<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 8, 1997.
REGISTRATION NO. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMERISERVE FOOD DISTRIBUTION, INC.*
(EXACT NAME OF REGISTRANT SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEBRASKA 5142 47-0464089
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
17975 WEST SARAH LANE, SUITE 100
BROOKFIELD, WISCONSIN 53045
(414) 792-9300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF THE
COMPANY'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
<TABLE>
<S> <C>
COPIES OF ALL COMMUNICATIONS
DONALD J. ROGERS ADAM O. EMMERICH, ESQ.
CHIEF FINANCIAL OFFICER WACHTELL, LIPTON, ROSEN & KATZ
AMERISERVE FOOD DISTRIBUTION, INC. 51 WEST 52ND STREET
17975 WEST SARAH LANE, SUITE 100 NEW YORK, NEW YORK 10019
BROOKFIELD, WISCONSIN 53045 (212) 403-1000
(414) 792-9300
(NAME, ADDRESS, INCLUDING ZIP CODE AND
TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
Approximate date of commencement of proposed sale to public: Upon
consummation of the Exchange Offer referred to herein.
------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================
AMOUNT PROPOSED PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER NOTE(2) OFFERING PRICE FEE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 1/8% New Senior
Subordinated Notes due
2007(1)..................... $500,000,000 100% $500,000,000 $151,515.15
- --------------------------------------------------------------------------------------------------
Guarantees for the New Senior
Subordinated Notes due
2007(3)(4).................. $0 0% $0(2) $0
==================================================================================================
</TABLE>
(1) This Registration Statement covers both the prospectus filed hereby in
connection with the exchange offer for the New Notes and the prospectus
filed hereby in connection with certain market-making activities by
affiliates of the Registrant.
(2) Estimated solely for the purpose of determining the registration fee.
(3) Calculated pursuant to Rule 457.
(4) Pursuant to Rule 457(n), no registration fee is required with respect to the
guarantees.
------------------------
THE REGISTRANTS HEREBY AMEND THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
*TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
STATE OR OTHER
JURISDICTION OF PRIMARY STANDARD I.R.S. EMPLOYER
INCORPORATION OR INDUSTRY IDENTIFICATION
NAME, ADDRESS AND TELEPHONE NUMBER ORGANIZATION CLASSIFICATION NUMBER NUMBER
- ------------------------------------------------ ---------------- --------------------- ----------------
<S> <C> <C> <C>
AmeriServ Food Company(1)....................... Delaware 5142 75-2296149
Chicago Consolidated Corporation(1)............. Illinois 5142 36-2691925
Northland Transportation Services, Inc.(1)...... Nebraska 5142 39-1807312
The Harry H. Post Company(1).................... Colorado 5142 84-0294250
Delta Transportation, Ltd.(1)................... Wisconsin 5142 39-1411171
AmeriServe Transportation, Inc.(2).............. Nebraska 5142 91-1824117
</TABLE>
- ---------------
(1) The address of these additional registrants is 17975 West Sarah Lane, Suite
100, Brookfield, WI 53045. Their telephone number is (414) 792-9300.
(2) The address of this registrant is 14841 Dallas Parkway, Dallas, TX 75240.
Its telephone number is (792) 385-8595.
<PAGE> 3
EXPLANATORY NOTE
This Registration Statement covers the registration of an aggregate
principal amount of $500,000,000 of 10 1/8% New Senior Subordinated Notes due
2007 (the "New Senior Subordinated Notes" or "New Notes") of AmeriServe Food
Distribution, Inc. (the "Company") that may be exchanged for equal principal
amounts of the Company's outstanding 10 1/8% Senior Subordinated Notes due 2007
(the "Senior Subordinated Notes") (the "Exchange Offer"). This Registration
Statement also covers the registration of the New Notes for resale by Donaldson,
Lufkin & Jenrette Securities Corporation and BancAmerica Securities, Inc. in
market-making transactions. The complete Prospectus relating to the Exchange
Offer (the "Exchange Offer Prospectus") follows immediately after this
Explanatory Note. Following the Exchange Offer Prospectus are certain pages of
the Prospectus relating solely to such market-making transactions (the
"Market-Making Prospectus"), including alternate front and back cover pages, an
alternate "Available Information" section, a section entitled "Risk
Factors -- Trading Market for the New Notes" to be used in lieu of the section
entitled "Risk Factors -- Absence of Public Market for the New Notes;
Restrictions on Transfers," a new section entitled "Use of Proceeds" and an
alternate section entitled "Plan of Distribution." In addition, the
Market-Making Prospectus will not include the following captions (or the
information set forth under such captions) in the Exchange Offer Prospectus:
"Prospectus Summary -- The Note Offering" and "-- The Exchange Offer", "Risk
Factors -- Exchange Offer Procedures" and "-- Restrictions on Transfer," "The
Exchange Offer, and "Certain Federal Income Tax Consequences of the Exchange
Offer". All other sections of the Exchange Offer Prospectus will be included in
the Market-Making Prospectus.
<PAGE> 4
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 8, 1997
PRELIMINARY PROSPECTUS
OFFER TO EXCHANGE
ALL OUTSTANDING
[AMERISERVE LOGO]
10 1/8% SENIOR SUBORDINATED NOTES DUE 2007
($500,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR
10 1/8% NEW SENIOR SUBORDINATED NOTES DUE 2007
($500,000,000 PRINCIPAL AMOUNT)
OF
AMERISERVE FOOD DISTRIBUTION, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997, UNLESS EXTENDED
AmeriServe Food Distribution, Inc., a Nebraska corporation (the "Company"),
hereby offers (the "Exchange Offer"), upon the terms and subject to the
conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), to exchange up to an aggregate
principal amount of $500,000,000 of its 10 1/8% New Senior Subordinated Notes
due 2007 (the "New Senior Subordinated Notes" or "New Notes") for an equal
principal amount of its outstanding 10 1/8% Senior Subordinated Notes due 2007
(the "Senior Subordinated Notes" or the "Notes"), in integral multiples of
$1,000. The New Notes will be guaranteed on a senior subordinated basis by
AmeriServ Food Company, a Delaware corporation and a subsidiary of the Company,
AmeriServe Transportation, Inc., a Nebraska corporation and a subsidiary of the
Company, Chicago Consolidated Corporation, an Illinois corporation and a
subsidiary of the Company, Northland Transportation Services, Inc., a Nebraska
corporation and a subsidiary of the Company, The Harry H. Post Company, a
Colorado corporation and a subsidiary of the Company, and Delta Transportation,
Ltd., a Wisconsin corporation and a subsidiary of the company (the "Subsidiary
Guarantors"). The New Notes will be senior subordinated unsecured obligations of
the Company and are substantially identical (including principal amount,
interest rate, maturity and redemption rights) to the Notes for which they may
be exchanged pursuant to this offer, except that (i) the offering and sale of
the New Notes will have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), and (ii) holders of New Notes will not be
entitled to certain rights of holders under a Registration Rights Agreement of
the Company and the Subsidiary Guarantors dated as of July 11, 1997 (the
"Registration Rights Agreement"). The Senior Subordinated Notes have been, and
the New Senior Subordinated Notes will be, issued under an Indenture dated as of
July 11, 1997 (the "Senior Subordinated Note Indenture" or the "Indenture"),
among the Company, the Subsidiary Guarantors and State Street Bank & Trust
Company, as trustee (the "Senior Subordinated Note Trustee"). See "Description
of New Notes." There will be no proceeds to the Company from this offering;
however, pursuant to the Registration Rights Agreement, the Company will bear
certain offering expenses.
------------------------
SEE "RISK FACTORS," COMMENCING ON PAGE 13, FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER NOTES IN THE EXCHANGE OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1997.
(cover page continued)
<PAGE> 5
The Company will accept for exchange any and all validly tendered Notes on
or prior to 5:00 p.m. New York City time, on [ ], 1997, unless the
Exchange Offer is extended (the "Expiration Date"). Tenders of Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date; otherwise such tenders are irrevocable. State Street Bank & Trust Company
will act as Exchange Agent with respect to the Senior Subordinated Notes (in
such capacity, the "Exchange Agent") in connection with the Exchange Offer. The
Exchange Offer is not conditioned upon any minimum principal amount of Notes
being tendered for exchange, but is otherwise subject to certain customary
conditions.
The Notes were sold by the Company on July 11, 1997 in transactions not
registered under the Securities Act in reliance upon the exemption provided in
Section 4(2) of the Securities Act. A portion of the Notes were subsequently
resold to qualified institutional buyers in reliance upon Rule 144A under the
Securities Act and to a limited number of institutional accredited investors in
a manner exempt from registration under the Securities Act. Based on information
provided by the Initial Purchasers, the Company believes no Notes were resold
outside the United States in reliance on Regulation S under the Securities Act.
Accordingly, the Notes may not be reoffered, resold or otherwise transferred in
the United States unless registered under the Securities Act or unless an
applicable exemption from the registration requirements of the Securities Act is
available. The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company under the Registration Rights Agreement. See "The
Exchange Offer."
The New Senior Subordinated Notes will bear interest from July 11, 1997,
the date of issuance of the Senior Subordinated Notes that are tendered in
exchange for the New Senior Subordinated Notes (or the most recent Interest
Payment Date (as defined herein) to which interest on such Notes has been paid),
at a rate equal to 10 1/8% per annum. Interest on the New Notes will be payable
semiannually on January 15 and July 15 of each year, commencing January 15,
1998. The New Notes are redeemable at the option of the Company, in whole or in
part, at any time on or after July 15, 2002, at the redemption prices set forth
herein, plus accrued and unpaid interest and liquidated damages, if any, thereon
to the date of redemption. See "Prospectus Summary -- Summary of Terms of New
Notes."
Prior to July 15, 2000, up to 33% of the initially outstanding aggregate
principal amount of New Senior Subordinated Notes will be redeemable at the
option of the Company, on one or more occasions, from the net proceeds of public
or private sales of common stock of, or contributions to the common equity
capital of, the Company, at a price of 110.125% of the principal amount of the
New Senior Subordinated Notes, together with accrued and unpaid interest, and
liquidated damages, if any, to the date of redemption; provided that at least
67% of the initially outstanding aggregate principal amount of New Senior
Subordinated Notes remains outstanding immediately after such redemption. Upon
the occurrence of a Change of Control (as defined in the Indenture), each Holder
(as defined herein) of New Notes may require the Company to repurchase all or a
portion of such Holder's New Notes at 101% of the aggregate principal amount of
the New Senior Subordinated Notes, together with accrued and unpaid interest,
and liquidated damages, if any, to the date of repurchase. See "Risk
Factors -- Payment Upon a Change of Control" and "Description of New Notes-
Repurchase at the Option of Holders."
The New Notes will be general, unsecured obligations of the Company, will
be subordinated to all Senior Debt (as defined herein) and will rank senior or
pari passu in right of payment to all existing and future subordinated
indebtedness of the Company. The claims of holders of the New Notes will be
effectively subordinated to the Senior Debt, which, as of March 29, 1997, on a
pro forma basis, after giving effect to the Acquisition (as defined herein), the
related financing transactions, and other transactions described herein, would
have been approximately $217.5 million, $205.0 million of which would have been
fully secured borrowings under the New Credit Facility (as defined herein). See
"Capitalization."
Based on an interpretation by the staff of the SEC (as defined herein) set
forth in no-action letters issued to third parties, the Company believes that
New Notes issued pursuant to the Exchange Offer in exchange for Notes may be
offered for resale, resold and otherwise transferred by any holder thereof
(other than any such holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such holder's
business and that such holder does not intend to participate in the distribution
of such New Notes.
(cover page continued)
i
<PAGE> 6
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with the initial resale of such New Notes. The Letter of Transmittal
delivered with this Prospectus states that by so acknowledging and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of New Notes received in exchange for Notes where
such Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that for a period
of 120 days after the consummation of the Exchange Offer, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale.
