG-II Merger Agreement by SMG-II's directors' and officers'
liability insurance policy (the "SMG-II Indemnified Parties"); provided,
however, that in no event shall Parent be required to expend in any one year
an amount in excess of 150% of the annual premiums currently paid by SMG-II
for such insurance; provided, further, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving SMG-II Corporation shall
be obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount; and provided, further, that the Surviving SMG-
II Corporation may substitute for such SMG-II's policies, policies with at
least the same coverage containing terms and conditions which are no less
advantageous and provided that said substitution does not result in any gaps
or lapses in coverage with respect to matters occurring prior to the Effective
Time or (b) cause Parent's directors' and
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officers' liability insurance then in effect to cover those persons who are
covered on the date of the SMG-II Merger Agreement by SMG-II's directors' and
officers' liability insurance policy with respect to those matters covered by
SMG-II's directors' and officers' liability policy.
Parent has agreed to indemnify, and to cause the Surviving SMG-II
Corporation to indemnify, all SMG-II Indemnified Parties to the fullest extent
permitted by applicable law with respect to all acts and omissions arising out
of such individuals' services as officers, directors, employees or agents of
SMG-II or any of its subsidiaries or as trustees or fiduciaries of any plan
for the benefit of employees of SMG-II or any of its subsidiaries, occurring
prior to the Effective Time including, without limitation, the transactions
contemplated by the SMG-II Merger Agreement.
Compensation and Benefits. During the period commencing at the Effective
Time and ending on the first anniversary thereof, Parent shall cause the
current and former employees of Pathmark and its subsidiaries who are, on the
SMG-II Merger Closing Date, entitled to receive compensation or any benefits
from Pathmark or any of its subsidiaries to be provided with compensation and
employee benefit plans (other than stock option or other plans involving the
potential issuance of securities of SMG-II, Parent, or any of their respective
subsidiaries and incentive compensation or similar programs) which in the
aggregate are not materially less favorable than those currently provided to
such employees by Pathmark and its subsidiaries, to the extent permitted under
laws and regulations in force from time to time, provided, that employees
covered by collective bargaining agreements need not be provided such
benefits, and provided, further, that Parent reserves the right to review all
employee benefits after the Effective Time and to make such changes as it
deems appropriate.
Options. Pursuant to the SMG-II Merger Agreement, prior to the Effective
Time, the board of directors of SMG-II (or, if appropriate, any committee
thereof) shall take all actions and shall obtain all necessary consents and
releases from all of the holders of all the outstanding stock options and
other rights to purchase SMG-II Stock (the "Management Options") heretofore
granted under any stock option plan of SMG-II or otherwise (collectively, the
"Stock Plans") to (i) provide for the cancellation, effective as of the
Effective Time of all Management Options, (ii) terminate, as of the Effective
Time, the Stock Plans and any other plan, program or arrangement providing for
the issuance or grant of any other interest in respect of the capital stock of
SMG-II or its subsidiaries (collectively with the Stock Plans, the "Stock
Incentive Plans") with respect to any interest in the capital stock of SMG-II
or any of its subsidiaries and (iii) amend, as of the SMG-II Merger Closing
Date, the provisions of any other employee benefit plan providing for the
issuance, transfer or grant of any capital stock of SMG-II or any of its
subsidiaries to provide no continuing rights to acquire, hold, transfer or
grant any capital stock of SMG-II or any of its subsidiaries or any interest
in the capital stock of SMG-II or any of its subsidiaries. Incident to the
foregoing, any of the then outstanding stock appreciation rights or limited
stock appreciation rights shall be canceled immediately prior to the Effective
Time without any payment therefor.
Agreement to Use Best Efforts. Pursuant to the SMG-II Merger Agreement and
subject to the terms and conditions thereof, each of SMG-II, Parent, and the
Purchaser shall, and SMG-II shall cause each of its subsidiaries to, cooperate
and use their respective best efforts to take, or cause to be taken, all
appropriate action, and to make, or cause to be made, all filings necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by the SMG-II Merger Agreement,
including, without limitation, their respective best efforts to obtain, prior
to the SMG-II Merger Closing Date, all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with SMG-II and its subsidiaries as are necessary for
consummation of the transactions contemplated by the SMG-II Merger Agreement
and to fulfill the conditions to the SMG-II Merger; provided, however, that no
loan agreement or contract for borrowed money shall be repaid except as
currently required by its
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terms, in whole or in part, and no material contract shall be amended to
increase the amount payable thereunder or otherwise to be materially more
burdensome to SMG-II or any of its subsidiaries in order to obtain any such
consent, approval or authorization without first obtaining the written
approval of Parent.
In addition, the SMG-II Merger Agreement provides that Parent, the Purchaser
and SMG-II will (i) take promptly all actions necessary to make the filings
required of Parent, the Purchaser or any of their affiliates under applicable
antitrust laws, (ii) comply at the earliest practicable date with any request
for additional information or documentary material received by Parent, SMG-II
or any of their affiliates from the Federal Trade Commission (the "FTC") or
the Antitrust Division of the Department of Justice pursuant to the HSR Act
and (iii) cooperate in connection with any filing under applicable Antitrust
Laws and in connection with resolving any investigation or other inquiry
concerning the transactions contemplated by the SMG-II Merger Agreement
commenced by any of the FTC, the Antitrust Division of the Department of
Justice or state attorneys general. Parent, the Purchaser and SMG-II shall in
addition, each use all best efforts to resolve such objections, if any, as may
be asserted with respect to the SMG-II Merger, the Stockholders Agreement or
any other transactions contemplated by the SMG-II Merger Agreement under any
Antitrust Law.
Representations and Warranties. In the SMG-II Merger Agreement, SMG-II has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, its organization, corporate authority,
capitalization, financial statements, public filings, conduct of business,
compliance with laws, consent and approvals, employee benefit plan triggering
events, brokers' or finders' fees, state takeover statutes, vote required,
undisclosed liabilities and the absence of any material adverse changes in
SMG-II since January 31, 1998.
Termination. The SMG-II Merger Agreement may be terminated at any time prior
to the SMG-II Merger Closing, whether before or after approval of the SMG-II
Merger by the stockholders of SMG-II: (a) subject to the provisions of the
SMG-II Merger Agreement, by mutual consent of SMG-II, on the one hand, and of
Parent, on the other hand; (b) by either Parent, on the one hand, or SMG-II,
on the other hand, if any governmental or regulatory agency shall have issued
an order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the SMG-II Merger and such order, decree
or ruling or other action shall have become final and nonappealable; provided,
however, that in the event the SMG-II Merger Agreement is terminated because
of such an order, decree, ruling or other action with respect to the Offer,
SMG-II and Parent shall, and SMG-II and Parent shall cause the Purchaser and
PTK to, effect the closing ("Alternative Stock Purchase Agreement Closing") of
the transactions contemplated by the Alternative Stock Purchase Agreement,
subject to the terms and conditions of and as defined in the Alternative Stock
Purchase Agreement; (c) by either Parent, on the one hand, or SMG-II, on the
other hand, if the SMG-II Merger Closing shall not have occurred by December
15, 1999, unless the SMG-II Merger Closing shall not have occurred because of
a material breach of any representation, warranty, obligation, covenant,
agreement or condition set forth in the SMG-II Merger Agreement on the part of
the party seeking to terminate the SMG-II Merger Agreement; (d) by Parent, (A)
if the Offer is terminated or expires in accordance with its terms without the
Purchaser having purchased any Shares thereunder due to a failure of any of
the conditions described in Section 14--"Conditions of the Offer" to be
satisfied, (B) if a 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, restrains, enjoins or restricts the
consummation of the Offer and which is in effect at the SMG-II Merger Closing,
or (C) a statute, rule, regulation, executive order, decree or order of any
kind shall have been enacted, entered, promulgated or enforced by any court or
governmental authority which prohibits, restrains, enjoins or restricts the
consummation of the Offer or has the effect of making the purchase of the
Shares illegal and (e) by Parent, at any time within 30 days after delivery of
the audited consolidated financial statements of each of SMG-II and of
Pathmark for the fiscal year ended January 30, 1999, in the event that such
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financial statements disclose (A) a consolidated shareholder's deficiency of
(x) SMG-II greater than $1,453,000,000 or (y) Pathmark greater than
$1,188,400,000, in each case as of the end of such fiscal year or (B) net
losses of (x) SMG-II materially greater than $29,321,000 or (y) Pathmark
materially greater than $28,420,000, in each case for the fiscal year then
ended.
The SMG-II Merger Agreement provides that, in the event of termination
pursuant to the provisions described above by Parent or the Purchaser, on the
one hand, or SMG-II, on the other hand, no party will incur any liability to
any other party except for breach of the SMG-II Merger Agreement and the
survival of certain obligations including, without limitation, in the event of
termination pursuant to clause (d) in the previous paragraph, the obligation
of SMG-II to cause PTK to sell to the Purchaser, and the obligation of Parent
to cause the Purchaser to purchase, all of the shares of the capital stock of
Pathmark, subject to the terms and conditions of the Alternative Stock
Purchase Agreement.
The Stockholders Agreement. The following is a summary of the material terms
of the Stockholders Agreement. This summary is not a complete description of
the terms and conditions thereof and is qualified in its entirety by reference
to the full text thereof which is incorporated herein by reference and a copy
of which has been filed with the Commission as an exhibit to the Schedule 14D-
1. The Stockholders Agreement may be inspected at, and copies may be obtained
from, the same places and in the manner set forth in Section 7--"Certain
Information Concerning the Company".
Concurrently with the execution of the SMG-II Merger Agreement and as
required by Parent and the Purchaser, Parent, the Purchaser and the SMG-II
Stockholders entered into the Stockholders Agreement. The SMG-II Stockholders
are listed on Exhibit I to the Stockholders Agreement.
Stock Option. Each SMG-II Stockholder has granted to the Purchaser an
irrevocable option (the "Stock Option") to purchase SMG-II Stock held by each
such SMG-II Stockholder on the date of the Stockholders Agreement, together
with any shares of SMG-II Stock acquired by such SMG-II Stockholder after such
date (the "Option Shares") at a purchase price per share equal to the
Applicable Merger Consideration until the earlier of the termination of the
SMG-II Merger Agreement as discussed above under the caption "Termination"
(unless such SMG-II Stockholder breaches any of its obligations under the
Stockholders Agreement in any material respect or if the SMG-II Merger
Agreement is terminated as the result of a material breach of any
representation, covenant or condition of the SMG-II Merger Agreement by SMG-
II) and (ii) the election by a SMG-II Stockholder at any time after February
15, 2000 to terminate the Stockholders Agreement (the "Stockholders Agreement
Termination Date"). Until the date of the termination of the Stockholders
Agreement, if the SMG-II Merger Agreement is terminated in accordance with its
terms (other than as a result of a material breach of any representation,
warranty, obligation, covenant, agreement or condition of the SMG-II Merger
Agreement by Parent or the Purchaser), the Stock Option shall become
exercisable, in whole but not in part, and remain exercisable until the date
which is 60 days after the date of the termination of the SMG-II Merger
Agreement, but shall not be exercisable in each case unless: (i) all waiting
periods under the HSR Act required for the purchase of the Option Shares upon
such exercise shall have expired or been waived, and (ii) there shall not be
in effect any preliminary or final injunction or other order issued by any
court or governmental, administrative or regulatory agency or authority
prohibiting the exercise of the Stock Option pursuant to the Stockholders
Agreement. If the Stockholders Agreement has not been terminated, in the event
that the Stock Option is not exercisable because the circumstances described
in clauses (i) or (ii) of the preceding sentence do not exist, then the Stock
Option shall be exercisable for the 60 day period commencing on the date that
the circumstances set forth in clauses (i) and (ii) do exist.
Voting. Each SMG-II Stockholder has agreed that, during the period
commencing on the date of the Stockholders Agreement and continuing until the
first to occur of (i) the Effective Time, (ii) the last date the Stock Option
is exercisable pursuant to the Stockholders Agreement and (iii) the
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Stockholders Agreement Termination Date, at any meeting of the holders of any
class or classes of SMG-II Stock, however called, or in connection with any
written consent of the holders of any class or classes of SMG-II Stock, each
such SMG-II Stockholder will vote (or cause to be voted) the Option Shares (i)
in favor of the SMG-II Merger and the approval of the terms of the SMG-II
Merger Agreement and each of the other transactions contemplated by the SMG-II
Merger Agreement and the Stockholders Agreement and any actions required in
furtherance thereof; (ii) against any action, agreement or transaction that
would result in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of SMG-II under the SMG-II
Merger Agreement or the Stockholders Agreement; and (iii) except as otherwise
agreed to in writing in advance by Parent, against the following actions
(other than the SMG-II Merger and the transactions contemplated by the SMG-II
Merger Agreement): (A) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving SMG-II or any of
its subsidiaries; (B) a sale, lease or transfer of a material amount of assets
of SMG-II or any of its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of SMG-II or any of its subsidiaries; or (C) (1)
any change in a majority of the persons who constitute the board of directors
of SMG-II; (2) any change in the present capitalization of SMG-II or any
amendment of SMG-II's Certificate of Incorporation or By-Laws; (3) any other
material change in SMG-II's corporate structure or business; or (4) any other
action involving SMG-II or its subsidiaries which is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the SMG-II Merger and the transactions
contemplated by the Stockholders Agreement and the SMG-II Merger Agreement.
The SMG-II Stockholders have further agreed not to enter into any agreement or
understanding with any person or entity the effect of which would be to
violate the provisions and agreements described above.
Representations, Warranties, Covenants and Other Agreements. In the
Stockholders Agreement, each SMG-II Stockholder has made certain
representations and warranties, including, without limitation, with respect to
(i) ownership of the Option Shares owned by such SMG-II Stockholder on the
date of the Stockholders Agreement, (ii) the legal capacity, power and
authority to enter into and perform its obligations under the Stockholders
Agreement, (iii) the ability of the SMG-II Stockholder to enter into the
Stockholders Agreement without violating other agreements to which it is a
party, (iv) the absence of finder's fees other than as set forth in the SMG-II
Merger Agreement and (v) the absence of liens and encumbrances on and in
respect of the Option Shares. Each SMG-II Stockholder has also entered into
certain covenants, including, without limitation, with respect to (i)
restrictions on the transfer of the Option Shares and (ii) the waiver of its
appraisal rights. Each SMG-II Stockholder has agreed that, until the last day
the Stock Option is exercisable pursuant to the Stockholders Agreement, it
will not, in its capacity as such, directly or indirectly initiate, solicit
(including by way of furnishing information), encourage or respond to or take
any other action knowingly to facilitate, any inquiries or the making of any
proposal by any person or entity (other than Parent or any affiliate of
Parent) with respect to SMG-II that constitutes or reasonably may be expected
to lead to an Acquisition Proposal, or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain any Acquisition Proposal, or agree to or endorse any
Acquisition Proposal, or authorize or permit any person or entity acting on
behalf of the SMG-II Stockholder to do any of the foregoing. If a SMG-II
Stockholder receives any inquiry or proposal regarding any Acquisition
Proposal, such SMG-II Stockholder shall promptly inform Parent of that inquiry
or proposal and the details thereof.
Termination. The Stockholders Agreement shall terminate and no party shall
have any rights or obligations thereunder, upon the earlier of (1) termination
of the SMG-II Merger Agreement pursuant to the termination provisions thereof
(except that if any SMG-II Stockholder breaches any of its obligations under
the Stockholders Agreement in any material respect or if the SMG-II Merger
Agreement is terminated as the result of a material breach of any
representation, warranty, obligation, covenant, agreement or condition of the
SMG-II Merger Agreement by SMG-II) and (2) the election by any SMG-II
Stockholder at any time after February 15, 2000 to terminate the Stockholders
Agreement.
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Company Merger Agreement. The following is a summary of the material terms
of the Company Merger Agreement. The summary is qualified in its entirety by
reference to the form of Company Merger Agreement which is an exhibit to the
SMG-II Merger Agreement which is incorporated herein by reference and a copy
of which has been filed with the Commission as an exhibit to the Schedule 14D-
1. The form of Company Merger Agreement may be inspected at, and copies may be
obtained from, the same places and in the manner set forth in Section 7--
"Certain Information Concerning the Company".
The SMG-II Merger Agreement provides that if not all of the Shares are
acquired by the Purchaser pursuant to the terms of the Offer, Parent shall
promptly after consummation of the SMG-II Merger cause the Company Merger to
occur pursuant to the Company Merger Agreement.
The Company Merger. The Company Merger Agreement will provide that, subject
to the terms and conditions thereof, and in accordance with the DGCL, the
Company shall be merged with and into SMG-II. Following the Company Merger,
the separate corporate existence of the Company will cease and SMG-II will
continue as the surviving corporation (the "Company Merger Surviving
Corporation").
In the Company Merger, (i) each issued and outstanding share of Class A
Common Stock and Class B Common Stock will be cancelled without payment to the
holders thereof and (ii) each issued and outstanding Share (other than Shares
held by any subsidiary of the Surviving SMG-II Corporation or in the treasury
of the Surviving SMG-II Corporation, or by Parent, the Purchaser or any other
subsidiary of Parent, which Shares will be cancelled, and other Shares, if
any, held by stockholders who perfect their appraisal rights under the DGCL)
will by virtue of the Company Merger and without any action by the holder
thereof, be converted into the right to receive $38.25 in cash (the "Company
Merger Consideration"), payable to the holder thereof, without interest
thereon.
At the Company Merger Effective Time (as hereinafter defined), each share of
common stock, par value $.01 per share, of SMG-II then issued and outstanding
will, by virtue of the Company Merger and without any action on the part of
the holder thereof, be converted into one fully paid and non-assessable share
of common stock, par value $0.01 per Share, of the Company Merger Surviving
Corporation.
The Company Merger Surviving Corporations' Board of Directors and
Officers. The Company Merger Agreement provides that, at the effective time of
the Company Merger (the "Company Merger Effective Time"), the directors of
SMG-II immediately prior to the Company Merger Effective Time shall be the
directors of the Company Merger Surviving Corporation, each of such directors
shall hold office, subject to the applicable provisions of the Certificate of
Incorporation and By-Laws of the Company Merger Surviving Corporation until
the next annual shareholders' meeting of the Company Merger Surviving
Corporation and until their respective successors shall be duly elected or
appointed and qualified. At the Company Merger Effective Time, the officers of
SMG-II immediately prior to the Company Merger Effective Time shall, subject
to the applicable provisions of the Certificate of Incorporation and By-Laws
of the Company Merger Surviving Corporation, be the officers of the Company
Merger Surviving Corporation until their respective successors shall be duly
elected or appointed and qualified.
Amendment of the Company Merger Agreement. The Company Merger Agreement may
be amended in writing by SMG-II and the Company, except that (i) no amendment
may be made which decreases the Company Merger Consideration or adversely
affects the rights of holders of Preferred Stock who comply with all of the
provisions of the DGCL covering the rights of holders of Preferred Stock to
dissent from the Company Merger and require appraisal of their Shares, without
the approval of such stockholders and (ii) after any such stockholder
approval, no amendment may be made which by law requires further approval by
such stockholders without such further approval.
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The Alternative Stock Purchase Agreement. Simultaneously with the execution
of the SMG-II Merger Agreement, Parent, Purchaser, SMG-II and PTK executed the
Alternative Stock Purchase Agreement. In the event that all of the conditions
to the consummation of the SMG-II Merger (other than the Minimum Condition and
certain related conditions) have been satisfied or waived, but the Minimum
Condition or certain related conditions have not been satisfied or waived,
SMG-II is obligated, pursuant to the terms and conditions of the Alternative
Stock Purchase Agreement, to cause PTK to sell the Pathmark Stock to the
Purchaser for a purchase price, payable in cash, equal to $242,800,000. The
following is a summary of the material terms of the Alternative Stock Purchase
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The
Alternative Stock Purchase Agreement may be inspected at, and copies may be
obtained from, the same places and in the manner set forth in Section 7--
"Certain Information Concerning the Company".
Purchase of the Pathmark Stock. Pursuant to the Alternative Stock Purchase
Agreement, PTK shall, and SMG-II shall cause PTK to, sell, assign, transfer
and deliver to Purchaser (the "Alternative Stock Purchase") at the Alternative
Stock Purchase Closing (with the date on which the Alternative Stock Purchase
Closing takes place being referred to as the "Alternative Stock Purchase
Closing Date"), and the Purchaser shall purchase from PTK, the Pathmark Stock
for an aggregate amount of $242,800,000 (such amount, the "Pathmark Purchase
Price"). The Alternative Stock Purchase Closing shall occur as soon as
practicable after the later of (i) the satisfaction or waiver of the
conditions set forth in the Alternative Stock Purchase Agreement (which
conditions are described below) and (ii) the date of termination of the SMG-II
Merger Agreement by Parent as a result of (x) the Offer having been terminated
or expired in accordance with its terms without the Purchaser having purchased
any Shares thereunder due to a failure of any of the conditions described in
Section 14--"Conditions of the Offer" to be satisfied, (y) the issuance of a
preliminary or permanent injunction or other order by any court or by any
governmental or regulatory agency, body or authority which prohibits,
restrains, enjoins or restricts the consummation of the Offer and which is in
effect at the SMG-II Merger Closing, or (z) a statute, rule, regulation,
executive order, decree or order of any kind having been enacted, entered,
promulgated or enforced by any court or governmental authority which
prohibits, restrains, enjoins or restricts the consummation of the Offer or
has the effect of making the purchase of the Shares illegal.
The Alternative Stock Purchase Agreement provides that the respective
obligations of the Purchaser, on the one hand, and SMG-II and PTK (the
"Sellers") on the other hand, to effect the Alternative Stock Purchase are
subject to the satisfaction or waiver (subject to applicable law) at or prior
to the Alternative Stock Purchase Closing of each of the following conditions:
(i) any waiting period (and any extension thereof) under the HSR Act
applicable to the Alternative Stock Purchase shall have expired or been
terminated; (ii) 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, restrains, enjoins or restricts the
consummation of the Alternative Stock Purchase and the transactions
contemplated by the Alternative Stock Purchase Agreement and which is in
effect at the Alternative Stock Purchase Closing; provided, however, that, in
the case of a decree, injunction or other order, each of the parties shall
have used all reasonable efforts to prevent the entry of any such injunction
or other order and to appeal as promptly as possible any decree, injunction or
other order that may be entered; and (iii) no statute, rule, regulation,
executive order, decree or order of any kind shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which
prohibits, restrains, enjoins or restricts the consummation of the Alternative
Stock Purchase or has the effect of making the purchase of the Pathmark Stock
illegal. The obligations of the Parent and Purchaser to effect the Alternative
Stock Purchase are further subject to the satisfaction or waiver (subject to
applicable law) at or prior to the Alternative Stock Purchase Closing of the
following additional conditions: (i) each representation or warranty of each
of the Sellers contained in the
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Alternative Stock Purchase Agreement that is subject to, or qualified by,
"material adverse effect", "material adverse change" or other materiality
qualification shall be true and correct, in each case as if such
representation or warranty was made at the Alternative Stock Purchase Closing,
any representation or warranty that is not so qualified shall be true and
correct in any respect which would otherwise have a material adverse effect on
the Condition of Pathmark and its subsidiaries taken as a whole, in each case
as if such representation or warranty was made at the Alternative Stock
Purchase Closing except as to any representation or warranty which speaks as
of a specific date or for a specific period, which must be true and correct in
the foregoing respects as of such specific date or period, and Parent shall
have received a certificate signed by an executive officer of Pathmark, dated
the Alternative Stock Purchase Closing Date, to such effect; (ii) each of the
Sellers shall have performed in all material respects all obligations and
complied in all material respects with all agreements and covenants to be
performed or complied with by it under the Alternative Stock Purchase
Agreement and, in the case only of failures to perform any such agreement or
covenant of Sellers, such failure to perform did not or would not have a
material adverse effect on the Condition of Pathmark and its subsidiaries
taken as a whole or materially adversely affect the ability of Parent or the
Purchaser to consummate the transactions contemplated by the Alternative Stock
Purchase Agreement or have a material adverse effect on the value of Pathmark
and its subsidiaries taken as a whole and Parent shall have received a
certificate signed by an executive officer of Pathmark, dated the Alternative
Stock Purchase Closing Date to such effect; and (iii) since the date of the
Alternative Stock Purchase Agreement, no event shall have occurred such that
there would be a material adverse change in the Condition of Pathmark and its
subsidiaries taken as a whole. The obligations of each Seller to effect the
Alternative Stock Purchase are further subject to the satisfaction of the
following additional conditions: (i) the representations and warranties of
Parent and the Purchaser contained in the Alternative Stock Purchase Agreement
shall be true and correct in all material respects as if such representations
and warranties were made at the Alternative Stock Purchase Closing, and
Pathmark shall have received a certificate signed by an executive officer of
Parent, dated the Alternative Stock Purchase Closing Date, to such effect; and
(ii) each of Parent and the Purchaser shall have performed in all material
respects all obligations and complied in all material respects with all
agreements and covenants to be performed and complied with by it under the
Alternative Stock Purchase Agreement, and Pathmark shall have received a
certificate signed by an executive officer of Parent, dated the Alternative
Stock Purchase Closing Date, to such effect.
Interim Operations. The Alternative Stock Purchase Agreement provides that,
except as contemplated by the Alternative Stock Purchase Agreement, during the
period from the date of the Alternative Stock Purchase Agreement until the
Alternative Stock Purchase Closing, the Sellers shall, and shall cause
Pathmark and each of its subsidiaries to, conduct its operations in the
ordinary course of business, consistent with past practice, will use its best
efforts to (i) preserve intact its business organization, (ii) maintain its
material rights and franchises, (iii) keep available the services of its
officers and employees, (iv) maintain satisfactory relationships with,
suppliers, distributors, customers and others having business relationships
with them and (v) take measures to reduce to zero any excess loss account (as
determined in accordance with Treasury Regulations 1.1502-14, 1.1502-19 and
1.1502-32) reflected on the books and records of Pathmark and its subsidiaries
or as subsequently determined by Pathmark. Without limiting the generality of
and in addition to the foregoing, and except as otherwise contemplated by the
Alternative Stock Purchase Agreement, prior to the time specified in the
preceding sentence, Sellers shall cause Pathmark and each of its subsidiaries
not to, without the prior written consent of Parent: (a) amend its certificate
of incorporation or by-laws or other organizational documents in any way; (b)
authorize for issuance, issue, sell, deliver or agree to commit to issue, sell
or deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of any
class or any other securities; (c) split, combine or reclassify any shares of
its capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof)
in respect of its capital stock or redeem or otherwise acquire any of its
securities; (d) (A) pledge or otherwise encumber
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shares of its capital stock; (B) except in the ordinary course of business
consistent with past practices: (1) incur, assume or prepay any obligations
with respect to any long-term debt, letters of credit or short-term debt,
other than indebtedness (x) incurred, assumed or prepaid under the Working
Capital Facility, (y) that is mandatorily prepayable in accordance with its
terms and (z) that is intercompany indebtedness by and among Pathmark and any
of its subsidiaries (other than PRMC); (2) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for any material obligations of any other person except any of its
wholly-owned subsidiaries; or (3) make any material loans, advances or capital
contributions to, or investments in, any other person; or (C) mortgage or
pledge any of its assets or create or permit to exist any material lien
thereupon that secures indebtedness for borrowed money; (e) except as required
by law or existing written agreements, enter into, adopt or materially amend
any bonus, profit sharing, compensation, severance, termination, stock option,
stock appreciation right, restricted stock, performance unit, pension,
retirement, deferred compensation, employment, severance or other employee
benefit agreements, trusts, plans, funds or other arrangements of or for the
benefit or welfare of any employee of Pathmark and its subsidiaries, or
(except for normal increases in the ordinary course of business that are
consistent with past practices) increase in any manner the compensation or
fringe benefits of any such employee or pay any benefit not required by any
existing plan and arrangement (including, without limitation, the granting of
stock options, stock appreciation rights, shares of restricted stock or
performance units) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing; (f) transfer, sell, lease, license or
dispose of any lines of business, subsidiaries, divisions, operating units or
facilities outside the ordinary course of business or enter into any material
commitment or transaction outside the ordinary course of business other than
any such transactions between or among Pathmark and its subsidiaries (other
than PRMC); (g) other than any such transactions between or among any of
Pathmark and its subsidiaries (other than PRMC, except with respect to any
transaction intended to reduce to zero any excess loss account), acquire or
agree to acquire, by merging or consolidating with, by purchasing an equity
interest or a portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization or
divisions thereof, or otherwise acquire or agree to acquire any other person
(other than the purchase of assets in the ordinary course of business and
consistent with past practice), in each case where such action would be
material to the Condition of Pathmark and its subsidiaries taken as a whole;
(h) except as may be required by law or existing written contractual or
collective bargaining agreements or in connection with the termination of any
employee, take any action to terminate or materially amend, in a manner
adverse to Pathmark or any of its subsidiaries, any of its pension plans or
retiree medical plans with respect to or for the benefit of any employee of
Pathmark or any of its subsidiaries; (i) materially modify, amend or terminate
any significant contract to which it is a party or waive any of its material
rights or claims except in the ordinary course of business consistent with
past practice; (j) effect any material change in any of its methods of
accounting, except as may be required by law or generally accepted accounting
principals; (k) (i) take any action, engage in any transaction or enter into
any agreement which would cause any of the representations or warranties set
forth in Article III of the Alternative Stock Purchase Agreement that are
subject to, or qualified by, a "material adverse effect", "material adverse
change" or other materiality qualification to be untrue as of the Alternative
Stock Purchase Closing Date, or any such representations and warranties that
are not so qualified to be untrue in any respect which would have a material
adverse effect on the Condition of Pathmark and its subsidiaries taken as a
whole or (ii) purchase or acquire, or offer to purchase or acquire, any shares
of capital stock of Pathmark; (l) take any action, including, without
limitation, the adoption of any shareholder rights plan or amendments to the
Certificate of Incorporation of Pathmark, which would, directly or indirectly,
restrict or impair the ability of Purchaser to vote, or otherwise to exercise
the rights and receive the benefits of a shareholder with respect to,
securities of Pathmark that may be acquired or controlled by the Purchaser or
permit any shareholders to acquire securities of Pathmark on a basis not
available to Purchaser in the event that Purchaser were to acquire securities
of Pathmark; and (m) enter into a legally binding commitment with respect to,
or any agreement to take, any of the foregoing actions.
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Notwithstanding anything else provided in the foregoing paragraph to the
contrary, the following are permitted under the Alternative Stock Purchase
Agreement: (1) the acquisition of direct or indirect interests in real
property intended for the operation of stores of Pathmark or any of its
subsidiaries (other than PRMC), the improvement of real property, the
remodeling of stores of Pathmark or any of its subsidiaries (other than PRMC)
and the obtaining of financing therefor in the ordinary course of business
consistent with past practice, (2) the negotiation and entering into by
Pathmark or any of its subsidiaries (other than PRMC) of amendments to
existing leases for real property in the ordinary course of business, (3) the
negotiation in good faith and entering into new collective bargaining
agreements by Pathmark that replace agreements that have expired or will
expire pursuant to their terms within 90 days from the date of the
commencement of negotiations, (4) the marketing and sale of certain real
estate not used in the supermarket business by Pathmark or any of its
subsidiaries (other than PRMC), provided that no such sale (other than a sale
pursuant to a binding agreement to which Pathmark is a party on the date of
the Alternative Stock Purchase Agreement) shall be agreed to without the prior
adequate consultation with Parent, (5) entering into amendments to the
Pathmark Credit Agreement to modify covenants as required (other than
modifications, except for a possible increase in interest rate, which will
make any one or more covenants more restrictive), (6) entering into an
agreement implementing the amendments to the Supply Agreement agreed to in a
memorandum of understanding dated December 27, 1998 by and between Pathmark
and C&S Wholesale Grocers, Inc. and (7) Pathmark may distribute that certain
indebtedness of PTK owed to Pathmark evidenced by a promissory note dated May
12, 1998 in the face amount of $53,202,328.52 as a dividend to PTK.
No Solicitation. The Alternative Stock Purchase Agreement provides that
Sellers shall not, and SMG-II shall cause Pathmark and each of its
subsidiaries not to, directly or indirectly, take (or authorize or permit
their respective officers, directors, employees, representatives, consultants,
investment bankers, attorneys, accountants or other agents or affiliates, to
so take) any action to (i) solicit, initiate or encourage the submission of
any Acquisition Proposal, (ii) enter into an agreement of merger or other
business combination or an agreement for the sale or other disposition by SMG-
II or any of its subsidiaries of a material amount of assets or a sale of
shares of capital stock whether by merger or other business combination or
tender or exchange offer or (iii) participate in any way in discussions or
negotiations with, or furnish any information to, any person (other than
Parent or the Purchaser) in connection with, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Acquisition Proposal. The
Alternative Stock Purchase Agreement provides that the Board of Directors of
each of the Sellers and Pathmark shall not take any action to withdraw or
modify in a manner adverse to Parent or the Purchaser, or take a position
inconsistent with, its approvals or recommendation of the Alternative Stock
Purchase Agreement or to recommend another Acquisition Proposal and shall not
resolve to do any of the foregoing. In addition to the obligations of Sellers
set forth previously in this paragraph, Sellers have agreed that they will,
and will cause Pathmark and each of its subsidiaries to, promptly advise
Parent of any request for information or of any Acquisition Proposal, or any
proposal with respect to any Acquisition Proposal, the material terms and
conditions of such Acquisition Proposal, and the identity of the Person making
any such Acquisition Proposal or inquiry. Immediately following the execution
of the Alternative Stock Purchase Agreement, Sellers shall, and shall cause
Pathmark and each of its subsidiaries and each of their respective officers,
directors, employees, representatives, consultants, investment bankers,
attorneys, accountants or other agents or affiliates to, cease any existing
discussions or negotiations with any parties previously conducted with respect
to any Acquisition Proposal and request each Person which has previously
executed a confidentiality agreement in connection with its consideration of
acquiring Pathmark or any of its subsidiaries or any portion thereof to return
all confidential information furnished to such Person by or on behalf of
Pathmark or any of its subsidiaries.
Directors' and Officers' Insurance and Indemnification. Parent has agreed in
the Alternative Stock Purchase Agreement that the Certificate of Incorporation
and the By-Laws of Pathmark shall
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contain the provisions with respect to indemnification and exculpation from
liability set forth in Pathmark's Certificate of Incorporation and By-Laws on
March 9, 1999, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Alternative Stock Purchase Closing
Date in any manner that would adversely affect the rights of individuals, who,
on or prior to the Alternative Stock Purchase Closing Date, were directors,
officers, employees or agents of Pathmark, unless such modification is
required by law. Parent also had agreed that all rights of indemnification now
existing in favor of any director, officer, employee, or agent of the
subsidiaries of Pathmark as provided in their respective charters or by-laws
on the date of the Alternative Stock Purchase Agreement shall survive the
Alternative Stock Purchase and shall continue in full force and effect for a
period of six years from the Alternative Stock Purchase Closing Date. In
addition, pursuant to the Alternative Stock Purchase Agreement, Pathmark shall
for the six year period commencing on the Alternative Stock Purchase Closing
Date either (a) maintain in effect Pathmark's current directors' and officers'
liability insurance covering those persons who are currently covered on the
date of the Alternative Stock Purchase Agreement by Pathmark's directors' and
officers' liability insurance policy (the "Pathmark Indemnified Parties");
provided, however, that in no event shall Parent be required to expend in any
one year an amount in excess of 150% of the annual premiums currently paid by
Pathmark for such insurance which Pathmark has represented to be $323,000;
provided, further, that if the annual premiums of such insurance coverage
exceed such amount, Pathmark shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount; and
provided, further, that Pathmark may substitute for such policies, policies
with at least the same coverage containing terms and conditions which are no
less advantageous and provided that said substitution does not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Alternative Stock Purchase Closing Date or (b) cause Parent's directors' and
officers' liability insurance then in effect to cover those persons who are
covered on the date of the Alternative Stock Purchase Agreement by Pathmark's
directors' and officers' liability insurance policy with respect to those
matters covered by Pathmark's directors' and officers' liability policy.
Parent has agreed to indemnify, and to cause Pathmark to indemnify, all
Pathmark Indemnified Parties to the fullest extent permitted by applicable law
with respect to all acts and omissions arising out of such individuals'
services as officers, directors, employees or agents of Pathmark or any of its
subsidiaries or as trustees or fiduciaries of any plan for the benefit of
employees of Pathmark or any of its subsidiaries, occurring prior to the
Alternative Stock Purchase Closing Date including, without limitation, the
transactions contemplated by the Alternative Stock Purchase Agreement.
Compensation and Benefits. During the period commencing at the Alternative
Stock Purchase Closing Date and ending on the first anniversary thereof,
Parent shall cause the current and former employees of Pathmark and its
subsidiaries who are on the Alternative Stock Purchase Closing Date entitled
to receive compensation or any benefits from Pathmark or any of its
subsidiaries to be provided with compensation and employee benefit plans
(other than stock option or other plans involving the potential issuance of
securities of Pathmark, Parent, or any of their respective subsidiaries and
incentive compensation or similar programs) which in the aggregate are not
materially less favorable than those currently provided to such employees by
Pathmark and its subsidiaries, to the extent permitted under laws and
regulations in force from time to time, provided that employees covered by
collective bargaining agreements need not be provided such benefits, and
provided, further, that Parent reserves the right to review all employee
benefits after the Alternative Stock Purchase Closing Date and to make such
changes as it deems appropriate.
Agreement to Use Best Efforts. Pursuant to the Alternative Stock Purchase
Agreement and subject to the terms and conditions thereof, each of Sellers,
Parent and the Purchaser shall, and the Sellers shall cause Pathmark and each
of its subsidiaries to, cooperate and use their respective best efforts to
take, or cause to be taken, all appropriate action, and to make, or cause to
be made, all filings necessary, proper or advisable under applicable laws and
regulations to consummate and make
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effective the transactions contemplated by the Alternative Stock Purchase
Agreement, including, without limitation, their respective best efforts to
obtain, prior to the Alternative Stock Purchase Closing Date, all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Sellers and their
respective subsidiaries as are necessary for consummation of the transactions
contemplated by the Alternative Stock Purchase Agreement; provided, however,
that no loan agreement or contract for borrowed money shall be repaid except
as currently required by its terms, in whole or in part, and no material
contract shall be amended to increase the amount payable thereunder or
otherwise to be materially more burdensome to Pathmark or any of its
subsidiaries in order to obtain any such consent, approval or authorization
without first obtaining the written approval of Parent.
In addition, the Alternative Stock Purchase Agreement provides that Parent,
the Purchaser and Sellers will (i) take promptly all actions necessary to make
the filings required of Parent, the Purchaser or any of their affiliates under
the applicable antitrust laws, (ii) comply at the earliest practicable date
with any request for additional information or documentary material received
by Parent, Sellers or any of their affiliates from the FTC or the Antitrust
Division of the Department of Justice pursuant to the HSR Act and (iii)
cooperate in connection with any filing under applicable antitrust laws and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by the Alternative Stock Purchase Agreement
commenced by any of the FTC, the Antitrust Division of the Department of
Justice or state attorneys general. Parent, the Purchaser and Sellers shall in
addition, each use all best efforts to resolve such objections, if any, as may
be asserted with respect to any transaction contemplated by the Alternative
Stock Purchase Agreement under any antitrust law.
Certain Tax Matters. SMG-II shall have the obligation to prepare and timely
file, or cause to be prepared and timely filed, all returns, statements, forms
and reports for taxes ("Returns") that are required by law to be filed by, or
with respect to, Pathmark or any of its subsidiaries with respect to any
taxable year or period ending on or before and, with respect to any taxable
year or period beginning before and ending after the Alternative Stock
Purchase Closing Date, the portion of such taxable year or period ending on
and including the Alternative Stock Purchase Closing Date ("Pre-Closing
Period"); provided, however, with respect to Returns to be filed by SMG-II
pursuant to this sentence for the Pre-Closing Period, (i) SMG-II shall provide
Parent with draft federal, state, local and foreign income tax returns that
include Pathmark or any of its subsidiaries at least thirty (30) days prior to
the due date for filing such Returns, (ii) at least fifteen (15) days prior to
the due date for the filing of such Returns, Parent shall notify SMG-II of the
existence of any objection Parent may have to any items set forth on such
draft Returns, and (iii) if, after consulting in good faith, SMG-II and Parent
are unable to resolve such objection(s), such objection(s) shall be resolved
by treating items on such Returns in a manner consistent with the past
practices of Pathmark and its subsidiaries with respect to such items, if any,
unless otherwise required by law (and if no past practice exists, the issue
shall be resolved in favor of the party that would bear the relevant tax
liability). At the request of SMG-II, Pathmark will prepare the Returns
described in the preceding sentence (or any such Return specified), including
any Returns required to be filed by SMG-II (or any of its subsidiaries) that
includes Pathmark or any of its subsidiaries for the tax year of the SMG-II
consolidated group that includes the Alternative Stock Purchase Closing Date,
in a manner consistent with this paragraph. Parent and SMG-II agree to the
extent permitted by applicable law to elect with the relevant taxing authority
to treat for all purposes the Alternative Stock Purchase Closing Date as the
last day of a taxable period of Pathmark and its subsidiaries.
SMG-II and its subsidiaries other than Pathmark and its subsidiaries (the
"SMG-II Group") shall be responsible and liable for the timely payment of any
and all taxes imposed on or with respect to the properties, income and
operations of the SMG-II Group including any gain to the SMG-II Group
resulting from the sale of the Pathmark Stock.
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Pathmark shall pay SMG-II the amount of any taxes allocated to Pathmark and
its subsidiaries in connection with the filing of a Return pursuant to the
second preceding paragraph (including taxes that may become payable as a
result of an adjustment by any taxing authority in respect of a Pre-Closing
Period) to the extent not already paid by Pathmark or any of its subsidiaries
on or before the Alternative Stock Purchase Closing Date. To the extent
reasonably practicable, at least ten (10) days prior to the due date for the
filing of any such Return, SMG-II shall provide to Parent its calculation of
the amount of such taxes allocable to Pathmark and its subsidiaries pursuant
to this paragraph. No later than five (5) days prior to the due date for the
filing of such Return, Parent shall notify SMG-II of any reasonable objections
Parent may have to SMG-II's calculation of the amount of such taxes allocable
to Pathmark and its subsidiaries pursuant to this paragraph, and, at such
time, Pathmark and its subsidiaries shall pay to SMG-II the amount of taxes
allocable to Pathmark and its subsidiaries pursuant to this paragraph as
determined by SMG-II. Any objection Parent may have with respect to SMG-II's
calculation of the amount of such taxes allocable to Pathmark and its
subsidiaries pursuant to this paragraph shall not be a cause for any failure
of Pathmark and its subsidiaries to make payments to Parent pursuant to this
paragraph. Parent and SMG-II agree to consult and resolve in good faith any
such objection, it being understood and agreed that in the absence of any such
resolution, any and all objections shall be resolved by treating items,
wherever possible, in a manner consistent with the past practices of Pathmark
and its subsidiaries with respect to such items unless otherwise required by
law. In the event Parent shall receive SMG-II's calculation of the amount of
such taxes allocable to Pathmark and its subsidiaries pursuant to this
paragraph and a draft of the relevant portions of such Return less than ten
(10) days prior to the due date for filing such Return, Pathmark and its
subsidiaries shall nevertheless endeavor in good faith to make payment to SMG-
II by such due date.
The SMG-II Group shall pay Pathmark the amount of any taxes that are
refunded, or in respect of which the SMG-II Group obtains a credit usable by
the SMG-II Group as an offset against taxes owed by the SMG-II Group, as the
result of an adjustment by any taxing authority that are allocable to Pathmark
or any of its subsidiaries (net of any taxes that are owed to any taxing
authority as the result of an adjustment by such authority relating to a Pre-
Closing Period that are allocable to Pathmark or any of its subsidiaries).
Each party shall promptly notify the other in writing upon receipt by such
party or any affiliate of such party of written notice of any inquiries,
claims, assessments, audits or similar events with respect to taxes for which
the other party may be liable (any such inquiry, claim, assessment, audit or
similar event, a "Tax Matter").
Parent shall have the sole right to control any Tax Matter, initiate any
claim for refund with respect to Pathmark or any of its subsidiaries, and
contest, resolve and defend against any assessment for additional taxes,
notice of tax deficiency or other adjustment of taxes of, or relating to, the
income, assets or operations of Pathmark or any of its subsidiaries for all
taxable periods to the extent that such Tax Matter or claim does not have an
adverse impact on the SMG-II Group (or any of its members). SMG-II shall have
the sole right to control any Tax Matter, initiate any claim for refund with
respect to the SMG-II Group, and contest, resolve and defend against any
assessment for additional taxes, notice of tax deficiency or other adjustment
of taxes of, or relating to, the income, assets or operations of the SMG-II
Group (or any of its members) for all taxable periods to the extent that such
Tax Matter or claim does not have an adverse impact on Pathmark or any of its
subsidiaries.
Neither party shall file or cause to be filed any amended Return or claims
for refund that would result in an increased tax liability of the other party
without the prior written consent of such other party, which consent shall not
be unreasonably withheld.
The Alternative Stock Purchase Agreement also terminates and supersedes any
and all of the tax sharing, allocation, indemnification or similar agreements,
arrangements or undertakings in effect on
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the Alternative Stock Purchase Closing Date as between the SMG-II Group or any
predecessor or affiliate thereof, on the one hand, and Pathmark and any of its
subsidiaries, on the other hand, for all taxes imposed by any government or
taxing authority, regardless of the period in which such taxes are imposed.
From and after the Alternative Stock Purchase Closing Date, SMG-II agrees,
and agrees to cause each of its subsidiaries, to permit Parent or a
representative of Parent to have reasonable access, during normal business
hours, to the books and records of the SMG-II Group, to the extent that such
books and records relate to a Pre-Closing Period, and to personnel, for the
purpose of enabling Parent to (i) prepare the Returns specified in the first
paragraph under the caption "Certain Tax Matters" and (ii) investigate or
contest any Tax Matter which Parent has the authority to conduct under the
third preceding paragraph.
From and after the Alternative Stock Purchase Closing Date, Parent agrees,
and agrees to cause Pathmark and each of its subsidiaries, to permit SMG-II to
have reasonable access, during normal business hours, to the books and records
of Pathmark and its subsidiaries, to the extent that such books and records
relate to a Pre-Closing Period, and to personnel of Pathmark and its
subsidiaries, for the purpose of enabling SMG-II to prepare the Returns
specified above and to investigate or contest any Tax Matter which SMG-II has
the authority to conduct as specified above.
Representations and Warranties. In the Alternative Stock Purchase Agreement,
Sellers have made customary representations and warranties to Parent and the
Purchaser with respect to, among other things, Pathmark's organization,
corporate authority, capitalization, financial statements, public filings,
conduct of business, compliance with laws, consent and approvals, employee
benefit plan triggering events, broker's or finder's fees, undisclosed
liabilities and the absence of any material adverse changes in Pathmark since
January 31, 1998.
Termination. The Alternative Stock Purchase Agreement may be terminated at
any time prior to the Alternative Stock Purchase Closing Date: (a) subject to
the provisions of the Alternative Stock Purchase Agreement, by mutual consent
of SMG-II, on the one hand, and of Parent, on the other hand; (b) by either
Parent, on the one hand, or SMG-II, on the other hand, if any governmental or
regulatory agency shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting the
Alternative Stock Purchase and such order, decree or ruling or other action
shall have become final and nonappealable; (c) by either Parent, on the one
hand, or Pathmark, on the other hand, if the Alternative Stock Purchase
Closing shall not have occurred by December 15, 1999, unless the Alternative
Stock Purchase Closing shall not have occurred because of a material breach of
any representation, warranty, obligation, covenant, agreement or condition set
forth in the Alternative Stock Purchase Agreement on the part of the party
seeking to terminate the Alternative Stock Purchase Agreement and (d) by
Parent, at any time within 30 days after delivery to it of the audited
consolidated financial statements of each of SMG-II and of Pathmark for the
fiscal year ended January 30, 1999, in the event that such financial
statements disclose (i) a consolidated shareholder's deficiency of (x) SMG-II
greater than $1,453,000,000 or (y) Pathmark greater than $1,188,400,000, in
each case as of the end of such fiscal year or (ii) net losses of (x) SMG-II
materially greater than $29,321,000 or (y) Pathmark materially greater than
$28,420,000, in each case for the fiscal year then ended. The Alternative
Stock Purchase Agreement further provides that it shall automatically be
terminated and the transactions contemplated thereby shall be automatically
abandoned at any time prior to the Alternative Stock Purchase Closing Date if
all the conditions set forth in the SMG-II Merger Agreement have been
satisfied prior to the SMG-II Merger Closing Date.
The Alternative Stock Purchase Agreement provides that, in the event of
termination pursuant to the provisions described above by Parent or the
Purchaser, on the one hand, or SMG-II, on the other
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hand, no party will incur any liability to any other party except for breach
of the Alternative Stock Purchase Agreement.
Confidentiality Agreement. The following is a summary of the Confidentiality
Agreement dated as of December 30, 1998 between Parent and SMG-II (the
"Confidentiality Agreement"). The summary is qualified in its entirety by
reference to the Confidentiality Agreement, a copy of which has been filed
with the Commission as an exhibit to the Schedule 14D-1. The Confidentiality
Agreement can be inspected at, and copies may be obtained from, the same
places and in the manner set forth in Section 7--"Certain Information
Concerning the Company".
Pursuant to the Confidentiality Agreement, Parent agreed, among other
things, to keep confidential and not disclose or reveal any information about
the business, financial condition, properties and operations of Pathmark (but
excluding information which (i) is or will be in the public domain, (ii) was
available to SMG-II on a nonconfidential basis prior to its disclosure by
Pathmark, (iii) becomes available to SMG-II on a nonconfidential basis from a
person other than Pathmark, which person is not otherwise bound by a
confidentiality agreement with Pathmark or other obligation not to transmit
such information and (iv) has been independently acquired (the "Proprietary
Information")) to any person other than its Representatives (as hereinafter
defined) who are actively and directly participating in Parent's evaluation of
a proposed acquisition of SMG-II or any of its subsidiaries by Parent (the
"Proposed Acquisition"), or who otherwise need to know the Proprietary
Information for the purpose of evaluating the Proposed Acquisition. The
Proprietary Information was provided to Parent in connection with the Proposed
Acquisition and is not to be used by Parent for any purpose other than its
evaluation of the Proposed Acquisition or the consummation of the Proposed
Acquisition. In addition, Parent will not disclose to any person (other than
its Representatives) any information about the Proposed Acquisition, or the
terms or conditions, or any other facts relating thereto. Parent also agreed
that, without SMG-II's prior written consent, it will not, for a period of
nine months commencing on December 30, 1998, directly or indirectly solicit
for employment or employ any person who is now employed by SMG-II or any of
its subsidiaries and who is identified by Parent as a result of its evaluation
in connection with the Proposed Acquisition. However, Parent is not prohibited
from (i) employing any employee of SMG-II or its subsidiaries who contacts it
on his or her own initiative and without any direct or indirect solicitation
by Parent, and (ii) making generalized searches for employees by use of
advertisements or regular executive searches in the media which are not
targeted specifically at employees of SMG-II or its subsidiaries. As used in
the Confidentiality Agreement, the term "person" is interpreted to include,
without limitation, any corporation, company, partnership and individual. In
addition, the term "Representative" means, as to any person, such person's
affiliates and its and their directors, officers, employees, partners,
members, agents, advisors (including, without limitation, financial advisors,
lenders, underwriters, counsel and accountants), consultants and controlling
persons.
12. Dividends and Distributions. As described above, the SMG-II Merger
Agreement provides that prior to the consummation of the SMG-II Merger, SMG-II
will cause the Company to not split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock or redeem or otherwise acquire any of its securities.
If, on or after March 9, 1999, the Company should (i) split, combine,
reclassify, redeem or otherwise acquire any of its securities or (ii)
authorize for issuance, issue, sell, deliver or agree or commit to issue, sell
or deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of any
class or any other Securities, then, subject to the provisions of Section 14--
"Conditions of the Offer", the Purchaser, in its sole discretion, may make
such adjustments as it deems appropriate in the Offer Price and other
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terms of the Offer, including, without limitation, the number or type of
securities offered to be purchased.
If, on or after March 9, 1999, the Company should declare, set aside or pay
any dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock payable or distributable
to stockholders of record on a date prior to the transfer of the Shares
purchased pursuant to the Offer to Purchase on the Company's stock transfer
records, then, subject to the provisions of Section 14--"Conditions of the
Offer", (a) the Offer Price may, in the sole discretion
of the Purchaser, be reduced by the amount of any such cash dividend or cash
distribution and (b) the whole of any such noncash dividend, distribution or
issuance to be received by the tendering stockholders will (i) be received and
held by the tendering stockholders for the account of the Purchaser and will
be required to be promptly remitted and transferred by each tendering
stockholder to the Depositary for the account of the Purchaser, accompanied by
appropriate documentation of transfer, or (ii) at the direction of the
Purchaser, be exercised for the benefit of the Purchaser, in which case the
proceeds of each exercise will promptly be remitted to the Purchaser. Pending
such remittance and subject to applicable law, the Purchaser will be entitled
to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
Pursuant to the terms of the SMG-II Merger Agreement, the Company is
prohibited from taking any of the actions described in the preceding
paragraphs and nothing herein shall constitute a waiver by Parent or the
Purchaser of any of its rights under the SMG-II Merger Agreement or a
limitation of remedies available to Parent or the Purchaser for any breach of
the SMG-II Merger Agreement, including termination thereof.
13. Effect of the Offer on the Market for the Shares; Exchange Act
Registration. There currently exists a limited and sporadic public trading
market for the Shares. The purchase of Shares pursuant to the Offer is
expected to reduce the number of holders of Shares and the number of Shares.
Consequently, depending upon the number of Shares purchased and the number of
remaining holders of Shares, the purchase of Shares pursuant to the Offer may
adversely affect the liquidity and market value of the remaining Shares held
by the public. The Purchaser cannot predict whether the reduction in the
number of Shares would have an adverse or beneficial effect on the market
price for, or marketability of, the Shares or whether it would cause future
market prices to be greater or less than the Offer Price.
The Shares are not "margin securities," as such term is defined under the
rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board").
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the
Commission if the Shares are not listed on a national securities exchange and
there are fewer than 300 record holders of the Shares. The termination of
registration of the Shares under the Exchange Act would substantially reduce
the information required to be furnished by the Company to holders of Shares
and to the Commission and would make certain provisions of the Exchange Act,
such as the short-swing profit recovery provisions of Section 16(b) and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Shares. In addition,
"affiliates" of the Company and persons holding "restricted securities" of the
Company may be deprived of the ability to dispose of such securities pursuant
to Rule 144 promulgated under the Securities Act of 1933. If registration of
the Shares under the Exchange Act were terminated, the Shares would no longer
be eligible for NASDAQ reporting. It is the present intention of the Purchaser
to cause the Company to make an application for termination of registration of
the Shares as soon as possible after successful completion of the Offer.
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14. Conditions of the Offer. Notwithstanding any other provision of the
Offer, the Purchaser shall not be required to accept for payment or, subject
to any applicable rules and regulations of the Commission, including Rule 14e-
1(c) under the Exchange Act (relating to the Purchaser's obligation to pay for
or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for any Shares tendered and may terminate or amend the Offer and
may postpone the acceptance of, and payment for, Shares if (i) prior to the
Expiration Date, the Minimum Condition has not been satisfied or (ii) at any
time on or after March 9, 1999 and at or before the time of acceptance of
Shares for payment or payment for any such Shares (whether or not any Shares
have been accepted for payment or paid for pursuant to the Offer), any of the
following shall occur:
(a) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser the approval or recommendation of the Offer, or approved or
recommended any takeover proposal with respect to the Company or any of its
subsidiaries or for any acquisition of any capital stock of the Company or
any of its subsidiaries (other than the Offer or the Company Merger), (ii)
the Board of Directors of SMG-II or any committee thereof shall have
withdrawn or modified in a manner adverse to Parent or the Purchaser the
approval or recommendation of the SMG-II Merger or the SMG-II Merger
Agreement, or approved or recommended any takeover proposal with respect to
SMG-II or any of its subsidiaries or any acquisition of any capital stock
of SMG-II or any of its subsidiaries (other than the SMG-II Merger), (iii)
any person shall have entered into a definitive agreement or an agreement
in principle with SMG-II, the Company or, as the case may be, any of their
respective subsidiaries with respect to a tender offer or exchange offer
for any capital stock of SMG-II, the Company or, as the case may be, any of
their respective subsidiaries or a merger, consolidation or other business
combination with or involving SMG-II, the Company or, as the case may be,
any of their respective subsidiaries or (iv) the Board of Directors of SMG-
II, the Company or, as the case may be, any of their respective
subsidiaries or any committee of any of them shall have resolved to do any
of the foregoing; or
(b) Any representation or warranty of SMG-II set forth in the SMG-II
Merger Agreement that is subject to, or qualified by, "material adverse
effect", "material adverse change" or other materiality qualification shall
not be true and correct, in each case as if such representation or warranty
was made on the Expiration Date, and any representation or warranty that is
not so qualified shall not be true and correct in any respect which would
otherwise have a material adverse effect on the Condition of SMG-II and its
subsidiaries taken as a whole, in each case as if such representation or
warranty was made on the Expiration Date except as to any such
representation or warranty which speaks as of a specific date or for a
specific period, which must not be true and correct in the foregoing
respects as of such specific date or period; or
(c) SMG-II shall have failed to perform in any material respect any
obligation or complied in any material respects with any agreement or
covenant to be performed or complied with by it under the SMG-II Merger
Agreement or, in the case only of failures to perform any agreement or
covenant of SMG-II pursuant to Section 5.3 (other than clause (c) thereof)
of the SMG-II Merger Agreement, such failure to perform did or would have a
material adverse effect on the Condition of SMG-II and its subsidiaries
taken as a whole or materially adversely effect the ability of Parent or
the Purchaser to consummate the transactions contemplated by the SMG-II
Merger Agreement or have a material adverse effect on the value of SMG-II
and its subsidiaries taken as a whole; or
(d) The SMG-II Merger Agreement and the SMG-II Merger shall not have been
approved and adopted by holders of 66 2/3% of all of the issued and
outstanding capital stock of SMG-II (voting as one class, with each share
of stock having one (1) vote) in accordance with applicable law, the
Certificate of Incorporation and By-Laws of SMG-II and the Stockholders'
Agreement, dated February 4, 1991 (the "Shareholders Agreement") by and
among SMG-II and its shareholders.
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(e) Holders of shares of stock representing in the aggregate more than 5%
of the amount that would be payable by Parent or the Purchaser pursuant to
Section 2.5 of the SMG-II Merger Agreement if there would be no dissenting
stockholders shall (i) have perfected their appraisal rights under Section
262 of the DGCL or (ii) be entitled after the Closing (as defined in the
SMG-II Merger Agreement) to so perfect their appraisal rights; or
(f) Any waiting period (and any extension thereof) under the HSR Act
applicable to the SMG-II Merger shall not have expired or been terminated;
or
(g) A 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, restrains, enjoins or restricts the consummation
of the SMG-II Merger or the Offer and is in effect at the Expiration Date;
or
(h) A statute, rule, regulation, executive order, decree or order of any
kind shall have been enacted, entered, promulgated or enforced by any court
or governmental authority which prohibits, restrains, enjoins or restricts
the consummation of the SMG-II Merger or the Offer or has the effect of
making the SMG-II Merger or the Offer illegal; or
(i) The Shareholders Agreement shall not have been terminated; or
(j) Since March 9, 1999, an event shall have occurred such that there
would be a material adverse change in the Condition of SMG-II and its
subsidiaries taken as a whole; or
(k) Parent shall not have received an irrevocable letter from SMG-II,
signed by an executive officer of SMG-II, stating that all of the
conditions to the obligations of SMG-II to effect the SMG-II Merger set
forth in Article VII of the SMG-II Merger Agreement have been satisfied or
waived; or
(l) the SMG-II Merger Agreement shall have been terminated in accordance
with its terms; or
(m) Any representation or warranty of Parent or the Purchaser contained
in the SMG-II Merger Agreement shall not be true and correct in any
material respect, in each case as if such representation or warranty was
made on the Expiration Date; or
(n) Parent or the Purchaser shall have failed to perform in any material
respect any obligations or complied in any material respect with any
agreement or covenant to be performed or complied with by it under the SMG-
II Merger Agreement;
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 (including those in the opening paragraph of this
Section 14) 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 in this Section
14 will be final and binding upon all parties to the SMG-II Merger Agreement.
15. Certain Legal Matters; Regulatory Approvals.
General. Except as otherwise disclosed herein, based on a review of publicly
available information filed by the Company with the Commission, neither Parent
nor the Purchaser is aware of (i) any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the acquisition of
Shares by the Purchaser pursuant to the Offer or the Company Merger or (ii)
any approval or other action by any
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governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required for the acquisition or ownership of Shares by
the Purchaser as contemplated herein. Should any such approval or other action
be required, the Purchaser currently contemplates that it would seek such
approval or action. Many of the Company's stores sell alcoholic beverages and
are subject to various state and local licensing requirements as a result. By
virtue of these license and registration requirements, the Purchaser or the
Company may be obligated to obtain certain governmental consents and approvals
in order to comply with applicable law. The Purchaser believes that such
approvals can be obtained in due course, and that the Company will continue to
conduct its operations substantially in the same manner as before the
transfer. The Purchaser's obligation under the Offer to accept for payment and
pay for Shares is subject to certain conditions. See Section 14--"Conditions
of the Offer". While the Purchaser does not currently intend to delay the
acceptance for payment of Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval
or action, if needed, would be obtained or would be obtained without
substantial conditions or that adverse consequences might not result to the
business of the Company, Parent or the Purchaser or that certain parts of the
businesses of the Company, Parent or the Purchaser might not have to be
disposed of in the event that such approvals were not obtained or any other
actions were not taken.
State Takeover Laws. The Company is incorporated under the laws of the State
of Delaware. In general, Section 203 of the DGCL prevents an "interested
stockholder" (generally a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock, or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Delaware corporation for a period of
three years following the date such person became an interested stockholder
unless, among other things, prior to the date the interested stockholder
became an interested stockholder, the board of directors of the corporation
approved either the business combination or the transaction in which the
interested stockholder became an interested stockholder. SMG-II has
represented to Parent and the Purchaser in the SMG-II Merger Agreement that
the provisions of Section 203 of the DGCL are inapplicable to the Company. As
a result, no action by the Board of Directors is required under such Section
in respect of the Offer, the SMG-II Merger or the Company Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers
of corporations meeting certain requirements more difficult. However, in 1987
in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the
State of Indiana may, as a matter of corporate law and, in particular, with
respect to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of
a target corporation without the prior approval of the remaining stockholders.
The state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of stockholders in the state and
were incorporated there.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. Based on information supplied by the Company and SMG-II's
representations in the SMG-II Merger Agreement, the Purchaser does not believe
that any state takeover statutes apply to the Offer. Neither Parent nor the
Purchaser has currently complied with any state takeover statute or
regulation. The Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer or the Company
Merger and nothing in this Offer to Purchase or any action taken in connection
with the Offer or the Company Merger is intended as a waiver of such right. In
the event it is asserted
47
<PAGE>
that one or more state takeover laws is applicable to the Offer or the Company
Merger, and an appropriate court does not determine that it is inapplicable or
invalid as applied to the Offer or the Company Merger, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer and the Company Merger. In
such case, the Purchaser may not be obligated to accept for payment any Shares
tendered. See Section 14--"Conditions of the Offer".
Appraisal Rights. No appraisal rights are available to holders of Shares in
connection with the Offer.
However, if the Company Merger is consummated, a stockholder will have
certain rights under Section 262 of the DGCL to dissent and demand appraisal
of, and payment in cash for the fair value of, that stockholder's Shares.
Those rights, if the statutory procedures are complied with, could lead to a
judicial determination of the fair value (excluding any value arising from the
Company Merger) required to be paid in cash to dissenting stockholders for
their Shares. Any judicial determination of the fair value of Shares could be
based upon considerations other than or in addition to the Offer Price and the
market value of the Shares, including asset values and the investment value of
the Shares. The value so determined could be more or less than the Offer
Price. Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of those rights.
If a stockholder who demands appraisal under Section 262 of the DGCL fails
to perfect, or effectively withdraws or loses, its right to appraisal, as
provided in the DGCL, the Shares of that stockholder will be converted into
the merger consideration in accordance with the Company Merger Agreement. A
stockholder may withdraw his demand for appraisal by delivering to the
Purchaser a written withdrawal of such demand for appraisal and acceptance of
the Company Merger.
The foregoing summary of the rights of objecting stockholders does not
purport to be a complete statement of the procedures to be followed by
stockholders desiring to exercise any available dissenters' rights. The
preservation and exercise of dissenters' rights require strict adherence to
the applicable provisions of the DGCL.
In addition, several decisions by Delaware courts have held that, in certain
instances, a controlling stockholder of a corporation involved in a merger
with such controlling stockholder or its affiliates has a fiduciary duty to
the other stockholders that requires the merger to be fair to such other
stockholders. In determining whether a merger is fair to minority
stockholders, the Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and
whether there were fair dealings among the parties. Although the remedies of
rescission or rescissory damages are possible in an action challenging a
merger as a breach of fiduciary duty, decisions of the Delaware courts have
indicated that in most cases the remedy available in a merger that is found
not to be "fair" to minority stockholders is a damages remedy based on
essentially the same principles as an appraisal.
Going Private Transactions. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. The Purchaser does not believe that
Rule 13e-3 will be applicable to the Company Merger, unless, among other
things, the Company Merger is completed more than one year after termination
of the Offer. If applicable, Rule 13e-3 would require, among other things,
that certain financial information regarding the Company and certain
information regarding the fairness of the Company Merger and the consideration
offered stockholders of the Company therein be filed with the Commission and
disclosed to stockholders of the Company prior to consummation of the Company
Merger.
48
<PAGE>
Regulatory Approvals. Under the HSR Act, certain mergers and acquisitions
may not be consummated unless certain information has been furnished to the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
the Federal Trade Commission (the "FTC") and certain waiting period
requirements have been satisfied. The acquisition of Shares by the Purchaser
pursuant to the Offer and the SMG-II Merger are subject to the HSR
requirements.
Under the provisions of the HSR Act applicable to the SMG-II Merger, the
SMG-II Merger may not be consummated until the expiration of a 30-calendar day
waiting period following the required filing of a Notification and Report Form
under the HSR Act by Parent and SMG-II, which filings Parent and SMG-II expect
to submit on or about March 22, 1999. Accordingly, the waiting period under
the HSR Act would expire at 11:59 P.M., New York City time, on or about April
21, 1999, unless early termination of the waiting period is granted or Parent
or SMG-II receives a request for additional information or documentary
material prior thereto. If either the FTC or the Antitrust Division were to
request additional information or documentary material prior to the expiration
of the 30-day waiting period, the waiting period would be extended and would
expire at 11:59 P.M., New York City time, on the twentieth calendar day after
the date of substantial compliance by Parent with such request. Under the
provisions of the HSR Act applicable to the purchase of Shares pursuant to the
Offer, such purchase may not be made until the expiration of a 15-calendar day
waiting period following the required filing of a Notification and Report Form
under the HSR Act by Parent, which filing Parent expects to submit on or about
March 22, 1999. Accordingly, the waiting period under the HSR Act would expire
at 11:59 P.M., New York City time, on or about April 6, 1999, unless early
termination of the waiting period is granted or Parent receives a request for
additional information or documentary material prior thereto. If either the
FTC or the Antitrust Division were to request additional information or
documentary material from Parent prior to the expiration of the 15-day waiting
period, the waiting period would be extended and would expire at 11:59 P.M.,
New York City time, on the tenth calendar day after the date of substantial
compliance by Parent with such request. Thereafter, the waiting periods could
be extended only by court order or by consent of Parent. If either the
acquisition of the Shares or the SMG-II Merger is delayed pursuant to a
request by the FTC or the Antitrust Division for additional information or
documentary material pursuant to the HSR Act, the purchase of and payment for
Shares pursuant to the Offer will be deferred until 20 days after the request
is substantially complied with, unless the waiting period is terminated sooner
by the FTC or the Antitrust Division. See Section 2--"Acceptance for Payment
and Payment of Shares". Only one extension of such waiting period pursuant to
a request for additional information or documentary material is authorized by
the rules promulgated under the HSR Act, except by court order or by consent.
However, if the Antitrust Division or the FTC raises substantive issues in
connection with a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning possible means
of addressing these issues and may agree to delay consummation of the
transaction while such negotiations continue.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares
by the Purchaser pursuant to the Offer or the SMG-II Merger. At any time
before or after the Purchaser's purchase of Shares, either the Antitrust
Division or the FTC could take such action under the antitrust laws as it
deems necessary or desirable in the public interest, including seeking to
enjoin the acquisition of Shares pursuant to the Offer or the SMG-II Merger or
seeking divestiture of Shares acquired by the Purchaser or divestiture of
substantial assets of Parent, the Company or any of their respective
subsidiaries. State attorneys general may also bring legal action under the
antitrust laws, and private parties may bring such action under certain
circumstances. Parent and the Purchaser believe that the acquisition of Shares
by the Purchaser and the SMG-II Merger will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer or the
SMG-II Merger on antitrust grounds will not be made or, if a challenge is
made, what the result will be. See Section 14--"Conditions of the Offer" for
certain conditions to the Offer, including conditions with respect to
litigation and certain governmental actions.
49
<PAGE>
16. Fees and Expenses. Except as set forth below, neither Parent nor the
Purchaser will pay any fees or commissions to any broker, dealer or other
person for soliciting tenders of Shares pursuant to the Offer.
Goldman Sachs are acting as the Dealer Managers in connection with the
Offer. Goldman Sachs will receive reasonable and customary compensation for
their services as Dealer Managers, will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under the
United States federal securities laws.
The Purchaser and Parent have also retained Citibank, N.A., as the
Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith, including certain
liabilities under the United States federal securities laws.
