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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE TO
Tender Offer Statement
Under Section 14(d)(1) or 13(e)(1) of the Securities Exchange Act of 1934
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U.S. Foodservice
(Name of Subject Company)
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Koninklijke Ahold N.V. (Royal Ahold)
Snow Acquisition, Inc.
(Names of Filing Persons)
Common Stock, par value $.01 per share
(Title of Class of Securities)
90331R101
(CUSIP Number of Class of Securities)
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Ton van Tielraden, Esq.
Koninklijke Ahold N.V.
Albert Heijnweg 1
1507 EH Zaandam
The Netherlands
011-31-75-659-9111
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Filing Persons)
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Copy to:
John M. Reiss, Esq.
Oliver C. Brahmst, Esq.
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
(212) 819-8200
CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee
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$2,814,613,776 $562,922.76
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* Based on the offer to purchase all of the outstanding shares of Common Stock
of the Subject Company at $26.00 cash per share and 108,254,376 shares of
Common Stock outstanding or represented by stock options and warrants, as of
March 3, 2000.
[_]Check the 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:
Form or Registration No:
Filing Party:
Date Filed:
[_]Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X]third-party tender offer subject to Rule 14d-1.
[_]issuer tender offer subject to Rule 13e-4.
[_]going-private transaction subject to Rule 13e-3.
[_]amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [_]
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This Tender Offer Statement on Schedule TO ("Schedule TO") relates to the
offer by Snow Acquisition, Inc. (the "Purchaser"), a Delaware corporation, and
an indirect wholly owned subsidiary of Koninklijke Ahold N.V. ("Parent"), a
public company with limited liability incorporated under the laws of The
Netherlands with its corporate seat in Zaandam (Municipality Zaanstad), The
Netherlands, to purchase all of the issued and outstanding shares of common
stock, par value $.01 per share, of U.S. Foodservice (the "Company"),
including the associated preferred stock purchase rights issued pursuant to
the Amended and Restated Rights Agreement, dated as of October 4, 1999 and
amended as of March 6, 2000, by and between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (such common stock and preferred
stock purchase rights are referred herein together as the "Common Stock"), at
a price of $26.00 per share of Common Stock, 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 13, 2000 (the "Offer to
Purchase"), a copy of which is attached hereto as Exhibit (a)(1), and in the
related Letter of Transmittal, a copy of which is attached hereto as Exhibit
(a)(2) (which, as they may be amended and supplemented from time to time,
together constitute the "Offer").
The information in the Offer to Purchase, including all schedules and
annexes thereto, is hereby expressly incorporated herein by reference in
response to all the items of this Schedule TO, except as otherwise set forth
below.
Item 10. Financial Statements.
(a) Financial information. Not applicable.
(b) Pro forma information. Not applicable.
Item 11. Additional Information.
(b) Other material information. The information set forth in the Letter of
Transmittal attached hereto as Exhibit (a)(2) is incorporated herein by
reference.
Item 12. Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Description
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<C> <S>
Exhibit (a)(1) Offer to Purchase.
Exhibit (a)(2) Letter of Transmittal.
Exhibit (a)(3) Notice of Guaranteed Delivery.
Exhibit (a)(4) Guidelines for Substitute Form W-9.
Exhibit (a)(5) Form of letter to brokers, dealers, commercial banks, trust
companies and other nominees.
Exhibit (a)(6) Form of letter to be used by brokers, dealers, commercial
banks, trust companies and other nominees to their clients.
Exhibit (a)(7) Press Release issued by Koninklijke Ahold N.V. dated March 7,
2000, announcing the tender offer. This Press Release was
filed under cover of Schedule TO with the Securities and
Exchange Commission on March 7, 2000 and is incorporated
herein by reference.
Exhibit (a)(8) Text of Analyst Presentation of Koninklijke Ahold N.V. This
Analyst Presentation was filed under cover of Schedule TO with
the Securities and Exchange Commission on March 7, 2000 and is
incorporated herein by reference.
Exhibit (a)(9) Fact Sheet of U.S. Foodservice issued by Koninklijke Ahold
N.V. This Fact Sheet was filed under cover of Schedule TO with
the Securities and Exchange Commission on March 7, 2000 and is
incorporated herein by reference.
</TABLE>
2
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<TABLE>
<CAPTION>
Exhibit No. Description
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<C> <S>
Exhibit (a)(10) Press Release summarizing remarks of Koninklijke Ahold N.V.
President & Chief Executive Officer, Cees van der Hoeven at
Annual Press Conference of Koninklijke Ahold N.V. This Press
Release was filed under cover of Schedule TO with the
Securities and Exchange Commission on March 7, 2000 and is
incorporated herein by reference.
Exhibit (a)(11) Corporate Profile of U.S. Foodservice Inc. issued by
Koninklijke Ahold N.V. This Corporate Profile was filed under
cover of Schedule TO with the Securities and Exchange
Commission on March 7, 2000 and is incorporated herein by
reference.
Exhibit (a)(12) Summary newspaper advertisement, dated March 13, 2000,
published in The Wall Street Journal.
Exhibit (b) None.
Exhibit (d)(1) Agreement and Plan of Merger, dated as of March 7, 2000, by
and among Koninklijke Ahold N.V., Snow Acquisition, Inc. and
U.S. Foodservice.
Exhibit (d)(2) Confidentiality Agreement, dated as of December 15, 1999, by
and between U.S. Foodservice and Koninklijke Ahold N.V.
Exhibit (g) None.
Exhibit (h) None.
</TABLE>
Item 13. Information Required by Schedule 13E-3.
Not applicable.
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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 13, 2000 Koninklijke Ahold N.V.
/s/ Robert G. Tobin
By: _________________________________
Name: Robert G. Tobin
Title: Executive Vice President
Dated: March 13, 2000 Snow Acquisition, Inc.
/s/ Robert G. Tobin
By: _________________________________
Name: Robert G. Tobin
Title: President
4
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Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
All of the Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
U.S. Foodservice
at
$26.00 Net Per Share of Common Stock
by
Snow 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 7, 2000, 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 COMMON STOCK (THE "COMMON STOCK"), PAR VALUE $0.01 PER
SHARE, OF U.S. FOODSERVICE (THE "COMPANY"), INCLUDING THE ASSOCIATED PREFERRED
STOCK PURCHASE RIGHTS WHICH REPRESENT AT LEAST A MAJORITY OF THE OUTSTANDING
SHARES OF COMMON STOCK ON A FULLY DILUTED BASIS, AND (II) THE EXPIRATION OR
TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER ANTITRUST LAWS DESCRIBED IN
SECTION 15--"CERTAIN LEGAL MATTERS; REGULATORY APPROVALS". THE OFFER IS ALSO
CONDITIONED UPON 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 (THE "MERGER
AGREEMENT"), DATED AS OF MARCH 7, 2000, BY AND AMONG KONINKLIJKE AHOLD N.V.,
SNOW ACQUISITION, INC. (THE "PURCHASER") AND THE COMPANY. SEE SECTION 11--
"PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; CERTAIN AGREEMENTS".
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (I) DETERMINED THAT
THE TERMS OF EACH OF THE OFFER AND THE MERGER (THE "MERGER") OF THE PURCHASER
WITH AND INTO THE COMPANY ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
HOLDERS (THE "HOLDERS") OF SHARES OF COMMON STOCK AND DECLARED THAT THE OFFER
AND THE MERGER ARE ADVISABLE, (II) APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
(III) RECOMMENDED THAT THE HOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES OF
COMMON STOCK PURSUANT TO THE OFFER AND (IF REQUIRED BY APPLICABLE LAW) ADOPT
THE MERGER AGREEMENT.
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IMPORTANT
Any Holder desiring to tender all or any portion of the shares of Common
Stock owned by such Holder should either (i) complete and sign the Letter of
Transmittal or a copy thereof in accordance with the instructions in the
Letter of Transmittal and mail or deliver it together with the certificate(s)
evidencing tendered shares of Common Stock, and any other required documents,
to Wilmington Trust Company, as Depositary (as hereinafter defined), (ii)
tender such shares of Common Stock pursuant to the procedures for book-entry
transfer set forth in Section 3--"Procedures for Tendering Shares of Common
Stock" or (iii) request such Holder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such Holder. Any Holder
whose shares of Common Stock 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 Holder desires
to tender such shares of Common Stock.
Unless the context indicates otherwise, references to shares of Common
Stock include references to the associated preferred stock purchase rights
(the "Rights") issued pursuant to the Amended and Restated Rights Agreement
(the "Rights Agreement"), dated as of October 4, 1999, as amended as of March
6, 2000, by and between the Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent. In order to validly tender shares of Common Stock, a
Holder must tender the Rights. Unless a Distribution Date (as defined in the
Rights Agreement) has occurred, the tender of a share of Common Stock will
constitute the tender of the Rights. See Section 3--"Procedures for Tendering
Shares of Common Stock".
Any Holder who desires to tender shares of Common Stock and whose
certificate(s) evidencing such shares of Common Stock 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
of Common Stock by following the procedures for guaranteed delivery set forth
in Section 3--"Procedures for Tendering Shares of Common Stock".
Copies of this Offer to Purchase, the Letter of Transmittal or any related
documents must not be mailed to or otherwise distributed or sent in, into or
from any country where such distribution or offering would require any
additional measures to be taken or would be in conflict with any law or
regulation of such a country or any political subdivision thereof. Persons
into whose possession this document comes are required to inform themselves
about and to observe any such laws or regulations. This Offer to Purchase may
not be used for, or in connection with, any offer to, or solicitation by,
anyone in any jurisdiction or under any circumstances in which such offer or
solicitation is not authorized or is unlawful.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager 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 at no cost from the Information Agent
or from brokers, dealers, commercial banks or trust companies.
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The Dealer Manager for the Offer is:
Merrill Lynch & Co.
March 13, 2000
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TABLE OF CONTENTS
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Page
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SUMMARY TERM SHEET........................................................ 1
INTRODUCTION.............................................................. 5
THE TENDER OFFER.......................................................... 7
1. Terms of the Offer.................................................. 7
2. Acceptance for Payment and Payment for Shares of Common Stock....... 9
3. Procedures for Tendering Shares of Common Stock..................... 10
4. Withdrawal Rights................................................... 13
5. Certain United States Federal Income Tax Consequences............... 14
6. Price Range of Shares of Common Stock; Dividends.................... 15
7. Certain Information Concerning the Company.......................... 16
8. Certain Information Concerning the Purchaser and Parent............. 21
9. Source and Amount of Funds.......................................... 22
10. Background of the Offer............................................. 23
11. Purpose of the Offer; Plans for the Company; Certain Agreements..... 25
12. Dividends and Distributions......................................... 40
13. Effect of the Offer on the Market for the Shares of Common Stock;
Exchange Act Registration.......................................... 40
14. Conditions of the Offer............................................. 41
15. Certain Legal Matters; Regulatory Approvals......................... 43
16. Fees and Expenses................................................... 45
17. Miscellaneous....................................................... 46
</TABLE>
SCHEDULE I Information Concerning the Directors and Executive Officers of
Koninklijke Ahold N.V. and Snow Acquisition, Inc.
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SUMMARY TERM SHEET
Snow Acquisition, Inc. is offering to purchase all of the outstanding shares
of common stock (including the associated preferred stock purchase rights) of
U.S. Foodservice for $26.00 net per share in cash, without any interest. The
following are some of the questions you, as a stockholder of U.S. Foodservice,
may have and answers to those questions.
We urge you to read carefully the remainder of this Offer to Purchase and
the Letter of Transmittal because the information in this summary term sheet is
not complete. Additional important information is contained in the remainder of
this Offer to Purchase and the Letter of Transmittal.
. WHO IS OFFERING TO BUY MY SECURITIES?
Our name is Snow Acquisition, Inc. We are a Delaware corporation formed for
the purpose of making this offer. We are 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. See the "Introduction" to this Offer
to Purchase.
. WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding shares of common stock
(including the associated preferred stock purchase rights) of U.S. Foodservice.
See the "Introduction" to this Offer to Purchase.
. HOW MUCH ARE YOU OFFERING TO PAY, WHAT IS THE FORM OF PAYMENT AND WILL I
HAVE TO PAY ANY FEES OR COMMISSIONS?
We are offering to pay $26.00 per share, net to you, in cash, without any
interest. If you are the record owner of your shares and you tender your shares
to us in the offer, you will not have to pay brokerage fees or similar
expenses. If you own your shares through a broker or other nominee, and your
broker tenders your shares on your behalf, your broker or nominee may charge
you a fee for doing so. You should consult your broker or nominee to determine
whether any charges will apply. See the "Introduction" to this Offer to
Purchase.
. DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
We will be provided with approximately $2.83 billion, by our ultimate parent
company, Koninklijke Ahold N.V. and/or its affiliates, which will be used to
purchase all shares validly tendered and not withdrawn in the offer and to
provide funding for the merger of Snow Acquisition, Inc. with and into U.S.
Foodservice. This merger is expected to follow the successful completion of the
offer in accordance with the terms and conditions of the Merger Agreement among
us, Koninklijke Ahold N.V. and U.S. Foodservice. The offer is not conditioned
upon any financing arrangements. Koninklijke Ahold N.V. and/or its affiliates
currently intend to provide the necessary funds through a combination of loans
and/or capital contributions. Koninklijke Ahold N.V. and/or its affiliates
intend to obtain such funds through a loan facility that will be established.
See Section 9--"Source and Amount of Funds" in this Offer to Purchase.
. IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision whether
to tender shares and accept the offer because:
. the offer is being made for all outstanding shares solely for cash,
. the offer is not subject to any financing condition, and
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. if we consummate the offer, we will acquire all remaining shares for the
same cash price in the merger of Snow Acquisition, Inc. with and into
U.S. Foodservice.
. HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have until 12:00 midnight, New York City time, on April 7, 2000, to
decide whether to tender your shares in the offer, unless the offer is extended
pursuant to the terms of the Merger Agreement dated as of March 7, 2000, among
Koninklijke Ahold N.V., U.S. Foodservice and us. Further, if you cannot deliver
everything that is required in order to make a valid tender by that time, you
may be able to use a guaranteed delivery procedure, which is described later in
this Offer to Purchase. See Section 1--"Terms of the Offer" in this Offer to
Purchase. See Section 3--"Procedures for Tendering Shares of Common Stock" in
this Offer to Purchase.
. CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Yes. We have agreed with U.S. Foodservice that we may extend the offer if
(i) at the time the offer is scheduled to expire, including at the end of an
earlier extension, any of the offer conditions is not satisfied or waived by
us, if we are required to under the terms of the Merger Agreement or (ii)
subject to waiver by us of certain of the offer conditions, more than 80% but
less than 90% of the shares have been tendered. We have also agreed with U.S.
Foodservice that we will extend the offer (i) under certain circumstances
contemplated by the Merger Agreement or (ii) if we are required to do so by the
rules of the Securities and Exchange Commission. See Section 1--"Terms of the
Offer" in this Offer to Purchase.
. HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform Wilmington Trust Company, which is
the depositary for the offer, of that fact. We also will make a public
announcement of the extension, not later than 9:00 a.m., New York City time, on
the next business day after the day on which the offer was scheduled to expire.
See Section 1--"Terms of the Offer" in this Offer to Purchase.
. WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
. We are not obligated to purchase any shares which are validly tendered
unless the number of shares validly tendered and not properly withdrawn
before the expiration of the offer represents at least a majority of the
outstanding shares of U.S. Foodservice on a fully diluted basis. We may,
however, decide to purchase all shares tendered, even though such number
may be less than a majority of the outstanding shares, with the prior
written consent of the Company.
. We are not obligated to purchase shares which are validly tendered if,
among other things, the applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, has not expired
or been waived before we accept the shares which have been validly
tendered.
See the "Introduction" and Section 14--"Conditions of the Offer" in this
Offer to Purchase.
. HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed Letter of Transmittal, to Wilmington Trust
Company, the depositary for the offer, not later than the time the tender offer
expires. If your shares are held in "street name", the shares can be tendered
by your nominee through The Depository Trust Company. If you cannot get any
document or instrument that is required to be delivered to the depositary by
the expiration of the tender offer, you may get a little extra time to do so by
having a broker, a bank or other fiduciary which is a member of the Securities
Transfer Agents Medallion Program or other eligible institution guarantee that
the missing items will be received by the depositary within three New York
Stock
2
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Exchange trading days. For the tender to be valid, however, the depositary must
receive the missing items within that three trading day period. See Section 3--
"Procedures for Tendering Shares of Common Stock" in this Offer to Purchase.
. UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw shares at any time until the offer has expired and, if we
have not by May 11, 2000 agreed to accept your shares for payment, you can
withdraw them at any time after such time until we accept shares for payment.
See Section 1--"Terms of the Offer" and Section 4--"Withdrawal Rights" in this
Offer to Purchase.
. HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
copy of one, with the required information to Wilmington Trust Company, the
depositary for the Offer, while you still have the right to withdraw the
shares. See Section 4--"Withdrawal Rights" in this Offer to Purchase.
. WHAT DOES THE U.S. FOODSERVICE BOARD OF DIRECTORS THINK OF THE OFFER?
We are making the offer pursuant to an agreement and plan of merger among
us, Koninklijke Ahold N.V. and U.S. Foodservice. The board of directors of U.S.
Foodservice unanimously approved the Merger Agreement, our tender offer and the
proposed merger of us with and into U.S. Foodservice. Following the proposed
merger, U.S. Foodservice will be the surviving corporation and an indirect
wholly owned subsidiary of Koninklijke Ahold N.V. The board of directors of
U.S. Foodservice has determined that the terms of the offer and the merger are
fair to, and in the best interests of, the stockholders of U.S. Foodservice and
recommends that you tender your shares in the Offer. See the "Introduction" to
this Offer to Purchase.
. IF A MAJORITY OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL U.S.
FOODSERVICE CONTINUE AS A PUBLIC COMPANY?
No. If the merger takes place, U.S. Foodservice will no longer be publicly
owned. Even if the merger does not take place, if we purchase all of the
tendered shares, there may be so few remaining stockholders and publicly held
shares that (a) U.S. Foodservice shares will no longer meet the published
guidelines of the New York Stock Exchange for continued listing and may be
delisted from the New York Stock Exchange, (b) there may not be a public
trading market for U.S. Foodservice shares and (c) U.S. Foodservice may cease
making filings with the Securities and Exchange Commission or otherwise cease
being required to comply with the SEC rules relating to publicly held
companies. See Section 13--"Effect of the Offer on the Market for the Shares of
Common Stock; Exchange Act Registration" in this Offer to Purchase.
. WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF U.S. FOODSERVICE'S
SHARES ARE NOT TENDERED IN THE OFFER?
Yes. If we accept for payment and pay for at least a majority of the
outstanding shares of U.S. Foodservice, Snow Acquisition, Inc. will be merged
with and into U.S. Foodservice. If that merger takes place, Koninklijke Ahold
N.V. will own indirectly all of the shares of U.S. Foodservice and all
remaining stockholders of U.S. Foodservice (other than Koninklijke Ahold N.V.
or its subsidiaries, including Snow Acquisition, Inc.) will receive $26.00 per
share in cash. See the "Introduction" to this Offer to Purchase.
. IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, stockholders not tendering in the
offer will receive the same amount of cash per share that they would have
received had they tendered their shares in the offer. Therefore, if the merger
takes place, the only difference to you between tendering your shares and not
tendering your shares is that you will be paid earlier if you tender your
shares. However, if the merger does not take place, the number
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of U.S. Foodservice stockholders and of shares of U.S. Foodservice which are
still in the hands of the public may be so small that there no longer will be
an active public trading market (or, possibly, there may not be any public
trading market) for the shares. Also, as described above, U.S. Foodservice may
cease making filings with the SEC or otherwise being required to comply with
the SEC rules relating to publicly held companies. See the "Introduction" and
Section 13--"Effect of the Offer on the Market for the Shares of Common Stock;
Exchange Act Registration" of this Offer to Purchase.
. WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On March 6, 2000, the last trading day before we announced the tender offer
and the possible subsequent merger, the last sale price of U.S. Foodservice
shares reported on the New York Stock Exchange was $18.25 per share. Between
December 31, 1999 and March 6, 2000, the price of U.S. Foodservice shares
ranged between $11.50 and $19.00 per share. We advise you to obtain a recent
quotation for shares of U.S. Foodservice in deciding whether to tender your
shares. See Section 6--"Price Range of Shares of Common Stock; Dividends" in
this Offer to Purchase.
. WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call Morrow & Co., Inc. at (800) 566-9061 (toll free) or Merrill
Lynch at (212) 236-3790 (call collect). Morrow & Co., Inc. is acting as the
information agent and Merrill Lynch is acting as the dealer manager for our
tender offer. See the back cover of this Offer to Purchase.
4
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To the Holders of Shares of Common Stock of
U.S. Foodservice:
INTRODUCTION
Snow Acquisition, Inc. (the "Purchaser"), a Delaware corporation, and an
indirect wholly owned subsidiary of Koninklijke Ahold N.V. ("Parent"), a
public company with limited liability incorporated under the laws of The
Netherlands with its corporate seat in Zaandam (Municipality Zaanstad), The
Netherlands, hereby offers to purchase all of the issued and outstanding
shares of Common Stock (the "Common Stock"), par value $0.01 per share, of
U.S. Foodservice (the "Company"), a Delaware corporation, including the
associated Rights (as hereinafter defined), at a price of $26.00 per share of
Common Stock, 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").
Unless the context indicates otherwise, all references to shares of Common
Stock shall include the associated preferred stock purchase rights (the
"Rights") issued pursuant to the Amended and Restated Rights Agreement (the
"Rights Agreement"), dated as of October 4, 1999 and amended as of March 6,
2000, by and between the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent. In order to validly tender shares of Common Stock, a holder
must tender the Rights. Unless a Distribution Date has occurred (as defined in
the Rights Agreement), the tender of shares of Common Stock will constitute
the tender of the associated Rights.
Tendering holders of shares of Common Stock ("Holders") whose shares of
Common Stock are registered in their own name and who tender directly to
Wilmington Trust Company, as Depositary (the "Depositary"), 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 of Common Stock pursuant to the Offer. The Purchaser will
pay all charges and expenses of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as Dealer Manager (the "Dealer Manager"), the Depositary and
Morrow & Co., as Information Agent (the "Information Agent"), in each case
incurred in connection with the Offer. See Section 16--"Fees and Expenses".
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 Common Stock which represent at least a majority of the
outstanding shares of Common Stock on a fully diluted basis (the "Minimum
Condition") and (ii) the satisfaction of the HSR Condition (as defined
herein). The Offer is also conditioned upon the satisfaction of certain other
terms and conditions described in Section 14--"Conditions of the Offer".
"HSR Condition" means the expiration or termination of any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder (the "HSR Act"). See
Section 14--"Conditions of the Offer" for a complete description of the
conditions of the Offer.
The Board of Directors of the Company has unanimously (i) determined that
the terms of each of the Offer and the merger (the "Merger") of the Purchaser
with and into the Company are fair to, and in the best interests of, Holders
of shares of Common Stock and declared that the Offer and the Merger are
advisable, (ii) approved the Merger Agreement (as hereinafter defined) and the
transactions contemplated thereby, including the Offer and the Merger, and
(iii) recommended that Holders accept the Offer, tender their shares of Common
Stock pursuant to the Offer and (if required by applicable law) adopt the
Merger Agreement.
The Company has advised Parent that Goldman, Sachs & Co., the financial
advisor to the Company, has delivered to the Board of Directors of the Company
its opinion dated March 7, 2000, that the Offer Price to be received by
Holders, pursuant to the Offer and the Merger, is fair from a financial point
of view to such Holders, subject to the assumptions and qualifications set
forth therein. A copy of the opinion of Goldman, Sachs & Co., which sets forth
the assumptions made, factors considered and scope of review undertaken by
Goldman, Sachs & Co., is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-
9"), which is being mailed to Holders concurrently herewith. Holders are urged
to read the full text of that opinion.
5
<PAGE>
The Offer is being made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of March 7, 2000, by and among Parent, the
Purchaser and the Company. The Merger Agreement provides that, upon
consummation of the Offer and upon the terms and subject to the conditions of
the Merger Agreement and in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), the Purchaser will be merged with and into the
Company. Following the effective time of the Merger (the "Effective Time"),
the Company will continue as the surviving corporation and become a wholly
owned subsidiary of Parent and the separate corporate existence of the
Purchaser will cease. At the Effective Time, except for (i) shares of Common
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 the Purchaser), all of
which shall cease to be outstanding and be canceled and none of which shall
receive any payment with respect thereto and (ii) shares of Common Stock held
by Holders exercising their rights to dissent in accordance with the DGCL,
each share of Common Stock issued and outstanding immediately prior to the
Effective Time 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 thereon, equal to $26.00. The 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 issued and
outstanding shares of Common Stock, the Purchaser will be able to approve and
effect the Merger without a vote of the Company's stockholders pursuant to
Section 253 of the DGCL. If, however, the Purchaser does not acquire at least
90% of the issued and outstanding shares of Common Stock, pursuant to the
Offer or otherwise, a vote of the Company's stockholders to effect the Merger
is required under the DGCL and a longer period of time will be required to
effect the Merger. See Section 11--"Purpose of the Offer; Plans for the
Company; Certain Agreements".
The Company has informed the Purchaser that, as of March 3, 2000, there (i)
were 102,587,339 shares of Common Stock issued and outstanding, (ii) were no
shares of Common Stock held in the Company's treasury, (iii) were options,
rights, restricted stock units and participant account balances issued and
outstanding, representing in the aggregate the right to purchase 5,523,923
shares of Common Stock and (iv) was a warrant which entitles the holder
thereof to purchase 143,113.7 shares of Common Stock. As a result, as of such
date, the Minimum Condition would be satisfied if at least 54,127,189 shares
of Common Stock are validly tendered and not properly withdrawn prior to the
Expiration Date (as hereinafter defined). The Company has been advised, and
has informed Parent, that each of its directors and executive officers intends
to tender pursuant to the Offer all shares of Common Stock owned of record and
beneficially by him or her, except to the extent that such tender would
violate applicable securities laws or require disgorgement of profits from any
such tender to the Company under Section 16 of the Exchange Act (as
hereinafter defined).
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.
6
<PAGE>
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 of Common Stock 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 7, 2000, unless and until the
Purchaser, in its sole discretion (but subject to the terms of the Merger
Agreement), 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 HSR Condition. 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, subject to the
terms of the Merger Agreement, expressly reserves the right (but is not
obligated) to (i) decline to purchase any of the shares of Common Stock
tendered in the Offer and terminate the Offer, and return all tendered shares
of Common Stock to the tendering Holders, (ii) waive or amend any or all
conditions to the Offer and, to the extent permitted by the Merger Agreement
or applicable law and applicable rules and regulations of the Securities and
Exchange Commission (the "Commission"), purchase all shares of Common Stock
validly tendered or (iii) subject to the limitations described below, extend
the Offer and, subject to the right of a tendering Holder to withdraw its
shares of Common Stock until the Expiration Date, retain the shares of Common
Stock which have been tendered during the period or periods for which the
Offer is extended, provided, however, that the Minimum Condition, the HSR
Condition and certain other conditions may not be waived by the Purchaser
without the prior written consent of the Company.
The Rights are currently evidenced by the certificates for the Common Stock
and the tender by a Holder of such Holder's shares of Common Stock will also
constitute a tender of the associated Rights. Pursuant to the Offer, no
separate payment will be made by the Purchaser for the Rights.
Subject to the terms of the Merger Agreement, 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, not later than 9:00
a.m. New York City time, on the next business day after the day on which the
offer was scheduled to expire. Except as otherwise provided in the Merger
Agreement, there can be no assurance that the Purchaser will exercise its
right to extend the Offer. During any such extension, all shares of Common
Stock previously tendered and not withdrawn will remain subject to the Offer,
subject to the rights of a tendering Holder to withdraw its shares of Common
Stock. See Section 4--"Withdrawal Rights".
Subject to the terms of the Merger Agreement, 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 of Common Stock were theretofore accepted for payment, payment
for, any shares of Common Stock (a) if any applicable waiting period under the
HSR Act has not expired or been terminated or (b) in order to comply in whole
or in part with any other applicable law, (ii) to terminate the Offer on any
scheduled expiration date and not accept for payment any shares of Common
Stock 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) 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.
7
<PAGE>
The Purchaser reserves the right to modify the terms of the Offer
including, without limitation, except as provided below, the right to extend
the Offer beyond any scheduled expiration date, but in no event later than one
hundred and eighty days after commencement of the Offer (the "Termination
Date"), provided that, without the prior written consent of the Company, the
Purchaser will not (i) reduce the number of shares of Common Stock to be
purchased pursuant to the Offer, (ii) reduce the Offer Price, (iii) impose
additional conditions to the Offer, (iv) change the form of consideration
payable in the Offer, (v) make any other change to the terms of the Offer
which is adverse in any manner to Holders, (vi) extend the expiration date of
the Offer beyond the twentieth Business Day after commencement of the Offer
except (A) as required by applicable law, (B) in certain circumstances where,
on any expiration date of the Offer, more than 80% but less than 90% of the
shares of Common Stock have been tendered and (C) that if any condition to the
Offer has not been satisfied or waived, the Purchaser may, in its sole
discretion, extend the expiration date of the Offer from time to time for one
or more periods not exceeding, in each case, ten business days, unless Parent
reasonably believes that such condition is not capable of being satisfied
within such time, in which case the Purchaser may extend the expiration date
of the Offer for a period of up to twenty business days, but in no event later
than the Termination Date, (vii) waive the Minimum Condition, (viii) waive the
HSR Condition or certain other Offer conditions unless the Purchaser shall pay
for all shares validly tendered and not withdrawn promptly following the
Purchaser's acceptance for payment of such shares, or (ix) waive the Offer
condition relating to the Merger Agreement not having been terminated. If, on
any scheduled expiration date of the Offer, the Offer would have expired due
to the failure to satisfy the HSR Condition, the Minimum Condition or certain
other Offer conditions, Parent shall, at the request of the Company, cause the
Purchaser to extend the expiration date of the Offer from time to time for one
or more periods not exceeding ten business days or, in certain circumstances,
twenty business days, but in no event later than the Termination Date, unless
Parent reasonably believes at such time that such Offer condition is not
capable of being satisfied.
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 of Common Stock 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 second preceding paragraph), any shares of
Common Stock 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 of Common Stock previously tendered
and not withdrawn will remain subject to the Offer, subject to the right of a
tendering Holder to withdraw its shares of Common Stock. 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 Holders 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(d), 14d-6(c) and 14e-1 under the Exchange Act. The minimum period during
which an offer must remain open following material changes in the terms of the
Offer or information concerning the Offer, other than a change in price or a
change in the percentage of shares of Common Stock sought, will depend upon
the facts and circumstances then existing, including the relative materiality
of the changed terms or information. With respect to a change in price or a
change in the percentage of shares of Common Stock sought, a minimum period of
ten business days is generally required to allow for adequate dissemination to
Holders and investor response.
8
<PAGE>
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings in respect of the shares of Common Stock for
the purpose of disseminating the Offer to Purchase, the Letter of Transmittal
and other relevant materials to Holders. This Offer to Purchase, the Letter of
Transmittal and other relevant materials will be mailed to holders of record
of shares of Common Stock whose names appear on the Company's list of holders
of shares of Common Stock and will be furnished, for subsequent transmittal to
beneficial owners of shares of Common Stock, 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 of Common
Stock or, where applicable, who are listed as participants in the security
position listing of The Depository Trust Company ("DTC").
2. Acceptance for Payment and Payment for Shares of Common Stock. Upon the
terms and subject to the conditions of the Offer, the Merger Agreement and
applicable law (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 of Common Stock validly
tendered prior to the Expiration Date (and not properly withdrawn in
accordance with Section 4--"Withdrawal Rights") as promptly as practicable
after the later to occur of (i) the Expiration Date and (ii) the satisfaction
or waiver of the conditions set forth in Section 14--"Conditions of the
Offer", including, but not limited to, the regulatory conditions specified in
Section 15--"Certain Legal Matters; Regulatory Approvals". Subject to
applicable rules of the Commission and the terms of the Merger Agreement, the
Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, shares of Common Stock in order to
comply, in whole or in part, with any applicable law or satisfaction or waiver
of the Minimum Condition. If, following acceptance for payment of shares of
Common Stock, the Purchaser asserts such regulatory approvals as a condition
and does not promptly pay for shares of Common Stock tendered, the Purchaser
will promptly return such shares of Common Stock.
In all cases, payment for shares of Common Stock purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such shares of Common Stock (the "Certificates") or
timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of
such shares of Common Stock into the Depositary's account at DTC (the "Book-
Entry Transfer Facility"), pursuant to the procedures set forth in Section 3--
"Procedures for Tendering Shares of Common Stock", (ii) the Letter of
Transmittal (or a copy thereof), properly completed and duly executed with any
required signature guarantees, or an Agent's Message (as hereinafter defined)
in connection with a book-entry transfer and (iii) any other documents
required to be included with the Letter of Transmittal under the terms and
subject to the conditions thereof and to this Offer to Purchase.
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 system, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from a participant in the
Book-Entry Transfer Facility tendering the shares of Common Stock that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal 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 of Common Stock validly tendered
and not properly withdrawn if, as and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
shares of Common Stock. Upon the terms and subject to the conditions of the
Offer, payment for shares of Common Stock 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 Holders for the purpose of receiving payments
from the Purchaser and transmitting payments to such tendering Holders whose
shares of Common Stock have been accepted for payment. UNDER NO CIRCUMSTANCES
WILL INTEREST ON THE PURCHASE PRICE FOR SHARES OF COMMON STOCK 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 Holders, the Purchaser's obligation to make
such payment shall
9
<PAGE>
be satisfied, and tendering Holders must thereafter look solely to the
Depositary for payment of amounts owed to them by reason of the acceptance for
payment of shares of Common Stock pursuant to the Offer.
If any tendered shares of Common Stock are not accepted for payment for any
reason pursuant to the terms and conditions of the Offer, or if Certificates
are submitted evidencing more shares of Common Stock than are tendered,
Certificates evidencing shares of Common Stock not purchased will be returned,
without expense to the tendering Holder (or, in the case of shares of Common
Stock 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 of Common Stock", such shares of Common
Stock will be credited to an account maintained at the Book-Entry Transfer
Facility), as promptly as practicable following the expiration or termination
of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
to be paid per share of Common Stock pursuant to the Offer, the Purchaser will
pay such increased consideration for all such shares of Common Stock purchased
pursuant to the Offer, whether or not such shares of Common Stock 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 of Common Stock tendered pursuant to the
Offer, but any such assignment will not relieve the Purchaser of its
obligations under the Offer and the Merger Agreement and will in no way
prejudice the rights of tendering Holders to receive payment for shares of
Common Stock validly tendered and accepted for payment pursuant to the Offer.
3. Procedures for Tendering Shares of Common Stock.
Valid Tender of Shares of Common Stock. In order for shares of Common Stock
to be validly tendered pursuant to the Offer, a Holder must, prior to the
Expiration Date, either (i) deliver to the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase (a) a properly completed
and duly executed Letter of Transmittal (or a copy thereof) with any required
signature guarantees, (b) the Certificates for shares of Common Stock to be
tendered and (c) any other documents required to be included with the Letter
of Transmittal under the terms and subject to the conditions thereof and of
this Offer to Purchase, (ii) cause such Holder's broker, dealer, commercial
bank, trust company or custodian to tender applicable shares of Common Stock
pursuant to the procedures for book-entry transfer described below or (iii)
comply with the guaranteed delivery procedures described below.
Pursuant to the Rights Agreement, until the close of business on the
Distribution Date (as defined in the Rights Agreement), the Rights will be
transferred with and only with the certificates for Common Stock and the
surrender for transfer of any certificates for Common Stock will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates. Pursuant to an amendment to the Rights
Agreement, dated as of March 6, 2000, no Distribution Date will occur by
reason of the commencement of the Offer, the acceptance for payment of, or the
payment for, shares of Common Stock pursuant to the Offer or the consummation
of the Merger or the other transactions contemplated by the Merger Agreement.
If separate certificates representing the Rights are issued to Holders
prior to the time a Holder's shares of Common Stock are tendered pursuant to
the Offer, certificates representing the number of Rights equal to the number
of shares of Common Stock tendered must be delivered to the Depositary, or, if
available, a Book-Entry Confirmation received by the Depositary with respect
thereto, in order for such shares of Common Stock to be validly tendered. If
the Distribution Date occurs and separate certificates representing the Rights
are not distributed prior to the time shares of Common Stock are tendered
pursuant to the Offer, Rights may be tendered prior to a Holder receiving the
certificates for Rights by use of the guaranteed delivery procedures described
below. A tender of shares of Common Stock constitutes an agreement by the
tendering Holder to deliver certificates representing all Rights formerly
associated with the number of shares of Common Stock tendered pursuant to the
Offer to the Depositary prior to expiration of the period permitted by such
guaranteed delivery procedures for delivery of certificates for, or a Book-
Entry Confirmation with respect to, Rights (the "Rights
10
<PAGE>
Delivery Period"). However, after expiration of the Rights Delivery Period,
the Purchaser may elect to reject as invalid a tender of shares of Common
Stock with respect to which certificates for, or a Book-Entry Confirmation
with respect to, the number of Rights required to be tendered with such shares
of Common Stock have not been received by the Depositary. Nevertheless, the
Purchaser will be entitled to accept for payment shares of Common Stock
tendered by a Holder prior to receipt of the certificates for the Rights
required to be tendered with such shares of Common Stock, or a Book-Entry
Confirmation with respect to such Rights, and either (i) subject to complying
with applicable rules and regulations of the Commission, withhold payment for
such shares of Common Stock pending receipt of the certificates for, or a
Book-Entry Confirmation with respect to, such Rights or (ii) make payment for
shares of Common Stock accepted for payment pending receipt of the
certificates for, or a Book-Entry Confirmation with respect to, such Rights in
reliance upon the agreement of a tendering Holder to deliver Rights and such
guaranteed delivery procedures. Any determination by the Purchaser to make
payment for shares of Common Stock in reliance upon such agreement and such
guaranteed delivery procedures or, after expiration of the Rights Delivery
Period, to reject a tender as invalid will be made in the sole and absolute
discretion of the Purchaser.
The method of delivery of the shares of Common Stock, Certificates, the
Letter of Transmittal and all other required documents, including delivery
through the Book-Entry Transfer Facility, is at the option and risk of the
tendering Holder and the delivery will be deemed made only when actually
received by the Depositary (including, in the case of book-entry transfer, by
Book-Entry Confirmation). 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 of Common Stock at the Book-Entry Transfer Facility for purposes
of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the Book-Entry
Transfer Facility's system may make book-entry delivery of shares of Common
Stock by (i) causing such securities to be transferred in accordance with the
Book-Entry Transfer Facility's procedures into the Depositary's account and
(ii) causing the Letter of Transmittal to be delivered to the Depositary by
means of an Agent's Message. Although delivery of shares of Common Stock may
be effected through book-entry transfer, either the Letter of Transmittal (or
manually signed copy thereof), properly completed and duly executed, together
with any required signature guarantees, or any Agent's Message in lieu of the
Letter of Transmittal, and any other required documents, must, in any case, be
transmitted to and received by the Depositary prior to the Expiration Date at
one of its addresses set forth on the back cover of this Offer to Purchase, or
the tendering Holder must comply with the guaranteed delivery procedures
described below. Delivery of the Letter of Transmittal and other required
documents or instructions to the Book-Entry Transfer Facility does not
constitute delivery to the Depositary.
Signature Guarantee. All signatures on a Letter of Transmittal must be
guaranteed by a financial institution (including most banks, savings and loan
associations and brokerage houses) that 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 (each, an
"Eligible Institution"), unless the shares of Common Stock tendered thereby
are tendered (i) by the registered holder(s) (which term, for purposes of this
document, shall include any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of shares of
Common Stock) of shares of Common Stock who has not completed the box entitled
"Special Delivery Instructions" or 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 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
Certificate not accepted for payment or not tendered is to be returned to a
person other than the registered holder(s), then the 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
Certificate, with the signature(s) on such Certificate or stock powers
guaranteed as described above. See Instructions 1, 5 and 7 to the Letter of
Transmittal.
11
<PAGE>
Guaranteed Delivery. If a Holder desires to tender shares of Common Stock
pursuant to the Offer and such Holder's Certificates are not immediately
available (including because certificates for Rights have not yet been
distributed by the Rights Agent) 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 of Common Stock may nevertheless be tendered if all the following
conditions are satisfied:
(i) such 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, is received
by the Depositary as provided below prior to the Expiration Date; and
(iii) the Certificates for all tendered shares of Common Stock in proper
form for transfer, together with a properly completed and duly executed
Letter of Transmittal (or a copy 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, Inc. ("NYSE") trading days after the
date of execution of the Notice of Guaranteed Delivery, or in the case
certificates for the Rights have been issued, three NYSE trading days after
the date certificates for Rights are distributed to Holders by the Rights
Agent. A trading day is when the NYSE is open for business.
Any Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by facsimile transmission, or by 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 of
Common Stock held through the Book-Entry Transfer Facility, the Notice of
Guaranteed Delivery must be delivered to the Depositary by a participant by
means of the confirmation system of the Book-Entry Transfer Facility.
Other Requirements. Notwithstanding any other provision hereof, payment for
shares of Common Stock 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 of Common Stock or a Book-Entry Confirmation of the
delivery of such shares of Common Stock, and if certificates evidencing Rights
have been issued, such certificates or a Book-Entry Confirmation, if
available, with respect to such certificates (unless the Purchaser elects, in
its sole discretion, to make payment for the shares of Common Stock pending
receipt of such certificates or a Book-Entry Confirmation, if available, with
respect to such certificates), (ii) a properly completed and duly executed
Letter of Transmittal or a copy thereof with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message) and (iii) any
other documents required by the Letter of Transmittal. Accordingly, tendering
Holders may be paid at different times depending upon when Certificates for
shares of Common Stock (or certificates for Rights) or Book-Entry
Confirmations with respect to shares of Common Stock (or Rights, if
applicable) are actually received by the Depositary. Under no circumstances
will interest be paid on the purchase price of the shares of Common Stock to
be paid by the Purchaser, regardless of any extension of the Offer or any
delay in making such payment.
Determination of Validity. All questions as to the validity, form,
eligibility (including, but not limited to, time of receipt) and acceptance
for payment of any tendered shares of Common Stock 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 of Common Stock determined by it not to be in proper form or if the
acceptance for payment of, or payment for, such shares of Common Stock may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also
reserves the right, in its sole discretion, subject to the terms of the Merger
Agreement, to waive any of the conditions of the Offer or any defect or
irregularity in any tender with respect to shares of Common Stock of any
particular Holder, whether or not similar defects or irregularities are waived
in the case of other Holders. No tender of shares of Common Stock will be
deemed to have been validly made until all defects and irregularities have
been cured or waived.
12
<PAGE>
Subject to the terms of the Merger Agreement, 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 Holder irrevocably
appoints each designee of the Purchaser as attorney-in-fact and proxy of such
Holder, with full power of substitution, to vote the shares of Common Stock as
described below in such manner as each such attorney-in-fact and proxy (or any
substitute thereof) shall deem proper in its sole discretion, and to otherwise
act (including pursuant to written consent) to the full extent of such
Holder's rights with respect to the shares of Common Stock (and any and all
dividends, distributions, rights, or other securities issued or issuable in
respect of such shares of Common Stock on or after March 13, 2000
(collectively, the "Distributions")) tendered by such Holder and accepted for
payment by the Purchaser prior to the time of such vote or action. All such
proxies shall be considered coupled with an interest in the tendered shares of
Common Stock and shall be irrevocable and are granted in consideration of, and
are effective upon, the acceptance for payment of such shares of Common Stock
and all Distributions in accordance with the terms of the Offer. Such
acceptance for payment by the Purchaser shall revoke, without further action,
any other proxy or power of attorney granted by such Holder at any time with
respect to such shares of Common Stock and all Distributions and no subsequent
proxies or powers of attorney will be given (or, if given, will not be deemed
effective) with respect thereto by such Holder. The designees of the Purchaser
will, with respect to the shares of Common Stock for which the appointment is
effective, be empowered to exercise all voting and other rights 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 of Common Stock or any Distributions to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such shares of
Common stock, the Purchaser must be able to exercise all rights (including,
without limitation, all voting rights and rights of conversion) with respect
to such shares of Common Stock and receive all Distributions.
Backup Withholding. Under United States federal income tax law, the amount
of any payments made by the Depositary to Holders (other than corporate and
certain other exempt Holders) pursuant to the Offer may be subject to backup
withholding tax at a rate of 31%. To avoid such backup withholding tax with
respect to payments pursuant to the Offer, a non-exempt, tendering "U.S.
Holder" (as defined in Section 5--"Certain United States Federal Income Tax
Consequences") must provide the Depositary with such Holder's correct taxpayer
identification number and certify under penalty of perjury that (i) the
taxpayer identification number ("TIN") provided is correct (or that such
Holder is awaiting a TIN) and (ii) such Holder 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 Holder
or if a Holder fails to deliver a completed Substitute Form W-9 to the
Depositary or otherwise establish an exemption, the Depositary is required to
withhold 31% of any payments made to such Holder. See Section 5--"Certain
United States Federal Income Tax Consequences" of this Offer to Purchase and
the information set forth under the heading "Important Tax Information"
contained in the Letter of Transmittal.
The Purchaser's acceptance for payment of the Common Stock tendered
pursuant to the Offer will constitute a binding agreement between the
tendering Holder and the Purchaser upon the terms and subject to the
conditions of the Offer.