Any Holder who tenders in the Exchange Offer with the intention to
participate, or for purpose of participating, in a distribution of the New Notes
cannot rely on the position of the staff of the SEC enunciated in Exxon Capital
Holdings Corporation (available April 13, 1989), or Morgan Stanley & Co., Inc.
(available June 5, 1991) or similar no-action letters and, in the absence of an
exemption therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with the resale of the New
Notes. Failure to comply with such requirements in such instance may result in
such Holder incurring liability under the Securities Act for which the Holder is
not indemnified by the Company.
The Company does not intend to list the New Notes on any securities
exchange, or to seek admission thereof to trading in the National Association of
Securities Dealers Automated Quotation System. Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") and BancAmerica Securities, Inc. ("BancAmerica"
and, together with DLJ, the "Initial Purchasers") have advised the Company that
they intend to make a market in the New Notes; however, they are not obligated
to do so and any market-making may be discontinued at any time. As a result, the
Company cannot determine whether an active public market will develop for the
New Notes.
ANY NOTES NOT TENDERED AND ACCEPTED IN THE EXCHANGE OFFER WILL REMAIN
OUTSTANDING. TO THE EXTENT ANY NOTES ARE TENDERED AND ACCEPTED IN THE EXCHANGE
OFFER, A HOLDER'S ABILITY TO SELL UNTENDERED NOTES COULD BE ADVERSELY AFFECTED.
FOLLOWING CONSUMMATION OF THE EXCHANGE OFFER, THE HOLDERS OF NOTES WILL CONTINUE
TO BE SUBJECT TO THE EXISTING RESTRICTIONS UPON TRANSFER THEREOF AND THE COMPANY
WILL HAVE FULFILLED ONE OF ITS OBLIGATIONS UNDER THE REGISTRATION RIGHTS
AGREEMENT. HOLDERS OF NOTES WHO DO NOT TENDER THEIR NOTES GENERALLY WILL NOT
HAVE ANY FURTHER REGISTRATION RIGHTS UNDER THE REGISTRATION RIGHTS AGREEMENT OR
OTHERWISE. SEE "THE EXCHANGE OFFER -- CONSEQUENCES OF FAILURE TO EXCHANGE."
The New Notes issued pursuant to this Exchange Offer generally will be
issued in the form of Global New Notes (as defined herein), which will be
deposited with, or on behalf of, The Depository Trust Company (the "Depository"
or "DTC") and registered in its name or in the name of Cede & Co., its nominee.
Beneficial interests in the Global New Notes representing the New Notes will be
shown on, and transfers thereof will be effected through, records maintained by
the Depository and its participants. Notwithstanding the foregoing, Notes held
in certificated form will be exchanged solely for New Notes in certificated
form. After the initial issuance of the Global New Notes, New Notes in
certificated form will be issued in exchange for the Global New Notes only on
the terms set forth in the Indenture. See "Description of New Notes --
Book-Entry, Delivery and Form."
------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE NEW NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY ANY OF THE NEW NOTES TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO
SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1997 (90 DAYS AFTER COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN
THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
ii
<PAGE> 7
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"SEC") a Registration Statement on Form S-4 under the Securities Act for the
registration of the New Notes offered hereby (the "Registration Statement").
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement,
certain items of which are contained in exhibits and schedules to the
Registration Statement as permitted by the rules and regulations of the SEC. For
further information with respect to the Company or the New Notes offered hereby,
reference is made to the Registration Statement, including the exhibits and
financial statement schedules thereto, which may be inspected without charge at
the public reference facility maintained by the SEC at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and copies of which may be obtained from the
SEC at prescribed rates. Statements made in this Prospectus concerning the
contents of any document referred to herein are not necessarily complete. With
respect to each such document filed with the SEC as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
Such documents and other information filed by the Company can be inspected
and copied at the public reference facilities of the SEC at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, at the web site maintained by the SEC
(http://www.sec.gov) and at the regional offices of the SEC located at 7 World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, at the Website maintained by the SEC
(http://www.sec.gov). Copies of such materials may be obtained from the Public
Reference Section of the SEC, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at its public reference facilities in New York, New
York and Chicago, Illinois at prescribed rates.
The Company and the Subsidiary Guarantors are not currently subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). As a result of the offering of the New Notes, each of the
Company and the Subsidiary Guarantors will become subject to the informational
requirements of the Exchange Act. The Company will fulfill its obligations with
respect to such requirements by filing periodic reports with the Commission on
its own behalf or, in the case of the Subsidiary Guarantors, by including
information regarding the Subsidiary Guarantors in the Company's periodic
reports. In addition, the Company will send to each holder of New Notes copies
of annual reports and quarterly reports containing the information required to
be filed under the Exchange Act.
So long as the Company is subject to the periodic reporting requirements of
the Exchange Act, it is required to furnish the information required to be filed
with the SEC to the Trustees and the holders of the Notes and the New Notes. The
Company has agreed that, even if it is not required under the Exchange Act to
furnish such information to the SEC, it will nonetheless continue to furnish
information that would be required to be furnished by the Company by Section 13
of the Exchange Act to the Trustees and the holders of the Notes or New Notes as
if it were subject to such periodic reporting requirements.
In addition, the Company and the Subsidiary Guarantors have agreed that,
for so long as any of the Notes remain outstanding, they will make available to
any prospective purchaser of the Notes or Holder of the Notes in connection with
any sale thereof, the information required by Rule 144A(d)(4) under the
Securities Act.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
AMERISERVE FOOD DISTRIBUTION, INC., 17975 WEST SARAH LANE, SUITE 100,
BROOKFIELD, WISCONSIN 53045, (414) 792-9300. IN ORDER TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY AUGUST , 1997.
2
<PAGE> 8
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to and
should be read in conjunction with the more detailed information and financial
statements, including the notes thereto, appearing elsewhere in this Prospectus.
Unless otherwise indicated, all references in this Prospectus to the Company's
business and pro forma data give effect to the transactions described below. An
index of certain defined terms used herein can be found on page 97. Unless the
context indicates or otherwise requires, references in this Prospectus to the
"Company" or "AmeriServe" are to AmeriServe Food Distribution, Inc., its
predecessors and its subsidiaries, and give effect to the acquisition of PFS and
the contribution of The Harry H. Post Company ("Post"), each as described below
and references to "NEHC" are to Nebco Evans Holding Company, a Delaware
corporation and the parent of the Company.
THE COMPANY
AmeriServe is North America's largest systems foodservice distributor
specializing in distribution to chain restaurants, the fastest growing segment
of the domestic restaurant industry. The Company is the primary supplier to its
customers of a wide variety of items, including fresh and frozen meat and
poultry, seafood, frozen foods, canned and dry goods, fresh and pre-processed
produce, beverages, dairy products, paper goods, cleaning supplies and
equipment. The Company serves over 30 different restaurant chains and over
26,500 restaurant locations in North America. The Company has had long-standing
relationships with such leading restaurant concepts as Pizza Hut, Taco Bell,
KFC, Wendy's, Burger King, Dairy Queen, Subway and Applebee's. The Company's
strategy is to capitalize on its market leading position, compelling industry
trends and management's extensive experience to: (i) pursue profitable internal
and external growth opportunities; (ii) capitalize on its nationwide network of
distribution centers to increase customer density and regional market
penetration; (iii) continue to provide low cost, superior customer service; and
(iv) maximize operating leverage by pursuing selective acquisitions within the
fragmented foodservice distribution industry. For the 12 months ended March 29,
1997, the Company generated pro forma net sales and Adjusted EBITDA of $4.8
billion and $145.2 million, respectively.
The Company has achieved a record of strong growth in net sales and EBITDA
by successfully implementing this strategy. From 1992 to 1996, exclusive of PFS,
the Company's net sales increased from $293.6 million to $1.3 billion,
representing a compound annual growth rate ("CAGR") of 44.5%. During the same
period, the Company's EBITDA, exclusive of PFS, increased from $6.0 million to
$26.0 million, representing a CAGR of 44.1%. The Company believes it is well
positioned to continue to expand its presence in the systems foodservice
distribution industry as a result of its reputation for providing superior
customer service as well as its ability to provide low cost, efficient services.
The Company believes that it was primarily as a result of these factors that in
January 1997 it was awarded a three-year exclusive contract effective April 1997
to provide foodservice distribution to approximately 2,600 Arby's restaurants.
The Company estimates that this contract, which management believes represents
the single largest customer migration in the systems foodservice distribution
industry, will result in the addition of approximately $325 million of net sales
in the first 12 months of such contract.
On May 23, 1997, in furtherance of its strategy, NEHC entered into an
agreement to acquire PFS, the foodservice distribution business of PepsiCo (the
"Acquisition"). Prior to the Acquisition, PFS was North America's second largest
systems foodservice distributor, serving over 17,000 restaurants in the Pizza
Hut, Taco Bell and KFC restaurant systems. The Company expects to realize
significant benefits from the Acquisition, including: (i) enhanced customer and
concept diversification; (ii) increased customer density; (iii) broadened
national and international presence; and (iv) substantial cost savings and
economies of scale. In addition, in connection with the Acquisition, the Company
has entered into the Distribution Agreement whereby it will be the exclusive
distributor of selected products for five years to the approximately 9,800 Pizza
Hut, Taco Bell and KFC restaurants in the continental United States owned by
PepsiCo and previously serviced by PFS. These restaurants accounted for
approximately 68% of PFS's 1996 net sales and 44% of the Company's 1996 pro
forma net sales after giving effect to the Arby's contract.
3
<PAGE> 9
The Company believes it is well positioned to capitalize on the attractive
characteristics of the chain restaurant segment of the foodservice distribution
industry, which include: (i) the high growth rate of the segment, which
experienced an approximately 7.4% net sales CAGR from 1985 to 1995; (ii) the
uniformity of product offerings and consistency of demand by chain restaurant
customers; (iii) the increased focus by chain restaurants on foodservice
distributors that can provide consistent quality, reliable service and value on
a nationwide basis to maintain the chain's uniform standards; and (iv) the
fragmented nature of the industry, which includes over 3,000 foodservice
distribution companies. As the largest systems foodservice distributor serving
chain restaurants, the Company believes it is better positioned than its
competitors to offer consistent quality, reliable service and value on a
national scale in order to accommodate the growth of each customer.
COMPETITIVE ADVANTAGES
The Company believes that it will benefit from the following competitive
advantages:
- Market Leader with a Nationwide Presence. As a result of its national
presence, the Company believes it is one of the few systems foodservice
distributors capable of effectively serving large national accounts. The
Company believes it has significant advantages over smaller, regional
foodservice distributors as a result of its ability to: (i) derive
significant economies of scale in operating and distribution expenses;
(ii) benefit from increased purchasing power; (iii) make significant
investments in advanced technology and equipment, which enhance
productivity and customer service; and (iv) provide superior customer
service on a national scale.
- Low Cost Structure. The Company believes that it is uniquely positioned
to provide distribution services to chain restaurants at attractive
prices while also providing superior customer service. A critical
component of the Company's ability to reduce costs is the Company's
effective management of its warehouse and distribution costs, primarily
as a result of: (i) utilizing fewer, larger distribution centers within
each of its geographic regions; and (ii) maximizing customer density
within each region it serves. Furthermore, the Company has made
significant investments in advanced distribution centers, transportation
equipment and information technology, which enable it to efficiently
serve its customers.
- Stable Customer Base. The Company services over 26,500 restaurant
locations within more than 30 different restaurant concepts. The Company
believes it has among the best relationships with its customers of any
systems foodservice distributor as evidenced by the length and stability
of such relationships. For example, as a result of its ability to provide
high quality service at attractive rates, the Company has developed
long-standing relationships with many of the leading restaurant concepts,
including Dairy Queen (customer for 46 years), Burger King (customer for
36 years), KFC (customer for 26 years), Wendy's (customer for 21 years),
Pizza Hut (customer for 20 years) and Taco Bell (customer for 18 years).