In addition, the Purchaser and Parent have retained Morrow & Co., Inc. to
act as the Information Agent in connection with the Offer. The Information
Agent will receive reasonable and customary compensation for its services,
will be reimbursed for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the United States federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
the Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering material to their customers.
17. Miscellaneous. The Purchaser is not aware of any jurisdiction where the
making of the Offer is prohibited by any administrative or judicial action
pursuant to any valid state statute. If the Purchaser becomes aware of any
valid state statute prohibiting the making of the Offer or the acceptance of
the Shares pursuant thereto, the Purchaser will make a good faith effort to
comply with such state statute or seek to have such statute declared
inapplicable to the Offer. If, after such good faith effort, the Purchaser
cannot comply with any such state statute, the Offer will not be made to (and
tenders will not be accepted from or on behalf of) the holders of Shares in
such state. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall
be deemed to be made on behalf of the Purchaser by the Dealer Managers or one
or more registered brokers or dealers which are licensed under the laws of
such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Parent or the Purchaser not contained in this
Offer to Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
Parent and the Purchaser have filed with the Commission the Schedule 14D-1,
together with exhibits, pursuant to Section 14(d)(1) of the Exchange Act and
Rule 14d-3 promulgated thereunder, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule 14D-1
and any amendments thereto, including exhibits, may be inspected at, and
copies may be obtained from, the same places and in the manner set forth in
Section 7--"Certain Information Concerning the Company" (except that they will
not be available at the regional offices of the Commission).
Ahold Acquisition, Inc.
March 15, 1999
50
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF KONINKLIJKE AHOLD N.V., CROESUS, INC., AHOLD U.S.A., INC. AND
AHOLD ACQUISITION, INC.
1. Supervisory Board, Corporate Executive Board and Executive Officers of
Koninklijke Ahold N.V. Set forth below is the name, present principal
occupation or employment and material occupations, positions, offices or
employments for the past five years of each member of the Supervisory Board,
the Corporate Executive Board and each executive officer of Koninklijke Ahold
N.V. The principal address of Koninklijke Ahold N.V. and, unless indicated
below, the current business address for each individual listed below is Albert
Heijnweg 1, 1507 EH Zaandam, The Netherlands, Telephone: 011-31-75-6599111.
Each such person is, unless indicated below, a citizen of The Netherlands.
Members of the Supervisory Board are identified by an asterisk and members of
the Corporate Executive Board are identified by two asterisks.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name and Current Material Positions Held During the Past
Business Address Five Years
---------------- -------------------------------------------
<C> <S>
H. de Ruiter*.................... Chairman of the Supervisory Board of
Koninklijke Ahold N.V.; Former Group
Managing Director and Managing Director of
Royal Dutch Petroleum Company; Member of
the Supervisory Board of Royal Dutch
Petroleum Company; Member of the
Supervisory Board of Heineken N.V.; Member
of the Supervisory Board of Wolters Kluwer
N.V.; Chairman of the Supervisory Board of
Beers N.V.; Chairman of the Supervisory
Board of Koninklijke Hoogovens N.V.;
Chairman of the Supervisory Board of
Koninklijke Pakhoed N.V.; Non-Executive
Director of British Biotech; Chairman of
the Supervisory Board of Aegon N.V.
R.J. Nelissen*................... Vice Chairman of the Supervisory Board of
Koninklijke Ahold N.V.; Former Chairman of
the Managing Board of ABN/AMRO Holding
N.V.; Supervisory Board Member of ABN AMRO
Bank N.V.; Supervisory Board Member of N.V.
Luchthaven Schiphol; Supervisory Board
Member of Koninklijke Boskalis Westminster
N.V.; Supervisory Board Member of
Koninklijke Ten Cate N.V.; Supervisory
Board Member of Mercedes Benz Nederland
B.V.; Supervisory Board Member of
International Flavors & Fragrances IFF
(Nederland) B.V.; Supervisory Board Member
of Elsevier N.V. and Reed Elsevier PLC
Sir Michael Perry*............... Member of the Supervisory Board of
Koninklijke Ahold N.V.; Deputy Chairman of
Bass PLC; Chairman of Centrica PLC
(formerly British Gas); Chairman of Dunlop
Slazenger Group Limited; Non-Executive
Director of Marks & Spencer PLC; Chairman
of The Shakespeare Globe Trust; Chairman of
The International Shakespeare Globe Centre
Ltd.; Former Director British Gas PLC;
Former Chairman of the Managing Board of
Unilever PLC; Former Chairman of United
Holdings Ltd.; Former Chairman of The
Advertising Association; Former Member of
the British Chamber of Commerce (Citizen of
the United Kingdom)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and Current Present Principal Occupation or Employment;
Business Address Material Positions Held During the Past Five Years
---------------- --------------------------------------------------
<C> <S>
J.A. van Kemenade*..... Member of the Supervisory Board of Koninklijke Ahold
N.V.; Governor-General for the Dutch Province of
North-Holland; Former Minister of Education and
Science of the Dutch Government; Supervisory Board
Member of De Nederlandsche Bank N.V.; Supervisory
Board Member of N.V. Bouwfonds Nederlandes S.E.
Gemeenten; Member on the Advisory Board of KPMG.
A.J. Kranendonk*....... Member of the Supervisory Board of Koninklijke Ahold
N.V.; Former President of the Management Board of
Friesland W.A.; Chairman of the Association of Dutch
Chambers of Commerce; Member of the Supervisory Board
of S.C. Johnson Polymer B.V.; Chairman of the
Supervisory Board of Athlon N.V.; Member of the
Supervisory Board of Lankhorst B.V.
R.F. Meyer*............ Member of the Supervisory Board of Koninklijke Ahold
N.V.; Professor of Business Administration, Harvard
Business School; Chairman of NEDD (Citizen of the
United States)
L.J.R. de Vink*........ Member of the Supervisory Board of Koninklijke Ahold
N.V.; President and Chief Operating Officer of Warner-
Lambert Company (Citizen of the United States)
C.H. van der Hoeven**.. President of Koninklijke Ahold N.V.; Member of the
Supervisory Board of ABN AMRO Bank N.V.; Director of
Ahold U.S.A., Inc.
J.G. Andreae**......... Executive Vice President of Koninklijke Ahold N.V.;
Former President of Albert Heijn B.V.; President of
the Supervisory Board of S.V.M.; Former Member of the
Supervisory Board of KLM-catering; Co-chairman of ECR
Europe; Co-chairman of ECR NL; Director of Ahold
U.S.A., Inc.
A.M. Meurs**........... Executive Vice President & CFO of Koninklijke Ahold
N.V.; Supervisory Director of Disco Ahold
International Holdings N.V.; Director and Vice
President of Ahold Americas Holdings, Inc.; Former
Senior Vice President Business Development of
Koninklijke Ahold N.V.; Former Senior Vice President
of Finance Koninklijke Ahold N.V.; Former Vice
President of Finance Koninklijke Ahold N.V.; Member of
the Supervisory Board of Van Den Boom Groep; Member of
the Supervisory Board of Van der Hoop Effectenbank
N.V.; Director and Executive Vice President of Ahold
U.S.A., Inc.
A.S. Noddle**.......... Executive Vice President of Koninklijke Ahold N.V.;
Supervisory Director of Disco Ahold International
Holdings N.V.; Former President and Chief Executive
Officer of Giant Food Stores, Inc.; Director of Ahold
U.S.A., Inc. (Citizen of the United States)
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
Name and Current Present Principal Occupation or Employment;
Business Address Material Positions Held During the Past Five Years
---------------- --------------------------------------------------
<C> <S>
R.G. Tobin**....... Executive Vice President of Koninklijke Ahold N.V.;
Director and President of Ahold Americas Holdings, Inc.;
Chairman, Director, President and Chief Executive officer
of Ahold U.S.A., Inc.; President and Chief Executive
Officer of Croesus, Inc.; Former Chairman, President and
Chief Executive Officer of The Stop & Shop Companies, Inc.
(Citizen of the United States).
R. Zwartendijk**... Executive Vice President of Koninklijke Ahold N.V.;
Supervisory Director of Disco Ahold International Holdings
N.V.; President of Luis Paez S.A.; Former Member of the
Supervisory Board of Schuitema N.V.; Member of the
Supervisory Board of Numico N.V.; President of the
Supervisory Board of A.C. Holding N.V.; Director of Ahold
U.S.A., Inc.
N.L.J. Berger...... Corporate Secretary of Koninklijke Ahold N.V.; Former
Deputy General Counsel of Koninklijke Ahold N.V.
A.J. Brouwer....... Senior Vice President of Management Development and
Organization of Koninklijke Ahold N.V.; Former Vice
President of Management Development and Organization of
Koninklijke Ahold N.V.
A. Buitenhuis...... Senior Vice President Finance and Fiscal Affairs of
Koninklijke Ahold N.V.; Former Senior Vice President of
Fiscal Affairs of Koninklijke Ahold N.V.
P.P.J. Butzelaar... Senior Vice President and General Counsel of Koninklijke
Ahold N.V.; Former Corporate Secretary of Koninklijke
Ahold N.V.; Member of the Supervisory Board of DCE Holding
B.V.
P.P.M. Ekelschot... Senior Vice President of Internal Audit of Koninklijke
Ahold N.V.; Former Vice President of Internal Audit of
Koninklijke Ahold N.V.
H.Gobes............ Senior Vice President of Communications of Koninklijke
Ahold N.V.
M.J. Dorhout Mees.. Senior Vice President of Business Development of
Koninklijke Ahold N.V.; Former Senior Vice President of
Sales & Services of Albert Heijn B.V.; Former Deputy
Director of Customer Services of Albert Heijn B.V.
L.A.P.A. Verhelst.. Senior Vice President of Administration of Koninklijke
Ahold N.V.; Former President of Pays-Bas Property Fund
N.V.; Former Member of the Executive Board of Koninklijke
Bols Wessanen N.V.
</TABLE>
2. Directors and Executive Officers of Croesus, Inc. Set forth below is the
name, present principal occupation or employment and material occupations,
positions, offices or employments for the past five years of each member of
the Board of Directors and each executive officer of Croesus, Inc. The
principal address of Croesus, Inc. is 913 N. Market St., Suite 209,
Wilmington, Delaware 19801, Telephone (302) 576-2889. The current business
address for each individual listed below is Albert Heijnweg 1,1507, Zaandam,
The Netherlands, Telephone: 011-31-75-6599111. Each such person is, unless
indicated below, a citizen of the United States.
I-3
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name and Current Material Positions Held During the Past
Business Address Five Years
---------------- -------------------------------------------
<C> <S>
F.B. Jacobs...................... Director of Croesus, Inc.; Vice President
of Griffin Corporate Services; Former Vice
President of Delaware Trust Capital
Management
D.F. Lindley..................... Director of Croesus, Inc.; Partner for
Duane, Morris, and Heckscher LLP
B.A. Fields...................... Director of Croesus, Inc. and Former
Assistant Secretary of Ahold U.S.A., Inc.;
Director of Ahold Finance U.S.A. Inc.
R.G. Tobin....................... President and Chief Executive Officer of
Croesus, Inc.; Executive Vice President of
Koninklijke Ahold N.V.; Director and
President of Ahold Americas Holdings, Inc.;
Chairman, Director, President and Chief
Executive Officer of Ahold U.S.A., Inc.;
Former Chairman, President and Chief
Executive Officer of The Stop & Shop
Companies, Inc.
M.J. Collins, Jr................. Executive Vice President of Croesus, Inc.;
Director and Executive Vice President--
Support Service of Ahold U.S.A., Inc.;
President and Chief Executive Officer of
BI-LO, Inc.
G.W. Preston..................... Executive Vice President of Croesus, Inc.;
Executive Vice President--Human Resources
of Ahold U.S.A., Inc.; Executive Vice
President--Human Resources of Ahold USA
Support Services, Inc.; Executive Vice
President--Human Resources of BI-LO, Inc.
E.J. Smith....................... Director, Executive Vice President and
Secretary of Croesus, Inc.; Executive Vice
President--Finance and Former Secretary of
Ahold U.S.A., Inc.; Secretary and Treasurer
of Ahold Americas Holdings, Inc.; Former
Secretary and Executive Vice President of
Giant Food Stores, Inc.
A.M. Meurs....................... Executive Vice President of Croesus, Inc.;
Director and Executive Vice President of
Ahold U.S.A., Inc.; Executive Vice
President & CFO of Koninklijke Ahold N.V.;
Director and Vice President of Ahold
Americas Holdings, Inc.; Supervisory
Director of Disco Ahold International
Holdings N.V.; Former Senior Vice
President--Business Development of
Koninklijke Ahold N.V.; Former Senior Vice
President of Finance Koninklijke Ahold
N.V.; Former Vice President of Finance
Koninklijke Ahold N.V.; Member of the
Supervisory Board of Van Den Boom Groep;
Member of the Supervisory Board of Van der
Hoop Effectenbank N.V. (Citizen of The
Netherlands).
</TABLE>
3. Directors and Executive Officers of Ahold U.S.A., Inc. Set forth below is
the name, present principal occupation or employment and material occupations,
positions, offices or employments for the past five years of each member of
the Board of Directors and each executive officer of Ahold U.S.A., Inc. The
principal address of Ahold U.S.A., Inc. is One Atlanta Plaza, East Paces Ferry
Road, Suite 2575, Atlanta, Georgia 30326. Unless indicated below, the current
business address for each individual listed below is Albert Heijnweg 1, 1507
EH Zaandam, The Netherlands, Telephone: 011-31-75-6599111. Each such person
is, unless indicated below, a citizen of The Netherlands.
I-4
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name and Current Material Positions Held During the Past
Business Address Five Years
---------------- -------------------------------------------
<C> <S>
R.G. Tobin....................... Chairman, Director, President and Chief
Executive Officer of Ahold U.S.A., Inc.
Executive Vice President of Koninklijke
Ahold N.V.; Director and President of Ahold
Americas Holdings, Inc.; President and
Chief Executive Officer of Croesus, Inc.;
Former Chairman, President and Chief
Executive Officer of The Stop & Shop
Companies, Inc. (Citizen of the United
States).
E.J. Smith....................... Executive Vice President--Finance and
Former Secretary of Ahold U.S.A., Inc.;
Secretary and Treasurer of Ahold Americas
Holdings, Inc.; Former Secretary and
Executive Vice President of Giant Food
Stores, Inc. (Citizen of the United States)
B.A. Fields...................... Director of Ahold U.S.A, Inc. and Former
Assistant Secretary of Ahold; U.S.A., Inc.;
Director of Croesus, Inc. (Citizen of the
United States)
M.J. Collins, Jr................. Director and Executive Vice President of
Ahold U.S.A., Inc.; Executive Vice
President of Croesus, Inc.; President and
Chief Executive Officer of BI-LO, Inc.
(Citizen of the United States)
G.W. Preston..................... Executive Vice President--Human Resources
of Ahold U.S.A., Inc.; Executive Vice
President--Human Resources of Ahold USA
Support Services, Inc.; Executive Vice
President of Croesus, Inc.; Executive Vice
President--Human Resources of BI-LO, Inc.
(Citizen of the United States)
A.M. Meurs....................... Director and Executive Vice President of
Ahold U.S.A., Inc.; Executive Vice
President & CFO of Koninklijke Ahold N.V.;
Director and Vice President of Ahold
Americas Holdings, Inc.; Supervisory
Director of Disco Ahold International
Holdings N.V.; Former Senior Vice President
Business Development of Koninklijke Ahold
N.V.; Former Senior Vice President of
Finance Koninklijke Ahold N.V.; Former Vice
President of Finance Koninklijke Ahold
N.V.; Member of the Supervisory Board of
Van Den Boom Groep; Member of the
Supervisory Board of Van der Hoop
Effectenbank N.V.; Executive Vice President
of Croesus, Inc.
J.G. Andreae..................... Director of Ahold U.S.A., Inc.; Executive
Vice President of Koninklijke Ahold N.V.;
Former President of Albert Heijn B.V.;
President of the Supervisory Board of
S.V.M.; Former Member of the Supervisory
Board of KLM-catering; Co-chairman of ECR
Europe; Co-chairman of ECR NL
A.S. Noddle...................... Director of Ahold U.S.A., Inc.; Executive
Vice President of Koninklijke Ahold N.V.;
Former President and Chief Executive
Officer of Giant Food Stores, Inc.,
Supervisory Director of Disco Ahold
International Holdings N.V. (Citizen of the
United States)
</TABLE>
I-5
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name and Current Material Positions Held During the Past
Business Address Five Years
---------------- -------------------------------------------
<C> <S>
C.H. van der Hoeven.............. Director of Ahold U.S.A., Inc.; President
of Koninklijke Ahold N.V.; Member of the
Supervisory Board of ABN AMRO Bank N.V.
R. Zwartendijk................... Director of Ahold U.S.A., Inc.; Executive
Vice President of Koninklijke Ahold N.V.;
Supervisory Director of Disco Ahold
International Holdings N.V.; President of
Luis Paez S.A.; Former Member of the
Supervisory Board of Schuitema N.V.; Member
of the Supervisory Board of Numico N.V.;
President of the Supervisory Board of A.C.
Holding N.V.
M.F. Smith....................... Assistant Secretary and Assistant Treasurer
of Ahold U.S.A., Inc. (Citizen of the
United States).
K.A. Krahnke..................... Secretary of Ahold U.S.A., Inc. (Citizen of
the United States).
F.B. Jacobs, II.................. Vice President and Treasurer of Ahold
U.S.A., Inc.
F. Gauthier...................... Assistant Secretary of Ahold U.S.A., Inc.
4. Directors and Executive Officers of Ahold Acquisition, Inc. Set forth
below is the name, present principal occupation or employment and material
occupations, positions, offices or employments for the past five years of each
director and executive officer of Ahold Acquisition, Inc. Each person
identified below has held his position since the formation of Ahold
Acquisition, Inc. in March 1999. The principal address of Ahold Acquisition,
Inc. is 1013 Center Road, Wilmington, Delaware 19805, Telephone: (800) 927-
9800. The current business address for each individual listed below is Albert
Heijnweg 1, 1507 EH Zaandam, The Netherlands, Telephone 011-31-75-6599111.
Each such person is, unless indicated below, a citizen of The Netherlands.
Directors are identified by an asterisk.
R.G. Tobin*...................... See above
A.M. Meurs*...................... See above
A.H.P.M. van Tielraden*.......... Vice President and Deputy General Counsel
of Koninklijke Ahold N.V.; Former Director
of Legal Affairs Hagemeyer N.V.; Former
Senior Legal Advisor Unilever Nederland
B.V.; Former General Counsel Quest
International
</TABLE>
5. Ownership of Shares by Directors and Executive Officers. To the best
knowledge of Koninklijke Ahold N.V., Croesus, Inc., Ahold U.S.A., Inc. and
Ahold Acquisition, Inc., none of the persons listed on this Schedule I
beneficially owns or has a right to acquire directly or indirectly any Shares,
and none of the persons listed on this Schedule I has effected any
transactions in the Shares during the past 60 days.
I-6
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for the
Shares and any other required documents should be sent by each holder of
Shares or his broker, dealer, commercial bank, trust company or other nominee
to the Depositary at one of the addresses set forth below:
The Depositary for the Offer is:
Citibank, N.A.
<TABLE>
<CAPTION>
By Hand: By Mail: By Overnight Courier:
<S> <C> <C>
Citibank, N.A. Citibank, N.A. Citibank, N.A.
Corporate Actions Corporate Actions Corporate Actions
111 Wall Street, Suite 4660 111 Wall Street,
5th Floor Window P.O. Box 2544 5th Floor Window
New York, New York 10043 Jersey City, New Jersey 07303-2544 New York, New York 10043
</TABLE>
For Information:
(877) 248-4237
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective addresses and telephone
numbers as set forth below. Additional copies of this Offer to Purchase, the
Letter of Transmittal, or other related tender offer materials may be obtained
from the Information Agent or from brokers, dealers, commercial banks or trust
companies.
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue
5th Floor
New York, New York 10022
Call Collect (212) 754-8000
Toll Free: (800) 566-9061
Bankers and Brokerage Firms, Please Call: (800) 662-5200
The Dealer Managers for the Offer are:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Call Collect (212) 357-6380
Toll Free: (877) 686-5059
<PAGE>
Exhibit (a)(2)
Letter of Transmittal
To Tender Shares of
$3.52 Cumulative Exchangeable Redeemable Preferred Stock
of
Supermarkets General Holdings Corporation
Pursuant to the Offer to Purchase
dated March 15, 1999
by
Ahold Acquisition, Inc.
An Indirect Wholly-Owned Subsidiary of
Koninklijke Ahold N.V.
(Royal Ahold)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, APRIL 9, 1999 UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
Citibank, N.A.
By Hand: By Mail: By Overnight Courier:
Citibank, N.A. Citibank, N.A.
Citibank, N.A. Corporate Actions Corporate Actions
Corporate Actions Suite 4660 111 Wall Street, 5th
111 Wall Street, 5th P.O. Box 2544 Floor Window
Floor Window Jersey City, New Jersey New York, New York
New York, New York 07303-2544 10043
10043
For Information:
(877) 248-4237
DESCRIPTION OF SHARES TENDERED
<TABLE>
- ------------------------------------------------------
<CAPTION>
Name(s) and
Address(es) of
Registered
Holder(s)
(Please fill
in, if blank,
exactly as
name(s)
appear(s)
on the Shares Tendered
certificate(s)) (Attach additional list if necessary)
- ------------------------------------------------------
Total Number
of Shares
Share Evidenced by Number
Certificate Share of Shares
Number(s) Certificate(s) Tendered:*
--------
<S> <C> <C> <C>
--------
--------
--------
--------
--------
Total
Shares..
- ------------------------------------------------------
</TABLE>
* Unless otherwise indicated, it will be assumed that all Shares evidenced by
any Share Certificate(s) delivered to the Depositary are being tendered.
See Instruction 4.
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed only by stockholders
holding certificates evidencing Shares (as defined below). If you hold Shares
in book-entry form, you may tender your Shares by book-entry transfer to the
account maintained by the Depositary at The Depository Trust Company ("DTC")
(the "Book-Entry Transfer Facility"), along with an Agent's Message (as
defined in the Offer to Purchase), pursuant to the procedures set forth in
Section 3--"Procedures for Tendering Shares" of the Offer to Purchase.
Stockholders who tender Shares by book-entry transfer are referred to herein
as "Book-Entry Stockholders" and other stockholders are referred to herein as
"Certificate Stockholders."
Stockholders whose certificates evidencing Shares ("Share Certificates")
are not immediately available or who cannot deliver their Share Certificates
and all other documents required hereby to the Depositary on or prior to the
Expiration Date (as defined in Section 1--"Terms of the Offer" of the Offer to
Purchase), or who cannot comply with the book-entry transfer procedures on a
timely basis, may nevertheless tender their Shares according to the guaranteed
delivery procedure set forth in Section 3--"Procedures for Tendering Shares"
of the Offer to Purchase. See Instruction 2 of this Letter of Transmittal.
Delivery of documents to the Book-Entry Transfer Facility does not constitute
delivery to the Depositary for this Offer (as defined herein).
[_]CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) ____________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Ahold Acquisition, Inc., a Delaware
corporation (the "Purchaser") and an indirect wholly-owned subsidiary of
Koninklijke Ahold N.V., a public company with limited liability incorporated
under the laws of The Netherlands with its corporate seat in Zaandam
(Municipality Zaanstad), The Netherlands ("Parent"), the above-described
shares of $3.52 Cumulative Exchangeable Redeemable Preferred Stock, par value
$0.01 per share, (the "Shares"), of Supermarkets General Holdings Corporation,
a Delaware corporation (the "Company"), pursuant to the Purchaser's offer to
purchase all of the issued and outstanding Shares at a price of $38.25 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 Offer
to Purchase, dated March 15, 1999 (the "Offer to Purchase"), receipt of which
is hereby acknowledged, and in this Letter of Transmittal (which together with
the Offer to Purchase, as they may be amended and
-2-
<PAGE>
supplemented from time to time, constitute the "Offer"). The undersigned
understands that the Purchaser reserves the right to assign to Parent, or any
direct or indirect wholly-owned subsidiary of Parent, the right to purchase
all or any portion of the Shares tendered pursuant to the Offer, but the
undersigned further understands that any such assignment will not relieve the
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
Upon the terms and conditions of the Offer, subject to, and effective
upon, acceptance for payment of and payment for the Shares tendered herewith
in accordance with the terms of the Offer, the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Purchaser, all right,
title and interest in and to all of the Shares that are being tendered hereby
and any and all dividends, distributions, rights, other Shares and other
securities issued or issuable in respect thereof on or after March 9, 1999
(collectively, "Distributions"), and appoints the Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to such
Shares and all Distributions with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest) to
(i) deliver such Share Certificates (as defined herein) and all Distributions
or transfer ownership of such Shares and all Distributions on the account
books maintained by the Book-Entry Transfer Facility, together in either such
case with all accompanying evidences of transfers and authenticity, to or upon
the order of the Purchaser, (ii) present such Shares and all Distributions for
transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares and all
Distributions, all in accordance with the terms and the conditions of the
Offer.
The undersigned hereby irrevocably appoints the designees of the
Purchaser, and each of them, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney and proxy or any substitute thereof shall deem proper in
the sole discretion of such attorney-in-fact and proxy or such substitute, and
otherwise act (including pursuant to written consent) with respect to all of
the Shares tendered hereby and all Distributions which have been accepted for
payment by the Purchaser prior to the time of such vote or action, which the
undersigned is entitled to vote at any meeting of stockholders (whether annual
or special and whether or not an adjourned meeting) of the Company or
otherwise. This proxy and power of attorney is coupled with an interest in the
Shares and is irrevocable and is granted in consideration of, and is effective
upon, the acceptance for payment of such Shares and all Distributions by the
Purchaser in accordance with the terms of the Offer. Such acceptance for
payment shall revoke any other proxy granted by the undersigned at any time
with respect to such Shares and all Distributions and no subsequent proxies
will be given (or, if given, will not be deemed effective) with respect
thereto by the undersigned. The undersigned understands that in order for
Shares to be deemed validly tendered pursuant to the Offer, immediately upon
the Purchaser's acceptance of such Shares and all Distributions for payment,
the Purchaser or its designee must be able to exercise full voting rights with
respect to such Shares and all Distributions, including, without limitation,
voting at any meeting of the Company's stockholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares and
all Distributions tendered hereby and that when the same are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment, and transfer of the Shares and all
Distributions tendered hereby. In addition, the undersigned shall promptly
remit and transfer to the Depositary for the account of the Purchaser any and
all Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer and, pending such remittance or
appropriate assurance thereof, the Purchaser shall be entitled to all rights
and privileges as owner of any such Distributions and may withhold the entire
purchase price or deduct
-3-
<PAGE>
from the purchase price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Subject to the withdrawal rights set forth in Section 4--
"Withdrawal Rights" of the Offer to Purchase, the tender of Shares hereby made
is irrevocable.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3--"Procedures for Tendering Shares" of the
Offer to Purchase and in the instructions hereto will constitute the
undersigned's acceptance of the terms and conditions of the Offer. The
Purchaser's acceptance for payment of such Shares will constitute a binding
agreement between the undersigned and the Purchaser upon the terms and subject
to the conditions set forth in the Offer. The undersigned recognizes that
under certain circumstances set forth in the Offer to Purchase, the Purchaser
may not be required to accept for payment any of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates not tendered or not accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any Share
Certificates not tendered or not accepted for payment (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Shares Tendered." In the event that both the
Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or issue any
Share Certificates not so tendered or accepted for payment in the name of, and
deliver said check and/or return such certificates to, the person or persons
so indicated. The undersigned recognizes that the Purchaser has no obligation,
pursuant to the Special Payment Instructions, to transfer any Shares from the
name of the registered holder thereof if the Purchaser does not accept for
payment any of the Shares so tendered.
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1,5,6 and 7) (See Instructions 1,5,6 and 7)
To be completed ONLY if To be completed ONLY if
certificate(s) for Shares not certificate(s) for Shares not
tendered or not purchased and/or tendered or not purchased and/or
the check for the purchase price the check for the purchase price
of Shares purchased are to be of Shares purchased are to be sent
issued in the name of someone to someone other than the
other than the undersigned. undersigned, or to the undersigned
at an address other than that
shown above.
Issue check and/or certificate(s)
to:
Mail check and/or certificate(s)
to:
Name: ___________________________
Please Type or Print
Name: ___________________________
Address: ________________________ Please Type or Print
---------------------------------
(Include Zip Code) Address: ________________________
--------------------------------- ---------------------------------
(Tax Identification or Social (Include Zip Code)
Security No.)* ---------------------------------
(See Substitute Form W-9 included (Tax Identification or Social
herewith) Security No.)
------- (See Substitute Form W-9 included
* Signature Guarantee required. herewith)
-4-
<PAGE>
IMPORTANT
STOCKHOLDER(S) SIGN HERE
(See instructions 1 and 5)
(Please Complete Substitute Form W-9 included herewith)
Signature(s) of Holder(s): _________________________________________________
----------------------------------------------------------------------------
Date: _________________________________________ , 1999
------------------------------------
(Tax Identification and Social
Security No.)
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing, or by person(s)
authorized to become registered holder(s) by certificate(s) and documents
enclosed with this Letter of Transmittal. If signature is by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or other person acting in a fiduciary or representative
capacity, please provide the following information and see Instruction 5.)
Name(s): ___________________________________________________________________
(Please Print)
Capacity (Full Title): _____________________________________________________
Address: ___________________________________________________________________
----------------------------------------------------------------------------
(Include Zip Code)
------------------------------------
(Area Code and Telephone No.)
Guarantee of Signature(s)
(See Instructions 1 and 5)
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________
(Please Type or Print)
Title: _____________________________________________________________________
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________
(Include Zip Code)
Name of Firm: ______________________________________________________________
Area Code and Telephone Number: ____________________________________________
Date: _________________________________________ , 1999
-5-
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) which is a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program (an "Eligible Institution"). Signatures
on this Letter of Transmittal need not be guaranteed (a) if this Letter of
Transmittal is signed by the registered holder(s) of the Shares tendered
herewith and such holder(s) have not completed the instruction entitled
"Special Payment Instructions" on this Letter of Transmittal or (b) if such
Shares are tendered for the account of an Eligible Institution. See
Instruction 5 of this Letter of Transmittal.
2. Delivery of Letter of Transmittal and Share Certificates or Book-Entry
Confirmations. This Letter of Transmittal is to be used if Share Certificates
are to be forwarded herewith. Share Certificates evidencing all physically
tendered Shares, along with this Letter of Transmittal or a facsimile thereof,
properly completed and duly executed with any required signature guarantees,
and any other documents required by this Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth herein on or
prior to the Expiration Date (as defined in Section 1--"Terms of the Offer" of
the Offer to Purchase). Shares held through the Book-Entry Transfer Facility
must be tendered to the Depositary by means of delivery of an Agent's Message
(as more fully described in the Offer to Purchase).
Stockholders whose Share Certificates are not immediately available or
who cannot deliver their Share Certificates and all other required documents
to the Depositary on or prior to the Expiration Date or who cannot complete
the procedures for book-entry transfer on a timely basis may nevertheless
tender their Shares by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in
Section 3--"Procedures for Tendering Shares" of the Offer to Purchase.
Pursuant to such procedure: (i) such tender must be made by or through an
Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Purchaser must
be received by the Depositary on or prior to the Expiration Date; and (iii)
Share Certificates, along with a Letter of Transmittal, properly completed and
duly executed with any required signature guarantees (or a facsimile hereof,
properly completed and duly executed with any required signature guarantees,
and all other documents required by this Letter of Transmittal, must be
received by the Depositary within three New York Stock Exchange trading days
after the date of execution of such Notice of Guaranteed Delivery. In the case
of Shares held through the Book-Entry Transfer Facility, the Notice of
Guaranteed Delivery must be delivered to the Depositary by a participant in
the Book-Entry Transfer Facility by means of an Agent's Message (as defined in
the Offer to Purchase) via the confirmation system of the Book-Entry Transfer
Facility confirmation system.
If Share Certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal (or
facsimile hereof) must accompany each such delivery.
-6-
<PAGE>
The method of delivery of this Letter of Transmittal, Share Certificates
and all other required documents, including delivery through the Book-Entry
Transfer Facility, is at the option and risk of the tendering stockholder.
Delivery will be deemed made only when actually received by the Depositary. If
such delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. In all cases, sufficient time should be
allowed to assure timely delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal or a facsimile hereof, waive any right to
receive any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided under "Description of Shares
Tendered" is inadequate, the Share Certificate numbers and/or the number of
Shares should be listed on a separate schedule and attached hereto.
4. Partial Tenders (Applicable to Certificate Stockholders Only). If
fewer than all the Shares evidenced by any Share Certificate submitted are to
be tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such cases, the Company's registrar
and transfer agent shall cause new Share Certificate(s) evidencing the
remainder of the Shares that were evidenced by Share Certificate(s) delivered
to the Depositary to be sent to the person signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Delivery Instructions"
on this Letter of Transmittal, as soon as practicable after the Expiration
Date. All Shares represented by Share Certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holders of the Shares
tendered hereby, the signature must correspond with the names as written on
the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
Shares.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, attorney-in-fact, officer of a
corporation or other person acting in fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to the Purchaser of such person's authority to so act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or Share
Certificates evidencing Shares not tendered or purchased are to be issued in
the name of, a person other than the registered holder(s). In such case, the
signature(s) on the applicable Letter of Transmittal must be guaranteed by an
Eligible Institution.
-7-
<PAGE>
If this Letter of Transmittal is signed by a person other than the
registered holder of the Shares tendered hereby, the Share Certificate(s) must
be endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
such Share Certificate(s). Signatures on such Share Certificates or stock
powers must be guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, the Purchaser will pay or cause to be paid any stock transfer taxes with
respect to the transfer and sale of purchased Shares to it or its order
pursuant to the Offer. If, however, payment of the purchase price of any
Shares purchased is to be made to, or, in the circumstances permitted hereby,
if Share Certificates for Shares not tendered or purchased are to be
registered in the name of, any person other than the registered holder, or if
tendered Share Certificates are registered in the name of any person other
than the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder or such person)
payable on account of the transfer to such person will be deducted from the
purchase price if satisfactory evidence of the payment of such taxes, or
exemption therefrom, is not submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share Certificates listed in this
Letter of Transmittal.
7. Special Payment and Delivery Instructions. If you request a check for
the purchase price to be issued in the name of, and/or Share Certificates for
Shares not tendered or not accepted for payment are to be issued or returned
to, a person other than the signer of this Letter of Transmittal, please
complete the box entitled "Special Payment Instructions" and obtain the
required signature guarantees. If you request a check and/or such Share
Certificates are to be mailed to someone other than the signer of this Letter
of Transmittal or to an address other than that shown above, please complete
the box entitled "Special Delivery Instructions".
8. Requests for Assistance or Additional Copies. Questions or requests
for assistance may be directed to, or additional copies of the Offer to
Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and
other tender offer materials may be obtained from, the Information Agent or
the Dealer Managers at their respective addresses set forth below or from your
broker, dealer, commercial bank or trust company.
9. Substitute Form W-9. Under the United States federal income tax backup
withholding rules, unless an exemption applies under the applicable law and
regulations, 31% of the gross proceeds payable to a shareholder or other payee
pursuant to the Offer must be withheld and remitted to the United States
Treasury, unless the shareholder or other payee provides his or her taxpayer
identification number ("TIN") (employer identification number or social
security number) to the Depositary and certifies that such number is correct.
Therefore, each tendering shareholder should complete and sign the Substitute
Form W-9 included as part of the Letter of Transmittal so as to provide the
information and certification necessary to avoid backup withholding, unless
such shareholder otherwise establishes to the satisfaction of the Depositary
that it is not subject to backup withholding. Certain shareholders (including,
among others, all corporations and certain foreign shareholders) are not
subject to these backup withholding and
-8-
<PAGE>
reporting requirements. In order for a foreign shareholder to qualify as an
exempt recipient, that shareholder should submit an IRS Form W-8 or a
Substitute Form W-8, signed under penalties of perjury, attesting to that
shareholder's exempt status. Such statements can be obtained from the
Depositary. Failure to provide the information on the form may subject the
tendering shareholder to 31% United States federal income tax withholding on
the payment of the purchase price. If the tendering shareholder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future, such shareholder should write "Applied For" in the space for
the TIN in Part 1 of the Substitute Form W-9, sign and date the form and
provide it to the Depositary. Notwithstanding that "Applied For" is written on
Part 1 and the certification is completed, the Depositary will withhold 31% of
all payments made prior to the time a properly certified TIN is provided.
10. Lost or Destroyed Certificates. If any Share Certificates have been
lost or destroyed, the stockholder should promptly notify the Company's
transfer agent. The stockholder will then be instructed as to the procedure to
be followed in order to replace the Share Certificates. This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost or destroyed Share Certificates have been followed.
Important: This Letter of Transmittal or a facsimile hereof together with
Share Certificates and all other required documents or the Notice of
Guaranteed Delivery must be received by the Depositary on or prior to the
Expiration Date.
-9-
<PAGE>
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(See Instruction 9)
PAYER'S NAME: Citibank, N.A.
- --------------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR Social Security Numberor
TIN IN THE BOX AT RIGHT AND Employer Identification
CERTIFY BY SIGNING AND Number:
DATING BELOW
SUBSTITUTE
Form W-9
----------------------
Department of Part 2--Certification--Under penalties of perjury, I
the Treasury certify that:
Internal Revenue --------------------------------------------------------
Service (1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me), and
Payer's Request for (2) I am not subject to backup withholding because
Taxpayer (i) I am exempt from backup withholding, (ii) I
Identification have not been notified by the Internal Revenue
Number ("TIN") Service (the "IRS") that I am subject to backup
and Certification withholding as a result of a failure to report
all interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to
backup withholding.
Certification Instructions--You must cross out item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because of
under-reporting interest or dividends on your tax
return.
--------------------------------------------------------
SIGNATURE __________________________ DATE _____________
NAME (Please Print) ___________________________________
ADDRESS _______________________________________________
CITY, STATE AND ZIP CODE ______________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
-10-
<PAGE>
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
Toll Free (800) 566-9061
Call Collect (212) 754-8000
Banks and Brokerage Firms Please Call:
(800) 662-5200
The Dealer Managers for the Offer are:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Call Collect: (212) 357-6380
Toll Free: (877) 686-5059
<PAGE>
Exhibit (a)(3)
Offer to Purchase for Cash
All of the Outstanding Shares
of $3.52 Cumulative Exchangeable Redeemable Preferred Stock
of
Supermarkets General Holdings Corporation
at
$38.25 Net Per Share
by
Ahold Acquisition, Inc.
An Indirect Wholly-Owned Subsidiary of
Koninklijke Ahold N.V.
(Royal Ahold)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, APRIL 9, 1999 UNLESS THE OFFER IS EXTENDED.
March 15, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Ahold Acquisition, Inc., a Delaware corporation
(the "Purchaser") and an indirect wholly-owned subsidiary of Koninklijke Ahold
N.V. (Royal Ahold), a public company with limited liability incorporated under
the laws of The Netherlands with its corporate seat in Zaandam (Municipality
Zaanstad), The Netherlands (the "Parent"), to act as Dealer Managers in
connection with the Purchaser's offer to purchase all outstanding shares of
the $3.52 Cumulative Exchangeable Redeemable Preferred Stock, par value $0.01
per share (the "Shares"), of Supermarkets General Holdings Corporation, a
Delaware corporation (the "Company"), at a price of $38.25 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 Offer to Purchase, dated
March 15, 1999 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, as they may be amended and supplemented from time to time,
together constitute the "Offer"), copies of which are enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase dated March 15, 1999.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
3. A letter to stockholders of the Company from James Donald, Chairman of
the Board, President, and Chief Executive Officer of the Company, together
with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the Securities and Exchange Commission by the Company and mailed to
stockholders of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if the procedures for tendering Shares set forth in the Offer to
Purchase cannot be completed on a timely basis.
<PAGE>
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, APRIL 9, 1999 UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The tender price is $38.25 per Share, net to the seller in cash,
without interest thereon, as set forth in the Introduction to the Offer to
Purchase.
2. The Offer is subject to there being validly tendered and not properly
withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase) a number of Shares which, together with shares previously
acquired by Parent, any direct or indirect subsidiary of Parent (including
the Purchaser), the Company or any direct or indirect subsidiary of the
Company, represent at least 66 2/3% percent of all of the issued and
outstanding Shares on a fully diluted basis and certain other conditions.
See the Introduction and Sections 1--"Terms of the Offer" and 14--
"Conditions of the Offer" of the Offer to Purchase.
3. The Offer is being made for all of the issued and outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. However, federal income tax backup withholding at a
rate of 31% may be required, unless an exemption is available or unless the
required tax identification information is provided. See Instruction 9 of
the Letter of Transmittal.
5. The Offer and the withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, April 9, 1999 unless the Offer is extended.
6. The Board of Directors of the Company (two members of which were
elected by the holders of the Shares, voting as a separate class) has
unanimously determined that each of the Offer and the subsequent merger of
the Company with and into SMG-II Holdings Corporation is fair to, and in
the best interests of, the holders of the Shares and unanimously recommends
that the holders of the Shares accept the Offer and tender their Shares
pursuant to the Offer.
7. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (i) certificates evidencing such
Shares (the "Share Certificates"), along with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), including any
required signature guarantees, or (ii) if such Shares are held in book-
entry form, timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Shares into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility") along with an
Agent's Message (as defined in the Offer to Purchase), pursuant to the
procedures set forth in Section 3--"Procedures for Tendering Shares" of the
Offer to Purchase and (iii) any other documents required by the Letter of
Transmittal. Accordingly, payment may not be made to all tendering
stockholders at the same time depending upon when Share Certificates are
actually received by the Depositary.
2
<PAGE>
In order to take advantage of the Offer (i) a duly executed and properly
completed Letter of Transmittal (and any required signature guarantee or other
required documents) or an Agent's Message in the case of Shares held in book-
entry form should be sent to the Depositary and (ii) Share Certificates
representing the tendered Shares or a timely Book-Entry Confirmation should be
delivered to the Depositary in accordance with the instructions set forth in
the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender may
be effected by following the guaranteed delivery procedures specified in
Section 3--"Procedures for Tendering Shares" of the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer (other
than the Dealer Managers, the Depositary and the Information Agent as
described in the Offer to Purchase). The Purchaser will, however, upon
request, reimburse you for customary mailing and handling expenses incurred by
you in forwarding any of the enclosed materials to your clients. The Purchaser
will pay or cause to be paid any transfer taxes payable on the transfer of
Shares to it, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Goldman, Sachs & Co., the Dealer Managers for the Offer, at 85 Broad Street,
New York, New York 10004, telephone number (212) 357-6380, or to Morrow & Co.,
Inc., the Information Agent for the Offer, at 445 Park Avenue, 5th Floor, New
York, New York 10022, telephone number (212) 754-8000.
Requests for copies of the enclosed materials may also be directed to the
Dealer Managers or to the Information Agent at the above addresses and
telephone numbers.
Very truly yours,
Goldman, Sachs & Co.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE COMPANY, THE
DEALER MANAGERS, THE DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE OF ANY
OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
Exhibit (a)(4)
Offer to Purchase for Cash
All of the Outstanding Shares
of $3.52 Cumulative Exchangeable Redeemable Preferred Stock
of
Supermarkets General Holdings Corporation
at
$38.25 Net Per Share
by
Ahold Acquisition, Inc.
An Indirect Wholly-Owned Subsidiary of
Koninklijke Ahold N.V.
(Royal Ahold)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, APRIL 9, 1999 UNLESS THE OFFER IS EXTENDED.
March 15, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated March 15,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
as they may be amended and supplemented from time to time, together constitute
the "Offer") relating to the offer by Ahold Acquisition, Inc., a Delaware
corporation (the "Purchaser") and an indirect wholly-owned subsidiary of
Koninklijke Ahold N.V. (Royal Ahold), a public company with limited liability
incorporated under the laws of The Netherlands with its corporate seat in
Zaandam (Municipality Zaanstad), The Netherlands (the "Parent"), to purchase
all of the issued and outstanding shares of the $3.52 Cumulative Exchangeable
Redeemable Preferred Stock, par value $0.01 per share (the "Shares"), of
Supermarkets General Holdings Corporation, a Delaware corporation (the
"Company"), at a price of $38.25 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 Offer to Purchase and in the related Letter of
Transmittal. Holders of Shares whose certificates evidencing such Shares (the
"Share Certificates") are not immediately available or who cannot deliver
their Share Certificates and all other required documents to Citibank, N.A.,
as depositary (the "Depositary"), or complete the procedures for book-entry
transfer prior to the Expiration Date (as defined in the Offer to Purchase)
must tender their Shares according to the guaranteed delivery procedures set
forth in Section 3--"Procedures for Tendering Shares" of the Offer to
Purchase.
We are (or our nominee is) the holder of record of Shares held for your
account. A tender of such Shares can be made only by us as the holder of
record and pursuant to your instructions. The Letter of Transmittal is
furnished to you for your information only and cannot be used by you to tender
Shares held by us for your account.
Accordingly, we request instruction as to whether you wish to have us tender
on your behalf any or all Shares held by us for your account pursuant to the
terms and conditions set forth in the Offer.
<PAGE>
Please note the following:
1. The tender price is $38.25 per Share, net to the seller in cash,
without interest thereon, as set forth in the Introduction to the Offer to
Purchase.
2. The Offer is subject to there being validly tendered and not properly
withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase) a number of Shares which, together with Shares previously
acquired by Parent, any direct or indirect subsidiary of Parent (including
the Purchaser), the Company or any direct or indirect subsidiary of the
Company, represent at least 66 2/3% percent of the Shares issued and
outstanding on a fully diluted basis and certain other conditions. See the
Introduction and Section 1--"Terms of the Offer" and Section 14--
"Conditions of the Offer" of the Offer to Purchase.
3. The Offer is being made for all of the issued and outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. However, federal income tax backup withholding at a
rate of 31% may be required, unless an exemption is available or unless the
required tax identification information is provided. See Instruction 9 of
the Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, April 9, 1999 unless the Offer is extended.
6. The Board of Directors of the Company (two members of which were
elected by the holders of the Shares, voting as a separate class) has
unanimously determined that each of the Offer and the subsequent merger of
the Company with and into SMG-II Holdings Corporation is fair to, and in
the best interests of, the holders of the Shares and unanimously recommends
that the holders of the Shares accept the Offer and tender their Shares
pursuant to the Offer.
7. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (i) certificates evidencing such
Shares (the "Share Certificates"), along with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), including any
required signature guarantees, or (ii) if such Shares are held in book-
entry form, timely confirmation of a book-entry transfer of such Shares
into the Depositary's account at The Depository Trust Company, along with
an Agent's Message (as defined in the Offer to Purchase) pursuant to the
procedures set forth in Section 3--"Procedures for Tendering Shares" of the
Offer to Purchase, and (iii) any other documents required by the Letter of
Transmittal. Accordingly, payment may not be made to all tendering
stockholders at the same time depending upon when Share Certificates are
actually received by the Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account please so instruct us by completing, executing, detaching and
returning to us the instruction form set forth herein. If you authorize the
tender of your Shares, all such Shares will be tendered unless otherwise
specified below. An envelope to return your instructions to us is enclosed.
Your instructions should be forwarded to us in ample time to permit us to
submit a tender on your behalf prior to the Expiration Date.
The Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statue. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with such state statute or
seek to have such statute declared inapplicable to the Offer. If, after such
good faith effort, the Purchaser cannot comply with such state statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in such state. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Purchaser by
Goldman, Sachs & Co. or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
2
<PAGE>
Instructions with Respect to the
Offer to Purchase for Cash
All of the Outstanding Shares
of $3.52 Cumulative Exchangeable Redeemable Preferred Stock
of
Supermarkets General Holdings Corporation
The undersigned acknowledge(s) receipt of your letter, the Offer to
Purchase, dated March 15, 1999, and the related Letter of Transmittal (which,
as they may be amended and supplemented from time to time, together constitute
the "Offer") in connection with the offer by Ahold Acquisition, Inc., a
Delaware corporation (the "Purchaser") and an indirect wholly-owned subsidiary
of Koninklijke Ahold N.V. (Royal Ahold), a public company with limited
liability incorporated under the laws of The Netherlands with its corporate
seat in Zaandam (Municipality Zaanstad), The Netherlands (the "Parent"), to
purchase all outstanding shares of the $3.52 Cummulative Exchangeable
Redeemable Preferred Stock, par value $0.01 per share (the "'Shares"), of
Supermarkets General Holdings Corporation, a Delaware corporation.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are
held by you for the account of the undersigned, upon the terms and subject to
the conditions set forth in the Offer.
Number of Shares to be Tendered*:
----------------------------------
Date:
----------------------------------------------------------
SIGN HERE
Signature(s):
----------------------------------------------------
Print Name(s):
---------------------------------------------------
Print Address(es):
------------------------------------------------
Area Code and Telephone Number(s):
--------------------------------
Taxpayer Identification or Social Security Number(s):
---------------------
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered.
3
<PAGE>
Ahold announces new US Exhibit (a)(5)
supermarket acquisition
Pathmark Stores to join Ahold Group
. Pathmark: 132 supermarkets with estimated 1998 sales of USD 3.7 billion
. Acquisition strengthens Ahold position in metro New York
. Edwards integration into Pathmark
. Ahold pays approx. USD 1.75 billion for full control including assumption of
debt
. Enhancing to Ahold's earnings per share
Zaandam, The Netherlands / Carteret, New Jersey, March 9, 1999 - Royal Ahold,
the international food retailer, has agreed to acquire the US supermarket
company Pathmark Stores Inc. ("Pathmark"). The company has reached agreement
with SMG-II Holdings Corporation ("SMG-II") to acquire all of the outstanding
capital stock of SMG-II. This holding company controls Pathmark through its
subsidiary Supermarket General Holdings Corporation ("SMGH").
The total price payable by Ahold for all of the capital stock of SMG-II and the
preferred stock of SMGH is approximately USD 250 million. Pursuant to the
agreement, Ahold will also indirectly assume all of the indebtedness of
Pathmark, amounting currently to approximately USD 1.5 billion. In connection
with the acquisition, Ahold will make a tender offer for all of the publicly
traded preferred shares of SMGH at a price of USD 38.25 per preferred share. The
SMGH board of directors has unanimously determined that the tender offer is fair
to, and in the best interests of, the preferred shareholders. The acquisition is
expected to be non-dilutive to Ahold's earnings per share growth in the first
year and enhancing thereafter.
Strengthening Ahold's US market position
The acquisition of Pathmark, headquartered in Carteret, New Jersey, provides
Ahold with a solid market position in densely populated metro New York,
including Northern New Jersey, New York City, Long Island and Philadelphia.
Pathmark, with estimated 1998 sales of USD 3.7 billion, operates most of its 132
large supermarkets in this trade area. With 25 million people in metro New York.
Pathmark has a market share of approximately 12%.
It is Ahold's intention to fully integrate its Edwards supermarkets in New
Jersey, New York City and Long Island into Pathmark, making it one of the best-
positioned food retailers in the area. The chain will operate under the Pathmark
banner as a stand-alone Ahold operating company.
Local consumer benefits from the acquisition are expected to be significant in
the coming years. Ahold plans to upgrade the Pathmark stores into state of the
art supermarkets and use its economies of scale and synergy programs to enhance
the shopping experience.
The acquisition of Pathmark will strengthen Ahold's leadership position in the
important markets of metro New York and Philadelphia. This is in addition to
Ahold's leading positions in other large cities such as Boston (Stop & Shop),
the Washington DC and Baltimore metropolitan areas (Giant-Landover) and Buffalo
(Tops).
Of the 132 Pathmark stores, 25 are located on Long Island, 18 in New York City,
7 in Westchester/Rockland, 52 in Northern New Jersey, 10 in Southern New Jersey,
16 in Pennsylvania and 4 in Delaware.
Features of Pathmark
The 132 supermarkets operating under the Pathmark banner have a total selling
area of 5.1 million square feet. A Pathmark supermarket has an average selling
area of 38,600 square feet and its annual sales per square foot of USD 720 are
among the highest in the country.
<PAGE>
Almost all Pathmark stores are Superstores, offering their customers the
convenience of one-stop shopping. A typical Pathmark Superstore features large
perishables departments, a meat department with a deli, seafood, health and
beauty care and bakery departments, video rentals, a pharmacy and a customer
service desk with in store banking facilities. Pathmark is highly regarded in
its communities for its well-located stores and broad range of quality food
items and general merchandise.
As of January 1998, the company employed approximately 28,000 people of whom
20,500 worked on a part time basis.
Financial background Pathmark
For the three quarters ending October 1998 Pathmark reported sales of USD 2.7
billion and operating earnings of almost USD 97.0 million, resulting in an
operating margin of 3.5 % and cash flow of USD 156 million (EBITDA 5.7% of
sales). While operationally a well performing food retailer, Pathmark has been
highly leveraged requiring it to use extensive cash to make interest payments.
Ahold intends to restructure Pathmark's debt so that cash generated can be
invested to upgrade the stores and improve the quality of the shopping
experience for their customers. The acquisition is subject to review by
regulatory agencies. Ahold expects to have the approvals in the second half of
1999 and complete the transaction shortly thereafter.
Transaction
Completion of the transaction is subject to a number of conditions, including
obtaining necessary US regulatory approvals and at least 66 2/3 % of the
preferred shares being tendered into the offer. Shareholders of SMG-II, holding
a sufficient number of shares to approve the merger, have agreed to vote their
shares in favor of the merger.
In the event the 66 2/3 % is not tendered, SMG-II has agreed to cause its
subsidiary to sell all of the outstanding shares of Pathmark for the same
purchase price. Following the tender offer, SMGH will merge with SMG-II, and the
remaining preferred shares will be converted into the right to receive USD 38.25
per share in the merger.
Acquisition to positively impact on Ahold's earnings per share growth
Ahold management anticipates that the integration of Pathmark within Ahold USA
will result in USD 30 million of cost savings for the combined organization in
its first year. This will increase to USD 50 million in the second year.
The acquisition is expected to be non-dilutive to Ahold's earnings per share
growth in the first full calendar year and enhancing thereafter.
Funding of Pathmark acquisition
Ahold intends to fund the purchase of all of the SMG-II common stock and the
SMGH preferred stock (USD 250 million) by drawing on existing committed long-
term credit facilities. Once Ahold has taken control of Pathmark it plans to
immediately redeem all existing outstanding debt obligations. Part of the debt
restructuring may be funded with newly issued equity capital.
Ahold in the United States
In the United States Ahold is the leading supermarket operator along the eastern
seaboard with over 1,000 stores. Ahold currently owns five companies: Stop &
Shop with stores in Connecticut and Massachusetts; Giant-Landover in the
Washington DC and Baltimore metropolitan areas, Giant-Carlisle including the
Edwards division in Pennsylvania; Tops Markets in western New York State and BI-
LO in the Carolinas.
The Ahold USA companies generated 1998 sales of USD 16.2 billion with operating
results of USD 714 million. Ahold employs approximately 130,000 people in the
US. The supermarkets have an excellent name with their customers and are
recognized for superior value for money and service. The company is making
substantial progress in developing synergies among its US chains benefiting its
customers. Private
<PAGE>
label products are purchased jointly and IT systems, distribution, construction
and administrative processes are being integrated.
Pathmark customers will benefit from the economies of scale Ahold generates in
the US, once the acquisition is completed.
Ahold in the world
In addition to the United States Ahold also operates prominent supermarket
chains and hypermarkets in The Netherlands and other European countries
including Portugal, Spain, the Czech Republic and Poland. Ahold also has
operations in Latin America and the Asia Pacific region. The company operates
more than 3,600 supermarkets, hypermarkets and specialty stores worldwide with
1998 sales of over USD 30 billion. Ahold employs over 280,000 people in 17
countries and serves 25 million customers every week.
Comments by Bob Tobin, President & CEO Ahold USA
'The acquisition of Pathmark provides Ahold with a large number of high quality
locations in an attractive market where our position left room for improvement.
This is now going to change. We are delighted to be able to service many new
customers under the Pathmark banner. We have various positive contributions in
mind and expect considerable synergies from the integration with our sister
operations. We have already gained quite a lot of experience in generating
synergies following our other successful acquisitions. We have shown this
recently after the fourth quarter 1998 acquisition of Giant-Landover and earlier
in 1996 with Ahold's acquisition of Stop & Shop. In particular, the exchange of
best practices, the restructuring of the Pathmark balance sheet and the
integration of certain administrative functions will positively impact on cost
and benefit the bottom line significantly. We also see important advantages for
local Pathmark customers as we offer them the upgrading of their favorite stores
and the continuity of shopping in a well-stocked supermarket where they can
count on quality service. That's what Ahold stands for. We are very excited
about this acquisition.'
Comments by James Donald, CEO of Pathmark
'The acquisition of Pathmark by Ahold is excellent news for us, our customers
and associates. In the last two years we have made significant progress
improving our operations to which customer reaction has been most positive.
However to stay maximum competitive and grow the business in the future, our
company is much better positioned by teaming up with Ahold and becoming part of
a much larger group, than trying to do it independently. Ahold is known for its
customer focus and how it succeeds in satisfying their needs. We are excited
about the opportunity to benefit from Ahold's economies of scale and synergy
benefits to step up our services in the local communities and improve the
company's results. As an Ahold company we will be optimally positioned to
realize our considerable potential and grow much faster. We're ready for it and
so are our customers.'
For more information:
Ahold Public Relations: +31 75 659 5720
After office hours:
Hans Gobes, Senior VP Corporate Communications: +31 6 5582 2298
Jan Hol, VP Public Relations: +31 6 2293 3137
This press release contains "forward-looking statements" within the meaning of
U.S. federal securities laws. The company's performance is subject to risks,
uncertainties and other factors that could cause actual results to differ
materially from these statements. Such risks include, but are not limited to,
general economic conditions and changes in interest rates in the countries in
which the Company operates, increases in competition, and fluctuations in
exchange rates between the Guilder and the other currencies in which the
Company's assets, liabilities and results are denominated, in particular, the
U.S. dollar. Many of these factors are beyond the Company's ability to control
or predict. For a more detailed discussion of such risks and other factors, see
Royal Ahold's Annual Report on Form 20-F for its fiscal year ended December 29,
1997.
<PAGE>
Exhibit (a)(6)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares Customer Service Financial Printing Group This announcement is
neither an offer to purchase nor a solicitation of an offer to sell Shares. The
Offer is made solely by the Offer to Purchase dated March 15, 1999 and the
related Letter of Transmittal and is being made to all holders of Shares.
Purchaser is not aware of any state where the making of the Offer is prohibited
by any applicable law. If Purchaser becomes aware of any jurisdiction where the
making of the Offer or the acceptance of Shares is not in compliance with any
applicable law, Purchaser will make a good faith effort to comply with such law.
If, after such good faith effort, Purchaser cannot comply with such law, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in such jurisdiction. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of Ahold
Acquisition, Inc. by Goldman, Sachs & Co. or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All of the Outstanding Shares of
$3.52 Cumulative Exchangeable Redeemable Preferred Stock
of
Supermarkets General Holdings
Corporation
at
$38.25 Net Per Share
by
Ahold Acquisition, Inc.
An Indirect Wholly-Owned Subsidiary of
Koninklijke Ahold N.V.
(Royal Ahold)
Ahold Acquisition, Inc. ("Purchaser"), a Delaware corporation and an
indirect wholly-owned subsidiary of Koninklijke Ahold N.V. (also known as Royal
Ahold) ("Parent"), a corporation organized under the laws of The Netherlands, is
offering to purchase all issued and out-standing shares of the $3.52 Cumulative
Exchangeable Redeemable Preferred Stock, par value $0.01 per share (the
"Shares"), of Supermarkets General Holdings Corporation, a Delaware corporation
(the "Company"), at a price of $38.25 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated March 15, 1999 and in the related Letter of
Transmittal (which, as they may be amended and supplemented from time to time,
together constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, APRIL 9, 1999 UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of Shares which, together with Shares previously acquired by Parent, any
direct or indirect subsidiary of Parent (including Purchaser), the Company or
any direct or indirect subsidiary of the Company, represent at least 66-2/3% of
all of the issued and outstanding Shares on a fully diluted basis (the "Minimum
Condition"), (ii) the expiration or termination of any applicable waiting period
under antitrust laws described in Section 15 of the Offer to Purchase and (iii)
the satisfaction of certain other terms and conditions referred to in Section 14
of the Offer to Purchase.
The Offer is an integral part of the transactions contemplated by, and is
being made pursuant to, an Agreement and Plan of Merger, dated as of March 9,
1999 (the "SMG-II Merger Agreement"), by and among Parent, Purchaser and SMG-II
Holdings Corporation ("SMG-II"), a Delaware corporation. SMG-II owns all of the
issued and outstanding shares of the capital stock of the Company other than the
Shares and, through the Company and PTK Holdings, Inc. ("PTK"), all of the
issued and outstanding shares of the capital stock (the "Pathmark Stock") of
Pathmark Stores, Inc. Pursuant to the SMG-II Merger Agreement, Parent will be
acquiring all of the issued and outstanding shares of the capital stock of SMG-
II through a merger of the Purchaser with and into SMG-II (the "SMG-II Merger").
Holders of 84% of all of the issued and outstanding shares of the capital stock
of SMG-II have agreed to vote in favor of the SMG-II Merger.
In the event that the Minimum Condition is not met, the Offer will expire
without any of the Shares being purchased hereunder and Purchaser will instead
acquire the Pathmark Stock from PTK for a purchase price of $242,800,000. In
such event, the only material asset of the Company would be the ownership of all
of the issued and outstanding shares of the capital stock of PTK, the only
material asset of which
<PAGE>
in turn would be the net after tax proceeds from the sale of the Pathmark Stock
to Purchaser. Following the consummation of the SMG-II Merger, the Company will
be merged with and into SMG-II (the "Company Merger"). At the effective time of
the Company Merger, each outstanding Share (other than Shares held by any
subsidiary of the Company or in the treasury of the Company, or by Parent or any
subsidiary of Parent (including the Shares acquired by Purchaser pursuant to the
Offer), which Shares will be canceled, and other Shares, if any, held by
stockholders who perfect their appraisal rights under Delaware Law) will be
converted into the right to receive $38.25 in cash, without interest.
The Board of Directors of the Company (two members of which were elected by
the holders of the Shares, voting as a separate class) has unanimously
determined that each of the Offer and the Company Merger is fair to, and in the
best interests of, the holders of the Shares and unanimously recommends that the
holders of the Shares accept the Offer and tender their Shares pursuant to the
Offer.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if, as and when Purchaser gives oral or written notice to the
depositary named below (the "Depositary") of its acceptance for payment of such
Shares. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted pursuant to the Offer will be made by deposit of the purchase
price therefor with the Depositary, which will act as agent for tendering
stockholders, for the purpose of receiving payments from Purchaser and
transmitting payments to such tendering stockholders whose Shares have been
accepted for payment. In all cases, payment for Shares purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of (i) in the
case of certificates evidencing such Shares, such certificates, along with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), including required signature guarantees, (ii) in the case of Shares
held in book-entry form, timely confirmation of a book-entry transfer of such
Shares into the account of the Depositary at the Book-Entry Transfer Facility,
along with an Agent's Message, as defined in Section 2 of the Offer to Purchase,
and (iii) all other documents required by the Letter of Transmittal. Under no
circumstances will interest be paid on the purchase price for the tendered
Shares, regardless of any delay in making such payment or extension of the
Expiration Date.
The term "Expiration Date" shall mean 12:00 midnight, New York City time,
on Friday, April 9, 1999, unless and until Purchaser, in accordance with the
terms of the Offer, shall have extended the period of time during which the
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date at which the Offer, as so extended by Purchaser, shall expire.
Subject to the applicable rules and regulations of the Securities and Exchange
Commission (the "Commission") and applicable law, Purchaser expressly reserves
the right, in its sole discretion, at any time or from time to time, to extend
for any reason the period of time during which the Offer is open, including upon
the occurrence of any of the events specified in Section 14 of the Offer to
Purchase, by giving oral or written notice of such extension to the Depositary
and by making a public announcement thereof.
Subject to the applicable rules and regulations of the Commission and to
applicable law, Purchaser also expressly reserves the right, in its sole
discretion at any time and from time to time: (i) to delay acceptance for
payment of, or, regardless of whether such Shares were theretofore accepted for
payment, payment for, any Shares pending receipt of any regulatory approval
specified in Section 15 of the Offer to Purchase or in order to comply in whole
or in part with any other applicable law; (ii) to terminate the Offer and not
accept for payment any Shares if any of the conditions referred to in Section 14
of the Offer to Purchase are not satisfied or any of the events specified in
Section 14 of the Offer to Purchase have occurred; and (iii) subject to the
terms of the SMG-II Merger Agreement, to waive any condition, or otherwise amend
the Offer in any respect, in each case by giving oral or written notice of such
delay, termination, waiver or amendment to the Depositary and by making a public
announcement thereof.
During any such extension, all Shares previously tendered and not withdrawn
will remain subject to the Offer, subject to the right of a tendering
stockholder to withdraw such stockholder's Shares. Any such extension, delay,
termination, waiver or amendment will be followed, as promptly as practicable,
by a public announcement thereof by no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. Subject
to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which require
that material changes be promptly disseminated to stockholders in a manner
reasonably designed to inform them of such changes and without limiting the
manner in which Purchaser may choose to make any public announcement, Purchaser
will have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a press release to the Dow Jones News
Service or as otherwise may be required by applicable law. Except as otherwise
provided below, tenders of Shares made pursuant to the Offer are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after May 13, 1999, or
at such later time as may apply if the Offer is extended. For a withdrawal to be
effective notice of withdrawal must be timely received by the Depositary at one
of its addresses set forth below. Any such notice of withdrawal must specify
the name of the person who tendered the Shares to be withdrawn, the number of
Shares to be withdrawn, and the name of the registered holder of the Shares, if
different from that of the person who tendered such Shares. If certificates
evidencing Shares to be withdrawn have been delivered or otherwise identified to
the Depositary, then, prior to the physical release of such certificates, the
tendering stockholders must submit to the Depositary the serial numbers shown on
the particular certificate evidencing the Shares to be withdrawn and, unless the
Shares evidenced by such certificates have been tendered by an Eligible
Institution (as defined in Section 3 of the Offer to Purchase) the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry transfer set
forth in Section 3 of the Offer to Purchase, any notice of withdrawal must also
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares and must otherwise comply with the
Book-Entry Transfer Facility's procedures.
Withdrawals of tendered Shares may not be rescinded (without Purchaser's
consent), and any Shares properly withdrawn will there-after be deemed not
validly tendered for purposes of the Offer. All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be determined
by Purchaser, in its sole discretion, which determination will be final and
binding. None of Parent, Purchaser, the Depositary, the Information Agent, the
Dealer Managers or any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Shares properly
withdrawn may be retendered at any time prior to the Expiration Date by
following any of the procedures described in Section 3 of the Offer to Purchase.
The Company has provided Purchaser with the Company's list of holders of the
Shares and security position listings in respect of the Shares for the purpose
of disseminating the Offer to the holders of Shares. The Offer to Purchase, the
Letter of Transmittal and any other relevant materials will be mailed to record
holders of Shares whose names appear on the Company's list of holders of the
Shares and will be furnished, for subsequent transmittal to beneficial owners of
Shares, to brokers, dealers, commercial banks, trust companies and similar
persons whose names or the names of whose nominees, appear on the Company's list
of holders of the Shares, or if applicable, who are listed as participants in a
clearing agency's security position listing.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 under the Exchange Act is contained in the Offer to Purchase and is
incorporated herein by reference.
<PAGE>
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is made
with respect to the Offer.
Requests for copies of the Offer to Purchase, the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent as set forth below, and copies will be furnished promptly at Purchaser's
expense. Questions or requests for assistance may be directed to the Information
Agent or the Dealer Managers as set forth below.
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
Toll Free (800) 566-9061
Call Collect (212) 754-8000
Banks and Brokerage Firms Please Call:
(800) 662-5200
The Depositary for the Offer is:
Citibank, N.A.
By Hand:
Citibank, N.A.
Corporate Actions
Suite 4660
P.O. Box 2544
Jersey City, New Jersey 07303-2544
For Information:
(877) 248-4257
By Mail:
CItibank N.A.
Corporate Actions
111 Wall Street, 5th Floor Window
New York, New York 10043
By Overnight Courier:
Citibank, N.A.
Corporate Actions
111 Wall Street, 5th Floor Window
New York, New York 10043
The Dealer Managers for the Offer are:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Call Collect (212) 357-6380
Toll Free: (877) 686-5059
March 15, 1999
<PAGE>
Exhibit (a)(7)
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you
are in any doubt as to the action to be taken, you should seek your own
financial advice immediately from your own appropriately authorized
independent financial advisor.
If you have sold or transferred all of your registered holding of Shares
(as defined below), please forward this document and all accompanying
documents to the stockbroker, bank or other agent through whom the sale or
transfer was effected, for transmission to the purchaser or transferee.
NOTICE OF GUARANTEED DELIVERY
For Tender of Shares of $3.52 Cumulative Exchangeable Redeemable Preferred
Stock
(Not to be used for Signature Guarantees)
of
Supermarkets General Holdings Corporation
Pursuant to the Offer to Purchase
dated March 15, 1999
by
Ahold Acquisition, Inc.
An Indirect Wholly-Owned Subsidiary of
Koninklijke Ahold N.V.