4. Withdrawal Rights. Tenders of shares of Common Stock made pursuant to
the Offer are irrevocable except that such shares of Common Stock 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 11, 2000, 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 of Common Stock or is unable to accept shares of Common
Stock 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 of Common
Stock, and such shares of Common Stock may not be withdrawn except to
13
<PAGE>
the extent that tendering Holders 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 or facsimile transmission
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 of Common Stock to be withdrawn, the number of shares of Common Stock
to be withdrawn and the name of the registered holder of the shares of Common
Stock, if different from that of the person who tendered such shares of Common
Stock. If Certificates evidencing shares of Common Stock to be withdrawn have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of such Certificates, the serial numbers shown on such
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 of Common Stock have been tendered for the account of an Eligible
Institution. Shares of Common Stock tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3--"Procedures for Tendering
Shares of Common Stock", may be withdrawn only by means of the withdrawal
procedures made available by the Book-Entry Transfer Facility, must specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn shares of Common Stock and must otherwise comply
with the Book-Entry Transfer Facility's procedures.
Withdrawals of tendered shares of Common Stock may not be rescinded without
the Purchaser's consent and any shares of Common Stock 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 Manager 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.
However, any shares of Common Stock 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 of Common Stock".
5. Certain United States Federal Income Tax Consequences. The receipt of
cash for shares of Common Stock pursuant to the Offer or the Merger by a U.S.
Holder (as hereinafter defined) 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. For purposes of this discussion,
a "U.S. Holder" is a beneficial owner of shares of Common Stock who for United
States federal income tax purposes is (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of
the United States or any State thereof (including the District of Columbia),
(iii) an estate the income of which is subject to United States federal income
taxation regardless of its source or (iv) a trust if such trust has validly
elected to be treated as a United States person for United States federal
income tax purposes or a trust (a) the administration over which a United
States court can exercise primary supervision and (b) all of the substantial
decisions of which one or more United States persons have the authority to
control.
In general, a U.S. Holder will recognize a 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 of Common Stock and such U.S. Holder's
adjusted tax basis in such shares of Common Stock. Assuming that the shares of
Common Stock constitute a capital asset in the hands of the U.S. Holder, such
gain or loss will be capital gain or loss. 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 of Common Stock exceeds one year.
The foregoing discussion may not be applicable to certain types of Holders,
including Holders who acquired shares of Common Stock pursuant to the exercise
of stock options or otherwise as compensation, Holders that are not U.S.
Holders and Holders that are otherwise subject to special tax rules, such as
financial institutions,
14
<PAGE>
insurance companies, dealers or traders in securities or currencies, tax-
exempt entities, persons that hold shares of Common Stock 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.
Backup Withholding Tax. As noted in Section 3--"Procedures for Tendering
Shares of Common Stock", a Holder (other than an "exempt recipient", including
a corporation, a non-U.S. Holder that provides appropriate certification and
certain other persons (if the payor does not have actual knowledge that such
certificate is false)) that receives cash in exchange for shares of Common
Stock may be subject to United States federal backup withholding tax at a rate
equal to 31%, unless such Holder provides its taxpayer identification number
and certifies that such Holder is not subject to backup withholding tax by
submitting a completed Substitute Form W-9 to the Depositary. Accordingly,
each U.S. Holder 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 income tax laws, regulations,
rulings and decisions now in effect, all of which are subject to change
(possibly retroactively). Holders are urged to consult their tax advisors with
respect to the 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 of Common Stock; Dividends. The shares of Common
Stock are listed and traded on the NYSE under the symbol "UFS". The table
below sets forth, for the periods indicated, the quarterly high and low daily
closing prices of the shares of Common Stock on the NYSE:
<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal Year Ended June 27, 1998
First Quarter............................................. $16.22 $14.35
Second Quarter............................................ 17.41 13.78
Third Quarter............................................. 18.60 16.16
Fourth Quarter............................................ 18.63 15.75
Fiscal Year Ended July 3, 1999
First Quarter............................................. $21.25 $16.44
Second Quarter............................................ 24.57 20.44
Third Quarter............................................. 26.25 20.47
Fourth Quarter............................................ 24.50 20.25
Fiscal Year Ending July 1, 2000
First Quarter............................................. $22.13 $17.56
Second Quarter............................................ 19.88 14.56
Third Quarter (through March 6, 2000)..................... 19.00 11.50
</TABLE>
- --------
Source: Company's Annual Report on Form 10-K filed with the Commission on
October 1, 1999, other than fiscal year 2000 data; fiscal year 2000 data from
Bloomberg.
On March 6, 2000, the last full trading day prior to the public
announcement of the Offer, the reported closing sales price of the shares of
Common Stock on the NYSE was $18.25 per share of Common Stock. On March 10,
2000, the last full trading day prior to the date of this Offer to Purchase,
the last reported closing sales price of the shares of Common Stock was $25.19
per share. Holders are urged to obtain current market quotations for the
shares of Common Stock.
No cash dividends have ever been paid on the shares of Common Stock. The
Merger Agreement prohibits the Company from declaring or paying any dividends
until the Effective Date of the Merger without the prior written consent of
Parent.
15
<PAGE>
7. Certain Information Concerning the Company.
The Company. Except as otherwise stated in this Offer to Purchase, 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 is one of the nation's largest broadline foodservice
distributors, based on its 1999 fiscal year net sales. The Company sells food
and related products to restaurants and other institutional foodservice
establishments through its national distribution network. The Company markets
and distributes more than 43,000 national and proprietary brand items to over
130,000 foodservice customers, including restaurants, hotels, healthcare
facilities, cafeterias and schools. The Company also purchases, stores,
markets and transports food products, paper products and other supplies and
food-related items for establishments that prepare and serve meals to be eaten
away from home. The Company is a Delaware corporation. The address of the
Company's principal executive offices is 9755 Patuxent Woods Drive, Columbia,
Maryland 21046. The telephone number of the Company at such offices is (410)
312-7100.
Capital Structure. The authorized capital of the Company consists of (a)
400,000,000 shares of Common Stock and (b) 5,000,000 shares of preferred
stock, par value $0.01 per share. As of March 3, 2000, no shares of preferred
stock were outstanding, but 350,000 of such preferred shares were designated
as Series A junior participating preferred stock (the "Series A Preferred
Stock") in accordance with the terms of the Rights Agreement.
(a) Common Stock
As of March 3, 2000, the Company had 102,587,339 shares of Common Stock
outstanding. As of March 3, 2000, no other shares of any class of the capital
stock of the Company were outstanding.
(b) Rights
On February 19, 1996, the Board of Directors of the Company authorized and
declared a dividend distribution of one Right for each share of Common Stock
outstanding at the close of business on March 1, 1996, and authorized the
issuance of one Right for each share of Common Stock of the Company issued
between March 1, 1996 and the Distribution Date (as hereinafter defined). Each
Right entitles the holder to purchase from the Company one one-hundredth of a
share of Series A Preferred Stock at a price of $95.00 per oneone-hundredth of
a share of Series A Preferred Stock, subject to adjustment.
Currently, the Rights are evidenced by the certificates for shares of
Common Stock registered in the names of the holders of Common Stock (which
certificates shall be deemed also to be certificates for Rights) and not by
Rights certificates, and the Rights are transferable only in connection with
the transfer of the underlying shares of Common Stock of the Company
(including a transfer to the Company).
The Rights become exercisable after the earlier to occur of (i) the tenth
day following a public announcement by the Company or an Acquiring Person (as
hereinafter defined) that an Acquiring Person has become such and (ii) the
tenth business day after the commencement by any person (other than the
Company, any subsidiary of the Company, any employee benefit plan of the
Company or of a subsidiary of the Company or any entity holding shares of
Common Stock for or pursuant to the terms of any such plan, hereinafter
collectively referred to as the "Exempt Persons") of, or the first public
announcement of the intention of any person (other than any of the Exempt
Persons) to commence a tender or exchange offer the consummation of which
would result in any person acquiring 10% (or 15%, in the case of a person who
is eligible to report its beneficial ownership of the Company on Schedule 13G
under the Exchange Act) or more of the then outstanding
16
<PAGE>
shares of Common Stock (such person, an "Acquiring Person") or otherwise would
result in any other person being deemed an Acquiring Person (the earlier of
such dates being hereinafter referred to as the "Distribution Date"). The
Purchaser has been advised by the Company that the Company and its Board of
Directors have taken all necessary action to render the Rights Agreement
inapplicable with respect to the Offer pursuant to the terms of the Merger
Agreement and the Merger.
At any time prior to the Distribution Date, the Company may redeem the
Rights, in whole but not in part, for $0.01 per Right. The Rights will expire
at the close of business on February 19, 2006, if not redeemed or exchanged by
the Company at an earlier date.
No holder, as such, of any Rights certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of
Series A Preferred Stock or any other securities of the Company which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained in the Rights Agreement or in any Rights certificate
be construed to confer upon the holder of any Rights certificate, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders, or to
receive dividends of subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights certificate shall have been exercised in
accordance with the provisions of the Rights Agreement.
(c) Warrant
On December 23, 1997, the Company issued a warrant which, as of March 3,
2000, entitles the holder to purchase 143,113.7 shares of Common Stock at a
purchase price of $6.51425 per share of Common Stock, subject to adjustment
from time to time pursuant to the terms of the warrant. The warrant will
expire on the earlier of (i) September 30, 2005 and (ii) the registration of
all of the shares of Common Stock issuable upon exercise of such warrant or
the termination of the restrictions on transfer of such shares of Common
Stock. The warrant may be exercised by the holder in whole or in part.
In the event that the holder of the warrant does not exercise the warrant
prior to the Merger, then, upon the Merger, the holder of the warrant, upon
exercise of the warrant after the consummation of the Merger, shall be
entitled to receive, in lieu of the Common Stock issuable upon such exercise
prior to such consummation, the stock and other securities, cash and property
to which the holder would have been entitled upon such consummation if the
holder had exercised the rights represented by the warrant immediately prior
thereto, subject to adjustments as provided in the warrant.
(d) Options
The Company has issued options or other rights to acquire shares of Common
Stock pursuant to a number of different stock option plans and other plans for
the benefit of non-management directors, executives and other employees. As of
March 3, 2000, these options and other rights were exercisable into 5,523,923
shares of Common Stock.
17
<PAGE>
U.S. FOODSERVICE
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
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 Report
on Form 10-K for the fiscal year ended June 27, 1998, as amended by Form 10-
K/A-1 and Form 10-K/A-2, its Annual Report on Form 10-K for the fiscal year
ended July 3, 1999, and its Quarterly Report on Form 10-Q for the quarterly
period ended January 1, 2000, as amended by Form 10-Q/A. 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 under "Available
Information".
<TABLE>
<CAPTION>
Fiscal Year Ended Three Months Ended
------------------------------------- ----------------------------
July 3, June 27, June 28, January 1, December 26,
1999 1998(1) 1997 2000(2) 1998(3)
----------- ----------- ----------- ------------ ------------
(In thousands except share and per share amounts)
<S> <C> <C> <C> <C> <C>
Statements of Operations
Data (4):
Net sales............... $ 6,198,408 $ 5,506,949 $ 5,169,406 $ 1,674,952 $ 1,533,089
Cost of sales........... 5,052,068 4,465,281 4,166,332 1,360,852 1,251,007
Operating expenses...... 917,094 876,170 845,901 246,901 226,686
Amortization of
intangible assets...... 17,080 15,354 15,349 4,732 4,147
Restructuring costs
(reversal)............. -- 53,715 (4,000) n/a n/a
Charge for impairment of
long-lived assets...... -- 35,530 -- n/a n/a
Interest expense and
other financing costs,
net.................... 64,974 73,894 76,063 17,208 16,476
Nonrecurring charges.... -- 17,822 5,400 n/a n/a
Provision for income
taxes.................. 58,910 6,475 26,075 17,982 14,165
Extraordinary charges,
net of income taxes.... (5,048) (9,712) -- -- (2,748)
----------- ----------- ----------- ------------ -----------
Net income (loss)(5).... $ 83,234 $ (47,004) $ 38,286 $ 27,277 $ 17,860
=========== =========== =========== ============ ===========
Per Share Data (6):
Net income (loss) per
common share:
Basic:
Before extraordinary
charge.............. $ 0.92 $ (0.41) $ 0.44 $ 0.27 $ 0.22
Extraordinary
charge.............. $ (0.05) $ (0.11) -- -- $ (0.02)
Net income (loss).... $ 0.87 $ (0.52) $ 0.44 $ 0.27 $ 0.20
Diluted:
Before extraordinary
charge.............. $ 0.91 $ (0.41) $ 0.43 $ 0.27 $ 0.21
Extraordinary
charge.............. $ (0.05) $ (0.11) -- -- $ (0.02)
Net income (loss).... $ 0.86 $ (0.52) $ 0.43 $ 0.27 $ 0.19
Weighted average number
of shares of common
stock (6):
Basic.................. 95,922,000 90,640,000 86,902,000 101,557,000 95,072,000
Diluted................ 97,190,000 90,640,000 88,126,000 102,102,000 96,454,000
Balance Sheet Data (at
end of period):
Total current assets.... $ 895,131 $ 797,282 $ 709,909 $ 1,108,417 951,354
Property and equipment,
net.................... 454,033 437,265 437,736 468,492 440,997
Goodwill (7)............ 637,107 561,695 541,519 712,414(8) 628,840(8)
Other noncurrent
assets................. 26,603 21,549 29,354 -- --
Total assets............ 2,012,874 1,817,791 1,732,183(9) 2,289,323 2,021,191
Total current
liabilities (10)....... 515,191 509,466 475,106 494,621 473,653
Long-term debt.......... 533,869 650,679 621,788 793,204 737,101
Obligations under
capital leases......... 24,671 29,946 33,458 22,310 28,328
Deferred income taxes... 13,051 6,064 -- 18,855 6,015
Other noncurrent
liabilities............ 96,713 36,916 22,685 74,168 101,992
Total stockholders'
equity................. 829,379 584,720 579,146 886,165 674,102
</TABLE>
- --------
(1) In connection with the acquisition of Rykoff-Sexton, Inc., U.S.
Foodservice incurred restructuring costs, asset impairment charges,
nonrecurring charges and certain other operating charges resulting from
the integration of the two businesses (the "acquisition related
18
<PAGE>
costs") totaling approximately $138.0 million, which significantly affected
U.S. Foodservice's results for the fiscal year ended June 27, 1998.
Excluding the impact of the acquisition related costs, U.S. Foodservice's
net income before extraordinary charge was $62.6 million, or $0.68 per
share, on a diluted basis.
(2) Data at January 1, 2000, and for the quarterly period ended January 1,
2000, included herein, are unaudited.
(3) Operations Data and Per Share Data for the quarterly period ended
December 26, 1998, included herein, are unaudited. Balance Sheet Data at
December 26, 1998 are unaudited and are based on Form 10-Q for the
quarterly period ended December 26, 1998.
(4) U.S. Foodservice operates on a 52-53 week fiscal year ending on the
Saturday closest to June 30. The fiscal year ended July 3, 1999 is a 53-
week fiscal year, while all other periods presented are 52-week fiscal
years.
(5) U.S. Foodservice has no elements of comprehensive income (loss), other
than net income (loss). Accordingly, comprehensive income (loss) is equal
to net income (loss) for all periods presented.
(6) Per share data have been retroactively adjusted to reflect the two-for-
one stock split effected on August 4, 1999.
(7) Goodwill and noncurrent assets data at July 3, 1999, June 27, 1998, June
28, 1997, January 1, 2000, and December 26, 1998 are net of accumulated
amortizations of $64,617, $45,960, $31,304, $73,612 and $56,641,
respectively.
(8) The amounts at January 1, 2000, and at December 26, 1998, each include
goodwill and other noncurrent assets.
(9) Total assets at June 28, 1997 include deferred income taxes of $13,665.
(10) Total current liabilities includes current maturities of long-term debt
and current obligations under capital leases.
Recent Developments. On February 16, 2000, the Company announced the
acquisition of Stock Yards Packing Co., Inc., which had net sales of
approximately $108 million for its fiscal year ended December 25, 1999.
CERTAIN PROJECTED FINANCIAL DATA FOR THE COMPANY
Prior to entering into the Merger Agreement, Parent received from the
Company certain information which Parent and the Purchaser believe was not and
is not publicly available, including certain projected financial data (the
"Projections") for the fiscal years 2000 through 2003. The Company does not
publicly disclose projections, and the Projections were not prepared with a
view to public disclosure.
<TABLE>
<CAPTION>
Fiscal Year Fiscal Year Fiscal Year Fiscal Year
2000 2001 2002 2003
------------ ------------ ------------ ------------
(In thousands except share and per share amounts)
<S> <C> <C> <C> <C>
Selected Income
Statement Data:
Sales.................. $ 7,055,026 $ 8,007,455 $ 9,088,461 $ 10,315,403
EBIT-A................. $ 273,190 $ 319,680 $ 375,560 $ 441,734
Net income............. $ 114,020 $ 137,465 $ 167,916 $ 206,303
Shares................. 102,700,000 104,345,000 107,002,000 109,799,000
EPS.................... $ 1.11 $ 1.32 $ 1.57 $ 1.88
Cash EPS............... $ 1.27 $ 1.50 $ 1.77 $ 2.11
Selected Balance Sheet
Data:
Total assets(1)........ $ 2,505,364 $ 2,735,064 $ 3,018,812 $ 3,328,810
Total liabilities
(other than debt)..... $ 610,902 $ 661,732 $ 726,224 $ 801,459
Total debt(2).......... $ 926,329 $ 915,840 $ 906,967 $ 864,989
Total equity........... $ 968,133 $ 1,157,491 $ 1,385,622 $ 1,662,363
Total liabilities
(including debt) and
equity................ $ 2,505,364 $ 2,735,064 $ 3,018,812 $ 3,328,810
============ ============ ============ ============
Selected Cash Flow
Statement Data:
EBITDA................. $ 314,690 $ 366,782 $ 429,022 $ 502,413
Capital expenditure.... $ (62,992) $ (69,610) $ (71,753) $ (71,968)
Acquisition............ $ (73,053) $ (80,427) $ (91,285) $ (103,608)
</TABLE>
- --------
(1) Total assets include accounts receivable which are grossed up by factored
receivables of $375,000 in 2000; $400,000 in 2001; $425,000 in 2002 and
$450,000 in 2003.
(2) Total debt includes securitization amounts which represent off-balance
sheet debt from factored receivable securitization arrangements.
19
<PAGE>
CAUTIONARY STATEMENTS CONCERNING THE PROJECTIONS
AND FORWARD-LOOKING STATEMENTS
The Projections were not prepared with a view to public disclosure or
compliance with published guidelines of the Commission, the guidelines
established by the American Institute of Certified Public Accountants for
Prospective Financial Information or generally accepted accounting principles.
Neither Parent's nor the Company's certified public accountants have examined
or compiled any of the Projections or expressed any conclusion or provided any
form of assurance with respect to the Projections and, accordingly, assume no
responsibility for the Projections. The Projections were not prepared with the
approval of the Company's Board of Directors. The Projections are included
herein to give the Holders access to information which was provided to Parent
and which is believed by Parent and the Purchaser to be not publicly
available.
Certain matters discussed herein (including, but not limited to, the
Projections) are forward-looking statements that are subject to certain risks
and uncertainties that could cause actual results to differ materially from
the statements included herein (including the Projections) and should be read
with caution. The Company has advised Parent and the Purchaser that the
Projections are subjective in many respects and thus susceptible to
interpretations and periodic revisions based on actual experience and recent
developments. While presented with numerical specificity, the Projections were
not prepared by the Company in the ordinary course and are based upon a
variety of estimates and hypothetical assumptions made by management of the
Company with respect to, among other things, industry performance, general
economic, market, interest rate and financial conditions, sales, cost of goods
sold, operating and other revenues and expenses, capital expenditures and
working capital of the Company, and other matters which may not be realized
and are inherently subject to significant business, economic and competitive
uncertainties and contingencies, all of which are difficult to predict and
many of which are beyond the Company's control. Accordingly, there can be no
assurance that the assumptions made in preparing the Projections will prove
accurate, and actual results may be materially greater or less than those
contained in the Projections. In addition, the Projections do not take into
account any of the transactions contemplated by the Merger Agreement,
including the Offer and the Merger. The Company has advised Parent and the
Purchaser that the Projections do not reflect, among other things, the impact
of the recent decline of the Company's stock price on the Company's ability to
use its stock as acquisition currency, which impact may negatively affect the
growth assumptions upon which the Projections are based. The Company has also
advised Parent and the Purchaser that the Projections do not reflect the
recently announced closure of the Company's San Francisco operations or the
reduction in its workforce announced in early February, 2000, which may
impact, among other things, the expected revenues set forth in such
Projections. These events may cause actual results to materially differ from
the Projections.
For these reasons, as well as the bases and assumptions on which the
Projections were complied, the inclusion of such Projections herein should not
be regarded as an indication that the Company, Parent, the Purchaser or any of
their respective affiliates or representatives considers such information to
be an accurate prediction of future events, and the Projections should not be
relied on as such. None of such persons assumes any responsibility for the
reasonableness, completeness, accuracy or reliability of such Projections. No
party nor any of their respective affiliates or representatives has made, or
makes, any representation to any person regarding the information contained in
the Projections and none of them intends to update or otherwise revise the
Projections to reflect circumstances existing after the date when made or to
reflect the occurrence of future events even in the event that any or all of
the assumptions are shown to be in error.
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 proxy statements filed with the
Commission. These reports, proxy statements and other information
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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.
8. Certain Information Concerning the Purchaser and Parent.
The Purchaser. The Purchaser, a newly incorporated Delaware corporation,
has not conducted any business other than in connection with the Offer and the
Merger Agreement. All of the issued and outstanding shares of capital stock of
the Purchaser are indirectly beneficially owned by Parent. The principal
address of the Purchaser is 1013 Centre Road, Wilmington, Delaware 19805. The
telephone number of the Purchaser at such office is (800) 927-9800.
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. Parent has interests in food
retailing in The Netherlands, various other European countries, the United
States, several countries in Asia and several countries in Latin and Central
America. Parent's shares of Common Stock are listed on the AEX-Stock Exchange
and the Swiss Exchange. American Depositary Shares representing Parent's
common stock trade on the NYSE 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 January 3, 1999 (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).
During the last five years, none of Parent, 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 or
similar misdemeanors) or (ii) was a party to any judicial or administrative
proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in 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, 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 or the Purchaser or, to the best of their knowledge, any
associate or majority-owned subsidiary of any of the persons listed in
Schedule I to this Offer to Purchase, beneficially owns or has any right to
acquire, directly or indirectly, any equity securities of the Company and (ii)
none of Parent, the Purchaser, or to the best of their knowledge, any of the
persons listed in Schedule I to this Offer to Purchase has effected any
transaction in such equity securities during the past 60 days. The Purchaser
and Parent disclaim beneficial ownership of any shares of Common Stock owned
by any pension plans of Parent or the Purchaser or any pension plans of any
associate or majority-owned subsidiary of Parent or the Purchaser.
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Except as described in this Offer to Purchase, none of Parent, 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, guarantees of loans, guarantees against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, during
the past two years, none of Parent, 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, during the past two years, there have been no
contacts, negotiations or transactions between any of Parent, the Purchaser or
any of their subsidiaries or, to the best knowledge of Parent, 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 of Common Stock pursuant to the Offer
and to pay related fees and expenses is expected to be approximately $2.83
billion. The Purchaser currently intends to obtain all such funds through a
combination of loans from and/or capital contributions by Parent or other
affiliates. Parent currently intends to obtain such funds primarily through a
loan facility (the "Credit Facility") to be provided by ABN AMRO Bank N.V. and
Chase Manhattan plc. (collectively, the "Arrangers").
Parent has received a commitment letter (the "Commitment Letter") from the
Arrangers pursuant to which the Arrangers have agreed to lend to Parent up to
EUR 4.4 billion of the Credit Facility. It is currently contemplated that the
Arrangers will syndicate some or all of the Credit Facility to other banks or
financial institutions.
The Credit Facility will be a multicurrency unsecured stand-by bridge loan
facility. Borrowings under the Credit Facility will bear interest at an
aggregate rate per annum equal to (i) the Euro Interbank Offered Rate
(EURIBOR) for advances denominated in Euro and London Interbank Offered Rate
(LIBOR) for advances denominated in any other currency, (ii) a margin of 40
basis points until June 29, 2000 and a margin to be agreed upon by Parent and
the Arrangers, but in no event greater than 90 basis points thereafter and
(iii) the cost of compliance with any applicable reserve asset requirements
and financial services authority fees. Parent is currently subject to a
commitment fee on the Credit Facility and has paid a structuring fee on the
maximum facility amount. Parent will be obligated to pay an additional two
basis points on any outstanding drawings under the Credit Facility on June 1,
2000. In the event that the Credit Facility will be outstanding beyond June
30, 2000, the Arrangers may syndicate the Credit Facility and Parent has
agreed to pay a further fee at such time. The Credit Facility will mature on
December 29, 2000.
The commitment of the Arrangers is subject to, among other things, the
negotiation and execution of definitive financing agreements on terms
satisfactory to Parent and the Arrangers. The definitive documentation
relating to the Credit Facility will contain representations and warranties,
covenants, events of default and conditions (including, without limitation, a
condition precedent that the structure and terms of the Offer and the Merger
are acceptable to the Arrangers) customary for transactions of this size and
type. Parent has agreed to pay certain expenses of, and provide customary
indemnities for, the Arrangers.
The foregoing summary of the source and amount of funds is subject to
preparation and completion of a definitive credit agreement for the Credit
Facility. If and when definitive agreements relating to the Credit Facility
are executed, copies will be filed as exhibits to an amendment to the Tender
Offer Statement on Schedule TO relating to the Offer which the Purchaser has
filed with the Commission (the "Schedule TO"). There are currently no
alternative financing arrangements in the event the primary financing becomes
unavailable.
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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 (including the shares of Common Stock) if such credit
is secured directly or indirectly by margin stock. The Purchaser believes that
the financing of the acquisition of the shares of Common Stock will not be
subject to the margin regulations.
Based on publicly available information, Parent estimates that
approximately $838 million may be necessary to repay or purchase existing
long-term and short-term indebtedness of the Company which may be required to
be repaid or purchased by reason of the consummation of the Offer. The Company
currently intends to request that certain of the lenders of such indebtedness
waive the provisions in the documents relating to such indebtedness which
would require such repayment or purchase. To the extent the Company is unable
to obtain any such waivers, Parent currently intends to provide the Company,
through a combination of loans and/or capital contributions, with the
necessary funds to repay or purchase such indebtedness from the incurrence of
debt by Parent under existing credit facilities.
10. Background of the Offer.
On September 27, 1999, during a social outing, Mr. James L. Miller,
Chairman, President and Chief Executive Officer of the Company and Mr. Robert
G. Tobin, a member of the Corporate Executive Board of Parent and the
President and Chief Executive Officer of Ahold U.S.A., Inc. ("Ahold U.S.A."),
discussed potential business opportunities involving the Company and Parent.
On October 11, 1999, Mr. Miller and Mr. Tobin met and further discussed
potential business opportunities involving the Company and Parent.
On December 2, 1999, Mr. Miller, Mr. Mark P. Kaiser, Executive Vice
President-Sales, Marketing and Procurement of the Company, Mr. Tobin, Mr.
Ernie Smith, Executive Vice President Finance and Chief Financial Officer of
Ahold U.S.A., Mr. Maarten Dorhout Mees, Senior Vice President Business
Development of Parent, and Mr. Gerard van Breen, Senior Vice President Global
Sourcing of Parent met at the Chantilly, Virginia office of Ahold U.S.A., to
discuss generally a potential transaction.
On December 3, 1999, the meeting continued at the head office of the
Company in Columbia, Maryland among Messrs. Miller, Kaiser, Tobin, Dorhout
Mees and Van Breen. Following this meeting, Messrs. Kaiser, Dorhout Mees and
Van Breen visited one of the Company's distribution centers located near its
head office, as well as one of its supplies and equipment shops. The visit
concluded again at the Company's head office, where Messrs. Dorhout Mees and
Van Breen briefly met with Mr. Miller and Mr. George Megas, Chief Financial
Officer of the Company. At this time, Mr. Miller indicated that, if the
Company were to pursue a business combination transaction, it would seek a
proposal of at least $30 per share of Common Stock.
On December 10, 1999, Mr. David M. Abramson, Executive Vice President and
General Counsel of the Company, forwarded a draft confidentiality agreement to
Mr. Michael Meurs, Executive Vice President and Chief Financial Officer of
Parent. On December 15, 1999, representatives of Parent and the Company signed
the Confidentiality Agreement (as hereinafter defined).
On December 15, 1999, Mr. Meurs forwarded to Mr. John Shaughnessy of
Goldman Sachs & Co., financial adviser to the Company, a request to provide
certain non-public information regarding the Company to facilitate Parent's
analysis of the Company.
During the week of December 20, 1999, Parent and Merrill Lynch & Co., the
financial adviser to Parent for the transaction, commenced a preliminary due
diligence review of the Company.
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On December 27, 1999, Messrs. Miller and Tobin met in Florida and discussed
issues relating to a potential strategic transaction between the Company and
Parent.
On January 14, 2000, representatives of Merrill Lynch communicated, on
behalf of Parent, to representatives of Goldman Sachs a preliminary indication
of Parent's interest with respect to a potential business combination in a
transaction range of $28-30 per share of Common Stock, without committing to
the form of consideration.
On January 20, 2000, the Corporate Executive Board of Parent met with Mr.
Miller and Mr. Kaiser in London. At this meeting, Mr. Miller provided the
Corporate Executive Board of Parent with an industry overview and a Company
overview. The Company overview included a description of the Company's growth
strategy, an analysis of its stockholder base, a synergies analysis and
Company highlights.
On January 21, 2000, representatives of Goldman Sachs met with
representatives of Merrill Lynch to discuss valuation issues and possible
synergies from a potential business combination transaction between the
Company and Parent.
On January 25, 2000, Messrs. Smith, Miller, Megas and Kaiser met to discuss
an overview of their operations and potential synergies with Ahold U.S.A.
Potential administrative, procurement, distribution, equipment and supplies
savings and implementation issues were discussed. Mr. Jan-Wytze van Boven,
Vice President Mergers and Acquisitions of Parent, participated in the meeting
by telephone. The parties agreed to continue discussions and to coordinate
further due diligence of the Company by Parent during the first week of
February.
On February 4, 2000, Mr. Cees van der Hoeven, President and Chief Executive
Officer of Parent, and Messrs. Tobin and Meurs discussed by telephone with Mr.
Miller the stock market reaction to the Company's second quarter results.
Messrs. Van der Hoeven, Tobin and Meurs informed Mr. Miller that the decrease
in the Company's share price would likely lead to a decrease in the price per
share of Common Stock that Parent would be prepared to pay.
On February 7, 2000, Messrs. Tobin and Meurs telephoned Mr. Miller to
present a preliminary proposal whereby Parent would acquire the Company at a
price of $26 per share (the Company's stock price closed at $12-3/8 on this
date). This preliminary proposal was subject to, among other things, further
due diligence, negotiation of a merger agreement with adequate deal
protections and approval of each of the Supervisory Board of Parent and the
Board of Directors of the Company. No decision was made regarding whether such
purchase price would be payable in cash or common shares of Parent. The
parties also discussed Parent's request for a break-up fee and a lock-up stock
option.
On February 8, 2000, Messrs. Meurs and Miller agreed by telephone
conference that Parent would continue its due diligence investigation. Mr.
Meurs indicated that Parent expected the due diligence to be principally
confirmatory in nature.
On February 8, 2000, White & Case LLP, legal counsel to Parent, had several
telephone conversations with legal counsel to the Company, during which they
discussed certain provisions of the Merger Agreement, including the request by
Parent to be granted a break-up fee and a lock-up stock option.
On February 9, 2000, Mr. Meurs sent a telecopy to Mr. Miller informing Mr.
Miller that, among other things, Parent would be willing to consider an all-
cash tender offer transaction at $26 per share of Common Stock.
In the afternoon of February 10, 2000, White & Case LLP, Simpson Thacher &
Bartlett and Mr. Abramson discussed by telephone conference the request by
Parent to be granted a lock-up stock option by the Company.
In the evening of February 10, 2000, Mr. Ton van Tielraden, Senior Vice
President and General Counsel of Parent, met with Mr. Abramson in Washington
D.C., where they discussed various issues regarding the Merger Agreement.
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On February 14, 2000, White & Case LLP delivered a first draft of the
Merger Agreement to Simpson Thacher & Bartlett and the Company.
On February 15, 2000, Messrs. Miller and Kaiser joined a meeting of the
Corporate Executive Board of Parent, Mr. William Grize, President and Chief
Executive Officer of Stop & Shop, and Mr. Bert Verhelst, Senior Vice President
Administration of Parent. During dinner following the meeting, the attendees
discussed in a general fashion synergy opportunities from the transaction.
During the period from February 16, 2000 until March 3, 2000, White & Case
LLP and Simpson Thacher & Bartlett conducted extensive negotiations of the
terms of the Merger Agreement. The negotiations focused on, among other
matters, the break-up fee, the grant by the Company of a lock-up stock option
to Parent and the no-shop provision. During that period, Mr. Van Tielraden and
Mr. Abramson also had a number of telephone conversations to discuss various
issues regarding the Merger Agreement. Towards the very end of this period,
the parties ultimately agreed, after lengthy negotiations, upon the amount of
the break-up fee and that the Company would not grant a lock-up stock option
to Parent.
Between March 3 and March 6, 2000, the legal advisors of the two parties
completed the negotiation of the remaining issues of the Merger Agreement.
On March 6, 2000, the Board of Directors of the Company approved the Offer
and the Merger.
On the morning of March 7, 2000, the Supervisory Board of Parent met to
consider and approve the transaction. The Parties executed the Merger
Agreement as of March 7, 2000, and publicly announced the transaction on that
date.
11. Purpose of the Offer; Plans for the Company; Certain Agreements.
Purpose of the Offer. The purpose of the Offer is to enable Parent to
acquire as many outstanding shares of Common Stock as possible as a first step
in acquiring the entire equity interest in the Company. The purpose of the
Merger is for Parent to acquire all remaining shares of Common Stock not
purchased pursuant to the Offer. Upon consummation of the Merger, the Company
will become an indirect wholly owned subsidiary of Parent. The Offer is being
made pursuant to the Merger Agreement.
Under the DGCL, the approval of the Board of Directors of the Company is
required to approve and adopt the Merger Agreement and the transactions
contemplated thereby, including the Merger. Unless the Merger is consummated
pursuant to the "short-form" merger provisions under Section 253 of the DGCL
described below (in which case no vote of the holders of the outstanding
shares of Common Stock is required), the only remaining required corporate
action of the Company is the adoption of the Merger Agreement and the approval
of the Merger by vote of the holders of a majority of the outstanding shares
of Common Stock. The Board of Directors of the Company has unanimously (i)
determined that the terms of each of the Offer and the Merger of the Purchaser
with and into the Company are fair to, and in the best interests of, the
Holders of shares of Common Stock and declared that the Offer and the Merger
are advisable, (ii) approved the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, and (iii)
recommended that the Holders accept the Offer, tender their shares of Common
Stock (including the Rights) pursuant to the Offer and (if required by
applicable law) adopt the Merger Agreement.
In the Merger Agreement, the Company has agreed to take all action
necessary to convene a meeting of its stockholders as soon as practicable
after the consummation of the Offer for the purpose of considering and taking
action on the Merger Agreement and the transactions contemplated thereby if
such action is required by the DGCL. However, under the DGCL, if the Purchaser
acquires, pursuant to the Offer or otherwise, at least 90% of the outstanding
shares of Common Stock, the Purchaser will be able to approve the Merger
without a vote of the Company's stockholders. Accordingly, if the Purchaser
acquires at least 90% of the outstanding shares of
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Common Stock, it will have sufficient voting power to cause the approval and
adoption of the Merger Agreement and the transactions contemplated thereby
without a vote of the Company's stockholders. In such event, Parent, the
Purchaser and the Company have agreed in the Merger Agreement to take, at the
request of the Purchaser, all necessary and appropriate action to cause the
Merger to become effective without a meeting of the Company's stockholders.
If, however, the Purchaser does not acquire at least 90% of the outstanding
shares of Common Stock pursuant to the Offer or otherwise and a vote of the
Company's stockholders is required under the DGCL, a significantly longer
period of time would be required to effect the Merger.
If the Purchaser purchases a majority of the outstanding shares of Common
Stock pursuant to the Offer, the Merger Agreement provides that the Purchaser
will be entitled to designate representatives to serve on the Board of
Directors of the Company in proportion to the Purchaser's ownership of shares
of Common Stock following such purchase. The Purchaser expects that such
representation would permit the Purchaser to exert substantial influence over
the Company's conduct of its business and operations.
Plans for the Company. Subject to certain matters described below, it is
currently expected that, initially following the Merger, the business and
operations of the Company will generally continue as they are currently being
conducted. Parent currently intends to cause the Company's operations to
continue to be run and managed by, amongst others, the Company's existing
executive officers. Parent will continue to evaluate all aspects of the
business, operations, capitalization and management of the Company during the
pendency of the Offer and after the consummation of the Offer and the Merger
and will take such further actions as it deems appropriate under the
circumstances then existing. Parent intends to seek additional information
about the Company during this period. Thereafter, Parent intends to review
such information as part of a comprehensive review of the Company's business,
operations, capitalization and management.
As a result of the completion of the Offer, the interest of Parent in the
Company's net book value and net earnings will be in proportion to the number
of shares of Common Stock acquired in the Offer. If the Merger is consummated,
Parent's interest in such items and in the Company's equity generally will
equal 100% and Parent and its subsidiaries will be entitled to all benefits
resulting from such interest, including all income generated by the Company's
operations and any future increase in the Company's value. Similarly, Parent
will also bear the risk of losses generated by the Company's operations and
any future decrease in the value of the Company after the Merger. Subsequent
to the Merger, current stockholders of the Company will cease to have any
equity interest in the Company, will not have the opportunity to participate
in the earnings and growth of the Company after the Merger and will not have
any right to vote on corporate matters. Similarly, stockholders will not face
the risk of losses generated by the Company's operations or decline in the
value of the Company after the Merger.
The shares of Common Stock are currently traded on the NYSE. Following the
consummation of the Merger, the shares of Common Stock will no longer be
listed on the NYSE and the registration of the shares of Common Stock under
the Exchange Act will be terminated. Accordingly, after the Merger there will
be no publicly-traded equity securities of the Company outstanding and the
Company will no longer be required to file periodic reports with the
Commission. See Section 13--"Effect of the Offer on the Market for the Shares
of Common Stock; Exchange Act Registration". It is expected that, if shares of
Common Stock are not accepted for payment by the Purchaser pursuant to the
Offer and the Merger is not consummated, the Company's current management,
under the general direction of the current Board of Directors, will continue
to manage the Company as an ongoing business.
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 any of its subsidiaries, or purchase, sale or transfer of a
material amount of assets of the Company or any of its subsidiaries or in any
other material changes to the Company's capitalization, dividend policy,
corporate structure, business or composition of the Board of Directors of the
Company or the management of the Company, except that Parent intends to review
the composition of the boards of directors (or similar governing bodies) of
the Company and its subsidiaries and to cause the election to such boards of
directors (or similar governing bodies) of certain of its representatives.
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Merger Agreement
The following is a summary of the material terms of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement,
a copy of which has been filed with the Commission as an exhibit to the
Schedule TO. The 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 Offer. The 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 of Common Stock tendered
pursuant to the Offer shall be subject to only those conditions set forth
therein. Subject to the terms of the Merger Agreement, Parent and the
Purchaser may modify the terms of the Offer, including, without limitation, to
extend the Offer beyond the Expiration Date or waive any of the conditions set
forth in Section 14--"Conditions of the Offer"; provided, however, that Parent
and the Purchaser shall not, without the prior written consent of the Company,
(i) reduce the number of shares of Common Stock to be purchased pursuant to
the Offer, (ii) reduce the Offer Price, (iii) impose any additional conditions
to the Offer, (iv) change the form of consideration payable in the Offer, (v)
make any change to the terms of the Offer which is adverse in any manner to
the Holders, (vi) extend the Expiration Date beyond twenty (20) business days
after commencement of the Offer except (A) as required by applicable law, (B)
as specified in the immediately succeeding sentence or (C) that if any of the
conditions set forth in Section 14--"Conditions of the Offer" have not been
satisfied or waived, the Purchaser may, in its sole discretion, extend the
Expiration Date from time to time for one or more periods not exceeding, in
each case, ten (10) business days, unless Parent reasonably believes that such
condition is not capable of being satisfied within such time, in which case
the Purchaser may extend the Expiration Date for a period up to twenty (20)
business days, but in no event later than the Termination Date, (vii) waive
the Minimum Condition, (viii) waive the HSR Condition or the conditions set
forth in clause (iii)(a) or (iii)(b) of Section 14--"Conditions of the Offer"
unless the Purchaser shall pay for all shares of Common Stock validly tendered
and not withdrawn promptly following the Purchaser's acceptance for payment of
such shares of Common Stock, or (ix) waive the condition set forth in clause
(iii)(f) of Section 14--"Conditions of the Offer"; provided, however, that the
Offer may be extended so as to comply with applicable rules and regulations of
the Commission or the staff thereof, unless the reason for such extension is
the result of a material breach of the Merger Agreement by Parent or the
Purchaser. Notwithstanding the foregoing sentence, the Purchaser may, without
the consent of the Company, extend the Offer for up to ten (10) business days
in the aggregate notwithstanding that all of the conditions set forth in
Section 14--"Conditions of the Offer" have been satisfied, if, on any
Expiration Date of the Offer, more than 80% but less than 90% of the shares of
Common Stock have been validly tendered and not withdrawn, so long as the
Purchaser irrevocably waives the continued satisfaction of any of the
conditions set forth in Section 14--"Conditions of the Offer", other than (x)
the Minimum Condition, (y) the condition set forth in clause (iii)(f) of
Section 14--"Conditions of the Offer", to the extent the Merger Agreement is
terminated pursuant to paragraphs (a), (b)(i), (c), (d)(iii) or (d)(iv) under
the heading --"Termination" hereof or (z) any of the conditions set forth in
clause (iii)(a) or (iii)(b) of Section 14 --"Conditions of the Offer", but
only to the extent that the failure of such condition is due to an event
making it illegal to purchase shares of Common Stock pursuant to the Offer.
The Merger Agreement further provides that if, on any Expiration Date of the
Offer, the Offer would have expired due to the failure to satisfy (w) any of
the conditions set forth in clause (iii)(a), (iii)(b) or (iii)(c) of Section
14--"Conditions of the Offer", (x) HSR Condition or (y) the Minimum Condition,
Parent shall, at the request of the Company, cause the Purchaser to extend the
Expiration Date (A) in the case of clause (w) or (x), from time to time for
one or more periods not exceeding, in each case, ten (10) business days, but
in no event later than the Termination Date and (B) in the case of clause (y),
for one or more periods not exceeding, in the aggregate, twenty (20) business
days, but in no event later than the Termination Date, unless, in each case,
Parent reasonably believes at such time that such tender offer condition is
not capable of being satisfied. Notwithstanding anything to the contrary
contained herein, Parent and the Purchaser have further agreed that, if the
Company shall have affirmatively announced to the Holders a neutral position
with respect to an Acquisition Proposal (as hereinafer defined), Parent shall,
at the request of the Company, cause the Purchaser to extend the Expiration
Date to the date ten (10) business days
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after the date of initial announcement of such neutral position by the
Company. Assuming prior satisfaction or waiver of the conditions set forth in
Section 14--"Conditions of the Offer", Parent shall provide funds to the
Purchaser and the Purchaser shall, as soon as permissible after commencement
of the Offer, accept for payment and pay for, in accordance with the terms of
the Offer, the shares of Common Stock that have been validly tendered and not
withdrawn at or prior to the expiration of the Offer.
Pursuant to the terms of the Merger Agreement, the Company has consented to
the Offer and the Merger and has represented (a) that the Board of Directors
of the Company has, by unanimous vote, (i) determined that each of the Offer
and the Merger is fair to, and in the best interest of, the Holders, (ii)
declared that the Offer and the Merger are advisable, (iii) approved the
Offer, the Merger and the Merger Agreement in accordance with the provisions
of the DGCL, (iv) recommended that the Holders accept the Offer and adopt the
Merger Agreement, and (v) taken all other action necessary to render Section
203 of the DGCL inapplicable to the Offer and the Merger and (b) that Goldman,
Sachs & Co. has delivered to the Board of Directors of the Company its opinion
that the consideration to be received by the Holders pursuant to the Offer and
the Merger is fair, from a financial point of view, to such Holders, subject
to the assumptions and qualifications contained in such opinion.
Composition of the Board Following Consummation of the Offer. The Merger
Agreement provides that, promptly upon the consummation of the Offer, the
Purchaser shall be entitled to designate such number of directors (the
"Designees"), rounded up to the next whole number, on the Board of Directors
of the Company as is equal to the product of the total number of directors on
the Board of Directors of the Company (determined after giving effect to any
increase in the size of such Board pursuant to this sentence) multiplied by
the percentage that the number of shares of Common Stock beneficially owned by
the Purchaser or its affiliates at such time bears to the total number of
shares of Common Stock then outstanding. At such time, the Company shall use
commercially reasonable efforts to take any and all such action needed to
cause the Designees to be appointed to the Board of Directors of the Company,
including using its commercially reasonable efforts to cause certain directors
to resign and/or increasing the size of the Board of Directors of the Company;
provided, however, that the Company and the Purchaser shall use their
respective commercially reasonable efforts so that the Board of Directors of
the Company shall continue to have at least three (3) members who were
directors of the Company on the signing date of the Merger Agreement (the
"Continuing Directors").