- Experienced Management Team. The Company's management team has extensive
experience in the systems foodservice distribution business and has
developed long-standing relationships with franchisees and senior
management of successful concepts. The top four senior executives of the
Company have an average of approximately 24 years of experience with the
Company. In addition, prior to the Acquisition, the Company's management
team has successfully integrated five acquisitions since 1990,
representing approximately $1.2 billion in aggregate annual sales.
BUSINESS STRATEGY
The Company's objective is to continue to increase net sales and EBITDA by
implementing the following key elements of its business strategy:
- Continue to Pursue Internal and External Growth Opportunities. The
Company intends to continue to grow through a combination of the
development of new business from existing customers, the addition of new
chains, international expansion and selective acquisitions.
4
<PAGE> 10
Growth From Existing Chains. As the primary foodservice distributor
to most of its customers, the Company expects to benefit from the continued
growth of the domestic chain restaurant industry, the fastest growing
sector of the restaurant industry. From 1985 to 1995, the chain restaurant
segment experienced an approximately 7.4% net sales CAGR, which exceeds the
estimated 3.0% CAGR experienced by the overall restaurant industry. The
Company expects to realize growth from its existing base of customers and
concepts primarily due to: (i) increased traffic within existing
restaurants; (ii) the addition of new product lines; (iii) new restaurant
development and restaurant acquisitions by existing customers; and (iv) the
addition of new customers within concepts currently serviced by the
Company.
Growth Through Addition of New Chains. The Company continually
monitors the marketplace for opportunities to expand its portfolio of
customers and concepts. The Company targets (i) chains operating in
geographic areas where the Company could benefit from increased customer
density, further enhancing its operating leverage, and (ii) concepts that
could benefit from the Company's national presence and superior customer
service. In April 1997, the Company began operating under a recently
awarded three-year exclusive contract to provide foodservice distribution
to over 2,600 Arby's restaurants nationwide. The Company estimates that
this contract, which management believes represents the single largest
customer migration in the systems foodservice distribution industry, will
result in the addition of approximately $325 million of net sales in the
first 12 months of such contract. In addition, the Company plans to pursue
additional export opportunities and further expand its operations in
international markets. After giving effect to the Acquisition, the Company
will export products from its distribution centers in the United States to
approximately 65 foreign countries.
Pursue Selective Acquisition Opportunities. As North America's
largest systems foodservice distributor serving chain restaurants, the
Company believes it is well positioned to capitalize on the consolidation
taking place in the fragmented foodservice distribution industry. The
number of foodservice distributors has decreased from approximately 3,600
in 1985 to approximately 3,000 in 1997, with a significant increase in the
market shares of the largest distributors. The Company intends to continue
to make strategic fold-in acquisitions in order to augment its operations
in existing markets, enhance customer density and further reduce costs.
- Capitalize on the Benefits of the PFS Acquisition. Management believes
that combining the operations of AmeriServe and PFS will present it with
opportunities to eliminate duplicative costs and realign the Company's
distribution center network to capitalize effectively on economies of
scale and the benefits of higher customer density. Management has
identified approximately $27 million of annual cost savings, which it
believes it can achieve through the elimination of general and
administrative expenses and the consolidation of distribution centers in
certain markets. Following the Acquisition, the Company expects to reduce
the number of current distribution centers from 39 to 29. In addition,
the five-year Distribution Agreement will further secure the Company's
customer base and provide for a long-term contract covering approximately
44% of the Company's pro forma 1996 net sales after giving effect to the
Arby's contract.
- Continue to Maximize Operating Leverage. As the largest systems
foodservice distributor in North America, the Company pursues a low-cost
operating strategy based primarily on achieving economies of scale in the
areas of warehousing, transportation, general and administrative
functions and management information systems. The Company generates
significant operating leverage by utilizing large distribution centers
strategically located within each of its geographic markets, enabling it
to: (i) service multiple concepts from the same warehouse; (ii) maximize
the density of restaurants served from each facility; (iii) optimize
delivery routes; (iv) invest in advanced technology, which increases
operational efficiencies and enhances customer service; and (v) manage
inventory more efficiently.
- Continue to Provide Superior Customer Service. The Company believes it
enjoys a reputation for providing consistent, high quality service based
on its customer focus, its commitment to service excellence and the depth
of its management team. The Company has successfully implemented a
decentralized management structure that enables the Company to respond
quickly and flexibly to local customer needs. The Company typically
interacts with its customers on a daily basis, and generally
5
<PAGE> 11
makes multiple deliveries to each restaurant each week. The Company measures
its service performance daily by continuously monitoring the accuracy and
promptness of deliveries. The Company's advanced computer systems are linked to
many of its customers' locations, enabling customers to communicate
electronically with the Company, thereby reducing the Company's administrative
costs, and enabling it to respond more efficiently to customers' needs. In
addition, the Company's national presence allows it to provide consistent and
reliable service to national restaurant concepts with geographically diverse
locations.
THE TRANSACTIONS
In connection with the Acquisition, the Company: (i) consummated the Note
Offering (as defined herein); (ii) entered into the New Credit Facility (as
defined herein); (iii) established the Accounts Receivable Program (as defined
herein); (iv) received the Equity Contribution (as defined herein); (v) effected
the Preferred Stock Contribution (as defined herein); and (vi) consummated the
Post Contribution (as defined herein) (collectively, the "Transactions"). See
"The Transactions," "Description of Indebtedness" and "Certain Relationships and
Related Party Transactions."
------------------------
The Company's principal executive offices are located at 17975 West Sarah
Lane, Suite 100, Brookfield, Wisconsin 53045 and its telephone number is (414)
792-9300.
THE NOTE OFFERING
THE NOTES.................. The Notes were sold by the Company on July 11, 1997
and were subsequently resold to qualified
institutional buyers pursuant to Rule 144A under
the Securities Act, to institutional investors that
are accredited investors in a manner exempt from
registration under the Securities Act and based on
information supplied by the Initial Purchasers, the
Company believes no sales were made to persons in
transactions outside the United States in reliance
on Regulation S under the Securities Act ("the Note
Offering").
REGISTRATION RIGHTS
AGREEMENT.................. In connection with the Note Offering, the Company
entered into the Registration Rights Agreement,
which grants Holders of the Notes certain exchange
and registration rights, which generally terminate
upon the consummation of the Exchange Offer.
THE EXCHANGE OFFER
SECURITIES OFFERED......... $500,000,000 in aggregate principal amount of the
Company's 10 1/8% New Senior Subordinated Notes due
2007.
THE EXCHANGE OFFER......... $1,000 principal amount of 10 1/8% New Notes in
exchange for each $1,000 principal amount of the
Notes. As of the date hereof, $500,000,000
aggregate principal amount of Senior Subordinated
Notes are outstanding. The Company will issue the
New Notes to Holders on or promptly after the
Expiration Date.
EXPIRATION DATE............ 5:00 p.m., New York City time on , 1997,
unless the Exchange Offer is extended, in which
case the term "Expiration Date" means the latest
date and time to which the Exchange Offer is
extended.
INTEREST ON THE NEW NOTES
AND THE NOTES.............. The New Notes will bear interest from July 11,
1997, the date of issuance of the Notes that are
tendered in exchange for the New Notes (or the most
recent Interest Payment Date (as defined below in
the
6
<PAGE> 12
Summary of Terms of New Notes) to which interest on
such Notes has been paid). Accordingly, Holders of
Notes that are accepted for exchange will not
receive interest on the Notes that is accrued but
unpaid at the time of tender, but such interest
will be payable on the first Interest Payment Date
after the Expiration Date.
CONDITIONS TO THE EXCHANGE
OFFER...................... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. See
"The Exchange Offer -- Conditions."
PROCEDURES FOR TENDERING
NOTES...................... Each Holder of Notes wishing to accept the Exchange
Offer must complete, sign and date the relevant
accompanying Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile, together with the Notes and any other
required documentation to the relevant Exchange
Agent at the address set forth in the Letter of
Transmittal. The Letter of Transmittal should be
used to tender Notes. By executing the Letter of
Transmittal, each Holder will represent to the
Company that, among other things, the Holder or the
person receiving such New Notes, whether or not
such person is the Holder, is acquiring the New
Notes in the ordinary course of business and that
neither the Holder nor any such other person has
any arrangement or understanding with any person to
participate in the distribution of such New Notes.
In lieu of physical delivery of the certificates
representing Notes, tendering Holders may transfer
Notes pursuant to the procedure for book-entry
transfer as set forth under "The Exchange Offer --
Procedures for Tendering."
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS.......... Any beneficial owner whose Notes are registered in
the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such registered Holder
promptly and instruct such registered Holder to
tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such
beneficial owner's own behalf, such beneficial
owner must, prior to completing and executing the
Letter of Transmittal and delivering its Notes,
either make appropriate arrangements to register
ownership of the Notes in such beneficial owner's
name or obtain a properly completed bond power from
the registered Holder. The transfer of registered
ownership may take considerable time.
GUARANTEED DELIVERY
PROCEDURES................. Holders of Notes who wish to tender their Notes and
whose Notes are not immediately available or who
cannot deliver their Notes, the Letter of
Withdrawal Transmittal or any other documents
required by the Letter of Transmittal to the
Exchange Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration Date
must tender their Notes according to the guaranteed
delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures."
WITHDRAWAL RIGHTS.......... Tenders may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date
pursuant to the procedures described under "The
Exchange Offer -- Terms of the Exchange Offer."
7
<PAGE> 13
ACCEPTANCE OF NOTES AND
DELIVERY OF NEW NOTES...... The Company will accept for exchange any and all
Notes that are properly tendered in the Exchange
Offer prior to 5:00 p.m., New York City time, on
the Expiration Date. The New Notes issued pursuant
to the Exchange Offer will be delivered promptly
following the Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."
FEDERAL INCOME TAX
CONSEQUENCES............... The issuance of the New Notes to Holders of the
Notes pursuant to the terms set forth in this
Prospectus will not constitute an exchange for
federal income tax purposes. Consequently, no gain
or loss would be recognized by Holders of the Notes
upon receipt of the New Notes. See "Certain Federal
Income Tax Consequences of the Exchange Offer."
USE OF PROCEEDS............ There will be no proceeds to the Company from the
exchange of Notes pursuant to the Exchange Offer.
EFFECT ON HOLDERS OF
NOTES...................... As a result of the making of this Exchange Offer,
the Company will have fulfilled certain of its
obligations under the Registration Rights
Agreement, and Holders of Notes who do not tender
their Notes will generally not have any further
registration rights under the Registration Rights
Agreement or otherwise. Such Holders will continue
to hold the untendered notes and will be entitled
to all the rights and subject to all the
limitations applicable thereto under the
Indentures, except to the extent such rights or
limitations, by their terms, terminate or cease to
have further effectiveness as a result of the
Exchange Offer. All untendered Notes will continue
to be subject to certain restrictions on transfer.
Accordingly, if any Notes are tendered and accepted
in the Exchange Offer, the trading market for the
untendered Notes could be adversely affected.
EXCHANGE AGENT............. State Street Bank and Trust Company is serving as
exchange agent in connection with the Exchange
Offer. See "The Exchange Offer -- Exchange Agent."
8
<PAGE> 14
SUMMARY OF TERMS OF EXCHANGE NOTES
The form and terms of the New Notes are the same as the form and terms of
the Notes (which they will replace) except that (i) the New Notes have been
registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof and (ii) the Holders of the New Notes generally
will not be entitled to further registration rights under the Registration
Rights Agreement, which rights generally will be satisfied when the Exchange
Offer is consummated. The New Notes will evidence the same debt as the Notes and
will be entitled to the benefits of the Indenture. See "Description of New
Notes."
