-----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, IFKUBcClBxN3Fv8ukqH03yl839aLZzVGrYvGguGgCxdEcG+JfJkcVZRXQNGfQhVJ H4jqehEMY6Oi30E3h490Ag== 0000950123-98-005307.txt : 19980520 0000950123-98-005307.hdr.sgml : 19980520 ACCESSION NUMBER: 0000950123-98-005307 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19980519 SROS: NONE 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 14D1 SEC ACT: SEC FILE NUMBER: 005-12275 FILM NUMBER: 98628281 BUSINESS ADDRESS: STREET 1: 6400 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: ROYAL AHOLD CENTRAL INDEX KEY: 0000869425 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: ALBERT HEIJNWEG 1 STREET 2: P O BOX 33 CITY: 1500 EA ZAANDAM THE STATE: P7 SC 14D1 1 SCHEDULE 14D-1 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ GIANT FOOD INC. (NAME OF SUBJECT COMPANY) ------------------------ KONINKLIJKE AHOLD N.V. (ROYAL AHOLD) (BIDDER) ------------------------ CLASS A COMMON STOCK, PAR VALUE $1.00 PER SHARE (TITLE OF CLASS OF SECURITIES) ------------------------ 374478105 (CUSIP NUMBER OF CLASS OF SECURITIES) ------------------------ MR. PAUL P.J. BUTZELAAR KONINKLIJKE AHOLD N.V. ALBERT HEIJNWEG 1 1507 EH ZAANDAM, THE NETHERLANDS 011-31-75-6598111 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER) ------------------------ COPY TO: MAUREEN S. BRUNDAGE, ESQ. WHITE & CASE LLP 1155 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10036 (212) 819-8200 CALCULATION OF FILING FEE ================================================================================ Transaction valuation* Amount of Filing Fee** $2,606,281,185 $521,256.79
================================================================================ * For purposes of calculating the filing fee only. This calculation assumes the purchase of 59,914,510 shares of Class A Common Stock, par value $1.00 per share, at a price per share of U.S. $43.50. ** 1/50th of 1% of Transaction Valuation ================================================================================ [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount Previously Paid: Filing Party: Form or Registration No.: Date Filed:
================================================================================ 2 SCHEDULE 14D-1 - ------------------------- CUSIP No. 80223310 - ------------------------- - ---------------------------------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Koninklijke Ahold N.V. - ---------------------------------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] 2 (b) [ ] - ---------------------------------------------------------------------------------------------------------- SEC USE ONLY 3 - ---------------------------------------------------------------------------------------------------------- SOURCE OF FUNDS 4 BK - ---------------------------------------------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED 5 PURSUANT TO ITEMS 2(e) or 2(f) [ ] - ---------------------------------------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 The Netherlands - ---------------------------------------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING 7 PERSON 0 - ---------------------------------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES 8 CERTAIN SHARES [ ] - ---------------------------------------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7 9 0.0% - ---------------------------------------------------------------------------------------------------------- TYPE OF REPORTING PERSON 10 CO - ----------------------------------------------------------------------------------------------------------
3 ITEM 1. SECURITY AND SUBJECT COMPANY. (a) This statement relates to the Class A Common Stock, par value $1.00 per share, of Giant Food Inc. (the "Company"), a Delaware corporation. The principal executive offices of the Company are located at 6300 Sheriff Road, Landover, Maryland, 20785. (b) This statement relates to the offer by Koninklijke Ahold N.V., a public company with limited liability incorporated under the laws of The Netherlands with its corporate seat in Zaandam (Municipality Zaanstaad) (the "Purchaser"), to purchase for cash all of the outstanding shares of Class A Common Stock, par value $1.00 per share, of the Company (the "Shares"), at a price of $43.50 per share (the "Offer Price"), net to the seller in cash, without interest thereon, dated May 19, 1998 (the "Offer to Purchase"), upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal and Notice of Guaranteed Delivery (which, together with any amendments or supplements thereto, collectively constitute the "Offer"), copies of which are attached hereto as Exhibits (a)(1), (a)(2) and (a)(7). Information concerning the number of outstanding Shares is set forth in the "Introduction" of the Offer to Purchase. (c) Information concerning the principal market in which the Shares are traded and the high and low sale prices of the Shares for each quarterly period during the past two years is set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase and is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d), (g) As noted in Item 1(a), the Purchaser is a public company with limited liability, incorporated under the laws of The Netherlands with its corporate seat in Zaandam (Municipality Zaanstaad). The information set forth in Section 8 ("Certain Information Concerning the Purchaser") of the Offer to Purchase is incorporated herein by reference. The name, business addresses, present principal occupations or employment and material occupations, positions, offices or employment during the last five years and citizenship of the members of the Supervisory Board, the Corporate Executive Board and the executive officers of the Purchaser are set forth in Schedule I to the Offer to Purchase and are incorporated herein by reference. (e), (f) During the last five years, neither the Purchaser nor, to the best of the Purchaser's knowledge, any of the persons listed in Schedule I to the Offer to Purchase has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which any such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such law. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a)-(b) The information set forth in the "Introduction" and Sections 8 ("Certain Information Concerning the Purchaser"), 10 ("Background of the Offer; Contacts with the Company") and 11 ("Purpose of the Offer; Plans for the Company; Stock Purchase Agreement; Sainsbury Agreement") of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(c) The information set forth in Section 9 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(g) The information set forth in the "Introduction" and Sections 10 ("Background of the Offer; Contacts with the Company"), 11 ("Purpose of the Offer; Plans for the Company; Stock Purchase Agreement; Sainsbury Agreement"), 12 ("Dividends and Distributions") and 13 ("Effect of the Offer on the 4 Market for Shares; Exchange Listing and Exchange Act Registration") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a)-(b) The information set forth in Sections 8 ("Certain Information Concerning the Purchaser") and 10 ("Background of the Offer; Contacts with the Company") is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the "Introduction" and Sections 10 ("Background of the Offer; Contacts with the Company") and 11 ("Purpose of the Offer; Plans for the Company; Stock Purchase Agreement; Sainsbury Agreement") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 8 ("Certain Information Concerning the Purchaser") of the Offer to Purchase is incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION. (a) The information set forth in Section 11 ("Purpose of the Offer; Plans for the Company; Stock Purchase Agreement; Sainsbury Agreement") of the Offer to Purchase is incorporated herein by reference. (b)-(c) The information set forth in Section 15 ("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 9 ("Source and Amount of Funds") and Section 13 ("Effect of the Offer on the Market for Shares; Exchange Listing and Exchange Act Registration") of the Offer to Purchase is incorporated herein by reference. (e) Not applicable. 5 (f) The information set forth in the Offer to Purchase, the Letter of Transmittal and the Stock Purchase Agreement dated as of May 19, 1998 between Koninklijke Ahold N.V. and The 1224 Corporation, copies of which are attached hereto as Exhibits (a)(1), (a)(2) and (c)(3) respectively, is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NUMBERED NUMBER DESCRIPTION PAGES ------- ----------- -------- Exhibit (a)(1) Offer to Purchase. ......................................... Exhibit (a)(2) Letter of Transmittal. ..................................... Exhibit (a)(3) Form of letter to brokers, dealers, commercial banks, trust companies and other nominees. .............................. Exhibit (a)(4) Form of letter to be used by brokers, dealers, commercial banks, trust companies and nominees to their clients. ...... Exhibit (a)(5) Press Release, dated May 19, 1998, announcing the tender offer. ..................................................... Exhibit (a)(6) Form of newspaper advertisement, dated May 20, 1998, published in The Wall Street Journal. ...................... Exhibit (a)(7) Notice of Guaranteed Delivery. ............................. Exhibit (a)(8) Guidelines for Substitute Form W-9. ........................ Exhibit (b)(1) Commitment Letter, dated May 18, 1998 between ABN AMRO Bank NV and Koninklijke Ahold N.V. .............................. Exhibit (b)(2) US$1,000,000,000 Multicurrency Revolving Credit Agreement, made on 18 December 1996 between Koninklijke Ahold N.V., Ahold USA Holdings, Inc. and a syndicate of banks headed by ABN Amro Bank N.V. Exhibit (c)(1) Confidentiality Agreement, made as of February 2, 1998, between Koninklijke Ahold N.V. and The 1224 Corporation. ... Exhibit (c)(2) Exclusivity Agreement, dated April 27, 1998, between Koninklijke Ahold N.V. and The 1224 Corporation. ........... Exhibit (c)(3) Stock Purchase Agreement, dated as of May 19, 1998, between Koninklijke Ahold N.V. and The 1224 Corporation. ........... Exhibit (d) None. ...................................................... Exhibit (e) Not applicable. ............................................ Exhibit (f) None. ......................................................
6 SIGNATURE Each Reporting Person certifies that, after reasonable inquiry and to the best of its knowledge and belief, the information set forth in this statement is true, complete and correct. Dated: May 19, 1998 KONINKLIJKE AHOLD N.V. By: /s/ PAUL P.J. BUTZELAAR ------------------------------------ Name: Paul P.J. Butzelaar Title: Senior Vice President and General Counsel 7 EXHIBIT INDEX
EXHIBIT NUMBERED NUMBER DESCRIPTION PAGES ------- ----------- -------- Exhibit (a)(1) Offer to Purchase. ......................................... Exhibit (a)(2) Letter of Transmittal. ..................................... Exhibit (a)(3) Form of letter to brokers, dealers, commercial banks, trust companies and other nominees. .............................. Exhibit (a)(4) Form of letter to be used by brokers, dealers, commercial banks, trust companies and nominees to their clients. ...... Exhibit (a)(5) Press Release, dated May 19, 1998, announcing the tender offer. ..................................................... Exhibit (a)(6) Form of newspaper advertisement, dated May 20, 1998, published in The Wall Street Journal. ...................... Exhibit (a)(7) Notice of Guaranteed Delivery. ............................. Exhibit (a)(8) Guidelines for Substitute Form W-9. ........................ Exhibit (b)(1) Commitment Letter, dated May 18, 1998 between ABN AMRO Bank NV and Koninklijke Ahold N.V. .............................. Exhibit (b)(2) US$1,000,000,000 Multicurrency Revolving Credit Agreement, made on 18 December 1996 between Koninklijke Ahold N.V., Ahold USA Holdings, Inc. and a syndicate of banks headed by ABN Amro Bank N.V. ......................................... Exhibit (c)(1) Confidentiality Agreement, made as of February 2, 1998, between Koninklijke Ahold N.V. and The 1224 Corporation. ... Exhibit (c)(2) Exclusivity Agreement, dated April 27, 1998, between Koninklijke Ahold N.V. and The 1224 Corporation. ........... Exhibit (c)(3) Stock Purchase Agreement, dated as of May 19, 1998, between Koninklijke Ahold N.V. and The 1224 Corporation. ........... Exhibit (d) None. ...................................................... Exhibit (e) Not applicable. ............................................ Exhibit (f) None. ......................................................
EX-99.A.1 2 OFFER TO PURCHASE 1 OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF CLASS A COMMON STOCK OF GIANT FOOD INC. AT $43.50 NET PER SHARE BY KONINKLIJKE AHOLD N.V. (ROYAL AHOLD) THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER ANTITRUST LAWS DESCRIBED IN SECTION 15 AND THE SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 14. KONINKLIJKE AHOLD N.V. (ROYAL AHOLD) (THE "PURCHASER") HAS ENTERED INTO A STOCK PURCHASE AGREEMENT WITH THE 1224 CORPORATION (THE "SELLING SHAREHOLDER") WHICH OWNS ALL OF THE OUTSTANDING SHARES OF CLASS AC COMMON STOCK, PAR VALUE $1.00 PER SHARE, OF THE COMPANY (THE "CLASS AC SHARES") AND 500 SHARES. PURSUANT TO THE STOCK PURCHASE AGREEMENT, THE SELLING SHAREHOLDER (i) HAS AGREED TO SELL, AND THE PURCHASER HAS AGREED TO PURCHASE, ALL OF THE CLASS AC SHARES AT A PRICE OF $43.50 PER SHARE ON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THE STOCK PURCHASE AGREEMENT AND (ii) HAS AGREED TO TENDER PURSUANT TO THE OFFER, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THE STOCK PURCHASE AGREEMENT, ALL OF THE SHARES OWNED BY THE SELLING SHAREHOLDER. SEE SECTION 11. IN ADDITION, THE PURCHASER AND J SAINSBURY plc ("SAINSBURY"), WHICH OWNS ALL OF THE OUTSTANDING SHARES OF CLASS AL COMMON STOCK, PAR VALUE $1.00 PER SHARE, OF THE COMPANY (THE "CLASS AL SHARES") AND 11,779,931 SHARES (OR APPROXIMATELY 20% OF THE OUTSTANDING SHARES), HAVE AGREED, SUBJECT TO AGREEMENT ON DOCUMENTATION, (i) FOR SAINSBURY TO SELL, AND FOR THE PURCHASER TO PURCHASE, ALL OF THE CLASS AL SHARES FOR AN AGGREGATE PURCHASE PRICE OF $100,000,000 ON THE TERMS AND CONDITIONS TO BE AGREED UPON AND (ii) FOR SAINSBURY TO TENDER PURSUANT TO THE OFFER, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH HEREIN, ALL OF THE SHARES OWNED BY SAINSBURY. SEE SECTION 11. THE STRATEGIC PLANNING COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE SHARES AND UNANIMOUSLY RECOMMENDED TO THE BOARD OF DIRECTORS OF THE COMPANY THAT IT APPROVE THE OFFER AND RECOMMEND THAT THE HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. AS OF THE DATE HEREOF, THE FULL BOARD OF DIRECTORS OF THE COMPANY HAS NOT REVIEWED THE OFFER AND HAS NOT TAKEN A POSITION WITH RESPECT TO THE OFFER. ------------------------ IMPORTANT Any stockholder desiring to tender all or any portion of the Shares owned by such stockholder should either (i) complete and sign the Letter of Transmittal or a facsimile thereof in accordance with the instructions in the Letter of Transmittal and mail or deliver it together with the certificate(s) evidencing tendered Shares, and any other required documents, to the Depositary or tender such Shares pursuant to the procedures for book-entry transfer set forth in Section 3 or (ii) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. Any stockholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if such stockholder desires to tender such Shares. Any stockholder who desires to tender Shares and whose certificates evidencing such Shares are not immediately available, or who cannot comply with the procedures for book-entry transfer described in this Offer to Purchase on a timely basis, may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3. 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 from the Information Agent or from brokers, dealers, commercial banks or trust companies. ------------------------ The Dealer Manager for the Offer is: MERRILL LYNCH & CO. ------------------------ May 19, 1998. 2 TABLE OF CONTENTS
PAGE ---- INTRODUCTION....................................................... 1 THE TENDER OFFER................................................... 2 1. Terms of the Offer.......................................... 2 2. Acceptance for Payment and Payment for Shares............... 3 3. Procedures for Tendering Shares............................. 5 4. Withdrawal Rights........................................... 7 5. Certain United States Federal Income Tax Consequences....... 7 6. Price Range of Shares; Dividends............................ 8 7. Certain Information Concerning the Company and the Selling Shareholder................................................. 9 8. Certain Information Concerning the Purchaser................ 11 9. Source and Amount of Funds.................................. 14 10. Background of the Offer; Contacts with the Company.......... 15 11. Purpose of the Offer; Plans for the Company; Stock Purchase Agreement; Sainsbury Agreement.............................. 18 12. Dividends and Distributions................................. 26 13. Effect of the Offer on the Market for the Shares; Exchange Listing and Exchange Act Registration....................... 27 14. Conditions of the Offer..................................... 28 15. Certain Legal Matters; Regulatory Approvals................. 30 16. Fees and Expenses........................................... 32 17. Miscellaneous............................................... 33
SCHEDULE I Information Concerning the Directors and Executive Officers of the Purchaser (i) 3 To the Holders of Class A Common Stock of Giant Food Inc.: INTRODUCTION 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 Zaanstaad) (the "Purchaser"), hereby offers to purchase all outstanding shares of Class A Common Stock, par value $1.00 per share (the "Shares"), of Giant Food Inc., a Delaware corporation (the "Company"), at a price of $43.50 per Share, net to the seller in cash, without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, as they may be amended and supplemented from time to time, together constitute the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares pursuant to the Offer. The Purchaser will pay all charges and expenses of Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Dealer Manager (the "Dealer Manager" or "Merrill Lynch"), The Bank of New York, as Depositary (the "Depositary"), and D.F. King & Co., Inc., as Information Agent (the "Information Agent"), in each case incurred in connection with the Offer. See Section 16. THE STRATEGIC PLANNING COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY (THE "SPECIAL COMMITTEE") HAS UNANIMOUSLY DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE SHARES AND UNANIMOUSLY RECOMMENDED TO THE BOARD OF DIRECTORS OF THE COMPANY THAT IT APPROVE THE OFFER AND RECOMMEND THAT THE HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. AS OF THE DATE HEREOF, THE FULL BOARD OF DIRECTORS OF THE COMPANY HAS NOT REVIEWED THE OFFER AND HAS NOT TAKEN A POSITION WITH RESPECT TO THE OFFER. The Offer is being made pursuant to a Stock Purchase Agreement, dated as of May 19, 1998, between the Purchaser and The 1224 Corporation (the "Selling Shareholder") (the "Stock Purchase Agreement"). Pursuant to the Stock Purchase Agreement, the Selling Shareholder (i) has agreed to sell, and the Purchaser has agreed to purchase, all of the shares of Class AC Common Stock, par value $1.00 per share, of the Company (the "Class AC Shares") at a price of $43.50 on the terms and subject to the conditions set forth in the Stock Purchase Agreement and (ii) has agreed to tender validly (and not to withdraw) pursuant to and in accordance with the terms of the Offer all of the Shares that are owned by it (which, as of the date hereof, is 500 Shares). The Selling Shareholder's obligation to sell and the Purchaser's obligation to purchase the Class AC Shares is conditioned upon the consummation of the Offer. See Sections 7 and 11. In addition, the Purchaser and J Sainsbury plc ("Sainsbury"), which owns all of the outstanding shares of Class AL Common Stock, par value $1.00 per share, of the Company (the "Class AL Shares") and 11,779,931 Shares (or approximately 20% of the outstanding Shares), have agreed, subject to agreement on documentation, (i) for Sainsbury to sell, and for the Purchaser to purchase, all of the Class AL Shares for an aggregate purchase price of $100,000,000 on the terms and conditions to be agreed upon and (ii) for Sainsbury to tender pursuant to the Offer, upon the terms and subject to the conditions set forth herein, all of the Shares owned by Sainsbury. See Section 11. The Company currently has three classes of common stock: (i) the Class AC Shares, (ii) the Class AL Shares and (iii) the Shares. All such classes of common stock have the same rights and privileges except that the Class AC Shares and the Class AL Shares each have voting rights and the Shares have no voting rights. Currently there are outstanding 125,000 Class AC Shares (all of which are owned by the Selling Shareholder) and 125,000 Class AL Shares (all of which are owned indirectly by Sainsbury). Pursuant to the Certificate of Incorporation of the Company, the Class AC Shares have the right to elect five of the nine directors of the Board of Directors of the Company and the Class AL Shares have the right to elect four of the nine directors of the Board of Directors of the Company. 4 THE PURCHASER HAS BEEN ADVISED THAT WASSERSTEIN PERELLA & CO., INC. ("WASSERSTEIN"), FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE, HAS DELIVERED TO THE SPECIAL COMMITTEE ITS WRITTEN OPINION DATED MAY 18, 1998 (WHICH OPINION WAS DELIVERED PRIOR TO THE INCREASE IN THE OFFER PRICE FROM $43.00 TO $43.50) THAT, AS OF SUCH DATE AND BASED UPON ITS REVIEW AND ANALYSIS AND SUBJECT TO THE LIMITATIONS SET FORTH THEREIN, THE $43.00 PER SHARE CASH CONSIDERATION TO BE RECEIVED BY THE HOLDERS OF THE SHARES PURSUANT TO THE OFFER IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO SUCH STOCKHOLDERS. A COPY OF THE OPINION OF WASSERSTEIN, WHICH SETS FORTH THE ASSUMPTIONS MADE, FACTORS CONSIDERED AND SCOPE OF REVIEW UNDERTAKEN BY WASSERSTEIN, IS CONTAINED IN THE SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 FILED BY THE MEMBERS OF THE SPECIAL COMMITTEE AND CERTAIN OFFICERS OF THE COMPANY (THE "OFFICERS' AND DIRECTORS' SCHEDULE 14D-9"), WHICH IS BEING MAILED TO HOLDERS OF THE SHARES CONCURRENTLY HEREWITH. HOLDERS OF THE SHARES ARE URGED TO READ THE FULL TEXT OF SUCH OPINION. THE PURCHASER HAS BEEN ADVISED THAT PAINEWEBBER INCORPORATED ("PAINEWEBBER"), THE FINANCIAL ADVISOR TO THE SELLING SHAREHOLDER, HAS DELIVERED TO THE BOARD OF DIRECTORS OF THE SELLING SHAREHOLDER ITS WRITTEN OPINION DATED MAY 18, 1998 (WHICH OPINION WAS DELIVERED PRIOR TO THE INCREASE IN THE OFFER PRICE FROM $43.00 TO $43.50), THAT, AS OF SUCH DATE AND BASED UPON ITS REVIEW AND ANALYSIS AND SUBJECT TO THE LIMITATIONS SET FORTH THEREIN, THE $43.00 PER SHARE CASH CONSIDERATION TO BE RECEIVED BY THE HOLDERS OF THE SHARES PURSUANT TO THE OFFER IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO SUCH STOCKHOLDERS. A COPY OF THE OPINION OF PAINEWEBBER, WHICH SETS FORTH THE ASSUMPTIONS MADE, FACTORS CONSIDERED AND SCOPE OF REVIEW UNDERTAKEN BY PAINEWEBBER, IS CONTAINED IN THE SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 FILED BY THE SELLING SHAREHOLDER, WHICH IS BEING MAILED TO HOLDERS OF THE SHARES CONCURRENTLY HEREWITH. HOLDERS OF THE SHARES ARE URGED TO READ THE FULL TEXT OF SUCH OPINION. The Purchaser has been informed that, as of May 13, 1998, there were 59,914,510 Shares issued and outstanding (excluding Shares held in the Company's treasury), 3,422,994 Shares reserved for issuance upon the exercise of outstanding options granted under the Company's stock option plans and 100,627 Shares held in the Company's treasury. THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. THE TENDER OFFER 1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any extension or amendment), the Purchaser will accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not withdrawn in accordance with Section 4. The term "Expiration Date" means 12:00 Midnight, New York City time, on Wednesday, June 17, 1998, unless and until the Purchaser, in its sole discretion, shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. The Offer is conditioned upon, among other things, the expiration or termination of any applicable waiting period under the antitrust laws described in Section 15. The Offer is also subject to certain other conditions set forth in Section 14. If these or any of the other conditions referred to in Section 14 are not satisfied or any of the events specified in Section 14 have occurred or are determined by the Purchaser to have occurred prior to the Expiration Date, the Purchaser reserves the right (but is not obligated) to (i) decline to purchase any of the Shares tendered in the Offer and terminate the Offer, and return all tendered Shares to the tendering stockholders, (ii) waive or amend any or all conditions to the Offer, to the extent permitted by applicable law and the provisions of the Stock Purchase Agreement and subject to complying with applicable rules and regulations of the Securities and Exchange Commission (the "Commission"), purchase all Shares validly tendered or (iii) subject to the limitations described below, extend the Offer and, subject to the right of stockholders to withdraw Shares until the Expiration Date, retain the Shares which have been tendered during the period or periods for which the Offer is extended. 2 5 Subject to the applicable rules and regulations of the Commission and to applicable law, the Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, to extend for any reason the period of time during which the Offer is open, including upon the occurrence of any of the events specified in Section 14, by giving oral or written notice of such extension to the Depositary. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of a tendering stockholder to withdraw its Shares. See Section 4. Subject to the applicable rules and regulations of the Commission and to applicable law, the Purchaser also expressly reserves the right, in its sole discretion, at any time and from time to time, (i) to delay acceptance for payment of, or, regardless of whether such Shares were theretofore accepted for payment, payment for, any Shares pending receipt of any regulatory approval specified in Section 15 or in order to comply in whole or in part with any other applicable law, (ii) to terminate the Offer and not accept for payment any Shares if any of the conditions referred to in Section 14 are not satisfied or any of the events specified in Section 14 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. The Purchaser reserves the right to modify the terms of the Offer, including without limitation, except as provided below, to extend the Offer beyond any scheduled expiration date, except that, without the consent of the Selling Shareholder, the Purchaser will not reduce the number of Shares sought in the Offer, reduce the Offer Price, modify or add to the conditions of the Offer referred to in Section 14 in a manner that is materially adverse to the holders of Shares or change the form of consideration payable in the Offer. The Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Purchaser to pay the consideration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer, and (ii) the Purchaser may not delay acceptance for payment of, or payment for (except as provided in clause (i) of the first sentence of the second preceding paragraph), any Shares upon the occurrence of any of the conditions specified in Section 14 without extending the period of time during which the Offer is open. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw such stockholder's Shares. Any such extension, delay, termination, waiver or amendment will be followed as promptly as practicable by public announcement thereof, with such announcement in the case of an extension to be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act), which require that material changes be promptly disseminated to stockholders in a manner reasonably designed to inform them of such changes and without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release to the Dow Jones News Service or as otherwise may be required by applicable law. If the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Purchaser will extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The Company has provided the Purchaser with the Company's list of holders of the Shares and security position listings in respect of the Shares for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase, the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares whose names appear on the Company's list of holders of the Shares and will be furnished, for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the list of holders of the Shares or, if applicable, who are listed as participants in a clearing agency's security position listing. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or 3 6 amendment), the Purchaser will purchase, by accepting for payment, and will pay for, all Shares validly tendered prior to the Expiration Date (and not properly withdrawn in accordance with Section 4) promptly after the later to occur of (i) the Expiration Date and (ii) the satisfaction or waiver of the conditions set forth in Section 14. Subject to applicable rules of the Commission, the Purchaser expressly reserves the right, in its discretion, to delay acceptance for payment of, or payment for, Shares pending receipt of any regulatory approvals specified in Section 15. Notwithstanding the fact that the Purchaser reserves the right to assert the non-occurrence of a condition set forth in Section 14, following acceptance for payment of Shares but prior to payment for Shares, in order to delay payment or cancel its obligation to pay for properly tendered Shares, the Purchaser understands that all conditions to the Offer, other than receipt of necessary regulatory approvals, must be satisfied or waived prior to acceptance for payment of Shares. In addition, if, following acceptance for payment of Shares, the Purchaser asserts such a regulatory approval as a condition and does not promptly pay for Shares tendered, the Purchaser will promptly return such Shares. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares (the "Share Certificates") or timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Shares, if such procedure is available, into the Depositary's account at The Depositary Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3, (ii) the Letter of Transmittal (or facsimile thereof), properly completed and duly executed with any required signature guarantees, or an Agent's Message (as defined below) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary forming a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the 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 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. Payment for Shares accepted pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from the Purchaser and transmitting payments to such tendering stockholders whose Shares have been accepted for payment. Under no circumstances will interest on the purchase price for Shares be paid by the Purchaser, regardless of any delay in making such payment or extension of the Expiration Date. Upon the deposit of funds with the Depositary for the purpose of making payments to tendering stockholders, the Purchaser's obligation to make such payment shall be satisfied, and tendering stockholders must thereafter look solely to the Depositary for payment of amounts owed to them by reason of the acceptance for payment of Shares pursuant to the Offer. If any tendered Shares are not accepted for payment for any reason pursuant to the terms and conditions of the Offer, or if Share Certificates are submitted evidencing more Shares than are tendered, Share Certificates evidencing unpurchased Shares will be returned, without expense to the tendering stockholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedure set forth in Section 3, such Shares will be credited to an account maintained at the Book-Entry Transfer Facility), as promptly as practicable following the expiration, termination or withdrawal of the Offer. If, prior to the Expiration Date, the Purchaser increases the consideration to be paid per Share pursuant to the Offer, the Purchaser will pay such increased consideration for all such Shares purchased pursuant to the Offer, whether or not such Shares were tendered prior to such increase in consideration. The Purchaser reserves the right to assign to any of its direct or indirect wholly-owned subsidiaries the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such assignment will not relieve the Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 4 7 3. PROCEDURES FOR TENDERING SHARES. VALID TENDER OF SHARES. In order for Shares to be validly tendered pursuant to the Offer, the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares, and any other required documents, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date and either (i) the Share Certificates evidencing tendered Shares must be received by the Depositary at such address or Shares must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary, in each case prior to the Expiration Date, or (ii) the tendering stockholder must comply with the guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect to the Shares at the Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Shares may be effected through book-entry transfer at the Book-Entry Transfer Facility, the Letter of Transmittal or a facsimile thereof, with any required signature guarantees, or an Agent's Message, and any other required documents, must, in any case, be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the tendering stockholder must comply with the guaranteed delivery procedures described below. Delivery of documents to the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures does not constitute delivery to the Depositary. SIGNATURE GUARANTEE. Signatures on all Letters of Transmittal must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) which is a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (an "Eligible Institution"), unless the Shares tendered thereby are tendered (i) by a registered holder of Shares who has not completed either 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 Share Certificate is registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made, or a Share Certificate not accepted for payment or not tendered is to be returned, to a person other than the registered holder(s), then the Share Certificate must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the Share Certificate, with the signature(s) on such Share Certificate or stock powers guaranteed as described above. See Instructions 1 and 5 to the Letter of Transmittal. GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's Share Certificates are not immediately available or time will not permit all required documents to reach the Depositary prior to the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, such Shares may nevertheless be tendered if all the following conditions are satisfied: (i) the tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Purchaser herewith, is received by the Depositary as provided below prior to the Expiration Date; and 5 8 (iii) the Share Certificates for all tendered Shares, in proper form for transfer, or a Book-Entry Confirmation, together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantee (or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by such Letter of Transmittal, are received by the Depositary within three American Stock Exchange (the "AMEX") trading days after the date of execution of the Notice of Guaranteed Delivery. Any Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery. Notwithstanding any other provision hereof, payment for Shares purchased pursuant to the Offer will, in all cases, be made only after timely receipt by the Depositary of (i) the Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the delivery of such Shares, (ii) a properly completed and duly executed Letter of Transmittal or facsimile thereof (or, in the case of a book-entry transfer, an Agent's Message) and (iii) any other documents required by the Letter of Transmittal. DETERMINATION OF VALIDITY. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tendered Shares pursuant to any of the procedures described above will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding on all parties. The Purchaser reserves the absolute right to reject any or all tenders of any Shares determined by it not to be in proper form or if the acceptance for payment of, or payment for, such Shares may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right, in its sole discretion, to waive any of the conditions of the Offer or any defect or irregularity in any tender with respect to Shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. APPOINTMENT AS PROXY. By executing a Letter of Transmittal as set forth above, a tendering stockholder irrevocably appoints designees of the Purchaser as such stockholder's proxies, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Purchaser (and any and all non-cash dividends, distributions, rights, other Shares or other securities issued or issuable in respect of such Shares on or after May 19, 1998). All such proxies shall be considered coupled with an interest in the tendered Shares. This appointment will be effective if, when, and only to the extent that, the Purchaser accepts such Shares for payment pursuant to the Offer. Upon such acceptance for payment, all prior proxies given by such stockholder with respect to such Shares and other securities will, without further action, be revoked, and no subsequent proxies may be given. The designees of the Purchaser will, with respect to the Shares and other securities for which the appointment is effective, be empowered to exercise all voting and other rights of such stockholder as they in their sole discretion may deem proper at any annual, special, adjourned or postponed meeting of the Company's stockholders, by written consent or otherwise, and the Purchaser reserves the right to require that, in order for Shares or other securities to be deemed validly tendered, immediately upon the Purchaser's acceptance (for payment of such Shares, the Purchaser must be able to exercise full voting rights with respect to such Shares and other securities. BACKUP WITHHOLDING. TO PREVENT UNITED STATES FEDERAL BACKUP WITHHOLDING TAX WITH RESPECT TO PAYMENT TO CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING TAX BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED AS PART OF THE LETTER OF TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES WITH RESPECT TO A STOCKHOLDER, THE DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH STOCKHOLDER. SEE SECTION 5 OF THIS OFFER TO PURCHASE AND INSTRUCTION 9 TO THE LETTER OF TRANSMITTAL. 6 9 The Purchaser's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer. 4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are irrevocable except that such Shares may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after July 18, 1998, or at such later time as may apply if the Offer is extended. If the Purchaser extends the Offer, is delayed in its acceptance for payment of Shares or is unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as described in this Section 4. Any such delay will be an extension of the Offer to the extent required by law. For a withdrawal to be effective, a written, telegraphic 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 to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of the Shares, if different from that of the person who tendered such Shares. If Share Certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share Certificates, the serial numbers shown on such Share Certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and must otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals of tendered Shares may not be rescinded (without the Purchaser's consent), and any Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, which determination will be final and binding. None of 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. Any Shares properly withdrawn will thereafter be deemed to not have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered at any time prior to the Expiration Date by following any of the procedures described in Section 3. 5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares pursuant to the Offer by a stockholder that is a citizen or resident of the United States, a partnership or corporation created in or under the laws of the United States or any state thereof (including the District of Columbia), an estate, the income of which is subject to U.S. federal income taxation regardless of its source 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 (a "U.S. Holder") 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. In general, a U.S. Holder will recognize gain or loss for United States federal income tax purposes equal to the difference, if any, between the amount realized from the sale of Shares and such U.S. Holder's adjusted tax basis in such Shares. Assuming that the Shares constitute a capital asset in the hands of the U.S. Holder, such gain or loss will be capital gain or loss and in the case of a noncorporate U.S. Holder, the maximum marginal U.S. federal income tax rate applicable to such gain will be lower than the maximum marginal U.S. federal income tax rate applicable to ordinary income if such U.S. Holder's holding period for such Shares exceeds one year and will be further reduced if such Shares were held for more than 18 months. 7 10 The foregoing discussion may not be applicable to certain types of stockholders, including stockholders who acquired Shares pursuant to the exercise of stock options or otherwise as compensation, holders that are not U.S. Holders and stockholders that are otherwise subject to special tax rules, such as financial institutions, insurance companies, dealers or traders in securities or currencies, tax-exempt entities, persons that hold Shares as a position in a "straddle" or as part of a "hedging" or "conversion" transaction for tax purposes and persons that have a "functional currency" other than the United States dollar. INFORMATION REPORTING AND BACKUP WITHHOLDING TAX. United States information reporting will apply to proceeds from the sale of Shares paid within the United States to a U.S. Holder (other than an "exempt recipient"). As noted in Section 3, a stockholder (other than an "exempt recipient," including a corporation and a non-U.S. Holder that provides appropriate certification (if the payor does not have actual knowledge that such certificate is false)) that receives cash in exchange for Shares may be subject to U.S. federal backup withholding tax at a rate equal to 31%, unless such stockholder provides its taxpayer identification number and certifies that such stockholder is not subject to backup withholding tax by submitting a completed Substitute Form W-9 to the Depositary. Accordingly, each stockholder should complete, sign and submit the Substitute Form W-9 included as part of the Letter of Transmittal in order to avoid the imposition of such backup withholding tax. THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION AND IS BASED UPON LAWS, REGULATIONS, RULINGS AND DECISIONS NOW IN EFFECT, ALL OF WHICH ARE SUBJECT TO CHANGE (POSSIBLY RETROACTIVELY). STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND STATE, LOCAL AND FOREIGN TAX LAWS. 6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and traded on the AMEX, the Philadelphia Stock Exchange and the Pacific Stock Exchange under the symbol "GFS.A". The following table sets forth, for the periods indicated, the high and low sales prices per Share on the AMEX as reported by the Dow Jones News Service.
MARKET PRICE ---------------- HIGH LOW ------ ------ FISCAL YEAR ENDED FEBRUARY 22, 1997: First Quarter............................................ $33.50 $30.38 Second Quarter........................................... 36.13 33.13 Third Quarter............................................ 35.50 32.38 Fourth Quarter........................................... 36.13 31.88 FISCAL YEAR ENDED FEBRUARY 28, 1998: First Quarter............................................ 33.75 31.00 Second Quarter........................................... 33.94 32.19 Third Quarter............................................ 33.94 28.38 Fourth Quarter........................................... 36.63 30.13 FISCAL YEAR ENDED FEBRUARY 27, 1999: First Quarter (through May 18, 1998)..................... 39.94 34.75
On May 18, 1998, the last full trading day prior to the public announcement of the Offer and the date of this Offer to Purchase, the reported closing sales price of the Shares on the AMEX was $37.69 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. 8 11 The table below sets forth the aggregate per share amount of dividends declared on the Shares during the periods indicated:
PER SHARE DIVIDEND AMOUNT --------------- Fiscal Year ended February 22, 1997......................... $0.76 Fiscal Year ended February 28, 1998......................... 0.78 Fiscal Year ended February 27, 1999 -- First Quarter (through May 23, 1998).................................... 0.20
On April 16, 1998, the Board of Directors of the Company announced that it had voted to increase the quarterly dividend from 19.5 cents to 20.0 cents per share on all classes of common stock of the Company, including the Shares. 7. CERTAIN INFORMATION CONCERNING THE COMPANY AND THE SELLING SHAREHOLDER. The Company. The information concerning the Company contained in this Offer to Purchase, including financial information, has been taken from or based upon publicly available documents and records on file with the Commission and other public sources. The Purchaser does not assume 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 the Purchaser. The Purchaser has not received projections or similar forward looking information from the Company. The Company and its subsidiaries operate a chain of 179 retail stores selling food, drugs and general merchandise in Washington, D.C., Maryland, Virginia, Delaware, New Jersey and Pennsylvania. The majority of the Company's stores are located in shopping centers. The Company also operates freestanding drug stores in Bethesda and Salisbury, Maryland and Arlington, Virginia. The Company is a Delaware corporation. The address of its principal executive offices is 6300 Sheriff Road, Landover, Maryland 20785. The telephone number of the Company at such offices is (301) 341-4100. Capital Structure. The Company currently has three classes of common stock: (i) the Class AC Shares, (ii) the Class AL Shares and (iii) the Shares. All such classes of common stock have the same rights and privileges except that the Class AC Shares and the Class AL Shares each have voting rights and the Shares have no voting rights. Currently, there are outstanding 125,000 Class AC Shares (all of which are owned by the Selling Shareholder) and 125,000 Class AL Shares. Pursuant to the Certificate of Incorporation of the Company, the Class AC Shares have the right to elect five of the nine directors of the Board of Directors of the Company, and the Class AL Shares have the right to elect four of the nine directors of the Board of Directors of the Company. All of the Class AC Shares are owned by the Selling Shareholder. All of the Class AL Shares are owned by Sainsbury. In addition, according to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1998, Sainsbury owns 11,779,931 Shares, or approximately 20% of the outstanding Shares. Financial Information. Set forth below is certain selected consolidated financial information relating to the Company and its subsidiaries which has been excerpted or derived from the financial statements contained in the Company's Annual Reports on Form 10-K for the fiscal years ended February 28, 1998 and February 22, 1997. More comprehensive financial information is included in these reports and other documents filed by the Company with the Commission. The financial information that follows is qualified in its entirety by reference to these reports and other documents, including the financial statements and related notes contained therein. These reports and other documents may be inspected at, and copies may be obtained from, the same places and in the manner set forth under "Available Information". 9 12 GIANT FOOD INC. SELECTED CONSOLIDATED FINANCIAL DATA
FISCAL YEAR ENDED -------------------------------------------- FEBRUARY 28, FEBRUARY 22, FEBRUARY 24, 1998(1) 1997 1996 ------------ ------------ ------------ (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) STATEMENT OF OPERATIONS DATA: Sales.................................................. $4,230,640 $3,880,959 $3,860,579 Costs and expenses..................................... 4,113,488 3,740,504 3,692,752 Income before income taxes............................. 117,152 140,455 167,827 Net income............................................. 71,190 85,504 102,153 Earnings per share(2).................................. 1.19 1.43 1.72 BALANCE SHEET DATA (AT PERIOD END): Total current assets................................... 522,073 557,876 546,271 Property, plant and equipment, net..................... 841,049 781,601 728,895 Total assets........................................... 1,521,882 1,503,525 1,447,139 Total current liabilities.............................. 348,693 359,117 337,242 Total long-term debt................................... 183,175 183,992 188,822 Total other liabilities................................ 87,401 86,763 98,318 Total stockholders' equity............................. 902,613 873,653 822,757
- --------------- (1) The fiscal year ended February 28, 1998 includes 53 weeks compared to 52 weeks for the fiscal years ended February 22, 1997 and February 24, 1996. (2) Amounts are on a non-diluted basis for all outstanding shares of common stock. Available Information. The Company is subject to the information and reporting requirements of the Exchange Act and is required to file reports and other information with the Commission relating to its business, financial condition and other matters. Information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities, any material interests of such persons in transactions with the Company and other matters is required to be disclosed in reports filed with the Commission. These reports and other information should be available for inspection at the public reference facilities of the Commission located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and also should be available for inspection and copying at prescribed rates at the following regional offices of the Commission: 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. Reports and other information concerning the Company should also be available for inspection at the offices of the AMEX, 86 Trinity Place, New York, New York 10006-1881. 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. THE SELLING SHAREHOLDER. The information concerning the Selling Shareholder contained in this Offer to Purchase has been provided by the Selling Shareholder or has been taken from or based upon publicly available documents and other public sources. The Purchaser does not assume any responsibility for the accuracy or completeness of the information concerning the Selling Shareholder contained in such documents or for any failure by the Selling Shareholder to disclose events which may have occurred or may affect the significance or accuracy of any such information but which are unknown to the Purchaser. 10 13 The Purchaser has been informed by the Selling Shareholder that the Selling Shareholder was established pursuant to the will of Israel Cohen, the son of one of the founders of the Company. The outstanding capital stock of the Selling Shareholder consists of 125,000 shares of non-voting common stock and 500 shares of voting common stock. All of the non-voting common stock of the Selling Shareholder is owned by the Israel Cohen Estate and each of the following individuals owns 100 shares of the voting common stock of the Selling Shareholder: Pete L. Manos (the Chairman of the Board, President and Chief Executive Officer of the Company), Alvin Dobbin (a Director of the Company), David W. Rutstein (the Senior Vice President-General Counsel of the Company), Roger D. Olson (the Senior Vice President-Labor Relations and Personnel of the Company) and Lillian Cohen Solomon, the sister of Mr. Cohen. The holders of the voting common stock of the Selling Shareholder have the exclusive right to exercise all the voting rights with respect to the Class AC Shares of the Company owned by the Selling Shareholder. The Certificate of Incorporation of the Selling Shareholder provides that the Selling Shareholder may sell the Class AC Shares only when authorized by a resolution adopted by holders of 60% of the voting common stock of the Selling Shareholder, and such sale must be part of a transaction pursuant to which all holders of Shares are afforded the opportunity to participate in the sale on equal terms with the Selling Shareholder. The Purchaser has been informed by the Selling Shareholder that the holders of the voting common stock of the Selling Shareholder, by unanimous vote, have adopted a resolution authorizing the sale of the Class AC Shares pursuant to the Stock Purchase Agreement. 8. CERTAIN INFORMATION CONCERNING THE PURCHASER. The Purchaser is a public company with limited liability incorporated under the laws of The Netherlands with its corporate seat in Zaandam (municipality Zaanstad), The Netherlands, with interests in food retailing in The Netherlands, various other European countries, the United States, several countries in Asia and in several countries in Latin America. The Purchaser's common shares are listed on the AEX-Stock Exchange and the Swiss Exchange. American Depositary Shares representing the Purchaser's common shares trade on the New York Stock Exchange, Inc. under the symbol "AHO". The principal executive offices of the Purchaser are located at Albert Heijnweg 1, 1507 EH Zaandam, The Netherlands. The telephone number of the Purchaser at such offices is 011-31-75-659-5648 (Investor Relations). The Purchaser 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 the Purchaser is set forth in the Purchaser's Annual Report on Form 20-F for the fiscal year ended December 28, 1997 (the "Purchaser 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 (except that since such reports are not filed through EDGAR, they are not publicly available through the Commission's home page). Set forth below are certain selected consolidated financial data with respect to the Purchaser and its consolidated subsidiaries for the Purchaser's last three fiscal years (collectively, the "Purchaser Financial Statements"), excerpted or derived from the Purchaser Annual Report. The financial information set forth below is derived from, and should be read in conjunction with, and is qualified entirely by reference to, the Purchaser Financial Statements and notes thereto prepared in accordance with Item 18 of Form 20-F and included in the Purchaser Annual Report filed with the Commission, which is incorporated herein by reference. The Purchaser Financial Statements and related notes may be inspected at, and copies may be obtained from, the same places and in the manner set forth in Section 7 (except that since such reports are not filed through EDGAR, they are not publicly available through the Commission's home page). The Purchaser Financial Statements are presented in Dutch Guilders ("Guilders" or "NLG") and are prepared in accordance with accounting principles generally accepted in The Netherlands ("Dutch GAAP"), which (as described below) differ in certain respects from generally accepted accounting principles in the United States ("U.S. GAAP"). In addition, as a significant portion of the Purchaser's business is based in the United States, exchange rate fluctuations between the Guilder and the U.S. dollar (the "Dollar") are among the factors influencing year-to-year comparability of consolidated earnings and equity. The weighted average 11 14 rate of the Guilder per Dollar utilized in the Purchaser Financial Statements was NLG 1.95, NLG 1.69 and NLG 1.61 for the fiscal years ended December 28, 1997, December 29, 1996 and December 31, 1995, respectively. The year-end rates of the Guilder per Dollar used in the preparation of the Purchaser Financial Statements as of December 28, 1997, December 29, 1996 and December 31, 1995 were NLG 2.00, NLG 1.75 and NLG 1.60, respectively. The rates used in the preparation of the Purchaser Financial Statements may vary in certain minor respects from the rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate"). As of May 15, 1998, the Noon Buying Rate was NLG 2.01 = U.S. $1.00. No representation is made that Guilders have been, could have been or could be converted into Dollars at that or any other rate. 12 15 KONINKLIJKE AHOLD N.V. SELECTED CONSOLIDATED FINANCIAL DATA
FISCAL YEAR ----------------------------- 1997 1996 1995 ------- ------- ------- (IN MILLIONS OF GUILDERS, EXCEPT PER SHARE AMOUNTS) CONSOLIDATED EARNINGS DATA Amounts in accordance with Dutch GAAP: Sales..................................................... 50,568 36,538 29,617 Net earnings(1)........................................... 934 632 457 Net earnings per common share(2).......................... 1.77 1.41 1.21 Approximate amounts in accordance with US GAAP: Net earnings(1)........................................... 712 517 410 Net earnings per common share(2).......................... 1.34 1.15 1.08
DEC. 28 DEC. 29 DEC. 28 1997 1996 1995 ------- ------- ------- (IN MILLIONS OF GUILDERS) CONSOLIDATED BALANCE SHEET DATA Amounts in accordance with Dutch GAAP: Total assets.............................................. 18,839 14,870 9,265 Borrowings, long-term portion............................. 3,916 3,122 1,302 Capitalized lease commitments, long-term portion.......... 1,494 1,222 826 Stockholders' equity...................................... 3,089 2,417 2,242 Approximate amounts in accordance with US GAAP: Total assets.............................................. 25,507 20,565 10,935 Stockholders' equity...................................... 9,593 8,114 3,779
- --------------- (1) Before dividends on Cumulative Preferred Financing Shares. (2) Adjusted for 3-for-1 stock split in July 1997. On May 12, 1998, the Purchaser announced that its consolidated sales for the first quarter of 1998 (which consisted of 16 weeks ended April 19, 1998) were NLG 16.1 million, a 14.6% (8.9% at a constant U.S. Dollar rate) increase over its consolidated sales for the first quarter of 1997 (which consisted of 16 weeks ended April 20, 1997). The differences between Dutch GAAP and U.S. GAAP which materially affect the Purchaser's reported net earnings and stockholders' equity are explained below. Goodwill: Under Dutch GAAP, the amount of goodwill included in the price of acquired companies is deducted from stockholders' equity (and minority interest when applicable) in the year of acquisition. Under U.S. GAAP, goodwill is capitalized and amortized over the estimated life, not to exceed 40 years. Pension cost: Under Dutch GAAP, pension costs are based on actual computed contributions to foundations. Under U.S. GAAP, pension costs are computed in accordance with the provisions of Statement of Financial Accounting Standard No. 87, "Employer's Accounting for Pensions" and include current service costs, interest costs and amortization of prior service costs. Revaluation of Ahold Vastgoed B.V.: Under Dutch GAAP, the assets of Ahold Vastgoed B.V., a real estate subsidiary of the Purchaser, were revalued in 1988. The resulting unrealized gain was added to the revaluation reserve, which is part of stockholders' equity. Upon selling revalued real estate, the relevant part of the revaluation reserve is considered realized and transferred to the statement of earnings. The revaluation 13 16 amount is depreciated over the life of the related asset. Such one-time revaluations are not allowed under U.S. GAAP. During the last five years, neither the Purchaser nor to the best of its knowledge, any of the persons listed in Schedule I hereto (i) has been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, Federal or state securities laws or finding any violation of such laws. Except as described in this Offer to Purchase, (i) neither the Purchaser nor, to the best of its knowledge, any of the persons listed in Schedule I to this Offer to Purchase or any associate or majority-owned subsidiary of the Purchaser beneficially owns or has any right to acquire, directly or indirectly, any equity securities of the Company and (ii) neither the Purchaser nor, to the best of its knowledge, any of the persons or entities referred to above or any director, executive officer or subsidiary of any of the foregoing has effected any transaction in such equity securities during the past 60 days. Except as described in this Offer to Purchase, neither the Purchaser nor, to the best of its knowledge, any of the persons listed in Schedule I to this Offer to Purchase has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, since February 26, 1995, neither the Purchaser nor, to the best of its knowledge, any of the persons listed on Schedule I hereto has had any business relationship or transaction with the Company or any of its executive officers, directors or affiliates that is required to be reported under the rules and regulations of the Commission applicable to the Offer. Except as set forth in this Offer to Purchase, since February 26, 1995, there have been no contacts, negotiations or transactions between the Purchaser or any of its subsidiaries or, to the best knowledge of 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 Class AC Shares from the Selling Shareholder, all of the Class AL Shares from Sainsbury and all of the outstanding Shares pursuant to the Offer and to pay related fees and expenses is expected to be approximately $2.7 billion. The Purchaser intends to obtain such funds primarily through a loan facility to be provided by ABN AMRO Bank nv (the "Bank") (the "1998 Credit Facility") and the balance through borrowings under an existing $1 billion multicurrency revolving credit agreement dated as of December 18, 1996 between the Purchaser, Ahold U.S.A., Inc. and a syndicate of banks headed by the Bank (the "1996 Credit Facility"). The Purchaser has received a commitment letter (the "Commitment Letter") from the Bank pursuant to which the Bank has agreed to lend to the Purchaser up to $2.0 billion. The 1998 Credit Facility will expire 364 days after signing. Borrowings under the 1998 Credit Facility will bear interest at the rate of LIBOR plus 15 basis points. The 1996 Credit Facility expires on December 18, 2002. Borrowings under the 1996 Credit Facility bear interest at LIBOR plus 10 basis points. The 1996 Credit Facility contains certain restrictions on, among other things, the creation of liens and certain financial covenants which require the Purchaser to maintain a specified (i) ratio of operating earnings before income taxes plus net interest expense to net interest expense and (ii) ratio of interest bearing debt minus subordinated loans minus cash to total capital accounts plus goodwill, associated with a previous acquisition. The 1996 Credit Facility also contains certain events of default including (i) the liquidation or bankruptcy of the Purchaser or any of its material subsidiaries, (ii) changes in the character of its business and (iii) the lease, sale or disposition of all or any of its assets. In addition, the 14 17 Purchaser has agreed to pay the Bank certain fees and to reimburse the Bank for certain expenses and to provide certain indemnities, as is customary for commitments of the type described herein. The foregoing summary of the source and amount of funds is subject to the preparation and completion of a definitive credit agreement for the 1998 Credit Facility and is qualified in its entirety by reference to the text of the Commitment Letter and the 1996 Credit Facility, copies of which have been filed as exhibits to the Tender Offer Statement on Schedule 14D-1 relating to the Offer which the Purchaser has filed with the Commission (the "Schedule 14D-1"). The Commitment Letter and the 1996 Credit Facility may be inspected at, and copies may be obtained from, the same places and in the manner set forth in Section 7. If and when definitive agreements relating to the 1998 Credit Facility are executed, copies will be filed as exhibits to an amendment to the Schedule 14D-1. 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) if such credit is secured directly or indirectly by margin stock. The Purchaser believes that the financing of the acquisition of the Shares will be in full compliance with, or not subject to, the margin regulations. The Purchaser currently contemplates that it will refinance the borrowings incurred as described above through the issuance of equity securities, subject to market conditions and available terms. No assurance can be given that market conditions or available terms will render it desirable to proceed with any such issuance of its equity securities. 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. BACKGROUND TO OFFER. On March 10, 1997, a representative of PaineWebber Incorporated ("PaineWebber"), the financial advisor to the Selling Shareholder, contacted the Purchaser to inquire whether the Purchaser would be interested in acquiring the Class AC Shares and the Shares and was informed that the Purchaser would be interested in an acquisition of all of the capital stock in the Company. On May 3, 1997, Alvin Dobbin, then the Executive Vice President of the Company and the Vice President and Treasurer of the Selling Shareholder, Cees H. van der Hoeven, the President and Chief Executive Officer of the Purchaser, and Robert G. Tobin, then Chief Executive Officer of The Stop & Shop Companies, Inc., a subsidiary of the Purchaser, met while attending an industry conference and discussed the interest of the Purchaser in an acquisition of the Company. Subsequently, Mr. Tobin and Pete L. Manos, the Chairman of the Board, President and Chief Executive Officer of the Company and the Chairman of the Board and President of the Selling Shareholder, had occasional telephone conversations regarding such possible acquisition. At an industry conference in June 1997, Mr. van der Hoeven spoke to Thomas Vyner, then Vice Chairman of Sainsbury about the possibility of the Purchaser's acquiring Sainsbury's interest in the Company. Mr. Vyner responded that Sainsbury was having a meeting in September regarding its U.S. strategy and that he would get back to Mr. van der Hoeven thereafter. In July 1997, Merrill Lynch, the financial advisor to the Purchaser, made a presentation to the Purchaser regarding, among other things, the potential acquisition of the Company by the Purchaser. In October 1997, Mr. van der Hoeven spoke with David Bremner, the Deputy Group Chief of Sainsbury, but was informed that Sainsbury was not interested in selling its interest in the Company at such time. On October 10, 1997, Mr. Tobin and Mr. Manos met and each expressed interest in considering a transaction at some point in the future. On October 29, 1997, Mr. Manos telephoned Mr. Tobin to inform him that the Selling Shareholder was prepared to enter into active negotiations with the Purchaser. As a result, a meeting was arranged in November among Mr. van der Hoeven, Mr. Tobin, Robert Zwartendijk, an Executive Vice President of the Purchaser and the Chief Executive Officer of Ahold U.S.A., Inc., and Mr. Manos to discuss a possible acquisition by the Purchaser. At such meeting, Mr. van der Hoeven expressed the Purchaser's continued interest in such an acquisition but only if it included the acquisition of the Class AL Shares owned by Sainsbury and requested that the Selling Shareholder inquire whether Sainsbury would be willing to sell the Class AL Shares to the Purchaser. 15 18 During December 1997 and January 1998, representatives of the Purchaser and the Selling Shareholder had telephone conversations regarding possible acquisition structures. On January 19, 1998, while attending another industry conference, Mr. van der Hoeven, Mr. Zwartendijk and Mr. Tobin met with Mr. Manos to discuss further a possible acquisition transaction. Subsequently, a meeting was held on January 28, 1998, among Paul J. Butzelaar, the Senior Vice President and General Counsel of the Purchaser, David W. Rutstein, the Senior Vice President--General Counsel of the Company and the Vice President of the Selling Shareholder, representatives of PaineWebber and legal advisors to the Purchaser, the Selling Shareholder and the Special Committee. At this meeting the legal structure of, the documentation required for and other aspects of a possible transaction were discussed. Subsequent to such meeting, Messrs. Butzelaar and Rutstein had several conversations further addressing the issues raised at the January 28(th) meeting. On February 2, 1998, a confidentiality agreement was entered into by the Purchaser and the Selling Shareholder. Subsequent thereto, representatives of the Purchaser conducted due diligence with respect to certain matters. In addition, during February further meetings were held among Mr. Butzelaar, Mr. Rutstein, the legal advisors to the Purchasers and the financial and legal advisors to the Selling Shareholder and the Special Committee at which the structure of the transaction and other issues were discussed. On March 26, a meeting was held among the representatives of the Purchaser, the Selling Shareholder and the Special Committee to discuss draft documentation that had previously been distributed by the Purchaser's legal advisors. Subsequent to such meeting, representatives of PaineWebber, Wasserstein and Merrill Lynch had several conversations regarding the transaction. At a meeting on March 31, 1998, representatives of Merrill Lynch indicated to representatives of PaineWebber and Wasserstein that the Purchaser would be willing to offer $41.25 for the Class AC Shares and the Shares, subject to the condition that the Purchaser is able to acquire the Class AL Shares from Sainsbury. The representatives of PaineWebber and Wasserstein stated that they believed their clients would not accept such an offer. On April 7, 1998, representatives of Merrill Lynch met with representatives of PaineWebber and Wasserstein, at which meeting PaineWebber and Wasserstein made a presentation regarding the Company's financial results, stock trading history, northern division and cost savings initiatives. On April 27, 1998, the Purchaser and the Selling Shareholder executed an exclusivity agreement pursuant to which the Selling Shareholder agreed from the date of such agreement until May 31, 1998, not to solicit or encourage any proposal to acquire the Class AC Shares, any tender or exchange offer for the Company's common shares, or any merger or similar transaction involving the Company, except as otherwise specifically permitted thereby. Subsequently on such date, at a meeting among the financial advisors to the Purchaser, the Selling Shareholder and the Special Committee, representatives of Merrill Lynch indicated that the Purchaser would be willing to increase the price it would pay for the Class AC Shares and the Shares to $41.75 per share. The financial advisors to the Selling Shareholder and the Special Committee responded that such price was less than what the Selling Shareholder and the Special Committee were willing to accept. On April 28, 1998, Mr. Zwartendijk proposed in a telephone call to Mr. Manos an increased offer price of $42.00 per share. On April 29, 1998, Messrs. Butzelaar and Rutstein, the legal advisors to the Purchaser, the Selling Shareholder and the Special Committee and a representative of Merrill Lynch met to continue negotiation of the draft agreements. During a portion of such meeting, Mr. Manos and Mr. Zwartendijk participated by conference telephone. After some discussion between the parties, Mr. Zwartendijk and Mr. Manos agreed to a price of $43.50 per share for the Class AC Shares and the Class A Shares but conditioned upon the Purchaser's acquisition of the Class AL Shares from Sainsbury and the approval by the Executive and Supervisory Boards of the Purchaser, the Board of Directors of the Selling Shareholder and the Special Committee. It was agreed that Mr. van der Hoeven and Mr. Manos should separately call Lord David Sainsbury, the Chairman of Sainsbury, to arrange separate meetings with him to discuss an acquisition by the Purchaser of Sainsbury's interest in the Company. Subsequently, Mr. van der Hoeven and Mr. Manos separately called Lord Sainsbury and arranged separate meetings with him in London on May 5, 1998. 