Following the election or appointment of the Designees pursuant to the
terms of the Merger Agreement and prior to the Effective Time, any amendment
or modification of the Merger Agreement, the Company's Certificate of
Incorporation or the Company's By-laws, any termination of the Merger
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or the Purchaser
or waiver of any of the Company's rights under the Merger Agreement, and any
other consent or action by the Company pursuant to the Merger Agreement, shall
be effected only if there are in office one or more Continuing Directors and
such action is approved by a majority of such Continuing Directors.
The Merger. The 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 the Company as soon as practicable following the
satisfaction or waiver of the conditions set forth in the Merger Agreement
(such date, the "Closing Date"), which conditions are described below.
Following the Merger, the separate corporate existence of the Purchaser will
cease and the Company will continue as the surviving corporation (the
"Surviving Corporation").
At the Effective Time, each issued and outstanding share of Common Stock
(other than shares of Common Stock held by any wholly owned subsidiary of the
Company or in the treasury of the Company, or, directly or indirectly, by
Parent or any subsidiary of Parent (including the Purchaser), which shares of
Common Stock shall cease to be outstanding and be canceled and none of which
shall receive any payment with respect thereto, and other shares of Common
Stock, if any, held by Holders who perfect their appraisal rights under the
DGCL) will, by virtue of the Merger and without any action by the Holders
thereof, be converted into the right to receive an amount in cash equal to the
Offer Price (the "Merger Consideration") payable to the Holder thereof,
without interest thereon.
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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
Merger and without any action on the part of the holder thereof, be converted
into one fully paid and nonassessable share of common stock, par value $0.01
per share, of the Surviving Corporation.
The Merger Agreement provides that the respective obligations of Parent and
the Purchaser, on the one hand, and the Company, on the other hand, to effect
the Merger are subject to the satisfaction or waiver (subject to applicable
law), at or prior to the Effective Time, of each of the following conditions:
(i) to the extent required by applicable law, the Merger Agreement shall have
been adopted by Holders of a majority of the shares of Common Stock entitled
to vote thereon (voting as one class, with each share of Common Stock having
one (1) vote); (ii) no temporary restraining order, preliminary or permanent
injunction or other order shall have been issued by any federal, state or
foreign court or by any court of competent jurisdiction and no other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect; (iii) no federal, state or foreign statute, rule, regulation,
executive order, decree or order of any kind shall have been enacted, entered,
promulgated or enforced by any domestic or foreign court, arbitral tribunal,
administrative agency or commission or other governmental or regulatory agency
or authority (each a "Governmental Entity") which prohibits, restrains,
restricts or enjoins the consummation of the Merger or has the effect of
making the Merger illegal; and (iv) the Purchaser shall have accepted for
payment and paid for all shares of Common Stock validly tendered in the Offer
and not withdrawn.
Directors and Officers of the Surviving Corporation. The 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 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 their respective successors shall be duly elected
or appointed and qualified. At the Effective Time, the officers of the Company
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.
Company Stockholders' Meeting. Pursuant to the Merger Agreement, promptly
following the purchase of shares of Common Stock pursuant to the Offer, if
required by law in order to consummate the Merger, the Company, acting through
the Board of Directors of the Company, shall, in accordance with applicable
law, (i) duly call, convene and hold a meeting of the stockholders of the
Company (the "Stockholders' Meeting") for the purpose of voting upon the
Merger Agreement and (ii) take all action necessary and advisable to secure
the vote of stockholders required by applicable law, the Company's Restated
Certificate of Incorporation, as amended, and Amended and Restated By-laws to
obtain their adoption of the Merger Agreement. The Company has agreed that, if
required by law, it shall include in the proxy statement or information
statement (the "Proxy Statement") required in connection with the
Stockholders' Meeting the recommendation of the Board of Directors of the
Company that the stockholders of the Company adopt the Merger Agreement.
Parent shall cause all shares of Common Stock of the Company owned by Parent
and its direct and indirect subsidiaries (including the Purchaser) to be voted
in favor of the Merger Agreement.
Interim Operations. The Merger Agreement provides that the Company agrees
that, except as expressly permitted or required by the Merger Agreement or
otherwise consented to in writing by Parent, during the period commencing on
March 7, 2000, until such time as nominees of Parent shall comprise a majority
of the members of the Board of Directors of the Company or the Merger
Agreement shall have been terminated pursuant to its termination provisions,
each of the Company and its subsidiaries will conduct its respective
operations only according to its ordinary and usual course of business
consistent with past practice and, except and to the extent it relates to the
performance by the Company of its obligations under the Merger Agreement, use
their commercially reasonable efforts to preserve intact its respective
business organizations, keep available the services of their respective
officers and key employees and maintain satisfactory relationships with
licensors, suppliers, distributors, clients, customers and others having
significant business relationships with them and, except as otherwise
disclosed by the Company, neither the Company nor any of its subsidiaries
shall (i) change
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or amend its certificate of incorporation or its by-laws (or comparable
governing documents), (ii) except for the possible issuance by the Company of
(u) approximately $9,000,000 worth of shares of Common Stock as employer
contributions to the 401(k) Retirement Savings Plan of the Company, (v) Rights
or other securities pursuant to the terms of the Rights Agreement, (w) 560,000
shares of Common Stock pursuant to the Company Stock Unit Plans and the
Company Deferred Compensation Plan (as such terms are hereinafter defined)
(assuming a price of $13.00 per share of Common Stock as of the relevant
valuation date), (x) 143,113.7 shares of Common Stock pursuant to the terms of
that certain common stock purchase warrant (the "BT Warrant"), dated December
23, 1997, issued by the Company to Bankers Trust New York Corporation subject
to adjustment, or (y) 4,983,574 shares of Common Stock and/or reload options
covering a number of shares of Common Stock (which reload options would have
exercise prices equal to the fair market value (as defined in the relevant
Company Stock Option Plan (as hereinafter defined)) of a share of Common Stock
on the date such reload option is granted), in each case, required to be
issued pursuant to the terms of any vested stock option (collectively, whether
vested or unvested, the "Company Stock Options") issued by the Company under
the Company Stock Option Plan for Outside Directors, dated as of November 22,
1994, as amended from time to time, the Company 1994 Stock Incentive Plan,
dated as of November 22, 1994, as amended from time to time, the Company 1998
Stock Option and Incentive Plan, dated as of September 24, 1998, as amended
from time to time, the Rykoff-Sexton, Inc. 1980 Stock Option Plan, as amended
from time to time, the Rykoff-Sexton, Inc. 1988 Stock Option and Compensation
Plan, as amended from time to time, the Amended and Restated US Foodservice
Inc. 1992 Stock Option Plan, as amended from time to time, the Rykoff-Sexton,
Inc. 1993 Director Stock Option Plan, as amended from time to time, the
Amended and Restated US Foodservice Inc. 1993 Stock Option Plan, as amended
from time to time, the Rykoff-Sexton, Inc. 1995 Key Employees Stock Option and
Compensation Plan, and the stock option and compensation plan disclosed by the
Company as required by the Merger Agreement (collectively, the "Company Stock
Option Plans") as the case may be, issue or sell, or authorize to issue or
sell, any shares of its capital stock or any other securities, or issue or
sell, or authorize to issue or sell, any securities convertible into or
exchangeable for, or options, warrants or rights to purchase or subscribe for,
or enter into any arrangement or contract with respect to the issuance or sale
of, any shares of its capital stock or any other securities, (iii) sell or
pledge or agree to sell or pledge any stock or other equity interest owned by
it in any other person, (iv) declare, pay or set aside any dividend or other
distribution or payment with respect to, or split, combine, redeem or
reclassify, or purchase or otherwise acquire, any shares of its capital stock
or its other securities (other than any dividends or other distributions, by
any direct or indirect wholly-owned subsidiary of the Company to another
direct or indirect wholly-owned subsidiary of the Company or to the Company),
(v) enter into any contract or commitment with respect to capital expenditures
not contemplated by the annual budget of the Company, other than any such
contract or commitment which has a value of less than, and requires
expenditures by the Company or such subsidiary of less than, $3,000,000, (vi)
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
person (other than investments in, or acquisitions of, businesses not
exceeding, in each case, $7,500,000), or otherwise acquire any assets of any
person (other than (A) the purchase of assets (other than inventory) in the
ordinary course of business and consistent with past practice, (B)
acquisitions, mergers, consolidations or purchases involving only the Company
and/or its wholly owned subsidiaries and no other person, (C) the purchase of
assets pursuant to contracts with any customer not exceeding $50,000,000 in
any year or $150,000,000 in the aggregate or any contract with any customer
that is terminable by the Company within ninety (90) days without penalty
(collectively, the "Excluded Contracts") and (D) the purchase of inventory not
purchased pursuant to any contract or any purchase order which represents
aggregate purchases of over $100,000,000 (collectively, "Material Inventory
Contracts") entered into after March 7, 2000), (vii) except to the extent
required under existing employee and director benefit plans, agreements or
arrangements as in effect on March 7, 2000 or applicable law, increase the
compensation or fringe benefits of any of its directors, officers or employees
(other than any such directors, officers or employees who are not executive
officers of the Company or regional vice presidents and who, in each case,
receive less than $250,000 in total annual cash compensation from the Company
or any of its subsidiaries) (provided, however, that the Company's executive
officers, directors and regional vice presidents may receive any increases in
fringe benefits as are generally applicable to all employees of the Company)
or grant any severance or termination pay in an amount exceeding, in each
case, $250,000 not currently required to be paid under existing severance plan
or enter into any employment,
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consulting or severance agreement or arrangement with any present or former
director, officer or other employee of the Company or any of its subsidiaries,
or establish, adopt, enter into or amend or terminate (other than in the
ordinary course of business and consistent with past practice) any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees, (vii)
sell, pledge or otherwise dispose of, encumber or subject to any lien, any
material assets, except in the ordinary course of business consistent with
past practice, (ix) make or rescind any material tax election (other than
consents to extend the statute of limitation with respect to prior tax years)
or settle or compromise any tax liability in an amount in excess of
$1,000,000, (x) except as required by applicable law or generally accepted
accounting principles, make any material change in its method of accounting,
(xi) adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than the
Merger) other than liquidations, dissolutions, mergers, consolidations,
restructurings, recapitalizations, or other reorganizations involving only
wholly-owned subsidiaries of the Company and no other person, (xii) other than
in connection with any action permitted by clauses (v) or (vi) of this
paragraph, (A) modify in any material respect or incur any indebtedness for
borrowed money or guarantee any such indebtedness of another person, other
than (1) indebtedness owing to or guarantees of indebtedness owing to the
Company or any direct or indirect wholly-owned subsidiary of the Company or
(2) for borrowings under existing credit facilities, disclosed in any forms,
reports, schedules, statements, registration statements and other documents
filed by the Company and its subsidiaries with the Commission or disclosed by
the Company as required by the Merger Agreement, in the ordinary course of
business consistent with past practice or (B) make any loans or advances to
any other person, other than to the Company or to any direct or indirect
wholly-owned subsidiary of the Company and other than advances to employees
consistent with past practices, (xiii) except as required by applicable law
and under employee benefit plans in effect as of March 7, 2000, accelerate the
payment, right to payment or vesting of any bonus, severance, profit sharing,
retirement, deferred compensation, stock option, insurance or other
compensation or benefits, (xiv) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction
(A) of any claims, liabilities or obligations (other than claims, liabilities
or obligations in connection with litigation) in the ordinary course of
business and consistent with past practice, (B) of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) contained in any
forms, reports, schedules, statements, registration statements and other
documents filed by the Company and its subsidiaries with the Commission, or
(C) of any claims, liabilities or obligations relating to litigation that
would not result in an uninsured or underinsured payment by or liability of
the Company or any of its subsidiaries in excess of $1,500,000 in the
aggregate, (xv) other than as disclosed by the Company, plan, announce,
implement or effect any reduction in force, lay-off, early retirement program,
severance program or other program or effort concerning the termination of
employment of employees of the Company or its subsidiaries, provided, however,
that routine employee terminations shall not be considered subject to this
clause (xv), (xvi) take any action including, without limitation, the adoption
of any shareholder rights plan or amendments to its certificate of
incorporation or by-laws (or comparable governing documents), 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 the Purchaser, (xvii) modify, amend or waive any material right
or obligation or claim under (in each case, other than in the ordinary course
of business consistent with past practice), or enter into or terminate, any
material contract (other than Excluded Contracts), (xviii) take any action
(other than the issuance of any option or other rights to acquire Common Stock
or shares of Common Stock permitted by clause (ii) of this paragraph), or omit
to take any action, engage in any transaction or enter into any agreement
which would (A) cause any adjustment to the exercise price of the BT Warrant
or (B) entitle any holder thereof to exchange any part or all of the BT
Warrant into a number of shares of Common Stock in excess of the number of
shares of Common Stock such holder would have been entitled to receive had
such holder exercised such part or all of the BT Warrant on March 7, 2000 or
(xix) agree, in writing or otherwise, to take any of the foregoing actions.
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No Solicitation. Pursuant to the Merger Agreement, the Company and its
affiliates and each of their respective officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents shall immediately cease any discussions or negotiations with any
other parties that may be ongoing with respect to any Acquisition Proposal (as
hereinafter defined). From and after March 7, 2000, neither the Company nor
any of its affiliates shall, directly or indirectly, take (and the Company
shall not authorize or permit its or its affiliates, officers, directors,
employees, representatives, consultants, investment bankers, attorneys,
accountants or other agents or affiliates, to so take) any action to (i)
directly or indirectly, solicit, initiate, facilitate or knowingly encourage
the making or submission of any Acquisition Proposal or of an inquiry with
respect to any Acquisition Proposal (including, without limitation, by taking
any action that would make Section 203 of the DGCL inapplicable to an
Acquisition Proposal), (ii) enter into any agreement to (w) facilitate or
further the consummation of, or consummate any Acquisition Proposal, (x)
facilitate the making of an inquiry with respect to any Acquisition Proposal,
(y) approve or endorse any Acquisition Proposal or (z) in connection with any
Acquisition Proposal, require it to abandon, terminate or fail to consummate
the Merger or any other transaction contemplated by the Merger Agreement,
(iii) initiate or participate in any way in any discussions or negotiations
with, or furnish or disclose any information to, any person (other than Parent
or the Purchaser) in connection with any Acquisition Proposal or inquiry with
respect to any Acquisition Proposal, or (iv) grant any waiver or release under
or materially amend any standstill, confidentiality or similar agreement
entered into by the Company or any of its affiliates or representatives.
Notwithstanding the foregoing, the Merger Agreement provides that, prior to
the consummation of the Offer, the Company, in response to an unsolicited
Acquisition Proposal that did not result from a breach in any material respect
of clauses (i) through (iv) of the second sentence of the immediately
preceding paragraph and following delivery to Parent of the information
required by the requirements set forth in the immediately following paragraph
and otherwise in compliance in all material respects with its obligations
under the requirements set forth in the immediately following paragraph, may
(1) participate in discussions with or request clarifications from, or furnish
information to, any third party which makes an unsolicited Acquisition
Proposal, in each case solely for the purpose of obtaining information
reasonably necessary to ascertain whether such Acquisition Proposal is, or
could reasonably likely lead to, a Superior Proposal (as hereinafter defined)
and (2) if the Board of Directors of the Company (after consultation with an
independent, nationally recognized investment bank) reasonably determines in
good faith that such Acquisition Proposal is a Superior Proposal, participate
in discussions or negotiations with or furnish information to any third party
which makes an unsolicited Acquisition Proposal, if, in the case of each of
(1) and (2), (x) such action is taken subject to a confidentiality agreement
with terms not more favorable in any material respect to such third party than
the terms of the Confidentiality Agreement (as hereinafter defined) as in
effect on March 7, 2000 (it being understood that the Company may waive or
amend any standstill provision contained in any existing confidentiality
agreement or enter into a confidentiality agreement with such third party
which does not contain a standstill provision or which contains a standstill
provision which is less favorable in any material respect to the Company than
the standstill provision contained in the Confidentiality Agreement (as
hereinafter defined) (as in effect on March 7, 2000) if the Company waives or
amends the standstill provision in the Confidentiality Agreement (as in effect
on March 7, 2000) to delete such provision or, as the case may be, render it
equally less favorable to the Company) and (y) the Board of Directors of the
Company (after receiving advice from outside nationally recognized legal
counsel to the Company) reasonably determines in good faith that it is
necessary to take such actions in order to comply with its fiduciary duties
under applicable law. Nothing in the provisions described under the heading --
"No Solicitation" hereof shall prohibit the Company or the Board of Directors
of the Company from taking and disclosing to the Holders a position with
respect to an Acquisition Proposal by a third party under Rules 14e-2 and 14d-
9 of the Exchange Act to the extent the Company is required to take a position
under such rules or from making any other public disclosure required by
applicable law or, prior to the consummation of the Offer, from taking any
action contemplated by clause (c)(i) under the heading --"Termination" hereof,
including having the Board of Directors of the Company take such actions as
are necessary to approve or resolve to approve the intention to enter into an
agreement with respect to a Superior Proposal (or any announcement in
connection therewith) or enter into an agreement with respect to a Superior
Proposal concurrently with termination pursuant to such clause (c)(i).
"Acquisition Proposal" means (i) any proposal or offer from any person or
group relating
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to any direct or indirect acquisition or purchase of 20% or more of the
consolidated assets of the Company and its subsidiaries or 20% or more of any
class of equity securities of the Company or any of its subsidiaries, (ii) any
tender offer or exchange offer that, if consummated, would result in any
person beneficially owning 20% or more of any class of equity securities of
the Company or any of its subsidiaries, (iii) any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries, or (iv) any
other business combination transaction the consummation of which could
reasonably be expected to impede, interfere with, prevent or materially delay
the Offer or the Merger or which could reasonably be expected to dilute
materially the benefits to Parent of the transactions contemplated by the
Merger Agreement. "Superior Proposal" means any bona fide written Acquisition
Proposal made by a third party relating to an acquisition or purchase of two-
thirds or more of the outstanding equity securities of the Company or all or
substantially all of the assets of the Company and its subsidiaries taken as a
whole (x) on terms which a majority of the members of the Board of Directors
of the Company (after consultation with an independent nationally recognized
investment bank) reasonably determines in good faith to be more favorable to
the Company and its stockholders (in their capacity as such) from a financial
point of view than the transactions contemplated by the Merger Agreement to
the extent proposed to be modified by Parent in accordance with clause (c)(i)
under the heading --"Termination" hereof and (y) which is reasonably capable
of being consummated (taking into account, among other things, all legal,
financial, regulatory and other aspects of such Acquisition Proposal and the
identity of the person making such Acquisition Proposal).
The Merger Agreement provides that, in addition to the obligations of the
Company set forth in the two immediately preceding paragraphs, promptly (but
in any event within twenty-four (24) hours) of receipt or occurrence thereof,
the Company shall advise Parent of any request for information with respect to
any Acquisition Proposal or of any Acquisition Proposal, or any inquiry,
proposal, discussions or negotiation with respect to any Acquisition Proposal,
the terms and conditions of such request, Acquisition Proposal, inquiry,
proposal, discussion or negotiation and the Company shall promptly (but in any
event within twenty-four (24) hours) of the receipt thereof provide to Parent
copies of any written documentation material to understanding or evaluating
such request, Acquisition Proposal, inquiry, proposal, discussion or
negotiation which is received by the Company from the person (or from any
representatives or agents of such person) making such Acquisition Proposal,
inquiry or proposal or with whom such discussions or negotiations are taking
place and the identity of the person making any such request, Acquisition
Proposal or such inquiry or proposal or with whom any discussion or
negotiation is taking place. The Company shall promptly provide to Parent any
non-public information concerning the Company provided to any other person in
connection with any Acquisition Proposal which was not previously provided to
Parent.
The Merger Agreement provides that, promptly, but in any event within one
(1) day of execution of the Merger Agreement, the Company shall request each
person which has heretofore executed a confidentiality agreement in connection
with its consideration of acquiring the Company or any portion thereof to
return all confidential information heretofore furnished to such person by or
on behalf of the Company and the Company shall use its commercially reasonable
efforts to have such information returned.
Directors' and Officers' Insurance and Indemnification. The Merger
Agreement provides that the certificate of incorporation and the by-laws of
the Surviving Corporation shall contain the provisions with respect to
indemnification, exculpation from liability and advancement of expenses set
forth in the Company's Restated Certificate of Incorporation, as amended, and
Amended and Restated By-laws as in effect on March 7, 2000, 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
(including, without limitation, rights with respect to the transactions
contemplated by the Merger Agreement) thereunder of individuals who on or
prior to the Effective Time were directors or officers of the Company, unless
such modification is required by law. In addition, pursuant to the Merger
Agreement, for a period of six (6) years from the Effective Time, Parent shall
cause the Surviving Corporation to either (a) maintain in effect the Company's
directors' and officers' liability insurance as in effect on April 1, 2000
covering those persons who were covered on March 7, 2000 by the Company's
directors' and officers' liability insurance policy (the "Insured Parties");
provided, however, that in
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no event shall the Surviving Corporation be required to expend in any one year
an amount in excess of 200% of the annual premiums paid by the Company for
such insurance which the Company represents will be not more than $400,000 for
the twelve month period ending on March 31, 2001; 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; and provided,
further, that the Surviving Corporation may substitute for such Company
policies other policies with at least the same coverage and containing terms
and conditions which are no less advantageous, provided, that said
substitution does not result in any gaps or lapses in coverage with respect to
matters occurring on or prior to the Effective Time (including, without
limitation, rights with respect to the transactions contemplated by the Merger
Agreement) or (b) cause Parent's directors' and officers' liability insurance
then in effect to cover the Insured Parties with respect to those matters
covered by the Company's directors' and officers' liability insurance policy
with at least the same coverage as such Company policies as in effect as of
April 1, 2000, 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 on or prior to the Effective Time
(including, without limitation, matters with respect to the transactions
contemplated by the Merger Agreement).
Parent shall cause the Surviving Corporation to indemnify, defend and hold
harmless each person who was, or has been at any time prior to March 7, 2000,
or who becomes prior to the Effective Time, an officer, director or employee
of the Company or any of its subsidiaries to the fullest extent permitted by
applicable law with respect to all acts and omissions arising out of such
individuals' services as officers, directors or employees 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 the Merger Agreement.
Compensation and Benefits. Pursuant to the Merger Agreement, until the
first anniversary of the Closing Date, 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 the Company or any
of its subsidiaries to be provided with compensation and employee benefit
plans (excluding 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 but including the severance pay
practices, programs or arrangements disclosed by the Company) 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. The provisions described in the immediately preceding
sentence shall not create in any current or former employee of the Company or
its subsidiaries any rights to employment or continued employment with Parent,
the Surviving Corporation or the Company or any of their respective
subsidiaries or affiliates or any right to specific terms or conditions of
employment. Except as set forth in this paragraph, from and after the
Effective Time, the Surviving Corporation shall have sole discretion over the
hiring, promotion, retention, termination and other terms and conditions of
the employment of the employees of the Surviving Corporation. Parent shall, or
shall cause the Surviving Corporation to, provide any employee of the Company
or any of its subsidiaries who continues to be an employee of the Surviving
Corporation or any of its subsidiaries as of the Effective Time (each, an
"Affected Employee") full credit for such Affected Employee's service with the
Company or any of its subsidiaries or predecessors for purposes of
eligibility, vesting and benefit accrual (except for benefit accruals under
any defined benefit pension plan) under the employee benefit plans or
arrangements maintained by Parent or the Surviving Corporation in which such
Affected Employees participate for such Affected Employee's service with the
Company or any of its subsidiaries, to the same extent recognized under
similar plans or arrangements of the Company or such subsidiary immediately
prior to the Effective Time. Parent shall, or shall cause the Surviving
Corporation to, (i) waive all limitations as to pre-existing conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to any Affected Employee under any welfare benefit
plans in which such Affected Employees may be eligible to participate after
the Effective Time, other than limitations or waiting periods that are already
in effect with respect to such Affected Employee and that have not been
satisfied as of the Effective Time under any welfare plan maintained for such
Affected Employee
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immediately prior to the Effective Time and (ii) provide each Affected
Employee with credit for any co-payments and deductibles paid prior to the
Effective Time under welfare plans of the Company or any of its subsidiaries
for the plan year in which the Effective Time occurs in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans
that such Affected Employee is eligible to participate in after the Effective
Time. Each Affected Employee shall be eligible for participation in the
equity-related plans of Parent under the same criteria applied to similarly
situated employees of Parent and its affiliates. Following the Effective Time,
Parent shall, or shall cause the Surviving Corporation to, honor and maintain
(i) all employment-related agreements in existence as of March 7, 2000,
between the Company or any of its subsidiaries and an Affected Employee (or an
employee who terminates employment prior to the Effective Time), (ii) all
vacation and other leave earned or accrued by, but not taken by or paid to,
Affected Employees through the Effective Time (as calculated or determined
under policies or plans in effect immediately prior to the Effective Time),
(iii) all provisions in the employee benefit plans for vested benefits and
other vested amounts earned or accrued through the Effective Time and (iv) all
collective bargaining agreements entered into by the Company or any of its
subsidiaries including all employee benefit-related terms and obligations.
Parent shall, or shall cause the Surviving Corporation to, ensure that the
Affected Employees who were employed at the headquarters of the Company and
who were notified of their target bonuses for the current fiscal year of the
Company, receive annual bonuses for the current fiscal year of the Company, in
the aggregate, equal to no less than the aggregate target bonuses such
employees were notified of. Such bonuses shall be payable in accordance with
the Company's historical practice and shall be allocated to such employees in
the discretion of James Miller, or his designee; provided, however, that no
such designation shall be permitted if Mr. Miller dies, terminates his
employment due to disability, voluntarily terminates his employment without
good reason, or the Company terminates his employment with cause, in which
case the allocation shall be based upon such employees' target bonuses. In
addition, with respect to the next fiscal year of the Company, Parent shall
ensure that such employees are provided bonus opportunities that are
comparable to those in effect at such time for similarly situated employees of
Ahold U.S.A.
Equity Compensation Matters; Options. Pursuant to the Merger Agreement, at
the Effective Time, (i) all account balances under the Company Stock Unit
Plans (as hereinafter defined) shall become immediately vested and (ii) each
restricted stock unit (collectively, the "Company Stock Units") under the
Company Stock Unit Plans and participant account balances (collectively, the
"Company Account Balances") under the Company Deferred Compensation Plan (as
hereinafter defined) that represents the right to receive shares of Common
Stock shall be converted into the right to receive an amount, in cash, equal
to the Merger Consideration, multiplied by the number of shares of Common
Stock subject to such Company Stock Unit or Company Account Balance. Within
fifteen (15) days following the date on which the Effective Time occurred, the
outstanding balance in the account of each participant in (w) the Company
Restricted Unit Plan (as amended, the "Company Restricted Unit Plan"), (x) the
Company Supplemental Executive Retirement Plan, dated as of July 1, 1998 (as
amended, the "Company SERP"), (y) the Company Supplemental Executive
Retirement Plan for Regional Vice Presidents, dated as of January 1, 1999 (as
amended, the "Company RVP SERP" and, together with the Company Restricted Unit
Plan and the Company SERP, the "Company Stock Unit Plans") and (z) the Company
Non-Employee Director Voluntary Deferred Compensation Plan, dated as of
January 1, 1999, as amended from time to time (the "Company Deferred
Compensation Plan") shall be distributed to such participant in a single lump
sum in cash. The Company SERP and the Company RVP SERP shall be amended (with
participant consent, as necessary) prior to the Effective Time to permit the
treatment of account balances thereunder as set forth above. As of the
Effective Time, each outstanding Company Stock Option, both vested and
unvested, shall be canceled and the holder thereof shall receive, as soon as
practicable following the Effective Time (but not later than ten (10) days
after the date on which the Effective Time occurred), an amount, in cash,
equal to (i) the number of shares of Common Stock subject to the Company Stock
Option multiplied by (ii) the amount, if any, by which the Merger
Consideration exceeds the per share exercise price specified in such Company
Stock Option (the "Cash Payment"). As of March 7, 2000, all payroll deductions
under the Company Employee Stock Purchase Plan (as amended, the "Company Stock
Purchase Plan") shall cease. Otherwise, the Company Stock Purchase Plan shall
continue to be administered in accordance with its terms; provided, however,
that each right outstanding under such plan as of the next "Investment Date"
(as such term is defined in the Company Stock Purchase Plan) after March 7,
2000 shall be treated as follows: as of the Effective Time, each such right
shall be
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canceled and the holder thereof shall receive, as soon as practicable
following the Effective Time (but not later than ten (10) days after the date
on which the Effective Time occurred), an amount, in cash, equal to (i) the
number of shares of Common Stock subject to it, multiplied by (ii) the Merger
Consideration.
Prior to the Effective Time, the Board of Directors of the Company (or, if
appropriate, any committee thereof) shall take all reasonable actions to (i)
(A) provide for the cancellation, effective at the Effective Time, subject to
the Cash Payment being made, of all Company Stock Options or (B) provide that
upon exercise of any Company Stock Options the holder thereof shall only be
entitled to receive the Cash Payment, (ii) provide for the cancellation,
effective at the Effective Time, subject to the payments provided for in the
immediately preceding paragraph being made, of all Company Stock Purchase Plan
rights, Company Stock Units and Company Account Balances, (iii) terminate, as
of the Effective Time, all Company Stock Option Plans, the Company Stock Unit
Plans, the Company Stock Purchase Plan 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 affiliate thereof and (iv)
amend, as of the Effective Time, the provisions of the Company Deferred
Compensation Plan and any other employee benefit plan providing for the
issuance, transfer or grant of any capital stock of the Company or any such
affiliate, or any interest in respect of any capital stock of the Company or
any such affiliate, to provide no continuing rights to acquire, hold, transfer
or grant any capital stock of the Company or any such affiliate or any
interest in the capital stock of the Company or any such affiliate. Except as
otherwise contemplated in the Merger Agreement, any outstanding stock
appreciation rights or limited stock appreciation rights issued by the Company
or any affiliate of the Company shall be canceled immediately prior to the
Effective Time without any payment therefor. The Company shall take all steps
to ensure that, except as contemplated in the Merger Agreement, neither it nor
any of its affiliates is or will be bound by any Company Stock Options, other
options, warrants, rights or agreements which would entitle any person, other
than Parent or its affiliates, to own any capital stock of the Company or any
of its subsidiaries or to receive any payment in respect thereof.
Agreement to Use Commercially Reasonable Efforts. Pursuant to the Merger
Agreement and subject to the terms and conditions provided therein, each of
the Company, Parent and the Purchaser shall, and the Company shall cause each
of its subsidiaries to, cooperate and use their commercially reasonable
efforts to take, or cause to be taken, all appropriate action, and do, or
cause to be done, and assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Offer, the Merger and the other
transactions contemplated by the Merger Agreement, including the satisfaction
of the respective conditions set forth above under the heading --"The Merger"
in this subsection entitled "Merger Agreement" of this Section 11--"Purpose of
the Offer; Plans for the Company; Certain Agreements" 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 Merger Agreement including, without limitation, their commercially
reasonable efforts to obtain, prior to the Closing Date, all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental entities and parties to contracts with the Company and its
subsidiaries as are reasonably necessary for consummation of the transactions
contemplated by the Merger Agreement and to fulfill the conditions to the
Offer and the Merger.
In addition, the Merger Agreement provides that each party thereto shall
(i) take promptly all actions necessary to make the filings required of it or
any of its affiliates under any applicable antitrust laws in connection with
the Merger Agreement and the transactions contemplated thereby, (ii) comply at
the earliest practicable date with any formal or informal request for
additional information or documentary material received by it or any of its
affiliates from any antitrust authority and (iii) cooperate with one another
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 Merger Agreement initiated by any antitrust
authority. Each party to the Merger Agreement shall use its commercially
reasonable efforts to resolve such objections, if any, as may be asserted with
respect to the transactions contemplated by the Merger Agreement under any
antitrust law. Each party to the Merger Agreement shall promptly inform the
other parties of any material communication made to, or received by such party
from, any antitrust authority or any other Governmental Entity regarding any
of the transactions contemplated thereby.
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Representations and Warranties. In the Merger Agreement, (i) the Company
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, litigation, compliance
with laws, consents and approvals, employee benefit plans, brokers' or
finders' fees, state takeover statutes, voting requirements, undisclosed
liabilities, taxes, intellectual property and the absence of any material
adverse changes in the Company since July 3, 1999 and (ii) Parent and the
Purchaser have made customary representations and warranties to the Company
with respect to, among other things, their respective organization, corporate
authority, consents and approvals, broker's or finder's fees, funds and, in
the case of Parent, voting/approval requirements.
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the Merger by the
Company's stockholders (a) by mutual consent of the Company, on the one hand,
and of Parent and the Purchaser, on the other hand; (b) by either Parent, on
the one hand, or the Company, on the other hand, if: (i) any court of
competent jurisdiction or any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently restricting, enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or payment
for, shares of Common Stock pursuant to the Offer or shares of Common Stock
pursuant to the Merger and such order, decree or ruling or other action shall
have become final and nonappealable; or (ii) the consummation of the Offer
shall not have occurred on or prior to the Termination Date, unless the
consummation of the Offer shall not have occurred because of a material breach
of any representation, warranty, obligation, covenant, agreement or condition
set forth in the Merger Agreement on the part of the party seeking to
terminate the Merger Agreement; (c) by the Company at any time prior to the
consummation of the Offer, if: (i) a Superior Proposal is received and the
Board of Directors of the Company (after receiving advice of outside
nationally recognized legal counsel to the Company) reasonably determines in
good faith that it is necessary to terminate the Merger Agreement and enter
into an agreement to effect the Superior Proposal in order to comply with its
fiduciary duties under applicable law; provided, however, that the Company may
not terminate the Merger Agreement pursuant to this clause (c)(i) unless and
until (i) three (3) business days have elapsed following delivery to Parent of
a written notice of such determination by the Board of Directors of the
Company and during such three (3) business day period (x) the Company has
fully informed Parent of the material terms and conditions of such Superior
Proposal, including the identity of the person making such Superior Proposal
and (y) the Company has negotiated in good faith with Parent with the intent
of enabling both parties to agree to a modification of the terms and
conditions of the Merger Agreement so that the transactions contemplated by
the Merger Agreement may be effected, (ii) at the end of such three (3)
business day period the Acquisition Proposal continues to constitute a
Superior Proposal and the Board of Directors of the Company (after receiving
the advice of outside nationally recognized legal counsel to the Company)
continues to reasonably determine in good faith that it is necessary to
terminate the Merger Agreement and enter into an agreement to effect the
Superior Proposal in order to comply with its fiduciary duties under
applicable law and (iii) (x) prior to such termination, Parent has received
all fees and expense reimbursements set forth in the Merger Agreement by wire
transfer in same day funds and (y) simultaneously or substantially
simultaneously with such termination the Company enters into a definitive
acquisition, merger or similar agreement to effect the Superior Proposal; (ii)
(x) there shall be a breach of any representation or warranty of Parent or the
Purchaser in the Merger Agreement that is qualified as to Material Adverse
Effect (as such term is defined in Section 14--"Conditions of the Offer"), (y)
there shall be a breach of any representation or warranty of Parent or the
Purchaser in the Merger Agreement that is not so qualified, other than any
such breaches which, in the aggregate, have not had, or would not reasonably
likely have, a Material Adverse Effect on Parent, or (z) there shall be a
material breach by Parent or the Purchaser of any of their respective
covenants or agreements contained in the Merger Agreement, which breach, in
the case of clause (x), (y) or (z), either is not reasonably capable of being
cured or, if it is reasonably capable of being cured, has not been cured
within the earlier of (A) ten (10) days after giving of notice to Parent of
such breach and (B) the expiration of the Offer, provided, that the Company
may not terminate the Merger Agreement pursuant to this clause (c)(ii) if the
Company is in material breach of the Merger Agreement, (iii) (x) Parent or the
Purchaser shall have (A) failed to commence the Offer on the fifth business
day following the execution of the Merger Agreement by each of Parent, the
Purchaser and the Company or (B) terminated the Offer or (y) the Offer has
expired without the Purchaser purchasing any shares of Common Stock pursuant
thereto, unless such failure, termination or expiration shall have been caused
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by the failure of the Company to satisfy the conditions set forth in clause
(iii)(d) or (e) of Section 14--"Conditions of the Offer"; (d) by Parent at any
time prior to the consummation of the Offer, if: (i) the Offer is terminated
or expires in accordance with its terms without the Purchaser having purchased
any shares of Common Stock thereunder due to an occurrence which would result
in a failure to satisfy any one or more of the conditions set forth in Section
14--"Conditions of the Offer", unless any such failure shall have been caused
by or resulted from the failure of Parent or the Purchaser to perform in any
material respect any covenant or agreement of either of them contained in the
Merger Agreement or the material breach by Parent or the Purchaser of any
representation or warranty of either of them contained in the Merger
Agreement; (ii) (x) there shall be a breach of any representation or warranty
of the Company in the Merger Agreement that is qualified as to Material
Adverse Effect, (y) there shall be a breach of any representation or warranty
of the Company in the Merger Agreement that is not so qualified other than any
such breaches which, in the aggregate, have not had or would not reasonably
likely have a Material Adverse Effect on the Company, or (z) there shall be a
material breach by the Company of any of its covenants or agreement contained
in the Merger Agreement, which breach, in the case of clause (x), (y) or (z),
either is not reasonably capable of being cured or, if it is reasonably
capable of being cured, has not been cured within the earlier of (A) ten (10)
days after giving of written notice to the Company of such breach and (B) the
expiration of the Offer; provided, that Parent may not terminate the Merger
Agreement pursuant to this clause (d)(ii) if Parent or the Purchaser is in
material breach of the Merger Agreement; (iii) (x) the Company shall have (A)
entered into any agreement with respect to any Acquisition Proposal, (B)
withdrawn, modified or amended, or proposed to withdraw, modify or amend, in a
manner adverse to Parent or the Purchaser, the approval or recommendation, as
the case may be, of the Offer, the Merger or the Merger Agreement, (C)
approved or recommended, or proposed to approve or recommend, any Acquisition
Proposal or (D) affirmatively announced to the stockholders of the Company a
neutral position with respect to any Acquisition Proposal and does not reject
or recommend such Acquisition Proposal prior to the date that is the later of
(1) the date that is ten (10) business days after the date of the initial
announcement of such neutral position (2) two (2) business days prior to the
first scheduled expiration date of the Offer after the date of the initial
announcement of such neutral position, or (y) the Company or the Board of
Directors of the Company or any committee thereof shall have resolved to do
any of the foregoing; it being understood and agreed that neither the delivery
of notice pursuant to clause (c)(i) of this paragraph and any subsequent
public announcement of such notice nor any communications by the Board of
Directors of the Company to the stockholders of the Company pursuant to Rule
14d-9(e)(3) under the Exchange Act shall entitle Parent to terminate the
Merger Agreement pursuant to this clause (d)(iii), unless the Company enters
into a definitive agreement with respect to an Acquisition Proposal; or (iv)
if there shall have been a material breach by the Company of any provision set
forth under the heading--"No Solicitation" of this subsection entitled "Merger
Agreement" of this Section 11--"Purpose of the Offer, Plans for the Company;
Certain Agreements."
The Merger Agreement provides that, in the event of termination of the
Merger Agreement by either Parent or the Company pursuant to the provisions
described above, the Merger Agreement will become void and there shall be no
liability thereunder on the part of the Company, Parent or the Purchaser,
except that (i) certain provisions including, without limitation, broker's and
finder's fees, fees and expenses, confidentiality, applicable law, specific
enforcement and waiver of jury trial shall survive termination and (ii) no
party shall be relieved of liability for willful breach of the Merger
Agreement.
Payment of Certain Fees and Expenses upon Termination. Except as provided
in the immediately succeeding sentence, all costs and expenses incurred in
connection with the Merger Agreement and the consummation of the transactions
contemplated thereby shall be paid by the party incurring such costs and
expenses. If the Merger Agreement is terminated by (i) Parent in accordance
with (w) paragraph (d)(iii)(x)(D) under the heading--"Termination" hereof (or
paragraph (d)(iii)(y) under the heading --"Termination" hereof, to the extent
related to paragraph (d)(iii)(x)(D) under the heading --"Termination" hereof)
and, within six (6) months of such termination, the Company enters into an
agreement with respect to, or consummates, any Acquisition Proposal, (x)
paragraph (d)(i) under the heading --"Termination" hereof, solely due to the
Minimum Condition not being met at the time of such termination and, within
six (6) months of such termination, the Company enters into an agreement with
respect to, or consummates, any Acquisition Proposal, (y) (A) paragraph
(d)(ii) under the heading--"Termination" hereof, (B) prior to the date of such
termination, there shall have been
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publicly announced an Acquisition Proposal and such Acquisition Proposal shall
not have been withdrawn in good faith prior to the date of the breach pursuant
to which the Merger Agreement was terminated and (C) within twelve (12) months
of such termination, the Company enters into an agreement with respect to, or
consummates, any Acquisition Proposal or (z) paragraphs (d)(iii)(x)(A),
(d)(iii)(x)(B) or (d)(iii)(x)(C) under the heading --"Termination" hereof (or
paragraph (a)(iii)(y) under the heading --"Termination" hereof, to the extent
related to paragraphs (d)(iii)(x)(A), (d)(iii)(x)(B) or (d)(iii)(x)(C) under
the heading --"Termination" hereof) or paragraph (d)(iv) under the heading --
"Termination" hereof, or (ii) the Company in accordance with paragraph (c)(i)
under the heading --"Termination" hereof, then the Company shall (A) in the
case of clause (i)(z), on the day next succeeding the date of such
termination, (B) in the case of clause (ii), immediately prior to the Company
entering into an agreement with respect to an Acquisition Proposal, or (C) in
the case of clauses (i)(w), (i)(x) or (i)(y), on the date of consummation of
such Acquisition Proposal, (I) reimburse Parent in immediately available funds
for all expenses of Parent and the Purchaser (including, without limitation,
printing fees, filing fees and fees and expenses of its legal and financial
advisors and all fees and expenses payable to any financing sources) related
to the Offer, the Merger Agreement, the transactions contemplated thereby and
any related financing in an amount not to exceed $12,000,000 in the aggregate
(it being understood that the amount of such expenses requested by Parent
shall be such amount as Parent determines in its sole discretion and shall not
be required to be documented) and (II) pay to Parent in immediately available
funds an amount equal to $86,000,000; provided, however, that, in the case of
clause (i)(y) above, unless such termination is due to the willful breach by
the Company of any representation, warranty, covenant or agreement of the
Company contained in the Merger Agreement, the Company shall pay to Parent in
immediately available funds an amount equal to $15,000,000 plus the amount
referred to in clause (I) above.
Confidentiality Agreement.
The following is a summary of the Confidentiality Agreement, dated as of
December 15, 1999, between Parent and the Company (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 TO. 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 has agreed, among other
things, (a) except as required by law, to keep confidential and not to
disclose any information concerning the business, financial condition,
operations, assets and liabilities of the Company (whether prepared by the
Company, its advisors or otherwise and irrespective of the form of
communication) (the "Evaluation Material"), (b) to use the Evaluation Material
solely for the purpose of evaluating a possible transaction with the Company
and (c) except as required by law, not to disclose to any other person the
fact that the Evaluation Material has been made available. Disclosure of the
Evaluation Material, however, may be made (a) to which the Company gives its
prior written consent or (b) to certain of Parent's affiliates, partners,
directors, officers, employees, agents or advisors (including attorneys,
accountants, consultants, bankers and financial advisors) (collectively, the
"Interested Parties") for purposes of evaluating a possible transaction with
the Company.
The term "Evaluation Material" does not include information which (a) is or
will be in the public domain other than as a result of a disclosure by Parent
or the Interested Parties, (b) was in Parent's possession prior to its being
furnished to Parent by or on behalf of the Company, provided that such
information was not known by Parent to be subject to another confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to the Company or another party or (c) became or becomes
available to Parent on a non-confidential basis from a source other than the
Company or any of its representatives, provided that such source is not bound
by a confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Company or another party.
Parent has agreed that for a period of two years commencing on December 15,
1999, it will not employ or solicit for employment or otherwise engage any of
the Company's current officers or management employees with whom Parent has
had contact during the course of discussions related to the possible
transaction. Parent
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and the Interested Parties have further agreed that, for a period of one year
commencing on December 15, 1999, neither Parent nor the Interested Parties
will, without the prior written consent of the Company:
(a) acquire, offer to acquire or agree to acquire any voting securities
(or rights to acquire voting securities) or any assets of the Company or
any subsidiary, division, successor or controlling person of the Company;
(b) solicit proxies to vote or seek to advise any person with respect to
voting of any voting securities of the Company;
(c) make any public announcement with respect to, or submit a proposal
for or offer of, any extraordinary transaction involving the Company or any
of its securities or assets; or
(d) form or participate in a "group" as defined in Section 13(d)(3) of
the Exchange Act;
unless a third party commences a tender or exchange offer, or proposes a
merger or business combination with the Company and the Company has (i)
exempted such transaction under Section 203 of the DGCL or (ii) publicly
announced or confirmed its engagement in negotiations in connection with such
transaction.