THE COMPANY................ AmeriServe Food Distribution, Inc.
MATURITY DATE.............. July 15, 2007.
SECURITIES OFFERED......... $500,000,000 principal amount of 10 1/8% New Senior
Subordinated Notes.
INTEREST RATE.............. The New Notes will bear interest at the rate of
10 1/8% per annum, payable semi-annually on January
15 and July 15 of each year, commencing January 15,
1998.
SUBORDINATION.............. The New Notes will be general unsecured obligations
of the Company, will rank subordinate in right of
payment to all Senior Debt and will rank senior or
pari passu in right of payment to all existing and
future subordinated indebtedness of the Company.
The New Notes will be unconditionally guaranteed on
a senior subordinated basis by the Subsidiary
Guarantors. The New Note Guarantees (as defined
herein) will be general unsecured obligations of
the Subsidiary Guarantors, will rank subordinate in
right of payment to all Senior Debt of the
Subsidiary Guarantors and will rank senior or pari
passu in right of payment to all existing and
future subordinated indebtedness of the Subsidiary
Guarantors. As of March 29, 1997, on a pro forma
basis, after giving effect to the Transactions, the
New Notes would have been subordinate to $217.5
million of Senior Debt. See "Risk
Factors -- Subordination."
OPTIONAL REDEMPTION........ The New Notes will be redeemable at the option of
the Company, in whole or in part, at any time on or
after July 15, 2002 in cash at the redemption
prices set forth herein, plus accrued and unpaid
interest and liquidated damages, if any, thereon to
the date of redemption. In addition, at any time
prior to July 15, 2000, the Company may redeem up
to 33% of the initially outstanding aggregate
principal amount of New Notes at a redemption price
equal to 110.125% of the principal amount thereof,
plus accrued and unpaid interest and liquidated
damages, if any, thereon to the redemption date,
with the net proceeds of a Public Equity Offering;
provided that, in each case, at least 67% of the
initially outstanding aggregate principal amount of
New Notes remains outstanding immediately after the
occurrence of any such redemption. See "Description
of New Notes -- Optional Redemption."
CHANGE OF CONTROL.......... Upon the occurrence of a Change of Control, each
holder of New Notes will have the right to require
the Company to repurchase all or any part of such
holder's New Notes at an offer price in cash equal
to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest and liquidated
damages, if any, thereon to the date of repurchase.
See "Description of New Notes -- Repurchase at the
Option of Holders -- Change of Control." There can
be no assurance that, in the event of a Change of
Control, the Company would have sufficient funds to
repurchase all New Notes tendered. See "Risk
Factors -- Payment Upon a Change of Control."
9
<PAGE> 15
NEW NOTE GUARANTEES........ The New Notes will be unconditionally guaranteed on
a senior subordinated basis by the Subsidiary
Guarantors.
CERTAIN COVENANTS.......... The Indenture contains certain covenants that
limit, among other things, the ability of the
Company to: (i) pay dividends, redeem capital stock
or make certain other restricted payments or
investments; (ii) incur additional indebtedness or
issue preferred equity interests; (iii) merge,
consolidate or sell all or substantially all of its
assets; (iv) create liens on assets; and (v) enter
into certain transactions with affiliates or
related persons. See "Description of New
Notes -- Certain Covenants."
FORM AND DENOMINATION...... The certificates representing the New Notes will be
issued in fully registered form, deposited with a
custodian for and registered in the name of a
nominee of the Depositary in the form of a Global
New Note certificate. Beneficial interests in the
certificates representing the Global New Note will
be shown on, and transfers thereof will be effected
through, records maintained by the Depositary and
its Participants. See "Book Entry, Delivery and
Form."
EXCHANGE OFFER;
REGISTRATION RIGHTS........ If any Holder of an aggregate of at least $2.0
million in principal amount of Notes notifies the
Company within 20 business days of the consummation
of the Exchange Offer that (A) such Holder is
prohibited by law or SEC policy from participating
in the Exchange Offer, or (B) such Holder may not
resell the New Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus
and the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or
available for such resales by such Holder, or (C)
such Holder is a broker-dealer and holds Notes
acquired directly from the Company or one of its
respective affiliates, then the Company and the
Subsidiary Guarantors will be required to provide a
shelf registration statement (the "Shelf
Registration Statement") to cover resales of the
Notes by the Holders thereof. Notwithstanding the
foregoing, at any time after consummation of the
Exchange Offer, the Company may allow the Shelf
Registration Statement to cease to be effective and
usable if (i) the Board of Directors of the Company
determines in good faith that it is in the best
interests of the Company not to disclose the
existence of or facts surrounding any proposed or
pending material corporate transaction involving
the Company, and the Company notifies the Holders
within a certain period of time after the Board of
Directors makes such determination, or (ii) the
prospectus contained in the Shelf Registration
Statement contains an untrue statement of a
material fact necessary in order to make the
statements therein, in the light of the
circumstances under which they were made, not
misleading. The Company will pay certain liquidated
damages to Holders of Notes and Holders of New
Notes if the Company is not in compliance with its
obligations under the Registration Rights
Agreement. See "Exchange Offer; Registration
Rights."
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PARTICIPANTS IN THE EXCHANGE OFFER, SEE "RISK FACTORS."
10
<PAGE> 16
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The following table sets forth summary unaudited pro forma consolidated
balance sheet data at March 29, 1997 and summary unaudited pro forma
consolidated income statement data of the Company for the fiscal year ended
December 28, 1996, for the first quarter of 1996 and 1997 and for the 12 months
ended March 29, 1997. The Company has a fiscal year ending on the Saturday
closest to the end of the calendar year. Each fiscal year was 52 weeks. PFS had
a fiscal year ending on the last Wednesday in December. Each PFS fiscal year was
52 weeks. The pro forma consolidated balance sheet data at March 29, 1997 give
effect to the Transactions as if they had occurred on March 29, 1997. The pro
forma consolidated income statement data and other data for the fiscal year
ended December 28, 1996, for the first quarter of 1996 and 1997 and for the 12
months ended March 29, 1997 give effect to the Transactions as if they had
occurred at the beginning of the period presented. The following information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations", the historical and unaudited pro
forma financial statements of the Company, the historical financial statements
of PFS and the related notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
TWELVE MONTHS
FIRST QUARTER ENDED
FISCAL YEAR ----------------------- MARCH 29,
1996 1996 1997 1997
----------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................................ $ 4,874,980 $1,080,901 $1,055,836 $ 4,849,915
Gross profit......................................... 488,051 108,871 110,310 489,490
Operating expenses................................... 397,202 93,651 95,900 399,451
Operating income..................................... 90,849 15,220 14,410 90,039
OTHER DATA:
EBITDA(1)............................................ $ 134,953 $ 25,595 $ 25,617 $ 134,975
Depreciation and amortization........................ 44,587 10,375 11,207 45,419
Capital expenditures................................. 41,510 8,105 8,557 41,962
CREDIT RATIOS:
Adjusted EBITDA(2)................................... -- -- -- $ 145,175
Cash interest expense(3)............................. -- -- -- 69,819
Adjusted EBITDA/cash interest expense................ -- -- -- 2.1x
Net debt/Adjusted EBITDA(4).......................... -- -- -- 4.6x
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 29, 1997
-----------------------
ACTUAL PRO FORMA
-------- ----------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................................................... $ 3,995 $ 48,116
Working capital.............................................................. 26,637 56,067
Total assets................................................................. 320,846 1,227,764
Long-term debt, including current portion.................................... 141,268 717,500
Stockholder's equity......................................................... 41,489 159,923
</TABLE>
- ---------------
(1) EBITDA represents operating income plus depreciation and amortization and
excludes one-time non-recurring gains and losses. EBITDA in fiscal 1996 and
for the twelve months ended March 29, 1997 excludes net one-time,
non-recurring gains of $0.5 million. EBITDA for fiscal 1996 and the twelve
months ended March 29, 1997 includes an adjustment to reflect $27.5 million
of annual cost savings related to the PFS Acquisition. EBITDA for the first
quarter 1996 and 1997 includes an adjustment to reflect $6.9 million of cost
savings related to the PFS Acquisition. EBITDA is calculated after deducting
the discount on the sale of receivables pursuant to the Accounts Receivable
Program. EBITDA is presented because it is a widely accepted financial
indicator used by certain investors and analysts to analyze and compare
companies on the basis of operating performance. EBITDA is not intended to
represent cash flows for the period, nor has it been presented as an
alternative to operating income as an indicator of operating performance and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. See the historical and unaudited pro forma financial statements
of the Company, the historical financial statements of PFS and the related
notes thereto included elsewhere herein.
(2) Adjusted EBITDA represents EBITDA plus (i) fees payable by the Company to
Holberg Industries, Inc. for expenses incurred in its capacity as a holding
company that are attributable to the operations of the Company and its
Restricted Subsidiaries (such payments are subordinated to the Company's
obligations under the Notes) and (ii) $6.2 million, which represents
management's estimate of the EBITDA contribution in the first 12 months of
the Company's three-year exclusive contract to provide foodservice
distribution services to Arby's.
(3) Cash interest expense represents total interest expense less amortization of
deferred financing fees and other non-cash interest charges.
(4) Net debt represents total long-term debt, including current portion, less
cash and cash equivalents. The ratio of net debt to Adjusted EBITDA was
calculated based on pro forma net debt as of March 29, 1997, of $669.4
million.
11
<PAGE> 17
SUMMARY SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The following table sets forth summary historical financial data of
AmeriServe and PFS for the fiscal years 1994, 1995 and 1996, which have been
derived from the audited financial statements of AmeriServe and PFS,
respectively. The financial statements of AmeriServe were audited by Ernst &
Young LLP for fiscal years 1994, 1995 and 1996. The financial statements of PFS
were audited by KPMG Peat Marwick LLP for fiscal years 1994, 1995 and 1996.
AmeriServe has a fiscal year ending on the Saturday closest to the end of the
calendar year. Each fiscal year for AmeriServe was 52 weeks. PFS had a 52-53
week fiscal year ending on the last Wednesday in December. Each fiscal year for
PFS was 52 weeks, except 1994, which contained 53 weeks. Data for the first
quarters of 1996 and 1997 have been derived from unaudited financial statements
of AmeriServe and PFS, which, in the opinion of management, include all
adjustments necessary for a fair presentation of the information. Data at and
for the first quarter of 1997 do not purport to be indicative of results to be
expected for the full fiscal year. The following information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations", the historical and unaudited pro forma financial
statements of the Company, the historical financial statements of PFS and
related notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
FISCAL YEAR FIRST QUARTER
------------------------------------ -------------------
AMERISERVE 1994 1995 1996 1996 1997
- ---------------------------------------------------------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................................... $ 358,516 $ 400,017 $1,280,598 $231,732 $308,727
Gross profit............................................ 37,914 40,971 128,849 23,709 31,641
Operating expenses...................................... 34,488 36,695 114,560 22,204 30,396
Operating income........................................ 3,426 4,276 14,289 1,505 1,245
OTHER DATA:
EBITDA(1)............................................... $ 6,710 $ 7,038 $ 26,041 $ 3,128 $ 3,983
Depreciation and amortization........................... 3,284 2,762 10,061 1,623 2,738
Capital expenditures.................................... 1,331 2,496 12,518 866 2,257
Net cash provided by (used in):
Operating activities.................................. 4,276 4,505 1,213 (4,599) (1,363)
Investing activities.................................. (5,422) (5,574) (105,013) (98,535) (6,801)
Financing activities.................................. 490 619 105,387 102,559 9,997
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR FIRST QUARTER
------------------------------------ -------------------
PFS 1994 1995 1996 1996 1997
- ----------------------------------------------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.................................... $3,279,837 $3,458,944 $3,422,086 $766,688 $720,524
Gross profit................................. 326,672 344,777 341,484 77,038 75,682
Operating expenses........................... 239,772 265,305 261,741 60,995 61,225
Operating income............................. 86,900 79,472 79,743 16,043 14,457
OTHER DATA:
EBITDA(1).................................... $ 103,953 $ 98,236 $ 99,573 $ 20,748 $ 19,363
Depreciation and amortization................ 17,053 18,764 19,830 4,705 4,906
Capital expenditures......................... 21,310 25,245 28,771 7,193 6,212
</TABLE>
- ---------------
(1) EBITDA represents operating income plus depreciation and amortization and
excludes one-time non-recurring gains and losses. EBITDA for AmeriServe in
fiscal 1996 adds back a net one-time, non-recurring charge of $1.7 million.
