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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
(Amendment No. 2)
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
SUPERMARKETS GENERAL HOLDINGS
CORPORATION
(Name of Subject Company)
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SUPERMARKETS GENERAL HOLDINGS
CORPORATION
(Name of Person Filing Statement)
$3.52 Cumulative Exchangeable Redeemable Preferred Stock,
par value $.01 per share
(Title of Class of Securities)
868446204
(CUSIP Number of Class of Securities)
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Marc A. Strassler, Esq.
Senior Vice President, Secretary and General Counsel
Supermarkets General Holdings Corporation
200 Milik Street
Carteret, New Jersey 07008-1194
(732) 499-3000
(Name, Address and Telephone Number of Person authorized to
Receive Notices and Communications on Behalf of
the Person Filing Statement)
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With a copy to:
Spencer D. Klein, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
212-848-4000
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This Amendment No. 2 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 15, 1999,
as amended by Amendment No. 1, dated March 26, 1999 (as amended, the "Schedule
14D-9") relating to a tender offer disclosed in the Tender Offer Statement on
Schedule 14D-1, dated March 15, 1999, as amended by Amendment No. 1, dated March
26, 1999 and Amendment No. 2, dated May 20, 1999 (as amended, the "Schedule
14D-1") filed by Koninklijke Ahold N.V., a company organized under the laws of
The Netherlands ("Parent"), Croesus, Inc., a Delaware corporation and an
indirect wholly owned subsidiary of Parent, Ahold U.S.A. Inc., a Delaware
corporation and an indirect wholly owned subsidiary of Parent, and Ahold
Acquisition, Inc., a Delaware corporation and an indirect wholly owned
subsidiary of Parent, to purchase all of the issued and outstanding shares of
$3.52 Cumulative Exchangeable Redeemable Preferred Stock, par value $.01 per
share (the "Preferred Stock"), of Supermarkets General Holdings Corporation, a
Delaware corporation (the "Company"), at a price of $38.25 per share, net to the
seller in cash, without interest thereon.
Capitalized terms used but not defined herein have the meanings ascribed
to such terms in the Schedule 14D-9.
Item 8. ADDITIONAL INFORMATION TO BE FURNISHED
Item 8 is hereby amended and supplemented to add the following:
Settlement of Litigation. As previously described in the Schedule 14D-9,
the Company, SMG-II, the Purchaser and the directors of the Company are
defendants (collectively, the "Defendants") in a purported stockholder class
action lawsuit entitled Wolfson v. Supermarkets General Holdings Corporation,
et al., C.A. No. 17047 (the "Action"), in which the plaintiff alleged, among
other things, that the defendant directors of the Company and SMG-II breached
their fiduciary duties to the holders of the Preferred Stock. The plaintiff, by
his counsel, has entered into a Memorandum of Understanding, dated May 19, 1999
(the "Memorandum of Understanding"), with the Defendants (by their counsel)
pursuant to which the parties have agreed to settle the Action. The proposed
settlement is subject to, among other things, the approval of the settlement by
the Court of Chancery of the State of Delaware (the "Court").
The Memorandum of Understanding provides for the following: (i) the
certification of the Action as a class action under the rules of the Court,
which class would consist of all holders of the Preferred Stock of the Company
from and including March 9, 1999 through and including the consummation of the
SMG-II Merger, or, if the SMG-II Merger fails to close, the Alternative Stock
Purchase (the "Class"); (ii) the complete and final compromise, settlement,
discharge and release of all claims, demands, rights, actions, causes of action,
liabilities, damages, losses, obligations, judgments, suits, matters and issues
of any kind or nature whatsoever, whether known or unknown, contingent or
absolute, suspected or unsuspected, disclosed or undisclosed, hidden or
concealed, matured or unmatured, arising under federal, state or any other law,
that have been, could have been, or in the future can or might be asserted in
the Action or in any court, tribunal or proceeding by or on behalf of any member
of the Class (the "Releasing
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Parties"), whether individual, class, derivative, representative, legal,
equitable or any other type or in any other capacity, against Defendants or any
of their families, parent entities, affiliates, subsidiaries, predecessors,
successors or assigns, and each and all of their respective past, present or
future officers, directors, associates, stockholders, controlling persons,
representatives, employees, attorneys, financial or investment advisors,
consultants, accountants, investment bankers, commercial bankers, engineers,
advisors, insurers or agents, heirs, executors, trustees, general or limited
partners or partnerships, personal representatives, estates or administrators,
predecessors, successors and assigns (collectively, the "Released Persons"),
which have arisen, could have arisen, or will arise out of, or which are related
in any manner to, the allegations, facts, events, transactions, acts,
occurrences, statements, representations, misrepresentations, omissions or any
other matter, set forth or otherwise related, directly or indirectly, to the
complaint filed in the Action, the SMG-II Merger, the Alternative Stock
Purchase, public filings or statements by Defendants or their representatives in
connection with the SMG-II Merger or the Alternative Stock Purchase, or any
other actions of the Defendants relating in any way to the SMG-II Merger or the
Alternative Stock Purchase (collectively, the "Settled Claims") (subject to
certain limited exceptions); (iii) the Defendants have denied, and continue to
deny, that they have committed or attempted to commit any violation of law or
breaches of duty of any kind; and (iv) the Defendants are entering into the
Memorandum of Understanding and will be entering into the proposed settlement
documentation solely because the proposed settlement would eliminate the burden,
risk and expense of further litigation and is in the best interests of the
Company and all of its stockholders. In addition, the Company has agreed to
amend the Schedule 14D-9 to provide certain supplemental information.