12. Dividends and Distributions. As described above, the Merger Agreement
provides that, subject to certain exceptions, the Company shall not, and shall
not permit any of its subsidiaries to, without the prior written consent of
Parent, (i) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to stockholders of the Company in their
capacity as such, other than dividends payable to the Company declared by any
of the Company's wholly owned subsidiaries, (ii) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities.
13. Effect of the Offer on the Market for the Shares of Common Stock;
Exchange Act Registration.
Market for Shares of Common Stock. The purchase of shares of Common Stock
pursuant to the Offer will reduce the number of shares of Common Stock that
might otherwise trade publicly and could adversely affect the liquidity and
market value of the remaining shares of Common Stock held by the public.
Stock Quotation. The shares of Common Stock are listed on the NYSE.
Depending on the number of shares of Common Stock purchased pursuant to the
Offer, the shares of Common Stock may no longer meet the published
requirements for continued listing on the NYSE and may therefore be delisted
from the NYSE. According to the NYSE's published guidelines, the NYSE would
consider delisting the shares of Common Stock if, among other things, (i) the
number of holders of shares of Common Stock (including beneficial holders of
shares of Common Stock held in the names of NYSE member organizations in
addition to holders of record) should fall below 1,200 and the average monthly
trading value of shares of Common Stock for the most recent 12 months should
be less than 100,000 shares of Common Stock, (ii) the number of publicly held
shares of Common Stock should fall below 600,000 (exclusive of the holdings of
officers, directors or their immediate families and other concentrated
holdings of 10% or more), (iii) the aggregate market value of publicly held
shares of Common Stock should drop below $8,000,000 (exclusive of the holdings
of officers, directors or their immediate families and other concentrated
holdings of 10% or more), (iv) the shares of Common Stock are no longer
registered under the Exchange Act, as described below or (v) the number of
holders of shares of Common Stock (including beneficial holders of shares of
Common Stock held in the names of NYSE members organizations in addition to
holders of record) should fall below 400.
If the NYSE were to delist the shares of Common Stock, it is possible that
the shares of Common Stock would continue to trade on other securities
exchanges or in the over-the-counter market and that price quotations would be
reported by such exchanges or through the Nasdaq Stock Market, Inc.'s National
Market System or other sources. However, the extent of the public market for
the shares of Common Stock and the availability of
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such quotations would depend upon such factors as the number of stockholders
and/or the aggregate market value of the shares of Common Stock remaining at
such time, the interest in maintaining a market in the shares of Common Stock
on the part of securities firms, the possible termination of registration
under the Exchange Act (as described below) and other factors.
Exchange Act Registration. The shares of Common Stock are currently
registered under the Exchange Act. Such registration under the Exchange Act
may be terminated upon application of the Company to the Commission if the
shares of Common Stock are neither listed on a national securities exchange
nor held by 300 or more holders of record. Termination of registration under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b)
of the Exchange Act, the requirement of furnishing a proxy statement pursuant
to Section 14(a) of the Exchange Act in connection with stockholders'
meetings, the related requirement of furnishing an annual report to
stockholders and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 promulgated under
the Securities Act of 1933, as amended, may be impaired or eliminated. The
Purchaser intends to seek to cause the Company to apply for termination of
registration of the shares of Common Stock under the Exchange Act as soon
after the completion of the Offer as the requirements for such termination are
met.
If registration of the shares of Common Stock is not terminated prior to
the Merger, then the shares of Common Stock will be delisted from all stock
exchanges and the registration of the shares of Common Stock under the
Exchange Act will be terminated following the consummation of the Merger.
Margin Regulations. The shares of Common Stock are currently "margin
securities", as such term is defined under the regulations of the Federal
Reserve Board, which has the effect, among other things, of allowing brokers
to extend credit on the collateral of the shares of Common Stock. Depending
upon factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the shares of Common
Stock would no longer constitute "margin securities" for the purposes of the
margin regulations of the Federal Reserve Board and therefore could no longer
be used as collateral for loans made by brokers. In any event, the shares of
Common Stock will cease to be "margin securities" if registration of the
shares of Common Stock under the Exchange Act is terminated.
14. Conditions of the Offer. Notwithstanding any other provision of the
Offer and subject to the Company's rights under the Merger Agreement, 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 of Common Stock promptly after termination or
withdrawal of the Offer), pay for any shares of Common Stock tendered pursuant
to the Offer and may terminate or amend the Offer and may postpone the
acceptance of, and payment for, any shares of Common Stock, if (i) the Minimum
Condition shall not have been satisfied, (ii) any applicable waiting period
(and any extension thereof) under the HSR Act shall not have expired or been
terminated or (iii) at any time on or after the date of the Merger Agreement
and at or before the time of payment for any such shares of Common Stock
(whether or not any shares of Common Stock have theretofore been accepted for
payment or paid for pursuant to the Offer) any of the following shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding by any government or any governmental authority or agency,
domestic or foreign, before any court of competent jurisdiction or
governmental authority or agency, domestic or foreign, (i) challenging or
seeking to, or which would reasonably be expected to, make illegal, impede,
delay or otherwise directly or indirectly restrain or prohibit the Offer or
the Merger, (ii) seeking to prohibit or materially limit the ownership or
operation by Parent or the Purchaser of all or any material portion of the
business or assets of the Company and its subsidiaries taken as a whole, or
to compel Parent or the Purchaser to dispose of or hold separately all or
any material portion of the business or assets of Parent and its
subsidiaries taken as a whole or the Company and its
41
<PAGE>
subsidiaries taken as a whole, or seeking to impose any limitation on the
ability of Parent or the Purchaser to conduct its business or own such
assets, (iii) seeking to impose limitations on the ability of Parent or the
Purchaser effectively to exercise full rights of ownership of the shares of
Common Stock, including, without limitation, the right to vote any shares
of Common Stock acquired or owned by the Purchaser or Parent on all matters
properly presented to the Company's stockholders, (iv) seeking to require
divestiture by Parent or the Purchaser of any shares of Common Stock or (v)
seeking any material diminution in the benefits expected to be derived by
Parent or the Purchaser as a result of the transactions contemplated by the
Offer or the Merger;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended or issued and applicable to or
deemed applicable to (i) Parent, the Purchaser, the Company or any
subsidiary of the Company or (ii) the Offer or the Merger, by any
legislative body, court, government or governmental, administrative or
regulatory authority or agency, domestic or foreign, other than the routine
application of the waiting period provisions of the HSR Act, to the Offer
or to the Merger, that would reasonably be expected to result directly or
indirectly in any of the consequences referred to in paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any United States securities
exchange, in any United States over-the-counter market or the Amsterdam
Stock Exchange, for a period in excess of three hours (excluding
suspensions or limitations resulting solely from physical damage or
interference with such exchanges not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or The Netherlands, (iii) any
material limitation (whether or not mandatory) by any United States Federal
or United States state or Netherlands' governmental authority or agency on
the extension of credit by banks or other lending institutions or (iv) in
the case of any of the foregoing existing at the time of the commencement
of the Offer, a material acceleration or worsening thereof;
(d) any representation or warranty of the Company contained in the
Merger Agreement that (i) is qualified as to Material Adverse Effect shall
not be true and correct as of the date of consummation of the Offer as
though made on or as of such date (other than representations and
warranties which by their terms address matters only as of another
specified date, which shall be true and correct only as of such other
specified date), or (ii) is not qualified as to Material Adverse Effect
shall not be true and correct (except where the failure of any such
representation or warranty referred to in this clause (ii) to be so true
and correct, in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect on the Company), as of the date
of consummation of the Offer as though made on or as of such date (other
than representations and warranties which by their terms address matters
only as of another specified date, which shall be true and correct only as
of such other specified date);
(e) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement; or
(f) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the reasonable judgment of the Purchaser, in any such case and
regardless of the circumstances (including any action or inaction by Parent or
the Purchaser) giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of, or payment
for, shares of Common Stock.
"Material Adverse Effect", with respect to any person, shall mean any
event, change, occurrence, effect, fact or circumstance which has, or which
would reasonably be expected to have, a material adverse effect on (i) the
ability of such person to perform its obligations under the Merger Agreement,
or to consummate the transactions contemplated thereby without material delay
or (ii) the financial condition, business, assets or results of operations of
such person and its subsidiaries, taken as a whole, other than any event,
change, occurrence, effect, fact or circumstance relating to (x) the economy
or securities markets in general, (y) the industries in
42
<PAGE>
which such person operates (which, in the case of the Company and its
subsidiaries, is the broadline foodservice distribution business) and not
specifically relating to such person and (z) the performance by such person of
the obligations under the Merger Agreement or the transactions contemplated
thereby.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser subject to the Company's rights under the Merger Agreement and may
be asserted by Parent or the Purchaser, or may be waived by Parent or the
Purchaser, in whole or in part at any time and from time to time in their
respective sole discretion. The failure by Parent or 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.
15. Certain Legal Matters; Regulatory Approvals.
General. Except as otherwise disclosed herein, 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 of Common
Stock by the Purchaser pursuant to the Offer, the Merger or otherwise or (ii)
any approval or other action by any governmental, administrative or regulatory
agency or authority, domestic or foreign, that would be required for the
acquisition or ownership of shares of Common Stock 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.
The Purchaser's obligation under the Offer to accept for payment and pay for
shares of Common Stock is subject to certain conditions. See Section 14--
"Conditions of the Offer". While, except as described in this Offer to
Purchase, the Purchaser does not currently intend to delay the acceptance for
payment of shares of Common Stock 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. The Company has
represented to Parent and the Purchaser in the Merger Agreement that the Board
of Directors of the Company has taken all action necessary to render Section
203 of the DGCL inapplicable to the Offer, the Merger, the Merger Agreement
and the transactions contemplated thereby.
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 holders in the state and were
incorporated there.
43
<PAGE>
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 representations made by the Company in the 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 Merger and nothing in this Offer to Purchase or
any action taken in connection with the Offer or the Merger is intended as a
waiver of such right. In the event it is asserted that one or more state
takeover laws is applicable to the Offer or the Merger, and an appropriate
court does not determine that it is inapplicable or invalid as applied to the
Offer or the 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 of Common Stock tendered pursuant to the Offer, or be delayed in
continuing or consummating the Offer and the Merger. In such case, the
Purchaser may not be obligated to accept for payment any shares of Common
Stock tendered. See Section 14--"Conditions of the Offer".
Appraisal Rights. No appraisal rights are available to Holders in
connection with the Offer.
However, if the Merger is consummated, a Holder of shares of Common Stock
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, such Holder's shares
of Common Stock. 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 Merger) required to be paid in cash to dissenting
stockholders for their shares of Common Stock. Any judicial determination of
the fair value of shares of Common Stock could be based upon considerations
other than or in addition to the Offer Price and the market value of the
shares of Common Stock, including asset values and the investment value of the
shares of Common Stock. 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 Holder 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 Common Stock of such Holder will be
converted into the merger consideration in accordance with the Merger
Agreement. A Holder may withdraw his demand for appraisal by delivering to the
Purchaser a written notice withdrawing such demand for appraisal and accepting
the Merger.
The foregoing summary of the rights of objecting Holders does not purport
to be a complete statement of the procedures to be followed by Holders
desiring to exercise any available appraisal rights.
The preservation and exercise of appraisal rights require strict adherence
to the applicable provisions of the DGCL. The provisions of Section 262 of the
DGCL are complex and technical in nature. Holders desiring to exercise their
appraisal rights may wish to consult counsel, since the failure to comply
strictly with these provisions will result in the loss of their appraisal
rights.
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 Merger, unless, among other things, the
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 Merger and the consideration offered to stockholders of
the Company therein be filed with the Commission and disclosed to stockholders
of the Company prior to consummation of the Merger.
Regulatory Approvals.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission ("FTC"), 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 FTC
44
<PAGE>
and certain waiting period requirements have been satisfied. The acquisition
of shares of Common Stock by the Purchaser pursuant to the Offer is subject to
the HSR Act requirements.
Under the provisions of the HSR Act applicable to the purchase of shares of
Common Stock pursuant to the Offer, such purchase may not be made until the
expiration of a fifteen calendar day waiting period following the required
filing of a Notification and Report Form under the HSR Act by Parent, which
Parent submitted on March 10, 2000. Accordingly, the waiting period under the
HSR Act will expire at 11:59 P.M., New York City time, on March 25, 2000,
which is the fifteenth calendar day following filing of the Notification and
Report Form by Parent, 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 fifteen 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 period could be extended only by court order
or by consent of Parent. If the acquisition of shares of Common Stock 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 of Common Stock pursuant to the Offer will
be deferred until ten days after the request is substantially complied with
unless the waiting period is terminated sooner by the FTC or the Antitrust
Division (and assuming all of the other Offer conditions have been satisfied
or waived). See Section 2--"Acceptance for Payment and Payment for Shares of
Common Stock". 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. Although
the Company is required to file certain information and documentary material
with the Antitrust Division and the FTC in connection with the Offer, neither
the Company's failure to make such filings nor a request to the Company from
the Antitrust Division or the FTC for additional information or documentary
material will extend the waiting period. 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
of Common Stock by the Purchaser pursuant to the Offer. At any time before or
after the Purchaser's purchase of shares of Common Stock, 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 of Common Stock pursuant to the Offer or
seeking divestiture of shares of Common Stock 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 of Common Stock by the Purchaser will not violate the antitrust
laws. Nevertheless, there can be no assurance that a challenge to the Offer 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.
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 of Common Stock pursuant to the Offer.
Merrill Lynch is acting as the Dealer Manager in connection with the Offer.
Pursuant to an engagement letter between Parent and Merrill Lynch, Merrill
Lynch has been retained to act as financial advisor to Parent in connection
with its effort to acquire the Company. Parent has agreed to pay Merrill Lynch
for its services a financial advisory fee of (a) $1,500,000 upon the earlier
of the execution of the Merger Agreement or commencement of the Offer and (b)
$9,000,000 upon the consummation of the transactions contemplated by the
Merger Agreement or the purchase of shares of Common Stock pursuant to the
Offer. In addition, if Parent is entitled to payment of any amounts pursuant
to the second sentence under the heading "Payment of Certain Fees
45
<PAGE>
and Expenses upon Termination" in Section 11, then, in certain cases, Merrill
Lynch will be entitled to receive a fee equal to 5% of the aggregate amount of
such amount paid to Parent. Parent has also agreed to reimburse Merrill Lynch
for all reasonable out-of-pocket expenses incurred by Merrill Lynch, including
the reasonable fees and disbursements of their counsel, provided that such
expenses will not, without prior approval of Parent, exceed $25,000. In
addition, Parent has agreed to indemnify Merrill Lynch and certain related
persons against certain liabilities and expenses, including liabilities under
the Federal securities laws.
The Purchaser and Parent have also retained Wilmington Trust Company 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 of Common Stock 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) Holders 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 Manager 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 TO,
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 TO
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).
Snow Acquisition, Inc.
March 13, 2000
46
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF KONINKLIJKE AHOLD N.V. AND SNOW 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>
<S> <C>
Name and Current Present Principal Occupation or Employment;
Business Address Material Positions Held During the Past Five Years
- ---------------- --------------------------------------------------
H. de Ruiter*.................... Chairman of the Supervisory Board of Koninklijke Ahold
N.V. (Chairman of the Supervisory Board from 1996 to
present and Member of the Supervisory Board from 1994
to present); Former Group Managing Director and
Managing Director of Royal Dutch Petroleum Company;
Member of the Supervisory Board of Royal Dutch
Petroleum Company (1994 to present); Director of Shell
Petroleum N.V. The Hague; Director of Shell Petroleum
Company Ltd. London; Member of the Supervisory Board of
Heineken N.V. (1993 to present); Chairman of the
Supervisory Board of Wolters Kluwer N.V. (5/94 to
present); Chairman of the Supervisory Board of Beers
N.V. (5/95 to present); Vice-Chairman of the
Supervisory Board of Corus Group (10/99 to present);
Chairman of the Supervisory Board of Koninklijke
Hoogovens N.V. (4/97 to 10/99) (Member of the
Supervisory Board from 4/95 to 4/97); Member of the
Supervisory Board of Vopak (11/99 to present); Chairman
of the Supervisory Board of Koninklijke Pakhoed N.V.
(4/97 to 11/99) (Member of the Supervisory Board from
4/95 to 4/97); Member of the Supervisory Board of Aegon
N.V. (5/96 to present)
R.J. Nelissen*................... Vice Chairman of the Supervisory Board of Koninklijke
Ahold N.V. (Vice Chairman of the Supervisory Board from
1992 to present and Member of the Supervisory Board
from 1981 to present); Former Minister of Economic
Affairs; Former Vice-Premier and Minister of Finance of
the Dutch Government; Former Chairman of the Managing
Board of ABN AMRO Holding N.V.; Supervisory Board
Member of ABN AMRO Holding N.V. and ABN AMRO Bank N.V.
(1992 to present); Chairman of the Supervisory Board of
N.V. Luchthaven Schiphol; Chairman of the Supervisory
Board of Koninklijke Boskalis Westminster N.V; Chairman
of the Supervisory Board of DaimlerChrysler 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 M. Perry*....................
c/o Centrica PLC Member of the Supervisory Board of Koninklijke Ahold
11-12 Clifford Street N.V. (1997 to present); Deputy Chairman of Bass PLC;
London W1X 1RB Chairman of Centrica PLC (formerly British Gas);
United Kingdom Chairman of Dunlop Slazenger Group Limited; Non-
Executive Director of Marks & Spencer PLC; Chairman of
The Shakespeare Globe Trust; Chairman of the British
Government's Senior Salaries Review Body; Former
Director of
</TABLE>
I-1
<PAGE>
<TABLE>
<S> <C>
Name and Current Present Principal Occupation or Employment;
Business Address Material Positions Held During the Past Five Years
- ---------------- --------------------------------------------------
British Gas PLC; Former Chairman of the Managing Board
of Unilever PLC (1992 to 1996); 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)
J.A. van Kemenade*............... Member of the Supervisory Board of Koninklijke Ahold
N.V. (1996 to present); Queen's Commissioner for the
Dutch Province of North-Holland; Former Minister of
Education and Science of the Dutch Government; Vice-
Chairman of the Supervisory Board of De Nederlandsche
Bank N.V.; Chairman of the Inter Provinciaal Overleg;
Member of the Board of Stichting; Chairman of Stichting
Prins Bernhard Cultuurfonds' Noord
A.J. Kranendonk*................. Member of the Supervisory Board of Koninklijke Ahold
N.V. (1985 to present); Former President of the Management
Board of Friesland W.A.; Former 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
Sneek B.V.; Chairman of the Supervisory Board of
Dokkumer Vlaggen Centrale B.V.; Chairman of Stichting
Preferente Aandelen' NBM-Amstelland; Member of the
Board of "Stichting Administratiekantoor' Koninklijke
Bols Wessanen
R.F. Meyer*...................... Member of the Supervisory Board of Koninklijke Ahold
c/o Harvard Business School N.V. (1988 to present); Professor of Business
Morgan Hall 211 Administration, Harvard Business School (9/65 to
Boston, Massachusetts 02163 present); Chairman of NEDD (Citizen of the United
States)
L.J.R. de Vink*.................. Member of the Supervisory Board of Koninklijke Ahold
c/o Warner-Lambert Company N.V. (1998 to present); Chairman, President and Chief
201 Tabor Road Executive Officer of Warner-Lambert Company (5/99 to
Morris Plains, New Jersey 07950 present); President and former Chief Operating Officer
of Warner-Lambert Company (8/91 to 4/99); Former
President of Schering International (Citizen of the
United States)
C.H. van der Hoeven**............ Member of the Corporate Executive Board of Koninklijke
Ahold N.V. (1997 to present); President and Chief
Executive Officer of Koninklijke Ahold N.V. (3/93 to
present); Member of the Supervisory Board of ABN AMRO
Bank N.V.; Director of Ahold U.S.A., Inc.; Membre du
Conseil d'Administration de LVMH (4/99 to present);
Member of the Supervisory Board of KPN (7/98 to
present)
J.G. Andreae**................... Member of the Corporate Executive Board of Koninklijke
Ahold N.V. (1997 to present); Executive Vice President
of Koninklijke Ahold N.V. (10/97 to present); Former
President of Albert Heijn B.V. (1992 to 10/97); Member
of the Corporate Executive Board of Albert Heijn B.V.
(10/97 to present); 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.
</TABLE>
I-2
<PAGE>
<TABLE>
<S> <C>
Name and Current Present Principal Occupation or Employment;
Business Address Material Positions Held During the Past Five Years
- ----------------- --------------------------------------------------
A.M.Meurs**...................... Member of the Corporate Executive Board of Koninklijke
Ahold N.V. (1997 to present); Executive Vice President
and Chief Financial Officer of Koninklijke Ahold N.V.
(4/97 to present); Treasurer of Snow Acquisition, Inc.;
Supervisory Director B of Disco Ahold International
Holdings N.V.; Former Senior Vice President of Business
Development of Koninklijke Ahold N.V. (4/96 to 4/97);
Former Senior Vice President of Finance of Koninklijke
Ahold N.V. (3/93 to 4/96); Former Vice President of
Finance Koninklijke Ahold N.V.; Former Director of
Ahold Americas Holdings, Inc.; Former Executive Vice
President of Croesus, Inc.; 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.; Member
of the Supervisory Board of Schuitema (3/99 to present)
A.S. Noddle**.................... Member of the Corporate Executive Board of Koninklijke
Ahold N.V. (1998 to present); Executive Vice President
of Koninklijke Ahold N.V. (9/98 to present);
Supervisory Director B of Disco Ahold International
Holdings N.V.; Director of Inversiones Santa Isabel
S.A.; Former President and Chief Executive Officer of
Giant Food Stores, Inc. (10/92 to 1/97); Director of
Ahold U.S.A., Inc.; Former President and Chief
Executive Officer of Ahold U.S.A. Support Services,
Inc. (1/97 to 9/98) (Citizen of the United States)
R.G. Tobin**..................... Member of the Corporate Executive Board of Koninklijke
c/o Ahold U.S.A., Inc Ahold N.V. (1998 to present); Executive Vice President
14101 Newbrook Drive of Koninklijke Ahold N.V. (9/98 to present); President
Chantilly, Virginia 20151 of Snow Acquisition, Inc.; Director and President of
Ahold Americas Holdings, Inc.; Chairman, Director,
President and Chief Executive Officer of Ahold U.S.A.,
Inc.; Director of Ahold Finance U.S.A., Inc.; Former
President and Chief Executive Officer of Croesus, Inc.;
Director and former Chairman, President and Chief
Executive Officer of The Stop & Shop Companies, Inc. (a
wholly owned subsidiary of Koninklijke Ahold N.V. since
1996) (6/60 to present) (Citizen of the United States)
N.L.J. Berger.................... Corporate Secretary of Koninklijke Ahold N.V. (4/94 to
present); 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. (10/97 to
present); Former Vice President of Management
Development and Organization of Koninklijke Ahold N.V.;
Executive Vice President HR/MD Ahold Europe
A. Buitenhuis.................... Senior Vice President of Finance and Fiscal Affairs of
Koninklijke Ahold N.V. (4/96 to present); Former Vice
President of Fiscal Affairs of Koninklijke Ahold N.V.
A.H.P.M. van Tielraden........... Senior Vice President and General Counsel of
Koninklijke Ahold N.V. (1/00 to present); Secretary of
Snow Acquisition, Inc.; Former Vice President and
Deputy General Counsel of Koninklijke Ahold N.V. (11/97
to 1/00); Director of Ralico SDN BHD; Supervisory B
member of Paiz Ahold B.V.; Former Director of Legal
Affairs Hagemeyer N.V. (5/95 to 8/97); Former Senior
Legal Advisor of Unilever Nederland B.V. (9/94 to
5/95); Former General Counsel of Quest International
(11/89 to 9/94)
</TABLE>
I-3
<PAGE>
<TABLE>
<S> <C>
Name and Current Present Principal Occupation or Employment;
Business Address Material Positions Held During the Past Five Years
- ----------------- --------------------------------------------------
P.P.M. Ekelschot................. Senior Vice President of Internal Audit of Koninklijke
Ahold N.V. (4/97 to present); Former Vice President of
Internal Audit of Koninklijke Ahold N.V.; Vice
President of Koninklijke NIVRA; Treasurer IIA-
Netherland
H. Gobes......................... Senior Vice President of Communications of Koninklijke
Ahold N.V. (1/90 to present)
M.J. Dorhout Mees................ Senior Vice President of Business Development of
Koninklijke Ahold N.V. (6/97 to present); Former Senior
Vice President of Sales and Services of Albert Heijn
B.V. (1994 to 1997); 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. (4/97 to present); Former Managing Director
of Pays-Bas Property Fund N.V. (4/95 to 3/97); Former
Member of the Executive Board of Koninklijke Bols
Wessanen N.V. (1/94 to 12/94); President of the
Supervisory Board of AVIO-Diepen B.V.
C. Sterk......................... Senior Vice President of Financial Services of
Koninklijke Ahold N.V. (11/99 to present); Senior Vice
President of Administration of Koninklijke Ahold N.V.
(1979 to 3/97); President of Albert Heijn B.V. (4/97 to
11/99)
2. Directors and Executive Officers of Snow 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 Snow Acquisition, Inc. Each person identified
below has held his position since the formation of Snow Acquisition, Inc. in
March 1999. The principal address of Snow Acquisition, Inc. is 1013 Center
Road, Wilmington, Delaware 19805, Telephone: (800) 927-9800. The current
business address for each individual listed below, unless indicated 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.
Name and Current Present Principal Occupation or Employment;
Business Address Material Positions Held During the Past Five Years
- ----------------- --------------------------------------------------
R.G. Tobin*...................... President of Snow Acquisition, Inc.; Member of the
c/o Ahold U.S.A., Inc Corporate Executive Board of Koninklijke Ahold N.V.
14101 Newbrook Drive (1998 to present); Executive Vice President of
Chantilly, Virginia 20151 Koninklijke Ahold N.V. (9/98 to present); Director and
President of Ahold Americas Holdings, Inc.; Chairman,
Director, President and Chief Executive Officer of
Ahold U.S.A., Inc.; Director of Ahold Finance U.S.A.,
Inc.; Former President and Chief Executive Officer of
Croesus, Inc.; Director and former Chairman, President
and Chief Executive Officer of The Stop & Shop
Companies, Inc. (a wholly owned subsidiary of
Koninklijke Ahold N.V. since 1996) (6/60 to present)
(Citizen of the United States)
</TABLE>
I-4
<PAGE>
<TABLE>
<S> <C>
Name and Current Present Principal Occupation or Employment;
Business Address Material Positions Held During the Past Five Years
- ----------------- --------------------------------------------------
A.M. Meurs*...................... Treasurer of Snow Acquisition, Inc.; Member of the
Corporate Executive Board of Koninklijke Ahold N.V.
(1997 to present); Executive Vice President and Chief
Financial Officer of Koninklijke Ahold N.V. (4/97 to
present); Supervisory Director B of Disco Ahold
International Holdings N.V.; Former Senior Vice
President of Business Development of Koninklijke Ahold
N.V. (4/96 to 4/97); Former Senior Vice President of
Finance of Koninklijke Ahold N.V. (3/93 to 4/96);
Former Vice President of Finance Koninklijke Ahold
N.V.; Former Director of Ahold Americas Holdings, Inc.;
Former Executive Vice President of Croesus, Inc.;
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.; Member of the
Supervisory Board of Schuitema (3/99 to present)
A.H.P.M. van Tielraden*..........
Secretary of Snow Acquisition, Inc.; Senior Vice
President and General Counsel of Koninklijke Ahold N.V.
(1/00 to present); Former Vice President and Deputy
General Counsel of Koninklijke Ahold N.V. (11/97 to
1/00); Director of Ralico SDN BHD; Supervisory B member
of Paiz Ahold B.V.; Former Director of Legal Affairs
Hagemeyer N.V. (5/95 to 8/97); Former Senior Legal
Advisor of Unilever Nederland B.V. (9/94 to 5/95);
Former General Counsel of Quest International (11/89 to
9/94)
</TABLE>
3. Ownership of shares of Common Stock by Directors and Executive
Officers. To the best knowledge of Koninklijke Ahold N.V. and Snow
Acquisition, Inc., none of the persons listed on this Schedule I beneficially
owns or has a right to acquire directly or indirectly any shares of Common
Stock, and none of the persons listed on this Schedule I has effected any
transactions in the shares of Common Stock during the past 60 days.
I-5
<PAGE>
Copies of the Letter of Transmittal, properly completed and duly signed,
will be accepted. The Letter of Transmittal, certificates and any other
required documents should be sent by each Holder or such Holder's 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:
Wilmington Trust Company
<TABLE>
<CAPTION>
By Mail: By Facsimile: By Hand/Overnight Courier:
<S> <C> <C>
Wilmington Trust Company (302) 651-1079 Wilmington Trust Company
1100 North Market Street 1105 North Market Street
Rodney Square North Wilmington, DE 19890
Wilmington, DE 19890 Attn: Corporate Trust Operations
Attn: Corporate Trust Operations
</TABLE>
For Confirmation Telephone:
(302) 651-8869
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager 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
Banks and Brokerage Firms, Please Call: (800) 662-5200
Stockholders, Please Call: (800) 566-9061
The Dealer Manager for the Offer is:
Merrill Lynch & Co.
World Financial Center
North Tower
New York, New York 10281-1305
(212) 236-3790 (Call Collect)
<PAGE>
Exhibit (a)(2)
LETTER OF TRANSMITTAL
To Tender
Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
U.S. Foodservice
Pursuant to the Offer to Purchase
Dated March 13, 2000
by
Snow 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 7, 2000, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
Wilmington Trust Company
<TABLE>
<CAPTION>
By Mail: By Facsimile: By Hand/Overnight Courier:
<S> <C> <C>
Wilmington Trust Company (302) 651-1079 Wilmington Trust Company
1100 North Market Street 1100 North Market Street
Rodney Square North Rodney Square North
Wilmington, DE 19890 Wilmington, DE 19890
Attn: Corporate Trust Operations Attn: Corporate Trust Operations
</TABLE>
For Confirmation Telephone:
(302) 651-8869
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE COPY NUMBER
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE
DEPOSITARY.
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 by holders of certificates
representing shares of Common Stock (as such term is defined in the Offer to
Purchase) (such holders of shares of Common Stock, collectively, the
"Holders"), either if certificates for shares of Common Stock are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchaser) is utilized, if tenders of shares of Common Stock are to be made by
book-entry transfer into the account of Wilmington Trust Company, as
Depositary (the "Depositary"), at The Depository Trust Company (the "Book-
Entry Transfer Facility" or "DTC") pursuant to the procedures set forth in
Section 3--"Procedures for Tendering Shares of Common Stock" of the Offer to
Purchase. Holders who tender shares of Common Stock by book-entry transfer are
referred to herein as "Book-Entry Holders" and other Holders are referred to
herein as "Certificate Holders."
1
<PAGE>
Any holders who desire to tender shares of Common Stock and whose
certificate(s) evidencing such shares of Common Stock (the "Certificates") are
not immediately available, or who cannot comply with the procedures for book-
entry transfer described in the Offer to Purchase on a timely basis, may
nevertheless tender such shares of Common Stock by following the procedures
for guaranteed delivery set forth in Section 3--"Procedures for Tendering
Shares of Common Stock" 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.
DESCRIPTION OF SHARES OF COMMON STOCK 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 of Common Stock Tendered
certificate(s)) (Attach additional list if necessary)
- -----------------------------------------------------------------------
Total Number
of Shares of
Common Stock Number of Shares
Certificate Evidenced by of Common Stock
Number(s)* Certificate(s)* Tendered:**
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
<S> <C> <C> <C>
Total Shares of Common Stock Tendered
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by Book-Entry Holders.
** Unless otherwise indicated, it will be assumed that all shares of
Common Stock evidenced by any Certificate(s) delivered to the
Depositary are being tendered. See Instruction 4.
2
<PAGE>
[_]CHECK HERE IF SHARES OF COMMON STOCK ARE BEING TENDERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-
ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN
THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY
TRANSFER):
Name(s) of Tendering Institution ___________________________________________
Check box of Book-Entry Transfer Facility:
[_]The Depositary Trust Company
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
[_]CHECK HERE IF SHARES OF COMMON STOCK 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 ______________________________
Account Number (if delivered by Book-Entry Transfer) _______________________
Transaction Code Number ____________________________________________________
[_]CHECK HERE IF TENDER IS BEING MADE IN RESPECT OF LOST, MUTILATED OR
DESTROYED CERTIFICATES. SEE INSTRUCTION 9.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Snow Acquisition, Inc. (the "Purchaser"),
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 ("Parent"), the above-
described shares of Common Stock, par value $0.01 per share, including the
associated preferred stock purchase rights, of U.S. Foodservice, a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated March 13, 2000 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as they may be amended and supplemented from time to time,
together constitute the "Offer"). The undersigned understands that 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 of Common Stock 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 the Merger Agreement (as
hereinafter defined) and that any such assignment will in no way prejudice the
rights of tendering Holders to receive payment for the shares of Common Stock
validly tendered and accepted for payment pursuant to the Offer. This Offer is
being made pursuant to the Agreement and Plan of Merger, dated as of March 7,
2000 (as amended from time to time, the "Merger Agreement"), by and among
Parent, the Purchaser and the Company.
Subject to, and effective upon, acceptance for payment of, and payment for,
the shares of Common Stock tendered herewith in accordance with the terms of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), 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 of Common Stock that are being
tendered hereby and any and all dividends, distributions, rights, or other
securities issued or issuable in respect of such shares of Common Stock on or
after March 13, 2000 (collectively, "Distributions"), and irrevocably appoints
the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such shares of Common Stock and all Distributions
with full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest) to (a) transfer ownership of such
shares of Common Stock and all Distributions, together with all accompanying
evidences of transfers and authenticity, to or upon the order of the
Purchaser, (b) present such shares of Common Stock and all Distributions for
transfer on the books of the Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such shares of Common
Stock and all Distributions, all in accordance with the terms and subject to
the conditions of the Offer as set forth in the Offer to Purchase.
The undersigned hereby irrevocably appoints each designee of the Purchaser
as such attorney-in-fact and proxy of the undersigned, with full power of
substitution, to vote the shares of Common Stock as described below in such
manner as each such attorney-in-fact and proxy (or any substitute thereof)
shall deem proper in its sole discretion, and to otherwise act (including
pursuant to written consent) to the full extent of the undersigned's rights
with respect to the shares of Common Stock and all Distributions tendered
hereby and accepted for payment by the Purchaser prior to the time of such
vote or action. All such proxies shall be considered coupled with an interest
in the tendered shares of Common Stock and shall be irrevocable and are
granted in consideration of, and are effective upon, the acceptance for
payment of such shares of Common Stock and all Distributions in accordance
with the terms of the Offer. Such acceptance for payment by the Purchaser
shall revoke, without further action, any other proxy or power of attorney
granted by the undersigned at any time with respect to such shares of Common
Stock and all Distributions and no subsequent proxies or powers of attorney
will be given (or, if given, will not be deemed effective) with respect
thereto by the undersigned. The designees of the Purchaser will, with respect
to the shares of Common Stock for which the appointment is effective, be
empowered to exercise all voting and other rights 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 of
Common Stock or any Distributions to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such shares of Common Stock,
the Purchaser must be able to exercise all rights (including, without
limitation, all voting rights and rights of conversion) with respect to such
shares of Common Stock and receive all Distributions.
4
<PAGE>
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the shares of
Common Stock 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 of
Common Stock 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 of
Common Stock tendered hereby, accompanied by appropriate documentation of
transfer and, pending such remittance or appropriate assurance thereof, the
Purchaser shall be, subject to applicable law, entitled to all rights and
privileges as owner of any such Distributions and may withhold the entire
purchase price or deduct 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 the shares of
Common Stock and related Distributions hereby made is irrevocable.
The undersigned understands that tenders of the shares of Common Stock
pursuant to any of the procedures described in Section 3--"Procedures for
Tendering Shares of Common Stock" of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions set
forth in the Offer. Without limiting the generality of the foregoing, if the
price to be paid in the Offer is amended in accordance with the terms of the
Merger Agreement, the price to be paid to the undersigned will be amended. 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 of Common Stock tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Certificates
not tendered or not accepted for payment in the name(s) of the registered
Holder(s) appearing under "Description of Shares of Common Stock Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any Certificates
not tendered or not accepted for payment (and accompanying documents, as
appropriate) to the address(es) of the registered Holder(s) appearing above
under "Description of Shares of Common Stock 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
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. Unless otherwise indicated under Special Payment Instructions,
please credit any shares of Common Stock tendered herewith by book-entry
transfer that are not accepted for payment by crediting the account at the
Book-Entry Transfer Facility designated above. The undersigned recognizes that
the Purchaser has no obligation, pursuant to the Special Payment Instructions,
to transfer any shares of Common Stock from the name(s) of the registered
holder(s) thereof if the Purchaser does not accept for payment any of the
shares of Common Stock so tendered.
5
<PAGE>
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) that are not Certificate(s) that are not
tendered or that are not purchased tendered or that are not purchased
and/or the check for the purchase and/or the check for the purchase
price of shares of Common Stock price of shares of Common Stock
purchased are to be issued in the purchased are to be sent to someone
name of someone other than the other than the undersigned, or to
undersigned or if shares of Common the undersigned at an address other
Stock tendered by book-entry than that shown above.
transfer which are not accepted for
payment are to be returned by Mail check and Certificate(s) to:
credit to an account maintained at
the Book-Entry Transfer Facility Name:
other than that designated above. -------------------------------
Please Type or Print
Issue check and Certificate(s) to:
Address:
Name: ------------------------------
-------------------------------
Please Type or Print ------------------------------------
(Include Zip Code)
Address:
------------------------------
------------------------------------
(Tax Identification or Social
Security No.)
(See Substitute Form W-9 Included
------------------------------------ Herewith)
(Include Zip Code)
*
------------------------------------
(Tax Identification or Social
Security No.)
(See Substitute Form W-9 Included
Herewith)
-------
* Signature Guarantee required
6
<PAGE>
IMPORTANT
HOLDER(S) SIGN HERE
(See Instructions 1 and 5)
(Please Complete Substitute Form W-9 Contained Herein)
Signature(s) of Holders(s): ____________________________________________________
Date: ______________________, 2000
(Must be signed by registered Holder(s) exactly as name(s) appear(s) on
Certificate(s) or on a security position listing or by person(s) authorized to
become registered Holder(s) by Certificate(s) and documents transmitted 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)
-------------------------------------------
- ---------------------------------- (Tax Identification or Social Security
(Daytime Area Code and Telephone No.)
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)
Area Code and Telephone Number: ________________________________________________
Date: ______________________, 2000
7
<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) that 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 (each, 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) (which term, for
purposes of this document, shall include any participant in the Book-Entry
Transfer Facility whose name appears on a security position listing as the
owner of shares of Common Stock) of the shares of Common Stock tendered
herewith and such Holder(s) have not completed the box entitled either
"Special Payment Instructions" or "Special Delivery Instructions" on this
Letter of Transmittal or (b) if such shares of Common Stock are tendered for
the account of an Eligible Institution. See Instruction 5 of this Letter of
Transmittal.
2. Delivery of Letter of Transmittal and Certificates or Book-Entry
Confirmations. This Letter of Transmittal must be received by the Depositary
at one of its addresses set forth herein prior to the Expiration Date (as
defined in the Offer to Purchase).
Holders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary
prior to the Expiration Date or who cannot complete the procedures for book-
entry transfer on a timely basis may nevertheless tender their shares of
Common Stock 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 Common Stock" 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 prior to the Expiration Date; and (iii)
Certificates, as well as a Letter of Transmittal (or copy thereof), properly
completed and duly executed with any required signature guarantees (or, in the
case of a book-entry delivery, an Agent's Message (as defined in the Offer to
Purchase)), 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.
If Certificates are forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal (or copy thereof)
must accompany each such delivery.
The method of delivery of this Letter of Transmittal, the shares of Common
Stock, Certificates and all other required documents, including delivery
through the Book-Entry Transfer Facility, is at the option and risk of the
tendering Holder, and the delivery will be deemed made only when actually
received by the Depositary (including, in the case of book-entry transfer, by
Book-Entry Confirmation (as defined in the Offer to Purchase)). 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.
No alternative, conditional or contingent tenders will be accepted and no
fractional shares of Common Stock will be purchased. All tendering Holders, by
execution of this Letter of Transmittal (or a copy hereof), waive any right to
receive any notice of the acceptance of their shares of Common Stock for
payment.
3. Inadequate Space. If the space provided under "Description of Shares of
Common Stock Tendered" is inadequate, the share Certificate numbers and/or the
number of shares of Common Stock should be listed on a separate schedule and
attached hereto.
4. Partial Tenders (Applicable to Certificate Holders Only; Not Applicable
to Shares of Common Stock Which are Tendered by Book-Entry Transfer). If fewer
than all the shares of Common Stock evidenced by any Certificate submitted are
to be tendered, fill in the number of shares of Common Stock which are to be
tendered in the box entitled "Number of Shares of Common Stock Tendered." In
such cases, new Certificate(s) evidencing the remainder of the shares of
Common Stock that were evidenced by Certificate(s) delivered to the Depositary
will be sent to the person signing this
8
<PAGE>
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 of Common Stock represented by
Certificate(s) 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 Holder(s) of the shares
of Common Stock tendered hereby, the signature(s) must correspond with the
name(s) as written on the face of the Certificate(s) without alteration,
enlargement or any change whatsoever.
If any of the shares of Common Stock 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 of Common Stock 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 the shares of Common Stock.
If this Letter of Transmittal or any Certificate or stock power is signed
by a trustee, executor, administrator, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and evidence satisfactory to the
Depositary and the Purchaser of such person's authority so to act must be
submitted.
If this Letter of Transmittal is signed by the registered Holder(s) of the
shares of Common Stock transmitted hereby, no endorsements of Certificate(s)
or separate stock powers are required unless payment is to be made to, or
Certificate(s) evidencing the shares of Common Stock not tendered or purchased
are to be issued in the name of, a person other than the registered Holder(s).
Signatures on such Certificate(s) or stock powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered Holder(s) of the shares of Common Stock tendered hereby, the
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 Certificate(s). Signatures on such Certificate(s) or
stock powers must be guaranteed by an Eligible Institution.
6. Transfer Taxes. Except as otherwise provided in this Instruction 6, the
Purchaser will pay or cause to be paid any transfer taxes with respect to the
transfer and sale of purchased shares of Common Stock to it or its order
pursuant to the Offer. If, however, payment of the purchase price of any
shares of Common Stock purchased is to be made to or, in the circumstances
permitted hereby, if Certificate(s) for the shares of Common Stock not
tendered or purchased are to be registered in the name of, any person other
than the registered holder, or if tendered Certificate(s) are registered in
the name of any person other than the person(s) signing this Letter of
Transmittal, the amount of any 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 for such shares of Common
Stock 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 Certificate(s) listed in this Letter
of Transmittal.
7. Special Payment and Delivery Instructions. If a check for the purchase
price is to be issued in the name of, and/or Certificates for the shares of
Common Stock not tendered or not accepted for payment are to be issued in the
name of, a person other than the signer of this Letter of Transmittal or if a
check and/or such Certificates for shares of Common Stock are to be mailed to
someone other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. A Book-Entry Holder may request that shares
of Common Stock not accepted for payment be credited to such account
maintained at the Book-Entry Transfer Facility as such Book-Entry Holder may
designate under "Special Payment Instructions." If no such instructions are
given, such shares of Common Stock not accepted for payment will be returned
by crediting the account at the Book-Entry Transfer Facility designated above.
9
<PAGE>
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
Manager at their respective addresses set forth on the back cover of the Offer
to Purchase or from your broker, dealer, commercial bank or trust company.
9. Lost, Mutilated or Destroyed Certificates. If any Certificates have been
lost, mutilated or destroyed, the Holder should promptly notify the Depositary
by checking the box immediately preceding the special payment/special delivery
instructions and indicating the number of shares of Common Stock lost. The
Holder will then be instructed as to the procedure to be followed in order to
replace the relevant Certificates. This Letter of Transmittal and related
documents cannot be processed until the procedures for replacing lost,
mutilated or destroyed Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A COPY HEREOF, TOGETHER WITH
CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under United States federal income tax law, a tendering Holder may be
subject to backup withholding tax at a rate of 31% with respect to payments by
the Depositary pursuant to the Offer unless such Holder: (i) is a corporation
or other exempt recipient and, if required, establishes its exemption from
backup withholding; (ii) provides its correct taxpayer identification number
("TIN") and certifies that the TIN provided is correct (or that such Holder is
awaiting a TIN); or (iii) certifies that it is not currently subject to backup
withholding or certifies as to its non-United States status. If such Holder is
an individual, the TIN is his or her social security number. Completion of a
Substitute Form W-9, in the case of a U.S. Holder, provided in this Letter of
Transmittal, should be used for this purpose. Failure to provide such Holder's
TIN on the Substitute Form W-9, if applicable, may subject the tendering
Holder (or other payee) to a $50 penalty imposed by the Internal Revenue
Service ("IRS"). More serious penalties may be imposed for providing false
information which, if willfully done, may result in fines and/or imprisonment.
The box in part 3 of the Substitute Form W-9 may be checked if the tendering
Holder (or other payee) is required to submit a Substitute Form W-9 and has
not been issued a TIN and has applied for a TIN or intends to apply for a TIN
in the near future. If the box in Part 3 is so checked and the Depositary is
not provided with a TIN by the time of payment, the Depositary will withhold
31% on all such payments of the Offer Price until a TIN is provided to the
Depositary. In order for a foreign Holder to qualify as an exempt recipient,
that Holder should submit an IRS Form W-8 or a Substitute Form W-8, signed
under penalties of perjury, attesting to that Holder's exempt status. Such
forms can be obtained from the Depositary. Failure to provide the information
on the form may subject tendering Holders to 31% United States federal income
tax withholding on the payment of the purchase price of cash pursuant to the
Offer. Backup withholding is not an additional tax. Rather, the tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained by filing a tax return with the IRS. The Depositary cannot refund
amounts withheld by reason of backup withholding.