EBITDA is presented because it is a widely accepted financial indicator used
by certain investors and analysts to analyze and compare companies on the
basis of operating performance. EBITDA is not intended to represent cash
flows for the period, nor has it been presented as an alternative to
operating income as an indicator of operating performance and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles. The
Company understands that, while EBITDA is frequently used by securities
analysts in the evaluation of companies, EBITDA, as used herein, is not
necessarily comparable to other similarly titled captions of other companies
due to potential inconsistencies in the method of calculation. See the
historical and unaudited pro forma financial statements of the Company and
the historical financial statements of PFS and the related notes thereto
included elsewhere herein.
12
<PAGE> 18
RISK FACTORS
Holders of Notes should consider carefully the factors set forth below, as
well as the other information set forth elsewhere in this Prospectus, before
making a decision to tender into the Exchange Offer. This Prospectus includes
forward-looking statements, including statements concerning the Company's
business strategy, operations, cost savings initiatives, economic performance,
financial condition and liquidity and capital resources. Such statements are
subject to various risks and uncertainties. The Company's actual results may
differ materially from the results discussed in such forward-looking statements
because of a number of factors, including those identified in this "Risk
Factors" section and elsewhere in this Prospectus. See "Summary," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"The Business." The forward-looking statements are made as of the date of this
Prospectus, and the Company assumes no obligation to update the forward-looking
statements or to update the reasons why actual results could differ from those
projected in the forward-looking statements.
SUBSTANTIAL LEVERAGE AND DEBT SERVICE
The Company is and will continue to be highly leveraged as a result of the
substantial indebtedness it has incurred in connection with the Transactions.
After giving pro forma effect to the Transactions, the Company would have had
total indebtedness of $717.5 million and stockholder's equity of $159.9 million
as of March 29, 1997, and the Company's ratio of earnings to fixed charges would
have been 1.2x for the year ended December 28, 1996. On a pro forma basis after
giving effect to the Transactions, cash interest expense for the last 12 months
ended March 29, 1997 would have been $69.8 million. The Company may incur
additional indebtedness in the future, subject to limitations imposed by the
Indenture and the New Credit Facility. See "Capitalization," "Unaudited Pro
Forma Combined Financial Statements" and "The Transactions -- The Acquisition."
The Company's ability to make scheduled payments of principal of, or to pay
interest on, or to refinance its indebtedness (including the New Notes) depends
on its future performance, which, to a certain extent, is subject to general
economic, financial, competitive, legislative, regulatory and other factors
beyond its control. Based upon the current level of operations and anticipated
growth, the management of the Company believes that available cash flow,
together with available borrowings under the New Credit Facility and other
sources of liquidity, including the Accounts Receivable Program, will be
adequate to meet the Company's anticipated future requirements for working
capital, capital expenditures, scheduled payments of principal of and interest
on its indebtedness, and interest on the New Notes. However, all or a portion of
the principal payments at maturity on the New Notes may require refinancing.
There can be no assurance that the Company's business will generate sufficient
cash flow from operations or that future borrowings will be available in an
amount sufficient to enable the Company to service its indebtedness, including
the New Notes, or to make necessary capital expenditures, or that any
refinancing would be available on commercially reasonable terms or at all. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
The degree to which the Company is now leveraged could have important
consequences to holders of the New Notes, including, but not limited to, the
following: (i) a substantial portion of the Company's cash flow from operations
will be required to be dedicated to debt service and will not be available for
other purposes; (ii) the Company's ability to obtain additional financing in the
future could be limited; (iii) certain of the Company's borrowings are at
variable rates of interest, which could result in higher interest expense in the
event of an increase in interest rates; and (iv) the Indenture and the New
Credit Facility contain financial and restrictive covenants that limit the
ability of the Company to, among other things, borrow additional funds, dispose
of assets or pay cash dividends. Failure by the Company to comply with such
covenants could result in an event of default, which, if not cured or waived,
could have a material adverse effect on the Company. In addition, the degree to
which the Company is leveraged could prevent it from repurchasing all New Notes
tendered to it upon the occurrence of a Change of Control. See "Description of
New Notes -- Repurchase at the Option of Holders -- Change of Control,"
"Description of Indebtedness -- New Credit Facility" and "The
Transactions -- The Acquisition."
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SUBORDINATION
The New Notes will be subordinated in right of payment to all existing and
future Senior Debt, including the principal of or premium, if any, and interest
on and all other amounts due on or payable in connection with Senior Debt. At
March 29, 1997, on a pro forma basis after giving effect to the Transactions,
there would have been outstanding approximately $217.5 million of Senior Debt.
By reason of such subordination, in the event of the insolvency, liquidation,
reorganization, dissolution or other winding-up of the Company or upon a default
in payment with respect to, or the acceleration of, any Senior Debt, the Holders
of such Senior Debt must be paid in full before the holders of the New Notes may
be paid. If the Company incurs any additional pari passu debt, the holders of
such debt would be entitled to share ratably with the holders of the New Notes
in any proceeds distributed in connection with any insolvency, liquidation,
reorganization, dissolution or other winding-up of the Company. This may have
the effect of reducing the amount of proceeds paid to holders of the New Notes.
In addition, no payments may be made with respect to the principal of, premium
and Liquidated Damages, if any, or interest on the New Notes if a payment
default exists with respect to Senior Debt and, under certain circumstances, no
payments may be made with respect to the principal of, premium and Liquidated
Damages, if any, or interest on the New Notes for a period of up to 179 days if
a non-payment default exists with respect to Senior Debt. In addition, the
Indenture permits the Company and its subsidiaries to incur additional debt if
certain conditions are met. See "Description of New Notes -- Subordination."
Under the New Credit Facility, NEHC granted to the lenders thereunder (the
"Lenders") security interests in all of the capital stock of the Company, and
the Company granted to the Lenders security interests in substantially all of
the current and future assets of the Company, including a pledge of all of the
issued and outstanding shares of capital stock of certain of the Company's
subsidiaries. In the event of a default on secured indebtedness (whether as a
result of the failure to comply with a payment or other covenant, a cross-
default, or otherwise), such Lenders will have a prior secured claim on the
capital stock of the Company and the assets of the Company and its subsidiaries.
If such Lenders should attempt to foreclose on their collateral, the Company's
financial condition and the value of the New Notes will be materially adversely
affected and could be eliminated. See "Description of Indebtedness."
KEY CONTRACTS
In January 1997, the Company entered into a three-year agreement, which
became effective April 1997, to become the primary supplier to approximately
2,600 Arby's restaurants nationwide. The Company expects to generate at least
$325 million of annual net sales during the term of the agreement. No assurance
can be given that the Company's contract with Arby's will be renewed upon
expiration, that any renewal of such contract will be on terms as favorable to
the Company as the current contract or that the Company will realize expected
net sales under the existing contract.
In connection with the Acquisition, the Company and PepsiCo's chain
restaurant business have entered into a five-year Distribution Agreement
effective from the Closing pursuant to which the Company will be the exclusive
distributor of specified restaurant products purchased by Pizza Hut, Taco Bell
and KFC restaurants within the continental United States, which are owned,
directly or indirectly, by PepsiCo as of the Closing (other than certain
specified restaurants) or which are acquired or built by PepsiCo's chain
restaurant business during the term of the Distribution Agreement. On a pro
forma basis after giving effect to the Transactions and after giving effect to
the Arby's contract, approximately 44% of the Company's 1996 net sales would
have been generated under the Distribution Agreement. The Distribution Agreement
may be terminated at any time (i) by any party in the event that the other party
breaches any material term and such breach remains unremedied for a period of 30
calendar days after written notice of such breach, (ii) by the PepsiCo Chains if
the Company is in material breach of the Distribution Agreement for failure to
maintain specified service levels for a specified period of time or (iii) by
either party in the event that the other party becomes the subject of a
bankruptcy, insolvency or other similar proceeding. See "The Acquisition --
Distribution Agreement."
While exclusive or written arrangements are not typically the basis of
foodservice distribution sales and have not historically been requisite to the
Company's growth, the Distribution Agreement will expire in five
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years and no assurance can be given that the Distribution Agreement will be
renewed or, if renewed, whether such renewal will be on terms as favorable as
the existing agreement. Furthermore, no assurance can be given that the Company
will be able to achieve the expected net sales under the current Distribution
Agreement. Gross profit and net pretax profit on certain sales by PFS to Pizza
Hut under the Distribution Agreement are limited.
DEPENDENCE ON CERTAIN CHAINS AND CUSTOMERS
The Company derives substantially all of its net sales from several chain
restaurant concepts. On a pro forma basis after giving effect to the
Transactions, and the Arby's contract, the largest chains serviced by the
Company would have been Pizza Hut, Taco Bell and KFC, representing 28%, 28% and
12% of 1996 net sales, respectively. Adverse developments affecting such chains
or a decision by a corporate owner or franchisor to revoke its approval of the
Company as a distributor could have a material adverse effect on the Company's
operating results.
The Company's customers are generally individual franchisees or
corporate-owned restaurants within such restaurant chains. Although the
corporate owner or franchisor of a chain generally reserves the right to approve
the distributors for its franchisees, each customer generally makes its
selection of a foodservice distributor from an approved group of distributors.
On a pro forma basis after giving effect to the Transactions and after giving
effect to the Arby's contract, the Company's largest customer would have been
PepsiCo, representing 44% of the Company's 1996 net sales. No other customer
accounted for more than 10% of the Company's pro forma net sales in 1996.
Adverse events affecting any of the Company's largest customers, a material
decrease in sales to any such customers or the loss of a major customer through
the acquisition thereof by a company with an internal foodservice distribution
business or otherwise could have a material adverse effect on the Company's
operating results. In addition, the Company's continued growth is dependent in
part on the continued growth and expansion of its customers.
A significant portion of the Company's business is conducted with customers
with which the Company does not have contracts. Such customers could cease doing
business with the Company on little or no notice. The Company's contracts with
its other customers are subject to termination by the customer prior to
expiration of the stated term under circumstances specified in each contract,
including, in some cases, failure to comply with performance reliability
standards. Although the Company is not aware of any issues of non-compliance
that could reasonably be expected to result in termination of any such contracts
prior to expiration of the stated term, and has not been notified by any
customer that it intends to terminate its contract with the Company, there can
be no assurance that historic levels of business from any customer of the
Company will be maintained in the future. See " -- Key Contracts" and "The
Business -- Customers."