16 19 On May 4, 1998, Mr. van der Hoeven met with Mr. Manos and Mr. Rutstein at an industry conference to discuss the upcoming meetings with Lord Sainsbury. At the May 5th meetings with Lord Sainsbury, Mr. van der Hoeven and Mr. Manos were each informed by Lord Sainsbury that Sainsbury was not interested in selling its interest in the Company to the Purchaser at such time. After such meetings, Mr. van der Hoeven, Mr. Manos and Mr. Rutstein met and Mr. Manos asked Mr. van der Hoeven whether the Purchaser would be willing to drop its condition that it acquire the Class AL Shares. Mr. van der Hoeven indicated that he could not respond to such request without further discussions with the Purchaser's Executive Board and Supervisory Board. On May 11, 1998, the Executive Board of the Purchaser met and determined to recommend to the Supervisory Board of the Company that the Purchaser proceed with an acquisition of the Class AC Shares and the Shares not conditioned upon its acquisition of the Class AL Shares from Sainsbury. On May 12, the Supervisory Board of the Purchaser authorized the Purchaser to proceed with such an acquisition but subject to approval of the final terms by the Executive Board of the Purchaser. Subsequent to such meeting, Mr. Zwartendijk called Mr. Manos to inform him of the Supervisory Board's decision. In such call, Mr. Zwartendijk further informed Mr. Manos that the Purchaser was unwilling to pay the $43.50 per share price it would have been willing to pay if Sainsbury had agreed to participate in the transaction. In addition, Mr. Zwartendijk stated that the tender offer would need to be subject to a 70% minimum tender condition. Mr. Zwartendijk further informed Mr. Manos that if an agreement were reached between the parties it would have to be approved by the Executive Board of the Purchaser at a meeting scheduled to be held on Monday, May 18th. Mr. Manos indicated that he would have to discuss Mr. Zwartendijk's proposal with the rest of the directors of the Selling Shareholder and with the Special Committee. On May 13, 1998, Mr. Zwartendijk proposed to Mr. Manos a price of $43.00 per share and a 65% minimum tender condition, subject to approval, in the case of the Purchaser, by its Executive Board, and in the case of the Selling Shareholder, by its Board of Directors, as well as the Special Committee. On May 14th, Mr. Manos phoned Mr. Zwartendijk and indicated that the $43.00 per share price would be acceptable if the Purchaser would agree that, if it were to acquire the Class AL Shares during the pendency of the tender offer, the price to be paid for the Class AC Shares and the Shares in the tender offer would be increased to $43.50. On Friday, May 15, Mr. Butzelaar informed Mr. Rutstein by telephone that Mr. Manos' proposal would be acceptable to the Purchaser. During the period from May 13 through May 18, 1998, the parties and their financial and legal advisors continued to negotiate the terms of the proposed stock purchase agreement. On Monday, May 18, 1998, the Executive Board of the Purchaser met to consider the proposed transaction described in this Offer to Purchase and approved the transaction. Later that evening the Purchaser was informed that the Board of Directors of the Selling Shareholder and the Special Committee also had approved the proposed transaction. On the morning of May 19, the Purchaser and the Selling Shareholder executed and delivered the Stock Purchase Agreement. Subsequently, on May 19, Mr. van der Hoeven informed Lord Sainsbury by telephone that the Purchaser would announce its agreement to acquire the Class AC Shares and Offer later that day even if Sainsbury did not expect to participate in the Offer or otherwise sell its interest in the Company to the Purchaser. Lord Sainsbury informed Mr. van der Hoeven that Sainsbury would be willing to tender its Shares into the Offer if the Offer Price were increased to $43.50 and if the Purchaser would agree to pay $100 million for the Class AL Shares held by Sainsbury. Mr. van der Hoeven said that he would need to consult with the other members of the Executive Board of the Purchaser and its advisors. After discussing Lord Sainsbury's proposal with other members of the Executive Board and the Purchaser's financial and legal advisors, Mr. van der Hoeven called Lord Sainsbury and accepted his proposal. As a result of Sainsbury's agreement to participate in the transaction, the Purchaser increased the price to be paid for the Class AC Shares pursuant to the Offer to $43.50 per share and agreed to waive the 65% minimum tender condition. Subsequently, the representatives of the Purchaser revised the documents relating to the Offer to reflect the Purchaser's understanding with Sainsbury, the increased Offer Price and the elimination of the minimum tender condition. 17 20 CONTACTS WITH THE COMPANY. Confidentiality Agreement. The following is a summary of the Confidentiality Agreement dated as of February 2, 1998 between the Purchaser and the Selling Shareholders (the "Confidentiality Agreement"). The summary is qualified in its entirety by reference to the Confidentiality Agreement, a copy of which has been filed with the Commission as an exhibit to the Schedule 14D-1. The Confidentiality Agreement can be inspected at, and copies may be obtained from, the same places and in the manner set forth in Section 7. Under the Confidentiality Agreement, the Purchaser agreed to use information furnished by the Selling Shareholder and the Company that is not otherwise generally available to the public (other than as a result of disclosure by the Purchaser or its representatives) (the "Received Material") exclusively for the purpose of evaluating an acquisition by the Purchaser from the Selling Shareholder of the Class AC Shares. In addition, the Purchaser agreed not to disclose any of the Received Materials other than under certain circumstances. Exclusivity Agreement. The following is a summary of the Letter Agreement dated April 27, 1998, between the Purchaser and the Selling Shareholder regarding exclusivity (the "Exclusivity Agreement"). The summary is qualified in its entirety by reference to the Exclusivity Agreement, a copy of which has been filed with the Commission as an exhibit to the Schedule 14D-1. The Exclusivity Agreement may be inspected at, and copies may be obtained from, the same places and in the manner set forth in Section 7. Under the Exclusivity Agreement, the Selling Shareholder agreed that from the date of the Exclusivity Agreement until May 31, 1998, neither it nor any of its agents would, directly or indirectly, take any action to enter into, solicit or otherwise encourage (i) any proposal to acquire any of the Class AC Shares, a substantial amount of the assets of the Company or more than 10% of any class of equity securities, (ii) any tender or exchange offer, or (iii) any merger, consolidation or similar transaction. However, pursuant to the Exclusivity Agreement, the Selling Shareholder could, in response to an unsolicited acquisition proposal from J Sainsbury (USA) Holdings Inc. or any affiliate thereof (collectively the "Sainsbury Group"), (i) enter into negotiations with the Sainsbury Group if the Selling Shareholder determined that the unsolicited proposal from the Sainsbury Group was superior to the proposal of the Purchaser and that failing to consider the proposal from the Sainsbury Group would be a breach of fiduciary duty by the Board of Directors of the Selling Shareholder and (ii) after notice to the Purchaser, enter into an acquisition agreement with the Sainsbury Group if the Selling Shareholder and the Purchaser are unable to enter into a stock purchase agreement meeting certain requirements. 11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; STOCK PURCHASE AGREEMENT; SAINSBURY AGREEMENT. PURPOSE OF THE OFFER. The purpose of the Offer and the Purchaser's acquisition of the Class AC Shares pursuant to the Stock Purchase Agreement and of the Class AL Shares pursuant to the agreement to be entered into with Sainsbury (the "Sainsbury Agreement") is to enable the Purchaser to acquire control of the Company's Board of Directors and the entire equity interest in the Company. Upon consummation of the Offer and the purchase of the Class AC Shares and the Class AL Shares, the Purchaser intends to propose a merger of a subsidiary of the Purchaser with and into the Company as described below. The Offer is being made pursuant to the Stock Purchase Agreement. PLANS FOR THE COMPANY. It is currently expected that, initially following the purchase of the Class AC Shares and the Class AL Shares and the consummation of the Offer, the business and operations of the Company will continue as they currently are conducted without substantial change. The Purchaser currently intends to cause the Company's operations to continue to be run and managed by its existing executive officers. The Purchaser 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 will take such further actions as it deems appropriate under the circumstances then existing. The Purchaser intends to seek additional information about the Company during this period. Thereafter, the Purchaser intends to review such information as part of a comprehensive review of the Company's business, operations, capitalization and management with a view to optimizing the Company's potential in conjunction with the Company's other U.S. operations and maximizing the synergies that are expected to result therefrom. 18 21 As a condition to the purchase of the Class AC Shares by the Purchaser pursuant to the Stock Purchase Agreement, each person who has been elected by the Selling Shareholder to the Board of Directors of the Company must have either resigned or have been removed as a director of the Company. It is anticipated that the Sainsbury Agreement will have a comparable condition with respect to the directors elected by Sainsbury to the Board of Directors of the Company. Simultaneously with the purchase by the Purchaser of the Class AC Shares pursuant to the Stock Purchase Agreement and of the Class AL Shares pursuant to the Sainsbury Agreement, the Purchaser will appoint all new directors to the Company's Board of Directors to replace those that resign or are removed as described above, as the Purchaser deems appropriate. Following the purchase of the Class AC Shares and the Class AL Shares and the consummation of the Offer, the Purchaser may transfer all or a portion of the Class AC Shares, the Class AL Shares and/or the Shares to a direct or indirect subsidiary of the Purchaser. Upon the acquisition by the Company of the Class AC Shares from the Selling Shareholder and the Class AL Shares from Sainsbury, the Purchaser would own 100% of the outstanding capital stock of the Company entitled to vote. As a result, the Purchaser will be able to cause the merger of a subsidiary of the Purchaser with and into the Company. Any remaining holders of the Shares will not be entitled to vote on such a merger. The Purchaser anticipates that it will take all necessary and appropriate action to cause such a merger to become effective as soon as reasonably practicable after its acquisition of the Class AC Shares and the Class AL Shares. At the effective time of such merger, each outstanding Share (other than those held by the Purchaser or any subsidiary thereof) will be converted into the highest price paid per Share pursuant to the Offer without interest. If such merger is consummated, the holders of the Shares will have certain rights under Section 262 of the Delaware General Corporation Law (the "DGCL") to dissent and demand appraisal of, and payment in cash for the fair value of, that stockholder's Shares. Those rights, if the statutory procedures are complied with, could lead to a judicial determination of the fair value (excluding any value arising from any such merger) required to be paid in cash to dissenting stockholders for their Shares. Any judicial determination of the fair value of Shares could be based upon considerations other than or in addition to the Offer Price, any such consideration provided in any such merger and the market value of the Shares, including asset values and the investment value of the Shares. The value so determined could be more or less than the Offer Price or any such consideration provided in any such merger. Failure to follow the steps required by Section 262 of the DGCL for protecting appraisal rights may result in the loss of those rights. If a stockholder who demands an appraisal under Section 262 of the DGCL fails to protect, or effectively withdraws or loses, his right to appraisal, as provided in the DGCL, the Shares of that stockholder could be converted into the consideration offered in accordance with any such agreement of merger which could be entered into. A stockholder may withdraw his demand for appraisal by delivering to the Purchaser a written withdrawal of such demand for appraisal and acceptance of any such merger. THE FORGOING SUMMARY OF THE RIGHTS OF OBJECTING STOCKHOLDERS DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL. In addition, several decisions by Delaware courts have held that, in certain instances, a controlling stockholder of a corporation involved in a merger with such controlling stockholder or its affiliates has a fiduciary duty to the other stockholders that requires the merger to be fair to such other stockholders. In determining whether a merger is fair to minority stockholders, the Delaware courts have considered, among other things, the type and amount of consideration to be received by the stockholders and whether there were fair dealings among the parties. Although the remedies of rescission or rescissionary damages are possible in an action challenging a merger as a breach of fiduciary duty, decisions of the Delaware courts have indicated that in most cases, the remedy available in a merger that is found not to be "fair" to minority stockholders is a damages remedy based on essentially the same principles as an appraisal. 19 22 Except as otherwise discussed in this Offer to Purchase, the Purchaser 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 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 Company's management. STOCK PURCHASE AGREEMENT. THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE STOCK PURCHASE AGREEMENT. THE SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE STOCK PURCHASE AGREEMENT, A COPY OF WHICH HAS BEEN FILED WITH THE COMMISSION AS AN EXHIBIT TO THE SCHEDULE 14D-1. THE STOCK PURCHASE AGREEMENT MAY BE INSPECTED AT, AND COPIES MAY BE OBTAINED FROM, THE SAME PLACES AND IN THE MANNER SET FORTH IN SECTION 7. Purchase of the Class AC Shares. Pursuant to the Stock Purchase Agreement, the Selling Shareholder agreed to sell, and the Purchaser agreed to purchase, subject to the terms and conditions thereof, all of the Class AC Shares at a price of $43.00 per share. The Stock Purchase Agreement, however, provided that if the Purchaser acquires, or enters into a binding agreement to acquire, all of the Class AL Shares prior to the Expiration Date of the Offer, the Offer Price of $43.00 per Share, net to the seller in cash, would be increased to $43.50 per Share, net to the seller in cash. Subsequent to the execution of the Stock Purchase Agreement, the Purchaser and Sainsbury agreed, subject to agreement on documentation, for the acquisition by the Purchaser of all of the Class AL Shares, and the Purchaser increased the Offer Price to $43.50, net to the seller in cash. The Selling Shareholder has agreed in the Stock Purchase Agreement to tender pursuant to the Offer, upon the terms and subject to the conditions set forth in the Stock Purchase Agreement, all of the Shares owned by the Selling Shareholder. The obligation of the Purchaser to purchase the Class AC Shares is subject to the satisfaction of the following conditions: the truth of the Selling Shareholder's representations and warranties, the performance by the Selling Shareholder of its covenants, no injunctions, receipt of consents and approvals, the non-occurrence of the conditions set forth in Section 14 hereof, the resignation of the Directors of the Company elected by the Selling Shareholder and the approval of the Offer by the Board of Directors of the Company. The obligations of the Selling Shareholder to sell the Class AC Shares is subject to the satisfaction of the following conditions: the truth of the representations and warranties of the Purchaser, the performance by the Purchaser of its covenants, no injunctions, the expiration of HSR waiting periods and consummation of the Offer. The Offer. The Stock Purchase Agreement provides that, subject to the terms and conditions thereof, the Purchaser will commence the Offer and that the obligation of the Purchaser to consummate the Offer and to accept for payment and to pay for any Shares tendered pursuant to the Offer shall be subject to only those conditions set forth in the Stock Purchase Agreement, which are described in Section 14. The Purchaser may waive any of the conditions described in Section 14. The Purchaser reserves the right to modify the terms of the Offer, including, without limitation, to extend the Offer beyond any scheduled expiration date, except that, without the consent of the Selling Shareholder, the Purchaser will not reduce the number of Shares sought in the Offer, reduce the Offer Price, modify or add to the conditions of the Offer described in Section 14 in a manner that is materially adverse to the holders of the Shares or change the form of consideration payable in the Offer. Subject to the terms and conditions set forth in the Stock Purchase Agreement (including the rights to terminate, extend or modify the Offer) and the terms and conditions of the Offer, the Purchaser agrees to use its best efforts to consummate the Offer as soon as legally permissible. In the Stock Purchase Agreement, the Selling Shareholder represented that (i) Wasserstein has delivered to the Special Committee its opinion that the consideration to be received by the holders of Shares pursuant to the Offer is fair, from a financial point of view, to holders of Shares, subject to the assumptions and qualifications contained in such opinion, (ii) the Special Committee has determined unanimously that the Offer is fair to, and in the best interests of, the holders of Class A Shares and recommended to the Board of Directors of the Company that it approve and recommend acceptance of the Offer by the holders of Class A 20 23 Shares, (iii) the President of the Company has called or will have called no later than May 19, 1998, a special meeting of the Board of Directors of the Company and (iv) it has been advised that five of the nine directors of the Company intend to vote to approve and recommend acceptance of the Offer by the holders of the Shares. The Stock Purchase Agreement provides that the Officers' and Directors' Schedule 14D-9 shall contain the recommendation of the Special Committee. Interim Operations. The Stock Purchase Agreement provides that during the period from the date of the Stock Purchase Agreement to the date that the Class AC Shares are purchased in accordance with the terms and provisions of the Stock Purchase Agreement and the Shares are purchased pursuant to the Offer (collectively the "Closing Date"), except as permitted, required or specifically contemplated by, or otherwise described in, the Stock Purchase Agreement or otherwise consented to or approved in writing by the Purchaser, the Selling Shareholder (i) shall not vote the Class AC Shares in favor of any action that would cause, or that is part of a transaction that would cause, (ii) shall cause the directors of the Company who are also directors of the Selling Shareholder not to vote in favor of any action that would cause, or that is a part of a transaction that would cause, and (iii) shall otherwise use its reasonable best efforts to cause the Company and each of its subsidiaries not to take any action that would cause, any of the representations or warranties with respect to the Company set forth in the Stock Purchase Agreement to be untrue or incorrect. In addition, the Stock Purchase Agreement provides that during the period from the date of the Stock Purchase Agreement to the Closing Date, except as permitted, required or specifically contemplated by, or otherwise described in, the Stock Purchase Agreement or otherwise consented to or approved in writing by the Purchaser, the Selling Shareholder (i) shall vote the Class AC Shares in favor of any action that would cause, or that is part of a transaction that would cause, (ii) shall cause the directors of the Company who are also directors of the Selling Shareholder to vote in favor of any action that would cause, or that is a part of a transaction that would cause, and (iii) shall otherwise use its reasonable best efforts to cause, in each case, the Company and each of its subsidiaries to do the following: (A) conduct their respective operations only according to their ordinary and usual course of business consistent with past practice; and (B) use their best efforts to preserve intact their respective business organization, keep available the services of their officers and employees and maintain satisfactory relationships with licensors, suppliers, distributors, clients, landlords, joint venture partners, employees, agents and others having business relationships with them. In addition, the Stock Purchase Agreement further provides that during the period from the date of the Stock Purchase Agreement to the Closing Date, except as permitted, required or specifically contemplated by, or otherwise described in, the Stock Purchase Agreement or otherwise consented to or approved in writing by the Purchaser, the Selling Shareholder (i) shall not vote the Class AC Shares in favor of, and shall affirmatively vote the Class AC Shares against, any action that would cause, or that is part of a transaction that would cause, (ii) shall cause the directors of the Company who are also directors of the Selling Shareholder not to vote in favor of, and to affirmatively vote against, any action that would cause, or that is a part of a transaction that would cause, and (iii) shall otherwise use its reasonable best efforts to cause, in each case, the Company and each of its subsidiaries not to do any of the following: (A) make any change in or amendment to the Certificate of Incorporation or By-Laws (or comparable governing documents) of the Company or any subsidiary, (B) issue, sell or acquire any shares of its capital stock (other than in connection with the exercise of all the stock options and other rights to purchase Shares outstanding on the date of the Stock Purchase Agreement) or any of its other securities, or issue any securities convertible into, or options, warrants or rights to purchase or subscribe to, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its capital stock or any of its other securities, or make any other changes in its capital structure, (C) sell or pledge or agree to sell or pledge any stock owned by it in any of its subsidiaries, (D) declare, pay, set aside or make 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 dividends and distributions by a direct or indirect wholly-owned subsidiary to its parent and regular annual cash dividends by the Company on its capital stock in an amount not in excess of $0.80 per share per fiscal annum at the same time such dividends are customarily declared and paid, (E) (1) except as set forth in the Stock Purchase Agreement, enter into any contract or commitment with respect to (x) any individual capital expenditure in excess of $7,500,000 in the case of certain budgeted capital expenditures or $2,000,000 in the case of 21 24 unbudgeted capital expenditures or (y) capital expenditures that in the aggregate exceed $40,000,000 in any thirteen week period, (2) acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business or division thereof, or (3) enter into, amend, modify, supplement or cancel any other material contract, (F) acquire a material amount of assets or securities or release or relinquish any material contract rights other than in the ordinary course of business in accordance with past practice and the Company's short term investment program, (G) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of the Stock Purchase Agreement, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its subsidiaries in the ordinary course of business in accordance with past practice, or grant any severance or termination pay 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 any collective bargaining (except for the termination of certain collective bargaining agreements which will expire in accordance with their terms prior to the Closing Date), 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, employees or former employees and/or directors, (H) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of, encumber or subject to any lien, any material assets or incur or modify any indebtedness or other liability or issue any debt securities or assume, guarantee or endorse or otherwise as an accommodation become responsible for the obligations of any person or, other than in the ordinary course of business consistent with past practice, make any loan or other extension of credit, (I) agree to the settlement of any material claim or litigation (including, but not limited to any claim or litigation in respect of or related to any environmental law), (J) make any material tax election or settle or compromise any material tax liability, (K) permit any insurance policy naming it as beneficiary or a loss payable payee to be canceled without notice to the Purchaser unless (1) such insurance policy is immediately replaced, with no gaps or lapses in coverage, with an insurance policy issued by a financially sound and reputable insurance company in at least such amounts and against at least such risks as the canceled policy or (2) such cancellation would not have a material adverse effect on the business, properties, assets, liabilities, condition (financial or otherwise), operations, results of operations or prospects of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"), (L) make any material change in its method of accounting, (M) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries not constituting an inactive subsidiary, (N) take any action, including, without limitation, the adoption of any stockholder rights plan or amendments to its Certificate of Incorporation (or other organizational or governing documents), which would, directly or indirectly, restrict or impair the ability of the Purchaser 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 the Purchaser or permit any stockholder to acquire securities of the Company on a basis not available to the Purchaser in the event that the Purchaser were to acquire securities of the Company, or (O) agree, in writing or otherwise, to take any of the foregoing actions. No Solicitation. The Stock Purchase Agreement provides that the Selling Shareholder and each of its officers, directors, employees, representatives, consultants, investment bankers, attorneys, accountants, agents or advisors (collectively "Agents") shall immediately cease any discussions or negotiations with any other parties that may be ongoing with respect to any purchase of the Class AC Shares or any Acquisition Proposal (as defined below). The Selling Shareholder shall not, directly or indirectly, take (and the Selling Shareholder shall not authorize or permit its Agents to so take) any action to (i) encourage, solicit or initiate the making of any offer to purchase the Class AC Shares or any Acquisition Proposal, (ii) enter into any agreement with respect to any offer to purchase the Class AC Shares or any Acquisition Proposal, or (iii) participate in any way in discussions or negotiations with, or furnish or disclose any information to, any person (other than the Purchaser) in connection with, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any offer to purchase the Class AC Shares or any Acquisition Proposal. For purposes of this Section, "Acquisition Proposal" shall mean any inquiry, proposal or offer from any person (other than the Purchaser) relating to any direct or indirect acquisition or 22 25 purchase of all or any of the Class AC Shares, of a substantial amount of assets of the Company or any of its subsidiaries or of more than 10% of any class of equity securities of the Company or any of its subsidiaries, any tender offer or exchange offer that if consummated would result in any person beneficially owning more than 10% of any other class of equity securities of the Company or any of its subsidiaries, any merger, consolidation, business combination, sale of substantially all the assets, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its subsidiaries, other than the transactions contemplated by the Stock Purchase Agreement, or any other transaction the consummation of which could reasonably be expected to impede, interfere with, prevent or materially delay the Offer or which would reasonably be expected to dilute materially the benefits to the Purchaser of the transactions contemplated by the Stock Purchase Agreement. In addition, the Stock Purchase Agreement provides that during the period from the date of the Stock Purchase Agreement to the Closing Date, except as permitted, required or specifically contemplated by, or otherwise described in, the Stock Purchase Agreement or otherwise consented to or approved in writing by the Purchaser, the Selling Shareholder (i) shall use its reasonable best efforts to cause (A) the Company and its Agents immediately to cease any discussions or negotiations with any other parties that may be ongoing with respect to any Acquisition Proposal and (B) the Company and its subsidiaries not to take, directly or indirectly, (and the Company not to authorize or permit its or its subsidiaries' Agents to take) any action to (1) encourage, solicit or initiate the making of any Acquisition Proposal, (2) enter into any agreement with respect to any Acquisition Proposal, or (3) participate in any way in discussions or negotiations with, or furnish or disclose any information to, any person (other than the Purchaser) in connection with, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal, (ii) shall not vote the Class AC Shares in favor of any Acquisition Proposal, (iii) shall cause the directors of the Company who are also directors of the Selling Shareholder not to vote to approve or recommend, or propose to approve or recommend, any Acquisition Proposal or in favor of the Company entering into any agreement with respect to any Acquisition Proposal, and (iv) shall otherwise use its reasonable best efforts to cause the Board of Directors of the Company not to approve, recommend or propose to approve or recommend any Acquisition Proposal or the entering into by the Company of any Acquisition Proposal. The Stock Purchase Agreement further provides that the Selling Shareholder shall, or shall use its reasonable best efforts to cause the Company to, advise the Purchaser of any request for information or of any offer to purchase the Class AC Shares or any Acquisition Proposal, or any inquiry or proposal with respect to any offer to purchase the Class AC Shares or any Acquisition Proposal, the material terms and conditions of such request, offer or Acquisition Proposal and of any changes thereto, and the identity of the entity or person making any such inquiry or proposal. Directors' and Officers' Insurance and Indemnification. The Purchaser has agreed in the Stock Purchase Agreement that for a period of six years from the Closing Date, the Purchaser shall cause the directors of the Company elected by the Purchaser to the Board of Directors of the Company not to vote to, and shall otherwise use its reasonable best efforts to cause the Company not to, amend, repeal or otherwise modify the provisions with respect to indemnification and exculpation from liability set forth in the Company's Certificate of Incorporation and By-Laws on the date of the Stock Purchase Agreement in any manner that would adversely affect the rights thereunder of individuals who on or prior to the Closing Date were directors, officers, employees or agents of the Company, unless such modification is required by law. In addition, the Stock Purchase Agreement provides that for a period of three years from the Closing Date, the Purchaser (i) shall cause the directors of the Company elected by the Purchaser to the Board of Directors of the Company to vote to, and shall otherwise use its reasonable best efforts to cause the Company to, maintain in effect the Company's current directors' and officers' liability insurance covering those persons who are currently covered on the date of the Stock Purchase Agreement by the Company's directors' and officers' liability insurance policy; provided, however, that in no event shall the Company be required to expend in any one year an amount in excess of 150% of the annual premiums currently paid by the Company for such insurance which the Selling Shareholder has represented to be $200,160 for the most recent twelve month period; provided further, that if the annual premiums of such insurance coverage exceed such amount, the Company shall be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such amount; provided further that the Company may substitute for such Company policies, policies with at 23 26 least the same coverage containing terms and conditions which are no less advantageous and provided that said substitution does not result in any gaps or lapses in coverage with respect to matters occurring prior to the Closing Date or, alternatively, (ii) shall cause the Purchaser's directors' and officers' liability insurance then in effect to cover those persons who are covered on the date of the Stock Purchase Agreement by the Company's directors' and officers' liability insurance policy with respect to those matters covered by the Company's directors' and officers' liability policy. Compensation and Benefits. The Stock Purchase Agreement states that the Purchaser currently intends that, during the period commencing at the Closing Date and ending on December 31, 1999, the active employees of the Company and its subsidiaries who are not covered by collective bargaining agreements ("Non-Union Employees") will be provided with employee benefits (other than stock option and other non-tax-qualified plans or arrangements involving the potential issuance of securities of the Company or of the Purchaser) which are in the aggregate not materially less favorable to those currently provided by the Company and its subsidiaries to such Non-Union Employees; provided, that (i) the covenants contained in this paragraph shall only be effective to the extent permitted under laws and regulations in force from time to time, and (ii) the Purchaser reserves the right to review all employee benefit plans and arrangements of the Company after the Closing Date and to make such changes of an administrative or investment management nature as it, in its discretion, deems appropriate. Notwithstanding the foregoing, Non-Union Employees who are currently accruing benefits under Section 3.8 of Article III and Article VI of the Giant Food Inc. Excess Benefit Savings Plan (the "EBS Plan") at the Closing Date shall continue to participate in the EBS Plan and to accrue benefits under these provisions at the same accrual rates in effect at the Closing Date. The preceding sentence shall not apply to any other benefits under the EBS Plan including, without limitation, benefits under Article IV thereof). In addition, the Stock Purchase Agreement states that Non-Union Employees who meet the minimum eligibility requirements under the stock option plans maintained by the Purchaser after the Closing Date shall be eligible to be granted stock options thereunder in accordance with the terms of such plans. Options. Pursuant to the Stock Purchase Agreement, prior to the Closing Date, the Selling Shareholder will cause appropriate resolutions to be voted on by the Board of Directors of the Company (or, if appropriate, any committee thereof), shall cause the directors of the Company who are also directors of the Selling Shareholder to vote in favor of the adoption of such resolutions and shall otherwise use its reasonable best efforts to cause such resolutions to be adopted, and use its reasonable best efforts to take all other actions necessary including, but not limited to, using its reasonable best efforts to cause the Company to obtain the consent and release of all of the holders of all the outstanding stock options and other rights to purchase Shares (the "Options") heretofore granted under any stock option plan of the Company or otherwise (the "Stock Plans"), to (i) provide for the cancellation, effective at the Closing Date, subject to the payment provided for in the next sentence being made, of all Options, (ii) terminate, as of the Closing Date, the Stock Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any subsidiary (collectively with the Stock Plans, referred to as the "Stock Incentive Plans") with respect to any interest in the capital stock of the Company and (iii) amend, as of the Closing Date, the provisions in any other employee benefit plan providing for the issuance, transfer or grant of any capital stock of the Company or any interest in respect of any capital stock of the Company to provide no continuing rights to acquire, hold, transfer or grant any capital stock of the Company or any interest in the capital stock of the Company (other than in respect of cash payments through the Offer). Immediately prior to the Closing Date, each Option, whether or not then vested or exercisable, shall no longer be exercisable for the purchase of Shares but shall entitle each holder thereof, in cancellation and settlement therefor, to payments by the Company in cash, subject to any applicable withholding taxes (the "Cash Payment"), at the Closing Date, equal to the product of (x) the total number of Shares subject to such Option, whether or not then vested or exercisable and (y) the excess of the Offer Price over the exercise price per Share subject to such Option, each such Cash Payment to be paid to each holder of an outstanding Option at the Closing Date. Incident to the foregoing, any then outstanding stock appreciation rights or limited stock appreciation rights shall be cancelled immediately prior to the Closing Date without any payment therefor. In addition, the Stock Purchase Agreement provides that the Selling Shareholder shall use its reasonable best efforts to cause the Company to take all steps to ensure that neither the Company nor any of its subsidiaries is 24 27 or will be bound by any Options, other options, warrants, rights or agreements which would entitle any person, other than the Purchaser or its affiliates, to own any capital stock of the Company or any of its subsidiaries or to receive any payment in respect thereof. Notwithstanding any other provision of this paragraph to the contrary, payment of the Cash Payment may be withheld with respect to any Option until necessary consents and releases are obtained. Agreement to Use Best Efforts. Pursuant to the Stock Purchase Agreement and subject to the terms and conditions thereof, each of the Purchaser and the Selling Shareholder shall, and the Selling Shareholder shall use its reasonable best efforts to cause the Company to, with respect to matters within their respective control, cooperate and use their respective best efforts to (i) take, or cause to be taken, all appropriate action, and do, or cause to be done, all reasonable things necessary and proper under applicable law to consummate the transactions contemplated by the Stock Purchase Agreement as promptly as practicable, (ii) obtain from any governmental authority, regulatory organization or other instrumentality or agency or any other third party any licenses, permits, consents, waivers, approvals, authorizations, qualifications, or orders required to be obtained or made by the Company, the Purchaser or the Selling Shareholder or any of their subsidiaries in connection with the authorization, execution and delivery of the Stock Purchase Agreement and the consummation of the transactions contemplated therein, and (iii) as promptly as practicable, make, or cause to be made, all filings necessary, proper or advisable with respect to the Stock Purchase Agreement and the transactions contemplated therein under (x) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and any related governmental request thereunder, and (y) any other applicable laws or regulations; provided, however, that no loan agreement or contract for borrowed money shall be repaid except as currently required by its terms, in whole or in part, and no contract shall be amended to increase the amount payable thereunder or otherwise to be more burdensome to the Company or any of its subsidiaries in order to obtain any such consent, approval or authorization without first obtaining the written approval of the Purchaser. In addition, the Stock Purchase Agreement provides that the Purchaser and the Selling Shareholder shall, and the Selling Shareholder shall use its reasonable best efforts to cause the Company to, cooperate with each other in connection with the making of all such filings, including providing copies of all such documents to the non-filing party and its advisors prior to filing and, if requested, to accept all reasonable additions, deletions or changes suggested in connection therewith. The Purchaser and the Selling Shareholder shall, and the Selling Shareholder shall use its reasonable best efforts to cause the Company to, use their respective best efforts to furnish to each other all information required for any application or other filing to be made pursuant to the rules and regulations of any applicable law in connection with the transactions contemplated by the Stock Purchase Agreement. Notwithstanding anything to the contrary in this paragraph, none of the Purchaser, the Selling Shareholder or the Company or any of their respective subsidiaries shall be required to sell or otherwise dispose of, or hold separate (through the establishment of a trust or otherwise) particular assets or categories of assets, or business of the Purchaser, the Selling Shareholder, the Company or any of their affiliates or withdraw from doing business in a particular jurisdiction or take any other action that, in the aggregate, in the sole judgment of the Purchaser, would reasonably be expected to substantially impair or substantially reduce the Purchaser's ability to control, direct or manage on a day-to-day basis the business or affairs of the Company or to substantially impair or substantially reduce the overall benefits expected, as of the date hereof, to be realized by the Purchaser from the consummation of the transactions contemplated by the Stock Purchase Agreement or would have a material adverse effect on the business, properties, assets, liabilities, condition (financial or otherwise), prospects, operations or results of operations of the Purchaser and its subsidiaries taken as a whole or the Company and its subsidiaries taken as a whole. Representations and Warranties. In the Stock Purchase Agreement, the Selling Shareholder has made customary representations and warranties to the Purchaser with respect to, among other things, its organization, corporate authority, ownership of Class AC Shares and consents and approvals. In addition, in the Stock Purchase Agreement, the Selling Shareholder has made customary representations and warranties to the best of its knowledge to the Purchaser with respect to, among other things, the Company's organization, corporate authority, capitalization, consent and approvals, financial statements, public filings, the absence of any material adverse changes in the Company since February 23, 1997, compliance with laws, employee benefit plans, undisclosed liabilities and litigation, taxes, intellectual property, environmental matters, labor relations, vote required, stockholder rights plan and opinion of financial advisor. 25 28 Termination. The Stock Purchase Agreement may be terminated and the transactions contemplated thereby may be abandoned by the Purchaser, on the one hand, or the Selling Shareholder, on the other hand, if any condition to the completion of the transactions contemplated thereby is not fulfilled on or prior to December 31, 1998. Payment of Certain Fees and Expenses Upon Termination. Except as provided in the next succeeding sentence, all expenses incurred in connection with the Stock Purchase Agreement and the consummation of the transactions contemplated thereby shall be paid by the party incurring such expenses. If (i) the transactions contemplated by the Stock Purchase Agreement are not consummated due to a material breach of the representations or warranties of the Selling Shareholder or a material failure by the Selling Shareholder to fulfill a covenant or agreement (other than in respect of a breach of the covenant specified under the heading "No Solicitation" above) or due to (x) the occurrence of any of the events set forth in subparagraph (iii) (e) of Section 14 hereof or (y) the occurrence of any of the events set forth in subparagraph (iii) (g) or (h) of Section 14 hereof (other than in respect of a breach of the covenant specified under the heading "No Solicitation" above) and (ii) the Selling Shareholder sells all or any portion of the Class AC Shares and/or the Shares within two years from the date of the Stock Purchase Agreement then in any such case the Selling Shareholder shall pay to the Purchaser, in lieu of reimbursement of the Purchaser's out-of-pocket expenses, $2,500,000 or such lesser amount as the Selling Shareholder shall receive in the aggregate from all sales of the Class AC Shares and Shares during such two year period, such amount to be paid by or on behalf of the Selling Shareholder in same day funds within two business days after each sale of the Class AC Shares and/or Shares until the amount so received by the Purchaser equals $2,500,000. If (i) the transactions contemplated by the Stock Purchase Agreement are not consummated due to the a breach of the covenant specified under the heading "No Solicitation" above or due to (1) the occurrence of any of the events set forth in subparagraph (ii) (f) of Section 14 hereof or (2) the occurrence of any of the events set forth in subparagraph (ii) (g) or (h) of Section 14 hereof (but only in respect of a breach of the covenant specified under the heading "No Solicitation" above), and (ii) the Selling Shareholder sells all or any portion of the Class AC Shares or the Shares within two years from the date of the Stock Purchase Agreement then in any such case, as a condition to such sale, the Selling Shareholder shall pay or cause to be paid to the Purchaser $10,000,000, such amount to be paid by or on behalf of the Selling Shareholder in same day funds within two business days after the first such sale of the Class AC Shares and/or Shares. Sainsbury Agreement. On May 19, 1998, the Purchaser and Sainsbury agreed, subject to agreement on documentation, (i) for Sainsbury to sell, and for the Purchaser to purchase, all of the Class AL Shares for an aggregate purchase price of $100,000,000 on the terms and conditions to be agreed upon and (ii) for Sainsbury to tender pursuant to the Offer, upon the terms and subject set forth herein, all of the Shares owned by Sainsbury. See Section 11. The Purchaser expects to enter into a definitive agreement with Sainsbury as promptly as practicable. The Purchaser anticipates that the conditions for the purchase and sale of the Class AL Shares will be comparable to those contained in the Stock Purchase Agreement. The foregoing description is subject to the preparation and completion of a definitive stock purchase agreement with Sainsbury. If and when a definitive stock purchase agreement with Sainsbury is executed, copies will be filed as exhibits to an amendment to the Schedule 14D-1. 12. DIVIDENDS AND DISTRIBUTIONS. As described above, the Stock Purchase Agreement provides that prior to the Closing Date, except as permitted, required or specifically contemplated by, or otherwise described in, the Stock Purchase Agreement or otherwise consented to or approved in writing by the Purchaser, the Selling Shareholder (i) shall not vote the Class AC Shares in favor of, and shall affirmatively vote the Class AC Shares against, any action that would cause, or that is part of a transaction that would cause, (ii) shall cause the directors of the Company who are also directors of the Selling Shareholder not to vote in favor of, and to affirmatively vote against, any action that would cause, or that is a part of a transaction that would cause, and (iii) shall otherwise use its reasonable best efforts to cause, in each case, the Company and each of its subsidiaries not to declare, pay, set aside or make 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 dividends and distributions by a direct or indirect wholly-owned subsidiary to its parent and regular annual cash dividends by the Company on its capital stock in the amount 26 29 not in excess of $0.80 per share per fiscal annum at the same time such dividends are customarily declared and paid. If, on or after May 19, 1998, the Company should (a) split, combine, redeem or reclassify or purchase or otherwise acquire any shares of its capital stock or its other securities or (b) issue or sell any shares of its capital stock (other than in connection with the exercise of options outstanding on the date of the Stock Purchase Agreement) or any of its other securities, or issue any securities convertible into, or options, warrants or rights to purchase or subscribe to, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its capital stock or any of its other securities, or make any other changes in its capital structure, then, subject to the provisions of Section 14, the Purchaser, in its sole discretion, may make such adjustments as it deems appropriate in the Offer Price and other terms of the Offer, including, without limitation, the number or type of securities offered to be purchased. If, on or after May 19, 1998, the Company should declare, pay, set aside or make any dividend or other distribution or payment with respect to any shares of its capital stock, or issue with respect to any shares of its capital stock any additional shares, shares of any other class of capital stock, other securities or any securities convertible into, or rights, warrants or options, conditional or otherwise, to acquire, any of the foregoing, payable or distributable to stockholders of record on a date prior to the transfer of the Shares purchased pursuant to the Offer to the Purchaser on the Company's stock transfer records, other than dividends and distributions by a direct or indirect wholly-owned subsidiary to its parent and regular annual cash dividends by the Company on its capital stock in the amount not in excess of $0.80 per share per fiscal annum at the same time such dividends are customarily declared and paid, then, subject to the provisions of Section 14, (a) the Offer Price may, in the sole discretion of the Purchaser, be reduced by the amount in excess of any permitted cash dividend or cash distribution and (b) the whole of any such noncash dividend, distribution or issuance to be received by the tendering stockholders will (i) be received and held by the tendering stockholders for the account of the Purchasers and will be required to be promptly remitted and transferred by each tendering stockholder to the Depositary for the account of the Purchaser, accompanied by appropriate documentation of transfer, or (ii) at the direction of the Purchaser, be exercised for the benefit of the Purchaser, in which case the proceeds of each exercise will promptly be remitted to the Purchaser. Pending such remittance and subject to applicable law, the Purchaser will be entitled to all rights and privileges as owner of any such noncash dividend, distribution, issuance or proceeds and may withhold the entire Offer Price or deduct from the Offer Price the amount or value thereof, as determined by the Purchaser in its sole discretion. Nothing in this Section 12 shall constitute a waiver by the Purchaser of any of its rights under the Stock Purchase Agreement or a limitation of remedies available to the Purchaser for any breach of the Stock Purchase Agreement, including termination thereof. 13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE LISTING AND EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to the Offer is expected to reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly. Consequently, depending upon the number of Shares purchased and the number of remaining holders of Shares, the purchase of Shares pursuant to the Offer may adversely affect the liquidity and market value of the remaining Shares held by the public. The Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Shares or whether it would cause future market prices to be greater or less than the Offer Price. The Shares are currently listed on the AMEX, the Philadelphia Stock Exchange, Inc. (the "PHSE") and the Pacific Stock Exchange (the "PSE" and, together with the AMEX and the PHSE, the "Exchanges"). Depending on the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the requirements for continued listing on the Exchanges and may therefore be delisted from some or all of the Exchanges. The AMEX's published guidelines require that an issuer have at least 200,000 publicly held shares (exclusive of holdings of officers, directors or beneficial owners of more than 10%), held by at least 300 record shareholders, with a market value of at least $1 million. The criteria for continued listing on the PHSE are divided into two tiers. A Tier I company must have (a) at least 200,000 shares outstanding and (b) either (i) at least 400 public shareholders or (ii) at least 300 shareholders. A Tier II company must have (a) at least 27 30 375,000 shares outstanding exclusive of shares held by reporting persons under Section 16(a) of the Exchange Act, (b) an aggregate trading value for a majority of days of at least (i) $250,000 for a three calendar month period, (ii) $500,000 for a six calendar month period, (iii) $750,000 for a nine calendar month period, and (iv) $1 million in a twelve calendar month period, and (c) at least 250 public holders. The criteria for continued listing on the PSE also is divided into two tiers. A Tier I issuer on the PSE must have (a) at least 200,000 publicly held shares and a market value of at least $1,000,000 and (b) at least 400 public beneficial holders, or at least 300 beneficial holders of 100 shares or more. A Tier II issuer on the PSE must have (a) 300,000 publicly held shares and a market value of $500,000 and (b) at least 250 public beneficial holders. The Purchaser has been advised that on May 15, 1998 there were 9,209 holders of record of Shares. If as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet the requirements of any of the Exchanges for continued listing and the listing of the Shares is discontinued on all or any of such Exchanges, the market and prices for the Shares could be adversely affected. If any of the Exchanges were to delist the Shares, it is possible that the Shares 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. ("NASDAQ") or other sources. However, the extent of the public market for the Shares and the availability of such quotations would depend upon such factors as the number of shareholders and/or the aggregate market value of the Shares remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration under the Exchange Act (as described below) and other factors. The Shares are currently "margin securities," as such term is defined under the rules of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such securities. Depending upon factors similar to those described above regarding listing and market quotations, following the Offer it is possible that the Shares might no longer constitute "margin securities" for purposes of the margin regulations of the Federal Reserve Board, in which event such Shares could no longer be used as collateral for loans made by brokers. The Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of the Company to the Commission if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders of the Shares. The termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to holders of Shares and to the Commission and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b) and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Shares. In addition, "affiliates" of the Company and persons holding "restricted securities" of the Company may be deprived of the ability to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or eligible for NASDAQ reporting. It is the present intention of the Purchaser to cause the Company to make an application for termination of registration of the Shares as soon as possible after successful completion of the Offer. 14. CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer or the Stock Purchase Agreement, the Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act, pay for any Shares tendered pursuant to the Offer and may terminate or amend the Offer and may postpone the acceptance of and payment for Shares (i) if the Stock Purchase Agreement shall have been terminated in accordance with its terms or the purchase and sale of the Class AC Shares pursuant to the Stock Purchase Agreement shall not have been consummated prior to or simultaneously with the consummation of the purchase of the Shares pursuant to the Offer; or (ii) if, at any time on or after May 19, 1998 and before the Expiration Date, any of the following shall occur: (a) there shall be threatened, instituted or pending any action or proceeding by any government or governmental authority or agency, domestic or foreign, or by any other person, domestic or foreign, before any court or governmental authority or agency, domestic or foreign, other than the routine application of 28 31 the waiting period provisions of the HSR Act (including a request for additional information or documentary material pursuant to 16 C.F.R. Sec. 803.20) to the purchase of the Class AC Shares pursuant to the Stock Purchase Agreement, without consent of the Purchaser, (i) challenging or seeking to, or which could reasonably be expected to make illegal, impede, materially delay or otherwise directly or indirectly restrain, prohibit or make more costly the acquisition of the Class AC Shares or the Offer or seeking to obtain material damages, (ii) seeking to prohibit or limit the ownership or operation by the Purchaser of all, or, in the sole judgment of the Purchaser, a portion that would reasonably be expected to substantially impair or substantially reduce the Purchaser's ability to control, direct or manage on a day-to-day basis the business or affairs of the Company or to substantially impair or substantially reduce the overall benefits expected, as of the date of the Stock Purchase Agreement, to be realized by the Purchaser from the consummation of the transactions contemplated by the Stock Purchase Agreement or would have a material adverse effect on the business, properties, assets, liabilities, condition (financial or otherwise), prospects, operations or results of operations of the Purchaser and its subsidiaries taken as a whole or the Company and its subsidiaries taken as a whole (a "significant portion"), of the business or assets of the Company or any of its subsidiaries or to compel the Purchaser to dispose of or hold separately all, or, in the sole judgment of the Purchaser, a significant portion of, the business or assets of the Purchaser or the Company or any of its subsidiaries, or seeking to impose any limitation on the ability of the Purchaser to conduct such business or own such assets which limitation, in the sole judgment of the Purchaser, would reasonably be expected to substantially impair or substantially reduce the Purchaser's ability to control, direct or manage on a day-to-day basis the business or affairs of the Company or to substantially impair or substantially reduce the overall benefits expected, as of the date of the Stock Purchase Agreement, to be realized by the Purchaser from the consummation of the transactions contemplated by the Stock Purchase Agreement or would have a material adverse effect on the business, properties, assets, liabilities, condition (financial or otherwise), prospects, operations or results of operations of the Purchaser and its subsidiaries taken as a whole or the Company and its subsidiaries taken as a whole, (iii) seeking to impose limitations on the ability of the Purchaser effectively to acquire, hold or exercise full rights of ownership of any shares of capital stock of the Company, which limitations, in the sole judgment of the Purchaser, are significant or (iv) seeking to require divestiture by the Purchaser of any shares of capital stock of the Company; (b) there shall be any action taken, or any statute, rule, regulation, legislation, interpretation, judgment, order or injunction proposed, enacted, enforced, promulgated, amended, issued or deemed applicable to (i) the Purchaser, the Company or any subsidiary of the Company or (ii) the Offer, the acquisition of any shares of capital stock of the Company, by any legislative body, court, government or governmental, administrative or regulatory authority or agency, domestic or foreign, other than the routine application of the waiting period provisions of the HSR Act (including a request for additional information or documentary materials pursuant to 16 C.F.R. Sec. 803.20) to the purchase of the Class AC Shares pursuant to the Stock Purchase Agreement, which could reasonably be expected to directly or indirectly, result in any of the consequences referred to in clauses (i) through (iv) of paragraph (a) above; (c) any change shall have occurred or been threatened (or any condition, event or development shall have occurred or been threatened involving a prospective change), or the Purchaser shall have become aware of any fact, that is reasonably likely to have a Material Adverse Effect on the Company; (d) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market (excluding any coordinated trading halt triggered solely as a result of a specified decrease in a market index), (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, The Netherlands or any other jurisdiction of incorporation or organization of any bank or other financial institution in any manner involved with the financing of the purchase of the Class AC Shares pursuant to the Stock Purchase Agreement or the Offer, (iii) any material limitation (whether or not mandatory) by any U.S. Federal, state or foreign governmental authority or agency on the extension of credit by banks or other lending institutions, (iv) a commencement or escalation of a war or armed 29 32 hostilities or other national or international calamity directly or indirectly involving the United States or The Netherlands or (v) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof; (e) any of the representations or warranties made by the Selling Shareholder in the Stock Purchase Agreement (in the case of any representations or warranties with respect to the Company, without regard to the knowledge of the Selling Shareholder) that are qualified as to materiality shall be untrue or incorrect in any respect or any such representations and warranties that are not so qualified shall be untrue or incorrect in any respect which would have a Material Adverse Effect, in each case as of the date of the Stock Purchase Agreement and the scheduled expiration date of the Offer as if such representation or warranty were made at the time of such determination and except as to any such representation or warranty which speaks as of a specific date or for a specific period, which must be untrue or incorrect in the foregoing respects as of such specific date or period; (f) (i) the Board of Directors of the Company shall have failed to approve or recommend the Offer, (ii) the Board of Directors of the Company shall have withdrawn or modified in a manner adverse to the Purchaser the approval or recommendation of the Offer or approved or recommended any Acquisition Proposal, (iii) any corporation, partnership, person or other entity or group shall have entered into a definitive agreement or an agreement in principle with the Company with respect to any Acquisition Proposal or (iv) the Board of Directors of the Company or any committee thereof shall have resolved to do any of the things set forth in clauses (ii) or (iii) of this paragraph (f); (g) the Selling Shareholder 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 Selling Shareholder to be performed or complied with by it under the Stock Purchase Agreement and, in the case only of failures to perform any agreement or covenant of the Selling Shareholder set forth under "Interim Operations" in Section 11, such failure to perform would have a Material Adverse Effect or materially adversely affect the ability of the Purchaser to consummate the transactions contemplated by the Stock Purchase Agreement or have a material adverse effect on the value of the Company and its subsidiaries taken as a whole; or (h) the Company or any of its subsidiaries shall have (i) failed to act in accordance with (b)(iii)(A) and (B) of "Interim Operations" in Section 11 and (b)(i)(B) and (iv) of "No Solicitation" in Section 11 or (ii) taken any of the actions listed in (c)(iii)(A)-(O) of "Interim Operations" in Section 11 or (b)(i)(A) of "No Solicitation" in Section 11; which, in the reasonable judgment of the Purchaser, in any such case and regardless of the circumstances giving rise to any such condition, makes it inadvisable to proceed with such acceptance for payment or payment. The foregoing conditions are for the sole benefit of the Purchaser and may be asserted by the Purchaser, or may be waived by the Purchaser, in whole or in part at any time and from time to time in its sole discretion. The failure by the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by the Purchaser concerning the events described in this Section 14 will be final and binding upon all parties to the Stock Purchase Agreement. The conditions to the Offer contained in the Stock Purchase Agreement included a condition that there be valid tendered and not properly withdrawn prior to the Expiration Date a number of Shares which constitutes at least 65% of the outstanding shares on a fully diluted basis. Upon reaching agreement with Sainsbury to acquire the Class AL Shares, the Purchaser determined to waive this minimum tender condition. 15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS. GENERAL. Except as otherwise disclosed herein, based on a review of publicly available information filed by the Company with the Commission, the Purchaser is not 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 30 33 adversely affected by the acquisition of Shares by the Purchaser pursuant to the Offer 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 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 Company's pharmacists are required to be licensed by the appropriate state board of pharmacy and the Federal Drug Enforcement Administration (the "FDEA"). The Company's pharmacies and the Company's pharmacy distribution center are also registered with the FDEA. Many of the Company's stores sell alcoholic beverages and are subject to various state and local licensing requirements as a result. By virtue of these license and registration requirements, the Purchaser or the Company may be obligated to obtain certain governmental consents and approvals in order to comply with applicable law. The Purchaser believes that such approvals can be obtained in due course, and that the Company will continue to conduct its operations substantially in the same manner as before the transfer. The Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions. See Section 14. While the Purchaser does not currently intend to delay the acceptance for payment of Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or action, if needed, would be obtained or would be obtained without substantial conditions or that adverse consequences might not result to the business of the Company, the Purchaser or that certain parts of the businesses of the Company 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 Purchaser does not believe that provisions of Section 203 of the DGCL are applicable to the Company because the Company does not have a class of voting stock that is (i) listed on a national securities exchange, (ii) authorized for quotation on the NASDAQ Stock Market or (iii) held of record by more than 2,000 stockholders. As a result, no action by the Board of Directors of the Company is required under such Section in respect of the Offer, the Stock Purchase Agreement or the other 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 stockholders in the state and were incorporated there. The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted takeover laws. Based on information supplied by the Selling Shareholder and the Selling Shareholder's representations in the Stock Purchase Agreement, the Purchaser does not believe that any state takeover statutes apply to the Offer. The Purchaser has not 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 and nothing in this Offer to Purchase or any action taken in connection with the Offer 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, and an appropriate court does not determine that it is 31 34 inapplicable or invalid as applied to the Offer, the Purchaser might be required to file certain information with, or receive approvals from, the relevant state authorities. In addition, if enjoined, the Purchaser might be unable to accept for payment any Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer. In such case, the Purchaser may not be obligated to accept for payment any Shares tendered. See Section 14. APPRAISAL RIGHTS. No appraisal rights are available to holders of Shares in connection with the Offer. REGULATORY APPROVALS. Under the HSR Act, certain 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 and certain waiting period requirements have been satisfied. The acquisition of Shares by the Purchaser pursuant to the Offer is subject to the prior or simultaneous acquisition of the Class AC Shares pursuant to the terms of the Stock Purchase Agreement and such acquisition of the Class AC Shares is subject to the HSR requirements. Under the provisions of the HSR Act applicable to the purchase of Class AC Shares pursuant to the Stock Purchase Agreement, such purchase may not be made until the expiration of a 30-calendar day waiting period following the required filing of a Notification and Report Form under the HSR Act by both the Purchaser and the Selling Shareholder, which filings the Purchaser and the Selling Shareholder plan to submit on or about May 20, 1998. Accordingly, the waiting period under the HSR Act will expire at 11:59 P.M., New York City time, on or about June 19, 1998, unless early termination of the waiting period is granted or the Purchaser or the Selling Shareholder 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 the Purchaser or the Selling Shareholder prior to the expiration of the 30-day waiting period, the waiting period would be extended and would expire at 11:59 P.M., New York City time, on the twentieth calendar day after the date of substantial compliance by both the Purchaser and the Selling Shareholder with such request. Thereafter, the waiting period could be extended only by court order or by consent of both the Purchaser and the Selling Shareholder. If the acquisition of Class AC Shares, and therefore the Shares, is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary material pursuant to the HSR Act, the purchase of and payment for Shares pursuant to the Offer will be deferred until 20 days after the request is substantially complied with, unless the waiting period is terminated sooner by the FTC or the Antitrust Division. See Section 2. Only one extension of such waiting period pursuant to a request for additional information or documentary material is authorized by the rules promulgated under the HSR Act, except by court order or by consent. However, if the Antitrust Division or the FTC raises substantive issues in connection with a proposed transaction, the parties frequently engage in negotiations with the relevant governmental agency concerning possible means of addressing these issues and may agree to delay consummation of the transaction while such negotiations continue. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the proposed acquisition of Class AC Shares by the Purchaser pursuant to the Stock Purchase Agreement. At any time before or after the Purchaser's purchase of Class AC Shares, either the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the acquisition of Class AC Shares pursuant to the Stock Purchase Agreement or seeking divestiture of Class AC Shares acquired by the Purchaser or divestiture of substantial assets of the Purchaser, 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. The Purchaser believes that the acquisition of Class AC Shares by the Purchaser will not violate the antitrust laws. Nevertheless, there can be no assurance that a challenge to the purchase of the Class AC Shares pursuant to the Stock Purchase Agreement on antitrust grounds will not be made or, if a challenge is made, what the result will be. See Section 14 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, the Purchaser will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Shares pursuant to the Offer. 32 35 Merrill Lynch is acting as the Dealer Manager in connection with the Offer. Pursuant to an engagement letter between the Purchaser and Merrill Lynch, Merrill Lynch has been retained to act as financial advisor to the Purchaser in connection with its effort to acquire the Company. The Purchaser has agreed to pay Merrill Lynch for its services a financial advisory fee of (a) $1,000,000 upon the earlier of the execution of the Stock Purchase Agreement or commencement of the Offer and (b) $9,000,000, less any amount previously paid pursuant to clause (a), upon the consummation of the transactions contemplated by the Stock Purchase Agreement or the purchase of the Shares pursuant to the Offer, provided that an amount equal to the lesser of (i) $2,000,000 and (ii) the sum of (A) the fees payable to Merrill Lynch in connection with (1) any bridge or bank financing in connection with the acquisition of the Company or (2) any public offering or private placement of any securities in connection with the acquisition of the Company and (B) the fees that would have been payable to Merrill Lynch with respect to any financing, offering or placement described in subclause (A) above with respect to which Merrill Lynch declined to take the leading role in, shall be refunded to the Purchaser from any fees payable to Merrill Lynch pursuant to this clause (b). In addition, if the Purchaser is entitled to payment of any amounts pursuant to the third sentence under the heading "Payment of Certain Fees 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 the Purchaser. The Purchaser 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 exceed $25,000, without prior approval of the Purchaser. In addition, the Purchaser has agreed to indemnify Merrill Lynch and certain related persons against certain liabilities and expenses, including liabilities under the Federal securities laws. The Purchaser has also retained The Bank of New York, 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 U.S. federal securities laws. In addition, the Purchaser has retained D.F. King & 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 U.S. federal securities laws. Brokers, dealers, commercial banks and trust companies will be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding offering material to their customers. 17. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction where the making of the Offer is prohibited by any administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of the Shares pursuant thereto, the Purchaser will make a good faith effort to comply with such state statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, the Purchaser cannot comply with any such state statute, the Offer will not be made to (and tenders will not be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer 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 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. The Purchaser has filed with the Commission the Schedule 14D-1, together with exhibits, pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-3 promulgated thereunder, furnishing certain additional information with respect to the Offer, and may file amendments thereto. The Schedule 14D-1 and any amendments thereto, including exhibits, may be inspected at, and copies may be obtained from, the same 33 36 places and in the manner set forth in Section 7 (except that they will not be available at the regional offices of the Commission). KONINKLIJKE AHOLD N.V. May 19, 1998 34 37 SCHEDULE I INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER 1. SUPERVISORY BOARD, CORPORATE EXECUTIVE BOARD AND EXECUTIVE OFFICERS OF THE PURCHASER. 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 the Purchaser. The principal address of the Purchaser 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.