10
<PAGE>
TO BE COMPLETED BY ALL TENDING HOLDERS
PAYER'S NAME: Wilmington Trust Company
- -------------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR Social Security Number
TIN IN THE BOX AT RIGHT AND or Employer
CERTIFY BY SIGNING AND Identification Number
DATING BELOW.
--------------------------------------------------------
SUBSTITUTE Part 4--Certification--Under penalties of perjury, I
Form W-9 certify that:
----------------------
Department of (1) The number shown on this form is my correct
the Treasury Taxpayer Identification Number (or I am waiting
Internal for a number to be issued to me), and
Revenue --------------------------------------------------------
Service Part 2--If you are exempt from backup withholding,
please check the box: [_]
Part 3--If you are
awaiting TIN, check
box: [_]
(2) I am not subject to backup withholding because
(i) I am exempt from backup withholding, (ii) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
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.
Payer's Request for Taxpayer Identification Number ("TIN") and Certification
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. However, if after being notified by the IRS
that you were subject to backup withholding, you
received another notification from the IRS that you
are no longer subject to backup withholding, do not
cross out such item (2).
--------------------------------------------------------
SIGNATURE ________________________________________
DATED ____________________________________________
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.
NOTE: YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable cash payments made to me thereafter
will be withheld until I provide a taxpayer identification number.
Signature _______________________________________ Dated ______ ,_2000
11
<PAGE>
Questions and requests for assistance may be directed to the Information
Agent or Dealer Manager at their respective addresses and telephone numbers
set forth below. Additional copies of the Offer to Purchase, this 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
Banks and Brokerage Firms, Please Call: (800) 662-5200
Stockholders, Please Call: (800) 566-9061
The Dealer Manager for the Offer is:
Merrill Lynch & Co.
World Financial Center
North Tower
New York, New York 10281-1305
(212) 236-3790 (Call Collect)
12
<PAGE>
Exhibit (a)(3)
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
holdings of shares of Common Stock (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
(Not to be used for Signature Guarantees)
For Tender of Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
U.S. Foodservice
Pursuant to the Offer to Purchase
dated March 13, 2000
by
Snow Acquisition, Inc.
An Indirect Wholly Owned Subsidiary of
Koninklijke Ahold N.V.
(Royal Ahold)
As set forth under Section 3--"Procedures for Tendering Shares of Common
Stock" in the Offer to Purchase, dated March 13, 2000, and any supplements or
amendments thereto (the "Offer to Purchase"), this form (or a copy hereof)
must be used to accept the Offer (as defined in the Offer to Purchase) if (i)
certificates (the "Certificates") representing shares of common stock, par
value $0.01 per share, together with the associated preferred stock purchase
rights (together, the "Common Stock") of U.S. Foodservice, 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 Certificates and all other required documents to
reach Wilmington Trust Company (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, by mail or by
overnight courier or transmitted by facsimile transmission to the Depositary
and must include a signature guarantee by an Eligible Institution (as defined
in Section 3--"Procedures for Tendering Shares of Common Stock" of the Offer
to Purchase) in the form set forth herein. See the guaranteed delivery
procedures described in the Offer to Purchase under Section 3--"Procedures for
Tendering Shares of Common Stock".
The Depositary for the Offer is:
Wilmington Trust Company
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Courier:
Wilmington Trust Company (302) 651-1079 Wilmington Trust Company
1100 North Market Street Rodney 1105 North Market Street
Square North Wilmington, DE Wilmington, DE 19890
19890 Attn: Corporate Trust Operations
Attn: Corporate Trust Operations
</TABLE>
For Confirmation Telephone:
(302) 651-8869
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instruction via facsimile transmission
other than as set forth above will 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 (as defined in Section 3--"Procedures
for Tendering Shares of Common Stock" of the Offer to Purchase) under the
instructions thereto, such signature guarantee must appear in the applicable
space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Snow 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, upon 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 of Common Stock
indicated below pursuant to the Guaranteed Delivery Procedures described in
the Offer to Purchase under Section 3--"Procedures for Tendering Shares of
Common Stock".
Name of Record Holder(s): ___________________________________________________
-----------------------------------------------------------------------------
Address(es): ________________________________________________________________
-----------------------------------------------------------------------------
Area Code(s) and Tel. No(s).: _______________________________________________
Signature(s): _______________________________________________________________
Date: _______________________________________________________________________
Number of shares of Common Stock: ___________________________________________
Certificate Number(s) if available: _________________________________________
If shares of Common Stock will be tendered by book-entry transfer check box:
[_]The Depository Trust Company
Account Number: __________________________________________________________
2
<PAGE>
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an Eligible Institution (as defined in Section 3--
"Procedures for Tendering Shares of Common Stock" of the Offer to Purchase),
hereby guarantees that the undersigned will deliver to the Depositary, at one
of its addresses set forth above, either the Certificates representing the
shares of Common Stock tendered hereby, in proper form for transfer, or Book-
Entry Confirmation (as defined in the Offer to Purchase), together with a
properly completed and duly executed Letter of Transmittal, including any
required signature guarantees, or, in the case of book-entry delivery of
shares of Common Stock, an Agent's Message (as defined in the Offer to
Purchase), and any other documents required by the Letter of Transmittal, all
within three New York Stock Exchange trading days (as defined in Section 3--
"Procedures for Tendering Shares of Common Stock" of the Offer to Purchase)
after the date hereof.
Name of Firm: Authorized Signature:
------------------------------------- -----------------------------------
Name:
------------------------------------- ------------------------------
(Please Print)
-------------------------------------
Title:
Address: ------------------------------
------------------------------
(Zip Code) Date:
------------------------------
Area Code and Tel. No.:
------------------
NOTE: DO NOT SEND CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY;
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
Exhibit (a)(4)
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>
Give the
For this type of account: SOCIAL SECURITY
number of --
- --------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, the first
individual on
the account(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor
guardian or committee for a or incompetent
designated ward, minor or person(3)
incompetent person
7. a. A revocable savings
trust account (in which The grantor-
grantor is also trustee) trustee(1)
b. Any "trust" account that The actual
is not a legal or valid owner(4)
trust under State law
8. Sole proprietorship account The owner(4)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of --
- ------------------------------------------------------------------------------
<S> <C>
9. A valid trust, estate, or pension trust Legal entity (Do
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, or educational organization The organization
account
12. Partnership account held in the name of the business The partnership
13. Association, club, or other tax-exempt organization The organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of Agriculture in the name The public
of a public entity (such as a State or local government, entity
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 do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and ap-
ply for a number.
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 re-
tirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any 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 exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times 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 indi- viduals. 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 pro-
vided 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 non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments of mortgage interest to you.
Exempt payees described above should file Form W-9 to avoid possible errone-
ous backup withholding.
FILE THIS FORM WITH THE PAYOR, 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, in-
terest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are re-
quired to file tax returns. Beginning January 1, 1993, 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. Cer-
tain 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 sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Failure to Report Certain Dividend and Interest Payments.--If you fail to
include any portion of an includable payment for interest, dividends, or pat-
ronage dividends in gross income, such failure will be treated as being due to
negligence and will be subject to a penalty of 20% on any portion of an under-
payment attributable to that failure unless there is clear and convincing evi-
dence to the contrary.
(3) 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.
(4) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
Exhibit (a)(5)
[Logo] Merrill Lynch World Financial Center
North Tower
New York, New York 10281-1305
(212) 236-3790 (Call Collect)
OFFER TO PURCHASE FOR CASH
All of the Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
U.S. Foodservice
at
$26.00 Net Per Share of Common Stock
by
Snow 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 7, 2000, UNLESS THE OFFER IS EXTENDED.
March 13, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Snow 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"), to act as Dealer Manager in connection
with the Purchaser's offer to purchase all of the issued and outstanding shares
of common stock, par value $0.01 per share, including the associated preferred
stock purchase rights (together, the "Common Stock"), of U.S. Foodservice, a
Delaware corporation (the "Company"), at a price of $26.00 per share of Common
Stock, 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 13,
2000 (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 of Common Stock 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 13, 2000.
2. The Letter of Transmittal to tender shares of Common Stock for your
use and for the information of your clients. Facsimile copies of the Letter
of Transmittal may be used to tender shares of Common Stock.
1
<PAGE>
3. A letter to stockholders of the Company from James L. Miller,
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 of Common Stock to be
used to accept the Offer if the procedures for tendering shares of Common
Stock set forth in the Offer to Purchase cannot be completed prior to the
Expiration Date (as defined in the Offer to Purchase).
5. A printed form of letter which may be sent to your clients for whose
accounts you hold shares of Common Stock 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 7, 2000, UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The tender price is $26.00 per share of Common Stock, net to the
seller in cash, without interest thereon, as set forth in the Introduction
to the Offer to Purchase.
2. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not properly withdrawn prior to the Expiration Date
(as defined in the Offer to Purchase) a number of shares of Common Stock
which represent at least a majority of the outstanding shares of Common
Stock on a fully diluted basis, (ii) the satisfaction of the HSR Condition
(as defined in the Offer to Purchase), and (iii) 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
of Common Stock.
4. Tendering holders of shares of Common Stock ("Holders") whose shares
of Common Stock are registered in their own name and who tender directly to
Wilmington Trust Company, as Depositary (the "Depositary"), will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase
of shares of Common Stock 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 7, 2000, unless the Offer is extended.
6. The Board of Directors of the Company has unanimously (i) determined
that the terms of each of the Offer and the merger (the "Merger") of the
Purchaser with and into the Company are fair to, and in the best interests
of, the Holders of shares of Common Stock and declared that the Offer and
the Merger are advisable, (ii) approved the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of March 7, 2000 by and among Parent,
the Purchaser and the Company and the transactions contemplated thereby,
including the Offer and the Merger, and (iii) recommended that the Holders
accept the Offer, tender their shares of Common Stock pursuant to the Offer
and (if required by applicable law) adopt the Merger Agreement.
7. Notwithstanding any other provision of the Offer, payment for shares
of Common Stock accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of (i) certificates evidencing
such shares of Common Stock (the "Certificates") or, if such shares of
Common Stock are held in book-entry form, timely confirmation of a book-
entry transfer (a "Book-Entry Confirmation") of such
2
<PAGE>
shares of Common Stock into the account of Wilmington Trust Company, as
depositary (the "Depositary"), at The Depository Trust Company, and if
certificates evidencing the associated preferred stock purchase rights (the
"Rights") have been issued, such certificates or a Book-Entry Confirmation,
if available, with respect to such certificates (unless the Purchaser
elects, in its sole discretion, to make payment for the shares of Common
Stock pending receipt of such certificates or a Book-Entry Confirmation, if
available, with respect to such certificates), (ii) a properly completed
and duly executed Letter of Transmittal or a copy thereof with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase)) and (iii) any other
documents required by the Letter of Transmittal. Accordingly, tendering
Holders may be paid at different times depending upon when Certificates for
shares of Common Stock (or certificates for Rights) or Book-Entry
Confirmations with respect to shares of Common Stock (or Rights, if
applicable) are actually received by the Depositary. Under no circumstances
will interest be paid on the purchase price of the shares of Common Stock
to be paid by the Purchaser, regardless of any extension of the Offer or
any delay in making such payment.
In order to take advantage of the Offer, Certificates, as well as a Letter
of Transmittal (or copy thereof), properly completed and duly executed with
any required signature guarantees (or, in the case of a book-entry delivery,
an Agent's Message), and all other documents required by the Letter of
Transmittal must be received by the Depositary, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
Any Holder who desires to tender shares of Common Stock and whose
Certificate(s) evidencing such shares of Common Stock are not immediately
available, or who cannot comply with the procedures for book-entry transfer
described in the Offer to Purchase on a timely basis, may tender such shares
of Common Stock by following the procedures for guaranteed delivery set forth
in Section 3--"Procedures for Tendering Shares of Common Stock" of the Offer
to Purchase.
Neither Parent nor the Purchaser will pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of shares of Common
Stock pursuant to the Offer (other than the Dealer Manager, 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 with
respect to the transfer and sale of purchased shares of Common Stock to it or
its order purusant to the Offer, 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
Merrill Lynch, Pierce, Fenner & Smith Incorporated, the Dealer Manager for the
Offer, at World Financial Center, North Tower, New York, New York 10281-1305,
telephone number (212) 236-3790, 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 Manager or to the Information Agent at the above addresses and
telephone numbers.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
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 MANAGER, 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)(6)
OFFER TO PURCHASE FOR CASH
All of the Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
U.S. Foodservice
at
$26.00 Net Per Share of Common Stock
by
Snow 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 7, 2000, UNLESS THE OFFER IS EXTENDED.
March 13, 2000
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated March 13,
2000 (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 Snow 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"), to purchase all
of the issued and outstanding shares of common stock, par value $0.01 per
share, including the associated preferred stock purchase rights (together, the
"Common Stock"), of U.S. Foodservice, a Delaware corporation (the "Company"),
at a price of $26.00 per share of Common Stock, 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. Any holders who desire to tender shares of Common Stock and whose
certificate(s) evidencing such shares of Common Stock (the "Certificates") are
not immediately available, or who cannot comply with the procedures for book-
entry transfer described in the Offer to Purchase on a timely basis, may
tender such shares of Common Stock by following the procedures for guaranteed
delivery set forth in Section 3-- "Procedures for Tendering Shares of Common
Stock" of the Offer to Purchase.
We are (or our nominee is) the holder of record of shares of Common Stock
held for your account. A tender of such shares of Common Stock 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 of Common Stock held by us for your account.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all shares of Common Stock held by us for your
account pursuant to the terms and conditions set forth in the Offer.
Please note the following:
1. The Offer Price is $26.00 per share of Common Stock, net to the
seller in cash, without interest thereon, as set forth in the Introduction
to the Offer to Purchase.
2. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not properly withdrawn prior to the Expiration Date
(as defined in the Offer to Purchase) a number of shares of Common Stock
which represent at least a majority of the outstanding shares of Common
Stock on a fully
<PAGE>
diluted basis, (ii) the satisfaction of the HSR Condition (as defined in
the Offer to Purchase) and (iii) 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
of Common Stock.
4. Tendering holders of shares of Common Stock ("Holders") whose shares
of Common Stock are registered in their own name and who tender directly to
Wilmington Trust Company, as Depositary (the "Depositary"), 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 of Common Stock 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 7, 2000, unless the Offer is extended.
6. The Board of Directors of the Company has unanimously (i) determined
that the terms of each of the Offer and the merger (the "Merger") of the
Purchaser with and into the Company are fair to, and in the best interests
of, the Holders of shares of Common Stock and declared that the Offer and
the Merger are advisable, (ii) approved the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of March 7, 2000, by and among Parent,
the Purchaser and the Company and the transactions contemplated thereby,
including the Offer and the Merger and (iii) recommended that the Holders
accept the Offer, tender their shares of Common Stock pursuant to the Offer
and (if required by applicable law) adopt the Merger Agreement.
7. Notwithstanding any other provision of the Offer, payment for shares
of Common Stock accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of (i) Certificates for shares
of Common Stock or, if such shares of Common Stock are held in book-entry
form, timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such shares of Common Stock into the Depositary's account
at The Depository Trust Company, and if certificates evidencing the
associated preferred stock purchase rights (the "'Rights") have been
issued, such certificates or a Book-Entry Confirmation, if available, with
respect to such certificates (unless the Purchaser elects, in its sole
discretion, to make payment for the shares of Common Stock pending receipt
of such certificates or a Book-Entry Confirmation, if available, with
respect to such certificates), (ii) a properly completed and duly executed
Letter of Transmittal or a copy thereof with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message
(as defined in the Offer to Purchase)) and (iii) any other documents
required by the Letter of Transmittal. Accordingly, tendering Holders may
be paid at different times depending upon when Certificates for shares of
Common Stock (or certificates for Rights) or Book-Entry Confirmations with
respect to shares of Common Stock (or Rights, if applicable) are actually
received by the Depositary. Under no circumstances will interest be paid on
the purchase price of the shares of Common Stock to be paid by the
Purchaser, regardless of any extension of the Offer or any delay in making
such payment.
If you wish to have us tender any or all of the shares of Common Stock 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 of Common Stock, all such shares of Common
Stock 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 jurisdiction where the making of the
Offer is prohibited by 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 shares of Common
Stock 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) Holders 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated or one or
more registered brokers or dealers which are 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 Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
U.S. Foodservice
The undersigned acknowledge(s) receipt of your letter, the Offer to
Purchase, dated March 13, 2000, 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 Snow 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, to purchase all of
the issued and outstanding shares of common stock, par value $0.01 per share,
including the associated preferred stock purchase rights (together, the
"Common Stock"), of U.S. Foodservice, a Delaware corporation, at a purchase
price of $26.00 per share of Common Stock, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
This will instruct you to tender to the Purchaser the number of shares of
Common Stock indicated below (or if no number is indicated below, all shares
of Common Stock) 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 of Common Stock 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 of
Common Stock held by us for your account are to be tendered.
3
<PAGE>
Exhibit (a)(12)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell shares of Common Stock. The Offer is made solely by the Offer to
Purchase dated March 13, 2000 and the related Letter of Transmittal and any
amendments or supplements thereto and is being made to all holders of shares of
Common Stock. The Purchaser is not aware of any state or jurisdiction where the
making of the Offer or the acceptance of shares of Common Stock is prohibited by
any applicable law. If the Purchaser becomes aware of any state or jurisdiction
where the making of the Offer or the acceptance of shares of Common Stock is not
in compliance with any applicable law, the Purchaser will make a good faith
effort to comply with such law. If, after such good faith effort, the 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 of Common Stock in such
state or jurisdiction. In any state or 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 Merrill
Lynch, Pierce, Fenner & Smith Incorporated or one or more registered brokers or
dealers licensed under the laws of such state or jurisdiction.
Notice of Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
U.S. Foodservice
at
$26.00 Net Per Share of Common Stock
by
Snow Acquisition, Inc.
An Indirect Wholly Owned Subsidiary of
Koninklijke Ahold N.V.
(Royal Ahold)
Snow 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"),
is offering to purchase all of the issued and outstanding shares of Common Stock
(the "Common Stock"), par value $0.01 per share, of U.S. Foodservice (the
"Company"), including the associated Rights (as defined below), at a price of
$26.00 per share of Common Stock, 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 13, 2000 (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"). Unless the
context indicates otherwise, all references to shares of Common Stock shall
include the associated preferred stock purchase rights (the "Rights") issued
pursuant to the Amended and Restated Rights
<PAGE>
Agreement dated as of October 4, 1999, as amended as of March 6, 2000, by and
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, APRIL 7, 2000, 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 Common Stock which represent at least a majority of the
outstanding shares of Common Stock on a fully diluted basis (the "Minimum
Condition") and (ii) the expiration or termination of any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). The Offer is also conditioned upon the satisfaction of
certain other terms and conditions described in Section 14 of the Offer to
Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of March 7, 2000 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company. The Merger Agreement provides that, promptly upon
consummation of the Offer, Parent will cause the Purchaser to be merged with and
into the Company (the "Merger"). At the effective time of the Merger (the
"Effective Time"), except for (i) shares of Common Stock which are held,
directly or indirectly, by any wholly owned 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 the Purchaser), all of
which shall cease to be outstanding and shall be canceled and none of which
shall receive any payment with respect thereto and (ii) shares of Common Stock
held by holders (the "Holders") exercising their rights to dissent in accordance
with Delaware law, each share of Common Stock issued and outstanding immediately
prior to the Effective Time and all rights in respect thereof shall, by virtue
of the Merger and without any action on the part of the Holder, forthwith cease
to exist and be converted into and represent the right to receive an amount in
cash equal to $26.00, without interest. The Merger Agreement is more fully
described in Section 11 of the Offer to Purchase. Under Delaware law, if the
Purchaser acquires, pursuant to the Offer or otherwise, at least 90% of the
issued and outstanding shares of Common Stock, the Purchaser will be able to
approve and effect the Merger without a vote of the Company's stockholders. If,
however, the Purchaser does not acquire at least 90% of the issued and
outstanding shares of Common Stock, pursuant to the Offer or otherwise, a vote
of the Company's stockholders to effect the Merger is required under Delaware
law and a longer period of time will be required to effect the Merger as
described in Section 11 of the Offer to Purchase.
The Board of Directors of the Company has unanimously (i) determined
that the terms of each of the Offer and the Merger of the Purchaser with and
into the Company are fair to, and in the best interests of, the Holders of
shares of Common Stock and declared that the Offer and the Merger are advisable,
(ii) approved the Merger Agreement and the
<PAGE>
transactions contemplated thereby, including the Offer and the Merger, and (iii)
recommended that the Holders accept the Offer, tender their shares of Common
Stock pursuant to the Offer and (if required by applicable law) adopt the Merger
Agreement.
Tendering Holders whose shares of Common Stock are registered in their
own name and who tender directly to Wilmington Trust Company, as Depositary (the
"Depositary"), 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 of Common Stock pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment (and thereby purchased) shares of Common Stock validly tendered and
not properly withdrawn if, as and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
shares of Common Stock. Upon the terms and subject to the conditions of the
Offer, payment for shares of Common Stock 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 Holders for the purpose of receiving payments from
the Purchaser and transmitting payments to such tendering Holders whose shares
of Common Stock have been accepted for payment. In all cases, payment for shares
of Common Stock purchased pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) the certificates evidencing such shares of
Common Stock or timely confirmation of a book-entry transfer of such shares of
Common Stock into the Depositary's account at the Book-Entry Transfer Facility
(as defined in Section 2 of the Offer to Purchase), pursuant to the procedures
set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal
(or a copy thereof), properly completed and duly executed with any required
signature guarantees, or an Agent's Message (as defined in Section 2 of the
Offer to Purchase) in connection with a book-entry transfer and (iii) any other
documents required to be included with the Letter of Transmittal under the terms
and subject to the conditions of the Letter of Transmittal and the Offer to
Purchase. Under no circumstances will interest on the purchase price for shares
of Common Stock be paid by the Purchaser, regardless of any delay in making such
payment or extension of the Expiration Date (as defined below).
The Rights are currently evidenced by the certificates for the Common
Stock and the tender by a Holder of such Holder's shares of Common Stock will
also constitute a tender of the associated Rights. Pursuant to an amendment to
the Rights Agreement dated as of March 6, 2000, no distribution of Rights will
occur by reason of the announcement, or consummation of the Offer in accordance
with the Merger Agreement or the consummation of the Merger or any of the other
transactions contemplated by the Merger Agreement. If separate certificates
representing the Rights are issued to Holders prior to the time a Holder's
shares of Common Stock are tendered pursuant to the Offer, certificates
representing a number of Rights equal to the number of shares of Common Stock
tendered must be delivered to the Depositary, or, if available, a Book-Entry
Confirmation (as defined in Section 2 of the Offer to Purchase) received by the
Depositary with respect thereto, in order for such shares of Common Stock to be
validly tendered. If a distribution of Rights occurs and separate certificates
representing the Rights are not distributed prior to the time shares of Common
Stock are tendered pursuant to the Offer, Rights may be tendered prior to a
Holder receiving the certificates
<PAGE>
for Rights by use of the guaranteed delivery procedures described in Section 3
of the Offer to Purchase.
The term "Expiration Date" shall mean 12:00 midnight, New York City
time, on Friday, April 7, 2000, unless and until the Purchaser, in its sole
discretion (but subject to the terms of the Merger Agreement and the applicable
rules and regulations of the Securities and Exchange Commission (the
"Commission")), 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. Subject
to the terms of the Merger Agreement, 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 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 notice of such extension to the Depositary and by making a
public announcement thereof. Any 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 requires that material changes
be promptly disseminated to Holders 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. During any such extension, all shares of
Common Stock previously tendered and not properly withdrawn will remain subject
to the Offer, subject to the right of a tendering Holder to withdraw its shares
of Common Stock.
Subject to the provisions of the Merger Agreement, 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 terminate the Offer and not accept for payment any shares of
Common Stock 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 return the tendered shares of Common Stock
to the tendering Holders and (ii) 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, provided, however, that, without the prior written consent
of the Company, the Purchaser will not, among other things, reduce the number of
shares of Common Stock to be purchased pursuant to the Offer, reduce the Offer
Price, impose additional conditions to the Offer, change the form of
consideration payable in the Offer or make any other change to the terms of the
Offer which is adverse in any manner to the Holders. 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 of the
Offer to Purchase has not expired or been terminated on the Expiration Date.
Except as otherwise provided below, tenders of shares of Common Stock
made pursuant to the Offer are irrevocable. Shares of Common Stock tendered
pursuant to the Offer may
<PAGE>
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 11, 2000, or at such later time as may apply if
the Offer is extended. For a withdrawal to be effective, a written or facsimile
notice of withdrawal must be timely received by the Depositary at one of its
addresses or the facsimile number set forth on the back cover of the Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the shares of Common Stock to be withdrawn, the number of shares of
Common Stock to be withdrawn, and the name of the registered holder of the
shares of Common Stock, if different from that of the person who tendered such
shares of Common Stock. If certificates evidencing shares of Common Stock to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such certificates, the serial numbers shown on
such certificates must be submitted to the Depositary and the signature(s) on
the notice of withdrawal must be guaranteed by an Eligible Institution (as
defined in Section 3 of the Offer to Purchase), unless such shares of Common
Stock have been tendered for the account of an Eligible Institution. Shares of
Common Stock tendered pursuant to the procedure for book-entry transfer as set
forth in Section 3 of the Offer to Purchase may be withdrawn only by means of
the withdrawal procedures made available by the Book-Entry Transfer Facility (as
defined in Section 2 of the Offer to Purchase), must specify the name and number
of the account at the Book-Entry Transfer Facility to be credited with the
withdrawn shares of Common Stock and must otherwise comply with the Book-Entry
Transfer Facility's procedures.
Withdrawals of tendered shares of Common Stock may not be rescinded
without the Purchaser's consent, and any shares of Common Stock 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 Company, the Depositary, the Information Agent, the Dealer
Manager 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 of Common Stock 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 receipt of cash in exchange for shares of Common Stock pursuant to
the Offer (or the Merger) will be a taxable transaction for U.S. federal income
tax purposes and may also be a taxable transaction under applicable state, local
or foreign tax laws. Generally, a stockholder who receives cash in exchange for
shares of Common Stock pursuant to the Offer (or the Merger) will recognize gain
or loss for U.S. federal income tax purposes equal to the difference between the
amount of cash received and such stockholder's adjusted tax basis in the shares
of Common Stock exchanged therefor. Provided that such shares of Common Stock
constitute capital assets in the hands of the stockholder, such gain or loss
will be capital gain or loss, and will be long-term capital gain or loss if the
Holder has held the shares of Common Stock for more than one year at the time of
sale. The maximum U.S. federal income tax rate applicable to individual
taxpayers on long-term capital gain is 20%, and the deductibility of capital
losses is subject to limitations. All stockholders should consult with their own
tax advisors as to the particular tax
<PAGE>
consequences of the Offer and the Merger to them, including the applicability
and effect of the alternative minimum tax and any state, local or foreign income
and other tax laws and of changes in such tax laws. For a more complete
description of certain U.S. federal income tax consequences of the Offer and the
Merger see Section 5 of the Offer to Purchase.
The information required to be disclosed by paragraph (d)(1) of Rule
14d-6 under the Exchange Act, is contained in the Offer to Purchase and is
incorporated herein by reference.
The Company has provided the Purchaser with the Company's stockholder
lists and security position listings in respect of the shares of Common Stock
for the purpose of disseminating the Offer to Purchase, the Letter of
Transmittal and other materials relevant to Holders. The Offer to Purchase, the
Letter of Transmittal and any other relevant materials will be mailed to record
holders of shares of Common Stock whose names appear on the Company's list of
holders of the shares of Common Stock and will be furnished, for subsequent
transmittal to beneficial owners of shares of Common Stock, 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 of
Common Stock or, where applicable, who are listed as participants in a clearing
agency's security position listing.
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 the
Purchaser's expense. Questions or requests for assistance may be directed to the
Information Agent or the Dealer Manager as set forth below.
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
Banks and Brokerage Firms Call: (800) 662-5200
Shareholders Please Call: (800) 566-9061
The Dealer Manager for the Offer is:
Merrill Lynch & Co.
World Financial Center
North Tower
New York, New York 10281-1305
(212) 236-3790 (Call Collect)
March 13, 2000
<PAGE>
Exhibit (d)(1)
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
KONINKLIJKE AHOLD N.V.,
SNOW ACQUISITION, INC.
AND
U.S. FOODSERVICE
Dated as of March 7, 2000
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
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<S> <C>
ARTICLE I DEFINITIONS...................................................................... 2
Section 1.1 Definitions............................................................... 2
ARTICLE II THE OFFER....................................................................... 7
Section 2.1 The Offer................................................................. 7
Section 2.2 Company Actions........................................................... 9
Section 2.3 Composition of the Board of Directors..................................... 10
ARTICLE III THE MERGER..................................................................... 11
Section 3.1 The Merger................................................................ 11
Section 3.2 Conversion of Stock....................................................... 12
Section 3.3 Dissenting Stock.......................................................... 12
Section 3.4 Surrender of Certificates................................................. 13
Section 3.5 Payment................................................................... 14
Section 3.6 No Further Rights of Transfers............................................ 14
Section 3.7 Stock Option and Other Plans.............................................. 15
Section 3.8 Treatment of Warrants..................................................... 16
Section 3.9 Certificate of Incorporation of the Surviving Corporation................. 16
Section 3.10 By-laws of the Surviving Corporation...................................... 16
Section 3.11 Directors and Officers of the Surviving Corporation....................... 17
Section 3.12 Closing................................................................... 17
Section 3.13 Withholding Rights........................................................ 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................... 17
Section 4. Representations and Warranties of the Company............................. 17
Section 4.1 Due Organization, Good Standing and Corporate Power....................... 17
Section 4.2 Authorization and Validity of this Agreement.............................. 18
Section 4.3 Capitalization............................................................ 18
Section 4.4 Consents and Approvals; No Violations.................................... 20
Section 4.5 Company Reports and Financial Statements.................................. 21
Section 4.6 Absence of Certain Changes................................................ 21
Section 4.7 Title to Properties; Encumbrances........................................ 22
Section 4.8 Compliance with Laws...................................................... 22
Section 4.9 Litigation................................................................ 22
Section 4.10 Employee Benefit Plans.................................................... 23
Section 4.11 Employment Relations and Agreements....................................... 24
Section 4.12 Taxes..................................................................... 25
(a) Tax Returns............................................................... 25
(b) Payment of Taxes.......................................................... 25
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
(c) Other Tax Matters........................................................ 25
Section 4.13 Liabilities.............................................................. 26
Section 4.14 Intellectual Property.................................................... 27
Section 4.15 Proxy Statement; Offer Documents and Schedule 14D-9...................... 28
Section 4.16 Broker's or Finder's Fee................................................. 28
Section 4.17 Certain Contracts and Arrangements....................................... 29
Section 4.18 Environmental Laws and Regulations....................................... 30
Section 4.19 State Takeover Statutes.................................................. 31
Section 4.20 Voting Requirements...................................................... 32
Section 4.21 Rights Agreement......................................................... 32
Section 4.22 Opinion of Financial Advisor............................................. 32
Section 4.23 BT Common Stock Purchase Warrant......................................... 32
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB................................. 32
Section 5.1 Due Organization, Good Standing and Corporate Power....................... 32
Section 5.2 Authorization and Validity of Agreement................................... 33
Section 5.3 Consents and Approvals; No Violations.................................... 33
Section 5.4 Offer Documents, Schedule 14D-9 and Proxy Statement....................... 34
Section 5.5 Broker's or Finder's Fee.................................................. 34
Section 5.6 Sub's Operations.......................................................... 34
Section 5.7 Funds..................................................................... 34
Section 5.8 Vote/Approval Required.................................................... 35
ARTICLE VI TRANSACTIONS PRIOR TO CLOSING DATE.............................................. 35
Section 6.1 Access to Information Concerning Properties and Records................... 35
Section 6.2 Confidentiality........................................................... 35
Section 6.3 Conduct of the Business of the Company Pending the Closing Date........... 35
Section 6.4 Company Stockholders' Meeting; Preparation of Proxy Statement;
Short Form Merger...................................................... 39
Section 6.5 Commercially Reasonable Efforts........................................... 40
Section 6.6 No Solicitation of Other Offers........................................... 40
Section 6.7 Notification of Certain Matters........................................... 42
Section 6.8 Governmental Approvals.................................................... 43
Section 6.9 Employee Benefits......................................................... 44
Section 6.10 Directors' and Officers' Insurance........................................ 45
Section 6.11 Rights Agreement.......................................................... 48
Section 6.12 Public Announcements...................................................... 48
ARTICLE VII CONDITIONS PRECEDENT........................................................... 48
Section 7.1 Conditions Precedent to Each Party's Obligation to Effect the Merger...... 48
(a) Approval of Company's Stockholders........................................ 48
(b) Injunction................................................................ 49
(c) Statutes.................................................................. 49
(d) Consummation of the Offer................................................. 49
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE VIII TERMINATION AND ABANDONMENT................................................... 49
Section 8.1 Termination............................................................... 49
Section 8.2 Effect of Termination..................................................... 51
ARTICLE IX MISCELLANEOUS................................................................... 52
Section 9.1 Fees and Expenses......................................................... 52
Section 9.2 Representations and Warranties............................................ 52
Section 9.3 Extension; Waiver......................................................... 53
Section 9.4 Notices................................................................... 53
Section 9.5 Entire Agreement.......................................................... 54
Section 9.6 Binding Effect; Benefit; Assignment....................................... 54
Section 9.7 Amendment and Modification................................................ 54
Section 9.8 Further Actions........................................................... 54
Section 9.9 Headings.................................................................. 55
Section 9.10 Counterparts.............................................................. 55
Section 9.11 APPLICABLE LAW............................................................ 55
Section 9.12 Severability.............................................................. 55
Section 9.13 Interpretation............................................................ 55
Section 9.14 Specific Enforcement...................................................... 56
Section 9.15 Waiver of Jury Trial...................................................... 56
</TABLE>
Annexes:
- -------
Annex A - Conditions
(iii)
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 7, 2000 (this
"Agreement"), by and among KONINKLIJKE AHOLD N.V., a company organized under the
- ----------
laws of The Netherlands ("Parent"), SNOW ACQUISITION, INC., a company organized
------
under the laws of Delaware and an indirect wholly-owned subsidiary of Parent
("Sub"), and U.S. FOODSERVICE, a company organized under the laws of Delaware
----
(the "Company").
-------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, each of the Supervisory Board and the Executive Board of
Parent and the respective Boards of Directors of Sub and the Company have
approved the acquisition of the Company by Parent;
WHEREAS, in order to consummate such acquisition, each of the
Supervisory Board and the Executive Board of Parent and the respective Boards of
Directors of Sub and the Company have approved this Agreement;
WHEREAS, in contemplation of such acquisition, it is proposed that Sub
will make a tender offer (the "Offer") to purchase, subject to the terms and
-----
conditions of this Agreement, any and all of the issued and outstanding shares
of common stock, par value $0.01 per share (the "Common Stock"), of the Company
------------
(including the associated Series A Junior Participating Preferred Stock Purchase
Rights (the "Rights" and, together with the Common Stock, the "Shares") issued
------ ------
pursuant to the Amended and Restated Rights Agreement, dated as of October 4,
1999, by and between the Company and ChaseMellon Shareholder Services, L.L.C.
(the "Rights Agreement")), at a price of $26.00 per share net to the seller in
----------------
cash (the "Offer Price"); and
-----------
WHEREAS, the Board of Directors of the Company (i) has unanimously
determined that the Offer and the Merger are fair to, and in the best interest
of, the Company and the holders of Common Stock, and has declared that the Offer
and the Merger are advisable, (ii) has unanimously approved the Offer and the
Merger and (iii) has unanimously resolved to recommend that the holders of
Common Stock accept the Offer and tender the Shares pursuant to the Offer and
that the stockholders of the Company adopt this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties intending to be legally bound, hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
-----------
Section 1.1 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 set forth in Section
6.6(a).
"Affected Employee" shall have the meaning set forth in Section
6.9(c).
"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 set forth in the preamble hereto.
"Antitrust Authorities" shall mean the Federal Trade Commission, the
Antitrust Division, the attorneys general of the several states of the United
States and any other governmental authority having jurisdiction with respect to
the transactions contemplated hereby pursuant to applicable Antitrust Laws.
"Antitrust Law" shall mean the Sherman Act, as amended, the Clayton
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended and
all other federal, state and foreign 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.
"BT Common Stock Purchase Warrant" shall mean that certain common
stock purchase warrant, dated December 23, 1997, issued to Bankers Trust New
York Corporation, representing the right to initially purchase 70,697 shares of
Common Stock at an initial exercise purchase price of $13.18696 per share of
Common Stock (the "BT Common Stock Purchase Warrant Exercise Price").
"BT Common Stock Purchase Warrant Exercise Price" shall have the
meaning provided in the definition of BT Common Stock Purchase Warrant.
"Business Day" shall mean any day except a Saturday, a Sunday or any
other day on which commercial banks are required or authorized to close in New
York, New York.
"Cash Payment" shall have the meaning set forth in Section 3.7(b).
-2-
<PAGE>
"Certificate of Merger" shall have the meaning set forth in Section
3.1(a).
"Certificates" shall have the meaning set forth in Section 3.4(a).
"Claims" shall have the meaning set forth in Section 4.18.
"Closing" shall have the meaning set forth in Section 3.12.
"Closing Date" shall have the meaning set forth in Section 3.12.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time, and the regulations and the rulings issued
thereunder.
"Commission" shall mean the Securities and Exchange Commission.
"Commission Filings" shall have the meaning set forth in Section 4.5.
"Common Stock" shall have the meaning set forth in third recital
hereto.
"Company" shall have the meaning set forth in the preamble hereto.
"Company Account Balances" shall have the meaning set forth in Section
4.3.
"Company Deferred Compensation Plan" shall have the meaning set forth
in Section 4.3.
"Company Disclosure Letter" shall have the meaning set forth in the
preamble to Section 4.
"Company Property" shall have the meaning set forth in Section 4.18.
"Company Restricted Unit Plan" shall have the meaning set forth in
Section 3.7(a).
"Company RVP SERP" shall have the meaning set forth in Section 3.7(a).
"Company SERP" shall have the meaning set forth in Section 3.7(a).
"Company Stock Options" shall have the meaning set forth in Section
4.3.
"Company Stock Option Plans" shall have the meaning set forth in
Section 4.3.
"Company Stock Purchase Plan" shall have the meaning set forth in
Section 3.7(c).
"Company Stock Units" shall have the meaning set forth in Section 4.3.
"Company Stock Unit Plans" shall have the meaning set forth in Section
3.7(a).
"Completed Commission Filings" shall have the meaning set forth in
Section 4.13.
-3-
<PAGE>
"Confidentiality Agreement" shall have the meaning set forth in
Section 6.2.
"Continuing Director" shall have the meaning set forth in Section
2.3(c).
"contracts" shall have the meaning set forth in Section 4.17.
"DGCL" shall have the meaning set forth in Section 2.2(a).
"Dissenting Stockholders" shall have the meaning set forth in Section
3.3.
"Effective Time" shall have the meaning set forth in Section 3.1(a).
"Employee Benefit Plans" shall have the meaning set forth in Section
4.10(a).
"Environmental Claims" shall have the meaning set forth in Section
4.18.
"Environmental Law" shall have the meaning set forth in Section 4.18.
"ERISA" shall have the meaning set forth in Section 4.10(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Contract" shall have the meaning set forth in Section 4.17.
"Former Company Property" shall have the meaning set forth in Section
4.18.
"GAAP" shall mean generally accepted accounting principles of the
United States of America consistently applied, as in effect from time to time.
"Governmental Entity" shall have the meaning set forth in Section
4.4(b).
"Hazardous Materials" shall have the meaning set forth in Section
4.18.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Indemnified Parties" shall have the meaning set forth in Section
6.10(c).
"Intellectual Property" shall mean all patents, patent applications,
trademarks, service marks and other indicia of origin, trademark and service
mark registrations and applications for registrations thereof, copyrights and
applications for registration thereof, internet domain names, inventions,
corporate and business names, trade names, trade dress, brand names, know how,
formulae and recipes, methods, designs, processes, procedures and improvements
and refinements thereof, technology, source codes, object codes, computer
software programs, databases, technology, and other proprietary information or
material.
"Insured Parties" shall have the meaning set forth in Section 6.10(b).
-4-
<PAGE>
"Knowledge" shall mean the knowledge of any Person set forth in
Schedule 1.1 of the Company Disclosure Letter.
"Letter of Transmittal" shall have the meaning set forth in Section
2.1(b).
"Lien" shall have the meaning set forth in Section 4.3.
"Material Adverse Effect", with respect to any Person, shall mean any
event, change, occurrence, effect, fact or circumstance (or, in the case of
Section 4.6, any event, change, occurrence, development of a state of facts or
circumstances) which has, or which would reasonably be expected to have, a
material adverse effect on (i) the ability of such Person to perform its
obligations under this Agreement, or to consummate the transactions contemplated
hereby without material delay or (ii) the financial condition, business, assets
or results of operations of such Person and its Subsidiaries, taken as a whole,
other than any event, change, occurrence, effect, fact or circumstance (or, in
the case of Section 4.6, any event, change, occurrence, development of a state
of facts or circumstances) relating to (x) the economy or securities markets in
general, (y) the industries in which such Person operates (which, in the case of
the Company and its Subsidiaries, is the broadline foodservice distribution
business) and not specifically relating to such Person and (z) the performance
by such Person of the obligations under this Agreement or the transactions
contemplated hereby.
"Material Contracts" shall have the meaning set forth in Section 4.17.
"Material Inventory Contracts" shall have the meaning provided in
Section 4.17.
"Merger" shall have the meaning set forth in Section 3.1(b).
"Merger Consideration" shall have the meaning set forth in Section
3.2(a).
"Minimum Condition" shall have the meaning set forth in Annex A.
"Multiemployer Plan" shall have the meaning set forth in Section
4.10(b).
"NLRB" shall have the meaning set forth in Section 4.11.
"Offer" shall have the meaning set forth in the third recital hereto.
"Offer Documents" shall have the meaning set forth in Section 2.1(b).
"Offer to Purchase" shall have the meaning set forth in Section
2.1(b).
"Offer Price" shall have the meaning set forth in the third recital
hereto.
"Other Acquisition Documentation" shall have the meaning set forth in
Section 6.6(b).
"Parent" shall have the meaning set forth in the preamble hereto.
-5-
<PAGE>
"Parent Designees" shall have the meaning set forth in Section 2.3(a).
"Paying Agent" shall have the meaning set forth in Section 3.4(a).
"Payment Fund" shall have the meaning set forth in Section 3.5.
"Permits" shall have the meaning set forth in Section 4.8(b).
"Permitted Investments" shall have the meaning set forth in Section
3.5.
"Person" shall mean and include an individual, a partnership, a
limited liability partnership, a joint venture, a corporation, a limited
liability company, a trust, an unincorporated organization, a group and a
government or other department or agency thereof.
"Pre-Closing Period" shall have the meaning set forth in Section
4.12(b).
"Proxy Statement" shall have the meaning set forth in Section 6.4(b).
"Release" shall have the meaning set forth in Section 4.18.
"Returns" shall have the meaning set forth in Section 4.12(a).
"Rights" shall have the meaning set forth in the third recital hereto.
"Rights Agreement" shall have the meaning set forth in the third
recital hereto.
"Schedule 14D-9" shall have the meaning set forth in Section 2.2(c).
"Schedule TO" shall have the meaning set forth in Section 2.1(b).
"Shares" shall have the meaning set forth in the third recital hereto.
"Stockholders' Meeting" shall have the meaning set forth in Section
6.4(a).
"Sub" shall have the meaning set forth in the preamble hereto.
"Subsidiary", with respect to any Person, shall mean and include (x)
any partnership of which such Person or any of its Subsidiaries is a general
partner or (y) any other entity in which such Person or any of its Subsidiaries
owns or has the power to vote more than fifty percent (50%) of the equity
interests in such entity having general voting power to participate in the
election of the governing body of such entity.
"Superior Proposal" shall have the meaning set forth in Section
6.6(a).
"Surviving Corporation" shall have the meaning set forth in Section
3.1(b).
"Taxes" shall have the meaning set forth in Section 4.12(a).
-6-
<PAGE>
"Tender Offer Conditions" shall have the meaning set forth in Section
2.1(a).
"Termination Date" shall have the meaning set forth in Section
8.1(b)(ii).
"WARN" shall have the meaning set forth in Section 4.11.