ABILITY TO INTEGRATE ACQUISITIONS
The Company has achieved a significant portion of its growth through
acquisitions and will continue to try to grow in this way. Although each of the
previously acquired companies has a significant operating history, the Company
has a limited history of owning and operating the most recently acquired of
these businesses on a consolidated basis. Holberg Industries, Inc. ("Holberg")
acquired NEBCO Distribution of Omaha, Inc. ("NEBCO") in 1986. NEBCO acquired
Evans Brothers Company ("Evans") in January 1990 and the combined company was
renamed "NEBCO EVANS Distribution, Inc." ("NEBCO EVANS"). NEBCO EVANS acquired
L.L. Distribution Systems Inc. in 1990, Condon Supply Company in 1991, AmeriServ
Food Company ("AmeriServ") in January 1996 and, in April 1997, changed its name
to AmeriServe Food Distribution, Inc. Following the Acquisition, the Company
will have to integrate PFS with its existing business, including its prior
acquisitions. While the Company believes that such integration provides
significant opportunities to reduce costs, there can be no assurance that the
Company will be able to meet performance expectations or successfully integrate
these businesses on a timely basis without disruption in the quality and
reliability of service to its customers or diversion of management resources. In
addition, while the Company has made acquisitions successfully before, the
Acquisition is substantially larger than the Company's prior acquisitions. The
integration of such businesses will also require improvements in the Company's
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management information systems. There can be no assurance that such improvements
will be realized on a timely basis.
DEPENDENCE ON KEY PERSONNEL
The Company's success is, and will continue to be, substantially dependent
upon the continued services of its senior management, particularly Mr. John V.
Holten, Chairman and Chief Executive Officer of the Company, and Mr. Raymond E.
Marshall, President and Treasurer of the Company. The loss of the services of
one or more members of senior management could adversely affect the Company's
operating results. The Company has entered into employment agreements with Mr.
Marshall and other members of senior management, and has obtained key-man life
insurance in the amount of $3.0 million on Mr. Marshall. In addition, the
Company's continued growth depends on the ability to attract and retain skilled
operating managers and employees and the ability of its key personnel to manage
the Company's growth and consolidate and integrate its operations. See
"Management."
COMPETITION
The foodservice distribution industry is highly competitive. The Company
competes with other systems foodservice distribution companies that focus on
chain restaurants and with broadline foodservice distributors that distribute to
a wide variety of customers. Further, the Company could face increased
competition to the extent that there is an increase in the number of foodservice
distributors specializing in distribution to chain restaurants on a nationwide
basis. See "The Business -- Competition."
CONTROL BY PRINCIPAL STOCKHOLDER
After the consummation of the Transactions, Holberg will indirectly own a
majority of the issued and outstanding capital stock of NEHC, which in turn
directly owns all of the issued and outstanding capital stock of the Company.
See "Security Ownership of Certain Beneficial Holders and Management." Holberg
and DLJ will collectively have sufficient voting power to elect the entire Board
of Directors of each of NEHC, and through NEHC, the Company, and thereby
exercise control over the business, policies and affairs of NEHC and the
Company, and, in general, determine the outcome of any corporate transaction or
other matters submitted to stockholders for approval, such as any amendment to
the certificate of incorporation of the Company (the "Certificate of
Incorporation"), the authorization of additional shares of capital stock, and
any merger, consolidation or sale of all or substantially all of the assets of
the Company, all of which could adversely affect the Company and holders of the
New Notes.
PAYMENT UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of New Notes may
require the Company to repurchase all or a portion of such holder's New Notes at
101% of the principal amount of the New Notes, together with accrued and unpaid
interest, if any, and Liquidated Damages, if any, to the date of repurchase. The
Indenture will require that prior to such a repurchase, the Company must either
repay all outstanding indebtedness under the New Credit Facility or obtain any
required consent to such repurchase. If a Change of Control were to occur, the
Company may not have the financial resources to repay all of its obligations
under the New Credit Facility, the New Notes and the other indebtedness that
would become payable upon such event. See "Description of New
Notes -- Repurchase at the Option of Holders -- Change of Control."
FRAUDULENT CONVEYANCE
Management of the Company believes that the indebtedness represented by the
New Notes is being incurred for proper purposes and in good faith, and that,
based on present forecasts, asset valuations and other financial information,
after the consummation of the Transactions, the Company will be solvent, will
have sufficient capital for carrying on its business and will be able to pay its
debts as they mature. See "-- Substantial Leverage and Debt Service."
Notwithstanding management's belief, however, if a court of competent
jurisdiction in a suit by an unpaid creditor or a representative of creditors
(such as a trustee in
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bankruptcy or a debtor-in-possession) were to find that, at the time of the
incurrence of such indebtedness, the Company was insolvent, was rendered
insolvent by reason of such incurrence, was engaged in a business or transaction
for which its remaining assets constituted unreasonably small capital, intended
to incur, or believed that it would incur, debts beyond its ability to pay such
debts as they matured, or intended to hinder, delay or defraud its creditors,
and that the indebtedness was incurred for less than reasonably equivalent
value, then such court could, among other things, (i) void all or a portion of
the Company's obligations to the holders of the New Notes, the effect of which
would be that the holders of the New Notes may not be repaid in full and/or (ii)
subordinate the Company's obligations to the holders of the New Notes to other
existing and future indebtedness of the Company to a greater extent than would
otherwise be the case, the effect of which would be to entitle such other
creditors to be paid in full before any payment could be made on the New Notes.
The Company's obligations under the New Notes will be guaranteed, jointly
and severally, on a senior subordinated basis, by each of the Subsidiary
Guarantors. Management of the Company believes that indebtedness represented by
the New Note Guarantees is being incurred by the Subsidiary Guarantors for
proper purposes and in good faith, and that, based on present forecasts, asset
valuations and other financial information, after consummation of the
Transactions, each of the Subsidiary Guarantors will be solvent, will have
sufficient capital for carrying on its business, and will be able to pay its
debts as they mature. See "-- Substantial Leverage and Debt Service."
Notwithstanding management's belief, however, if a court of competent
jurisdiction in a suit by an unpaid creditor or a representative of creditors
(such as a trustee in bankruptcy or a debtor-in-possession) were to find that,
at the time of the incurrence of such indebtedness, the Subsidiary Guarantors
were insolvent, were rendered insolvent by reason of such incurrence, were
engaged in a business or transaction for which their remaining assets
constituted unreasonably small capital, intended to incur, or believed that they
would incur, debts beyond their ability to pay such debts as they matured, or
intended to hinder, delay or defraud their creditors, and that the indebtedness
was incurred for less than reasonably equivalent value, then such court could,
among other things, (i) void all or a portion of such Subsidiary Guarantors'
obligations to the holders of the New Notes, the effect of which would be that
the holders of the New Notes may not be repaid in full or at all and/or (ii)
subordinate such Subsidiary Guarantors' obligations to the holders of the New
Notes to other existing and future indebtedness of such Subsidiary Guarantors,
the effect of which would be to entitle such other creditors to be paid in full
before any payment could be made on the New Notes. Among other things, a legal
challenge to a Note Guarantee on fraudulent conveyance grounds may focus on the
benefits, if any, realized by the Subsidiary Guarantors as a result of the
issuance by the Company of the New Notes.
ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES; RESTRICTIONS ON TRANSFERS
The Notes are currently owned by a relatively small number of beneficial
owners. The Notes have not been registered under the Exchange Act and will be
subject to restrictions on transferability to the extent that they are not
exchanged for the New Notes. The New Notes will constitute a new issue of
securities with no established trading market. Although the New Notes will
generally be permitted to be resold or otherwise transferred by Holders who are
not affiliates of the Company without compliance with the registration
requirements under the Securities Act, the Company does not intend to list the
New Notes on any securities exchange or to seek admission thereof to trading in
the National Association of Securities Dealers Automated Quotation System.
Although DLJ and BancAmerica have advised the Company that they currently intend
to make a market in the New Notes, they are not obligated to do so and may
discontinue such market making at any time without notice. If a trading market
does not develop or is not maintained, holders of the New Notes may experience
difficulty in reselling the New Notes or may be unable to sell them at all. If a
market for the New Notes develops, any such market may be discontinued at any
time. See "Notice to Investors." In addition, such market making activity will
be subject to the limits imposed by the Exchange Act. See "Description of New
Notes -- Registration Rights; Liquidated Damages." Accordingly, there can be no
assurance as to the development or liquidity of any market for the New Notes.
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<PAGE> 23
EXCHANGE OFFER PROCEDURES
Issuance of the New Notes in exchange for Notes pursuant to the Exchange
Offer will be made only after a timely receipt by the Exchange Agent of such
Notes, a properly completed and duly executed letter of transmittal and all
other required documents. Therefore, Holders of the Notes desiring to tender
such Notes in exchange for New Notes should allow sufficient time to ensure
timely delivery. The Company is under no duty to give notification of defects or
irregularities with respect to the tenders of Notes for exchange. Notes that are
not tendered or are tendered but not accepted will, following the consummation
of the Exchange Offer, continue to be subject to the existing restrictions upon
transfer thereof and, upon consummation of the Exchange Offer, the registration
rights under the Registration Rights Agreement generally will terminate. In
addition, any Holder of Notes who tenders in the Exchange Offer for the purpose
of participating in a distribution of the New Notes may be deemed to have
received restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale. Each broker-dealer that receives New Notes for its
own account in exchange for Notes, where such Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities must acknowledge that it will deliver a prospectus in connection with
the initial resale of such New Notes. To the extent that Notes are tendered and
accepted in the Exchange Offer, the trading market for untendered and tendered
but unaccepted Notes could be adversely affected. See "The Exchange Offer."
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<PAGE> 24
THE EXCHANGE OFFER
The following discussion sets forth or summarizes what the Company believes
are the material terms of the Exchange Offer, including those set forth in the
Letter of Transmittal distributed with this Prospectus. This summary is
qualified in its entirety by reference to the full text of the documents
underlying the Exchange Offer, copies of which are filed as exhibits to the
Registration Statement of which this Prospectus is a part, and are incorporated
by reference herein.
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Notes were sold by the Company on July 11, 1997, and were subsequently
resold to qualified institutional buyers pursuant to Rule 144A under the
Securities Act, to institutional investors that are accredited investors in a
manner exempt from registration under the Securities Act and to certain persons
in transactions outside the United States in reliance on Regulation S under the
Securities Act. In connection with the Note Offering, the Company entered into
the Registration Rights Agreement, which requires, among other things, that
promptly following the completion of the Acquisition, the Company and the
Subsidiary Guarantors (i) file with the SEC a registration statement under the
Securities Act with respect to an issue of new Notes of the Company identical in
all material respects to the Notes, (ii) use their best efforts to cause such
registration statement to become effective under the Securities Act and (iii)
upon the effectiveness of that registration statement, offer to the Holders of
the Notes the opportunity to exchange their Notes for a like principal amount of
New Notes, which would be issued without a restrictive legend and may be
reoffered and resold by the holder without restrictions or limitations under the
Securities Act (other than any such holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act). A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The term "Holder" with respect to
the Exchange Offer means any person in whose name the Notes are registered on
the books of the Company or any other person who has obtained a properly
completed bond power from the registered holder.
Because the Exchange Offer is for any and all Notes, the number of Notes
tendered and exchanged in the Exchange Offer will reduce the principal amount of
Notes outstanding. Following the consummation of the Exchange Offer, Holders of
the Notes who did not tender their Notes generally will not have any further
registration rights under the Registration Rights Agreement, and such Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for such Notes could be adversely affected. The Notes
are currently eligible for sale pursuant to Rule 144A through the PORTAL System
of the National Association of Securities Dealers, Inc. Because the Company
anticipates that most holders of Notes will elect to exchange such Notes for New
Notes due to the absence of restrictions on the resale of New Notes under the
Securities Act, the Company anticipates that the liquidity of the market for any
Notes remaining after the consummation of the Exchange Offer May be
substantially limited.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Notes
validly tendered and not withdrawn prior to 5:00 p.m. New York City time, on the
Expiration Date. The Company will issue $1,000 principal amount of New Senior
Subordinated Notes in exchange for each $1,000 principal amount of outstanding
Senior Subordinated Notes accepted in the Exchange Offer. Holders may tender
some or all of their Notes pursuant to the Exchange Offer. However, Notes may be
tendered only in integral multiples of $1,000.