(Royal Ahold)
As set forth under Section 3--"Procedures for Tendering Shares" in the Offer
to Purchase dated March 15, 1999 and any supplements or amendments thereto
(the "Offer to Purchase"), this form or one substantially equivalent hereto
must be used to accept the Offer if (i) certificates ("Share Certificates")
representing shares of $3.52 Cumulative Exchangeable Redeemable Preferred
Stock, par value $0.01 per share ("Shares"), of Supermarkets General Holdings
Corporation, a Delaware corporation (the "Company"), are not immediately
available, (ii) if the procedures for book-entry transfer cannot be completed
on a timely basis, or (iii) time will not permit Share Certificates and all
other required documents to reach Citibank, N.A. (the "Depositary") prior to
the Expiration Date (as defined in Section 1--"Terms of the Offer" of the
Offer to Purchase). This Notice of Guaranteed Delivery may be delivered by
hand or mail to the Depositary and must include a signature guarantee by an
Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery. See the Guaranteed Delivery Procedures described in the Offer to
Purchase under Section 3--"Procedures for Tendering Shares". Certain terms
used herein and not otherwise defined herein shall have the meanings assigned
to them in the Offer to Purchase.
The Depositary for the Offer is:
Citibank, N.A.
<TABLE>
<CAPTION>
By Hand: By Mail: By Overnight Carrier:
<S> <C> <C>
Citibank, N.A. Citibank, N.A. Citibank, N.A.
Corporate Actions Corporate Actions Corporate Actions
111 Wall Street, 5th Floor Window Suite 4660 111 Wall Street, 5th Floor Window
New York, New York 10043 P.O. Box 2544 New York, New York 10043
Jersey City, New Jersey 07303-2544
</TABLE>
For Information:
(877) 248-4237
<PAGE>
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above does not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee a
signature. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the instruction thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal. See Signature Guarantee in Section
3--"Procedures for Tendering Shares" of the Offer to Purchase.
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Ahold Acquisition, Inc., a Delaware
corporation and an indirect wholly-owned subsidiary of Koninklijke Ahold N.V.
(Royal Ahold), a public company with limited liability incorporated under the
laws of The Netherlands with its corporate seat in Zaandam (Municipality
Zaanstad), The Netherlands, under the terms and subject to the conditions set
forth in the Offer to Purchase and the related Letter of Transmittal, receipt
of each of which is hereby acknowledged, the number of Shares indicated below
pursuant to the Guaranteed Delivery Procedures described in the Offer to
Purchase under Section 3--"Procedures for Tendering Shares".
<TABLE>
<S> <C>
Number of Shares: ______________________________ Name of Record Holder(s) _______________________
Certificate No.(s) (if available): _____________ ________________________________________________
________________________________________________ ________________________________________________
Address: _______________________________________
________________________________________________
Area Code and Tel. No.: ________________________
Signature(s): __________________________________
Dated: _________________________________________
</TABLE>
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an Eligible Institution (as defined in the Offer to
Purchase), hereby guarantees that the undersigned will deliver to the
Depositary, at one of its addresses set forth above, the Share Certificates
representing the Shares tendered hereby, in proper form for transfer, together
with a properly completed and duly executed Letter of Transmittal or with any
required signature guarantees and any other required documents, all within
three New York Stock Exchange trading days after the date hereof.
<TABLE>
<S> <C>
Name of Firm, Agent or Trustee: ________________ ________________________________________________
(Authorized Signature)
________________________________________________ Name: __________________________________________
(Please type or print)
Address: _______________________________________ Title: _________________________________________
(Zip Code)
________________________________________________ Dated: _________________________________________
Area code and Tel. No.: ________________________
</TABLE>
Note: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY;
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
Exhibit (a)(8)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer--Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the Payer.
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
For this type of Give the
account: SOCIAL SECURITY
number of--
- -----------------------------------------------
<S> <C>
1. An individual's The individual
account
2. Two or more The actual owner of the
individuals (joint account or, if combined
account) funds, the first
individual on the
account(1)
3. Husband and wife The actual owner of the
(joint account) account or, if joint
funds, the first
individual on the
account(1)
4. Custodian account The minor(2)
of a minor (Uniform
Gift to Minors Act)
5. Adult and minor The adult, or if the
(joint account) minor is the only
contributor, the
minor(1)
6. Account in the name The ward, minor or
of guardian or incompetent person(3)
committee for a
designated ward,
minor or incompetent
person
7. a. A revocable The grantor-trustee(1)
savings trust
account (in
which grantor is
also trustee)
b. Any "trust" The actual owner(4)
account that is
not a legal or
valid trust
under State law
</TABLE>
<TABLE>
<CAPTION>
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of--
-------------------------------------
<S> <C>
8. Sole proprietorship The owner(4)
account
9. A valid trust, estate The legal entity (Do
or pension trust not furnish the
identifying
number of the personal
representative or
trustee
unless the legal
entity
itself is not
designated in
the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable The organization
or
educational organization
account
12. Partnership account The partnership
held in the name of the
business
13. Association, club or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the name
of a public entity (such
as a State or local
governmental school
district or prison) that
receives agricultural
program payments
</TABLE>
- --------------------------------------- ---------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Card, or Form SS-
4, Application for Employer Identification Number (for businesses and all
other entities), or Form W-7 for Individual Taxpayer Identification Number
(for alien individuals required to file U.S. tax returns), at an office of the
Social Security Administration or the Internal Revenue Service.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on all payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under Section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An entity registered at all times during the tax year under the
Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice.--Section 6109 requires most recipients of dividend,
interest or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to
file tax returns. Payers must generally withhold 31% of taxable interest,
dividend and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT (b)(1)
DATED SEPTEMBER 7, 1998
between
KONINKLIJKE AHOLD N.V.
AHOLD U.S.A., INC.
(formerly
AHOLD USA HOLDINGS, INC.)
as Borrowers and Guarantors
and
THE CHASE MANHATTAN BANK
as Facility Agent
----------------------------------------
AMENDMENT AND RESTATEMENT AGREEMENT
relating to a
Multicurrency Revolving Credit Agreement
dated 18 December 1996
----------------------------------------
Clifford Chance
Amsterdam
<PAGE>
THIS AMENDMENT AND RESTATEMENT AGREEMENT is made the 7th day of September 1998
BETWEEN
(1) KONINKLIJKE AHOLD N.V. (the "Principal Company");
(2) AHOLD U.S.A., INC. (formerly AHOLD USA HOLDINGS, INC.) ("Ahold USA" and,
together with the Principal Company, the "Borrowers"); and
(3) THE CHASE MANHATTAN BANK (the "Facility Agent").
NOW IT IS AGREED as follows:
WHEREAS:
(A) By an agreement dated 18 December, 1996 (the "Existing Facility Agreement")
made between (i) the Principal Company as borrower and guarantor, (ii)
Ahold USA as borrower and guarantor, (iii) ABN AMRO Bank N.V., Chase
Investment Bank Limited and J.P. Morgan Securities Ltd. as arrangers, (iv)
the Facility Agent as facility, swing-line, letter of credit agent and
short term advances agent, (v) Chase Manhattan International limited as
multicurrency facility agent and (vi) the financial institutions named
therein as Banks, the Banks made available to the Borrowers a
US$1,000,000,000 multicurrency revolving credit facility with short-term
advance, swing-line and letter of credit options on the terms and
conditions set out therein.
(B) It has been agreed between the parties hereto (in connection with which the
Facility Agent is acting on behalf of, and with the express consent of,
itself, the Arrangers and the Banks) that the Existing Facility Agreement
shall be amended and restated as hereinafter provided, subject to the terms
and conditions hereof.
NOW IT IS HEREBY AGREED as follows:
1. Interpretation
1.1 Terms defined in the Existing Facility Agreement shall, unless otherwise
defined herein and save as the context otherwise requires, have the same
meanings when used in this Agreement.
1.2 In this Agreement the "Effective Date" means the later of the date hereof
and the date upon which the Facility Agent confirms in writing to the Banks and
the Principal Company that it has received each of the documents listed in the
Schedule in form and substance satisfactory to the Facility Agent.
1.3 Clause and Schedule headings are for ease of reference only.
<PAGE>
1.4 Words and expressions used herein importing the singular shall, where the
context permits or requires, include the plural and vice versa.
2. Amendments to the Existing Facility Agreement
The parties hereto agree that the Existing Facility Agreement shall, as of the
Effective Date, be amended and restated for all purposes as set out in the Annex
to this Agreement and agree to be bound by the terms and conditions thereof
accordingly.
3. Representations
Each of the Borrowers and the Guarantors:
(a) repeats each of the representations and warranties set out in
paragraphs (i), (ii), (iii), (viii) and (x) of Clause 23
(Representations and Warranties) of the Existing Facility Agreement on
the date hereof and on the Effective Date (by reference to the facts
and circumstances then subsisting) as if each reference therein to the
"Finance Documents" included a reference to this Agreement and the
Existing Facility Agreement (as amended hereby, when such
representations and warranties are repeated on the Effective Date) and
acknowledges that the Facility Agent has entered into this Agreement
in reliance on those representations and warranties; and
(b) confirms on the date hereof and on the Effective Date that no Event of
Default or Potential Event of Default has occurred.
4. Waiver
The Facility Agent hereby waives any default under the Existing Facility
Agreement which may have occurred as a result of any breach of any
representation contained in paragraph (xix) of Clause 23 of the Existing
Facility Agreement by virtue of (a) any Margin Stock being owned by any Member
of the Group or (b) the proceeds of any borrowings under the Existing Facility
Agreement being used, directly or indirectly, for any purposes specified in such
paragraph (xix).
5. Miscellaneous
5.1 Clauses 33 (Costs and Expenses), 37 (Remedies and Waivers, Partial
Invalidity), 39 (Notices) and 40.2 (English Courts) to Clause 40.9 (Waiver of
Immunity) of the Existing Facility Agreement shall be deemed to be incorporated
herein as though set out herein, mutatis mutandis.
5.2 The Existing Facility Agreement shall remain in full force and effect save
as expressly amended hereby and the parties hereto agree that:
(a) this Agreement shall be a "Finance Document" for the purposes of the
Existing Facility Agreement and the other Finance Documents; and
-2-
<PAGE>
(b) on and after the Effective Date any reference to the Existing Facility
Agreement in any of the Finance Documents (including the Existing
Facility Agreement) shall be construed as a reference to the Existing
Facility Agreement as amended hereby.
5.3 For the avoidance of doubt the guarantees and other obligations given and
entered into by the Guarantors pursuant to Clause 26 of the Existing Facility
Agreement shall not be affected by the amendments to the Existing Facility
Agreement effected hereby on the Effective Date or by any of the other matters
provided for in this Agreement (including the waiver in Clause 4 of this
Agreement)(and shall continue in full force and effect in accordance with the
terms of the Existing Facility Agreement notwithstanding such amendments or such
other matters).
6. Counterparts
This Agreement may be executed in any number of counterparts and by different
parties hereto on separate counterparts, each of which, when so executed, shall
be an original but all such counterparts shall together constitute but one and
the same instrument.
7. Law
This Agreement shall be governed by, and construed in accordance with, the laws
of The Netherlands.
IN WITNESS whereof this Agreement has been entered into the day and year first
above written.
-3-
<PAGE>
THE SCHEDULE
Conditions Precedent Documents
1. In relation to each of the Obligors:
(a) a copy, certified a true copy by a duly authorised officer of such
Obligor, of the constitutional documents of such Obligor and (in the
case of the Principal Company) an extract from the relevant Chamber of
Commerce;
(b) a copy, certified a true copy by a duly authorised officer of such
Obligor, of a board resolution of such Obligor and (in the case of the
Principal Company) such resolutions of the board of managing directors
of the Principal Company, the supervisory board of the Principal
Company (Raad van Commissarissen) and the works' council of the
Principal Company (Ondernemingsraad) as may be required by Dutch
Counsel to the Banks approving the execution, delivery and performance
of this Agreement and the terms and conditions hereof and authorising
a named person or persons to sign this Agreement and any documents to
be delivered by such Obligor pursuant hereto; and
(c) a certificate of a duly authorised officer of such Obligor setting out
the names and signatures of the persons authorised to sign, on behalf
of such Obligor, this Agreement and any documents to be delivered by
such Obligor pursuant hereto.
2. A copy, certified a true copy by or on behalf of the Principal Company, of
each such law, decree, consent, licence, approval, registration or
declaration as is, in the opinion of counsel to the Banks, necessary to
render this Agreement legal, valid, binding and enforceable, to make this
Agreement admissible in evidence in each Obligor's jurisdiction of
incorporation and to enable each of the Obligors to perform its obligations
hereunder.
3. An opinion of each of the Borrowers' in-house Dutch and United States
counsel in substantially the form agreed by the Facility Agent prior to the
execution hereof.
4. An opinion of Clifford Chance, solicitors to the Facility Agent, in
substantially the form agreed by the Facility Agent prior to the execution
hereof.
The Obligors
KONINKLIJKE AHOLD N.V.
By:
Address: Albert Heijnweg 1
1507 EH Zaandam
The Netherlands
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<PAGE>
Attention: The Treasury
Telephone: 31 75 659 5635
Fax: 31 75 695 8359
AHOLD U.S.A., INC.
By:
Address: One Atlanta Plaza, Suite 2575
950 East Paces
Ferry Road
30326 Atlanta,
Georgia
United States of America
Attention: Ernie J. Smith
Telephone: 1 404 262 6050
Fax: 1 404 262 6051
The Facility Agent
THE CHASE MANHATTAN BANK
By:
Address: 270 Park Avenue
New York, NY 10081
United States of America
Attention: Hilma Gabbidon
Telephone: 1 212 552 4650
Telefax: 1 212 552 5658
-5-
<PAGE>
ANNEX
US$1,000,000,000
MULTICURRENCY REVOLVING CREDIT AGREEMENT
with
SHORT-TERM ADVANCE, SWING-LINE AND LETTER OF CREDIT OPTIONS
between
KONINKLIJKE AHOLD N.V.
AHOLD USA HOLDINGS, INC.
as Borrowers and Guarantors
ABN AMRO BANK N.V.
CHASE INVESTMENT BANK LIMITED
J.P. MORGAN SECURITIES LTD.
as Arrangers
THE CHASE MANHATTAN BANK
as Facility, Swing-Line,
Letter of Credit and Short-Term Advances Agent
CHASE MANHATTAN INTERNATIONAL LIMITED
as Multicurrency Facility Agent
and
OTHERS
Clifford Chance
Amsterdam
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PART 1
DEFINITIONS AND INTERPRETATION....................................................................................1
1. Definitions and Interpretation...............................................................................1
PART 2
THE FACILITIES; ADDITIONAL BORROWERS.............................................................................15
2. The Facilities..............................................................................................15
PART 3
UTILISATION OF THE REVOLVING CREDIT FACILITY.....................................................................17
3. Utilisation of the Revolving Credit Facility................................................................17
PART 4
UTILISATION OF THE LETTER OF CREDIT FACILITY.....................................................................20
4. Utilisation of the Letter of Credit Facility................................................................20
5. Indemnity...................................................................................................22
6. Letter of Credit Fees and Fronting Fee......................................................................23
PART 5
UTILISATION OF THE SWING-LINE FACILITY...........................................................................24
7. Utilisation of the Swing-Line Facility......................................................................24
PART 6
UTILISATIONS OF THE SHORT-TERM ADVANCES FACILITY.................................................................26
8. Request for offers..........................................................................................26
9. Offers for Short-Term Advances..............................................................................27
10. Offers by the Short-Term Advances Agent or its Affiliates...................................................27
11. Acceptance of Offers........................................................................................28
12. Making of Short-Term Advances...............................................................................28
PART 7
INTEREST.........................................................................................................30
13. Interest on Revolving Credit Advances.......................................................................30
14. Interest on Swing-Line Advances.............................................................................30
15. Interest on Short-Term Advances.............................................................................30
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
PART 8
REPAYMENT AND CANCELLATION.......................................................................................31
16. Repayment of Advances.......................................................................................31
17. Cancellation................................................................................................31
PART 9
RISK ALLOCATION..................................................................................................32
18. Taxes.......................................................................................................32
19. Tax Receipts................................................................................................32
20. Increased Costs.............................................................................................33
21. Mitigation..................................................................................................34
22. Market Disruption...........................................................................................35
PART 10
REPRESENTATIONS, WARRANTIES, UNDERTAKINGS AND EVENTS OF DEFAULT..................................................36
23. Representations and Warranties..............................................................................36
24. Undertakings................................................................................................39
25. Events of Default...........................................................................................42
PART 11
GUARANTEE........................................................................................................45
26. Guarantee and Indemnity.....................................................................................45
PART 12
DEFAULT INTEREST AND INDEMNITY...................................................................................48
27. Default Interest and Indemnity..............................................................................48
PART 13
PAYMENTS.........................................................................................................50
28. Currency of Account and Payment.............................................................................50
29. Payments....................................................................................................50
30. Setoff......................................................................................................52
31. Sharing.....................................................................................................52
PART 14
FEES, COSTS AND EXPENSES.........................................................................................54
32. Fees........................................................................................................54
33. Costs and Expenses..........................................................................................54
PART 15
AGENCY PROVISIONS................................................................................................56
34. The Agents, the Arrangers and the Banks.....................................................................56
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
PART 16
ASSIGNMENTS AND TRANSFERS........................................................................................60
35. Assignments and Transfers...................................................................................60
PART 17
MISCELLANEOUS....................................................................................................62
36. Calculations and Evidence of Debt...........................................................................62
37. Remedies and Waivers, Partial Invalidity....................................................................62
38. Amendments..................................................................................................63
39. Notices.....................................................................................................64
PART 18
LAW AND JURISDICTION.............................................................................................66
40. Law and Jurisdiction........................................................................................66
</TABLE>
THE SCHEDULES
The First Schedule : The Banks
The Second Schedule : Form of Transfer Certificate
The Third Schedule : Condition Precedent Documents
The Fourth Schedule : Utilisation Request
The Fifth Schedule : Material Subsidiaries
The Sixth Schedule : Existing Letters of Credit
The Seventh Schedule : Opinion of Borrowers' Netherlands and United
States Counsel
The Eighth Schedule : Supplemental Agreement
(iii)
<PAGE>
THIS AGREEMENT is made on 18 December 1996
BETWEEN:
(1) KONINKLIJKE AHOLD N.V. as borrower and guarantor (the "Principal Company");
(2) AHOLD USA HOLDINGS, INC. as borrower and guarantor ("Ahold USA" and,
together with the Principal Company, the "Borrowers");
(3) ABN AMRO BANK N.V., CHASE INVESTMENT BANK LIMITED and J.P. MORGAN
SECURITIES LTD. as arrangers (the "Arrangers");
(4) THE CHASE MANHATTAN BANK as facility agent (the "Facility Agent"), as
swing-line agent (the "Swing-Line Agent"), as Letter of Credit agent (the
"Letter of Credit Agent") and as short term advances agent (the "Short-Term
Advances Agent");
(5) CHASE MANHATTAN INTERNATIONAL LIMITED as Multicurrency Facility Agent (the
"Multicurrency Facility Agent"); and
(6) THE BANKS (as defined below).
IT IS AGREED as follows:
PART 1
DEFINITIONS AND INTERPRETATION
1. Definitions and Interpretation
1.1 Definitions In this Agreement:
"Absolute Basis" in relation to Short-Term Advances means the basis of any offer
therefor expressed as a percentage rate and not by reference to LIBOR.
"Adjustment Amounts" means, in relation to any proposed Advance or Letter of
Credit:
(a) the Dollar Amounts of any other proposed Advances or Letters of Credit
which any of the Banks or the Issuing Bank are then obliged to make,
issue or participate in on or before the proposed Utilisation Date
relating to such proposed Advance or Letter of Credit; and
(b) the Dollar Amounts of any Advances or Letters of Credit which have
been made, issued or participated in by any of the Banks or the
Issuing Bank pursuant hereto and which are due to be repaid or, as the
case may be, expire on or before the proposed Utilisation Date
relating to such proposed Advance or Letter of Credit.
"Advance" means a Revolving Credit Advance, a Swing-Line Advance or a Short-Term
Advance.
"Additional Borrower" means a wholly-owned direct or indirect subsidiary of the
Principal Company which, with the prior written consent of the Facility Agent
acting on the instructions of the Banks, has become an Additional Borrower
pursuant to and in accordance with the provisions of Clause 2.9 to Clause 2.12.
<PAGE>
"Agents" means the Facility Agent, the Swing-Line Agent, the Letter of Credit
Agent, the Short-Term Advance Agent and the Multicurrency Facility Agent.
"Available Commitment" means, in relation to a Bank at any time and save as
otherwise provided herein, its Commitment at such time less its share of the
Outstandings at such time Provided that such amount shall not be less than
zero.
"Available Facility" means, at any time, the aggregate of the Available
Commitments at such time and adjusted so as to take into account:
(a) any Adjustment Amounts; and
(b) any reduction in the Commitment of a Bank which will occur prior to
the commencement of the Term relating to the relevant Advance or the
relevant Letter of Credit consequent upon a cancellation of the whole
or any part of the relevant Commitment of such Bank pursuant to the
terms hereof;
"Available Letter of Credit Commitment" means, in relation to a Bank at any time
and save as otherwise provided herein, the lesser of:
(a) its Letter of Credit Commitment at such time less its share of the
Dollar Amounts of the outstanding Letters of Credit at such time (and
for the purposes of this definition an "outstanding" Existing Letter
of Credit shall mean an Existing Letter of Credit in which the Banks
are participating in accordance with Clause 4); and
(b) its Available Commitment at such time.
"Available Letter of Credit Facility" means, at any time, the aggregate of the
Available Letter of Credit Commitments at such time and, for the purposes of
Clause 4.2(c) and Clause 4.3(a) and a proposed Letter of Credit only, adjusted
so as to take into account:
(a) any Adjustment Amounts; and
(b) any reduction in the Commitment or Letter of Credit Commitment of a
Bank which will occur prior to the commencement of the Term relating
to such proposed Letter of Credit consequent upon a cancellation of
the whole or any part of the Commitment of such Bank pursuant to the
terms hereof.
"Available Swing-Line Commitment" means, in relation to a Swing-Line Bank at any
time and save as otherwise provided herein, the lesser of:
(a) its Swing-Line Commitment at such time less its share of the Dollar
Amounts of the outstanding Swing-Line Advances at such time; and
(b) its Available Commitment at such time.
"Available Swing-Line Facility" means, at any time, the aggregate of the
Available Swing-Line Commitments at such time and, for the purposes of Clause
7.2(b) and Clause 7.3(a) and a proposed Swing-Line Advance only, adjusted so as
to take into account:
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<PAGE>
(a) any Adjustment Amounts; and
(b) any reduction in the Commitment or Swing-Line Commitment of a Swing-
Line Bank which will occur prior to the commencement of the Term
relating to such proposed Swing-Line Advance consequent upon a
cancellation of the whole or any part of the Commitment of such Swing-
Line Bank pursuant to the terms hereof.
"Banks" means:
(a) any financial institution named in Part 1 of the First Schedule (The
Banks) (other than one which has ceased to be a party hereto in
accordance with the terms hereof); and
(b) any financial institution which has become a party hereto in
accordance with the provisions of Clause 35.4 (Assignments by Banks)
or Clause 35.5 (Transfers by Banks).
"Code" means the United States Internal Revenue Code of 1986.
"Commitment" means, in relation to a Bank at any time and save as otherwise
provided herein, the amount set opposite its name in Part 1 of the First
Schedule (The Banks).
"Dollar Amount" means:
(a) in relation to any Advance, the principal amount thereof or, if such
Advance is not denominated in dollars, the equivalent of such amount
in dollars calculated as at the date of the Utilisation Request in
respect of such Advance; and
(b) in relation to any Letter of Credit:
(i) at or before the Utilisation Date in respect of such Letter of
Credit, the face amount thereof; and
(ii) thereafter, the sum at such time of the maximum actual and
contingent liabilities of the Issuing Bank under such Letter of
Credit and the total amount of any payments made by the Issuing
Bank thereunder which at such time have not been paid or
reimbursed by any Obligor to the Issuing Bank hereunder,
and the Dollar Amount of a Requested Amount shall be determined accordingly.
"Employee Plan" shall mean an "employee pension benefit plan" as defined in
Section 3(2) of ERISA, other than a Multiemployer Plan, which is maintained for,
or under which contributions are made on behalf of, employees of any Obligor or
any ERISA Affiliate.
"Environment" means:
(a) land including any natural or man-made structures;
(b) water including ground waters and waters in drains and sewers; and
(c) air including air within buildings and other natural or man-made
structures above or below ground.
-3-
<PAGE>
"Environmental Laws" means all and any applicable laws, including common law,
statute and subordinate legislation, European Community Regulations and
Directives and judgments and decisions, including notices, orders or circulars,
of any court or authority competent to make such judgment or decision compliance
with which is mandatory for any member of the Group in any jurisdiction with
regard to:
(a) the pollution or protection of the Environment;
(b) harm to the health of humans, animals or plants including laws
relating to public and workers' health and safety;
(c) emissions, discharges or releases into the Environment of chemicals or
any other pollutants or contaminants or industrial, radioactive,
dangerous, toxic or hazardous substances or wastes (whether in solid,
semi-solid, liquid or gaseous form and including noise and genetically
modified organisms); or
(d) the manufacture, processing, use, treatment, storage, distribution,
disposal, transport or handling of the substances or wastes described
in (c) above.
"Environmental Permits" means all and any permits, licences, consents,
approvals, certificates, qualifications, specifications, registrations and other
authorisations including any conditions which attach to any of the foregoing and
the filing of all notifications, reports and assessments required under
Environmental Laws for the operation of any business.
"ERISA" shall mean, at any date, the US Employee Retirement Income Security Act
of 1974 and the regulations promulgated and rulings issued thereunder, all as
the same shall be in effect at such date.
"ERISA Affiliate" shall mean any person that for the purposes of Title I and
Title IV of ERISA and Section 412 of the Code is a member of any Obligor's
controlled group, or under common control with any Obligor, within the meaning
of Section 414 (b) and (c) of the Code and the regulations promulgated and
rulings issued thereunder.
"ERISA Event" shall mean (i) (A) any reportable event, as defined in Section
4043(c) of ERISA with respect to an Employee Plan, as to which PBGC has not by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within thirty days of the occurrence of such event (provided that a
failure to meet the minimum funding standard of Section 412 of the Code or
Section 302 of ERISA shall be a reportable event for the purposes of this sub-
paragraph (i) regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code); or (B) the requirements of subsection (1) of
Section 4043(b) of ERISA (without regard to subsection (2) of such Section) are
met with respect to a contributing sponsor, as defined in Section 4001(a)(13) of
ERISA, of an Employee Plan and an event described in paragraph (9), (10), (11),
(12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with
respect to such Employee Plan within the following 30 days; (ii) the filing
under Section 4041(c) of ERISA of a notice of intent to terminate any Employee
Plan or the termination of any Employee Plan under Section 4042 of ERISA by the
PBGC, or the appointment of a trustee to administer any Employee Plan under
Section 4042 of ERISA; (iii) the failure to make a required contribution to any
Employee Plan that would result in the imposition of a lien under Section 412
(n) of the Code or Section 302 (f) of ERISA; and (iv) an engagement in a non-
exempt prohibited transaction within the meaning of Section 4795 of the Code or
Section 406 of ERISA.
"Event of Default" means any of those circumstances specified in Clause 25
(Events of Default).
-4-
<PAGE>
"Existing Facilities" means the following facilities:
(a) the $400,000,000 revolving credit facility granted pursuant to an
agreement dated 29 March 1994 in favour of the Principal Company by
certain financial institutions named therein for whom ABN AMRO Bank
N.V. acted as Facility Agent;
(b) the $600,000,000 Credit Agreement among The Stop & Shop Companies,
Inc., the several Banks and The Chase Manhattan Bank as Agent, dated
29 August 1994;
(c) the $200,000,000 Credit Agreement among The Stop & Shop Companies,
Inc. the several Banks and The Chase Manhattan Bank as Agent, dated 19
January 1996; and
(d) the $200,000,000 Credit Agreement among The Shop & Stop Master Trust,
the several Banks and The Chase Manhattan Bank as Agent, dated 12
January 1995.
"Existing Letter of Credit" means a Letter of Credit, details of which are set
out in the Sixth Schedule.
"Expiry Date" means, in relation to any Letter of Credit or Existing Letter of
Credit, the date on which the maximum aggregate liability thereunder is to be
reduced to zero.
"Facilities" means the Revolving Credit Facility, the Letter of Credit Facility,
the Swing-Line Facility and the Short-Term Advances Facility (and "Facility"
means any one of them).
"Facility Office" means:
(a) in relation to any Agent, the office identified with such Agent's
signature below or such other office as it may from time to time
select; and
(b) in relation to any Bank and any Facility, the office identified with
its signature below (or, in the case of a Transferee, at the end of
the Transfer Certificate to which it is a party as Transferee) for the
purposes of such Facility or, in any such case, such other office as
such Bank may from time to time select.
"Federal Funds Rate" means, in relation to any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the United States Federal Reserve System arranged by Federal funds
brokers, as published for that day (or, if that day is not a business day in New
York, for the immediately preceding business day in New York) by the Federal
Reserve Bank of New York or, if a rate is not so published for any day which is
a business day in New York, the average of the quotations for that day on such
transactions received by the Swing-Line Agent from three Federal funds brokers
of recognised standing selected by the Swing-Line Agent.
"Finance Documents" means this Agreement (as supplemented by any Supplemental
Agreement) and each Supplemental Agreement.
"Financial L/C Commission Rate" means:
(i) during the period commencing on the date hereof and ending on the date
which is the fifth anniversary of the date hereof, 0.10 per cent. per
annum; and
(ii) thereafter, 0.1125 per cent. per annum.
-5-
<PAGE>
"Financial Letter of Credit" means a Letter of Credit issued in favour of any
contractor or state agency for the purposes of credit guarantees in relation to
the construction of property and self insurance schemes (such as workers'
compensation programmes).
"Guarantors" means the Principal Company and Ahold USA in their respective
capacities as guarantors hereunder.
"Group" means the Principal Company and its subsidiaries for the time being.
"Instructing Group" means:
(a) whilst no Advances or Letters of Credit are outstanding hereunder and
in any event for the purposes of Clause 39, a Bank or group of Banks
whose Commitments at such time (or, if each Bank's Commitment has been
reduced to zero, did immediately before such reduction to zero) amount
in aggregate to more than sixty-six and two thirds per cent. of the
Total Commitments at such time; or
(b) at any time that there are one or more Advances or Letters of Credit
outstanding hereunder, a Bank or group of Banks to whom more than
sixty-six and two thirds per cent. of the Outstandings at such time is
owed (other than the Dollar Amount of Swing-Line Advances and Short-
Term Advances).
"Issuing Bank" means any Bank which, at the time of the Utilisation Request
relating to the relevant Letter of Credit, has a long-term debt rating by
Standard & Poor's of not less than AA- or by Moody's Investors Service, Inc. of
not less than Aa3 as selected by Ahold USA or such alternative equivalent long
term debt rating as may be applied by Standard & Poor's or Moody's Investors
Service, Inc., respectively, from time to time.
"L/C Outstandings" means, at any time, the aggregate of the Dollar Amounts of
each outstanding Letter of Credit (and for the purposes of this definition an
"outstanding" Existing Letter of Credit shall mean an Existing Letter of Credit
in which the Banks are participating in, in accordance with Clause 4).
"Letter of Credit" means a letter of credit (including, without limitation,
except for the purposes of Clause 4, an Existing Letter of Credit) issued or to
be issued by an Issuing Bank, subject to and with the benefit of the provisions
hereof, under the Letter of Credit Facility.
"Letter of Credit Commitment" means, in relation to a Bank at any time and save
as otherwise provided herein, the amount set opposite its name in Part 1 of the
First Schedule.
"Letter of Credit Facility" means the letter of credit facility granted to Ahold
USA pursuant to the terms of this Agreement.
"LIBOR" means, in relation to any Revolving Credit Advance or Short-Term Advance
or unpaid sum in respect of the Revolving Credit Facility or Short-Term Advances
Facility:
(i) the rate per annum which is the offered rate (if any) appearing on the
relevant page of the Telerate Screen which displays British Bankers'
Association Settlement Rates for deposits in the London Interbank
Market for the specified period denominated in the currency in which
such Revolving Credit Advance, Short-Term Advance or unpaid sum is to
be or is
-6-
<PAGE>
denominated during the specified period at or about 11.00 a.m. on the
Quotation Date for the specified period; or
(ii) in the event no such rate can be determined for the specified period
in accordance with (i) above, the rate per annum determined by the
Multicurrency Facility Agent to be equal to the arithmetic mean
(rounded upwards to four decimal places) of the rates (as notified to
the Multicurrency Facility Agent) at which each of the Reference Banks
was offering to prime banks in the London Interbank Market deposits in
the currency in which such Revolving Credit Advance, Short-Term
Advance or unpaid sum is to be or is denominated for the specified
period at or about 11.00 a.m. on the Quotation Date for such period
and for the purposes of this definition, "specified period" means the Term of
such Revolving Credit Advance or Short-Term Advance or, as the case may be, the
period in respect of which LIBOR falls to be determined in relation to such
unpaid sum.
"Margin" means:
(i) during the period commencing on the date hereof and ending on the date
which is the fifth anniversary of the date hereof, 0.10 per cent. per
annum; and
(ii) thereafter, 0.1125 per cent. per annum.
"Margin Stock" means margin stock within the meaning of Regulations T, U and X.
"Material Subsidiary" means, at any time:
(i) any subsidiary of the Principal Company the assets of which exceed ten
per cent. (10%) of the consolidated assets of the Group taken as a
whole; and
(ii) each other subsidiary of the Principal Company specified from time to
time by the Principal Company (which, at the date hereof and without
limitation to the foregoing, are the companies listed in the Fifth
Schedule)
Provided that the Principal Company shall ensure that the assets of all
subsidiaries referred to in paragraphs (i) and (ii) shall at all times account
for at least 80 per cent. of the consolidated assets of the Principal Company
and its subsidiaries and for these purposes, the assets of such subsidiary or
the Principal Company and its subsidiaries (as the case may be) shall, in each
case be adjusted, as the Facility Agent acting on the instructions of an
Instructing Group may consider appropriate, to take account of any changes in
circumstances since the date as of which the most recent audited consolidated
financial statements were prepared.
"Multiemployer Plan" means a multiemployer plan (as defined in Section
4001(a)(3) of ERISA) maintained or contributed to for employees of (i) any
Obligor or (ii) any ERISA Affiliate.
"Non-Financial L/C Commission Rate" means 0.15 per cent. per annum.
"Non-Financial Letter of Credit" means any Letter of Credit other than a
Financial Letter of Credit.
"Obligors" means the Borrowers and the Guarantors (and "Obligor" means anyone of
them).
-7-
<PAGE>
"Optional Currency" means any currency (other than ecu, sterling and dollars)
which is freely transferable and freely convertible into dollars.
"Original Financial Statements" means:
(a) in relation to the Principal Company, its audited consolidated
financial statements for its financial year ended 31 December 1995;
and
(b) in relation to each Additional Borrower, its most recently published
audited financial statements as at the date it becomes an Additional
Borrower hereunder.
"Outstandings" means, at any time, the aggregate of:
(a) the Dollar Amounts of all outstanding Advances; and
(b) the L/C Outstandings.
"Participation" in relation to a Bank at any time means the aggregate of such
Bank's Available Commitment at such time and its share of all Outstandings at
such time;
"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding
to all or any of its functions under ERISA.
"Potential Event of Default" means any event which could or would become (with
the passage of time, the giving of notice, the making of any determination
hereunder or any combination thereof) an Event of Default.
"Prime Rate" means, on any day, the prime commercial lending rate publicly
announced by the Swing-Line Agent in respect of such day, which rate need not be
the lowest rate charged to its borrowers Provided that each change in the
interest rate applicable to a Swing-Line Advance which results from a change in
the Prime Rate shall become effective on the day on which the change in the
Prime Rate becomes effective.
"Proportion" means, in relation to a Bank, the proportion borne by its
Commitment to the Total Commitments (or, if the Total Commitments are then zero,
by its Commitment to the Total Commitments immediately prior to their reduction
to zero).
"Quotation Date" means, in relation to any period for which LIBOR is to be
determined hereunder, the day which is two business days prior to the first day
of such period.
"Reference Banks" means, for the purposes of determining LIBOR, the principal
London offices of ABN AMRO Bank N.V., The Chase Manhattan Bank and Morgan
Guaranty Trust Company of New York or such other bank or banks as may from time
to time be agreed between the Principal Company and the Facility Agent.
"Regulation D Costs" means, in relation to the portion of any Advance made by a
Bank to a US Borrower (or deposits maintained by a Bank to fund such an
Advance), the amount (if any) certified by such Bank to be the cost to it of
complying with Regulation D (or any similar reserve requirements) in respect of
that Advance or those deposits.
"Regulations D, T, U and X" means, respectively, Regulations D, T, U and X of
the Board of Governors of the Federal Reserve System of the United States (or
any successor).
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"Relevant Amount" means, in relation to any Bank or Swing-Line Bank at any time
and any proposed Utilisation, the amount arrived at by applying the following
formula:
Relevant Amount = BC x (RA + TO)
-------------- - BO
TC
where:
BC = such Bank's or Swing-Line Bank's Commitment at such time;
RA = the Dollar Amount of the Advance or Letter of Credit
comprising such proposed Utilisation;
TO = the Outstandings at such time;
TC = the Total Commitments at such time;
BO = the relevant Bank or Swing-Line Bank's share of all
Outstandings at such time,
Provided that when in respect of any one or more Banks or Swing-Line Banks
application of the above formula results in a negative figure, then for the
purpose of calculating the Relevant Amount for each other Bank or Swing-Line
Bank, the first mentioned Bank(s) or Swing-Line Bank(s) and it or their
Commitment(s) (and that of any affiliates thereof) shall be deducted from "TC"
and the aggregate of such Bank's or Swing-Line Bank's share of all Outstandings
shall be deducted from "TO".
"Repayment Date" means, in relation to any Advance, the last day of the Term
thereof or such earlier date upon which such Advance is required to be repaid
pursuant hereto.
"Requested Amount" means, in relation to any Utilisation Request, the aggregate
principal amount of the Advances or, as the case may be, the face amount of the
Letter of Credit therein requested to be made or issued or in which the Banks
are requested to participate.
"Revolving Credit Advance" means, save as otherwise provided herein, an advance
made or to be made by the Banks pursuant to Clause 3 (Utilisation of the
Revolving Credit Advance) and the other terms hereof.
"Revolving Credit Facility" means the multicurrency revolving credit facility
granted to the Borrowers pursuant to the terms of this Agreement.
"Short-Term Advance" means, save as otherwise provided herein, an advance made
or to be made by the Banks pursuant to Clause 8 (Request for Offers) and the
other terms hereof.
"Short-Term Advances Facility" means the short term advances facility granted to
Ahold USA pursuant to the terms of this Agreement.
"Substantial" means equal to or greater than 10 per cent. of the relevant amount
as disclosed by the latest audited consolidated balance sheet or, as the case
may be, profit and loss account of the Group.
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"Supplemental Agreement" means any agreement entered into by the parties hereto
with any Additional Borrower (in its capacity as an Additional Obligor) pursuant
to Clause 2.9 (Nomination of Additional Borrowers) to Clause 2.12 (Original
Borrower's Authority) substantially in the form set out in the Eighth Schedule
(Supplemental Agreement for Additional Borrowers) or such other form as the
Principal Company and the Facility Agent shall agree.
"Swing-Line Advance" means, save as otherwise provided herein, an advance made
or to be made by the Swing-Line Banks pursuant to Clause 7 (Utilisation of the
Swing-Line Facility) and the other terms hereof.
"Swing-Line Banks" means each of the Banks listed in Part 2 of the First
Schedule (Swing-Line Banks).
"Swing-Line Commitment" means, in relation to a Swing-Line Bank at any time and
save as otherwise provided herein, the amount set opposite its name in Part 2 of
the First Schedule.
"Swing-Line Facility" means the swing-line facility granted to the Borrowers
pursuant to the terms of this Agreement.
"Swing-Line Margin" means 0.50 per cent. per annum.
"Term" means, save as otherwise provided herein, in relation to any Advance, the
period for which such Advance is borrowed (as specified in the Utilisation
Request relating thereto) and, in relation to any Letter of Credit, the period
from the date on which such Letter of Credit is issued (or, in the case of an
Existing Letter of Credit, the Banks commence participating in such Existing
Letter of Credit pursuant to Clause 4) until its Expiry Date (as specified in
the Utilisation Request relating thereto).
"Termination Date" means the day which is eighty-four months after the date
hereof.
"Total Commitments" means the aggregate for the time being of the Banks'
Commitments.
"Transfer Certificate" means a certificate substantially in the form set out in
the Second Schedule (Form of Transfer Certificate) signed by a Bank and a
Transferee whereby:
(a) such Bank seeks to procure the transfer to such Transferee of all or a
part of such Bank's rights, benefits and obligations hereunder as
contemplated in Clause 35.3 (Assignments and Transfers by Banks); and
(b) such Transferee undertakes to perform the obligations it will assume
as a result of delivery of such certificate to the Facility Agent as
is contemplated in Clause 35.5 (Transfers by Banks).
"Transfer Date" means, in relation to any Transfer Certificate, the date for the
making of the transfer as specified in the schedule to such Transfer
Certificate.
"Transferee" means a bank or other financial institution to which a Bank seeks
to transfer all or part of such Bank's rights, benefits and obligations
hereunder.
"United States" and "US" means the United States of America (including the
District of Columbia), its territories, possessions and other areas subject to
the jurisdiction of the United States of America.
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"US Borrower" means any Material Subsidiary which has been incorporated in the
United States.
"US Obligor" means any Obligor incorporated in the United States.
"Utilisation" means a utilisation of any or more of the Facilities hereunder.
"Utilisation Date" means the date of a Utilisation, being the date on which the
Advance in respect thereof is to be made or the Letter of Credit in respect
thereof is to be issued (or, in relation to an Existing Letter of Credit, the
date on which the Banks are to commence participating therein).
"Utilisation Request" means a notice substantially in the form set out in the
Fourth Schedule (Utilisation Request).
"Withdrawal Liability" has the meaning given to such term under Part I of
Subtitle E of Title IV of ERISA.
1.2 Interpretation Any reference in this Agreement to:
any Agent or any Bank in any capacity hereunder shall be construed so as to
include its and any subsequent successors, Transferees and assigns in accordance
with their respective interests;
"affiliate" of any person is a reference to a holding company or a subsidiary,
or a subsidiary of a holding company, of such person;
any "applicable law" shall be construed so as to include all present and future
applicable laws, statutes, regulations, codes, treaties, conventions, judgments,
awards, determinations or decrees;
"borrowed money" means, in respect of any person:
(i) money borrowed or raised and premiums (if any) and capitalised interest
in respect thereof;
(ii) the principal and premiums (if any) and capitalised interest in respect
of any debenture, bond, note, loan stock or similar instrument;
(iii) liabilities in respect of any letter of credit, acceptance credit, bill
discounting or note purchase facility and any receivables purchase,
factoring or discounting arrangement;
(iv) rental or hire payments under leases or hire purchase agreements
(whether in respect of land, machinery, equipment or otherwise) entered
into primarily for the purpose of raising finance;
(v) the deferred purchase price of assets or services in respect of
transactions which have the commercial effect of borrowing or which
otherwise finance its or the Group's operations or capital requirements
(except any such arrangements entered into in the ordinary and usual
course of trading and having a term not exceeding 90 days from the date
on which the liability was originally incurred);
(vi) liabilities in respect of any foreign exchange agreement, currency or
interest purchase or swap transactions or similar arrangements;
(vii) all obligations to purchase, redeem, retire, defease or otherwise
acquire for value any share capital of any person or any warrants,
rights or options to acquire such share capital in respect of
transactions which
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have the commercial effect of borrowing or which otherwise finance its
or the Group's operations or capital requirements;
(viii) any other transactions having the commercial effect of borrowing entered
into by any person to finance its operations or capital requirements;
and
(ix) all indebtedness for borrowed money of other persons referred to in
paragraphs (i) to (viii) above guaranteed directly or indirectly in any
manner by such person, or having the commercial effect of being
guaranteed directly or indirectly by such person by virtue of an
agreement (a) to pay or purchase such indebtedness for borrowed money or
to advance or supply funds for the payment or purchase of such
indebtedness for borrowed money, (b) to purchase or lease (as lessee)
property, or to purchase services, primarily for the purpose of enabling
the debtor to make payments of such indebtedness for borrowed money, (c)
to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property of services irrespective of
whether such property is received or such services are rendered) or (d)
otherwise to assure any person to whom indebtedness for borrowed money
is owed against loss with respect thereto;
a "business day" shall be construed as a reference to a day (other than a
Saturday or Sunday) on which banks are generally open for business in London and
New York City and, if such reference relates to the date for the payment of any
sum denominated in any Optional Currency, banks are generally open for business
in the principal financial centre of the country of such Optional Currency;
a "business day in New York" shall be construed as a reference to a day (other
than a Saturday or a Sunday) on which banks are generally open for business in
New York City;
a "Clause" shall, subject to any contrary indication, be construed as a
reference to a clause hereof;
a "currency" includes ecu;
"encumbrance" means any mortgage, pledge, lien (other than a lien arising solely
by operation of law in the ordinary course of business), charge, assignment,
hypothecation, security interest or other encumbrance or charge by way of
security or any title retention right (other than in the ordinary course of
trading), preferential right (other than a preferential right accorded to
creditors on a liquidation solely by operation of law) or trust arrangement or
other agreement or arrangement the effect of any of which is the creation of
security;
the "equivalent" on any given date in one currency (the "first currency") of an
amount denominated in another currency (the "second currency") is a reference to
the amount of the first currency which could be purchased with the amount of the
second currency at the spot rate of exchange quoted by the Facility Agent at or
about 12.00 (noon) London time on such date for the purchase of the first
currency with the second currency;
a "holding company" of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned company or
corporation is a subsidiary;
"indebtedness" shall be construed so as to include any obligation (whether
incurred as principal or as surety) for the payment or repayment of money,
whether present or future, actual or contingent;
a "month" is a reference to a period starting on one day in a calendar month and
ending on the numerically corresponding day in the next succeeding calendar
month save that, where any such period would otherwise end on a day which is not
a business day, it shall end on the next succeeding business day, unless that
day falls in the
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calendar month succeeding that in which it would otherwise have ended, in which
case it shall end on the immediately preceding business day Provided that, if a
period starts on the last business day in a calendar month or if there is no
numerically corresponding day in the month in which that period ends, that
period shall end on the last business day in that later month (and references to
"months" shall be construed accordingly);
"net assets" shall be construed as a reference to the difference between (a) the
aggregate of the current assets (including but not limited to Cash and cash
Equivalents, Receivables and Inventories) and fixed assets (including but not
limited to Total Net Tangible Fixed Assets, Loan Receivables, Investments in
unconsolidated subsidiaries and affiliates and Intangible Assets) of the
Principal Company and (b) the aggregate of the current liabilities (including
but not limited to Loans payable, Taxes payable, Accounts payable, Accrued
expenses and Other current liabilities) and long term liabilities (including but
not limited to Subordinated loans, Other loans, Capitalised lease commitments,
Deferred income taxes and Other provisions) of the Principal Company in each
case as reported in the latest consolidated balance sheet of the Principal
Company delivered pursuant to Clause 24(i)(a) (Undertakings);
a "person" shall be construed as a reference to any person, firm, company,
corporation, government, state or agency of a state or any association or
partnership (whether or not having separate legal personality) of two or more of
the foregoing;
a "subsidiary" of the Principal Company means a company which is a subsidiary of
the Principal Company within the meaning of Article 24.a of the Dutch Civil Code
and which is a company which is consolidated in the consolidated financial
statements of the Principal Company;
a "subsidiary" of a company or corporation other than the Principal Company
shall be construed as a reference to any company or corporation:
(a) which is controlled, directly or indirectly, by the first-mentioned
company or corporation;
(b) more than half the issued share capital of which is beneficially
owned, directly or indirectly, by the first-mentioned company or
corporation; or
(c) which is a subsidiary of another subsidiary of the first-mentioned
company or corporation
and, for these purposes, a company or corporation shall be treated as being
controlled by another if that other company or corporation is able to direct its
affairs and/or to control the composition of its board of directors or
equivalent body;
"tax" shall be construed so as to include any tax, levy, impost, duty or other
charge of a similar nature (including, without limitation, any penalty or
interest payable in connection with any failure to pay or any delay in paying
any of the same);
"VAT" shall be construed as a reference to value added tax including any similar
tax which may be imposed in place thereof from time to time; and
the "winding-up", "dissolution" or "administration" of a company or corporation
shall be construed so as to include any equivalent or analogous proceedings
under the law of the jurisdiction in which such company or corporation is
incorporated or any jurisdiction in which such company or corporation carries on
business including the seeking of liquidation, winding-up, reorganisation,
dissolution, administration, arrangement, adjustment, protection or relief of
debtors.
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1.3 Currency Symbols "$" and "dollars" denote lawful currency of the United
States of America and "sterling" denotes lawful currency of the United Kingdom.
1.4 Agreements, Documents and Statutes Save where the contrary is indicated,
any reference in this Agreement to:
(a) this Agreement or any other agreement or document shall be construed
as a reference to this Agreement or, as the case may be, such other
agreement or document as the same may have been, or may from time to
time be, amended, varied, novated or supplemented;
(b) a statute shall be construed as a reference to such statute as the
same may have been, or may from time to time be, amended or re-
enacted; and
(c) a time of day shall be construed as a reference to New York time.
1.5 Headings Clause, Part and Schedule headings are for ease of reference
only.
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PART 2
THE FACILITIES; ADDITIONAL BORROWERS
2. The Facilities
2.1 Revolving Credit Facility The Banks grant to the Borrowers, upon the terms
and subject to the conditions hereof, a multicurrency revolving credit facility
in an aggregate amount of $1,000,000,000 or its equivalent from time to time in
Optional Currencies.
2.2 Letter of Credit Facility The Banks grant to Ahold USA, upon the terms and
subject to the conditions hereof, a dollar denominated letter of credit facility
in an aggregate amount of $100,000,000.
2.3 Swing-Line Facility The Swing-Line Banks grant to the Borrowers, upon the
terms and subject to the conditions hereof, a dollar denominated swing-line
facility in an aggregate amount of $200,000,000.
2.4 Short-Term Advances Facility The Banks grant to Ahold USA, upon the terms
and subject to the conditions hereof, an uncommitted short term advances
facility in an aggregate amount of $1,000,000,000.
2.5 Purpose and Application The Facilities are intended for general corporate
purposes including working capital and the refinancing of the Existing
Facilities. Accordingly, each of the Borrowers shall apply all amounts raised by
it under each Facility in or towards satisfaction of such purposes. Without
prejudice to the obligations of the Borrowers under this Clause 2.5 (Purpose and
Application), neither the Agents, the Arrangers and the Banks nor any of them
shall be obliged to concern themselves with the application of amounts raised by
any Borrower hereunder.
2.6 Condition Precedent Documents None of the Borrowers may deliver any
Utilisation Request hereunder unless the Facility Agent has confirmed to the
Principal Company and the Banks that it has received all of the documents listed
in the Third Schedule (Condition Precedent Documents) each, in form and
substance, satisfactory to the Facility Agent and that each of the other
conditions referred to therein have been met to the satisfaction of the Facility
Agent.
2.7 Banks' Obligations Several The obligations of each Bank hereunder are
several. The failure by a Bank to perform its obligations hereunder shall not
affect the obligations of any Obligor towards any other party hereto nor shall
any other party be liable for the failure by such Bank to perform its
obligations hereunder. The amounts outstanding at any time hereunder from a
Borrower to any of the parties hereto shall, subject as otherwise provided
herein, be a separate and independent debt and each such party shall, subject to
the terms of this Agreement, be entitled to protect and enforce its individual
rights arising out of this Agreement independently of any other party and it
shall not be necessary for any party hereto to be joined as an additional party
in any proceedings for this purpose.
2.8 Aggregation of Advances Clause 2.1 (Revolving Credit Facility), Clause 2.2
(Letter of Credit Facility), Clause 2.3 (Swing-Line Facility) and Clause 2.4
(Short-Term Advances Facility) are subject to the restriction that at no time
may the aggregate of the Dollar Amounts of all outstanding Advances and Letters
of Credit under each of the Facilities referred to in such Clauses exceed the
Total Commitments, (being, at the date hereof, $1,000,000,000).
2.9 Nomination of Additional Borrowers Subject to having obtained the prior
written consent, through the Facility Agent, of all the Banks, the Principal
Company may from time to time designate any of its wholly-owned subsidiaries as
an Additional Borrower. If the Principal Company so designates any such
subsidiary or
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subsidiaries, the Principal Company shall promptly deliver or cause to be
delivered to the Facility Agent a Supplemental Agreement duly executed by the
parties thereto.
2.10 Accession of Additional Borrowers Promptly on receipt by it of each of
the conditions precedent specified in any Supplemental Agreement, the Facility
Agent will confirm to the relevant Additional Borrower, the Principal Company
and the Banks that it has received such documents and whether or not each is, in
form and substance, satisfactory to it. Upon delivery to the Facility Agent of
any Supplemental Agreement and subject to the Facility Agent having confirmed to
the relevant Additional Borrower, the Principal Company and the Banks that it
has received, in form and substance satisfactory to it, each of the conditions
precedent specified therein, this Agreement shall thenceforth be read and
construed as if each subsidiary of the Principal Company which is a party to the
Supplemental Agreement as an Additional Borrower were a party hereto having all
the rights and obligations of a Borrower. Accordingly all references in any
Finance Document to (a) any "Additional Borrower", "Borrower", "Obligor" or any
derivative term, shall be treated as including a reference to any such
subsidiary becoming a party hereto in the manner contemplated above; and (b)
this Agreement, shall be treated as a reference to this Agreement as
supplemented by such Supplemental Agreement and all previous Supplemental
Agreements to the intent that this Agreement, such Supplemental Agreement and
all previous Supplemental Agreements shall be read and construed together as one
single agreement.
2.11 Facility Agent's Authority Each of the Agents (other than the Facility
Agent), the Arranger and the Banks irrevocably authorises the Facility Agent to
execute any Supplemental Agreement on its behalf. The Facility Agent shall
promptly notify each of the Banks of the execution by it of any Supplemental
Agreement.
2.12 Original Borrower's Authority Each of the Obligors (other than the
Principal Company) irrevocably authorises the Principal Company to designate any
of its subsidiaries as an Additional Borrower pursuant to Clause 2.9 (Nomination
of Additional Borrowers) and irrevocably authorises the Principal Company to
execute on its behalf any Supplemental Agreement in relation thereto.
2.13 Separate and Independent Facilities Subject to Clause 2.8 (Aggregation of
Advances), the Facilities granted in this Agreement are separate and independent
of each other. The aggregate of the amounts outstanding at any time under each
Facility shall be a separate and independent debt.
2.14 Use of Facilities Any Bank may, by notice to the Facility Agent,
designate another bank or financial institution (a "Funding Bank") to make
available to the relevant Agent the proceeds of that Bank's share of any Advance
or to make payments in respect of any Letter of Credit (in which case that Bank
shall ensure that the Funding Bank does so). Any such notice shall specify the
name of the Funding Bank and its fax number and address (which must be in New
York City) and marking (if any) for the purpose of communications to it in
relation to the relevant Facility. A copy of any written communication to that
Bank shall be sent to the Funding Bank (which need not be a party to this
Agreement nor an affiliate of that Swingline Bank). Whether or not the Funding
Bank is a party to this Agreement, all rights and obligations with respect to
that Bank's Commitment and its Outstandings under the Facilities shall remain
solely in that Bank (not the Funding Bank) and this Agreement shall apply as if
that Bank (rather than the Funding Bank) had funded its share of each Advance or
Letter of Credit, except that the Bank may direct that its share of any payment
with respect to the relevant Facility be made to the Funding Bank instead.
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PART 3
UTILISATION OF THE REVOLVING CREDIT FACILITY
3. Utilisation of the Revolving Credit Facility
3.1 Delivery of Utilisation Request for Revolving Credit Advances Save as
otherwise provided herein, a Borrower may from time to time request the making
of Revolving Credit Advances under the Revolving Credit Facility by the delivery
to the Facility Agent and, in the case of a Revolving Credit Advance denominated
in an Optional Currency, the Multicurrency Facility Agent not more than eight
business days nor later than three (or, in the case of a Revolving Credit
Advance denominated in any Optional Currency four) business days before the
proposed date for the making of the relevant Revolving Credit Advance, of a duly
completed Utilisation Request therefor.
3.2 Utilisation Details Each Utilisation Request delivered to the Facility
Agent and Multicurrency Facility Agent pursuant to Clause 3.1 (Delivery of
Utilisation Request for Revolving Credit Advances) shall be irrevocable and
shall specify:
(a) the proposed date for the making of the relevant Revolving Credit
Advance which shall be a business day falling before the Termination
Date;
(b) the currency of denomination of the proposed Revolving Credit Advance
which shall be dollars or an Optional Currency Provided that, if the
relevant Borrower selects an Optional Currency, such Borrower may also
select dollars to apply if its first selection becomes ineffective
pursuant to Clause 3.3 (Banks' Agreement to Optional Currency);
(c) the amount of the proposed Revolving Credit Advance, which shall be an
amount of not less than $25,000,000 and an integral multiple of
$5,000,000 (or, if the Revolving Credit Advance is to be denominated
in an Optional Currency, such comparable and convenient amount thereof
as the Multicurrency Facility Agent may from time to time specify) and
the Dollar Amount of which shall not exceed the Available Facility;
(d) the proposed Term of the proposed Revolving Credit Advance, which
shall be a period of one, two, three or six months or such other
period not exceeding twelve months agreed by the Banks ending on a
business day falling on or before the Termination Date; and
(e) the account to which the proceeds of the proposed Revolving Credit
Advance are to be paid.
3.3 Banks' Agreement to Optional Currency If a Borrower requests that a
Revolving Credit Advance be denominated in an Optional Currency and:
(a) no later than 12.00 noon (London time) on the third business day
preceding the first day of the Term of such Revolving Credit Advance,
any Bank notifies the Multicurrency Facility Agent that it does not
agree to such request; or
(b) no later than 11.00 a.m. (London time) on the Quotation Date for such
Revolving Credit Advance, the Facility Agent notifies the Borrower and
the Banks that the Multicurrency Facility Agent is of the reasonable
opinion that it is not feasible for such Revolving Credit Advance to
be made in such Optional Currency; or
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(c) to give effect to such request would mean that the Revolving Credit
Advances outstanding would be denominated in more than three Optional
Currencies,
then, unless such Borrower and the Banks otherwise agree, such Revolving Credit
Advance shall not be made unless such Borrower specified in the Utilisation
Request in respect of such Revolving Credit Advance that in such event such
Revolving Credit Advance should be denominated in dollars in which case such
Revolving Credit Advance shall, save as otherwise provided herein, be made in
dollars in an amount equal to the Dollar Amount relating to such Utilisation
Request.
3.4 Making of Revolving Credit Advances If a Borrower requests a Revolving
Credit Advance in accordance with the provisions of this Clause 3 and, on the
proposed date for the making of such Advance:
(a) none of the events mentioned in Clause 22(a) and (b) (Market
Disruption) shall have occurred;
(b) the Dollar Amount of such Revolving Credit Advance does not exceed the
Available Facility;
(c) to give effect to such request would not result in more than ten
Advances being outstanding; and
(d) either:
(i) no Event of Default or Potential Event of Default has occurred
and is continuing or would result from the making of such
Revolving Credit Advance; and
(ii) the representations set out in Clause 23 (Representation and
Warranties) which are to be repeated pursuant to the relevant
Utilisation Request are true on and as of the proposed date for
the making of such Revolving Credit Advance and would continue to
be true immediately following the making of the relevant
Revolving Credit Advance and the application of the proceeds
thereof in meeting the purpose for the making of such Revolving
Credit Advance (as if references therein to Original Financial
Statements were references to the most recent set of annual
audited financial statements delivered by each Borrower to the
Facility Agent pursuant to Clause 24 (Undertakings))
or each of the Banks agrees, notwithstanding any matter mentioned at
(i) or (ii) above to participate in the making of such Revolving
Credit Advance,
then:
(1) the Facility Agent (or in the case of a Revolving Credit Advance
denominated in an Optional Currency, the Multicurrency Facility Agent)
shall, no later than 5.00 p.m. (London time) on the third business day
prior to the proposed Utilisation Date, notify each Bank by telefax or
by telephone (with confirmation to follow by telefax) at its Facility
Office specified for the purpose of Revolving Credit Advances of the
amount of such Revolving Credit Advance, the amount of such Bank's
participation therein and the period for which such Revolving Credit
Advance is to be made;
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(2) each Bank shall, no later than 12.00 noon (local time for the
financial centre of the relevant currency) on such proposed
Utilisation Date make its portion of such Revolving Credit Advance
available to the Facility Agent or in the case of a Revolving Credit
Advance denominated in an Optional Currency, the Multicurrency
Facility Agent), in the relevant currency, in accordance with Clause
29 (Payments); and
(3) the Facility Agent (or in the case of a Revolving Credit Advance
denominated in an Optional Currency, the Multicurrency Facility Agent)
shall, no later than 4.00 p.m. (local time for the financial centre of
the relevant currency) on such proposed Utilisation Date, make such
Revolving Credit Advance available to the relevant Borrower in
accordance with but subject to Clause 29 (Payments).
3.5 Facility Office Each Bank will participate in each Revolving Credit
Advance made pursuant to this Clause 3 through its Facility Office specified in
relation to Revolving Credit Advances in its Relevant Amount.
3.6 Reduction of Advances If a Bank's Commitment is reduced in accordance with
the terms hereof after the Facility Agent (or in the case of a Revolving Credit
Advance denominated in an Optional Currency, the Multicurrency Facility Agent)
has received the Utilisation Request for a Revolving Credit Advance, then both
the Dollar Amount and the amount of that Revolving Credit Advance shall be
reduced accordingly.
3.7 Application of Advances The proceeds of any Revolving Credit Advance made
hereunder shall first be applied in repayment of any Swing-Line Advance
(together with any accrued interest thereon), and the Facility Agent shall pay
such portion of any Revolving Credit Advance to be made hereunder to the Swing-
Line Banks as the Swing-Line Agent instructs the Facility Agent is necessary to
repay each outstanding Swing-Line Advance (together with any accrued interest
thereon).
3.8 Payment of Swing-Line Advances Notwithstanding anything to the contrary
provided herein, one or more Revolving Credit Advances (as may be necessary)
will be made by the Banks to the Borrower if, prior to 10.00 a.m. on any
business day, the Swing-Line Agent, on behalf of the Swing-Line Banks, gives
notice to the Facility Agent that it requires each outstanding Swing-Line
Advance to be repaid by means of a Revolving Credit Advance hereunder (and, for
the purposes hereof such notice shall be deemed to have been automatically given
by the Swing-Line Agent to the Facility Agent, if either (i) the Facility Agent
receives notice from any other party hereto that an Event of Default has
occurred or (ii) for any reason whatsoever the proceeds of a Revolving Credit
Advance hereunder cannot be applied in the manner outlined in Clause 3.7) and,
two business days after the Swing-Line Agent gives notice to the Facility Agent
as aforesaid a Revolving Credit Advance will be made in respect of each
outstanding Swing-Line Advance by the Banks in an amount of each such Swing-Line
Advance and for a Term selected by the Facility Agent, in consultation with the
Borrower, notwithstanding (a) the occurrence of an Event of Default, (b) any
reduction in the Total Commitments after the date hereof or (c) any other
requirements for a drawdown pursuant to any of the other provisions of this
Clause 3 not being fulfilled Provided that nothing herein contained shall be
construed so as to require the Banks to participate in any Revolving Credit
Advance requested hereunder by the Swing-Line Agent to repay any Swing-Line
Advance which was made in breach of Clause 7.2(b) or was made in the
circumstances set out in Clause 7.3(b). Each Revolving Credit Bank will
participate through its Facility Office in its Relevant Amount in any Revolving
Credit Advance made pursuant to the terms of this Clause 3.8.
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PART 4
UTILISATION OF THE LETTER OF CREDIT FACILITY
4. Utilisation of the Letter of Credit Facility
4.1 Delivery of Utilisation Request for Letters of Credit Save as otherwise
provided herein, Ahold USA may from time to time request the issue of Letter(s)
of Credit and/or that the Banks participate in the issuance of any Existing
Letter(s) of Credit under the Letter of Credit Facility by the delivery to the
Facility Agent, not more than eight business days in New York nor later than
9.30 a.m. on the third business day in New York before the proposed date for
either (a) the issue of the relevant Letter(s) of Credit and/or (b) the
effectiveness of the Banks' participating in the relevant Existing Letter(s) of
Credit (as the case may be) of a duly completed Utilisation Request therefor.
4.2 Utilisation Details Each Utilisation Request delivered to the Facility
Agent pursuant to Clause 4.1 (Delivery of Utilisation Request for Letters of
Credit) shall be irrevocable and shall specify:
(a) the face amount of (i) the proposed Letter(s) of Credit and/or (ii)
Existing Letter(s) of Credit (as the case may be), which shall be an
amount of not more than the Available Letter of Credit Facility;
(b) the proposed Term of (i) the proposed Letter(s) of Credit and/or (ii)
Existing Letter(s) of Credit (as the case may be), which shall be a
period ending on a business day falling on or before the Termination
Date;
(c) the name and address of the recipient to whom such Letter(s) of Credit
is to be delivered and/or to whom such Existing Letter(s) of Credit
has been delivered (as the case may be); and
(d) the Issuing Bank relating to such Letter(s) of Credit and/or Existing
Letter(s) of Credit (as the case may be).
4.3 Issue of Letters of Credit If the Borrower requests the issue of a Letter
of Credit and/or the participation of Banks in the issuance of any Existing
Letter of Credit in accordance with the provisions of this Clause 4 and, on the
proposed date for such issue and/or participation:
(a) the Dollar Amount of such Letter(s) of Credit and (if applicable)
Existing Letter(s) of Credit does not exceed the Available Letter of
Credit Facility;
(b) the identity of the recipient has been agreed by all the Banks no
later than 3.00 p.m. (New York Time) on the third business day in New
York before the proposed date for the issue of the relevant Letter(s)
of Credit or participation in the relevant Existing Letter(s) of
Credit;
(c) (in relation to any new Letter of Credit) the form of such Letter(s)
of Credit is such form as has been agreed between the relevant
Borrower and the Issuing Bank (acting on the instructions of the
Banks) by no later than 3.00 p.m. (New York Time) on the third
business day in New York before the date from the issue of such
Letter(s) of Credit;
(d) either:
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(i) no Event of Default or Potential Event of Default has occurred
and is continuing or would result from the issue of such
Letter(s) of Credit or participation by the Banks in such
Existing Letter(s) of Credit; and
(ii) the representations set out in Clause 23 (Representations and
Warranties) which are to be repeated pursuant to the relevant
Utilisation Request are true on and as of the proposed date for
the issue of such Letter(s) of Credit and/or participation in
such Existing Letter(s) of Credit (as the case may be) and would
continue to be true immediately following the issuing of the
relevant Letter(s) of Credit and/or participation in such
Existing Letter(s) of Credit (as the case may be) (as if
references therein to Original Financial Statements were
references to the most recent set of annual audited financial
statements delivered by each Borrower to the Facility Agent
pursuant to Clause 24 (Undertakings))
or each of the Banks agrees, notwithstanding any matter mentioned at
(i) or (ii) above to the issue of such Letter of Credit and/or
participation in such Existing Letter(s) of Credit (as the case may
be),
then:
(1) the Facility Agent shall, no later than 5.00 p.m. (New York Time) on
the third business day prior to the proposed Utilisation Date, notify
each Bank and the Issuing Bank by telefax or by telephone (with
confirmation to follow by telefax) at its Facility Office specified
for the purpose of the Letter of Credit Facility of the amount of such
Letter(s) of Credit and/or Existing Letter(s) of Credit (as the case
may be), the amount of such Bank's participation therein and the Term
of such Letter(s) of Credit and/or Existing Letter(s) of Credit (as
the case may be); and
(2) (in the case of any new Letter(s) of Credit) the Issuing Bank shall on
such proposed Utilisation Date, issue such Letter of Credit to the
relevant recipient
Provided that, if the issue of such proposed new Letter(s) of Credit to the
proposed beneficiary is prohibited under any law, statute, regulation, order or
decree to which a Bank is subject or pursuant to any request or requirement of
any central bank or other fiscal, monetary or other authority to which a Bank is
subject, the Issuing Bank shall not be obliged to issue such proposed new
Letter(s) of Credit.
4.4 Banks' Participation in Letters of Credit Each Bank will participate in
the issuance of each Letter of Credit and each Existing Letter of Credit through
its Facility Office specified in relation to the Letter of Credit Facility to
the extent of its Relevant Amount.
4.5 Reduction of Banks' Letter of Credit Commitments If a Bank's Commitment is
reduced in accordance with the terms hereof after the Facility Agent has
received the Utilisation Request for any Letter(s) of Credit and/or Existing
Letter(s) of Credit, then both the Dollar Amount and the amount of such
Letter(s) of Credit and/or Existing Letter(s) of Credit shall be reduced
accordingly.
4.6 Completion of Letters of Credit The Issuing Bank relating to any Letter of
Credit is hereby authorised to issue such Letter of Credit pursuant to Clause
4.3 (Issue of Letters of Credit) by:
(a) completing the issue date and Expiry Date of such Letter of Credit;
and
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(b) executing and delivering such Letter of Credit to the relevant
recipient on the Utilisation Date.
5. Indemnity
5.1 Demand for Payment If, at any time, a demand for payment (the amount so
demanded being herein referred to as the "Amount Demanded") is made under a
Letter of Credit the Issuing Bank relating to such Letter of Credit shall notify
the Facility Agent who shall notify each of the Banks and Ahold USA of such
demand and the Facility Agent shall make demand of each of the Banks for an
amount equal to its share of the amount demanded.
5.2 Payment Each Bank shall, upon receipt by it of a demand made on it by the
Facility Agent under this Clause 5 and in any event no later than 11.00 a.m.
(London time) on the business day following receipt of the demand, pay to the
Facility Agent the amount demanded of it. The Facility Agent shall, upon receipt
of such amount, promptly pay the same to the Issuing Bank of the relevant Letter
of Credit.
