-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NEBjB/cLFTYgM6BGcCJyFg9yG2HG8VHyJloB9P97ArVVoiY7R8gKNsN5D9i6MtOR td1l0ZpvEAeDSrrPqMk1rA== 0000906287-98-000203.txt : 19981022 0000906287-98-000203.hdr.sgml : 19981022 ACCESSION NUMBER: 0000906287-98-000203 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19981021 SROS: AMEX SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GIANT FOOD INC CENTRAL INDEX KEY: 0000041289 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 530073545 STATE OF INCORPORATION: DE FISCAL YEAR END: 0222 FILING VALUES: FORM TYPE: SC 14D9/A SEC ACT: SEC FILE NUMBER: 005-12275 FILM NUMBER: 98728261 BUSINESS ADDRESS: STREET 1: 6300 SHERIFF RD STREET 2: DEPT 593 CITY: LANDOVER STATE: MD ZIP: 20785 BUSINESS PHONE: 3013414100 MAIL ADDRESS: STREET 1: P O BOX 1804 DEPT 593 STREET 2: 6400 SHERIFF ROAD CITY: LANDOVER STATE: MD ZIP: 20785 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GIANT FOOD INC CENTRAL INDEX KEY: 0000041289 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 530073545 STATE OF INCORPORATION: DE FISCAL YEAR END: 0222 FILING VALUES: FORM TYPE: SC 14D9/A BUSINESS ADDRESS: STREET 1: 6300 SHERIFF RD STREET 2: DEPT 593 CITY: LANDOVER STATE: MD ZIP: 20785 BUSINESS PHONE: 3013414100 MAIL ADDRESS: STREET 1: P O BOX 1804 DEPT 593 STREET 2: 6400 SHERIFF ROAD CITY: LANDOVER STATE: MD ZIP: 20785 SC 14D9/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 2 TO SCHEDULE 14D-9 Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934 GIANT FOOD INC. (Name of Subject Company) GIANT FOOD INC. (Name of Person(s) Filing Statement) Class A Common Stock (Non-Voting), $1.00 par value (Title of Class of Securities) 374478105 (Cusip Number of Class of Securities) David W. Rutstein, Esq. Senior Vice President and General Counsel Giant Food Inc. 6300 Sheriff Road Landover, Maryland 20785 (301) 341-4100 (Name, address and telephone number of person authorized to receive notice and communications on behalf of the person(s) filing statement) Copy to: Wayne K. Johnson, Esq. Jorden Burt Boros Cicchetti Berenson & Johnson LLP Suite 400 East 1025 Thomas Jefferson Street, N.W. Washington, D.C. 20007 (202) 965-8100 1 This Amendment No. 2 amends and supplements the Solicitation/Recommendation Statement on Schedule 14D-9 filed on May 29, 1998 (the "Schedule 14D-9") on behalf of Giant Food Inc., a Delaware corporation (the "Company"), relating to the tender offer by Giant Acquisition Corporation, a Delaware corporation and 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 Zanstaad) (the "Purchaser"), to purchase for cash all of the outstanding shares of the Company's Class A Common Stock (Non-Voting), par value $1.00 per share (the "Shares"), at a price of $43.50 per Share, net to the seller in cash, without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase, dated May 19, 1998 (the "Offer to Purchase"), and in the related Letter of Transmittal and Notice of Guaranteed Delivery. All capitalized terms not defined herein are used as defined in the Schedule 14D-9. ITEM 3. IDENTITY AND BACKGROUND. Item 3(b) of the Schedule 14D-9 is hereby amended by adding at the end thereof the following: "Other. In October,1998, the Company entered into a Deductible Indemnification Agreement (the "Indemnification Agreement")with the MollyAnna Company, an indirect, wholly-owned subsidiary of the Purchaser ("MollyAnna"), effective as of July 18, 1998. Under the Indemnification Agreement, MollyAnna will indemnify the Company for certain sums which the Company and its affiliates become legally obligated to pay pursuant to their contractual obligations to indemnify various insurers for incurred losses, retrospective premiums, deductible losses, allocated loss adjustment expenses and unallocated claims handling fees pursuant to retrospective premium plans, deductible plans, co-insurance provisions or other similar contractual provisions. In consideration, the Company paid MollyAnna a one-time premium of $73 million. A copy of the Indemnification Agreement is attached hereto as Exhibit 14 and is incorporated herein by reference." ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED. Item 8 is amended by adding the following: On October 20, 1998, Royal Ahold issued a press release announcing the Federal Trade Commission's acceptance of the proposed divestiture settlement which will allow Royal Ahold's acquisition of the Company to be completed. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. The information contained in Item 9 of the Schedule 14D-9 is hereby amended by adding the following additional Exhibit: Exhibit 14 -- Deductible Indemnification Agreement effective as of July 18, 1998 by and between The MollyAnna Company and Giant Food Inc. 2 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. GIANT FOOD INC. By: /s/ David W. Rutstein ---------------------------------- David W. Rutstein Senior Vice President and General Counsel Dated: October 20, 1998 3 EX-99.14 2 THE MOLLYANNA COMPANY P.O. BOX 306, MONTPELIER, VERMONT 05601 (802) 229-5042 COVERAGE BINDER FOR: Giant Food, Inc. 6300 Sheriff Road Landover, Maryland 20785 TYPE: Deductible Indemnification POLICY NO.: 98-006 COVERAGE PERIOD: All periods prior to July 18, 