The form and terms of the New Notes are the same as the form and terms of
the Notes except that (i) the New Notes have been registered under the
Securities Act and hence will not bear legends restricting the transfer thereof
and (ii) the holders of the New Notes generally will not be entitled to certain
rights under the Registration Rights Agreement, which rights generally will
terminate upon consummation of the Exchange Offer. The New Notes will evidence
the same debt as the Notes and will be entitled to the benefits of the
Indentures.
Holders of Notes do not have any appraisal or dissenters' rights under the
Nebraska Business Corporation Act or the Indentures in connection with the
Exchange Offer. The Company intends to conduct the Exchange
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<PAGE> 25
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the SEC thereunder, including Rule 14e-1 thereunder.
The Company shall be deemed to have accepted validly tendered Notes when,
as and if the Company has given oral or written notice thereof to the Exchange
Agents. The Exchange Agent will act as agent for the tendering Holders for the
purpose of receiving the New Notes from the Company.
If any tendered Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
the certificates for any such unaccepted Notes will be returned, without
expense, to the tendering Holder thereof as promptly as practicable after the
Expiration Date.
Holders who tender Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Notes pursuant to
the Exchange Offer. The Company will pay all charges and expenses, other than
transfer taxes in certain circumstances, in connection with the Exchange Offer.
See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
To extend the Exchange Offer, the Company will notify the Exchange Agent of
any extension by oral or written notice, followed by a public announcement
thereof no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
The Company reserves the right, in its reasonable judgment, (i) to delay
accepting any Notes, to extend the Exchange Offer or to terminate the Exchange
Offer if any of the conditions set forth below under "-- Conditions" shall not
have been satisfied, by giving oral or written notice of such delay, extension
or termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer in, any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by a public announcement
thereof. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered Holders, and, depending upon the significance of the amendment and
the manner of disclosure to the registered Holders, the Company will extend the
Exchange Offer for five to ten business days if the Exchange Offer would
otherwise expire during such five to ten business-day period.
If the Company does not consummate the Exchange Offer, or, in lieu thereof,
the Company does not file and cause to become effective a resale shelf
registration for the New Notes within the time periods set forth herein,
liquidated damages will accrue and be payable on the New Notes either
temporarily or permanently. See "Description of New Notes -- Registration
Rights; Liquidated Damages."
INTEREST ON NEW NOTES
The New Senior Subordinated Notes will bear interest from July 11, 1997,
the date of issuance of the Notes that are tendered in exchange for the New
Notes (or the most recent Interest Payment Date to which interest on such Notes
has been paid). Accordingly, Holders of Notes that are accepted for exchange
will not receive interest that is accrued but unpaid on the Notes at the time of
tender, but such interest will be payable on the first Interest Payment Date
after the Expiration Date. Interest on the New Notes will be payable
semiannually on each January 15 and July 15, commencing on January 15, 1998.
PROCEDURES FOR TENDERING
Only a Holder of Notes may tender such Notes in the Exchange Offer. To
tender in the Exchange Offer, a Holder must complete, sign and date the relevant
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Notes
and any other required documents, to the Exchange Agent so as to be received by
the Exchange Agent at the address set forth below prior to 5:00 p.m.,
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New York City time, on the Expiration Date. The Letter of Transmittal must be
used to tender Notes. Delivery of the Notes may be made by book-entry transfer
in accordance with the procedures described below. Confirmation of such
book-entry transfer must be received by the Exchange Agent prior to the
Expiration Date.
By executing the Letter of Transmittal, each Holder will make to the
Company the representation set forth below in the second paragraph under the
heading "-- Resale of New Notes."
The tender by a Holder and the acceptance thereof by the Company will
constitute an agreement between such Holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered Holder promptly and instruct such registered
Holder to tender on such beneficial owner's behalf.
Signatures on the Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Notes tendered pursuant thereto are tendered (i) by a registered
Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by 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 or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered Holder of any Notes listed therein, such Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered Holder
as such registered Holder's name appears on such Notes with the signature
thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
The Company understands that each Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Notes at the Depository for the purpose of facilitating the Exchange Offer,
and subject to the establishment thereof, any financial institution that is a
participant in the Depository's system may make book-entry delivery of the Notes
by causing the Depository to transfer such Notes into the Exchange Agent's
account with respect to the Notes in accordance with the Depository's procedures
for such transfer. Although delivery of the Notes may be effected through
book-entry transfer into the Exchange Agent's account at the Depository, an
appropriate Letter of Transmittal properly completed and duly executed with any
required signature guarantee and all other required documents must in each case
be transmitted to and received or confirmed by the Exchange Agent at its address
set forth below on or prior to the Expiration Date, or, if the guaranteed
delivery procedures described below are complied with, within the
21
<PAGE> 27
time period provided under such procedures. Delivery of documents to the
Depository does not constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Notes not properly tendered or any Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities or conditions of tender
as to particular Notes. The Company's interpretation of the terms and conditions
of the Exchange Offer (including the instructions in the Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Notes must be cured within such
time as the Company shall determine. Although the Company intends to notify
Holders of defects or irregularities with respect to tenders of Notes, none of
the Company, the Exchange Agent or any other person shall incur any liability
for failure to give such notification. Tenders of Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Notes received by the Exchange Agent that are not properly tendered and as
to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Notes and (i) whose New Notes are not
immediately available, (ii) who cannot deliver their Notes, the Letter of
Transmittal or any other required documents to the relevant Exchange Agent or
(iii) who cannot complete the procedures for book-entry transfer, prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the relevant Exchange Agent receives
from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand
delivery) setting forth the name and address of the Holder, the certificate
number(s) of such Notes and the principal amount of Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof), together with the certificates(s)
representing the Notes (or a confirmation of book-entry transfer of such
Notes into the Exchange Agent's account at the Depository) and any other
documents required by the Letter of Transmittal, will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Notes in proper form for transfer (or a confirmation of book-entry transfer
of such Notes into the Exchange Agent's account at the Depository) and all
other documents required by the Letter of Transmittal, are received by the
Exchange Agent within three New York Stock Exchange trading days after the
Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWALS OF TENDERS
Except as otherwise provided herein, tenders of Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at its
address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Notes to be withdrawn (the "Depositor"), (ii)
identify the Notes to be withdrawn (including the certificate number(s) and
principal amount of such Notes, or, in the case of Notes transferred
22
<PAGE> 28
by book-entry transfer, the name and number of the account at the Depository to
be credited), (iii) be signed by the Holder in the same manner as the original
signature on the Letter of Transmittal by which such Notes were tendered
(including any required signature guarantees) or be accompanied by documents of
transfer sufficient to have the Trustee with respect to the Notes register the
transfer of such Notes into the name of the person withdrawing the tender, and
(iv) specify the name in which any such Notes are to be registered, if different
from that of the Depositor. All questions as to the validity, form and
eligibility (including time or receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Notes so withdrawn will be deemed not to have been validly tendered for purposes
of the Exchange Offer and no New Notes will be issued with respect thereto
unless the Notes so withdrawn are validly retendered. Any Notes which have been
tendered but which are not accepted for exchange will be returned to the Holder
thereof without cost to such Holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Notes may be retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or to exchange New Notes for, any Notes, and
may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Notes, if (a) any law, statute, rule, regulation or
interpretation by the staff of the SEC is proposed, adopted or enacted, which,
in the reasonable judgment of the Company, might materially impair the ability
of the Company to proceed with the Exchange Offer or materially impair the
contemplated benefits of the Exchange Offer to the Company.
If the Company determines in its reasonable judgment that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Notes and
return all tendered Notes to the tendering Holders, (ii) extend the Exchange
Offer and retain all Notes tendered prior to the expiration of the Exchange
Offer, subject, however, to the rights of Holders to withdraw such Notes (see
"Withdrawals of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Notes which have
not been withdrawn. If such waiver constitutes a material change to the Exchange
Offer, the Company will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered Holders, and, depending
upon the significance of the waiver and the manner of disclosure to the
registered Holders, the Company will extend the Exchange Offer for a period of
five to ten business days if the Exchange Offer would otherwise expire during
such five to ten business-day period.
EXCHANGE AGENT
State Street Bank & Trust Company will act as Exchange Agent for the
Exchange Offer with respect to the Notes (the "Exchange Agent").
Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal for the Notes and requests for
copies of Notice of Guaranteed Delivery should be directed to the Exchange
Agent, addressed as follows:
By Registered or Certified Mail, Overnight Mail or Courier Service or in
Person by Hand:
State Street Bank & Trust Company
777 Main Street, 11th floor
Hartford, CT 06123-0177
Attention: Corporate Trust Administration
By Facsimile:
(860) 986-7920
23
<PAGE> 29
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone, facsimile or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agents reasonable and customary fees for their services and will
reimburse them for their reasonable out-of-pocket expenses in connection
therewith and pay other registration expenses, including fees and expenses of
the Trustees, filing fees, blue sky fees and printing and distribution expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of the Notes pursuant to the Exchange Offer. If, however, certificates
representing the New Notes or the Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered Holder of the Notes tendered, or if
tendered Notes are registered in the name of any person other than the person
signing the Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the exchange of the Notes pursuant to the Exchange Offer, then
the amount of any such transfer taxes (whether imposed on the registered Holder
or any other person) will be payable by the tendering Holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Notes,
which is the aggregate principal amount in the case of the Notes, as reflected
in the Company's accounting records on the date of exchange. Accordingly, no
gain or loss for accounting purposes will be recognized in connection with the
Exchange Offer. The expenses of the Exchange Offer will be amortized over the
term of the New Notes.
RESALE OF NEW NOTES
Based on an interpretation by the staff of the SEC set forth in no-action
letters issued to third parties, the Company believes that New Notes issued
pursuant to the Exchange Offer in exchange for New Notes may be offered for
resale, resold and otherwise transferred by any Holder of such New Notes (other
than any such Holder which is an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such Holder's business and such
Holder does not intend to participate, and has no arrangement or understanding
with any person to participate, in the distribution of such New Notes. Any
Holder who tenders in the Exchange Offer with the intention to participate, or
for the purpose of participating, in a distribution of the New Notes may not
rely on the position of the staff of the SEC enunciated in Exxon Capital
Holdings Corporation (available April 13, 1989) and Morgan Stanley & Co.,
Incorporated (available June 5, 1991), or similar no-action letters, but rather
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. In addition, any such
resale transaction should be covered by an effective registration statement
containing the selling security holder's information required by Item 507 or 508
of Regulation S-K of the Securities Act, as applicable. Each broker-dealer that
receives New Notes for its own account in exchange for Notes, where such Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, may be a statutory underwriter and must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes.
By tendering in the Exchange Offer, each Holder will represent to the
Company that, among other things, (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving such New Notes, whether or not such person is a Holder, (ii)
neither the Holder nor any such other person has an arrangement or understanding
with any person to participate in the distribution of such New Notes and (iii)
the Holder and such other person acknowledge that if they participate in the
Exchange Offer for the purpose of distributing the New Notes (a) they must, in
the absence of an exemption therefrom, comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale of the New Notes and cannot rely on the no-action letters
24
<PAGE> 30
referenced above and (b) failure to comply with such requirements in such
instance could result in such Holder incurring liability under the Securities
Act for which such Holder is not indemnified by the Company. Further, by
tendering in the Exchange Offer, each Holder that may be deemed an "affiliate"
(as defined under Rule 405 of the Securities Act) of the Company will represent
to the Company that such Holder understands and acknowledges that the New Notes
may not be offered for resale, resold or otherwise transferred by that Holder
without registration under the Securities Act or an exemption therefrom.