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 the Purchaser; Carel van Bijlandtlaan Former Group Managing Director and Managing Director of 2596 HR The Hague Royal Dutch Petroleum Company; Member of the Supervisory (P.O. Box 162 2501 AN) Board of Royal Dutch Petroleum Company; Member of the (The Hague) Supervisory Board of Heineken N.V.; Member of the The Netherlands Supervisory Board of Wolters Kluwer N.V.; Chairman of the Supervisory Board of Beers N.V.; Chairman of the Supervisory Board of Koninklijke Hoogovens N.V.; Chairman of the Supervisory Board of Koninklijke Pakhoed N.V.; Non-Executive Director of British Biotech; Chairman of the Supervisory Board of Aegon N.V. R.J. Nelissen*............................ Vice Chairman of the Supervisor Board of the Purchaser; Hoog Hoefloo 36 Former Chairman of the Managing Board of ABN/AMRO 1251 ED Laren Holding N.V.; Supervisory Board Member of ABN AMRO The Netherlands Holding N.V. and ABN AMRO Bank N.V.; Supervisory Board Member of Elsevier N.V. and Reed Elsevier PLC Sir Michael Perry*........................ Member of the Supervisory Board of the Purchaser; Deputy Clarendon House Chairman of Bass PLC; Chairman of Centrica PLC (formerly 11-12 Cliffort Street British Gas); Chairman of Dunlop Slazenger Group London W1X 1RB Limited; Member of Supervisory Board of Marks & Spencer United Kingdom PLC; Chairman of The Shakespeare Globe Trust; Chairman of The International Shakespeare Globe Centre Ltd.; Former Director British Gas PLC; Former Chairman of the Managing Board of Unilever PLC; Former Chairman of United Holdings Ltd.; Former Chairman of The Advertising Association; Former member of the British Chamber of Commerce (Citizen of the United Kingdom) J.A. van Kemenade*........................ Member of the Supervisory Board of the Purchaser; Dreef 3 2012 HR Haarlem Governor- General for the Dutch Province of The Netherlands North-Holland; Former Minister of Education and Science of the Dutch Government
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NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---------------- -------------------------------------------------- A.J. Kranendonk*.......................... Member of the Supervisory Board of the Purchaser; Former Nieuw Rapenburg 23 President of the Management Board of Freisland W.A.; 8935 BG Leeuwarden Chairman of the Association of Dutch Chambers of The Netherlands Commerce; Member of the Supervisory Board of N.V. S.C. Johnson -- Benelux S.A.; Chairman of the Supervisory Board of Athlon N.V.; Member of the Supervisory Board of De Nederlandse Bank N.V.; Member of the Supervisory Board of DHV B.V.; President of the Supervisory Board of Dokkumer Vlaggen Centrale B.V.; Member of the Supervisory Board of Meyn B.V.; Member of the Supervisory Board of Lankhorst B.V. R.F. Meyer*............................... Member of the Supervisory Board of the Purchaser; Harvard University Professor of Business Administration, Harvard Business Morgan 311 School; Chairman of NEDD (Citizen of USA) Cambridge MA 02163 USA C.H. van der Hoeven**..................... President of the Purchaser; Member of the Supervisory Board of ABN AMRO Bank N.V. F.I. Ahlqvist**........................... Executive Vice-President of the Purchaser; Member of the Supervisory Board of Schuitema N.V.; Member of Supervisory Board of "We" International B.V.; Deputy Chairman of the Supervisory Board of Achmea Holding N.V.; Chairman of Supervisory Board GUS Holland Holding B.V.; Past Chairman of CIES; Board Member of CIES (Citizen of Sweden) J.G. Andreae**............................ Executive Vice-President of the Purchaser; Former President of Albert Heijn B.V.; President of the Supervisory Board of S.V.M.; Former Member of the Supervisory Board of KLM-catering; Co-chairman of ECR Europe; Co-chairman of ECR NL A.M. Meurs**.............................. Executive Vice-President & CFO of the Purchaser; Former Senior Vice-President of the Purchaser; Former Senior Vice-President of Finance of the Purchaser; Former Vice-President of Finance of the Purchaser; Member of the Supervisory Board of Van Den Boom Groep; Member of the Supervisory Board of Van der Hoop Effectenbank N.V. E.S. Moerk**.............................. Executive Vice-President of the Purchaser; Member of the Supervisory Board of Schuitema N.V.; Member of the Board and International Council of INSEAD; Former President of Campbell Biscuits Europe; Former Corporate Vice-President of Campbell Soup Company (Citizen of Norway) R. Zwartendijk**.......................... Executive Vice-President of the Purchaser; President and CEO of Ahold U.S.A. Inc.; President of Luis Paez S.A.; Former Member of the Supervisory Board of Schuitema N.V.; Member of the Supervisory Board of Numico N.V.; President of the Supervisory Board of A.C. Holding N.V. A. Buitenhuis............................. Senior Vice President of Finance and Fiscal Affairs of the Purchaser; former Director of Finance of the Purchaser
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NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---------------- -------------------------------------------------- P.P.J. Butzelaar.......................... Senior Vice President and General Counsel of the Purchaser; Managing Director of Disco International Holdings N.V.; Former Corporate Secretary and Senior Vice President and General Counsel of the Purchaser; Member of the Supervisory Board of DCE Holding B.V. H. Gobes.................................. Senior Vice-President of Communications of the Purchaser L.A.P.A. Verhelst......................... Senior Vice President of Administration of the Purchaser; Former President of Pays-Bas Property Fund N.V.; Former Member of the Executive Board of Koninklijke Bols Wessanen N.V. M.J. Dorhout Mees......................... Senior Vice President of Business Development of the Purchaser; Former Senior Vice President of Sales & Services of Albert Heijn B.V.; Former Deputy Director of Customer Services of Albert Heijn B.V. N.L.J. Berger............................. Corporate Secretary of the Purchaser; Former Deputy and General Counsel of the Purchaser A.J. Brouwer.............................. Senior Vice President of Management Development and Organization of the Purchaser; Former Vice President of Management Development and Organization of the Purchaser P.P.M. Ekelschot.......................... Senior Vice President of Internal Audit of the Purchaser; Former Vice President of Internal Audit of the Purchaser
2. OWNERSHIP OF SHARES BY DIRECTORS AND EXECUTIVE OFFICERS. To the best knowledge of the Purchaser, none of the other persons listed on this Schedule I beneficially owns or has a right to acquire directly or indirectly any Shares, and none of the persons listed on this Schedule I has effected any transactions in the Shares during the past 60 days. I-3 40 Facsimile copies of the Letter of Transmittal, properly completed and duly signed, will be accepted. The Letter of Transmittal, certificates for the Shares and any other required documents should be sent by each holder of Shares or his broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of the addresses set forth below: The Depositary for the Offer is: THE BANK OF NEW YORK
By Mail: Facsimile Transmission: By Hand or Overnight Courier: -------- ----------------------- ----------------------------- (for Eligible Institutions Only) Tender & Exchange Department Tender & Exchange Department P.O. Box 11248 (212) 815-6213 101 Barclay Street Church Street Station Receive and Deliver Window New York, New York 10286-1248 New York, New York 10286 For Information Telephone: ------------------------------ (800) 507-9357
Questions and requests for assistance may be directed to the Information Agent or the Dealer Managers at their respective addresses and telephone numbers as set forth below. Additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and all other tender offer materials may be obtained from the Information Agent. Stockholders may also contact their brokers, dealers, commercial banks and trust companies or other nominees for assistance concerning the Offer. The Information Agent for the Offer is: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 Bankers and Brokers call collect: (212) 425-1685 Call Toll Free : (800) 714-3311 The Dealer Manager for the Offer is: MERRILL LYNCH & CO. World Financial Center North Tower New York, New York 10281-1305 (212) 449-8971 (Call Collect) EX-99.A.2 3 LETTER OF TRANSMITTAL 1 LETTER OF TRANSMITTAL TO TENDER SHARES OF CLASS A COMMON STOCK OF GIANT FOOD INC. PURSUANT TO THE OFFER TO PURCHASE DATED MAY 19, 1998 BY KONINKLIJKE AHOLD N.V. (ROYAL AHOLD) THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 17, 1998 UNLESS THE OFFER IS EXTENDED. THE DEPOSITARY FOR THE OFFER IS: THE BANK OF NEW YORK By Mail: Facsimile Transmission: By Hand or Overnight Courier: Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department P.O. Box 11248 (212) 815-6213 101 Barclay Street Church Street Station For Information Telephone: Receive and Deliver Window New York, New York 10286-1248 (800) 507-9357 New York, New York 10286 - --------------------------------------------------------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED - --------------------------------------------------------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN IF BLANK EXACTLY AS SHARES TENDERED NAME(S) APPEAR(S) ON THE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY) - --------------------------------------------------------------------------------------------------------------------------------- TOTAL NUMBER OF SHARES SHARE EVIDENCED BY NUMBER CERTIFICATE SHARE OF SHARES NUMBER(S)* CERTIFICATE(S)* TENDERED: --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- Total Shares - ---------------------------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares evidenced by any Share Certificate(s) delivered to the Depositary are being tendered. See Instruction 4. - -------------------------------------------------------------------------------- DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE COPY NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. 2 This Letter of Transmittal is to be completed by stockholders if certificates evidencing Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if tenders of Shares are to be made by book-entry transfer to the account maintained by the Depositary at The Depository Trust Company ("DTC") (the "Book-Entry Transfer Facility"), pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Stockholders who tender Shares by book-entry transfer are referred to herein as "Book-Entry Stockholders" and other stockholders are referred to herein as "Certificate Stockholders." Stockholders whose certificates evidencing Shares ("Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other documents required hereby to the Depositary on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or who cannot comply with the book-entry transfer procedures on a timely basis, may nevertheless tender their Shares according to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY FOR THIS OFFER (AS DEFINED HEREIN). [ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution ----------------------------------------------------------------------------- Account Number ----------------------------------------------------------------------------- Transaction Code Number ----------------------------------------------------------------------------- [ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s) ----------------------------------------------------------------------------- Window Ticket No. (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 ----------------------------------------------------------------------------- 3 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to Koninklijke Ahold N.V., a public company with limited liability incorporated under the laws of The Netherlands with its corporate seat in Zaandam (Municipal Zanstaad) (the "Purchaser"), the above-described shares of Class A Common Stock, par value $1.00 per share (the "Shares"), of Giant Food Inc., a Delaware corporation (the "Company"), pursuant to the Purchaser's Offer to Purchase all of the outstanding Shares at a price of $43.50 per Share, net to the seller in cash, without interest thereon (the "Offer Price"), dated May 19, 1998 (the "Offer to Purchase"), upon the terms and subject to the conditions set forth in the Offer to Purchase, receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together with the Offer to Purchase constitutes the "Offer"). The undersigned understands that the Purchaser reserves the right to assign to any direct or indirect wholly owned subsidiary the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but the undersigned further understands that any such assignment will not relieve the Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. Upon the terms and conditions of the Offer, subject to, and effective upon, acceptance for payment of and payment for the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Purchaser, all right, title and interest in and to all of the Shares that are being tendered hereby and any and all dividends, distributions, rights, other Shares and other securities issued or issuable in respect thereof on or after May 19, 1998 (collectively, "Distributions"), and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and all Distributions with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (a) deliver such Share Certificates (as defined herein) and all Distributions or transfer ownership of such Shares and all Distributions on the account books maintained by the Book-Entry Transfer Facility, together in either such case with all accompanying evidences of transfers and authenticity, to or upon the order of the Purchaser, (b) present such Shares 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 and all Distributions, all in accordance with the terms and the conditions of the Offer. The undersigned hereby irrevocably appoints the designees of the Purchaser, and each of them, the attorneys-in-fact and proxies of the undersigned, each with full power of substitution, to vote in such manner as each such attorney and proxy or any substitute thereof shall deem proper in the sole discretion of such attorney-in-fact and proxy or such substitute, and otherwise act (including pursuant to written consent) with respect to all of the Shares tendered hereby and all Distributions which have been accepted for payment by the Purchaser prior to the time of such vote or action, which the undersigned is entitled to vote at any meeting of stockholders (whether annual or special and whether or not an adjourned meeting) of the Company or otherwise. This proxy and power of attorney is coupled with an interest in the Shares and is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of such Shares and all Distributions by the Purchaser in accordance with the terms of the Offer. Such acceptance for payment shall revoke any other proxy granted by the undersigned at any time with respect to such Shares and all Distributions and no subsequent proxies will be given (or, if given, will not be deemed effective) with respect thereto by the undersigned. The undersigned understands that in order for Shares to be deemed validly tendered pursuant to the Offer, immediately upon the Purchaser's acceptance of such Shares and all Distributions for payment, the Purchaser or its designee must be able to exercise full voting rights with respect to such Shares and all Distributions, including, without limitation, voting at any meeting of the Company's stockholders then scheduled. 4 The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares and all Distributions tendered hereby and that when the same are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances, and the same will not be subject to any adverse claim. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment, and transfer of the Shares and all Distributions tendered hereby. In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of the Purchaser any and all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer; and, pending such remittance or appropriate assurance thereof, the Purchaser shall be entitled to all rights and privileges as owner of any such Distributions and may withhold the entire purchase price or deduct 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 of the Offer to Purchase, the tender of Shares hereby made is irrevocable. The undersigned understands that tenders of Shares pursuant to any of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the Offer. The Purchaser's acceptance for payment of such Shares will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions set forth in the Offer. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, the Purchaser may not be required to accept for payment any of the Shares tendered hereby. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price and/or return any Share Certificates not tendered or not accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price and/or return any Share Certificates not tendered or not accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered." In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or issue any Share Certificates not so tendered or accepted for payment in the name of, and deliver said check and/or return such certificates to, the person or persons so indicated. The undersigned recognizes that the Purchaser has no obligation, pursuant to the Special Payment Instructions, to transfer any Shares from the name of the registered holder thereof if the Purchaser does not accept for payment any of the Shares so tendered. 5 SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificate(s) for Shares not tendered or not purchased and/or the check for the purchase price of Shares purchased are to be issued in the name of someone other than the undersigned. Issue check and/or certificate(s) to: Name: ---------------------------------------------------- (PLEASE TYPE OR PRINT) Address: -------------------------------------------------- ------------------------------------------------------------ (INCLUDE ZIP CODE) ------------------------------------------------------------ (TAX IDENTIFICATION OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE) SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificate(s) for Shares not tendered or not purchased and/or the check for the purchase price of Shares purchased are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown above. Mail check and/or certificate(s) to: Name: ---------------------------------------------------- (PLEASE TYPE OR PRINT) Address: -------------------------------------------------- ------------------------------------------------------------ (INCLUDE ZIP CODE) ------------------------------------------------------------ (TAX IDENTIFICATION OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE) 6 IMPORTANT STOCKHOLDER(S) SIGN HERE (SEE INSTRUCTIONS 1 AND 5) (PLEASE COMPLETE SUBSTITUTE FORM W-9 CONTAINED HEREIN) Signature(s) of Holder(s) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Dated: - --------------------------- , 1998 (Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificate(s) and documents transmitted with this Letter of Transmittal. If the signature is made by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5.) Name(s): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (PLEASE PRINT) Capacity (Full Title): - -------------------------------------------------------------------------------- Address: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (INCLUDE ZIP CODE) ========================================================= (AREA CODE AND TELEPHONE NO.) (TAX IDENTIFICATION AND SOCIAL SECURITY NO.) GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature: - -------------------------------------------------------------------------------- Name: - -------------------------------------------------------------------------------- (PLEASE TYPE OR PRINT) Title: - -------------------------------------------------------------------------------- Name of Firm: - -------------------------------------------------------------------------------- Address: - -------------------------------------------------------------------------------- (INCLUDE ZIP CODE) Name of Firm: - -------------------------------------------------------------------------------- Area Code and Telephone Number: - -------------------------------------------------------------------------------- Dated: - --------------------------- , 1998 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) which is a participant in the Security Transfer Agents Medallion Program, or the Stock Exchange Medallion Program (an "Eligible Institution"). Signatures on this Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed by the registered holder(s) of the Shares (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) tendered herewith and such holder(s) have not completed either the instruction entitled "Special Payment Instructions" or the instruction entitled "Special Delivery Instructions" on this Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instruction 5 of this Letter of Transmittal. 2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES OR BOOK-ENTRY CONFIRMATIONS. This Letter of Transmittal is to be used either if Share Certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. Share Certificates evidencing all physically tendered Shares or confirmation of any book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility of Shares tendered by book-entry transfer, as well as this Letter of Transmittal or a facsimile thereof, properly completed and duly executed with any required signature guarantees or an Agent's Message, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). Stockholders whose Share Certificates are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary on or prior to the Expiration Date or who cannot complete the procedures for book-entry transfer on a timely basis may nevertheless tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Purchaser must be received by the Depositary on or prior to the Expiration Date; and (iii) Share Certificates or confirmation of any book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility of Shares tendered by book-entry transfer, as well as a Letter of Transmittal, properly completed and duly executed with any required signature guarantees (or a facsimile thereof, properly completed and duly executed with any required signature guarantees or an Agent's Message), and all other documents required by this Letter of Transmittal, must be received by the Depositary within three American Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery. If Share Certificates are forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal (of facsimile hereof) must accompany each such delivery. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF SUCH DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering stockholders, by execution of this Letter of Transmittal or a facsimile hereof, waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided under "Description of Shares Tendered" is inadequate, the Share Certificate numbers and/or the number of Shares should be listed on a separate schedule and attached hereto. 8 4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer than all the Shares evidenced by any Share Certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such cases, new Share Certificate(s) evidencing the remainder of the Shares that were evidenced by Share Certificate(s) delivered to the Depositary will be sent to the person signing this Letter of Transmittal, unless otherwise provided in the box entitled "Special Delivery Instructions" on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holders of the Shares tendered hereby, the signature must correspond with the names as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of Shares. If this Letter of Transmittal or any Share Certificate or stock power is signed by a trustee, executor, administrator, attorney-in-fact, officer of a corporation or other person acting in fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Purchaser of such person's authority so to act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment is to be made to, or Share Certificates evidencing Shares not tendered or purchased are to be issued in the name of, a person other than the registered holder(s). Signatures on such certificates 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 of the Shares tendered hereby, the Share Certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holder or holders appear(s) on such Share Certificate(s). Signatures on such Share Certificates or stock powers must be guaranteed by an Eligible Institution. 6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6, the Purchaser will pay or cause to be paid any stock transfer taxes with respect to the transfer and sale of purchased Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price of any Shares purchased is to be made to, or, in the circumstances permitted hereby, if Share Certificates for Shares not tendered or purchased are to be registered in the name of, any person other than the registered holder, or if tendered Share Certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder or such person) payable on account of the transfer to such person will be deducted from the purchase price if satisfactory evidence of the payment of such taxes, or exemption therefrom, is not submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES LISTED IN THIS LETTER OF TRANSMITTAL. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase price is to be issued in the name of, and/or Share Certificates for Shares not tendered or not accepted for payment are to be issued or returned to, a person other than the signer of this Letter of Transmittal or if a check and/or such Share Certificates are to be mailed to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. 9 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 below or from your broker, dealer, commercial bank or trust company. 9. SUBSTITUTE FORM W-9. Under the United States federal income tax backup withholding rules, unless an exemption applies under the applicable law and regulations, 31% of the gross proceeds payable to a shareholder or other payee pursuant to the Offer must be withheld and remitted to the United States Treasury, unless the shareholder or other payee provides his or her taxpayer identification number ("TIN") (employer identification number or social security number) to the Depositary and certifies that such number is correct. Therefore, each tendering shareholder should complete and sign the Substitute Form W-9 included as part of the Letter of Transmittal so as to provide the information and certification necessary to avoid backup withholding, unless such shareholder otherwise establishes to the satisfaction of the Depositary that it is not subject to backup withholding. Certain shareholders (including, among others, all corporation and certain foreign shareholders) are not subject to these backup withholding and reporting requirements. In order for a foreign shareholder to qualify as an exempt recipient, that shareholder should submit an IRS Form W-8 or a Substitute Form W-8, signed under penalties of perjury, attesting to that shareholder's exempt status. Such statements can be obtained from the Depositary. Failure to provide the information on the form may subject to tendering shareholder to 31% U.S. federal income tax withholding on the payment of the purchase price. If the tendering shareholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, such shareholder should write "Applied For" in the space for the TIN in Part 1 of the Substitute Form W-9, sign and date the form and provide it to the Depositary. Notwithstanding that "Applied For" is written on Part 1 and the certification is completed, the Depositary will withhold 31% of all payments made prior to the time a properly certified TIN is provided. 10. LOST OR DESTROYED CERTIFICATES. If any Share Certificates have been lost or destroyed, the stockholder should promptly notify the Company's transfer agent, American Stock Transfer & Trust Co. The stockholder will then be instructed as to the procedure to be followed in order to replace the Share Certificates. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed Share Certificates have been followed. Important: This Letter of Transmittal or a facsimile hereof or an Agent's Message together with Share Certificates or confirmation of book-entry transfer and all other required documents or the Notice of Guaranteed Delivery must be received by the Depositary on or prior to the Expiration Date. IMPORTANT TAX INFORMATION Under U.S. federal income tax law, a stockholder that is a United States person (other than an "exempt recipient") whose tendered Shares are accepted for purchase is required by law to provide the Depositary (as payer) with such stockholder's correct TIN on Substitute Form W-9 below. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If such stockholder is an individual, the TIN is his or her social security number. If a stockholder fails to provide a TIN to the Depositary, such stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such stockholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding of 31%. Certain stockholders (including, among others, all corporations and foreign persons that provide appropriate certification) are not subject to these backup withholding and reporting requirements. In order for a foreign person to qualify as an exempt recipient, that stockholder must submit an Internal Revenue Service Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 can be obtained from the Depositary. 10 If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the stockholder or payee. 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 from the Internal Revenue Service. If the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future, such stockholder should write "Applied For" in the space for the TIN in Part 1 of the Substitute Form W-9, sign and date the form and provide it to the Depositary. Generally, the stockholder then will have 60 days to obtain a TIN and to provide it to the Depositary. The Depositary will withhold 31% of all payments prior to the time a property certified TIN is provided to the Depositary. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup U.S. federal income tax withholding with respect to payment of the purchase price for Shares purchased pursuant to the Offer, a stockholder must provide the Depositary with his or her correct TIN by completing the Substitute Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and that (1) such stockholder has not been notified by the Internal Revenue Service that he or she is subject to backup withholding as a result of failure to report all interest or dividends or (2) the Internal Revenue Service has notified the stockholder that he or she is no longer subject to backup withholding. WHAT NUMBER TO GIVE THE DEPOSITARY The stockholder is required to give the Depositary the social security number or employer identification number of the record holder of the Shares tendered hereby. If Shares are registered in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. 11 TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS (SEE INSTRUCTION 9) - --------------------------------------------------------------------------------------------------------------------------- PAYER'S NAME: [ ] - --------------------------------------------------------------------------------------------------------------------------- SUBSTITUTE PART I -- Please provide your TIN in the box at ---------------------------------------- FORM W-9 right and certify by signing and dating below. Social Security Number or Employer Identification Number ------------------------------------------------------------------------------------------- DEPARTMENT OF THE TREASURY PART II -- For Payees exempt from Backup Withholding: Write "Exempt" in this Part 2, enter INTERNAL REVENUE SERVICE your correct TIN in Part 1 and sign and date this form. ------------------------------------------------------------------------------------------- PAYER'S REQUEST FOR PART III -- Certification -- Under penalties of perjury, I certify that: TAXPAYER IDENTIFICATION (1) The number shown on this form is my correct Taxpayer Identification Number (or I am NUMBER ("TIN") waiting for a number to be issued to me), and AND CERTIFICATION (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 and Certification withholding. CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding because of under-reporting interest or dividends on your tax return. ------------------------------------------------------------------------------------------- Signature Date: ______________ Name (Please Print) Address City, State and Zip Code - ---------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATIONS OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. 12 The Information Agent for the Offer Is: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 Banks and Brokerage Firms, please call collect: (212) 425-1685 Call Toll Free: (800) 714-3311 The Dealer Manager for the Offer is: MERRILL LYNCH & CO. World Financial Center North Tower New York, New York 10281-1305 (212) 449-8971 (Call Collect) EX-99.A.3 4 LETTER TO BROKERS, DEALERS, COMMERCIAL BANKS 1 OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF CLASS A COMMON STOCK OF GIANT FOOD INC. AT $43.50 NET PER SHARE BY KONINKLIJKE AHOLD N.V. (ROYAL AHOLD) THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS EXTENDED. May 19, 1998 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by Koninklijke Ahold N.V., a public company with limited liability incorporated under the laws of The Netherlands with its corporate seat in Zaandam (municipality Zaanstad) (the "Purchaser"), to act as Dealer Manager in connection with the Purchaser's offer to purchase for cash all outstanding shares of Class A Common Stock, par value $1.00 per share (the "Shares"), of Giant Food Inc., a Delaware corporation (the "Company"), at a price of $43.50 per Share, net to the seller in cash, as set forth in the Introduction to the Offer to Purchase, dated May 19, 1998 (the "Offer to Purchase"), 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 (which, as they may be amended and supplemented from time to time together constitute the "Offer"), copies of which are enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares in your name or in the name of your nominee. Enclosed herewith for your information and forwarding to your clients are copies of the following documents: 1. The Offer to Purchase dated May 19, 1998. 2. The Letter of Transmittal to tender Shares for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal may be used to tender Shares. 3. A letter to holders of Shares from Pete L. Manos, the Chairman of the Board and President of The 1224 Corporation, together with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by The 1224 Corporation and mailed to holders of Shares. 4. A Letter to holders of Shares from Pete L. Manos, the Chairman of the Board, President and Chief Executive Officer of the Company, for the Director/Management Committee of the Company, together with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities 2 and Exchange Commission by the Director/Management Committee of the Company and mailed to holders of Shares. 5. The Notice of Guaranteed Delivery for Shares to be used to accept the Offer if neither of the two procedures for tendering Shares set forth in the Offer to Purchase can be completed on a timely basis. 6. A printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. 7. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. 8. A return envelope addressed to The Bank of New York, the Depositary. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER EXPIRES AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS EXTENDED. Please note the following: 1. The tender price is $43.50 per Share, net to the seller in cash, without interest thereon, as set forth in the Introduction to the Offer to Purchase. 2. The Offer is subject to certain terms and conditions. See the Introduction and Sections 1 and 14 of the Offer to Purchase. 3. The Offer is being made for all of the outstanding Shares. 4. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 to the Letter of Transmittal, transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. However, federal income tax backup withholding at a rate of 31% may be required, unless an exemption is available or unless the required tax identification information is provided. See Instruction 9 to the Letter of Transmittal. 5. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Wednesday, June 17, 1998, unless the Offer is extended. 6. The Strategic Planning Committee of the Board of Directors of the Company has unanimously determined that the Offer is fair to, and in the best interests of, the holders of the Shares and has unanimously recommended to the Board of Directors of the Company that it approve the Offer and recommend that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer. As of the date hereof, the full Board of Directors of the Company has not reviewed the Offer and has not taken a position with respect to the Offer. 7. Notwithstanding any other provision of the Offer, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) the certificates evidencing such Shares (the "Share Certificates") pursuant to the procedures set forth in Section 3 of the Offer to Purchase, or a timely Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to such Shares, (b) the Letter of Transmittal or a facsimile thereof, properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry transfer, and (c) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering stockholders at the same time depending upon when Share Certificates are actually received by the Depositary. In order to take advantage of the Offer, (i) a duly executed and properly completed Letter of Transmittal or a facsimile thereof and any required signature guarantee or other required documents should be sent to the Depositary and (ii) Share Certificates representing the tendered Shares or a timely Book-Entry Confirmation 3 (as defined in the Offer to Purchase) should be delivered to the Depositary in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. If holders of Shares wish to tender, but it is impracticable for them to forward their Share Certificates or other required documents or complete the procedures for book-entry transfer prior to the Expiration Date, a tender may be effected by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. The Purchaser will, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. The Purchaser will pay or cause to be paid any transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 to 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) 449-8971 (call collect), or to D.F. King & Co., Inc., the Information Agent for the Offer, at 77 Water Street, New York, New York 10005, telephone number (212) 425-1685. 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, 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. EX-99.A.4 5 FORM OF LETTER TO CLIENTS 1 OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF CLASS A COMMON STOCK OF GIANT FOOD INC. AT $43.50 NET PER SHARE BY KONINKLIJKE AHOLD N.V. (ROYAL AHOLD) THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS EXTENDED. May 19, 1998 To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated May 19, 1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer") relating to the offer by Koninklijke Ahold N.V., a public company with limited liability incorporated under the laws of The Netherlands with its corporate seat in Zaandam (municipality Zaanstad) (the "Purchaser"), to purchase all the outstanding shares of Class A Common Stock, par value $1.00 per share (the "Shares"), of Giant Food Inc., a Delaware corporation (the "Company"), at a purchase price of $43.50 per Share, net to the seller in cash, as set forth in the Introduction to the Offer to Purchase, without interest thereon, upon the terms and subject to the conditions set forth in the Offer. Holders of Shares whose certificates evidencing such Shares (the "Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other required documents to The Bank of New York as depositary (the "Depositary") or complete the procedures for book-entry transfer prior to the Expiration Date (as defined in the Offer to Purchase) must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. We are (or our nominee is) the holder of record of Shares held by us for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account. Accordingly, we request instruction as to whether you wish to have us tender on your behalf any or all Shares held by us for your account pursuant to the terms and conditions set forth in the Offer. Please note the following: 1. The tender price is $43.50 per Share, net to the seller in cash, without interest thereon, as set forth in the Introduction to the Offer to Purchase. 2. The Offer is subject to certain terms and conditions. See the Introduction and Sections 1 and 14 of the Offer to Purchase. 2 3. The Offer is being made for all of the outstanding Shares. 4. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 to the Letter of Transmittal, transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. However, federal income tax backup withholding at a rate of 31% may be required, unless an exemption is provided or unless the required taxpayer identification information is provided. See Instruction 9 to the Letter of Transmittal. 5. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Wednesday, June 17, 1998, unless the Offer is extended. 6. The Strategic Planning Committee of the Board of Directors of the Company has unanimously determined that the Offer is fair to, and in the best interests of, the holders of the Shares and unanimously recommended to the Board of Directors of the Company that it approve the Offer and recommend that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer. As of the date hereof, the full Board of Directors of the Company has not reviewed the Offer and has not taken a position with respect to the Offer. 7. Notwithstanding any other provision of the Offer, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) the Share Certificates pursuant to the procedures set forth in Section 3 of the Offer to Purchase, or a timely Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to such Shares, (b) the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees or an Agent's Message) (as defined in the Offer to Purchase) in connection with a book-entry transfer, and (c) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering stockholders at the same time depending upon when Share Certificates are actually received by the Depositary. If you wish to have us tender any or all of the Shares held by us for your account please so instruct us by completing, executing, detaching and returning to us the instruction form set forth herein. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified below. An envelope to return your instructions to us is enclosed. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the Expiration Date. The Purchaser is not aware of any jurisdiction where the making of the Offer is prohibited by any administrative or judicial action pursuant to any valid state statue. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of the Shares pursuant thereto, the Purchaser will make a good faith effort to comply with such state statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, the Purchaser cannot comply with any such state statute, the Offer will not be made to (and tenders will not be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by Merrill Lynch, Pierce, Fenner & Smith Incorporated or one or more registered brokers or dealers which are licensed under the laws of such jurisdiction. 2 3 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF CLASS A COMMON STOCK OF GIANT FOOD INC. The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to Purchase, dated May 19, 1998, and the related Letter of Transmittal (which together constitute the "Offer") in connection with the offer by Koninklijke Ahold N.V., a public company with limited liability incorporated under the laws of The Netherlands with its corporate seat in Zaandam (municipality Zaanstad) (the "Purchaser"), to purchase all outstanding shares of Class A Common Stock, par value $1.00 per share (the "Shares"), of Giant Food Inc., a Delaware corporation. This will instruct you to tender to the Purchaser the number of Shares indicated below (or if no number is indicated below, all Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Number of Shares to be Tendered*: ----------------------------------------------------- Date: --------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SIGN HERE Signature(s): ----------------------------------------------------------------------- (Print Name(s)): ------------------------------------------------------------------- (Print Address(es)): ----------------------------------------------------------------- (Area Code and Telephone Number(s)): -------------------------------------------------- (Taxpayer Identification or Social Security Number(s)): ---------------------------------------- * Unless otherwise indicated, it will be assumed that all of your Shares held by us for your account are to be tendered. 3 EX-99.A.5 6 PRESS RELEASE 1 AHOLD ANNOUNCES LARGE NEW US ACQUISITION Ahold acquires control of Giant Food Inc. with sales of USD 4.2 billion - - Giant Food Inc. operates 176 supermarkets, prominent in Washington and Baltimore - - Acquisition is perfect fit with Ahold USA (1997 sales of USD 14.3 billion) - - Considerable synergies with Ahold's existing operations - - Tender offer at USD 43.50 per share to be made for all of Giant Food Inc.'s outstanding non-voting shares - - Considerable contribution to growth of Ahold's earnings per share Zaandam, The Netherlands/Landover, Maryland. USA, May 19, 1998 - Royal Ahold, the international food retailer, and the holding company 1224 Corporation today signed an agreement for the purchase by Ahold of all the Class AC voting shares in Giant Food Inc. held by the 1224 Corporation at a price per share of USD 43.50. Ahold has also reached agreement, subject to contract, to acquire for the aggregate amount of USD 100 million all the Class AL voting shares currently owned by J. Sainsbury USA Holdings Inc., a subsidiary of the British supermarket company J. Sainsbury plc., London, UK. Sainsbury will also tender its 11.8 million class A non-voting shares in Giant Food Inc. Headquartered in Landover, Maryland, Giant Food Inc. is the prominent supermarket company in the Washington D.C. metropolitan area with sales of USD 4.2 billion in its fiscal year ended February 28, 1998. Upon completion of the purchase of the Class AC voting shares and Class AL voting shares, Ahold will be entitled to appoint all nine members of Giant Food Inc.'s Board of Directors. As a result, Ahold will have full control of Giant Food Inc. - ----------------------- Not for publication: Invitation to a press conference this evening, Tuesday, May 19, at 19.00 hours at Royal Ahold corporate headquarters in Zaandam, Albert Heijnweg 1. Details at end of press release. 2 Full interaction of Giant Food Inc. within Ahold USA - ---------------------------------------------------- Upon completion of the acquisition, Ahold intends to continue operating Giant Food Inc. as a separate operating company. Giant Food Inc. will be fully integrated within Ahold USA. Ahold USA achieved 1997 sales of USD 14.3 billion. Considerable synergy benefits among Ahold's current four US operating companies and Giant Food Inc. are anticipated. Background to GIANT FOOD INC.'S capital structure - ------------------------------------------------- Giant Food Inc.'s capital structure consists of three classes of shares: - 125,000 shares of Class AC Voting Stock which elects five directors. All of the Class AC Voting Stock is owned by 1224 Corporation, a Delaware corporation created under the will of Israel Cohen who died in November 1995. - 125,000 shares of Class AL Voting Stock which elects four directors. All of the Class AL Voting Stock is owned by J. Sainsbury USA Holdings, Inc., which is a subsidiary of J. Sainsbury plc, London, England. - Approximately 59.9 million shares of Class A Non-Voting Stock which trades on the American Stock Exchange. Tender offer for Giant Food Inc.'s Class A Non-Voting Stock - ----------------------------------------------------------- Ahold will now commence a tender offer for all the outstanding Class A Non-Voting Stock -- approximately 59.9 million shares -- at the same price of USD 43.05 per share. This represents an amount of approximately USD 2.6 billion, which is a premium of approximately 14% over Giant Food Inc.'s closing share price on May 18, 1998. Regulatory Approval - ------------------- Completion of the acquisition by Ahold of the AC voting stock held by the 1224 Corporation and the AL voting stock held by Sainsbury as well as the A non-voting stock is subject to a number of conditions, including the obtaining of the necessary regulatory approvals. Positive impact on growth of earnings per Ahold share - ----------------------------------------------------- Ahold intends to finance the transaction initially through a bridge loan and an existing facility, and to refinance the transaction in due course by an equity issue. Ahold's acquisition of Giant Food Inc. is expected to be non-dilutive to Ahold's earnings per share growth in the first year following the acquisition, and significantly enhancing thereafter. Ahold reconfirms its previously-expressed expectation that net earnings and earnings per share in 1998 will be significantly higher than in 1997. Upon completion of the transaction, Ahold will operate over 1,000 supermarkets and other stores in the United States with annualized sales approaching USD 20 billion. Giant Food Inc. well-known in US - -------------------------------- Headquartered in Landover, Maryland, Giant Food Inc. is one of the best-known supermarket companies in the United States. The company employs 28,000 people and operates 176 stores, predominantly Superstores and conventional supermarkets in the District of Columbia and five states: Maryland (and the city of Baltimore in particular), Delaware, New Jersey, Pennsylvania and Virginia. For the 53-week year ended February 28, 1998, Giant had sales of USD 4.2 billion and net income of USD 71.2 million. Giant Food Inc. is unrelated to Ahold's Carlisle, PA-based Giant Food Stores subsidiary acquired in 1981. 3 STRATEGIC BENEFITS FOR AHOLD USA AND GIANT Both Ahold USA and Giant Food Inc. foresee significant benefits from the combination in terms of operating synergies, exchange of best practices and margin improvement. As a result, both companies will be able to strengthen customer service while jointly accelerating growth. Upon completion of the transaction, Giant Food Inc. will be fully consolidated for accounting purposes with the rest of Ahold's consolidated operations. AHOLD'S WORLDWIDE ANNUALIZED SALES TO APPROACH USD 35 BILLION Including recent Latin American investments and upon completion of the acquisition of Giant Food Inc., Ahold's worldwide operations will generate consolidated annualized sales of approximately USD 35 billion. REMARKS BY AHOLD PRESIDENT & CEO CEES VAN DER HOEVEN 'Our US strategy continues to move forward as another prominent supermarket company reinforces our market coverage and growth prospects. Giant Food Inc. is an excellent company with a strong consumer franchise and a high-quality operating base. Giant is highly compatible with our other US companies and as part of Ahold USA will significantly accelerate its development, benefiting all our US customers. We have been following Giant Food Inc. for some time and are delighted to be able to integrate them into our US operations. The acquisition is a perfect fit with our existing US organization and is fully in line with our long-term strategic objectives.' REMARKS BY PETE MANOS, PRESIDENT & CEO OF GIANT FOOD INC. 'For many years, we have watched the growth and success of Ahold with great admiration. The sale of all Giant's voting stock to such a fine organization as Ahold with a consistent record of integrity, good employee and community relations and service to customers safeguards the continuity of our company. Ahold has a clear, long-term vision for growth and the capacity and skills to achieve its goals. We believe joining forces with Ahold will greatly benefit Giant Food Inc.'s customers, associates and shareholders. The internal synergy with Ahold's four existing operating companies in the US appeals to us and will considerably reinforce our ability to compete. We are delighted to team up with Ahold.' REMARKS BY ROBERT ZWARTENDIJK, PRESIDENT & CEO OF AHOLD USA 'We are happy to welcome Giant Food Inc. into the Ahold USA family. Geographically, it is the perfect, natural fit to our existing operations along the eastern seaboard. Strategically, Giant Food Inc. adds critical mass and highly-developed food retailing expertise. Locally, Giant Food Inc. has long been a highly respected supermarket company enjoying a healthy reputation for quality, innovation and customer service. It's a win-win situation for both companies and their customers!' 4 GIANT FOOD INC. Giant Food Inc. operates stores in three formats: newer, larger Superstores averaging 53,000 sq.ft.; older superstores in the 44,000 sq.ft. range; and conventional supermarkets of around 30,000 sq.ft. They offer a full line of dry groceries, meat, produce, seafood, flowers, prepared foods and household/non-food items. The company carries about 1,500 private label products and manufactures its own branded products for sale at its stores, including baked goods, dairy products, ice cream and soft drinks. Giant Food Inc. also operates three drugstores and its Giant Realty subsidiary manages 29 shopping centers and coordinates the development of new stores. The company was formed in 1935, opened its first store a year later and went public in 1959. AHOLD USA Ahold has been active in the US market since 1977 and now ranks among the top food retailers in the United States with 830 stores and 1997 sales of USD 14.3 billion. The company is making substantial progress in developing synergies among its chains, benefiting its US customers. Private label products are purchased jointly and IT systems, distribution, construction and administrative processes are being integrated. Ahold USA's four operating companies are: Stop & Shop, with 1997 sales of USD 5.5 billion, operates 187 superstores and supermarkets in New England. Giant Food Stores (including Edwards), with 1997 sales of USD 3.2 billion, operates 144 supermarkets in New Jersey, New York, Pennsylvania, Maryland, Virginia and West Virginia. Tops Markets (including Finast), with 1997 sales of USD 2.8 billion, operates 236 stores mainly in New York and Ohio in and around the cities of Buffalo, Rochester and Cleveland. And BI-LO, with 1997 sales of USD 2.8 billion, operates 263 stores in North and South Carolina, Tennessee and Georgia. Stop & Shop was acquired by Ahold in 1996, Giant Food Stores in 1981, Tops Markets in 1991 and BI-LO in 1977. Since their acquisition by Ahold, the companies have maintained their identity and grown significantly. ROYAL AHOLD Royal Ahold is a rapidly growing international food retailer with leading supermarket chains in the United State, Europe, Latin America and Asia, Headquartered in The Netherlands, the company operates worldwide over 3,200 supermarkets, hypermarkets and specialty stores in 17 countries. Sales for 1997 amounted to approximately USD 26 billion, operating results totaled about USD 900 million and net earnings of approximately USD 467 million were achieved. Ahold employs almost 220,000 people and serves about 20 million customers world-wide every week. Ahold shares are listed on the AEX Stock Exchange, the Swiss Exchange and, in the form of American Depositary Receipts (ADRs) on the New York Stock Exchange. EDITORIAL NOTE: A press conference will be held at 19.00 hours this evening at Royal Ahold corporate headquarters, Albert Heijnweg 1, Zaandam, The Netherlands, tel.:+31 75 659 9111, fax: +31 75 659 8360. You will also be receiving additional information on Giant Food Inc. during the press conference from Cees van der Hoeven, President & CEO of Ahold, and Michiel Meurs, Chief Financial Officer. - ------------------------------------------------------------------------------ Ahold Corporate Communications: Hans Gobes, Senior Vice President Corporate Communications tel: +31 75 659 5665 (office), +31 23 527 0456 (after office hours) Jan Hol, Vice President Public Relations, tel: +31 75 659 5720 (office), +31 318 523 789 (after office hours). EX-99.A.6 7 FORM OF NEWSPAPER ADVERTISEMENT 1 THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE DATED MAY 19, 1998 AND THE RELATED LETTER OF TRANSMITTAL AND IS BEING MADE TO ALL HOLDERS OF SHARES. PURCHASER IS NOT AWARE OF ANY STATE WHERE THE MAKING OF THE OFFER IS PROHIBITED BY ANY ADMINISTRATIVE OR JUDICIAL ACTION PURSUANT TO ANY VALID STATE STATUTE. IF PURCHASER BECOMES AWARE OF ANY VALID STATE STATUTE PROHIBITING THE MAKING OF THE OFFER OR THE ACCEPTANCE OF SHARES PURSUANT THERETO, PURCHASER WILL MAKE A GOOD FAITH EFFORT TO COMPLY WITH SUCH STATE STATUTE OR SEEK TO HAVE SUCH STATE STATUTE DECLARED INAPPLICABLE TO THE OFFER. IF, AFTER SUCH GOOD FAITH EFFORT, PURCHASER CANNOT COMPLY WITH SUCH STATE STATUTE, THE OFFER WILL NOT BE MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) THE HOLDERS OF SHARES IN SUCH STATE. IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON BEHALF OF KONINKLIJKE AHOLD N.V. BY MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OF THE OUTSTANDING SHARES OF CLASS A COMMON STOCK OF GIANT FOOD INC. AT $43.00 NET PER SHARE BY KONINKLIJKE AHOLD N.V. (ROYAL AHOLD) Koninklijke Ahold N.V., a corporation organized under the laws of the Netherlands ("Purchaser"), is offering to purchase all outstanding shares of Class A Common Stock, par value $1.00 per share (the "Shares"), of Giant Food Inc., a Delaware corporation (the "Company"), at a price of $43.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 20, 1998 and in the related Letter of Transmittal (which, as they may be amended and supplemented from time to time, together constitute the "Offer"). If Purchaser or any of its affiliates acquires, or enters into a binding agreement to acquire, all of the shares of Class AL Common Stock, par value $1.00 per share (the "Class AL Shares"), of the Company prior to the Expiration Date (defined below), the offer price of $43.00 per Share, net to the Seller in cash, shall be increased to $ per Share, net to the Seller in cash. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 17, 1998 UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF SHARES WHICH CONSTITUTES AT LEAST SIXTY-FIVE PERCENT (65%) OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION AND SECTION 1 OF THE OFFER TO PURCHASE. The Offer is being made pursuant to a Stock Purchase Agreement, dated as of May 19, 1998 (the "Stock Purchase Agreement"), between Purchaser and The 1224 Corporation (the "Selling Shareholder"), a Delaware corporation and the owner of all the issued and outstanding Class AC Common Stock, par value $1.00 per share, of the Company (the "Class AC Shares"). The Stock Purchase Agreement provides, among other things, that, on the terms and subject to the provisions provided therein, (i) Purchaser will purchase from the Selling Shareholder all the Class AC Shares at the same price per share paid for the Shares pursuant to the Offer, (ii) Purchaser will make the Offer for the Shares, and (iii) the Selling Shareholder will tender pursuant to the Offer all Shares owned by it. The Class AC Shares represent 50% of the voting power of the outstanding shares of capital stock of the Company and the holder thereof is entitled to elect five of the nine members of the Board of Directors of the Company. Purchaser and J Sainsbury plc ("Sainsbury"), which owns all of the outstanding shares of Class AL Common Stock, par value $1.00 per share, of the Company (the "Class AL Shares"), and 11,799,931 Shares (or approximately 20% of the outstanding Shares), have agreed, subject to agreement on documentation, (i) for Sainsbury to sell, and for Purchaser to purchase, all of the Class AL Shares for an aggregate purchase price of $100,000,000 on the terms and conditions to be agreed upon and (ii) for Sainsbury to tender pursuant to the Offer, upon the terms and subject to the conditions set forth in the Offer to Purchase, all of the Shares owned by Sainsbury. The Class AL Shares represent 50% of the number of voting shares of the Company and the holder thereof is entitled to elect four of the nine members of the Board of Directors of the Company. THE STRATEGIC PLANNING COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY RECOMMENDED TO THE BOARD OF DIRECTORS OF THE COMPANY THAT IT APPROVE AND RECOMMEND ACCEPTANCE OF THE OFFER BY THE HOLDERS OF SHARES. THE BOARD OF DIRECTORS OF THE COMPANY WILL REVIEW THE OFFER AND, AS OF THE DATE HEREOF, HAS NOT TAKEN A POSITION WITH RESPECT TO THE OFFER. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 to the Letter of Transmittal, stock transfer taxes on the purchase of Shares pursuant to the Offer. For purposes of the Offer, Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares, validly tendered and not properly withdrawn if, as and when Purchaser gives oral or written notice to the depositary named below (the "Depositary") of its acceptance of such Shares for payment. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders, for the purpose of receiving payments from Purchaser and transmitting payments to such tendering stockholders whose Shares have theretofore been accepted for payment. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares or, in the case of Shares held in book-entry form, timely confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility as defined in Section 2 of the Offer to Purchase, (ii) a duly executed Letter of Transmittal (or facsimile thereof) or Agent's Message (in the case of a book-entry transfer), and (iii) all other documents required by the Letter of Transmittal. Under no circumstances will interest be paid on the purchase price for the tendered Shares, regardless of any delay in making such payment or extension of the Expiration Date. The "Expiration Date" shall be 12:00 midnight, New York City time, on Wednesday, June 17, 1998, unless and until Purchaser, in accordance with the terms of the Offer, shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire. Subject to the applicable rules and regulations of the Securities and Exchange Commission (the "Commission") and applicable law, Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, to extend for any reason the period of time during which the Offer is open, including upon the occurrence of any of the events specified in Section 14 of the Offer to Purchase, by giving oral or written notice of such extension to the Depositary. Subject to the applicable rules and regulations of the Commission and to applicable law, Purchaser also expressly reserves the right, in its sole discretion at any time and from time to time: (i) to delay acceptance for payment of, or, regardless of whether such Shares were theretofore accepted for payment, payment for, any Shares pending receipt of any regulatory approval specified in Section 15 of the Offer to Purchase or in order to comply in whole or in part with any other applicable law; (ii) to terminate the Offer and not accept for payment any Shares if any of the conditions referred to in Section 14 of the Offer to Purchase are not satisfied or any of the events specified in Section 14 of the Offer to Purchase have occurred; and (iii) to waive any condition, or otherwise amend the Offer in any respect, in each case by giving oral or written notice of such delay, termination, waiver or amendment to the Depositary and by making a public announcement thereof. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw such stockholder's Shares. Any such extension, delay, termination, waiver or amendment will be followed, as promptly as practicable, by a public announcement thereof by no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Securities Exchange Act of 1934 , as amended (the "Exchange Act"), which require that material changes be promptly disseminated to stockholders in a manner reasonably designed to inform them of such changes) and without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release to the Dow Jones News Service or as otherwise may be required by applicable law. Except as otherwise provided below, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn any time prior to the expiration date and, unless theretofore accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn at any time after July 18, 1998, or at such later time as may apply if the Offer is extended. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of the addresses set forth below. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn, and the name of the registered holder of the Shares, if different from that of the person who tendered such Shares. If certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the tendering stockholders must submit the serial numbers shown on the particular certificate evidencing the Shares to be withdrawn and, unless the Shares evidenced by such certificates have been tendered by an Eligible Institution (as defined in Section 3 of the Offer to Purchase) or by means of a Letter of Transmittal, the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and must otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals of tendered Shares may not be rescinded (without Purchaser's consent), and any Shares properly withdrawn will 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 Purchaser, in its sole discretion, which determination shall be final and binding. None of 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. Any Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer, but may be retendered at any time prior to the Expiration Date by following any of the procedures described in Section 3 of the Offer to Purchase. The Company has provided Purchaser with the Company's list of holders of the Shares and security position listings in respect of the Shares for the purpose of disseminating the Offer to the holders of Shares. The Offer to Purchase, the Letter of Transmittal and any other relevant materials will be mailed to record holders of Shares whose names appear on the Company's list of holders of the Shares and will be furnished, for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names or the names of whose nominees, appear on the Company's list of holders of the Shares, or if applicable, who are listed as participants in a clearing agency's security position listing. THE INFORMATION REQUIRED TO BE DISCLOSED BY PARAGRAPH (E)(1)(VII) OF RULE 14D-6 UNDER THE EXCHANGE ACT IS CONTAINED IN THE OFFER TO PURCHASE AND IS INCORPORATED HEREIN BY REFERENCE. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Requests for copies of the Offer to Purchase, the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent as set forth below, and copies will be furnished promptly at Purchaser's expense. Questions or requests for assistance may be directed to the Information Agent or the Dealer Manager as set forth below. The Information Agent for the Offer is: D. F. KING & CO., INC. 77 Water Street New York, New York 10005 Bankers and Brokers call collect: (212) 425-1685 Call Toll Free: (800) 714-3311 The Depositary for the Offer is: THE BANK OF NEW YORK
Facsimile Transmission: By Mail: (for Eligible Institutions Only) Tender & Exchange Department (212) 815-6213 P. O. Box 11248 Church Street Station For Information Telephone: New York, New York 10286-1248 (800) 507-9357 By Mail: By Hand or Overnight Courier: Tender & Exchange Department Tender & Exchange Department P. O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver Window New York, New York 10286-1248 New York, New York 10286
The Dealer Manager for the Offer is: MERRILL LYNCH & CO. World Financial Center North Tower New York, New York 10281-1305 (212) 449-8971 (Call Collect) MAY 20, 1998 EX-99.A.7 8 NOTICE OF GUARANTEED DELIVERY 1 - -------------------------------------------------------------------------------- THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN ANY DOUBT AS TO THE ACTION TO BE TAKEN, YOU SHOULD SEEK YOUR OWN FINANCIAL ADVICE IMMEDIATELY FROM YOUR OWN APPROPRIATELY AUTHORIZED INDEPENDENT FINANCIAL ADVISOR. IF YOU HAVE SOLD OR TRANSFERRED ALL OF YOUR REGISTERED HOLDING OF SHARES (AS DEFINED BELOW), PLEASE FORWARD THIS DOCUMENT AND ALL ACCOMPANYING DOCUMENTS TO THE STOCKBROKER, BANK OR OTHER AGENT THROUGH WHOM THE SALE OR TRANSFER WAS EFFECTED, FOR TRANSMISSION TO THE PURCHASER OR TRANSFEREE. - -------------------------------------------------------------------------------- NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF CLASS A COMMON STOCK (NOT TO BE USED FOR SIGNATURE GUARANTEES) OF GIANT FOOD INC. PURSUANT TO THE OFFER TO PURCHASE DATED MAY 19, 1998 BY KONINKLIJKE AHOLD N.V. (ROYAL AHOLD) As set forth under "Section 3. Procedures for Tendering Shares" in the Offer to Purchase dated May 19, 1998 and any supplements or amendments thereto (the "Offer to Purchase"), this form or one substantially equivalent hereto must be used to accept the Offer (as defined below) if (i) certificates ("Share Certificates") representing shares of Class A Common Stock, par value $1.00 per share ("Shares"), of Giant Food Inc., a Delaware corporation (the "Company"), are not immediately available, (ii) if the procedures for book-entry transfer cannot be completed on a timely basis or (iii) time will not permit Share Certificates and all other required documents to reach The Bank of New York (the "Depositary") prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). This Notice of Guaranteed Delivery may be delivered by hand or mail or sent by facsimile transmission to the Depositary and must include a signature guarantee by an Eligible Institution. See the Guaranteed Delivery Procedures described in the Offer to Purchase under "Section 3. Procedures for Tendering Shares". Certain terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Offer to Purchase. The Depositary for the Offer is: THE BANK OF NEW YORK By Mail: Facsimile Transmission: By Hand or Overnight Courier: (for Eligible Institutions Only) Tender & Exchange Department (212) 815-6213 Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver Window New York, New York 10286-1248 New York, New York 10286
For Information Telephone: (800) 507-9357 ------------------------ DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signature. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instruction thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. 2 Ladies and Gentlemen: The undersigned hereby tenders to 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 "Purchaser"), upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal (which together constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares indicated below pursuant to the Guaranteed Delivery Procedures described in the Offer to Purchase under "Section 3. Procedures for Tendering Shares". Number of Shares: --------------------------------- Name of Record Holder(s) ----------------------- Certificate No.(s) (if available): ------------------ ----------------------------------------------------- - ----------------------------------------------------- ----------------------------------------------------- If Shares will be tendered by book-entry transfer Address: -------------------------------------------- check box: ----------------------------------------------------- [ ] The Depositary Trust Company Area Code and Tel. No: --------------------------- Account Number: ---------------------------------- Signature(s): --------------------------------------- Transaction Code Number: ------------------------ Dated: ----------------------------------------------
GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, an escrow agent under an escrow agreement or a trustee under a trust, hereby guarantees that the undersigned will deliver to the Depositary, at one of its addresses set forth above, the Share Certificates representing the Shares tendered hereby, in proper form for transfer, or confirmation of the book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company, together with a properly completed and duly executed Letter of Transmittal or, in the case of a book-entry transfer, an Agent's Message (as defined in the Letter of Transmittal) with any required signature guarantees and any other required documents, all within three American Stock Exchange trading days after the date hereof. Name of Firm, Agent or Trustee: ----------------- ----------------------------------------------------- (AUTHORIZED SIGNATURE) - ----------------------------------------------------- Name: ---------------------------------------------- (PLEASE TYPE OR PRINT) Address: -------------------------------------------- Title: ----------------------------------------------- (ZIP CODE) Area code and Tel. No.: --------------------------- Dated: ----------------------------------------------
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY; SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.A.8 9 GUIDELINES FOR SUBSTITUTE FORM W-9 1 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.