ARTICLE II
THE OFFER
---------
Section 2.1 The Offer. (a) Provided that this Agreement shall not
---------
have been terminated in accordance with Article VIII hereof and so long as none
of the events set forth on Annex A hereto (the "Tender Offer Conditions") shall
------- -----------------------
have occurred and are continuing, on the fifth Business Day after the date of
this Agreement Sub shall, and Parent shall cause Sub to, commence (within the
meaning of Rule 14d-2 promulgated under the Exchange Act) the Offer at the Offer
Price. The obligation of Sub to accept for payment and to pay for any Shares
tendered shall be subject only to the Tender Offer Conditions. Subject to the
proviso set forth in the immediately succeeding sentence and the obligations of
Parent and Sub to extend the Offer under certain circumstances as set forth in
this Section 2.1(a), the Tender Offer Conditions are for the sole benefit of
Parent and Sub and may be asserted by Parent and Sub regardless of the
circumstances giving rise to any such Tender Offer Conditions. Parent and Sub
expressly reserve the right to modify the terms of the Offer, including, without
limitation, to extend the Offer beyond any scheduled expiration date or waive
any Tender Offer Condition; provided, however, that neither Parent nor Sub
-------- -------
shall, without the prior written consent of the Company, (i) reduce the number
of Shares to be purchased pursuant to the Offer, (ii) reduce the Offer Price,
(iii) impose any additional conditions to the Offer, (iv) change the form of
consideration payable in the Offer, (v) make any change to the terms of the
Offer which is adverse in any manner to the holders of the Shares, (vi) extend
the expiration date of the Offer beyond the twentieth (20/th/) Business Day
after commencement of the Offer except (A) as required by applicable law, (B) as
specified below in the sixth sentence of this Section 2.1(a) or (C) that if any
condition to the Offer has not been satisfied or waived, Sub may, in its sole
discretion, extend the expiration date of the Offer from time to time for one or
more periods not exceeding, in each case, ten (10) Business Days, unless Parent
reasonably believes that such condition is not capable of being satisfied within
such time, in which case Sub may extend the expiration date of the Offer for a
period up to twenty (20) Business Days, but in no event later than the
Termination Date, (vii) waive the Minimum Condition, (viii) waive the Tender
Offer Condition relating to the expiration of the waiting period under the HSR
Act or the Tender Offer Conditions set forth in clause (iii)(a) or (iii)(b) of
Annex A unless Sub shall pay for all Shares validly tendered and not withdrawn
promptly following Sub's acceptance for payment of such Shares, or (ix) waive
the Tender Offer Condition set forth in clause (iii)(f) of Annex A; provided,
--------
however, that the Offer may be extended so as to comply with applicable rules
- -------
and regulations of the Commission or the staff thereof, unless the reason for
such extension is the result of a material breach of this Agreement by Parent or
Sub. Assuming prior satisfaction or waiver of the Tender Offer Conditions,
Parent shall provide funds to Sub and Sub shall, as soon as legally permissible
after the commencement thereof, accept for payment and pay for, in accordance
with the terms of the Offer, the Shares which have been validly tendered
-7-
<PAGE>
and not withdrawn at or prior to the expiration of the Offer. If, on any
expiration date of the Offer, more than 80% but less than 90% of the Shares have
been validly tendered and not withdrawn, Sub may, without the consent of the
Company, extend the Offer for up to ten (10) Business Days in the aggregate
notwithstanding that all conditions to the Offer have been satisfied, so long as
Sub irrevocably waives the continued satisfaction of any of the Tender Offer
Conditions, other than (x) the Minimum Condition, (y) the condition contained in
clause (iii)(f) of Annex A, to the extent this Agreement is terminated pursuant
to Section 8.1(a), 8.1(b)(i), 8.1(c), 8.1(d)(iii) or 8.1(d)(iv) or (z) any of
the Tender Offer Conditions set forth in clause (iii)(a) or (iii)(b) of Annex A,
but only to the extent that the failure of such condition is due to an event
making it illegal to purchase Shares pursuant to the Offer. If, on any scheduled
expiration date of the Offer, the Offer would have expired due to the failure to
satisfy (w) any of the Tender Offer Conditions set forth in clause (iii)(a),
(iii)(b) or (iii)(c) of Annex A, (x) the Tender Offer Condition relating to the
expiration of the waiting period under the HSR Act or (y) the Minimum Condition,
Parent shall, at the request of the Company, cause Sub to extend the expiration
date of the Offer (A) in the case of clause (w) or (x), from time to time for
one or more periods not exceeding, in each case, ten (10) Business Days, but in
no event later than the Termination Date and (B) in the case of clause (y), for
one or more periods not exceeding, in the aggregate, twenty (20) Business Days,
but in no event later than the Termination Date, unless Parent, in each case,
reasonably believes at such time that such Tender Offer Condition is not capable
of being satisfied. In addition, notwithstanding anything in this Section 2.1(a)
to the contrary, if the Company shall have affirmatively announced to the
stockholders of the Company a neutral position with respect to an Acquisition
Proposal, Parent shall, at the request of the Company, cause Sub to extend the
expiration date of the Offer to ten (10) Business Days after the date of initial
announcement of such neutral position.
(b) As soon as reasonably practicable on the date the Offer is
commenced, Parent and Sub shall file with the Commission a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto,
the "Schedule TO") with respect to the Offer. The Schedule TO shall contain
-----------
(included as an exhibit) or shall incorporate by reference an offer to purchase
(the "Offer to Purchase") and the related letter of transmittal (the "Letter of
----------------- ---------
Transmittal") and summary advertisement, as well as all other information and
- -----------
exhibits required by law (which Schedule TO, Offer to Purchase, Letter of
Transmittal, summary advertisement and such other information and exhibits,
together with any supplements or amendments thereto, are referred to herein
collectively as the "Offer Documents"). The Company and its counsel shall be
---------------
given reasonable opportunity to review and comment upon the Schedule TO prior to
its filing with the Commission. The Schedule TO shall comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the Commission and the date first published, sent or given to
the holders of the Shares, 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 are made, not misleading, except that no representation is made
by Parent or Sub with respect to any information supplied by the Company in
writing for inclusion in the Schedule TO. Each of Parent and Sub, on the one
hand, and the Company, on the other hand, agrees to promptly correct any
information provided by it for use in the Offer Documents that shall be, or have
become, false or misleading in any material respect, and Parent and Sub further
agree to take all steps necessary to
-8-
<PAGE>
cause the Schedule TO as so corrected to be filed with the Commission and the
other Offer Documents as so corrected to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. Each of Parent and Sub agrees to provide the Company and its
counsel with information with respect to any oral comments and copies of any
written comments Parent and Sub or their counsel may receive from the Commission
or its staff with respect to the Offer Documents promptly after the receipt of
such comments and shall provide the Company and its counsel an opportunity to
participate in the response of Parent or Sub to such comments, including by
participating with Parent and Sub or their counsel in any discussions with the
Commission or its staff.
Section 2.2 Company Actions. The Company hereby consents to the
---------------
Offer and the Merger and represents and warrants that:
(a) its Board of Directors (at a meeting duly called and held) has,
by unanimous vote, (i) determined that each of the Offer and the Merger is fair
to, and in the best interest of, the holders of Common Stock, (ii) declared that
the Offer and the Merger are advisable, (iii) approved the Offer and the Merger
and approved this Agreement in accordance with the provisions of the Delaware
General Corporation Law (the "DGCL"), (iv) recommended acceptance of the Offer
----
and adoption of this Agreement by the stockholders of the Company, and (v) taken
all other action necessary to render Section 203 of the DGCL inapplicable to the
Offer and the Merger.
(b) Goldman, Sachs & Co. has delivered to the Board of Directors of
the Company its opinion that the consideration to be received by the holders of
Shares, other than Parent and any direct or indirect subsidiary of Parent
(including Sub), pursuant to the Offer and the Merger is fair to such holders of
Common Stock from a financial point of view, subject to the assumptions and
qualifications contained in such opinion and a complete and correct copy of such
opinion has been, or promptly upon receipt thereof will be, made available to
Parent.
(c) The Company shall file with the Commission, as soon as
practicable on the date of the commencement of the Offer, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule l4D-9"), containing the
--------------
recommendations referred to in clause (a)(iv) of this Section 2.2 and shall
disseminate the Schedule 14D-9 as required by Rule 14d-9 under the Exchange Act.
Parent and Sub and their counsel shall be given reasonable opportunity to review
and comment upon the Schedule l4D-9 prior to its filing with the Commission. 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 the Common
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 are
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. Each of the Company, on the one hand, and Parent and Sub, on the
other hand, agrees promptly to correct any information provided by it for use in
the Schedule 14D-9 if and to the extent that the Schedule 14D-9 shall be, or
have become false or misleading in any material respect; and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9
-9-
<PAGE>
as so corrected to be filed with the Commission and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company agrees to provide Parent and its counsel
with information with respect to any oral comments and copies of any written
comments the Company 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 in the
response of the Company to such comments, including by participating with the
Company and its counsel in any discussions with the Commission or its staff.
(d) In connection with the Offer, the Company shall 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 Common
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 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 Offer to the holders of Shares. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger, Sub
shall hold in confidence the information contained in any such labels, listings
and files, will use such information only in connection with the Offer and the
Merger and, if this Agreement is terminated, shall deliver to the Company all
copies of such information in their possession.
(e) The Company represents and warrants that it has been advised that
each of its directors and executive officers intends to tender pursuant to the
Offer all Common Stock owned of record and beneficially by him or her except to
the extent such tender would violate applicable securities laws.
Section 2.3 Composition of the Board of Directors. (a) Promptly
-------------------------------------
upon the acceptance for payment of, and payment by Sub for, Shares equal to at
least a majority of the outstanding shares of Common Stock pursuant to the terms
of the Offer, Sub shall be entitled to designate up to such number of directors
("Parent Designees") on the Board of Directors of the Company, rounded up to the
----------------
next whole number, as will give Sub, subject to compliance with Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, representation on the
Board of Directors of the Company equal to at least that number of directors
which equals the product of the total number of directors on the Board of
Directors of the Company (giving effect to the directors elected pursuant to
this sentence) multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock beneficially owned by Sub and Parent and the
denominator of which shall be the number of shares of Common Stock then issued
and outstanding, and the Company shall, at such time, use commercially
reasonable efforts to take any and all such action necessary to cause Parent
Designees to be appointed to the Board of Directors of the Company (including
using its commercially reasonable efforts to cause relevant directors to resign
and/or increasing the size of the Board of Directors of the Company (subject to
the limitations set forth in the Company's Certificate of Incorporation and the
Company's By-laws)). Subject to applicable law, the Company shall take all
action required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder to effect the election of such Parent Designees,
including (i) mailing to its stockholders the information required by Section
14(f) of
-10-
<PAGE>
the Exchange Act and Rule 14f-1 promulgated thereunder or (ii) including such
information in the Schedule 14D-9 filed with the Commission and distributed to
the stockholders of the Company, and the Company agrees to make such mailing so
long as Sub shall have provided to the Company on a timely basis all information
required to be included in the Information Statement with respect to Sub's
designees. Parent and Sub shall be solely responsible for any information with
respect to either of them and their nominees, officers, directors and Affiliates
required by Section 14(f) and Rule 14f-1. At the Effective Time, the Company, if
so requested, shall use its reasonable best efforts to cause Persons designated
by Sub to constitute the same percentage of each committee of its Board of
Directors, each Board of Directors of each material Subsidiary and each
committee of each such Board of Directors (in each case to the extent of the
Company's ability to elect such Persons).
(b) The provisions of Section 2.3(a) are in addition to and shall not
limit any rights which Parent, Sub or any of their respective Affiliates may
have as a holder or beneficial owner of Common Stock as a matter of applicable
law with respect to the election of directors or otherwise.
(c) Notwithstanding the provisions of this Section 2.3, the parties
hereto shall use their respective commercially reasonable efforts to ensure that
at least three (3) of the members of the Board of Directors shall, at all times
prior to the Effective Time, be Persons who are directors of the Company on the
date hereof (the "Continuing Directors"), provided that, if there shall be in
-------------------- --------
office less than three (3) Continuing Directors, the Board of Directors may
cause the Person designated by the remaining Continuing Director or Continuing
Directors to fill such vacancy and such Person shall be deemed to be a
Continuing Director for all purposes of this Agreement, or if no Continuing
Directors then remain, the other directors of the Company then in office shall
designate three (3) Persons to fill such vacancies who will not be officers,
employees or Affiliates of the Company or Parent and such Persons shall be
deemed to be Continuing Directors for all purposes of this Agreement; provided,
--------
further, that Parent, Sub and the Parent Designees shall take no action prior to
- -------
the Effective Time to remove any Continuing Director. Following the election or
appointment of Sub's designees pursuant to this Section 2.3 and prior to the
Effective Time, any amendment or modification of this Agreement, the Company's
Certificate of Incorporation or the Company's By-laws, any termination of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent and Sub or waiver
of any of the Company's rights hereunder, and any other consent or action by the
Company hereunder, shall be effected only if there are in office one or more
Continuing Directors and such action is approved by a majority of the Continuing
Directors.
ARTICLE III
THE MERGER
----------
Section 3.1 The Merger. (a) Upon the terms and subject to the
----------
conditions of this Agreement, at the Closing, a certificate of merger or, if
applicable, a certificate of ownership and merger (the "Certificate of Merger")
---------------------
shall be duly prepared, executed and acknowledged by Sub and the Company in
accordance with the DGCL and shall be filed with the Secretary of State of
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<PAGE>
Delaware as provided in the DGCL. 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 to by Parent and the Company). The date
and time when the Merger shall become effective is hereinafter referred to as
the "Effective Time."
--------------
(b) On the terms and subject to the conditions set forth in this
Agreement and in accordance with the DGCL, at the Effective Time, Sub shall be
merged with and into the Company (the "Merger") 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 (the "Surviving
---------
Corporation").
- -----------
(c) From and after the Effective Time, the Merger shall have the
effects set forth in Section 259(a) of the DGCL.
Section 3.2 Conversion of Stock. At the Effective Time:
-------------------
(a) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time (other than (i) any shares of Common Stock which are
held by any wholly-owned Subsidiary of the Company or in the treasury of the
Company, or which are held, directly or indirectly, by Parent or any Subsidiary
of Parent (including Sub), all of which shall cease to be outstanding and be
canceled and none of which shall receive any payment with respect thereto and
(ii) shares of Common Stock held by Dissenting Stockholders) 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, equal to the
Offer Price (the "Merger Consideration"); and
--------------------
(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, be converted into one fully paid and
nonassessable share of Common Stock, par value $0.01 per share, of the Surviving
Corporation.
Section 3.3 Dissenting Stock. Notwithstanding anything contained in
----------------
this Agreement to the contrary but only to the extent required by the DGCL,
shares of Common Stock that are issued and outstanding immediately prior to the
Effective Time and are held by holders of Common Stock who comply with all the
provisions of the DGCL concerning the right of holders of Common Stock to demand
appraisal of their shares of Common Stock in connection with the Merger (such
holders, "Dissenting Stockholders"), shall not be converted into the right to
-----------------------
receive the Merger Consideration but shall only 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 if any
-------- -------
Dissenting Stockholder who demands appraisal of such holder's shares of Common
Stock under the DGCL shall effectively withdraw or lose (through failure to
perfect or otherwise) his or her right to appraisal, then as of the Effective
Time, or the occurrence of such event, whichever occurs later, such holder's
shares of Common Stock shall thereupon be deemed to have been converted as of
the Effective Time into the right to receive the Merger Consideration, without
interest thereon, and such holder shall no longer be a Dissenting Stockholder.
The Company shall give Parent and Sub (x) prompt notice of any written demands
-12-
<PAGE>
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 3.4 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 which shall be reasonably satisfactory to the
Company (the "Paying Agent") to receive funds in trust in order to make the
------------
payments contemplated by Section 3.2(a). 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 wholly-owned 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 Merger Consideration deliverable in respect thereof pursuant to this Article
III. 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 product of the Merger Consideration and the number of
shares of Common Stock represented by such Certificates. 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 III.
No interest shall be paid or accrued in respect of such cash payments.
(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 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
III; 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.
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<PAGE>
Section 3.5 Payment. Concurrently with or immediately prior to the
-------
Effective Time, Parent shall deposit or cause to be deposited in trust with the
Paying Agent, for the benefit of holders of Shares, cash in United States
dollars in an aggregate amount equal to the product of (i) the number of shares
of Common Stock outstanding immediately prior to the Effective Time (other than
shares of Common Stock which are held by any wholly-owned 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 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 Sub 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 Service, 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 Sub as and when requested by Sub. The Paying Agent shall,
pursuant to irrevocable instructions, make the payments referred to in Section
3.2(a) hereof out of the Payment Fund. The Payment Fund shall not be used for
any other purpose. Promptly following the date which is one hundred and eighty
(180) days 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, 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 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 under applicable law. Notwithstanding the
foregoing, neither the Paying Agent nor any party hereto shall be liable to a
holder of shares of Common Stock for any Merger Consideration delivered to a
public official pursuant to applicable abandoned property, escheat and similar
laws.
Section 3.6 No Further Rights of Transfers. At and after the
------------------------------
Effective Time, each holder of Common Stock shall cease to have any rights as a
stockholder of the Company, except as otherwise required by applicable law and
except for, in the case of a holder of a Certificate (other than shares of
Common Stock to be canceled pursuant to Section 3.2(a) hereof or 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
Stockholder, to perfect his or her right to receive payment for his or her
shares pursuant to the law 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 Common 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 III. At the close of
business on the day of the Effective Time the stock ledger of the Company with
respect to Common Stock shall be closed.
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<PAGE>
Section 3.7 Stock Option and Other Plans. (a) At the Effective
----------------------------
Time: (i) all account balances under the Company Stock Unit Plans (as
hereinafter defined in this Section 3.7) shall become immediately vested; and
(ii) each Company Stock Unit (as defined in Section 4.3) and Company Account
Balance (as defined in Section 4.3) that represents the right to receive shares
of Common Stock shall be converted into the right to receive an amount, in cash,
equal to the Merger Consideration, multiplied by the number of shares of Common
Stock subject to such Company Stock Unit or Company Account Balance. Within
fifteen (15) days following the date on which the Effective Time occurred: (x)
the outstanding balance in the account of each participant in the Company
Restricted Unit Plan (as amended, the "Company Restricted Unit Plan") shall be
----------------------------
distributed to such participant in a single lump sum in cash; (y) the
outstanding balance in the account of each participant in the Company
Supplemental Executive Retirement Plan, dated as of July 1, 1998 (as amended,
the "Company SERP") shall be distributed to such participant in a single lump
------------
sum in cash; and (z) the outstanding balance in the account of each participant
in the Company Supplemental Executive Retirement Plan for Regional Vice
Presidents, dated as of January 1, 1999 (as amended, the "Company RVP SERP" and,
----------------
together with the Company Restricted Unit Plan and the Company SERP, the
"Company Stock Unit Plans") shall be distributed to such participant in a single
- -------------------------
lump sum in cash. The outstanding balance in the account of each participant in
the Company Deferred Compensation Plan (as defined in Section 4.3) shall be
distributed to such participant in a single lump sum in cash within fifteen (15)
days following the date on which the Effective Time occurred. The Company SERP
and the Company RVP SERP shall be amended (with participant consent, as
necessary) prior to the Effective Time to permit the treatment of account
balances thereunder as set forth above.
(b) As of the Effective Time, each outstanding Company Stock Option
(as defined in Section 4.3), both vested and unvested, shall be canceled and the
holder thereof shall receive, as soon as practicable following the Effective
Time (but not later than ten (10) days after the date on which the Effective
Time occurred), an amount, in cash, equal to (i) the number of shares of Common
Stock subject to the Company Stock Option multiplied by (ii) the amount, if any,
by which the Merger Consideration exceeds the per share exercise price specified
in such Company Stock Option (the "Cash Payment").
(c) As of the date hereof, all payroll deductions under the Company
Employee Stock Purchase Plan (as amended, the "Company Stock Purchase Plan")
---------------------------
shall cease. Otherwise, the Company Stock Purchase Plan shall continue to be
administered in accordance with its terms; provided, however, that each right
-------- -------
outstanding under such plan as of the next "Investment Date" (as such term is
defined in the Company Stock Purchase Plan) subsequent to the date hereof shall
be treated as follows: as of the Effective Time, each such right shall be
canceled and the holder thereof shall receive, as soon as practicable following
the Effective Time (but not later than ten (10) days after the date on which the
Effective Time occurred), an amount, in cash, equal to (i) the number of shares
of Common Stock subject to it, multiplied by (ii) the Merger Consideration.
(d) Prior to the Effective Time, the Board of Directors of the
Company (or, if appropriate, any committee thereof) shall take all reasonable
actions to (i) (A) provide for the cancellation, effective at the Effective
Time, subject to the Cash Payment being made, of all Company Stock Options or
(B) provide that upon exercise of any Company Stock Options the holder thereof
shall only be entitled to receive the Cash Payment, (ii) provide for the
cancellation,
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<PAGE>
effective at the Effective Time, subject to the payments provided for in
paragraph (a) or (c) of this Section 3.7 being made, of all Company Stock
Purchase Plan rights, Company Stock Units and Company Account Balances, (iii)
terminate, as of the Effective Time, the Company Stock Option Plans, the Company
Stock Unit Plans, the Company Stock Purchase Plan 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 Affiliate thereof and (iv) amend, as
of the Effective Time, the provisions of the Company Deferred Compensation Plan
and any other Employee Benefit Plan providing for the issuance, transfer or
grant of any capital stock of the Company or any such Affiliate, or any interest
in respect of any capital stock of the Company or any such Affiliate, to provide
no continuing rights to acquire, hold, transfer or grant any capital stock of
the Company or any such Affiliate or any interest in the capital stock of the
Company or any such Affiliate. Except as otherwise contemplated herein, any
outstanding stock appreciation rights or limited stock appreciation rights
issued by the Company or any Affiliate of the Company shall be canceled
immediately prior to the Effective Time without any payment therefor. The
Company shall take all steps to ensure that, except as contemplated herein,
neither it nor any of its Affiliates is or will be bound by any Company Stock
Options, other options, warrants, rights or agreements which would entitle any
Person, other than Parent or its Affiliates, to own any capital stock of the
Company or any of its Subsidiaries or to receive any payment in respect thereof.
Section 3.8 Treatment of Warrants. At the Effective Time, by virtue
---------------------
of the Merger and without any action on the part of the holders thereof, the BT
Common Stock Purchase Warrant shall no longer be convertible into shares of
Common Stock but shall be converted, in accordance with Section 3.1 of the BT
Common Stock Purchase Warrant, only into the right to receive an amount equal to
the amount required to be paid pursuant to such Section 3.1.
Section 3.9 Certificate of Incorporation of the Surviving
---------------------------------------------
Corporation. The Restated Certificate of Incorporation of the Company, as
- -----------
amended, 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 (x) Article 4 thereof reads in its entirety as
follows: "The total number of shares of Common Stock which the Corporation has
authority to issue is 1,000 shares of Common Stock, par value one cent ($0.01)
per share" and (y) Article 9 thereof reads in its entirety as follows: "The
business of the Corporation shall be managed under the direction of the Board
except as otherwise provided by law. The number and qualifications of the
directors of the Corporation shall be fixed from time to time by, or in the
manner provided in, the By-laws. Election of the directors of the Corporation
need not be by written ballot unless the By-laws of the Corporation shall so
provide".
Section 3.10 By-laws of the Surviving Corporation. The Amended and
------------------------------------
Restated By-laws of the Company, as in effect immediately prior to the Effective
Time, shall be the By-laws of the Surviving Corporation, and shall be amended
immediately prior to the Effective Time by the Company so that Article III,
Section 1 reads in its entirety as follows: "Section 1. Number. The Board of
---------- -------
Directors shall consist of four (4) persons as of the Effective Time (as such
term is defined in the Agreement and Plan of Merger dated as of March 7, 2000 by
and among the Corporation, Koninklijke Ahold N.V. and Snow Acquisition, Inc.).
The number of directors of the Corporation may be changed by a resolution passed
by a majority of the whole Board of Directors or by a vote of the holders of
record of at least a majority of the shares of common
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<PAGE>
stock of the Corporation, issued and outstanding and entitled to vote. Directors
of the Corporation shall hold office until the next annual election and until
their successors shall have been elected and shall have qualified, unless sooner
displaced".
Section 3.11 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 their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Company 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.
Section 3.12 Closing. Unless this Agreement shall have been
-------
terminated and the transactions contemplated hereby shall have been abandoned
pursuant to Article VIII, and subject to the satisfaction or waiver of all of
the conditions set forth in Article VII, the closing of 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 Article VII hereof is satisfied or waived, other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions, or at such other date, time or
place as the parties hereto shall agree in writing. Such date is herein
referred to as the "Closing Date".
------------
Section 3.13 Withholding Rights. Parent shall be entitled to deduct
------------------
and withhold, or cause to be deducted or withheld, from (i) the consideration
otherwise payable pursuant to this Agreement to any holder of Shares or the BT
Common Stock Purchase Warrant or (ii) any payment made pursuant to Section 3.7,
such amounts as are required to be deducted and withheld with respect to the
making of such payment under the Code, or any provision of applicable U.S.
federal, state or local Tax law. To the extent that amounts are so deducted and
withheld, such deducted and withheld amounts shall be treated for all purposes
of this Agreement as having been paid to such holders in respect of which such
deduction and withholding was made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
Section 4. Representations and Warranties of the Company. Except as
---------------------------------------------
set forth in the corresponding Schedules of the disclosure letter delivered by
the Company to Parent and Sub upon or prior to entering into this Agreement (the
"Company Disclosure Letter"), the Company hereby represents and warrants to
-------------------------
Parent and Sub as follows:
Section 4.1 Due Organization, Good Standing and Corporate Power.
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Each of the Company and its Subsidiaries is a corporation duly incorporated (or,
if not a corporation, duly organized), validly existing and in good standing
under the laws of the jurisdiction of its incorpo-
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<PAGE>
ration (or, if not a corporation, organization) and each such Person has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. The Company and each of its
Subsidiaries is duly qualified or licensed to do business 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 reasonably be expected to have a
Material Adverse Effect on the Company. The Company has, prior to the date of
this Agreement, made available to Parent complete and correct copies of the
Company's Restated Certificate of Incorporation, as amended, and the Company's
Amended and Restated By-laws and the comparable governing documents of each of
its material Subsidiaries, in each case as amended and in full force and effect
as of the date of this Agreement. Other than as set forth in Schedule 4.1 of the
Company Disclosure Letter, the respective Certificates of Incorporation and By-
laws or other organizational documents of the Subsidiaries of the Company do not
contain any provision limiting or otherwise restricting the ability of the
Company to control each Subsidiary of the Company having an aggregate fair
market value in excess of $1,000,000 and in which (x) in the case of any such
Subsidiary that is organized as a partnership, the Company or any of its
Subsidiaries is the general partner of such Subsidiary, (y) in the case of any
such Subsidiary that is organized as a limited liability company, the Company
has the right to appoint a majority of the managers of such Subsidiary, and (z)
in the case of any such Subsidiary that is organized as a corporation, the
Company has the right to appoint a majority of the members of the Board of
Directors of such Subsidiary.
Section 4.2 Authorization and Validity of this Agreement. The
--------------------------------------------
Company has the requisite corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and (subject to, if
required by the DGCL, the approval of the stockholders of the Company) to
consummate 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 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, if required by the DGCL, the adoption of this Agreement by the
stockholders of the Company and the filing of appropriate merger documents as
required by the DGCL). This Agreement has been duly executed and delivered by
the Company and, assuming that this Agreement constitutes a valid and binding
obligation of Parent and Sub, constitutes 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.
Section 4.3 Capitalization. The authorized capital stock of the
--------------
Company consists of (a) 400,000,000 shares of Common Stock and (b) 5,000,000
shares of preferred stock, par value $0.01 per share, of which 350,000 shares
are designated Series A junior participating preferred stock. At the close of
business on March 3, 2000: (i) 102,587,339 shares of Common Stock were issued
and outstanding, (ii) 143,113.7 shares of Common Stock were reserved for
issuance pursuant to the BT Common Stock Purchase Warrant, (iii) 350,000 shares
of Series A junior participating preferred stock were reserved for issuance
pursuant to the Rights Agreement,
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<PAGE>
(iv) no shares of Common Stock were held by the Company in its treasury, (v)
options representing in the aggregate the right to purchase 4,983,574 shares of
Common Stock (collectively, the "Company Stock Options") under the Company
---------------------
Stock Option Plan for Outside Directors, dated as of November 22, 1994, as
amended from time to time, the Company 1994 Stock Incentive Plan, dated as of
November 22, 1994, as amended from time to time, the Company 1998 Stock Option
and Incentive Plan, dated as of September 24, 1998, as amended from time to
time, the Rykoff-Sexton, Inc. 1980 Stock Option Plan, as amended from time to
time, the Rykoff-Sexton, Inc. 1988 Stock Option and Compensation Plan, as
amended from time to time, the Amended and Restated US Foodservice Inc. 1992
Stock Option Plan, as amended from time to time, the Rykoff-Sexton, Inc. 1993
Director Stock Option Plan, as amended from time to time, the Amended and
Restated US Foodservice Inc. 1993 Stock Option Plan, as amended from time to
time, the Rykoff-Sexton, Inc. 1995 Key Employees Stock Option and Compensation
Plan, and the stock option and compensation plan set forth in Schedule 4.3(f) of
the Company Disclosure Letter (collectively, the "Company Stock Option Plans")
--------------------------
were outstanding, (vi) options or rights representing in the aggregate the right
to purchase up to approximately 41,316 shares of Common Stock under the Company
Stock Purchase Plan were outstanding (assuming the price of a share of Common
Stock on the next Investment Date is $13.8125), (vii) restricted stock units
("Company Stock Units") representing in the aggregate the right to receive
-------------------
488,964 shares of Common Stock under the Company Stock Unit Plans were
outstanding; (viii) participant account balances ("Company Account Balances")
------------------------
representing in the aggregate the right to receive 10,069 shares of Common Stock
under the Company Non-Employee Director Voluntary Deferred Compensation Plan,
dated as of January 1, 1999, as amended from time to time, (the "Company
-------
Deferred Compensation Plan") were outstanding and (xix) reload options
- --------------------------
representing the right to purchase additional shares of Common Stock upon the
exercise of outstanding Company Stock Options, at an exercise price equal to the
fair market value of the Common Stock (as defined in the applicable Company
Stock Option Plan) at the date of grant of such reload options, were
outstanding. Schedule 4.3(a) of the Company Disclosure Letter sets forth the
owners of more than 5% of the issued and outstanding shares of each class of
capital stock of the Company. All issued and outstanding shares of capital stock
of the Company and each of its Subsidiaries have been duly authorized and
validly issued and are fully paid and nonassessable, and are not subject to, nor
were issued in violation of, any preemptive rights. Except as set forth on
Schedule 4.3(b) of the Company Disclosure Letter as of the date hereof, there
are no outstanding or authorized options, warrants, rights, subscriptions,
agreements, obligations, convertible or exchangeable securities, or other
commitments or claims, contingent or otherwise, relating to the holding, voting
or disposition of shares of capital stock of the Company or any of its
Subsidiaries or 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 outstanding bonds,
debentures, notes or other indebtedness the holders of which have the right to
vote (or convertible or exercisable for or exchangeable into securities the
holders of which have the right to vote) on any matter on which the stockholders
of the Company or any of its Subsidiaries may vote. Except as set forth on
Schedule 4.3(c) of the Company 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 (other than any
Subsidiary of the
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<PAGE>
Company) having an aggregate fair market value in excess of $1,000,000. Except
as set forth on Schedule 4.3(d) of the Company 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 one or more of its
Subsidiaries free and clear of any liens, security interest, charge or
encumbrance of any kind or nature (each, a "Lien"). Except as set forth on
----
Schedule 4.3(e) of the Company 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, other than restrictions under applicable law.
Section 4.4 Consents and Approvals; No Violations. (a) Except as
--------------------------------------
set forth in Schedule 4.4(a) of the Company Disclosure Letter, the execution and
delivery by the Company of this Agreement does not, and the consummation by the
Company of the transactions contemplated hereby and compliance by the Company
with the provisions hereof will not: (x) violate any of the provisions of the
Restated Certificate of Incorporation, as amended, or Amended and Restated By-
laws of the Company or the comparable governing documents of any Subsidiary of
the Company, (y) subject to the governmental filings and other matters set forth
in Section 4.4(b), violate or result in a breach of or default (with or without
notice or lapse of time, or both) under, or give rise to any obligation, right
of termination, cancellation, acceleration or increase of any obligation or loss
of a material benefit under, or require the consent of any Person under, any
note, bond, mortgage, indenture or other agreement, permit, concession,
franchise, license, arrangement or other instrument or undertaking to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any of their respective assets is bound or affected or (z)
subject to the governmental filings and other matters referred to in Section
4.4(b), violate any domestic or foreign law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to the Company
or any of its Subsidiaries, which, in the case of clauses (y) and (z), would
reasonably be expected to have a Material Adverse Effect on the Company.
(b) No consent, approval, order or authorization of, or declaration,
registration or filing with, or notice to, any domestic or foreign court,
arbitral tribunal, administrative agency or commission or other governmental or
regulatory agency or authority (each a "Governmental Entity"), which has not
-------------------
been received or made is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by the Company, the consummation by the Company of the transactions contemplated
hereby or compliance by the Company with the provisions hereof, except for (i)
the filing of premerger notification and report forms under the HSR Act, (ii)
the filing with the Commission of (A) the Schedule 14D-9 and, if required by
applicable law, the Proxy Statement (as defined in Section 6.4(b)), (B) such
reports and filings under the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated hereby, (iii) the filing of the
certificate of merger or the certificate of ownership and merger, as the case
may be, with the Delaware Secretary of State and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business, (iv) as required under the rules and regulations of the New York Stock
Exchange and (v) any other consents, approvals, authorizations, filings or
notices the failure to make or obtain would not reasonably be expected to have a
Material Adverse Effect on the Company.
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<PAGE>
Section 4.5 Company Reports and Financial Statements. Since June 28,
----------------------------------------
1997, the Company (including any predecessor entity) and its Subsidiaries have
filed all forms, reports, schedules, statements, registration statements and
other documents with the Commission relating to periods commencing on or after
such date required to be filed by it pursuant to the federal securities laws and
the Commission rules and regulations thereunder (such forms, reports, schedules,
statements, registration statements and other documents being hereinafter
referred to as the "Commission Filings"), and, as of their respective dates, the
------------------
Commission Filings complied in all material respects with all applicable
requirements of the federal securities laws and the Commission rules and
regulations promulgated thereunder. The Company has, prior to the date of this
Agreement, made available to Parent true and complete copies of all portions of
any Commission Filings not publicly available. As of their respective dates,
the Commission Filings 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 therein, in light of the circumstances under which they were
made, not misleading. Each of the consolidated financial statements of the
Company and its consolidated Subsidiaries contained in the Commission Filings
have been prepared in accordance with GAAP (except (i) as may be indicated
therein or in the notes or schedules thereto and (ii) in the case of unaudited
quarterly financial statements, as permitted by Form 10-Q of the Commission) and
presented fairly, in all material respects, the consolidated financial position
of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and changes in cash flows for the
periods then ended (subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments). The Company has heretofore provided Parent
with true and correct copies of any amendments and/or modifications to any
Commission Filings which have not yet been filed with the Commission but that
are required to be filed with the Commission in accordance with applicable
federal securities laws and the Commission rules and regulations promulgated
thereunder.
Section 4.6 Absence of Certain Changes. Except as set forth on
--------------------------
Schedule 4.6 of the Company Disclosure Letter and in the Completed Commission
Filings, since July 3, 1999, (i) there has been no Material Adverse Effect on
the Company; (ii) as of the date hereof, the businesses of the Company and each
of its Subsidiaries have been conducted only in the ordinary course consistent
with past practice, (iii) except to the extent required under the Employee
Benefit Plans or by applicable law, neither the Company nor any of its
Subsidiaries have, as of the date hereof, increased the compensation of any
officer or granted any salary or benefits increase to their respective employees
(other than any such officer or employee who is not an executive officer of the
Company or a regional vice president and who, in each case, receives annual
total cash compensation in an amount less than $250,000; provided, however, that
-------- -------
the Company's executive officers and regional vice presidents may receive
increases in fringe benefits (A) as set forth in Schedule 4.6 of the Company
Disclosure Letter or (B) as are generally applicable to all employees of the
Company); (iv) as of the date hereof, neither the Company nor any of its
Subsidiaries has taken any action referred to in Section 6.3 hereof except as
permitted thereby; (v) there has been no declaration, setting aside or payment
of any dividend or other distribution with respect to any class of stock or any
repurchase, redemption or other acquisition by the Company of any of its
Subsidiaries of any stock or other securities of the Company or any of its
Subsidiaries (other than any dividends or other distributions by any direct or
indirect wholly-owned Subsidiary of the Company to another direct or indirect
wholly-owned Subsidiary of the Company or to the
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<PAGE>
Company); and (vi) there has not been, as of the date hereof, any change by the
Company in accounting principles, practices or methods.
Section 4.7 Title to Properties; Encumbrances. Except as set forth
----------------------------------
in Schedule 4.7 of the Company Disclosure Letter, the Company and each of its
Subsidiaries has good, valid and marketable title to, or, in the case of leased
properties and assets, valid leasehold interests in, (i) all of its material
tangible properties and assets (real and personal), including, without
limitation, all the properties and assets reflected in the consolidated balance
sheet as of July 3, 1999 contained in the Commission Filings except as
indicated in the notes thereto and except for properties and assets reflected
in the consolidated balance sheet as of July 3, 1999 contained in the Commission
Filings which have been sold or otherwise disposed of in the ordinary course of
business after such date and except where the failure to have such good, valid
and marketable title or valid leasehold interest would not reasonably be
expected to have a Material Adverse Effect on the Company, and (ii) all the
tangible properties and assets purchased by the Company and any of its
Subsidiaries since July 3, 1999, except for such properties and assets which
have been sold or otherwise disposed of in the ordinary course of business and
except where the failure to have such good, valid and marketable title or valid
leasehold interest would not reasonably be expected to have a Material Adverse
Effect on the Company; in each case subject to no Liens, except for (x) Liens
reflected or reserved against in the Completed Commission Filings and (y) such
Liens which would not reasonably be expected to have a Material Adverse Effect
on the Company.
Section 4.8 Compliance with Laws. (a) Except as set forth on
--------------------
Schedule 4.8 of the Company Disclosure Letter and except where the failure to so
comply would not reasonably be expected to have a Material Adverse Effect on the
Company, the Company and its Subsidiaries are in compliance with all applicable
federal, state, local and foreign statutes, laws, regulations, orders, judgments
and decrees and have not received notification of any asserted present or past
failure to so comply.
(b) The Company and its Subsidiaries hold all federal, state, local
and foreign permits, approvals, licenses, authorizations, certificates, rights,
exemptions and orders from governmental authorities (the "Permits") that are
-------
necessary for the operation of the business of the Company and/or its
Subsidiaries as now conducted, and there has not occurred any default under any
such Permit, except to the extent that any such failure to hold Permits and any
such default would not reasonably be expected to have a Material Adverse Effect
on the Company.
Section 4.9 Litigation. Except as set forth in Schedule 4.9 of the
----------
Company Disclosure Letter, there is no action, suit, proceeding at law or in
equity, or any arbitration or any administrative or other proceeding by or
before (or to the Knowledge of the Company any investigation by) any
governmental or other instrumentality or agency, pending, or, to the Knowledge
of the Company, threatened, against or affecting the Company or any of its
Subsidiaries, or any of their respective properties or rights which would
reasonably be expected to have a Material Adverse Effect on the Company.
Neither the Company nor any of its Subsidiaries is subject to any judgment,
order or decree entered in any lawsuit or proceeding which would reasonably be
expected to have a Material Adverse Effect on the Company.
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<PAGE>
Section 4.10 Employee Benefit Plans. (a) Set forth on Schedule
----------------------
4.10(a) of the Company Disclosure Letter is an accurate and complete list of
each domestic and foreign 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"), whether or not subject to ERISA, and
-----
each stock option, stock appreciation right, restricted stock, stock purchase,
stock unit, performance share, incentive, bonus, profit-sharing, savings,
deferred compensation, health, medical, dental, life insurance, disability,
accident, supplemental unemployment or retirement, employment, severance or
salary or benefits continuation, change in control, "parachute payment," or
fringe benefit plan, program, arrangement, agreement or commitment (other than
individual arrangements, agreements and commitments) maintained by the Company
or any Affiliate thereof (including, for this purpose and for the purpose of all
of the representations in this Section 4.10, all employers (whether or not
incorporated) that would be treated together with the Company, any such
Affiliate and/or the stockholder as a single employer within the meaning of
Section 414 of the Code) or to which the Company or any Affiliate thereof
contributes (or has any obligation to contribute), has any liability or is a
party (collectively, the "Employee Benefit Plans").
----------------------
(b) Except as set forth in Schedule 4.10(b) of the Company Disclosure
Letter or except where the failure to comply with the following representations
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company: (i) each Employee Benefit Plan is in
compliance with all applicable laws (including, without limitation, ERISA and
the Code) and has been administered and operated in all respects in accordance
with its terms; (ii) each Employee Benefit Plan which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has received, on or
after December 31, 1993, a favorable determination letter from the Internal
Revenue Service and, to the Knowledge of the Company, no event has occurred and
no condition exists which could reasonably be expected to result in the
revocation of any such determination; (iii) the actuarial present value of the
accumulated plan benefits (whether or not vested) under each Employee Benefit
Plan covered by Title IV of ERISA (other than any Employee Benefit Plan which is
a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) (a
"Multiemployer Plan")) as of the close of its most recent plan year did not
- -------------------
exceed the market value of the assets allocable thereto; (iv) no Employee
Benefit Plan covered by Title IV of ERISA has been terminated and no proceedings
have been instituted to terminate or appoint a trustee under Title IV of ERISA
to administer any such plan; (v) no "reportable event" (as defined in Section
4043 of ERISA) has occurred with respect to any Employee Benefit Plan covered by
Title IV of ERISA; (vi) no Employee Benefit Plan (other than any Multiemployer
Plan) subject to Section 412 of the Code or Section 302 of ERISA has incurred
any accumulated funding deficiency within the meaning of Section 412 of the Code
or Section 302 of ERISA, or obtained a waiver of any minimum funding standard or
an extension of any amortization period under Section 412 of the Code or Section
303 or 304 of ERISA; (vii) neither the Company nor any of its Affiliates has
incurred any unsatisfied withdrawal liability under Part 1 of Subtitle E of
Title IV of ERISA to any Multiemployer Plan; (viii) no Multiemployer Plan is, to
the Knowledge of the Company, in "reorganization" (within the meaning of Section
4241 of ERISA) or is or may become "insolvent" (within the meaning of Section
4245 of ERISA); (ix) full payment has been timely made of all amounts which the
Company and/or its Affiliates is required under applicable law or under any
Employee Benefit
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<PAGE>
Plan or related agreement to have paid as of the last day of the most recent
fiscal year of each Employee Benefit Plan ended prior to the date hereof, and,
to the Knowledge of the Company, no event has occurred or condition exists that
could reasonably be expected to result in an increase in the level of such
amounts paid or accrued for the most recently ended fiscal year; (x) neither the
Company nor any of its Affiliates, nor any of their respective directors,
officers or employees, nor, to the Knowledge of the Company, any other
"disqualified person" or "party in interest" (as defined in Section 4975(e)(2)
of the Code and Section 3(14) of ERISA, respectively) has engaged in any
transaction, act or omission to act in connection with any Employee Benefit Plan
that could reasonably be expected to result in the imposition on the Company or
any of its Affiliates of a penalty or fine pursuant to Section 502 of ERISA,
damages pursuant to Section 409 of ERISA or a tax pursuant to Section 4975 of
the Code; and (xi) no liability, claim, action, litigation, audit, examination,
investigation or administrative proceeding has been made, commenced or, to the
Knowledge of the Company, threatened with respect to any Employee Benefit Plan
(other than routine claims for benefits payable in the ordinary course) which
could result in a liability of the Company or any Affiliate thereof.
(c) The Company has delivered or caused to be delivered or made
available to Parent true and complete copies of each Employee Benefit Plan,
together with all amendments thereto, and, to the extent applicable, (i) all
current summary plan descriptions; (ii) the annual report on Internal Revenue
Service Form 5500-series, including any attachments thereto, for each of the
last three plan years; (iii) the most recent actuarial valuation report and (iv)
the most recent determination letter.
Section 4.11 Employment Relations and Agreements. Except as set
-----------------------------------
forth on Schedule 4.11 of the Company Disclosure Letter or in the Completed
Commission Filings, (i) each of the Company and its Subsidiaries is in
substantial compliance with all federal, state or other applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and has not engaged in any unfair labor practice
as determined by the National Labor Relations Board ("NLRB"); (ii) no material
----
unfair labor practice charge or complaint against the Company or any of its
Subsidiaries is pending before the NLRB or an equivalent tribunal under
applicable foreign law; (iii) there is no labor strike, slowdown, stoppage
pending or, to the Knowledge of the Company, threatened against or involving the
Company or any of its Subsidiaries; (iv) no material grievance or arbitration
proceeding arising out of or under a collective bargaining agreement is pending
or, to the Knowledge of the Company, is threatened with respect to the Company's
or its Subsidiaries' operations; (v) neither the Company nor any of its
Subsidiaries has any Equal Employment Opportunity Commission charges or other
claims of employment discrimination pending or, to the Knowledge of the Company,
threatened against the Company or any such Subsidiary; (vi) no wage and hour
department investigation has been made of the Company or any of its
Subsidiaries; (vii) the Company and each of its Subsidiaries is in compliance in
all material respects with the terms and provisions of the Immigration Reform
and Control Act of 1986, as amended, and all related regulations promulgated
thereunder; and (viii) there has been no "mass layoff" or "plant closing" by the
Company as defined in the Federal Workers Adjustment Retraining and Notification
Act ("WARN") or state law equivalent, or any other mass layoff or plant closing
----
that would trigger notice pursuant to WARN or state law equivalent, within
ninety (90) days prior to the Closing Date.