5.3 Indemnification Ahold USA hereby irrevocably and unconditionally agrees to
indemnify and keep indemnified the Issuing Bank, the Facility Agent and each
Bank on demand against each and every sum paid or payable by the Issuing Bank or
any such Bank under or in respect of any Letter of Credit and also undertakes to
indemnify and hold harmless the Issuing Bank, the Facility Agent and each Bank
on demand from and against all actions, proceedings, liabilities, costs
(including any costs incurred in funding any amount which falls due from the
Issuing Bank, the Facility Agent or any Bank under any Letter of Credit in
connection with any such Letter of Credit), claims, losses, damages and expenses
which the Issuing Bank, the Facility Agent and each Bank may at any time incur
or sustain in connection with or arising out of any Letter of Credit.
5.4 The Issuing Bank's and Banks' Entitlements The Issuing Bank and each Bank
shall be entitled to make any payment under or in respect of any Letter of
Credit for which a demand has been made without any reference to or further
authority from Ahold USA or any other investigation or enquiry, need not concern
itself with the propriety of any demand made or purported to be made under and
in the manner required by the terms of any such Letter of Credit and shall be
entitled to assume that any person expressed in any Letter of Credit or in any
notice served pursuant to any such Letter of Credit to be entitled to make
demands is so entitled and that any individual purporting to sign any such
demand or notice on behalf of such person is duly authorised to do so;
accordingly, it shall not be a defence to any demand made of Ahold USA, nor
shall Ahold USA's obligations hereunder be impaired by the fact (if it be the
case), that the Issuing Bank, the Facility Agent or any Bank was or might have
been justified in refusing payment, in whole or in part, of the amounts so
demanded.
5.5 Obligations Not Discharged The obligations of each of the Banks and Ahold
USA to the Issuing Bank, the Facility Agent and (in the case of Ahold USA) each
Bank shall not be discharged, lessened or impaired by any act, omission or
circumstance whatsoever which, but for this provision, might operate to release
or exonerate such Bank or Ahold USA from all or part of such obligations or in
any other way discharge, lessen or impair the same.
5.6 Certificate of the Issuing Bank Conclusive A certificate of the Issuing
Bank as to the amount paid out by the Issuing Bank under any Letter of Credit
shall, save for manifest error, be conclusive and binding upon Ahold USA for the
purposes of this Agreement and prima facie evidence of the payment of such
amounts in any legal action or proceedings arising in connection therewith.
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6. Letter of Credit Fees and Fronting Fee
6.1 Letter of Credit Fees Ahold USA shall, in respect of each Letter of Credit
issued at its request, be obliged to pay to the Facility Agent for the
account of each Bank (for distribution in proportion to each Bank's
participation under the relevant Letter of Credit, a letter of credit fee
at the Financial L/C Commission Rate (in the case of Financial Letter of
Credit) or Non Financial L/C Commission Rate (in the case of a Non-
Financial Letter of Credit) on the face amount of the relevant Letter of
Credit. Such letter of credit fee shall be paid in arrears in respect of
each successive period of three months (or such shorter period as shall end
on the Expiry Date relating to such Letter of Credit) which begins during
the Term of the relevant Letter of Credit, each payment of such letter of
credit commission to be made on the last day of each such period.
6.2 Fronting Fee Ahold USA shall negotiate in good faith with any proposed
Issuing Bank and agree a fee to be paid to such Issuing Bank in respect of
its issuing any Letter of Credit or Existing Letter of Credit. Such fee
shall be payable in arrears in respect of each successive period of three
months (or such shorter period as shall end on the Expiry Date of such
Letter of Credit or Existing Letter of Credit (as the case may be)) which
begins during the Term of such Letter of Credit or Existing Letter of
Credit (as the case may be), such fee to be payable directly to such
Issuing Bank on the last day of each such period. In addition, Ahold USA
shall compensate each Issuing Bank in full on demand by such Issuing Bank
for all customary administrative, issuance, amendment, payment and
negotiation charges incurred or chargeable by it in connection with any
Letter of Credit or Existing Letter of Credit (as the case may be) issued
by it.
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PART 5
UTILISATION OF THE SWING-LINE FACILITY
7. Utilisation of the Swing-Line Facility
7.1 Delivery of Utilisation Request for Swing-Line Advances Save as otherwise
provided herein, a Borrower may from time to time request the making of a Swing-
Line Advance under the Swing-Line Facility by delivery by telefax to the Swing-
Line Agent and the Facility Agent, not more than three business days in New York
before nor later than 10.00 a.m. (New York Time) on the latest business day in
New York which falls on or before the proposed date for the making of the
relevant Swing-Line Advance, of a duly completed Utilisation Request.
7.2 Utilisation Details Each request made of the Swing-Line Agent pursuant to
Clause 7.1 (Delivery of Utilisation Request for Swing-Line Advances) shall be
irrevocable and shall specify:
(a) the proposed date for the making of the relevant Swing-Line Advance,
which shall be a business day in New York falling before the
Termination Date;
(b) the amount of the proposed Swing-Line Advance, which shall be an
amount of not less than $25,000,000 and an integral multiple of
$5,000,000 which is less than or equal to the Available Swing-Line
Facility;
(c) the proposed Term of the proposed Swing-Line Advance, which shall be a
period of not more than ten business days in New York ending on a
business day in New York on or before the Termination Date; and
(d) the account to which the proceeds of the proposed Swing-Line Advance
are to be paid.
7.3 Conditions of Utilisation If the Borrower requests a Swing-Line Advance in
accordance with the preceding provisions of this Clause 7 and, on the proposed
date for the making of such Swing-Line Advance:
(a) the Dollar Amount of such Swing-Line Advance does not exceed the
Available Swing-Line Facility; and
(b) either:
(i) no Event of Default or Potential Event of Default has occurred
and is continuing or would result from the making of such Swing-
Line Advance; and
(ii) the representations set out in Clause 23 (Representation and
Warranties) which are to be repeated pursuant to the relevant
Utilisation Request are true on and as of the proposed date for
the making of such Swing-Line Advance and would continue to be
true immediately following the making of the relevant Swing-Line
Advance and the application of the proceeds thereof in meeting
the purpose of the making of such Swing-Line Advance (as if
references therein to Original Financial Statements were
references to the most recent set of annual audited financial
statements delivered by each Borrower to the Facility Agent
pursuant to Clause 24 (Undertakings))
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or each of the Swing-Line Banks agrees (notwithstanding any matter
mentioned at (i) or (ii) above) to participate in the making of such
Swing-Line Advance,
then:
(1) the Swing-Line Agent shall, no later than 1.00 p.m. (New York Time) on
the proposed Utilisation Date, notify each Swing-Line Bank by telefax
or by telephone (with confirmation to follow by telefax) at its
Facility Office specified for the purpose of Swing-Line Advances of
the amount of such Swing-Line Advance, the amount of such Swing-Line
Bank's participation therein and the period for which such Swing-Line
Advance is to be made;
(2) each Swing-Line Bank shall, no later than 2.00 p.m. (New York Time) on
such proposed Utilisation Date make its portion of such Swing-Line
Advance available to the Swing-Line Agent, in dollars, in accordance
with Clause 29 (Payments); and
(3) the Swing-Line Agent shall, no later than 4.00 p.m. (New York Time) on
such proposed Utilisation Date, make such Swing-Line Advance available
to the relevant Borrower in accordance with but subject to Clause 29
(Payments).
7.4 Facility Office Each Swing-Line Bank will participate in each Swing-Line
Advance made pursuant to this Clause 7 through its Facility Office specified for
the purpose of Swing-Line Advances in its Relevant Amount.
7.5 Reduction of Commitment If a Bank's Swing-Line Commitment is reduced in
accordance with the terms hereof after the Swing-Line Agent has received a
request for a Swing-Line Advance, then the amount of that Swing-Line Advance
shall be reduced accordingly.
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PART 6
UTILISATIONS OF THE SHORT-TERM ADVANCES FACILITY
8. Request for offers
8.1 Making Requests for Offers Save as otherwise provided herein, Ahold USA may
from time to time request offers by tender for the making of Short-Term Advances
under the Short-Term Advances Facility by the delivery to the Short-Term
Advances Agent by telex, not earlier than the eighth business day nor later than
five (or if the interest rates relating to such Short-Term Advances are to be
expressed on the Absolute Basis 9.30 a.m. (New York Time) two) business days
before the proposed Utilisation Date relating to such Short-Term Advance, of a
duly completed Utilisation Request therefor.
8.2 Request Details Each Utilisation Request delivered to the Short-Term
Advances Agent pursuant to Clause 8.1 (Making Requests for Offers) shall be
irrevocable and shall specify:
(a) the proposed Utilisation Date, which shall be a business day falling
five business days or more after the previous Utilisation Date, if
any, relating to Short-Term Advances and one month or more before the
Termination Date;
(b) whether or not the interest rate relating to the relevant Short-Term
Advances is to be determined by reference to LIBOR or expressed on the
Absolute Basis;
(c) the aggregate amount of the Short-Term Advances in respect of which
offers are requested, which shall be an amount of not less than
$10,000,000 and an integral multiple of $5,000,000 and the Dollar
Amount of which is less than the Available Facility;
(d) the proposed Term of the proposed Short-Term Advances which shall be a
period of one, two, three, six or twelve months (if the interest rate
relating to such Short-Term Advances is to be determined by reference
to LIBOR) or not less than seven days or more than one hundred and
eighty days (if the interest rate relating to such Short-Term Advances
is to be expressed on the Absolute Basis) and, in each case, ending on
a business day falling on or before the Termination Date.
8.3 Notification of Banks The Short-Term Advances Agent shall, promptly after
receipt by it of a Utilisation Request and in any event no later than 2.00 p.m.
(New York Time) on the fourth business day (or, in the case of Short-Term
Advances the interest rate relating to which is to be expressed on the Absolute
Basis 2.00 p.m. (New York Time) on the second business day) before the proposed
Utilisation Date relating thereto, notify the Banks by telex of its receipt of
such Utilisation Request specifying:
(a) the proposed Utilisation Date;
(b) the Requested Amount and Term of the proposed Short-Term Advances; and
(c) whether or not the interest rate relating to the relevant Short-Term
Advances is to be determined by reference to LIBOR or expressed on the
Absolute Basis;
and inviting each Bank to make an offer or offers to make the proposed Short-
Term Advances.
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9. Offers for Short-Term Advances
9.1 Offers by Banks Each Bank may (but is not obliged to) make an offer or
offers (not exceeding three) to make any proposed Short-Term Advances by the
delivery to the Short-Term Advances Agent by telex, no later than 11.00 a.m.
(New York Time) on the third business day (or, in the case of Short-Term
Advances the interest rate relating to which is to be determined by reference to
the Absolute Basis, 9.30 a.m. (New York Time) on the business day) before the
proposed Utilisation Date relating to such Short-Term Advances, of a notice
bearing such Bank's name, and the reference "Ahold USA Holdings, Inc - Short-
Term Advances" and specifying:
(a) the Utilisation Request in relation to which the offer or offers
therein contained are made; and
(b) in relation to each offer therein contained the amount of the Short-
Term Advance which such Bank offers to make, which shall be not less
than $5,000,000 and an integral multiple of $1,000,000; and
(c) if the interest rate in relation to such Short-Term Advances is to be
determined by reference to LIBOR, the margin (positive or negative and
expressed as a percentage rounded up, if necessary, to four decimal
places) over or under LIBOR or if the interest rate in relation to
such Short-Term Advances is to be expressed by reference to the
Absolute Basis, the rate of interest per annum expressed as a fixed
annual percentage yield (rounded up, if necessary, and specified in
increments of 1/10,000 of one per cent.) offered for each such Short-
Term Advance.
9.2 Separate Offers Each offer made by a Bank pursuant to Clause 9.1 (Offers by
Banks) shall be treated as a separate offer for the purposes hereof and shall be
irrevocable and capable of acceptance by Ahold USA in accordance with the terms
hereof.
9.3 Notification to Ahold USA The Short-Term Advances Agent shall, as soon as
practicable and in any event no later than 12.30 p.m. (New York Time) on the
third business day (or, in the case of Short-Term Advances the interest rate
relating to which is to be expressed on the Absolute Basis, 10.15 a.m. (New York
Time) on the business day) preceding the proposed Utilisation Date for any
Short-Term Advances, notify Ahold USA by telex or telephone of the offers made
pursuant to the Utilisation Request relating to such Short-Term Advances
specifying, in respect of each offer:
(a) the name of the Bank making such offer;
(b) the amount of the Short-Term Advance offered; and
(c) the relevant margin quote (in the case of Short-Term Advances the
interest rate relating to which is to be determined by reference to
LIBOR) or fixed annual percentage yield (in the case of Short-Term
Advances the interest rate in relation to which is to be determined by
reference to the Absolute Basis).
10. Offers by the Short-Term Advances Agent or its Affiliates
Notwithstanding the provisions of Clause 9 (Offers for Short-Term Advances), any
Bank which is, or is an affiliate of, the Short-Term Advances Agent may only
make an offer or offers to make Short-Term Advances in response to any
Utilisation Request by notifying its offer or offers to Ahold USA making such
request by telex no later than 10.00 a.m. (New York Time) on the third business
day (or, in the case of Short-Term Advances the interest rate relating to which
is to be expressed on the Absolute Basis, 9.00 a.m. (New York Time) on the
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business day) prior to the proposed Utilisation Date for such Short-Term
Advances and any offer by such a Bank which is not so notified to Ahold USA
shall be invalid and shall not be capable of acceptance by Ahold USA.
11. Acceptance of Offers
11.1 Notification by Ahold USA of Acceptances Ahold USA shall, no later than
1.30 p.m. (New York Time) on the third business day (or, in the case of Short-
Term Advances the interest rate relating to which is to be determined by
reference to the Absolute Basis, 11.30 a.m. (New York Time) on the business day)
prior to the Utilisation Date relating to such Short-Term Advances, notify the
Short-Term Advances Agent by telex or telephone whether or not it wishes to
accept, in whole or in part, the offers made in response to the relevant
Utilisation Request and, if so, the aggregate amount of the Short-Term Advances
the offers in respect of which it wishes to accept, which shall be:
(a) not less than $10,000,000 and an integral multiple of $5,000,000 and
which shall be: -
(i) not more than the Requested Amount specified in such Utilisation
Request; and
(ii) the Dollar Amount of which shall not exceed the Available
Facility.
11.2 Accepted Offers Each acceptance by Ahold USA pursuant to Clause 11.1
(Notification by Ahold USA of Acceptances) of the offers made in response to a
Utilisation Request shall be treated as an acceptance of such offers in
ascending order of the yields (in the case of offers made by reference to LIBOR,
calculated in accordance with Clause 9.1 (Offers by Bank)) at which the same
were made but if, as a result thereof, two or more offers at the same yield fall
to be partially accepted, then the amounts of the Short-Term Advances in respect
of which such offers are accepted shall be treated as being the amounts which
bear the same proportion to one another as the respective amounts of the Short-
Term Advances so offered bear to one another but, in each case, rounded as the
Short-Term Advances Agent may consider necessary to ensure that the amount of
each Short-Term Advance is an amount of not less than $5,000,000 and an integral
multiple of $1,000,000.
11.3 Notification to Banks of Accepted Offers The Short-Term Advances Agent
shall, no later than 3.00 p.m. (New York Time) on the third business day (or, in
the case of Short-Term Advances the interest rate in relation to which is
expressed on the Absolute Basis 3.00 p.m. (New York Time) on the business day)
prior to the Utilisation Date relating to the relevant Short-Term Advances,
notify by telex each Bank which has made an offer in response to such
Utilisation Request whether or not such offer has been accepted in whole or in
part and, if so, the amount of the Short-Term Advance in respect of which such
offer has been accepted and the yield relating thereto.
12. Making of Short-Term Advances
If the Short-Term Advances Agent notifies any Bank in accordance with
Clause 11.3 (Notification to Banks of Accepted Offers) of Ahold USA's
acceptance, in whole or in part, of any offer by such Bank to make any Short-
Term Advance and on the proposed Utilisation Date relating to such Short-Term
Advance:
(i) if the interest rate in respect of such Short-Term Advance is to be
determined by reference to LIBOR, neither of the events mentioned in
Clause 22 (Market Disruption) shall have occurred;
(ii) the Dollar Amount of such Short-Term Advance does not exceed the
Available Facility; and
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(iii) either:
(a) no Event of Default or Potential Event of Default has occurred
and is continuing or would result from the making of such Short-
Term Advance; and
(b) the representations set out in Clause 23 (Representations and
Warranties) which are to be repeated pursuant to the relevant
Utilisation Request are true on and as of the proposed date for
the making of such Short-Term Advance and would continue to be
true immediately following the making of the relevant Short-Term
Advance and the application of the proceeds of thereof in meeting
the purpose of such Short-Term Advance (as if references therein
to Original Financial Statements were references to the most
recent set of annual audited financial statements delivered by
each Borrower to the Facility Agent pursuant to Clause 24
(Undertakings)),
or the respective Bank agrees (notwithstanding any matter mentioned in
(a) and (b) above) to participate in the making of such Short-Term
Advance, then, on such Utilisation Date, such Bank shall make such
Short-Term Advance through its Facility Office to Ahold USA in
accordance with Clause 29 (Payments).
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PART 7
INTEREST
13. Interest on Revolving Credit Advances
13.1 Rate of Interest The rate of interest applicable to a Revolving Credit
Advance during the Term of such Revolving Credit Advance shall be the rate per
annum determined by the Facility Agent to be the sum of LIBOR relating to such
Revolving Credit Advance and the Margin at such time.
13.2 Notification The Facility Agent shall promptly notify the relevant
Borrower and each Bank of each determination made by it pursuant to this Clause
13.
13.3 Payment of Interest On the Repayment Date relating to each Revolving
Credit Advance (and if such Revolving Credit Advance has a Term which exceeds
six months, at the end of each successive six monthly period of such Term) the
relevant Borrower shall pay accrued interest on that Revolving Credit Advance.
14. Interest on Swing-Line Advances
14.1 Rate of Interest The rate of interest applicable to a Swing-Line Advance
on each day (a "relevant day") during the Term of such Swing-Line Advance shall
be the rate per annum determined by the Swing-Line Agent as at 11.00 a.m. (New
York Time) on the relevant day to be the greater of:
(i) the Prime Rate for such relevant day; and
(ii) the sum of the Federal Funds Rate for such relevant day and the Swing-
Line Margin at such time.
14.2 Notification The Swing-Line Agent shall promptly notify the relevant
Borrower and each Swing-Line Bank of each determination made by it pursuant to
Clause 14.1 (Rate of Interest).
14.3 Payment of Interest On the Repayment Date relating to each Swing-Line
Advance the relevant Borrower shall pay accrued interest on that Swing-Line
Advance.
15. Interest on Short-Term Advances
15.1 Rate of Interest The rate of interest applicable to a Short-Term Advance
during the Term of such Short-Term Advance shall be:
(i) (if the interest rate relating to such Short-Term Advance is to be
determined by reference to LIBOR) the rate per annum determined by the
Facility Agent to be the sum of LIBOR relating to such Short-Term
Advance and the margin at which such Short-Term Advance was offered
or, if such margin was negative, the difference between such margin
(taking such margin as a positive number for such purpose) and LIBOR
relating to such Short-Term Advance; or
(ii) (if the interest rate relating to such Short-Term Advance is expressed
on the Absolute Basis) the fixed annual percentage yield at which such
Short-Term Advance was offered.
15.2 Payment of Interest On the Repayment Date relating to each Short-Term
Advance (and if such Short-Term Advance has a Term which exceeds six
months, at the end of each successive six monthly period of such Term) the
relevant Borrower shall pay accrued interest on that Short-Term Advance.
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PART 8
REPAYMENT AND CANCELLATION
16. Repayment of Advances
16.1 Repayment Each Borrower shall repay each Advance made to it in full on
the Repayment Date relating thereto.
16.2 Prepayment A Borrower may, subject to Clause 27.5 (Broken Periods), if it
gives to the Facility Agent not less than fifteen days' prior written notice to
that effect, prepay the whole of any Advance. Any notice of prepayment shall be
irrevocable, shall specify the date upon which such prepayment is to be made and
the amount of such prepayment and shall oblige such Borrower to make such
prepayment on such date.
16.3 Mandatory Payment If any Bank claims indemnification from a Borrower
under Clause 18 (Taxes) or Clause 20 (Increased Costs) and within thirty days
thereafter the Facility Agent receives from such Borrower at least ten days'
prior written notice (which shall be irrevocable) of such Borrower's intention
to repay such Bank's share of any Advance, the Borrower shall, subject to Clause
27.5 (Broken Periods), repay such Bank's portion of such Advance.
16.4 Reduction of Commitments A Bank for whose account a repayment is to be
made under Clause 16.3 (Mandatory Repayment) shall not be obliged to make any
Advances hereunder on or after the date upon which the Facility Agent receives a
Borrower's notice of its intention to repay such Bank's share of any Advance, on
which date such Bank's Available Commitment (and hence its Swing-Line Commitment
and Letter of Credit Commitment) shall be reduced to zero.
16.5 Repayment Method None of the Borrowers shall repay all or any part of any
Advance outstanding hereunder except at the times and in the manner expressly
provided herein but shall, save as provided herein, be entitled to reborrow any
amount repaid.
17. Cancellation
17.1 Cancellation The Principal Company may, by giving to the Facility Agent
not less than ten days' prior written notice to that effect, cancel the whole or
any part (being an amount of not less than $25,000,000 and an integral multiple
of $5,000,000) of the Total Commitments. Any such cancellation shall reduce the
Commitment of each Bank rateably.
17.2 Irrevocable Instruction Any notice of cancellation given by the Principal
Company pursuant to Clause 17.1 (Cancellation) shall be irrevocable and shall
specify the date upon which such cancellation is to be made and the amount of
such cancellation.
17.3 Notice The Facility Agent shall promptly notify each of the other Agents
and the Banks of any notice of cancellation received by it from the Borrower
pursuant to Clause 17.1 (Cancellation).
17.4 Cancellation of Commitment If any Bank claims indemnification from the
Principal Company under Clause 18 (Taxes) or Clause 20 (Increased Costs), the
Principal Company may, whilst the relevant circumstances continue and by not
less than ten days' prior written notice to the Facility Agent (which notice
shall be irrevocable), cancel such Bank's Commitment whereupon such Bank shall
cease to be obliged to make Advances and its Commitment (and thereby its Swing-
Line Commitment and its Letter of Credit Commitment, if any) shall be reduced to
zero.
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PART 9
RISK ALLOCATION
18. Taxes
18.1 Tax Gross-Up All payments to be made by any Obligor to any person
hereunder shall be made free and clear of and without deduction for or on
account of tax unless such Obligor is required to make such a payment subject to
the deduction or withholding of tax, in which case the sum payable by such
Obligor in respect of which such deduction or withholding is required to be made
shall be increased to the extent necessary to ensure that, after the making of
the required deduction or withholding, such person receives and retains (free
from any liability in respect of any such deduction or withholding) a net sum
equal to the sum which it would have received and so retained had no such
deduction or withholding been made or required to be made.
18.2 Tax Indemnity Without prejudice to the provisions of Clause 18.1 (Tax
Gross-Up), if any person or an Agent on its behalf is required to make any
payment on account of tax or otherwise (not being a tax imposed on the net
income of any Facility Office by the jurisdiction in which it is incorporated or
in which such Facility Office is located) on or in relation to any sum received
or receivable hereunder by such person or an Agent on its behalf (including,
without limitation, any sum received or receivable under this Clause 18) or any
liability in respect of any such payment is asserted, imposed, levied or
assessed against such person or an Agent on its behalf, the Principal Company
shall, upon demand of the relevant Agent, promptly indemnify such person against
such payment or liability, together with any interest, penalties and expenses
payable or incurred in connection therewith.
18.3 Claims by Banks Any person intending to make a demand pursuant to Clause
18.2 (Tax Indemnity) shall notify the Principal Company (through the Facility
Agent in the case of a Bank) in reasonable detail of the event by reason of
which it is entitled to do so Provided that nothing herein shall require such
person to disclose any confidential information relating to the organisation of
its affairs.
18.4 U.S. Withholding Taxes Each Bank and Agent that is not incorporated under
the laws of the United States of America or a state thereof which is or will be
a lender to Ahold USA agrees that it will deliver to Ahold USA and the Facility
Agent two duly completed copies of United States Internal Revenue Service Form
1001 or 4224 or successor applicable form, as the case may be. Each such Bank
and Agent also agrees to deliver to Ahold USA and the Facility Agent two further
copies of said Form 1001 or 4224 or successor applicable forms or other manner
of certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to Ahold USA and the
Facility Agent and such extensions or renewals thereof as may reasonably be
requested by Ahold USA or the Facility Agent, unless in any such case an event
(including, without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank or Agent from duly completing and delivering any such form with respect to
it and such Bank or Agent so advises Ahold USA and (in the case of any Bank) the
Facility Agent. Each such Bank and Agent shall certify that it is entitled to
receive payments from Ahold USA under this Agreement without deduction or
withholding of any United States federal income taxes.
19. Tax Receipts
19.1 Notification of Requirement to Deduct Tax If, at any time, any Obligor is
required by law to make any deduction or withholding from any sum payable by it
hereunder (or if thereafter there is any change in the rates at which or the
manner in which such deductions or withholdings are calculated), such Obligor
shall promptly notify the Facility Agent upon becoming aware of the same.
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19.2 Evidence of Payment of Tax If any Obligor makes any payment hereunder in
respect of which it is required to make any deduction or withholding, it shall
pay the full amount required to be deducted or withheld to the relevant taxation
or other authority within the time allowed for such payment under applicable law
and shall deliver to the Facility Agent for each Bank, within thirty days after
it has made such payment to the applicable authority, an original receipt (or a
certified copy thereof) issued by such authority (if any) or other written
evidence of payment as such Obligor can provide evidencing the payment to such
authority of all amounts so required to be deducted or withheld in respect of
that Bank's share of such payment.
20. Increased Costs
20.1 Increased Costs If, by reason of (i) any change in law or in its
interpretation or administration and/or (ii) compliance with any request from or
requirement of any central bank or other fiscal, monetary or other authority
(including, without limitation, a request or requirement which affects the
manner in which a Bank or any holding company of such Bank is required to or
does maintain capital resources having regard to such Bank's obligations
hereunder and to amounts owing to it hereunder):
(a) a Bank or any holding company of such Bank incurs a cost as a result
of such Bank's having entered into and/or performing its obligations
under this Agreement and/or assuming or maintaining a commitment or
performing its obligations (including its obligation to make Advances
or participate in, or make a payment under, a Letter of Credit) under
this Agreement and/or its participating in or making one or more
Advances or the issuing of or participation in one or more Letters of
Credit;
(b) a Bank or any holding company of such Bank is unable to obtain the
rate of return on its overall capital which it would have been able to
obtain but for such Bank's having entered into and/or performing its
obligations and/or assuming or maintaining a commitment under this
Agreement;
(c) there is any increase in the cost to a Bank or any holding company of
such Bank of funding or maintaining all or any of the advances
comprised in a class of advances formed by or including the Advances
or payments in respect of Letters of Credit made or to be made by such
Bank hereunder; or
(d) a Bank or any holding company of such Bank becomes liable to make any
payment on account of tax or otherwise (not being a tax imposed on the
net income of such holding company or any Facility Office of such Bank
by the jurisdiction in which it is incorporated or in which such
Facility Office is located) on or calculated by reference to the
amount of the Advances made or to be made by such Bank hereunder or
Letters of Credit issued or to be issued hereunder or its
participation therein and/or to any sum received or receivable by it
hereunder,
then the Principal Company shall, from time to time on demand of the Facility
Agent, promptly pay to the Facility Agent for the account of that Bank amounts
sufficient to indemnify that Bank or any such holding company against, as the
case may be, (1) such cost, (2) such reduction in such rate of return (or such
proportion of such reduction as is, in the opinion of that Bank, attributable to
its obligations hereunder), (3) such increased cost (or such proportion of such
increased cost as is, in the opinion of that Bank, attributable to its funding
or maintaining Advances or payments in respect of Letters of Credit) or (4) such
liability.
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20.2 Increased Cost Claims A Bank intending to make a claim pursuant to Clause
20.1 (Increased Costs) shall notify the Facility Agent in reasonable detail of
the event by reason of which it is entitled to do so, whereupon the Facility
Agent shall notify the Principal Company thereof Provided that nothing herein
shall require such Bank to disclose any confidential information relating to the
organisation of its affairs.
20.3 Exclusion of Swing-Line For the purposes of this Clause 20 "Bank" does not
include any Bank in its capacity as a Swing-Line Bank and "Advances" does not
include Swing-Line Advances.
20.4 Illegality If, at any time, it is unlawful for a Bank to make, fund or
allow to remain outstanding all or any of the Advances made or to be made by it
hereunder or to participate in the issue of, or to allow to remain outstanding
all or any of its liabilities under, any of the Letters of Credit, then that
Bank shall, promptly after becoming aware of the same, deliver to the Principal
Company through the Facility Agent a notice to that effect and:
(a) such Bank shall not thereafter be obliged to make any Advances or to
participate in the issue of any Letters of Credit or the Swing-Line
Facility and the amount of its Commitment shall be immediately reduced
to zero; and
(b) if the Facility Agent on behalf of such Bank so requires, the
Principal Company shall procure that the relevant Borrower or
Borrowers shall on such date as the Facility Agent shall have
specified:
(i) repay each outstanding Advance together with accrued interest
thereon and all other amounts owing to such Bank; and/or
(ii) procure that such Bank's obligations under any Letters of Credit
will be reduced to zero or otherwise secured with 100% cash
security (in the currency in which such Letter of Credit is
denominated) in a manner acceptable to such Bank.
20.5 Regulation D Costs Each relevant Borrower shall, within seven days of
demand by any Bank (through the Facility Agent), pay to that Bank the amount of
any Regulation D Costs actually incurred by that Bank in respect of any Advance
made by it to that Borrower. Any such demand shall contain reasonable details of
the calculation of the relevant Regulation D Costs.
21. Mitigation
If, in respect of any Bank, circumstances arise which would or would upon the
giving of notice result in:
(a) the reduction of its Commitment (and thereby its Swing-Line Commitment
and its Letter of Credit Commitment, if any) to zero pursuant to
Clause 20.4(a) (Illegality);
(b) an increase in the amount of any payment to be made to it or for its
account pursuant to Clause 18.1 (Tax Gross-Up); or
(c) a claim for indemnification pursuant to Clause 18.2 (Tax Indemnity) or
Clause 20.1 (Increased Costs),
then, without in any way limiting, reducing or otherwise qualifying the rights
of such Bank or the obligations of any Borrower under any of the Clauses
referred to in (a), (b) or (c) above such Bank shall promptly upon becoming
aware of the same notify the Facility Agent thereof and, in consultation with
the Facility Agent and the
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Borrower and to the extent that it can do so without prejudice to its own
position, take reasonable steps to mitigate the effects of such circumstances
including the transfer of its Facility Office Provided that such Bank shall be
under no obligation to take any such action if, in the opinion of such Bank, to
do so might have any material adverse effect upon its business, operations or
financial condition.
22. Market Disruption
If, in relation to any Revolving Credit Advance or Short-Term Advance the
interest rate in relation to which is to be determined by reference to LIBOR:
(a) the Facility Agent determines that at 11.00 a.m. on the Quotation Date
for such Revolving Credit Advance or Short-Term Advance (i) there is
no screen rate quote for LIBOR and (ii) none or only one of the
Reference Banks was offering to prime banks in the London Interbank
Market deposits in the currency requested for such Revolving Credit
Advance or Short-Term Advance for the proposed duration of the Term
thereof; or
(b) before the close of business in London on the Quotation Date for such
Term the Facility Agent has been notified by a Bank or each of a group
of Banks to whom in aggregate thirty-five per cent. or more of the
Dollar Amount of the Outstandings is (or, if such Revolving Credit
Advance or Short-Term Advance were then made, would be) owed that the
rate at which such deposits were being so offered does not accurately
reflect the cost to it of obtaining such deposits,
then, notwithstanding the provisions of Clause 13 (Interest on Revolving Credit
Advances) or 15 (Interest on Short-Term Advances):
(i) the Facility Agent shall notify the other parties hereto of
such event;
(ii) such Revolving Credit Advance or Short-Term Advance shall not
be made; and
(iii) if the Facility Agent so requires, within five days of such
notification the Facility Agent and the Principal Company shall
enter into negotiations in good faith with a view to agreeing a
substitute basis for determining the rates of interest which
may be applicable to Revolving Credit Advances or Short-Term
Advance in the future and any such substitute basis that is
agreed shall take effect in accordance with its terms and be
binding on each party hereto Provided that the Facility Agent
may not agree any such substitute basis without the prior
consent of each Bank.
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PART 10
REPRESENTATIONS, WARRANTIES, UNDERTAKINGS AND EVENTS OF DEFAULT
23. Representations and Warranties
Each Obligor represents and warrants to the Agents and each of the Banks that:
(i) (in the case of the Principal Company) it is a public company with
limited liability ("naamloze vennootschap") duly incorporated and
validly existing under the laws of The Netherlands, (in the case of
Ahold USA) it is a corporation duly organised and in good standing
under the laws of the State of Delaware and the United States of
America and (in the case of any Additional Borrower) it is a
corporation duly organised and in good standing under the laws of
its jurisdiction of incorporation and has the corporate power to
own its property and assets and to carry on its business as it is
now being conducted;
(ii) it has the corporate power to enter into and perform the Finance
Documents to which it is expressed to be a party and the
transactions contemplated thereby and to borrow and to undertake
obligations in respect of Letters of Credit hereunder and has taken
all necessary actions to authorise the borrowing of Advances and
the undertaking of obligations in respect of Letters of Credit upon
the terms and conditions of this Agreement and to authorise the
execution, delivery and performance of the Finance Documents to
which it is expressed to be a party in accordance with their
respective terms;
(iii) each of the Finance Documents to which it is expressed to be a
party constitutes and will at all times constitute its legal, valid
and binding obligations, enforceable in accordance with its terms;
(iv) its indebtedness under this Agreement is its direct, unconditional
and general indebtedness and ranks, and will at all times rank,
pari passu with all other unsecured indebtedness and liabilities
(actual or contingent) (with the exception of any indebtedness and
liabilities preferred by law and deferred or subordinated
indebtedness) issued, created or assumed now or in the future or
for which it is now or may at any time in the future otherwise be
or become responsible;
(v) its Original Financial Statements (copies of which have been
provided to each of the Banks) were prepared in accordance with
accounting principles generally accepted in The Netherlands (in the
case of the Principal Company) and its jurisdiction of
incorporation and The Netherlands (in the case of any Additional
Borrower) and fairly present its condition and (in the case of the
Principal Company) that of the Group, at such date and its results
and (in the case of the Principal Company) the results of the Group
for such year; there has been no material adverse change in its
financial position or in the financial position of the Group or in
the financial position of Ahold USA and its subsidiaries, taken as
a whole, since that date which might have a material adverse effect
on any Obligor's ability to perform its obligations under any of
the Finance Documents to which it is expressed to be a party, and
such accounts included all significant liabilities (including
contingent liabilities);
(vi) since the date on which its Original Financial Statements were
prepared there has been no material adverse change in its (or, in
the case of the Principal Company, the Group's, or, in the case of
Ahold USA, Ahold USA and its subsidiaries) financial or trading
condition or prospects which could have a material adverse effect
on its ability to perform or comply with its obligations under this
Agreement;
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(vii) no Event of Default or Potential Event of Default has occurred and
is continuing unremedied, nor will any Event of Default or
Potential Events of Default result from the making of any Advance
or issue of or participation by a Bank in any Letter of Credit
hereunder;
(viii) its execution, delivery and performance of the Finance Documents to
which it is expressed to be a party and the borrowing of Advances
and the undertaking of obligations in respect of Letters of Credit
do not and will not violate in any respect any provisions of (i)
any applicable law or judgement of The Netherlands, its
jurisdiction of incorporation or any other relevant jurisdiction,
or (ii) any mortgage contract other undertaking or instrument to
which it is a party or which is binding upon it or any of its
assets and does not and will not result in the creation or
imposition of any encumbrance on any of its assets pursuant to the
provisions of any such mortgage, contract or other undertaking or
instrument;
(ix) no litigation, arbitration or administrative proceedings are
presently current or pending or, to the best of its knowledge
threatened, which would or might have a material adverse effect on
its ability to perform its obligations under this Agreement;
(x) all acts, conditions and things required to be done, fulfilled and
performed in order (a) to enable it lawfully to enter into,
exercise its rights under and perform and comply with the
obligations expressed to be assumed by it in the Finance Documents
to which it is expressed to be party, (b) to ensure that the
obligations expressed to be assumed by it in the Finance Documents
to which it is expressed to be party are legal, valid and binding
and (c) to make the Finance Documents to which it is expressed to
be party admissible in evidence in its jurisdiction of
incorporation have been done, fulfilled and performed;
(xi) no member of the Group is in breach of or in default under any
agreement in respect of borrowed money which exceeds $25,000,000
(or its equivalent) (save, in respect of any guarantees, where
liability under such guarantee is being contested by an Obligor or
Material Subsidiary in good faith) to which it is a party or which
is binding on it or any of its assets;
(xii) all of the written information supplied by it to the Agents, the
Arrangers and the Banks in connection herewith is true, complete
and accurate in all material respects and it is not aware of any
material facts or circumstances that have not been disclosed to the
Agents, the Arrangers and the Banks and which might, if disclosed,
adversely affect the decision of a person considering whether or
not to provide finance to it;
(xiii) neither it nor (in the case of the Principal Company and Ahold USA)
any of its subsidiaries has taken any corporate action nor have any
other steps been taken or legal proceedings been started or (to the
best of its knowledge and belief) threatened against it or (in the
case of the Principal Company and Ahold USA) any of its
subsidiaries for its winding-up, dissolution, administration or re-
organisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of it or of any
or all of its assets or revenues;
(xiv) it is conducting its business and operations in compliance with all
laws and regulations and all directives of governmental authorities
having the force of law applicable or relevant to it;
(xv) it owns and has good and marketable title to all of its property;
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(xvi) to the best of its knowledge, it is in compliance with all
Environmental Laws and it has obtained, and will at all times
obtain, and is in compliance with, all Environmental Permits;
(xvii) to the best of its knowledge, there are no circumstances which have
led, or could lead, to a competent authority or a third party
taking any action or making a claim under any Environmental Laws
including the requirement to clean up any contaminated land or the
revocation, suspension, variation or non-renewal of any
Environmental Permits or to any member of the Group having to take
action to avert the possibility of any such action or claim;
(xviii) the aggregate liabilities of each Obligor and the ERISA Affiliates
to all Multiemployer Plans in the event of a complete withdrawal
therefrom, as of the close of the most recent fiscal year of each
such Multiemployer Plan ended prior to the date hereof, would not
have a material adverse effect upon the financial condition of such
Obligor; each Employee Plan is in compliance in all material
respects in form and operation with ERISA and the Code; except as
disclosed, each Employee Plan which is intended to be qualified
under Section 401(a) of the Code has been determined by the IRS to
be so qualified as to form, and, to the knowledge of any Obligor,
nothing has occurred since the date of such determination that
would adversely affect such determination; the fair market value of
the assets of each Employee Plan subject to Title IV of ERISA is at
least equal to the present value of the "benefit liabilities"
(within the meaning of Section 4001(a)(16) of ERISA) under such
Employee Plan determined using the actuarial assumptions and method
used by the actuary to such Employee Plan in its most recent
valuation of such Employee Plan; there are no actions, suits or
claims pending against or with respect to an Employee Plan (other
than routine claims for benefits) which would cause the Obligor to
incur a material liability or to the knowledge of any Obligor,
which could reasonably be expected to be asserted against or with
respect to any Employee Plan which would cause the Obligor to incur
a material liability; each of the Obligors and the ERISA Affiliates
has made all material contributions to or under each such Employee
Plan, or any contract or agreement requiring contribution to an
Employee Plan; none of the Obligors or any ERISA Affiliate has
ceased operations at a facility so as to become subject to the
provisions of Section 4062(e) of ERISA, withdrawn as a substantial
employer so as to become subject to the provisions of Section 4063
of ERISA or ceased making contributions to any Plan subject to
Section 4064(a) of ERISA to which it made contributions each in a
manner which would cause such Obligor to incur a material
liability; and none of the Obligors nor any of the ERISA Affiliates
has incurred or reasonably expects to incur any material liability
to PBGC other than for premiums under Section 4007 of ERISA;
(xix) The borrowings made hereunder will not violate or give rise to a
violation of Regulation U or Regulation X. No member of the Group
or any agent acting on their behalf has taken or will take any
action which would cause this Agreement or any of the documents or
instruments delivered pursuant hereto, any borrowing hereunder or
use of proceeds thereof to violate any regulation of the Board of
Governors of the Federal Reserve System of the United States or to
violate the US Securities Exchange Act of 1934 or any applicable US
federal or state securities laws; and
(xx) no member of the Group is subject to regulation under the United
States Public Utility Holding Company Act of 1935, the United
States Federal Power Act or the United States Investment Company
Act of 1940 or to any United States federal or state statute or
regulation limiting its ability to incur indebtedness; no member of
the Group is an "investment company," or an "affiliated person" of,
or "promoter" or "principal underwriter" for, an "investment
company,"
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as such terms are defined in the U.S. Investment Company Act of
1940 (15 U.S.C. (S)(S) 80a-1. et seq.); and none of the
transactions contemplated by this Agreement will violate such Act.
24. Undertakings
Each of the Borrowers (unless otherwise specified) undertakes that from and
after the date hereof and until all sums due and to become due from such
Borrower under this Agreement have been paid or repaid and the Facilities shall
no longer exist:
(i) (a) the Principal Company will deliver to the Facility Agent and each
of the Banks as soon as the same are available (and in any event
no later than 180 days after the end of the relevant financial
year) its audited consolidated (and unconsolidated to the extent
that any Bank shall have to comply with any regulations imposed
on it in relation to the provision of financial information by
the Principal Company) profit and loss account for such financial
year and its audited consolidated (and unconsolidated to the
extent that any Bank shall have to comply with any regulations
imposed on it in relation to the provision of financial
information by the Principal Company) balance sheet as at the end
of such financial year prepared in conformity with generally
accepted accounting principles in The Netherlands applied on a
basis consistent with those of the preceding financial year, or
if not prepared on a consistent basis, containing or accompanied
by an adequate explanation of the consequences of any such
inconsistency;
(b) the Principal Company will promptly send to the Facility Agent
and each of the Banks two copies of any interim report or
accounts or any other notice or communication sent by it to its
shareholders in their capacity as such or to any stock exchange
on which its shares are listed;
(c) it will forthwith upon a request to that effect, provide the
Facility Agent with such additional financial information or
other information as the Facility Agent or any Bank through the
Facility Agent may from time to time reasonably require
(including, without limitation, information that the Facility
Agent or any Bank may reasonably require in order to determine
the ratios referred to in Clause 24(vii) in respect of any
financial period) and upon receipt of a written request to that
effect from the Facility Agent, confirm to the Facility Agent
that, save as previously notified to the Facility Agent or as
notified in such confirmation, no Event of Default or Potential
Event of Default has occurred;
(d) it will annually as soon as possible after the end of its
financial year (but in no event later than 90 days after the end
of the relevant financial year) furnish the Facility Agent with a
certificate to the effect that the representations and warranties
set out in Clause 23 (Representations and Warranties) hereof are
true and accurate on and as of that time as if made at that time;
(e) without prejudice to Clause 24(i)(b), the Principal Company will
as soon as possible after the end of each quarter of each
financial year (but in no event later than 90 days after the end
of the relevant quarter of such financial year) furnish the
Facility Agent in sufficient copies for the Banks with its
interim report in respect of such financial quarter, such interim
report to contain such information as may be required to enable
the Facility Agent and the Banks to calculate the ratios
contained in Clause 24(vii) as at
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or during the four quarter period ending on (as the case may be)
the last day of the relevant quarter of such financial year and a
duly signed certificate by one of its duly authorised officers
stating that the covenants set out in Clause 24(vii) were
complied with during the four quarter period ending at the end of
such quarter;
(ii) it will promptly give written notice to the Facility Agent of any
Event of Default and of any Potential Event of Default or of the
occurrence of any such event in relation to a subsidiary as if the
references to Borrower in Clause 25 (Events of Default) were
references to a subsidiary and if, in such latter case, such event
could have a material adverse affect on the ability of any Borrower
to perform its obligations under this Agreement, at the same time
informing the Facility Agent of any action taken or proposed to be
taken by such Borrower in connection therewith;
(iii) it will not without the Banks' prior written consent create or
permit to be created or to subsist and will ensure that none of its
subsidiaries will without the Banks' prior written consent create or
permit to be created or to subsist any encumbrance on or over the
whole or any part of its assets (present or future); Provided that
(x) the foregoing shall not prohibit any encumbrances upon any
Margin Stock; and (y) the Banks hereby consent to (i) encumbrances
to secure indebtedness for borrowed money to be created or to
subsist over assets and revenues not in excess of 15% of the total
consolidated net assets of the Group according to the audited
consolidated financial statements of the Group most recently
delivered to the Facility Agent pursuant to Clause 24(i)(a), and
(ii) encumbrances created or consented to by any member of the Group
prior to the date of this Agreement Provided that the Principal
Company has notified the Facility Agent in writing of such
encumbrances providing to the Facility Agent full details thereof,
such notice to be received by the Facility Agent not later than the
date hereof;
(iv) it will, if the consent (other than the consent granted pursuant to
sub-clause (iii)) of the Banks is required pursuant to sub-clause
(iii) above and such consent is forthcoming in relation to any
encumbrance, create to the satisfaction of the Banks in favour of
the Banks (or the Facility Agent on behalf of the Banks) the same
encumbrance or such other encumbrance or encumbrances as the Banks
in their absolute discretion shall deem not materially less
beneficial to them than the encumbrance in respect of which such
consent is given to secure, in each case, all sums due and to become
due from any Obligor under this Agreement Provided that the
foregoing shall not apply to any Margin Stock;
(v) it will forthwith notify the Facility Agent of any litigation or
administrative or arbitration proceedings in or by any court,
tribunal, arbitrator or governmental or municipal authority in
process, pending or threatened against any member of the Group or
any of their respective assets which might have a material adverse
effect on the ability of an Obligor to perform its obligations under
this Agreement;
(vi) it will use its best endeavours to obtain and maintain all
authorisations, approvals, consents, licenses and exemptions and it
will make all necessary filings and registrations as may be required
under any applicable law or regulation to enable it to perform its
obligations under each Finance Document, or required for the
validity or enforceability of each Finance Document and will comply
with the terms of the same; and
(vii) the Principal Company will ensure at all times the consolidated
financial condition of the Group, as evidenced by the Principal
Company's most recent audited annual consolidated financial
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statements (adjusted to take account of any changes in circumstances
which occur after the date as of which such audited annual
consolidated financial statements were prepared), shall be such that
the ratio of operating earnings before income taxes plus Net
Interest Expense to Net Interest Expense determined on a rolling
four quarter average basis is not less than 3.00:1.00.
The expressions used in this Clause 24(vii) shall have the meaning
attributed thereto in the consolidated financial statements of the
Group (which shall comply with Clause 24(i) and shall be construed
in accordance with generally accepted accounting principles in the
Netherlands) but so that "Net Interest Expense" shall equal interest
expense minus interest income.
Finally, "determined on a rolling four quarter average basis", means
in relation to the ratio referred to above, such ratio tested at the
end of each Quarterly Financial Period by taking the average of such
ratios calculated for each of such Quarterly Financial Period and
the three immediately preceding Quarterly Financial Periods where
"Quarterly Financial Period" means a financial quarter of a
financial year of the Principal Company;
(viii) procure that each member of the Group maintains insurances on and in
relation to its business and assets with reputable underwriters or
insurance companies against such risks and to such extent as is
usual for companies carrying on a business such as that carried on
by such member of the Group whose practice is not to self insure;
(ix) it shall ensure that each of its subsidiaries shall comply with all
Environmental Laws and Environmental Permits applicable from time to
time to all or any part of its business or assets;
(x) it shall ensure that each of its subsidiaries shall not allow any
circumstances to arise which could lead to a competent authority or
a third party taking action or making a claim under any
Environmental Laws including the requirement to clean up any
contaminated land or the revocation, suspension, variation or non-
renewal of any Environmental Permits or to it or any such subsidiary
having to take action to avert the possibility of any such action or
claim;
(xi) within four days of the receipt of notice of the same, give full
particulars (and if requested a copy of any written particulars
received by the relevant member of the Group) to the Facility Agent
of any material notice, order, direction, designation, resolution or
proposal having application to all or any part of the its business
or assets or that of any of its subsidiaries or to the area in which
such business or assets are situate given or made by any planning
authority or other public body or authority whatsoever under or by
virtue of Environmental Laws or any other statutory power whatsoever
or in pursuance of the powers conferred by any other statute
whatsoever;
(xii) if so required by the Facility Agent, without delay and at the cost
of the Principal Company, take all reasonable or necessary steps to
comply with any such notice or order referred to in Clause 24(xi)
above and at the request of any Bank, without delay and at the cost
of the Principal Company, make or join with the Facility Agent in
making such objection or objections or representations against or in
respect of any proposal for such a notice or order as the Facility
Agent shall deem expedient; and
(xiii) nothing contained in this Agreement shall restrict the ability of
the Borrower or any of its subsidiaries from selling, pledging or
otherwise disposing of any assets which, at the time
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in question, constitute Margin Stock, or cause or enable any one or
more Banks to cause any or all of the Advances or other obligations
to become due and payable or to enable any one or more of the Banks
to take any of the actions specified in Clause 25.1(a), (b) or (c)
below as a result of any such sale, pledge or disposition.
25. Events of Default
25.1 Events of Default If:
(i) any Obligor fails to pay any principal, interest or other sum on the
day of the same becoming due and payable pursuant to this Agreement;
(ii) any representation, warranty or statement made or (deemed to be)
repeated by any Obligor in this Agreement or in any certificate,
statement, opinion or other document contemplated hereby proves to
be untrue or incorrect in a respect which is, in the opinion of an
Instructing Group, material at the time such certificate statement,
opinion or document is made or repeated (or deemed to be made or
repeated) or expressed; or
(iii) any Obligor defaults in the due performance or observance of any
undertaking or obligation on its part contained in or pursuant to
this Agreement and, if such default is capable of remedy, the same
shall not have been remedied to the satisfaction of the Facility
Agent (after consultation with an Instructing Group,) within
fourteen days thereafter; or
(iv) there shall have occurred the liquidation of any of the Obligors or
any Material Subsidiary or any order is made or resolution, law or
regulation passed or other action taken (including the making of any
application to any court or other relevant authority) for or with a
view to the liquidation of any Obligor or any Material Subsidiary or
any Obligor or any Material Subsidiary shall otherwise enter into
liquidation; or
(v) any Obligor or any Material Subsidiary petitions or applies to any
court, tribunal or other body or authority for the appointment of,
or there shall otherwise be appointed, any administrator,
bewindvoerder, receiver, liquidator, curator, sequestrator, trustee
or other similar officer of any Obligor or any Material Subsidiary
or of all or any part of the assets of any Obligor or any Material
Subsidiary; or
(vi) any Obligor or any Material Subsidiary applies for a (temporary)
moratorium or suspension of payments or for an arrangement with its
creditors or for any proceedings or arrangement by which the assets
of any Obligor or any Material Subsidiary are submitted to the
control of its creditors or any Obligor or any Material Subsidiary
otherwise threatens, proposes or declares any moratorium on its
debts or any class of its debts; or
(vii) any Obligor or any Material Subsidiary becomes, or is declared by
any competent authority to be, insolvent or admits in writing its
inability to pay its debts as they fall due or is or becomes subject
to or applies for any bankruptcy proceedings or starts negotiations
with its creditors for a restructuring of its debt; or
(viii) any Obligor without the written consent of the Facility Agent on
behalf of the Banks ceases or threatens to cease its business as
presently conducted or if any Obligor or any other member of the
Group sells, leases, transfers or otherwise disposes of the whole or
any Substantial part of
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its assets (other than Margin Stock) exceeding a value equalling a
Substantial part of the assets on a consolidated basis of the
Principal Company whether by one transaction or a series of related
transactions without the prior written consent of the Banks; or
(ix) any other indebtedness of any Obligor or any Material Subsidiary for
or in respect of any borrowed moneys which, when aggregated with the
amount of all other borrowed monies to which this Clause 25.1(ix)
applies, exceed $25,000,000 (or its equivalent) (save, in respect of
any guarantee, where liability under such guarantee is being
contested by such Obligor or any Material Subsidiary in good faith)
is not paid when due for payment (or within any stated applicable
period of grace) or is found not to have been so paid or becomes due
and payable or capable of being declared due and payable prior to
its stated date of payment or, if payable on demand, shall not be
paid when demanded Provided that if such other indebtedness is held
by any Bank (or any affiliate thereof) and was declared to be due
and payable or became capable of being declared due and payable
prior to its stated date of payment, in any case, in circumstances
which would not have occurred but for a default by either of the
Borrowers or one or more of its subsidiaries in complying with a
restriction contained in the documentation governing such
indebtedness on the ability of such Borrower or such subsidiary to
sell, pledge or otherwise dispose of Margin Stock, then neither such
declaration (or any failure to pay based on any such declaration) or
such becoming capable of being declared due and payable shall
constitute a Potential Event of Default or Event of Default; or
(x) any Obligor or any Material Subsidiary defaults under any mortgage,
charge, pledge, lien or other encumbrance or other security interest
upon the whole or any part of the assets of such Obligor or any
Material Subsidiary and the same accordingly becomes enforceable; or
(xi) all or any Substantial part of the assets of any Obligor or any
Material Subsidiary are attached or distrained upon or becomes
subject to any order or court or other process for execution and
such attachment, distraint, order or process remains in effect and
not discharged for 30 days; or
(xii) any consent of the Dutch authorities or the authorities of any other
relevant jurisdiction required for the validity, enforceability or
legality of this Agreement or the performance thereof ceases to be
or is not for any reason in full force and effect or such
performance becomes unlawful; or
(xiii) the whole or any part of the assets, revenues or share capital of
any Obligor or any Material Subsidiary having a value which, when
aggregated with the value of all other assets to which this Clause
25.1(xiii) applies, equals or exceeds 15% of the consolidated net
assets of the Principal Company, is expropriated or nationalised by
any government; or
(xiv) any US Obligor shall (i) file a petition to take advantage of any
insolvency act; (ii) file a petition or answer seeking
reorganisation or arrangement or similar relief under the Federal
Bankruptcy Code or any other applicable law or statute of the United
States or any state; or (iii) by appropriate proceedings of the
board of directors, or the general or limited partners or other
governing body of any US Obligor, authorize the filing of any such
petition, making of such assignment or commencement of such a
proceeding; or
(xv) in respect of any US Obligor a court of competent jurisdiction shall
enter an order, judgment or decree appointing a custodian, receiver,
trustee, liquidator or conservator of any US Obligor or of the whole
or any substantial part of its properties, or approve a petition
filed against any US Obligor seeking reorganization or arrangement
or similar relief under the Federal Bankruptcy
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Code or any other applicable law or statute of the United States or
any state; or if, under the provisions of any other law for the
relief or aid of debtors, a court of competent jurisdiction shall
assume custody or control of any US Obligor or of the whole or any
substantial part of its properties; or if there is commenced against
any US Obligor any proceeding for any of the foregoing relief and
such proceeding or petition remains undismissed for a period of
sixty days; or if any US Obligor by any act indicates its consent to
or approval of any such proceeding or petition; or
(xvi) with respect to any Obligor or any ERISA Affiliate thereof, an ERISA
Event shall occur with respect to an Employee Plan and there shall
result from such ERISA Event a liability which, individually or in
the aggregate, has a material adverse effect upon the financial
condition of such Obligor,
then, and in any such case and at any time thereafter, the Facility Agent may
(and, if so instructed by an Instructing Group, shall) by written notice to the
Borrowers:
(a) declare the Advances to be immediately due and payable (in the
case of an Event of Default specified in paragraphs (i) - (xi),
and (xiii) - (xv) above) or due and payable within seven days of
demand of the Facility Agent (in any other case) (whereupon the
same shall become so payable together with accrued interest
thereon and any other sums then owed by any Obligor hereunder) or
declare the Advances to be due and payable on demand of the
Facility Agent; and/or
(b) require the relevant Borrower to procure that the obligations of
each of the Banks in respect of each Letter of Credit are
promptly reduced to zero or provide 100% cash security (in the
currency in which such Letter of Credit is denominated) in a
manner acceptable to each Bank in respect thereof (whereupon the
relevant Borrower shall do so); and/or
(c) declare that the Facilities shall be cancelled, whereupon the
same shall be cancelled and the Commitment of each Bank shall be
reduced to zero
(Provided, however, that notwithstanding the above, if there shall occur an
Event of Default under Clause 25.1(xiv) or Clause 25.1(xv) then the obligations
of the Banks to lend hereunder shall automatically terminate and any and all of
the Advances and other obligations shall be immediately due and payable without
any action by the Facility Agent or any Bank).
25.2 Facilities Due on Demand If, pursuant to Clause 25.1 (Events of Default),
the Facility Agent declares the Advances to be due and payable on demand of the
Facility Agent, then, and at any time thereafter, the Facility Agent may (and,
if so instructed by an Instructing Group, shall) by written notice to the
Borrowers call for repayment of the Advances on such date as it may specify in
such notice (whereupon the same shall become due and payable on such date
together with, in the case of payments in respect of Advances, accrued interest
thereon and any other sums then owed by the Obligors hereunder) or withdraw its
declaration with effect from such date as it may specify in such notice.
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PART 11
GUARANTEE
26. Guarantee and Indemnity
26.1 Guarantee: Principal Company The Principal Company irrevocably and
unconditionally guarantees to the Agents, the Arrangers and the Banks the due
and punctual observance and performance of all the terms, conditions and
covenants on the part of each other Obligor under this Agreement and agrees to
pay to the Facility Agent for its account or for the account of the Banks, the
Arrangers and the other Agents from time to time on demand any and every sum or
sums of money which any such other Obligor is at any time liable to pay to the
Agents, the Arrangers and the Banks or any of them under or pursuant to this
Agreement and which has become due and payable but has not been paid at the time
such demand is made.
26.2 Indemnity: Principal Company The Principal Company irrevocably and
unconditionally agrees as a primary obligation to indemnify the Agents, the
Arrangers and the Banks from time to time on demand by the Facility Agent from
and against any loss incurred by the Agents, the Arrangers and the Banks or any
of them as a result of any of the obligations of any other Obligor under or
pursuant to this Agreement being or becoming void, voidable, unenforceable or
ineffective as against such Obligor for any reason whatsoever, whether or not
known to the Agents, the Arrangers and the Banks or any of them or any other
person, the amount of such loss being the amount which the person or persons
suffering it would otherwise have been entitled to recover from such Obligor.
26.3 Guarantee: Ahold USA Ahold USA irrevocably and unconditionally guarantees
to the Agents, the Arrangers and the Banks the due and punctual observance and
performance of all the terms, conditions and covenants on the part of the
Principal Company contained in this Agreement and agrees to pay to the Facility
Agent for its account or for the account of the Banks, the Arrangers and the
other Agents from time to time on demand any and every sum or sums of money
which the Principal Company is at any time liable to pay to the Agents, the
Arrangers and the Banks or any of them under or pursuant to this Agreement and
which has become due and payable but has not been paid at the time such demand
is made.
26.4 Indemnity: Ahold USA Ahold USA irrevocably and unconditionally agrees as
a primary obligation to indemnify the Agents, the Arrangers and the Banks from
time to time on demand by the Facility Agent from and against any loss incurred
by the Agents, the Arrangers and the Banks or any of them as a result of any of
the obligations of the Principal Company under or pursuant to this Agreement
being or becoming void, voidable, unenforceable or ineffective as against the
Principal Company for any reason whatsoever, whether or not known to the Agents,
the Arrangers and the Banks or any of them or any other person, the amount of
such loss being the amount which the person or persons suffering it would
otherwise have been entitled to recover from the Principal Company.
26.5 Additional Security The obligations of each Guarantor herein contained
shall be in addition to and independent of every other security which the
Agents, the Arrangers and the Banks or any of them may at any time hold in
respect of any obligations of any Obligor hereunder.
26.6 Continuing Obligations The obligations of each Guarantor herein contained
shall constitute and be continuing obligations notwithstanding any settlement of
account or other matter or thing whatsoever and shall not be considered
satisfied by any intermediate payment or satisfaction of all or any of the
obligations of any Obligor under this Agreement and shall continue in full force
and effect until final payment in full of all amounts owing by each Obligor
hereunder and total satisfaction of all the Obligors' actual and contingent
obligations hereunder.
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26.7 Obligations not Discharged Neither the obligations of each Guarantor
herein contained nor the rights, powers and remedies conferred in respect of
such Guarantor upon the Agents, the Arrangers and the Banks or any of them by
this Agreement or by law shall be discharged, impaired or otherwise affected by:
(a) the winding-up, dissolution, administration or re-organisation of any
other Obligor or any other person or any change in its status,
function, control or ownership;
(b) any of the obligations of any other Obligor or any other person
hereunder or under any other security taken in respect of any of its
obligations hereunder being or becoming illegal, invalid,
unenforceable or ineffective in any respect;
(c) time or other indulgence being granted or agreed to be granted to any
other Obligor in respect of its obligations hereunder or under any
such other security;
(d) any amendment to, or any variation, waiver or release of, any
obligation of any other Obligor hereunder or under any such other
security;
(e) any failure to take, or fully to take, any security contemplated
hereby or otherwise agreed to be taken in respect of any other
Obligor's obligations hereunder;
(f) any failure to realise or fully to realise the value of, or any
release, discharge, exchange or substitution of, any security taken in
respect of any other Obligor's obligations hereunder; or
(g) any other act, event or omission which, but for this Clause 26.7,
might operate to discharge, impair or otherwise affect any of the
obligations of such Obligor herein contained or any of the rights,
powers or remedies conferred upon the Agents, the Arrangers and the
Banks or any of them by this Agreement or by law.
26.8 Settlement Conditional Any settlement or discharge between the Guarantors
and the Agents, the Arrangers and the Banks or any of them shall be conditional
upon no security or payment to the Agents, the Arrangers and the Banks or any of
them by any Obligor or any other person on behalf of such Obligor being avoided
or reduced by virtue of any provisions or enactments relating to bankruptcy,
insolvency, liquidation or similar laws of general application for the time
being in force and, if any such security or payment is so avoided or reduced,
the Agents, the Arrangers and the Banks shall each be entitled to recover the
value or amount of such security or payment from such Guarantor subsequently as
if such settlement or discharge had not occurred.
26.9 Exercise of Rights Neither the Agents, the Arrangers and the Banks nor
any of them shall be obliged before exercising any of the rights, powers or
remedies conferred upon them in respect of any Guarantor by this Agreement or by
law:
(a) to make any demand of any other Obligor;
(b) to take any action or obtain judgment in any court against any other
Obligor;
(c) to make or file any claim or proof in a winding-up or dissolution of
any other Obligor; or
(d) to enforce or seek to enforce any other security taken in respect of
any of the obligations of any other Obligor hereunder.
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26.10 Deferral of Borrowers' Rights Each Guarantor agrees that, so long as any
amounts are or may be owed by any other Obligor hereunder or any other Borrower
is under any actual or contingent obligations hereunder, such Guarantor shall
not exercise any rights which it may at any time have by reason of performance
by it of its obligations hereunder:
(a) to be indemnified by any other Obligor; and/or
(b) to claim any contribution from any other Obligor or any other
guarantor of any other Obligor's obligations hereunder; and/or
(c) to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Agents, the Arrangers
and the Banks hereunder or of any other security taken pursuant to, or
in connection with, this Agreement by all or any of the Agents, the
Arrangers and the Banks.
26.11 Suspense Accounts All moneys received, recovered or realised by a Bank
by virtue of Clause 26.1 (Guarantee: Principal Company) or Clause 26.3
(Guarantee: Ahold USA) or Clause 26.2 (Indemnity: Principal Company) or Clause
26.4 (Indemnity) may, in that Bank's discretion, be credited to a suspense or
impersonal account and may be held in such account for so long as such Bank
thinks fit pending the application from time to time (as such Bank may think
fit) of such moneys in or towards the payment and discharge of any amounts owing
by any of the Obligors to such Bank hereunder.
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PART 12
DEFAULT INTEREST AND INDEMNITY
27. Default Interest and Indemnity
27.1 Default Interest Periods If any sum due and payable by any of the
Obligors hereunder (other than in relation to a Swing-Line Advance) is not paid
on the due date therefor in accordance with the provisions of Clause 29
(Payments) or if any sum due and payable by any of the Obligors under any
judgment of any court in connection herewith is not paid on the date of such
judgment, the period beginning on such due date or, as the case may be, the date
of such judgment and ending on the date upon which the obligation of such
Obligor to pay such sum (the balance thereof for the time being unpaid being
herein referred to as an "unpaid sum") is discharged shall be divided into
successive periods, each of which (other than the first) shall start on the last
day of the preceding such period shall be of such duration (not exceeding three
months) as the Facility Agent may select (except as otherwise provided in this
Clause 27).
27.2 Default Interest During each such period relating thereto as is mentioned
in Clause 27.1 (Default Interest Periods) an unpaid sum referred to in Clause
27.1 shall bear interest at the rate per annum which is the sum from time to
time of two per cent., the Margin and LIBOR determined in respect of such unpaid
sum for such period Provided that:
(a) if, for any such period, LIBOR cannot be determined, the rate of
interest applicable to each part of any unpaid sum owed to any Bank
shall be the sum from time to time of two per cent., the Margin and
the rate per annum (rounded upwards to the nearest four decimal
places) notified (together with reasonable evidence that such rate is
applicable) by such Bank to the Facility Agent (who shall notify the
Borrower thereof) before the last day of such period to be that which
expresses as a percentage rate per annum the cost to it of funding
from whatever source it may select its portion of such unpaid sum for
such period; and
(b) if such unpaid sum is all or part of a Revolving Credit or Short-Term
Advance which became due and payable on a day other than the last day
of the Term thereof, the first such period applicable thereto shall be
of a duration equal to the unexpired portion of that Term and the rate
of interest applicable thereto from time to time during such period
shall be that which exceeds by two per cent. the rate which would have
been applicable to it had it not so fallen due.
27.3 Swing-Line Default Interest If any sum due and payable by the Borrower
hereunder in respect of a Swing-Line Advance is not paid on the due date
therefor in accordance with the provisions of Clause 29 (Payments) or if any sum
due and payable by the Borrower under any judgment of any court in connection
with any Swing-Line Advance is not paid on the date of such judgment, then
interest shall accrue on such sum on each day (a "relevant day") from and
including the due date thereof or the date of such judgment (as the case may be
) until (but excluding) the date of actual payment at a rate per annum (as
determined by the Swing-Line Agent at 11.00 a.m. on each such relevant day)
equal to the sum of two per cent. and the greater of:
(i) the Prime Rate for such relevant day; and
(ii) the sum of the Federal Funds Rate for such relevant day and the Swing-
Line Margin.
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27.4 Payment of Default Interest Any interest which shall have accrued under
Clause 27.2 (Default Interest) and Clause 27.3 (Swing-Line Default Interest) in
respect of any sum shall be due and payable and shall be paid by the Obligor
owing such sum at the end of the period by reference to which it is calculated
or on such other date or dates as the Facility Agent may specify by written
notice to such Obligor.
27.5 Broken Periods If any Bank or the Facility Agent on its behalf receives
or recovers all or any part of an Advance made by such Bank otherwise than on
the last day of the Term thereof, the Obligor to whom such Advance was made
shall pay to the Facility Agent on demand for account of such Bank an amount
equal to the amount (if any) by which (a) the additional interest which would
have been payable on the amount so received or recovered had it been received or
recovered on the last day of the Term thereof exceeds (b) the amount of interest
which in the opinion of the Facility Agent would have been payable to the
Facility Agent on the last day of the Term thereof in respect of a deposit in
the currency of the amount so received or recovered equal to the amount so
received or recovered placed by it with a prime bank in London for a period
starting on the third business day following the date of such receipt or
recovery and ending on the last day of the Term thereof.
27.6 The Principal Company's Indemnity The Principal Company undertakes to
indemnify:
(a) each of the Agents, the Arrangers and the Banks against any cost,
claim, loss, expense (including legal fees) or liability together with
any VAT thereon, which any of them may sustain or incur as a
consequence of the occurrence of any Event of Default or any payment
default by any of the Obligors hereunder;
(b) each Agent against any loss it may suffer as a result of its entering
into, or performing, any foreign exchange contract for the purposes of
Part 13; and
(c) each Bank against any loss it may suffer as a result of its funding an
Advance requested by any of the Borrowers hereunder but not made by
reason of the operation of any one or more of the provisions hereof.
27.7 Unpaid Sums as Advances Any unpaid sum shall (for the purposes of this
Clause 27 and Clause 20.1 (Increased Costs)) be treated as an advance and
accordingly in this Clause 27 and Clause 20.1 (Increased Costs) the term
"Advance" includes any unpaid sum and "Term", in relation to an unpaid sum,
includes each such period relating thereto as is mentioned in Clause 20.1
(Default Interest Periods).
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PART 13
PAYMENTS
28. Currency of Account and Payment
28.1 Currency of Account The dollar is the currency of account and payment for
each and every sum at any time due from any of the Obligors hereunder Provided
that:
(a) each repayment of an Advance or a part thereof shall be made in the
currency in which such Advance is denominated at the time of that
repayment;
(b) each payment in respect of a Letter of Credit shall be made in the
currency in which such Letter of Credit is denominated;
(c) each payment of interest shall be made in the currency in which the
sum in respect of which such interest is payable is denominated;
(d) each payment in respect of costs and expenses shall be made in the
currency in which the same were incurred;
(e) each payment pursuant to Clause 18.2 (Tax Indemnity) or Clause 20.1
(Increased Costs) shall be made in the currency specified by the party
claiming thereunder; and
(f) any amount expressed to be payable in a currency other than dollars
shall be paid in that other currency.