GIVE THE NAME AND GIVE THE NAME AND EMPLOYER SOCIAL SECURITY IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ----------------------------------------------------------------------------------------------------------------------------------- 1. Individual The individual 7. Corporate The corporation 2. Two or more individuals The actual owner of the 8. Association, club, The organization (joint account) account or, if combined religious, charitable, funds, the first individual educational or other tax- on the account(1) exempt organization 3. Custodian account of a The minor (2) 9. Partnership The partnership minor (Uniform Gift to 10. A broker or registered The broker or nominee Minors Act) nominee 4. a. The usual revocable The grantor-trustee(1) 11. Account with the The public entity savings trust (grantor Department of Agriculture is also trustee) in the name of a public b. So-called trust account The actual owner(1) entity (such as a state or that is not a legal or local government, school valid trust under state district, or prison) that law receives agricultural 5. Sole proprietorship The owner(3) program payments 6. A valid trust, estate,or The legal entity(4) pension trust - -----------------------------------------------------------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's social security number. (3) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your social security number or employer identification number (if you have one). (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) 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. 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number, or Form SS-4, Application for an Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. United States resident aliens who cannot obtain a social security number must apply for an ITIN (Individual Taxpayer Identification Number) on Form W-7. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on payments of interest, dividends and with respect to broker transactions include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501(a), or an individual retirement plan. - The United States or any agency or instrumentality thereof. - A state, the District of Columbia, a possession of the United States, or any political subdivision or instrumentality thereof. - A foreign government, or any a political subdivision, agency or instrumentality thereof. - An international organization or any agency or instrumentality thereof. - A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States. - 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. - 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 United States and which have at least one nonresident alien partner. - Payments of patronage dividends not paid in money. - Payments made by certain foreign organizations. - Payments made to a middleman known in the investment community as a nominee or who is listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. Payments of interest not generally subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - Payments described in section 6049(b)(5) to nonresident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Payments made to a middleman known in the investment community as a nominee or who is listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE EX-99.B.1 10 COMMITMENT LETTER 1 [ABN-AMRO LETTERHEAD] 18th May 1998 Koninklijke Ahold N.V. Treasury Department KA 227 Albert Heijnweg 1 1507 EH Zaandam Attn: Mr. P.H. Freischlag and Mr. P.S.H. Zandstra - ------------------------------------------------- Dear Messrs. Freischlag and Zandstra, Committed Stand-by Credit Facilities ------------------------------------ As per our recent discussions on the subject we are very pleased to offer Koninklijke Ahold N.V. a new USD 2 billion committed stand-by bridge facility. The main terms and conditions of the facility are outlined below. Borrower: Koninklijke Ahold N.V. Amount: USD 2,000,000,000 (two billion) Type of Facility: 364 day committed stand-by bridge facility Availability: From the date of signing up to the Repayment Date, taking into account the proviso mentioned for year end drawings here below. Pricing: 15 bp margin commitment fee of 7.5 bp Repayment Date: Bullet at the latest 364 days after signing Interest Period: Any period agreed upon with the ABN AMRO Bank N.V. Arrangement Fee: Up front NLG 200,000 2 [ABN-AMRO LOGO] Documentation: Standard clauses, cross default with the USD 1 billion syndicated facility of Koninklijke Ahold N.V., signed on December 18, 1996 and the USD 500 min. syndicated facility dated 16th March 1998. Governing Law: Dutch Law The letter represents ABN AMRO's firm commitment towards Ahold. In case you wish to draw under this facility, we will draft documentation in co-operation with our legal department. This facility is available for a period of 364 days. Although the Facility is available for a period of 364 days, any drawings over year end (from 15 December onwards) will be subject to an increased margin to be agreed between ABN AMRO and Koninklijke Ahold N.V. ABN AMRO also reserves the right to syndicate part of this facility in consultation with Koninklijke Ahold N.V. If you have any questions or remarks, please do not hesitate to contact us. Regards, /s/ John Martin /s/ Ben Kalkman John Martin Ben Kalkman Managing Director Global Corporate Banker 2 EX-99.B.2 11 MULTICURRENCY REVOLVING CREDIT AGREEMENT 1 Conformed Copy US$1,000,000,000 MULTICURRENCY REVOLVING CREDIT AGREEMENT with SHORT-TERM ADVANCE, SWING-LINE AND LETTER OF CREDIT OPTIONS between KONINKLIJKE AHOLD N.V. AHOLD USA HOLDINGS, INC. as Borrowers and Guarantors ABN AMRO BANK N.V. CHASE INVESTMENT BANK LIMITED J.P. MORGAN SECURITIES LTD. as Arrangers THE CHASE MANHATTAN BANK as Facility, Swing-Line, Letter of Credit and Short-Term Advances Agent CHASE MANHATTAN INTERNATIONAL LIMITED as Multicurrency Facility Agent and OTHERS Clifford Chance Amsterdam 2 CONTENTS
Clause Page No. PART 1 DEFINITIONS AND INTERPRETATION 1. Definitions and Interpretation........................................... 1 PART 2 THE FACILITIES; ADDITIONAL BORROWERS 2. The Facilities........................................................... 16 PART 3 UTILISATION OF THE REVOLVING CREDIT FACILITY 3. Utilisation of the Revolving Credit Facility............................. 19 PART 4 UTILISATION OF THE LETTER OF CREDIT FACILITY 4. Utilisation of the Letter of Credit Facility............................. 23 5. Indemnity................................................................ 25 6. Letter of Credit Fees and Fronting Fee................................... 26 PART 5 UTILISATION OF THE SWING-LINE FACILITY 7. Utilisation of the Swing-Line Facility................................... 27 PART 6 UTILISATIONS OF THE SHORT-TERM ADVANCES FACILITY 8. Request for offers....................................................... 29 9. Offers for Short-Term Advances........................................... 30 10. Offers by the Short-Term Advances Agent or its Affiliates................ 31 11. Acceptance of Offers..................................................... 31 12. Making of Short-Term Advances............................................ 32 PART 7 INTEREST 13. Interest on Revolving Credit Advances.................................... 33 14. Interest on Swing-Line Advances.......................................... 33 15. Interest on Short-Term Advances.......................................... 33
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PART 8 REPAYMENT AND CANCELLATION 16. Repayment of Advances..................................................................... 35 17. Cancellation.............................................................................. 35 PART 9 RISK ALLOCATION 18. Taxes..................................................................................... 37 19. Tax Receipts.............................................................................. 38 20. Increased Costs........................................................................... 38 21. Mitigation................................................................................ 40 22. Market Disruption......................................................................... 40 PART 10 REPRESENTATIONS, WARRANTIES, UNDERTAKINGS AND EVENTS OF DEFAULT 23. Representations and Warranties............................................................ 42 24. Undertakings.............................................................................. 45 25. Events of Default......................................................................... 49 PART 11 GUARANTEE 26. Guarantee and Indemnity................................................................... 53 PART 12 DEFAULT INTEREST AND INDEMNITY 27. Default Interest and Indemnity............................................................ 56 PART 13 PAYMENTS 28. Currency of Account and Payment........................................................... 58 29. Payments.................................................................................. 58 30. Set-off................................................................................... 60 31. Sharing................................................................................... 60 PART 14 FEES, COSTS AND EXPENSES 32. Fees...................................................................................... 62 33. Costs and Expenses........................................................................ 62
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PART 15 AGENCY PROVISIONS 34. The Agents, the Arrangers and the Banks................................................... 64 PART 16 ASSIGNMENTS AND TRANSFERS 35. Assignments and Transfers................................................................. 69 PART 17 MISCELLANEOUS 36. Calculations and Evidence of Debt......................................................... 71 37. Remedies and Waivers, Partial Invalidity.................................................. 72 38. Amendments................................................................................ 72 39. Notices................................................................................... 73 PART 18 LAW AND JURISDICTION 40. Law and Jurisdiction...................................................................... 75
THE SCHEDULES The First Schedule : The Banks The Second Schedule : Form of Transfer Certificate The Third Schedule : Condition Precedent Documents The Fourth Schedule : Utilisation Request The Fifth Schedule : Material Subsidiaries The Sixth Schedule : Existing Letters of Credit The Seventh Schedule : Opinion of Borrowers' Netherlands and United States Counsel The Eighth Schedule : Supplemental Agreement
5 THIS AGREEMENT is made on 18 December 1996 BETWEEN: (1) KONINKLIJKE AHOLD N.V. as borrower and guarantor (the "Principal Company"); (2) AHOLD USA HOLDINGS, INC. as borrower and guarantor ("Ahold USA" and, together with the Principal Company, the "Borrowers"); (3) ABN AMRO BANK N.V., CHASE INVESTMENT BANK LIMITED and J.P. MORGAN SECURITIES LTD. as arrangers (the "Arrangers"); (4) THE CHASE MANHATTAN BANK as facility agent (the "Facility Agent"), as swing-line agent (the "Swing-Line Agent"), as Letter of Credit agent (the "Letter of Credit Agent") and as short term advances agent (the "Short-Term Advances Agent"); (5) CHASE MANHATTAN INTERNATIONAL LIMITED as Multicurrency Facility Agent (the "Multicurrency Facility Agent"); and (6) THE BANKS (as defined below). IT IS AGREED as follows: PART 1 DEFINITIONS AND INTERPRETATION 1. DEFINITIONS AND INTERPRETATION 1.1 Definitions In this Agreement: "ABSOLUTE BASIS" in relation to Short-Term Advances means the basis of any offer therefor expressed as a percentage rate and not by reference to LIBOR. "ADJUSTMENT AMOUNTS" means, in relation to any proposed Advance or Letter of Credit: (a) the Dollar Amounts of any other proposed Advances or Letters of Credit which any of the Banks or the Issuing Bank are then obliged to make, issue or participate in on or before the proposed Utilisation Date relating to such proposed Advance or Letter of Credit; and (b) the Dollar Amounts of any Advances or Letters of Credit which have been made, issued or participated in by any of the Banks or the Issuing Bank pursuant hereto and which are due to be repaid or, as the case may be, expire on or before the proposed Utilisation Date relating to such proposed Advance or Letter of Credit. "ADVANCE" means a Revolving Credit Advance, a Swing-Line Advance or a Short-Term Advance. "ADDITIONAL BORROWER" means a wholly-owned direct or indirect subsidiary of the Principal Company 6 which, with the prior written consent of the Facility Agent acting on the instructions of the Banks, has become an Additional Borrower pursuant to and in accordance with the provisions of Clause 2.9 to Clause 2.12. "AGENTS" means the Facility Agent, the Swing-Line Agent, the Letter of Credit Agent, the Short-Term Advance Agent and the Multicurrency Facility Agent. "AVAILABLE COMMITMENT" means, in relation to a Bank at any time and save as otherwise provided herein, its Commitment at such time less its share of the Outstandings at such time Provided that such amount shall not be less than zero. "AVAILABLE FACILITY" means, at any time, the aggregate of the Available Commitments at such time and adjusted so as to take into account: (a) any Adjustment Amounts; and (b) any reduction in the Commitment of a Bank which will occur prior to the commencement of the Term relating to the relevant Advance or the relevant Letter of Credit consequent upon a cancellation of the whole or any part of the relevant Commitment of such Bank pursuant to the terms hereof; "AVAILABLE LETTER OF CREDIT COMMITMENT" means, in relation to a Bank at any time and save as otherwise provided herein, the lesser of: (a) its Letter of Credit Commitment at such time less its share of the Dollar Amounts of the outstanding Letters of Credit at such time (and for the purposes of this definition an "outstanding" Existing Letter of Credit shall mean an Existing Letter of Credit in which the Banks are participating in accordance with Clause 4); and (b) its Available Commitment at such time. "AVAILABLE LETTER OF CREDIT FACILITY" means, at any time, the aggregate of the Available Letter of Credit Commitments at such time and, for the purposes of Clause 4.2(c) and Clause 4.3(a) and a proposed Letter of Credit only, adjusted so as to take into account: (a) any Adjustment Amounts; and (b) any reduction in the Commitment or Letter of Credit Commitment of a Bank which will occur prior to the commencement of the Term relating to such proposed Letter of Credit consequent upon a cancellation of the whole or any part of the Commitment of such Bank pursuant to the terms hereof. "AVAILABLE SWING-LINE COMMITMENT" means, in relation to a Swing-Line Bank at any time and save as otherwise provided herein, the lesser of: (a) its Swing-Line Commitment at such time less its share of the Dollar Amounts of the 2 7 outstanding Swing-Line Advances at such time; and (b) its Available Commitment at such time. "AVAILABLE SWING-LINE FACILITY" means, at any time, the aggregate of the Available Swing-Line Commitments at such time and, for the purposes of Clause 7.2(b) and Clause 7.3(a) and a proposed Swing-Line Advance only, adjusted so as to take into account: (a) any Adjustment Amounts; and (b) any reduction in the Commitment or Swing-Line Commitment of a Swing-Line Bank which will occur prior to the commencement of the Term relating to such proposed Swing-Line Advance consequent upon a cancellation of the whole or any part of the Commitment of such Swing-Line Bank pursuant to the terms hereof. "BANKS" means: (a) any financial institution named in Part 1 of the First Schedule (The Banks) (other than one which has ceased to be a party hereto in accordance with the terms hereof); and (b) any financial institution which has become a party hereto in accordance with the provisions of Clause 35.4 (Assignments by Banks) or Clause 35.5 (Transfers by Banks). "CODE" means the United States Internal Revenue Code of 1986. "COMMITMENT" means, in relation to a Bank at any time and save as otherwise provided herein, the amount set opposite its name in Part 1 of the First Schedule (The Banks). "DOLLAR AMOUNT" means: (a) in relation to any Advance, the principal amount thereof or, if such Advance is not denominated in dollars, the equivalent of such amount in dollars calculated as at the date of the Utilisation Request in respect of such Advance; and (b) in relation to any Letter of Credit: (i) at or before the Utilisation Date in respect of such Letter of Credit, the face amount thereof; and (ii) thereafter, the sum at such time of the maximum actual and contingent liabilities of the Issuing Bank under such Letter of Credit and the total amount of any payments made by the Issuing Bank thereunder which at such time have not been paid or reimbursed by any Obligor to the Issuing Bank hereunder, and the Dollar Amount of a Requested Amount shall be determined accordingly. 3 8 "EMPLOYEE PLAN" shall mean an "employee pension benefit plan" as defined in Section 3(2) of ERISA, other than a Multiemployer Plan, which is maintained for, or under which contributions are made on behalf of, employees of any Obligor or any ERISA Affiliate. "ENVIRONMENT" means: (a) land including any natural or man-made structures; (b) water including ground waters and waters in drains and sewers; and (c) air including air within buildings and other natural or man-made structures above or below ground. "ENVIRONMENTAL LAWS" means all and any applicable laws, including common law, statute and subordinate legislation, European Community Regulations and Directives and judgments and decisions, including notices, orders or circulars, of any court or authority competent to make such judgment or decision compliance with which is mandatory for any member of the Group in any jurisdiction with regard to: (a) the pollution or protection of the Environment; (b) harm to the health of humans, animals or plants including laws relating to public and workers' health and safety; (c) emissions, discharges or releases into the Environment of chemicals or any other pollutants or contaminants or industrial, radioactive, dangerous, toxic or hazardous substances or wastes (whether in solid, semi-solid, liquid or gaseous form and including noise and genetically modified organisms); or (d) the manufacture, processing, use, treatment, storage, distribution, disposal, transport or handling of the substances or wastes described in (c) above. "ENVIRONMENTAL PERMITS" means all and any permits, licences, consents, approvals, certificates, qualifications, specifications, registrations and other authorisations including any conditions which attach to any of the foregoing and the filing of all notifications, reports and assessments required under Environmental Laws for the operation of any business. "ERISA" shall mean, at any date, the US Employee Retirement Income Security Act of 1974 and the regulations promulgated and rulings issued thereunder, all as the same shall be in effect at such date. "ERISA AFFILIATE" shall mean any person that for the purposes of Title I and Title IV of ERISA and Section 412 of the Code is a member of any Obligor's controlled group, or under common control with any Obligor, within the meaning of Section 414 (b) and (c) of the Code and the regulations promulgated and rulings issued thereunder. "ERISA EVENT" shall mean (i) (A) any reportable event, as defined in Section 4043(c) of ERISA with 4 9 respect to an Employee Plan, as to which PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within thirty days of the occurrence of such event (provided that a failure to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA shall be a reportable event for the purposes of this sub-paragraph (i) regardless of the issuance of any waivers in accordance with Section 412(d) of the Code); or (B) the requirements of subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of such Section) are met with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of an Employee Plan and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Employee Plan within the following 30 days; (ii) the filing under Section 4041(c) of ERISA of a notice of intent to terminate any Employee Plan or the termination of any Employee Plan under Section 4042 of ERISA by the PBGC, or the appointment of a trustee to administer any Employee Plan under Section 4042 of ERISA; (iii) the failure to make a required contribution to any Employee Plan that would result in the imposition of a lien under Section 412 (n) of the Code or Section 302 (f) of ERISA; and (iv) an engagement in a non-exempt prohibited transaction within the meaning of Section 4795 of the Code or Section 406 of ERISA. "EVENT OF DEFAULT" means any of those circumstances specified in Clause 25 (Events of Default). "EXISTING FACILITIES" means the following facilities: (a) the $400,000,000 revolving credit facility granted pursuant to an agreement dated 29 March 1994 in favour of the Principal Company by certain financial institutions named therein for whom ABN AMRO Bank N.V. acted as Facility Agent; (b) the $600,000,000 Credit Agreement among The Stop & Shop Companies, Inc., the several Banks and The Chase Manhattan Bank as Agent, dated 29 August 1994; (c) the $200,000,000 Credit Agreement among The Stop & Shop Companies, Inc. the several Banks and The Chase Manhattan Bank as Agent, dated 19 January 1996; and (d) the $200,000,000 Credit Agreement among The Shop & Stop Master Trust, the several Banks and The Chase Manhattan Bank as Agent, dated 12 January 1995. "EXISTING LETTER OF CREDIT" means a Letter of Credit, details of which are set out in the Sixth Schedule. "EXPIRY DATE" means, in relation to any Letter of Credit or Existing Letter of Credit, the date on which the maximum aggregate liability thereunder is to be reduced to zero. "FACILITIES" means the Revolving Credit Facility, the Letter of Credit Facility, the Swing-Line Facility and the Short-Term Advances Facility (and "FACILITY" means any one of them). "FACILITY OFFICE" means: (e) in relation to any Agent, the office identified with such Agent's signature below or such other office as it may from time to time select; and 5 10 (f) in relation to any Bank and any Facility, the office identified with its signature below (or, in the case of a Transferee, at the end of the Transfer Certificate to which it is a party as Transferee) for the purposes of such Facility or, in any such case, such other office as such Bank may from time to time select. "FEDERAL FUNDS RATE" means, in relation to any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the United States Federal Reserve System arranged by Federal funds brokers, as published for that day (or, if that day is not a business day in New York, for the immediately preceding business day in New York) by the Federal Reserve Bank of New York or, if a rate is not so published for any day which is a business day in New York, the average of the quotations for that day on such transactions received by the Swing-Line Agent from three Federal funds brokers of recognised standing selected by the Swing-Line Agent. "FINANCE DOCUMENTS" means this Agreement (as supplemented by any Supplemental Agreement) and each Supplemental Agreement. "FINANCIAL L/C COMMISSION RATE" means: (i) during the period commencing on the date hereof and ending on the date which is the fifth anniversary of the date hereof, 0.10 per cent. per annum; and (ii) thereafter, 0.1125 per cent. per annum. "FINANCIAL LETTER OF CREDIT" means a Letter of Credit issued in favour of any contractor or state agency for the purposes of credit guarantees in relation to the construction of property and self insurance schemes (such as workers' compensation programmes). "GUARANTORS" means the Principal Company and Ahold USA in their respective capacities as guarantors hereunder. "GROUP" means the Principal Company and its subsidiaries for the time being. "INSTRUCTING GROUP" means: (a) whilst no Advances or Letters of Credit are outstanding hereunder and in any event for the purposes of Clause 39, a Bank or group of Banks whose Commitments at such time (or, if each Bank's Commitment has been reduced to zero, did immediately before such reduction to zero) amount in aggregate to more than sixty-six and two thirds per cent. of the Total Commitments at such time; or (b) at any time that there are one or more Advances or Letters of Credit outstanding hereunder, a Bank or group of Banks to whom more than sixty-six and two thirds per cent. of the Outstandings at such time is owed (other than the Dollar Amount of Swing-Line Advances and Short-Term Advances). 6 11 "ISSUING BANK" means any Bank which, at the time of the Utilisation Request relating to the relevant Letter of Credit, has a long-term debt rating by Standard & Poor's of not less than AA- or by Moody's Investors Service, Inc. of not less than Aa3 as selected by Ahold USA or such alternative equivalent long term debt rating as may be applied by Standard & Poor's or Moody's Investors Service, Inc., respectively, from time to time. "L/C OUTSTANDINGS" means, at any time, the aggregate of the Dollar Amounts of each outstanding Letter of Credit (and for the purposes of this definition an "outstanding" Existing Letter of Credit shall mean an Existing Letter of Credit in which the Banks are participating in, in accordance with Clause 4). "LETTER OF CREDIT" means a letter of credit (including, without limitation, except for the purposes of Clause 4, an Existing Letter of Credit) issued or to be issued by an Issuing Bank, subject to and with the benefit of the provisions hereof, under the Letter of Credit Facility. "LETTER OF CREDIT COMMITMENT" means, in relation to a Bank at any time and save as otherwise provided herein, the amount set opposite its name in Part 1 of the First Schedule. "LETTER OF CREDIT FACILITY" means the letter of credit facility granted to Ahold USA pursuant to the terms of this Agreement. "LIBOR" means, in relation to any Revolving Credit Advance or Short-Term Advance or unpaid sum in respect of the Revolving Credit Facility or Short-Term Advances Facility: (i) the rate per annum which is the offered rate (if any) appearing on the relevant page of the Telerate Screen which displays British Bankers' Association Settlement Rates for deposits in the London Interbank Market for the specified period denominated in the currency in which such Revolving Credit Advance, Short-Term Advance or unpaid sum is to be or is denominated during the specified period at or about 11.00 a.m. on the Quotation Date for the specified period; or (ii) in the event no such rate can be determined for the specified period in accordance with (i) above, the rate per annum determined by the Multicurrency Facility Agent to be equal to the arithmetic mean (rounded upwards to four decimal places) of the rates (as notified to the Multicurrency Facility Agent) at which each of the Reference Banks was offering to prime banks in the London Interbank Market deposits in the currency in which such Revolving Credit Advance, Short-Term Advance or unpaid sum is to be or is denominated for the specified period at or about 11.00 a.m. on the Quotation Date for such period and for the purposes of this definition, "SPECIFIED PERIOD" means the Term of such Revolving Credit Advance or Short-Term Advance or, as the case may be, the period in respect of which LIBOR falls to be determined in relation to such unpaid sum. "MARGIN" means: 7 12 (i) during the period commencing on the date hereof and ending on the date which is the fifth anniversary of the date hereof, 0.10 per cent. per annum; and (ii) thereafter, 0.1125 per cent. per annum. "MARGIN STOCK" means margin stock within the meaning of Regulations G, T, U and X. "MATERIAL SUBSIDIARY" means, at any time: (i) any subsidiary of the Principal Company the assets of which exceed ten per cent. (10%) of the consolidated assets of the Group taken as a whole; and (ii) each other subsidiary of the Principal Company specified from time to time by the Principal Company (which, at the date hereof and without limitation to the foregoing, are the companies listed in the Fifth Schedule) Provided that the Principal Company shall ensure that the assets of all subsidiaries referred to in paragraphs (i) and (ii) shall at all times account for at least 80 per cent. of the consolidated assets of the Principal Company and its subsidiaries and for these purposes, the assets of such subsidiary or the Principal Company and its subsidiaries (as the case may be) shall, in each case be adjusted, as the Facility Agent acting on the instructions of an Instructing Group may consider appropriate, to take account of any changes in circumstances since the date as of which the most recent audited consolidated financial statements were prepared. "MULTIEMPLOYER PLAN" means a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) maintained or contributed to for employees of (i) any Obligor or (ii) any ERISA Affiliate. "NON-FINANCIAL L/C COMMISSION RATE" means 0.15 per cent. per annum. "NON-FINANCIAL LETTER OF CREDIT" means any Letter of Credit other than a Financial Letter of Credit. "OBLIGORS" means the Borrowers and the Guarantors (and "OBLIGOR" means anyone of them). "OPTIONAL CURRENCY" means any currency (other than ecu, sterling and dollars) which is freely transferable and freely convertible into dollars. "ORIGINAL FINANCIAL STATEMENTS" means: (a) in relation to the Principal Company, its audited consolidated financial statements for its financial year ended 31 December 1995; and (b) in relation to each Additional Borrower, its most recently published audited financial statements as at the date it becomes an Additional Borrower hereunder. "OUTSTANDINGS" means, at any time, the aggregate of: 8 13 (a) the Dollar Amounts of all outstanding Advances; and (b) the L/C Outstandings. "PARTICIPATION" in relation to a Bank at any time means the aggregate of such Bank's Available Commitment at such time and its share of all Outstandings at such time; "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to all or any of its functions under ERISA. "POTENTIAL EVENT OF DEFAULT" means any event which could or would become (with the passage of time, the giving of notice, the making of any determination hereunder or any combination thereof) an Event of Default. "PRIME RATE" means, on any day, the prime commercial lending rate publicly announced by the Swing-Line Agent in respect of such day, which rate need not be the lowest rate charged to its borrowers Provided that each change in the interest rate applicable to a Swing-Line Advance which results from a change in the Prime Rate shall become effective on the day on which the change in the Prime Rate becomes effective. "PROPORTION" means, in relation to a Bank, the proportion borne by its Commitment to the Total Commitments (or, if the Total Commitments are then zero, by its Commitment to the Total Commitments immediately prior to their reduction to zero). "QUOTATION DATE" means, in relation to any period for which LIBOR is to be determined hereunder, the day which is two business days prior to the first day of such period. "REFERENCE BANKS" means, for the purposes of determining LIBOR, the principal London offices of ABN AMRO Bank N.V., The Chase Manhattan Bank and Morgan Guaranty Trust Company of New York or such other bank or banks as may from time to time be agreed between the Principal Company and the Facility Agent. "REGULATION D COSTS" means, in relation to the portion of any Advance made by a Bank to a US Borrower (or deposits maintained by a Bank to fund such an Advance), the amount (if any) certified by such Bank to be the cost to it of complying with Regulation D (or any similar reserve requirements) in respect of that Advance or those deposits. "REGULATIONS D, G, T, U AND X" means, respectively, Regulations D, G, T, U and X of the Board of Governors of the Federal Reserve System of the United States (or any successor). "RELEVANT AMOUNT" means, in relation to any Bank or Swing-Line Bank at any time and any proposed Utilisation, the amount arrived at by applying the following formula: Relevant Amount = BC x (RA + TO) ______________ - BO 9 14 TC where: BC = such Bank's or Swing-Line Bank's Commitment at such time; RA = the Dollar Amount of the Advance or Letter of Credit comprising such proposed Utilisation; TO = the Outstandings at such time; TC = the Total Commitments at such time; BO = the relevant Bank or Swing-Line Bank's share of all Outstandings at such time, Provided that when in respect of any one or more Banks or Swing-Line Banks application of the above formula results in a negative figure, then for the purpose of calculating the Relevant Amount for each other Bank or Swing-Line Bank, the first mentioned Bank(s) or Swing-Line Bank(s) and it or their Commitment(s) (and that of any affiliates thereof) shall be deducted from "TC" and the aggregate of such Bank's or Swing-Line Bank's share of all Outstandings shall be deducted from "TO". "REPAYMENT DATE" means, in relation to any Advance, the last day of the Term thereof or such earlier date upon which such Advance is required to be repaid pursuant hereto. "REQUESTED AMOUNT" means, in relation to any Utilisation Request, the aggregate principal amount of the Advances or, as the case may be, the face amount of the Letter of Credit therein requested to be made or issued or in which the Banks are requested to participate. "REVOLVING CREDIT ADVANCE" means, save as otherwise provided herein, an advance made or to be made by the Banks pursuant to Clause 3 (Utilisation of the Revolving Credit Advance) and the other terms hereof. "REVOLVING CREDIT FACILITY" means the multicurrency revolving credit facility granted to the Borrowers pursuant to the terms of this Agreement. "SHORT-TERM ADVANCE" means, save as otherwise provided herein, an advance made or to be made by the Banks pursuant to Clause 8 (Request for Offers) and the other terms hereof. "SHORT-TERM ADVANCES FACILITY" means the short term advances facility granted to Ahold USA pursuant to the terms of this Agreement. "SUBSTANTIAL" means equal to or greater than 10 per cent. of the relevant amount as disclosed by the latest audited consolidated balance sheet or, as the case may be, profit and loss account of the Group. "SUPPLEMENTAL AGREEMENT" means any agreement entered into by the parties hereto with any Additional Borrower (in its capacity as an Additional Obligor) pursuant to Clause 2.9 (Nomination of 10 15 Additional Borrowers) to Clause 2.12 (Original Borrower's Authority) substantially in the form set out in the Eighth Schedule (Supplemental Agreement for Additional Borrowers) or such other form as the Principal Company and the Facility Agent shall agree. "SWING-LINE ADVANCE" means, save as otherwise provided herein, an advance made or to be made by the Swing-Line Banks pursuant to Clause 7 (Utilisation of the Swing-Line Facility) and the other terms hereof. "SWING-LINE BANKS" means each of the Banks listed in Part 2 of the First Schedule (Swing-Line Banks). "SWING-LINE COMMITMENT" means, in relation to a Swing-Line Bank at any time and save as otherwise provided herein, the amount set opposite its name in Part 2 of the First Schedule. "SWING-LINE FACILITY" means the swing-line facility granted to the Borrowers pursuant to the terms of this Agreement. "SWING-LINE MARGIN" means 0.50 per cent. per annum. "TERM" means, save as otherwise provided herein, in relation to any Advance, the period for which such Advance is borrowed (as specified in the Utilisation Request relating thereto) and, in relation to any Letter of Credit, the period from the date on which such Letter of Credit is issued (or, in the case of an Existing Letter of Credit, the Banks commence participating in such Existing Letter of Credit pursuant to Clause 4) until its Expiry Date (as specified in the Utilisation Request relating thereto). "TERMINATION DATE" means the day which is eighty-four months after the date hereof. "TOTAL COMMITMENTS" means the aggregate for the time being of the Banks' Commitments. "TRANSFER CERTIFICATE" means a certificate substantially in the form set out in the Second Schedule (Form of Transfer Certificate) signed by a Bank and a Transferee whereby: (a) such Bank seeks to procure the transfer to such Transferee of all or a part of such Bank's rights, benefits and obligations hereunder as contemplated in Clause 35.3 (Assignments and Transfers by Banks); and (b) such Transferee undertakes to perform the obligations it will assume as a result of delivery of such certificate to the Facility Agent as is contemplated in Clause 35.5 (Transfers by Banks). "TRANSFER DATE" means, in relation to any Transfer Certificate, the date for the making of the transfer as specified in the schedule to such Transfer Certificate. "TRANSFEREE" means a bank or other financial institution to which a Bank seeks to transfer all or part of such Bank's rights, benefits and obligations hereunder. 11 16 "UNITED STATES" and "US" means the United States of America (including the District of Columbia), its territories, possessions and other areas subject to the jurisdiction of the United States of America. "US BORROWER" means any Material Subsidiary which has been incorporated in the United States. "US OBLIGOR" means any Obligor incorporated in the United States. "UTILISATION" means a utilisation of any or more of the Facilities hereunder. "UTILISATION DATE" means the date of a Utilisation, being the date on which the Advance in respect thereof is to be made or the Letter of Credit in respect thereof is to be issued (or, in relation to an Existing Letter of Credit, the date on which the Banks are to commence participating therein). "UTILISATION REQUEST" means a notice substantially in the form set out in the Fourth Schedule (Utilisation Request). "WITHDRAWAL LIABILITY" has the meaning given to such term under Part I of Subtitle E of Title IV of ERISA. 1.2 INTERPRETATION Any reference in this Agreement to: any Agent or any Bank in any capacity hereunder shall be construed so as to include its and any subsequent successors, Transferees and assigns in accordance with their respective interests; "AFFILIATE" of any person is a reference to a holding company or a subsidiary, or a subsidiary of a holding company, of such person; any "APPLICABLE LAW" shall be construed so as to include all present and future applicable laws, statutes, regulations, codes, treaties, conventions, judgments, awards, determinations or decrees; "BORROWED MONEY" means, in respect of any person: (i) money borrowed or raised and premiums (if any) and capitalised interest in respect thereof; (ii) the principal and premiums (if any) and capitalised interest in respect of any debenture, bond, note, loan stock or similar instrument; (iii) liabilities in respect of any letter of credit, acceptance credit, bill discounting or note purchase facility and any receivables purchase, factoring or discounting arrangement; (iv) rental or hire payments under leases or hire purchase agreements (whether in respect of land, machinery, equipment or otherwise) entered into primarily for the purpose of raising finance; (v) the deferred purchase price of assets or services in respect of transactions which have the commercial effect of borrowing or which otherwise finance its or the Group's operations or capital requirements (except any such arrangements entered into in the ordinary and usual 12 17 course of trading and having a term not exceeding 90 days from the date on which the liability was originally incurred); (vi) liabilities in respect of any foreign exchange agreement, currency or interest purchase or swap transactions or similar arrangements; (vii) all obligations to purchase, redeem, retire, defease or otherwise acquire for value any share capital of any person or any warrants, rights or options to acquire such share capital in respect of transactions which have the commercial effect of borrowing or which otherwise finance its or the Group's operations or capital requirements; (viii)any other transactions having the commercial effect of borrowing entered into by any person to finance its operations or capital requirements; and (ix) all indebtedness for borrowed money of other persons referred to in paragraphs (i) to (viii) above guaranteed directly or indirectly in any manner by such person, or having the commercial effect of being guaranteed directly or indirectly by such person by virtue of an agreement (a) to pay or purchase such indebtedness for borrowed money or to advance or supply funds for the payment or purchase of such indebtedness for borrowed money, (b) to purchase or lease (as lessee) property, or to purchase services, primarily for the purpose of enabling the debtor to make payments of such indebtedness for borrowed money, (c) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property of services irrespective of whether such property is received or such services are rendered) or (d) otherwise to assure any person to whom indebtedness for borrowed money is owed against loss with respect thereto; a "BUSINESS DAY" shall be construed as a reference to a day (other than a Saturday or Sunday) on which banks are generally open for business in London and New York City and, if such reference relates to the date for the payment of any sum denominated in any Optional Currency, banks are generally open for business in the principal financial centre of the country of such Optional Currency; a "BUSINESS DAY IN NEW YORK" shall be construed as a reference to a day (other than a Saturday or a Sunday) on which banks are generally open for business in New York City; a "CLAUSE" shall, subject to any contrary indication, be construed as a reference to a clause hereof; a "CURRENCY" includes ecu; "ENCUMBRANCE" means any mortgage, pledge, lien (other than a lien arising solely by operation of law in the ordinary course of business), charge, assignment, hypothecation, security interest or other encumbrance or charge by way of security or any title retention right (other than in the ordinary course of trading), preferential right (other than a preferential right accorded to creditors on a liquidation solely by operation of law) or trust arrangement or other agreement or arrangement the effect of any of which is the creation of security; the "EQUIVALENT" on any given date in one currency (the "FIRST CURRENCY") of an amount denominated in another currency (the "SECOND CURRENCY") is a reference to the amount of the first currency which 13 18 could be purchased with the amount of the second currency at the spot rate of exchange quoted by the Facility Agent at or about 12.00 (noon) London time on such date for the purchase of the first currency with the second currency; a "HOLDING COMPANY" of a company or corporation shall be construed as a reference to any company or corporation of which the first-mentioned company or corporation is a subsidiary; "INDEBTEDNESS" shall be construed so as to include any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent; a "MONTH" is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next succeeding calendar month save that, where any such period would otherwise end on a day which is not a business day, it shall end on the next succeeding business day, unless that day falls in the calendar month succeeding that in which it would otherwise have ended, in which case it shall end on the immediately preceding business day Provided that, if a period starts on the last business day in a calendar month or if there is no numerically corresponding day in the month in which that period ends, that period shall end on the last business day in that later month (and references to "MONTHS" shall be construed accordingly); "NET ASSETS" shall be construed as a reference to the difference between (a) the aggregate of the current assets (including but not limited to Cash and cash Equivalents, Receivables and Inventories) and fixed assets (including but not limited to Total Net Tangible Fixed Assets, Loan Receivables, Investments in unconsolidated subsidiaries and affiliates and Intangible Assets) of the Principal Company and (b) the aggregate of the current liabilities (including but not limited to Loans payable, Taxes payable, Accounts payable, Accrued expenses and Other current liabilities) and long term liabilities (including but not limited to Subordinated loans, Other loans, Capitalised lease commitments, Deferred income taxes and Other provisions) of the Principal Company in each case as reported in the latest consolidated balance sheet of the Principal Company delivered pursuant to Clause 24(i)(a) (Undertakings); a "PERSON" shall be construed as a reference to any person, firm, company, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing; a "SUBSIDIARY" of the Principal Company means a company which is a subsidiary of the Principal Company within the meaning of Article 24.a of the Dutch Civil Code and which is a company which is consolidated in the consolidated financial statements of the Principal Company; a "SUBSIDIARY" of a company or corporation other than the Principal Company shall be construed as a reference to any company or corporation: (a) which is controlled, directly or indirectly, by the first-mentioned company or corporation; (b) more than half the issued share capital of which is beneficially owned, directly or indirectly, by the first-mentioned company or corporation; or 14 19 (c) which is a subsidiary of another subsidiary of the first-mentioned company or corporation and, for these purposes, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to direct its affairs and/or to control the composition of its board of directors or equivalent body; "TAX" shall be construed so as to include any tax, levy, impost, duty or other charge of a similar nature (including, without limitation, any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same); "VAT" shall be construed as a reference to value added tax including any similar tax which may be imposed in place thereof from time to time; and the "WINDING-UP", "DISSOLUTION" or "ADMINISTRATION" of a company or corporation shall be construed so as to include any equivalent or analogous proceedings under the law of the jurisdiction in which such company or corporation is incorporated or any jurisdiction in which such company or corporation carries on business including the seeking of liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief of debtors. 1.3 CURRENCY SYMBOLS "$" and "DOLLARS" denote lawful currency of the United States of America and "STERLING" denotes lawful currency of the United Kingdom. 1.4 AGREEMENTS, DOCUMENTS AND STATUTES Save where the contrary is indicated, any reference in this Agreement to: (a) this Agreement or any other agreement or document shall be construed as a reference to this Agreement or, as the case may be, such other agreement or document as the same may have been, or may from time to time be, amended, varied, novated or supplemented; (b) a statute shall be construed as a reference to such statute as the same may have been, or may from time to time be, amended or re-enacted; and (c) a time of day shall be construed as a reference to New York time. 1.5 HEADINGS Clause, Part and Schedule headings are for ease of reference only. 15 20 PART 2 THE FACILITIES; ADDITIONAL BORROWERS 2. THE FACILITIES 2.1 REVOLVING CREDIT FACILITY The Banks grant to the Borrowers, upon the terms and subject to the conditions hereof, a multicurrency revolving credit facility in an aggregate amount of $1,000,000,000 or its equivalent from time to time in Optional Currencies. 2.2 LETTER OF CREDIT FACILITY The Banks grant to Ahold USA, upon the terms and subject to the conditions hereof, a dollar denominated letter of credit facility in an aggregate amount of $100,000,000. 2.3 SWING-LINE FACILITY The Swing-Line Banks grant to the Borrowers, upon the terms and subject to the conditions hereof, a dollar denominated swing-line facility in an aggregate amount of $200,000,000. 2.4 SHORT-TERM ADVANCES FACILITY The Banks grant to Ahold USA, upon the terms and subject to the conditions hereof, an uncommitted short term advances facility in an aggregate amount of $1,000,000,000. 2.5 PURPOSE AND APPLICATION The Facilities are intended for general corporate purposes including working capital and the refinancing of the Existing Facilities. Accordingly, each of the Borrowers shall apply all amounts raised by it under each Facility in or towards satisfaction of such purposes. Without prejudice to the obligations of the Borrowers under this Clause 2.5 (Purpose and Application), neither the Agents, the Arrangers and the Banks nor any of them shall be obliged to concern themselves with the application of amounts raised by any Borrower hereunder. 2.6 CONDITION PRECEDENT DOCUMENTS None of the Borrowers may deliver any Utilisation Request hereunder unless the Facility Agent has confirmed to the Principal Company and the Banks that it has received all of the documents listed in the Third Schedule (Condition Precedent Documents) each, in form and substance, satisfactory to the Facility Agent and that each of the other conditions referred to therein have been met to the satisfaction of the Facility Agent. 2.7 BANKS' OBLIGATIONS SEVERAL The obligations of each Bank hereunder are several. The failure by a Bank to perform its obligations hereunder shall not affect the obligations of any Obligor towards any other party hereto nor shall any other party be liable for the failure by such Bank to perform its obligations hereunder. The amounts outstanding at any time hereunder from a Borrower to any of the parties hereto shall, subject as otherwise provided herein, be a separate and independent debt and each such party shall, subject to the terms of this Agreement, be entitled to protect and enforce its individual rights arising out of this Agreement independently of any other party and it shall not be necessary for any party hereto to be joined as an additional party in any proceedings for this purpose. 2.8 AGGREGATION OF ADVANCES Clause 2.1 (Revolving Credit Facility), Clause 2.2 (Letter of Credit Facility), Clause 2.3 (Swing-Line Facility) and Clause 2.4 (Short-Term Advances Facility) are subject to the restriction that at no time may the aggregate of the Dollar Amounts of all outstanding Advances and 16 21 Letters of Credit under each of the Facilities referred to in such Clauses exceed the Total Commitments, (being, at the date hereof, $1,000,000,000). 2.9 NOMINATION OF ADDITIONAL BORROWERS Subject to having obtained the prior written consent, through the Facility Agent, of all the Banks, the Principal Company may from time to time designate any of its wholly-owned subsidiaries as an Additional Borrower. If the Principal Company so designates any such subsidiary or subsidiaries, the Principal Company shall promptly deliver or cause to be delivered to the Facility Agent a Supplemental Agreement duly executed by the parties thereto. 2.10 ACCESSION OF ADDITIONAL BORROWERS Promptly on receipt by it of each of the conditions precedent specified in any Supplemental Agreement, the Facility Agent will confirm to the relevant Additional Borrower, the Principal Company and the Banks that it has received such documents and whether or not each is, in form and substance, satisfactory to it. Upon delivery to the Facility Agent of any Supplemental Agreement and subject to the Facility Agent having confirmed to the relevant Additional Borrower, the Principal Company and the Banks that it has received, in form and substance satisfactory to it, each of the conditions precedent specified therein, this Agreement shall thenceforth be read and construed as if each subsidiary of the Principal Company which is a party to the Supplemental Agreement as an Additional Borrower were a party hereto having all the rights and obligations of a Borrower. Accordingly all references in any Finance Document to (a) any "Additional Borrower", "Borrower", "Obligor" or any derivative term, shall be treated as including a reference to any such subsidiary becoming a party hereto in the manner contemplated above; and (b) this Agreement, shall be treated as a reference to this Agreement as supplemented by such Supplemental Agreement and all previous Supplemental Agreements to the intent that this Agreement, such Supplemental Agreement and all previous Supplemental Agreements shall be read and construed together as one single agreement. 2.11 FACILITY AGENT'S AUTHORITY Each of the Agents (other than the Facility Agent), the Arranger and the Banks irrevocably authorises the Facility Agent to execute any Supplemental Agreement on its behalf. The Facility Agent shall promptly notify each of the Banks of the execution by it of any Supplemental Agreement. 2.12 ORIGINAL BORROWER'S AUTHORITY Each of the Obligors (other than the Principal Company) irrevocably authorises the Principal Company to designate any of its subsidiaries as an Additional Borrower pursuant to Clause 2.9 (Nomination of Additional Borrowers) and irrevocably authorises the Principal Company to execute on its behalf any Supplemental Agreement in relation thereto. 2.13 SEPARATE AND INDEPENDENT FACILITIES Subject to Clause 2.8 (Aggregation of Advances), the Facilities granted in this Agreement are separate and independent of each other. The aggregate of the amounts outstanding at any time under each Facility shall be a separate and independent debt. 2.14 USE OF FACILITIES Any Bank may, by notice to the Facility Agent, designate another bank or financial institution (a "FUNDING BANK") to make available to the relevant Agent the proceeds of that Bank's share of any Advance or to make payments in respect of any Letter of Credit (in which case that Bank shall ensure that the Funding Bank does so). Any such notice shall specify the name of the Funding Bank and its fax number and address (which must be in New York City) and marking (if any) for the purpose of communications to it in relation to the relevant Facility. A copy of any written 17 22 communication to that Bank shall be sent to the Funding Bank (which need not be a party to this Agreement nor an affiliate of that Swingline Bank). Whether or not the Funding Bank is a party to this Agreement, all rights and obligations with respect to that Bank's Commitment and its Outstandings under the Facilities shall remain solely in that Bank (not the Funding Bank) and this Agreement shall apply as if that Bank (rather than the Funding Bank) had funded its share of each Advance or Letter of Credit, except that the Bank may direct that its share of any payment with respect to the relevant Facility be made to the Funding Bank instead. 18 23 PART 3 UTILISATION OF THE REVOLVING CREDIT FACILITY 3. UTILISATION OF THE REVOLVING CREDIT FACILITY 3.1 DELIVERY OF UTILISATION REQUEST FOR REVOLVING CREDIT ADVANCES Save as otherwise provided herein, a Borrower may from time to time request the making of Revolving Credit Advances under the Revolving Credit Facility by the delivery to the Facility Agent and, in the case of a Revolving Credit Advance denominated in an Optional Currency, the Multicurrency Facility Agent not more than eight business days nor later than three (or, in the case of a Revolving Credit Advance denominated in any Optional Currency four) business days before the proposed date for the making of the relevant Revolving Credit Advance, of a duly completed Utilisation Request therefor. 3.2 UTILISATION DETAILS Each Utilisation Request delivered to the Facility Agent and Multicurrency Facility Agent pursuant to Clause 3.1 (Delivery of Utilisation Request for Revolving Credit Advances) shall be irrevocable and shall specify: (a) the proposed date for the making of the relevant Revolving Credit Advance which shall be a business day falling before the Termination Date; (b) the currency of denomination of the proposed Revolving Credit Advance which shall be dollars or an Optional Currency Provided that, if the relevant Borrower selects an Optional Currency, such Borrower may also select dollars to apply if its first selection becomes ineffective pursuant to Clause 3.3 (Banks' Agreement to Optional Currency); (c) the amount of the proposed Revolving Credit Advance, which shall be an amount of not less than $25,000,000 and an integral multiple of $5,000,000 (or, if the Revolving Credit Advance is to be denominated in an Optional Currency, such comparable and convenient amount thereof as the Multicurrency Facility Agent may from time to time specify) and the Dollar Amount of which shall not exceed the Available Facility; (d) the proposed Term of the proposed Revolving Credit Advance, which shall be a period of one, two, three or six months or such other period not exceeding twelve months agreed by the Banks ending on a business day falling on or before the Termination Date; and (e) the account to which the proceeds of the proposed Revolving Credit Advance are to be paid. 3.3 BANKS' AGREEMENT TO OPTIONAL CURRENCY If a Borrower requests that a Revolving Credit Advance be denominated in an Optional Currency and: (a) no later than 12.00 noon (London time) on the third business day preceding the first day of the Term of such Revolving Credit Advance, any Bank notifies the Multicurrency Facility Agent that it does not agree to such request; or 19 24 (b) no later than 11.00 a.m. (London time) on the Quotation Date for such Revolving Credit Advance, the Facility Agent notifies the Borrower and the Banks that the Multicurrency Facility Agent is of the reasonable opinion that it is not feasible for such Revolving Credit Advance to be made in such Optional Currency; or (c) to give effect to such request would mean that the Revolving Credit Advances outstanding would be denominated in more than three Optional Currencies, then, unless such Borrower and the Banks otherwise agree, such Revolving Credit Advance shall not be made unless such Borrower specified in the Utilisation Request in respect of such Revolving Credit Advance that in such event such Revolving Credit Advance should be denominated in dollars in which case such Revolving Credit Advance shall, save as otherwise provided herein, be made in dollars in an amount equal to the Dollar Amount relating to such Utilisation Request. 3.4 MAKING OF REVOLVING CREDIT ADVANCES If a Borrower requests a Revolving Credit Advance in accordance with the provisions of this Clause 3 and, on the proposed date for the making of such Advance: (a) none of the events mentioned in Clause 22(a) and (b) (Market Disruption) shall have occurred; (b) the Dollar Amount of such Revolving Credit Advance does not exceed the Available Facility; (c) to give effect to such request would not result in more than ten Advances being outstanding; and (d) either: (i) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the making of such Revolving Credit Advance; and (ii) the representations set out in Clause 23 (Representation and Warranties) which are to be repeated pursuant to the relevant Utilisation Request are true on and as of the proposed date for the making of such Revolving Credit Advance and would continue to be true immediately following the making of the relevant Revolving Credit Advance and the application of the proceeds thereof in meeting the purpose for the making of such Revolving Credit Advance (as if references therein to Original Financial Statements were references to the most recent set of annual audited financial statements delivered by each Borrower to the Facility Agent pursuant to Clause 24 (Undertakings)) or each of the Banks agrees, notwithstanding any matter mentioned at (i) or (ii) above to participate in the making of such Revolving Credit Advance, 20 25 then: (1) the Facility Agent (or in the case of a Revolving Credit Advance denominated in an Optional Currency, the Multicurrency Facility Agent) shall, no later than 5.00 p.m. (London time) on the third business day prior to the proposed Utilisation Date, notify each Bank by telefax or by telephone (with confirmation to follow by telefax) at its Facility Office specified for the purpose of Revolving Credit Advances of the amount of such Revolving Credit Advance, the amount of such Bank's participation therein and the period for which such Revolving Credit Advance is to be made; (2) each Bank shall, no later than 12.00 noon (local time for the financial centre of the relevant currency) on such proposed Utilisation Date make its portion of such Revolving Credit Advance available to the Facility Agent or in the case of a Revolving Credit Advance denominated in an Optional Currency, the Multicurrency Facility Agent), in the relevant currency, in accordance with Clause 29 (Payments); and (3) the Facility Agent (or in the case of a Revolving Credit Advance denominated in an Optional Currency, the Multicurrency Facility Agent) shall, no later than 4.00 p.m. (local time for the financial centre of the relevant currency) on such proposed Utilisation Date, make such Revolving Credit Advance available to the relevant Borrower in accordance with but subject to Clause 29 (Payments). 3.5 FACILITY OFFICE Each Bank will participate in each Revolving Credit Advance made pursuant to this Clause 3 through its Facility Office specified in relation to Revolving Credit Advances in its Relevant Amount. 3.6 REDUCTION OF ADVANCES If a Bank's Commitment is reduced in accordance with the terms hereof after the Facility Agent (or in the case of a Revolving Credit Advance denominated in an Optional Currency, the Multicurrency Facility Agent) has received the Utilisation Request for a Revolving Credit Advance, then both the Dollar Amount and the amount of that Revolving Credit Advance shall be reduced accordingly. 3.7 APPLICATION OF ADVANCES The proceeds of any Revolving Credit Advance made hereunder shall first be applied in repayment of any Swing-Line Advance (together with any accrued interest thereon), and the Facility Agent shall pay such portion of any Revolving Credit Advance to be made hereunder to the Swing-Line Banks as the Swing-Line Agent instructs the Facility Agent is necessary to repay each outstanding Swing-Line Advance (together with any accrued interest thereon). 3.8 PAYMENT OF SWING-LINE ADVANCES Notwithstanding anything to the contrary provided herein, one or more Revolving Credit Advances (as may be necessary) will be made by the Banks to the Borrower if, prior to 10.00 a.m. on any business day, the Swing-Line Agent, on behalf of the Swing-Line Banks, gives notice to the Facility Agent that it requires each outstanding Swing-Line Advance to be repaid by means of a Revolving Credit Advance hereunder (and, for the purposes hereof such notice shall be deemed to have been automatically given by the Swing-Line Agent to the Facility Agent, if either (i) the Facility Agent receives notice from any other party hereto that an Event of Default has occurred or (ii) for any reason whatsoever the proceeds of a Revolving Credit Advance hereunder 21 26 cannot be applied in the manner outlined in Clause 3.7) and, two business days after the Swing-Line Agent gives notice to the Facility Agent as aforesaid a Revolving Credit Advance will be made in respect of each outstanding Swing-Line Advance by the Banks in an amount of each such Swing-Line Advance and for a Term selected by the Facility Agent, in consultation with the Borrower, notwithstanding (a) the occurrence of an Event of Default, (b) any reduction in the Total Commitments after the date hereof or (c) any other requirements for a drawdown pursuant to any of the other provisions of this Clause 3 not being fulfilled Provided that nothing herein contained shall be construed so as to require the Banks to participate in any Revolving Credit Advance requested hereunder by the Swing-Line Agent to repay any Swing-Line Advance which was made in breach of Clause 7.2(b) or was made in the circumstances set out in Clause 7.3(b). Each Revolving Credit Bank will participate through its Facility Office in its Relevant Amount in any Revolving Credit Advance made pursuant to the terms of this Clause 3.8. 22 27 PART 4 UTILISATION OF THE LETTER OF CREDIT FACILITY 4. UTILISATION OF THE LETTER OF CREDIT FACILITY 4.1 DELIVERY OF UTILISATION REQUEST FOR LETTERS OF CREDIT Save as otherwise provided herein, Ahold USA may from time to time request the issue of Letter(s) of Credit and/or that the Banks participate in the issuance of any Existing Letter(s) of Credit under the Letter of Credit Facility by the delivery to the Facility Agent, not more than eight business days in New York nor later than 9.30 a.m. on the third business day in New York before the proposed date for either (a) the issue of the relevant Letter(s) of Credit and/or (b) the effectiveness of the Banks' participating in the relevant Existing Letter(s) of Credit (as the case may be) of a duly completed Utilisation Request therefor. 4.2 UTILISATION DETAILS Each Utilisation Request delivered to the Facility Agent pursuant to Clause 4.1 (Delivery of Utilisation Request for Letters of Credit) shall be irrevocable and shall specify: (a) the face amount of (i) the proposed Letter(s) of Credit and/or (ii) Existing Letter(s) of Credit (as the case may be), which shall be an amount of not more than the Available Letter of Credit Facility; (b) the proposed Term of (i) the proposed Letter(s) of Credit and/or (ii) Existing Letter(s) of Credit (as the case may be), which shall be a period ending on a business day falling on or before the Termination Date; (c) the name and address of the recipient to whom such Letter(s) of Credit is to be delivered and/or to whom such Existing Letter(s) of Credit has been delivered (as the case may be); and (d) the Issuing Bank relating to such Letter(s) of Credit and/or Existing Letter(s) of Credit (as the case may be). 4.3 ISSUE OF LETTERS OF CREDIT If the Borrower requests the issue of a Letter of Credit and/or the participation of Banks in the issuance of any Existing Letter of Credit in accordance with the provisions of this Clause 4 and, on the proposed date for such issue and/or participation: (a) the Dollar Amount of such Letter(s) of Credit and (if applicable) Existing Letter(s) of Credit does not exceed the Available Letter of Credit Facility; (b) the identity of the recipient has been agreed by all the Banks no later than 3.00 p.m. (New York Time) on the third business day in New York before the proposed date for the issue of the relevant Letter(s) of Credit or participation in the relevant Existing Letter(s) of Credit; (c) (in relation to any new Letter of Credit) the form of such Letter(s) of Credit is such form as has been agreed between the relevant Borrower and the Issuing Bank (acting on the instructions of the Banks) by no later than 3.00 p.m. (New York Time) on the 23 28 third business day in New York before the date from the issue of such Letter(s) of Credit; (d) either: (i) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the issue of such Letter(s) of Credit or participation by the Banks in such Existing Letter(s) of Credit; and (ii) the representations set out in Clause 23 (Representations and Warranties) which are to be repeated pursuant to the relevant Utilisation Request are true on and as of the proposed date for the issue of such Letter(s) of Credit and/or participation in such Existing Letter(s) of Credit (as the case may be) and would continue to be true immediately following the issuing of the relevant Letter(s) of Credit and/or participation in such Existing Letter(s) of Credit (as the case may be) (as if references therein to Original Financial Statements were references to the most recent set of annual audited financial statements delivered by each Borrower to the Facility Agent pursuant to Clause 24 (Undertakings)) or each of the Banks agrees, notwithstanding any matter mentioned at (i) or (ii) above to the issue of such Letter of Credit and/or participation in such Existing Letter(s) of Credit (as the case may be), then: (1) the Facility Agent shall, no later than 5.00 p.m. (New York Time) on the third business day prior to the proposed Utilisation Date, notify each Bank and the Issuing Bank by telefax or by telephone (with confirmation to follow by telefax) at its Facility Office specified for the purpose of the Letter of Credit Facility of the amount of such Letter(s) of Credit and/or Existing Letter(s) of Credit (as the case may be), the amount of such Bank's participation therein and the Term of such Letter(s) of Credit and/or Existing Letter(s) of Credit (as the case may be); and (2) (in the case of any new Letter(s) of Credit) the Issuing Bank shall on such proposed Utilisation Date, issue such Letter of Credit to the relevant recipient Provided that, if the issue of such proposed new Letter(s) of Credit to the proposed beneficiary is prohibited under any law, statute, regulation, order or decree to which a Bank is subject or pursuant to any request or requirement of any central bank or other fiscal, monetary or other authority to which a Bank is subject, the Issuing Bank shall not be obliged to issue such proposed new Letter(s) of Credit. 4.4 BANKS' PARTICIPATION IN LETTERS OF CREDIT Each Bank will participate in the issuance of each Letter of Credit and each Existing Letter of Credit through its Facility Office specified in relation to the Letter of Credit Facility to the extent of its Relevant Amount. 24 29 4.5 REDUCTION OF BANKS' LETTER OF CREDIT COMMITMENTS If a Bank's Commitment is reduced in accordance with the terms hereof after the Facility Agent has received the Utilisation Request for any Letter(s) of Credit and/or Existing Letter(s) of Credit, then both the Dollar Amount and the amount of such Letter(s) of Credit and/or Existing Letter(s) of Credit shall be reduced accordingly. 4.6 COMPLETION OF LETTERS OF CREDIT The Issuing Bank relating to any Letter of Credit is hereby authorised to issue such Letter of Credit pursuant to Clause 4.3 (Issue of Letters of Credit) by: (a) completing the issue date and Expiry Date of such Letter of Credit; and (b) executing and delivering such Letter of Credit to the relevant recipient on the Utilisation Date. 5. INDEMNITY 5.1 DEMAND FOR PAYMENT If, at any time, a demand for payment (the amount so demanded being herein referred to as the "AMOUNT DEMANDED") is made under a Letter of Credit the Issuing Bank relating to such Letter of Credit shall notify the Facility Agent who shall notify each of the Banks and Ahold USA of such demand and the Facility Agent shall make demand of each of the Banks for an amount equal to its share of the amount demanded. 5.2 PAYMENT Each Bank shall, upon receipt by it of a demand made on it by the Facility Agent under this Clause 5 and in any event no later than 11.00 a.m. (London time) on the business day following receipt of the demand, pay to the Facility Agent the amount demanded of it. The Facility Agent shall, upon receipt of such amount, promptly pay the same to the Issuing Bank of the relevant Letter of Credit. 5.3 INDEMNIFICATION Ahold USA hereby irrevocably and unconditionally agrees to indemnify and keep indemnified the Issuing Bank, the Facility Agent and each Bank on demand against each and every sum paid or payable by the Issuing Bank or any such Bank under or in respect of any Letter of Credit and also undertakes to indemnify and hold harmless the Issuing Bank, the Facility Agent and each Bank on demand from and against all actions, proceedings, liabilities, costs (including any costs incurred in funding any amount which falls due from the Issuing Bank, the Facility Agent or any Bank under any Letter of Credit in connection with any such Letter of Credit), claims, losses, damages and expenses which the Issuing Bank, the Facility Agent and each Bank may at any time incur or sustain in connection with or arising out of any Letter of Credit. 5.4 THE ISSUING BANK'S AND BANKS' ENTITLEMENTS The Issuing Bank and each Bank shall be entitled to make any payment under or in respect of any Letter of Credit for which a demand has been made without any reference to or further authority from Ahold USA or any other investigation or enquiry, need not concern itself with the propriety of any demand made or purported to be made under and in the manner required by the terms of any such Letter of Credit and shall be entitled to assume that any person expressed in any Letter of Credit or in any notice served pursuant to any such Letter of Credit to be entitled to make demands is so entitled and that any individual purporting to sign any such demand or notice on behalf of such person is duly authorised to do so; accordingly, it shall not be a defence to any demand made of Ahold USA, nor shall Ahold USA's obligations hereunder be impaired 25 30 by the fact (if it be the case), that the Issuing Bank, the Facility Agent or any Bank was or might have been justified in refusing payment, in whole or in part, of the amounts so demanded. 5.5 OBLIGATIONS NOT DISCHARGED The obligations of each of the Banks and Ahold USA to the Issuing Bank, the Facility Agent and (in the case of Ahold USA) each Bank shall not be discharged, lessened or impaired by any act, omission or circumstance whatsoever which, but for this provision, might operate to release or exonerate such Bank or Ahold USA from all or part of such obligations or in any other way discharge, lessen or impair the same. 5.6 CERTIFICATE OF THE ISSUING BANK CONCLUSIVE A certificate of the Issuing Bank as to the amount paid out by the Issuing Bank under any Letter of Credit shall, save for manifest error, be conclusive and binding upon Ahold USA for the purposes of this Agreement and prima facie evidence of the payment of such amounts in any legal action or proceedings arising in connection therewith. 6. LETTER OF CREDIT FEES AND FRONTING FEE 6.1 LETTER OF CREDIT FEES Ahold USA shall, in respect of each Letter of Credit issued at its request, be obliged to pay to the Facility Agent for the account of each Bank (for distribution in proportion to each Bank's participation under the relevant Letter of Credit, a letter of credit fee at the Financial L/C Commission Rate (in the case of Financial Letter of Credit) or Non Financial L/C Commission Rate (in the case of a Non-Financial Letter of Credit) on the face amount of the relevant Letter of Credit. Such letter of credit fee shall be paid in arrears in respect of each successive period of three months (or such shorter period as shall end on the Expiry Date relating to such Letter of Credit) which begins during the Term of the relevant Letter of Credit, each payment of such letter of credit commission to be made on the last day of each such period. 6.2 FRONTING FEE Ahold USA shall negotiate in good faith with any proposed Issuing Bank and agree a fee to be paid to such Issuing Bank in respect of its issuing any Letter of Credit or Existing Letter of Credit. Such fee shall be payable in arrears in respect of each successive period of three months (or such shorter period as shall end on the Expiry Date of such Letter of Credit or Existing Letter of Credit (as the case may be)) which begins during the Term of such Letter of Credit or Existing Letter of Credit (as the case may be), such fee to be payable directly to such Issuing Bank on the last day of each such period. In addition, Ahold USA shall compensate each Issuing Bank in full on demand by such Issuing Bank for all customary administrative, issuance, amendment, payment and negotiation charges incurred or chargeable by it in connection with any Letter of Credit or Existing Letter of Credit (as the case may be) issued by it. 26 31 PART 5 UTILISATION OF THE SWING-LINE FACILITY 7. UTILISATION OF THE SWING-LINE FACILITY 7.1 DELIVERY OF UTILISATION REQUEST FOR SWING-LINE ADVANCES Save as otherwise provided herein, a Borrower may from time to time request the making of a Swing-Line Advance under the Swing-Line Facility by delivery by telefax to the Swing-Line Agent and the Facility Agent, not more than three business days in New York before nor later than 10.00 a.m. (New York Time) on the latest business day in New York which falls on or before the proposed date for the making of the relevant Swing-Line Advance, of a duly completed Utilisation Request. 7.2 UTILISATION DETAILS Each request made of the Swing-Line Agent pursuant to Clause 7.1 (Delivery of Utilisation Request for Swing-Line Advances) shall be irrevocable and shall specify: (a) the proposed date for the making of the relevant Swing-Line Advance, which shall be a business day in New York falling before the Termination Date; (b) the amount of the proposed Swing-Line Advance, which shall be an amount of not less than $25,000,000 and an integral multiple of $5,000,000 which is less than or equal to the Available Swing-Line Facility; (c) the proposed Term of the proposed Swing-Line Advance, which shall be a period of not more than ten business days in New York ending on a business day in New York on or before the Termination Date; and (d) the account to which the proceeds of the proposed Swing-Line Advance are to be paid. 7.3 CONDITIONS OF UTILISATION If the Borrower requests a Swing-Line Advance in accordance with the preceding provisions of this Clause 7 and, on the proposed date for the making of such Swing-Line Advance: (a) the Dollar Amount of such Swing-Line Advance does not exceed the Available Swing-Line Facility; and (b) either: (i) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the making of such Swing-Line Advance; and (ii) the representations set out in Clause 23 (Representation and Warranties) which are to be repeated pursuant to the relevant Utilisation Request are true on and as of the proposed date for the making of such Swing-Line Advance and would continue to be true immediately following the making of the relevant Swing-Line Advance and the application of the proceeds thereof in meeting the purpose of the making of such Swing-Line Advance (as if references 27 32 therein to Original Financial Statements were references to the most recent set of annual audited financial statements delivered by each Borrower to the Facility Agent pursuant to Clause 24 (Undertakings)) or each of the Swing-Line Banks agrees (notwithstanding any matter mentioned at (i) or (ii) above) to participate in the making of such Swing-Line Advance, then: (1) the Swing-Line Agent shall, no later than 1.00 p.m. (New York Time) on the proposed Utilisation Date, notify each Swing-Line Bank by telefax or by telephone (with confirmation to follow by telefax) at its Facility Office specified for the purpose of Swing-Line Advances of the amount of such Swing-Line Advance, the amount of such Swing-Line Bank's participation therein and the period for which such Swing-Line Advance is to be made; (2) each Swing-Line Bank shall, no later than 2.00 p.m. (New York Time) on such proposed Utilisation Date make its portion of such Swing-Line Advance available to the Swing-Line Agent, in dollars, in accordance with Clause 29 (Payments); and (3) the Swing-Line Agent shall, no later than 4.00 p.m. (New York Time) on such proposed Utilisation Date, make such Swing-Line Advance available to the relevant Borrower in accordance with but subject to Clause 29 (Payments). 7.4 FACILITY OFFICE Each Swing-Line Bank will participate in each Swing-Line Advance made pursuant to this Clause 7 through its Facility Office specified for the purpose of Swing-Line Advances in its Relevant Amount. 