1998 and the period commencing July 18, 1998 and ending July 17, 1999 COVERAGE/LIMITS: Indemnification of Giant Food, Inc., for all sums which Giant shall become legally obligated to pay pursuant to its Deductible Obligations for Incurred Losses under the Policies during the Effective Period of this Agreement. PREMIUM: $73,006,331 All terms and conditions as per wording of Policy and appropriate endorsement. /s/ Andrew Sargeant --------------------------- Andrew Sargeant Authorized Representative THE MOLYANNA COMPANY Policy No. 98-006 DEDUCTIBLE INDEMNIFICATION AGREEMENT THIS DEDUCTIBLE INDEMNITY AGREEMENT ("Agreement") is made and effective as of the 18th day of July, 1998 by and between: (1) THE MOLLYANNA COMPANY, P.O. Box 306, Montpelier, VT 05601, a Vermont insurance company ("MollyAnna"), and (2) GIANT FOOD, INC., 6300 Sheriff Road, Landover, MD 20785, a company incorporated in Delaware, and its affiliates as more completely disclosed on Schedule D ("Giant") (collectively, the "Parties"). WITNESSETH: WHEREAS, during the Coverage Period, Giant has insured and will continue to insure certain workers compensation, general liability, and automobile risks with various insurers (collectively, the "Insurer") under the Policies; WHEREAS, Giant is obligated to indemnify the Insurer for liabilities incurred by the Insurer with respect to a specified layer of risk pursuant to various deductible provisions, endorsements, and retrospective rating plans under the Policies; WHEREAS, MollyAnna is duly licensed to transact the business of insurance in Vermont and authorized to enter into this agreement; NOW THEREFORE, in consideration of the premium set forth in Schedule A, the Parties hereby agree as follows: I. AGREEMENT A. COVERAGE MollyAnna will indemnify Giant for all sums which Giant shall become legally obligated to pay pursuant to its Deductible Obligation for Incurred Losses under the Policies during the effective period of this Agreement. B. EFFECTIVE PERIOD This Agreement is effective as of the date listed above and will remain in effect until canceled or terminated by either of the Parties or until the Deductible Obligations under the Policies are exhausted. C. NO OBLIGATION TO DEFEND MollyAnna has no obligation to investigate or defend any claim or suit against Giant. II. DEFINITIONS A. "DEDUCTIBLE OBLIGATIONS" means Giant's contractual obligations under the Policies to indemnify the Insurer for Incurred Losses pursuant to retrospective premiums plans, deductible plans, co-insurance provisions or other similar contractual provisions requiring Giant to indemnify the Insurer for Incurred Losses, including with effect from March 1, 1999, Giant's contractual obligation to indemnify the Insurer, or the amounts Giant is required to pay as a result of its self-insured retention under a controlling policy, providing the amount is not in excess of $1,000,000 per occurence. B. "INCURRED LOSS" or "INCURRED LOSSES" shall include, without limitation, incurred losses, retrospective premiums (including any adjustments to retrospective premiums for taxes and claims handling), deductible losses, allocated loss adjustment expenses and unallocated claims handling fees. Incurred Losses shall not include any sums paid by Giant prior to the Effective Period. C. "COVERAGE PERIOD" shall mean all periods prior to July 18, 1998 and the period commencing July 18, 1998 and ending July 17, 1999. D. "POLICIES" means all workers compensation, general liability and automobile insurance policies entered into by Giant which incepted or will incept during the Coverage Period, including, without limitation, the policies set forth on Schedule A. E. Unless expressly provided in this Agreement or unless the context requires otherwise, terms used in this Agreement shall have the meanings attributed to them in the Policies. III. CONDITIONS A. CLAIMS REPORTING Within [30 days] after the end of each [quarterly/annual] period, Giant shall provide MollyAnna with a report reflecting the sums [paid to/due to] the Insurer pursuant to the Deductible Obligations and proof of the sums for which Giant seeks payment under this Agreement. Such proof shall include: 1. the identity of each claim incurred by the Insurer; 2. for each claim: a. the amounts paid or reserved for payment for Loss and Allocated Loss Adjustment Expense; and b. the amount of deductible payment applicable thereto; and c. the insurer's claim number, the claimant's name, and the date of accident or occurrence; and 3. all tax factors and claims handling charges and fees. Giant shall cooperate with MollyAnna and allow MollyAnna to obtain records necessary to verify any of these items of information. B. AUDIT & INSPECTION MollyAnna shall have the right to examine and audit, at Giant's expense, Giant's books and records at any time during the Effective Period and within five years after the expiration of this Agreement, or until all claims under the Policies have been settled or commuted, whichever is later. MollyAnna shall have the further right to physically inspect, at the expense of Giant, the premises of Giant to review Giant's safety, labor and operational practices. C. CHANGES The terms of this Agreement