28.2 Currency Indemnity If any sum due from any of the Obligors under this
Agreement or any order or judgment given or made in relation hereto has to be
converted from the currency (the "first currency") in which the same is payable
hereunder or under such order or judgment into another currency (the "second
currency") for the purpose of (a) making or filing a claim or proof against such
Obligor, (b) obtaining an order or judgment in any court or other tribunal or
(c) enforcing any order or judgment given or made in relation hereto or if any
such sum is paid in the second currency, the Principal Company shall indemnify
and hold harmless each of the persons to whom such sum is due from and against
any loss suffered as a result of any discrepancy between (i) the rate of
exchange used for such purpose to convert the sum in question from the first
currency into the second currency and (ii) the rate or rates of exchange at
which such person may in the ordinary course of business purchase the first
currency with the second currency upon receipt of a sum paid to it in
satisfaction, in whole or in part, of any such order, judgment, claim or proof.
29. Payments
29.1 Payments to the Agents On each date on which this Agreement requires an
amount to be paid by any Obligor or any of the Banks hereunder, such Obligor or,
as the case may be, such Bank shall make the same available to the Facility
Agent or, in the case of an amount to be paid in an Optional Currency, the
Multicurrency Facility Agent:
(a) where such amount is denominated in dollars, by payment in dollars and
in same day funds (or in such other funds as may for the time being be
customary in New York City for the settlement in New York City of
international banking transactions in dollars) to the Facility Agent's
account number 323510027 with The Chase Manhattan Bank, New York,
N.Y., United States of America under account name Ahold USA Holdings,
Inc. and ABA
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Number 021000021 (or such other account or bank as the Facility Agent
may have specified for this purpose); or
(b) where such amount is denominated in an Optional Currency, by payment
in such Optional Currency and in immediately available, freely
transferable, cleared funds to such account with such bank in the
principal financial centre of the country of such Optional Currency as
the Multicurrency Facility Agent shall have specified for this
purpose.
Any payment received by any Agent from any Obligor in accordance with the
foregoing shall, without prejudice to such Agent's or any Bank's rights to
reclaim or reassert its rights to payment from the Obligors of any amount which
such Agent or such Bank is required to repay to the Obligors for any reason,
constitute fulfilment by the Obligors of its obligation to make such payment
hereunder.
29.2 Alternative Payment Arrangements If, at any time, it shall become
impracticable (by reason of any action of any governmental authority or any
change in law, exchange control regulations or any similar event) for any or all
of the Obligors to make any payments hereunder in the manner specified in Clause
29.1 (Payments to the Agents), then such Obligor may agree with each or any of
the Banks alternative arrangements for the payment direct to such Bank of
amounts due to such Bank hereunder Provided that, in the absence of any such
agreement with any Bank, such Obligor shall be obliged to make all payments due
to such Bank in the manner specified herein. Upon reaching such agreement such
Obligor and such Bank shall immediately notify the appropriate Agent thereof and
shall thereafter promptly notify such Agent of all payments made direct to such
Bank.
29.3 Payments by the Agents Save as otherwise provided herein, each payment
received by any Agent for the account of another person pursuant to Clause 29.1
(Payments to the Agents) shall:
(a) in the case of a payment received for the account of any Obligor, be
made available by such Agent to such Obligor by application:
(i) first, in or towards payment (on the date, and in the currency
and funds, of receipt) of any amount then due from such Obligor
hereunder to the person from whom the amount was so received or
in or towards the purchase of any amount of any currency to be so
applied; and
(ii) secondly, in or towards payment (on the date, and in the currency
and funds, of receipt) to such account with such bank in the
principal financial centre of the country of the currency of such
payment as such Obligor shall have previously notified to such
Agent for this purpose; and
(b) in the case of any other payment, be made available by such Agent to
the person for whose account such payment was received (in the case of
a Bank, for the account of its relevant Facility Office) for value the
same day by transfer to such account of such person with such bank in
the principal financial centre of the country of the currency of such
payment as such person shall have previously notified to such Agent.
29.4 Payments under the Short-Term Advances Facility In the case of the
acceptance of an offer pursuant to Clause 11 (Acceptance of Offers) for Short-
Term Advances the provisions of Clause 29.1 (Payments to the Agents) shall not
apply to the making of the relevant Short-Term Advance by the relevant Bank or
the repayment thereof or the payment of any interest thereon on or prior to its
Repayment Date. All such payments shall be paid directly to the relevant Obligor
by the relevant Bank or, as the case may be, by the relevant Obligor to the
relevant
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Bank, in each case, in such manner as the relevant Obligor and the relevant Bank
shall agree. The relevant Bank shall promptly notify the Short-Term Advances
Agent if any payment referred to in this Clause 29.4 is not met in full on its
due date specifying the amount and currency of any shortfall.
29.5 No Set-off All payments required to be made by any of the Obligors
hereunder shall be calculated without reference to any set-off or counterclaim
and shall be made free and clear of and without any deduction for or on account
of any set-off or counterclaim.
29.6 Clawback Where a sum is to be paid hereunder to an Agent for account of
another person, such Agent shall not be obliged to make the same available to
that other person or to enter into or perform any exchange contract in
connection therewith until it has been able to establish to its satisfaction
that it has actually received such sum, but if it does so and it proves to be
the case that it had not actually received such sum, then the person to whom
such sum or the proceeds of such exchange contract were so made available shall
on request refund the same to such Agent together with an amount sufficient to
indemnify such Agent against any cost or loss it may have suffered or incurred
by reason of its having paid out such sum or the proceeds of such exchange
contract prior to its having received such sum.
30. Set-off
30.1 Contractual Set-off Each of the Obligors authorises each Bank to apply
and each Bank shall be entitled to set-off any credit balance to which such
Obligor is entitled on any account of such Obligor with that Bank in
satisfaction of any sum due and payable from such Obligor to such Bank hereunder
but unpaid; for this purpose, each Bank is authorised to purchase with the
moneys standing to the credit of any such account such other currencies as may
be necessary to effect such application.
30.2 Set-off not Mandatory No Bank shall be obliged to exercise any right
given to it by Clause 30.1 (Contractual Set-off).
31. Sharing
31.1 Redistribution of Payments Subject to Clause 31.3 (Recoveries Through
Legal Proceedings), if, at any time, the proportion which any Bank (a
"Recovering Bank") has received or recovered (whether by payment, the exercise
of a right of set-off or combination of accounts or otherwise) in respect of its
portion of any payment (a "relevant payment") to be made under this Agreement by
any of the Obligors for account of such Recovering Bank and one or more other
Banks is greater (the portion of such receipt or recovery giving rise to such
excess proportion being herein called an "excess amount") than the proportion
thereof so received or recovered by the Bank or Banks so receiving or recovering
the smallest proportion thereof, then:
(a) such Recovering Bank shall pay to the relevant Agent an amount equal
to such excess amount;
(b) there shall thereupon fall due from such Obligor to such Recovering
Bank an amount equal to the amount paid out by such Recovering Bank
pursuant to paragraph (a) above, the amount so due being, for the
purposes hereof, treated as if it were an unpaid part of such
Recovering Bank's portion of such relevant payment; and
(c) such Agent shall treat the amount received by it from such Recovering
Bank pursuant to paragraph (a) above as if such amount had been
received by it from such Obligor in
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respect of such relevant payment and shall pay the same to the persons
entitled thereto (including such Recovering Bank) pro rata to their
respective entitlements thereto,
Provided that to the extent that any excess amount is attributable to a payment
to a Bank pursuant to paragraph (a)(i) of Clause 29.3 (Payments by the Agents)
such portion of such excess amount as is so attributable shall not be required
to be shared pursuant hereto.
31.2 Repayable Recoveries If any sum (a "relevant sum") received or recovered
by a Recovering Bank in respect of any amount owing to it by any of the Obligors
becomes repayable and is repaid by such Recovering Bank, then:
(a) each Bank which has received a share of such relevant sum by reason of
the implementation of Clause 31.1 (Redistribution of Payments) shall,
upon request of the relevant Agent, pay to such Agent for account of
such Recovering Bank an amount equal to its share of such relevant
sum; and
(b) there shall thereupon fall due from such Obligor to each such Bank an
amount equal to the amount paid out by it pursuant to paragraph (a)
above, the amount so due being, for the purposes hereof, treated as if
it were the sum payable to such Bank against which such Bank's share
of such relevant sum was applied.
31.3 Recoveries Through Legal Proceedings If any Bank shall commence any
action or proceeding in any court to enforce its rights hereunder after
consultation with the other Banks and, as a result thereof or in connection
therewith, shall receive any excess amount (as defined in Clause 31.1
(Redistribution of Payments)), then such Bank shall not be required to share any
portion of such excess amount with any Bank which has the legal right to, but
does not, join in such action or proceeding or commence and diligently prosecute
a separate action or proceeding to enforce its rights in another court.
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PART 14
FEES, COSTS AND EXPENSES
32. Fees
32.1 Facility Fee The Principal Company shall pay to the Facility Agent for
account of each Bank a facility fee on the amount of the Total Commitments from
time to time during the period (the "relevant period") beginning on the date
hereof and ending on the Termination Date, such facility fee to be calculated:
(i) in respect of the period commencing on the date hereof and ending on
the date which is the fifth anniversary of the date hereof, at the
rate of 0.10 per cent. per annum; and
(ii) thereafter, at the rate of 0.1125 per cent. per annum.
and to be payable in arrear on the last day of each successive period of three
months which ends during the relevant period and on the Termination Date.
32.2 Participation Fee The Principal Company shall pay to the Facility Agent
for the account of the Arrangers and the Banks the fees specified in the mandate
letter signed by the Borrower on 18 November 1996 at the times, and in the
amounts, specified in such letter.
32.3 Agency Fee The Principal Company shall pay to the Facility Agent for its
own account the agency fees specified in the letter of even date herewith from
the Facility Agent to the Principal Company at the times, and in the amounts,
specified in such letter.
33. Costs and Expenses
33.1 Transaction Expenses The Principal Company shall, on demand of the
Facility Agent, reimburse each of the Agents and the Arrangers for all
reasonable legal and out-of-pocket costs and expenses (including printing and
publicity costs) together with any VAT thereon incurred by it in connection with
the negotiation, preparation and execution of this Agreement and the completion
of the transactions herein contemplated.
33.2 Preservation and Enforcement of Rights The Principal Company shall, from
time to time on demand of the Facility Agent, reimburse each of the Agents, the
Arrangers and the Banks for all costs and expenses (including legal fees)
together with any VAT thereon incurred in or in connection with the preservation
and/or enforcement of any of the rights of any of the Agents, the Arrangers and
the Banks under this Agreement.
33.3 Stamp Taxes The Principal Company shall pay all stamp, registration and
other taxes to which this Agreement is or at any time may be subject and shall,
from time to time on demand of the Facility Agent, indemnify each of the Agents,
the Arrangers and the Banks against any liabilities, costs, claims and expenses
resulting from any failure to pay or any delay in paying any such tax.
33.4 Agents' Costs The Principal Company shall, from time to time on demand of
the Facility Agent (and without prejudice to the provisions of Clause 33.2
(Preservation and Enforcement of Rights) and Clause 38.2 (Amendment Costs))
compensate each of the Agents at such daily and/or hourly rates as such Agent
shall from time to time reasonably determine for the time and expenditure, all
costs and expenses (including telephone, fax, copying, travel and personnel
costs) incurred by such Agent in connection with its taking such action as it
may deem appropriate or in complying with any instructions from an Instructing
Group or any request by the Borrowers or any of them in connection with:
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(a) the granting or proposed granting of any waiver or consent requested
hereunder by the Borrowers or any of them;
(b) any actual, potential or suspected breach by the Borrowers or any of
them of its obligations hereunder;
(c) the occurrence of any event which is an Event of Default or a
Potential Event of Default; or
(d) any amendment or proposed amendment hereto requested by the Borrowers
or any of them.
33.5 Banks' Liabilities for Costs If the Principal Company fails to perform
any of its obligations under this Clause 33, each Bank shall, in its Proportion,
indemnify each of the Agents and the Arrangers against any loss incurred by
either of them as a result of such failure and the Principal Company shall
forthwith reimburse each Bank for any payment made by it pursuant to this Clause
33.5.
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PART 15
AGENCY PROVISIONS
34. The Agents, the Arrangers and the Banks
34.1 Appointment of the Agents Each of the Arrangers and the Banks hereby
appoints each of the Agents, and each of the Agents hereby appoints the Facility
Agent, to act as its agent in connection herewith and authorises such Agent to
exercise such rights, powers, authorities and discretions as are specifically
delegated to such Agent by the terms hereof together with all such rights,
powers, authorities and discretions as are reasonably incidental thereto.
34.2 Agent's Discretions Each Agent may:
(a) assume that:
(i) any representation made by any of the Borrowers in connection
herewith is true;
(ii) no Event of Default or Potential Event of Default has occurred;
(iii) none of the Borrowers is in breach of or default under its
obligations hereunder; and
(iv) any right, power, authority or discretion vested herein upon an
Instructing Group, the Banks or any other person or group of
persons has not been exercised
unless such Agent has, in its capacity as agent hereunder, actual
knowledge of or received actual notice to the contrary from any other
party hereto;
(b) assume that the Facility Office or, as the case may be, each Facility
Office of each Bank is that identified with its signature below (or,
in the case of a Transferee, at the end of the Transfer Certificate to
which it is a party as Transferee) until it has received from such
Bank a notice designating some other office of such Bank to replace
any such Facility Office and act upon any such notice until the same
is superseded by a further such notice;
(c) engage and pay for the advice or services of any lawyers, accountants,
surveyors or other experts whose advice or services may to it seem
necessary, expedient or desirable and rely upon any advice so
obtained;
(d) rely as to any matters of fact which might reasonably be expected to
be within the knowledge of any of the Obligors upon a certificate
signed by or on behalf of such Obligor;
(e) rely upon any communication or document believed by it to be genuine;
(f) refrain from exercising any right, power or discretion vested in it as
agent hereunder unless and until instructed by an Instructing Group as
to whether or not such right, power or discretion is to be exercised
and, if it is to be exercised, as to the manner in which it should be
exercised; and
(g) refrain from acting in accordance with any instructions of an
Instructing Group to begin any legal action or proceeding arising out
of or in connection with this Agreement until it
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shall have received such security as it may require (whether by way of
payment in advance or otherwise) for all costs, claims, losses,
expenses (including legal fees) and liabilities together with any VAT
thereon which it will or may expend or incur in complying with such
instructions.
34.3 Agent's Obligations Each Agent shall:
(a) promptly inform each Bank of the contents of any notice or document
received by it in its capacity as Agent from any of the Obligors
hereunder;
(b) promptly notify each Bank of the occurrence of any Event of Default or
any default by any of the Borrowers in the due performance of or
compliance with its obligations under this Agreement of which such
Agent has actual knowledge or received actual notice from any other
party hereto;
(c) save as otherwise provided herein, act as agent hereunder in
accordance with any instructions given to it by an Instructing Group,
which instructions shall be binding on the Arrangers and all of the
Banks; and
(d) if so instructed by an Instructing Group, refrain from exercising any
right, power or discretion vested in it as agent hereunder unless such
right, power or discretion is vested in such Agent in its individual
capacity hereunder or is a right, power or discretion that may be
exercised against the Arrangers, any other Agent, the Banks or any of
them.
34.4 Excluded Obligations Notwithstanding anything to the contrary expressed
or implied herein, neither any Agent nor any of the Arrangers shall:
(a) be bound to enquire as to:
(i) whether or not any representation made by any of the Borrowers
in connection herewith is true;
(ii) the occurrence or otherwise of any Event of Default or Potential
Event of Default;
(iii) the performance by any of the Borrowers of its obligations
hereunder; or
(iv) any breach of or default by any of the Borrowers of or under its
obligations hereunder;
(b) be bound to account to any Bank for any sum or the profit element of
any sum received by it for its own account;
(c) be bound to disclose to any other person any information relating to
any member of the Group if such disclosure would or might in its
opinion constitute a breach of any law or regulation or be otherwise
actionable at the suit of any person; or
(d) be under any obligations or fiduciary duties other than those for
which express provision is made herein.
34.5 Indemnification Each Bank shall, in its Proportion, from time to time on
demand by any Agent, indemnify such Agent, against any and all costs, claims,
losses, expenses (including legal fees) and liabilities
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together with any VAT thereon which such Agent may incur in acting in its
capacity as agent hereunder to the extent the same are not paid by any of the
Obligors. Each Bank shall, following any payment made by it under this Clause
34.5, be entitled to recover from an Agent any amount which it establishes has
been paid by it to such Agent pursuant to this Clause 34.5 in respect of costs,
claims, losses, expenses (including legal fees) and liabilities incurred by such
Agent as a result of such Agent's own gross negligence or wilful misconduct in
acting in its capacity as agent hereunder.
34.6 Exclusion of Liabilities None of the Agents and the Arrangers accepts any
responsibility for the accuracy and/or completeness of any information supplied
by any of the Borrowers in connection herewith or for the legality, validity,
effectiveness, adequacy or enforceability of this Agreement and none of the
Agents and the Arrangers shall be under any liability as a result of taking or
omitting to take any action in relation to this Agreement, save in the case of
gross negligence or wilful misconduct.
34.7 No Actions Each of the Banks agrees that it will not assert or seek to
assert against any director, officer or employee of any Agent or any Arranger
any claim it might have against any of them in respect of the matters referred
to in Clause 34.6 (Exclusion of Liabilities).
34.8 Business with the Group Each of the Agents and the Arrangers may accept
deposits from, lend money to and generally engage in any kind of banking or
other business with any member of the Group.
34.9 Resignation Each Agent may resign its appointment hereunder at any time
without assigning any reason therefor by giving not less than thirty days' prior
written notice to that effect to each of the other parties hereto Provided that
no such resignation shall be effective until a successor for such Agent is
appointed in accordance with the succeeding provisions of this Clause 34.
34.10 Removal of Agent An Instructing Group may remove any Agent from its
appointment hereunder as Agent at any time by giving not less than thirty days'
prior written notice to that effect to each of the other parties hereto provided
that no such removal shall be effective until a successor for such Agent is
appointed in accordance with the succeeding provisions of this Clause 34.
34.11 Successor Agent If an Agent gives notice of its resignation pursuant to
Clause 34.9 (Resignation), then any reputable and experienced bank or other
financial institution may be appointed as a successor to such Agent by an
Instructing Group during the period of such notice but, if no such successor is
so appointed, such Agent may appoint such a successor itself.
34.12 New Agent If an Instructing Group removes an Agent from its appointment
hereunder pursuant to Clause 34.10 (Removal of Agent), then any reputable and
experienced bank or other financial institution may be appointed, after
consultation with the Principal Company, as a successor to such Agent by an
Instructing Group.
34.13 Rights and Obligations If a successor to an Agent is appointed under the
provisions of Clause 34.11 (Successor Agent) or Clause 34.12 (New Agent), then
(a) the retiring Agent shall be discharged from any further obligation hereunder
but shall remain entitled to the benefit of the provisions of this Clause 34 and
(b) its successor and each of the other parties hereto shall have the same
rights and obligations amongst themselves as they would have had if such
successor had been a party hereto.
34.14 Own Responsibility It is understood and agreed by each Bank that it has
itself been, and will continue to be, solely responsible for making its own
independent appraisal of and investigations into the financial condition,
creditworthiness, condition, affairs, status and nature of each Borrower and the
Group and, accordingly, each
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Bank warrants to each of the Agents and the Arrangers that it has not relied on
and will not hereafter rely on any of the Agents and the Arrangers:
(a) to check or enquire on its behalf into the adequacy, accuracy or
completeness of any information provided by any of the Borrowers in
connection with this Agreement or the transactions herein contemplated
(whether or not such information has been or is hereafter circulated
to such Bank by any Agent or Arranger); or
(b) to assess or keep under review on its behalf the financial condition,
creditworthiness, condition, affairs, status or nature of any member
of the Group.
34.15 Separation of Departments In acting as Agent and/or Arranger for the
Banks, the agency department of each of the Agents and the Arrangers shall be
treated as a separate entity from any other of its divisions or departments and,
notwithstanding the foregoing provisions of this Clause 34, in the event that an
Agent or, as the case may be, an Arranger should act for any member of the Group
in any capacity in relation to any other matter, any information given by such
member of the Group to such Agent or, as the case may be, such Arranger in such
other capacity may be treated as confidential by such Agent or, as the case may
be, such Arranger and shall not constitute actual knowledge of any matter for
the purposes of Clause 34.2.
34.16 The Short-Term Advances Agent Ahold USA hereby appoints the Short-Term
Advances Agent to act as its agent in connection with this Agreement and
authorises the Short-Term Advances Agent to exercise such rights, powers and
discretions as are specifically delegated to the Short-Term Advances Agent by
the terms of this Agreement together with all such rights, powers and
discretions as are reasonably incidental thereto.
34.17 Exoneration of Short-Term Advances Agent The Short-Term Advances Agent
shall comply with the obligations expressly undertaken by it hereunder
Provided that the accidental failure by the Short-Term Advances Agent to
give any notice to any Bank of a Short-Term Advances Request delivered to
it hereunder or to give any notice to Ahold USA of any offer for Short-
Term Advances received by it hereunder shall not constitute a breach of
the Short-Term Advances Agent's obligations hereunder nor shall any other
party hereto be entitled to require such failure to be rectified after
the latest time for the giving of the relevant notice hereunder.
34.18 Indemnity Ahold USA shall, on demand by the Short-Term Advances Agent,
indemnify the Short-Term Advances Agent against any and all reasonable costs,
claims, expenses (including reasonable legal fees) and liabilities which the
Short-Term Advances Agent may incur, otherwise than by reason of its own
negligence or wilful misconduct, in acting in its capacity as Short-Term
Advances Agent under this Agreement.
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PART 16
ASSIGNMENTS AND TRANSFERS
35. Assignments and Transfers
35.1 Binding Agreement This Agreement shall be binding upon and enure to the
benefit of each party hereto and its or any subsequent successors, Transferees
and assigns.
35.2 No Assignments and Transfers by the Obligors None of the Obligors shall
be entitled to assign or transfer all or any of its rights, benefits and
obligations hereunder.
35.3 Assignment and Transfers by Banks Any Bank may, at any time, assign all
or (subject to the proviso below) any of its rights and benefits hereunder or
transfer in accordance with Clause 35.5 all or any of its rights, benefits and
obligations hereunder (i) to any holding company, any of its wholly-owned
subsidiaries or any affiliate or (ii) with the prior written consent of the
Principal Company (not to be unreasonably withheld or delayed) to any other
person provided that (without prejudice to a Bank's right to assign and/or
transfer all of its rights, benefits and obligations hereunder in accordance
with this Clause 35.3) a Bank shall be entitled to assign and/or transfer part
of its Participation hereunder only in an amount equal to or exceeding
$10,000,000 and then only if it retains a Participation of not less than
$25,000,000.
35.4 Assignments by Banks If any Bank assigns all or any of its rights and
benefits hereunder in accordance with Clause 35.3 (Assignments and Transfers by
Banks), then, unless and until the assignee has agreed with the Principal
Company, the Agents, the Arrangers and the other Banks that it shall be under
the same obligations towards each of them as it would have been under if it had
been an original party hereto as a Bank (whereupon such assignee shall become a
party hereto as a "Bank"), the Agents, the Arrangers and the other Banks shall
not be obliged to recognise such assignee as having the rights against each of
them which it would have had if it had been such a party hereto. The Assignee
shall be responsible for giving notice of the assignment to the relevant
Obligors.
35.5 Transfers by Banks If any Bank wishes to transfer all or any of its
rights, benefits and/or obligations hereunder as contemplated in Clause 35.3
(Assignments and Transfers by Banks), then such transfer may be effected by the
delivery to and signature by the Facility Agent on behalf of the Obligors (and
each of the Obligors hereby irrevocably appoints the Facility Agent as its agent
for the purposes of such delivery and signature of any Transfer Certificate) of
a duly completed and duly executed Transfer Certificate in which event it is
hereby irrevocably agreed by each of the Obligors in advance that, on the later
of the Transfer Date specified in such Transfer Certificate and the fifth
business day after (or such earlier business day endorsed by the Facility Agent
on such Transfer Certificate falling on or after) the date of delivery of such
Transfer Certificate to and signature by the Facility Agent on behalf of the
Obligors (which signature the Facility Agent agrees to complete promptly upon
receipt of the relevant Transfer Certificate in accordance with this Clause 35):
(a) to the extent that in such Transfer Certificate the Bank party thereto
seeks to transfer its rights, benefits and obligations hereunder each
of the Obligors and such Bank shall be released from further
obligations towards one another hereunder and their respective rights
against one another shall be cancelled (such rights, benefits and
obligations being referred to in this Clause 35.5 as "discharged
rights and obligations");
(b) each of the Obligors and the Transferee party thereto shall assume
obligations towards one another and/or acquire rights against one
another which differ from such discharged rights and
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obligations only insofar as such Obligor and such Transferee have
assumed and/or acquired the same in place of such Obligor and such
Bank;
(c) the Agents, the Arrangers, such Transferee and the other
Banks shall acquire the same rights and benefits and assume the same
obligations between themselves as they would have acquired and assumed
had such Transferee been an original party hereto as a Bank with the
rights, benefits and/or obligations acquired or assumed by it as a
result of such transfer;
(d) such Transferee shall become a party hereto as a "Bank" and will also
be deemed to have appointed the Agents as its Agent in accordance with
the terms of this Agreement; and
(e) to the extent that in such Transfer Certificate the Bank party thereto
seeks to transfer its Commitment, the Transferee shall replace such
Bank in respect of any relevant Letter of Credit.
Receipt of a Transfer Certificate by the Facility Agent shall also constitute
notice to the Obligors as required by Dutch law and each party hereto hereby
irrevocably authorises and instructs the Facility Agent to receive each such
notice on its behalf and irrevocably agrees that each such notice to be given to
such party may be given to the Facility Agent as representative of such party.
35.6 Transfer Fee On the date upon which a transfer takes effect pursuant to
Clause 35.5 (Transfers by Banks) the Transferee in respect of such transfer
shall pay to the Facility Agent for its own account a transfer fee of $1,000.
All costs of any transfer of any Bank's rights, benefits and obligations
hereunder to any Transferee (including, without limitation, any stamp duty)
shall be for the account of such Bank.
35.7 Excess Amounts If any Bank assigns or transfers any of its rights,
benefits and obligations hereunder or changes its Facility Office and there
arises (by reason of circumstances existing at the date of such assignment or
transfer or which are not existing at such date but which are scheduled to take
effect or in respect of which there is a general consensus that they will take
effect after the date thereof) an obligation on the part of a Borrower to such
Bank or its assignee or transferee or any other person any amount in excess of
the amount it would have been obliged to pay but for such assignment, transfer
or change, then such Borrower shall not be obliged to pay the amount of such
excess.
35.8 Disclosure of Information Any Bank may disclose to any actual or
potential assignee or Transferee or to any person who may otherwise enter into
contractual relations with such Bank in relation to this Agreement such
information about the Borrowers and the Group as such Bank shall consider
appropriate.
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PART 17
MISCELLANEOUS
36. Calculations and Evidence of Debt
36.1 Basis of Accrual Interest and the facility fee shall accrue from day to
day and shall be calculated on the basis of a year of 360 days (or, if market
practice differs, in accordance with market practice) and the actual number of
days elapsed.
36.2 Accrual of Letter of Credit Commission Letter of credit commission in
respect of any Letter of Credit, and any period of the Term thereof determined
pursuant to Clause 6 (Letters of Credit Fees and Fronting Fee), shall be
calculated on the basis of a year of 360 days and the actual number of days in
such period.
36.3 Quotations If on any occasion a Reference Bank or Bank fails to supply
any Agent with a quotation required of it under the foregoing provisions of this
Agreement, the rate for which such quotation was required shall be determined
from those quotations which are supplied to such Agent.
36.4 Evidence of Debt Each Bank shall maintain in accordance with its usual
practice accounts evidencing the amounts from time to time lent by and owing to
it hereunder.
36.5 Control Accounts The Facility Agent shall maintain on its books a control
account or accounts in which shall be recorded (a) the amount of any Advance
made or arising hereunder (and the name of the Bank to whom such sum relates and
each Bank's share therein) and the face amount of any Letter of Credit issued
(and each Bank's share therein) as the case may be, (b) the amount of all
principal, interest and other sums due or to become due from any of the
Borrowers to any of the Banks hereunder and each Bank's share therein and (c)
the amount of any sum received or recovered by any Agent hereunder and each
Bank's share therein. The Facility Agent shall, upon request of any Borrower,
deliver to such Borrower statements of the accounts referred to in this Clause
36.5.
36.6 Prima Facie Evidence In any legal action or proceeding arising out of or
in connection with this Agreement, the entries made in the accounts maintained
pursuant to Clause 36.4 (Evidence of Debt) and Clause 36.5 (Control Accounts)
shall be prima facie evidence of the existence and amounts of the obligations of
the Borrowers therein recorded.
36.7 Certificates of Banks A certificate of a Bank as to (a) the amount by
which a sum payable to it hereunder is to be increased under Clause 18.1 (Tax
Gross-up) or (b) the amount for the time being required to indemnify it against
any such cost, payment or liability as is mentioned in Clause 18.2 (Tax
Indemnity) or Clause 20.1 (Increased Costs) or Clause 27.5 (Broken Periods) or
Clause 28.2 (Currency Indemnity) shall be conclusive evidence for the purposes
of this Agreement save in the case of manifest error.
36.8 Agents' Certificates A certificate of any Agent as to the amount at any
time due from any Borrower hereunder or the amount which, but for any of the
obligations of any Borrower hereunder being or becoming void, voidable,
unenforceable or ineffective, at any time would have been due from such Borrower
hereunder shall, in the absence of manifest error, be conclusive for the
purposes of Part 11 (Guarantee).
37. Remedies and Waivers, Partial Invalidity
37.1 Remedies and Waivers No failure to exercise, nor any delay in exercising,
on the part of any party hereto, any right or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of
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any right or remedy prevent any further or other exercise thereof or the
exercise of any other right or remedy. The rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies provided by law.
37.2 Partial Invalidity If, at any time, any provision hereof is or becomes
illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions hereof nor the legality, validity or enforceability of such provision
under the law of any other jurisdiction shall in any way be affected or impaired
thereby.
38. Amendments
38.1 Amendments With the prior written consent of an Instructing Group, the
Facility Agent and the Principal Company may from time to time enter into
written amendments, supplements or modifications hereto for the purpose of
adding any provisions to this Agreement or changing in any manner the rights of
all or any of the Agents, the Arrangers and the Banks or of any Obligor
hereunder, and, at the request of the Principal Company with the prior consent
of an Instructing Group, the Facility Agent on behalf of the other Agents, the
Arrangers and the Banks may execute and deliver to the Principal Company a
written instrument waiving prospectively or retrospectively, on such terms and
conditions as the Facility Agent may specify in such instrument, any of the
requirements of this Agreement or any Event of Default or Potential Event of
Default and its consequences Provided, however, that:
(i) no such waiver and no such amendment, supplement or modification shall
without the prior consent of all the Banks:
(a) amend or modify the definitions of Additional Borrower,
Instructing Group, Margin, Swing-Line Margin or Termination Date;
(b) amend, modify or waive any provision which requires the prior
written consent of the Banks, Clause 32 (Fees), Clause 35.2 (No
Assignments and Transfers by the Obligors) or this Clause 38;
(c) change the principal or currency of any Advance or Letter of
Credit or extend the Term thereof;
(d) decrease the amount of, or change the currency of or extend the
date for any payment of interest, fees or any other amount
payable to all or any of the Agents, the Arrangers and the Banks
hereunder;
(e) increase the amount of the Total Commitments; or
(f) release any Guarantor from all or any of its obligations
hereunder;
(ii) notwithstanding any other provision hereof, the Facility Agent shall
not be obliged to agree to any such waiver, amendment, supplement or
modification if the same would:
(a) amend, modify or waive any provision of this Clause 38; or
(b) otherwise amend, modify or waive any of the Agents' or the
Arrangers' rights hereunder or subject any Agent or, as the case
may be, any Arranger to any additional obligations hereunder; and
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(iii) the Facility Agent shall promptly notify the Banks of any written
amendments, supplements or modifications hereto which have been made
with the consent of an Instructing Group and the Borrower.
38.2 Amendment Costs If the Principal Company requests any amendment,
supplement, modification or waiver in accordance with Clause 38.1, then the
Principal Company shall, on demand of the Facility Agent, reimburse the Facility
Agent for all reasonable costs and expenses (including reasonable legal fees)
together with any VAT thereon incurred by the Facility Agent in the negotiation,
preparation and execution of any written instrument contemplated by Clause 38.1.
39. Notices
39.1 Communications in Writing Each communication to be made hereunder shall
be made in writing but, unless otherwise stated, may be made by telefax or
letter Provided that the Borrowers shall indemnify each of the Agents, the
Arrangers and the Banks against any cost, claims, loss, expense (including legal
fees) or liability together with any VAT thereon which any of them may sustain
or incur as a consequence of any telefax communication originating from any
Borrower not being actually received by or delivered to the intended recipient
thereof or any telefax communication purporting to originate from any Borrower
being made or delivered fraudulently.
39.2 Delivery Any communication or document (unless made by telefax or
telephone) to be made or delivered by one person to another pursuant to this
Agreement shall (unless that other person has by fifteen days' written notice to
the Facility Agent specified another address) be made or delivered to that other
person at the address identified with its signature below (or, in the case of a
Transferee, at the end of the Transfer Certificate to which it is a party as
Transferee) and shall be deemed to have been made or delivered when left at that
address or (as the case may be) ten days after being deposited in the post
postage prepaid in an envelope addressed to it at that address Provided that:
(a) any communication or document to be made or delivered to any Agent
shall be effective only when received by such Agent and then only if
the same is expressly marked for the attention of the department or
officer identified with such Agent's signature below (or such other
department or officer as such Agent shall from time to time specify
for this purpose); and
(b) any communication or document to be made or delivered to any Bank
having more than one Facility Office shall (unless such Bank has by
fifteen days' written notice to the Facility Agent specified another
address) be made or delivered to such Bank at the address identified
with its signature below (or, in the case of a Transferee, at the end
of the Transfer Certificate to which it is a party as Transferee) as
its main Facility Office.
39.3 Communications by telephone or telefax Where any provision of this
Agreement specifically contemplates telephone or telefax communication made by
one person to another, such communication shall be made to that other person at
the relevant telephone number specified by it from time to time for the purpose
and shall be deemed to have been received when made (in the case of any
communication by telephone) or when transmission of such telefax communication
has been completed (in the case of any telecommunication by telefax). Each such
telefax communication, if made to any Agent by a Borrower shall be signed by the
person or persons authorised by such Borrower in the certificate delivered
pursuant to the Third Schedule and shall be expressed to be for the attention of
the department or officer whose name has been notified for the time being for
that purpose by such Agent to such Borrower.
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39.4| English Language Each communication and document made or delivered by
one party to another pursuant to this Agreement shall be in the English language
or accompanied by a translation thereof into English certified (by an officer of
the person making or delivering the same) as being a true and accurate
translation thereof.
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PART 18
LAW AND JURISDICTION
40. Law and Jurisdiction
40.1 Dutch Law This Agreement shall be governed by, and shall be construed in
accordance with, laws of The Netherlands.
40.2 English Courts Each of the parties hereto irrevocably agrees for the
benefit of each of the Agents, the Arrangers and the Banks that the courts of
England shall have jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in connection
with this Agreement (respectively "Proceedings" and "Disputes") and, for such
purposes, irrevocably submits to the jurisdiction of such courts.
40.3 Dutch Courts Each of the Obligors irrevocably agrees for the benefit of
each of the Agents, the Arrangers and the Banks that the competent courts of
Amsterdam, The Netherlands shall have jurisdiction to hear and determine any
suit, action or Proceeding, and to settle any Disputes and, for such purposes,
irrevocably submits to the jurisdiction of such courts.
40.4 New York Courts Each of the Obligors irrevocably agrees that the courts
of the State of New York and the courts of the United States of America, in each
case sitting in the County of New York, shall have jurisdiction to hear and
determine any Proceedings and to settle any Disputes and, for such purposes,
irrevocably submits to the jurisdiction of such courts.
40.5 Appropriate Forum Each of the Obligors irrevocably waives any objection
which it might now or hereafter have to the courts referred to in Clause 40.2
(English Courts), Clause 40.3 (Dutch Courts) and Clause 40.3 (New York Courts)
being nominated as the forum to hear and determine any Proceedings and to settle
any Disputes and agrees not to claim that any such court is not a convenient or
appropriate forum.
40.6 Service of Process Each of the Obligors agrees that the process by which
any suit, action or proceeding is begun may be served on it by being delivered
(i) in connection with any suit, action or proceeding in England, to Legibus
Secretaries Limited at 200 Aldersgate Street, London EC1A 4JJ and (ii) in
connection with any suit, action or proceeding in New York, to CT Corporation
System at 1633 Broadway, New York N.Y. 10019, United States of America. If the
appointment of the person mentioned in this Clause 40.6 ceases to be effective
each Obligor shall immediately appoint a further person in England or, as the
case may be, New York to accept service of process on its behalf in England or,
as the case may be, New York and, failing such appointment within 15 days, the
Facility Agent shall be entitled to appoint such a person by notice to such
Obligor. Nothing contained herein shall affect the right to serve process in any
other manner permitted by law.
40.7 Non-exclusive Submissions The submission to the jurisdiction of the
courts referred to in Clause 40.2 (English Courts), Clause 40.3 (Dutch Courts)
and Clause 40.4 (New York Courts) shall not (and shall not be construed so as
to) limit the right of the Agents, the Arrangers and the Banks or any of them to
take Proceedings against any of the Obligors in any other court of competent
jurisdiction nor shall the taking of Proceedings in any one or more
jurisdictions preclude the taking of Proceedings in any other jurisdiction
(whether concurrently or not) if and to the extent permitted by applicable law.
40.8 Consent to Enforcement Each of the Obligors hereby consents generally in
respect of any Proceedings to the giving of any relief or the issue of any
process in connection with such Proceedings including, without
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limitation, the making, enforcement or execution against any property whatsoever
(irrespective of its use or intended use) of any order or judgment which may be
made or given in such Proceedings.
40.9 Waiver of Immunity To the extent that any of the Obligors may in any
jurisdiction claim for itself or its assets immunity from suit, execution,
attachment (whether in aid of execution, before judgment or otherwise) or other
legal process and to the extent that in any such jurisdiction there may be
attributed to itself or its assets such immunity (whether or not claimed), such
Obligor hereby irrevocably agrees and shall be obliged for the purposes of this
Agreement not to claim and hereby irrevocably waives such immunity to the full
extent permitted by the laws of such jurisdiction and, in particular, to the
intent that in any Proceedings taken in New York the foregoing waiver of
immunity shall have effect under and be construed in accordance with the United
States Foreign Sovereign Immunities Act of 1976.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
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THE FIRST SCHEDULE
The Banks
Part 1
The Revolving Credit Banks
Commitment ($)
ABN AMRO Bank N.V. 61,000,000
The Chase Manhattan Bank 61,000,000
Morgan Guaranty Trust Company of New York 61,000,000
The First National Bank of Boston 57,000,000
Bayerische Landesbank International S.A. 57,000,000
Citibank N.A., Amsterdam Branch 57,000,000
Deutsche Bank AG 57,000,000
Fleet National Bank 57,000,000
Dai-Ichi Kangyo Bank Nederland N.V. 57,000,000
ING Bank N.V. 57,000,000
Rabobank International, Utrecht Branch 57,000,000
SBC 57,000,000
Union Bank of Switzerland 57,000,000
Westdeutsche Landesbank Girozentrale, London Branch 57,000,000
The Bank of New York 38,000,000
Banque Paribas Nederland N.V. 38,000,000
Barclays Bank plc (CLAD) UK 38,000,000
The First National Bank of Chicago 38,000,000
Kredietbank (Nederland) N.V. 38,000,000
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Part 2
The Swing-Line Banks
Bank Commitment ($)
ABN AMRO Bank N.V. 36,666,666.66
The Chase Manhattan Bank 36,666,666.66
Morgan Guaranty Trust Company of New York 36,666,666.66
The Bank of New York 30,000,000.00
Bayerische Landesbank Girozentrale, New York Branch 30,000,000.00
Union Bank of Switzerland 30,000,000.00
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THE SECOND SCHEDULE
Form of Transfer Certificate
To: The Chase Manhattan Bank
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "Facility Agreement") dated [ ] 199[ ] whereby a
US$1,000,000,000 multicurrency revolving credit and short-term advances
facility, a US$100,000,000 letter of credit facility and a US$200,000,000 swing-
line facility was made available to Koninklijke Ahold N.V. and Ahold USA
Holdings, Inc., as borrowers by a group of banks on whose behalf The Chase
Manhattan Bank acted as Facility Agent in connection therewith.
1. Terms defined in the Facility Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank and Transferee are
defined in the schedule hereto.
2. The Bank (a) confirms that the details in the schedule hereto under the
heading "Bank's Commitment", "Swing-Line Commitment", "Letter of Credit
Commitment", "Relevant Revolving Credit Advance(s)" "Relevant Letters of Credit
Issued", "Relevant Swing-Line Advance(s)", and "Relevant Short-Term Advances"
accurately summarises its Commitment, its Swing-Line Commitment, and/or its
Letter of Credit Commitment and/or, as the case may be, the Term and Repayment
Date of one or more existing Advances or Letters of Credit made by it or in
which it participates and (ii) requests the Transferee to accept and procure the
transfer to the Transferee of the portion specified in the schedule hereto of,
as the case may be, its Commitment, its Swing-Line Commitment, its Letter of
Credit Commitment and/or such Advance(s) and/or participations by counter-
signing and delivering this Transfer Certificate to the Facility Agent at its
address for the service of notices specified in the Facility Agreement.
3. The Transferee hereby requests the Facility Agent to accept this Transfer
Certificate as being delivered to the Facility Agent pursuant to and for the
purposes of Clause 35.5 (Transfers by Banks) of the Facility Agreement so as to
take effect in accordance with the terms thereof on the Transfer Date or on such
later date as may be determined in accordance with the terms thereof.
4. The Transferee confirms that it has received a copy of the Facility
Agreement together with such other information as it has required in connection
with this transaction and that it has not relied and will not hereafter rely on
the Bank to check or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such information and
further agrees that it has not relied and will not rely on the Bank to assess or
keep under review on its behalf the financial condition, creditworthiness,
condition, affairs, status or nature of any of the Borrowers.
5. The Transferee hereby undertakes with the Bank and each of the other parties
to the Facility Agreement that it will perform in accordance with their terms
all those obligations which by the terms of the Facility Agreement will be
assumed by it after delivery of this Transfer Certificate to the Facility Agent
and satisfaction of the conditions (if any) subject to which this Transfer
Certificate is expressed to take effect.
6. The Bank makes no representation or warranty and assumes no responsibility
with respect to the legality, validity, effectiveness, adequacy or
enforceability of the Facility Agreement or any document relating thereto and
assumes no responsibility for the financial condition of any of the Borrowers or
for the performance and observance by such Borrower of any of its obligations
under the Facility Agreement or any document relating
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<PAGE>
thereto and any and all such conditions and warranties, whether express or
implied by law or otherwise, are hereby excluded.
7. The Bank hereby gives notice that nothing herein or in the Facility
Agreement (or any document relating thereto) shall oblige the Bank to (a) accept
a re-transfer from the Transferee of the whole or any part of its rights,
benefits and/or obligations under the Facility Agreement transferred pursuant
hereto or (b) support any losses directly or indirectly sustained or incurred by
the Transferee for any reason whatsoever including the non-performance by any of
the Borrowers or any other party to the Facility Agreement (or any document
relating thereto) of its obligations under any such document. The Transferee
hereby acknowledges the absence of any such obligation as is referred to in (a)
or (b) above.
8. This Transfer Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with Dutch law.
THE SCHEDULE
1. Bank:
2. Transferee:
3. Transfer Date:
4. Commitment:
Bank's Commitment Portion Transferred
Swing-Line Commitment Portion Transferred
Letter of Credit Commitment Portion Transferred
5. Advance(s):
Term and Repayment Date of
Revolving Credit Advance(s) Portion Transferred
Term and Repayment Date of
Letters of Credit Portion Transferred
Term and Repayment Date of
Swing-Line Advances Portion Transferred
Term and Repayment Date
of Short-Term Advances Portion Transferred
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<PAGE>
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
[Facility Agent] as agent for and on behalf of the Borrower
By:
Date:
Administrative Details of Transferee
Address/Main Office:
Contact name:
Swing-Line Office:
Letter of Credit Office:
Short-Term Advances Office:
Contact Name:
Account for Payments in US Dollars:
Telex: [ ] (Main office)
[ ] (Swing-Line office)
[ ] (Letter of Credit Office)
[ ] (Short-Term Advances Office)
Telephone:[ ] (Main office)
[ ] (Swing-Line office)
[ ] (Letter of Credit Office)
[ ] (Short-Term Advances Office)
Telefax: [ ] (Main office)
[ ] (Swing-Line office)
[ ] (Letter of Credit Office)
[ ] (Short-Term Advances Office)
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THE THIRD SCHEDULE
Condition Precedent Documents
1. In relation to each of the Obligors:
(a) a copy, certified a true copy by a duly authorised officer of such
Obligor, of the constitutional documents of such Borrower and (in the
case of the Principal Company) an extract from the relevant Chamber of
Commerce;
(b) a copy, certified a true copy by a duly authorised officer of such
Obligor, of a board resolution of such Obligor and (in the case of the
Principal Company) such resolutions of the board of managing directors
of the Principal Company, the supervisory board of the Principal
Company (Raad van Commissarissen) and the works' council of the
Principal Company (Ondernemingsraad) as may be required by Dutch
Counsel to the Banks approving the execution, delivery and performance
of this Agreement and the terms and conditions hereof and authorising
a named person or persons to sign this Agreement and any documents to
be delivered by such Obligor pursuant hereto; and
(c) a certificate of a duly authorised officer of such Obligor setting out
the names and signatures of the persons authorised to sign, on behalf
of such Obligor, this Agreement and any documents to be delivered by
such Obligor pursuant hereto.
2. A copy, certified a true copy by or on behalf of the Principal Company, of
each such law, decree, consent, licence, approval, registration or declaration
as is, in the opinion of counsel to the Banks, necessary to render this
Agreement legal, valid, binding and enforceable, to make this Agreement
admissible in evidence in each Obligor's jurisdiction of incorporation and to
enable each of the Obligors to perform its obligations hereunder.
3. An opinion of each of the Borrowers' in-house Dutch and United States
Counsel in substantially the forms set out in the Eighth Schedule.
4. An opinion of Clifford Chance, solicitors to the Facility Agent, in
substantially the form distributed to the Banks prior to the execution hereof.
5. A copy, certified a true copy by a duly authorised officer of each Borrower,
of the Original Financial Statements of such Borrower.
6. Evidence that each of the process agents referred to in Clause 40.6 has
agreed to act as the agent of the Obligors for the service of process in England
and New York.
7. Evidence that the Existing Facilities shall be terminated and all
outstandings thereunder shall be paid or repaid upon the making of the first
Advance or issue of (or participation by a Bank in) the first Letter of Credit
(whichever occurs first).
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THE FOURTH SCHEDULE
Utilisation Request
From: [Name of Borrower]
To: The Facility Agent [and the Multicurrency Facility Agent [delete if no
Optional Currency is requested]*
Dated:
Dear Sirs,
1. We refer to the agreement (as from time to time amended, varied, novated
or supplemented, the "Facility Agreement") dated [ ] 1996 and made between
Koninklijke Ahold N.V., Ahold USA Holdings, Inc. as borrowers, ABN AMRO Bank
N.V., The Chase Investment Bank Limited and J.P. Morgan Securities Ltd. as
arrangers, The Chase Manhattan Bank as Facility, Letter of Credit, Swing-Line
and Short-Term Advances Agent and Chase Manhattan International Limited as
Multicurrency Facility Agent and the financial institutions named therein as
banks. Terms defined in the Facility Agreement shall have the same meaning in
this notice.
[2. We hereby give you notice that, pursuant to the Facility Agreement, we
wish the [Banks/Swing-Line Banks] to *[make Advances/Swing-Line Advances/make
offers of Short-Term Advances] as follows:
(a) Aggregate *[principal/face] amount:
(b) Utilisation Date:
(c) Term (specify number of business days for Swing-Line Advances or the
number of months or business days for other Advances):
(d) *[Repayment Date]:]*
[2. We require [a Letter of Credit to be opened for our account/the Banks to
participate in an Existing Letter of Credit]* under the Facility Agreement
as follows:
(a) Issue Date: [ ]
(b) Tenor: [ ]
(c) Amount: [ ]
(d) Approved Beneficiary: [ ]
(e) Concerning: [brief details of the purpose of the Letter of Credit].]*
[3. If it is not possible, pursuant to Clause 3.3 (Banks' Agreement to Optional
Currency) of the Facility Agreement, for the Advance to be made in the currency
specified, we would wish the Advance to be denominated in dollars.]*[N.B: Only
retain in case of Revolving Credit Advance requested in Optional Currency]
[3./4. We confirm that, at the date hereof, the representations set out in
Clause 23 of the Facility Agreement are true provided that each reference to
"Original Financial Statements" therein shall be deemed to be a reference
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to each most recent set of annual audited financial statements delivered by any
Borrower to the Facility Agent pursuant to Clause 24.
[4/5.] *[The proceeds of this Utilisation should be credited to [insert account
details]]/[The Letter of Credit should be issued in favour of [name of
recipient] in the form attached and delivered to the recipient at [address of
recipient]]./1/
Yours faithfully
.............................
for and on behalf of
[NAME OF BORROWER]
- --------------------------------------------------------------------------------
* Delete as appropriate
- ---------------
/1/ not applicable for Existing Letters of Credit
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THE FIFTH SCHEDULE
Material Subsidiaries
Albert Heijn B.V.
BI-LO, Inc.
Giant Food Stores, Inc.
Ahold Vastgoed B.V.
Tops Markets, Inc.
Schuitema N.V.
The Stop & Shop Companies, Inc.
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THE SIXTH SCHEDULE
Existing Letters of Credit
<TABLE>
<CAPTION>
Issue Date Issuer No. of Letter Outstanding ($) Expiry Date
of Credit
<C> <S> <C> <C> <C>
09.10.89 The First National Bank of Chicago 31449901 30,686,000.00 01.11.97
20.06.95 The First National Bank of Chicago 31449912 396,395.21 30.10.98
01.08.95 The First National Bank of Chicago 31449914 830,400.00 01.08.97
16.02.96 The First National Bank of Chicago 31449919 385,908.00 16.02.97
11.03.96 The First National Bank of Chicago 31449920 1,750,000.00 11.02.97
15.10.96 The First National Bank of Chicago 31449921 1,074,073.00 15.10.97
</TABLE>
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THE SEVENTH SCHEDULE
Opinion of Borrowers' Netherlands and United States Counsel
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<PAGE>
THE EIGHTH SCHEDULE
Supplemental Agreement for Additional Borrowers
THIS SUPPLEMENTAL AGREEMENT is made on the day of
, 19
BETWEEN:
(1) KONINKLIJKE AHOLD N.V. (the "Principal Company");
(2) [Additional Borrower(s)] (the "Additional Borrower(s)"); and
(3) [The Chase Manhattan Bank] on behalf of itself as facility agent and on
behalf of the Arranger(s), the other Agents, the Banks and Swing-Line
Banks.
WHEREAS:
(1) By an agreement (together with the supplemental agreements referred to in
(2) below, the "Facility Agreement") dated [ ] 1996 and made
between the Principal Company, Ahold USA, the Arrangers, the Agents and the
Banks the Principal Company and Ahold USA were granted facilities in the
maximum amount of $1,000,000,000.
(2) The agreement referred to in (1) above has been supplemented by the
following agreements:
[List Supplemental Agreements]
NOW IT IS HEREBY AGREED as follows:
1. Interpretation
Save as otherwise defined herein, terms defined in the Facility Agreement shall
bear the same meaning herein.
2. Additional Borrower(s)
With effect as from the date that the Facility Agent confirms to the Principal
Company that it has received, in form and substance satisfactory to it [in
relation to each Additional Borrower], each of the conditions precedent
documents specified in Clause 3, the Facility Agreement shall henceforth be read
and construed as if the [each] Additional Borrower were party to the Facility
Agreement having all the rights and obligations of an Additional Borrower and an
Obligor. Accordingly all references in any Finance Document to (a) any
"Additional Borrower" or "Obligor" shall be treated as including a reference to
the [such] Additional Borrower and (b) the Facility Agreement shall be treated
as a reference to the Facility Agreement as supplemented by this Agreement to
the intent that this Agreement and the Facility Agreement shall be read and
construed together as one single agreement.
3. Conditions Precedent
The following are the conditions precedent referred to in Clause 2 which are
required to be delivered to the Facility Agent in relation to the [each]
Additional Borrower:
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(a) a copy, certified a true and up-to-date copy by a duly authorised
officer of the [such] Additional Borrower, of the Memorandum and
Articles of Association [or other constitutional documents] of the
[such] Additional Borrower together with its most recent audited
annual financial statements;
(b) a copy, certified a true copy by a duly authorised officer of the
[such] Additional Borrower, of all corporate and other resolutions of
the [such] Additional Borrower required for the approval of the
execution, delivery and performance of this Agreement and the
performance of the obligations to be assumed pursuant hereto by the
[such] Additional Borrower under the Facility Agreement and
authorising a named person or persons to sign this Agreement and any
documents to be delivered by the [such] Additional Borrower pursuant
hereto or thereto and to operate the Facilities on behalf of the
[such] Additional Borrower;
(c) a certificate of a duly authorised officer of the [such] Additional
Borrower setting out the names and signatures of the persons
authorised to sign, on behalf of the [such] Additional Borrower, this
Agreement and any documents to be delivered by the [such] Additional
Borrower pursuant hereto or to the Facility Agreement and a
certificate as to the names of any persons authorised to give telex or
telephone instructions in relation to the operation of the Facilities
on behalf of the [such] Additional Borrower as contemplated by
paragraph (b) above;
(d) a copy, certified a true copy by a duly authorised officer of the
[such] Additional Borrower, of each such law, decree, consent,
licence, approval, registration or declaration as is necessary to
render this Agreement and the Facility Agreement legal, valid and
binding as against the [such] Additional Borrower in accordance with
their respective terms, to make this Agreement and the Facility
Agreement admissible in evidence against the [such] Additional
Borrower in the [such] Additional Borrower's country of incorporation
and to enable the [such] Additional Borrower to perform its
obligations hereunder and thereunder;
(e) a copy, certified a true and up-to-date copy by an Authorised
Signatory of the Principal Company, of the Memorandum and Articles of
Association of the Principal Company/a letter from an Authorised
Signatory of the Principal Company confirming that there has been no
change in the Memorandum and Articles of Association of the Principal
Company since the same were last delivered to the Facility Agent;
(f) a copy, certified a true copy by an Authorised Signatory of the
Principal Company, of all resolutions required for the approval of the
execution, delivery and performance of this Agreement and confirming
that its board resolution referred to in paragraph 2 of the Third
Schedule of the Facility Agreement has not been revoked, varied or
amended;
(g) written evidence that [ ]
has agreed to act as the agent of the [such] Additional Borrower for
the service of process in England and that [ ]
has agreed to act as the agent of the [such] Additional Borrower for
the service of process in New York;
(h) an opinion of counsel to the Facility Agent and the Banks, in a form
satisfactory to them;
-80-
<PAGE>
(i) an opinion of counsel to the Additional Borrower, in a form
satisfactory to the Facility Agent and the Banks;
(j) written evidence of the consent of the Facility Agent and the Banks to
the [such] Additional Borrower being designated by the Principal
Company as such; and
(k) if requested by the Facility Agent, on the basis of regulations
applicable to any Bank requiring the provision of financial
information, the most recent added financial statements or written
confirmation than there is no requirement to produce such statements.
4. Representations
The [Each] Additional Borrower hereby represents as if the representations set
out in Clause 23 of the Facility Agreement were set out in full in this
Agreement.
5. Covenant
To the extent that any Bank shall have to comply with any regulations imposed on
it in relation to the provision of financial information by the Additional
Borrower, the Additional Borrower shall supply the Facility Agent with its most
recent audited consolidated financial statement or if such statement do not
exist then the Additional Borrower shall supply the Facility Agent with written
confirmation stating that it is not required to produce such statements.
6. Counterparts
This Agreement may be signed in counterparts, all of which taken together shall
constitute a single agreement.
7. Law
This Agreement shall be governed by, and construed in accordance with, Dutch
law.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
-81-
<PAGE>
[NAME OF ADDITIONAL BORROWER]
By :
Address :
-82-
<PAGE>
The Obligors
KONINKLIJKE AHOLD N.V.
By:
Address: Albert Heijnweg 1
1507 EH Zaandam
The Netherlands
Attention: Norbert Berger / Paul Freischlag
Telephone: 31 75 595795
Fax: 31 75 598355
AHOLD USA HOLDINGS, INC.
By:
Address: One Atlanta Plaza, Suite 2575
950 East Paces Ferry Road
30326 Atlanta, Georgia
United States of America
Attention: Joseph Harber
Telephone: 1 404 262 6050
Fax: 1 404 262 6051
The Arrangers
ABN AMRO BANK N.V.
By:
Address: P.O. Box 283
1000 EA Amsterdam
The Netherlands
-83-
<PAGE>
CHASE INVESTMENT BANK LIMITED
By:
Address: 125 London Wall
London EC2Y 5AJ
United Kingdom
J.P. MORGAN SECURITIES LTD.
By:
Address: 60 Victoria Embankment
London EC4Y 0JP
United Kingdom
The Agents
THE CHASE MANHATTAN BANK
By:
Address: 270 Park Avenue
New York, NY 10081
United States of America
Attention: Hilma Gabbidon
Telephone: 1 212 552 4650
Telefax: 1 212 552 5658
CHASE MANHATTAN INTERNATIONAL LIMITED
By:
Address: Trinity Tower
9 Thomas More Street
London E1 9YT
United Kingdom
Attention: Steve Horford
Telephone: 44 171 777 2847
Telefax: 44 171 777 2085
-84-
<PAGE>
The Banks
ABN AMRO BANK N.V.
By:
Address: Foreign Credit Services/AA4130
P.O. Box 283
1000 EA Amsterdam
The Netherlands
Attention: Ruud Farenhorst / Agnes Knigge-Dekker / Jim Fraeyhoven
/ Maartje Kuit
Telephone: 31 20 628 7392 / 31 20 628 4367 / 31 20 628 7423
/ 31 20 628 6450
Telefax: 31 20 628 1286
For Swing-Line Advances
Address. 500 Park Avenue
New York, NY 10022
United States of America
Attention: Doreen Yip / Barbara Tsiakaros
Telephone: 1 212 754 6114
Telefax: 1 212 446 4155
THE CHASE MANHATTAN BANK
By:
Address: European Loan Services
125 London Wall
London EC2Y 5AJ
United Kingdom
Attention: Nick Gittins / Tina Holes, European Loan Services
Telephone: 1 202 34 3923/2020
Telefax: 1 202 34 3730
-85-
<PAGE>
With a copy to:
Attention: Anne Whittaker, Transaction Management
Telefax: 44 171 962 3611
For Swing-Line Advances
Address: 270 Park Avenue
New York, NY 10081
United States of America
Attention: Hilma Gabbidon
Telephone: 1 212 552 4650
Telefax: 1 212 552 5658
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:
Address: 60 Victoria Embankment
London EC4Y O5P
United Kingdom
Attention: Alex Cornwell / Ray Mayers, Global Credit
Telephone: 44 171 325 5291 / 44 171 325 5245
Telefax: 44 171 325 8190 / 44 171 325 8217
For Swingline Advances
Address: J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
United States of America
Attention: Donna Davis / Kendal Hinmon, IBG Operations
Telephone: 1 302 634 1860
Telefax: 1 302 634 4267
-86-
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By:
Address: 100 Federal Street/MS-01-09-04
Boston, Mass. 02110
United States of America
Attention: Susan Santos
Telephone: 1 617 434 3496
Telefax: 1 617 434 0637
For Short Term Advances
Address: 100 Federal Street/MS-01-12-07
Boston, Mass. 02110
United States of America
Attention: Larry Faccini
Telephone: 1 617 434 7725
Telefax: 1 617 434 4695
For Letters of Credit
Address: 150 Federal Street/MS-50-04-01
Boston, Mass. 02110
United States of America
Attention: Dawn Trench
Telephone: 1 617 434 5874
Telefax: 1 617 434 1202
For Advances in a Multicurrency
Address: 100 Rustcraft Rd/MS-74-02-02D
Dedham, Mass. 02026
United States of America
Attention: Cheryl Troy
Telephone: 1 617 434 2087
-87-
<PAGE>
Telefax: 1 617 434 2094
BAYERISCHE LANDESBANK INTERNATIONAL S.A.
By:
Address: 3, rue Jean Monnet
L-2180 Luxembourg
Luxembourg
Attention: Mr. P. Lang
Telephone: 352 42434 3325
Telefax: 352 42434 3399
For Letters of Credit, Short-Term Advances and Swing-Line Advances
Address: Bayerische Landesbank Girozentrale, New York Branch
560 Lexington Avenue
New York, NY 10022
United States of America
Attention: Ms. Patricia Sanchez
Telephone: 1 212 310 9810
Telefax: 1 212 310 9930
CITIBANK, N.A., AMSTERDAM BRANCH
By:
Address: "Europlaza"
Hoogoorddreef 54 B
1101 BE Amsterdam Z.O.
The Netherlands
Attention: Mr. Hans P. Verdoes
Telephone: 31 20 6514 394
Telefax: 31 20 6514 292
For Short-Term Advances and Letters of Credit
Address: Citibank, N.A.
-88-
<PAGE>
One Court Square, 7th Floor
Long Island City, NY 11120
United States of America
Attention: Mrs. Stephanie Tackore, Manager
Telephone: 1 718 248 3596
Telefax: 1 718 248 7393
DEUTSCHE BANK AG
By:
Address: Deutsche Bank de Bary N.V.
FX/MM Settlements
Herengracht 450
1017 CA Amsterdam
The Netherlands
Attention: C. Spaans
Telephone: 31 20 555 4202
Telefax: 31 20 555 4428
For Swing-Line Advances
Address: 31 West 52nd Street
New York, NY 10019
United States of America
Attention: Babara Hoeltz
Telephone: 1 212 469 8121
Telefax: 1 212 469 8115
-89-
<PAGE>
FLEET NATIONAL BANK
By:
Address: One Federal Street
Boston, MA 02211
United States of America
Attention: Fancia Castillo, National Banking
Telephone: 1 617 346 5635
Telefax: 1 617 346 0595
For Advances in a Multicurrency
Attention: Gordon Kilby
Telephone: 44 171 248 9531
Telefax: 44 171 334 9456
DAI-ICHI KANGYO BANK NEDERLAND N.V.
By:
Address: Apollolaan 171
1077 AS Amsterdam
The Netherlands
Attention: Mr. Joost van Leeuwen
Telephone: 31 20 5740200
Telefax: 31 20 6760301
ING BANK N.V.
By:
Address: De Weer 75
P.O. Box 48
1500 EA Zaandam
The Netherlands
Attention: Mr. M.H. van Doorn / Mr. G.J. Bakker
Telephone: 31 75 681 1335
-90-
<PAGE>
Telefax: 31 75 612 3007
RABOBANK INTERNATIONAL, UTRECHT BRANCH
By:
Address: Croeselaan 18
P.O. Box 17100
3500 HG Utrecht
The Netherlands
Attention: Mr. Richard Polkerman, BOF / Loan Administration
Telephone: 31 30 216 3445
Telefax: 31 30 216 2767
For Letters of Credit and Short-Term Advances
Address: 1201 West Peachtree Street N.W.
Atlanta, GA 30309
United States of America
Attention:
Telephone: 1 404 881 4050
Telefax: 1 404 881 4777
SBC
By:
Address: 1 High Timber Street
London EC4V 3SB
United Kingdom
Attention: Paul Hardy, Associate Director, Treasury Customer Desk
Telephone: 44 171 329 0201
Telefax: 44 171 711 3861
For Advances to Ahold USA
Address: Swiss Bank Corporation
222 Broadway, 2nd Floor
New York, NY 10038
United States of America
-91-
<PAGE>
Attention: Marisa Reonegro, Banking Finance Support
Telephone: 1 212 574 6241
Telefax: 1 212 574 5248
UNION BANK OF SWITZERLAND
By:
Address: Bahnhofstrasse 45
8021 Zurich
Switzerland
Attention: Claude Aklin, Assistant Vice President, Ref.: KABI-AKC
Telephone: 41 1 235 69 79 / 41 1 235 33 73
Telefax: 41 1 235 32 68
For Swing-Line Advances
Address: 299 Park Avenue
New York, NY 10171
United States of America
Attention: Douglas Edwards
Telephone: 1 212 821 3628
Telefax: 1 212 821 3878
-92-
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE, LONDON BRANCH
By:
Address: 51 Moorgate
London EC2R 6AE
United Kingdom
Attention: Mr. Stewart Nutt
Telephone: 44 171 4572116
Telefax: 44 171 374 8546
THE BANK OF NEW YORK
By:
For Letters of Credit and Swing-Line Advances
Address: One Wall Street, 22nd Floor
New York, NY 10286
United States of America
Attention: Patricia Botler / Terry Blackborn
Telephone: 1 212 635 6732
Telefax: 1 212 635 6397
For Short-Term Advances
Address: 48 Wall Street, 13th Floor
New York, NY 10005
United States of America
Attention: Wilson Mastrandrea
Telephone: 1 212 804 2050
Telefax: 1 212 809 5272
-93-
<PAGE>
BANQUE PARIBAS NEDERLAND N.V.
By:
Address: Herengracht 527
P.O. Box 2171
1000 CD Amsterdam
The Netherlands
Attention: Ms. R. van de Vondervoort / Mr. J. de Wild
Telephone: 31 20 520 4400
Telefax: 31 20 620 1623
BARCLAYS BANK PLC (CLAD) UK
By:
Address: 5th Floor
St. Swithin's House
11-12 St. Swithin's Lane
London EC4N 8AS
United Kingdom
Attention: Sharon Carter
Telephone: 44 171 621 4000
Telefax: 44 171 621 4583
With a copy to:
Address: Atrium, Strawinskylaan 3053
1077 ZX Amsterdam
The Netherlands
Attention: Victor J. van der Linden
Telephone: 31 20 5045 338
Telefax: 31 20 5045 339
-94-
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By:
Address: First Chicago House
90 Long Acre
London WC2E 9RB
United Kingdom
Attention: Dot O'Flaherty
Telephone: 44 171 438 4150
Telefax: 44 171 438 4148
For Letters of Credit
Address: The First National Bank of Chicago
300 S.Riverside
Suite 0236-7th Floor
Chicago, Illinois
United States of America
Attention: Louis Virgo, Operations Officer
Telephone: 1 312 954 1928
Telefax: 1 312 954 1963 / 001 312 954 1964
KREDIETBANK (NEDERLAND) N.V.
By:
Address: Westersingel 88
3015 LC Rotterdam
The Netherlands
Attention: Mr. H. Langstraat
Telephone: 31 10 43 68 399
Telefax: 31 10 43 66 335
-95-
<PAGE>
EXHIBIT (C)(1)
SMG-II HOLDINGS CORPORTION
================================================================================
200 MILIK STREET, CARTERET, NJ 07008
(732) 499-3930 FAX: (732) 499-3460
December 30, 1998
Mr. Robert Tobin,
Member of the Executive Board
Koninklijke Ahold nv
One Atlanta Plaza
950 E. Paces Ferry Road
Suite 2575
Atlanta, Georgia 30326
Dear Mr. Tobin:
In connection with your consideration of a possible negotiated transaction
(the "Proposed Acquisition") with SMG-II Holdings Corporation and/or its
subsidiaries which currently consist of Supermarket General Holdings
Corporation, PTK Holdings, Inc. and Pathmark Stores, Inc. (collectively, with
such subsidiaries, the "Company"), the Company is prepared to deliver to you
upon your execution and delivery to us of this letter agreement, certain
information about the business, financial condition, properties and operations
of the Company.
All information about the Company furnished by the Company or our
representatives (as defined below), whether furnished before or after the date
hereof, whether oral or written, and regardless of the manner in which it is
furnished, is referred to in this letter agreement as "Proprietary
Information". Proprietary Information does not include, however, information
which (a) is or becomes generally available to the public other than as a result
of a disclosure by you or your Representatives, (b) was available to you on a
nonconfidential basis prior to its disclosure by us or our Representatives, (c)
becomes available to you on a nonconfidential basis from a person other than us
or our Representatives who is not otherwise bound by a confidentially agreement
with us, or any Representative of ours, or is not otherwise under an
obligation (contractual, legal or fiduciary) to us or any Representative of ours
not to transmit the information to you, or (d) has been, or hereinafter is,
independently acquired or developed by you without violation of any of your
obligations under this confidentiality agreement. As used in this letter, the
term "person" shall be broadly interpreted to include, without limitation, any
corporation, company, partnership and individual. As used in this letter
agreement, "Representative" means, as to any person, such person's affiliates
and its and their directors, officers, employees, partners, members, agents,
advisors(including, without
<PAGE>
Mr. Robert Tobin,
Member of the Executive Board
Koninklijke Ahold nv
c/o Ahold USA, Inc.
December 30, 1998
Page 2
Limitations, financial advisors, lenders, underwriters, counsel and
accountants), consultants and controlling persons.