7.5 REDUCTION OF COMMITMENT If a Bank's Swing-Line Commitment is reduced in accordance with the terms hereof after the Swing-Line Agent has received a request for a Swing-Line Advance, then the amount of that Swing-Line Advance shall be reduced accordingly. 28 33 PART 6 UTILISATIONS OF THE SHORT-TERM ADVANCES FACILITY 8. REQUEST FOR OFFERS 8.1 MAKING REQUESTS FOR OFFERS Save as otherwise provided herein, Ahold USA may from time to time request offers by tender for the making of Short-Term Advances under the Short-Term Advances Facility by the delivery to the Short-Term Advances Agent by telex, not earlier than the eighth business day nor later than five (or if the interest rates relating to such Short-Term Advances are to be expressed on the Absolute Basis 9.30 a.m. (New York Time) two) business days before the proposed Utilisation Date relating to such Short-Term Advance, of a duly completed Utilisation Request therefor. 8.2 REQUEST DETAILS Each Utilisation Request delivered to the Short-Term Advances Agent pursuant to Clause 8.1 (Making Requests for Offers) shall be irrevocable and shall specify: (a) the proposed Utilisation Date, which shall be a business day falling five business days or more after the previous Utilisation Date, if any, relating to Short-Term Advances and one month or more before the Termination Date; (b) whether or not the interest rate relating to the relevant Short-Term Advances is to be determined by reference to LIBOR or expressed on the Absolute Basis; (c) the aggregate amount of the Short-Term Advances in respect of which offers are requested, which shall be an amount of not less than $10,000,000 and an integral multiple of $5,000,000 and the Dollar Amount of which is less than the Available Facility; (d) the proposed Term of the proposed Short-Term Advances which shall be a period of one, two, three, six or twelve months (if the interest rate relating to such Short-Term Advances is to be determined by reference to LIBOR) or not less than seven days or more than one hundred and eighty days (if the interest rate relating to such Short-Term Advances is to be expressed on the Absolute Basis) and, in each case, ending on a business day falling on or before the Termination Date. 8.3 NOTIFICATION OF BANKS The Short-Term Advances Agent shall, promptly after receipt by it of a Utilisation Request and in any event no later than 2.00 p.m. (New York Time) on the fourth business day (or, in the case of Short-Term Advances the interest rate relating to which is to be expressed on the Absolute Basis 2.00 p.m. (New York Time) on the second business day) before the proposed Utilisation Date relating thereto, notify the Banks by telex of its receipt of such Utilisation Request specifying: (a) the proposed Utilisation Date; (b) the Requested Amount and Term of the proposed Short-Term Advances; and (c) whether or not the interest rate relating to the relevant Short-Term Advances is to be determined by reference to LIBOR or expressed on the Absolute Basis; 29 34 and inviting each Bank to make an offer or offers to make the proposed Short-Term Advances. 9. OFFERS FOR SHORT-TERM ADVANCES 9.1 OFFERS BY BANKS Each Bank may (but is not obliged to) make an offer or offers (not exceeding three) to make any proposed Short-Term Advances by the delivery to the Short-Term Advances Agent by telex, no later than 11.00 a.m. (New York Time) on the third business day (or, in the case of Short-Term Advances the interest rate relating to which is to be determined by reference to the Absolute Basis, 9.30 a.m. (New York Time) on the business day) before the proposed Utilisation Date relating to such Short-Term Advances, of a notice bearing such Bank's name, and the reference "AHOLD USA HOLDINGS, INC - SHORT-TERM ADVANCES" and specifying: (a) the Utilisation Request in relation to which the offer or offers therein contained are made; and (b) in relation to each offer therein contained the amount of the Short-Term Advance which such Bank offers to make, which shall be not less than $5,000,000 and an integral multiple of $1,000,000; and (c) if the interest rate in relation to such Short-Term Advances is to be determined by reference to LIBOR, the margin (positive or negative and expressed as a percentage rounded up, if necessary, to four decimal places) over or under LIBOR or if the interest rate in relation to such Short-Term Advances is to be expressed by reference to the Absolute Basis, the rate of interest per annum expressed as a fixed annual percentage yield (rounded up, if necessary, and specified in increments of 1/10,000 of one per cent.) offered for each such Short-Term Advance. 9.2 SEPARATE OFFERS Each offer made by a Bank pursuant to Clause 9.1 (Offers by Banks) shall be treated as a separate offer for the purposes hereof and shall be irrevocable and capable of acceptance by Ahold USA in accordance with the terms hereof. 9.3 NOTIFICATION TO AHOLD USA The Short-Term Advances Agent shall, as soon as practicable and in any event no later than 12.30 p.m. (New York Time) on the third business day (or, in the case of Short-Term Advances the interest rate relating to which is to be expressed on the Absolute Basis, 10.15 a.m. (New York Time) on the business day) preceding the proposed Utilisation Date for any Short-Term Advances, notify Ahold USA by telex or telephone of the offers made pursuant to the Utilisation Request relating to such Short-Term Advances specifying, in respect of each offer: (a) the name of the Bank making such offer; (b) the amount of the Short-Term Advance offered; and (c) the relevant margin quote (in the case of Short-Term Advances the interest rate relating to which is to be determined by reference to LIBOR) or fixed annual percentage yield (in the case of Short-Term Advances the interest rate in relation to which is to be 30 35 determined by reference to the Absolute Basis). 10. OFFERS BY THE SHORT-TERM ADVANCES AGENT OR ITS AFFILIATES Notwithstanding the provisions of Clause 9 (Offers for Short-Term Advances), any Bank which is, or is an affiliate of, the Short-Term Advances Agent may only make an offer or offers to make Short-Term Advances in response to any Utilisation Request by notifying its offer or offers to Ahold USA making such request by telex no later than 10.00 a.m. (New York Time) on the third business day (or, in the case of Short-Term Advances the interest rate relating to which is to be expressed on the Absolute Basis, 9.00 a.m. (New York Time) on the business day) prior to the proposed Utilisation Date for such Short-Term Advances and any offer by such a Bank which is not so notified to Ahold USA shall be invalid and shall not be capable of acceptance by Ahold USA. 11. ACCEPTANCE OF OFFERS 11.1 NOTIFICATION BY AHOLD USA OF ACCEPTANCES Ahold USA shall, no later than 1.30 p.m. (New York Time) on the third business day (or, in the case of Short-Term Advances the interest rate relating to which is to be determined by reference to the Absolute Basis, 11.30 a.m. (New York Time) on the business day) prior to the Utilisation Date relating to such Short-Term Advances, notify the Short-Term Advances Agent by telex or telephone whether or not it wishes to accept, in whole or in part, the offers made in response to the relevant Utilisation Request and, if so, the aggregate amount of the Short-Term Advances the offers in respect of which it wishes to accept, which shall be: (a) not less than $10,000,000 and an integral multiple of $5,000,000 and which shall be: - (i) not more than the Requested Amount specified in such Utilisation Request; and (ii) the Dollar Amount of which shall not exceed the Available Facility. 11.2 ACCEPTED OFFERS Each acceptance by Ahold USA pursuant to Clause 11.1 (Notification by Ahold USA of Acceptances) of the offers made in response to a Utilisation Request shall be treated as an acceptance of such offers in ascending order of the yields (in the case of offers made by reference to LIBOR, calculated in accordance with Clause 9.1 (Offers by Bank)) at which the same were made but if, as a result thereof, two or more offers at the same yield fall to be partially accepted, then the amounts of the Short-Term Advances in respect of which such offers are accepted shall be treated as being the amounts which bear the same proportion to one another as the respective amounts of the Short-Term Advances so offered bear to one another but, in each case, rounded as the Short-Term Advances Agent may consider necessary to ensure that the amount of each Short-Term Advance is an amount of not less than $5,000,000 and an integral multiple of $1,000,000. 11.3 NOTIFICATION TO BANKS OF ACCEPTED OFFERS The Short-Term Advances Agent shall, no later than 3.00 p.m. (New York Time) on the third business day (or, in the case of Short-Term Advances the interest rate in relation to which is expressed on the Absolute Basis 3.00 p.m. (New York Time) on the business day) prior to the Utilisation Date relating to the relevant Short-Term Advances, notify by telex each Bank which has made an offer in response to such Utilisation Request whether or not such offer 31 36 has been accepted in whole or in part and, if so, the amount of the Short-Term Advance in respect of which such offer has been accepted and the yield relating thereto. 12. MAKING OF SHORT-TERM ADVANCES If the Short-Term Advances Agent notifies any Bank in accordance with Clause 11.3 (Notification to Banks of Accepted Offers) of Ahold USA's acceptance, in whole or in part, of any offer by such Bank to make any Short-Term Advance and on the proposed Utilisation Date relating to such Short-Term Advance: (i) if the interest rate in respect of such Short-Term Advance is to be determined by reference to LIBOR, neither of the events mentioned in Clause 22 (Market Disruption) shall have occurred; (ii) the Dollar Amount of such Short-Term Advance does not exceed the Available Facility; and (iii) either: (a) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the making of such Short-Term Advance; and (b) the representations set out in Clause 23 (Representations and Warranties) which are to be repeated pursuant to the relevant Utilisation Request are true on and as of the proposed date for the making of such Short-Term Advance and would continue to be true immediately following the making of the relevant Short-Term Advance and the application of the proceeds of thereof in meeting the purpose of such Short-Term Advance (as if references therein to Original Financial Statements were references to the most recent set of annual audited financial statements delivered by each Borrower to the Facility Agent pursuant to Clause 24 (Undertakings)), or the respective Bank agrees (notwithstanding any matter mentioned in (a) and (b) above) to participate in the making of such Short-Term Advance, then, on such Utilisation Date, such Bank shall make such Short-Term Advance through its Facility Office to Ahold USA in accordance with Clause 29 (Payments). 32 37 PART 7 INTEREST 13. INTEREST ON REVOLVING CREDIT ADVANCES 13.1 RATE OF INTEREST The rate of interest applicable to a Revolving Credit Advance during the Term of such Revolving Credit Advance shall be the rate per annum determined by the Facility Agent to be the sum of LIBOR relating to such Revolving Credit Advance and the Margin at such time. 13.2 NOTIFICATION The Facility Agent shall promptly notify the relevant Borrower and each Bank of each determination made by it pursuant to this Clause 13. 13.3 PAYMENT OF INTEREST On the Repayment Date relating to each Revolving Credit Advance (and if such Revolving Credit Advance has a Term which exceeds six months, at the end of each successive six monthly period of such Term) the relevant Borrower shall pay accrued interest on that Revolving Credit Advance. 14. INTEREST ON SWING-LINE ADVANCES 14.1 RATE OF INTEREST The rate of interest applicable to a Swing-Line Advance on each day (a "RELEVANT DAY") during the Term of such Swing-Line Advance shall be the rate per annum determined by the Swing-Line Agent as at 11.00 a.m. (New York Time) on the relevant day to be the greater of: (i) the Prime Rate for such relevant day; and (ii) the sum of the Federal Funds Rate for such relevant day and the Swing-Line Margin at such time. 14.2 NOTIFICATION The Swing-Line Agent shall promptly notify the relevant Borrower and each Swing-Line Bank of each determination made by it pursuant to Clause 14.1 (Rate of Interest). 14.3 PAYMENT OF INTEREST On the Repayment Date relating to each Swing-Line Advance the relevant Borrower shall pay accrued interest on that Swing-Line Advance. 15. INTEREST ON SHORT-TERM ADVANCES 15.1 RATE OF INTEREST The rate of interest applicable to a Short-Term Advance during the Term of such Short-Term Advance shall be: (i) (if the interest rate relating to such Short-Term Advance is to be determined by reference to LIBOR) the rate per annum determined by the Facility Agent to be the sum of LIBOR relating to such Short-Term Advance and the margin at which such Short-Term Advance was offered or, if such margin was negative, the difference between such margin (taking such margin as a positive number for such purpose) and LIBOR relating to such Short-Term Advance; or 33 38 (ii) (if the interest rate relating to such Short-Term Advance is expressed on the Absolute Basis) the fixed annual percentage yield at which such Short-Term Advance was offered. 15.2 PAYMENT OF INTEREST On the Repayment Date relating to each Short-Term Advance (and if such Short-Term Advance has a Term which exceeds six months, at the end of each successive six monthly period of such Term) the relevant Borrower shall pay accrued interest on that Short-Term Advance. 34 39 PART 8 REPAYMENT AND CANCELLATION 16. REPAYMENT OF ADVANCES 16.1 REPAYMENT Each Borrower shall repay each Advance made to it in full on the Repayment Date relating thereto. 16.2 PREPAYMENT A Borrower may, subject to Clause 27.5 (Broken Periods), if it gives to the Facility Agent not less than fifteen days' prior written notice to that effect, prepay the whole of any Advance. Any notice of prepayment shall be irrevocable, shall specify the date upon which such prepayment is to be made and the amount of such prepayment and shall oblige such Borrower to make such prepayment on such date. 16.3 MANDATORY PAYMENT If any Bank claims indemnification from a Borrower under Clause 18 (Taxes) or Clause 20 (Increased Costs) and within thirty days thereafter the Facility Agent receives from such Borrower at least ten days' prior written notice (which shall be irrevocable) of such Borrower's intention to repay such Bank's share of any Advance, the Borrower shall, subject to Clause 27.5 (Broken Periods), repay such Bank's portion of such Advance. 16.4 REDUCTION OF COMMITMENTS A Bank for whose account a repayment is to be made under Clause 16.3 (Mandatory Repayment) shall not be obliged to make any Advances hereunder on or after the date upon which the Facility Agent receives a Borrower's notice of its intention to repay such Bank's share of any Advance, on which date such Bank's Available Commitment (and hence its Swing-Line Commitment and Letter of Credit Commitment) shall be reduced to zero. 16.5 REPAYMENT METHOD None of the Borrowers shall repay all or any part of any Advance outstanding hereunder except at the times and in the manner expressly provided herein but shall, save as provided herein, be entitled to reborrow any amount repaid. 17. CANCELLATION 17.1 CANCELLATION The Principal Company may, by giving to the Facility Agent not less than ten days' prior written notice to that effect, cancel the whole or any part (being an amount of not less than $25,000,000 and an integral multiple of $5,000,000) of the Total Commitments. Any such cancellation shall reduce the Commitment of each Bank rateably. 17.2 IRREVOCABLE INSTRUCTION Any notice of cancellation given by the Principal Company pursuant to Clause 17.1 (Cancellation) shall be irrevocable and shall specify the date upon which such cancellation is to be made and the amount of such cancellation. 17.3 NOTICE The Facility Agent shall promptly notify each of the other Agents and the Banks of any notice of cancellation received by it from the Borrower pursuant to Clause 17.1 (Cancellation). 17.4 CANCELLATION OF COMMITMENT If any Bank claims indemnification from the Principal Company under Clause 18 (Taxes) or Clause 20 (Increased Costs), the Principal Company may, whilst 35 40 the relevant circumstances continue and by not less than ten days' prior written notice to the Facility Agent (which notice shall be irrevocable), cancel such Bank's Commitment whereupon such Bank shall cease to be obliged to make Advances and its Commitment (and thereby its Swing-Line Commitment and its Letter of Credit Commitment, if any) shall be reduced to zero. 36 41 PART 9 RISK ALLOCATION 18. TAXES 18.1 TAX GROSS-UP All payments to be made by any Obligor to any person hereunder shall be made free and clear of and without deduction for or on account of tax unless such Obligor is required to make such a payment subject to the deduction or withholding of tax, in which case the sum payable by such Obligor in respect of which such deduction or withholding is required to be made shall be increased to the extent necessary to ensure that, after the making of the required deduction or withholding, such person receives and retains (free from any liability in respect of any such deduction or withholding) a net sum equal to the sum which it would have received and so retained had no such deduction or withholding been made or required to be made. 18.2 TAX INDEMNITY Without prejudice to the provisions of Clause 18.1 (Tax Gross-Up), if any person or an Agent on its behalf is required to make any payment on account of tax or otherwise (not being a tax imposed on the net income of any Facility Office by the jurisdiction in which it is incorporated or in which such Facility Office is located) on or in relation to any sum received or receivable hereunder by such person or an Agent on its behalf (including, without limitation, any sum received or receivable under this Clause 18) or any liability in respect of any such payment is asserted, imposed, levied or assessed against such person or an Agent on its behalf, the Principal Company shall, upon demand of the relevant Agent, promptly indemnify such person against such payment or liability, together with any interest, penalties and expenses payable or incurred in connection therewith. 18.3 CLAIMS BY BANKS Any person intending to make a demand pursuant to Clause 18.2 (Tax Indemnity) shall notify the Principal Company (through the Facility Agent in the case of a Bank) in reasonable detail of the event by reason of which it is entitled to do so Provided that nothing herein shall require such person to disclose any confidential information relating to the organisation of its affairs. 18.4 U.S. WITHHOLDING TAXES Each Bank and Agent that is not incorporated under the laws of the United States of America or a state thereof which is or will be a lender to Ahold USA agrees that it will deliver to Ahold USA and the Facility Agent two duly completed copies of United States Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the case may be. Each such Bank and Agent also agrees to deliver to Ahold USA and the Facility Agent two further copies of said Form 1001 or 4224 or successor applicable forms or other manner of certification, as the case may be, on or before the date that any such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to Ahold USA and the Facility Agent and such extensions or renewals thereof as may reasonably be requested by Ahold USA or the Facility Agent, unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Bank or Agent from duly completing and delivering any such form with respect to it and such Bank or Agent so advises Ahold USA and (in the case of any Bank) the Facility Agent. Each such Bank and Agent shall certify that it is entitled to receive payments from Ahold USA under this Agreement without deduction or withholding of any United States federal income taxes. 37 42 19. TAX RECEIPTS 19.1 NOTIFICATION OF REQUIREMENT TO DEDUCT TAX If, at any time, any Obligor is required by law to make any deduction or withholding from any sum payable by it hereunder (or if thereafter there is any change in the rates at which or the manner in which such deductions or withholdings are calculated), such Obligor shall promptly notify the Facility Agent upon becoming aware of the same. 19.2 EVIDENCE OF PAYMENT OF TAX If any Obligor makes any payment hereunder in respect of which it is required to make any deduction or withholding, it shall pay the full amount required to be deducted or withheld to the relevant taxation or other authority within the time allowed for such payment under applicable law and shall deliver to the Facility Agent for each Bank, within thirty days after it has made such payment to the applicable authority, an original receipt (or a certified copy thereof) issued by such authority (if any) or other written evidence of payment as such Obligor can provide evidencing the payment to such authority of all amounts so required to be deducted or withheld in respect of that Bank's share of such payment. 20. INCREASED COSTS 20.1 INCREASED COSTS If, by reason of (i) any change in law or in its interpretation or administration and/or (ii) compliance with any request from or requirement of any central bank or other fiscal, monetary or other authority (including, without limitation, a request or requirement which affects the manner in which a Bank or any holding company of such Bank is required to or does maintain capital resources having regard to such Bank's obligations hereunder and to amounts owing to it hereunder): (a) a Bank or any holding company of such Bank incurs a cost as a result of such Bank's having entered into and/or performing its obligations under this Agreement and/or assuming or maintaining a commitment or performing its obligations (including its obligation to make Advances or participate in, or make a payment under, a Letter of Credit) under this Agreement and/or its participating in or making one or more Advances or the issuing of or participation in one or more Letters of Credit; (b) a Bank or any holding company of such Bank is unable to obtain the rate of return on its overall capital which it would have been able to obtain but for such Bank's having entered into and/or performing its obligations and/or assuming or maintaining a commitment under this Agreement; (c) there is any increase in the cost to a Bank or any holding company of such Bank of funding or maintaining all or any of the advances comprised in a class of advances formed by or including the Advances or payments in respect of Letters of Credit made or to be made by such Bank hereunder; or (d) a Bank or any holding company of such Bank becomes liable to make any payment on account of tax or otherwise (not being a tax imposed on the net income of such holding company or any Facility Office of such Bank by the jurisdiction in which it is incorporated or in which such Facility Office is located) on or calculated by reference 38 43 to the amount of the Advances made or to be made by such Bank hereunder or Letters of Credit issued or to be issued hereunder or its participation therein and/or to any sum received or receivable by it hereunder, then the Principal Company shall, from time to time on demand of the Facility Agent, promptly pay to the Facility Agent for the account of that Bank amounts sufficient to indemnify that Bank or any such holding company against, as the case may be, (1) such cost, (2) such reduction in such rate of return (or such proportion of such reduction as is, in the opinion of that Bank, attributable to its obligations hereunder), (3) such increased cost (or such proportion of such increased cost as is, in the opinion of that Bank, attributable to its funding or maintaining Advances or payments in respect of Letters of Credit) or (4) such liability. 20.2 INCREASED COST CLAIMS A Bank intending to make a claim pursuant to Clause 20.1 (Increased Costs) shall notify the Facility Agent in reasonable detail of the event by reason of which it is entitled to do so, whereupon the Facility Agent shall notify the Principal Company thereof Provided that nothing herein shall require such Bank to disclose any confidential information relating to the organisation of its affairs. 20.3 EXCLUSION OF SWING-LINE For the purposes of this Clause 20 "BANK" does not include any Bank in its capacity as a Swing-Line Bank and "ADVANCES" does not include Swing-Line Advances. 20.4 ILLEGALITY If, at any time, it is unlawful for a Bank to make, fund or allow to remain outstanding all or any of the Advances made or to be made by it hereunder or to participate in the issue of, or to allow to remain outstanding all or any of its liabilities under, any of the Letters of Credit, then that Bank shall, promptly after becoming aware of the same, deliver to the Principal Company through the Facility Agent a notice to that effect and: (a) such Bank shall not thereafter be obliged to make any Advances or to participate in the issue of any Letters of Credit or the Swing-Line Facility and the amount of its Commitment shall be immediately reduced to zero; and (b) if the Facility Agent on behalf of such Bank so requires, the Principal Company shall procure that the relevant Borrower or Borrowers shall on such date as the Facility Agent shall have specified: (i) repay each outstanding Advance together with accrued interest thereon and all other amounts owing to such Bank; and/or (ii) procure that such Bank's obligations under any Letters of Credit will be reduced to zero or otherwise secured with 100% cash security (in the currency in which such Letter of Credit is denominated) in a manner acceptable to such Bank. 20.5 REGULATION D COSTS Each relevant Borrower shall, within seven days of demand by any Bank (through the Facility Agent), pay to that Bank the amount of any Regulation D Costs actually incurred by that Bank in respect of any Advance made by it to that Borrower. Any such demand shall contain 39 44 reasonable details of the calculation of the relevant Regulation D Costs. 21. MITIGATION If, in respect of any Bank, circumstances arise which would or would upon the giving of notice result in: (a) the reduction of its Commitment (and thereby its Swing-Line Commitment and its Letter of Credit Commitment, if any) to zero pursuant to Clause 20.4(a) (Illegality); (b) an increase in the amount of any payment to be made to it or for its account pursuant to Clause 18.1 (Tax Gross-Up); or (c) a claim for indemnification pursuant to Clause 18.2 (Tax Indemnity) or Clause 20.1 (Increased Costs), then, without in any way limiting, reducing or otherwise qualifying the rights of such Bank or the obligations of any Borrower under any of the Clauses referred to in (a), (b) or (c) above such Bank shall promptly upon becoming aware of the same notify the Facility Agent thereof and, in consultation with the Facility Agent and the Borrower and to the extent that it can do so without prejudice to its own position, take reasonable steps to mitigate the effects of such circumstances including the transfer of its Facility Office Provided that such Bank shall be under no obligation to take any such action if, in the opinion of such Bank, to do so might have any material adverse effect upon its business, operations or financial condition. 22. MARKET DISRUPTION If, in relation to any Revolving Credit Advance or Short-Term Advance the interest rate in relation to which is to be determined by reference to LIBOR: (a) the Facility Agent determines that at 11.00 a.m. on the Quotation Date for such Revolving Credit Advance or Short-Term Advance (i) there is no screen rate quote for LIBOR and (ii) none or only one of the Reference Banks was offering to prime banks in the London Interbank Market deposits in the currency requested for such Revolving Credit Advance or Short-Term Advance for the proposed duration of the Term thereof; or (b) before the close of business in London on the Quotation Date for such Term the Facility Agent has been notified by a Bank or each of a group of Banks to whom in aggregate thirty-five per cent. or more of the Dollar Amount of the Outstandings is (or, if such Revolving Credit Advance or Short-Term Advance were then made, would be) owed that the rate at which such deposits were being so offered does not accurately reflect the cost to it of obtaining such deposits, then, notwithstanding the provisions of Clause 13 (Interest on Revolving Credit Advances) or 15 (Interest on Short-Term Advances): 40 45 (i) the Facility Agent shall notify the other parties hereto of such event; (ii) such Revolving Credit Advance or Short-Term Advance shall not be made; and (iii) if the Facility Agent so requires, within five days of such notification the Facility Agent and the Principal Company shall enter into negotiations in good faith with a view to agreeing a substitute basis for determining the rates of interest which may be applicable to Revolving Credit Advances or Short- Term Advance in the future and any such substitute basis that is agreed shall take effect in accordance with its terms and be binding on each party hereto Provided that the Facility Agent may not agree any such substitute basis without the prior consent of each Bank. 41 46 PART 10 REPRESENTATIONS, WARRANTIES, UNDERTAKINGS AND EVENTS OF DEFAULT 23. REPRESENTATIONS AND WARRANTIES Each Obligor represents and warrants to the Agents and each of the Banks that: (i) (in the case of the Principal Company) it is a public company with limited liability ("naamloze vennootschap") duly incorporated and validly existing under the laws of The Netherlands, (in the case of Ahold USA) it is a corporation duly organised and in good standing under the laws of the State of Delaware and the United States of America and (in the case of any Additional Borrower) it is a corporation duly organised and in good standing under the laws of its jurisdiction of incorporation and has the corporate power to own its property and assets and to carry on its business as it is now being conducted; (ii) it has the corporate power to enter into and perform the Finance Documents to which it is expressed to be a party and the transactions contemplated thereby and to borrow and to undertake obligations in respect of Letters of Credit hereunder and has taken all necessary actions to authorise the borrowing of Advances and the undertaking of obligations in respect of Letters of Credit upon the terms and conditions of this Agreement and to authorise the execution, delivery and performance of the Finance Documents to which it is expressed to be a party in accordance with their respective terms; (iii) each of the Finance Documents to which it is expressed to be a party constitutes and will at all times constitute its legal, valid and binding obligations, enforceable in accordance with its terms; (iv) its indebtedness under this Agreement is its direct, unconditional and general indebtedness and ranks, and will at all times rank, pari passu with all other unsecured indebtedness and liabilities (actual or contingent) (with the exception of any indebtedness and liabilities preferred by law and deferred or subordinated indebtedness) issued, created or assumed now or in the future or for which it is now or may at any time in the future otherwise be or become responsible; (v) its Original Financial Statements (copies of which have been provided to each of the Banks) were prepared in accordance with accounting principles generally accepted in The Netherlands (in the case of the Principal Company) and its jurisdiction of incorporation and The Netherlands (in the case of any Additional Borrower) and fairly present its condition and (in the case of the Principal Company) that of the Group, at such date and its results and (in the case of the Principal Company) the results of the Group for such year; there has been no material adverse change in its financial position or in the financial position of the Group or in the financial position of Ahold USA and its subsidiaries, taken as a whole, since that date which might have a material adverse effect on any Obligor's ability to perform its obligations under any of 42 47 the Finance Documents to which it is expressed to be a party, and such accounts included all significant liabilities (including contingent liabilities); (vi) since the date on which its Original Financial Statements were prepared there has been no material adverse change in its (or, in the case of the Principal Company, the Group's, or, in the case of Ahold USA, Ahold USA and its subsidiaries) financial or trading condition or prospects which could have a material adverse effect on its ability to perform or comply with its obligations under this Agreement; (vii) no Event of Default or Potential Event of Default has occurred and is continuing unremedied, nor will any Event of Default or Potential Events of Default result from the making of any Advance or issue of or participation by a Bank in any Letter of Credit hereunder; (viii)its execution, delivery and performance of the Finance Documents to which it is expressed to be a party and the borrowing of Advances and the undertaking of obligations in respect of Letters of Credit do not and will not violate in any respect any provisions of (i) any applicable law or judgement of The Netherlands, its jurisdiction of incorporation or any other relevant jurisdiction, or (ii) any mortgage contract other undertaking or instrument to which it is a party or which is binding upon it or any of its assets and does not and will not result in the creation or imposition of any encumbrance on any of its assets pursuant to the provisions of any such mortgage, contract or other undertaking or instrument; (ix) no litigation, arbitration or administrative proceedings are presently current or pending or, to the best of its knowledge threatened, which would or might have a material adverse effect on its ability to perform its obligations under this Agreement; (x) all acts, conditions and things required to be done, fulfilled and performed in order (a) to enable it lawfully to enter into, exercise its rights under and perform and comply with the obligations expressed to be assumed by it in the Finance Documents to which it is expressed to be party, (b) to ensure that the obligations expressed to be assumed by it in the Finance Documents to which it is expressed to be party are legal, valid and binding and (c) to make the Finance Documents to which it is expressed to be party admissible in evidence in its jurisdiction of incorporation have been done, fulfilled and performed; (xi) no member of the Group is in breach of or in default under any agreement in respect of borrowed money which exceeds $25,000,000 (or its equivalent) (save, in respect of any guarantees, where liability under such guarantee is being contested by an Obligor or Material Subsidiary in good faith) to which it is a party or which is binding on it or any of its assets; (xii) all of the written information supplied by it to the Agents, the Arrangers and the Banks in connection herewith is true, complete and accurate in all material respects and it is not aware of any material facts or circumstances that have not been disclosed to the 43 48 Agents, the Arrangers and the Banks and which might, if disclosed, adversely affect the decision of a person considering whether or not to provide finance to it; (xiii)neither it nor (in the case of the Principal Company and Ahold USA) any of its subsidiaries has taken any corporate action nor have any other steps been taken or legal proceedings been started or (to the best of its knowledge and belief) threatened against it or (in the case of the Principal Company and Ahold USA) any of its subsidiaries for its winding-up, dissolution, administration or re-organisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of it or of any or all of its assets or revenues; (xiv) it is conducting its business and operations in compliance with all laws and regulations and all directives of governmental authorities having the force of law applicable or relevant to it; (xv) it owns and has good and marketable title to all of its property; (xvi) to the best of its knowledge, it is in compliance with all Environmental Laws and it has obtained, and will at all times obtain, and is in compliance with, all Environmental Permits; (xvii)to the best of its knowledge, there are no circumstances which have led, or could lead, to a competent authority or a third party taking any action or making a claim under any Environmental Laws including the requirement to clean up any contaminated land or the revocation, suspension, variation or non-renewal of any Environmental Permits or to any member of the Group having to take action to avert the possibility of any such action or claim; (xviii)the aggregate liabilities of each Obligor and the ERISA Affiliates to all Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan ended prior to the date hereof, would not have a material adverse effect upon the financial condition of such Obligor; each Employee Plan is in compliance in all material respects in form and operation with ERISA and the Code; except as disclosed, each Employee Plan which is intended to be qualified under Section 401(a) of the Code has been determined by the IRS to be so qualified as to form, and, to the knowledge of any Obligor, nothing has occurred since the date of such determination that would adversely affect such determination; the fair market value of the assets of each Employee Plan subject to Title IV of ERISA is at least equal to the present value of the "benefit liabilities" (within the meaning of Section 4001(a)(16) of ERISA) under such Employee Plan determined using the actuarial assumptions and method used by the actuary to such Employee Plan in its most recent valuation of such Employee Plan; there are no actions, suits or claims pending against or with respect to an Employee Plan (other than routine claims for benefits) which would cause the Obligor to incur a material liability or to the knowledge of any Obligor, which could reasonably be expected to be asserted against or with respect to any Employee Plan which would cause the Obligor to incur a 44 49 material liability; each of the Obligors and the ERISA Affiliates has made all material contributions to or under each such Employee Plan, or any contract or agreement requiring contribution to an Employee Plan; none of the Obligors or any ERISA Affiliate has ceased operations at a facility so as to become subject to the provisions of Section 4062(e) of ERISA, withdrawn as a substantial employer so as to become subject to the provisions of Section 4063 of ERISA or ceased making contributions to any Plan subject to Section 4064(a) of ERISA to which it made contributions each in a manner which would cause such Obligor to incur a material liability; and none of the Obligors nor any of the ERISA Affiliates has incurred or reasonably expects to incur any material liability to PBGC other than for premiums under Section 4007 of ERISA; (xix) no member of the Group owns any Margin Stock; the Letters of Credit issued hereunder and the proceeds of the borrowings made hereunder will not be used, directly or indirectly, for the purpose of purchasing or carrying any Margin Stock or for the purpose of reducing or retiring any borrowing which was originally incurred to purchase or carry Margin Stock or for any other purpose which might constitute any Advances or Letters of Credit a "purpose credit" within the meaning of Regulation U or Regulation X. No member of the Group or any agent acting in their behalf has taken or will take any action which might cause this Agreement or any of the documents or instruments delivered pursuant hereto to violate any regulation of the Board of Governors of the Federal Reserve System of the United States or to violate the US Securities Exchange Act of 1934 or any applicable US federal or state securities laws; and (xx) no member of the Group is subject to regulation under the United States Public Utility Holding Company Act of 1935, the United States Federal Power Act or the United States Investment Company Act of 1940 or to any United States federal or state statute or regulation limiting its ability to incur indebtedness; no member of the Group is an "investment company," or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the U.S. Investment Company Act of 1940 (15 U.S.C.Sections80a-1. et seq.); and none of the transactions contemplated by this Agreement will violate such Act. 24. UNDERTAKINGS Each of the Borrowers (unless otherwise specified) undertakes that from and after the date hereof and until all sums due and to become due from such Borrower under this Agreement have been paid or repaid and the Facilities shall no longer exist: (i) (a) the Principal Company will deliver to the Facility Agent and each of the Banks as soon as the same are available (and in any event no later than 180 days after the end of the relevant financial year) its audited consolidated (and unconsolidated to the extent that any Bank shall have to comply with any regulations imposed on it in relation to the provision of financial information by the Principal Company) profit and loss account for such financial year and its audited consolidated (and unconsolidated to the extent that any Bank shall 45 50 have to comply with any regulations imposed on it in relation to the provision of financial information by the Principal Company) balance sheet as at the end of such financial year prepared in conformity with generally accepted accounting principles in The Netherlands applied on a basis consistent with those of the preceding financial year, or if not prepared on a consistent basis, containing or accompanied by an adequate explanation of the consequences of any such inconsistency; (b) the Principal Company will promptly send to the Facility Agent and each of the Banks two copies of any interim report or accounts or any other notice or communication sent by it to its shareholders in their capacity as such or to any stock exchange on which its shares are listed; (c) it will forthwith upon a request to that effect, provide the Facility Agent with such additional financial information or other information as the Facility Agent or any Bank through the Facility Agent may from time to time reasonably require (including, without limitation, information that the Facility Agent or any Bank may reasonably require in order to determine the ratios referred to in Clause 24(vii) in respect of any financial period) and upon receipt of a written request to that effect from the Facility Agent, confirm to the Facility Agent that, save as previously notified to the Facility Agent or as notified in such confirmation, no Event of Default or Potential Event of Default has occurred; (d) it will annually as soon as possible after the end of its financial year (but in no event later than 90 days after the end of the relevant financial year) furnish the Facility Agent with a certificate to the effect that the representations and warranties set out in Clause 23 (Representations and Warranties) hereof are true and accurate on and as of that time as if made at that time; (e) without prejudice to Clause 24(i)(b), the Principal Company will as soon as possible after the end of each quarter of each financial year (but in no event later than 90 days after the end of the relevant quarter of such financial year) furnish the Facility Agent in sufficient copies for the Banks with its interim report in respect of such financial quarter, such interim report to contain such information as may be required to enable the Facility Agent and the Banks to calculate the ratios contained in Clause 24(vii) as at or during the four quarter period ending on (as the case may be) the last day of the relevant quarter of such financial year and a duly signed certificate by one of its duly authorised officers stating that the covenants set out in Clause 24(vii) were complied with during the four quarter period ending at the end of such quarter; (ii) it will promptly give written notice to the Facility Agent of any Event of Default and of any Potential Event of Default or of the occurrence of any such event in relation to a subsidiary as if the references to Borrower in Clause 25 (Events of Default) were references to a subsidiary and if, in such latter case, such event could have a material 46 51 adverse affect on the ability of any Borrower to perform its obligations under this Agreement, at the same time informing the Facility Agent of any action taken or proposed to be taken by such Borrower in connection therewith; (iii) it will not without the Banks' prior written consent create or permit to be created or to subsist and will ensure that none of its subsidiaries will without the Banks' prior written consent create or permit to be created or to subsist any encumbrance on or over the whole or any part of its assets (present or future), provided however that the Banks hereby consent to (i) encumbrances to secure indebtedness for borrowed money to be created or to subsist over assets and revenues not in excess of 15% of the total consolidated net assets of the Group according to the audited consolidated financial statements of the Group most recently delivered to the Facility Agent pursuant to Clause 24(i)(a), and encumbrances created or consented to by any member of the Group prior to the date of this Agreement Provided that the Principal Company has notified the Facility Agent in writing of such encumbrances providing to the Facility Agent full details thereof, such notice to be received by the Facility Agent not later than the date hereof; (iv) it will, if the consent (other than the consent granted pursuant to sub-clause (iii)) of the Banks is required pursuant to sub-clause (iii) above and such consent is forthcoming in relation to any encumbrance create to the satisfaction of the Banks in favour of the Banks (or the Facility Agent on behalf of the Banks) the same encumbrance or such other encumbrance or encumbrances as the Banks in their absolute discretion shall deem not materially less beneficial to them than the encumbrance in respect of which such consent is given to secure, in each case, all sums due and to become due from any Obligor under this Agreement; (v) it will forthwith notify the Facility Agent of any litigation or administrative or arbitration proceedings in or by any court, tribunal, arbitrator or governmental or municipal authority in process, pending or threatened against any member of the Group or any of their respective assets which might have a material adverse effect on the ability of an Obligor to perform its obligations under this Agreement; (vi) it will use its best endeavours to obtain and maintain all authorisations, approvals, consents, licenses and exemptions and it will make all necessary filings and registrations as may be required under any applicable law or regulation to enable it to perform its obligations under each Finance Document, or required for the validity or enforceability of each Finance Document and will comply with the terms of the same; and (vii) the Principal Company will ensure at all times the consolidated financial condition of the Group, as evidenced by the Principal Company's most recent audited annual consolidated financial statements (adjusted to take account of any changes in circumstances which occur after the date as of which such audited annual consolidated financial statements were prepared), shall be such that: (a) the ratio of operating earnings before income taxes plus Net Interest Expense to Net Interest Expense 47 52 determined on a rolling four quarter average basis is not less than 2.50:1.00; and: (b) the ratio of Interest Bearing Debt minus subordinated loans minus cash to Total Capital Accounts plus goodwill associated with the acquisition of Stop & Shop Companies, Inc. is less than 0.785:1.00. The expressions used in this Clause 24(vii) shall have the meanings attributed thereto in the consolidated financial statements of the Group (which shall comply with Clause 24(i) and shall be construed in accordance with generally accepted accounting principles in The Netherlands) but so that: (1) Net Interest Expense shall equal interest expense minus interest income; (2) Interest Bearing Debt means loans payable, other loans, subordinated loans and capitalised lease commitments; and (3) Total Capital Accounts includes stockholders' equity, minority interests (if any) and subordinated loans. Finally, "determined on a rolling four quarter average basis", means in relation to the ratio referred to in (a) above, such ratio tested at the end of each Quarterly Financial Period by taking the average of such ratios calculated for each of such Quarterly Financial Period and the three immediately preceding Quarterly Financial Periods where "QUARTERLY FINANCIAL PERIOD" means a financial quarter of a financial year of the Principal Company; (viii)procure that each member of the Group maintains insurances on and in relation to its business and assets with reputable underwriters or insurance companies against such risks and to such extent as is usual for companies carrying on a business such as that carried on by such member of the Group whose practice is not to self insure; (ix) it shall ensure that each of its subsidiaries shall comply with all Environmental Laws and Environmental Permits applicable from time to time to all or any part of its business or assets; (x) it shall ensure that each of its subsidiaries shall not allow any circumstances to arise which could lead to a competent authority or a third party taking action or making a claim under any Environmental Laws including the requirement to clean up any contaminated land or the revocation, suspension, variation or non-renewal of any Environmental Permits or to it or any such subsidiary having to take action to avert the possibility of any such action or claim; (xi) within four days of the receipt of notice of the same, give full particulars (and if requested a copy of any written particulars received by the relevant member of the Group) to the Facility Agent of any material notice, order, direction, designation, resolution or proposal having application to all or any part of the its business or assets or that of any of its subsidiaries or to the area in which such business or assets are 48 53 situate given or made by any planning authority or other public body or authority whatsoever under or by virtue of Environmental Laws or any other statutory power whatsoever or in pursuance of the powers conferred by any other statute whatsoever; and (xii) if so required by the Facility Agent, without delay and at the cost of the Principal Company, take all reasonable or necessary steps to comply with any such notice or order referred to in Clause 24(xi) above and at the request of any Bank, without delay and at the cost of the Principal Company, make or join with the Facility Agent in making such objection or objections or representations against or in respect of any proposal for such a notice or order as the Facility Agent shall deem expedient. 25. EVENTS OF DEFAULT 25.1 EVENTS OF DEFAULT If: (i) any Obligor fails to pay any principal, interest or other sum on the day of the same becoming due and payable pursuant to this Agreement; (ii) any representation, warranty or statement made or (deemed to be) repeated by any Obligor in this Agreement or in any certificate, statement, opinion or other document contemplated hereby proves to be untrue or incorrect in a respect which is, in the opinion of an Instructing Group, material at the time such certificate statement, opinion or document is made or repeated (or deemed to be made or repeated) or expressed; or (iii) any Obligor defaults in the due performance or observance of any undertaking or obligation on its part contained in or pursuant to this Agreement and, if such default is capable of remedy, the same shall not have been remedied to the satisfaction of the Facility Agent (after consultation with an Instructing Group,) within fourteen days thereafter; or (iv) there shall have occurred the liquidation of any of the Obligors or any Material Subsidiary or any order is made or resolution, law or regulation passed or other action taken (including the making of any application to any court or other relevant authority) for or with a view to the liquidation of any Obligor or any Material Subsidiary or any Obligor or any Material Subsidiary shall otherwise enter into liquidation; or (v) any Obligor or any Material Subsidiary petitions or applies to any court, tribunal or other body or authority for the appointment of, or there shall otherwise be appointed, any administrator, bewindvoerder, receiver, liquidator, curator, sequestrator, trustee or other similar officer of any Obligor or any Material Subsidiary or of all or any part of the assets of any Obligor or any Material Subsidiary; or (vi) any Obligor or any Material Subsidiary applies for a (temporary) moratorium or suspension of payments or for an arrangement with its creditors or for any proceedings 49 54 or arrangement by which the assets of any Obligor or any Material Subsidiary are submitted to the control of its creditors or any Obligor or any Material Subsidiary otherwise threatens, proposes or declares any moratorium on its debts or any class of its debts; or (vii) any Obligor or any Material Subsidiary becomes, or is declared by any competent authority to be, insolvent or admits in writing its inability to pay its debts as they fall due or is or becomes subject to or applies for any bankruptcy proceedings or starts negotiations with its creditors for a restructuring of its debt; or (viii)any Obligor without the written consent of the Facility Agent on behalf of the Banks ceases or threatens to cease its business as presently conducted or if any Obligor or any other member of the Group sells, leases, transfers or otherwise disposes of the whole or any Substantial part of its assets exceeding a value equalling a Substantial part of the assets on a consolidated basis of the Principal Company whether by one transaction or a series of related transactions without the prior written consent of the Banks; or (ix) any other indebtedness of any Obligor or any Material Subsidiary for or in respect of any borrowed moneys which, when aggregated with the amount of all other borrowed monies to which this Clause 25.1(ix) applies, exceed $25,000,000 (or its equivalent) (save, in respect of any guarantee, where liability under such guarantee is being contested by such Obligor or any Material Subsidiary in good faith) is not paid when due for payment (or within any stated applicable period of grace) or is found not to have been so paid or becomes due and payable or capable of being declared due and payable prior to its stated date of payment or, if payable on demand, shall not be paid when demanded; or (x) any Obligor or any Material Subsidiary defaults under any mortgage, charge, pledge, lien or other encumbrance or other security interest upon the whole or any part of the assets of such Obligor or any Material Subsidiary and the same accordingly becomes enforceable; or (xi) all or any Substantial part of the assets of any Obligor or any Material Subsidiary are attached or distrained upon or becomes subject to any order or court or other process for execution and such attachment, distraint, order or process remains in effect and not discharged for 30 days; or (xii) any consent of the Dutch authorities or the authorities of any other relevant jurisdiction required for the validity, enforceability or legality of this Agreement or the performance thereof ceases to be or is not for any reason in full force and effect or such performance becomes unlawful; or (xiii)the whole or any part of the assets, revenues or share capital of any Obligor or any Material Subsidiary having a value which, when aggregated with the value of all other assets to which this Clause 25.1(xiii) applies, equals or exceeds 15% of the 50 55 consolidated net assets of the Principal Company, is expropriated or nationalised by any government; or (xiv) any US Obligor shall (i) file a petition to take advantage of any insolvency act; (ii) file a petition or answer seeking reorganisation or arrangement or similar relief under the Federal Bankruptcy Code or any other applicable law or statute of the United States or any state; or (iii) by appropriate proceedings of the board of directors, or the general or limited partners or other governing body of any US Obligor, authorize the filing of any such petition, making of such assignment or commencement of such a proceeding; or (xv) in respect of any US Obligor a court of competent jurisdiction shall enter an order, judgment or decree appointing a custodian, receiver, trustee, liquidator or conservator of any US Obligor or of the whole or any substantial part of its properties, or approve a petition filed against any US Obligor seeking reorganization or arrangement or similar relief under the Federal Bankruptcy Code or any other applicable law or statute of the United States or any state; or if, under the provisions of any other law for the relief or aid of debtors, a court of competent jurisdiction shall assume custody or control of any US Obligor or of the whole or any substantial part of its properties; or if there is commenced against any US Obligor any proceeding for any of the foregoing relief and such proceeding or petition remains undismissed for a period of sixty days; or if any US Obligor by any act indicates its consent to or approval of any such proceeding or petition; or (xvi) with respect to any Obligor or any ERISA Affiliate thereof, an ERISA Event shall occur with respect to an Employee Plan and there shall result from such ERISA Event a liability which, individually or in the aggregate, has a material adverse effect upon the financial condition of such Obligor, then, and in any such case and at any time thereafter, the Facility Agent may (and, if so instructed by an Instructing Group, shall) by written notice to the Borrowers: (a) declare the Advances to be immediately due and payable (in the case of an Event of Default specified in paragraphs (i) - (xi), and (xiii) - (xv) above) or due and payable within seven days of demand of the Facility Agent (in any other case) (whereupon the same shall become so payable together with accrued interest thereon and any other sums then owed by any Obligor hereunder) or declare the Advances to be due and payable on demand of the Facility Agent; and/or (b) require the relevant Borrower to procure that the obligations of each of the Banks in respect of each Letter of Credit are promptly reduced to zero or provide 100% cash security (in the currency in which such Letter of Credit is denominated) in a manner acceptable to each Bank in respect thereof (whereupon the relevant Borrower shall do so); and/or 51 56 (c) declare that the Facilities shall be cancelled, whereupon the same shall be cancelled and the Commitment of each Bank shall be reduced to zero (Provided, however, that notwithstanding the above, if there shall occur an Event of Default under Clause 25.1(xiv) or Clause 25.1(xv) then the obligations of the Banks to lend hereunder shall automatically terminate and any and all of the Advances and other obligations shall be immediately due and payable without any action by the Facility Agent or any Bank). 25.2 FACILITIES DUE ON DEMAND If, pursuant to Clause 25.1 (Events of Default), the Facility Agent declares the Advances to be due and payable on demand of the Facility Agent, then, and at any time thereafter, the Facility Agent may (and, if so instructed by an Instructing Group, shall) by written notice to the Borrowers call for repayment of the Advances on such date as it may specify in such notice (whereupon the same shall become due and payable on such date together with, in the case of payments in respect of Advances, accrued interest thereon and any other sums then owed by the Obligors hereunder) or withdraw its declaration with effect from such date as it may specify in such notice. 52 57 PART 11 GUARANTEE 26. GUARANTEE AND INDEMNITY 26.1 GUARANTEE: PRINCIPAL COMPANY The Principal Company irrevocably and unconditionally guarantees to the Agents, the Arrangers and the Banks the due and punctual observance and performance of all the terms, conditions and covenants on the part of each other Obligor under this Agreement and agrees to pay to the Facility Agent for its account or for the account of the Banks, the Arrangers and the other Agents from time to time on demand any and every sum or sums of money which any such other Obligor is at any time liable to pay to the Agents, the Arrangers and the Banks or any of them under or pursuant to this Agreement and which has become due and payable but has not been paid at the time such demand is made. 26.2 INDEMNITY: PRINCIPAL COMPANY The Principal Company irrevocably and unconditionally agrees as a primary obligation to indemnify the Agents, the Arrangers and the Banks from time to time on demand by the Facility Agent from and against any loss incurred by the Agents, the Arrangers and the Banks or any of them as a result of any of the obligations of any other Obligor under or pursuant to this Agreement being or becoming void, voidable, unenforceable or ineffective as against such Obligor for any reason whatsoever, whether or not known to the Agents, the Arrangers and the Banks or any of them or any other person, the amount of such loss being the amount which the person or persons suffering it would otherwise have been entitled to recover from such Obligor. 26.3 GUARANTEE: AHOLD USA Ahold USA irrevocably and unconditionally guarantees to the Agents, the Arrangers and the Banks the due and punctual observance and performance of all the terms, conditions and covenants on the part of the Principal Company contained in this Agreement and agrees to pay to the Facility Agent for its account or for the account of the Banks, the Arrangers and the other Agents from time to time on demand any and every sum or sums of money which the Principal Company is at any time liable to pay to the Agents, the Arrangers and the Banks or any of them under or pursuant to this Agreement and which has become due and payable but has not been paid at the time such demand is made. 26.4 INDEMNITY: AHOLD USA Ahold USA irrevocably and unconditionally agrees as a primary obligation to indemnify the Agents, the Arrangers and the Banks from time to time on demand by the Facility Agent from and against any loss incurred by the Agents, the Arrangers and the Banks or any of them as a result of any of the obligations of the Principal Company under or pursuant to this Agreement being or becoming void, voidable, unenforceable or ineffective as against the Principal Company for any reason whatsoever, whether or not known to the Agents, the Arrangers and the Banks or any of them or any other person, the amount of such loss being the amount which the person or persons suffering it would otherwise have been entitled to recover from the Principal Company. 26.5 ADDITIONAL SECURITY The obligations of each Guarantor herein contained shall be in addition to and independent of every other security which the Agents, the Arrangers and the Banks or any of them may at any time hold in respect of any obligations of any Obligor hereunder. 26.6 CONTINUING OBLIGATIONS The obligations of each Guarantor herein contained shall constitute 53 58 and be continuing obligations notwithstanding any settlement of account or other matter or thing whatsoever and shall not be considered satisfied by any intermediate payment or satisfaction of all or any of the obligations of any Obligor under this Agreement and shall continue in full force and effect until final payment in full of all amounts owing by each Obligor hereunder and total satisfaction of all the Obligors' actual and contingent obligations hereunder. 26.7 OBLIGATIONS NOT DISCHARGED Neither the obligations of each Guarantor herein contained nor the rights, powers and remedies conferred in respect of such Guarantor upon the Agents, the Arrangers and the Banks or any of them by this Agreement or by law shall be discharged, impaired or otherwise affected by: (a) the winding-up, dissolution, administration or re-organisation of any other Obligor or any other person or any change in its status, function, control or ownership; (b) any of the obligations of any other Obligor or any other person hereunder or under any other security taken in respect of any of its obligations hereunder being or becoming illegal, invalid, unenforceable or ineffective in any respect; (c) time or other indulgence being granted or agreed to be granted to any other Obligor in respect of its obligations hereunder or under any such other security; (d) any amendment to, or any variation, waiver or release of, any obligation of any other Obligor hereunder or under any such other security; (e) any failure to take, or fully to take, any security contemplated hereby or otherwise agreed to be taken in respect of any other Obligor's obligations hereunder; (f) any failure to realise or fully to realise the value of, or any release, discharge, exchange or substitution of, any security taken in respect of any other Obligor's obligations hereunder; or (g) any other act, event or omission which, but for this Clause 26.7, might operate to discharge, impair or otherwise affect any of the obligations of such Obligor herein contained or any of the rights, powers or remedies conferred upon the Agents, the Arrangers and the Banks or any of them by this Agreement or by law. 26.8 SETTLEMENT CONDITIONAL Any settlement or discharge between the Guarantors and the Agents, the Arrangers and the Banks or any of them shall be conditional upon no security or payment to the Agents, the Arrangers and the Banks or any of them by any Obligor or any other person on behalf of such Obligor being avoided or reduced by virtue of any provisions or enactments relating to bankruptcy, insolvency, liquidation or similar laws of general application for the time being in force and, if any such security or payment is so avoided or reduced, the Agents, the Arrangers and the Banks shall each be entitled to recover the value or amount of such security or payment from such Guarantor subsequently as if such settlement or discharge had not occurred. 26.9 EXERCISE OF RIGHTS Neither the Agents, the Arrangers and the Banks nor any of them shall be 54 59 obliged before exercising any of the rights, powers or remedies conferred upon them in respect of any Guarantor by this Agreement or by law: (a) to make any demand of any other Obligor; (b) to take any action or obtain judgment in any court against any other Obligor; (c) to make or file any claim or proof in a winding-up or dissolution of any other Obligor; or (d) to enforce or seek to enforce any other security taken in respect of any of the obligations of any other Obligor hereunder. 26.10 DEFERRAL OF BORROWERS' RIGHTS Each Guarantor agrees that, so long as any amounts are or may be owed by any other Obligor hereunder or any other Borrower is under any actual or contingent obligations hereunder, such Guarantor shall not exercise any rights which it may at any time have by reason of performance by it of its obligations hereunder: (a) to be indemnified by any other Obligor; and/or (b) to claim any contribution from any other Obligor or any other guarantor of any other Obligor's obligations hereunder; and/or (c) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Agents, the Arrangers and the Banks hereunder or of any other security taken pursuant to, or in connection with, this Agreement by all or any of the Agents, the Arrangers and the Banks. 26.11 SUSPENSE ACCOUNTS All moneys received, recovered or realised by a Bank by virtue of Clause 26.1 (Guarantee: Principal Company) or Clause 26.3 (Guarantee: Ahold USA) or Clause 26.2 (Indemnity: Principal Company) or Clause 26.4 (Indemnity) may, in that Bank's discretion, be credited to a suspense or impersonal account and may be held in such account for so long as such Bank thinks fit pending the application from time to time (as such Bank may think fit) of such moneys in or towards the payment and discharge of any amounts owing by any of the Obligors to such Bank hereunder. 55 60 PART 12 DEFAULT INTEREST AND INDEMNITY 27. DEFAULT INTEREST AND INDEMNITY 27.1 DEFAULT INTEREST PERIODS If any sum due and payable by any of the Obligors hereunder (other than in relation to a Swing-Line Advance) is not paid on the due date therefor in accordance with the provisions of Clause 29 (Payments) or if any sum due and payable by any of the Obligors under any judgment of any court in connection herewith is not paid on the date of such judgment, the period beginning on such due date or, as the case may be, the date of such judgment and ending on the date upon which the obligation of such Obligor to pay such sum (the balance thereof for the time being unpaid being herein referred to as an "UNPAID SUM") is discharged shall be divided into successive periods, each of which (other than the first) shall start on the last day of the preceding such period shall be of such duration (not exceeding three months) as the Facility Agent may select (except as otherwise provided in this Clause 27). 27.2 DEFAULT INTEREST During each such period relating thereto as is mentioned in Clause 27.1 (Default Interest Periods) an unpaid sum referred to in Clause 27.1 shall bear interest at the rate per annum which is the sum from time to time of two per cent., the Margin and LIBOR determined in respect of such unpaid sum for such period Provided that: (a) if, for any such period, LIBOR cannot be determined, the rate of interest applicable to each part of any unpaid sum owed to any Bank shall be the sum from time to time of two per cent., the Margin and the rate per annum (rounded upwards to the nearest four decimal places) notified (together with reasonable evidence that such rate is applicable) by such Bank to the Facility Agent (who shall notify the Borrower thereof) before the last day of such period to be that which expresses as a percentage rate per annum the cost to it of funding from whatever source it may select its portion of such unpaid sum for such period; and (b) if such unpaid sum is all or part of a Revolving Credit or Short-Term Advance which became due and payable on a day other than the last day of the Term thereof, the first such period applicable thereto shall be of a duration equal to the unexpired portion of that Term and the rate of interest applicable thereto from time to time during such period shall be that which exceeds by two per cent. the rate which would have been applicable to it had it not so fallen due. 27.3 SWING-LINE DEFAULT INTEREST If any sum due and payable by the Borrower hereunder in respect of a Swing-Line Advance is not paid on the due date therefor in accordance with the provisions of Clause 29 (Payments) or if any sum due and payable by the Borrower under any judgment of any court in connection with any Swing-Line Advance is not paid on the date of such judgment, then interest shall accrue on such sum on each day (a "RELEVANT DAY") from and including the due date thereof or the date of such judgment (as the case may be ) until (but excluding) the date of actual payment at a rate per annum (as determined by the Swing-Line Agent at 11.00 a.m. on each such relevant day) equal to the sum of two per cent. and the greater of: 56 61 (i) the Prime Rate for such relevant day; and (ii) the sum of the Federal Funds Rate for such relevant day and the Swing-Line Margin. 27.4 PAYMENT OF DEFAULT INTEREST Any interest which shall have accrued under Clause 27.2 (Default Interest) and Clause 27.3 (Swing-Line Default Interest) in respect of any sum shall be due and payable and shall be paid by the Obligor owing such sum at the end of the period by reference to which it is calculated or on such other date or dates as the Facility Agent may specify by written notice to such Obligor. 27.5 BROKEN PERIODS If any Bank or the Facility Agent on its behalf receives or recovers all or any part of an Advance made by such Bank otherwise than on the last day of the Term thereof, the Obligor to whom such Advance was made shall pay to the Facility Agent on demand for account of such Bank an amount equal to the amount (if any) by which (a) the additional interest which would have been payable on the amount so received or recovered had it been received or recovered on the last day of the Term thereof exceeds (b) the amount of interest which in the opinion of the Facility Agent would have been payable to the Facility Agent on the last day of the Term thereof in respect of a deposit in the currency of the amount so received or recovered equal to the amount so received or recovered placed by it with a prime bank in London for a period starting on the third business day following the date of such receipt or recovery and ending on the last day of the Term thereof. 27.6 THE PRINCIPAL COMPANY'S INDEMNITY The Principal Company undertakes to indemnify: (a) each of the Agents, the Arrangers and the Banks against any cost, claim, loss, expense (including legal fees) or liability together with any VAT thereon, which any of them may sustain or incur as a consequence of the occurrence of any Event of Default or any payment default by any of the Obligors hereunder; (b) each Agent against any loss it may suffer as a result of its entering into, or performing, any foreign exchange contract for the purposes of Part 13; and (c) each Bank against any loss it may suffer as a result of its funding an Advance requested by any of the Borrowers hereunder but not made by reason of the operation of any one or more of the provisions hereof. 27.7 UNPAID SUMS AS ADVANCES Any unpaid sum shall (for the purposes of this Clause 27 and Clause 20.1 (Increased Costs)) be treated as an advance and accordingly in this Clause 27 and Clause 20.1 (Increased Costs) the term "Advance" includes any unpaid sum and "Term", in relation to an unpaid sum, includes each such period relating thereto as is mentioned in Clause 20.1 (Default Interest Periods). 57 62 PART 13 PAYMENTS 28. CURRENCY OF ACCOUNT AND PAYMENT 28.1 CURRENCY OF ACCOUNT The dollar is the currency of account and payment for each and every sum at any time due from any of the Obligors hereunder Provided that: (a) each repayment of an Advance or a part thereof shall be made in the currency in which such Advance is denominated at the time of that repayment; (b) each payment in respect of a Letter of Credit shall be made in the currency in which such Letter of Credit is denominated; (c) each payment of interest shall be made in the currency in which the sum in respect of which such interest is payable is denominated; (d) each payment in respect of costs and expenses shall be made in the currency in which the same were incurred; (e) each payment pursuant to Clause 18.2 (Tax Indemnity) or Clause 20.1 (Increased Costs) shall be made in the currency specified by the party claiming thereunder; and (f) any amount expressed to be payable in a currency other than dollars shall be paid in that other currency. 28.2 CURRENCY INDEMNITY If any sum due from any of the Obligors under this Agreement or any order or judgment given or made in relation hereto has to be converted from the currency (the "FIRST CURRENCY") in which the same is payable hereunder or under such order or judgment into another currency (the "SECOND CURRENCY") for the purpose of (a) making or filing a claim or proof against such Obligor, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation hereto or if any such sum is paid in the second currency, the Principal Company shall indemnify and hold harmless each of the persons to whom such sum is due from and against any loss suffered as a result of any discrepancy between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which such person may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. 29. PAYMENTS 29.1 PAYMENTS TO THE AGENTS On each date on which this Agreement requires an amount to be paid by any Obligor or any of the Banks hereunder, such Obligor or, as the case may be, such Bank shall make the same available to the Facility Agent or, in the case of an amount to be paid in an Optional Currency, the Multicurrency Facility Agent: 58 63 (a) where such amount is denominated in dollars, by payment in dollars and in same day funds (or in such other funds as may for the time being be customary in New York City for the settlement in New York City of international banking transactions in dollars) to the Facility Agent's account number 323510027 with The Chase Manhattan Bank, New York, N.Y., United States of America under account name Ahold USA Holdings, Inc. and ABA Number 021000021 (or such other account or bank as the Facility Agent may have specified for this purpose); or (b) where such amount is denominated in an Optional Currency, by payment in such Optional Currency and in immediately available, freely transferable, cleared funds to such account with such bank in the principal financial centre of the country of such Optional Currency as the Multicurrency Facility Agent shall have specified for this purpose. Any payment received by any Agent from any Obligor in accordance with the foregoing shall, without prejudice to such Agent's or any Bank's rights to reclaim or reassert its rights to payment from the Obligors of any amount which such Agent or such Bank is required to repay to the Obligors for any reason, constitute fulfilment by the Obligors of its obligation to make such payment hereunder. 29.2 ALTERNATIVE PAYMENT ARRANGEMENTS If, at any time, it shall become impracticable (by reason of any action of any governmental authority or any change in law, exchange control regulations or any similar event) for any or all of the Obligors to make any payments hereunder in the manner specified in Clause 29.1 (Payments to the Agents), then such Obligor may agree with each or any of the Banks alternative arrangements for the payment direct to such Bank of amounts due to such Bank hereunder Provided that, in the absence of any such agreement with any Bank, such Obligor shall be obliged to make all payments due to such Bank in the manner specified herein. Upon reaching such agreement such Obligor and such Bank shall immediately notify the appropriate Agent thereof and shall thereafter promptly notify such Agent of all payments made direct to such Bank. 29.3 PAYMENTS BY THE AGENTS Save as otherwise provided herein, each payment received by any Agent for the account of another person pursuant to Clause 29.1 (Payments to the Agents) shall: (a) in the case of a payment received for the account of any Obligor, be made available by such Agent to such Obligor by application: (i) first, in or towards payment (on the date, and in the currency and funds, of receipt) of any amount then due from such Obligor hereunder to the person from whom the amount was so received or in or towards the purchase of any amount of any currency to be so applied; and (ii) secondly, in or towards payment (on the date, and in the currency and funds, of receipt) to such account with such bank in the principal financial centre of the country of the currency of such payment as such Obligor shall have previously notified to such Agent for this purpose; and (b) in the case of any other payment, be made available by such Agent to the person for 59 64 whose account such payment was received (in the case of a Bank, for the account of its relevant Facility Office) for value the same day by transfer to such account of such person with such bank in the principal financial centre of the country of the currency of such payment as such person shall have previously notified to such Agent. 