In addition, the parties have agreed in the Memorandum of Understanding
that plaintiff's counsel in the Action will apply to the Court for a total award
of attorneys' fees and expenses in an amount not to exceed $1,956,268.40, or
$0.40 per share of Preferred Stock, which Defendants have agreed not to oppose,
provided, however, such amount shall be payable only after Final Court Approval
(as defined below), and only if the Offer at the New Offer Price (as defined
below) closes. In the event the Offer at the New Offer Price does not close, but
the Alternative Stock Purchase does, pursuant to the terms of the Memorandum of
Understanding, the Released Persons shall continue to enjoy all of the benefits
of the settlement and plaintiff's counsel reserves their right to petition the
Court for an award of attorneys' fees and expenses, and the Defendants reserve
their rights to oppose any such petition.
Pursuant to the terms of the Memorandum of Understanding, the Defendants
have agreed, subject to Final Court Approval, that the Purchaser shall increase
the Offer Price to $40.25 per share of Preferred Stock, less the total amount
awarded as fees and expenses to plaintiff's counsel by the Court divided by the
total number of outstanding shares of Preferred Stock (the "New Offer Price").
As described above, plaintiff's counsel currently intends to apply to the Court
for an award of fees and expenses in an aggregate amount of $1,956,268.40, or
$0.40 per share of Preferred Stock. Thus, if the Court approves the settlement
and the fees and
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expenses of counsel for the plaintiff in full, the New Offer Price will be
$39.85 per share of Preferred Stock.
In addition, promptly following the approval of the settlement by the
Court, the Defendants have also agreed to amend the SMG-II Merger Agreement and
the Alternative Stock Purchase Agreement to permit either party to the SMG-II
Merger Agreement and the Alternative Stock Purchase Agreement, in the event that
Final Court Approval is not obtained on or prior to November 15, 1999, to extend
unilaterally the December 15, 1999 termination date set forth in the SMG-II
Merger Agreement and the Alternative Stock Purchase Agreement, to a new date 30
days after the date of the Final Court Approval or a final determination that
does not constitute Final Court Approval (the "New Termination Date"), provided,
however, that the New Termination Date shall not in any event be later than
April 17, 2000 unless otherwise mutually agreed by the parties to the SMG-II
Merger Agreement and the Alternative Stock Purchase Agreement, respectively.
The Defendants have also agreed that the Purchaser, at its sole option,
may elect on any date during the period from March 1, 2000 through April 1,
2000, if prior to such date neither Final Court Approval nor a final
determination that does not constitute Final Court Approval (an "Adverse
Determination") has been received, to cause the SMG-II Merger Agreement to be
amended to reduce the merger consideration to be received by the holders of the
capital stock of SMG-II pursuant to the SMG-II Merger Agreement by $9,781,342
(being the product of (x) the amount equal to the difference between the New
Offer Price and the Offer Price and (y) the number of outstanding shares of
Preferred Stock) (the "Escrow Amount"), which amount shall be held in escrow for
the benefit of the holders of the Preferred Stock pending Final Court Approval.
Upon any such election by the Purchaser, pursuant to the terms of the Memorandum
of Understanding, the Purchaser shall be deemed to have waived on behalf of all
parties any requirement under the settlement of obtaining Final Court Approval
prior to closing the Offer and the SMG-II Merger or the Alternative Stock
Purchase. In addition, the Defendants have agreed that in the event that the
Purchaser makes such an election, but Final Court Approval ultimately is not
obtained, the Escrow Amount, (i) if the Offer closes, shall remain in escrow and
be available for satisfaction of an adverse judgment against Defendants, if any,
or (ii) if the Alternative Stock Purchase closes, shall be released to PTK.
In addition, the Defendants have also agreed that in the event that an
Adverse Determination is received at any time before termination or closing of
the Offer, then the parties shall proceed with the SMG-II Merger and Alternative
Stock Purchase on the terms set forth in the original SMG-II Merger Agreement or
original Alternative Stock Purchase Agreement; provided, however, that if the
Purchaser has made the election described above and subsequent to such election,
but prior to the closing of the Offer or the Alternative Stock Purchase, an
Adverse Determination is received, then the parties shall proceed with the
SMG-II Merger or the Alternative Stock Purchase on the terms set forth in the
original SMG-II Merger Agreement and
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the original Alternative Stock Purchase Agreement only if SMG-II provides notice
to the Purchaser by April 1, 2000 of its election to proceed on those terms.