Subject to the immediately succeeding paragraph, unless otherwise agreed to
in writing by us, you agree (a) except as required by law, to keep all
Proprietary Information confidential and not to disclose or reveal any
Proprietary Information to any person other than your Representatives who are
actively and directly participating in your evaluation of the Proposed
Acquisition, or who otherwise need to know the Proprietary Information for the
purpose of evaluating the Proposed Acquisition and to cause those persons to
observe the terms of this letter agreement, (b) not to use the Proprietary
Information for any purpose other than in connection with your evaluation of the
Proposed Acquisition or the consummation of the Proposed Acquisition in a manner
that we have approved, and (c) except as required by law, not to disclose to any
person(other than those of your Representatives who are actively and directly
participating in your evaluation of the Proposed Acquisition or who otherwise
need to know for the purpose of evaluating the Proposed Acquisition and, in the
case of your Representatives, whom you will cause to observe the terms of this
letter agreement) any information about the Proposed Acquisition, or the
terms or conditions, or any other facts relating thereto, including without
limitation, the fact that discussions are taking place with respect thereto or
the status thereof, or the fact that Proprietary Information has been made
available to you or your Representatives. You will be responsible for any
breach of the terms of this letter agreement by you or your Representative.
In the event that you or your Representatives are requested pursuant to,
or required by, applicable law or regulation, or by legal process to disclose
any Proprietary Information or any other information concerning the Company or
the Proposed Acquisition, you agree that you or your Representatives will
provide us with prompt written notice of such request or requirement in order to
enable us to seek an appropriate protective order or other remedy, to consult
with you or your Representatives with respect to our taking steps to resist or
narrow the scope of such request or legal process, or to waive compliance, in
whole or in part, with the terms of this letter agreement, provided that, in any
event, you may comply with such requests as required by law immediately prior to
the expiration date of such legal process unless a protective order has been
granted. In any such event, you or our Representatives will use your reasonable
best efforts to cooperate with us to ensure
<PAGE>
Mr. Robert Tobin,
Member of the Executive Board
Koninklijke Ahold nv
c/o Ahold USA, Inc.
December 30, 1998
Page 3
that all Proprietary Information and other information that is so disclosed will
be accorded confidential treatment.
If you determine that you do not wish to proceed with a Proposed
Acquisition, you will promptly advise us of that decision. In that case, or in
the event that we, in our sole discretion, so request or the Proposed
Acquisition is not consummated by you, you will, upon our request, promptly
deliver to us all of the Proprietary Information, including all copies,
reproductions, summaries, analyses or extracts thereof or based thereon in your
possession or in the possession of any of your Representatives.
You acknowledge that none of the Company, Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("ML"), Stonington Partners, Inc. ("SPI") or our other
Representatives, and none of the respective directors, officers, employees,
affiliates, agents, financial advisors or controlling persons of the Company,
ML, SPI or our other Representatives make any express or implied representation
or warranty as to the accuracy or completeness of any Proprietary Information,
and you agree that none of such persons shall have any liability to you or to
any of your Representatives relating to or arising from your or their use of any
Proprietary Information or for any errors therein or omissions therefrom,
provided, however, that such entities as listed above shall endeavor to ensure
the accuracy of such Proprietary Information. You also agree that you are not
entitled to rely on the accuracy or completeness of any Proprietary Information
and that you shall be entitled to rely solely on such representations and
warranties regarding Proprietary Information as may be made to you in any final
acquisition agreement relating to the Proposed Acquisition, subject to the terms
and conditions of such agreement.
You agree that, without our written consent, you will not, for a period of
nine months from the date hereof, directly or indirectly solicit for employment
or employ any person who is now employed by the Company or any of our
subsidiaries listed in paragraph 1 and who is identified by you as a result of
your evaluation in connection with the Proposed Acquisition, provided, however,
that you shall no be prohibited from (i) employing any such person who contacts
you on his or her own initiative and without any direct or indirect solicitation
by you, and (ii) making generalized searches for employees by use of
advertisements or regular executive searches in the media which are not targeted
specifically at employees of the Company.
<PAGE>
Mr. Robert Tobin,
Member of the Executive Board
Koninklijke Ahold nv
c/o Ahold USA, Inc.
December 30, 1998
Page 4
You agree that until a final definitive acquisition agreement regarding the
Proposed Acquisition has been executed by you and the Company, neither the
Company nor any of its Representatives is under any legal obligation, and shall
have no liability to you of any nature whatsoever with respect to te Proposed
Acquisition by virtue of this letter agreement. You also acknowledge and agree
that (i) we and our Representatives may conduct the process that may or may not
result in the Proposed Acquisition in such manner as we, in our sole discretion,
may determine (including without limitation, negotiating and entering into a
final acquisition agreement with any third party without notice to you), and
(ii) we reserve the right to change (in our sole discretion, at any time and
without notice to you) the procedures relating to our and your consideration of
the Proposed Acquisition (including, without limitation, terminating all further
discussions with you and requesting that you return all Proprietary Information
to us).
Without prejudice to the rights and remedies otherwise available to us, we
shall be entitled to equitable relief by way of injunction if you or any of our
Representatives breach or threaten to breach any of the provisions of the letter
agreement.
It is understood and agreed that no failure or delay by us in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or future
exercise thereof or the exercise of any other right, power or privilege
hereunder.
This letter agreement shall be governed by, and construed in accordance
with the laws of the State of New York.
Any assignment of this letter agreement by you without our prior written
consent shall terminate and shall be void.
This letter agreement shall terminate and shall be null and void and of no
further force and effect on and after the second anniversary of the date hereof.
This letter contains the entire agreement between you and us concerning
confidentiality of the Proprietary Information and no modification of this
letter or waiver of the terms and conditions hereof shall be binding upon you or
us, unless approved in writing by each of you and us.
<PAGE>
Mr. Robert Tobin,
Member of the Executive Board
Koninklijke Ahold nv
c/o Ahold USA, Inc.
December 30, 1998
Page 5
It is understood and agreed that this confidentiality agreement shall not
in any manner be interpreted to restrict you from competing with the Company in
the ordinary and customary course of business.
Please confirm your agreement with the foregoing by signing and returning
the duplicate copy of this letter, enclosed herewith, to me at the above
address.
Very truly yours,
SMG-II HOLDINGS CORPORATION
By: /s/ Marc A. Strassler
-----------------------------
Marc A. Strassler
Senior Vice President,
and General Counsel
Accepted and Agreed as of the date
first above written:
KONINKLIJKE AHOLD NV
By: /s/ Robert Tobin
-----------------------------
Robert Tobin
Member of the Executive Board
<PAGE>
Exhibit (c)(2)
EXECUTION COPY
--------------
================================================================================
STOCKHOLDERS AGREEMENT
BY AND AMONG
KONINKLIJKE AHOLD N.V.,
AHOLD ACQUISITION, INC.
AND
THE STOCKHOLDERS LISTED ON EXHIBIT 1 HERETO
Dated as of March 9, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions..............................................................................................1
2. Provisions Concerning Company Stock......................................................................1
3. Purchase Right...........................................................................................2
4. Representations and Warranties of the Stockholders.......................................................3
(a) Ownership of Shares.............................................................................3
(b) Power; Binding Agreement........................................................................3
(c) No Conflicts....................................................................................3
(d) No Finder's Fees................................................................................3
(e) No Encumbrances.................................................................................4
(f) Reliance by Parent..............................................................................4
5. Representations and Warranties of Parent and Sub.........................................................4
(a) Due Organization, etc...........................................................................4
(b) No Conflicts....................................................................................4
(c) Investment Intent...............................................................................4
6. Covenants of the Stockholders............................................................................5
(a) No Solicitation.................................................................................5
(b) Restriction on Transfer, Proxies and Non-Interference...........................................5
(c) Waiver of Appraisal Rights......................................................................5
(d) Stop Transfer; Changes in Shares................................................................5
7. Fiduciary Duties.........................................................................................6
8. Miscellaneous............................................................................................6
(a) Further Assurances..............................................................................6
(b) Entire Agreement................................................................................6
(c) Certain Events..................................................................................6
(d) Assignment......................................................................................6
(e) Amendments, Waivers, Etc........................................................................6
(f) Notices.........................................................................................6
(g) Severability....................................................................................8
(h) Specific Performance............................................................................8
(i) Remedies Cumulative.............................................................................8
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C>
(j) No Waiver.......................................................................................8
(k) No Third Party Beneficiaries....................................................................8
(l) Governing Law...................................................................................8
(m) Submission to Jurisdiction; Waiver of Jury Trial................................................8
(n) Descriptive Headings............................................................................9
(o) Counterparts....................................................................................9
9. Termination..............................................................................................9
10. Limited Liability of Partners...................................................................9
</TABLE>
(ii)
<PAGE>
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (this "Agreement") dated as of March 9, 1999,
among KONINKLIJKE AHOLD N.V., a company organized under the laws of The
Netherlands ("Parent"), AHOLD ACQUISITION, INC., a company organized under the
laws of Delaware and an indirect wholly owned subsidiary of Parent ("Sub"), and
the other parties signatory hereto (individually, a Stockholder and,
collectively, the "Stockholders").
W I T N E S S E T H:
-------------------
WHEREAS, prior to entering into this Agreement, Parent, Sub and SMG-II
Holdings Corporation, a company organized under the laws of Delaware (the
"Company"), entered into an Agreement and Plan of Merger (such agreement, the
"Merger Agreement"), pursuant to which Sub will be merged with and into the
Company (the "Merger"); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholders agree, and the Stockholders
have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. For purposes of this Agreement:
-----------
(a) "Company Stock" shall mean, collectively, each of the Class A
Common Stock, par value $0.01 per share, of the Company, the Class B Common
Stock, par value $0.01 per share, of the Company, the Series A Preferred Stock,
par value $0.01 per share, of the Company, the Series B Preferred Stock par
value $0.01 per share, of the Company and the Series C Preferred Stock, par
value $0.01 per share, of the Company.
(b) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.
2. Provisions Concerning Company Stock. Each Stockholder hereby
-----------------------------------
agrees that during the period commencing on the date hereof and continuing until
the first to occur of (i) the Effective Time, (ii) the last date the Stock
Option is exercisable pursuant to Section 3 and (iii) the termination date set
forth in Section 9, at any meeting of the holders of any class or classes of
Company Stock, however called, or in connection with any written consent of the
holders of any class or classes of Company Stock, such Stockholder shall vote
(or cause to be voted) the number of shares of Company Stock set forth opposite
such Stockholder's name on Exhibit I hereto (the "Existing Shares" and, together
with any shares of Company Stock acquired by such Stockholder after the date
hereof and prior to the termination of this Agreement whether upon the exercise
of
<PAGE>
options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of purchase, dividend, distribution or
otherwise and acquired by such Stockholder solely in its capacity as a
stockholder, such shares, with respect to such Stockholder or any of its
transferees, the "Shares"), and any other shares of Company Stock owned by such
Stockholder whether issued, heretofore owned or hereafter acquired, (x) in favor
of the Merger, and the approval of the terms of the Merger Agreement and each of
the other transactions contemplated by the Merger Agreement and this Agreement
and any actions required in furtherance thereof; (y) against any action,
transaction or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or this Agreement; and (z) except as
otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or any of its
subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or any of its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or any of its subsidiaries; (C) (1)
any change in a majority of the Persons who constitute the board of directors of
the Company; (2) any change in the present capitalization of the Company or any
amendment of Company's Certificate of Incorporation or By-laws; (3) any other
material change in the Company's corporate structure or business; or (4) any
other action involving the Company or any of its subsidiaries which is intended,
or could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by this
Agreement and the Merger Agreement. None of the Stockholders shall enter into
any agreement or understanding with any Person the effect of which would be to
violate the provisions and agreements contained in this Section 2.
3. Purchase Right. Each Stockholder hereby grants to Sub an
--------------
irrevocable option (the "Stock Option") to purchase the Shares at a purchase
price (the "Purchase Price") equal to the Applicable Merger Consideration until
the termination date set forth in Section 9. Until the termination date set
forth in Section 9, if the Merger Agreement is terminated in accordance with its
terms (other than as a result of a material breach of any representation,
warranty, obligation, covenant, agreement or condition of the Merger Agreement
by Parent or Sub), the Stock Option shall become exercisable, in whole but not
in part, and remain exercisable until the date which is 60 days after the date
of the termination of the Merger Agreement, but shall not be exercisable in each
case unless: (x) all waiting periods under the HSR Act, required for the
purchase of Stock Option upon such exercise shall have expired or been waived,
and (y) there shall not then be in effect any preliminary or final injunction or
other order issued by any court or governmental, administrative or regulatory
agency or authority prohibiting the exercise of the Stock Option pursuant to
this Agreement. Provided that this Agreement has not been terminated, in the
event that the Stock Option is not exercisable because the circumstances
described in clauses (x) and (y) do not exist, then the Stock Option shall be
exercisable for the 60 day period commencing on the date that the circumstances
set forth in clauses (x) and (y) do exist. In the event that Parent wishes to
exercise the Stock Option, Parent shall send a written notice to each
Stockholder identifying the place for the closing of such purchase at least
three business days prior to such closing.
-2-
<PAGE>
4. Representations and Warranties of the Stockholders. Each
--------------------------------------------------
Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the record and
-------------------
beneficial owner of the number and class of Existing Shares set forth opposite
such Stockholder's name on Schedule I hereto. Such Stockholder has sole voting
power and sole power to issue instructions with respect to the matters set forth
in Sections 2 and 3 hereof, sole power of disposition, sole power of conversion,
sole power to demand appraisal rights and sole power to agree to all of the
matters set forth in this Agreement, in each case with respect to all of the
Existing Shares set forth opposite Stockholder's name on Schedule I hereto, with
no limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) Power; Binding Agreement. Such Stockholder has the legal
------------------------
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, stockholders agreement or voting trust. This Agreement
has been duly and validly executed and delivered by such Stockholder and
constitutes a valid and binding agreement of such Stockholder, enforceable
against such Stockholder in accordance with its terms. There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of which
such Stockholder is trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by such Stockholder of the
transactions contemplated hereby.
(c) No Conflicts. Except for (i) filings and approvals under the HSR
------------
Act or the Antitrust Laws, if applicable, (A) no filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions contemplated hereby
and (B) none of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the provisions
hereof shall (1) conflict with or result in any breach of any applicable
organizational documents applicable to such Stockholder, (2) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which such Stockholder is a party or by which such
Stockholder or any of such Stockholder's properties or assets may be bound, or
(3) violate any order, writ, injunction, decree, judgment, order, statute, rule
or regulation applicable to such Stockholder or any of such Stockholder's
properties or assets.
(d) No Finder's Fees. Except as disclosed pursuant to the Merger
----------------
Agreement, no broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of such Stockholder.
-3-
<PAGE>
(e) No Encumbrances. The Shares of such Stockholder and the
---------------
certificates representing the Shares of such Stockholder are now, and at all
times during the term hereof will be, held by such Stockholder, or by a nominee
or custodian for the benefit of such Stockholder, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements, understandings
or arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder. The transfer by such Stockholder of
the Shares of such Stockholder to Sub hereunder shall pass to and
unconditionally vest in Sub good and valid title to all Shares, free and clear
of all claims, liens, restrictions, security interests, pledges, limitations and
encumbrances whatsoever, other than any such encumbrances created by Sub.
(f) Reliance by Parent. Such Stockholder understands and acknowledges
------------------
that Parent is entering into, and causing Sub to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
5. Representations and Warranties of Parent and Sub. Parent and Sub
------------------------------------------------
hereby represent and warrant to each Stockholder as follows:
(a) Due Organization, etc. Each of Parent and Sub is a corporation
----------------------
duly organized and validly existing under the laws of the jurisdiction of its
incorporation. Each of Parent and Sub has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by Parent and Sub
have been duly authorized by all necessary corporate action on the part of
Parent and Sub and, assuming its due authorization, execution and delivery by
each Stockholder, constitutes a legal, valid and binding obligation of each of
Parent and Sub, enforceable against each of Parent and Sub in accordance with
its terms.
(b) No Conflicts. Except for (i) filings and approvals under the HSR
------------
Act or the Antitrust Laws, if applicable, (A) no filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by Parent and Sub and
the consummation by Parent and Sub of the transactions contemplated hereby and
(B) none of the execution and delivery of this Agreement by Parent or Sub, the
consummation by Parent and Sub of the transactions contemplated hereby shall (1)
conflict with or result in any breach of the organizational documents of Parent
or Sub, (2) result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any third party
right of termination, cancellation, material modification or acceleration) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which Parent or Sub is a party
or by which Parent or Sub or any of their respective properties or assets may be
bound, or (3) violate any order, writ, injunction, decree, judgment, order,
statute, rule or regulation applicable to Parent or Sub or any of their
respective properties or assets.
(c) Investment Intent. The purchase of Shares from the Stockholders
-----------------
pursuant to this Agreement is for the account of Sub for the purpose of
investment and not with a view to
-4-
<PAGE>
or for sale in connection with any distribution thereof within the meaning of
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
6. Covenants of the Stockholders. Each Stockholder covenants and
-----------------------------
agrees as follows:
(a) No Solicitation. Beginning on the date hereof and ending on the
---------------
last date the Stock Option is exercisable pursuant to Section 3 hereof, such
Stockholder shall not, in its capacity as such, directly or indirectly,
initiate, solicit (including by way of furnishing information), encourage or
respond to or take any other action knowingly to facilitate, any inquiries or
the making of any proposal by any Person (other than Parent or any affiliate of
Parent) with respect to the Company that constitutes or reasonably may be
expected to lead to, an Acquisition Proposal, or enter into or maintain or
continue discussions or negotiate with any Person in furtherance of such
inquiries or to obtain any Acquisition Proposal, or agree to or endorse any
Acquisition Proposal, or authorize or permit any Person acting on behalf of the
Stockholder to do any of the foregoing. If the Stockholder receives any inquiry
or proposal regarding any Acquisition Proposal, the Stockholder shall promptly
inform Parent of that inquiry or proposal and the details thereof.
(b) Restriction on Transfer, Proxies and Non-Interference. Beginning
-----------------------------------------------------
on the date hereof and ending on the last date the Stock Option is exercisable
pursuant to Section 3 hereof, such Stockholder shall not (i) directly or
indirectly, offer for sale, sell, transfer, tender, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
the Shares of such Stockholder or any interest therein; (ii) except as
contemplated by this Agreement, grant any proxies or powers of attorney, deposit
any Shares of such Stockholder into a voting trust or enter into a voting
agreement with respect to any Shares; or (iii) take any action that would make
any representation or warranty of such Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling such Stockholder from
performing such Stockholder's obligations under this Agreement.
(c) Waiver of Appraisal Rights. Such Stockholder hereby irrevocably
--------------------------
waives any rights of appraisal or rights to dissent from the Merger that such
Stockholder may have.
(d) Stop Transfer; Changes in Shares. Such Stockholder agrees with,
--------------------------------
and covenants to, Parent that such Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Shares of such Stockholder,
unless such transfer is made in compliance with this Agreement. In the event of
a stock dividend or distribution, or any change in any class of Company Stock by
reason of any stock dividend, split-up, recapitalization, combination, exchange
of shares or the like, the term "Shares" shall be deemed to refer to and include
the Shares of such Shareholder as well as all such stock dividends and
distributions and any shares into which or for which any or all of the Shares of
such Stockholder may be changed or exchanged and the Purchase Price shall be
appropriately adjusted. Such Stockholder shall be entitled to receive any cash
dividend paid by
-5-
<PAGE>
the Company in respect of the Shares of such Stockholder during the term of this
Agreement until the Effective Time or purchased hereunder.
7. Fiduciary Duties. Notwithstanding anything in this Agreement to
----------------
the contrary, the covenants and agreements set forth herein shall not prevent
any of the Stockholder's designees serving on the Company's Board of Directors
from taking any action, subject to the applicable provisions of the Merger
Agreement, while acting in the capacity of a director of the Company.
8. Miscellaneous.
-------------
(a) Further Assurances. From time to time, at the other party's
------------------
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
(b) Entire Agreement. This Agreement and the Merger Agreement
----------------
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understanding, both
written and oral, between the parties with respect to the subject matter hereof.
(c) Certain Events. Each Stockholder agrees that this Agreement and
--------------
the obligations hereunder shall attach to the Shares of such Stockholder and
shall be binding upon any Person to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Stockholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(d) Assignment. This Agreement shall not be assigned by operation of
----------
law or otherwise without the prior written consent of the other party, provided
--------
that Parent may assign, at its sole discretion, its rights and obligations
- ----
hereunder to any direct or indirect wholly-owned subsidiary of Parent, although
no such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
(e) Amendments, Waivers, Etc. This Agreement may not be amended,
------------------------
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the relevant
parties with respect to any one or more Stockholders hereto, provided that
-------- ----
Schedule I hereto may be supplemented by Parent by adding the name and other
relevant information concerning any stockholder of the Company who agrees to be
bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added stockholder shall be treated as a
"Stockholder" for all purposes of this Agreement.
(f) Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received
-6-
<PAGE>
if so given) by hand delivery, telegram, telex or telecopy, or by mail
(registered or certified mail, postage prepaid, return receipt requested) or by
any courier service, such as Federal Express, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Stockholders: At the addresses set forth on Schedule I hereto
copies to:
SMG-II Holdings Corporation
200 Milik Street
Carteret, NJ 07008-1194
Telecopier: (732) 499-3460
Attention: Marc A. Strassler, Esq.
and
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopier: (212) 848-7179
Attention: Spencer D. Klein, Esq.
Rohan Weerasinghe, Esq.
If to Parent or Sub:
c/o Koninklijke Ahold N.V.
Albert Heijnweg 1
1507 EH Zaandam
The Netherlands
Telecopier: 31-75-659-83-66
Attention: Paul J. Butzelaar, Esq.
Ton van Tielraden, Esq.
copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Telecopier: (212) 354-8113
Attention: John M. Reiss, Esq.
-7-
<PAGE>
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) Severability. Whenever possible, each provision or portion of any
------------
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(h) Specific Performance. Each of the parties hereto recognizes and
--------------------
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(i) Remedies Cumulative. All rights, powers and remedies provided
-------------------
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such Party.
(j) No Waiver. The failure of any party hereto to exercise any right,
---------
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof shall not constitute a waiver by such party of
its right to exercise any such or other right, power or remedy or to demand such
compliance.
(k) No Third Party Beneficiaries. This Agreement is not intended to
----------------------------
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(l) Governing Law. This Agreement, and the legal relations between
-------------
the parties hereto, shall be governed and construed in accordance with the laws
of the State of New York, applicable to agreements executed and to be performed
solely within such State.
(m) Submission to Jurisdiction; Waiver of Jury Trial. The parties
------------------------------------------------
hereby submit to the jurisdiction of the United States District Court for the
Southern District of New York and of any New York State Court sitting in the
City of New York for purposes of all legal proceedings which may arise hereunder
or under any of the other documents entered into in connection herewith. The
parties irrevocably waive, to the fullest extent permitted by law, any objection
which it may have or hereafter have to the laying of the venue of any such
proceeding brought in
-8-
<PAGE>
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum. The parties hereby consent to process
being served in any such proceeding by the mailing of a copy thereof by
registered or certified mail, postage prepaid, to their respective addresses
specified in Section 8(f) or in any other manner permitted by law. THE PARTIES
HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER DOCUMENTS ENTERED INTO
IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OF ANY PARTY.
(n) Descriptive Headings. The descriptive headings used herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(o) Counterparts. This Agreement may be executed in two or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Agreement.
9. Termination. This Agreement shall terminate, and none of Parent,
-----------
Sub or any Stockholder shall have any rights or obligations hereunder and this
Agreement shall become null and void and have no effect upon the earlier of (i)
termination of the Merger Agreement pursuant to Section 8.1 thereof (unless such
Stockholder breaches any of its obligations hereunder in any material respect or
if the Merger Agreement is terminated as the result of a material breach of any
representation, warranty, obligation, covenant, agreement or condition of the
Merger Agreement by the Company) and (ii) the election by such Stockholder at
any time after February 15, 2000 to terminate this Agreement, except nothing in
this Section 8 shall relieve any party of liability for breach of this
Agreement.
10. Limited Liability of Partners. Notwithstanding any other
-----------------------------
provision of this Agreement, neither the general partner nor the limited
partners nor any future general or limited partner of any Stockholder shall have
any personal liability for performance of any obligation of such Stockholder
under this Agreement in excess of the respective capital contribution of such
general partner and limited partners to such Stockholder.
-9-
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
KONINKLIJKE AHOLD N.V.
By: /s/ R. G. Tobin
-------------------------------------
Name: R. G. Tobin
Title: Executive Vice President
AHOLD ACQUISITION, INC.
By: /s/ R. G. Tobin
-------------------------------------
Name: R. G. Tobin
Title: President
-10-
<PAGE>
MLCP ASSOCIATES L.P. NO. II
By MERRILL LYNCH CAPITAL PARTNERS,
INC. as General Partner
By /s/ Matthias Bowman
------------------------------
Name: Matthias Bowman
Title: Vice President
MERCHANT BANK L.P. NO. IV
By MERRILL LYNCH MBP, INC.,
as General Partner
By /s/ Mark McAndrews
------------------------------
Name: Mark McAndrews
Title: President
MERRILL LYNCH KECALP, L.P. 1989
By KECALP INC., as General Partner
By /s/ Matthias Bowman
------------------------------
Name: Matthias Bowman
Title: Vice President
MERRILL LYNCH KECALP, L.P. 1991
By KECALP INC., as General Partner
By /s/ Matthias Bowman
------------------------------
Name: Matthias Bowman
Title: Vice President
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
By /s/ U. Peter C. Gummeson
------------------------------
Name: U. Peter C. Gummeson
Title: Investment Officer
-11-
<PAGE>
MERCHANT BANKING L.P. NO. 1
By MERRILL LYNCH MBP INC., as
General Partner
By /s/ Mark McAndrews
------------------------------
Name: Mark McAndrews
Title: President
MERRILL LYNCH KECALP L.P. 1987
By KECALP INC., as General Partner
By /s/ Matthias Bowman
------------------------------
Name: Matthias Bowman
Title: Vice President
MERRILL LYNCH CAPITAL APPRECIATION
PARTNERSHIP NO. B-X, L.P.
By MERRILL LYNCH LBO PARTNERS
NO. B-II, L.P., as General Partner
By MERRILL LYNCH CAPITAL PARTNERS,
INC., as General Partner
By /s/ Matthias Bowman
------------------------------
Name: Matthias Bowman
Title: Vice President
ML OFFSHORE LBO PARTNERSHIP NO. B-X
By MERRILL LYNCH LBO PARTNERS
NO. B-II, L.P., as Investment
General Partner
By MERRILL LYNCH CAPITAL PARTNERS,
INC., as General Partner
By /s/ Matthias Bowman
------------------------------
Name: Matthias Bowman
Title: Vice President
-12-
<PAGE>
MERRILL LYNCH CAPITAL APPRECIATION
PARTNERSHIP NO. IX, L.P.
By MERRILL LYNCH LBO PARTNERS
NO. II, L.P., as General Partner
By MERRILL LYNCH CAPITAL PARTNERS,
INC., as General Partner
By /s/ Matthias Bowman
------------------------------
Name: Matthias Bowman
Title: Vice President
ML OFFSHORE LBO PARTNERSHIP NO. IX
By MERRILL LYNCH LBO PARTNERS NO.
II, L.P., as Investment
General Partner
By MERRILL LYNCH CAPITAL PARTNERS,
INC., as General Partner
By /s/ Matthias Bowman
------------------------------
Name: Matthias Bowman
Title: Vice President
ML EMPLOYEES LBO PARTNERSHIP NO. I, L.P.
By ML EMPLOYEES LBO MANAGERS,
INC., as General Partner
By /s/ Matthias Bowman
------------------------------
Name: Matthias Bowman
Title: Vice President
ML IBK POSITIONS, INC.
By /s/ Matthias Bowman
------------------------------
Name: Matthias Bowman
Title: Vice President
-13-
<PAGE>
EQUITABLE DEAL FLOW FUND, L.P.
By EQUITABLE MANAGED ASSETS, L.P.,
as General Partner
By THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES,
as General Partner
By /s/ U. Peter C. Gummeson
------------------------------
Name: U. Peter C. Gummeson
Title: Investment Officer
JAMES L. DONALD, INDIVIDUAL
STOCKHOLDER
By /s/ James L. Donald
------------------------------
James L. Donald
-14-
<PAGE>
EXHIBIT I
To Stockholders Agreement
<TABLE>
<CAPTION>
Number of Shares of Class
of Company Stock held by
Name of Stockholder Class of Company Stock Stockholder
- ----------------------------------------- ------------------------------ -----------------------------
<S> <C> <C>
Merrill Lynch Capital Class A Common Stock 488,704.8
Appreciation Partnership No. IX, L.P.
ML Offshore LBO Partnership No. IX Class A Common Stock 12,424.7
ML Employees LBO Partnership No. I, L.P. Class A Common Stock 12,148.6
ML IBK Positions, Inc. Class A Common Stock 21,258.9
Merchant Banking L.P. No. 1 Class A Common Stock 8,119
Merrill Lynch KECALP L.P. 1987 Class A Common Stock 7,344
The Equitable Life Assurance Society of Class B Common Stock 150,000
the United States
Equitable Deal Flow Fund, L.P. Class B Common Stock 150,000
Merrill Lynch Capital Series A Preferred Stock 133,043
Appreciation Partnership No. B-X, L.P.
ML Offshore LBO Partnership No. B-X Series A Preferred Stock 40,950
</TABLE>
<PAGE>
EXHIBIT I
Page 2
<TABLE>
<CAPTION>
Number of Shares of Class
of Company Stock held by
Name of Stockholder Class of Company Stock Stockholder
- ----------------------------------------- ------------------------------ -----------------------------
<S> <C> <C>
MLCP Associates L.P. No. II Series A Preferred Stock 1,740
ML IBK Positions, Inc. Series A Preferred Stock 46,344.5
Merchant Bank L.P. No. IV Series A Preferred Stock 3,779
Merrill Lynch KECALP, L.P. 1989 Series A Preferred Stock 7,000
Merrill Lynch KECALP, L.P. 1991 Series A Preferred Stock 3,874.5
The Equitable Life Assurance Society of Series B Preferred Stock 84,134
the United States
Equitable Deal Flow Fund, L.P. Series B Preferred Stock 84,135
James Donald Series C Preferred Stock 8,520
</TABLE>
<PAGE>
EXHIBIT (c)(3)
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
KONINKLIJKE AHOLD N.V.
AHOLD ACQUISITION, INC.
and
SMG-II HOLDINGS CORPORATION
Dated as of March 9, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS........................................................................... 2
Section 1. Definitions................................................... 2
ARTICLE II
THE MERGER............................................................................ 6
Section 2.1 The Merger................................................... 6
Section 2.2 Conversion of Stock.......................................... 7
Section 2.3 Dissenting Stock............................................. 7
Section 2.4 Surrender of Certificates.................................... 8
Section 2.5 Payment...................................................... 9
Section 2.6 No Further Rights of Transfers............................... 9
Section 2.7 Stock Option and Other Plans................................. 10
Section 2.8 Certificate of Incorporation of the Surviving Corporation.... 10
Section 2.9 By-Laws of the Surviving Corporation......................... 10
Section 2.10 Directors and Officers of the Surviving Corporation......... 10
Section 2.11 Closing..................................................... 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................... 11
Section 3. Representations and Warranties of the Company................. 11
Section 3.1 Due Organization, Good Standing and Corporate Power.......... 11
Section 3.2 Authorization and Validity of Agreement...................... 11
Section 3.3 Capitalization............................................... 12
Section 3.4 Consents and Approvals; No Violations........................ 12
Section 3.5 Financial Statements......................................... 13
Section 3.6 Public Reports............................................... 14
Section 3.7 Absence of Certain Changes................................... 14
Section 3.8 Compliance with Laws......................................... 15
Section 3.9 Employee Benefit Plan Triggering Events...................... 15
Section 3.10 Liabilities................................................. 15
Section 3.11 Broker's or Finder's Fee.................................... 15
Section 3.12 State Takeover Statutes..................................... 16
Section 3.13 Voting Requirements......................................... 16
</TABLE>
(i)
<PAGE>
<TABLE>
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<S> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB...................................... 16
Section 4.1 Due Organization; Good Standing and Corporate Power.......... 16
Section 4.2 Authorization and Validity of Agreement...................... 16
Section 4.3 Consents and Approvals; No Violations........................ 17
Section 4.4 Broker's or Finder's Fee..................................... 17
Section 4.5 Financing.................................................... 17
ARTICLE V
COVENANTS............................................................................. 17
Section 5.1 Access to Information Concerning Properties and Records...... 17
Section 5.2 Confidentiality.............................................. 18
Section 5.3 Conduct of the Business of the Company and its Subsidiaries.. 18
Section 5.4 Stockholder Approval......................................... 21
Section 5.5 Best Efforts................................................. 21
Section 5.6 No Solicitation of Other Offers.............................. 22
Section 5.7 Notification of Certain Matters.............................. 22
Section 5.8 Antitrust Filings............................................ 23
Section 5.9 Transfer Taxes............................................... 24
Section 5.10 SMGH Preferred Stock Tender Offer........................... 24
Section 5.11 Merger of SMG-II and SMGH................................... 26
Section 5.12 Employee Benefits........................................... 26
Section 5.13 Directors' and Officers' Insurance; Indemnification......... 26
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND SUB................................. 28
Section 6. Conditions Precedent to Obligations of Parent and Sub......... 28
Section 6.1 Truth of Representations and Warranties...................... 28
Section 6.2 Performance of Agreements.................................... 28
Section 6.3 Approval of Company's Stockholders........................... 28
Section 6.4 HSR Act...................................................... 28
Section 6.5 Injunction................................................... 29
Section 6.6 SMGH Preferred Stock Tender Offer............................ 29
Section 6.7 Statutes..................................................... 29
Section 6.8 Company Stockholders' Agreement.............................. 29
Section 6.9 No Material Adverse Effect................................... 29
Section 6.10 Fulfillment of Company Conditions........................... 29
</TABLE>
(ii)
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<S> <C>
ARTICLE VII
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE COMPANY............................................................ 29
Section 7. Conditions Precedent to Obligations of the Company............ 29
Section 7.1 Truth of Representations and Warranties...................... 29
Section 7.2 Performance of Agreements.................................... 29
Section 7.3 HSR Act Waiting Periods...................................... 30
Section 7.4 Injunction................................................... 30
Section 7.5 Approval of Company's Stockholders........................... 30
Section 7.6 Statutes..................................................... 30
ARTICLE VIII
TERMINATION AND ABANDONMENT........................................................... 30
Section 8.1 Termination.................................................. 30
Section 8.2 Effect of Termination........................................ 31
ARTICLE IX
MISCELLANEOUS......................................................................... 31
Section 9.1 Fees and Expenses............................................ 31
Section 9.2 Representations and Warranties............................... 31
Section 9.3 Extension; Waiver............................................ 32
Section 9.4 Public Announcements......................................... 32
Section 9.5 Governing Law................................................ 32
Section 9.6 Captions..................................................... 32
Section 9.7 Notices...................................................... 32
Section 9.8 Binding Effect; Benefit; Assignment.......................... 33
Section 9.9 Counterparts................................................. 33
Section 9.10 Entire Agreement............................................. 34
Section 9.11 Amendments................................................... 34
Section 9.12 Severability................................................. 34
Section 9.13 Disclosure Letter............................................ 34
Section 9.14 Submission to Jurisdiction; Waiver of Jury Trial............. 34
</TABLE>
(iii)
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 9, 1999 (this "Agreement"),
---------
by and among KONINKLIJKE AHOLD N.V., a company organized under the laws of the
Netherlands ("Parent"), AHOLD ACQUISITION, INC., a company organized under the
------
laws of Delaware and an indirect wholly-owned subsidiary of Parent ("Sub") and
---
SMG-II HOLDINGS CORPORATION, a company organized under the laws of Delaware (the
"Company").
-------
W I T N E S S E T H :
--------------------
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Sub;
WHEREAS, to complete such acquisition, the respective Boards of Directors
of Parent, Sub and the Company have approved the merger of Sub into the Company
(the "Merger"), pursuant to and subject to the terms and conditions of this
------
Agreement;
WHEREAS, the Directors of the Company have unanimously determined that the
Merger is fair to, and in the best interests of, the holders of shares of Class
A Common Stock, par value $0.01 per share (the "Class A Common Stock"), of the
--------------------
Company, the holders of shares of Class B Common Stock, par value $0.01 per
share (the "Class B Common Stock"), of the Company, the holders of shares of
--------------------
Series A Cumulative Convertible Preferred Stock, par value $0.01 per share (the
"Series A Preferred Stock"), of the Company, the holders of shares of Series B
------------------------
Cumulative Convertible Preferred Stock, par value $0.01 per share (the "Series B
--------
Preferred Stock"), of the Company, and the holders of shares of Series C
- ---------------
Cumulative Convertible Preferred Stock, par value $0.01 per share (the "Series C
--------
Preferred Stock" and, together with the Class A Common Stock, the Class B Common
- ---------------
Stock, the Series A Preferred Stock and the Series B Preferred Stock,
collectively, the "Stock"), of the Company;
-----
WHEREAS, Parent and Sub are unwilling to enter into this Agreement unless
certain stockholders of the Company concurrently with the execution and delivery
of this Agreement, enter into a stockholders agreement (the "Stockholders
------------
Agreement") by and among Parent, Sub and such holders of Stock of the Company
- ---------
providing for, among other things, the agreement of such holders of Stock to
vote all shares of Stock owned by such holders of Stock in favor of the Merger
and the grant to Sub of an option to purchase all such shares of Stock at the
Applicable Merger Consideration (as such term is defined herein) under the
circumstances set forth in such agreement;
WHEREAS, Sub will make a tender offer (the "Tender Offer") to purchase all
------------
of the issued and outstanding $3.52 Cumulative Exchangeable Preferred Stock, par
value $0.01 per share (the "SMGH Preferred Stock"), of Supermarkets General
--------------------
Holdings Corporation, a company organized under the laws of Delaware and a
wholly-owned subsidiary of the Company
<PAGE>
("SMGH"), subject to the terms and conditions of this Agreement and certain
----
other conditions, at a price of $38.25 per share, net to the Seller in cash (the
"Tender Offer Price per Share");
----------------------------
WHEREAS, the parties hereto have agreed that, in the event certain
conditions set forth herein are not satisfied, the Company shall in the
alternative cause PTK Holdings, Inc., a company organized under the laws of the
State of Delaware and an indirect wholly-owned subsidiary of the Company
("PTK"), to sell, and Sub shall in the alternative purchase, an aggregate of 100
---
shares of Common Stock, par value $.10 per share (the "Pathmark Stock"), of
--------------
Pathmark Stores, Inc., a company organized under the laws of Delaware
("Pathmark"), being all of the issued and outstanding shares of capital stock of
- ----------
Pathmark, all in accordance with a separate stock purchase agreement entered
into by and among the Company, PTK, Sub and Parent concurrently with the
execution of this Agreement (the "Alternative Stock Purchase Agreement)".
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINITIONS
-----------
Section 1. Definitions. When used in this Agreement, the following terms
-----------
shall have the respective meanings specified therefor below (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
"Acquisition Proposal" shall have the meaning assigned to such term in
--------------------
Section 5.6(a).
"Affiliate" of any Person shall mean any Person directly or indirectly
---------
controlling, controlled by, or under common control with, such Person; provided
--------
that, for the purposes of this definition, "control" (including, with
- ----
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities
or partnership interests, by contract or otherwise.
"Agreement" shall have the meaning assigned to such term in the preamble to
---------
this Agreement.
"Alcohol and Drug Laws" shall have the meaning assigned to such term in
---------------------
Section 3.4.
"Alternative Stock Purchase Agreement" shall have the meaning assigned to
------------------------------------
such term in the sixth recital to this Agreement.
"Alternative Structure" shall have the meaning assigned to such term in
---------------------
Section 2.1(d).
"Antitrust Law" shall have the meaning assigned to such term in Section
-------------
5.8(d).
-2-
<PAGE>
"Applicable Merger Consideration" shall have the meaning assigned to such
-------------------------------
term in Section 2.2(a).
"Balance Sheet" shall have the meaning assigned to such term in Section
-------------
3.5(a).
"Balance Sheet Date" shall have the meaning assigned to such term in
------------------
Section 3.5(a).
A "business day" shall mean any day, other than a Saturday, Sunday or a day
------------
on which banks located in New York City and Amsterdam shall be authorized or
required by law to close.
"Certificate of Merger" shall have the meaning assigned to such term in
---------------------
Section 2.1(a).
"Certificates" shall have the meaning assigned to such term in Section
------------
2.4(a).
"Class A Common Stock" shall have the meaning assigned to such term in the
--------------------
third recital to this Agreement.
"Class B Common Stock" shall have the meaning assigned to such term in the
--------------------
third recital to this Agreement.
"Closing" shall have the meaning assigned to such term in Section 2.11.
-------
"Closing Date" shall have the meaning assigned to such term in Section
------------
2.11.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
----
to time and the Treasury regulations promulgated and the rulings issued
thereunder.
"Commission" shall have the meaning assigned to such term in Section
----------
3.6(a).
"Company" shall have the meaning assigned to such term in the preamble to
-------
this Agreement.
"Company Stockholders' Agreement" shall mean the Stockholders Agreement,
-------------------------------
dated February 4, 1991, by and among the Company and its stockholders, as
amended.
"Condition" shall mean, with respect to any Person the business,
---------
properties, assets, liabilities, results of operations or condition (financial
or otherwise) of such Person.
"Credit Agreement" shall have the meaning assigned to such term in Section
----------------
3.10.
"Disclosure Letter" shall mean that certain Disclosure Letter, dated the
-----------------
date hereof, delivered by the Company to the Purchaser concurrently with the
execution of this Agreement.
"Dissenting Stockholders" shall have the meaning assigned to such term in
-----------------------
Section 2.3.
"Effective Time" shall have the meaning assigned to such term in Section
--------------
2.1(a).
"Employee Benefit Plan" shall have the meaning assigned to such term in
---------------------
Section 3.9.
-3-
<PAGE>
"ERISA" shall have the meaning assigned to such term in Section 3.9.
-----
"Exchange Act" shall have the meaning assigned to such term in Section
------------
5.10(a).
"GAAP" shall mean generally accepted accounting principles of the United
----
States of America.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
-------
1976, as amended, and the rules and regulations thereunder.
"Indemnified Parties" shall have the meaning assigned to such term in
-------------------
Section 5.13(b).
"Liens" shall mean, collectively, liens, security interests, options,
-----
rights of first refusal, easements, mortgages, charges, indentures, deeds of
trust, rights of way, restrictions on the use of real property, encroachments,
licenses to third parties, leases to third parties, security agreements, or any
other encumbrances and other restrictions or limitations on use of real or
personal property.
"Management Options" shall have the meaning assigned to such term in
------------------
Section 2.7.
"Merger" shall have the meaning assigned to such term in the second recital
------
to this Agreement.
"Minimum Condition" shall have the meaning assigned to such term in Section
-----------------
5.10(a).
"October Balance Sheet" shall have the meaning assigned to such term in
---------------------
Section 3.5(a).
"Offer Documents" shall have the meaning assigned to such term in Section
---------------
5.10(b).
"Parent" shall have the meaning assigned to such term in the preamble to
------
this Agreement.
"Paying Agent" shall have the meaning assigned to such term in Section
------------
2.4(a).
"Payment Fund" shall have the meaning assigned to such term in Section 2.5.
------------
"Pathmark" shall have the meaning assigned to such term in the sixth
--------
recital to this Agreement.
"Pathmark Stock" shall have the meaning assigned to such term in the sixth
--------------
recital to this Agreement.
"Permitted Investments" shall have the meaning assigned to such term in
---------------------
Section 2.5.
"Person" shall mean and include an individual, a partnership, a joint
------
venture, a corporation, a limited liability company, a limited liability
partnership, a trust, an incorporated organization and a government or other
department or agency thereof.
"PTK" shall have the meaning assigned to such term in the sixth recital to
---
this Agreement.
-4-
<PAGE>
"Public Disclosure Date" shall have the meaning assigned to such term in
----------------------
Section 3.6(a).
"Public Reports" shall have the meaning assigned to such term in Section
--------------
3.6(a).
"Schedule 14D-1" shall have the meaning assigned to such term in Section
--------------
5.10(b).
"Schedule 14D-9" shall have the meaning assigned to such term in Section
--------------
5.10(c).
"Second Step Merger" shall have the meaning assigned to such term in
------------------
Section 5.11.
"Series A Preferred Stock" shall have the meaning assigned to such term in
------------------------
the third recital to this Agreement.
"Series B Preferred Stock" shall have the meaning assigned to such term in
------------------------
the third recital to this Agreement.
"Series C Preferred Stock" shall have the meaning assigned to such term in
------------------------
the third recital to this Agreement.
"SMGH" shall have the meaning assigned to such term in the fifth recital to
----
this Agreement.
"SMGH Preferred Stock" shall have the meaning assigned to such term in the
--------------------
fifth recital to this Agreement.
"Stock" shall have the meaning assigned to such term in the third recital
-----
to this Agreement.
"Stock Incentive Plans" shall have the meaning assigned to such term in
---------------------
Section 2.7.
"Stock Plans" shall have the meaning assigned to such term in Section 2.7.
-----------
"Stockholders Agreement" shall have the meaning assigned to such term in
----------------------
the fourth recital to this Agreement.
"Sub" shall have the meaning assigned to such term in the preamble to this
---
Agreement.
"Supply Agreement" shall mean the First Amended and Restated Supply
----------------
Agreement dated January 29, 1998, by and between Pathmark and C&S Wholesale
Grocers, Inc.
"Surviving Corporation" shall have the meaning assigned to such term in
---------------------
Section 2.1(b).
"Tender Offer" shall have the meaning assigned to such term in the fifth
------------
recital to this Agreement.
"Tender Offer Conditions" shall have the meaning assigned to such term in
-----------------------
Section 5.10(a).
-5-
<PAGE>
"Tender Offer Price per Share" shall have the meaning assigned to such term
----------------------------
in the fifth recital to this Agreement.
"Third Party Provisions" shall have the meaning assigned to such term in
----------------------
Section 9.8.
"Transfer Taxes" shall have the meaning assigned to such term in Section
--------------
5.9.
"Working Capital Facility" shall have the meaning assigned to such term in
------------------------
Section 3.10.
ARTICLE II
THE MERGER
----------
Section 2.1 The Merger. (a) Upon the terms and subject to the terms and
----------
conditions of this Agreement, at the Closing (as such term is defined in Section
2.11), a certificate of merger (the "Certificate of Merger") shall be duly
---------------------
prepared, executed and acknowledged by Sub and the Company in accordance with
the Delaware General Corporation Law and shall be filed with the Secretary of
State of Delaware as provided in Section 251 of the Delaware General Corporation
Law. The Merger shall become effective upon the filing of the Certificate of
Merger (or at such later time reflected in such Certificate of Merger as shall
be agreed by Parent and the Company). The date and time when the Merger shall
become effective is hereinafter referred to as the "Effective Time."
--------------
(b) At the Effective Time, Sub shall be merged with and into the Company
and the separate corporate existence of Sub shall cease, and the Company shall
continue as the surviving corporation under the laws of the State of Delaware
under the name of "Pathmark Holdings Corporation" (the "Surviving Corporation").
---------------------
(c) From and after the Effective Time, the Merger shall have the effects
set forth in Section 259(a) of the Delaware General Corporation Law.
(d) If Parent so elects, the Merger may alternatively be structured with
Sub as the Surviving Corporation or so that any direct or indirect subsidiary of
Parent is merged with and into the Company or the Company is merged with and
into any such other subsidiary (an "Alternative Structure"). In the event of
---------------------
such an election, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such election. If Parent elects to use an
Alternative Structure, the inaccuracy of any representation or warranty of the
Company which is premised on the assumption that Sub shall be merged with and
into the Company and the Company shall be the Surviving Corporation, which
representation or warranty becomes inaccurate solely as a result of the use of
such Alternative Structure shall not be deemed to be a breach of such
representation or warranty.
(e) If, at any time after the Effective Time, the Surviving Corporation
shall consider or be advised that any deeds, bills of sale, assignments,
assurances or any other actions or things are necessary or desirable to continue
in, vest, perfect or confirm of record or otherwise in the Surviving
Corporation's right, title or interest in, to or under any of the rights,
properties,
-6-
<PAGE>
privileges, franchises or assets of either of its constituent corporations
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger, or otherwise to carry out the intent of this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of either of the
constituent corporations of the Merger, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties, privileges, franchises or
assets in the Surviving Corporation or otherwise to carry out the intent of this
Agreement.
Section 2.2 Conversion of Stock. At the Effective Time:
-------------------
(a) Each share of Stock issued and outstanding immediately prior to the
Effective Time (other than (i) any shares of Stock which are held by any
subsidiary of the Company or in the treasury of the Company, or which are held,
directly or indirectly, by Parent or any direct or indirect subsidiary of Parent
(including Sub), all of which shall cease to be outstanding and be canceled and
retired and none of which shall receive any payment with respect thereto and
(ii) shares of Stock held by Dissenting Stockholders (as such term is defined in
Section 2.3)) and all rights in respect thereof shall, by virtue of the Merger
and without any action on the part of the holder thereof, forthwith cease to
exist and be converted into and represent the right to receive an amount in
cash, without interest as follows (such amount, with respect to each share of
Stock, the "Applicable Merger Consideration"):
-------------------------------
(i) each share of Class A Common Stock - $5.315;
(ii) each share of Class B Common Stock - $5.315;
(iii) each share of Series A Preferred Stock - $113.353;
(iv) each share of Series B Preferred Stock - $113.353; and
(v) each share of Series C Preferred Stock - $113.353.
(b) Each share of common stock, par value $0.01 per share, of Sub then
issued and outstanding shall, by virtue of the Merger and without any action on
the part of the holder thereof, become one fully paid and nonassessable share of
common stock, par value $0.01 per share, of the Surviving Corporation.
Section 2.3 Dissenting Stock. Notwithstanding anything contained in this
----------------
Agreement to the contrary but only to the extent required by the Delaware
General Corporation Law, shares of Stock that are issued and outstanding
immediately prior to the Effective Time and are held by holders of Stock who
comply with all the provisions of the law of the State of Delaware concerning
the right of holders of Stock to dissent from the Merger and require appraisal
of their shares of Stock (such holders, "Dissenting Stockholders") shall not be
-----------------------
converted into the right to receive the Applicable Merger Consideration but
shall become the right to receive such consideration as may be determined to be
due such Dissenting Stockholder pursuant to the law of the State of Delaware;
provided, however, that (i) if any Dissenting Stockholder shall subsequently
- -------- -------
deliver a
-7-
<PAGE>
written withdrawal of his or her demand for appraisal (with the written approval
of the Surviving Corporation, if such withdrawal is not tendered within 60 days
after the Effective Time), or (ii) if any Dissenting Stockholder fails to
establish and perfect his or her entitlement to appraisal rights as provided by
applicable law, or (iii) if within 120 days of the Effective Time neither any
Dissenting Stockholder nor the Surviving Corporation has filed a petition
demanding a determination of the value of all shares of Stock outstanding at the
Effective Time and held by Dissenting Stockholders in accordance with applicable
law, then such Dissenting Stockholder or Dissenting Stockholders, as the case
may be, shall forfeit the right to appraisal of such shares and such shares
shall thereupon be deemed to have been converted into the right to receive, as
of the Effective Time, the Applicable Merger Consideration, without interest.
The Company shall give Parent and Sub (x) prompt notice of any written demands
for appraisal, withdrawals of demands for appraisal and any other related
instruments received by the Company, and (y) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal. The Company
shall not voluntarily make any payment with respect to any demands for appraisal
and shall not, except with the prior written consent of Parent, settle or offer
to settle any demand.
Section 2.4 Surrender of Certificates. (a) Prior to the Effective Time,
-------------------------
Parent shall designate a bank or trust company located in the United States to
act as paying agent (the "Paying Agent") for purposes of making the cash
------------
payments contemplated hereby. As soon as practicable after the Effective Time,
Parent shall cause the Paying Agent to mail and/or make available to each holder
of a certificate theretofore evidencing shares of Common Stock (other than those
which are held by any subsidiary of the Company or in the treasury of the
Company or which are held directly or indirectly by Parent or any direct or
indirect subsidiary of Parent (including Sub)) a notice and letter of
transmittal advising such holder of the effectiveness of the Merger and the
procedure for surrendering to the Paying Agent such certificate or certificates
which immediately prior to the Effective Time represented outstanding Common
Stock (the "Certificates") in exchange for the Applicable Merger Consideration
------------
deliverable in respect thereof pursuant to this Article II. Upon the surrender
for cancellation to the Paying Agent of such Certificates, together with a
letter of transmittal, duly executed and completed in accordance with the
instructions thereon, and any other items specified by the letter of
transmittal, the Paying Agent shall promptly pay to the Person entitled thereto
the Applicable Merger Consideration deliverable in respect thereof. Until so
surrendered, each Certificate shall be deemed, for all corporate purposes, to
evidence only the right to receive upon such surrender the Applicable Merger
Consideration deliverable in respect thereof to which such Person is entitled
pursuant to this Article II. No interest shall be paid or accrued in respect of
such cash payments.
(b) If the Applicable Merger Consideration (or any portion thereof) is to
be delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of the Applicable Merger Consideration that the Certificates so
surrendered shall be properly endorsed or accompanied by appropriate stock
powers and otherwise in proper form for transfer, that such transfer otherwise
be proper and that the Person requesting such transfer pay to the Paying Agent
any transfer or other taxes payable by reason of the foregoing or establish to
the satisfaction of the Paying Agent that such taxes have been paid or are not
required to be paid.
-8-
<PAGE>
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Applicable Merger
Consideration deliverable in respect thereof as determined in accordance with
this Article II, provided that the Person to whom the Applicable Merger
-------- ----
Consideration is paid shall, as a condition precedent to the payment thereof,
give the Surviving Corporation a bond in such sum as it may direct or otherwise
indemnify the Surviving Corporation in a manner satisfactory to it against any
claim that may be made against the Surviving Corporation with respect to the
Certificate claimed to have been lost, stolen or destroyed.
Section 2.5 Payment. Concurrently with or immediately prior to the
-------
Effective Time, Parent or Sub shall deposit in trust with the Paying Agent cash
in United States dollars in an aggregate amount equal to the product of (i) the
number of shares of each class of Stock outstanding immediately prior to the
Effective Time (other than shares of Stock which are held by any subsidiary of
the Company or in the treasury of the Company or which are held directly or
indirectly by Parent or any direct or indirect subsidiary of Parent (including
Sub) or a Person known at the time of such deposit to be a Dissenting
Stockholder) and (ii) the Applicable Merger Consideration (such amount being
hereinafter referred to as the "Payment Fund"). The Payment Fund shall be
------------
invested by the Paying Agent as directed by Parent in direct obligations of the
United States, obligations for which the full faith and credit of the United
States is pledged to provide for the payment of principal and interest,
commercial paper of an issuer organized under the laws of a state of the United
States rated of the highest quality by Moody's Investors Services, Inc. or
Standard & Poor's Ratings Group or certificates of deposit, bank repurchase
agreements or bankers' acceptances of a United States commercial bank having at
least $1,000,000,000 in assets (collectively, "Permitted Investments") or in
---------------------
money market funds which are invested in Permitted Investments, and any net
earnings with respect thereto shall be paid to Parent as and when requested by
Parent. The Paying Agent shall, pursuant to irrevocable instructions, make the
payments referred to in Section 2.2(a) hereof out of the Payment Fund. The
Payment Fund shall not be used for any other purpose. Promptly following the
date which is three months after the Effective Time, the Paying Agent shall
return to the Surviving Corporation all cash, certificates and other instruments
in its possession that constitute any portion of the Payment Fund (other than
net earnings on the Payment Fund which shall be paid to Parent), and the Paying
Agent's duties shall terminate. Thereafter, each holder of a Certificate may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Applicable Merger Consideration, without interest, but shall have
no greater rights against the Surviving Corporation than may be accorded to
general creditors of the Surviving Corporation or Parent under applicable law.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to a holder of shares of Stock for any Applicable Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
Section 2.6 No Further Rights of Transfers. At and after the Effective
------------------------------
Time, each holder of Stock shall cease to have any rights as a stockholder of
the Company, except for, in the case of a holder of a Certificate (other than
shares of Stock to be canceled pursuant to Section 2.2(a) hereof or held by
Dissenting Stockholders), the right to surrender his or her Certificate in
exchange for payment of the Applicable Merger Consideration or, in the case of a
Dissenting
-9-
<PAGE>
Stockholder, to perfect his or her right to receive payment for his or her
shares pursuant to the laws of the State of Delaware if such holder has validly
perfected and not withdrawn or otherwise lost his or her right to receive
payment for his or her shares, and no transfer of shares of Stock shall be made
on the stock transfer books of the Surviving Corporation. Certificates presented
to the Surviving Corporation after the Effective Time shall be canceled and
exchanged for cash as provided in this Article II. At the close of business on
the day of the Effective Time the stock ledger of the Company with respect to
Stock shall be closed.
Section 2.7 Stock Option and Other Plans. Prior to the Effective Time,
----------------------------
the Board of Directors of the Company (or, if appropriate, any committee
thereof), shall take all actions and shall obtain all necessary consents and
releases from all of the holders of all of the outstanding stock options and
other rights to purchase Stock (the "Management Options") heretofore granted
------------------
under any stock option plan of the Company or otherwise (collectively, the
"Stock Plans") to (i) provide for the cancellation, effective as of the
- ------------
Effective Time of all Management Options, (ii) terminate, as of the Effective
Time, the Stock Plans and any other plan, program or arrangement providing for
the issuance or grant of any other interest in respect of the capital stock of
the Company or any of its subsidiaries (collectively with the Stock Plans, the
"Stock Incentive Plans") with respect to any interest in the capital stock of
- ----------------------
the Company or any of its subsidiaries and (iii) amend, as of the Closing Date,
the provisions in any other Employee Benefit Plan (as such term is defined in
Section 3.9) providing for the issuance, transfer or grant of any capital stock
of the Company or any of its subsidiaries, or any interest in respect of any
capital stock of the Company or any of its subsidiaries to provide no continuing
rights to acquire, hold, transfer or grant any capital stock of the Company or
any of its subsidiaries or any interest in the capital stock of the Company or
any of its subsidiaries. Incident to the foregoing, any then outstanding stock
appreciation rights or limited stock appreciation rights shall be canceled
immediately prior to the Effective Time without any payment therefor.
Section 2.8 Certificate of Incorporation of the Surviving Corporation.
---------------------------------------------------------
The Certificate of Incorporation of the Company, as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation and shall be amended following the Merger so that Article
IV thereof reads in its entirety as follows: "The total number of shares of
Stock of all classes which the Corporation has authority to issue is 1,000
shares of Common Stock, par value one cent ($0.01) per share."
Section 2.9 By-Laws of the Surviving Corporation. The By-Laws of the
------------------------------------
Company, as in effect immediately prior to the Effective Time, shall be the By-
Laws of the Surviving Corporation.
Section 2.10 Directors and Officers of the Surviving Corporation. At the
---------------------------------------------------
Effective Time, the directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, each of such directors to
hold office, subject to the applicable provisions of the Certificate of
Incorporation and By-Laws of the Surviving Corporation, until the next annual
stockholders' meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of Sub immediately prior to the Effective Time shall, subject
to the applicable provisions of the Certificate of Incorporation and By-Laws of
the Surviving Corporation, be the officers of the Surviving Corporation until
their respective successors shall be duly elected or appointed and qualified.
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<PAGE>
Section 2.11 Closing. The Merger (the "Closing") shall take place at
------- -------
10:00 A.M. at the offices of White & Case LLP, 1155 Avenue of the Americas, New
York, New York 10036 as soon as practicable, but in any event within three (3)
business days after the last of the conditions set forth in Articles VI and VII
hereof is satisfied or waived or at such other time and date as the parties
hereto shall agree in writing. Such date is herein referred to as the "Closing
-------
Date".
- ----
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
----------------------------------------------
Section 3. Representations and Warranties of the Company. The Company
---------------------------------------------
hereby represents and warrants to Parent and Sub as follows:
Section 3.1 Due Organization, Good Standing and Corporate Power. Each of
---------------------------------------------------
the Company and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and each of the Company and its subsidiaries has the corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of the Company and its subsidiaries is
duly qualified or licensed to do business as a foreign corporation and is in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except in such jurisdictions where the failure to be so
qualified or licensed and in good standing would not have a material adverse
effect on the Condition of the Company and its subsidiaries taken as a whole.
The Company has made available to Parent complete and correct copies of the
certificates of incorporation and by-laws or other organizational documents of
each of the Company and its subsidiaries, in each case as amended to the date of
this Agreement. Except as set forth on Schedule 3.1 of the Disclosure Letter,
the respective certificates of incorporation and by-laws or other organizational
documents of each of the Company and its subsidiaries do not contain any
provision limiting or otherwise restricting the ability of such Person to
control its subsidiaries.
Section 3.2 Authorization and Validity of Agreement. The Company has the
---------------------------------------
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate (subject to the approval
of the stockholders of the Company) the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by the Company, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized and approved by its Board of Directors and no other corporate or
stockholder action on the part of the Company is necessary to authorize the
execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby (other than the approval of
this Agreement by the stockholders of the Company). This Agreement has been duly
executed and delivered by the Company and is a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
to the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether considered in a proceeding at law or in equity).
-11-
<PAGE>
Section 3.3 Capitalization. Schedule 3.3(a) of the Disclosure Letter sets
--------------
forth (i) the authorized, issued and outstanding capital stock of each of the
Company and its subsidiaries and (ii) the owners of the issued and outstanding
shares of capital stock of each of the Company and its subsidiaries (or, in the
case of (x) the Stock, each owner of record of the issued and outstanding shares
of Stock and (y) SMGH, each owner of common stock only). All issued and
outstanding capital stock of each of the Company and its subsidiaries has been
duly authorized and validly issued and is fully paid and nonassessable, and is
not subject to, nor was issued in violation of, any preemptive rights. Except
as set forth on Schedule 3.3(b) of the Disclosure Letter, no shares of capital
stock of either the Company or any of its subsidiaries are authorized, issued or
outstanding and there are no outstanding or authorized options, warrants,
rights, subscriptions, claims of any character, agreements, obligations,
convertible or exchangeable securities, or other commitments, contingent or
otherwise, relating to capital stock of the Company or any of its subsidiaries,
pursuant to which the Company or any of its subsidiaries is or may become
obligated to issue shares of its capital stock or any securities convertible
into, exchangeable for, or evidencing the right to subscribe for, any shares of
the capital stock of the Company or any of its subsidiaries. Neither the
Company nor any of its subsidiaries has authorized or outstanding bonds,
debentures, notes or other indebtedness the holders of which have the right to
vote (or convertible or exchangeable into or exercisable for securities having
the right to vote) with the stockholders of such Person on any matter. Except
as set forth on Schedule 3.3(c) of the Disclosure Letter, neither the Company
nor any of its subsidiaries owns, directly or indirectly, any capital stock or
other equity, ownership or proprietary interest in any Person. Except as set
forth on Schedule 3.3(d) of the Disclosure Letter, all of the outstanding shares
of capital stock of each of the subsidiaries of the Company (other than the SMGH
Preferred Stock) are owned, of record and beneficially, by the Company or its
subsidiaries free and clear of any Liens. Except as set forth on Schedule
3.3(e) of the Disclosure Letter, there are no restrictions of any kind which
prevent or restrict the payment of dividends by the Company or any of its
subsidiaries.
Section 3.4 Consents and Approvals; No Violations. Other than in
-------------------------------------
connection with or in compliance with the provisions of (i) the Delaware General
Corporation Law relating to the filing of the Certificate of Merger and other
appropriate merger documents, if any, and the approval of the Merger by the
holders of 66-2/3% of the Stock (voting as one class, with each share of Stock
having one (1) vote), (ii) the HSR Act and other Antitrust Laws, (iii) the
Securities Act, (iv) the Exchange Act, (v) the "blue sky" laws of various
states, and (vi) applicable alcohol beverage control and licensing laws and drug
and pharmacy laws and regulations ("Alcohol and Drug Laws") and except as
disclosed in Schedule 3.4 of the Disclosure Letter, the execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby will not: (1) violate any provision of the
certificate of incorporation or by-laws (or other organizational document) of
the Company or any of its subsidiaries; (2) violate any statute, ordinance,
rule, regulation, order or decree of any court or of any governmental or
regulatory body, agency or authority applicable to the Company or any of its
subsidiaries or by which any of its respective properties or assets may be
bound; (3) require the Company or any of its subsidiaries to make or obtain any
filing with or permit, consent or approval or give any notice to, any
governmental or regulatory body, agency or authority; or (4) result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the crea-
-12-
<PAGE>
tion of any Lien upon any of the properties or assets of the Company or any of
its subsidiaries under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, franchise, permit, agreement, lease,
franchise agreement, collective bargaining agreement or other agreement,
instrument or obligation to which the Company or any of its subsidiaries is a
party, or by which it or any of its respective properties or assets is bound,
except for such filings, permits, consents or approvals the absence of which
would not, or violations which would not, have a material adverse effect on the
Condition of the Company and its subsidiaries, taken as a whole, or which could
not reasonably be expected to prevent or materially delay consummation of the
transactions contemplated by this Agreement.
Section 3.5 Financial Statements. (a) The Company has heretofore
--------------------
furnished Parent with the audited consolidated balance sheets of the Company and
its subsidiaries as of February 3, 1996, February 1, 1997 and January 31, 1998
and the related consolidated statements of operations, shareholder's deficiency
and cash flows for the fiscal years then ended, all certified by the Company's
independent accountants, and the unaudited consolidated balance sheets of the
Company and its subsidiaries as at October 31, 1998 and the related consolidated
statements of operations, shareholders' deficiency and cash flows for the nine
months then ended (the consolidated balance sheet of the Company and its
subsidiaries as at January 31, 1998 is hereinafter referred to as the "Balance
-------
Sheet" and January 31, 1998 as the "Balance Sheet Date" and the unaudited
- ----- ------------------
consolidated balance sheet of the Company and its subsidiaries as at October 31,
1998 is hereinafter referred to as the "October Balance Sheet"). Such financial
---------------------
statements, including the footnotes thereto, except as indicated therein, have
been prepared in accordance with GAAP consistently applied throughout the
periods indicated.
(b) The Balance Sheet fairly presents, in all material aspects, and the
financial statements of the Company, SMGH and Pathmark delivered to Parent
pursuant to Section 5.7(b)(i) will fairly present, in all material respects, the
consolidated financial condition of the Company, SMGH and, as the case may be,
Pathmark and their respective subsidiaries at the date thereof and reflects or,
as the case may be, will reflect all material claims against and all material
debts and liabilities of the Company, SMGH and, as the case may be, Pathmark and
their respective subsidiaries, fixed or contingent, as at the date thereof, and
the related consolidated statements of operations, shareholders' deficiency and
cash flows fairly present, in all material respects or, as the case may be, will
fairly present, in all material respects, the consolidated results of operations
and cash flows of the Company, SMGH and, as the case may be, Pathmark and their
respective subsidiaries and the changes in their financial position for the
period indicated. Subject to normal year end adjustments, the October Balance
Sheet fairly presents, in all material respects, the consolidated financial
position of the Company and its subsidiaries as at the date thereof and reflects
all material claims and all material debts and liabilities of the Company and
its subsidiaries, fixed or contingent, as at the date thereof and the related
consolidated statements of operations, shareholder's deficiency and cash flows
fairly present, in all material aspects, the consolidated results of operations
and cash flows of the Company and its subsidiaries and the changes in their
financial position for the period indicated.
(c) The other balance sheets of the Company and its subsidiaries referred
to in clause (a) above fairly present, in all material respects, the
consolidated financial condition of the Company and its subsidiaries at the
respective dates thereof and reflect all material claims and all
-13-
<PAGE>
material debts and liabilities of the Company and its subsidiaries, fixed or
contingent, as at the respective dates thereof, and the related consolidated
statements of operations, shareholders' deficiency and cash flows fairly
present, in all material respects, the consolidated results of the operations
and cash flows of the Company and its subsidiaries and the changes in their
financial position for the periods indicated.
Section 3.6 Public Reports. (a) Since January 1, 1996 (the "Public
-------------- ------
Disclosure Date"), each of SMGH and Pathmark has filed all forms, reports,
- ---------------
registration statements and other filings with the United States Securities and
Exchange Commission (the "Commission") required to be filed by it pursuant to
the federal securities laws and the Commission rules and regulations thereunder
(such forms, reports, registration statements and other filings, together with
any amendments thereto, are collectively referred to as the "Public Reports"),
--------------
and the Public Reports filed with the Commission have complied in all material
respects with all applicable requirements of the federal securities laws and the
Commission rules and regulations thereunder.
(b) As of their respective dates, the Public Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading. Each of the
audited consolidated balance sheets and the unaudited consolidated balance
sheets (including any related notes and schedules) included in the Public
Reports fairly present, in all material respects, the consolidated financial
position of SMGH or, as the case may be, Pathmark and their respective
subsidiaries, as of its date, and each of the consolidated statements of
operations, shareholders' deficiency and cash flows included in the Public
Reports (including any related notes and schedules) fairly present, in all
material respects, the consolidated results of operation, cash flows and changes
in financial position of SMGH or, as the case may be, Pathmark and their
respective subsidiaries, for the period set forth therein (subject, where
appropriate, to notes and normal year-end audit adjustments), in accordance with
GAAP consistently applied throughout the periods indicated (except as may be
indicated therein or in the notes or schedules thereto).
Section 3.7 Absence of Certain Changes. Except as previously disclosed in
--------------------------
the Public Reports or in Schedule 3.7 of the Disclosure Letter or as otherwise
contemplated by this Agreement, since the Balance Sheet Date and up to and
including the date hereof (i) there has not been any material adverse change in
the Condition of the Company and its subsidiaries taken as a whole; (ii) the
businesses of the Company and each of its subsidiaries have been conducted only
in the ordinary course; (iii) neither the Company nor any of its subsidiaries
has incurred any material liabilities (direct, contingent or otherwise) or
engaged in any material transaction or entered into any material agreement other
than in the ordinary course of business; (iv) neither the Company nor any of its
subsidiaries has increased the compensation of any officer or granted any
general salary or benefits increase to any of their employees other than in the
ordinary course of business or pursuant to collective bargaining agreements; (v)
there has been no declaration, setting aside or payment of any dividend or other
distribution with respect to the capital stock of the Company or any of its
subsidiaries; and (vi) there has been no change by the Company or any of its
subsidiaries in accounting principles, practices or methods.