cannot be changed except by written amendment executed by Giant and MollyAnna. D. ASSIGNMENT This Agreement shall not be assigned or transferred without MollyAnna's written consent. E. NOVATION Giant shall have the right to require that MollyAnna novate this Agreement and transfer the liability hereunder to an insurer designated by Giant, provided, however, that the insurer must have an AM Best rating of "B" or higher. In the event Giant exercises this right, MollyAnna shall be obligated to pay to the designated insurer an amount equal to the premium set forth in Exhibit A minus the sums paid by MollyAnna to Giant pursuant to this Agreement and MollyAnna shall be relieved of any further liability under this Agreement. F. PREMIUM Upon execution of this Agreement, Giant immediately shall pay to MollyAnna the premium amounts as set forth in Schedule C, subject to, effective March 1, 1999, Giant retaining an amount of $1,000,000 per occurrence under contractual obligations to the Insurer or self-insured retention under a controlling policy. Should such an amount change, the premium will be adjusted to reflect the higher or lower amount. G. TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO MOLLYANNA Giant agrees to transfer to MollyAnna, any rights to recover all or part of any payment to others under this Agreement, if these rights arise for any reason, including contribution, subrogation, indemnification or collection of any insurance proceeds that may apply. Giant must take no action after a loss to impair these rights. At MollyAnna's request, Giant will bring suit to enforce these rights or will transfer these rights to MollyAnna and assist MollyAnna in enforcing them. H. BANKRUPTCY Bankruptcy or insolvency of Giant, or the estate thereof, will not relieve MollyAnna of its obligations under this Agreement. I. ARBITRATION Any dispute, claim, or controversy arising from or relating to this Agreement or from any transaction related to this Agreement, shall be submitted to arbitration proceeding in Montpelier, Vermont at the request of any of the Parties. 1. The arbitration proceedings will be before three arbitrators. Giant shall appoint one arbitrator and MollyAnna shall appoint another one arbitrator; the two so appointed shall select a third. If the two arbitrators fail to agree on a third arbitrator for a period of sixty calendar days from the date of their first attempt to select the third arbitrator, then on request of Giant or MollyAnna such third arbitrator shall be selected by the then president of the American Arbitration Association. Giant and MollyAnna may by express agreement determine the arbitral procedures to be followed. In the event the parties do not agree, Vermont law shall govern all such matters of arbitral procedure. 2. Unless the Parties agree otherwise, all arbitrators must be executive officers or former executive officers of property or casualty insurance or reinsurance companies or insurance brokerage companies domiciled in the United States of America not under the control of either of the Parties to this Agreement. 3. Each of the Parties must submit its respective case to the arbitrators within 30 days of the appointment of the third arbitrator. The arbitrators must make their decisions within 60 days following termination of the hearing, unless the Parties consent to an extension. The majority decision of any two arbitrators, when filed with the Parties, will be final and binding on the Parties. 4. The arbitrators must render their decision in writing, based upon a hearing in which evidence may be introduced without following strict rules of evidence, but in which cross examination and rebuttal must be allowed. 5. The arbitrators may award compensatory damages and interest thereupon. The arbitrators may also order the Parties to release or provide collateral to the extent required by this Agreement. They will have exclusive jurisdiction over the entire matter in dispute, including any question as to its arbitrability. However, they will not have the power to award exemplary damages or punitive damages, however denominated, whether or not multiplied, whether imposed by law or otherwise. 6. The Parties must each bear the expense of their respective arbitrator and must jointly and equally bear with each other the expense of the third arbitrator and of the arbitration. 7. This Section will apply whether that dispute arises before or after termination of this Agreement. J. CHOICE OF LAW This Agreement shall be governed and construed in accordance with the laws of the State of Vermont. K.. COUNTERPARTS This Agreement may be executed in counterparts, all of which together shall constitute one document. L. MODIFICATION This Agreement may not be modified except upon written agreement of both Parties. WITNESS WHEREOF, the parties intending to be legally bound have executed this Agreement. THE MOLLYANNA COMPANY GIANT FOOD, INC. By: Andrew Sargeant By: Kathleen Davis Title: Attorney-in-fact Title: Attorney-in-fact ----------------------- ----------------------- SCHEDULE A: Insurer and Policies SCHEDULE B: Deductibles SCHEDULE C: Premium SCHEDULE D: Giant and its Affiliates -----END PRIVACY-ENHANCED MESSAGE-----