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<PAGE>
Section 4.12 Taxes. Except as set forth on in Schedule 4.12 of the
-----
Company Disclosure Letter and except for failures that would not reasonably be
expected to have a Material Adverse Effect on the Company:
(a) Tax Returns. The Company and each of its Subsidiaries has timely
-----------
filed or caused to be timely filed or will file or cause to be timely filed with
the appropriate taxing authorities all returns, statements, forms and reports
for Taxes (as hereinafter defined) (the "Returns") that are required to be filed
-------
by, or with respect to, the Company and such subsidiaries on or prior to the
Closing Date. The Returns reflect accurately and will reflect accurately all
liability for Taxes of the Company and each of its Subsidiaries for the periods
covered thereby. "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 shall include any
liability for 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 or other entity.
(b) Payment of Taxes. All Taxes and Tax liabilities of the Company
----------------
and its Subsidiaries for all taxable years or periods that end on or prior to
the Closing Date and, with respect to any taxable year or period beginning prior
to and ending after the Closing Date, the portion of such taxable year or period
ending on and including the Closing Date ("Pre-Closing Period"), have been
------------------
timely paid or will be timely paid in full on or prior to the Closing Date or
accrued and adequately disclosed and fully provided for on the financial
statements of the Company and its Subsidiaries in accordance with GAAP.
(c) Other Tax Matters. (i) Neither the Company nor any of its
-----------------
Subsidiaries has been the subject of any audit or other examination of Taxes by
the tax authorities of any nation, state or locality, nor has the Company or any
of its Subsidiaries received any material notices from any tax authority
relating to a Tax liability of the Company or any of its Subsidiaries.
(ii) Neither the Company nor any of its Subsidiaries has been
included in any "consolidated," "unitary" or "combined" Return (other than
Returns which include only the Company and any Subsidiaries of the Company)
provided for under the laws of the United States, any foreign jurisdiction
or any state or locality with respect to Taxes for any taxable period for
which the statute of limitations has not expired.
(iii) All Taxes which the Company or any of its Subsidiaries is (or
was) required by law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable.
(iv) There are no tax sharing, allocation, indemnification or similar
agreements or arrangements in effect as between the Company, any
Subsidiary, or any predecessor or
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<PAGE>
Affiliate of any of them and any other party under which Parent, Sub, the
Company or any of its Subsidiaries could be liable for any material Taxes
or other claims of any party.
(v) No indebtedness of the Company or any of its Subsidiaries
consists of "corporate acquisition indebtedness" within the meaning of
Section 279 of the Code.
(vi) Neither the Company nor any of its Subsidiaries has applied
for, been granted, or agreed to any accounting method change for which it
will be required to take into account any material adjustment pursuant to
Section 481 or any similar provision of the Code or the corresponding tax
laws of any nation, state or locality.
(vii) Neither the Company nor any of its Subsidiaries, as of the
Closing Date: (A) has entered into a written agreement or waiver or been
requested in writing to enter into an agreement or waiver extending any
statute of limitations relating to the payment or collection of Taxes of
the Company or any of its Subsidiaries, (B) is presently contesting a
material Tax liability of the Company or any of its Subsidiaries before any
court, tribunal or agency, or (C) has applied for and/or received a ruling
or determination from a taxing authority regarding a past or prospective
transaction of the Company or any of its Subsidiaries.
(viii) No election under 341(f) of the Code has been made or shall be
made prior to the Closing Date to treat the Company or any of its
Subsidiaries as a consenting corporation, as defined in Section 341 of the
Code.
(ix) The Company has delivered or made available to Parent true and
complete copies of all agreements and arrangements that would require the
Company or any of its Subsidiaries to make any payment that would
constitute an "excess parachute payment" for purposes of Sections 280G and
4999 of the Code, together with all other information within the possession
of the Company necessary to compute any such excess parachute payment, but
only to the extent that the Company or any of its Subsidiaries is required
to make a gross-up payment to the recipient of such excess parachute
payment (to reimburse such recipient for the excise taxes (and related
taxes) that will be imposed upon him as a result of receiving such excess
parachute payment); provided, however, that this representation shall be
-------- -------
deemed to not have been breached if the failure to deliver or make
available a particular document or information, or if inaccuracies, errors
or omissions in the information delivered or made available, would not
reasonably be expected to have a Material Adverse Effect on the Company.
(x) No claim has ever been made by any taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that the Company or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction.
Section 4.13 Liabilities. Neither the Company nor any of its
-----------
Subsidiaries has any claims, liabilities or indebtedness, contingent or
otherwise of any kind whatsoever (whether accrued, absolute, contingent or
otherwise and whether or not required to be reflected in the Company's financial
statements in accordance with GAAP), except (i) as set forth in Schedule
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4.13 of the Company Disclosure Letter, (ii) as set forth in the Commission
Filings, or referred to in the footnotes thereto filed prior to the date of this
Agreement (the "Completed Commission Filings"), (iii) for liabilities incurred
----------------------------
since the date of the most recent financial statements included in the Completed
Commission Filings in the ordinary course of business consistent with past
practice and (iv) such other claims, liabilities or indebtedness which would not
reasonably be expected to have a Material Adverse Effect on the Company.
Section 4.14 Intellectual Property. (a) Schedule 4.14(a) of the
---------------------
Company Disclosure Letter contains a complete list of all material foreign and
domestic registered and unregistered trademarks, service marks, trade names,
domain names and applications for registration thereof, registered copyrights,
software and computer programs and patents and applications therefor owned by
the Company and its Subsidiaries. As of the date hereof, to the extent
indicated on such Schedule, such Intellectual Property has been, as applicable,
duly registered in, filed in or issued by the United States Patent and Trademark
Office, United States Copyright Office or a duly accredited and appropriate
domain name registrar and/or the appropriate offices in the various states of
the United States or other jurisdictions, and each such registration, filing
and/or issuance remains in full force and effect.
(b) Except as set forth in Schedule 4.14(b) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to any
license or agreement, whether as licensor, licensee, or otherwise with respect
to any material Intellectual Property. To the extent any material Intellectual
Property is used under license in the business of the Company and/or any of its
Subsidiaries, no notice of a material default has been sent or received by the
Company or any of its Subsidiaries under any such license which remains uncured.
To the Knowledge of the Company, each such license agreement is a legal, valid
and binding obligation of the Company and/or its Subsidiaries and each of the
other parties thereto, enforceable in accordance with the terms thereof.
(c) Except as set forth in Schedule 4.14(c) of the Company Disclosure
Letter, the Company and/or its Subsidiaries owns or is licensed to use, all of
the material Intellectual Property used in the business, free and clear of any
liens, security interest, charges and encumbrances, without obligation to pay
any royalty to any licensor or any other fees with respect thereto. To the
Knowledge of the Company, the use by the Company or any of its Subsidiaries of
material Intellectual Property does not infringe any Intellectual Property
rights of any third party. No Intellectual Property set forth on Schedule
4.14(a) of the Company Disclosure Letter has been canceled, or abandoned by the
Company, and all applicable renewal fees in respect thereof have been duly paid.
(d) Except as set forth in Schedule 4.14(d) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has received any written
notice or claim from any Person challenging the right of the Company or any of
its Subsidiaries to use any of the Intellectual Property set forth on Schedule
4.14(a) of the Company Disclosure Letter which claim is still pending.
(e) Except as set forth in Schedule 4.14(e) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has made any claim in
writing of a violation,
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infringement, misuse or misappropriation by any Person of its rights to, or in
connection with any of its material Intellectual Property, which claim is still
pending.
Section 4.15 Proxy Statement; Offer Documents and Schedule 14D-9.
---------------------------------------------------
The definitive Proxy Statement will comply in all material respects with the
Exchange Act and the rules and regulations thereunder and any other applicable
laws. If at any time prior to a meeting of the stockholders of the Company, any
event occurs which should be described in an amendment or supplement to the
Proxy Statement, the Company shall file and disseminate, as required, an
amendment or supplement which complies in all material respects with the
Exchange Act and the rules and regulations thereunder and any other applicable
laws. Prior to its filing with the Commission, the amendment or supplement
shall be delivered to Parent and Sub and their counsel. None of the information
supplied by the Company for inclusion or incorporation by reference in (i) the
documents pursuant to which the Offer will be made, including the Offer
Documents, or (ii) the Proxy Statement, will, in the case of the Offer
Documents, at the respective times the Offer Documents are filed with the
Commission or first published, sent or given to the Company's stockholders or,
in the case of the Proxy Statement, at the date such information is supplied and
at the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made, in
light of the circumstance under which they are made, not misleading. None of
the information supplied by the Company in the Schedule 14D-9, at the respective
times the Schedule 14D-9 is filed with the Commission or first published, sent
or given to the Company's stockholders will contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which they are made, not misleading.
Notwithstanding the foregoing, no representation or warranty is made with
respect to any information with respect to Parent, Sub or their officers,
directors or Affiliates provided to the Company by Parent or Sub in writing for
inclusion in the Schedule 14D-9. The Schedule l4D-9 shall comply in all
material respects with the Exchange Act and the rules and regulations thereunder
and any other applicable laws. If at any time prior to the expiration or
termination of the Offer any event occurs which should be described in an
amendment or supplement to the Schedule l4D-9 or any amendment or supplement
thereto, the Company shall file and disseminate, as required, an amendment or
supplement which complies in all material respects with the Exchange Act and the
rules and regulations thereunder and any other applicable laws. Prior to its
filing with the Commission, the amendment or supplement shall be delivered to
Parent and Sub and their counsel. If, at any time prior to the Effective Time,
any event with respect to the Company, or with respect to any information
supplied by the Company for inclusion in the Offer Documents, shall occur which
should be described in an amendment of, or a supplement to, such documents, the
Company shall promptly provide a description of such event to Parent and Sub.
Section 4.16 Broker's or Finder's Fee. Except for the fees of
------------------------
Goldman, Sachs & Co. (whose fees and expenses will be paid by the Company in
accordance with the Company's agreement with such firm, a true and correct copy
of which has been previously delivered to Parent by the Company), no agent,
broker, Person or firm acting on behalf of the Company is, or will be, entitled
to any fee, commission or broker's or finder's fees in connection with this
Agreement or any of the transactions contemplated hereby from any of the parties
hereto, or from any Affiliate of the parties hereto.
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Section 4.17 Certain Contracts and Arrangements. As of the date
----------------------------------
hereof, except as set forth on Schedule 4.17 of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries is a party to or bound by any
contracts, agreements, instruments or understandings ("contracts") of the
following nature (collectively, the "Material Contracts"):
------------------
(i) contracts with any current or former officer, employee or
director of the Company or any of its Subsidiaries (other than any such
officer, employee or director who is not an executive officer of the
Company or a regional vice president and who, in each case, receives or
received (during his or her last year of employment with the Company or any
of its Subsidiaries) less than $250,000 in total annual cash compensation
from the Company or any of its Subsidiaries);
(ii) contracts entered into (x) for the sale of any amount of assets
of the Company or any of its Subsidiaries with an aggregate market value in
excess of $5,000,000 or (y) for the grant to any Person of any preferential
rights to purchase any material amount of its assets (in each case, other
than any contract (collectively, "Excluded Contracts") with any customer
(a) not exceeding $50,000,000 in any year or $150,000,000 in the aggregate
or (b) that is terminable by the Company within ninety (90) days without
penalty);
(iii) contracts which materially restrict the Company or any of its
Affiliates from competing in any material line of business or with any
Person in any geographical area or which materially restrict any other
Person from competing with the Company or any of its Affiliates in any
material line of business or in any geographical area;
(iv) contracts which are material to the Company and which restrict
the Company or any of its Subsidiaries from disclosing any information
concerning or obtained from any other Person or which restrict any other
Person from disclosing any information concerning or obtained from the
Company or any of its Subsidiaries (other than contracts entered into in
the ordinary course of business consistent with past practice);
(v) any confidentiality, nondisclosure or similar contract which
contains any "standstill" provisions or similar restrictions on Acquisition
Proposals by any third party (other than Parent or its Affiliates);
(vi) contracts involving (A) the acquisition, merger or purchase of
all or substantially all of the assets or business of a third party
involving aggregate consideration of $7,500,000 or more or (B) the purchase
or sale of assets, or a series of purchases and sales of assets (other than
inventory), involving aggregate consideration of $7,500,000 or more, other
than any Excluded Contract or (C) the purchase of inventory pursuant to any
contract or any purchase order, which contract or purchase order represents
aggregate purchases of over $100,000,000 (collectively, the "Material
Inventory Contracts");
(vii) contracts with any Affiliate that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities Act;
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(viii) contracts which are material to the Company and contain a
"change in control" or similar provision;
(ix) contracts, including mortgages or other grants of security
interests, guarantees and notes, relating to the borrowing of money in an
aggregate amount in excess of $5,000,000 in the aggregate;
(x) contracts relating to any material joint venture, partnership,
strategic alliance or similar arrangement; and
(xi) contracts involving revenues or payments in excess of (A)
$25,000,000 per year or (B) $75,000,000 in the aggregate at any time, in
each case, other than any Excluded Contract or any contract for the
purchase of inventory that is not a Material Inventory Contract.
Except as set forth on Schedule 4.17 of the Company Disclosure Letter
and except as would not reasonably be expected to have a Material Adverse Effect
on the Company, neither the Company nor any of its Subsidiaries is in breach or
default under any Material Contract nor, to the Knowledge of the Company, is any
other party to any Material Contract in breach or default thereunder.
Section 4.18 Environmental Laws and Regulations. Except as set
----------------------------------
forth on Schedule 4.18 of the Company Disclosure Letter and except as would not
reasonably be expected to have a Material Adverse Effect on the Company, (i)
Hazardous Materials have not been generated, used, treated or stored, or
transported to or from, or Released or disposed of, on any Company Property or
any Former Company Property, in each case, during the ownership, leasing or
operation by the Company or any of its Subsidiaries, except in compliance with
applicable Environmental Laws, (ii) the Company and each of its Subsidiaries are
in compliance with all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws with respect to any Company
Property, (iii) there are no past, pending or, to the Knowledge of the Company,
any threatened Environmental Claims against the Company or any of its
Subsidiaries or any Company Property or, to the Knowledge of the Company, any
Former Company Property, (iv) there are no facts or circumstances, conditions or
occurrences regarding any Company Property or, to the Knowledge of the Company,
any Former Company Property that could reasonably be anticipated (x) to form the
basis of an Environmental Claim against the Company or any of its Subsidiaries
or such Company Property for which the Company or any of its Subsidiaries could
reasonably be expected to be liable or such Former Company Property, as the case
may be, or (y) to cause such Company Property or such Former Company Property,
as the case may be, to be subject to any restrictions on its ownership,
occupancy, use or transferability under any applicable Environmental Law and (v)
there are not now any underground storage tanks located on any Company Property
or, to the Knowledge of the Company, any Former Company Property.
Notwithstanding the other representations and warranties made by the Company in
this Agreement, the representations and warranties made by the Company in this
Section 4.18 shall be deemed to be the only representations and warranties made
by the Company with respect to Environmental Laws or Hazardous Materials.
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<PAGE>
For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Company Property" means any real property and
----------------
improvements owned, leased or operated by the Company or any of its Subsidiaries
as of the date hereof; (ii) "Former Company Property" means any real property
-----------------------
and improvements previously owned, leased or operated by the Company or any at
its Subsidiaries at any time prior to the date hereof; (iii) "Hazardous
---------
Materials" means (x) any petroleum or petroleum products, radioactive materials,
- ---------
asbestos in any form that has become friable, urea formaldehyde foam insulation,
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(y) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "extremely hazardous substances," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," or words of similar
import, under any applicable Environmental Law; and (z) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any governmental authority; (iv) "Environmental Law" means any federal, state,
-----------------
foreign or local statute, law, rule, regulation, ordinance, policy that has the
force and effect of law, code or rule of common law in effect and in each case
as amended as of the date hereof and Closing Date, and any judicial
interpretation thereof or order applicable to the Company or its operations or
property as of the date hereof and Closing Date, including any judicial or
administrative order, consent decree or judgment, relating to the environment or
health and safety as affected by the environment or Hazardous Materials,
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.;
-- ----
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. (S) 6901 et
--
seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. (S) 1251 et
- ---- --
seq.; the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq.; the Clean
- ---- -- ----
Air Act, 42 U.S.C. (S) 7401 et seq.; Occupational Safety and Health Act, 29
-- ----
U.S.C. 651 et seq. (solely as it relates to the exposure to Hazardous
-- ----
Materials); Oil Pollution Act of 1990, 33 U.S.C. (S) 2701 et seq.; the Safe
-- ----
Drinking Water Act, 42 U.S.C. (S) 300f et seq., and their state and local
-- ----
counterparts and equivalents; and (v) "Environmental Claims" means any and all
--------------------
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigations or
proceedings under any applicable Environmental Law or any permit issued under
any such Environmental Law (for purposes of this subclause (v), "Claims"),
------
including without limitation (x) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law and (y)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief pursuant to
any applicable Environmental Law and (vi) "Release" means disposing,
-------
discharging, injecting, spilling, leaking, leaching, dumping, emitting,
escaping, emptying or seeping into or upon any land or water or air, or
otherwise entering into the environment.
Section 4.19 State Takeover Statutes. The Board of Directors of the
-----------------------
Company has approved the Offer, the Merger and this Agreement and such approval
is sufficient to render inapplicable to the Offer, the Merger, this Agreement
and the other transactions contemplated by this Agreement the restrictions
contained in Section 203(a) of the DGCL. Except for Section 203 of the DGCL
(which has been rendered inapplicable), no other takeover statute or similar
statute or regulation of any state is applicable to the Offer, the Merger or
this Agreement (including all of the transactions contemplated hereby).
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Section 4.20 Voting Requirements. In the event that Section 253 of
-------------------
the DGCL is inapplicable and unavailable to effectuate the Merger, the
affirmative vote of the holders of at least a majority of the outstanding shares
of Common Stock (voting as one class, with each share of Common Stock having one
(1) vote) entitled to be cast adopting this Agreement is the only vote of the
holders of any class or series of the Company's capital stock necessary to adopt
this Agreement and approve the transactions contemplated by this Agreement.
Section 4.21 Rights Agreement. (i) The Company and the Board of
----------------
Directors of the Company have taken all necessary action to amend the Rights
Agreement (without redeeming the Rights) to (i) render the Rights Agreement
inapplicable with respect to the acquisition of Shares by Sub pursuant to the
Offer in accordance with this Agreement and the Merger, and (ii) ensure that (x)
neither Parent nor Sub nor any of their Affiliates (as defined in the Rights
Agreement) or Associates (as defined in the Rights Agreement) is considered to
be an Acquiring Person (as defined in the Rights Agreement) solely by reason of
the execution or delivery of this Agreement or the transactions contemplated
hereby in accordance with the terms hereof and (y) the provisions of the Rights
Agreement, including the occurrence of a Distribution Date (as defined in the
Rights Agreement), are not and shall not be triggered solely by reason of the
announcement or consummation of the Offer in accordance with this Agreement, the
Merger or the consummation of any of the other transactions contemplated hereby
in accordance with the provisions hereof. The Company has delivered to Parent a
complete and correct copy of the Rights Agreement as amended and the Rights
Agreement has not been further modified or amended.
Section 4.22 Opinion of Financial Advisor. The Company has received
----------------------------
the opinion of Goldman, Sachs & Co. to the effect that, as of the date of this
Agreement, the consideration to be received in the Offer and the Merger by the
holders of Common Stock, other than Parent and Sub, is fair to such holders from
a financial point of view, subject to the qualifications and assumptions
contained therein, and such opinion has not been withdrawn or modified.
Section 4.23 BT Common Stock Purchase Warrant. As of March 3, 2000,
--------------------------------
the number of shares of Common Stock issuable upon exercise of the BT Common
Stock Purchase Warrant is 143,113.7. As of March 3, 2000, the BT Common Stock
Purchase Warrant Exercise Price is $6.51425.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
------------------------------------------------
Section 5. Each of Parent and Sub hereby represents and warrants, to
the Company as follows:
Section 5.1 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.
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Section 5.2 Authorization and Validity of Agreement. Each of Parent
---------------------------------------
and Sub has the requisite 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 Parent and Sub, and the consummation by each of them of the
transactions contemplated hereby, have been duly authorized by the Supervisory
Board and the Executive Board 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
(other than the filing of the appropriate merger documents as required by the
DGCL). This Agreement has been duly executed and delivered by each of Parent
and Sub and, assuming that this Agreement constitutes a valid and binding
obligation of the Company, constitutes 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.
Section 5.3 Consents and Approvals; No Violations. (a) The
--------------------------------------
execution and delivery by Parent and Sub of this Agreement do not, and the
consummation by each of Parent and Sub of the transactions contemplated hereby
and compliance by each of Parent and Sub with the provisions hereof will not:
(x) violate any of the provisions of the certificate of incorporation or by-laws
of Sub or the comparable governing documents of Parent, (y) subject to the
governmental filings and other matters set forth in Section 5.3(b), violate or
result in a breach of or default (with or without notice or lapse of time, or
both) under, or give rise to any obligation, right of termination, cancellation,
acceleration or increase of any obligation or loss of a material benefit under,
or require the consent of any Person under, any note, bond, mortgage, indenture
or other agreement, permit, concession, franchise, license, arrangement or other
instrument or undertaking to which the Parent or any of its Subsidiaries
(including Sub) is a party or by which Parent or any of its Subsidiaries
(including Sub) or any of their respective assets is bound or affected or (z)
subject to the governmental filings and other matters referred to in Section
5.3(b), violate any domestic or foreign law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to Parent or
Sub, which, in the case of clauses (y) and (z) above, would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the ability of Parent or Sub to perform their respective obligations under this
Agreement or to consummate the transactions contemplated hereby.
(b) No consent, approval, order or authorization of, or declaration,
registration or filing with, or notice to, any Governmental Entity, which has
not been received or made is required by or with respect to the Parent or any of
its Subsidiaries (including Sub) in connection with the execution and delivery
of this Agreement by each of Parent and Sub, the consummation by each of Parent
and Sub of the transactions contemplated hereby or compliance by each of Parent
and Sub with the provisions hereof, except for (i) the filing of premerger
notification and report forms under the HSR Act, (ii) the filing with the
Commission of (A) the Schedule TO, (B) such reports under the Exchange Act as
may be required in connection with this Agreement and the transactions
contemplated hereby, (iii) the filing of the certificate of merger or the
certificate of ownership and merger, as the case may be, with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to
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<PAGE>
do business, (iv) as required under the rules and regulations of the New York
Stock Exchange and (v) any other consents, approvals, authorizations, filings or
notices the failure to make or obtain would not reasonably be expected to have a
Material Adverse Effect on the ability of Parent or Sub to perform their
respective obligations under this Agreement or to consummate the transactions
contemplated hereby.
Section 5.4 Offer Documents, Schedule 14D-9 and Proxy Statement. The
---------------------------------------------------
Offer Documents shall comply in all material respects with the Exchange Act and
the rules and regulations thereunder and any other applicable laws. None of the
information supplied by Parent and Sub in the Offer Documents will, at the
respective times they are filed with the Commission or first published, sent or
given to the Company's stockholders, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they are made, not
misleading; provided, however, that no representation or warranty is hereby made
-------- -------
by Parent or Sub with respect to any information supplied to Parent or Sub in
writing by the Company or its officers, directors or Affiliates for inclusion in
the Offer Documents or amendments or supplements thereto. If at any time prior
to the expiration or termination of the Offer any event occurs which is required
to be described in an amendment or supplement to the Schedule TO or any
amendment or supplement thereto, Sub shall file and disseminate, as required, an
amendment or supplement which complies in all material respects with the
Exchange Act and the rules and regulations thereunder and any other applicable
laws. Prior to its filing with the Commission, the amendment or supplement
shall be delivered to the Company and its counsel. None of the written
information supplied or to be supplied to the Company by Parent and Sub for
inclusion in the Proxy Statement and the Schedule l4D-9 of the Company will, on
the date first mailed to the Company's stockholders, 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 made, in light of
the circumstances under which they are made, not misleading. If, at any time
prior to the Effective Time, any event with respect to Parent or Sub, or with
respect to any information supplied by Parent or Sub for inclusion in the
Schedule 14D-9 or the Proxy Statement, shall occur which should be described in
an amendment of, or a supplement to, such document, Parent or Sub shall promptly
provide a description of such event to the Company.
Section 5.5 Broker's or Finder's Fee. Except for Merrill Lynch &
------------------------
Co., Inc. (whose fees and expenses as financial advisor to Parent and Sub will
be paid by Parent or Sub), no agent, broker, Person or firm acting on behalf of
Parent or Sub is, or will be, entitled to any fee, commission or broker's or
finder's fees in connection with this Agreement or any of the transactions
contemplated hereby from any of the parties hereto, or from any Affiliate of the
parties hereto.
Section 5.6 Sub's Operations. Sub was formed solely for the purpose
----------------
of engaging in the transactions contemplated by this Agreement and has not
engaged in any business activities or conducted any operations other than in
connection with such transactions.
Section 5.7 Funds. Parent or Sub has, or will have, prior to the
-----
consummation of the Offer, sufficient funds available to satisfy the obligation
to pay or repay, as the case may be, (i) for shares of Common Stock in the Offer
and to pay the Merger Consideration in the Merger, (ii)
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<PAGE>
any existing indebtedness that is required to be repaid as a result of the
transactions contemplated hereby and (iii) all costs, amounts, fees and expenses
payable by Parent and Sub in connection with their respective obligations under
this Agreement and the transactions contemplated hereby or payable by the
Company pursuant to Section 3.7 hereof.
Section 5.8 Vote/Approval Required. No vote of the holders of any
----------------------
class or series of capital stock of Parent is necessary to approve this
Agreement, the Merger or the Offer. Neither Parent nor any of its Affiliates is
required to obtain the advice of any works council or workers council of Parent
or any of its Affiliates in connection with this Agreement, the Merger or the
Offer or the transactions contemplated hereby or the financing thereof.
ARTICLE VI
TRANSACTIONS PRIOR TO CLOSING DATE
Section 6.1 Access to Information Concerning Properties and Records.
-------------------------------------------------------
Subject to the inability of the Company to provide Parent and Sub access to
confidentiality agreements in standard form relating to potential acquisition or
business combination transactions by which the Company or any of its
Subsidiaries is bound, during the period commencing on the date hereof and
ending on the earlier of (i) the Closing Date and (ii) the date on which this
Agreement is terminated pursuant to Section 8.1 hereof, the Company shall, and
shall cause each of its Subsidiaries to, upon reasonable notice, afford Parent
and Sub and their respective employees, counsel, accountants, consultants and
other authorized representatives, reasonable access during normal business hours
to the officers, directors (other than "non-management" directors), employees,
--------------
accountants, properties, books and records of the Company and its Subsidiaries
in order that they may have the opportunity to make such investigations as they
shall reasonably desire of the affairs of the Company and its Subsidiaries;
provided, however, that such investigation shall not affect the representations
- -------- -------
and warranties made by the Company in this Agreement. The Company shall furnish
promptly to Parent and Sub (x) a copy of each form, report, schedule, statement,
registration statement and other document filed by it or its Subsidiaries during
such period pursuant to the requirements of Federal or state securities laws and
(y) all other information concerning its or its Subsidiaries' business,
properties and personnel as Parent and Sub may reasonably request. The Company
agrees 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.
Section 6.2 Confidentiality. Information obtained by Parent, Sub and
---------------
their respective counsel, accountants, consultants and other authorized
representatives pursuant to Section 6.1 shall be subject to the provisions of
the Confidentiality Agreement by and between the Company and Parent dated
December 15, 1999 (the "Confidentiality Agreement").
-------------------------
Section 6.3 Conduct of the Business of the Company Pending the
--------------------------------------------------
Closing Date. The Company agrees that, except as expressly permitted or
- ------------
required by this Agreement or otherwise consented to in writing by Parent,
during the period commencing on the date hereof
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<PAGE>
until such time as nominees of Parent shall comprise a majority of the members
of the Board of Directors of the Company or this Agreement shall have been
terminated pursuant to Section 8.1:
(a) The Company and each of its Subsidiaries shall conduct their
respective operations only according to their ordinary and usual course of
business consistent with past practice and, except and to the extent it relates
to the performance by the Company of its obligations hereunder, shall use their
commercially reasonable efforts to preserve intact their respective business
organizations, keep available the services of their respective officers and key
employees and maintain satisfactory relationships with licensors, suppliers,
distributors, clients, customers and others having significant business
relationships with them; and
(b) Except as set forth in Schedule 6.3(b) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries shall:
(i) make any change in or amendment to its certificate of
incorporation or its by-laws (or comparable governing documents);
(ii) except for the possible issuance by the Company of (u)
approximately $9,000,000 worth of shares of Common Stock as employer
contributions to the Company 401(k) Retirement Savings Plan, (v) Rights or
other securities pursuant to the terms of the Rights Agreement, (w) 560,000
shares of Common Stock pursuant to the Company Stock Unit Plans and the
Company Deferred Compensation Plan (assuming a price of $13.00 of the
Common Stock as of the relevant valuation date), (x) 143,113.7
shares of Common Stock pursuant to the terms of the BT Common Stock
Purchase Warrant, subject to adjustment pursuant to 6.3(b)(xviii), or (y)
4,983,574 shares of Common Stock and/or reload options covering a number of
shares of Common Stock (which reload options would have exercise prices
equal to the fair market value (as defined in the relevant Company Stock
Option Plan) of a share of Common Stock on the date such reload option is
granted), in each case, required to be issued pursuant to the terms of any
vested Company Stock Options, as the case may be, issue or sell, or
authorize to issue or sell, any shares of its capital stock or any other
securities, or issue or sell, or authorize to issue or sell, any securities
convertible into or exchangeable for, or options, warrants or rights to
purchase or subscribe for, or enter into any arrangement or contract with
respect to the issuance or sale of, any shares of its capital stock or any
other securities;
(iii) sell or pledge or agree to sell or pledge any stock or other
equity interest owned by it in any other Person;
(iv) declare, pay or set aside any dividend or other distribution or
payment with respect to, or split, combine, redeem or reclassify, or
purchase or otherwise acquire, any shares of its capital stock or its other
securities (other than any dividends or other distributions, by any direct
or indirect wholly-owned Subsidiary of the Company to another direct or
indirect wholly-owned Subsidiary of the Company or to the Company);
(v) enter into any contract or commitment with respect to capital
expenditures not contemplated by the annual budget of the Company (a true
and correct copy of which
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has been delivered by the Company to Parent), other than any such contract
or commitment which has a value of less than, and requires expenditures by
the Company or such Subsidiary of less than, $3,000,000;
(vi) 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 Person (other than investments in, or acquisitions of,
businesses not exceeding, in each case, $7,500,000), or otherwise acquire
any assets of any Person (other than (A) the purchase of assets (other than
inventory) in the ordinary course of business and consistent with past
practice, (B) acquisitions, mergers, consolidations or purchases involving
only the Company and/or its wholly-owned Subsidiaries and no other Person,
(C) the purchase of assets pursuant to Excluded Contracts and (D) the
purchase of inventory not purchased pursuant to a Material Inventory
Contract entered into after the date hereof);
(vii) except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on the date
of this Agreement or applicable law, increase the compensation or fringe
benefits of any of its directors, officers or employees (other than any
such directors, officers or employees who are not executive officers of the
Company or regional vice presidents and who, in each case, receive less
than $250,000 in total annual cash compensation from the Company or any of
its Subsidiaries) (provided, however, that the Company's executive
-------- -------
officers, directors and regional vice presidents may receive any increases
in fringe benefits as are generally applicable to all employees of the
Company) or grant any severance or termination pay in an amount exceeding,
in each case, $250,000 not currently required to be paid under existing
severance plans or enter into any employment, consulting or severance
agreement or arrangement with any present or former director, officer or
other employee of the Company or any of its Subsidiaries, or establish,
adopt, enter into or amend or terminate (other than in the ordinary course
of business and consistent with past practice) any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any directors, officers or employees;
(viii) sell, pledge, or otherwise dispose of, encumber or subject to
any Lien, any material assets, except in the ordinary course of business
consistent with past practice;
(ix) make or rescind any material tax election (other than consents
to extend the statute of limitations with respect to prior tax years) or
settle or compromise any tax liability in an amount in excess of
$1,000,000;
(x) except as required by applicable law or GAAP, make any
material change in its method of accounting;
(xi) adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its Subsidiaries (other than
the Merger), other than liquidations, dissolutions,
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mergers, consolidations, restructurings, recapitalizations, or other
reorganizations involving only wholly-owned Subsidiaries of the Company and
no other Person;
(xii) other than in connection with any action permitted by Section
6.3(b)(v) or (vi), (A) modify in any material respect or incur any
indebtedness for borrowed money or guarantee any such indebtedness of
another Person, other than (1) indebtedness owing to or guarantees of
indebtedness owing to the Company or any direct or indirect wholly-owned
Subsidiary of the Company or (2) for borrowings under existing credit
facilities described in the Completed Commission Filings or Schedule 6.3(b)
of the Company Disclosure Letter in the ordinary course of business
consistent with past practice or (B) make any loans or advances to any
other Person, other than to the Company or to any direct or indirect
wholly-owned Subsidiary of the Company and other than advances to employees
consistent with past practices;
(xiii) except as required by applicable law and under Employee
Benefit Plans in effect as of the date hereof, accelerate the payment,
right to payment or vesting of any bonus, severance, profit sharing,
retirement, deferred compensation, stock option, insurance or other
compensation or benefits;
(xiv) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (A) of any
such claims, liabilities or obligations (other than claims, liabilities or
obligations in connection with litigation) in the ordinary course of
business and consistent with past practice, (B) of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) contained in the
Completed Commission Filings, or (C) any claims, liabilities or obligations
relating to litigation that would not result in an uninsured or
underinsured payment by or liability of the Company or any of its
Subsidiaries in excess of $1,500,000 in the aggregate;
(xv) other than as disclosed in the Completed Commission Filings,
plan, announce, implement or effect any reduction in force, lay-off, early
retirement program, severance program or other program or effort concerning
the termination of employment of employees of the Company or its
Subsidiaries, provided, however, that routine employee terminations shall
-------- -------
not be considered subject to this clause (xv);
(xvi) take any action including, without limitation, the adoption of
any shareholder rights plan or amendments to its certificate of
incorporation or by-laws (or comparable governing documents), 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;
(xvii) modify, amend or waive any material right or obligation or
claim under (in each case, other than in the ordinary course of business
consistent with past practice), or enter into or terminate, any Material
Contract (other than Excluded Contracts);
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<PAGE>
(xviii) take any action (other than the issuance of any option or
other rights to acquire Common Stock or shares of Common Stock permitted by
Section 6.3(b)(ii)), or omit to take any action, engage in any transaction
or enter into any agreement which would (A) cause any adjustment to the BT
Common Stock Purchase Warrant Exercise Price or (B) entitle any holder
thereof to exchange any part or all of the BT Common Stock Purchase Warrant
into a number of shares of Common Stock in excess of the number of shares
of Common Stock such holder would have been entitled to receive had such
holder exercised such part or all of the BT Common Stock Purchase Warrant
on the date hereof; or
(xix) agree, in writing or otherwise, to take any of the foregoing
actions.
Section 6.4 Company Stockholders' Meeting; Preparation of Proxy
---------------------------------------------------
Statement; Short Form Merger. (a) Promptly following the purchase of shares of
- ----------------------------
Common Stock pursuant to the Offer, if required by law in order to consummate
the Merger, the Company, acting through its Board of Directors, shall, in
accordance with applicable law, duly call, convene and hold a meeting of the
stockholders of the Company (the "Stockholders' Meeting") for the purpose of
---------------------
voting upon this Agreement and the Company agrees that this Agreement shall be
submitted at such meeting. The Company shall take all action necessary to
solicit from its stockholders proxies, and shall take all other action necessary
and advisable, to secure the vote of stockholders required by applicable law and
the Company's Restated Certificate of Incorporation, as amended, or the
Company's Amended and Restated By-laws to obtain their adoption of this
Agreement. The Board of Directors of the Company shall recommend that the
holders of Common Stock vote in favor of the adoption of the Agreement at the
Stockholders' Meeting and the Company agrees that it shall include in the Proxy
Statement such recommendation of its Board of Directors that the stockholders of
the Company adopt this Agreement. Parent shall cause all shares of Common Stock
of the Company owned by Parent and its direct and indirect subsidiaries
(including Sub) to be voted in favor of this Agreement.
(b) If stockholder approval of the Merger is required by law, as
promptly as practicable, following Parent's request, the Company shall promptly
prepare and file a preliminary proxy statement or information statement
(together with any amendment or supplement thereto, the "Proxy Statement") with
----------------
the Commission and shall promptly use its reasonable best efforts to respond to
the comments of the Commission, if any, in connection therewith and to furnish
all information regarding the Company required in the definitive Proxy Statement
(including, without limitation, financial statements and supporting schedules
and certificates and reports of independent public accountants). Parent, Sub
and the Company shall cooperate with each other in the preparation of the Proxy
Statement. Without limiting the generality of the foregoing, each of Parent and
Sub shall furnish to the Company in writing for inclusion in the Proxy Statement
the information relating to it required by the Exchange Act to be set forth in
the Proxy Statement. Promptly after the expiration or termination of the Offer,
if required by the DGCL in order to consummate the Merger, the Company shall
cause the definitive Proxy Statement to be mailed to the stockholders of the
Company and, if necessary, after the definitive Proxy Statement shall have been
so mailed, promptly circulate amended, supplemental or supplemented proxy
material and, if required in connection therewith, resolicit proxies. The
Company shall not use any proxy material in connection with the meeting of its
stockholders without Parent's prior approval.
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Section 6.5 Commercially Reasonable 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
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and do, or cause to be done, and assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Offer, the
Merger and the other transactions contemplated hereby, including the
satisfaction of the respective conditions set forth in the Article VII, 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
commercially reasonable efforts to obtain, prior to the Closing Date, all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities and parties to contracts with the Company and
its Subsidiaries as are reasonably necessary for consummation of the
transactions contemplated by this Agreement and to fulfill the conditions to the
Offer and the Merger.
Section 6.6 No Solicitation of Other Offers. (a) The Company and
-------------------------------
its Affiliates and each of their respective officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents shall immediately cease any discussions or negotiations with any
other parties that may be ongoing with respect to any Acquisition Proposal. From
and after the date hereof, neither the Company nor any of its Affiliates shall,
directly or indirectly, take (and the Company shall not authorize or permit its
or its Affiliates, officers, directors, employees, representatives, consultants,
investment bankers, attorneys, accountants or other agents or Affiliates, to so
take) any action to (i) directly or indirectly, solicit, initiate, facilitate or
knowingly encourage the making or submission of any Acquisition Proposal or of
an inquiry with respect to any Acquisition Proposal (including, without
limitation, by taking any action that would make Section 203 of the DGCL
inapplicable to an Acquisition Proposal), (ii) enter into any agreement to (w)
facilitate or further the consummation of, or consummate, any Acquisition
Proposal, (x) facilitate the making of an inquiry with respect to any
Acquisition Proposal, (y) approve or endorse any Acquisition Proposal or (z) in
connection with any Acquisition Proposal, require it to abandon, terminate or
fail to consummate the Merger or any other transaction contemplated by this
Agreement, (iii) initiate or participate in any way in any discussions or
negotiations with, or furnish or disclose any information to, any Person (other
than Parent or Sub) in connection with any Acquisition Proposal or inquiry with
respect to any Acquisition Proposal or (iv) grant any waiver or release under or
materially amend any standstill, confidentiality or similar agreement entered
into by the Company or any of its Affiliates or representatives; provided,
--------
however, that, prior to consummation of the Offer, the Company, in response to
- -------
an unsolicited Acquisition Proposal that did not result from a breach in any
material respect of this Section 6.6(a) and following delivery to Parent of the
information required under Section 6.6(b) and otherwise in compliance in all
material respects with its obligations under Section 6.6(b), may (1) participate
in discussions with or request clarifications from, or furnish information to,
any third party which makes an unsolicited Acquisition Proposal, in each case
solely for the purpose of obtaining information reasonably necessary to
ascertain whether such Acquisition Proposal is, or could reasonably likely lead
to, a Superior Proposal and (2) if the Board of Directors of the Company (after
consultation with an independent, nationally recognized investment bank)
reasonably determines in good faith that such Acquisition Proposal is a Superior
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<PAGE>
Proposal, participate in discussions or negotiations with or furnish information
to any third party which makes an unsolicited Acquisition Proposal, if, in the
case of each of (1) and (2), (x) such action is taken subject to a
confidentiality agreement with terms not more favorable in any material respect
to such third party than the terms of the Confidentiality Agreement as in effect
on the date hereof (it being understood that the Company may waive or amend any
standstill provision contained in any existing confidentiality agreement or
enter into a confidentiality agreement with such third party which does not
contain a standstill provision or which contains a standstill provision which is
less favorable in any material respect to the Company than the standstill
provision contained in the Confidentiality Agreement (as in effect on the date
hereof) if the Company waives or amends the standstill provision in the
Confidentiality Agreement (as in effect on the date hereof) to delete such
provision or, as the case may be, render it equally less favorable to the
Company) and (y) the Board of Directors of the Company (after receiving advice
from outside nationally recognized legal counsel to the Company) reasonably
determines in good faith that it is necessary to take such actions in order to
comply with its fiduciary duties under applicable law. Without limiting the
foregoing, Parent, Sub and the Company agree that any violation of the
restrictions set forth in this Section 6.6(a) by any Affiliate, officer,
director, employee, representative, consultant, investment banker, attorney,
accountant or other agent of the Company or any of its Affiliates whether or not
such Person is purporting to act on behalf of the Company or any of its
Affiliates, shall constitute a breach of this Section 6.6(a) by the Company.
Nothing in this Section 6.6 shall prohibit the Company or its Board of Directors
from taking and disclosing to the Company's stockholders a position with respect
to an Acquisition Proposal by a third party under Rules 14e-2 and 14d-9 of the
Exchange Act to the extent the Company is required to take a position under such
rules or from making any other public disclosure required by applicable law or,
prior to the consummation of the Offer, from taking any action contemplated by
Section 8.1(c)(i), including having the Board of Directors take such actions as
are necessary to approve or resolve to approve the intention to enter into an
agreement with respect to a Superior Proposal (or any announcement in connection
therewith) or enter into an agreement with respect to a Superior Proposal
concurrently with termination pursuant to Section 8.1(c)(i).
"Acquisition Proposal" shall mean (i) any proposal or offer from any
--------------------
Person or group relating to any direct or indirect acquisition or purchase of
20% or more of the consolidated assets of the Company and its Subsidiaries or
20% or more of any class of equity securities of the Company or any of its
Subsidiaries, (ii) any tender offer or exchange offer that, if consummated,
would result in any Person beneficially owning 20% or more of any class of
equity securities of the Company or any of its Subsidiaries, (iii) any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its Subsidiaries, or (iv)
any other business combination transaction the consummation of which could
reasonably be expected to impede, interfere with, prevent or materially delay
the Offer or the Merger or which could reasonably be expected to dilute
materially the benefits to Parent of the transactions contemplated hereby.
"Superior Proposal" shall mean any bona fide written Acquisition
-----------------
Proposal made by a third party relating to an acquisition or purchase of two-
thirds or more of the outstanding equity securities of the Company or all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole (x) on terms which a majority of the members of the Board of
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Directors of the Company (after consultation with an independent nationally
recognized investment bank) reasonably determines in good faith to be more
favorable to the Company and its stockholders (in their capacity as such) from a
financial point of view than the transactions contemplated hereby, to the extent
proposed to be modified by Parent in accordance with Section 8.1(c)(i) and (y)
which is reasonably capable of being consummated (taking into account, among
other things, all legal, financial, regulatory and other aspects of such
Acquisition Proposal and the identity of the Person making such Acquisition
Proposal).
(b) In addition to the obligations of the Company set forth in
paragraph (a), promptly (but in any event within (24) hours) of receipt or
occurrence thereof, the Company shall advise Parent of any request for
information with respect to any Acquisition Proposal or of any Acquisition
Proposal, or any inquiry, proposal, discussions or negotiation with respect to
any Acquisition Proposal, the terms and conditions of such request, Acquisition
Proposal, inquiry, proposal, discussion or negotiation and the Company shall
promptly (but in any event within twenty-four (24) hours) of the receipt
thereof, provide to Parent copies of any written documentation material to
understanding or evaluating such request, Acquisition Proposal, inquiry,
proposal, discussion or negotiation (the "Other Acquisition Documentation")
which is received by the Company from the Person (or from any representatives or
agents of such Person) making such Acquisition Proposal, inquiry or proposal or
with whom such discussions or negotiations are taking place and the identity of
the Person making any such request, Acquisition Proposal or such inquiry or
proposal or with whom any discussion or negotiation are taking place. The
Company shall keep Parent fully informed of the status and material details
(including amendments or proposed amendments) of any such request or Acquisition
Proposal and keep Parent fully informed as to the material details of any
information requested of or provided by the Company and as to the material
details of all discussions or negotiations with respect to any such request,
Acquisition Proposal, inquiry or proposal and shall provide to Parent within one
(1) day of receipt thereof all copies of any additional Other Acquisition
Documentation received by the Company from the Person (or from any
representatives or agents of such Person) making such Acquisition Proposal,
inquiry or proposal or with whom such discussions or negotiations are taking
place, with respect thereto. The Company shall promptly provide to Parent any
non-public information concerning the Company provided to any other Person in
connection with any Acquisition Proposal which was not previously provided to
Parent.