-14-
<PAGE>
Section 3.8 Compliance with Laws. Except as disclosed in the Public
--------------------
Reports filed on or prior to the date hereof, the Company and each of its
subsidiaries is in compliance with all applicable laws, regulations, orders,
judgments and decrees except where the failure to so comply would not,
individually or in the aggregate, have a material adverse effect on the
Condition of the Company and its subsidiaries taken as a whole or could
reasonably likely prevent or materially delay consummation of the transactions
contemplated by this Agreement.
Section 3.9 Employee Benefit Plan Triggering Events. Except as set forth
---------------------------------------
on Schedule 3.9 of the Disclosure Letter, the execution of this Agreement and
the consummation of the transactions contemplated hereby do not constitute a
triggering event under any Employee Benefit Plan, policy, arrangement,
statement, commitment or agreement, whether or not legally enforceable, which
will or may result in any payment, acceleration, vesting or increase in benefits
to any employee or former employee, officer or director of the Company or any
of its subsidiaries.
"Employee Benefit Plan" shall mean any domestic or foreign (i) "employee
---------------------
benefit plan," within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
thereunder ("ERISA"); (ii) bonus, stock option, stock purchase, restricted
-----
stock, incentive, profit-sharing, pension or retirement, deferred compensation,
medical, life, disability, accident, or welfare plans, programs, arrangements,
commitments or practices (whether or not insured); and (iii) employment,
consulting, termination and severance contracts or agreements for active,
retired or former employees or directors, whether or not any such plans,
programs, arrangements, commitments, contracts, agreements or practices referred
to in (i), (ii) or (iii) are in writing or are otherwise exempt from the
provisions of ERISA, established, maintained or contributed to (or with respect
to which an obligation to contribute has been undertaken) or with respect to
which any potential liability is borne by the Company or any of its subsidiaries
(including, for the purposes of this Section 3.9, all employers (whether or not
incorporated) that are by reason of common control treated together with the
Company or any of is subsidiaries as a single employer within the meaning of
Section 414 of the Code.
Section 3.10 Liabilities. Except (i) as set forth in the Balance Sheet or
-----------
referred to in the footnotes thereto, (ii) as set forth in the October Balance
Sheet or referred to in the footnotes thereto, (iii) as set forth in the Public
Reports, (iv) as disclosed in Schedule 3.10 of the Disclosure Letter, or (v) as
otherwise contemplated by this Agreement, since the Balance Sheet Date and up to
and including the date hereof, neither the Company nor any of its subsidiaries
has incurred any material outstanding claims, liabilities or indebtedness (other
than trade payables incurred in the ordinary course of business), contingent or
otherwise, that would be required to be disclosed in the Company's consolidated
financial statements prepared in accordance with GAAP consistently applied,
other than (x) liabilities incurred subsequent to the Balance Sheet Date in the
ordinary course of business not involving borrowings by the Company or any of
its subsidiaries and (y) indebtedness incurred since the Balance Sheet Date
pursuant to Pathmark's working capital facility (the "Working Capital Facility")
------------------------
as in effect as of the date hereof pursuant to the Credit Agreement among
Pathmark, various banks, and The Chase Manhattan Bank, as Agent, dated as of
June 30, 1997, as amended and restated (the "Credit Agreement").
----------------
Section 3.11 Broker's or Finder's Fee. Except as set forth on Schedule
------------------------
3.11 of the Disclosure Letter, no agent, broker, Person or firm acting on behalf
of the Company or any of its
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<PAGE>
subsidiaries is, or will be, entitled to any fee, commission or broker's or
finder's fees from any of the parties hereto, or from any Person controlling,
controlled by, or under common control with any of the parties hereto, in
connection with this Agreement or any of the transactions contemplated hereby.
Section 3.12 State Takeover Statutes. The Board of Directors of the
-----------------------
Company has approved the Merger and this Agreement. Section 203 of the Delaware
General Corporation Law is inapplicable to the Merger, this Agreement and the
entering into and performance by Parent and Sub of the Stockholders Agreement
and the other transactions contemplated by this Agreement and the Stockholders
Agreement. No other state takeover statute or similar statute or regulation
applies to the Merger, this Agreement or the Stockholders Agreement.
Section 3.13 Voting Requirements. The affirmative vote of the holders of
-------------------
66-2/3% of the Stock (voting as one class, with each share of Stock having one
(1) vote) entitled to be cast approving this Agreement is the only vote of the
holders of any class or series of Stock necessary to approve the Merger, this
Agreement and the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
------------------------------------------------
Section 4. Each of Parent and Sub hereby represents and warrants, jointly
and severally, to the Company as follows:
Section 4.1 Due Organization; Good Standing and Corporate Power. Parent is
---------------------------------------------------
a public company with limited liability duly organized and validly existing
under the laws of the Netherlands. Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Section 4.2 Authorization and Validity of Agreement. Each of Parent and
---------------------------------------
Sub has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Sub, and the consummation by each of them
of the transactions contemplated hereby, have been duly authorized by each of
the Executive and Supervisory Boards of Parent and the Board of Directors of
Sub. No other corporate action on the part of either of Parent or Sub is
necessary to authorize the execution, delivery and performance of this Agreement
by each of Parent and Sub and the consummation of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of Parent
and Sub and is a valid and binding obligation of each of Parent and Sub,
enforceable against each of Parent and Sub in accordance with its terms, except
that such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and general equitable principles (whether considered in a proceeding
at law or in equity).
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<PAGE>
Section 4.3 Consents and Approvals; No Violations. Other than in
-------------------------------------
connection with or in compliance with the provisions of (i) the Delaware General
Corporation Law which relate to the filing of the Certificate of Merger and
other appropriate merger documents, if any, and the approval of the Merger by
the holders of 66-2/3% of the Stock (voting as one class with each share of
Stock having one (1) vote), (ii) the HSR Act and other Antitrust Laws, (iii) the
Securities Act, (iv) the Exchange Act, (v) the "blue sky" laws of various
states, and (vi) applicable Alcohol and Drug Laws, the execution and delivery of
this Agreement by Parent and Sub and the consummation by Parent and Sub of the
transactions contemplated hereby will not: (1) violate any provision of the
certificate of incorporation or by-laws of Parent or Sub; (b) violate any
statute, ordinance, rule, regulation, order or decree of any court or of any
governmental or regulatory body, agency or authority applicable to Parent or Sub
or by which its properties or assets may be bound; (c) require Parent or Sub to
make or obtain any filing with, or permit, consent or approval of, or give any
notice to, any governmental or regulatory body, agency or authority; or (d)
result in a violation or breach of, conflict with, constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, payment or acceleration) under, or result in the
creation of any Lien upon any of the properties or assets of Parent or Sub
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, franchise, permit, agreement, lease, franchise agreement or
other instrument or obligation to which Parent or Sub is a party or by which
Parent or Sub or its properties or assets is bound, except for such filings,
permits, consents or approvals the absence of which could not reasonably be
expected to prevent or materially delay consummation of the transactions
contemplated by this Agreement.
Section 4.4 Broker's or Finder's Fee. No agent, broker, Person or firm
------------------------
acting on behalf of Parent or Sub is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by, or under common control with any of the parties
hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
Section 4.5 Financing. Parent will provide, or cause to be provided to
---------
Sub, the funds necessary to consummate the Merger and the transactions
contemplated in accordance with the terms hereof.
ARTICLE V
COVENANTS
---------
Section 5.1 Access to Information Concerning Properties and Records.
-------------------------------------------------------
During the period commencing on the date hereof and ending on the Closing Date,
the Company shall, and shall cause each of its subsidiaries to, upon reasonable
notice, afford Parent, Sub and good faith potential purchasers of stores in
connection with the obligations of the parties hereto pursuant to Section
5.8(b), and their respective counsel, accountants, consultants and other
authorized representatives, reasonable access during normal business hours to
the employees, properties, books and records of the Company and each of its
subsidiaries in order that they may have the opportunity to make such reasonable
investigations as they shall desire of the affairs of the Company
-17-
<PAGE>
and each of its subsidiaries and other information concerning the business,
properties and personnel of the Company and each of its subsidiaries as Parent
and Sub may reasonably request, provided that Parent and Sub shall not have the
-------- ----
right to conduct tests of the surface or subsurface soil and water beneath or
about the real property owned or used by the Company or any of its subsidiaries.
The Company shall, and shall cause each of its subsidiaries to, cause its
officers and employees to furnish such additional financial and operating data
and other information, and respond to such inquiries, as Parent and Sub shall
from time to time reasonably request. Notwithstanding anything in this Section
5.1 to the contrary, neither the Company nor any of its subsidiaries shall be
required to provide such access to or otherwise disclose such books, records or
other information concerning their respective businesses to Parent or Sub as
would violate Antitrust Laws.
Section 5.2 Confidentiality. Each of Parent and Sub will hold and will
---------------
cause its officers, employees, auditors and other agents, representatives and
advisors to hold in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all documents and
information concerning the Company or any of its subsidiaries furnished to
Parent or Sub in connection with the transactions contemplated by this Agreement
(except to the extent that such information can be shown to have been (i)
previously known by Parent or Sub from sources other than the Company or any of
its subsidiaries, or its directors, officers, auditors or other agents,
representatives and advisors (ii) in the public domain through no fault of
Parent or Sub or (iii) later lawfully acquired by Parent or Sub on a non-
confidential basis from other sources who are not known by Parent or Sub to be
bound by a confidentiality agreement or otherwise prohibited from transmitting
the information to Parent or Sub by a contractual, legal or fiduciary
obligation) and will not release or disclose such information to any other
Person, except its auditors and other agents, representatives and advisors in
connection with this Agreement who need to know such information. If the
transactions contemplated by this Agreement are not consummated, such confidence
shall be maintained for a period of two years from the date hereof and, if
requested by or on behalf of Parent and Sub shall, and shall use all reasonable
efforts to cause their auditors and other agents, representatives and advisors
to, return to the Company or destroy all copies of written information furnished
by the Company or any of its subsidiaries or its advisors to Parent and Sub or
their auditors and other agents, representatives and advisors. It is understood
that Parent and Sub shall be deemed to have satisfied their obligation to hold
such information confidential if they exercise the same care as they take to
preserve confidentiality for their own similar information.
Section 5.3 Conduct of the Business of the Company and its Subsidiaries.
-----------------------------------------------------------
Except as contemplated by this Agreement, during the period from the date of
this Agreement until the Effective Time, the Company shall, and shall cause each
of its subsidiaries to, conduct its operations in the ordinary course of
business, consistent with past practice and to use its best efforts to (v)
preserve intact its business organization, (w) maintain its material rights and
franchises, (x) keep available the services of its officers and employees, (y)
maintain satisfactory relationships with suppliers, distributors, customers and
others having business relationships with it and (z) to take measures to reduce
to zero any excess loss account (as determined in accordance with Treasury
Regulations Sections 1.1502-14, 1.1502-19 and 1.1502-32) reflected on the books
and records of the Company and its subsidiaries or as subsequently determined by
the Company. Without limiting the generality of and in addition to the
foregoing, except as set forth on Schedule
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<PAGE>
5.3 of the Disclosure Letter and except as otherwise contemplated by this
Agreement, prior to the time specified in the preceding sentence, the Company
shall not, and shall cause each of its subsidiaries not to, without prior
written consent of Parent:
(a) amend its certificate of incorporation or by-laws or other
organizational documents in any way;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities other than shares of Class A Common Stock
issuable pursuant to the terms of existing Management Options;
(c) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock or redeem
or otherwise acquire any of its securities;
(d) (i) pledge or otherwise encumber shares of its capital stock; (ii)
except in the ordinary course of business consistent with past practices (x)
incur, assume or prepay any obligations with respect to any long-term debt,
letters of credit or short-term debt, other than indebtedness (A) incurred,
assumed or prepaid under the Working Capital Facility, (B) that is mandatorily
prepayable in accordance with its terms and (C) that is intercompany
indebtedness by and among any of the Company and any of its subsidiaries (other
than SMGH or Pathmark Risk Management Corporation); (y) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for any material obligations of any other Person
except any of its wholly-owned subsidiaries; or (z) make any material loans,
advances or capital contributions to, or investments in, any other Person; or
(iii) mortgage or pledge any of its assets or create or permit to exist any
material lien thereupon that secures indebtedness for borrowed money;
(e) except as required by law or existing written agreements, enter into,
adopt or materially amend any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreements, trusts, plans, funds or other
arrangements of or for the benefit or welfare of any employee of the Company and
its subsidiaries, or (except for normal increases in the ordinary course of
business that are consistent with past practices) increase in any manner the
compensation or fringe benefits of any such employee or pay any benefit not
required by any existing plan and arrangement (including, without limitation,
the granting of stock options, stock appreciation rights, shares of restricted
stock or performance units) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing;
(f) transfer, sell, lease, license or dispose of any lines of business,
subsidiaries, divisions, operating units or facilities outside the ordinary
course of business or enter into any material commitment or transaction outside
the ordinary course of business other than any such transactions between or
among any of the Company and its subsidiaries (other than SMGH or Pathmark Risk
Management Corporation);
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(g) other than any such transactions between or among any of the Company
and its subsidiaries (other than SMGH or, except with respect to any transaction
intended to comply with Section 5.3(z), Pathmark Risk Management Corporation),
acquire or agree to acquire, by merging or consolidating with, by purchasing an
equity interest in or a portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets of any other Person (other than the purchase of assets in the ordinary
course of business and consistent with past practice), in each case where such
action would be material to the Condition of the Company and its subsidiaries
taken as a whole;
(h) except as may be required by law or existing written contractual or
collective bargaining agreements or in connection with the termination of any
employee, take any action to terminate or materially amend, in a manner adverse
to the Company or any of its subsidiaries, any of its pension plans or retiree
medical plans with respect to or for the benefit of any employee of the Company
or any of its subsidiaries;
(i) materially modify, amend or terminate any significant contract to
which it is a party or waive any of its material rights or claims except in the
ordinary course of business consistent with past practice;
(j) effect any material change in any of its methods of accounting, except
as may be required by law or generally accepted accounting principles;
(k) (i) take any action, engage in any transaction or enter into any
agreement which would cause any of the representations or warranties set forth
in Article III that are subject to, or qualified by, a "material adverse
effect", "material adverse change" or other materiality qualification to be
untrue as of the Effective Time, or any such representations and warranties that
are not so qualified to be untrue in any respect which would otherwise have a
material adverse effect on the Condition of the Company and its subsidiaries
taken as a whole or (ii) purchase or acquire, or offer to purchase or acquire,
any shares of capital stock of the Company;
(l) take any action including, without limitation, the adoption of any
shareholder rights plan or amendments to the Certificate of Incorporation, which
would, directly or indirectly, restrict or impair the ability of Parent to vote,
or otherwise to exercise the rights and receive the benefits of a stockholder
with respect to, securities of the Company that may be acquired or controlled by
Parent or Sub or permit any stockholder to acquire securities of the Company on
a basis not available to Parent in the event that Parent were to acquire any
shares of Stock; and
(m) enter into a legally binding commitment with respect to, or any
agreement to take, any of the foregoing actions.
Notwithstanding anything else contained in this Section 5.3 to the
contrary, the following shall be permitted: (1) the acquisition of direct or
indirect interests in real property intended for the operation of stores of
Pathmark or any of its subsidiaries (other than Pathmark Risk Management
Corporation), the improvement of real property, the remodeling of stores of
Pathmark or any of its subsidiaries (other than Pathmark Risk Management
Corporation) and the
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obtaining of financing therefor in the ordinary course of business consistent
with past practice, (2) the negotiation and entering into by Pathmark or any of
its subsidiaries (other than Pathmark Risk Management Corporation) of amendments
to existing leases for real property in the ordinary course of business, (3) the
negotiation in good faith and entering into new collective bargaining agreements
by Pathmark that replace agreements that have expired or will expire pursuant to
their terms within 90 days from the date of the commencement of negotiations,
(4) the marketing and sale of certain real estate not used in the supermarket
business by Pathmark or any of its subsidiaries (other than Pathmark Risk
Management Corporation) as set forth on Schedule 5.3 of the Disclosure Letter,
provided that no such sale (other than a sale pursuant to a binding agreement
- -------- ----
that the Company is a party to on the date hereof) shall be agreed to without
prior adequate consultation with Parent, (5) entering into of amendments to the
Credit Agreement to modify covenants as required (other than modifications,
except for a possible increase in the interest rate, which will make any one or
more covenants more restrictive) and (6) entering into an agreement implementing
the amendments to the Supply Agreement agreed to in a memorandum of
understanding effective December 27, 1998 by and between Pathmark and C&S
Wholesale Grocers, Inc.
Section 5.4 Stockholder Approval. Promptly after the execution of this
--------------------
Agreement, the Company, acting through its Board of Directors, shall, in
accordance with applicable law, (i) call a special meeting of the holders of
Stock for the purpose of voting upon this Agreement and the Merger, submit this
Agreement and the Merger at such special meeting and use its reasonable efforts
to solicit in writing proxies in favor of this Agreement and the Merger from all
holders of Stock or (ii) use its reasonable efforts to solicit in writing the
consent to this Agreement and the Merger from all holders of Stock. The Company
shall include in its written proxy solicitation or, as the case may be, consent
solicitation the recommendation of its Board of Directors that holders of Stock
approve and adopt this Agreement and approve the Merger and take all other
lawful action necessary and advisable to secure the vote or, as the case may be,
consent of holders of 66-2/3% of the Stock (voting as one class, with each share
having one (1) vote) in favor of the Merger and this Agreement.
Section 5.5 Best Efforts. Subject to the terms and conditions provided
------------
herein, each of the Company, Parent and Sub shall, and the Company shall cause
each of its subsidiaries to, cooperate and use their respective best efforts to
take, or cause to be taken, all appropriate action, and to make, or cause to be
made, all filings necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, their respective best efforts to
obtain, prior to the Closing Date, all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company or any of its subsidiaries as are
necessary for consummation of the transactions contemplated by this Agreement
and to fulfill the conditions to the Merger; provided, however, that no loan
-------- ------- ----
agreement or contract for borrowed money shall be repaid except as currently
required by its terms, in whole or in part, and no material contract shall be
amended to increase the amount payable thereunder or otherwise to be materially
more burdensome to the Company or any of its subsidiaries in order to obtain any
such consent, approval or authorization without first obtaining the written
approval of Parent.
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Section 5.6 No Solicitation of Other Offers. (a) The Company shall not,
-------------------------------
and the Company shall cause each of its subsidiaries not to, directly or
indirectly, take (or authorize or permit their respective officers, directors,
employees, representatives, consultants, investment bankers, attorneys,
accountants or other agents or Affiliates, to so take) any action to (i)
solicit, initiate or encourage the submission of any Acquisition Proposal, (ii)
enter into an agreement of merger or other business combination or an agreement
for the sale or other disposition by the Company or any of its subsidiaries of a
material amount of assets or a sale of shares of capital stock whether by merger
or other business combination or tender or exchange offer or (iii) participate
in any way in discussions or negotiations with, or furnish any information to,
any Person (other than Parent or Sub) in connection with, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal.
"Acquisition Proposal" shall mean any proposed merger or other business
--------------------
combination, sale or other disposition of any material amount of assets, sale of
shares of capital stock, tender offer or exchange offer or similar transactions
involving the Company or any of its subsidiaries.
(b) The Board of Directors of the Company shall not take any action to
withdraw or modify in a manner adverse to Parent or Sub, or take a position
inconsistent with, its approvals or recommendation of the Merger, this Agreement
or the Stockholders Agreement or to recommend another Acquisition Proposal and
shall not resolve to do any of the foregoing.
(c) In addition to the obligations of the Company set forth in paragraph
(a), the Company shall, and the Company shall cause each of its subsidiaries to,
promptly advise Parent of any request for information or of any Acquisition
Proposal, or any proposal with respect to any Acquisition Proposal, the material
terms and conditions of such Acquisition Proposal, and the identity of the
Person making any such Acquisition Proposal or inquiry.
(d) Immediately following the execution of this Agreement, the Company
shall, and shall cause each of its subsidiaries and each of their respective
officers, directors, employees, representatives, consultants, investment
bankers, attorneys, accountants or other agents or Affiliates to, cease any
existing discussions or negotiations with any parties conducted heretofore with
respect to any Acquisition Proposal and request each Person which has heretofore
executed a confidentiality agreement in connection with its consideration of
acquiring the Company or any of its subsidiaries or any portion thereof to
return all confidential information heretofore furnished to such Person by or on
behalf of the Company or any of its subsidiaries.
Section 5.7 Notification of Certain Matters. (a) The Company shall give
-------------------------------
prompt notice to Parent of any notice of, or other communication relating to, a
material default or event that, with notice or lapse of time or both, would
become a material default, received by the Company subsequent to the date of
this Agreement and prior to the Effective Time, under any material contract to
which the Company or any of its subsidiaries is a party or is subject. The
Company and Parent shall give prompt notice to each other of (i) any notice or
other communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement and (ii) the occurrence or non-occurrence of any events the
occurrence or non-occurrence of which would cause either (w) a representation or
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<PAGE>
warranty contained in this Agreement, in any Schedule to the Disclosure Letter
or in any certificate delivered pursuant to this Agreement and not qualified by
any materiality standard, to be untrue or inaccurate in any material respect,
(x) any other representation or warranty contained in this Agreement, in any
schedule to the Disclosure Letter or in any certificate delivered pursuant to
this Agreement, to be untrue or inaccurate in any respect, (y) any of the
conditions set forth in Article VI or VII to be unsatisfied in any material
respect at the Effective Time; provided that the parties hereto need not give
-------- ----
notice with respect to events that are reported in the financial or general
interest newspapers that do not specifically relate to the Company, any of its
subsidiaries or Parent or their respective businesses or (z) any failure to
comply with or satisfy any covenants, condition or agreement to be complied with
or satisfied by it hereunder.
(b) The Company shall provide Parent with (i) the audited consolidated
balance sheet of the Company, SMGH and, as the case may be, Pathmark, and their
respective subsidiaries as of January 30, 1999 and the related statements of
operations, shareholder's deficiency and cash flows for the fiscal year then
ended, all as certified by the Company's, SMGH's and, as the case may be,
Pathmark's independent accountants, within three (3) business days after
preparation and certification thereof, (ii) the unaudited consolidated balance
sheet of each of the Company, SMGH and Pathmark, and the related consolidated
statements of operations, shareholders' deficiency and cash flows for each
fiscal quarter ending prior to the Effective Time, within forty-five days after
the end of each such fiscal quarter and (iii) the unaudited statement of
operations of Pathmark for each fiscal month ending prior to the Effective Time,
within thirty days after the end of each such fiscal month. In addition,
subject to compliance with the Antitrust Laws, the Company shall cause Pathmark
to deliver to Parent on a weekly basis its internal sales overview reports
promptly as they are prepared by Pathmark for each such week.
Section 5.8 Antitrust Filings. (a) Parent, Sub and the Company shall (i)
-----------------
take promptly all actions necessary to make the filings required of Parent, Sub
or any of their Affiliates under the applicable Antitrust Laws (as such term is
defined in Section 5.8(d)), (ii) comply at the earliest practicable date with
any request for additional information or documentary material received by
Parent, the Company or any of their respective Affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
the HSR Act and (iii) cooperate in connection with any filing under applicable
Antitrust Laws and in connection with resolving any investigation or other
inquiry concerning the transactions contemplated by this Agreement commenced by
any of the Federal Trade Commission, the Antitrust Division of the Department of
Justice or state attorneys general.
(b) Each of the Company, Parent and Sub shall use all best efforts to
resolve such objections, if any, as may be asserted with respect to the Merger,
the Stockholders Agreement or any other transaction contemplated by this
Agreement under any Antitrust Law. If any administrative, judicial or
legislative action or proceeding is instituted (or threatened to be instituted)
challenging the Merger, the Stockholders Agreement or any other transaction
contemplated by this Agreement as violative of any Antitrust Law, the Company,
Parent and Sub shall cooperate to contest and resist any such action or
proceeding, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) that is in effect and that restricts, prevents or prohibits
consummation of the Merger,
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<PAGE>
the Stockholders Agreement or any other transactions contemplated by this
Agreement, including, without limitation, by pursuing all reasonable avenues of
administrative and judicial appeal.
(c) Each of the Company, Parent and Sub shall promptly inform each other of
any material communication made to, or received by such party from, the Federal
Trade Commission, the Antitrust Division of the Department of Justice or any
other governmental or regulatory authority regarding any of the transactions
contemplated hereby.
(d) "Antitrust Law" means the Sherman Act, as amended, the Clayton Act, as
-------------
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal and state statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
Section 5.9 Transfer Taxes. The Company and Parent shall cooperate in the
--------------
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees and any similar taxes which become payable in
connection with the transactions contemplated by this Agreement (together with
any related interest, penalties or additions to tax, "Transfer Taxes"). All
--------------
Transfer Taxes shall be paid by the Company and expressly shall not be a
liability of any holder of Stock.
Section 5.10 SMGH Preferred Stock Tender Offer. (a) Immediately after
---------------------------------
execution of this Agreement, Sub shall, and Parent shall cause Sub to, make a
public announcement pursuant to Rule 14d-2b under the Securities Exchange Act of
1934, as amended (the "Exchange Act") and, promptly thereafter, but in no event
------------
later than the fifth (5th) business day following the date thereof, commence the
Tender Offer to purchase, subject to holders of shares of SMGH Preferred Stock
having tendered and not withdrawn at least 66 2/3% of the issued and outstanding
shares of SMGH Preferred Stock (the "Minimum Condition") and the fulfillment of
-----------------
the other conditions set forth on Exhibit 1 (collectively, the "Tender Offer
------------
Conditions"), all of the issued and outstanding shares of SMGH Preferred Stock
- ----------
at the Tender Offer Price per Share. Sub shall not, and Parent shall cause Sub
not to, change the Tender Offer Price per Share without the prior written
consent of the Company. In addition, Sub shall not, and Parent shall cause Sub
not to, amend, change or waive any of the Tender Offer Conditions without the
prior written consent of the Company.
(b) As soon as reasonably practical on the date the Tender Offer is
commenced, Sub shall, and Parent shall cause Sub to, file with the Commission a
Tender Offer Statement on Schedule 14d-1 with respect to the Tender Offer
(together with all amendments and supplements thereto and including the exhibits
thereto, the "Schedule 14D-1") which will include (as exhibits) or incorporate
--------------
by reference an offer to purchase and a form of letter of transmittal with
respect to the Tender Offer as well as all other information and exhibits
required by law (collectively, together with any amendments and supplements
thereto, the "Offer Documents"). Parent and Sub represent and warrant that the
---------------
Offer Documents will comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder, and all other applicable
United States federal securities laws and, on the date filed with the Commission
and on the date first published, sent or given to the holders of shares of SMGH
Preferred Stock, will not contain
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<PAGE>
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent and Sub with respect
to information supplied in writing by the Company for inclusion in the Schedule
14D-1 or the Offer Documents. Sub shall, and Parent shall cause Sub to, take all
steps necessary to cause the Offer Documents to be filed with the Commission and
to be disseminated to all holders of shares of SMGH Preferred Stock, in each
case as and to the extent required by applicable United States federal
securities laws and any other applicable laws. Sub shall, and Parent shall cause
Sub to, promptly correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false and
misleading in any material respect, and Sub shall, and Parent shall cause Sub
to, take all steps necessary to cause the Offer Documents, as so corrected, to
be filed with the Commission and to be disseminated to holders of shares of SMGH
Preferred Stock, in each case as and to the extent required by applicable United
States federal securities laws and any other applicable laws. The Company shall
be given the opportunity to review and comment on the Offer Documents before
they are filed with the Commission. In addition, Sub shall, and Parent shall
cause Sub to, provide to the Company and its counsel copies of any written
comments Parent or Sub may receive from time to time from the Commission or its
staff with respect to the Offer Documents, promptly after receipt of such
comments and provide the Company and its counsel an opportunity to participate,
including by participating with Sub and its counsel in any discussions with the
Commission or its staff, in the response of Sub to such comments.
(c) The Company hereby represents and warrants that the Board of Directors
of SMGH (at a meeting duly called and held) has (i) determined by the unanimous
vote of the directors that each of the Tender Offer and the Second Step Merger
(as such term is defined in Section 5.11) is fair to, and in the best interests
of, the holders of shares of SMGH Preferred Stock, (ii) approved the Tender
Offer and the Second Step Merger in accordance with the provisions of the
Delaware General Corporation Law and (iii) recommended acceptance of the Tender
Offer. The Company shall cause SMGH to file with the Commission, as soon as
practicable on the date of the commencement of the Tender Offer, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9"), containing the
--------------
recommendations referred to in the preceding sentence and shall disseminate the
Schedule 14D-9 as required by Rule 14d-9 under the Exchange Act. Parent and its
counsel shall be given the opportunity to review and comment upon the Schedule
14D-9 prior to its filing with the Commission. The Company represents and
warrants that the Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
Commission and on the date first published, sent or given to the holders of SMGH
Preferred Stock, shall not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by the
Company with respect to information supplied by Parent or Sub in writing for
inclusion in the Schedule 14D-9. The Company shall cause SMGH to provide Parent
and its counsel with any comments SMGH or its counsel may receive from the
Commission or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments and shall provide Parent and its counsel an opportunity
to participate, including by participating with SMGH and its
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<PAGE>
counsel in any discussions with the Commission or its staff, in the response by
SMGH to such comments. In connection with the Tender Offer, the Company shall
cause SMGH to promptly furnish Sub with mailing labels, security position
listings and any available listing or computer list containing the names and
addresses of the record holders of shares of SMGH Preferred Stock as of the most
recent practicable date and shall furnish Sub with such additional information
(including, but not limited to, updated lists of holders of shares of SMGH
Preferred Stock and their addresses, mailing labels and lists of security
positions) and such other assistance as Sub or its agents may reasonably request
in communicating the Tender Offer to the holders of shares of SMGH Preferred
Stock.
Section 5.11 Merger of SMG-II and SMGH. In the event that the shares of
-------------------------
SMGH Preferred Stock tendered and accepted for payment in the Tender Offer do
not constitute all of the issued and outstanding shares of SMGH Preferred Stock,
Parent shall, promptly after the Closing (but in any event not prior to receipt
of any required approval of the stockholders of SMGH) cause SMGH to merge with
and into SMG-II (the "Second Step Merger") pursuant to an Agreement and Plan of
------------------
Merger in substantially the form attached hereto as Exhibit 2.
Section 5.12 Employee Benefits. During the period commencing at the
-----------------
Effective Time and ending on the first anniversary thereof, Parent shall cause
the current and former employees of Pathmark and its subsidiaries who are on the
Closing Date entitled to receive compensation or any benefits from Pathmark or
any of its subsidiaries to be provided with compensation and employee benefit
plans (other than stock option or other plans involving the potential issuance
of securities of the Company, Parent or any of their respective subsidiaries,
and incentive compensation or similar programs) which in the aggregate are not
materially less favorable than those currently provided to such employees by
Pathmark and its subsidiaries, to the extent permitted under laws and
regulations in force from time to time, provided that employees covered by
-------- ----
collective bargaining agreements need not be provided with such benefits, and
provided, further, that Parent reserves the right to review all employee
- -------- ------- ----
benefits after the Effective Time and to make such changes as it deems
appropriate.
Section 5.13 Directors' and Officers' Insurance; Indemnification. (a) The
---------------------------------------------------
certificate of incorporation and the by-laws of the Surviving Corporation shall
contain the provisions with respect to indemnification and exculpation from
liability set forth in the Company's certificate of incorporation and by-laws on
the date of this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who on
or prior to the Effective Time were directors, officers, employees or agents of
the Company, unless such modification is required by law. Parent agrees that
all rights of indemnification now existing in favor of any director, officer,
employee, or agent of the subsidiaries of the Company as provided in their
respective charters or by-laws on the date of this Agreement shall survive the
Merger and shall continue in full force and effect for a period of six years
from the Effective Time.
(b) The Surviving Corporation shall for the six year period commencing on
the Effective Time either (x) maintain in effect the Company's current
directors' and officers' liability insurance covering those Persons who are
currently covered on the date of this Agreement by the Company's directors' and
officers' liability insurance policy (a copy of which has been heretofore
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<PAGE>
delivered to Parent) (the "Indemnified Parties"); provided, however, that in no
------------------- -------- -------
event shall Parent be required to expend in any one year an amount in excess of
150% of the annual premiums currently paid by the Company for such insurance
which the Company represents to be $323,000; provided further, that if the
---------------- ----
annual premiums of such insurance coverage exceed such amount, the Surviving
Corporation shall be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding such amount; provided further, that the
---------------- ----
Surviving Corporation may substitute for the Company policies, policies with at
least the same coverage containing terms and conditions which are no less
advantageous and provided that said substitution does not result in any gaps or
lapses in coverage with respect to matters occurring prior to the Effective Time
or (y) cause the Parent's directors' and officers' liability insurance then in
effect to cover those Persons who are covered on the date of this Agreement by
the Company's directors' and officers' liability insurance policy with respect
to those matters covered by the Company's directors' and officers' liability
policy.
(c) Parent agrees to indemnify, and to cause the Surviving Corporation to
indemnify, all Indemnified Parties to the fullest extent permitted by applicable
law with respect to all acts and omissions arising out of such individuals'
services as officers, directors, employees or agents of the Company or any of
its subsidiaries or as trustees or fiduciaries of any plan for the benefit of
employees of the Company or any of its subsidiaries, occurring prior to the
Effective Time including, without limitation, the transactions contemplated by
this Agreement. Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including without
limitation, the transactions contemplated by this Agreement, occurring prior to,
and including, the Effective Time, Parent, from and after the Effective Time,
will pay as incurred such Indemnified Party's reasonable legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith. Subject to Section 5.13(d) below, Parent shall pay all
reasonable expenses, including attorneys' fees, that may be incurred by any
Indemnified Party in enforcing this Section 5.13 or any action involving an
Indemnified Party resulting from the transactions contemplated by this
Agreement. If the indemnity provided for in this Section 5.13 is not available
with respect to any Indemnified Party, then the Surviving Corporation and the
Indemnified Party shall contribute to the amount payable in such proportion as
is appropriate to reflect relative faults and benefits.
(d) Any Indemnified Party wishing to claim indemnification under paragraph
(a) or (c) of this Section 5.13, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent thereof. In the event
of any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) Parent or the Surviving Corporation
shall have the right, from and after the Effective Time, to assume the defense
thereof (with counsel engaged by Parent or the Surviving Corporation to be
reasonably acceptable to the relevant Indemnified Party) and Parent shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof, (ii) such Indemnified Party will cooperate in the
defense of any such matter and (iii) Parent or the Surviving Corporation shall
not be liable for any settlement effected without its prior written consent; and
provided further that Parent shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall
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<PAGE>
ultimately determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND SUB
-----------------------------------------------------
Section 6. Conditions Precedent to Obligations of Parent and Sub. The
-----------------------------------------------------
respective obligations of Parent and Sub to effect the Merger are subject to the
satisfaction or waiver (subject to applicable law) at or prior to the Closing of
each of the following conditions:
Section 6.1 Truth of Representations and Warranties. Each representation
---------------------------------------
or warranty of the Company contained in this Agreement that is subject to, or
qualified by, "material adverse effect", "material adverse change" or other
materiality qualification shall be true and correct, in each case as if such
representation or warranty was made at the Closing, and any representation or
warranty that is not so qualified shall be true and correct in any respect which
would otherwise have a material adverse effect on the Condition of the Company
and its subsidiaries taken as a whole, in each case as if such representation or
warranty was made at the Closing except as to any such representation or
warranty which speaks as of a specific date or for a specific period, which must
be true and correct in the foregoing respects as of such specific date or
period, and Parent shall have received a certificate signed by an executive
officer of the Company, dated the Closing Date, to such effect.
Section 6.2 Performance of Agreements. The Company shall have performed
-------------------------
in all material respects all obligations and complied in all material respects
with all agreements and covenants to be performed or complied with by it under
this Agreement and, in the case only of failures to perform any agreement or
covenant of the Company pursuant to Section 5.3 (other than clause (c) thereof),
such failure to perform did or would not have a material adverse effect on the
Condition of the Company and its subsidiaries taken as a whole or materially
adversely effect the ability of Parent or Sub to consummate the transactions
contemplated by this Agreement or have a material adverse effect on the value of
the Company and its subsidiaries taken as a whole and Parent shall have received
a certificate signed by an executive officer of the Company, dated the Closing
Date, to such effect.
Section 6.3 Approval of Company's Stockholders. This Agreement and the
----------------------------------
Merger shall have been approved and adopted by holders of 66-2/3% of the Stock
(voting as one class, with each share of Stock having one (1) vote) in
accordance with applicable law, the Certificate of Incorporation and By-Laws of
the Company and the Company's Stockholders' Agreement. Holders of shares of
Stock representing in the aggregate not more than 5% of the amount that would be
payable by Parent or Sub pursuant to Section 2.5 if there would be no Dissenting
Stockholders shall (i) have perfected their appraisal rights under Section 262
of the Delaware General Corporation Law or (ii) be entitled after the Closing to
so perfect their appraisal rights.
Section 6.4 HSR Act. Any waiting period (and any extension thereof) under
-------
the HSR Act applicable to the Merger shall have expired or been terminated.
-28-
<PAGE>
Section 6.5 Injunction. 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, restrains, enjoins or restricts the
consummation of the Merger, or the Tender Offer and which is in effect at the
Closing, provided that, in the case of a decree, injunction or other order, each
-------- ----
of the parties shall have used all reasonable efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as possible any
decree, injunction or other order that may be entered.
Section 6.6 SMGH Preferred Stock Tender Offer. The Tender Offer
---------------------------------
Conditions including, without limitation, the Minimum Condition shall have been
fulfilled without any waiver thereof.
Section 6.7 Statutes. No statute, rule, regulation, executive order,
--------
decree or order of any kind shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which prohibits, restrains,
enjoins or restricts the consummation of the Merger or the Tender Offer or has
the effect of making the Merger or the Tender Offer illegal.
Section 6.8 Company Stockholders' Agreement. The Company Stockholders'
-------------------------------
Agreement shall have been terminated.
Section 6.9 No Material Adverse Effect. Since the date hereof, no event
--------------------------
shall have occurred such that there would be a material adverse change in the
Condition of the Company and its subsidiaries taken as a whole.
Section 6.10 Fulfillment of Company Conditions. Parent shall have
---------------------------------
received an irrevocable letter from the Company, signed by an executive officer
of the Company, stating that all of the conditions to the obligations of the
Company to effect the Merger set forth in Article VII have been satisfied or
waived.
ARTICLE VII
CONDITIONS PRECEDENT TO THE
----------------------------
OBLIGATIONS OF THE COMPANY
--------------------------
Section 7. Conditions Precedent to Obligations of the Company. The
--------------------------------------------------
obligations of the Company to effect the Merger is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions:
Section 7.1 Truth of Representations and Warranties. The representations
---------------------------------------
and warranties of Parent and Sub contained in this Agreement shall be true and
correct in all material respects as if such representations and warranties were
made at the Closing, and the Company shall have received a certificate signed by
an executive officer of Parent, dated the Closing Date, to such effect.
Section 7.2 Performance of Agreements. Each of Parent and Sub shall have
-------------------------
performed in all material respects all obligations and complied in all materials
respects with all agreements and covenants to be performed and complied with by
it under this Agreement, and the Company shall
-29-
<PAGE>
have received a certificate signed by an executive officer of Parent, dated the
Closing Date, to such effect.
Section 7.3 HSR Act Waiting Periods. All applicable waiting periods under
-----------------------
the HSR Act with respect to the transactions contemplated by this Agreement
shall have expired or been terminated.
Section 7.4 Injunction. 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, restrains, enjoins or restricts the
consummation of the Merger or the Tender Offer which is in effect at the
Closing, provided that, in the case of a decree, injunction or other order, each
-------- ----
of the parties shall have used all reasonable efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as possible any
decree, injunction or other order that may be entered.
Section 7.5 Approval of Company's Stockholders. This Agreement and the
----------------------------------
Merger shall have been approved and adopted by holders of 66-2/3% of the Stock
(voting as one class, with each share of Stock having one (1) vote) in
accordance with applicable law (if required by applicable law), the Certificate
of Incorporation and By-Laws of the Company and the Company Stockholders'
Agreement.
Section 7.6 Statutes. No statute, rule, regulation, executive order,
--------
decree or order of any kind shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which prohibits, restrains,
enjoins or restricts the consummation of the Merger or the Tender Offer or has
the effect of making the Merger or the Tender Offer illegal.
ARTICLE VIII
TERMINATION AND ABANDONMENT
Section 8.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated hereby may be abandoned, at any time prior to the
Closing, whether before or after approval of the Merger by the holders of Stock:
(a) by mutual written consent of the Company, on the one hand, and of
Parent, on the other hand;
(b) by either Parent, on the one hand, or the Company, on the other hand,
if any governmental or regulatory agency shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree or ruling or other action shall
have become final and nonappealable; provided, however, that in the event this
-------- ------- ----
Agreement is terminated because of such an order, decree, ruling or other action
with respect to the Tender Offer, the Company and Parent shall, and the Company
and Parent shall cause Sub and PTK to, effect the "Closing" pursuant to, subject
to the terms and conditions of and as defined in the Alternative Stock Purchase
Agreement;
-30-
<PAGE>
(c) by either Parent, on the one hand, or the Company, on the other hand,
if the Closing shall not have occurred by December 15, 1999, unless the Closing
shall not have occurred because of a material breach of any representation,
warranty, obligation, covenant, agreement or condition set forth in this
Agreement on the part of the party seeking to terminate this Agreement;
(d) by Parent, if any of the conditions set forth in Section 6.6, 6.5 or
6.7 (to the extent that the latter two sections relate to the Tender Offer) are
not satisfied immediately prior to the date on which the Closing would have
taken place but for the failure of any of the conditions set forth in Sections
6.6, 6.5 or Section 6.7 (to the extent that the latter two sections relate to
the Tender Offer) to be satisfied, in which case the Company and Parent shall,
and the Company and Parent shall cause Sub and PTK to, effect the "Closing"
pursuant to, subject to the terms and conditions of and as defined in the
Alternative Stock Purchase Agreement; and
(e) by Parent, at any time within 30 days after delivery to it pursuant to
Section 5.7(b)(i) of the audited consolidated financial statements of each of
the Company and of Pathmark for the fiscal year ended January 30, 1999, in the
event that such financial statements disclose (i) a consolidated shareholder's
deficiency of (x) the Company greater than $1,453,000,000 or (y) Pathmark
greater than $1,188,400,000, in each case as of the end of such fiscal year or
(ii) net losses of (x) the Company materially greater than $29,321,000 or (y)
Pathmark materially greater than $28,420,000, in each case for the fiscal year
then ended.
Section 8.2 Effect of Termination. In the event of the termination of
---------------------
this Agreement pursuant to Section 8.1 (other than in the case of termination
pursuant to Section 8.1(a)) hereof by Parent, on the one hand, or the Company,
on the other hand, written notice thereof shall forthwith be given to the other
party specifying the provision hereof pursuant to which this Agreement is
terminated, and this Agreement shall become void and have no effect, and there
shall be no liability hereunder on the part of Parent, Sub or the Company,
except that Sections 3.12, 5.2, 5.3(l), 8.1(d) 9.1, 9.5 and this Section 8.2
shall survive any termination of this Agreement. Nothing in this Section 8.2
shall relieve any party to this Agreement of liability for breach of this
Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses. All costs and expenses incurred in
-----------------
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
Section 9.2 Representations and Warranties. The respective
------------------------------
representations and warranties of the Company, on the one hand, and Parent and
Sub, on the other hand, contained herein or in any certificates or other
documents delivered prior to or at the Closing shall not be deemed waived or
otherwise affected by any investigation made by any party. Each and every such
representation and warranty shall expire with, and be terminated and
extinguished by, the Closing and thereafter none of the Company, Parent or Sub
shall be under any liability whatsoever
-31-
<PAGE>
with respect to any such representation or warranty. This Section 9.2 shall have
no effect upon any other obligation of the parties hereto, whether to be
performed before or after the Closing.
Section 9.3 Extension; Waiver. At any time prior to the Effective Time,
-----------------
the parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company, Parent or Sub, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
Section 9.4 Public Announcements. The Company, on the one hand, and
--------------------
Parent and Sub, on the other hand, agree to consult promptly with each other
prior to issuing any press release or otherwise making any public statement with
respect to the transactions contemplated hereby, and shall not issue any such
press release or make any such public statement prior to such consultation and
review by the other party of a copy of such release or statement, unless
required by applicable law.
Section 9.5 Governing Law. This Agreement, and the legal relations
-------------
between the parties hereto, shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements executed and to
be performed solely within such State, provided, however, that any of the
-------- -------
provisions contained herein with respect to the Merger shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements executed and to be performed solely within such State.
Section 9.6 Captions. The Article and Section captions used herein are
--------
for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 9.7 Notices. Any notice, delivery or other communication required
-------
or permitted under this Agreement shall be sufficiently given if delivered in
person or sent by telecopy (with receipt confirmed) or by registered or
certified mail, postage prepaid, addressed as follows:
If to either Parent or Sub:
Koninklijke Ahold NV
Albert Heijnweg 1
1507 EH Zaandam, P.O. Box 33
1500 EA Zaandam, The Netherlands
Telecopier: 31-75-659-83-66
Attention: Paul P.J. Butzelaar, Esq.
Ton van Tielraden, Esq.
and
White & Case
1155 Avenue of the Americas
-32-
<PAGE>
New York, New York 10036
Telecopier: (212) 354-8113
Attention: John M. Reiss, Esq.
If to the Company:
SMG-II Holdings Corporation
200 Milik Street
Carteret, NJ 07008-1194
Telecopier: (732) 499-3460
Attention: James Donald
Marc A. Strassler, Esq.
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022-7179
Telecopier: (212) 848-7179
Attention: Spencer D. Klein, Esq.
Rohan Weerasinghe, Esq.
or to such other person as shall be designated in writing by any such party, and
such notice or communication shall be deemed to have been given as of the date
so delivered, sent by telecopier or mailed.
Section 9.8 Binding Effect; Benefit; Assignment. This Agreement shall
-----------------------------------
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, that Sub may assign and
-------- ------- ----
delegate, in its sole discretion, its rights, interests and obligations
hereunder to any direct or indirect wholly-owned subsidiary of Parent.
Notwithstanding anything contained in this Agreement to the contrary, except for
the provisions of Section 2.5 and Section 5.13 (collectively, the "Third Party
-----------
Provisions"), nothing in this Agreement, expressed or implied, is intended to
- ----------
confer on any Person other than the parties hereto or their respective
successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement. The Third Party Provisions
may be enforced by the beneficiaries thereof.
Section 9.9 Counterparts. This Agreement may be executed in two or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Agreement.
-33-
<PAGE>
Section 9.10 Entire Agreement. This Agreement, including the other
----------------
documents entered into in connection herewith, contains the entire understanding
of the parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
Section 9.11 Amendments. This Agreement may not be changed, amended,
----------
waived, or modified orally, but only by an agreement in writing signed by the
parties hereto.
Section 9.12 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon a determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the maximum extent
possible.
Section 9.13 Disclosure Letter. The parties hereto acknowledge that
-----------------
certain matters set forth in the Disclosure Letter are included for
informational purposes only, notwithstanding the fact that, because they do not
rise above applicable materiality thresholds or otherwise, they would not be
required to be set forth therein by the terms of this Agreement and that
disclosure of such matters shall not be taken as an admission by the Company
that such disclosure is required to be made under the terms of any provision of
this Agreement.
Section 9.14 Submission to Jurisdiction; Waiver of Jury Trial. The
------------------------------------------------
parties hereby submit to the jurisdiction of the United States District Court
for the Southern District of New York and of any New York State Court sitting in
the City of New York for purposes of all legal proceedings which may arise
hereunder or under any of the other documents entered into in connection
herewith. The parties irrevocably waive, to the fullest extent permitted by
law, any objection which it may have or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
The parties hereby consent to process being served in any such proceeding by the
mailing of a copy thereof by registered or certified mail, postage prepaid, to
their respective addresses specified in Section 9.7 or in any other manner
permitted by law. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER DOCUMENTS ENTERED INTO IN CONNECTION HEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OF ANY
PARTY.
-34-
<PAGE>
IN WITNESS WHEREOF, each party has caused its corporate name to be hereunto
subscribed by its officer thereunto duly authorized, all as of the day and year
first above written.
KONINKLIJKE AHOLD N.V.
By: /s/ Robert G. Tobin
--------------------------------
Name: R.G. Tobin
Title: Executive Vice President
AHOLD ACQUISITION, INC.
By: /s/ Robert G. Tobin
--------------------------------
Name: R.G. Tobin
Title: President
Title:
SMG-II HOLDINGS CORPORATION
By: /s/ James L. Donald
--------------------------------
Name: James L. Donald
Title: Chairman, President and
Chief Executive Officer
-35-
<PAGE>
EXECUTION COPY
EXHIBIT 1
---------
The capitalized terms used in this Exhibit 1 shall have the meanings
set forth in the Merger Agreement to which it is annexed, except that the term
"Merger Agreement" shall be deemed to refer to the Agreement to which this
Exhibit 1 is appended and "Purchaser" shall be deemed to refer to Sub.
- --------------------------------------------------------------------------------
Notwithstanding any other provision of the Tender Offer or the Merger
Agreement, Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the Commission, including Rule 14e-1c
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered shares promptly after termination or withdrawal of the Tender Offer),
pay for any shares of SMGH Preferred Stock tendered and may terminate or amend
the Tender Offer and may postpone the acceptance of, and payment for, shares of
SMGH Preferred Stock, if there shall not have been validly tendered and not
withdrawn prior to the expiration of the Tender Offer a number of shares of SMGH
Preferred Stock which, together with SMGH Preferred Stock previously acquired by
Parent, any direct or indirect subsidiary of Parent, the Company, any direct or
indirect subsidiary of the Company or Purchaser, represent 66 2/3% of the total
issued and outstanding shares of SMGH Preferred Stock on a fully diluted basis
(the "Minimum Condition"), or at any time at or before the time of acceptance of
tendered shares of SMGH Preferred Stock for payment or payment for any such
shares of SMGH Preferred Stock (whether or not any shares of SMGH Preferred
Stock have theretofore been accepted for payment or paid for pursuant to the
Tender Offer) any of the following shall occur:
(a)(i) the Board of Directors of SMGH or any committee thereof shall
have withdrawn or modified in a manner adverse to Parent or Purchaser the
approval or recommendation of the Tender Offer or approved or recommended
any takeover proposal with respect to SMGH or any of its subsidiaries or
for any acquisition of any capital stock of SMGH or any of its subsidiaries
(other than the Tender Offer or the Merger), (ii) the Board of Directors of
the Company or any committee thereof shall have withdrawn or modified in a
manner adverse to Parent or Purchaser the approval or recommendation of the
Merger or the Merger Agreement, or approved or recommended any takeover
proposal with respect to the Company or any of its subsidiaries or any
acquisition of any
<PAGE>
Exhibit 1
capital stock of the Company or any of its subsidiaries (other than the
Merger), (iii) any Person shall have entered into a definitive agreement or
an agreement in principle with the Company, SMGH or, as the case may be,
any of their respective subsidiaries with respect to a tender offer or
exchange offer for any capital stock of the Company, SMGH or, as the case
may be, any of their respective subsidiaries or a merger, consolidation or
other business combination with or involving the Company, SMGH or, as the
case may be, any of their respective subsidiaries or (iv) the Board of
Directors of the Company, SMGH or, as the case may be, any of their
respective subsidiaries or any committee of any of them shall have resolved
to do any of the foregoing;
(b) any condition in the Merger Agreement to the consummation of the
Merger shall not have been met; or
(c) the Merger Agreement shall have been terminated in accordance
with its terms;
which, in the reasonable judgment of 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 (including those set forth in the opening
paragraph above) are for the sole benefit of Purchaser and may be asserted by
Purchaser, or may be waived by Purchaser, in whole or in part at any time and
from time to time in its sole discretion. The failure by 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.
-2-
<PAGE>
EXECUTION COPY
EXHIBIT 2
---------
to Agreement and Plan of Merger
-------------------------------
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PATHMARK HOLDINGS CORPORATION
AND
SUPERMARKETS GENERAL HOLDINGS CORPORATION
Dated as of [_________]
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
THE MERGER AND RELATED MATTERS....................................... 1
1.1 The Merger................................................. 1
1.2 Conversion of Stock........................................ 2
1.3 Dissenting Stock........................................... 2
1.4 Surrender of Certificates.................................. 3
1.5 Payment.................................................... 4
1.6 No Further Rights of Transfers............................. 5
1.7 Certificate of Incorporation of the Surviving Corporation.. 5
1.8 By-Laws of the Surviving Corporation....................... 5
1.9 Directors and Officers of the Surviving Corporation........ 5
ARTICLE II
MISCELLANEOUS........................................................ 6
2.1 Fees and Expenses.......................................... 6
2.2 Notices.................................................... 6
2.3 Entire Agreement........................................... 6
2.4 Binding Effect; Benefit; Assignment........................ 6
2.5 Amendment and Modification................................. 7
2.6 Further Actions............................................ 7
2.7 Headings................................................... 7
2.8 Counterparts............................................... 7
2.9 Applicable Law............................................. 7
2.10 Severability.............................................. 7
2.11 Submission to Jurisdiction Waiver of Jury Trial........... 8
(i)
<PAGE>
[Draft: (New York) March 9, 1999]
EXHIBIT 2
---------
to Agreement and Plan of Merger
-------------------------------
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of [________] (this
"Agreement"), by and among PATHMARK HOLDINGS CORPORATION, a Delaware corporation
("Pathmark"), and SUPERMARKETS GENERAL HOLDINGS CORPORATION, a Delaware
corporation ("SMGH"). Terms used and not otherwise defined herein shall have
the meanings ascribed to them in the First Step Merger Agreement (as defined
below).
WHEREAS, Koninklijke Ahold N.V. ("Parent") has acquired (the
"Acquisition") (x) control of Pathmark pursuant to an Agreement and Plan of
Merger, dated as of March [ ], 1999, by and among, Parent, Ahold Acquisition
Inc. and Pathmark (formerly known as SMG-II Holdings Corporation) (the "First
Step Merger Agreement") and (y) [______] shares of SMGH Preferred Stock;
WHEREAS, to complete the Acquisition, the respective Boards of
Directors of Pathmark and SMGH unanimously determined that the merger of SMGH
with and into Pathmark (the "Merger") is fair to, and in the best interests of,
the holders of capital stock of each of Pathmark and SMGH, approved the Merger
and recommended the approval and adoption of this Agreement by the holders of
capital stock of each of Pathmark and SMGH; and
WHEREAS, at duly called and convened meetings of the holders of all
classes of capital stock of each of Pathmark and SMGH, the holders of each class
of capital stock of each of Pathmark and SMGH by requisite majority approved the
Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
THE MERGER AND RELATED MATTERS
1.1 The Merger. (a) On the date hereof Pathmark and SMGH shall
----------
prepare, execute and acknowledge a certificate of merger (the "Certificate of
Merger") in accordance with the Delaware General Corporation Law and shall cause
the Certificate of Merger to be filed with the Secretary of State of the State
of Delaware as provided in Section 251 of the Delaware General Corporation Law.
The Merger shall become effective upon the filing of the Certificate of Merger
(or at such later time reflected in the Certificate of Merger as shall be agreed
by Pathmark and SMGH). The date and time when the Merger shall become effective
is hereinafter referred to as the "Effective Time."
(b) At the Effective Time, SMGH shall be merged with and into
Pathmark and the separate corporate existence of SMGH shall cease, and Pathmark
shall continue as the surviving
<PAGE>
Exhibit 2
---------
to Agreement and Plan of Merger
-------------------------------
corporation under the laws of the State of Delaware under the name of "Pathmark
Holdings Corporation" (the "Surviving Corporation").
(c) From and after the Effective Time, the Merger shall have the
effects set forth in Section 259(a) of the Delaware General Corporation Law.
(d) If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to continue in, vest, perfect or confirm of record or otherwise in the
Surviving Corporation's right, title or interest in, to or under any of the
rights, properties, privileges, franchise or assets of either of its constituent
corporations acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger, or otherwise to carry out the intent of
this Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of either of the
constituent corporations of the Merger, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties, privileges, franchises or
assets in the Surviving Corporation (as defined) or otherwise to carry out the
intent of this Agreement.
1.2 Conversion of Stock. At the Effective Time:
-------------------
(a) Each share of Class A Common Stock of SMGH then issued and
outstanding and each share of Class B Common Stock of SMGH then issued and
outstanding shall be cancelled without payment to the holders thereof. Each
share of SMGH Preferred Stock then issued and outstanding (other than (i) any
shares of SMGH Preferred Stock which are held by any subsidiary of SMGH or in
the treasury of SMGH, or which are held, directly or indirectly, by Parent or
any direct or indirect subsidiary of Parent (including Pathmark), all of which
shall cease to be outstanding and be cancelled and retired and none of which
shall receive any payment with respect thereto and (ii) shares of SMGH Preferred
Stock held by Dissenting Stockholders (as such term is defined in Section 1.3
hereof)) and all rights in respect thereof shall, by virtue of the Merger and
without any action on the part of Pathmark, SMGH or the holder thereof,
forthwith cease to exist and be converted into and represent the right to
receive an amount in cash, without interest, equal to $38.25 (the "Merger
Consideration"); and
(b) Each share of common stock, par value $0.01 per share, of
Pathmark then issued and outstanding shall, by virtue of the Merger and without
any action on the part of Pathmark, SMGH or the holder thereof, become one fully
paid and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
1.3 Dissenting Stock. Notwithstanding anything contained in this
----------------
Agreement to the contrary but only to the extent required by the Delaware
General Corporation Law, shares of SMGH Preferred Stock that are issued and
outstanding immediately prior to the Effective Time
-2-
<PAGE>
Exhibit 2
---------
to Agreement and Plan of Merger
-------------------------------
and are held by holders of SMGH Preferred Stock who comply with all the
provisions of the law of the State of Delaware concerning the right of holders
of preferred stock to dissent from the Merger and require appraisal of their
shares of SMGH Preferred Stock ("Dissenting Stockholders") shall not be
converted into the right to receive the Merger Consideration but shall become
the right to receive such consideration as may be determined to be due such
Dissenting Stockholder pursuant to the law of the State of Delaware; provided,
--------
however, that (i) if any Dissenting Stockholder shall subsequently deliver a
- -------
written withdrawal of his or her demand for appraisal (with the written approval
of the Surviving Corporation, if such withdrawal is not tendered within 60 days
after the Effective Time), or (ii) if any Dissenting Stockholder fails to
establish and perfect his or her entitlement to appraisal rights as provided by
applicable law, or (iii) if within 120 days of the Effective Time neither any
Dissenting Stockholder nor the Surviving Corporation has filed a petition
demanding determination of the value of all shares of SMGH Preferred Stock
outstanding at the Effective Time and held by Dissenting Stockholders in
accordance with applicable law, then such Dissenting Stockholder or Dissenting
Stockholders, as the case may be, shall forfeit the right to appraisal of such
shares and such shares shall thereupon be deemed to have been converted into the
right to receive, as of the Effective Time, the Merger Consideration, without
interest. SMGH shall give Pathmark (A) prompt notice of any written demands for
appraisal, withdrawals of demands for appraisal and any other related
instruments received by SMGH, and (B) the opportunity to direct all negotiations
and proceedings with respect to demands for appraisal. SMGH will not, except
with the prior written consent of Pathmark, voluntarily make any payment with
respect to any demands for appraisal or settle or offer to settle any such
demand.
1.4 Surrender of Certificates. (a) Prior to the Effective Time,
-------------------------
Pathmark shall designate a bank or trust company located in the United States to
act as paying agent (the "Paying Agent") for purposes of making the cash
payments contemplated hereby. As soon as practicable after the Effective Time,
Pathmark shall cause the Paying Agent to mail and/or make available to each
holder of a certificate theretofore evidencing shares of SMGH Preferred Stock
(other than those which are held by any subsidiary of SMGH or in the treasury of
SMGH or which are held directly or indirectly by Parent or any direct or
indirect subsidiary (including Pathmark) of Parent) a notice and letter of
transmittal advising such holder of the effectiveness of the Merger and the
procedure for surrendering to the Paying Agent such certificate or certificates
which immediately prior to the Effective Time represented outstanding SMGH
Preferred Stock (the "Certificates") in exchange for the Merger Consideration
deliverable in respect thereof pursuant to this Article I. Upon the surrender
for cancellation to the Paying Agent of such Certificates, together with a
letter of transmittal, duly executed and completed in accordance with the
instructions thereon, and any other items specified by the letter of
transmittal, the Paying Agent shall promptly pay to the person entitled thereto
the Merger Consideration deliverable in respect thereof. Until so surrendered,
each Certificate shall be deemed, for all corporate purposes, to evidence only
the right to receive upon such surrender the Merger Consideration deliverable in
respect thereof to which such Person is entitled pursuant to this Article I. No
interest shall be paid or accrued in respect of such cash payments.
-3-
<PAGE>
Exhibit 2
---------
to Agreement and Plan of Merger
-------------------------------
(b) If the Merger Consideration (or any portion thereof) is to be
delivered to a person other than the person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of the Merger Consideration that the Certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise in
proper form for transfer, that such transfer otherwise be proper and that the
Person requesting such transfer pay to the Paying Agent any transfer or other
taxes payable by reason of the foregoing or establish to the satisfaction of the
Paying Agent that such taxes have been paid or are not required to be paid.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article I,
provided that, the person to whom the Merger Consideration is paid shall, as a
condition precedent to the payment thereof, give the Surviving Corporation a
bond in such sum as it may direct or otherwise indemnify the Surviving
Corporation in a manner satisfactory to it against any claim that may be made
against the Surviving Corporation with respect to the Certificate claimed to
have been lost, stolen or destroyed.
1.5 Payment. Concurrently with or immediately prior to the Effective
-------
Time, Pathmark shall deposit in trust with the Paying Agent cash in United
States dollars in an aggregate amount equal to the product of (i) the number of
shares of SMGH Preferred Stock outstanding immediately prior to the Effective
Time (other than shares of SMGH Stock Preferred which are held by any subsidiary
of SMGH or in the treasury of SMGH or which are held directly or indirectly by
Parent or any direct or indirect subsidiary (including Pathmark) of Parent or a
person known at the time of such deposit to be a Dissenting Stockholder) and
(ii) the Merger Consideration (such amount being hereinafter referred to as the
"Payment Fund"). The Payment Fund shall be invested by the Paying Agent as
directed by Pathmark in direct obligations of the United States, obligations for
which the full faith and credit of the United States is pledged to provide for
the payment of principal and interest, commercial paper of an issuer organized
under the laws of a state of the United States rated of the highest quality by
Moody's Investors Services, Inc. or Standard & Poor's Ratings Group or
certificates of deposit, bank repurchase agreements or bankers' acceptances of a
United States commercial bank having at least $100,000,000 in assets
(collectively "Permitted Investments") or in money market funds which are
invested in Permitted Investments, and any net earnings with respect thereto
shall be paid to Pathmark as and when requested by Pathmark. The Paying Agent
shall, pursuant to irrevocable instructions, make the payments referred to in
Section 1.2(a) hereof out of the Payment Fund. The Payment Fund shall not be
used for any other purpose. Promptly following the date which is six months
after the Effective Time, the Paying Agent shall return to the Surviving
Corporation all cash, certificates and other instruments in its possession that
constitute any portion of the Payment Fund, (other than net earnings on the
Payment Fund which shall be paid to Pathmark) and the Paying Agent's duties
shall terminate. Thereafter, each holder of a Certificate may surrender such
Certificate to
-4-
<PAGE>
Exhibit 2
---------
to Agreement and Plan of Merger
-------------------------------
the Surviving Corporation and (subject to applicable abandoned property, escheat
and similar laws) receive in exchange therefor the Merger Consideration, without
interest, but shall have no greater rights against the Surviving Corporation or
Pathmark than may be accorded to general creditors of the Surviving Corporation
or Pathmark under applicable law. Notwithstanding the foregoing, neither the
Paying Agent nor any party hereto shall be liable to a holder of shares of SMGH
Preferred Stock for any Merger Consideration delivered to a public official
pursuant to applicable abandoned property, escheat and similar laws.
1.6 No Further Rights of Transfers. At and after the Effective Time,
------------------------------
each holder of a Certificate shall cease to have any rights as a stockholder of
SMGH, except for, in the case of a holder of a Certificate (other than shares of
capital stock to be cancelled pursuant to Section 1.2(a) hereof and other than
shares held by Dissenting Stockholders), the right to surrender his or her
Certificate in exchange for payment of the Merger Consideration or, in the case
of a Dissenting Shareholder, to perfect his or her right to receive payment for
his or her shares pursuant to Delaware law if such holder has validly perfected
and not withdrawn or otherwise lost his or her right to receive payment for his
or her shares, and no transfer of shares of SMGH Preferred Stock shall be made
on the stock transfer books of the Surviving Corporation. Certificates presented
to the Surviving Corporation after the Effective Time shall be cancelled and
exchanged for cash as provided in this Article I. At the close of business on
the day of the Effective Time the stock ledger of SMGH with respect to capital
stock of SMGH shall be closed.
1.7 Certificate of Incorporation of the Surviving Corporation. The
---------------------------------------------------------
Certificate of Incorporation of Pathmark, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation.
1.8 By-Laws of the Surviving Corporation. The By-Laws of Pathmark,
------------------------------------
as in effect immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation.
1.9 Directors and Officers of the Surviving Corporation. At the
---------------------------------------------------
Effective Time, the directors of Pathmark immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, each of such directors
to hold office, subject to the applicable provisions of the Certificate of
Incorporation and By-Laws of the Surviving Corporation, until the next annual
shareholders' meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of Pathmark immediately prior to the Effective Time shall,
subject to the applicable provisions of the Certificate of Incorporation and By-
Laws of the Surviving Corporation, be the officers of the Surviving Corporation
until their respective successors shall be duly elected or appointed and
qualified.
-5-
<PAGE>
Exhibit 2
---------
to Agreement and Plan of Merger
-------------------------------
ARTICLE II
MISCELLANEOUS
2.1 Fees and Expenses. (a) All costs and expenses incurred in
-----------------
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
2.2 Notices. All notices, requests, demands, waivers and other
-------
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person or
mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or telecopier, as follows:
(a) if to Pathmark, to it at:
_____________________
_____________________
_____________________
(b) if to SMGH, to it at:
_______________________
_______________________
_______________________
(c) if to the Surviving Corporation, to it at:
_______________________
_______________________
_______________________
or to such other person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third business day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
2.3 Entire Agreement. This Agreement contains the entire
----------------
understanding of the parties hereto with respect to the subject matter contained
herein and supersedes all prior agreements and understandings, oral and written,
with respect to such subject matter.
2.4 Binding Effect; Benefit; Assignment. This Agreement shall inure
-----------------------------------
to the benefit of and be binding upon the parties hereto, but neither this
Agreement nor any of the rights,
-6-
<PAGE>
Exhibit 2
---------
to Agreement and Plan of Merger
-------------------------------
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Notwithstanding anything contained in this
Agreement to the contrary, except for the provisions of Section 2.5 (the "Third
-----
Party Provision"), nothing in this Agreement, expressed or implied, is intended
- ---------------
to confer on any person other than the parties hereto or their respective
successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement. The Third Party Provisions may
be enforced by the beneficiaries thereof.
2.5 Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified and supplemented in writing by the parties
hereto in any and all respects before the Effective Time (notwithstanding any
stockholder approval), by action taken by the respective Boards of Directors of
Pathmark and SMGH or by the respective officers authorized by such Boards of
Directors, provided, however, that (i) no amendment may be made which decreases
-------- -------
the Merger Consideration or which adversely effects the rights of the Dissenting
Stockholders without the approval of such stockholders and (ii) after any such
stockholder approval, no amendment shall be made which by law requires further
approval by such stockholders without such further approval.
2.6 Further Actions. Each of the parties hereto agrees that, subject
---------------
to its legal obligations, it will use its best efforts to fulfill all conditions
precedent specified herein, to the extent that such conditions are within its
control, and to do all things reasonably necessary to consummate the
transactions contemplated hereby.
2.7 Headings. The descriptive headings of the several Articles and
--------
Sections of this Agreement are inserted for convenience only, do not constitute
a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.
2.8 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
2.9 Applicable Law. This Agreement, and the legal relations between
--------------
the parties hereto, shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements executed and to be
performed solely within such State, provided, however, that any of the
-------- -------
provisions contained herein with respect to the Merger shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements executed and to be performed solely within such State.
2.10 Severability. If any term, provision, covenant or restriction
------------
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
-7-
<PAGE>
Exhibit 2
---------
to Agreement and Plan of Merger
-------------------------------
2.11 Submission to Jurisdiction Waiver of Jury Trial. The parties
-----------------------------------------------
hereby submit to the jurisdiction of the United States District Court for the
Southern District of New York and of any New York State Court sitting in the
City of New York for purposes of all legal proceedings which may arise hereunder
or under any of the other documents entered into in connection herewith. The
parties irrevocably waive, to the fullest extent permitted by law, any objection
which it may have or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. The parties
hereby consent to process being served in any such proceeding by the mailing of
a copy thereof by registered or certified mail, postage prepaid, to their
respective addresses specified in Section 2.2 or in any other manner permitted
by law. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER DOCUMENTS ENTERED INTO IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OF ANY PARTY.
-8-
<PAGE>
Exhibit 2
---------
to Agreement and Plan of Merger
-------------------------------
IN WITNESS WHEREOF, each of the Parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
all as of the date first above written.