29.4 PAYMENTS UNDER THE SHORT-TERM ADVANCES FACILITY In the case of the acceptance of an offer pursuant to Clause 11 (Acceptance of Offers) for Short-Term Advances the provisions of Clause 29.1 (Payments to the Agents) shall not apply to the making of the relevant Short-Term Advance by the relevant Bank or the repayment thereof or the payment of any interest thereon on or prior to its Repayment Date. All such payments shall be paid directly to the relevant Obligor by the relevant Bank or, as the case may be, by the relevant Obligor to the relevant Bank, in each case, in such manner as the relevant Obligor and the relevant Bank shall agree. The relevant Bank shall promptly notify the Short-Term Advances Agent if any payment referred to in this Clause 29.4 is not met in full on its due date specifying the amount and currency of any shortfall. 29.5 NO SET-OFF All payments required to be made by any of the Obligors hereunder shall be calculated without reference to any set-off or counterclaim and shall be made free and clear of and without any deduction for or on account of any set-off or counterclaim. 29.6 CLAWBACK Where a sum is to be paid hereunder to an Agent for account of another person, such Agent shall not be obliged to make the same available to that other person or to enter into or perform any exchange contract in connection therewith until it has been able to establish to its satisfaction that it has actually received such sum, but if it does so and it proves to be the case that it had not actually received such sum, then the person to whom such sum or the proceeds of such exchange contract were so made available shall on request refund the same to such Agent together with an amount sufficient to indemnify such Agent against any cost or loss it may have suffered or incurred by reason of its having paid out such sum or the proceeds of such exchange contract prior to its having received such sum. 30. SET-OFF 30.1 CONTRACTUAL SET-OFF Each of the Obligors authorises each Bank to apply and each Bank shall be entitled to set-off any credit balance to which such Obligor is entitled on any account of such Obligor with that Bank in satisfaction of any sum due and payable from such Obligor to such Bank hereunder but unpaid; for this purpose, each Bank is authorised to purchase with the moneys standing to the credit of any such account such other currencies as may be necessary to effect such application. 30.2 SET-OFF NOT MANDATORY No Bank shall be obliged to exercise any right given to it by Clause 30.1 (Contractual Set-off). 31. SHARING 31.1 REDISTRIBUTION OF PAYMENTS Subject to Clause 31.3 (Recoveries Through Legal Proceedings), if, at any time, the proportion which any Bank (a "RECOVERING BANK") has received or recovered (whether by payment, the exercise of a right of set-off or combination of accounts or otherwise) in respect of its portion of any payment (a "RELEVANT PAYMENT") to be made under this Agreement by any 60 65 of the Obligors for account of such Recovering Bank and one or more other Banks is greater (the portion of such receipt or recovery giving rise to such excess proportion being herein called an "EXCESS AMOUNT") than the proportion thereof so received or recovered by the Bank or Banks so receiving or recovering the smallest proportion thereof, then: (a) such Recovering Bank shall pay to the relevant Agent an amount equal to such excess amount; (b) there shall thereupon fall due from such Obligor to such Recovering Bank an amount equal to the amount paid out by such Recovering Bank pursuant to paragraph (a) above, the amount so due being, for the purposes hereof, treated as if it were an unpaid part of such Recovering Bank's portion of such relevant payment; and (c) such Agent shall treat the amount received by it from such Recovering Bank pursuant to paragraph (a) above as if such amount had been received by it from such Obligor in respect of such relevant payment and shall pay the same to the persons entitled thereto (including such Recovering Bank) pro rata to their respective entitlements thereto, Provided that to the extent that any excess amount is attributable to a payment to a Bank pursuant to paragraph (a)(i) of Clause 29.3 (Payments by the Agents) such portion of such excess amount as is so attributable shall not be required to be shared pursuant hereto. 31.2 REPAYABLE RECOVERIES If any sum (a "RELEVANT SUM") received or recovered by a Recovering Bank in respect of any amount owing to it by any of the Obligors becomes repayable and is repaid by such Recovering Bank, then: (a) each Bank which has received a share of such relevant sum by reason of the implementation of Clause 31.1 (Redistribution of Payments) shall, upon request of the relevant Agent, pay to such Agent for account of such Recovering Bank an amount equal to its share of such relevant sum; and (b) there shall thereupon fall due from such Obligor to each such Bank an amount equal to the amount paid out by it pursuant to paragraph (a) above, the amount so due being, for the purposes hereof, treated as if it were the sum payable to such Bank against which such Bank's share of such relevant sum was applied. 31.3 RECOVERIES THROUGH LEGAL PROCEEDINGS If any Bank shall commence any action or proceeding in any court to enforce its rights hereunder after consultation with the other Banks and, as a result thereof or in connection therewith, shall receive any excess amount (as defined in Clause 31.1 (Redistribution of Payments)), then such Bank shall not be required to share any portion of such excess amount with any Bank which has the legal right to, but does not, join in such action or proceeding or commence and diligently prosecute a separate action or proceeding to enforce its rights in another court. 61 66 PART 14 FEES, COSTS AND EXPENSES 32. FEES 32.1 FACILITY FEE The Principal Company shall pay to the Facility Agent for account of each Bank a facility fee on the amount of the Total Commitments from time to time during the period (the "RELEVANT PERIOD") beginning on the date hereof and ending on the Termination Date, such facility fee to be calculated: (i) in respect of the period commencing on the date hereof and ending on the date which is the fifth anniversary of the date hereof, at the rate of 0.10 per cent. per annum; and (ii) thereafter, at the rate of 0.1125 per cent. per annum. and to be payable in arrear on the last day of each successive period of three months which ends during the relevant period and on the Termination Date. 32.2 PARTICIPATION FEE The Principal Company shall pay to the Facility Agent for the account of the Arrangers and the Banks the fees specified in the mandate letter signed by the Borrower on 18 November 1996 at the times, and in the amounts, specified in such letter. 32.3 AGENCY FEE The Principal Company shall pay to the Facility Agent for its own account the agency fees specified in the letter of even date herewith from the Facility Agent to the Principal Company at the times, and in the amounts, specified in such letter. 33. COSTS AND EXPENSES 33.1 TRANSACTION EXPENSES The Principal Company shall, on demand of the Facility Agent, reimburse each of the Agents and the Arrangers for all reasonable legal and out-of-pocket costs and expenses (including printing and publicity costs) together with any VAT thereon incurred by it in connection with the negotiation, preparation and execution of this Agreement and the completion of the transactions herein contemplated. 33.2 PRESERVATION AND ENFORCEMENT OF RIGHTS The Principal Company shall, from time to time on demand of the Facility Agent, reimburse each of the Agents, the Arrangers and the Banks for all costs and expenses (including legal fees) together with any VAT thereon incurred in or in connection with the preservation and/or enforcement of any of the rights of any of the Agents, the Arrangers and the Banks under this Agreement. 33.3 STAMP TAXES The Principal Company shall pay all stamp, registration and other taxes to which this Agreement is or at any time may be subject and shall, from time to time on demand of the Facility Agent, indemnify each of the Agents, the Arrangers and the Banks against any liabilities, costs, claims and expenses resulting from any failure to pay or any delay in paying any such tax. 33.4 AGENTS' COSTS The Principal Company shall, from time to time on demand of the Facility 62 67 Agent (and without prejudice to the provisions of Clause 33.2 (Preservation and Enforcement of Rights) and Clause 38.2 (Amendment Costs)) compensate each of the Agents at such daily and/or hourly rates as such Agent shall from time to time reasonably determine for the time and expenditure, all costs and expenses (including telephone, fax, copying, travel and personnel costs) incurred by such Agent in connection with its taking such action as it may deem appropriate or in complying with any instructions from an Instructing Group or any request by the Borrowers or any of them in connection with: (a) the granting or proposed granting of any waiver or consent requested hereunder by the Borrowers or any of them; (b) any actual, potential or suspected breach by the Borrowers or any of them of its obligations hereunder; (c) the occurrence of any event which is an Event of Default or a Potential Event of Default; or (d) any amendment or proposed amendment hereto requested by the Borrowers or any of them. 33.5 BANKS' LIABILITIES FOR COSTS If the Principal Company fails to perform any of its obligations under this Clause 33, each Bank shall, in its Proportion, indemnify each of the Agents and the Arrangers against any loss incurred by either of them as a result of such failure and the Principal Company shall forthwith reimburse each Bank for any payment made by it pursuant to this Clause 33.5. 63 68 PART 15 AGENCY PROVISIONS 34. THE AGENTS, THE ARRANGERS AND THE BANKS 34.1 APPOINTMENT OF THE AGENTS Each of the Arrangers and the Banks hereby appoints each of the Agents, and each of the Agents hereby appoints the Facility Agent, to act as its agent in connection herewith and authorises such Agent to exercise such rights, powers, authorities and discretions as are specifically delegated to such Agent by the terms hereof together with all such rights, powers, authorities and discretions as are reasonably incidental thereto. 34.2 AGENT'S DISCRETIONS Each Agent may: (a) assume that: (i) any representation made by any of the Borrowers in connection herewith is true; (ii) no Event of Default or Potential Event of Default has occurred; (iii) none of the Borrowers is in breach of or default under its obligations hereunder; and (iv) any right, power, authority or discretion vested herein upon an Instructing Group, the Banks or any other person or group of persons has not been exercised unless such Agent has, in its capacity as agent hereunder, actual knowledge of or received actual notice to the contrary from any other party hereto; (b) assume that the Facility Office or, as the case may be, each Facility Office of each Bank is that identified with its signature below (or, in the case of a Transferee, at the end of the Transfer Certificate to which it is a party as Transferee) until it has received from such Bank a notice designating some other office of such Bank to replace any such Facility Office and act upon any such notice until the same is superseded by a further such notice; (c) engage and pay for the advice or services of any lawyers, accountants, surveyors or other experts whose advice or services may to it seem necessary, expedient or desirable and rely upon any advice so obtained; (d) rely as to any matters of fact which might reasonably be expected to be within the knowledge of any of the Obligors upon a certificate signed by or on behalf of such Obligor; (e) rely upon any communication or document believed by it to be genuine; 64 69 (f) refrain from exercising any right, power or discretion vested in it as agent hereunder unless and until instructed by an Instructing Group as to whether or not such right, power or discretion is to be exercised and, if it is to be exercised, as to the manner in which it should be exercised; and (g) refrain from acting in accordance with any instructions of an Instructing Group to begin any legal action or proceeding arising out of or in connection with this Agreement until it shall have received such security as it may require (whether by way of payment in advance or otherwise) for all costs, claims, losses, expenses (including legal fees) and liabilities together with any VAT thereon which it will or may expend or incur in complying with such instructions. 34.3 AGENT'S OBLIGATIONS Each Agent shall: (a) promptly inform each Bank of the contents of any notice or document received by it in its capacity as Agent from any of the Obligors hereunder; (b) promptly notify each Bank of the occurrence of any Event of Default or any default by any of the Borrowers in the due performance of or compliance with its obligations under this Agreement of which such Agent has actual knowledge or received actual notice from any other party hereto; (c) save as otherwise provided herein, act as agent hereunder in accordance with any instructions given to it by an Instructing Group, which instructions shall be binding on the Arrangers and all of the Banks; and (d) if so instructed by an Instructing Group, refrain from exercising any right, power or discretion vested in it as agent hereunder unless such right, power or discretion is vested in such Agent in its individual capacity hereunder or is a right, power or discretion that may be exercised against the Arrangers, any other Agent, the Banks or any of them. 34.4 EXCLUDED OBLIGATIONS Notwithstanding anything to the contrary expressed or implied herein, neither any Agent nor any of the Arrangers shall: (a) be bound to enquire as to: (i) whether or not any representation made by any of the Borrowers in connection herewith is true; (ii) the occurrence or otherwise of any Event of Default or Potential Event of Default; (iii) the performance by any of the Borrowers of its obligations hereunder; or 65 70 (iv) any breach of or default by any of the Borrowers of or under its obligations hereunder; (b) be bound to account to any Bank for any sum or the profit element of any sum received by it for its own account; (c) be bound to disclose to any other person any information relating to any member of the Group if such disclosure would or might in its opinion constitute a breach of any law or regulation or be otherwise actionable at the suit of any person; or (d) be under any obligations or fiduciary duties other than those for which express provision is made herein. 34.5 INDEMNIFICATION Each Bank shall, in its Proportion, from time to time on demand by any Agent, indemnify such Agent, against any and all costs, claims, losses, expenses (including legal fees) and liabilities together with any VAT thereon which such Agent may incur in acting in its capacity as agent hereunder to the extent the same are not paid by any of the Obligors. Each Bank shall, following any payment made by it under this Clause 34.5, be entitled to recover from an Agent any amount which it establishes has been paid by it to such Agent pursuant to this Clause 34.5 in respect of costs, claims, losses, expenses (including legal fees) and liabilities incurred by such Agent as a result of such Agent's own gross negligence or wilful misconduct in acting in its capacity as agent hereunder. 34.6 EXCLUSION OF LIABILITIES None of the Agents and the Arrangers accepts any responsibility for the accuracy and/or completeness of any information supplied by any of the Borrowers in connection herewith or for the legality, validity, effectiveness, adequacy or enforceability of this Agreement and none of the Agents and the Arrangers shall be under any liability as a result of taking or omitting to take any action in relation to this Agreement, save in the case of gross negligence or wilful misconduct. 34.7 NO ACTIONS Each of the Banks agrees that it will not assert or seek to assert against any director, officer or employee of any Agent or any Arranger any claim it might have against any of them in respect of the matters referred to in Clause 34.6 (Exclusion of Liabilities). 34.8 BUSINESS WITH THE GROUP Each of the Agents and the Arrangers may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group. 34.9 RESIGNATION Each Agent may resign its appointment hereunder at any time without assigning any reason therefor by giving not less than thirty days' prior written notice to that effect to each of the other parties hereto Provided that no such resignation shall be effective until a successor for such Agent is appointed in accordance with the succeeding provisions of this Clause 34. 34.10 REMOVAL OF AGENT An Instructing Group may remove any Agent from its appointment hereunder as Agent at any time by giving not less than thirty days' prior written notice to that effect to each of the other parties hereto provided that no such removal shall be effective until a successor for such Agent is appointed in accordance with the succeeding provisions of this Clause 34. 34.11 SUCCESSOR AGENT If an Agent gives notice of its resignation pursuant to Clause 34.9 66 71 (Resignation), then any reputable and experienced bank or other financial institution may be appointed as a successor to such Agent by an Instructing Group during the period of such notice but, if no such successor is so appointed, such Agent may appoint such a successor itself. 34.12 NEW AGENT If an Instructing Group removes an Agent from its appointment hereunder pursuant to Clause 34.10 (Removal of Agent), then any reputable and experienced bank or other financial institution may be appointed, after consultation with the Principal Company, as a successor to such Agent by an Instructing Group. 34.13 RIGHTS AND OBLIGATIONS If a successor to an Agent is appointed under the provisions of Clause 34.11 (Successor Agent) or Clause 34.12 (New Agent), then (a) the retiring Agent shall be discharged from any further obligation hereunder but shall remain entitled to the benefit of the provisions of this Clause 34 and (b) its successor and each of the other parties hereto shall have the same rights and obligations amongst themselves as they would have had if such successor had been a party hereto. 34.14 OWN RESPONSIBILITY It is understood and agreed by each Bank that it has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigations into the financial condition, creditworthiness, condition, affairs, status and nature of each Borrower and the Group and, accordingly, each Bank warrants to each of the Agents and the Arrangers that it has not relied on and will not hereafter rely on any of the Agents and the Arrangers: (a) to check or enquire on its behalf into the adequacy, accuracy or completeness of any information provided by any of the Borrowers in connection with this Agreement or the transactions herein contemplated (whether or not such information has been or is hereafter circulated to such Bank by any Agent or Arranger); or (b) to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of any member of the Group. 34.15 SEPARATION OF DEPARTMENTS In acting as Agent and/or Arranger for the Banks, the agency department of each of the Agents and the Arrangers shall be treated as a separate entity from any other of its divisions or departments and, notwithstanding the foregoing provisions of this Clause 34, in the event that an Agent or, as the case may be, an Arranger should act for any member of the Group in any capacity in relation to any other matter, any information given by such member of the Group to such Agent or, as the case may be, such Arranger in such other capacity may be treated as confidential by such Agent or, as the case may be, such Arranger and shall not constitute actual knowledge of any matter for the purposes of Clause 34.2. 34.16 THE SHORT-TERM ADVANCES AGENT Ahold USA hereby appoints the Short-Term Advances Agent to act as its agent in connection with this Agreement and authorises the Short-Term Advances Agent to exercise such rights, powers and discretions as are specifically delegated to the Short-Term Advances Agent by the terms of this Agreement together with all such rights, powers and discretions as are reasonably incidental thereto. 34.17 EXONERATION OF SHORT-TERM ADVANCES AGENT The Short-Term Advances Agent shall comply 67 72 with the obligations expressly undertaken by it hereunder Provided that the accidental failure by the Short-Term Advances Agent to give any notice to any Bank of a Short-Term Advances Request delivered to it hereunder or to give any notice to Ahold USA of any offer for Short-Term Advances received by it hereunder shall not constitute a breach of the Short-Term Advances Agent's obligations hereunder nor shall any other party hereto be entitled to require such failure to be rectified after the latest time for the giving of the relevant notice hereunder. 34.18 INDEMNITY Ahold USA shall, on demand by the Short-Term Advances Agent, indemnify the Short-Term Advances Agent against any and all reasonable costs, claims, expenses (including reasonable legal fees) and liabilities which the Short-Term Advances Agent may incur, otherwise than by reason of its own negligence or wilful misconduct, in acting in its capacity as Short-Term Advances Agent under this Agreement. 68 73 PART 16 ASSIGNMENTS AND TRANSFERS 35. ASSIGNMENTS AND TRANSFERS 35.1 BINDING AGREEMENT This Agreement shall be binding upon and enure to the benefit of each party hereto and its or any subsequent successors, Transferees and assigns. 35.2 NO ASSIGNMENTS AND TRANSFERS BY THE OBLIGORS None of the Obligors shall be entitled to assign or transfer all or any of its rights, benefits and obligations hereunder. 35.3 ASSIGNMENT AND TRANSFERS BY BANKS Any Bank may, at any time, assign all or (subject to the proviso below) any of its rights and benefits hereunder or transfer in accordance with Clause 35.5 all or any of its rights, benefits and obligations hereunder (i) to any holding company, any of its wholly-owned subsidiaries or any affiliate or (ii) with the prior written consent of the Principal Company (not to be unreasonably withheld or delayed) to any other person provided that (without prejudice to a Bank's right to assign and/or transfer all of its rights, benefits and obligations hereunder in accordance with this Clause 35.3) a Bank shall be entitled to assign and/or transfer part of its Participation hereunder only in an amount equal to or exceeding $10,000,000 and then only if it retains a Participation of not less than $25,000,000. 35.4 ASSIGNMENTS BY BANKS If any Bank assigns all or any of its rights and benefits hereunder in accordance with Clause 35.3 (Assignments and Transfers by Banks), then, unless and until the assignee has agreed with the Principal Company, the Agents, the Arrangers and the other Banks that it shall be under the same obligations towards each of them as it would have been under if it had been an original party hereto as a Bank (whereupon such assignee shall become a party hereto as a "Bank"), the Agents, the Arrangers and the other Banks shall not be obliged to recognise such assignee as having the rights against each of them which it would have had if it had been such a party hereto. The Assignee shall be responsible for giving notice of the assignment to the relevant Obligors. 35.5 TRANSFERS BY BANKS If any Bank wishes to transfer all or any of its rights, benefits and/or obligations hereunder as contemplated in Clause 35.3 (Assignments and Transfers by Banks), then such transfer may be effected by the delivery to and signature by the Facility Agent on behalf of the Obligors (and each of the Obligors hereby irrevocably appoints the Facility Agent as its agent for the purposes of such delivery and signature of any Transfer Certificate) of a duly completed and duly executed Transfer Certificate in which event it is hereby irrevocably agreed by each of the Obligors in advance that, on the later of the Transfer Date specified in such Transfer Certificate and the fifth business day after (or such earlier business day endorsed by the Facility Agent on such Transfer Certificate falling on or after) the date of delivery of such Transfer Certificate to and signature by the Facility Agent on behalf of the Obligors (which signature the Facility Agent agrees to complete promptly upon receipt of the relevant Transfer Certificate in accordance with this Clause 35): (a) to the extent that in such Transfer Certificate the Bank party thereto seeks to transfer its rights, benefits and obligations hereunder each of the Obligors and such Bank shall be released from further obligations towards one another hereunder and their respective rights against one another shall be cancelled (such rights, benefits and 69 74 obligations being referred to in this Clause 35.5 as "DISCHARGED RIGHTS AND OBLIGATIONS"); (b) each of the Obligors and the Transferee party thereto shall assume obligations towards one another and/or acquire rights against one another which differ from such discharged rights and obligations only insofar as such Obligor and such Transferee have assumed and/or acquired the same in place of such Obligor and such Bank; (c) the Agents, the Arrangers, such Transferee and the other Banks shall acquire the same rights and benefits and assume the same obligations between themselves as they would have acquired and assumed had such Transferee been an original party hereto as a Bank with the rights, benefits and/or obligations acquired or assumed by it as a result of such transfer; (d) such Transferee shall become a party hereto as a "Bank" and will also be deemed to have appointed the Agents as its Agent in accordance with the terms of this Agreement; and (e) to the extent that in such Transfer Certificate the Bank party thereto seeks to transfer its Commitment, the Transferee shall replace such Bank in respect of any relevant Letter of Credit. Receipt of a Transfer Certificate by the Facility Agent shall also constitute notice to the Obligors as required by Dutch law and each party hereto hereby irrevocably authorises and instructs the Facility Agent to receive each such notice on its behalf and irrevocably agrees that each such notice to be given to such party may be given to the Facility Agent as representative of such party. 35.6 TRANSFER FEE On the date upon which a transfer takes effect pursuant to Clause 35.5 (Transfers by Banks) the Transferee in respect of such transfer shall pay to the Facility Agent for its own account a transfer fee of $1,000. All costs of any transfer of any Bank's rights, benefits and obligations hereunder to any Transferee (including, without limitation, any stamp duty) shall be for the account of such Bank. 35.7 EXCESS AMOUNTS If any Bank assigns or transfers any of its rights, benefits and obligations hereunder or changes its Facility Office and there arises (by reason of circumstances existing at the date of such assignment or transfer or which are not existing at such date but which are scheduled to take effect or in respect of which there is a general consensus that they will take effect after the date thereof) an obligation on the part of a Borrower to such Bank or its assignee or transferee or any other person any amount in excess of the amount it would have been obliged to pay but for such assignment, transfer or change, then such Borrower shall not be obliged to pay the amount of such excess. 35.8 DISCLOSURE OF INFORMATION Any Bank may disclose to any actual or potential assignee or Transferee or to any person who may otherwise enter into contractual relations with such Bank in relation to this Agreement such information about the Borrowers and the Group as such Bank shall consider appropriate. 70 75 PART 17 MISCELLANEOUS 36. CALCULATIONS AND EVIDENCE OF DEBT 36.1 BASIS OF ACCRUAL Interest and the facility fee shall accrue from day to day and shall be calculated on the basis of a year of 360 days (or, if market practice differs, in accordance with market practice) and the actual number of days elapsed. 36.2 ACCRUAL OF LETTER OF CREDIT COMMISSION Letter of credit commission in respect of any Letter of Credit, and any period of the Term thereof determined pursuant to Clause 6 (Letters of Credit Fees and Fronting Fee), shall be calculated on the basis of a year of 360 days and the actual number of days in such period. 36.3 QUOTATIONS If on any occasion a Reference Bank or Bank fails to supply any Agent with a quotation required of it under the foregoing provisions of this Agreement, the rate for which such quotation was required shall be determined from those quotations which are supplied to such Agent. 36.4 EVIDENCE OF DEBT Each Bank shall maintain in accordance with its usual practice accounts evidencing the amounts from time to time lent by and owing to it hereunder. 36.5 CONTROL ACCOUNTS The Facility Agent shall maintain on its books a control account or accounts in which shall be recorded (a) the amount of any Advance made or arising hereunder (and the name of the Bank to whom such sum relates and each Bank's share therein) and the face amount of any Letter of Credit issued (and each Bank's share therein) as the case may be, (b) the amount of all principal, interest and other sums due or to become due from any of the Borrowers to any of the Banks hereunder and each Bank's share therein and (c) the amount of any sum received or recovered by any Agent hereunder and each Bank's share therein. The Facility Agent shall, upon request of any Borrower, deliver to such Borrower statements of the accounts referred to in this Clause 36.5. 36.6 PRIMA FACIE EVIDENCE In any legal action or proceeding arising out of or in connection with this Agreement, the entries made in the accounts maintained pursuant to Clause 36.4 (Evidence of Debt) and Clause 36.5 (Control Accounts) shall be prima facie evidence of the existence and amounts of the obligations of the Borrowers therein recorded. 36.7 CERTIFICATES OF BANKS A certificate of a Bank as to (a) the amount by which a sum payable to it hereunder is to be increased under Clause 18.1 (Tax Gross-up) or (b) the amount for the time being required to indemnify it against any such cost, payment or liability as is mentioned in Clause 18.2 (Tax Indemnity) or Clause 20.1 (Increased Costs) or Clause 27.5 (Broken Periods) or Clause 28.2 (Currency Indemnity) shall be conclusive evidence for the purposes of this Agreement save in the case of manifest error. 36.8 AGENTS' CERTIFICATES A certificate of any Agent as to the amount at any time due from any Borrower hereunder or the amount which, but for any of the obligations of any Borrower hereunder being or becoming void, voidable, unenforceable or ineffective, at any time would have been due from such Borrower hereunder shall, in the absence of manifest error, be conclusive for the purposes of 71 76 Part 11 (Guarantee). 37. REMEDIES AND WAIVERS, PARTIAL INVALIDITY 37.1 REMEDIES AND WAIVERS No failure to exercise, nor any delay in exercising, on the part of any party hereto, any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof or the exercise of any other right or remedy. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law. 37.2 PARTIAL INVALIDITY If, at any time, any provision hereof is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions hereof nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby. 38. AMENDMENTS 38.1 AMENDMENTS With the prior written consent of an Instructing Group, the Facility Agent and the Principal Company may from time to time enter into written amendments, supplements or modifications hereto for the purpose of adding any provisions to this Agreement or changing in any manner the rights of all or any of the Agents, the Arrangers and the Banks or of any Obligor hereunder, and, at the request of the Principal Company with the prior consent of an Instructing Group, the Facility Agent on behalf of the other Agents, the Arrangers and the Banks may execute and deliver to the Principal Company a written instrument waiving prospectively or retrospectively, on such terms and conditions as the Facility Agent may specify in such instrument, any of the requirements of this Agreement or any Event of Default or Potential Event of Default and its consequences Provided, however, that: (i) no such waiver and no such amendment, supplement or modification shall without the prior consent of all the Banks: (a) amend or modify the definitions of Additional Borrower, Instructing Group, Margin, Swing-Line Margin or Termination Date; (b) amend, modify or waive any provision which requires the prior written consent of the Banks, Clause 32 (Fees), Clause 35.2 (No Assignments and Transfers by the Obligors) or this Clause 38; (c) change the principal or currency of any Advance or Letter of Credit or extend the Term thereof; (d) decrease the amount of, or change the currency of or extend the date for any payment of interest, fees or any other amount payable to all or any of the Agents, the Arrangers and the Banks hereunder; (e) increase the amount of the Total Commitments; or 72 77 (f) release any Guarantor from all or any of its obligations hereunder; (ii) notwithstanding any other provision hereof, the Facility Agent shall not be obliged to agree to any such waiver, amendment, supplement or modification if the same would: (a) amend, modify or waive any provision of this Clause 38; or (b) otherwise amend, modify or waive any of the Agents' or the Arrangers' rights hereunder or subject any Agent or, as the case may be, any Arranger to any additional obligations hereunder; and (iii) the Facility Agent shall promptly notify the Banks of any written amendments, supplements or modifications hereto which have been made with the consent of an Instructing Group and the Borrower. 38.2 AMENDMENT COSTS If the Principal Company requests any amendment, supplement, modification or waiver in accordance with Clause 38.1, then the Principal Company shall, on demand of the Facility Agent, reimburse the Facility Agent for all reasonable costs and expenses (including reasonable legal fees) together with any VAT thereon incurred by the Facility Agent in the negotiation, preparation and execution of any written instrument contemplated by Clause 38.1. 39. NOTICES 39.1 COMMUNICATIONS IN WRITING Each communication to be made hereunder shall be made in writing but, unless otherwise stated, may be made by telefax or letter Provided that the Borrowers shall indemnify each of the Agents, the Arrangers and the Banks against any cost, claims, loss, expense (including legal fees) or liability together with any VAT thereon which any of them may sustain or incur as a consequence of any telefax communication originating from any Borrower not being actually received by or delivered to the intended recipient thereof or any telefax communication purporting to originate from any Borrower being made or delivered fraudulently. 39.2 DELIVERY Any communication or document (unless made by telefax or telephone) to be made or delivered by one person to another pursuant to this Agreement shall (unless that other person has by fifteen days' written notice to the Facility Agent specified another address) be made or delivered to that other person at the address identified with its signature below (or, in the case of a Transferee, at the end of the Transfer Certificate to which it is a party as Transferee) and shall be deemed to have been made or delivered when left at that address or (as the case may be) ten days after being deposited in the post postage prepaid in an envelope addressed to it at that address Provided that: (a) any communication or document to be made or delivered to any Agent shall be effective only when received by such Agent and then only if the same is expressly marked for the attention of the department or officer identified with such Agent's signature below (or such other department or officer as such Agent shall from time to time specify for this purpose); and 73 78 (b) any communication or document to be made or delivered to any Bank having more than one Facility Office shall (unless such Bank has by fifteen days' written notice to the Facility Agent specified another address) be made or delivered to such Bank at the address identified with its signature below (or, in the case of a Transferee, at the end of the Transfer Certificate to which it is a party as Transferee) as its main Facility Office. 39.3 COMMUNICATIONS BY TELEPHONE OR TELEFAX Where any provision of this Agreement specifically contemplates telephone or telefax communication made by one person to another, such communication shall be made to that other person at the relevant telephone number specified by it from time to time for the purpose and shall be deemed to have been received when made (in the case of any communication by telephone) or when transmission of such telefax communication has been completed (in the case of any telecommunication by telefax). Each such telefax communication, if made to any Agent by a Borrower shall be signed by the person or persons authorised by such Borrower in the certificate delivered pursuant to the Third Schedule and shall be expressed to be for the attention of the department or officer whose name has been notified for the time being for that purpose by such Agent to such Borrower. 39.4 ENGLISH LANGUAGE Each communication and document made or delivered by one party to another pursuant to this Agreement shall be in the English language or accompanied by a translation thereof into English certified (by an officer of the person making or delivering the same) as being a true and accurate translation thereof. 74 79 PART 18 LAW AND JURISDICTION 40. LAW AND JURISDICTION 40.1 DUTCH LAW This Agreement shall be governed by, and shall be construed in accordance with, laws of The Netherlands. 40.2 ENGLISH COURTS Each of the parties hereto irrevocably agrees for the benefit of each of the Agents, the Arrangers and the Banks that the courts of England shall have jurisdiction to hear and determine any suit, action or proceeding, and to settle any disputes, which may arise out of or in connection with this Agreement (respectively "PROCEEDINGS" and "DISPUTES") and, for such purposes, irrevocably submits to the jurisdiction of such courts. 40.3 DUTCH COURTS Each of the Obligors irrevocably agrees for the benefit of each of the Agents, the Arrangers and the Banks that the competent courts of Amsterdam, The Netherlands shall have jurisdiction to hear and determine any suit, action or Proceeding, and to settle any Disputes and, for such purposes, irrevocably submits to the jurisdiction of such courts. 40.4 NEW YORK COURTS Each of the Obligors irrevocably agrees that the courts of the State of New York and the courts of the United States of America, in each case sitting in the County of New York, shall have jurisdiction to hear and determine any Proceedings and to settle any Disputes and, for such purposes, irrevocably submits to the jurisdiction of such courts. 40.5 APPROPRIATE FORUM Each of the Obligors irrevocably waives any objection which it might now or hereafter have to the courts referred to in Clause 40.2 (English Courts), Clause 40.3 (Dutch Courts) and Clause 40.3 (New York Courts) being nominated as the forum to hear and determine any Proceedings and to settle any Disputes and agrees not to claim that any such court is not a convenient or appropriate forum. 40.6 SERVICE OF PROCESS Each of the Obligors agrees that the process by which any suit, action or proceeding is begun may be served on it by being delivered (i) in connection with any suit, action or proceeding in England, to Legibus Secretaries Limited at 200 Aldersgate Street, London EC1A 4JJ and (ii) in connection with any suit, action or proceeding in New York, to CT Corporation System at 1633 Broadway, New York N.Y. 10019, United States of America. If the appointment of the person mentioned in this Clause 40.6 ceases to be effective each Obligor shall immediately appoint a further person in England or, as the case may be, New York to accept service of process on its behalf in England or, as the case may be, New York and, failing such appointment within 15 days, the Facility Agent shall be entitled to appoint such a person by notice to such Obligor. Nothing contained herein shall affect the right to serve process in any other manner permitted by law. 40.7 NON-EXCLUSIVE SUBMISSIONS The submission to the jurisdiction of the courts referred to in Clause 40.2 (English Courts), Clause 40.3 (Dutch Courts) and Clause 40.4 (New York Courts) shall not (and shall not be construed so as to) limit the right of the Agents, the Arrangers and the Banks or any of them to take Proceedings against any of the Obligors in any other court of competent jurisdiction nor shall the taking of Proceedings in any one or more jurisdictions preclude the taking of Proceedings in 75 80 any other jurisdiction (whether concurrently or not) if and to the extent permitted by applicable law. 40.8 CONSENT TO ENFORCEMENT Each of the Obligors hereby consents generally in respect of any Proceedings to the giving of any relief or the issue of any process in connection with such Proceedings including, without limitation, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in such Proceedings. 40.9 WAIVER OF IMMUNITY To the extent that any of the Obligors may in any jurisdiction claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), such Obligor hereby irrevocably agrees and shall be obliged for the purposes of this Agreement not to claim and hereby irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction and, in particular, to the intent that in any Proceedings taken in New York the foregoing waiver of immunity shall have effect under and be construed in accordance with the United States Foreign Sovereign Immunities Act of 1976. AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first before written. 76 81 THE FIRST SCHEDULE THE BANKS PART 1 THE REVOLVING CREDIT BANKS
COMMITMENT ($) ABN AMRO Bank N.V. 61,000,000 The Chase Manhattan Bank 61,000,000 Morgan Guaranty Trust Company of New York 61,000,000 The First National Bank of Boston 57,000,000 Bayerische Landesbank International S.A. 57,000,000 Citibank N.A., Amsterdam Branch 57,000,000 Deutsche Bank AG 57,000,000 Fleet National Bank 57,000,000 Dai-Ichi Kangyo Bank Nederland N.V. 57,000,000 ING Bank N.V. 57,000,000 Rabobank International, Utrecht Branch 57,000,000 SBC 57,000,000 Union Bank of Switzerland 57,000,000 Westdeutsche Landesbank Girozentrale, London Branch 57,000,000 The Bank of New York 38,000,000 Banque Paribas Nederland N.V. 38,000,000 Barclays Bank plc (CLAD) UK 38,000,000 The First National Bank of Chicago 38,000,000 Kredietbank (Nederland) N.V. 38,000,000
77 82 PART 2
THE SWING-LINE BANKS BANK COMMITMENT ($) ABN AMRO Bank N.V. 36,666,666.66 The Chase Manhattan Bank 36,666,666.66 Morgan Guaranty Trust Company of New York 36,666,666.66 The Bank of New York 30,000,000.00 Bayerische Landesbank Girozentrale, New York Branch 30,000,000.00 Union Bank of Switzerland 30,000,000.00
78 83 THE SECOND SCHEDULE FORM OF TRANSFER CERTIFICATE To: The Chase Manhattan Bank TRANSFER CERTIFICATE relating to the agreement (as from time to time amended, varied, novated or supplemented, the "Facility Agreement") dated [ ] 199[ ] whereby a US$1,000,000,000 multicurrency revolving credit and short-term advances facility, a US$100,000,000 letter of credit facility and a US$200,000,000 swing-line facility was made available to Koninklijke Ahold N.V. and Ahold USA Holdings, Inc., as borrowers by a group of banks on whose behalf The Chase Manhattan Bank acted as Facility Agent in connection therewith. 1. Terms defined in the Facility Agreement shall, subject to any contrary indication, have the same meanings herein. The terms Bank and Transferee are defined in the schedule hereto. 2. The Bank (a) confirms that the details in the schedule hereto under the heading "BANK'S COMMITMENT", "SWING-LINE COMMITMENT", "LETTER OF CREDIT COMMITMENT", "RELEVANT REVOLVING CREDIT ADVANCE(S)" "RELEVANT LETTERS OF CREDIT ISSUED", "RELEVANT SWING-LINE ADVANCE(S)", and "RELEVANT SHORT-TERM ADVANCES" accurately summarises its Commitment, its Swing-Line Commitment, and/or its Letter of Credit Commitment and/or, as the case may be, the Term and Repayment Date of one or more existing Advances or Letters of Credit made by it or in which it participates and (ii) requests the Transferee to accept and procure the transfer to the Transferee of the portion specified in the schedule hereto of, as the case may be, its Commitment, its Swing-Line Commitment, its Letter of Credit Commitment and/or such Advance(s) and/or participations by counter-signing and delivering this Transfer Certificate to the Facility Agent at its address for the service of notices specified in the Facility Agreement. 3. The Transferee hereby requests the Facility Agent to accept this Transfer Certificate as being delivered to the Facility Agent pursuant to and for the purposes of Clause 35.5 (Transfers by Banks) of the Facility Agreement so as to take effect in accordance with the terms thereof on the Transfer Date or on such later date as may be determined in accordance with the terms thereof. 4. The Transferee confirms that it has received a copy of the Facility Agreement together with such other information as it has required in connection with this transaction and that it has not relied and will not hereafter rely on the Bank to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of any such information and further agrees that it has not relied and will not rely on the Bank to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of any of the Borrowers. 5. The Transferee hereby undertakes with the Bank and each of the other parties to the Facility Agreement that it will perform in accordance with their terms all those obligations which by the terms of the Facility Agreement will be assumed by it after delivery of this Transfer Certificate to the Facility Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed 79 84 to take effect. 6. The Bank makes no representation or warranty and assumes no responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of the Facility Agreement or any document relating thereto and assumes no responsibility for the financial condition of any of the Borrowers or for the performance and observance by such Borrower of any of its obligations under the Facility Agreement or any document relating thereto and any and all such conditions and warranties, whether express or implied by law or otherwise, are hereby excluded. 7. The Bank hereby gives notice that nothing herein or in the Facility Agreement (or any document relating thereto) shall oblige the Bank to (a) accept a re-transfer from the Transferee of the whole or any part of its rights, benefits and/or obligations under the Facility Agreement transferred pursuant hereto or (b) support any losses directly or indirectly sustained or incurred by the Transferee for any reason whatsoever including the non-performance by any of the Borrowers or any other party to the Facility Agreement (or any document relating thereto) of its obligations under any such document. The Transferee hereby acknowledges the absence of any such obligation as is referred to in (a) or (b) above. 8. This Transfer Certificate and the rights and obligations of the parties hereunder shall be governed by and construed in accordance with Dutch law. THE SCHEDULE 1. Bank: 2. Transferee: 3. Transfer Date: 4. Commitment: Bank's Commitment Portion Transferred Swing-Line Commitment Portion Transferred Letter of Credit Commitment Portion Transferred 5. Advance(s): Term and Repayment Date of Revolving Credit Advance(s) Portion Transferred Term and Repayment Date of Letters of Credit Portion Transferred 80 85 Term and Repayment Date of Swing-Line Advances Portion Transferred Term and Repayment Date of Short-Term Advances Portion Transferred [Transferor Bank] [Transferee Bank] By: By: Date: Date: [Facility Agent] as agent for and on behalf of the Borrower By: Date: ADMINISTRATIVE DETAILS OF TRANSFEREE Address/Main Office: Contact name: Swing-Line Office: Letter of Credit Office: Short-Term Advances Office: Contact Name: Account for Payments in US Dollars: Telex: [ ] (Main office) [ ] (Swing-Line office) [ ] (Letter of Credit Office) [ ] (Short-Term Advances Office) Telephone: [ ] (Main office) 81 86 [ ] (Swing-Line office) [ ] (Letter of Credit Office) [ ] (Short-Term Advances Office) Telefax: [ ] (Main office) [ ] (Swing-Line office) [ ] (Letter of Credit Office) [ ] (Short-Term Advances Office) 82 87 THE THIRD SCHEDULE CONDITION PRECEDENT DOCUMENTS 1. In relation to each of the Obligors: (a) a copy, certified a true copy by a duly authorised officer of such Obligor, of the constitutional documents of such Borrower and (in the case of the Principal Company) an extract from the relevant Chamber of Commerce; (b) a copy, certified a true copy by a duly authorised officer of such Obligor, of a board resolution of such Obligor and (in the case of the Principal Company) such resolutions of the board of managing directors of the Principal Company, the supervisory board of the Principal Company (Raad van Commissarissen) and the works' council of the Principal Company (Ondernemingsraad) as may be required by Dutch Counsel to the Banks approving the execution, delivery and performance of this Agreement and the terms and conditions hereof and authorising a named person or persons to sign this Agreement and any documents to be delivered by such Obligor pursuant hereto; and (c) a certificate of a duly authorised officer of such Obligor setting out the names and signatures of the persons authorised to sign, on behalf of such Obligor, this Agreement and any documents to be delivered by such Obligor pursuant hereto. 2. A copy, certified a true copy by or on behalf of the Principal Company, of each such law, decree, consent, licence, approval, registration or declaration as is, in the opinion of counsel to the Banks, necessary to render this Agreement legal, valid, binding and enforceable, to make this Agreement admissible in evidence in each Obligor's jurisdiction of incorporation and to enable each of the Obligors to perform its obligations hereunder. 3. An opinion of each of the Borrowers' in-house Dutch and United States Counsel in substantially the forms set out in the Eighth Schedule. 4. An opinion of Clifford Chance, solicitors to the Facility Agent, in substantially the form distributed to the Banks prior to the execution hereof. 5. A copy, certified a true copy by a duly authorised officer of each Borrower, of the Original Financial Statements of such Borrower. 6. Evidence that each of the process agents referred to in Clause 40.6 has agreed to act as the agent of the Obligors for the service of process in England and New York. 7. Evidence that the Existing Facilities shall be terminated and all outstandings thereunder shall be paid or repaid upon the making of the first Advance or issue of (or participation by a Bank in) the first Letter of Credit (whichever occurs first). 83 88 THE FOURTH SCHEDULE UTILISATION REQUEST From: [Name of Borrower] To: The Facility Agent [and the Multicurrency Facility Agent [delete if no Optional Currency is requested]* Dated: Dear Sirs, 1. We refer to the agreement (as from time to time amended, varied, novated or supplemented, the "FACILITY AGREEMENT") dated [ ] 1996 and made between Koninklijke Ahold N.V., Ahold USA Holdings, Inc. as borrowers, ABN AMRO Bank N.V., The Chase Investment Bank Limited and J.P. Morgan Securities Ltd. as arrangers, The Chase Manhattan Bank as Facility, Letter of Credit, Swing-Line and Short-Term Advances Agent and Chase Manhattan International Limited as Multicurrency Facility Agent and the financial institutions named therein as banks. Terms defined in the Facility Agreement shall have the same meaning in this notice. [2. We hereby give you notice that, pursuant to the Facility Agreement, we wish the [Banks/Swing-Line Banks] to *[make Advances/Swing-Line Advances/make offers of Short-Term Advances] as follows: (a) Aggregate *[principal/face] amount: (b) Utilisation Date: (c) Term (SPECIFY NUMBER OF BUSINESS DAYS FOR SWING-LINE ADVANCES OR THE NUMBER OF MONTHS OR BUSINESS DAYS FOR OTHER ADVANCES): (d) *[Repayment Date]:]* [2. We require [a Letter of Credit to be opened for our account/the Banks to participate in an Existing Letter of Credit]* under the Facility Agreement as follows: (a) Issue Date: [ ] (b) Tenor: [ ] (c) Amount: [ ] (d) Approved Beneficiary: [ ] (e) Concerning: [brief details of the purpose of the Letter of Credit].]* 84 89 [3. If it is not possible, pursuant to Clause 3.3 (Banks' Agreement to Optional Currency) of the Facility Agreement, for the Advance to be made in the currency specified, we would wish the Advance to be denominated in dollars.]*[N.B: Only retain in case of Revolving Credit Advance requested in Optional Currency] [3./4. We confirm that, at the date hereof, the representations set out in Clause 23 of the Facility Agreement are true provided that each reference to "Original Financial Statements" therein shall be deemed to be a reference to each most recent set of annual audited financial statements delivered by any Borrower to the Facility Agent pursuant to Clause 24. [4/5.] *[The proceeds of this Utilisation should be credited to [insert account details]]/[The Letter of Credit should be issued in favour of [name of recipient] in the form attached and delivered to the recipient at [address of recipient]].(1) Yours faithfully -------------------- for and on behalf of [NAME OF BORROWER] * Delete as appropriate (1) not applicable for Existing Letters of Credit 85 90 THE FIFTH SCHEDULE MATERIAL SUBSIDIARIES Albert Heijn B.V. BI-LO, Inc. Giant Food Stores, Inc. Ahold Vastgoed B.V. Tops Markets, Inc. Schuitema N.V. The Stop & Shop Companies, Inc. 86 91 THE SIXTH SCHEDULE EXISTING LETTERS OF CREDIT
ISSUE DATE ISSUER NO. OF LETTER OUTSTANDING($) EXPIRY DATE OF CREDIT 09.10.89 The First National Bank of Chicago 31449901 30,686,000.00 01.11.97 20.06.95 The First National Bank of Chicago 31449912 396,395.21 30.10.98 01.08.95 The First National Bank of Chicago 31449914 830,400.00 01.08.97 16.02.96 The First National Bank of Chicago 31449919 385,908.00 16.02.97 11.03.96 The First National Bank of Chicago 31449920 1,750,000.00 11.02.97 15.10.96 The First National Bank of Chicago 31449921 1,074,073.00 15.10.97
87 92 THE SEVENTH SCHEDULE OPINION OF BORROWERS' NETHERLANDS AND UNITED STATES COUNSEL 88 93 89 94 90 95 91 96 92 97 93 98 94 99 95 100 96 101 THE EIGHTH SCHEDULE SUPPLEMENTAL AGREEMENT FOR ADDITIONAL BORROWERS THIS SUPPLEMENTAL AGREEMENT is made on the day of , 19 BETWEEN: (1) KONINKLIJKE AHOLD N.V. (the "PRINCIPAL COMPANY"); (2) [Additional Borrower(s)] (the "ADDITIONAL BORROWER(S)"); and (3) [The Chase Manhattan Bank] on behalf of itself as facility agent and on behalf of the Arranger(s), the other Agents, the Banks and Swing-Line Banks. WHEREAS: (1) By an agreement (together with the supplemental agreements referred to in (2) below, the "FACILITY AGREEMENT") dated [ ] 1996 and made between the Principal Company, Ahold USA, the Arrangers, the Agents and the Banks the Principal Company and Ahold USA were granted facilities in the maximum amount of $1,000,000,000. (2) The agreement referred to in (1) above has been supplemented by the following agreements: [List Supplemental Agreements] NOW IT IS HEREBY AGREED as follows: 1. INTERPRETATION Save as otherwise defined herein, terms defined in the Facility Agreement shall bear the same meaning herein. 2. ADDITIONAL BORROWER(S) With effect as from the date that the Facility Agent confirms to the Principal Company that it has received, in form and substance satisfactory to it [in relation to each Additional Borrower], each of the conditions precedent documents specified in Clause 3, the Facility Agreement shall henceforth be read and construed as if the [each] Additional Borrower were party to the Facility Agreement having all the rights and obligations of an Additional Borrower and an Obligor. Accordingly all references in any Finance Document to (a) any "Additional Borrower" or "Obligor" shall be treated as including a reference to the [such] Additional Borrower and (b) the Facility Agreement shall be treated as a reference to the Facility Agreement as supplemented by this Agreement to the intent that this Agreement and the Facility Agreement shall be read and construed together as one single agreement. 97 102 3. CONDITIONS PRECEDENT The following are the conditions precedent referred to in Clause 2 which are required to be delivered to the Facility Agent in relation to the [each] Additional Borrower: (a) a copy, certified a true and up-to-date copy by a duly authorised officer of the [such] Additional Borrower, of the Memorandum and Articles of Association [or other constitutional documents] of the [such] Additional Borrower together with its most recent audited annual financial statements; (b) a copy, certified a true copy by a duly authorised officer of the [such] Additional Borrower, of all corporate and other resolutions of the [such] Additional Borrower required for the approval of the execution, delivery and performance of this Agreement and the performance of the obligations to be assumed pursuant hereto by the [such] Additional Borrower under the Facility Agreement and authorising a named person or persons to sign this Agreement and any documents to be delivered by the [such] Additional Borrower pursuant hereto or thereto and to operate the Facilities on behalf of the [such] Additional Borrower; (c) a certificate of a duly authorised officer of the [such] Additional Borrower setting out the names and signatures of the persons authorised to sign, on behalf of the [such] Additional Borrower, this Agreement and any documents to be delivered by the [such] Additional Borrower pursuant hereto or to the Facility Agreement and a certificate as to the names of any persons authorised to give telex or telephone instructions in relation to the operation of the Facilities on behalf of the [such] Additional Borrower as contemplated by paragraph (b) above; (d) a copy, certified a true copy by a duly authorised officer of the [such] Additional Borrower, of each such law, decree, consent, licence, approval, registration or declaration as is necessary to render this Agreement and the Facility Agreement legal, valid and binding as against the [such] Additional Borrower in accordance with their respective terms, to make this Agreement and the Facility Agreement admissible in evidence against the [such] Additional Borrower in the [such] Additional Borrower's country of incorporation and to enable the [such] Additional Borrower to perform its obligations hereunder and thereunder; (e) a copy, certified a true and up-to-date copy by an Authorised Signatory of the Principal Company, of the Memorandum and Articles of Association of the Principal Company/a letter from an Authorised Signatory of the Principal Company confirming that there has been no change in the Memorandum and Articles of Association of the Principal Company since the same were last delivered to the Facility Agent; (f) a copy, certified a true copy by an Authorised Signatory of the Principal Company, of all resolutions required for the approval of the execution, delivery and performance of this Agreement and confirming that its board resolution referred to in paragraph 2 of the 98 103 Third Schedule of the Facility Agreement has not been revoked, varied or amended; (g) written evidence that [ ] has agreed to act as the agent of the [such] Additional Borrower for the service of process in England and that [ ] has agreed to act as the agent of the [such] Additional Borrower for the service of process in New York; (h) an opinion of counsel to the Facility Agent and the Banks, in a form satisfactory to them; (i) an opinion of counsel to the Additional Borrower, in a form satisfactory to the Facility Agent and the Banks; (j) written evidence of the consent of the Facility Agent and the Banks to the [such] Additional Borrower being designated by the Principal Company as such; and (k) if requested by the Facility Agent, on the basis of regulations applicable to any Bank requiring the provision of financial information, the most recent added financial statements or written confirmation than there is no requirement to produce such statements. 4. REPRESENTATIONS The [Each] Additional Borrower hereby represents as if the representations set out in Clause 23 of the Facility Agreement were set out in full in this Agreement. 5. COVENANT To the extent that any Bank shall have to comply with any regulations imposed on it in relation to the provision of financial information by the Additional Borrower, the Additional Borrower shall supply the Facility Agent with its most recent audited consolidated financial statement or if such statement do not exist then the Additional Borrower shall supply the Facility Agent with written confirmation stating that it is not required to produce such statements. 6. COUNTERPARTS This Agreement may be signed in counterparts, all of which taken together shall constitute a single agreement. 7. LAW This Agreement shall be governed by, and construed in accordance with, Dutch law. AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first before written. 99 104 100 105 [NAME OF ADDITIONAL BORROWER] By : Address : 101 106 THE OBLIGORS KONINKLIJKE AHOLD N.V. By: Paul Freischlag Address: Albert Heijnweg 1 1507 EH Zaandam The Netherlands Attention: Norbert Berger / Paul Freischlag Telephone: 31 75 595795 Fax: 31 75 598355 AHOLD USA HOLDINGS, INC. By: Paul Freischlag Address: One Atlanta Plaza, Suite 2575 950 East Paces Ferry Road 30326 Atlanta, Georgia United States of America Attention: Joseph Harber Telephone: 1 404 262 6050 Fax: 1 404 262 6051 THE ARRANGERS ABN AMRO BANK N.V. By: Charlotte Seagrave Address: P.O. Box 283 1000 EA Amsterdam The Netherlands 102 107 CHASE INVESTMENT BANK LIMITED By: Neville Crow Address: 125 London Wall London EC2Y 5AJ United Kingdom J.P. MORGAN SECURITIES LTD. By: Charlotte Seagrave Address: 60 Victoria Embankment London EC4Y 0JP United Kingdom THE AGENTS THE CHASE MANHATTAN BANK By: Neville Crow Address: 270 Park Avenue New York, NY 10081 United States of America Attention: Hilma Gabbidon Telephone: 1 212 552 4650 Telefax: 1 212 552 5658 CHASE MANHATTAN INTERNATIONAL LIMITED By: Neville Crow Address: Trinity Tower 9 Thomas More Street London E1 9YT United Kingdom Attention: Steve Horford Telephone: 44 171 777 2847 Telefax: 44 171 777 2085 103 108 THE BANKS ABN AMRO BANK N.V. By: Charlotte Seagrave Address: Foreign Credit Services/AA4130 P.O. Box 283 1000 EA Amsterdam The Netherlands Attention: Ruud Farenhorst / Agnes Knigge-Dekker / Jim Fraeyhoven / Maartje Kuit Telephone: 31 20 628 7392 / 31 20 628 4367 / 31 20 628 7423 / 31 20 628 6450 Telefax: 31 20 628 1286 For Swing-Line Advances Address. 500 Park Avenue New York, NY 10022 United States of America Attention: Doreen Yip / Barbara Tsiakaros Telephone: 1 212 754 6114 Telefax: 1 212 446 4155 THE CHASE MANHATTAN BANK By: Neville Crow Address: European Loan Services 125 London Wall London EC2Y 5AJ United Kingdom Attention: Nick Gittins / Tina Holes, European Loan Services Telephone: 1 202 34 3923/2020 104 109 Telefax: 1 202 34 3730 With a copy to: Attention: Anne Whittaker, Transaction Management Telefax: 44 171 962 3611 For Swing-Line Advances Address: 270 Park Avenue New York, NY 10081 United States of America Attention: Hilma Gabbidon Telephone: 1 212 552 4650 Telefax: 1 212 552 5658 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: Charlotte Seagrave Address: 60 Victoria Embankment London EC4Y O5P United Kingdom Attention: Alex Cornwell / Ray Mayers, Global Credit Telephone: 44 171 325 5291 / 44 171 325 5245 Telefax: 44 171 325 8190 / 44 171 325 8217 For Swingline Advances Address: J.P. Morgan Services Inc. 500 Stanton Christiana Road Newark, Delaware 19713 United States of America Attention: Donna Davis / Kendal Hinmon, IBG Operations Telephone: 1 302 634 1860 105 110 Telefax: 1 302 634 4267 106 111 THE FIRST NATIONAL BANK OF BOSTON By: Charlotte Seagrave Address: 100 Federal Street/MS-01-09-04 Boston, Mass. 02110 United States of America Attention: Susan Santos Telephone: 1 617 434 3496 Telefax: 1 617 434 0637 For Short Term Advances Address: 100 Federal Street/MS-01-12-07 Boston, Mass. 02110 United States of America Attention: Larry Faccini Telephone: 1 617 434 7725 Telefax: 1 617 434 4695 For Letters of Credit Address: 150 Federal Street/MS-50-04-01 Boston, Mass. 02110 United States of America Attention: Dawn Trench Telephone: 1 617 434 5874 Telefax: 1 617 434 1202 For Advances in a Multicurrency Address: 100 Rustcraft Rd/MS-74-02-02D Dedham, Mass. 02026 United States of America Attention: Cheryl Troy 107 112 Telephone: 1 617 434 2087 Telefax: 1 617 434 2094 BAYERISCHE LANDESBANK INTERNATIONAL S.A. By: Charlotte Seagrave Address: 3, rue Jean Monnet L-2180 Luxembourg Luxembourg Attention: Mr. P. Lang Telephone: 352 42434 3325 Telefax: 352 42434 3399 For Letters of Credit, Short-Term Advances and Swing-Line Advances Address: Bayerische Landesbank Girozentrale, New York Branch 560 Lexington Avenue New York, NY 10022 United States of America Attention: Ms. Patricia Sanchez Telephone: 1 212 310 9810 Telefax: 1 212 310 9930 CITIBANK, N.A., AMSTERDAM BRANCH By: Charlotte Seagrave Address: "Europlaza" Hoogoorddreef 54 B 1101 BE Amsterdam Z.O. The Netherlands Attention: Mr. Hans P. Verdoes Telephone: 31 20 6514 394 108 113 Telefax: 31 20 6514 292 For Short-Term Advances and Letters of Credit Address: Citibank, N.A. One Court Square, 7th Floor Long Island City, NY 11120 United States of America Attention: Mrs. Stephanie Tackore, Manager Telephone: 1 718 248 3596 Telefax: 1 718 248 7393 DEUTSCHE BANK AG By: Charlotte Seagrave Address: Deutsche Bank de Bary N.V. FX/MM Settlements Herengracht 450 1017 CA Amsterdam The Netherlands Attention: C. Spaans Telephone: 31 20 555 4202 Telefax: 31 20 555 4428 For Swing-Line Advances Address: 31 West 52nd Street New York, NY 10019 United States of America Attention: Babara Hoeltz Telephone: 1 212 469 8121 Telefax: 1 212 469 8115 109 114 FLEET NATIONAL BANK By: Charlotte Seagrave Address: One Federal Street Boston, MA 02211 United States of America Attention: Fancia Castillo, National Banking Telephone: 1 617 346 5635 Telefax: 1 617 346 0595 For Advances in a Multicurrency Attention: Gordon Kilby Telephone: 44 171 248 9531 Telefax: 44 171 334 9456 DAI-ICHI KANGYO BANK NEDERLAND N.V. By: Charlotte Seagrave Address: Apollolaan 171 1077 AS Amsterdam The Netherlands Attention: Mr. Joost van Leeuwen Telephone: 31 20 5740200 Telefax: 31 20 6760301 ING BANK N.V. By: Charlotte Seagrave Address: De Weer 75 P.O. Box 48 1500 EA Zaandam The Netherlands 110 115 Attention: Mr. M.H. van Doorn / Mr. G.J. Bakker Telephone: 31 75 681 1335 Telefax: 31 75 612 3007 RABOBANK INTERNATIONAL, UTRECHT BRANCH By: Charlotte Seagrave Address: Croeselaan 18 P.O. Box 17100 3500 HG Utrecht The Netherlands Attention: Mr. Richard Polkerman, BOF / Loan Administration Telephone: 31 30 216 3445 Telefax: 31 30 216 2767 For Letters of Credit and Short-Term Advances Address: 1201 West Peachtree Street N.W. Atlanta, GA 30309 United States of America Attention: Telephone: 1 404 881 4050 Telefax: 1 404 881 4777 SBC By: Neville Crow Address: 1 High Timber Street London EC4V 3SB United Kingdom Attention: Paul Hardy, Associate Director, Treasury Customer Desk Telephone: 44 171 329 0201 111 116 Telefax: 44 171 711 3861 For Advances to Ahold USA Address: Swiss Bank Corporation 222 Broadway, 2nd Floor New York, NY 10038 United States of America Attention: Marisa Reonegro, Banking Finance Support Telephone: 1 212 574 6241 Telefax: 1 212 574 5248 UNION BANK OF SWITZERLAND By: Neville Crow Address: Bahnhofstrasse 45 8021 Zurich Switzerland Attention: Claude Aklin, Assistant Vice President, Ref.: KABI-AKC Telephone: 41 1 235 69 79 / 41 1 235 33 73 Telefax: 41 1 235 32 68 For Swing-Line Advances Address: 299 Park Avenue New York, NY 10171 United States of America Attention: Douglas Edwards Telephone: 1 212 821 3628 Telefax: 1 212 821 3878 112 117 WESTDEUTSCHE LANDESBANK GIROZENTRALE, LONDON BRANCH By: Neville Crow Address: 51 Moorgate London EC2R 6AE United Kingdom Attention: Mr. Stewart Nutt Telephone: 44 171 4572116 Telefax: 44 171 374 8546 THE BANK OF NEW YORK By: Neville Crow For Letters of Credit and Swing-Line Advances Address: One Wall Street, 22nd Floor New York, NY 10286 United States of America Attention: Patricia Botler / Terry Blackborn Telephone: 1 212 635 6732 Telefax: 1 212 635 6397 For Short-Term Advances Address: 48 Wall Street, 13th Floor New York, NY 10005 United States of America Attention: Wilson Mastrandrea Telephone: 1 212 804 2050 Telefax: 1 212 809 5272 113 118 BANQUE PARIBAS NEDERLAND N.V. By: Neville Crow Address: Herengracht 527 P.O. Box 2171 1000 CD Amsterdam The Netherlands Attention: Ms. R. van de Vondervoort / Mr. J. de Wild Telephone: 31 20 520 4400 Telefax: 31 20 620 1623 BARCLAYS BANK PLC (CLAD) UK By: Neville Crow Address: 5th Floor St. Swithin's House 11-12 St. Swithin's Lane London EC4N 8AS United Kingdom Attention: Sharon Carter Telephone: 44 171 621 4000 Telefax: 44 171 621 4583 With a copy to: Address: Atrium, Strawinskylaan 3053 1077 ZX Amsterdam The Netherlands Attention: Victor J. van der Linden Telephone: 31 20 5045 338 Telefax: 31 20 5045 339 114 119 THE FIRST NATIONAL BANK OF CHICAGO By: Neville Crow Address: First Chicago House 90 Long Acre London WC2E 9RB United Kingdom Attention: Dot O'Flaherty Telephone: 44 171 438 4150 Telefax: 44 171 438 4148 For Letters of Credit Address: The First National Bank of Chigago 300 S.Riverside Suite 0236-7th Floor Chicago, Illinois United States of America Attention: Louis Virgo, Operations Officer Telephone: 1 312 954 1928 Telefax: 1 312 954 1963 / 001 312 954 1964 KREDIETBANK (NEDERLAND) N.V. By: Neville Crow Address: Westersingel 88 3015 LC Rotterdam The Netherlands Attention: Mr. H. Langstraat Telephone: 31 10 43 68 399 Telefax: 31 10 43 66 335 115 120 116 121 117 EX-99.C.1 12 CONFIDENTIALITY AGREEMENT 1 CONFIDENTIALITY AGREEMENT AGREEMENT made as of February 2, 1998, between 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 ("Ahold"), and 1224 Corporation, a Delaware corporation ("1224 Corp.") (each, a "Party" and collectively, the "Parties"). WHEREAS, the Parties have expressed an interest in discussing the possibility of an acquisition from 1224 Corp. of outstanding shares of capital stock of Giant Food Inc., a Delaware corporation ("Giant") (the "Transaction"); WHEREAS, in connection therewith Ahold has requested oral and written information with respect to Giant's business, assets, financial condition, operations and prospects which Giant will provide to Ahold; and WHEREAS, as conditions to the exchange of such information, Ahold is required to agree, as set forth below, (i) to treat confidentially such information and any other information that Ahold or any representative thereof receives from 1224 Corp., Giant or any of their respective representatives, whether received before or after the date of this Agreement, together with all analyses, compilations, studies or other documents or records prepared by Ahold or any of its representatives which contain or otherwise reflect or are generated from such information (collectively, "Received Material") and (ii) to take or abstain from taking certain other actions as set forth below. As used herein with respect to any Party, the term "representatives" means its affiliates, directors, officers, employees, agents and representatives, including financial advisors, consultants and counsel and the term "affiliate" has the meaning provided in Rule 12b-2 promulgated pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in any event, shall include any person who on the date hereof or at the time of determination thereof, directly or indirectly, owns 10% or more of such Party. NOW, THEREFORE, in consideration of the mutual convenants and agreements set forth herein, the Parties agree as follows: 1. Ahold acknowledges and agrees that Received Material is a valuable and proprietary asset, has competitive value and is of a confidential nature. 2. Ahold agrees that, except as 1224 Corp. may otherwise agree in writing in advance, it will, and each of its representatives will, treat confidentially, preserve and protect with the same standard of care afforded by Ahold to any of its documents and not disclose any Received Material and will use Received Material solely to evaluate the Transaction; provided, however, that Ahold may disclose Received Material or portions thereof only to those representatives who need to know such information solely for the purpose described above (it being understood that (a) each such representative shall be informed of the confidential nature of Received Material and shall be directed to treat Received Material confidentially, not to use it other than for the purpose described above and to otherwise comply with the provisions hereof applicable to representatives and (b) that, in any event, Ahold shall be responsible for any actions 2 taken by any of its representatives which if such representative was a party hereto would breach a provision of this Agreement applicable to representatives). 3. The term "Received Material" shall not include information (i) which was or becomes generally available to the public other than as a result of a disclosure by Ahold or by any representative thereof in breach of this Agreement, (ii) which was or becomes available on a non-confidential basis from a source other than 1224 Corp. or Giant or any representative thereof, provided that such source is not and was not known to Ahold to be bound by a confidentiality agreement with 1224 Corp. or Giant or any representative thereof or by any other contractual, legal or fiduciary obligation to 1224 Corp. or Giant which would prohibit the disclosure of such information to Ahold, or (iii) which was within the possession of Ahold or any affiliate thereof prior to such receipt. The term "Received Material" shall also not include any analyses, compilations, studies or other documents or records that have been prepared by Ahold or its representatives solely from information of the nature described in any of clauses (i), (ii) or (iii) of this paragraph 3. 4. Each Party agrees that, without the prior written consent of the other Party, it will not, and will direct its representatives not to, disclose to any person the fact that discussions regarding the Transaction (or any other discussions between or involving the Parties) are taking or have taken place or other facts with respect to such discussions, including the status thereof, or the fact (if such becomes the case) that any confidential information has been exchanged, nor otherwise make any public disclosure (whether written or oral) with respect to this Agreement or the matters contemplated hereby, except and only to the extent that such Party has been advised by legal counsel that such disclosure is required by law and then, to the extent practicable, only after prior notice to the other Party. The term "person" as used in this Agreement shall be broadly defined to include, without limitation, any corporation, partnership, company or individual, but shall not include (i) those officers of Giant who are informed of the Transaction in order to provide the information requested by Ahold, (ii) those directors of Giant who are members of the Special Committee of the Board of Directors of Giant and (iii) with the prior written consent of Ahold, the remaining members of the Board of Directors of Giant. 5. If Ahold or any representative thereof is requested or required (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to disclose any Received Material, it will, to the extent permitted by applicable law, notify 1224 Corp. promptly and, to the extent practicable, prior to any disclosure, so that 1224 Corp. or Giant, as the case may be, may seek any appropriate protective order and/or take any other appropriate action. In the event such protective order is not obtained, or that 1224 Corp. waives compliance with the provisions hereof, (i) Ahold or its representative, as the case may be, may disclose to any tribunal or regulatory or administrative body with jurisdiction only that portion of the Received Material which it is required to be disclosed, and shall exercise reasonable best efforts to obtain assurance that confidential treatment will be accorded such Received Material and (ii) Ahold shall not be liable for such disclosure unless such disclosure to such tribunal or regulatory or administrative body was caused by or resulted from a previous disclosure by Ahold or any representative thereof not permitted by this Agreement. 2 3 6. Each Party hereby acknowledges to the other Party that it is aware, and will advise its representatives who are informed as to the matters which are the subject of this Agreement, that the United States securities laws prohibit any persons who are in possession of material, non-public information with respect to an issuer from purchasing or selling securities of such issuer or, subject to certain limited circumstances, from communicating such information to any other person. 7. In the event that the Parties do not agree to a Transaction within 90 days of the date hereof (which period may be extended by the Parties by mutual written agreement), or if either Party terminates discussions prior to such 90-day period, Ahold and its representatives will, as promptly as practical following a request from 1224 Corp., deliver to 1224 Corp. all Received Material and any other material (whether in written, electronic, magnetic or other form) containing or reflecting any information in the Received Material (whether prepared by Ahold, its representatives or otherwise) and will not retain any copy or other extract or reproduction in whole or in part thereof; except that, all Received Material whether in written, electronic, magnetic or other form whatsoever, prepared by Ahold or any representative thereof containing or reflecting information in the Received Material may be destroyed and such destruction shall be certified in writing to 1224 Corp. by an authorized officer supervising such destruction. 8. Ahold understands that except as may be provided for in such definitive agreement or agreements, if any, as may be entered into in connection with a Transaction, none of 1224 Corp., Giant or any of their respective representatives makes any representation or warranty as to the accuracy or completeness of any Received Material and no liability (on any basis including, without limitation, in contract, tort or otherwise) to Ahold or any representative thereof shall result from its use. 9. Each party agrees that unless and until a definitive agreement between the parties hereto with respect to a Transaction has been executed and delivered, neither party will be under any legal obligation of any kind whatsoever with respect to a Transaction by virtue of this or any written or oral expression with respect to such a Transaction by any of its directors, officers, employees, or other representatives or its advisors or representative thereof except of the matters specifically agreed to in this letter. 