Pursuant to the terms of the Memorandum of Understanding, any of the
Defendants shall have the right to withdraw from the proposed settlement in the
event that (i) any claims related to the SMG-II Merger, the Alternative Stock
Purchase, or the subject matter of the Action are commenced by any member of the
Class against any Released Persons in any court prior to Final Court Approval of
the settlement, and the court in which such claims are pending denies
Defendants' application to dismiss or stay such action in contemplation of
dismissal or (ii) any of the other conditions to the consummation of the
settlement described below shall not have been satisfied. The consummation of
the settlement is subject to (i) the drafting and execution of the settlement
documents and the other agreements necessary to effectuate the terms of the
proposed settlement; (ii) Final Court Approval of the settlement; (iii)
dismissal of the Action by the Court with prejudice and without awarding fees or
costs to any party; and (iv) the Purchaser closing (A) the Offer and the SMG-II
Merger or (B) the Alternative Stock Purchase.
For purposes hereof, "Final Court Approval" of the settlement means an
order entered by the Court approving the settlement and awarding plaintiff's
counsel's fees and expenses and such order is finally affirmed, without
modification of any substantive right of any party to the Memorandum of
Understanding, on appeal or is no longer subject to appeal and time for any
petition for reargument, appeal or review, by certiorari or otherwise, has
expired, provided that any modification of the order approving the settlement
with respect to the amount of attorneys' fees and expenses awarded and/or any
additional supplemental disclosure required shall not be considered a
modification of a substantive right affecting Final Court Approval.
Extension Agreement. Concurrently with the execution of the Memorandum of
Understanding and as required by Parent and the Purchaser, Parent, the Purchaser
and the SMG-II Stockholders entered into an extension agreement, pursuant to
which the SMG-II Stockholders have agreed to extend the Stockholders Agreement
Termination Date to a new date that is two months after the New Termination
Date.
Item 9. MATERIAL TO BE FILED AS EXHIBITS
The following are hereby added as exhibits:
Exhibit No.
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(a) (12) Press release issued by the Company on May 19, 1999.
(a) (13) Press release issued by Parent on May 20, 1999.
(c) (9) Memorandum of Understanding dated May 19, 1999.
+(c) (10) Extension Agreement dated May 19, 1999 among Parent, the Purchaser
and the Stockholders listed on Exhibit I thereto.
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+ Filed as an exhibit to the Schedule 14D-1 and is incorporated herein
by reference.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Supermarkets General Holdings Corporation
By: /s/ Marc A. Strassler
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Name: Marc A. Strassler
Title: Senior Vice President, Secretary
and General Counsel
Dated: May 20, 1999
EXHIBIT INDEX
Exhibit No.
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*(a)(1) Offer to Purchase dated March 15, 1999.
*(a)(2) Letter of Transmittal dated March 15, 1999.
*(a)(3) Agreement and Plan of Merger dated March 9, 1999 among Parent, the
Purchaser and SMG-II.
*(a)(4) Stock Purchase Agreement dated March 9, 1999 among Parent, the
Purchaser, SMG-II and PTK.
*(a)(5) Stockholders Agreement dated March 9, 1999 among Parent, the Purchaser
and Stockholders listed on Exhibit I thereto.
*(a)(6) Confidentiality Agreement dated December 30, 1998 between Parent and
SMG-II.
*(a)(7) A copy of pages 58 through 63 of the Annual Report on Form 10K that
was filed by the Company with the SEC on April 28, 1998.
*(a)(8) Sale and Transition agreement between Pathmark and James L. Donald
dated March 8, 1999.
*(a)(9) Letter from the Company to holders of the Shares dated March 15, 1999.
*(a)(10) Joint Press Release issued by the Company and Parent on March 9, 1999.
*(a)(11) Press Release issued by Parent on March 26, 1999.
(a)(12) Press Release issued by the Company on May 19, 1999.
(a)(13) Press Release issued by Parent on May 20, 1999.
*(c)(1) Employment Agreement between Pathmark and Eileen Scott dated
February 1, 1999.
*(c)(2) Employment Agreement between Pathmark and John Sheehan dated
February 1, 1999.
*(c)(3) Employment Agreement between Pathmark and Marc A. Strassler dated
February 1, 1999.
*(c)(4) Employment Agreement between Pathmark and Frank Vitrano dated
February 1, 1999.
*(c)(5) Employment Agreement between Pathmark and Joseph Adelhardt dated
February 1, 1999.
*(c)(6) Employment Agreement between Pathmark and Harvey Gutman dated
February 1, 1999.
*(c)(7) Employment Agreement between Pathmark and Robert Joyce dated
February 1, 1999.
*(c)(8) Employment Agreement between Pathmark and Myron D. Waxberg dated
February 1, 1999.
(c)(9) Memorandum of Understanding dated May 19, 1999.
+(c)(10) Extension Agreement dated May 19, 1999 among Parent, the Purchaser
and the Stockholders listed on Exhibit I thereto.
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* Previously filed.
+ Filed as an exhibit to the Schedule 14D-1 and is incorporated herein
by reference.