(c) Promptly, but in any event within one (1) day of execution of this
Agreement, the Company shall immediately request each Person which has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company or any portion thereof to return all
confidential information heretofore furnished to such Person by or on behalf of
the Company and the Company shall use its commercially reasonable efforts to
have such information returned.
Section 6.7 Notification of Certain Matters. Parent and the Company
-------------------------------
shall promptly notify each other of the occurrence or non-occurrence of any
fact or event which has caused or could reasonably likely cause (x) any
representation or warranty made by it (including, in the case of Parent, Sub) in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Effective Time or (y) any covenant, condition or
agreement under this Agreement not to be complied with or satisfied by it
(including, in the case of Parent,
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Sub) in any material respect; provided, however, that no such notification
-------- -------
shall modify the representations or warranties of any party or the conditions to
the obligations of any party hereunder; provided, further, that this Section 6.7
-------- -------
shall not constitute a covenant or agreement for the purpose of Section
8.1(c)(ii), Section 8.1(d)(ii) or clause (d) or (e) of Annex A hereto. Each of
the Company, Parent and Sub shall give prompt notice to the other parties hereof
of 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.
Section 6.8 Governmental Approvals. (a) Upon the terms and subject
----------------------
to the conditions hereof, each of the parties hereto shall (i) promptly make its
respective filings, and thereafter make any other required submissions, under
the Exchange Act and any other relevant statute, rule or regulation, with
respect to the Offer, the Merger and the other transactions contemplated hereby
and (ii) use commercially reasonable efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations (or if appropriate to omit
taking any action) to consummate and make effective the Offer, the Merger and
the other transactions contemplated hereby, including, without limitation, using
commercially reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Entities
and cooperate to obtain all consents, approvals and authorizations of parties to
contracts with the Company and its Subsidiaries as are necessary for the
consummation of the Offer, the Merger and the other transactions contemplated
hereby and to fulfill the conditions to the Offer and the Merger.
(b) Each party hereto shall (i) take promptly all actions necessary
to make the filings required of it or any of its Affiliates under any applicable
Antitrust Laws in connection with this Agreement and the transactions
contemplated hereby, (ii) comply at the earliest practicable date with any
formal or informal request for additional information or documentary material
received by it or any of its Affiliates from any Antitrust Authority and (iii)
cooperate with one another 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 initiated by
any Antitrust Authority.
(c) Each party hereto shall use its commercially reasonable efforts
to resolve objections, if any, as may be asserted with respect to the
transactions contemplated by this Agreement under any Antitrust Law. Without
limiting the generality of the foregoing, "commercially reasonable efforts"
shall include in the case of each of Parent and the Company, without limitation:
(i) filing with the appropriate Antitrust Authorities as promptly as
practicable (but, in the case of the Company, in accordance with applicable
law and, in the case of Parent, no later than the fifth (5/th/) day)
following the date hereof a Notification and Report Form with respect to
the transactions contemplated by this Agreement; and
(ii) if Parent or the Company receives a formal request for
information and documents from an Antitrust Authority, substantially
complying with such formal request as promptly as practicable (but in any
event not later than sixty (60) days) following the
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<PAGE>
date of its receipt thereof or such shorter period as is required by
applicable Antitrust Laws.
(d) Each party hereto shall promptly inform the other parties of any
material communication made to, or received by such party from, any Antitrust
Authority or any other Governmental Entity regarding any of the transactions
contemplated hereby.
Section 6.9 Employee Benefits. (a) 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 the Company
or any of its Subsidiaries to be provided with compensation and employee benefit
plans (excluding 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 but including the severance pay
practices, programs or arrangements described in Schedule 6.9(a) of the Company
Disclosure Letter) 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. The provisions of this Section 6.9 shall not
create in any current or former employee of the Company or its Subsidiaries any
rights to employment or continued employment with Parent, the Surviving
Corporation or the Company or any of their respective Subsidiaries or Affiliates
or any right to specific terms or conditions of employment.
(b) Except as set forth below, from and after the Effective Time, the
Surviving Corporation shall have sole discretion over the hiring, promotion,
retention, termination and other terms and conditions of the employment of the
employees of the Surviving Corporation. Nothing herein shall prevent Parent or
the Surviving Corporation from amending or terminating any Employee Benefit Plan
or other employee benefit or fringe benefit plan in accordance with its terms.
(c) Parent shall, or shall cause the Surviving Corporation to, provide
any employee of the Company or any of its Subsidiaries who continues to be an
employee of the Surviving Corporation or any of its Subsidiaries as of the
Effective Time (each, an "Affected Employee") full credit for such Affected
Employee's service with the Company or any of its Subsidiaries or predecessors
for purposes of eligibility, vesting and benefit accrual (except for benefit
accruals under any defined benefit pension plan) under the employee benefit
plans or arrangements maintained by the Parent or the Surviving Corporation in
which such Affected Employees participate for such Affected Employee's service
with the Company or any of its Subsidiaries, to the same extent recognized under
similar plans or arrangements of the Company or such Subsidiary immediately
prior to the Effective Time.
(d) Parent shall, or shall cause the Surviving Corporation to, (i)
waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable to
any Affected Employee under any welfare benefit plans in which such Affected
Employees may be eligible to participate after the Effective Time, other than
limitations or waiting periods that are already in effect with respect to such
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Affected Employee and that have not been satisfied as of the Effective Time
under any welfare plan maintained for such Affected Employee immediately prior
to the Effective Time, and (ii) provide each Affected Employee with credit for
any co-payments and deductibles paid prior to the Effective Time under welfare
plans of the Company or any of its Subsidiaries for the plan year in which the
Effective Time occurs in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such Affected Employee is eligible to
participate in after the Effective Time.
(e) Each Affected Employee shall be eligible for participation in the
equity-related plans of Parent under the same criteria applied to similarly-
situated employees of Parent and its Affiliates.
(f) Following the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, honor and maintain (i) all employment-related
agreements in existence as of the date hereof between the Company or any of its
Subsidiaries and an Affected Employee (or an employee who terminates employment
prior to the Effective Time); (ii) all vacation and other leave earned or
accrued by, but not taken by or paid to, Affected Employees through the
Effective Time (as calculated or determined under policies or plans in effect
immediately prior to the Effective Time); (iii) all provisions in the Employee
Benefit Plans for vested benefits and other vested amounts earned or accrued
through the Effective Time; and (iv) all collective bargaining agreements
entered into by the Company or any of its Subsidiaries including all employee
benefit-related terms and obligations. The preceding sentence to the contrary
notwithstanding, nothing set forth herein shall impair or otherwise affect the
rights of Parent or the Surviving Corporation or their Affiliates to amend,
suspend or terminate any such agreement, policy or plan in accordance with its
terms as in effect from time to time.
(g) Parent shall, or shall cause the Surviving Corporation to, ensure
that the Affected Employees who were employed at the headquarters of the Company
and who were notified of their target bonuses for the current fiscal year of the
Company, receive annual bonuses for the current fiscal year of the Company, in
the aggregate, equal to no less than the aggregate target bonuses such Employees
were notified of (as set forth in Schedule 6.9(g) of the Company Disclosure
Letter). Such bonuses shall be payable in accordance with the Company's
historical practice and shall be allocated to such employees in the discretion
of James Miller, or his designee; provided, however, that no such designation
shall be permitted if Mr. Miller dies, terminates employment due to Disability,
voluntarily terminates his employment without Good Reason, or the Company
terminates his employment with Cause (as such terms are defined in his
employment agreement), in which case, the allocation shall be based upon such
employees' target bonuses. In addition, with respect to the next fiscal year of
the Company, Parent shall ensure that such employees are provided bonus
opportunities that are comparable to those in effect at such time for similarly
situated employees of Ahold U.S.A., Inc., a corporation organized under the laws
of Delaware and an indirect wholly-owned subsidiary of Parent.
Section 6.10 Directors' and Officers' Insurance. (a) The
----------------------------------
Certificate of Incorporation and the By-laws of the Surviving Corporation shall
contain the provisions with respect to indemnification, exculpation from
liability and advancement of expenses set forth in the Company's Restated
Certificate of Incorporation, as amended, and By-laws as in effect on the
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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 (including, without limitation,
rights with respect to the transactions contemplated by this Agreement)
thereunder of individuals who on or prior to the Effective Time were directors
or officers of the Company, unless such modification is required by law.
(b) For a period of six (6) years from the Effective Time, Parent
shall cause the Surviving Corporation to either (i) maintain in effect the
Company's directors' and officers' liability insurance as in effect on April 1,
2000 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 delivered to Parent) (the "Insured
-------
Parties"); provided, however, that in no event shall the Surviving Corporation
- ------- -------- -------
be required to expend in any one year an amount in excess of 200% of the annual
premiums paid by the Company for such insurance which the Company represents
will be not more than $400,000 for the twelve month period ending on March 31,
2001; 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; and provided, further, that the Surviving Corporation may substitute for
-------- -------
such Company 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 on or prior to the Effective Time (including, without limitation,
rights with respect to the transactions contemplated by this Agreement) or (ii)
cause Parent's, directors' and officers' liability insurance then in effect to
cover the Insured Parties with respect to those matters covered by the Company's
directors' and officers' liability insurance policy with at least the same
coverage as such Company policies as in effect as of April 1, 2000 (subject to
the first proviso of this Section 6.10(b)), 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 on or
prior to the Effective Time (including, without limitation, matters with respect
to the transactions contemplated by this Agreement).
(c) Parent shall cause the Surviving Corporation to indemnify, defend
and hold harmless each Person who is now, or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, an officer, director or
employee of the Company or any of its Subsidiaries (collectively, the
"Indemnified Parties") to the fullest extent permitted by Section 145 of the
- ---------------------
DGCL with respect to all acts and omissions arising out of such individuals'
services as officers, directors or employees 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 shall cause the Surviving Corporation,
from and after the Effective Time, to 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 6.10(d),
Parent shall cause the Surviving Corporation to pay all reasonable expenses,
including attorneys' fees, that may be incurred by any
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Indemnified Party in enforcing this Section 6.10 or any action involving an
Indemnified Party resulting from the transactions contemplated by this
Agreement.
(d) Any Indemnified Party wishing to claim indemnification under
paragraph (a) or (c) of this Section 6.10, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify the Surviving
Corporation thereof; provided, however, that any Indemnified Party's failure to
-------- -------
promptly notify the Surviving Corporation upon learning of any such claim,
action, suit, proceeding or investigation shall only eliminate such Indemnified
Party's rights under this Section 6.10 in the event such failure to notify
materially prejudices the Surviving Corporation's ability to defend such claim,
action, suit, proceeding or investigation. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Surviving Corporation shall have the right, from and
after the Effective Time, to assume the defense thereof (with counsel engaged by
the Surviving Corporation to be reasonably acceptable to the relevant
Indemnified Party) and the Surviving Corporation shall not be liable to such
Indemnified Party for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than as expressly set forth herein, (ii) such Indemnified Party
will cooperate in the defense of any such matter and (iii) the Surviving
Corporation shall not be liable for any settlement effected without its prior
written consent, which consent shall not be unreasonably withheld; provided,
--------
that the Surviving Corporation shall not have any obligation hereunder to any
- ----
Indemnified Party when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by Section 145 of the DGCL. The Surviving Corporation shall not,
except with the consent of any Indemnified Party, enter into any settlement that
does not include as an unconditional term thereof the giving by the Person or
Persons making, asserting or conducting such claim, action suit, proceeding or
investigation to such Indemnified Party of an unconditional release from all
liability with respect to such claim, action, suit, proceeding or investigation
which is indemnifiable pursuant to Section 6.10(c). Notwithstanding the right of
the Surviving Corporation to assume and control the defense of such litigation,
claim or proceeding, such Indemnified Party shall have the right to employ
separate counsel and to participate in the defense of such litigation, claim or
proceeding, and the Surviving Corporation shall bear the fees, costs and
expenses of such separate counsel and shall pay such fees, costs and expenses
promptly after receipt of an invoice from such Indemnified Party if (i) the use
of counsel chosen by the Surviving Corporation to represent such Indemnified
Party would present such counsel with a conflict of interest, (ii) the
Indemnifying Party shall not have employed counsel reasonably acceptable to such
Indemnified Party within a reasonable period of time after notice of the
relevant claim, action, suit, proceeding or investigation or (iii) such
Indemnified Party shall have been advised by counsel that there may be legal
defenses available to it which are different from or in addition to those
available to the Surviving Corporation.
(e) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors, assigns or transferees of the
Surviving Corporation shall succeed to the obligations set forth in this Section
6.10.
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(f) Each Indemnified Party shall be entitled to the advancement of
expenses to the full extent contemplated in this Section 6.10 in connection with
any such action. The rights to indemnification and advancement of expenses under
Section 6.10 shall continue in full force and effect for a period of six years
from the Effective Time; provided, however, that all rights to
-------- -------
indemnification in respect of any claim for indemnification or advancement of
expenses asserted or made within such period shall continue until the
disposition of such claim.
Section 6.11 Rights Agreement. Other than in connection with the
----------------
transactions contemplated hereby or concurrently with the termination of this
Agreement, the Company shall not (i) redeem the Rights, (ii) amend (other than
(x) to delay the Distribution Date (as defined therein) or (y) to render the
Rights inapplicable to the Offer and the Merger) or terminate the Rights
Agreement prior to the Effective Time, unless required to do so by a court of
competent jurisdiction or (iii) take any action which would allow any Person (as
such term is defined in the Rights Agreement) other than Parent or Sub to be the
Beneficial Owner (as such term is defined in the Rights Agreement) of 10% or
more of the Common Stock (or, in the case of any 13G Eligible Holders (as such
term is defined in the Rights Agreement), 15% or more) without causing a Shares
Acquisition Date (as such term is defined in the Rights Agreement) to occur.
Section 6.12 Public Announcements. Parent and the Company shall
--------------------
consult with each other before issuing any press release or otherwise making any
public statements with respect to the transactions contemplated by this
Agreement 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 such
release or statement or without the prior consent of the other party, which
shall not be unreasonably withheld; provided, however, that a party may, without
-------- -------
the prior consent of the other party, issue such press release or make such
public statement as may be required by law or any listing agreement with a
national securities exchange or automated quotation system which Parent or the
Company is a party to, if it has used commercially reasonable efforts to consult
with the other party and to obtain such party's consent but has been unable to
do so in a timely manner.
ARTICLE VII
CONDITIONS PRECEDENT
--------------------
Section 7.1 Conditions Precedent to Each Party's Obligation to
--------------------------------------------------
Effect the Merger. The respective obligations of each party to effect the
- -----------------
Merger are subject to the satisfaction or waiver (subject to applicable law), at
or prior to the Effective Time, of each of the following conditions:
(a) Approval of Company's Stockholders. To the extent required by
----------------------------------
applicable law, this Agreement shall have been adopted by holders of a majority
of the shares of Common Stock entitled to vote thereon (voting as one class,
with each share of Common Stock having one (1) vote) in accordance with
applicable law, the Company's Restated Certificate of Incorporation, as amended,
and the Company's By-laws;
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(b) Injunction. No temporary restraining order, preliminary or
----------
permanent injunction or other order shall have been issued by any federal, state
or foreign court or by any court of competent jurisdiction and no other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect;
(c) Statutes. No federal, state or foreign statute, rule, regulation,
--------
executive order, decree or order of any kind shall have been enacted, entered,
promulgated or enforced by any court or Governmental Entity which prohibits,
restrains, restricts or enjoins the consummation of the Merger or has the effect
of making the Merger illegal; and
(d) Consummation of the Offer. Sub shall have accepted for payment
-------------------------
and paid for all Shares validly tendered in the Offer and not withdrawn.
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
Effective Time, whether before or after approval of the Merger by the Company's
stockholders:
(a) by mutual consent of the Company, on the one hand, and of Parent
and Sub, on the other hand;
(b) by either Parent, on the one hand, or the Company, on the other
hand, if:
(i) any court of competent jurisdiction or any Governmental Entity
shall have issued an order, decree or ruling or taken any other action
permanently restricting, enjoining, restraining or otherwise prohibiting
the acceptance for payment of, or payment for, shares of Common Stock
pursuant to the Offer or shares of Common Stock pursuant to the Merger and
such order, decree or ruling or other action shall have become final and
nonappealable; or
(ii) the consummation of the Offer shall not have occurred within one
hundred and eighty (180) days after commencement of the Offer (the
"Termination Date"), unless the consummation of the Offer 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;
(c) by the Company at any time prior to the consummation of the
Offer, if:
(i) a Superior Proposal is received and the Board of Directors of the
Company (after receiving advice of outside nationally recognized legal
counsel to the Company) reasonably determines in good faith that it is
necessary to terminate this Agreement and enter into an agreement to effect
the Superior Proposal in order to comply with its fiduciary duties under
applicable law; provided, however, that the Company may not
-------- -------
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<PAGE>
terminate this Agreement pursuant to this Section 8.1(c)(i) unless and
until (i) three (3) Business Days have elapsed following delivery to Parent
of a written notice of such determination by the Board of Directors and
during such three (3) Business Day period (x) the Company has fully
informed Parent of the material terms and conditions of such Superior
Proposal, including the identity of the Person making such Superior
Proposal and (y) the Company has negotiated in good faith with Parent with
the intent of enabling both parties to agree to a modification of the terms
and conditions of this Agreement so that the transactions contemplated
hereby may be effected; (ii) at the end of such three (3) Business Day
period the Acquisition Proposal continues to constitute a Superior Proposal
and the Board of Directors of the Company (after receiving the advice of
outside nationally recognized legal counsel to the Company) continues to
reasonably determine in good faith that it is necessary to terminate this
Agreement and enter into an agreement to effect the Superior Proposal in
order to comply with its fiduciary duties under applicable law and (iii)
(x) prior to such termination, Parent has received all fees and expense
reimbursements set forth in Section 9.1 by wire transfer in same day funds
and (y) simultaneously or substantially simultaneously with such
termination the Company enters into a definitive acquisition, merger or
similar agreement to effect the Superior Proposal;
(ii) (x) there shall be a breach of any representation or warranty
of Parent or Sub in this Agreement that is qualified as to Material Adverse
Effect, (y) there shall be a breach of any representation or warranty of
Parent or Sub in this Agreement that is not so qualified, other than any
such breaches which, in the aggregate, have not had, or would not
reasonably likely have, a Material Adverse Effect on Parent, or (z) there
shall be a material breach by Parent or Sub of any of their respective
covenants or agreements contained in this Agreement, which breach, in the
case of clause (x), (y) or (z), either is not reasonably capable of being
cured or, if it is reasonably capable of being cured, has not been cured
within the earlier of (A) ten (10) days after giving of notice to Parent of
such breach and (B) the expiration of the Offer, provided, that the Company
-------- ----
may not terminate this Agreement pursuant to this Section 8.1(c)(ii) if the
Company is in material breach of this Agreement.
(iii) (x) Parent or Sub shall have (A) failed to commence the Offer
in accordance with the first sentence of Section 2.1(a) or (B) terminated
the Offer or (y) the Offer has expired without Sub purchasing any Shares
pursuant thereto, unless such failure, termination or expiration shall have
been caused by the failure of the Company to satisfy the conditions set
forth in clauses (iii)(d) or (e) of Annex A.
(d) by Parent at any time prior to the consummation of the Offer, if:
(i) the Offer is terminated or expires in accordance with its terms
without Sub having purchased any shares of Common Stock thereunder due to
an occurrence which would result in a failure to satisfy any one or more of
the conditions set forth on Annex A hereto, unless any such failure shall
have been caused by or resulted from the failure of Parent or Sub to
perform in any material respect any covenant or agreement of either of them
contained in this Agreement or the material breach by Parent or Sub of any
representation or warranty of either of them contained in this Agreement;
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(ii) (x) there shall be a breach of any representation or warranty
of the Company in this Agreement that is qualified as to Material Adverse
Effect, (y) there shall be a breach of any representation or warranty of
the Company in this Agreement that is not so qualified other than any such
breaches which, in the aggregate, have not had or would not reasonably
likely have a Material Adverse Effect on the Company, or (z) there shall be
a material breach by the Company of any of its covenants or agreement
contained in this Agreement, which breach, in the case of clause (x), (y)
or (z), either is not reasonably capable of being cured or, if it is
reasonably capable of being cured, has not been cured within the earlier of
(A) ten (10) days after giving of written notice to the Company of such
breach and (B) the expiration of the Offer; provided, that Parent may not
-------- ----
terminate this Agreement pursuant to this Section 8.1(d)(ii) if Parent or
Sub is in material breach of this Agreement;
(iii) (x) the Company shall have (A) entered into any agreement with
respect to any Acquisition Proposal, (B) withdrawn, modified or amended, or
proposed to withdraw, modify or amend, in a manner adverse to Parent or
Sub, the approval or recommendation, as the case may be, of the Offer, the
Merger or this Agreement, (C) approved or recommended, or proposed to
approve or recommend, any Acquisition Proposal or (D) affirmatively
announced to the stockholders of the Company a neutral position with
respect to any Acquisition Proposal and does not reject or recommend such
Acquisition Proposal prior to the date that is the later of (1) the date
that is ten (10) Business Days after the date of the initial announcement
of such neutral position and (2) two (2) Business Days prior to the first
scheduled expiration date of the Offer after the date of the initial
announcement of such neutral position, or (y) the Company or the Company's
Board of Directors or any committee thereof shall have resolved to do any
of the foregoing; it being understood and agreed that neither the delivery
of notice pursuant to Section 8.1(c)(i) and any subsequent public
announcement of such notice nor any communications by the Board of
Directors of the Company to the stockholders of the Company pursuant to
Rule 14d-9(e)(3) under the Exchange Act shall entitle Parent to terminate
this Agreement pursuant to this Section 8.1(d)(iii), unless the Company
enters into a definitive agreement with respect to an Acquisition Proposal;
or
(iv) if there shall have been a material breach by the Company of
any provision of Section 6.6.
Section 8.2 Effect of Termination. In the event of the termination
---------------------
of this Agreement pursuant to Section 8.1 by Parent or Sub, on the one hand, or
the Company, on the other hand, written notice thereof shall forthwith be given
to the other party or parties specifying the provision hereof pursuant to which
such termination is made, 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 4.16, 5.5, 6.2 and Article IX 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 willful breach of
this Agreement.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses. (a) Except as provided in paragraph
-----------------
(b) below, 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.
(b) If this Agreement is terminated by (i) Parent in accordance with
(w) Section 8.1(d)(iii)(x)(D) (or 8.1(d)(iii)(y) to the extent related to
Section 8.1(d)(iii)(x)(D)) and, within six (6) months of such termination, the
Company enters into an agreement with respect to, or consummates, any
Acquisition Proposal, (x) Section 8.1(d)(i) hereof, solely due to the Minimum
Condition not being met at the time of such termination and, within six (6)
months of such termination, the Company enters into an agreement with respect
to, or consummates, any Acquisition Proposal, (y) (A) Section 8.1(d)(ii), (B)
prior to the date of such termination, there shall have been publicly announced
an Acquisition Proposal and such Acquisition Proposal shall not have been
withdrawn in good faith prior to the date of the breach pursuant to which this
Agreement was terminated and (C) within twelve (12) months of such termination,
the Company enters into an agreement with respect to, or consummates, any
Acquisition Proposal or (z) Section 8.1(d)(iii)(x)(A), 8.1(d)(iii)(x)(B),
8.1(d)(iii)(x)(C) (or 8.1(a)(iii)(y) to the extent related to Section
8.1(d)(iii)(x)(A), 8.1(d)(iii)(x)(B) or 8.1(d)(iii)(x)(C)) or 8.1(d)(iv), or
(ii) the Company in accordance with Section 8.1(c)(i) hereof, then the Company
shall (A) in the case of clause (i)(z), on the day next succeeding the date of
such termination, (B) in the case of clause (ii), immediately prior to the
Company entering into an agreement with respect to an Acquisition Proposal, or
(C) in the case of clauses (i)(w), (i)(x) or (i)(y), on the date of consummation
of such Acquisition Proposal, (I) reimburse Parent in immediately available
funds for all expenses of Parent and Sub (including, without limitation,
printing fees, filing fees and fees and expenses of its legal and financial
advisors and all fees and expenses payable to any financing sources) related to
the Offer, this Agreement, the transactions contemplated hereby and any related
financing in an amount not to exceed $12,000,000 in the aggregate (it being
understood that the amount of such expenses requested by Parent shall be such
amount as Parent determines in its sole discretion and shall not be required to
be documented) and (II) pay to Parent in immediately available funds an amount
equal to $86,000,000; provided, however, that, in the case of clause (i)(y)
-------- -------
above, unless such termination is due to the willful breach by the Company of
any representation, warranty, covenant or agreement of the Company, the Company
shall pay to Parent in immediately available funds an amount equal to
$15,000,000 plus the amount referred to in clause (I) above.
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 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 Effective Time.
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Section 9.3 Extension; Waiver. Subject to Section 2.3, at any time
-----------------
prior to the Effective Time, the parties hereto, by action taken by or on behalf
of the Executive Board of Directors and the respective Boards of Directors of
the Company 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 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 (upon confirmation of receipt), as follows:
(a) if to the Company, to it at:
U.S. Foodservice
9755 Patuxent Woods Drive
Columbia, Maryland 21046
Attention: David M. Abramson, Esq.
Fax: 410-312-7201
with a copy (which shall not constitute notice) to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn.: John G. Finley, Esq.
Fax: 212-455-2502
(b) if to either Parent or Sub, to it at:
Koninklijke Ahold N.V.
Albert Heijnweg 1
1507 EH Zaandam, The Netherlands
Attention: Ton van Tielraden, Esq.
Fax: 31-75-659-83-66
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with a copy (which shall not constitute notice) to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: John M. Reiss, Esq.
Oliver C. Brahmst, Esq.
Fax: 212-354-8113
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 (3/rd/) Business Day after
the mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
Section 9.5 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 thereto, other than the Confidentiality Agreement.
Section 9.6 Binding Effect; Benefit; Assignment. This Agreement
-----------------------------------
shall inure to the benefit of and be binding upon the parties hereto and, with
respect to the provisions of Section 6.10, shall inure to the benefit of the
Persons or entities benefiting from the provisions thereof who are intended to
be third-party beneficiaries thereof. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of each of the other parties,
except that Sub may assign and transfer its right and obligations hereunder to
any of its Affiliates which is a wholly-owned Subsidiary of Parent, provided
--------
that, Sub shall remain liable for all of its obligations under this Agreement.
Except as provided in the first sentence of this Section 9.6, nothing in this
Agreement, expressed or implied, is intended to confer on any Person (including,
without limitation, any current or former employees of the Company), other than
the parties hereto, any rights or remedies.
Section 9.7 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 authorized by the
Executive Board of Parent and the respective Boards of Directors of Sub and the
Company or, in the case of Parent or Sub, by the respective officers authorized
by the Executive Board or, as the case may be, Board of Directors, provided,
--------
however, that after any such stockholder approval, no amendment shall be made
- -------
which by law requires further approval by such stockholders without such further
approval.
Section 9.8 Further Actions. Each of the parties hereto agrees
---------------
that, subject to its legal obligations, it will use its commercially reasonable
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.
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Section 9.9 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.
Section 9.10 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.
Section 9.11 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 DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAWS RULES
THEREOF; PROVIDED, HOWEVER, THAT ANY OF THE PROVISIONS CONTAINED HEREIN WITH
-------- -------
REGARD TO THE MERGER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAWS RULES
THEREOF. THE STATE OR FEDERAL COURTS LOCATED WITHIN THE STATE OF DELAWARE WILL
HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN THE PARTIES HERETO, WHETHER
IN LAW OR EQUITY, ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE
AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY AND THE PARTIES
CONSENT TO AND AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS. EACH OF THE
PARTIES HEREBY WAIVES AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (I) SUCH PARTY IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, (II) SUCH PARTY AND SUCH
PARTY'S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR (III)
ANY LITIGATION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN AN
INCONVENIENT FORUM. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER
PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED
IN SECTION 9.4, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE
VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE
ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.
Section 9.12 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, and this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable term, provision, covenant or restriction or
any portion thereof had never been contained herein.
Section 9.13 Interpretation. When a reference is made in this
--------------
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for convenience of reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
-55-
<PAGE>
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." The inclusion of any matter in the Company Disclosure Letter in
connection with any representation, warranty, covenant or agreement that is
qualified as to materiality or "Material Adverse Effect" shall not be an
admission by the Company that such matter is material or would have a Material
Adverse Effect. Any matter disclosed in any Schedule of the Company Disclosure
Letter or in Article IV shall be considered disclosed for the purpose of any
other Section of Article IV and for the purpose of Sections 6.3(b), 6.9(a) or
6.9(g) to the extent such matter on its face is readily apparent to be relevant
to the matters covered by such other Section of Article IV or Sections 6.3(b),
6.9(a) or 6.9(g), as the case may be.
Section 9.14 Specific Enforcement. The parties agree that
--------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section 9.15 Waiver of Jury Trial. Each of the parties to this
--------------------
Agreement hereby irrevocably waives all right to a trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement or the
transactions contemplated hereby.
* * * * *
-56-
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Company have caused
this Agreement to be executed by their respective officers thereunto duly
authorized, all as of the date first above written.
U.S. FOODSERVICE
By: /s/ Jim Miller
------------------------
Name: James L. Miller
Title: President and Chief
Executive Officer
SNOW ACQUISITION, INC.
By: /s/ A.M. Meurs
------------------------
Name: A.M. Meurs
Title: Treasurer
KONINKLIJKE AHOLD N.V.
By: /s/ A.M. Meurs
------------------------
Name: A.M. Meurs
Title: EVP
<PAGE>
ANNEX A
-------
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex A is
annexed and "Purchaser" shall be deemed to refer to Sub.
Notwithstanding any other provision of the Offer and subject to the
Company's rights under 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-1(c) under the Exchange Act (relating to
Purchaser's obligation to pay for or return tendered shares promptly after
termination or withdrawal of the Offer), pay for any Shares tendered pursuant to
the Offer and may terminate or amend the Offer and may postpone the acceptance
of, and payment for, any Shares, if (i) there shall not have been validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of Shares which represent at least a majority of all issued and
outstanding Shares, on a fully diluted basis ("on a fully-diluted basis"
------------------------
meaning, at any time, the number of Shares outstanding, together with the Shares
which the Company may be required to issue pursuant to warrants or options or
other obligations outstanding at such time under employee stock or similar
benefit plans or otherwise, whether or not vested or then exercisable), on the
date of purchase (the "Minimum Condition"), (ii) any applicable waiting period
-----------------
(and any extension thereof) under the HSR Act shall not have expired or been
terminated or (iii) if, at any time on or after the date of the Merger Agreement
and at or before the time of payment for any such Shares (whether or not any
Shares have theretofore been accepted for payment or paid for pursuant to the
Offer) any of the following shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding by any government or any governmental authority or agency,
domestic or foreign, before any court of competent jurisdiction or
governmental authority or agency, domestic or foreign, (i) challenging or
seeking to, or which would reasonably be expected to make, illegal, impede,
delay or otherwise directly or indirectly restrain or prohibit the Offer or
the Merger, (ii) seeking to prohibit or materially limit the ownership or
operation by Parent or Purchaser of all or any material portion of the
business or assets of the Company and its Subsidiaries taken as a whole or
to compel Parent or Purchaser to dispose of or hold separately all or any
material portion of the business or assets of Parent and its subsidiaries
taken as a whole or the Company and its Subsidiaries taken as a whole, or
seeking to impose any limitation on the ability of Parent or Purchaser to
conduct its business or own such assets, (iii) seeking to impose
limitations on the ability of Parent or Purchaser effectively to exercise
full rights of ownership of the shares of Common Stock, including, without
limitation, the right to vote any shares of Common Stock acquired or owned
by Purchaser or Parent on all matters properly presented to the Company's
stockholders, (iv) seeking to require divestiture by Parent or Purchaser of
any shares of Common Stock or (v) seeking any material diminution in the
benefits expected to be derived by Parent or Purchaser as a result of the
transactions contemplated by the Offer or the Merger;
(b) there shall be any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
proposed, enacted, enforced, promulgated, amended or issued and applicable
to or deemed applicable to (i) Parent, Purchaser, the Company or any
Subsidiary of the Company or (ii) the Offer or the Merger, by any
<PAGE>
Annex A
Page 2
legislative body, court, government or governmental, administrative or
regulatory authority or agency, domestic or foreign, other than the routine
application of the waiting period provisions of the HSR Act, to the Offer
or to the Merger, that would reasonably be expected to result directly or
indirectly in any of the consequences referred to in paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any U.S. securities
exchange, in any U.S. over-the-counter market or the Amsterdam Stock
Exchange, for a period in excess of three hours (excluding suspensions or
limitations resulting solely from physical damage or interference with such
exchanges not related to market conditions), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or the Netherlands, (iii) any material limitation (whether or
not mandatory) by any United States Federal or United States state or
Netherlands' governmental authority or agency on, the extension of credit
by banks or other lending institutions, or (iv) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(d) any representation or warranty of the Company contained in the
Agreement that (i) is qualified as to Material Adverse Effect shall not be
true and correct as of the date of consummation of the Offer as though made
on or as of such date (other than representations and warranties which by
their terms address matters only as of another specified date, which shall
be true and correct only as of such other specified date), or (ii) is not
qualified as to Material Adverse Effect shall not be true and correct
(except where the failure of any such representation or warranty referred
to in this clause (ii) to be so true and correct, in the aggregate, has not
had and would not reasonably be expected to have a Material Adverse Effect
on the Company), as of the date of consummation of the Offer as though made
on or as of such date (other than representations and warranties which by
their terms address matters only as of another specified date, which shall
be true and correct only as of such other specified date);
(e) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement; or
(f) 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 (including any action or inaction by Parent or Purchaser)
giving rise to any such condition, makes it inadvisable to proceed with the
Offer and/or with such acceptance for payment of, or payment for, Shares.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser subject to the Company's rights under the Merger Agreement and may be
asserted by Parent or the Purchaser, or may be waived by Parent or the
Purchaser, in whole or in part at any time and from time to time in their
respective sole discretion. The failure by Parent or the Purchaser at any
<PAGE>
Annex A
Page 3
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.
<PAGE>
Exhibit (d)(2)
CONFIDENTIALITY AGREEMENT
February 17, 2000
SENT VIA FACSIMILE
- ------------------
Royal Ahold N.V.
c/o Michael Meurs
Executive Vice President and
Chief Financial Officer
Albert Heijnweg 1
1507 EH Zaandam
The Netherlands
Dear Mr. Meurs:
In connection with a possible transaction involving Royal Ahold N.V.
("Ahold") and U.S. Foodservice (the "Company"), the Company is prepared to make
available to you certain information concerning the business, financial
condition, operations, assets and liabilities of the Company. As a condition to
such information being furnished to you and certain of your affiliates,
partners, directors, officers, employees, agents or advisors (including, without
limitation, your attorneys, accountants, consultants, bankers and financial
advisors) (collectively, the "Interested Parties"), you agree to treat any
information concerning the Company (whether prepared by the Company, its
advisors or otherwise and irrespective of the form of communication) which is
furnished to you or to the Interested Parties now or in the future by or on
behalf of the Company (herein collectively referred to as the "Evaluation
Material") in accordance with the provisions of this letter agreement, and to
take or abstain from taking certain other actions as hereinafter set forth.
The term "Evaluation Material" also shall be deemed to include all
notes, analyses, compilations, studies, interpretations or other documents
prepared by you or in the Interested Parties which contain, reflect or are based
upon, in whole or in part, the information furnished to you or in the Interested
Parties pursuant hereto. The term "Evaluation Material" does not include
information which (i) is or becomes generally available to the public other than
as a result of a disclosure by you or the Interested Parties; (ii) was within
your possession prior to its being furnished to you by or on behalf of the
Company, provided that the source of such information was not known by you to be
bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the Company or any other party with
respect to such information; or (iii) becomes available to you on a non-
confidential basis from a source other than the Company or any of its
representatives, provided that such source is not bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to the Company or any other party with respect to such
information.
You hereby agree that you and the Interested Parties shall use the
Evaluation Material solely for the purpose of evaluating a possible transaction
between the Company and you, that the Evaluation Material will be kept
confidential and that you and the Interested Parties will not disclose any of
the Evaluation Material in any manner whatsoever, provided, however, that (i)
you may make any disclosure of such information to which the Company gives its
prior
<PAGE>
Royal Ahold N.V.
February 17, 2000
Page 2
written consent; and (ii) any of such information may be disclosed to the
Interested Parties who need to know such information for the sole purpose of
evaluating a possible transaction with the Company, who agree to keep such
information confidential. In any event, you shall be responsible for any breach
of this letter agreement by any of the Interested Parties, or anyone else the
Evaluation Material is shared with by you, and you agree, at your sole expense,
to take all reasonable measures (including but not limited to court proceedings)
to restrain such parties from prohibited or unauthorized disclosure or use of
the Evaluation Material.
In addition, you agree that, without the prior written consent of the
Company, you and the Interested Parties will not disclose to any other person
the fact that the Evaluation Material has been made available to you, that
discussions or negotiations are taking place concerning a possible transaction
involving the Company or any of the terms, conditions or other facts with
respect thereto (including the status thereof), provided that you may make such
disclosure if you have received the written opinion of your outside counsel that
such disclosure must be made by you in order that you not commit a violation of
law. Without limiting the generality of the foregoing, you further agree that,
without the prior written consent of the Company, you will not, directly or
indirectly, enter into any agreement, arrangement or understanding, or any
discussions which might lead to such agreement, arrangement or understanding,
with any person regarding a possible transaction involving the Company. The
term "person" as used in this letter agreement shall be broadly interpreted to
include the media and any corporation, partnership, group, individual or other
entity.
In the event that you or any of the Interested Parties are requested
or required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process) to disclose any of the Evaluation Material, you shall provide
the Company with prompt written notice of any such request or requirement so
that the Company may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this letter agreement. If, in the
absence of a protective order or other remedy or the receipt of a waiver by the
Company, you or any of the Interested Parties are nonetheless, in the written
opinion of your outside counsel, legally compelled to disclose Evaluation
Material to any tribunal or else stand liable for contempt or suffer other
censure or penalty or other damages under law, you or the Interested Parties
may, without liability hereunder, disclose only that portion of the Evaluation
Material which such counsel advises you is legally required to be disclosed,
provided that you exercise your best efforts to preserve the confidentiality of
the Evaluation Material, including, without limitation, by cooperating with the
Company to obtain an appropriate protective order or other reliable assurance
that confidential treatment will be accorded the Evaluation Material.
If you decide that you do not wish to proceed with a transaction with
the Company, you will promptly inform the Company of that decision. In that
case, or at any time upon the request of the Company for any reason, you will
promptly deliver to the Company all Evaluation Material (and all copies thereof)
furnished to you or the Interested Parties by or on behalf of the Company
pursuant hereto. In the event of such a decision or request, all other
Evaluation Material prepared by you or the Interested Parties shall be destroyed
and no copy
<PAGE>
Royal Ahold N.V.
February 17, 2000
Page 3
thereof shall be retained. Notwithstanding the return or destruction of the
Evaluation Material, you and the Interested Parties will continue to be bound by
your obligations of confidentiality and other obligations hereunder.
You understand and acknowledge that neither the Company nor any of its
Representatives (including, without limitation, any of the Company's directors,
officers, employees or agents) make any representation or warranty, express or
implied, as to the accuracy or completeness of the Evaluation Material. You
agree that neither the Company nor any of its Representatives (including,
without limitation, any of the Company's directors, officers, employees, or
agents) shall have any liability to you or to any of the Interested Parties
relating to or resulting from the use of the Evaluation Material or any errors
therein or omissions therefrom. Only those representations or warranties which
are made in a final definitive agreement regarding any transactions contemplated
hereby, when, as and if executed, and subject to such limitations and
restrictions as may be specified therein, will have any legal effect.
In particular, you recognize that any financial projections which may
be contained in the Evaluation Material together with any and all other
financial projections delivered to you (all such projections are referred to
herein as the "Financial Projections"), are being furnished subject to the terms
and conditions of this letter agreement. The Financial Projections reflect a
number of estimates and highly subjective assumptions and judgments concerning
anticipated results of operations. These assumptions and judgments may or may
not prove to be correct and there can be no assurance that any projected results
are attainable or will be realized. The Company expressly disclaims any
representation or warranty, express or implied, as to the accuracy or
completeness of the Financial Projections, and you agree that you will not rely
on the Financial Projections in connection with your evaluation of any possible
transaction with the Company. Only those particular representations and
warranties which may be made by the Company in a definitive agreement, when and
if one is executed, and subject to such limitations and restrictions as may be
specified in such agreement, shall have any legal effect. It is understood and
agreed that any such definitive written agreement shall contain an express
disclaimer consistent with this disclaimer. You further agree that neither the
Company nor any of its directors, officers, employees, agents or representatives
shall have any liability to you relating to or resulting from (i) the use of the
Financial Projections or any errors therein or omissions therefrom or (ii) any
other oral or written communications transmitted to you or any other interested
party in connection with the Financial Projections. The delivery of the
Financial Projections shall not, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
thereof. In furnishing the Financial Projections, the Company undertakes no
obligation to update or otherwise revise any of the information contained
therein to reflect events or circumstances existing or arising after the date
thereof.
In consideration of the Evaluation Material being furnished to you,
you hereby agree that, for a period of two years from the date hereof, neither
you nor any of your affiliates will solicit to employ or actually employ or
otherwise engage any of the current officers or management employees of the
Company whom you meet during the course of evaluating this transaction without
obtaining the prior written consent of the Company.
<PAGE>
Royal Ahold N.V.
February 17, 2000
Page 4
In consideration of the Evaluation Material being provided to you, you
also agree that for a period of one year from the date of this letter agreement,
neither you nor any of the Interested Parties will, without the prior written
consent of the Company or its Board of Directors,
a) acquire, offer to acquire, or agree to acquire, directly or indirectly
by purchase or otherwise, any voting securities or direct or indirect
rights to acquire any voting securities of the Company or any
subsidiary thereof, or of any successor to or person in control of the
Company, or any assets of the Company or any subsidiary or division
thereof or of any such successor or controlling person;
b) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" to vote (as such terms are used in the
rules of the Securities and Exchange Commission), or seek to advise or
influence any persons or entity with respect to the voting of any
voting securities of the Company;
c) make any public announcement with respect to, or submit a proposal
for, or offer of (with or without conditions) any extraordinary
transaction involving the Company or any of its securities or assets;
or
d) form, join or in any way participate in a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
in connection with any of the foregoing.
Provided that, you shall be permitted to take any of the steps set
forth in clause (a) through (d) above without the prior consent of the Company
or its Board of Directors in the event that a third party commences a tender or
exchange offer, or otherwise proposes a merger or business combination in
respect of the Company and the Company has (i) exempted such transaction for
purposes of Section 203 of the Delaware General Corporation Law, or (ii)
publicly announced or publicly confirmed that it is engaged in negotiations in
connection with such proposed transaction.
You will promptly advise the Company of any inquiry or proposal made
to you with respect to any of the foregoing.
You understand and agree that no contract or agreement providing for
any transaction involving the Company shall be deemed to exist between you and
the Company unless and until a final definitive agreement has been executed and
delivered, and you hereby waive, in advance, any claims (including, without
limitation, breach of contract) in connection with any transaction involving the
Company unless and until you and the Company shall have entered into a final
definitive agreement. You also agree that unless and until a final definitive
agreement regarding a transaction between the Company and you has been executed
and delivered, neither the Company nor you will be under any legal obligation of
any kind whatsoever with respect to such a transaction by virtue of this letter
agreement except for the matters specifically agreed to herein. You further
acknowledge and agree that the Company reserves the right, in its sole
<PAGE>
Royal Ahold N.V.
February 17, 2000
Page 5
discretion, to terminate discussions and negotiations with you at any time. You
further understand that you shall not have any claims whatsoever against the
Company, its representatives or any of their respective directors, officers,
stockholders, owners, affiliates or agents arising out of or relating to any
transaction involving the Company (other than those as against the parties to a
definitive agreement with you in accordance with the terms thereof). Neither
this paragraph nor any other provision in this letter agreement can be waived or
amended except by written consent of the Company, which consent shall
specifically refer to this paragraph (or such provision) and explicitly make
such waiver or amendment.
It is understood and agreed that no failure or delay by the Company 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.
It is further understood and agreed that money damages would not be a
sufficient remedy for any breach of this letter agreement by you or any of the
Interested Parties and that the Company shall be entitled to equitable relief,
including injunction and specific performance, as a remedy for any such breach.
Such remedies shall not be deemed to be the exclusive remedies for a breach by
you of this letter agreement but shall be in addition to all other remedies
available at law or equity to the Company. In the event of litigation relating
to this letter agreement, if a court of competent jurisdiction determines that
you or any of the Interested parties have breached this letter agreement, then
you shall be liable and pay to the Company the reasonable legal fees incurred by
the Company in connection with such litigation, including any appeal therefrom.
Please confirm your agreement with the foregoing by signing and
returning one copy of this letter to the undersigned, whereupon this letter
agreement shall become a binding agreement between you and the Company.
Very truly yours,
U.S. Foodservice
/s/ David M. Abramson
---------------------------------
By: David M. Abramson
Executive Vice President and
General Counsel
<PAGE>
Royal Ahold N.V.
February 17, 2000
Page 6
Accepted and agreed as of
the date first written above:
Royal Ahold N.V.
/s/ Michael Meurs
- --------------------------------
By: Michael Meurs
Executive Vice President
and Chief Financial Officer