10. It is understood and agreed that money damages would not be a sufficient remedy for any breach of this Agreement and that the Parties shall be entitled to specific performance and injunctive relief as remedies for any such breach and neither the Parties nor their representatives will oppose the granting of such relief. Such remedies shall not be deemed to be the exclusive remedies for breach of this Agreement but shall be in addition to all other remedies available at law or in equity to the Parties. 11. This Agreement shall inure to the benefit of and be enforceable by the Parties and their successors. 12. The Parties agree and acknowledge that nothing contained herein shall limit, restrict or otherwise affect the rights of the Parties to compete with each other, provided that the 3 4 Received Material will be used by Ahold solely to evaluate the Transaction and not for any operating or other purpose. 13. It is further understood that no failure or delay by either Party 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 further exercise thereof or the exercise of any right, power or privilege hereunder. 14. This Agreement shall remain in effect until the earlier of (i) three years from the date hereof and (ii) consummation of the Transaction. 15. This Agreement (a) shall be governed and construed in accordance with the laws of the State of Delaware applicable to agreements made and to be performed within such State and (b) may not be terminated or modified nor any of its provisions waived, except in a writing signed by a duly authorized officers of both Parties. 16. Each of the Parties agrees that any legal action or proceeding with respect to this Agreement may be brought in the Courts of the State of Delaware or the United States District Court for the District of Delaware, by execution and delivery of this Agreement, each Party hereby irrevocably submits itself in respect of its property, generally and unconditionally to be the non-exclusive jurisdiction of the aforesaid courts in any legal action or proceeding arising out of this Agreement. Each of the Parties hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement brought in the courts referred to in the preceding sentence. Each Party consents to process being served in any action or proceeding by the mailing of a copy thereof to the address set forth opposite its name below and agrees that such service upon receipt shall constitute good and sufficient service of process or notice thereof. Nothing in this paragraph shall affect or eliminate any right to serve process in any other matter permitted by law. 17. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall be deemed the same instrument. 4 5 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the day and year first above written. Address: KONINKLIJKE AHOLD N.V. Albert Heijnweg 1 1507 EH Zaandam, The Netherlands By: /s/ A. M. Meurs ------------------------------- Name: A. M. Meurs Title: Executive Vice President 1013 Centre Road, 1224 CORPORATION Wilmington, DE 19805 By: /s/ Pete Manos ------------------------------- Name: Pete Manos Title: Chairman and President 5 EX-99.C.2 13 EXCLUSIVITY AGREEMENT 1 KONINKLIJKE AHOLD N.V. Albert Heijnweg 1 1507 EH Zaandam The Netherlands April 27, 1998 The 1224 Corporation 6300 Sheriff Road Landover, Maryland 20785 Attention: David W. Rutstein Gentlemen: This letter confirms our mutual understandings and intentions concerning negotiations between Koninklijke Ahold N.V. (the "Purchaser") and The 1224 Corporation (the "Seller"), regarding the possible purchase by the Purchaser, directly or through one of its affiliates, of all of the outstanding Class AC Voting Common Stock (the "AC Shares") of Giant Food Inc. (the "Company") from the Seller. It is the parties' intention that the negotiations regarding such possible purchase and of definitive transaction documents continue after the execution of this letter and the parties each agree to negotiate in good faith. During the period from the date hereof until May 31, 1998, none of the Seller, or any of its officers, directors, employees, representatives, agents or advisors (collectively "Agents") shall, directly or indirectly, take any action (other than an action directly related to negotiations with the Purchaser) to (i) encourage, initiate or solicit the making of an Acquisition Proposal (as defined below), (ii) engage in discussions or negotiations with, or provide any information to, any entity or person in connection with, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal, or (iii) enter into an agreement with respect to an Acquisition Proposal; provided, however, that, subject to compliance by the Seller with the immediately succeeding sentence, (a) the Seller, in response to an unsolicited Acquisition Proposal from J. Sainsbury (USA) Holdings Inc. or any affiliate thereof (collectively "Sainsbury"), may participate in discussions or negotiations with, or furnish information to, Sainsbury if the Board of Directors of the Seller reasonably determines that the unsolicited Acquisition Proposal proposed by Sainsbury is reasonably likely to result in a Sainsbury Superior Proposal (as defined below) and believes (based upon the advice of outside legal advisors of recognized standing in the state of Delaware) that failing to take such action is reasonably likely to constitute a breach of its fiduciary duties and (b) the Seller may enter into an agreement with respect to a Sainsbury Superior Proposal if, within ten days of receipt of written notice from the Seller with respect to such Sainsbury Superior Proposal pursuant to subclause (i) of the next succeeding sentence, the Purchaser fails to have (1) executed and delivered to the Seller a Stock Purchase Agreement in substantially the form of the April 17, 1998 draft of the Stock Purchase Agreement by and between the Purchaser and the Seller relating to the purchase by the Purchaser from the Seller of the AC Shares (the "Draft AC 2 The 1224 Corporation April 27, 1998 Page 2 Stock Purchase Agreement"), but as modified (w) to eliminate the condition contained in Section 6.6 of the Draft AC Stock Purchase Agreement and all references to a stock purchase agreement by and between the Purchaser and Sainsbury, (x) to change all references to the Agreement and Plan of Merger by and among the Purchaser, a wholly-owned subsidiary thereof and the Company (the "Merger Agreement") so as to refer instead to the agreement referred to in subclause (2) of this sentence, (y) to include in Section 2.2 thereof as the price to be paid per AC Share by the Purchaser to the Seller thereunder the Agreed Upon Price (as defined below) or, if there is no Agreed Upon Price, the price per AC Share offered by Sainsbury to the Seller pursuant to the Sainsbury Superior Proposal and (z) to reflect the mutually acceptable resolution of the issues that have been raised by the Purchaser or the Seller with respect to the Draft AC Stock Purchase Agreement and that have not been resolved prior to the date hereof which resolution the Purchaser and the Seller agree to negotiate in good faith, and (2) executed and delivered to the Company an agreement containing the representations, warranties and covenants contained in the April 17, 1998 draft of the Merger Agreement (the "Draft Merger Agreement") as modified to reflect the mutually acceptable resolution of the issues that have been raised by the Purchaser, the Seller or the Company with respect to the Draft Merger Agreement and that have not been resolved prior to the date hereof, which resolution the Purchaser and the Seller agree (and the Seller agrees to use its best efforts to cause the Company) to negotiate in good faith. The Seller promptly shall advise the Purchaser (i) orally and in writing of the receipt of any Acquisition Proposal (including from or otherwise involving Sainsbury) and of the identity of the entity or person making such Acquisition Proposal and of the material terms thereof and of any changes thereto and (ii) orally prior to commencing any discussions or negotiations between the Seller or any of its Agents, on the one hand, and Sainsbury or any of its Agents, on the other hand, (x) regarding an Acquisition Proposal by Sainsbury or (y) which could reasonably lead to a Sainsbury Superior Proposal, and subsequently regarding the progress of any such negotiations or discussions. As used herein the term "Acquisition Proposal" means any proposal to purchase or acquire, directly or indirectly, all or any of the AC Shares of the Company, a substantial amount of the assets of the Company or any of its subsidiaries or more than 10% of any class of equity securities of the Company or any of its subsidiaries, any tender offer or exchange offer that if consummated would result in any person beneficially owning more than 10% of any class of equity securities of the Company or any of its subsidiaries, any merger, consolidation, business combination, sale of substantially all the assets, recapitalization, liquidation, dissolution or similar transaction involving the Company or any other transaction, the consummation of which could reasonably be expected to dilute materially the benefits to the Purchaser of the acquisition of the AC Shares. As used herein the term "Sainsbury Superior Proposal" means any bona fide proposal from or otherwise involving Sainsbury to purchase all of the AC Shares of the Company in cash at a price per share that is either (x) greater than the price per AC Share agreed upon at the time by the Purchaser and the Seller (the "Agreed Upon Price") or (y) if the Purchaser and the Seller have not reached an agreement on the price to be paid per AC Share, greater than the price per AC Share most recently proposed to the Seller by the Purchaser, and on terms which the Board of Directors of the Seller determines in its good faith reasonable judgment (based upon the advice of 3 The 1224 Corporation April 27, 1998 Page 3 outside financial and legal advisors) to be as or more favorable to the Seller and the Company than the transactions contemplated by the Draft AC Stock Purchase Agreement (i) which is not subject to a financing condition and as to which Sainsbury has represented and warranted to the Seller in writing that financing is or will be available and (ii) which does not provide for any breakup fee or other inducement to Sainsbury other than reimbursement of documented out-of-pocket expenses incurred in connection with the Sainsbury Superior Proposal. Except as otherwise required by law, neither of the parties hereto (nor any affiliate, or Agent thereof) shall issue any press release or make any other statement intended for public distribution relating to, or connected with, this letter or the matters contained herein without obtaining the prior approval of the other party hereto. Each of the parties hereto recognizes and acknowledges that a breach by it of any agreements contained in this letter will cause the other party to sustain damages for which it would not have an adequate remedy at law for money damages, and therefore each of the parties hereto agrees that in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. Except for the agreements set forth in the three immediately preceding paragraphs), this letter does not represent any binding commitment or legal obligation of any kind whatsoever by the Purchaser or the Seller in connection herewith with respect to the transaction contemplated hereby. Such binding commitment or legal obligation shall arise only when and if the definitive transaction documents, developed as a result of the negotiations between the parties are in fact executed by the parties. Notwithstanding anything contained in this letter to the contrary, this letter may be terminated by either the Purchaser or the Seller upon delivery of written notice to the other party to such effect if the Purchaser and Seller have not agreed on or prior to May 4, 1998 upon the price per AC Share that would be paid by the Purchaser to the Seller pursuant to the AC Stock Purchase Agreement. In the event of such termination, this letter shall become void and have no further effect. This letter shall not be amended or modified except in writing signed by the parties hereto. This letter shall be governed by, and construed in accordance with, the laws of the State of Delaware. The parties agree that any legal action or proceeding relating to this letter, or for recognition and enforcement of any judgment in respect thereof, shall be instituted in the courts of the State of Delaware, the courts of the United States of America located in Delaware and appellate courts of any thereof. 4 The 1224 Corporation April 27, 1998 Page 4 This letter may be executed in one or more counterparts, each of which shall be an original, but all such counterparts shall together constitute but one and the same instrument. If the foregoing correctly sets forth our mutual understanding with respect to the proposed negotiations, please so indicate by signing the enclosed copy of this letter and returning it to us. KONINKLIJKE AHOLD N.V. By /s/ Robert Zwartendijk --------------------------------- Name: Robert Zwartendijk Title: Executive Vice President Acknowledged and Agreed, this 27 day of April, 1998 THE 1224 CORPORATION By /s/ David W. Rutstein --------------------------------------- Name: David W. Rutstein Title: Vice President and Secretary EX-99.C.3 14 STOCK PURCHASE AGREEMENT 1 ================================================================================ STOCK PURCHASE AGREEMENT Dated as of May 19, 1998 By and Between KONINKLIJKE AHOLD N.V. (Royal Ahold) and THE 1224 CORPORATION ================================================================================ 2 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS............................................................................ 1 Section 1.1 Definitions........................................................ 1 ARTICLE II SALE OF STOCK AND TENDER OFFER........................................................ 6 Section 2.1 Sale of Transferred Shares......................................... 6 Section 2.2 Purchase Price for Transferred Shares.............................. 6 Section 2.3 Closing............................................................ 6 Section 2.4 Transfer Taxes..................................................... 6 Section 2.5 The Tender Offer................................................... 6 Section 2.6 Corporation Actions................................................ 7 Section 2.7 Tender of Class A Shares........................................... 10 Section 2.8 Stock Option and Other Plans. ..................................... 10 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER......................................... 11 Section 3. Representations and Warranties of the Seller....................... 11 Section 3.1 Legal Status....................................................... 11 Section 3.2 Power and Authority; Enforceability................................ 11 Section 3.3 Ownership of Transferred Shares.................................... 12 Section 3.4 No Conflicts; Consents of Third Parties; Compliance with Laws...... 12 Section 3.5 Disclosure......................................................... 13 Section 3.6 Broker's or Finder's Fees.......................................... 13 Section 3.7. Tender Offer Documents and Schedules 14D-9 ........................ 13 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER REGARDING THE CORPORATION....................................................................... 14 Section 4. Representations and Warranties of the Seller Regarding the Corporation........................................................ 14 Section 4.1 Due Organization, Good Standing and Corporate Power................ 14 Section 4.2 Capitalization..................................................... 14 Section 4.3 Consents and Approvals; No Violations.............................. 15 Section 4.4 Company Reports; Financial Statements and 1998 Budget.............. 16 Section 4.5 Absence of Certain Changes......................................... 17 Section 4.6 Compliance with Laws............................................... 17 Section 4.7 Employee Benefit Plans............................................. 17 Section 4.8 Employee Benefit Plan Triggering Events............................ 22 Section 4.9 Liabilities........................................................ 22 Section 4.10 Litigation........................................................ 22 Section 4.11 Taxes............................................................. 22
(i) 3 Section 4.12 Intellectual Properties........................................... 23 Section 4.13 Environmental Laws and Regulations................................ 23 Section 4.14 Labor Relations................................................... 24 Section 4.15 Tender Offer Documents and Corporation's Schedule 14D-9 .......... 24 Section 4.16 State Takeover Statutes........................................... 25 Section 4.17 Rights Agreements................................................. 25 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER ....................................... 25 Section 5. Representations and Warranties of the Purchaser.................... 25 Section 5.1 Legal Status....................................................... 25 Section 5.2 Power and Authority; Enforceability................................ 25 Section 5.3 No Conflicts....................................................... 25 Section 5.4 Broker's or Finder's Fees.......................................... 26 Section 5.5 Available Funds.................................................... 26 Section 5.6 Securities Act..................................................... 26 Section 5.7 Schedules l4D-9.................................................... 26 ARTICLE VI CONDUCT OF BUSINESS, EXCLUSIVE DEALING,REVIEW, OTHER COVENANTS........................ 26 Section 6.1 Access to Information Concerning Properties and Records............ 26 Section 6.2 Confidentiality.................................................... 27 Section 6.3 Conduct of Business of the Corporation............................. 27 Section 6.4 Approval by Purchaser of Changes................................... 29 Section 6.5 Exclusive Dealing.................................................. 29 Section 6.6 Notification of Certain Matters.................................... 31 Section 6.7 Directors' and Officers' Insurance ................................ 31 Section 6.8 Employee Benefits.................................................. 32 Section 6.9 Further Assurances................................................. 32 Section 6.10 Resignations...................................................... 32 Section 6.11 Provisions Concerning Transferred Shares.......................... 32 Section 6.12 Restriction on Transfer, Proxies and Non-Interference............. 33 Section 6.13 Changes in Shares................................................. 33 Section 6.14 Broker's and Finder's Fees........................................ 33 ARTICLE VII CONDITIONS TO THE PURCHASER'S OBLIGATIONS............................................ 34 Section 7. Conditions to the Purchaser's Obligations........................... 34 Section 7.1 Truth of Representations and Warranties............................ 34 Section 7.2 Performance of Agreements.......................................... 34 Section 7.3 Injunction......................................................... 34 Section 7.4 Consents and Approvals............................................. 35 Section 7.5 Tender Offer Conditions........................................... 35 Section 7.6 Resignations....................................................... 35 Section 7.7 Approval of Tender Offer........................................... 35
(ii) 4 ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF THE SELLER......................................... 35 Section 8. Conditions to the Obligations of the Seller........................ 35 Section 8.1 Truth of Representations and Warranties............................ 35 Section 8.2 Performance of Agreements.......................................... 36 Section 8.3 Injunction......................................................... 36 Section 8.4 HSR................................................................ 36 Section 8.5 Tender Offer....................................................... 36 ARTICLE IX MISCELLANEOUS......................................................................... 36 Section 9.1 Representations and Warranties; Knowledge of the Seller............ 36 Section 9.2 Expenses........................................................... 37 Section 9.3 Governing Law...................................................... 37 Section 9.4 Headings........................................................... 38 Section 9.5 Publicity.......................................................... 38 Section 9.6 Notices............................................................ 38 Section 9.7 Binding Effect; Benefit; Assignment................................ 39 Section 9.8 Best Efforts....................................................... 40 Section 9.9 Counterparts....................................................... 41 Section 9.10 Entire Agreement.................................................. 41 Section 9.11 Amendments........................................................ 41 Section 9.12 Severability...................................................... 41 Section 9.13 Termination of Agreement.......................................... 41 Section 9.14 Specific Performance.............................................. 41 Section 9.15 Remedies Cumulative............................................... 41 Section 9.16 No Waiver......................................................... 41
EXHIBITS Exhibit A 1997 10-K (iii) 5 STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT (this "Agreement") dated as of May 19, 1998, by and between The 1224 Corporation, a corporation organized and existing under the laws of the State of Delaware (the "Seller"), and Koninklijke Ahold N.V. (Royal Ahold), a public company with limited liability organized under the laws of the Netherlands with its corporate seat in Zaandam (Municipality Zanstaad) (the "Purchaser"). W I T N E S S E T H : WHEREAS, the Seller owns, beneficially and of record, 125,000 shares of Class AC Common Stock, par value $1.00 per share (the "Class AC Shares"), and 500 shares of Class A Common Stock, par value $1.00 per share (the "Class A Shares"), in each case of Giant Food Inc., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"); WHEREAS, the Seller desires to sell, and the Purchaser desires to purchase, all of the Class AC Shares (such Class AC Shares, collectively, the "Transferred Shares"), on the terms and subject to the conditions set forth in this Agreement; and WHEREAS, as required by the Certificate of Incorporation of the Seller, it is proposed that the Purchaser will make a tender offer to purchase any and all of the issued and outstanding Class A Shares, subject to the terms and conditions set forth in this Agreement (including, without limitation, the conditions set forth in Section 2.5 hereof) (the "Tender Offer"), at a price per share equal to the per share price to be paid to the Seller hereunder for the Transferred Shares (as such price may be increased in accordance with Section 2.2, the "Tender Offer Price"). NOW, THEREFORE, in consideration of the premises and of the promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 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). "Action" shall have the meaning provided in Section 6.4 hereof. "Acquisition Proposal" shall have the meaning provided in Section 6.5(a) hereof. "Affiliate" shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such 6 Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, or the power to appoint or dismiss the managing directors of such other Person, whether through the ownership of voting securities, by contract or otherwise. "Agents" shall have the meaning provided in Section 6.5(a) hereof. "Agreement" shall have the meaning provided in the recitals hereto. "Alcohol and Drug Laws" shall have the meaning provided in Section 4.3 hereof. "Budget" shall have the meaning provided in Section 4.4(c) hereof. "Cash Payment" shall have the meaning provided in Section 2.8 hereof. "Claims" shall have the meaning provided in Section 4.13 hereof. "Class AC Shares" shall have the meaning provided in the recitals hereof. "Class AL Shares" shall have the meaning provided in Section 2.2 hereof. "Class A Shares" shall have the meaning provided in the recitals hereto. "Closing" shall have the meaning provided in Section 2.3 hereof. "Closing Date" shall have the meaning provided in Section 2.3 hereof. "Code" shall have the meaning provided in Section 4.7(a) hereof. "Corporation" shall have the meaning provided in the recitals hereto. "Corporation Property" shall have the meaning provided in Section 4.13 hereof. "Corporation's Schedule 14D-9" shall have the meaning provided in Section 2.6(c) hereof. "DGCL" shall have the meaning provided in Section 2.6(b) hereof. "Director" shall have the meaning provided in Section 7.6 hereof. "Directors' Schedule 14D-9" shall have the meaning provided in Section 2.6(f) hereof. "EBS Plan" shall have the meaning provided in Section 6.8 hereof. "Employee Benefit Plans" shall have the meaning provided in Section 4.7(a) hereof. -2- 7 "Environmental Claims" shall have the meaning provided in Section 4.13 hereof. "Environmental Law" shall have the meaning provided in Section 4.13 hereof. "ERISA" shall have the meaning provided in Section 4.7(a) hereof. "Exchange Act" shall have the meaning provided in Section 2.5(a) hereof. "Existing Class A Shares" shall have the meaning provided in Section 2.7 hereof. "GAAP" shall mean generally accepted accounting principles in the United States consistently applied during a relevant period. "Hazardous Materials" shall have the meaning provided in Section 4.13 hereof. "HSR Act" shall have the meaning set forth in Section 3.4(b) hereof. "Indemnified Parties" shall have the meaning provided in Section 6.7(b) hereof. "IRS" shall have the meaning provided in Section 4.7(c) hereof. "Law" shall mean any constitution, treaty, convention, statute, law, Environmental Law, code, ordinance, decree, order, rule, regulation, guideline, interpretation, direction, policy or request, or judicial or arbitral decision or judgment. "Letter of Transmittal" shall have the meaning provided in Section 2.5(b) hereof. "Liens" shall mean liens, security interests, options, rights of first refusal, easements, mortgages, charges, claims, indentures, deeds of trust, rights of way, restrictions on the use of real property, encroachments, licenses to third parties, leases to third parties, security agreements, or any other encumbrances and other restrictions or limitations on use of real or personal property or irregularities in title thereto; provided, however, that with respect to the Transferred Shares, "Liens" shall not include any restrictions imposed upon such Transferred Shares by the Certificate of Incorporation or By-Laws of the Corporation or by the DGCL. "Material Adverse Effect" shall mean an effect that is, or is reasonably likely to be, materially adverse to the business, properties, assets, liabilities, condition (financial or otherwise), operations, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. "Multiemployer Plan" shall have the meaning provided in Section 4.7(c) hereof. "Non-Union Employees" shall have the meaning provided in Section 6.8 hereof. "Offer to Purchase" shall have the meaning provided in Section 2.5(b) hereof. "Options" shall have the meaning provided in Section 2.8 hereof. -3- 8 "PaineWebber" shall have the meaning provided in Section 3.6 hereof. "PaineWebber Agreement" shall have the meaning provided in Section 3.6 hereof. "PaineWebber Obligations" shall have the meaning provided in Section 6.14 hereof. "PBGC" shall have the meaning provided in Section 4.7(c) hereof. "Permitted Liens" shall mean (i) Liens consisting of zoning or planning restrictions or regulations, easements, and other restrictions or limitations on the use of real property or irregularities in, or exceptions to, title thereto which do not materially detract from the value of, or materially impair the use of, such property by the Corporation in the operation of its business, (ii) Liens for taxes, assessments or governmental charges or levies on property not yet due and payable or due but not delinquent or being contested in good faith by appropriate proceedings, and (iii) Liens individually identified and disclosed in the 1997 10-K. "Person" shall mean any individual, partnership, limited liability company, corporation, trust, unincorporated association or other entity which is recognized as having legal personality under national or international Law. "Purchase Price" shall have the meaning provided in Section 2.2 hereof. "Purchaser" shall have the meaning provided in the preamble hereto. "Schedule 14D-1" shall have the meaning provided in Section 2.5(b) hereof. "SEC" shall have the meaning provided in Section 2.5(b) hereof. "SEC Filings" shall have the meaning provided in Section 4.4(a) hereof. "Securities Act" shall have the meaning provided in Section 5.6 hereof. "Seller" shall have the meaning provided in the preamble hereto. "Seller System" shall have the meaning provided in Section 4.12 hereof. "Seller's Class A Shares" shall have the meaning provided in Section 2.7 hereof. "Seller's Schedule 14D-9" shall have the meaning provided in Section 2.6(e) hereof. "Shares" shall have the meaning provided in Section 4.2(a) hereof. "Share Register" shall mean, collectively, the register book maintained by the Corporation setting forth the names and addresses of each of the owners of the shares of capital -4- 9 stock of the Corporation and the number of such shares owned by each such owner, and indicating each transfer or encumbrance of such shares by any owner thereof. "Single Employer Plan" shall have the meaning provided in Section 4.7(e) hereof. "Special Committee" shall have the meaning provided in Section 2.6(a) hereof. "Stock Incentive Plans" shall have the meaning provided in Section 2.8 hereof. "Stock Plans" shall have the meaning provided in Section 2.8 hereof. "subsidiary" shall mean each subsidiary of the Corporation that is a "subsidiary" within the meaning of Regulation S-X promulgated by the SEC. "Tax" or "Taxes" shall mean any net income, alternative or add-on minimum tax, advance corporation, gross income, gross receipts, sales, use, ad valorem, franchise, profits, license, value-added, withholding, payroll, employment, excise, transfer, stamp or occupation tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty imposed by any governmental authority with respect thereto and any liability for such amounts as a result of either being a member of an affiliated group or of a contractual obligation to indemnify any other entity. "Tender Offer" shall have the meaning provided in the recitals hereto. "Tender Offer Conditions" shall have the meaning provided in Section 2.5(a) hereof. "Tender Offer Documents" shall have the meaning provided in Section 2.5(b) hereof. "Tender Offer Price" shall have the meaning provided in the recitals hereto. "Transferred Shares" shall have the meaning provided in the recitals hereto. "WARN Act" shall have the meaning provided in Section 4.14 hereof. "Wasserstein" shall have the meaning provided in Section 2.6 hereof. "1997 10-K" shall have the meaning provided in Section 4.4(a) hereof. -5- 10 ARTICLE II SALE OF STOCK AND TENDER OFFER Section 2.1 Sale of Transferred Shares. On the terms and subject to the conditions set forth in this Agreement, the Seller agrees to sell and transfer to the Purchaser at the Closing, and the Purchaser agrees to purchase from the Seller at the Closing, the Transferred Shares, free and clear of all Liens. At or immediately following the Closing, the Seller shall use its reasonable best efforts to cause the Corporation to duly enter the transfer of the Transferred Shares in the Share Register. Section 2.2 Purchase Price for Transferred Shares. In full consideration for the purchase by the Purchaser of the Transferred Shares, the Purchaser shall pay to the Seller on the Closing Date Forty-Three Dollars ($43.00) per Transferred Share (Five Million Three Hundred Seventy Five Thousand Dollars ($5,375,000) in the aggregate) by wire transfer in immediately available funds to the account specified by the Seller to the Purchaser at least two business days prior to the Closing (the "Purchase Price"). Notwithstanding the foregoing, if the Purchaser or any Affiliate of the Purchaser acquires, or enters into a binding agreement to acquire, all of the shares of Class AL Common Stock, par value $1.00 per share (the "Class AL Shares"), before the expiration of the Tender Offer, then the Purchase Price of $43.00 per Transferred Share shall be increased to $43.50 per Transferred Share. For purposes of this Section 2.2, "business day" shall mean any day other than a Saturday, a Sunday or a day on which the banks in the United States or the Netherlands are authorized or obligated by Law to close. Section 2.3 Closing. The sale referred to in Section 2.1 (the "Closing") shall take place at the offices of White & Case LLP, 601 Thirteenth Street, NW, Suite 600 South, Washington, DC, as soon as practicable after the last of the conditions set forth in Articles VII and VIII hereof is fulfilled or waived (subject to applicable law) but (a) in no event later than the fifth business day thereafter, or at such other time and place and on such other date as the Purchaser and the Seller shall mutually agree and (b) in any case simultaneously with the purchase of Class A Shares pursuant to the Tender Offer (the "Closing Date"). On the Closing Date, the Seller shall deliver to the Purchaser, against payment as provided in Section 2.2 hereof, certificates representing the Class AC Shares, duly endorsed in blank, or accompanied by stock powers duly endorsed in blank, with all necessary transfer tax and other revenue stamps, acquired at the Purchaser's expense, affixed thereto. Section 2.4 Transfer Taxes. The Seller shall pay all Taxes charged to grantors, transferors or assignors under applicable Law, provided that the Purchaser shall pay any stock transfer and stamp taxes which become payable in connection with the purchase of the Transferred Shares hereunder. Section 2.5 The Tender Offer. (a) So long as none of the events set forth in Annex A hereto (the "Tender Offer Conditions") shall have occurred and are continuing, as promptly as practicable, but in no event later than the fifth business day (within the meaning of Rule 14d-1 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) after the date of this Agreement, the Purchaser shall commence (within the meaning of Rule 14d-2 promulgated under the Exchange Act) the Tender Offer. The obligations of the -6- 11 Purchaser to accept for payment and to pay for any Class A Shares tendered shall be subject to the Tender Offer Conditions, any of which may be waived by the Purchaser in its sole discretion. The Tender Offer Conditions are for the sole benefit of the Purchaser and may be asserted by the Purchaser regardless of the circumstances giving rise to any such Tender Offer Conditions or may be waived by the Purchaser in whole or in part. The Purchaser expressly reserves the right to modify the terms of the Tender Offer, including, without limitation, to extend the Tender Offer beyond any scheduled expiration date; provided; however, (i) without the consent of the Corporation and the Seller, the Purchaser shall not (A) reduce the number of Class A Shares to be purchased in the Tender Offer, (B) reduce the Tender Offer Price, (C) modify or add to the Tender Offer Conditions in a manner that is materially adverse to the holders of Class A Shares or (D) change the form of consideration payable in the Tender Offer and (ii) if any Tender Offer Condition is waived for purposes of Section 7.5 hereof, the Purchaser shall waive such condition with respect to the Tender Offer. (b) As soon as reasonably practicable on the date the Tender Offer is commenced, the Purchaser shall file with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments and supplements thereto, the "Schedule 14D-1") with respect to the Tender Offer. The Schedule 14D-1 shall contain (included as an exhibit) or shall incorporate by reference an offer to purchase (the "Offer to Purchase") and a form of the related letter of transmittal (the "Letter of Transmittal"), as well as all other information and exhibits required by Law (which Schedule 14D-1, Offer to Purchase, Letter of Transmittal and such other information and exhibits, together with any supplements or amendments thereto, are referred to herein collectively as the "Tender Offer Documents"). The Schedule 14D-1 will comply in all material respects with the provisions of applicable federal securities laws and, on the date filed with the SEC and the date first published, sent or given to the holders of the Class A 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 the Purchaser with respect to any information supplied by the Corporation or the Seller or their respective officers, directors or affiliates for inclusion in the Schedule 14D-1. The Purchaser agrees promptly to correct any information provided by it for use in the Tender Offer Documents that shall be, or have become, false or misleading in any material respect, and the Purchaser further agrees to take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the other Tender Offer Documents as so corrected to be disseminated to holders of Class A Shares, in each case as and to the extent required by applicable federal securities laws. The Purchaser agrees to provide the Seller, the Corporation and their respective counsel with copies of any written comments the Purchaser or its counsel may receive from the SEC or its staff with respect to the Tender Offer Documents promptly after the receipt of such comments. Section 2.6 Corporation Actions. (a) The Seller hereby represents that (i) Wasserstein Perella & Co., Inc. ("Wasserstein") has delivered to the Special Committee its opinion that, as of the date of this Agreement, the consideration to be received by the holders of Class A Shares pursuant to the Tender Offer is fair to the holders of Class A Shares from a financial point of view, subject to the assumptions and qualifications contained in such opinion, -7- 12 and a complete and correct signed copy of such opinion has been, or promptly upon receipt thereof by the Special Committee will be, delivered to the Purchaser and (ii) the Strategic Planning Committee of the Board of Directors of the Corporation (the "Special Committee"), at a meeting duly called and held, has (A) determined unanimously that the Tender Offer is fair to, and in the best interests of, the holders of Class A Shares and (B) recommended to the Board of Directors of the Corporation that it approve and recommend acceptance of the Tender Offer by the holders of the Class A Shares. (b) The Seller hereby further represents that the President of the Corporation has called, or will call no later than the date hereof, a special meeting of the Board of Directors of the Corporation, such meeting to take place on or before May 26, 1998, and has given, or will give no later than the date hereof, notice in writing of such special meeting to all the directors of the Corporation on or before the date hereof, in each case, in accordance with the Certificate of Incorporation and By-Laws of the Corporation and the provisions of the General Corporation Law of the State of Delaware (the "DGCL"). The Seller shall cause the directors of the Corporation who are also directors of the Seller, and shall use its reasonable best efforts to cause the other directors of the Corporation who were appointed by the Seller, to vote to approve and recommend acceptance of the Tender Offer by the holders of the Class A Shares. The Seller has been advised that each of the directors of the Corporation appointed by the Seller intends to vote to approve and recommend acceptance of the Tender Offer by the holders of the Class A Shares. (c) The Seller shall use its reasonable best efforts to cause the Corporation to file with the SEC, as soon as practicable after the date of the commencement of the Tender Offer, a Solicitation/Recommendation Statement on Schedule 14D-9 of the Corporation (the "Corporation's Schedule l4D-9") containing the recommendation of the Board of Directors of the Corporation with respect to the Tender Offer and to disseminate the Corporation's Schedule 14D-9 as required by Rule 14d-9 promulgated under the Exchange Act. The Seller shall use its reasonable best efforts to cause the Corporation to give the Purchaser and its counsel the opportunity to review and comment upon the Corporation's Schedule l4D-9 prior to its filing with the SEC. The Seller shall use its reasonable best efforts to cause the Corporation's Schedule 14D-9 to comply in all material respects with the provisions of applicable federal securities laws and, on the date filed with the SEC and on the date first published, sent or given to the holders of the Class A Shares, not to contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by the Seller with respect to information supplied by the Purchaser in writing for inclusion in the Corporation's Schedule 14D-9. The Seller agrees to use its reasonable best efforts to cause the Corporation promptly to correct any information provided by it for use in the Corporation's Schedule 14D-9 that shall be, or have become, false or misleading in any material respect, and the Seller further agrees to use its reasonable best efforts to cause the Corporation to take all steps necessary to cause the Corporation's Schedule 14D-9 as so corrected to be filed with the SEC as required by applicable federal securities laws. The Seller agrees to use its reasonable best efforts to cause the Corporation to provide the Purchaser and its counsel with any comments the Corporation or its counsel may receive from the SEC or its staff with respect to the Corporation's Schedule 14D-9 promptly after the receipt of such comments -8- 13 and to provide the Purchaser and its counsel an opportunity to participate, including by way of discussions with the SEC or its staff, in the response of the Corporation to such comments. (d) In connection with the Tender Offer, the Seller will use its reasonable best efforts to cause the Corporation promptly to furnish the Purchaser with mailing labels, security position listings and any available listing or computer list containing the names and addresses of the record holders of the Class A Shares as of the most recent practicable date and to furnish the Purchaser with such additional information (including, but not limited to, updated lists of holders of Class A Shares and their addresses, mailing labels and lists of security positions) and such other assistance as the Purchaser or its agents may reasonably request in communicating the Tender Offer to the holders of the Class A Shares. (e) The Seller shall file with the SEC, as soon as practicable on the date hereof, a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Seller's Schedule l4D-9") containing its recommendation of the Tender Offer and shall disseminate the Seller's Schedule 14D-9 as required by Rule 14d-9 promulgated under the Exchange Act. The Purchaser and its counsel shall be given the opportunity to review and comment upon the Seller's Schedule l4D-9 prior to its filing with the SEC. The Seller's Schedule 14D-9 will comply in all material respects with the provisions of applicable federal securities laws and, on the date filed with the SEC and on the date first published, sent or given to the holders of the Class A 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 were made, not misleading, except that no representation is made by the Seller with respect to information supplied by the Purchaser in writing for inclusion in the Seller's Schedule 14D-9. The Seller agrees promptly to correct any information provided by it for use in the Seller's Schedule 14D-9 that shall be, or have become, false or misleading in any material respect, and the Seller further agrees to take all steps necessary to cause the Seller's Schedule 14D-9 as so corrected to be filed with the SEC as required by applicable federal securities laws. The Seller agrees to provide the Purchaser and its counsel with any comments the Seller or its counsel may receive from the SEC or its staff with respect to the Seller's Schedule 14D-9 promptly after the receipt of such comments and shall provide the Purchaser and its counsel an opportunity to participate, including by way of discussions with the SEC or its staff, in the response of the Seller to such comments. (f) To the extent required by the Exchange Act and the rules promulgated thereunder, the Seller shall use its reasonable best efforts to cause the directors of the Corporation appointed by the Seller and officers of the Corporation to file with the SEC, as soon as practicable on the date hereof, a Solicitation/Recommendation Statement on Schedule 14D-9 of the Corporation (the "Directors' Schedule l4D-9") containing the recommendation of such directors and officers of the Corporation with respect to the Tender Offer and to disseminate the Directors' Schedule 14D-9 as required by Rule 14d-9 promulgated under the Exchange Act. The Seller shall use its reasonable best efforts to cause such directors and officers to give the Purchaser and its counsel the opportunity to review and comment upon the Directors' Schedule l4D-9 prior to its filing with the SEC. The Seller shall use its reasonable best efforts to cause the Directors' Schedule 14D-9 to comply in all material respects with the provisions of applicable federal -9- 14 securities laws and, on the date filed with the SEC and on the date first published, sent or given to the holders of the Class A Shares, not to contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by the Seller with respect to information supplied by the Purchaser in writing for inclusion in the Directors' Schedule 14D-9. The Seller agrees to use its reasonable best efforts to cause such directors and officers promptly to correct any information provided by it for use in the Directors' Schedule 14D-9 that shall be, or have become, false or misleading in any material respect, and the Seller further agrees to cause such directors and officers to take all steps necessary to cause the Directors' Schedule 14D-9 as so corrected to be filed with the SEC as required by applicable federal securities laws. The Seller agrees to use its reasonable best efforts to use its reasonable best efforts to cause such directors and officers to provide the Purchaser and its counsel with any comments such directors and officers or their counsel may receive from the SEC or its staff with respect to the Directors' Schedule 14D-9 promptly after the receipt of such comments and to provide the Purchaser and its counsel an opportunity to participate, including by way of discussions with the SEC or its staff, in the response of such directors and officers to such comments. Section 2.7 Tender of Class A Shares. (a) The Seller hereby agrees to validly tender (and not to withdraw) pursuant to and in accordance with the terms of the Tender Offer (provided that the Tender Offer is not amended in a manner prohibited under Section 2.5), in a timely manner for acceptance by the Purchaser in the Tender Offer, the 500 Class A Shares owned by the Seller on the date hereof (the "Existing Class A Shares") and any Class A Shares that may be acquired by the Seller after the date hereof and prior to the termination of this Agreement whether upon the exercise of options, warrants or rights, the conversion or exchange of convertible or exchangeable securities, or by means of purchase, dividend, distribution or otherwise (such Class A Shares, together with the Existing Class A Shares, are referred to herein as the "Seller's Class A Shares"). The Seller hereby acknowledges and agrees that the Purchaser's obligation to accept for payment and pay for Class A Shares tendered in the Tender Offer, including the Seller's Class A Shares, is subject to the terms and conditions of the Tender Offer. (b) The Seller hereby agrees to permit the Purchaser to publish and disclose in the Tender Offer Documents its identity and ownership of Class A Shares and the nature of its commitments, arrangements and understandings under this Agreement. (c) The Seller has been advised that each of the directors of the Corporation who are also directors of the Seller intends to tender pursuant to the Tender Offer all Class A Shares owned of record and beneficially by him or her. Section 2.8 Stock Option and Other Plans. Prior to the Closing Date, the Seller shall cause appropriate resolutions to be voted on by the Board of Directors of the Corporation (or, if appropriate, any committee thereof), shall cause the directors of the Corporation who are also directors of the Seller to vote in favor of the adoption of such resolutions and shall otherwise use its reasonable best efforts to cause such resolutions to be adopted, and use its reasonable best -10- 15 efforts to take all other actions necessary including, but not limited to, using its reasonable best efforts to cause the Corporation to obtain the consent and release of all of the holders of all the outstanding stock options and other rights to purchase Class A Common Stock (the "Options") heretofore granted under any stock option plan of the Corporation or otherwise (the "Stock Plans"), to (i) provide for the cancellation, effective at the Closing Date, subject to the payment provided for in the next sentence being made, of all Options, (ii) terminate, as of the Closing Date, the Stock Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Corporation or any subsidiary (collectively with the Stock Plans, referred to as the "Stock Incentive Plans") with respect to any interest in the capital stock of the Corporation and (iii) amend, as of the Closing Date, the provisions in any other Employee Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Corporation or any interest in respect of any capital stock of the Corporation to provide no continuing rights to acquire, hold, transfer or grant any capital stock of the Corporation or any interest in the capital stock of the Corporation (other than in respect of cash payments through the Offer). Immediately prior to the Closing Date, each Option, whether or not then vested or exercisable, shall no longer be exercisable for the purchase of shares of Class A Common Stock but shall entitle each holder thereof, in cancellation and settlement therefor, to payments by the Corporation in cash, subject to any applicable withholding taxes (the "Cash Payment"), at the Closing Date, equal to the product of (x) the total number of shares of Class A Common Stock subject to such Option, whether or not then vested or exercisable and (y) the excess of the Tender Offer Price over the exercise price per share of Class A Common Stock subject to such Option, each such Cash Payment to be paid to each holder of an outstanding Option at the Closing Date. Incident to the foregoing, any then outstanding stock appreciation rights or limited stock appreciation rights shall be cancelled immediately prior to the Closing Date without any payment therefor. The Seller shall use its reasonable best efforts to cause the Corporation to take all steps to ensure that neither the Corporation nor any of its subsidiaries is or will be bound by any Options, other options, warrants, rights or agreements which would entitle any Person, other than the Purchaser or its affiliates, to own any capital stock of the Corporation or any of its subsidiaries or to receive any payment in respect thereof. Notwithstanding any other provision of this Section 2.8 to the contrary, payment of the Cash Payment may be withheld with respect to any Option until necessary consents and releases are obtained. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER Section 3. Representations and Warranties of the Seller. In order to induce the Purchaser to enter into this Agreement, to acquire the Transferred Shares and to make the Tender Offer, the Seller makes the following representations and warranties. Section 3.1 Legal Status. The Seller is a duly organized and validly existing corporation in good standing under the Laws of the State of Delaware. Section 3.2 Power and Authority; Enforceability. The Seller has full requisite legal capacity, power and authority to execute, deliver and perform the terms and provisions of this Agreement and to consummate the transactions contemplated hereby and has taken all -11- 16 necessary corporate action to authorize the execution, delivery and performance by the Seller of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by the Seller and constitutes a valid and legally binding obligation of the Seller enforceable against the Seller in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors' rights and to general equitable principles. The sale by the Seller of the Transferred Shares to the Purchaser pursuant to this Agreement has been duly authorized by a resolution adopted by the holders of at least 60% of the outstanding Class AV Common Stock of the Seller in compliance with the provisions of Article Sixth of the Certificate of Incorporation of the Seller. Section 3.3 Ownership of Transferred Shares. The Seller is the lawful record and beneficial owner of all of the Class AC Shares and the Existing Class A Shares, in each case free and clear of all Liens. Other than as specified in the preceding sentence, the Seller does not own any shares of capital stock of the Corporation. The Seller has full legal right, power and authority to sell, assign, transfer and convey the Transferred Shares pursuant to this Agreement. The Seller has sole power of disposition and sole power to agree to all of the matters set forth in this Agreement with respect to all of the Transferred Shares and all of the Seller's Class A Shares, with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. The delivery to the Purchaser of the Transferred Shares pursuant to this Agreement and of the Seller's Class A Shares pursuant to the Tender Offer will, in each case, transfer to the Purchaser on the Closing Date good and marketable title thereto, free and clear of any Liens. The Transferred Shares and the certificates representing the Transferred Shares and the Seller's Class A Shares are now, and at all times during the term hereof will be, held by the Seller or by a nominee or custodian for the benefit of the Seller, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements, except for any Lien arising hereunder. The transfer by the Seller of the Transferred Shares to the Purchaser hereunder and the Seller's Class A Shares pursuant to the Tender Offer shall pass to and unconditionally vest in the Purchaser good and valid title to all the Transferred Shares and the Seller's Class A Shares, as the case may be, free and clear of all Liens. Section 3.4 No Conflicts; Consents of Third Parties; Compliance with Laws. (a) Assuming the receipts of the consents, approvals, etc. specified in clause (b) below and except as set forth on Schedule 3.4(a) attached hereto, the execution, delivery and performance by the Seller of this Agreement and the consummation of the purchase of the Transferred Shares, the Tender Offer and the other transactions contemplated hereby will not (i) conflict with the Certificate of Incorporation or By-Laws of the Seller, (ii) conflict with, or result in the breach or termination of, or constitute a default (or give rise to any third party right of termination, cancellation, material modification or acceleration) under, any lease, charter, note, bond, mortgage, license, permit, indenture, contract, agreement, commitment, arrangement or other instrument or obligation, or any order, judgment, decree, injunction, regulation or ruling of any governmental authority or regulatory organization, domestic or foreign, to which the Seller is a party or by which the Seller or any of its properties or assets are bound, (iii) constitute a violation by the Seller of any Law applicable to the Seller or any of its properties or assets, or (iv) result in the creation of any Lien upon the Transferred Shares. -12- 17 (b) Except (i) as set forth on Schedule 3.4(b) attached hereto, (ii) for filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and (iii) as required by the Exchange Act and the rules and regulations thereunder in connection with the Tender Offer, no consent, approval, permit or authorization of, or designation, declaration or filing with, any governmental authorities or third parties is required on the part of the Seller or the Corporation in connection with the execution and delivery of this Agreement and the performance of the transactions contemplated hereby. Section 3.5 Disclosure. None of this Agreement, any Schedule attached hereto, certificate delivered pursuant to this Agreement or any document or statement in writing which has been supplied by or on behalf of the Seller or any of its directors or officers in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact, or omits any statement of a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Seller which materially and adversely affects the business, operations, condition (financial or otherwise) or prospects of the Corporation or any of its subsidiaries or their respective properties or assets, which has not been set forth in (a) this Agreement, (b) the financial statements referred to in this Agreement (including the footnotes thereto), (c) any Schedule attached hereto or delivered pursuant to this Agreement or (d) any document or statement in writing which has been supplied by or on behalf of the Seller or by any of the Corporation's or any of its subsidiaries' directors or officers in connection with the transactions contemplated by this Agreement. Section 3.6 Broker's or Finder's Fees. Except for Wasserstein (whose fees and expenses will be paid by the Corporation in accordance with the Corporation's agreement with such firm, a copy of which has been previously provided to the Purchaser) and PaineWebber Incorporated ("PaineWebber") (whose fees and expenses will be paid as provided in Section 6.14 hereof in accordance with the Seller's agreement with such firm, a copy of which has been previously provided to the Purchaser (the "PaineWebber Agreement")), no agent, broker, person or firm acting on behalf of the Seller or any of its Affiliates (other than the Corporation) or, to the best knowledge of the Seller, the Corporation or any of its Affiliates is, or will be, entitled to any commission or broker's or finder's fees from any of the parties hereto, or from any Person controlling, controlled by or under common control with any of the parties hereto, in connection with any of the transactions contemplated by this Agreement. Section 3.7. Tender Offer Documents and Schedules 14D-9 . None of the information supplied by the Seller for inclusion or incorporation by reference in the Tender Offer Documents, the Corporation's Schedule 14D-9 or the Directors' Schedule 14D-9, at the respective times the Tender Offer Documents, the Corporation's Schedule 14D-9 or the Directors' Schedule 14D-9 are filed with the SEC and the date first published, sent or given to the holders of the Class A Shares, will 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. The Seller agrees promptly to correct any information provided by it for use in the Tender Offer Documents, the Corporation's Schedule 14D-9 or the Directors' Schedule 14D-9 that shall be, or shall have become, false or misleading in any material respect. -13- 18 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER REGARDING THE CORPORATION Section 4. Representations and Warranties of the Seller Regarding the Corporation. In order to induce the Purchaser to enter into this Agreement, to acquire the Transferred Shares and to make the Tender Offer, the Seller makes the following representations and warranties to the best of its knowledge: Section 4.1 Due Organization, Good Standing and Corporate Power. Each of the Corporation and each of its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and each such corporation has the corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted. Each of the Corporation and its subsidiaries is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so qualified or licensed and in good standing would not have a Material Adverse Effect and set forth on Schedule 4.1 attached hereto is a list of each such jurisdiction. The Purchaser has been provided with complete and correct copies of the Certificates of Incorporation and By-Laws or other organizational documents of each of the Corporation and each of its subsidiaries, in each case as amended to the date of this Agreement. The respective Certificates of Incorporation and By-Laws or other organizational documents of the subsidiaries of the Corporation do not contain any provision limiting or otherwise restricting the ability of the Corporation to control such subsidiaries. Section 4.2 Capitalization. (a) On the Closing Date, the Corporation will have an authorized capitalization consisting of 75,000,000 Class A Shares, 125,000 Class AC Shares and 125,000 Class AL Shares (the Class A Shares, the Class AC Shares and the Class AL Shares, collectively the "Shares"). As of May 13, 1998, (A) 59,914,510 Class A Shares, 125,000 Class AC Shares and 125,000 Class AL Shares are issued and outstanding, (B) 100,627 Class A Shares are held in the Corporation's treasury and (C) 3,422,994 Class A Shares are reserved for issuance pursuant to outstanding Options granted under the Stock Plans. On the Closing Date, all issued and outstanding shares will have been duly authorized, validly issued, fully paid and nonassessable and were not issued in violation of any preemptive rights. Except as set forth in this Section 4.2(a) or on Schedule 4.2(a) attached hereto, no Shares of the Corporation are, or on the Closing Date will be, reserved for issuance or held in the treasury of the Corporation and there are or, on the Closing Date, will be no outstanding options, warrants, rights, calls, subscriptions, claims, agreements, obligations, convertible or exchangeable securities or other commitments, contingent or otherwise, relating to the Shares of the Corporation or pursuant to which the Corporation is or may become obligated to issue or exchange any shares of capital stock, other than as contemplated by this Agreement. Other than as provided in the Certificate of Incorporation of the Corporation, no shareholder of the Corporation has or, on the Closing Date, will have any preemptive or other rights to acquire any of the Shares. Other than pursuant to the Certificate of Incorporation of the Corporation and under the provisions of the DGCL, there are or, on the Closing Date, will be no restrictions on (i) transfers of the Shares, (ii) voting of the Shares, or (iii) -14- 19 the declaration or payment of any dividend or distribution in respect of the Shares. The Corporation has no authorized or outstanding bonds, debentures, notes or other indebtedness the holders of which have the right to vote (or convertible or exchangeable into or exercisable for securities having the right to vote) with the stockholders of the Corporation or any of its subsidiaries on any matter. (b) Schedule 4.2(b) attached hereto lists all of the Corporation's subsidiaries. All of the outstanding shares of capital stock of each subsidiary of the Corporation have been duly authorized and validly issued, are fully paid and nonassessable and are not subject to, nor were they issued in violation of, any preemptive rights, and, except as set forth in Schedule 4.2(b) attached hereto, are owned, of record and beneficially, by the Corporation, free and clear of any Liens. Except as set forth on Schedule 4.2(b) attached hereto, no shares of capital stock of any subsidiary of the Corporation are or, on the Closing Date, will be reserved for issuance or held in the treasury of such subsidiary and there are or, on the Closing Date, will be no outstanding options, warrants, rights, calls, subscriptions, claims, agreements, obligations, convertible or exchangeable securities or other commitments, contingent or otherwise, relating to the capital stock of any subsidiary of the Corporation or pursuant to which any subsidiary of the Corporation is or may become obligated to issue or exchange any shares of capital stock. (c) Neither the Corporation nor any subsidiary of the Corporation owns, directly or indirectly, any capital stock or other equity or ownership or proprietary interest in any corporation, limited liability company, partnership, association, trust, joint venture or other entity except as set forth on Schedule 4.2(c) attached hereto. (d) Other than restrictions imposed or permitted by existing indebtedness agreements or under applicable corporate law, there are no restrictions of any kind which prevent the payment of dividends by any of the Corporation's subsidiaries. Section 4.3 Consents and Approvals; No Violations . Other than in connection with or in compliance with the specific provisions of (a) the HSR Act regarding the purchase of the Class AC Shares pursuant to this Agreement, (b) the Exchange Act and the rules and regulations promulgated thereunder as may be applicable to the Tender Offer, (c) the "blue sky" laws of various states, (d) applicable alcohol beverage control and licensing laws and drug and pharmacy laws and regulations ("Alcohol and Drug Laws"), and (e) applicable local permit laws, rules and regulations pertaining to the operation of the business of the Corporation and its subsidiaries, and except as disclosed in Schedule 4.3 attached hereto, the execution, delivery and performance by the Seller of this Agreement and the consummation of the purchase of the Transferred Shares, the Tender Offer and the other transactions contemplated hereby will not: (1) violate any provision of the Certificate of Incorporation or By-Laws (or other organizational document) of the Corporation or any of its subsidiaries, (2) violate any Law applicable to the Corporation or any of its subsidiaries or by which any of their respective properties or assets may be bound, (3) require any filing with, or permit, consent or approval of, or the giving of any notice to, any governmental or regulatory body, agency or authority, or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, payment or acceleration) under, or result in the -15- 20 creation of any Lien upon any of the properties or assets of the Corporation or any of its subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease, franchise agreement or other instrument or obligation to which the Corporation or any of its subsidiaries is a party, or by which it or any of their respective properties or assets, except in the case of clauses (2), (3) or (4) above for such filings, permits, consents, approvals or violations, which would not have a Material Adverse Effect or could not be reasonably likely to prevent or materially delay consummation of the transactions contemplated by this Agreement. Section 4.4 Company Reports; Financial Statements and 1998 Budget. (a) Since January 1, 1997, the Corporation has filed all forms, reports and documents with the SEC required to be filed by it pursuant to the federal securities laws and the SEC rules and regulations thereunder, and all forms, reports and documents filed with the SEC have complied in all material respects with all applicable requirements of the federal securities laws and the SEC rules and regulations promulgated thereunder. The Corporation has, prior to the date of this Agreement, made available to the Purchaser true and complete copies of all forms, reports, registration statements and other filings filed by the Corporation with the SEC since January 1, 1997 (such forms, reports, registration statements and other filings and financials, together with any exhibits, any amendments thereto and information incorporated by reference therein, are sometimes collectively referred to as the "SEC Filings"). Attached hereto as Exhibit A is the Corporation's Annual Report on Form 10-K for the fiscal year ended February 28, 1998 (the "1997 10-K"), filed or to be filed with the SEC on the date hereof. As of their respective dates, the SEC Filings and the 1997 10-K 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 balance sheets included in the SEC Filings and in the 1997 10-K were prepared in accordance with GAAP (except as may be indicated therein or in the notes or schedules thereto) and fairly present in all material respects the consolidated financial position of the Corporation and its consolidated subsidiaries as of the dates thereof and the results of their operations and their cash flows for the periods then ended. (b) The Seller will use its reasonable best efforts to cause the Corporation to deliver to the Purchaser as soon as they become available true and complete copies of any report or statement mailed by it to its stockholders generally or filed by it with the SEC subsequent to the date hereof and prior to the Closing Date. As of their respective dates, such reports and statements (excluding any information therein provided by the Purchaser, as to which the Seller makes no representation) will 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 are made, not misleading and will comply in all material respects with all applicable requirements of the federal securities laws and the SEC rules and regulations thereunder. The consolidated financial statements of the Corporation to be included in such reports and statements (excluding any information therein provided by the Purchaser or Seller, as to which the Seller makes no representation) will be prepared in accordance with GAAP (except as may be indicated therein or in the notes or schedules thereto) and will fairly present in all material respects the consolidated financial position of the Corporation and its consolidated -16- 21 subsidiaries as of the dates thereof and the results of their operations and their cash flows for the periods then ended (subject, in the case of any unaudited financial statements, to normal year-end audit adjustments). (c) The Seller will use its reasonable best efforts to cause the Corporation to deliver to the Purchaser simultaneously with the execution and delivery of this Agreement a true and complete copy of its 1998 Fiscal Year Annual Budget (the "Budget"). Section 4.5 Absence of Certain Changes. Except as previously disclosed in the SEC Filings or as otherwise disclosed in Schedule 4.5 attached hereto or as otherwise contemplated by this Agreement, since February 23, 1997 and up to the Closing Date, (i) there has not been and will not be any Material Adverse Change, (ii) the businesses of the Corporation and each of its subsidiaries have been and will be conducted only in the ordinary course, (iii) neither the Corporation nor any of its subsidiaries has incurred or will incur any material liabilities (direct, contingent or otherwise) or engaged in any material transaction or entered into any material agreement outside the ordinary course of business, (iv) the Corporation and its subsidiaries have not and will not increase the compensation of any officer or grant any general salary or benefits increase to their employees other than in the ordinary course of business or pursuant to collective bargaining agreements, (v) there has been no, and will not be any, declaration, setting aside or payment of any dividend or other distribution with respect to the capital stock of the Corporation other than regular annual cash dividends by the Corporation on its capital stock in an amount not in excess of $0.80 per share per fiscal annum which have been or will be declared and paid at the same time such dividends are customarily declared and paid, (vi) there has been no, and will not be any, change by the Corporation in accounting principles, practices or methods, and (vii) neither the Corporation nor any of its subsidiaries has agreed or will agree, whether or not in writing, to do any of the foregoing. Section 4.6 Compliance with Laws. Except as previously disclosed in the SEC Filings, the Corporation and its subsidiaries are in compliance with all applicable Laws, except where the failure to so comply would not have a Material Adverse Effect or could be reasonably likely to prevent or materially delay consummation of the transactions contemplated by this Agreement. Section 4.7 Employee Benefit Plans. (a) List of Plans. Set forth on Schedule 4.7 attached hereto is an accurate and complete list of all domestic and foreign (i) "employee benefit plans," within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations thereunder ("ERISA"), (ii) bonus, stock option, stock purchase, restricted stock, incentive, fringe benefit, profit-sharing, pension, or retirement, deferred compensation, medical, life, disability, accident, salary continuation, severance, accrued leave, vacation, sick pay, sick leave, supplemental retirement and unemployment benefit plans, programs, arrangements, commitments and/or practices (whether or not insured), and (iii) employment, consulting, termination, and severance contracts or agreements; for active, retired or former employees or directors, whether or not any such plans, programs, arrangements, commitments, contracts, agreements and/or practices (referred to in (i), (ii) or (iii) above) are in writing or are otherwise -17- 22 exempt from the provisions of ERISA, that have been established, maintained or contributed to (or with respect to which an obligation to contribute has been undertaken) or with respect to which any potential liability is borne by the Corporation or any of its subsidiaries (including, for this purpose and for the purpose of all of the representations in this Section 4.7, any predecessors to the Corporation or to any of its subsidiaries and all employers (whether or not incorporated) that would be treated together with the Corporation and/or any of its subsidiaries as a single employer (A) within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder (the "Code") or (B) as a result of the Corporation or any of its subsidiaries being or having been a general partner of any such employer) since September 2, 1974 ("Employee Benefit Plans"). (b) Status of Plans. Each Employee Benefit Plan (including any related trust) complies in form with the requirements of all applicable laws, including, without limitation, ERISA and the Code, and has at all times been maintained and operated in substantial compliance with its terms and the requirements of all applicable laws, including, without limitation, ERISA and the Code. No complete or partial termination of any Employee Benefit Plan has occurred or is expected to occur, and no proceedings have been instituted, and no condition exists and no event has occurred that could constitute grounds, under Title IV of ERISA to terminate, or appoint a trustee to administer, any Employee Benefit Plan. Neither the Corporation nor any of its subsidiaries has any commitment, intention or understanding to create, modify or terminate any Employee Benefit Plan. Except as required to maintain the tax-qualified status of any Employee Benefit Plan intended to qualify under Section 401(a) of the Code, no condition or circumstance exists that would prevent the amendment or termination of any Employee Benefit Plan. No event has occurred and no condition or circumstance has existed that could result in a material increase in the benefits under or the expense of maintaining any Employee Benefit Plan from the level of benefits or expense incurred for the most recent fiscal year ended thereof. No Employee Benefit Plan is a plan described in Section 4063(a) of ERISA. (c) Liabilities. No Employee Benefit Plan subject to Section 412 or 418B of the Code or Section 302 of ERISA has incurred any accumulated funding deficiency within the meaning of Section 412 or 418B of the Code or Section 302 of ERISA, respectively, or has applied for or obtained a waiver from the Internal Revenue Service ("IRS") of any minimum funding requirement or an extension of any amortization period under Section 412 of the Code or Section 303 or 304 of ERISA. Except for payments of premiums to the Pension Benefit Guaranty Corporation ("PBGC"), which have been timely paid in full, neither the Corporation nor any of its subsidiaries has incurred any liability (including, for this purpose and for the purpose of all of the representations in this Section 4.7 any indirect, contingent, or secondary liability) to the PBGC in connection with any Employee Benefit Plan covering any active, retired or former employees or directors of the Corporation or any of its subsidiaries, including, without limitation, any liability under Section 4069 or 4212(c) of ERISA or any penalty imposed under Section 4071 of ERISA, or ceased operations at any facility or withdrawn from any such Employee Benefit Plan in a manner which could subject it to liability under Section 4062, 4063 or 4064 of ERISA, or knows of any facts or circumstances that might give rise to any liability of the Corporation or any of its subsidiaries to the PBGC under Title IV of ERISA that could reasonably be anticipated to result in any claims being made against the Purchaser by the PBGC. -18- 23 Neither the Corporation nor any of its subsidiaries has incurred any withdrawal liability (including any contingent or secondary withdrawal liability) within the meaning of Section 4201 or 4204 of ERISA to any Employee Benefit Plan which is a "multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA) ("Multiemployer Plan") which has not been satisfied in full, and no event has occurred and no condition or circumstance has existed, that presents a material risk of the occurrence of any withdrawal from or the partition, termination, reorganization or insolvency of any such Multiemployer Plan which could result in any liability of the Corporation or any of its subsidiaries to any such Multiemployer Plan. Except as disclosed on Schedule 4.7 attached hereto, neither the Corporation nor any of its subsidiaries maintains any Employee Benefit Plan which is a "group health plan" (as such term is defined in Section 5000(b)(1) of the Code or Section 607(1) of ERISA) that has not been administered and operated in all respects in compliance with the applicable requirements of Part 6 of Title 1 of ERISA and Section 4980B of the Code and neither the Corporation nor any of its subsidiaries is subject to any liability, including, without limitation, additional contributions, fines, taxes, penalties or loss of tax deduction as a result of such administration and operation. Each Employee Benefit Plan that is intended to meet the requirements of Section 125 of the Code meets such requirements, and each program of benefits for which employee contributions are provided pursuant to elections