PATHMARK HOLDINGS CORPORATION
By:
------------------------------------
Name:
Title:
SUPERMARKETS GENERAL HOLDINGS CORPORATION
By:
------------------------------------
Name:
Title:
-9-
<PAGE>
Exhibit (c)(4)
EXECUTION COPY
================================================================================
STOCK PURCHASE AGREEMENT
BY AND AMONG
KONINKLIJKE AHOLD N.V.
AHOLD ACQUISITION, INC.
SMG-II HOLDINGS CORPORATION
and
PTK HOLDINGS, INC.
Dated as of March 9, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS..............................................................................................1
Section 1. Definitions.....................................................................1
ARTICLE II
PURCHASE AND SALE OF STOCK...............................................................................4
Section 2.1 Purchase and Sale of Stock......................................................4
Section 2.2 Purchase Price..................................................................4
Section 2.3 Payment of Purchase Price.......................................................4
Section 2.4 Closing.........................................................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS ...........................................................5
Section 3. Representations and Warranties of the Sellers....................................5
Section 3.1 DueOrganization, Good Standing and Corporate Power..............................5
Section 3.2 Authorizationand Validity of Agreement..........................................5
Section 3.3 Capitalization..................................................................6
Section 3.4 Consents and Approvals; No Violations...........................................6
Section 3.5 Public Reports..................................................................7
Section 3.6 Other Financial Statements......................................................7
Section 3.7 Absence of Certain Changes......................................................8
Section 3.8 Compliance with Laws............................................................8
Section 3.9 Employee Benefit Plan Triggering Events.........................................8
Section 3.10 Liabilities....................................................................9
Section 3.11 Broker's or Finder's Fee.......................................................9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.........................................................9
Section 4.1 Due Organization; Good Standing and Corporate Power.............................9
Section 4.2 Authorization and Validity of Agreement........................................10
Section 4.3 Consents and Approvals; No Violations..........................................10
Section 4.4 Broker's or Finder's Fee.......................................................10
Section 4.5 Financing......................................................................10
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C>
ARTICLE V
COVENANTS................................................................................................11
Section 5.1 Access to Information Concerning Properties and Records.........................11
Section 5.2 Confidentiality.................................................................11
Section 5.3 Conduct of the Business of the Company and its Subsidiaries.....................12
Section 5.4 Best Efforts....................................................................14
Section 5.5 No Solicitation of Other Offers.................................................15
Section 5.6 Notification of Certain Matters.................................................15
Section 5.7 Antitrust Filings...............................................................16
Section 5.8 Transfer Taxes..................................................................17
Section 5.9 Employee Benefits...............................................................17
Section 5.10 Directors' and Officers' Insurance; Indemnification............................17
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF SUB...............................................................19
Section 6. Conditions Precedent to Obligations of Parent and Sub...........................19
Section 6.1 Truth of Representations and Warranties.........................................19
Section 6.2 Performance of Agreements.......................................................19
Section 6.3 HSR Act.........................................................................19
Section 6.4 Injunction......................................................................19
Section 6.5Statutes.............................................................................20
Section 6.6 No Material Adverse Effect......................................................20
ARTICLE VII
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE SELLERS...............................................................................20
Section 7. Conditions Precedent to Obligations of the Sellers..............................20
Section 7.1 Truth of Representations and Warranties.........................................20
Section 7.2 Performance of Agreements.......................................................20
Section 7.3 HSR Act Waiting Periods.........................................................20
Section 7.4 Injunction......................................................................20
Section 7.5 Statutes........................................................................20
ARTICLE VIII
TERMINATION AND ABANDONMENT..............................................................................21
Section 8.1 Termination.....................................................................21
Section 8.2 Automatic Termination...........................................................21
Section 8.3 Effect of Termination...........................................................21
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C>
ARTICLE IX
TAX MATTERS..............................................................................................22
Section 9.1 Tax Returns.....................................................................22
Section 9.2 Payment of Taxes................................................................22
Section 9.3 Controversies...................................................................23
Section 9.4 Amended Returns.................................................................23
Section 9.5 Prior Tax Agreements............................................................24
Section 9.6 Post-Closing Access and Cooperation.............................................24
ARTICLE X
MISCELLANEOUS............................................................................................24
Section 10.1 Fees and Expenses.............................................................24
Section 10.2 Representations and Warranties................................................24
Section 10.3 Extension; Waiver.............................................................24
Section 10.4 Public Announcements..........................................................25
Section 10.5 Governing Law.................................................................25
Section 10.6 Captions......................................................................25
Section 10.7 Notices.......................................................................25
Section 10.8 Binding Effect; Benefit; Assignment...........................................26
Section 10.9 Counterparts..................................................................26
Section 10.10 Entire Agreement..............................................................26
Section 10.11 Amendments....................................................................27
Section 10.12 Severability..................................................................27
Section 10.13 Disclosure Letter.............................................................27
Section 10.14 Submission to Jurisdiction; Waiver of Jury Trial..............................27
</TABLE>
(iii)
<PAGE>
EXECUTION COPY
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of March 9, 1999 (this "Agreement"), by
---------
and among KONINKLIJKE AHOLD N.V., a company organized under the laws of the
Netherlands ("Parent"), AHOLD ACQUISITION, INC., a company organized under the
------
laws of Delaware and an indirect wholly-owned subsidiary of Parent ("Sub"), SMG-
---
II HOLDINGS CORPORATION, a company organized under the laws of Delaware ("SMG-
---
II") AND PTK HOLDINGS, INC., a company organized under the laws of Delaware
- --
("PTK").
---
W I T N E S S E T H :
--------------------
WHEREAS, Parent, Sub and SMG-II have entered into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which it is contemplated that Sub
----------------
merges with and into SMG-II (the "Merger");
------
WHEREAS, in contemplation of the Merger, Sub will make a tender offer (the
"Tender Offer") to purchase all of the issued and outstanding $3.52 Cumulative
------------
Exchangeable Preferred Stock, par value $0.01 per share, of Supermarkets General
Holdings Corporation, a company organized under the laws of Delaware, subject to
the terms and conditions of the Merger Agreement and certain other conditions,
at a price of $38.25 per share, net to the Seller in cash;
WHEREAS, the parties hereto have agreed that, in the event certain
conditions in connection with the Tender Offer set forth in the Merger Agreement
are not satisfied, SMG-II shall in the alternative cause PTK to sell, and Sub
shall in the alternative purchase, an aggregate of 100 shares of Common Stock,
par value $.10 per share (the "Stock"), of Pathmark Stores, Inc., a company
-----
organized under the laws of Delaware (the "Company"), being all of the issued
-------
and outstanding shares of capital stock of the Company, all in accordance with
this Agreement.
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINITIONS
-----------
Section 1. Definitions. When used in this Agreement, the following terms
-----------
shall have the respective meanings specified therefor below (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
"Acquisition Proposal" shall have the meaning assigned to such term in
--------------------
Section 5.5(a).
"Affiliate" of any Person shall mean any Person directly or indirectly
---------
controlling, controlled by, or under common control with, such Person; provided
--------
that, for the purposes of this definition, "control" (including, with
- ----
correlative meanings, the terms "controlled by" and "under
<PAGE>
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or partnership interests, by contract or
otherwise.
"Agreement" shall have the meaning assigned to such term in the preamble to
---------
this Agreement.
"Alcohol and Drug Laws" shall have the meaning assigned to such term in
---------------------
Section 3.4.
"Antitrust Law" shall have the meaning assigned to such term in Section
-------------
5.7(d).
"Balance Sheet" shall have the meaning assigned to such term in Section
-------------
3.6(a).
"Balance Sheet Date" shall have the meaning assigned to such term in
------------------
Section 3.6(a).
A "business day" shall mean any day, other than a Saturday, Sunday or a day
------------
on which banks located in New York City and Amsterdam shall be authorized or
required by law to close.
"Closing" shall have the meaning assigned to such term in Section 2.4.
-------
"Closing Date" shall have the meaning assigned to such term in Section 2.4.
------------
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
----
to time and the Treasury regulations promulgated and the rulings issued
thereunder.
"Commission" shall have the meaning assigned to such term in Section
----------
3.5(a).
"Company" shall have the meaning assigned to such term in the third recital
-------
to this Agreement.
"Condition" shall mean, with respect to any Person the business,
---------
properties, assets, liabilities, results of operations or condition (financial
or otherwise) of such Person.
"Credit Agreement" shall have the meaning assigned to such term in Section
----------------
3.10.
"Disclosure Letter" shall mean that certain Disclosure Letter, dated the
-----------------
date hereof, delivered by the Company to the Purchaser concurrently with the
execution of this Agreement.
"Employee Benefit Plan" shall have the meaning assigned to such term in
---------------------
Section 3.9.
"ERISA" shall have the meaning assigned to such term in Section 3.9.
-----
"GAAP" shall mean generally accepted accounting principles of the United
----
States of America.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
-------
1976, as amended, and the rules and regulations thereunder.
-2-
<PAGE>
"Indemnified Parties" shall have the meaning assigned to such term in
-------------------
Section 5.10(b).
"Liens" shall mean, collectively, liens, security interests, options,
-----
rights of first refusal, easements, mortgages, charges, indentures, deeds of
trust, rights of way, restrictions on the use of real property, encroachments,
licenses to third parties, leases to third parties, security agreements, or any
other encumbrances and other restrictions or limitations on use of real or
personal property.
"Merger" shall have the meaning assigned to such term in the first recital
------
to this Agreement.
"Merger Agreement" shall have the meaning set forth in the first recital to
----------------
this Agreement.
"Merger Closing" shall mean the "Closing", as such term is defined in the
--------------
Merger Agreement.
"October Balance Sheet" shall have the meaning assigned to such term in
---------------------
Section 3.6(a).
"Parent" shall have the meaning assigned to such term in the preamble to
------
this Agreement.
"Person" shall mean and include an individual, a partnership, a joint
------
venture, a corporation, a limited liability company, a limited liability
partnership, a trust, an incorporated organization and a government or other
department or agency thereof.
"PTK" shall have the meaning assigned to such term in the preamble to this
---
Agreement.
"Pre-Closing Period" shall have the meaning assigned to such term in
------------------
Section 9.1.
"Public Disclosure Date" shall have the meaning assigned to such term in
----------------------
Section 3.5(a).
"Public Reports" shall have the meaning assigned to such term in Section
--------------
3.5(a).
"Purchase Price" shall have the meaning assigned to such term in Section
--------------
2.2.
"Returns" shall have the meaning assigned to such term in Section 9.1.
-------
"Sellers" shall mean, collectively, SMG-II and PTK.
-------
"SMG-II" shall have the meaning assigned to such term in the preamble to
------
this Agreement.
"SMG-II Group" shall have the meaning assigned to such term in Section 9.2.
------------
"Stock" shall have the meaning assigned to such term in the third recital
-----
to this Agreement.
"Sub" shall have the meaning assigned to such term in the preamble to this
---
Agreement.
-3-
<PAGE>
"Supply Agreement" shall mean the First Amended and Restated Supply
----------------
Agreement dated January 29, 1998, by and between the Company and C&S Wholesale
Grocers, Inc.
"Tax" or "Taxes" shall mean all taxes, assessments, charges, duties, fees,
--- -----
levies or other governmental charges including, without limitation, all Federal,
state, local, foreign and other income, franchise, profits, capital gains,
capital stock, transfer, sales, use, occupation, property, excise, severance,
windfall profits, stamp, license, payroll, withholding and other taxes,
assessments, charges, duties, fees, levies or other governmental charges of any
kind whatsoever (whether payable directly or by withholding and whether or not
requiring the filing of a return), all estimated taxes, deficiency assessments,
additions to tax, penalties and interest and any liability for any such amounts
as a result either of being a member of a combined, consolidated, unitary or
affiliated group or of a contractual obligation to indemnify any Person.
"Tax Matter" shall have the meaning assigned to such term in Section 9.3.
----------
"Tender Offer" shall have the meaning assigned to such term in the second
------------
recital to this Agreement.
"Third Party Provisions" shall have the meaning assigned to such terms in
----------------------
Section 10.8.
"Transfer Taxes" shall have the meaning assigned to such term in Section
--------------
5.8.
"Working Capital Facility" shall have the meaning assigned to such term in
------------------------
Section 3.10.
ARTICLE II
PURCHASE AND SALE OF STOCK
--------------------------
Section 2.1 Purchase and Sale of Stock. Upon the terms and subject to the
--------------------------
conditions set forth in this Agreement, PTK shall, and SMG-II shall cause PTK
to, sell, assign, transfer and deliver to Sub at the Closing, and Sub shall
purchase from PTK at the Closing, the Stock. The certificate or certificates
representing the Stock shall be duly endorsed in blank, or accompanied by stock
powers duly executed in blank, by PTK, with all necessary transfer tax and other
revenue stamps, acquired at the Sellers' expense, affixed and canceled. The
Sellers agree to cure any deficiencies with respect to the endorsement of the
certificates representing the Stock or with respect to the stock powers
accompanying any such certificates.
Section 2.2 Purchase Price. The purchase price to be paid by Sub for the
--------------
Stock at the Closing shall be equal to an aggregate amount of Two Hundred and
Forty Two Million Eight Hundred Thousand Dollars ($242,800,000) (such amount,
the "Purchase Price").
--------------
Section 2.3 Payment of Purchase Price. Sub shall pay the Purchase Price
-------------------------
by wire transfer in immediately available funds to such account or accounts as
PTK shall designate in writing to Sub not less than three (3) business days
prior to the Closing Date.
-4-
<PAGE>
Section 2.4 Closing. The purchase and sale of the Stock (the "Closing")
------- -------
shall take place at 10:00 A.M. at the offices of White & Case LLP, 1155 Avenue
of the Americas, New York, New York 10036 as soon as practicable, but in any
event upon the occurrence of the later of (i) three (3) business days after the
last of the conditions set forth in Articles VI and VII hereof is satisfied or
waived and (ii) the date of termination by Parent of the Merger Agreement
pursuant to Section 8.1 (d) thereof, or at such other time and date as the
parties hereto shall agree in writing. Such date is herein referred to as the
"Closing Date".
- -------------
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
----------------------------------------------
Section 3. Representations and Warranties of the Sellers. Each of the
---------------------------------------------
Sellers hereby jointly and severally represents and warrants to Parent and Sub
as follows:
Section 3.1 Due Organization, Good Standing and Corporate Power. Each of
---------------------------------------------------
the Sellers is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
each of the Company and its subsidiaries has the corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted. Each of the Company and its subsidiaries is duly qualified or
licensed to do business as a foreign corporation and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary, except in
such jurisdictions where the failure to be so qualified or licensed and in good
standing would not have a material adverse effect on the Condition of the
Company and its subsidiaries taken as a whole. The Company has made available
to Parent complete and correct copies of the certificates of incorporation and
by-laws or other organizational documents of each of the Company and its
subsidiaries, in each case as amended to the date of this Agreement. Except as
set forth on Schedule 3.1 of the Disclosure Letter, the respective certificates
of incorporation and by-laws or other organizational documents of each of the
Company and its subsidiaries do not contain any provision limiting or otherwise
restricting the ability of such Person to control its subsidiaries.
Section 3.2 Authorization and Validity of Agreement. Each of the Sellers
---------------------------------------
has the necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of the Sellers, and the consummation by it of the
transactions contemplated hereby, have been duly authorized and approved by its
Board of Directors and no other corporate or stockholder action on the part of
either Seller is necessary to authorize the execution, delivery and performance
of this Agreement by such Seller and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of the Sellers and is a valid and binding obligation of such Seller enforceable
against such Seller in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affect-
-5-
<PAGE>
ing the enforcement of creditors' rights generally and by general equitable
principles (whether considered in a proceeding at law or in equity).
Section 3.3 Capitalization. Schedule 3.3(a) of the Disclosure Letter sets
--------------
forth (i) the authorized, issued and outstanding capital stock of each of the
Company and its subsidiaries and (ii) the owners of the issued and outstanding
shares of capital stock of each of the Company and its subsidiaries. All issued
and outstanding capital stock of each of the Company and its subsidiaries has
been duly authorized and validly issued and is fully paid and nonassessable, and
is not subject to, nor was issued in violation of, any preemptive rights.
Except as set forth on Schedule 3.3(b) of the Disclosure Letter, no shares of
capital stock of either the Company or any of its subsidiaries are authorized,
issued or outstanding and there are no outstanding or authorized options,
warrants, rights, subscriptions, claims of any character, agreements,
obligations, convertible or exchangeable securities, or other commitments,
contingent or otherwise, relating to capital stock of the Company or any of its
subsidiaries, pursuant to which the Company or any of its subsidiaries is or may
become obligated to issue shares of its capital stock or any securities
convertible into, exchangeable for, or evidencing the right to subscribe for,
any shares of the capital stock of the Company or any of its subsidiaries.
Neither the Company nor any of its subsidiaries has authorized or outstanding
bonds, debentures, notes or other indebtedness the holders of which have the
right to vote (or convertible or exchangeable into or exercisable for securities
having the right to vote) with the stockholders of such Person on any matter.
Except as set forth on Schedule 3.3(c) of the Disclosure Letter, neither the
Company nor any of its subsidiaries owns, directly or indirectly, any capital
stock or other equity, ownership or proprietary interest in any Person. Except
as set forth on Schedule 3.3(d) of the Disclosure Letter, all of the outstanding
shares of capital stock of each of the subsidiaries of the Company are owned, of
record and beneficially, by the Company or its subsidiaries free and clear of
any Liens. Except as set forth on Schedule 3.3(e) of the Disclosure Letter,
there are no restrictions of any kind which prevent or restrict the payment of
dividends by the Company or any of its subsidiaries.
Section 3.4 Consents and Approvals; No Violations. Other than in
-------------------------------------
connection with or in compliance with the provisions of (i) the HSR Act and
other Antitrust Laws, (ii) the Securities Act, (iii) the Exchange Act, (iv) the
"blue sky" laws of various states, and (v) applicable alcohol beverage control
and licensing laws and drug and pharmacy laws and regulations ("Alcohol and Drug
Laws") and except as disclosed in Schedule 3.4 of the Disclosure Letter, the
execution and delivery of this Agreement by the Sellers and the consummation by
the Sellers of the transactions contemplated hereby will not: (1) violate any
provision of the certificate of incorporation or by-laws (or other
organizational document) of the Sellers or the Company or any of its
subsidiaries; (2) violate any statute, ordinance, rule, regulation, order or
decree of any court or of any governmental or regulatory body, agency or
authority applicable to the Sellers or the Company or any of its subsidiaries or
by which any of their respective properties or assets may be bound; (3) require
the Sellers or the Company or any of its subsidiaries to make or obtain any
filing with or permit, consent or approval or give any notice to, any
governmental or regulatory body, agency or authority; or (4) result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
Lien upon any of the properties or assets of the Sellers or the Company or any
of its subsidiaries under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, franchise, permit, agreement, lease,
-6-
<PAGE>
franchise agreement, collective bargaining agreement or other agreement,
instrument or obligation to which the Sellers or the Company or any of its
subsidiaries is a party, or by which it or any of their respective properties or
assets is bound, except for such filings, permits, consents or approvals the
absence of which would not, or violations which would not, have a material
adverse effect on the Condition of the Company and its subsidiaries, taken as a
whole, or which could not reasonably be expected to prevent or materially delay
consummation of the transactions contemplated by this Agreement.
Section 3.5 Public Reports. (a) Since January 1, 1996 (the "Public
-------------- ------
Disclosure Date"), the Company has filed all forms, reports, registration
- ---------------
statements and other filings with the Securities and Exchange Commission (the
"Commission") required to be filed by it pursuant to the federal securities laws
- -----------
and the Commission rules and regulations thereunder (such forms, reports,
registration statements and other filings, together with any amendments thereto,
are collectively referred to as the "Public Reports"), and the Public Reports
--------------
filed with the Commission have complied in all material respects with all
applicable requirements of the federal securities laws and the Commission rules
and regulations thereunder.
(b) As of their respective dates, the Public Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading. Each of the
audited consolidated balance sheets and the unaudited consolidated balance
sheets (including any related notes and schedules) included in the Public
Reports fairly present, in all material respects, the consolidated financial
position of the Company and its subsidiaries as of its date, and each of the
consolidated statements of operations, shareholders' deficiency and cash flows
included in the Public Reports (including any related notes and schedules)
fairly present, in all material respects, the consolidated results of operation,
cash flows and changes in financial position of the Company and its subsidiaries
for the period set forth therein (subject, where appropriate, to notes and
normal year-end audit adjustments), in accordance with GAAP consistently applied
throughout the periods indicated (except as may be indicated therein or in the
notes or schedules thereto).
Section 3.6 Other Financial Statements. (a) The Sellers have heretofore
--------------------------
furnished Parent with the unaudited consolidated balance sheets of the Company
and its subsidiaries as at October 31, 1998 and the related consolidated
statements of operations, shareholders' deficiency and cash flows for the nine
month period then ended. The consolidated balance sheet of the Company and its
subsidiaries as at January 30, 1998 contained in the Public Reports is
hereinafter referred to as the "Balance Sheet" and January 30, 1998 as the
-------------
"Balance Sheet Date" and the unaudited consolidated balance sheet of the Company
- -------------------
and its subsidiaries as at October 31, 1998 is hereinafter referred to as the
"October Balance Sheet". The October Balance Sheet, including the footnotes
- ----------------------
thereto, except as indicated therein, has been prepared in accordance with GAAP
consistently applied throughout the nine month period indicated. Subject to
normal year end adjustments, the October Balance Sheet fairly presents, in all
material respects, the consolidated financial position of the Company and its
subsidiaries as at the date thereof and reflects all material claims and all
material debts and liabilities of the Company and its subsidiaries, fixed or
contingent, as at the date thereof and the related consolidated statements of
operations, shareholder's deficiency and cash flows fairly present, in all
material aspects, the results of operations
-7-
<PAGE>
and cash flows of the Company and its subsidiaries and the changes in financial
position for the nine month period indicated.
(b) The consolidated financial statements of the Company and its
subsidiaries delivered to Parent pursuant to Section 5.6(b)(i) will fairly
present, in all material respects, the consolidated financial condition of the
Company and its subsidiaries at the date thereof and will reflect all material
claims against and all material debts and liabilities of the Company and its
subsidiaries, fixed or contingent, as at the date thereof, and the related
consolidated statements of operations, shareholders' deficiency and cash flows
will fairly present, in all material respects, the results of operations and
cash flows of the Company and its subsidiaries and the changes in financial
position for the period indicated.
Section 3.7 Absence of Certain Changes. Except as previously disclosed in
--------------------------
the Public Reports or in Schedule 3.7 of the Disclosure Letter or as otherwise
contemplated by this Agreement, since the Balance Sheet Date and up to and
including the date hereof (i) there has not been any material adverse change in
the Condition of the Company and its subsidiaries taken as a whole; (ii) the
businesses of the Company and each of its subsidiaries have been conducted only
in the ordinary course; (iii) neither the Company nor any of its subsidiaries
has incurred any material liabilities (direct, contingent or otherwise) or
engaged in any material transaction or entered into any material agreement other
than in the ordinary course of business; (iv) neither the Company nor any of its
subsidiaries has increased the compensation of any officer or granted any
general salary or benefits increase to any of their employees other than in the
ordinary course of business or pursuant to collective bargaining agreements; (v)
there has been no declaration, setting aside or payment of any dividend or other
distribution with respect to the capital stock of the Company or any of its
subsidiaries; and (vi) there has been no change by the Company or any of its
subsidiaries in accounting principles, practices or methods.
Section 3.8 Compliance with Laws. Except as disclosed in the Public
--------------------
Reports filed on or prior to the date hereof, the Company and each of its
subsidiaries is in compliance with all applicable laws, regulations, orders,
judgments and decrees except where the failure to so comply would not,
individually or in the aggregate, have a material adverse effect on the
Condition of the Company and its subsidiaries taken as a whole or could
reasonably likely prevent or materially delay consummation of the transactions
contemplated by this Agreement.
Section 3.9 Employee Benefit Plan Triggering Events. Except as set forth
---------------------------------------
on Schedule 3.9 of the Disclosure Letter, the execution of this Agreement and
the consummation of the transactions contemplated hereby do not constitute a
triggering event under any Employee Benefit Plan, policy, arrangement,
statement, commitment or agreement, whether or not legally enforceable, which
will or may result in any payment, acceleration, vesting or increase in benefits
to any employee or former employee, officer or director of the Company or any
of its subsidiaries.
"Employee Benefit Plan" shall mean any domestic or foreign (i) "employee
---------------------
benefit plan," within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
thereunder ("ERISA"); (ii) bonus, stock option, stock purchase, restricted
stock, incentive, profit-sharing, pension or retirement, deferred compensation,
-8-
<PAGE>
medical, life, disability, accident, or welfare plans, programs, arrangements,
commitments or practices (whether or not insured); and (iii) employment,
consulting, termination and severance contracts or agreements for active,
retired or former employees or directors, whether or not any such plans,
programs, arrangements, commitments, contracts, agreements or practices referred
to in (i), (ii) or (iii) are in writing or are otherwise exempt from the
provisions of ERISA, established, maintained or contributed to (or with respect
to which an obligation to contribute has been undertaken) or with respect to
which any potential liability is borne by the Company or any of its subsidiaries
(including, for the purposes of this Section 3.9, all employers (whether or not
incorporated) that are by reason of common control treated together with the
Company or any of is subsidiaries as a single employer within the meaning of
Section 414 of the Code.
Section 3.10 Liabilities. Except (i) as set forth in the Balance Sheet or
-----------
referred to in the footnotes thereto, (ii) as set forth in the October Balance
Sheet or referred to in the footnotes thereto, (iii) as set forth in the Public
Reports, (iv) as disclosed in Schedule 3.10 of the Disclosure Letter, or (v) as
otherwise contemplated by this Agreement, since the Balance Sheet Date and up to
and including the date hereof, neither the Company nor any of its subsidiaries
has incurred any material outstanding claims, liabilities or indebtedness (other
than trade payables incurred in the ordinary course of business), contingent or
otherwise, that would be required to be disclosed in the Company's consolidated
financial statements prepared in accordance with GAAP consistently applied,
other than (x) liabilities incurred subsequent to the Balance Sheet Date in the
ordinary course of business not involving borrowings by the Company or any of
its subsidiaries and (y) indebtedness incurred since the Balance Sheet Date
pursuant to the Company's working capital facility (the "Working Capital
---------------
Facility") as in effect as of the date hereof pursuant to the Credit Agreement
- --------
among the Company, various banks, and The Chase Manhattan Bank, as Agent, dated
as of June 30, 1997, as amended and restated (the "Credit Agreement").
----------------
Section 3.11 Broker's or Finder's Fee. Except as set forth on Schedule
------------------------
3.11 of the Disclosure Letter, no agent, broker, Person or firm acting on behalf
of the Sellers, the Company or any of their respective subsidiaries is, or will
be, entitled to any fee, commission or broker's or finder's fees from any of the
parties hereto, or from any Person controlling, controlled by, or under common
control with any of the parties hereto, in connection with this Agreement or any
of the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
------------------------------------------------
Section 4. Each of Parent and Sub hereby represents and warrants, jointly
and severally, to the Sellers as follows:
Section 4.1 Due Organization; Good Standing and Corporate Power. Parent is
---------------------------------------------------
a public company with limited liability duly organized and validly existing
under the laws of the Netherlands. Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
-9-
<PAGE>
Section 4.2 Authorization and Validity of Agreement. Each of Parent and
---------------------------------------
Sub has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Sub, and the consummation by each of them
of the transactions contemplated hereby, have been duly authorized by each of
the Executive and Supervisory Boards of Parent and the Board of Directors of
Sub. No other corporate action on the part of either of Parent or Sub is
necessary to authorize the execution, delivery and performance of this Agreement
by each of Parent and Sub and the consummation of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of Parent
and Sub and is a valid and binding obligation of each of Parent and Sub,
enforceable against each of Parent and Sub in accordance with its terms, except
that such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and general equitable principles (whether considered in a proceeding
at law or in equity).
Section 4.3 Consents and Approvals; No Violations. Other than in
-------------------------------------
connection with or in compliance with the provisions of (i) the HSR Act and
other Antitrust Laws, (ii) the Securities Act, (iii) the Exchange Act, (iv) the
"blue sky" laws of various states, and (v) applicable Alcohol and Drug Laws, the
execution and delivery of this Agreement by Parent and Sub and the consummation
by Parent and Sub of the transactions contemplated hereby will not: (1) violate
any provision of the certificate of incorporation or by-laws of Parent or Sub;
(b) violate any statute, ordinance, rule, regulation, order or decree of any
court or of any governmental or regulatory body, agency or authority applicable
to Parent or Sub or by which its properties or assets may be bound; (c) require
Parent or Sub to make or obtain any filing with, or permit, consent or approval
of, or give any notice to, any governmental or regulatory body, agency or
authority; or (d) result in a violation or breach of, conflict with, constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation, payment or acceleration) under, or
result in the creation of any Lien upon any of the properties or assets of
Parent or Sub under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, franchise, permit, agreement, lease,
franchise agreement or other instrument or obligation to which Parent or Sub is
a party or by which Parent or Sub or its properties or assets is bound, except
for such filings, permits, consents or approvals the absence of which could not
reasonably be expected to prevent or materially delay consummation of the
transactions contemplated by this Agreement.
Section 4.4 Broker's or Finder's Fee. No agent, broker, Person or firm
------------------------
acting on behalf of Parent or Sub is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by, or under common control with any of the parties
hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
Section 4.5 Financing. Parent will provide, or cause to be provided to
---------
Sub, the funds necessary to consummate the purchase and sale of the Stock in
accordance with the terms hereof.
-10-
<PAGE>
ARTICLE V
COVENANTS
---------
Section 5.1 Access to Information Concerning Properties and Records.
-------------------------------------------------------
During the period commencing on the date hereof and ending on the Closing Date,
the Sellers shall, and shall cause the Company and each of its subsidiaries to,
upon reasonable notice, afford Parent, Sub and good faith potential purchasers
of stores in connection with the obligations of the parties hereto pursuant to
Section 5.7(b), and their respective counsel, accountants, consultants and other
authorized representatives, reasonable access during normal business hours to
the employees, properties, books and records of the Company and each of its
subsidiaries in order that they may have the opportunity to make such reasonable
investigations as they shall desire of the affairs of the Company and each of
its subsidiaries and other information concerning the business, properties and
personnel of the Company and each of its subsidiaries as Parent and Sub may
reasonably request, provided that Parent and Sub shall not have the right to
-------- ----
conduct tests of the surface or subsurface soil and water beneath or about the
real property owned or used by the Company or any of its subsidiaries. The
Sellers shall, and shall cause the Company and each of its subsidiaries to,
cause its officers and employees to furnish such additional financial and
operating data and other information, and respond to such inquiries, as Parent
and Sub shall from time to time reasonably request. Notwithstanding anything in
this Section 5.1 to the contrary, neither the Company nor any of its
subsidiaries shall be required to provide such access to or otherwise disclose
such books, records or other information concerning their respective businesses
to Parent or Sub as would violate Antitrust Laws.
Section 5.2 Confidentiality. Each of Parent and Sub will hold and will
---------------
cause its officers, employees, auditors and other agents, representatives and
advisors to hold in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all documents and
information concerning the Company or any of its subsidiaries furnished to
Parent or Sub in connection with the transactions contemplated by this Agreement
(except to the extent that such information can be shown to have been (i)
previously known by Parent or Sub from sources other than the Company or any of
its subsidiaries, or its directors, officers, auditors or other agents,
representatives and advisors (ii) in the public domain through no fault of
Parent or Sub or (iii) later lawfully acquired by Parent or Sub on a non-
confidential basis from other sources who are not known by Parent or Sub to be
bound by a confidentiality agreement or otherwise prohibited from transmitting
the information to Parent or Sub by a contractual, legal or fiduciary
obligation) and will not release or disclose such information to any other
Person, except its auditors and other agents, representatives and advisors in
connection with this Agreement who need to know such information. If the
transactions contemplated by this Agreement are not consummated, such confidence
shall be maintained for a period of two years from the date hereof and, if
requested by or on behalf of Parent and Sub shall, and shall use all reasonable
efforts to cause their auditors and other agents, representatives and advisors
to, return to the Sellers or destroy all copies of written information furnished
by the Sellers or the Company or any of its subsidiaries or their respective
advisors to Parent and Sub or their auditors and other agents, representatives
and advisors. It is understood that Parent and Sub shall be deemed to have
satisfied their obligation to hold such information confidential if they
exercise the same care as they take to preserve confidentiality for their own
similar information.
-11-
<PAGE>
Section 5.3 Conduct of the Business of the Company and its Subsidiaries.
-----------------------------------------------------------
Except as contemplated by this Agreement, during the period from the date of
this Agreement until the Closing, the Sellers shall cause the Company and each
of its subsidiaries to conduct its operations in the ordinary course of
business, consistent with past practice and to use its best efforts to (v)
preserve intact its business organization, (w) maintain its material rights and
franchises, (x) keep available the services of its officers and employees, (y)
maintain satisfactory relationships with suppliers, distributors, customers and
others having business relationships with it and (z) to take measures to reduce
to zero any excess loss account (as determined in accordance with Treasury
Regulations Sections 1.1502-14, 1.1502-19 and 1.1502-32) reflected on the books
and records of the Company and its subsidiaries or as subsequently determined by
the Company. Without limiting the generality of and in addition to the
foregoing, except as set forth on Schedule 5.3 of the Disclosure Letter and
except as otherwise contemplated by this Agreement, prior to the time specified
in the preceding sentence, the Sellers shall cause the Company and each of its
subsidiaries not to, without prior written consent of Parent:
(a) amend its certificate of incorporation or by-laws or other
organizational documents in any way;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities;
(c) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock or redeem
or otherwise acquire any of its securities;
(d) (i) pledge or otherwise encumber shares of its capital stock; (ii)
except in the ordinary course of business consistent with past practices (x)
incur, assume or prepay any obligations with respect to any long-term debt,
letters of credit or short-term debt, other than indebtedness (A) incurred,
assumed or prepaid under the Working Capital Facility, (B) that is mandatorily
prepayable in accordance with its terms and (C) that is intercompany
indebtedness by and among any of the Company and any of its subsidiaries (other
than Pathmark Risk Management Corporation); (y) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for any material obligations of any other Person except any of its
wholly-owned subsidiaries; or (z) make any material loans, advances or capital
contributions to, or investments in, any other Person; or (iii) mortgage or
pledge any of its assets or create or permit to exist any material lien
thereupon that secures indebtedness for borrowed money;
(e) except as required by law or existing written agreements, enter into,
adopt or materially amend any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreements, trusts, plans, funds or other
arrangements of or for the benefit or welfare of any employee of the Company and
its subsidiaries, or (except for normal increases in the ordinary course of
business that are consistent with past practices) increase in any manner the
compensation or fringe benefits of any such employee or pay any benefit not
required by any existing plan and arrangement (including, without limitation,
the
-12-
<PAGE>
granting of stock options, stock appreciation rights, shares of restricted stock
or performance units) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing;
(f) transfer, sell, lease, license or dispose of any lines of business,
subsidiaries, divisions, operating units or facilities outside the ordinary
course of business or enter into any material commitment or transaction outside
the ordinary course of business other than any such transactions between or
among any of the Company and its subsidiaries (other than Pathmark Risk
Management Corporation);
(g) other than any such transactions between or among any of the Company
and its subsidiaries (other than Pathmark Risk Management Corporation, except
with respect to any transaction intended to comply with Section 5.3(z)), acquire
or agree to acquire, by merging or consolidating with, by purchasing an equity
interest in or a portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets of any
other Person (other than the purchase of assets in the ordinary course of
business and consistent with past practice), in each case where such action
would be material to the Condition of the Company and its subsidiaries taken as
a whole;
(h) except as may be required by law or existing written contractual or
collective bargaining agreements or in connection with the termination of any
employee, take any action to terminate or materially amend, in a manner adverse
to the Company or any of its subsidiaries, any of its pension plans or retiree
medical plans with respect to or for the benefit of any employee of the Company
or any of its subsidiaries;
(i) materially modify, amend or terminate any significant contract to
which it is a party or waive any of its material rights or claims except in the
ordinary course of business consistent with past practice;
(j) effect any material change in any of its methods of accounting, except
as may be required by law or generally accepted accounting principles;
(k) (i) take any action, engage in any transaction or enter into any
agreement which would cause any of the representations or warranties set forth
in Article III that are subject to, or qualified by, a "material adverse
effect", "material adverse change" or other materiality qualification to be
untrue as of the Closing, or any such representations and warranties that are
not so qualified to be untrue in any respect which would otherwise have a
material adverse effect on the Condition of the Company and its subsidiaries
taken as a whole or (ii) purchase or acquire, or offer to purchase or acquire,
any shares of capital stock of the Company;
(l) take any action including: without limitation, the adoption of any
shareholder rights plan or amendments to the Certificate of Incorporation, which
would, directly or indirectly, restrict or impair the ability of Sub to vote, or
otherwise to exercise the rights and receive the benefits of a stockholder with
respect to, securities of the Company that may be acquired or
-13-
<PAGE>
controlled by Sub or permit any stockholder to acquire securities of the Company
on a basis not available to Sub in the event that Sub were to acquire any shares
of Stock; and
(m) enter into a legally binding commitment with respect to, or any
agreement to take, any of the foregoing actions.
Notwithstanding anything else contained in this Section 5.3 to the
contrary, the following shall be permitted: (1) the acquisition of direct or
indirect interests in real property intended for the operation of stores of the
Company or any of its subsidiaries (other than Pathmark Risk Management
Corporation), the improvement of real property, the remodeling of stores of the
Company or any of its subsidiaries (other than Pathmark Risk Management
Corporation) and the obtaining of financing therefor in the ordinary course of
business consistent with past practice, (2) the negotiation and entering into by
the Company or any of its subsidiaries (other than Pathmark Risk Management
Corporation) of amendments to existing leases for real property in the ordinary
course of business, (3) the negotiation in good faith and entering into new
collective bargaining agreements by the Company that replace agreements that
have expired or will expire pursuant to their terms within 90 days from the date
of the commencement of negotiations, (4) the marketing and sale of certain real
estate not used in the supermarket business by the Company or any of its
subsidiaries (other than Pathmark Risk Management Corporation) as set forth on
Schedule 5.3 of the Disclosure Letter, provided that no such sale (other than a
-------- ----
sale pursuant to a binding agreement that the Company is a party to on the date
hereof) shall be agreed to without prior adequate consultation with Parent, (5)
entering into amendments to the Credit Agreement to modify covenants as required
(other than modifications, except for a possible increase in the interest rate,
which will make any one or more covenants more restrictive), (6) entering into
an agreement implementing the amendments to the Supply Agreement agreed to in a
memorandum of understanding effective December 27, 1998 by and between the
Company and C&S Wholesale Grocers, Inc. and (7) the Company may distribute that
certain indebtedness of PTK owed to the Company evidenced by a promissory note
dated May 12, 1998 in the face amount of $53,302,328.52 as a dividend to PTK.
Section 5.4 Best Efforts. Subject to the terms and conditions provided
------------
herein, each of the Sellers, Parent and Sub shall, and the Sellers shall cause
the Company and each of its subsidiaries to, cooperate and use their respective
best efforts to take, or cause to be taken, all appropriate action, and to make,
or cause to be made, all filings necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, their respective
best efforts to obtain, prior to the Closing Date, all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and parties to contracts with the Sellers, the Company or any of
their respective subsidiaries as are necessary for consummation of the
transactions contemplated by this Agreement; provided, however, that no loan
-------- ------- ----
agreement or contract for borrowed money shall be repaid except as currently
required by its terms, in whole or in part, and no material contract shall be
amended to increase the amount payable thereunder or otherwise to be materially
more burdensome to the Company or any of its subsidiaries in order to obtain any
such consent, approval or authorization without first obtaining the written
approval of Parent.
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<PAGE>
Section 5.5 No Solicitation of Other Offers. (a) The Sellers shall not,
-------------------------------
and the Sellers shall cause the Company and each of its subsidiaries not to,
directly or indirectly, take (or authorize or permit their respective officers,
directors, employees, representatives, consultants, investment bankers,
attorneys, accountants or other agents or Affiliates, to so take) any action to
(i) solicit, initiate or encourage the submission of any Acquisition Proposal,
(ii) enter into an agreement of merger or other business combination or an
agreement for the sale or other disposition by the Company or any of its
subsidiaries of a material amount of assets or a sale of shares of capital stock
whether by merger or other business combination or tender or exchange offer or
(iii) participate in any way in discussions or negotiations with, or furnish any
information to, any Person (other than Parent or Sub) in connection with, or
take any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal.
"Acquisition Proposal" shall mean any proposed merger or other business
--------------------
combination, sale or other disposition of any material amount of assets, sale of
shares of capital stock, tender offer or exchange offer or similar transactions
involving the Company or any of its subsidiaries.
(b) The Board of Directors of each of the Sellers and the Company shall not
take any action to withdraw or modify in a manner adverse to Parent or Sub, or
take a position inconsistent with, its approvals or recommendation of this
Agreement or to recommend another Acquisition Proposal and shall not resolve to
do any of the foregoing.
(c) In addition to the obligations of the Sellers set forth in paragraph
(a), the Sellers shall, and the Sellers shall cause the Company and each of its
subsidiaries to, promptly advise Parent of any request for information or of any
Acquisition Proposal, or any proposal with respect to any Acquisition Proposal,
the material terms and conditions of such Acquisition Proposal, and the identity
of the Person making any such Acquisition Proposal or inquiry.
(d) Immediately following the execution of this Agreement, the Sellers
shall, and shall cause the Company and each of its subsidiaries and each of
their respective officers, directors, employees, representatives, consultants,
investment bankers, attorneys, accountants or other agents or Affiliates to,
cease any existing discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal and request each Person
which has heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company or any of its subsidiaries or any portion
thereof to return all confidential information heretofore furnished to such
Person by or on behalf of the Company or any of its subsidiaries.
Section 5.6 Notification of Certain Matters. (a) The Sellers shall give
-------------------------------
prompt notice to Parent of any notice of, or other communication relating to, a
material default or event that, with notice or lapse of time or both, would
become a material default, received by the Sellers subsequent to the date of
this Agreement and prior to the Closing, under any material contract to which
the Company or any of its subsidiaries is a party or is subject. The Sellers
and Parent shall give prompt notice to each other of (i) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement and (ii) the occurrence or non-occurrence of any events the occurrence
or non-occurrence of which would cause either (w) a representation or warranty
con-
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<PAGE>
tained in this Agreement, in any Schedule to the Disclosure Letter or in any
certificate delivered pursuant to this Agreement and not qualified by any
materiality standard, to be untrue or inaccurate in any material respect, (x)
any other representation or warranty contained in this Agreement, in any
schedule to the Disclosure Letter or in any certificate delivered pursuant to
this Agreement, to be untrue or inaccurate in any respect, (y) any of the
conditions set forth in Article VI or VII to be unsatisfied in any material
respect at the Closing; provided that the parties hereto need not give notice
-------- ----
with respect to events that are reported in the financial or general interest
newspapers that do not specifically relate to the Sellers, the Company or any of
its subsidiaries or Parent or their respective businesses or (z) any failure to
comply with or satisfy any covenants, condition or agreement to be complied with
or satisfied by it hereunder.
(b) The Sellers shall provide Parent with (i) the audited consolidated
balance sheet of the Company and its subsidiaries as of January 30, 1999 and the
related statements of operations, shareholder's deficiency and cash flows for
the fiscal year then ended, all as certified by the Company's independent
accountants, within three (3) business days after preparation and certification
thereof, (ii) the unaudited consolidated balance sheet of the Company and its
subsidiaries, and the related consolidated statements of operations,
shareholders' deficiency and cash flows of the Company and its consolidated
subsidiaries, for each fiscal quarter ending prior to the Closing, within forty-
five days after the end of each such fiscal quarter and (iii) the unaudited
statement of operations of the Company for each fiscal month ending prior to the
Closing, within thirty days after the end of each such fiscal month. In
addition, subject to compliance with the Antitrust Laws, the Sellers shall cause
the Company to deliver to Parent on a weekly basis its internal sales overview
reports promptly as they are prepared by the Company for each such week.
Section 5.7 Antitrust Filings. (a) Parent, Sub and the Sellers shall (i)
-----------------
take promptly all actions necessary to make the filings required of Parent, Sub
or any of their Affiliates under the applicable Antitrust Laws (as such term is
defined in Section 5.7(d)), (ii) comply at the earliest practicable date with
any request for additional information or documentary material received by
Parent, the Sellers or any of their respective Affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
the HSR Act and (iii) cooperate in connection with any filing under applicable
Antitrust Laws and in connection with resolving any investigation or other
inquiry concerning the transactions contemplated by this Agreement commenced by
any of the Federal Trade Commission, the Antitrust Division of the Department of
Justice or state attorneys general.
(b) Each of the Sellers, Parent and Sub shall use all best efforts to
resolve such objections, if any, as may be asserted with respect to any
transaction contemplated by this Agreement under any Antitrust Law. If any
administrative, judicial or legislative action or proceeding is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any Antitrust Law, the Company, Parent and Sub shall
cooperate to contest and resist any such action or proceeding, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) that is in effect and
that restricts, prevents or prohibits consummation of the any transaction
contemplated by this Agreement, including, without limitation, by pursuing all
reasonable avenues of administrative and judicial appeal.
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<PAGE>
(c) Each of the Sellers, Parent and Sub shall promptly inform each other of
any material communication made to, or received by such party from, the Federal
Trade Commission, the Antitrust Division of the Department of Justice or any
other governmental or regulatory authority regarding any of the transactions
contemplated hereby.
(d) "Antitrust Law" means the Sherman Act, as amended, the Clayton Act, as
-------------
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal and state statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
Section 5.8 Transfer Taxes. The Sellers and Parent shall cooperate in the
--------------
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees and any similar taxes which become payable in
connection with the transactions contemplated by this Agreement (together with
any related interest, penalties or additions to tax, "Transfer Taxes"). All
--------------
Transfer Taxes shall be paid by the Company and expressly shall not be a
liability of the Sellers.
Section 5.9 Employee Benefits. During the period commencing at the
-----------------
Closing and ending on the first anniversary thereof, Parent shall cause the
current and former employees of the Company and its subsidiaries who are on the
Closing Date entitled to receive compensation or any benefits from Pathmark or
any of its subsidiaries to be provided with compensation and employee benefit
plans (other than stock option or other plans involving the potential issuance
of securities of the Company, Parent or any of their respective subsidiaries,
and incentive compensation or similar programs) which in the aggregate are not
materially less favorable than those currently provided to such employees by the
Company and its subsidiaries, to the extent permitted under laws and regulations
in force from time to time, provided that employees covered by collective
-------- ----
bargaining agreements need not be provided with such benefits, and provided,
--------
further, that Parent reserves the right to review all employee benefits after
- ------- ----
the Closing and to make such changes as it deems appropriate.
Section 5.10 Directors' and Officers' Insurance; Indemnification. (a) The
---------------------------------------------------
certificate of incorporation and the by-laws of the Company shall contain the
provisions with respect to indemnification and exculpation from liability set
forth in the Company's certificate of incorporation and by-laws on the date of
this Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Closing in any manner that would
adversely affect the rights thereunder of individuals who on or prior to the
Closing were directors, officers, employees or agents of the Company, unless
such modification is required by law. Parent agrees that all rights of
indemnification now existing in favor of any director, officer, employee, or
agent of the subsidiaries of the Company as provided in their respective
charters or by-laws on the date of this Agreement shall survive the Merger and
shall continue in full force and effect for a period of six years from the
Effective Time
(b) The Company shall for the six year period commencing at the Closing
either (x) maintain in effect the Company's current directors' and officers'
liability insurance covering those
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Persons who are currently covered on the date of this Agreement by the Company's
directors' and officers' liability insurance policy (a copy of which has been
heretofore delivered to Parent) (the "Indemnified Parties"); provided, however,
------------------- -------- -------
that in no event shall Parent be required to expend in any one year an amount in
excess of 150% of the annual premiums currently paid by the Company for such
insurance which the Company represents to be $323,000; provided further, that if
---------------- ----
the annual premiums of such insurance coverage exceed such amount, the Company
shall be obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount; provided further, that the Company may
---------------- ----
substitute for the Company policies, policies with at least the same coverage
containing terms and conditions which are no less advantageous and provided that
said substitution does not result in any gaps or lapses in coverage with respect
to matters occurring prior to the Closing or (y) cause the Parent's directors'
and officers' liability insurance then in effect to cover those Persons who are
covered on the date of this Agreement by the Company's directors' and officers'
liability insurance policy with respect to those matters covered by the
Company's directors' and officers' liability policy.
(c) Parent agrees to indemnify, and to cause the Company to indemnify, all
Indemnified Parties to the fullest extent permitted by applicable law with
respect to all acts and omissions arising out of such individuals' services as
officers, directors, employees or agents of the Company or any of its
subsidiaries or as trustees or fiduciaries of any plan for the benefit of
employees of the Company or any of its subsidiaries, occurring prior to the
Closing including, without limitation, the transactions contemplated by this
Agreement. Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including without
limitation, the transactions contemplated by this Agreement, occurring prior to,
and including, the Closing, Parent, from and after the Closing, will pay as
incurred such Indemnified Party's reasonable legal and other expenses (including
the cost of any investigation and preparation) incurred in connection therewith.
Subject to Section 5.11(d) below, Parent shall pay all reasonable expenses,
including attorneys' fees, that may be incurred by any Indemnified Party in
enforcing this Section 5.11 or any action involving an Indemnified Party
resulting from the transactions contemplated by this Agreement. If the
indemnity provided for in this Section 5.11 is not available with respect to any
Indemnified Party, then the Company and the Indemnified Party shall contribute
to the amount payable in such proportion as is appropriate to reflect relative
faults and benefits.
(d) Any Indemnified Party wishing to claim indemnification under paragraph
(a) or (c) of this Section 5.11, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent thereof. In the event
of any such claim, action, suit, proceeding or investigation (whether arising
before or after the Closing), (i) Parent or the Company shall have the right,
from and after the Closing, to assume the defense thereof (with counsel engaged
by Parent or the Company to be reasonably acceptable to the relevant Indemnified
Party) and Parent shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof, (ii) such Indemnified
Party will cooperate in the defense of any such matter and (iii) Parent or the
Company shall not be liable for any settlement effected without its prior
written consent; and provided further that Parent shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination
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<PAGE>
shall have become final, that the indemnification of such Indemnified Party in
the manner contemplated hereby is prohibited by applicable law.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF SUB
------------------------------------------
Section 6. Conditions Precedent to Obligations of Parent and Sub. The
-----------------------------------------------------
respective obligations of Parent and Sub to purchase the Stock is subject to the
satisfaction or waiver (subject to applicable law) at or prior to the Closing of
each of the following conditions:
Section 6.1 Truth of Representations and Warranties. Each representation
---------------------------------------
or warranty of the Sellers contained in this Agreement that is subject to, or
qualified by, "material adverse effect", "material adverse change" or other
materiality qualification shall be true and correct, in each case as if such
representation or warranty was made at the Closing, any representation or
warranty that is not so qualified shall be true and correct in any respect which
would otherwise have a material adverse effect on the Condition of the Company
and its subsidiaries taken as a whole, in each case as if such representation or
warranty was made at the Closing except as to any such representation or
warranty which speaks as of a specific date or for a specific period, which must
be true and correct in the foregoing respects as of such specific date or
period, and Parent shall have received a certificate signed by an executive
officer of the Company, dated the Closing Date, to such effect.
Section 6.2 Performance of Agreements. Each of the Sellers shall have
-------------------------
performed in all material respects all obligations and complied in all material
respects with all agreements and covenants to be performed or complied with by
it under this Agreement and, in the case only of failures to perform any
agreement or covenant of the Sellers pursuant to Section 5.3 (other than clause
(c) thereof), such failure to perform did or would not have a material adverse
effect on the Condition of the Company and its subsidiaries taken as a whole or
materially adversely effect the ability of Parent or Sub to consummate the
transactions contemplated by this Agreement or have a material adverse effect on
the value of the Company and its subsidiaries taken as a whole and Parent shall
have received a certificate signed by an executive officer of the Company, dated
the Closing Date, to such effect.
Section 6.3 HSR Act. Any waiting period (and any extension thereof) under
-------
the HSR Act applicable to the transactions contemplated by this Agreement shall
have expired or been terminated.
Section 6.4 Injunction. 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, restrains, enjoins or restricts the
consummation of the transactions contemplated by this Agreement and which is in
effect at the Closing, provided that, in the case of a decree, injunction or
-------- ----
other order, each of the parties shall have used all reasonable efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any decree, injunction or other order that may be entered.
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<PAGE>
Section 6.5 Statutes. No statute, rule, regulation, executive order,
--------
decree or order of any kind shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which prohibits, restrains,
enjoins or restricts the consummation of the transactions contemplated by this
Agreement or has the effect of making any of the transactions contemplated by
this Agreement illegal.
Section 6.6 No Material Adverse Effect. Since the date hereof, no event
--------------------------
shall have occurred such that there would be a material adverse change in the
Condition of the Company and its subsidiaries taken as a whole.
ARTICLE VII
CONDITIONS PRECEDENT TO THE
----------------------------
OBLIGATIONS OF THE SELLERS
--------------------------
Section 7. Conditions Precedent to Obligations of the Sellers. The
--------------------------------------------------
obligations of the Sellers to sell the Stock to Sub is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
Section 7.1 Truth of Representations and Warranties. The representations
---------------------------------------
and warranties of Parent and Sub contained in this Agreement shall be true and
correct in all material respects as if such representations and warranties were
made at the Closing, and the Company shall have received a certificate signed by
an executive officer of Parent, dated the Closing Date, to such effect.
Section 7.2 Performance of Agreements. Each of Parent and Sub shall have
-------------------------
performed in all material respects all obligations and complied in all materials
respects with all agreements and covenants to be performed and complied with by
it under this Agreement, and the Company shall have received a certificate
signed by an executive officer of Parent, dated the Closing Date, to such
effect.
Section 7.3 HSR Act Waiting Periods. All applicable waiting periods under
-----------------------
the HSR Act with respect to the transactions contemplated by this Agreement
shall have expired or been terminated.
Section 7.4 Injunction. 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, restrains, enjoins or restricts the
consummation of the transactions contemplated by this Agreement and which is in
effect at the Closing, provided that, in the case of a decree, injunction or
-------- ----
other order, each of the parties shall have used all reasonable efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any decree, injunction or other order that may be entered.
Section 7.5 Statutes. No statute, rule, regulation, executive order,
--------
decree or order of any kind shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which prohibits, restrains,
enjoins or restricts the consummation of the transactions
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<PAGE>
contemplated by this Agreement or has the effect of making any of the
transactions contemplated by this Agreement illegal.
ARTICLE VIII
TERMINATION AND ABANDONMENT
Section 8.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated hereby may be abandoned, at any time prior to the
Closing:
(a) by mutual written consent of SMG-II, on the one hand, and of Parent,
on the other hand;
(b) by either Parent, on the one hand, or SMG-II, on the other hand, if
any governmental or regulatory agency shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree or ruling or other action shall have become final and nonappealable;
(c) by either Parent, on the one hand, or the Company, on the other hand,
if the Closing shall not have occurred by December 15, 1999, unless the Closing
shall not have occurred because of a material breach of any representation,
warranty, obligation, covenant, agreement or condition set forth in this
Agreement on the part of the party seeking to terminate this Agreement; and
(d) by Parent, at any time within 30 days after delivery to it pursuant to
Section 5.7(b)(i) of the audited consolidated financial statements of each of
the Company and of Pathmark for the fiscal year ended January 30, 1999, in the
event that such financial statements disclose (i) a consolidated shareholder's
deficiency of (x) the Company greater than $1,453,000,000 or (y) Pathmark
greater than $1,188,400,000, in each case as of the end of such fiscal year or
(ii) net losses of (x) the Company materially greater than $29,321,000 or (y)
Pathmark materially greater than $28,420,000, in each case for the fiscal year
then ended.
Section 8.2 Automatic Termination. This Agreement shall automatically be
---------------------
terminated and the transactions contemplated hereby shall automatically be
abandoned if, at any time prior to the Closing, all of the conditions set forth
in Articles VI and VII of the Merger Agreement are satisfied immediately prior
to the Merger Closing.
Section 8.3 Effect of Termination. In the event of the termination of
---------------------
this Agreement pursuant to Section 8.1 or Section 8.2 (other than in the case of
termination pursuant to Section 8.1(a)) hereof by Parent, on the one hand, or
SMG-II, on the other hand, written notice thereof shall forthwith be given to
the other party specifying the provision hereof pursuant to which this Agreement
is terminated, and this Agreement shall become void and have no effect, and
there shall be no liability hereunder on the part of Parent, Sub or SMG-II,
except that Sections 3.12, 5.2, 5.3(l), 9.1, 9.5 and this Section 8.3 shall
survive any termination of this Agreement. Nothing
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<PAGE>
in this Section 8.3 shall relieve any party to this Agreement of liability for
breach of this Agreement.
ARTICLE IX
TAX MATTERS
-----------
Section 9.1 Tax Returns. SMG-II shall have the obligation to prepare and
-----------
timely file, or cause to be prepared and timely filed, all returns, statements,
forms and reports for Taxes ("Returns") that are required by law to be filed
-------
by, or with respect to, the Company or any of its subsidiaries with respect to
any taxable year or period ending on or before and, with respect to any taxable
year or period beginning before and ending after the Closing Date, the portion
of such taxable year or period ending on and including the Closing Date ("Pre-
Closing Period"); provided, however, with respect to Returns to be filed by SMG-
-------- -------
II pursuant to this Section 9.1 for the Pre-Closing Period, (i) SMG-II shall
provide Parent with draft Federal, state, local and foreign income tax returns
that include the Company or any of its subsidiaries at least thirty (30) days
prior to the due date for filing such Returns, (ii) at least fifteen (15) days
prior to the due date for the filing of such Returns, Parent shall notify SMG-II
of the existence of any objection Parent may have to any items set forth on such
draft Returns, and (iii) if, after consulting in good faith, SMG-II and Parent
are unable to resolve such objection(s), such objection(s) shall be resolved by
treating items on such Returns in a manner consistent with the past practices of
the Company and its subsidiaries, if any, with respect to such items unless
otherwise required by law (and if no past practice exists the issue shall be
resolved in favor of the party that would bear the relevant Tax liability
hereunder). At the request of SMG-II, the Company will prepare the Returns
described in this Section 9.1 (or any such Return specified), including any
Returns required to be filed by SMG-II (or any of its subsidiaries) that
includes the Company or any of its subsidiaries for the tax year of the SMG-II
consolidated group that includes the Closing Date, in a manner consistent with
this Section 9.1. Parent and SMG-II agree to the extent permitted by applicable
law to elect with the relevant taxing authority to treat for all purposes the
Closing Date as the last day of a taxable period of the Company and its
subsidiaries.
Section 9.2 Payment of Taxes. (a) SMG-II and its subsidiaries other than
----------------
the Company and its subsidiaries (the "SMG-II Group") shall be responsible and
liable for the timely payment of any and all Taxes imposed on or with respect to
the properties, income and operations of the SMG-II Group, including any gain to
the SMG-II Group resulting from the sale of the Stock.
(b) The Company shall pay SMG-II the amount of any Taxes allocated to the
Company and its subsidiaries in connection with the filing of a Return pursuant
to Section 9.1 above (including Taxes that may become payable as the result of
an adjustment by any taxing authority in respect of a Pre-Closing Period) to the
extent not already paid by the Company or any of its subsidiaries on or before
the Closing Date. To the extent reasonably practicable, at least ten (10) days
prior to the due date for the filing of any such Return, SMG-II shall provide to
Parent its calculation of the amount of such Taxes allocable to the Company and
its subsidiaries pursuant to this Section 9.2(b). No later than five (5) days
prior to the due date for the filing of such Return, Parent shall notify SMG-II
of any reasonable objections Parent may have to SMG-II's calculation
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<PAGE>
of the amount of such Taxes allocable to the Company and its subsidiaries
pursuant to this Section 9.2(b), and, at such time, the Company and its
subsidiaries shall pay to SMG-II the amount of Taxes allocable to the Company
and its subsidiaries pursuant to this Section 9.2(b) as determined by SMG-II.
Any objection Parent may have with respect to SMG-II's calculation of the amount
of such Taxes allocable to the Company and its subsidiaries pursuant to this
Section 9.2(b) shall not be cause for any failure of the Company and its
subsidiaries to make payments to Parent pursuant to this Section 9.2(b). Parent
and SMG-II agree to consult and resolve in good faith any such objection, it
being understood and agreed that in the absence of any such resolution, any and
all objections shall be resolved by treating items, wherever possible, in a
manner consistent with the past practices of the Company and its subsidiaries
with respect to such items unless otherwise required by law. In the event Parent
shall receive SMG-II's calculation of the amount of such Taxes allocable to the
Company and its subsidiaries pursuant to this Section 9.2(b) and a draft of the
relevant portions of such Return less than ten (10) days prior to the due date
for filing such Return, the Company and its subsidiaries shall nevertheless
endeavor in good faith to make payment to SMG-II by such due date.
(c) The SMG-II Group shall pay the Company the amount of any Taxes that
are refunded, or in respect of which the SMG-II Group obtains a credit usable by
the SMG-II Group as an offset against taxes owed by the SMG-II Group, as the
result of an adjustment by any taxing authority that are allocable to the
Company or any of its subsidiaries (net of any Taxes that are owed to any taxing
authority as the result of an adjustment by such authority relating to a Pre-
Closing Period that are allocable to the Company or any of its subsidiaries).
Section 9.3 Controversies. (a) Each party shall promptly notify the
-------------
other in writing upon receipt by such party or any Affiliate of such party of
written notice of any inquiries, claims, assessments, audits or similar events
with respect to Taxes for which the other party may be liable (any such inquiry,
claim, assessment, audit or similar event, a "Tax Matter").
----------
(b) Parent shall have the sole right to control any Tax Matter, initiate
any claim for refund with respect to the Company or any of its subsidiaries, and
contest, resolve and defend against any assessment for additional Taxes, notice
of Tax deficiency or other adjustment of Taxes of, or relating to, the income,
assets or operations of the Company or any of its subsidiaries for all taxable
periods to the extent that such Tax Matter or claim does not have an adverse
impact on the SMG-II Group (or any of its members). SMG-II shall have the sole
right to control any Tax Matter, initiate any claim for refund with respect to
the SMG-II Group, and contest, resolve and defend against any assessment for
additional Taxes, notice of Tax deficiency or other adjustment of Taxes of, or
relating to, the income, assets or operations of the SMG-II Group (or any of its
members) for all taxable periods to the extent that such Tax Matter or claim
does not have an adverse impact on the Company or any of its subsidiaries.
Section 9.4 Amended Returns. Neither party shall file or cause to be
---------------
filed any amended Return or claims for refund that would result in an increased
Tax liability of the other party without the prior written consent of such other
party, which consent shall not be unreasonably withheld.
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<PAGE>
Section 9.5 Prior Tax Agreements. This Agreement terminates and
--------------------
supersedes any and all of the tax sharing, allocation, indemnification or
similar agreements, arrangements or undertakings in effect on the Closing Date
as between the SMG-II Group or any predecessor or Affiliate thereof, on the one
hand, and the Company and any of its subsidiaries, on the other hand, for all
Taxes imposed by any government or taxing authority, regardless of the period in
which such Taxes are imposed.
Section 9.6 Post-Closing Access and Cooperation. (a) From and after the
-----------------------------------
Closing Date, SMG-II agrees, and agrees to cause each of its subsidiaries, to
permit Parent or a representative of Parent to have reasonable access, during
normal business hours, to the books and records of the SMG-II Group, to the
extent that such books and records relate to a Pre-Closing Period, and
personnel, for the purpose of enabling Parent to (i) prepare the Returns
specified in Section 9.1 and (ii) investigate or contest any Tax Matter which
Parent has the authority to conduct under Section 9.3.
(b) From and after the Closing Date, Parent agrees, and agrees to cause the
Company and each of its subsidiaries, to permit SMG-II to have reasonable
access, during normal business hours, to the books and records of the Company
and its subsidiaries, to the extent that such books and records relate to a Pre-
Closing Period, and personnel, for the purpose of enabling SMG-II to (i) prepare
the Returns specified in Section 9.1 and (ii) investigate or contest any Tax
Matter which SMG-II has the authority to conduct under Section 9.3.
ARTICLE X
MISCELLANEOUS
Section 10.1 Fees and Expenses. All costs and expenses incurred in
-----------------
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, except that the Company shall pay the costs and expenses of SMG-II and
PTK.
Section 10.2 Representations and Warranties. The respective
------------------------------
representations and warranties of the Sellers, on the one hand, and Parent and
Sub, on the other hand, contained herein or in any certificates or other
documents delivered prior to or at the Closing shall not be deemed waived or
otherwise affected by any investigation made by any party. Each and every such
representation and warranty shall expire with, and be terminated and
extinguished by, the Closing and thereafter none of the Sellers, Parent or Sub
shall be under any liability whatsoever with respect to any such representation
or warranty. This Section 10.2 shall have no effect upon any other obligation
of the parties hereto, whether to be performed before or after the Closing.
Section 10.3 Extension; Waiver. At any time prior to the Closing, the
-----------------
parties hereto, by action taken by or on behalf of the respective Boards of
Directors of SMG-II, PTK, Parent or Sub, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or
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conditions contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
Section 10.4 Public Announcements. The Sellers, on the one hand, and
--------------------
Parent and Sub, on the other hand, agree to consult promptly with each other
prior to issuing any press release or otherwise making any public statement with
respect to the transactions contemplated hereby, and shall not issue any such
press release or make any such public statement prior to such consultation and
review by the other party of a copy of such release or statement, unless
required by applicable law.
Section 10.5 Governing Law. This Agreement, and the legal relations
-------------
between the parties hereto, shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements executed and to
be performed solely within such State.
Section 10.6 Captions. The Article and Section captions used herein are
--------
for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 10.7 Notices. Any notice, delivery or other communication
-------
required or permitted under this Agreement shall be sufficiently given if
delivered in person or sent by telecopy (with receipt confirmed) or by
registered or certified mail, postage prepaid, addressed as follows:
If to either Parent or Sub:
Koninklijke Ahold NV
Albert Heijnweg 1
1507 EH Zaandam, P.O. Box 33
1500 EA Zaandam, The Netherlands
Telecopier: 31-75-659-83-66
Attention: Paul P.J. Butzelaar, Esq.
Ton van Tielraden, Esq.
and
White & Case
1155 Avenue of the Americas
New York, New York 10036
Telecopier: (212) 354-8113
Attention: John M. Reiss, Esq.
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<PAGE>
If to the Sellers:
c/o SMG-II Holdings Corporation
200 Milik Street
Carteret, NJ 07008-1194
Telecopier: (732) 499-3460
Attention: James Donald
Marc A. Strassler, Esq.
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022-7179
Telecopier: (212) 848-7179
Attention: Spencer D. Klein, Esq.
Rohan Weerasinghe, Esq.
or to such other person as shall be designated in writing by any such party, and
such notice or communication shall be deemed to have been given as of the date
so delivered, sent by telecopier or mailed.
Section 10.8 Binding Effect; Benefit; Assignment. This Agreement shall
-----------------------------------
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, that Sub may assign and
-------- -------
delegate, in its sole discretion, its rights, interests and obligations
hereunder to any direct or indirect wholly-owned subsidiary of Parent.
Notwithstanding anything contained in this Agreement to the contrary, except for
the provisions of Section 5.10 (the "Third Party Provisions"), nothing in this
----------------------
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto or their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. The Third Party Provisions may be enforced by the beneficiaries
thereof.
Section 10.9 Counterparts. This Agreement may be executed in two or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Agreement.
Section 10.10 Entire Agreement. This Agreement, including the other
----------------
documents entered into in connection herewith, contains the entire understanding
of the parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
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<PAGE>
Section 10.11 Amendments. This Agreement may not be changed, amended,
----------
waived, or modified orally, but only by an agreement in writing signed by the
parties hereto.
Section 10.12 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon a determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the maximum extent
possible.
Section 10.13 Disclosure Letter. The parties hereto acknowledge that
-----------------
certain matters set forth in the Disclosure Letter are included for
informational purposes only, notwithstanding the fact that, because they do not
rise above applicable materiality thresholds or otherwise, they would not be
required to be set forth therein by the terms of this Agreement and that
disclosure of such matters shall not be taken as an admission by the Sellers
that such disclosure is required to be made under the terms of any provision of
this Agreement.
Section 10.14 Submission to Jurisdiction; Waiver of Jury Trial. The
------------------------------------------------
parties hereby submit to the jurisdiction of the United States District Court
for the Southern District of New York and of any New York State Court sitting in
the City of New York for purposes of all legal proceedings which may arise
hereunder or under any of the other documents entered into in connection
herewith. The parties irrevocably waive, to the fullest extent permitted by
law, any objection which it may have or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
The parties hereby consent to process being served in any such proceeding by the
mailing of a copy thereof by registered or certified mail, postage prepaid, to
their respective addresses specified in Section 10.7 or in any other manner
permitted by law. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER DOCUMENTS ENTERED INTO IN CONNECTION HEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OF ANY
PARTY.
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<PAGE>
IN WITNESS WHEREOF, each party has caused its corporate name to be hereunto
subscribed by its officer thereunto duly authorized, all as of the day and year
first above written.
KONINKLIJKE AHOLD N.V.
By: /s/ Robert G. Tobin
-----------------------------------
Name: R.G. Tobin
Title: Executive Vice President
AHOLD ACQUISITION, INC.
By: /s/ Robert G. Tobin
-----------------------------------
Name: R.G. Tobin
Title: President
SMG-II HOLDINGS CORPORATION
By: /s/ James L. Donald
-----------------------------------
Name: James L. Donald
Title: Chairman, President and
Chief Executive Officer
PTK HOLDINGS, INC.
By: /s/ James L. Donald
-----------------------------------
Name: James L. Donald
Title: Chairman, President and
Chief Executive Officer
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