under any Employee Benefit Plan meets the requirements of the Code applicable thereto. Neither the Corporation nor any of its subsidiaries maintains any Employee Benefit Plan which is an "employee welfare benefit plan" (as such term is defined in Section 3(1) of ERISA) that has provided any "disqualified benefit" (as such term is defined in Section 4976(b) of the Code) with respect to which an excise tax could be imposed. Except as disclosed on Scheduled 4.7 attached hereto, neither the Corporation nor any of its subsidiaries maintains any Employee Benefit Plan (whether qualified or non-qualified under Section 401(a) of the Code) providing for post-employment or retiree health, life insurance and/or other welfare benefits and having unfunded liabilities, and neither the Corporation nor any of its subsidiaries have any obligation to provide any such benefits to any retired or former employees or active employees following such employees' retirement or termination of service. Neither the Corporation nor any of its subsidiaries has any unfunded liabilities pursuant to any Employee Benefit Plan that is not intended to be qualified under Section 401(a) of the Code. Except as disclosed on Schedule 4.7 attached hereto, neither the Corporation nor any of its subsidiaries has incurred any liability for any tax or excise tax arising under Chapter 43 of the Code, and no event has occurred and no condition or circumstance has existed that could give rise to any such liability. No asset of the Corporation or any of its subsidiaries is subject to any lien arising under Section 302(f) of ERISA or Section 412(n) of the Code, and no event has occurred and no condition or circumstance has existed that could give rise to any such lien. Neither the Corporation nor any of its subsidiaries has been required to provide any security under Section 307 of ERISA or Section 401(a)(29) or 412(f) of the Code, and no event has occurred and no condition or circumstance has existed that could give rise to any such requirement to provide any such security. -19- 24 There are no actions, suits, claims or disputes pending or, to the best knowledge and belief of the Corporation, threatened, anticipated or expected to be asserted against or with respect to any Employee Benefit Plan or the assets of any such plan (other than routine claims for benefits and appeals of denied routine claims). No civil or criminal action brought pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISA is pending, threatened, anticipated, or expected to be asserted against the Corporation or any of its subsidiaries or any fiduciary of any Employee Benefit Plan, in any case with respect to any Employee Benefit Plan. No Employee Benefit Plan or any fiduciary thereof is the direct or indirect subject of an audit, investigation or examination by any governmental or quasi-governmental agency. (d) Contributions. Full payment has been timely made of all amounts which the Corporation or any of its subsidiaries is required, under applicable law or under any Employee Benefit Plan or any agreement relating to any Employee Benefit Plan to which the Corporation or any of its subsidiaries is a party, to have paid as contributions or premiums thereto as of the last day of the most recent fiscal year of such Employee Benefit Plan ended prior to the date hereof. All such contributions and/or premiums have been fully deducted for income tax purposes and no such deduction has been challenged or disallowed by any governmental entity, and to the best knowledge and belief of the Corporation no event has occurred and no condition or circumstance has existed that could give rise to any such challenge or disallowance. The Corporation has made adequate provision for reserves to meet contributions and premiums and any other liabilities that have not been paid or satisfied because they are not yet due under the terms of any Employee Benefit Plan, applicable law or related agreements. Benefits under all Employee Benefit Plans are as represented and have not been increased subsequent to the date as of which documents have been provided. (e) Funded Status; Withdrawal Liability. As of the date of this Agreement, the current value of the accumulated benefit obligations (based upon actuarial assumptions which are in the aggregate reasonable in all respects and which have been furnished to and relied upon by Parent) under each Employee Benefit Plan which is covered by Title IV of ERISA and which is a "single employer plan" (as such term is defined in Section 4001(a)(15) of ERISA) ("Single Employer Plan") did not exceed the current fair value of the assets of each such Single Employer Plan allocable to such accrued benefits, and since the date of the 1997 10-K, there has been (A) no material adverse change in the financial condition of any Single Employer Plan, (B) no change in the actuarial assumptions with respect to any Single Employer Plan, and (C) no increase in benefits under any Single Employer Plan as a result of plan amendments, written interpretations or announcements (whether written or not), change in applicable law or otherwise, which individually or in the aggregate, would result in the current value of any Single Employer Plan's accrued benefits exceeding the current value of all such Single Employer Plan's assets. No Employee Benefit Plan holds as an asset any interest in any annuity contract, guaranteed investment contract or any other investment or insurance contract, policy or instrument issued by an insurance company that, to the best knowledge and belief of the Corporation, is or may be the subject of bankruptcy, conservatorship, insolvency, liquidation, rehabilitation or similar proceedings. As of the date of this Agreement, using actuarial assumptions and computation methods consistent with Part 1 of Subtitle E of Title IV of ERISA, (A) the Corporation and its -20- 25 subsidiaries would have no liability to the FELRA and UFCW Pension Fund, the Warehouse Employees Union Local No. 730 Pension Trust, and the Bakers and Confectionary and Industry International Health Benefits and Pension Fund in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan ended prior to the date hereof and (B) the aggregate liabilities of the Corporation and its subsidiaries to all other Multiemployer Plans in the aggregate in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan ended prior to the date hereof, would not result in a material liability. To the best knowledge of the Corporation, there has been no material change in the financial condition of any Multiemployer Plan, in any such actuarial assumption or computation method or in the benefits under any Multiemployer Plan as a result of collective bargaining or otherwise since the close of each such fiscal year which, individually or in the aggregate, would materially increase such liability. (f) Tax Qualification. Except as disclosed on Schedule 4.7 attached hereto, each Employee Benefit Plan intended to be qualified under Section 401(a) of the Code has, as currently in effect, been determined to be so qualified by the IRS. Each trust established in connection with any Employee Benefit Plan which is intended to be exempt from Federal income taxation under Section 501(a) of the Code has, as currently in effect, been determined to be so exempt by the IRS. Since the date of each most recent determination referred to in this paragraph (vi), no event has occurred and no condition or circumstance has existed that resulted or is likely to result in the revocation of any such determination or that could adversely affect the qualified status of any such Employee Benefit Plan or the exempt status of any such trust. (g) Transactions. No "reportable event" (as such term is defined in Section 4043 of ERISA) for which the 30-day notice requirement has not been waived by the PBGC has occurred or is expected to occur with respect to any Employee Benefit Plan. Neither the Corporation nor any of its subsidiaries nor any of their respective directors, officers, employees or, to the best knowledge and belief of the Corporation, other persons who participate in the operation of any Employee Benefit Plan or related trust or funding vehicle, has engaged in any transaction with respect to any Employee Benefit Plan or breached any applicable fiduciary responsibilities or obligations under Title I of ERISA that would subject any of them to a tax, penalty or liability for prohibited transactions or breach of any obligations under ERISA or the Code or would result in any claim being made under, by or on behalf of any such Employee Benefit Plan by any party with standing to make such claim. (h) Documents. The Corporation has delivered or caused to be delivered to the Purchaser and its counsel true and complete copies of all material documents in connection with each Employee Benefit Plan, including, without limitation (where applicable): (i) all Employee Benefit Plans as in effect on the date hereof, together with all amendments thereto, including, in the case of any Employee Benefit Plan not set forth in writing, a written description thereof; (ii) all current summary plan descriptions, summaries of material modifications, and material communications; (iii) all current trust agreements, declarations of trust and other documents establishing other funding arrangements (and all amendments thereto and the latest financial statements thereof); (iv) the most recent IRS determination letter obtained with respect to each Employee Benefit Plan intended to be qualified under Section 401(a) of the Code or exempt under Section -21- 26 501(a) of the Code; (v) the annual report on IRS Form 5500-series for each of the last three years for each Employee Benefit Plan required to file such form; (vi) the most recently prepared actuarial valuation report for each Employee Benefit Plan covered by Title IV of ERISA; (vii) the most recently prepared financial statements; and (viii) all contracts and agreements relating to each Employee Benefit Plan, including, without limitation, service provider agreements, insurance contracts, annuity contracts, investment management agreements, subscription agreements, participation agreements, and recordkeeping agreements and collective bargaining agreements. Section 4.8 Employee Benefit Plan Triggering Events. Except as disclosed on Schedule 4.8 attached hereto, the Tender Offer does not constitute a triggering event under any Employee Benefit Plan, policy, arrangement, statement, commitment or agreement, whether or not legally enforceable, which (either alone or upon the occurrence of any additional or subsequent event) will or may result in any payment (whether of severance pay or otherwise), "parachute payment" (as such term is defined in Section 280G of the Code), acceleration, vesting or increase in benefits to any employee or former employee or director of the Corporation or any of its subsidiaries. No Employee Benefit Plan provides for the payment of severance, termination, change in control or similar-type payments or benefits. Section 4.9 Liabilities. Except as set forth in the SEC Filings or as disclosed in Schedule 4.9 attached hereto or as otherwise contemplated by this Agreement, since February 23, 1997 to the date of this Agreement, neither the Corporation nor any of its subsidiaries has incurred any material outstanding claims, liabilities or indebtedness, contingent or otherwise, that would be required to be disclosed in the Corporation's consolidated financial statements prepared in accordance with GAAP, other than liabilities incurred subsequent to February 23, 1997 in the ordinary course of business not involving borrowings by the Corporation or any of its subsidiaries. Section 4.10 Litigation. (a) Except as set forth on Schedule 4.10 attached hereto, there is no action, suit, proceeding at law or in equity, arbitration or administrative or other proceeding by or before (or to the best knowledge of the Corporation any investigation by) any governmental or other instrumentality or agency, pending or, to the best knowledge of the Corporation, threatened, against or affecting the Corporation or any of its subsidiaries, or any of their properties or rights which, individually or in the aggregate, could have a Material Adverse Effect. (b) Except as set forth on Schedule 4.10 attached hereto, neither the Corporation nor any of its subsidiaries is subject to any judgment, order or decree entered in any lawsuit or proceeding which could have a Material Adverse Effect. Section 4.11 Taxes. (a) Tax Returns. Except as set forth on Schedule 4.11 attached hereto, the Corporation has timely filed or caused to be timely filed or will timely file or cause to be timely filed with the appropriate taxing authorities all returns, statements, forms and reports for Taxes that are required by Law to be filed by, or which include, the Corporation or any of its subsidiaries on or prior to the Closing Date. Such tax returns accurately reflect all liability for Taxes of the Corporation and each of its subsidiaries for the periods covered thereby. -22- 27 (b) Payment of Taxes. Except as set forth on Schedule 4.11 attached hereto, all Taxes and Tax liabilities of the Corporation due for all taxable years or periods that end on or before the Closing Date and, with respect to any taxable year or period beginning before and ending after the Closing Date, the portion of such taxable year or period ending on and including the Closing Date, have been timely paid or are reserved in accordance with GAAP in financial statements of the Corporation on or prior to the Closing Date. (c) Tax Audits. Except as set forth on Schedule 4.11 attached hereto, no examination of any tax return of the Corporation is currently in progress and there are no outstanding agreements or waivers extending the statutory period of limitation applicable to any tax return of the Corporation. Section 4.12 Intellectual Properties. The costs to the Corporation and its subsidiaries of ensuring that the equipment and software and other computer programs used by the Corporation or any of its subsidiaries (each a "Seller System") will be Year 2000 compliant (a) are estimated to be approximately $15,000,000, (b) are expensed as incurred, and (c) the balance of such cost is not expected to have a material adverse impact on the Corporation's financial position, results of operations or cash flows in future periods. For purposes of this paragraph, "Year 2000 compliant" means that a change of, reference to or use after December 31, 1999 of date-related data for dates before, on or after December 31, 1999 in the operation of that Seller System, whether alone or in conjunction with each other Seller System or item of equipment, software or other computer program under the control of a third party with whom the Corporation or any of its subsidiaries routinely exchanges date information, will not have a material adverse effect on, nor give rise to a material increased inconvenience in, the operation of that Seller System. Section 4.13 Environmental Laws and Regulations. There are no facts or circumstances, conditions or occurrences regarding any Corporation Property (as defined below) that could reasonably be anticipated (a) to form the basis of an Environmental Claim (as defined below) against the Corporation or any of its subsidiaries or any Corporation Property or (b) to cause such Corporation Property to be subject to any restrictions on its ownership, occupancy, use or transferability under any Environmental Law (as defined below). For purposes of this Agreement, the following terms shall have the following meanings: (a) "Corporation Property" means any real property and improvements owned, leased, used, operated or occupied by the Corporation or any of its subsidiaries; (b) "Hazardous Materials" means (i) any petroleum or petroleum products, radioactive materials, asbestos in any form that is friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas, (ii) any chemicals, materials or substances defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants," or words of similar import, under any applicable Environmental Law, and (iii) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority; (c) "Environmental Law" means any federal, state or local statute, law, rule, regulation, ordinance, code, policy or rule of -23- 28 common law in effect and in each case as amended as of the date hereof and Closing Date, and any judicial or administrative interpretation thereof as of the date hereof and Closing Date, including any judicial or administrative order, consent decree or judgment, relating to the environment, health, safety or Hazardous Materials, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 3808 et seq.; and state and local equivalent statutes and regulations; and (d) "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 relating in any way to any Environmental Law (for purposes of this subclause (d), "Claims") or any permit issued under any such Environmental Law, including without limitation (i) 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 (ii) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment. Section 4.14 Labor Relations. Except as set forth on Schedule 4.14 attached hereto, there is no strike, labor dispute, slowdown or stoppage pending or, to the best knowledge of the Corporation, threatened against the Corporation or any of its subsidiaries which would be reasonably likely to have a Material Adverse Effect on the Corporation. The Corporation and its subsidiaries have complied with the Worker Adjustment and Retraining Notification Act (the "WARN Act"). None of the present or former employees of the Corporation or its subsidiaries has suffered an employment loss or mass layoff as that term is defined in the WARN Act in the 6-month period ending on the Closing Date. Section 4.15 Tender Offer Documents and Corporation's Schedule 14D-9 . None of the information supplied by the Corporation for inclusion or incorporation by reference in the Tender Offer Documents will at the respective times the Tender Offer Documents are filed with the SEC 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 in the Corporation's Schedule 14D-9, at the respective times the Corporation's Schedule 14D-9 is filed with the SEC and first published, sent or given to the holders of the Class A Shares, 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 the Purchaser or its officers, directors or affiliates provided to the Corporation by the Purchaser in writing for inclusion in the Corporation's Schedule 14D-9. The Corporation's Schedule 14D-9 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 the expiration or termination of the Tender Offer any event occurs which should be described in an amendment or supplement to the Corporation's Schedule 14D-9 or any amendment or supplement thereto, the Seller will use its reasonable best -24- 29 efforts to cause the Corporation to 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. The Seller shall use its reasonable best efforts to cause the Corporation to deliver any amendment or supplement to the Purchaser and its counsel prior to its filing with the SEC. Section 4.16 State Takeover Statutes. The provisions of Section 203 of the DGCL are not applicable to the Corporation and, as a result, no action by the Board of Directors of the Corporation is required under such Section in respect of the Tender Offer. No other state takeover statute or similar statute or regulation applies or purports to apply to the Tender Offer. Section 4.17 Rights Agreements. The Corporation has no stockholder rights plan or similar agreement in effect. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER Section 5. Representations and Warranties of the Purchaser. In order to induce the Seller to enter into this Agreement and to sell the Transferred Shares, the Purchaser makes the following representations and warranties. Section 5.1 Legal Status. The Purchaser is a duly organized and validly existing public company with limited liability under the laws of the Netherlands. Section 5.2 Power and Authority; Enforceability. The Purchaser has full requisite legal capacity, power and authority to execute, deliver and perform the terms and provisions of this Agreement and to consummate the transactions contemplated hereby and has taken all necessary corporate action to authorize the execution, delivery and performance by the Purchaser of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by the Purchaser and constitutes a valid and legally binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditor's rights and to general equitable principles. Section 5.3 No Conflicts. (a) Assuming the receipts of the consents, approvals, etc. specified in clause (b) below, the execution, delivery and performance of this Agreement by the Purchaser and the performance of the provisions regarding the Tender Offer will not (i) conflict with the Articles of Association of the Purchaser, (ii) conflict with, result in the breach or termination of, or constitute a default (or give rise to any third party right of termination, cancellation, material modification or acceleration) under, any lease, charter, note, bond, mortgage, license, indenture, contract, agreement, commitment, arrangement or other instrument or obligation or any order, judgment, decree, injunction, regulation or ruling of any governmental authority or regulatory organization, domestic or foreign, to which the Purchaser is a party or by -25- 30 which the Purchaser or any of its properties or assets are bound, or (iii) constitute a violation by the Purchaser of any Law or regulation applicable to the Purchaser any of its properties or assets. (b) Except (i) for filings under the HSR Act, (ii) as required by the Exchange Act and the rules and regulations thereunder in connection with the Tender Offer, (iii) the "blue sky" laws of various states, (iv) applicable Alcohol and Drug Laws and (v) applicable local permit laws, rules and regulations pertaining to the operation of the business of the Corporation and its subsidiaries, no consent, approval, permit, or authorization of, or designation, declaration or filing with, any governmental authorities or third parties is required on the part of the Purchaser in connection with the execution and delivery of this Agreement and the performance by the Purchaser of the transactions contemplated hereby. Section 5.4 Broker's or Finder's Fees. Except for Merrill Lynch & Co. (whose fees and expenses will be paid by the Purchaser), no agent, broker, person or firm acting on behalf of the Purchaser or any Affiliate thereof is, or will be, entitled to any commission or broker's or finder's fees from any of the parties hereto, or from any Person controlling, controlled by or under common control with any of the parties hereto, in connection with any of the transactions contemplated by this Agreement. Section 5.5 Available Funds. The Purchaser has or will have available to it all funds necessary to satisfy all of its obligations hereunder and in connection with the transactions contemplated by this Agreement. Section 5.6 Securities Act. The Purchaser is acquiring the Transferred Shares solely for the purpose of investment and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act of 1933, as amended (the "Securities Act"). The Purchaser acknowledges that the Transferred Shares are not registered under the Securities Act or any applicable state securities law, and that the Transferred Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and pursuant to state securities laws and regulations as applicable. Section 5.7 Schedules l4D-9. The written information supplied or to be supplied by the Purchaser for inclusion in the Corporation's Schedule l4D-9, the Seller's Schedule 14D-9 or the Directors' Schedule 14D-9 will not 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. ARTICLE VI CONDUCT OF BUSINESS, EXCLUSIVE DEALING, REVIEW, OTHER COVENANTS Section 6.1 Access to Information Concerning Properties and Records. During the period commencing on the date hereof and ending on the Closing Date, the Seller shall use its reasonable best efforts to cause the Corporation and each of its subsidiaries to, upon reasonable notice, afford the Purchaser, and its counsel, accountants, consultants and other authorized -26- 31 representatives, full access during normal business hours to the employees, properties, books and records of the Corporation and its subsidiaries in order that they may have the opportunity to make such investigations as they shall desire of the affairs of the Corporation and its subsidiaries and all other information concerning its or its subsidiaries' business, properties and personnel as the Purchaser may request; such investigation shall not, however, affect the representations and warranties made by the Seller in this Agreement. The Seller shall use its reasonable best efforts to cause the Corporation to furnish promptly to the Purchaser (a) a copy of each report, schedule, registration statement and other document filed by the Corporation or its subsidiaries during such period pursuant to the requirements of Federal or state securities laws and (b) such additional financial and operating data and all other information concerning the Corporation's or its subsidiaries' business, properties and personnel in the possession of the Seller as the Purchaser may reasonably request. Section 6.2 Confidentiality. Information obtained by the Purchaser pursuant to Section 6.1 hereof or otherwise pursuant to this Agreement shall be subject to the provisions of the Confidentiality Agreement between the Seller and the Purchaser dated as of February 2, 1998. Section 6.3 Conduct of Business of the Corporation. (a) During the period from the date of this Agreement to the Closing Date, except as permitted, required or specifically contemplated by, or otherwise described in, this Agreement or otherwise consented to or approved in writing by the Purchaser, the Seller (i) shall not vote the Class AC Shares in favor of any action that would cause, or that is part of a transaction that would cause, (ii) shall cause the directors of the Corporation who are also directors of the Seller not to vote in favor of any action that would cause, or that is a part of a transaction that would cause, and (iii) shall otherwise use its reasonable best efforts to cause the Corporation and each of its subsidiaries not to take any action that would cause, any of the representations or warranties with respect to the Corporation set forth in Article IV of this Agreement to be untrue or incorrect. (b) During the period from the date of this Agreement to the Closing Date, except as permitted, required or specifically contemplated by, or otherwise described in, this Agreement or otherwise consented to or approved in writing by the Purchaser, the Seller (i) shall vote the Class AC Shares in favor of any action that would cause, or that is part of a transaction that would cause, (ii) shall cause the directors of the Corporation who are also directors of the Seller to vote in favor of any action that would cause, or that is a part of a transaction that would cause, and (iii) shall otherwise use its reasonable best efforts to cause, in each case, the Corporation and each of its subsidiaries to do the following: (A) conduct their respective operations only according to their ordinary and usual course of business consistent with past practice; and (B) use their best efforts to preserve intact their respective business organization, keep available the services of their officers and employees and maintain satisfactory relationships with licensors, suppliers, distributors, clients, landlords, joint venture partners, employees, agents and others having business relationships with them. -27- 32 (c) During the period from the date of this Agreement to the Closing Date, except as permitted, required or specifically contemplated by, or otherwise described in, this Agreement or otherwise consented to or approved in writing by the Purchaser, the Seller (i) shall not vote the Class AC Shares in favor of, and shall affirmatively vote the Class AC Shares against, any action that would cause, or that is part of a transaction that would cause, (ii) shall cause the directors of the Corporation who are also directors of the Seller not to vote in favor of, and to affirmatively vote against, any action that would cause, or that is a part of a transaction that would cause, and (iii) shall otherwise use its reasonable best efforts to cause, in each case, the Corporation and each of its subsidiaries not to do any of the following: (A) make any change in or amendment to the Certificate of Incorporation or By-Laws (or comparable governing documents) of the Corporation or any subsidiary, (B) issue, sell or acquire any shares of its capital stock (other than in connection with the exercise of Options outstanding on the date hereof) or any of its other securities, or issue any securities convertible into, or options, warrants or rights to purchase or subscribe to, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its capital stock or any of its other securities, or make any other changes in its capital structure, (C) sell or pledge or agree to sell or pledge any stock owned by it in any of its subsidiaries, (D) declare, pay, set aside or make 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 dividends and distributions by a direct or indirect wholly-owned subsidiary to its parent and regular annual cash dividends by the Corporation on its capital stock in an amount not in excess of $0.80 per share per fiscal annum at the same time such dividends are customarily declared and paid, (E) (1) except as set forth on Schedule 6.3 attached hereto, enter into any contract or commitment with respect to (x) any individual capital expenditure in excess of $7,500,000 in the case of capital expenditures provided for in the Corporation's Budget or $2,000,000 in the case of capital expenditures not provided for in the Budget or (y) capital expenditures that in the aggregate exceed $40,000,000 in any thirteen week period, (2) acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business or division thereof, or (3) enter into, amend, modify, supplement or cancel any other material contract, (F) acquire a material amount of assets or securities or release or relinquish any material contract rights other than in the ordinary course of business in accordance with past practice and the Corporation's short term investment program, (G) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Corporation or its subsidiaries in the ordinary course of business in accordance with past practice, or grant any severance or termination pay 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 Corporation or any of its subsidiaries, or establish, adopt, enter into or amend or terminate any collective bargaining (except for the termination of the collective bargaining agreements which will expire in accordance with their terms prior to the Closing Date, all -28- 33 of which are listed on Schedule 6.3(c) attached hereto), 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, employees or former employees and/or directors, (H) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of, encumber or subject to any lien, any material assets or incur or modify any indebtedness or other liability or issue any debt securities or assume, guarantee or endorse or otherwise as an accommodation become responsible for the obligations of any person or, other than in the ordinary course of business consistent with past practice, make any loan or other extension of credit, (I) agree to the settlement of any material claim or litigation (including, but not limited to any claim or litigation in respect of or related to any Environmental Law), (J) make any material tax election or settle or compromise any material tax liability, (K) permit any insurance policy naming it as beneficiary or a loss payable payee to be canceled without notice to the Purchaser unless (1) such insurance policy is immediately replaced, with no gaps or lapses in coverage, with an insurance policy issued by a financially sound and reputable insurance company in at least such amounts and against at least such risks as the canceled policy or (2) such cancellation would not have a Material Adverse Effect, (L) make any material change in its method of accounting, (M) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Corporation or any of its subsidiaries not constituting an inactive subsidiary, (N) take any action, including, without limitation, the adoption of any stockholder rights plan or amendments to its Certificate of Incorporation (or other organizational or governing documents), which would, directly or indirectly, restrict or impair the ability of the Purchaser to vote, or otherwise to exercise the rights and receive the benefits of a stockholder with respect to, securities of the Corporation that may be acquired or controlled by the Purchaser or permit any stockholder to acquire securities of the Corporation on a basis not available to the Purchaser in the event that the Purchaser were to acquire securities of the Corporation, or (O) agree, in writing or otherwise, to take any of the foregoing actions. Section 6.4 Approval by Purchaser of Changes. If the Seller makes a request in writing to the Purchaser for the Purchaser's approval of an action or inaction enumerated in Section 6.3(b) or (c) of this Agreement (an "Action"), the Purchaser will use all reasonable efforts to approve or reject such request within five business days of receipt thereof. If the Seller does not receive notice from the Purchaser within such five business day period, the action or inaction specified in such written request shall be deemed to be approved by the Purchaser. No approval or consent of a single Action shall constitute an approval or consent to any Action not specified in the request to which the Purchaser was responding. Section 6.5 Exclusive Dealing. (a) The Seller and each of its officers, directors, employees, representatives, consultants, investment bankers, attorneys, accountants, agents or advisors (collectively "Agents") shall immediately cease any discussions or negotiations with any other parties that may be ongoing with respect to any purchase of the Transferred Shares or any Acquisition Proposal (as defined below). The Seller shall not, directly or indirectly, take (and the Seller shall not authorize or permit its Agents to so take) any action to (i) encourage, solicit or -29- 34 initiate the making of any offer to purchase the Transferred Shares or any Acquisition Proposal, (ii) enter into any agreement with respect to any offer to purchase the Transferred Shares or any Acquisition Proposal, or (iii) participate in any way in discussions or negotiations with, or furnish or disclose any information to, any Person (other than the Purchaser) in connection with, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any offer to purchase the Transferred Shares or any Acquisition Proposal. "Acquisition Proposal" shall mean any inquiry, proposal or offer from any Person (other than the Purchaser) relating to any direct or indirect acquisition or purchase of all or any of the Class AC Shares, of a substantial amount of assets of the Corporation or any of its subsidiaries or of more than 10% of any class of equity securities of the Corporation or any of its subsidiaries, any tender offer or exchange offer that if consummated would result in any person beneficially owning more than 10% of any other class of equity securities of the Corporation or any of its subsidiaries, any merger, consolidation, business combination, sale of substantially all the assets, recapitalization, liquidation, dissolution or similar transaction involving the Corporation or any of its subsidiaries, other than the transactions contemplated hereby, or any other transaction the consummation of which could reasonably be expected to impede, interfere with, prevent or materially delay the Tender Offer or which would reasonably be expected to dilute materially the benefits to the Purchaser of the transactions contemplated hereby. (b) During the period from the date of this Agreement to the Closing Date, except as permitted, required or specifically contemplated by, or otherwise described in, this Agreement or otherwise consented to or approved in writing by the Purchaser, the Seller (i) shall use its reasonable best efforts to cause (A) the Corporation and its Agents immediately to cease any discussions or negotiations with any other parties that may be ongoing with respect to any Acquisition Proposal and (B) the Corporation and its subsidiaries not to take, directly or indirectly, (and the Corporation not to authorize or permit its or its subsidiaries' Agents to take) any action to (1) encourage, solicit or initiate the making of any Acquisition Proposal, (2) enter into any agreement with respect to any Acquisition Proposal, or (3) participate in any way in discussions or negotiations with, or furnish or disclose any information to, any Person (other than the Purchaser) in connection with, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal, (ii) shall not vote the Class AC Shares in favor of any Acquisition Proposal, (iii) shall cause the directors of the Corporation who are also directors of the Seller not to vote to approve or recommend, or propose to approve or recommend, any Acquisition Proposal or in favor of the Corporation entering into any agreement with respect to any Acquisition Proposal, and (iv) shall otherwise use its reasonable best efforts to cause the Board of Directors of the Corporation not to approve, recommend or propose to approve or recommend any Acquisition Proposal or the entering into by the Corporation of any Acquisition Proposal. (c) In addition to the obligations of the Seller set forth in paragraphs (a) and (b), on the date of receipt thereof, the Seller shall, or shall use its reasonable best efforts to cause the Corporation to, advise the Purchaser of any request for information or of any offer to purchase the Transferred Shares or any Acquisition Proposal, or any inquiry or proposal with respect to any -30- 35 offer to purchase the Transferred Shares or any Acquisition Proposal, the material terms and conditions of such request, offer or Acquisition Proposal and of any changes thereto, and the identity of the entity or person making any such inquiry or proposal. Section 6.6 Notification of Certain Matters. The Seller shall (to the extent known by the Seller), and shall use its reasonable best efforts to cause the Corporation to, give prompt notice to the Purchaser of: (a) any notice of, or other communication relating to, a default or event that, with notice or lapse of time or both, would become a default, received by the Corporation or any of its subsidiaries subsequent to the date of this Agreement and prior to the Closing Date, under any material contract to which the Corporation or any of its subsidiaries is a party or is subject; (b) any change that might have a Material Adverse Effect on the Corporation and its subsidiaries taken as a whole or the occurrence of any event which is reasonably likely to result in a Material Adverse Effect; (c) the occurrence, or non-occurrence, of any events the occurrence, or non-occurrence, of which would cause either (i) a representation or warranty of the Seller contained in this Agreement to be untrue or inaccurate in any respect at any time from the date hereof to the date Class A Shares are accepted for payment pursuant to the Tender Offer or (ii) any of the Tender Offer Conditions to be unsatisfied in any material respect at any time from the date hereof to the date Class A Shares are purchased pursuant to the Tender Offer. The Seller shall (to the extent known by the Seller), and shall use its reasonable best efforts to cause the Corporation to, and the Purchaser shall give prompt notice to the other party 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 6.7 Directors' and Officers' Insurance . (a) For a period of six years from the Closing Date, the Purchaser shall cause the directors of the Corporation elected by the Purchaser to the Board of Directors of the Corporation not to vote to, and shall otherwise use its reasonable best efforts to cause the Corporation not to, amend, repeal or otherwise modify the provisions with respect to indemnification and exculpation from liability set forth in the Corporation's Certificate of Incorporation and By-Laws on the date of this Agreement in any manner that would adversely affect the rights thereunder of individuals who on or prior to the Closing Date were directors, officers, employees or agents of the Corporation, unless such modification is required by law. (b) For a period of three years from the Closing Date, the Purchaser (i) shall cause the directors of the Corporation elected by the Purchaser to the Board of Directors of the Corporation to vote to, and shall otherwise use its reasonable best efforts to cause the Corporation to, maintain in effect the Corporation's current directors' and officers' liability insurance covering those persons who are currently covered on the date of this Agreement by the Corporation's directors' and officers' liability insurance policy (a copy of which has been heretofore delivered to the Purchaser) (the "Indemnified Parties"); provided, however, that in no event shall the Corporation be required to expend in any one year an amount in excess of 150% of the annual premiums currently paid by the Corporation for such insurance which the Seller represents to be $200,160 for the most recent twelve month period; provided further, that if the annual premiums of such insurance coverage exceed such amount, the Corporation shall be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such -31- 36 amount; provided further that the Corporation may substitute for such Corporation policies, policies with at least the same coverage containing terms and conditions which are no less advantageous and provided that said substitution does not result in any gaps or lapses in coverage with respect to matters occurring prior to the Closing Date or, alternatively, (ii) shall cause the Purchaser's directors' and officers' liability insurance then in effect to cover those persons who are covered on the date of this Agreement by the Corporation's directors' and officers' liability insurance policy with respect to those matters covered by the Corporation's directors' and officers' liability policy. Section 6.8 Employee Benefits. The Purchaser currently intends that, during the period commencing at the Closing Date and ending on December 31, 1999, the active employees of the Corporation and its subsidiaries who are not covered by collective bargaining agreements ("Non-Union Employees") will be provided with employee benefits (other than stock option and other non-tax-qualified plans or arrangements involving the potential issuance of securities of the Corporation or of the Purchaser) which are in the aggregate not materially less favorable to those currently provided by the Corporation and its subsidiaries to such Non-Union Employees; provided, that (i) the covenants contained in this subsection (a) shall only be effective to the extent permitted under laws and regulations in force from time to time and (ii) the Purchaser reserves the right to review all employee benefit plans and arrangements of the Corporation after the Closing Date and to make such changes of an administrative or investment management nature as it, in its discretion, deems appropriate. Notwithstanding the foregoing, Non-Union Employees who are currently accruing benefits under Section 3.8 of Article III and Article VI of the [Green] Excess Benefit Savings Plan (the "EBS Plan") on the Closing Date shall continue to participate in the EBS Plan and to accrue benefits under those provisions at the same accrual rates in effect on the Closing Date. The preceding sentence shall not apply to any other benefits under the EBS Plan including, without limitation, benefits under Article IV therein. Non-Union Employees who meet the minimum eligibility requirements under the stock option plans maintained by the Purchaser after the Closing Date shall be eligible to be granted stock options thereunder in accordance with the terms of such plans. Section 6.9 Further Assurances. Each of the parties shall execute, acknowledge, deliver and file, without further consideration, all such additional documents and take such other actions as may be necessary or reasonably requested by the other party to consummate or evidence the transactions and fulfill the obligations contemplated by this Agreement. Section 6.10 Resignations. On the Closing Date, the Seller shall cause each Person who has been elected by the Seller to the Board of Directors of the Corporation to resign effective as of the Closing Date. Section 6.11 Provisions Concerning Transferred Shares. The Seller hereby agrees that during the period commencing on the date hereof and continuing until the earlier of (i) the Closing Date or (ii) the termination date set forth in Section 9.13 hereof, at any meeting of the holders of capital stock of the Corporation, however called, or in connection with any written consent of the holders of capital stock of the Corporation, the Seller shall vote (or cause to be voted) the Transferred Shares whether issued, heretofore owned or hereafter acquired, (x) in -32- 37 favor of each of the actions contemplated by this Agreement and any actions required in furtherance hereof, (y) against any action or agreement that would result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of the Seller under this Agreement, and (z) except as otherwise agreed to in writing in advance by the Purchaser, against the following actions: (A) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Corporation or its subsidiaries; (B) a sale, lease or transfer of a material amount of assets of the Corporation or its subsidiaries, or a reorganization, recapitalization, dissolution or liquidation of the Corporation or its subsidiaries; or (C) (1) any change in a majority of the persons who constitute the Board of Directors of the Corporation, (2) any change in the present capitalization of the Corporation or any amendment of the Corporation's Certificate of Incorporation or By-Laws, (3) any other material change in the Corporation's corporate structure or business, or (4) any other action involving the Corporation or its subsidiaries which is intended, or could reasonably be expected, to impede, interfere with, delay, postpone, or materially adversely affect the transactions contemplated by this Agreement. The Seller shall not enter into any agreement or understanding with any Person the effect of which would be to violate the provisions and agreements contained in this Section 6.11. Section 6.12 Restriction on Transfer, Proxies and Non-Interference. Beginning on the date hereof and ending on the earlier of the Closing Date or the termination date set forth in Section 9.13 hereof, the Seller shall not (i) directly or indirectly, offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any of the Transferred Shares or any of the Existing Class A Shares or any interest therein, (ii) except as contemplated by this Agreement, grant any proxies or powers of attorney, deposit any Shares into a voting trust or enter into a voting agreement with respect to any Shares, or (iii) take any action that would make any representation or warranty of the Seller contained herein untrue or incorrect or have the effect of preventing or disabling the Seller from performing its obligations under this Agreement. Section 6.13 Changes in Shares. In the event of a stock dividend or distribution, or any change in the capital stock of the Corporation by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term "Transferred Shares" shall be deemed to refer to and include the Transferred Shares as well as all such stock dividends and distributions and any shares into which or for which any or all of the Transferred Shares may be changed or exchanged and the Purchase Price shall be appropriately adjusted. The Seller shall be entitled to receive any cash dividend paid during the term of this Agreement by the Corporation on the Transferred Shares until the Transferred Shares are purchased hereunder and on the Seller's Class A Shares as and to the extent provided in the Tender Offer Documents. Section 6.14 Broker's and Finder's Fees. The Seller shall use its reasonable best efforts to cause the President of the Corporation to call a special meeting of the Board of Directors of the Corporation, in accordance with the Certificate of Incorporation and Bylaws of the Corporation and the provisions of the DGCL, for the purpose of considering the assumption by the Corporation of the obligations of the Seller to PaineWebber under the PaineWebber Agreement as a result of the purchase of the Transferred Shares and the consummation of the -33- 38 Tender Offer as contemplated by this Agreement (the "PaineWebber Obligations"). The Seller shall cause the Directors of the Corporation who are also Directors of the Seller, and shall use its reasonable best efforts to cause the other Directors of the Corporation, not to abstain and to vote to approve the assumption by the Corporation of the PaineWebber Obligations. ARTICLE VII CONDITIONS TO THE PURCHASER'S OBLIGATIONS Section 7. Conditions to the Purchaser's Obligations. The obligation of the Purchaser to purchase the Transferred Shares on the Closing Date is subject to the satisfaction, at or prior to the Closing, of the following conditions: Section 7.1 Truth of Representations and Warranties. (a) The representations and warranties of the Seller contained in this Agreement or in any Schedule attached hereto shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date, and the Purchaser shall have received a certificate signed by an executive officer of the Seller, dated the Closing Date, to such effect and (b) the representations and warranties of the Seller with respect to the Corporation contained in this Agreement or in any Schedule attached hereto shall be true and correct in all material respects, without regard to the knowledge of the Seller, on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date. Section 7.2 Performance of Agreements. (a) All of the agreements of the Seller to be performed and all of the covenants of the Seller to be complied with prior to the Closing pursuant to the terms of this Agreement shall have been duly performed or complied with, as applicable, in all material respects and the Purchaser shall have received a certificate signed by an executive officer of the Seller, dated the Closing Date, to such effect and (b) the Corporation and each of its subsidiaries shall not have (i) failed to act in accordance with Section 6.3(b)(iii)(A) and (B) and Section 6.5(b)(i)(B) and (iv) of this Agreement or (ii) taken any of the actions listed in Section 6.3(c)(iii)(A)-(O) or Section 6.5(b)(i)(A) of this Agreement and the Purchaser shall have received a certificate signed by an executive officer of the Seller, dated the Closing Date, to such effect but which certificate can be based upon the reasonable best knowledge of the Seller after due inquiry. Section 7.3 Injunction. No preliminary or permanent injunction or other order shall have been issued by any court or by any governmental or regulatory agency, body or authority which prohibits the consummation of the Tender Offer, the purchase of the Transferred Shares or any of the other transactions contemplated by this Agreement and which is in effect at the Closing Date, provided, however, that, in the case of a decree, injunction or other order, each of the parties shall have used reasonable efforts to prevent the entry of any such injunction or other order and to appeal as promptly as possible any decree, injunction or other order that may be entered. -34- 39 Section 7.4 Consents and Approvals. All governmental and third-party consents, waivers and approvals, if any, disclosed on any Schedule attached hereto or necessary to permit the consummation of the transactions contemplated by this Agreement shall have been received. All time periods under the HSR Act applicable to the purchase of the Transferred Shares hereunder shall have expired or been terminated. No governmental or other instrumentality or agency shall have required that, in exchange for approval of the transactions contemplated by this Agreement, the Purchaser, the Corporation or any of their respective Affiliates sell or otherwise dispose of, or hold separate (through the establishment of a trust or otherwise) particular assets or categories of assets, or businesses of the Purchaser, the Corporation or any of their respective Affiliates or withdraw from doing business in a particular jurisdiction or take any other action that, in the aggregate, in the sole judgment of the Purchaser, would reasonably be expected to substantially impair or substantially reduce the Purchaser's ability to control, direct or manage on a day-to-day basis the business or affairs of the Corporation or to substantially impair or substantially reduce the overall benefits expected, as of the date hereof, to be realized by the Purchaser from the consummation of the transactions contemplated by this Agreement or would have a material adverse effect on the business, properties, assets, liabilities, condition (financial or otherwise), prospects, operations or results of operations of the Purchaser and its subsidiaries taken as a whole or the Corporation and its subsidiaries taken as a whole. Section 7.5 Tender Offer Conditions. At any time on or after the date hereof and at or before the time of payment for the Transferred Shares hereunder, none of the Tender Offer Conditions shall have occurred. Section 7.6 Resignations. Each Person who has been elected by the Seller to the Board of Directors of the Corporation (each a "Director") shall have delivered to the Purchaser their written resignation from such position effective as of the Closing Date or the Purchaser shall have received written evidence satisfactory to it that any Director who has not delivered such written resignation has been removed from such position effective as of the Closing Date. Section 7.7 Approval of Tender Offer. The Board of Directors of the Corporation shall have approved the Tender Offer and recommended acceptance of the Tender Offer by the holders of Class A Shares. ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF THE SELLER Section 8. Conditions to the Obligations of the Seller. The obligation of the Seller to sell the Transferred Shares on the Closing Date is subject to satisfaction, at or prior to such date, of the following conditions: Section 8.1 Truth of Representations and Warranties. The representations and warranties of the Purchaser contained in this Agreement shall be true and correct in all respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date, and the Seller shall have received a certificate signed by an authorized officer of the Purchaser, dated the Closing Date, to such effect. -35- 40 Section 8.2 Performance of Agreements. All of the agreements of the Purchaser, including without limitation compliance with Section 2.5 hereof, to be performed and all of the covenants of the Purchaser to be complied with prior to the Closing pursuant to the terms of this Agreement shall have been duly performed or complied with, as applicable, and the Seller shall have received a certificate signed by an authorized officer of the Purchaser, dated the Closing Date, to such effect. Section 8.3 Injunction. No preliminary or permanent injunction or other order shall have been issued by any court or by any governmental or regulatory agency, body or authority which prohibits the consummation of the Tender Offer, the purchase of the Transferred Shares or any of the other transactions contemplated by this Agreement and which is in effect at the Closing Date, provided, however, that, in the case of a decree, injunction or other order, each of the parties shall have used reasonable efforts to prevent the entry of any such injunction or other order and to appeal as promptly as possible any decree, injunction or other order that may be entered. Section 8.4 HSR. All applicable time periods under the HSR Act shall have expired or been terminated. Section 8.5 Tender Offer. The purchase of the Class A Shares pursuant to the Tender Offer shall be consummated simultaneously with the purchase of the Transferred Shares pursuant to this Agreement. ARTICLE IX MISCELLANEOUS Section 9.1 Representations and Warranties; Knowledge of the Seller. The respective representations and warranties of the Seller and the Purchaser 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 serve solely as a condition to closing and shall expire with, and be terminated and extinguished by, the Closing and thereafter none of the Seller, the Purchaser nor any of their respective officers, directors, employees, representatives, consultants, investment bankers, attorneys, accountants or other agents shall be under or subject to any liability whatsoever with respect to any such representation or warranty. This Section 9.1 shall have no effect upon any other obligation of the parties hereto. Where any representation or warranty contained in this Agreement is expressly qualified by reference to the best knowledge of the Seller, (i) the Seller confirms that it has made due and diligent inquiry of appropriate officers or employees of the Corporation as to the matters that are the subject of such representations and warranties and (ii) the Seller will be deemed to have knowledge of any matter if it is known by any director or officer of the Seller. If in the course of its investigation of the Corporation, the Purchaser discovers any fact or circumstance which would cause any of the representations or warranties of the Seller set forth in this Agreement to be untrue, incorrect or breached and of which the Purchaser believes that none of the Seller's or the Corporation's officers, directors, employees, representatives, consultants, investment bankers, attorneys, accountants and/or other agents are aware, the Purchaser will use its reasonable efforts to notify the Seller of such fact or -36- 41 circumstance, provided that the failure by the Purchaser to so notify the Seller shall not have any effect upon such representation or warranty or any rights that the Purchaser may have hereunder or in respect of the Tender Offer. Section 9.2 Expenses. (a) Except as provided in paragraph (b) below, the parties hereto shall pay all of their own expenses relating to the transactions contemplated by this Agreement, including, without limitation, the fees and expenses of their respective counsel and financial advisers. (b) If (i) the transactions contemplated by this Agreement are not consummated due to the non-satisfaction of the conditions enumerated in (A) Section 7.1, (B) Section 7.2 (other than in respect of a breach of Section 6.5 of this Agreement) or (C) Section 7.5 due to (x) the occurrence of any of the events set forth in clause (iii) (e) of Annex A hereto or (y) the occurrence of any of the events set forth in clause (iii) (g) or (h) of Annex A hereto (other than in respect of a breach of Section 6.5 of this Agreement) and (ii) the Seller sells all or any portion of the Class AC Shares and/or the Class A Shares within two years from the date of this Agreement then in any such case the Seller shall pay to the Purchaser, in lieu of reimbursement of the Purchaser's out-of-pocket expenses, $2,500,000 or such lesser amount as the Seller shall receive in the aggregate from all sales of the Class AC Shares and Class A Shares during such two year period, such amount to be paid by or on behalf of the Seller in same day funds within two business days after each sale of the Class AC Shares and/or Class A Shares until the amount so received by the Purchaser equals $2,500,000. (c) If (i) the transactions contemplated by this Agreement are not consummated due to the non-satisfaction of the conditions enumerated in (A) Section 7.2 (but only in respect of a breach of Section 6.5 of this Agreement) or (B) Section 7.5 due to (1) the occurrence of any of the events set forth in clause (iii) (f) of Annex A hereto or (2) the occurrence of any of the events set forth in clause (iii) (g) or (h) of Annex A hereto (but only in respect of a breach of Section 6.5 of this Agreement), and (ii) the Seller sells all or any portion of the Class AC Shares or the Class A Shares within two years from the date of this Agreement then in any such case, as a condition to such sale, the Seller shall pay or cause to be paid to the Purchaser $10,000,000, such amount to be paid by or on behalf of the Seller in same day funds within two business days after the first such sale of the Class AC Shares and/or Class A Shares. Section 9.3 Governing Law. This Agreement shall be construed in accordance with, and be governed by, the Laws of the State of Delaware. Each of the parties hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the general jurisdiction of the courts of the State of Delaware, the courts of the United States of America located in Delaware and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or -37- 42 proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding will be in accordance with the laws of the State of Delaware and, in the case of the Purchaser, agrees to appoint an agent for service of process in the State of Delaware within 20 business days of the date hereof; and (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law. Section 9.4 Headings. The headings in this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. Section 9.5 Publicity. Except as required by Law or as otherwise provided for in this Agreement, no announcement or other publicity relating to this Agreement or the Corporation shall be made or issued directly or indirectly by or on behalf of any party hereto without the prior approval of the other parties hereto. Section 9.6 Notices. All notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, or when sent by telex or telecopy or other facsimile transmission (with receipt confirmed), or when sent via express delivery service and addressed as follows (or at such other addresses as the parties may designate by written notice in the manner aforesaid): If to the Purchaser: Koninklijke Ahold N.V. Albert Heijnweg 1 1507 EH Zaandam The Netherlands Telecopier: 011 31 75 659 83 66 Attention: Paul P.J. Butzelaar with a copy to: White & Case LLP 1155 Avenue of the Americas New York, New York 10036 Telecopier: (212) 354-8113 Attention: Maureen Brundage, Esq. -38- 43 If to the Seller: The 1224 Corporation c/o Samuel Kastner, Esq. Ginsburg, Feldman and Bress 1250 Connecticut Avenue, NW Washington, DC 20036 Telecopier: (202) 637-9195 with a copy to: Ginsburg, Feldman and Bress 1250 Connecticut Avenue, NW Washington, DC 20036 Telecopier: (202) 637-9195 Attention: Samuel Kastner, Esq. If to the Corporation: Giant Food Inc. 6300 Sheriff Road Landover , MD Telecopier: (301) 341-3954 Attention: David W. Rutstein, Mark Berey with a copy to: Jorden, Burt, Berenson & Johnson 1025 Thomas Jefferson St. NW Suite 400 East Washington, DC 20007 Telecopier: (202) 965-8104 Attention: Wayne Johnson or to such other person as shall be designated in writing by any such party, and such notice or communication shall be deemed to have been given as of the date so delivered, sent by telecopier or mailed. Section 9.7 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 6.7 hereof, shall inure to the benefit of the Persons benefiting from the provisions thereof who are intended to be third party beneficiaries thereof and, in each such case, their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Notwithstanding anything in this Section 9.7 to the contrary, it is -39- 44 expressly understood and agreed that the Purchaser may assign this Agreement and its rights, interests and obligations hereunder to any Affiliate of the Purchaser. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. Section 9.8 Best Efforts. Subject to the terms and conditions provided herein, each of the Purchaser and the Seller shall, and the Seller shall use its reasonable best efforts to cause the Corporation to, with respect to matters within their respective control, cooperate and use their respective best efforts to, (i) take, or cause to be taken, all appropriate action, and do, or cause to be done, all reasonable things necessary and proper under applicable law to consummate the transactions contemplated hereby as promptly as practicable, (ii) obtain from any governmental authority, regulatory organization or other instrumentality or agency or any other third party any licenses, permits, consents, waivers, approvals, authorizations, qualifications, or orders required to be obtained or made by the Corporation, the Purchaser, the Seller or any of their subsidiaries in connection with the authorization, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, and (iii) as promptly as practicable, make, or cause to be made, all filings and other submissions necessary, proper or advisable with respect to this Agreement and the transactions contemplated hereby under (x) the HSR Act and any related governmental request thereunder and (y) any other applicable laws or regulations; provided, however, that no loan agreement or contract for borrowed money shall be repaid except as currently required by its terms, in whole or in part, and no contract shall be amended to increase the amount payable thereunder or otherwise to be more burdensome to the Corporation or any of its subsidiaries in order to obtain any such consent, approval or authorization without first obtaining the written approval of the Purchaser. The Purchaser and the Seller shall, and the Seller shall use its reasonable best efforts to cause the Corporation to, cooperate with each other in connection with the making of all such filings, including providing copies of all such documents to the non-filing party and its advisors prior to filing and, if requested, to accept all reasonable additions, deletions or changes suggested in connection therewith. The Purchaser and the Seller shall, and the Seller shall use its reasonable best efforts to cause the Corporation to, use their respective best efforts to furnish to each other all information required for any application or other filing to be made pursuant to the rules and regulations of any applicable law in connection with the transactions contemplated by this Agreement. Notwithstanding anything to the contrary in this Section 9.8, none of the Purchaser, the Seller or the Corporation or any of their respective subsidiaries shall be required to sell or otherwise dispose of, or hold separate (through the establishment of a trust or otherwise) particular assets or categories of assets, or business of the Purchaser, the Seller, the Corporation or any of their affiliates or withdraw from doing business in a particular jurisdiction or take any other action that, in the aggregate, in the sole judgment of the Purchaser, would reasonably be expected to substantially impair or substantially reduce the Purchaser's ability to control, direct or manage on a day-to-day basis the business or affairs of the Corporation or to substantially impair or substantially reduce the overall benefits expected, as of the date hereof, to be realized by the Purchaser from the consummation of the transactions contemplated by this Agreement or would have a material adverse effect on the business, properties, assets, liabilities, condition (financial or -40- 45 otherwise), prospects, operations or results of operations of the Purchaser and its subsidiaries taken as a whole or the Corporation and its subsidiaries taken as a whole. Section 9.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute the same Agreement. Section 9.10 Entire Agreement. This Agreement, including the other documents referred to herein which form a part hereof, contains the entire understanding of the parties hereto with respect to the subject matter contained herein and therein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. Section 9.11 Amendments. This Agreement may not be changed, amended, waived, or modified orally, but only by an agreement in writing signed by the Purchaser and the Seller. 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. Section 9.13 Termination of Agreement. All parties hereto agree to use their best efforts to fulfill the requirements of Articles VII and VIII as soon as practicable. If any precondition to the completion of the transactions contemplated hereby is not fulfilled on or prior to December 31, 1998, then this Agreement shall terminate and become void and have no effect, without any liability hereunder of either party to the other party. Section 9.14 Specific Performance. Each of the parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at law for money damages, and therefore each of the parties hereto agrees that in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. Section 9.15 Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. Section 9.16 No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof shall not constitute a -41- 46 waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. -42- 47 IN WITNESS WHEREOF, each of the Purchaser and the Seller has caused its corporate name to be hereunto subscribed by its officer thereunto duly authorized all as of the day and year first above written. KONINKLIJKE AHOLD N.V. By: /s/ Robert Zwartendijk Name: Robert Zwartendijk Title: Executive Vice President THE 1224 CORPORATION By: /s/ Pete L. Manos Name: Pete L. Manos Title: President 48 ANNEX A The capitalized terms used in this Annex A shall have the meanings set forth in the Stock Purchase Agreement to which this Annex A is annexed (the "Agreement"). Notwithstanding any other provision of the Tender Offer or the Agreement, the Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1c under the Exchange Act, pay for any Class A Shares tendered pursuant to the Tender Offer and may terminate or amend the Tender Offer and may postpone the acceptance of and payment for Class A Shares (i) if there shall not have been validly tendered and not withdrawn prior to the expiration of the Tender Offer a number of Class A Shares which represents at least sixty-five percent (65%) of the total Class A Shares outstanding on a fully diluted basis, (ii) if the Agreement shall have been terminated in accordance with its terms or the purchase and sale of the Class AC Shares pursuant to the Agreement shall not have been consummated prior to or simultaneously with the consummation of the purchase of the Class A Shares pursuant to the Tender Offer, or (iii) if, at any time on or after the date of the Agreement and at or before the time of payment for any such Class A Shares (whether or not any Class A Shares have theretofore been accepted for payment or paid for pursuant to the Tender Offer), any of the following shall occur: (a) there shall be threatened, instituted or pending any action or proceeding by any government or governmental authority or agency, domestic or foreign, or by any other Person, domestic or foreign, before any court or governmental authority or agency, domestic or foreign, other than the routine application of the waiting period provisions of the HSR Act (including a request for additional information or documentary material pursuant to 16 C.F.R. Sec. 803.20) to the purchase of the Class AC Shares pursuant to the Agreement, without the consent of the Purchaser, (i) challenging or seeking to, or which could reasonably be expected to make illegal, impede, materially delay or otherwise directly or indirectly restrain, prohibit or make more costly the acquisition of the Class AC Shares or the Tender Offer or seeking to obtain material damages, (ii) seeking to prohibit or limit the ownership or operation by the Purchaser of all, or, in the sole judgment of the Purchaser, a portion that would reasonably be expected to substantially impair or substantially reduce the Purchaser's ability to control, direct or manage on 49 Annex A Page 2 a day-to-day basis the business or affairs of the Corporation or to substantially impair or substantially reduce the overall benefits expected, as of the date hereof, to be realized by the Purchaser from the consummation of the transactions contemplated by the Agreement or would have a material adverse effect on the business, properties, assets, liabilities, condition (financial or otherwise), prospects, operations or results of operations of the Purchaser and its subsidiaries taken as a whole or the Corporation and its subsidiaries taken as a whole (a "significant portion"), of the business or assets of the Corporation or any of its subsidiaries or to compel the Purchaser to dispose of or hold separately all, or, in the sole judgment of the Purchaser, a significant portion of the business or assets of the Purchaser or the Corporation or any of its subsidiaries, or seeking to impose any limitation on the ability of the Purchaser to conduct such business or own such assets which limitation, in the sole judgment of the Purchaser, would reasonably be expected to substantially impair or substantially reduce the Purchaser's ability to control, direct or manage on a day-to-day basis the business or affairs of the Corporation or to substantially impair or substantially reduce the overall benefits expected, as of the date hereof, to be realized by the Purchaser from the consummation of the transactions contemplated by the Agreement or would have a material adverse effect on the business, properties, assets, liabilities, condition (financial or otherwise), prospects, operations or results of operations of the Purchaser and its subsidiaries taken as a whole or the Corporation and its subsidiaries taken as a whole, (iii) seeking to impose limitations on the ability of the Purchaser effectively to acquire, hold or exercise full rights of ownership of any Shares, which limitations, in the sole judgment of the Purchaser, are significant, or (iv) seeking to require divestiture by the Purchaser of any Shares; (b) there shall be any action taken, or any statute, rule, regulation, legislation, interpretation, judgment, order or injunction proposed, enacted, enforced, promulgated, amended, issued or deemed applicable to (i) the Purchaser, the Corporation or any subsidiary of the Corporation or (ii) the Tender Offer or the acquisition of any Shares, by any legislative body, court, government or governmental, administrative or regulatory authority or agency, domestic or foreign, other than the routine application of the waiting period provisions of the HSR Act (including a request for additional information or documentary material pursuant to 16 C.F.R. Sec. 803.20) to the purchase of the Class AC Shares pursuant to the Agreement, which could reasonably be expected to directly or indirectly, result in any of the consequences referred to in clauses (i) through (iv) of paragraph (a) above; (c) any change shall have occurred or been threatened (or any condition, event or development shall have occurred or been threatened involving a prospective change), or the Purchaser shall have become aware of any fact, that is reasonably likely to have a Material Adverse Effect on the Corporation; (d) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market (excluding any coordinated trading halt triggered solely as a result of a specified decrease in a market index), (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, the Netherlands or any other jurisdiction of incorporation or organization of any bank or other financial institution in any manner involved with the financing of the purchase of the Class AC Shares pursuant to the Agreement or the Tender Offer, (iii) any material limitation (whether or not mandatory) by any U.S. Federal, state or foreign governmental 50 Annex A Page 3 authority or agency on the extension of credit by banks or other lending institutions, (iv) a commencement or escalation of a war or armed hostilities or other national or international calamity directly or indirectly involving the United States or the Netherlands or (v) in the case of any of the foregoing existing at the time of the commencement of the Tender Offer, a material acceleration or worsening thereof; (e) any of the representation or warranties made by the Seller in the Agreement (in the case of any representations or warranties with respect to the Corporation, without regard to the knowledge of the Seller) that are qualified as to materiality shall be untrue or incorrect in any respect or any such representations and warranties that are not so qualified shall be untrue or incorrect in any respect which would have a Material Adverse Effect, in each case as of the date of the Agreement and the scheduled expiration date of the Tender Offer as if such representation or warranty were made at the time of such determination and except as to any such representation or warranty which speaks as of a specific date or for a specific period, which must be untrue or incorrect in the foregoing respects as of such specific date or period; (f) (i) the Board of Directors of the Corporation shall have failed to approve or recommend the Tender Offer, (ii) the Board of Directors of the Corporation shall have withdrawn or modified in a manner adverse to the Purchaser the approval or recommendation of the Tender Offer or approved or recommended any Acquisition Proposal, (iii) any corporation, partnership, person or other entity or group shall have entered into a definitive agreement or an agreement in principle with the Corporation with respect to any Acquisition Proposal, or (iv) the Board of Directors of the Corporation or any committee thereof shall have resolved to do any of the things set forth in clauses (ii) or (iii) of this paragraph (f); (g) the Seller 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 Seller to be performed or complied with by it under the Agreement and, in the case only of failures to perform any agreement or covenant of the Seller pursuant to Section 6.3 of the Agreement, such failure to perform would have a Material Adverse Effect or materially adversely affect the ability of the Purchaser to consummate the transactions contemplated by the Agreement or have a material adverse effect on the value of the Corporation and its subsidiaries taken as a whole; or (h) the Corporation or any of its subsidiaries shall have (i) failed to act in accordance with Section 6.3(b)(iii)(A) and (B) and Section 6.5(b)(i)(B) and (iv) of the Agreement or (ii) taken any of the actions listed in Section 6.3(c)(iii)(A)-(O) or Section 6.5(b)(i)(A) of the Agreement; which, in the reasonable judgment of the Purchaser, in any such case and regardless of the circumstances giving rise to any such condition, makes it inadvisable to proceed with such payment. The foregoing conditions (including those set forth in clauses (i)-(iii) above) are for the sole benefit of the Purchaser and may be asserted by the Purchaser, or may be waived by 51 Annex A Page 4 the Purchaser, in whole or in part at any time and from time to time in its sole discretion. The failure by the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by the Purchaser concerning the events described in this Annex A will be final and binding upon all parties. -----END PRIVACY-ENHANCED MESSAGE-----