As set forth above, affiliates of the Company are not entitled to rely on
the foregoing interpretations of the staff of the SEC with respect to resales of
the New Notes without compliance with the registration and prospectus delivery
requirements of the Securities Act. In connection with the Note Offering, the
Company entered into the Registration Rights Agreement pursuant to which the
Company agreed to file and maintain, subject to certain limitations, a
registration statement that would allow DLJ , and BancAmerica to engage in
market-making transactions with respect to the Notes or the New Notes. The
Company has agreed to bear all registration expenses incurred under such
agreement, including printing and distribution expenses, reasonable fees of
counsel, blue sky fees and expenses, reasonable fees of independent accountants
in connection with the preparation of comfort letters, and SEC and the National
Association of Securities Dealers, Inc. filing fees and expenses.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of this Exchange Offer, the Company will have
fulfilled one of its obligations under the Registration Rights Agreement, and
Holders of Notes who do not tender their Notes generally will not have any
further registration rights under the Registration Rights Agreement or
otherwise. Accordingly, any Holder of Notes that does not exchange that Holder's
Notes for New Notes will continue to hold the untendered Notes and will be
entitled to all the rights and limitations applicable thereto under the
Indentures, except to the extent that such rights or limitations, by their
terms, terminate or cease to have further effectiveness as a result of the
Exchange Offer.
The Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will remain restricted securities. Accordingly, such Notes may be resold
only (i) to the Company (upon redemption thereof or otherwise), (ii) pursuant to
an effective registration statement under the Securities Act, (iii) so long as
the Notes are eligible for resale pursuant to Rule 144A, to a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act in
a transaction meeting the requirements of Rule 144A, (iv) outside the United
States to a foreign person pursuant to the exemption from the registration
requirements of the Securities Act provided by Regulation S thereunder, (v)
pursuant to an exemption from registration under the Securities Act provided by
Rule 144 thereunder (if available), or (vi) to an institutional accredited
investor in a transaction exempt from the registration requirements of the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States. See "Risk Factors -- Restrictions on
Transfer."
OTHER
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Notes are urged to consult
their financial and tax advisors in making their own decision on what action to
take.
The Company may in the future seek to acquire untendered Notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. The Company has no present plans to acquire any Notes that are not
tendered in the Exchange Offer or to file a registration statement to permit
resales of any untendered Notes.
25
<PAGE> 31
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF THE EXCHANGE OFFER
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service (the "IRS") will not take a contrary view, and
no ruling from the IRS has been or will be sought. Legislative, judicial or
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to Holders. Certain Holders of the Notes (including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
foreign corporations and persons who are not citizens or residents of the United
States) may be subject to special rules not discussed below. Each Holder of a
Note should consult his, her or its own tax advisor as to the particular tax
consequences of exchanging such Holder's Notes for New Notes, including the
applicability and effect of any state, local or foreign tax laws.
The issuance of the New Notes to Holders of the Notes pursuant to the terms
set forth in this Prospectus will not constitute an exchange for federal income
tax purposes. Consequently, no gain or loss would be recognized by Holders of
the Notes upon receipt of the New Notes, and ownership of the New Notes will be
considered a continuation of ownership of the Notes. For purposes of determining
gain or loss upon the subsequent sale or exchange of the New Notes, a Holder's
basis in the New Notes should be the same as such Holder's basis in the Notes
exchanged therefor. A Holder's holding period for the New Notes should include
the Holder's holding period for the Notes exchanged therefor. The issue price,
and other tax characteristics of the New Notes should be identical to the issue
price, and other tax characteristics of the Notes exchanged therefor.
See also "Description of Certain Federal Income Tax Consequences of an
Investment in the New Notes."
THE TRANSACTIONS
In connection with the Acquisition, the Company: (i) consummated the Note
Offering; (ii) entered into the New Credit Facility; (iii) established the
Accounts Receivable Program; (iv) received the Equity Contribution; (v) effected
the Preferred Stock Contribution; and (vi) consummated the Post Contribution.
See "Description of Indebtedness" and "Certain Relationships and Related Party
Transactions."
THE ACQUISITION
Pursuant to an Asset Purchase Agreement (together with the related
agreement covering Canadian assets, the "Asset Purchase Agreement"), dated as of
May 23, 1997, by and between NEHC and PepsiCo, which was assigned to the Company
at the Closing, the Company subject to the terms and conditions contained in the
Asset Purchase Agreement, acquired substantially all of the assets and
properties used or held for use by PFS for $830.0 million in cash, subject to
adjustment, and assumed certain liabilities, including post-Closing purchase
price adjustments. See note 2 to the unaudited pro forma financial statements of
the Company.
THE POST CONTRIBUTION
In connection with the January 1996 purchase of AmeriServ, the Company
acquired a minority interest in Post Holdings Company ("Post Holdings"), which
owned 93.6% of Post. Post is a systems food distributor with three distribution
centers in the western United States. For the fiscal year ending December 28,
1996, Post generated net sales of $119.4 million and EBITDA of $1.9 million. On
November 25, 1996, NEHC: (i) acquired (a) the Company's ownership interest in
Post Holdings, and (b) Daniel W. Crippen's 50% ownership of Post Holdings and
(ii) merged Post Holdings with and into NEHC with NEHC as the surviving entity.
Mr. Crippen is the Company's Chief Operating Officer and was the President of
Post.
26
<PAGE> 32
In connection with the Acquisition: (i) the remaining 6.4% of the capital
stock outstanding of Post was acquired from the minority stockholder; (ii) a
dividend of $4.7 million was declared to eliminate the intercompany balance
between Post and NEHC; (iii) all of the capital stock of Post was transferred to
AmeriServ Food Company, a subsidiary of the Company; and (iv) Post's $9.0
million of outstanding indebtedness was refinanced. AmeriServ Food Company's
investment in NEHC preferred stock of $2.5 million was cancelled (collectively,
the "Post Contribution"). See note 2 to the historical financial statements of
the Company.
EQUITY CONTRIBUTION
In connection with the Acquisition, NEHC contributed $130.0 million of cash
to the Company (the "Equity Contribution"). The Equity Contribution was financed
through NEHC's sale of debt and equity securities. A portion of such funds was
raised by NEHC through the sale to DLJ Merchant Banking, L.P. II and Affiliates
("DLJMBII") of preferred stock and warrants for aggregate consideration of
$115.0 million. See "Certain Relationships and Related Party Transactions."
PREFERRED STOCK CONTRIBUTION
In connection with the Acquisition, NEHC contributed to the Company an
aggregate principal amount of $45.0 million of outstanding non-convertible
preferred stock of the Company (the "Preferred Stock Contribution"). See
"Capitalization."
SOURCES AND USES OF FUNDS
The gross proceeds from the sale of the Notes, together with borrowings
under the New Credit Facility, proceeds from the Accounts Receivable Program and
the Equity Contribution, were used and will be used by the Company: (i) to fund
the purchase price payable in connection with the Acquisition; (ii) to repay in
full certain existing indebtedness; (iii) to provide working capital; and (iv)
to pay fees and expenses in connection with the Transactions.
The following table sets forth the estimated sources and uses of funds in
connection with the Transactions, assuming that the Transactions occurred on
March 29, 1997 (in millions):
<TABLE>
<S> <C>
SOURCES
New Credit Facility(1)
Revolving Credit Facility........................................ $ 0.0
Term Loans....................................................... 205.0
--------
Total.................................................... 205.0
Accounts Receivable Program(2)..................................... 225.0
Senior Subordinated New Notes due 2007............................. 500.0
Equity Contribution................................................ 130.0
--------
Total sources............................................ $1,060.0
========
USES
Cash purchase of PFS assets........................................ $ 830.0
Refinance AmeriServe senior debt................................... 124.8
Refinance other debt............................................... 14.8
Cash for working capital........................................... 43.9
Estimated fees and expenses........................................ 46.5
--------
Total uses............................................... $1,060.0
========
</TABLE>
- ---------------
(1) At Closing, the Company entered into a new $355.0 million senior credit
facility (the "New Credit Facility") by and among Bank of America National
Trust and Savings Association ("Bank of America NT&SA"; in such capacity,
the "Administrative Agent"), and DLJ Capital Funding, Inc. (in such
27
<PAGE> 33
capacity, the documentation agent; and with the Administrative Agent, the
"Agents") and the other Lenders thereto. BancAmerica Securities, Inc.
("BancAmerica Securities") served as the syndication agent. The following
amounts were drawn under the New Credit Facility: $205.0 million of term
loans (the "Term Loans"), consisting of: (a) $78.1 million Term Loan A,
which matures in six years; (b) $42.3 million of Term Loan B, which matures
in seven years; (c) $42.3 million of Term Loan C, which matures in eight
years; and (d) $42.3 million of Term Loan D, which matures in nine years.
See "Description of Indebtedness -- New Credit Facility." A $150.0 million
revolving credit facility (the "Revolving Credit Facility") is available as
part of the New Credit Facility for working capital and general corporate
purposes, including the issuance of letters of credit which were $11.1
million at Closing, subject to the achievement of certain financial ratios
and compliance with certain conditions.
(2) At Closing, the Company entered into a $250.0 million Accounts Receivable
Program (the "Accounts Receivable Program"), approximately $225.0 million of
which was funded at Closing. Under the Accounts Receivable Program, the
Company established a wholly-owned, special purpose bankruptcy-remote
subsidiary that purchases from the Company, on a revolving basis, all trade
receivables generated by the Company and/or one or more of its subsidiaries.
See "Description of Indebtedness -- Accounts Receivable Program."
USE OF PROCEEDS
The net proceeds from the sale of the Notes was approximately $483.0
million (after deducting discounts and commissions and estimated expenses of the
Offering) and, together with borrowings under the New Credit Facility, proceeds
from the Accounts Receivable Program and the Equity Contribution were used and
will be used by the Company: (i) to fund the cash purchase price payable in
connection with the Acquisition; (ii) to repay in full certain existing
indebtedness; (iii) to provide working capital; and (iv) to pay fees and
expenses in connection with the Transactions. The existing indebtedness of the
Company being repaid in connection with the Transactions includes approximately
$124.8 million of borrowings under the Company's existing credit facility (which
bears interest at a blended rate of approximately 8.6% at March 29, 1997) and
$14.8 million of other indebtedness (which bears interest at a blended rate of
approximately 9.5% per annum).
See "The Transactions -- Sources and Uses of Funds."
28
<PAGE> 34
CAPITALIZATION
(DOLLARS IN THOUSANDS)
The following table sets forth the consolidated cash and capitalization of
the Company as of March 29, 1997 and the pro forma consolidated capitalization
of the Company as of March 29, 1997, adjusted to reflect the Transactions. This
table should be read in conjunction with the historical and unaudited pro forma
financial statements of the Company and the related notes thereto included
elsewhere herein. See "The Transactions."
<TABLE>
<CAPTION>
AS OF MARCH 29, 1997
----------------------
ACTUAL PRO FORMA
-------- ---------
<S> <C> <C>
Cash and cash equivalents.............................................. $ 3,995 $ 48,116
======== ========
Long-term debt (including current portion):
Existing credit facility............................................. $124,800 $ --
Revolving Credit Facility(1)......................................... -- --
Term Loans(1)........................................................ -- 205,000
Capital lease obligation............................................. 10,673 12,500
Senior Subordinated New Notes due 2007............................... -- 500,000
Other................................................................ 5,795 --
-------- --------
Total long-term debt......................................... 141,268 717,500
Stockholder's equity:
Preferred............................................................ 45,000 --
Common............................................................... (3,511) 159,923
-------- --------
Total stockholder's equity................................... 41,489 159,923
-------- --------
Total capitalization................................................... $182,757 $ 877,423
======== ========
</TABLE>
- ---------------
(1) At the Closing, the following amounts were drawn under the New Credit
Facility: (a) $78.1 million Term Loan A, which matures in six years; (b)
$42.3 million of Term Loan B, which matures in seven years; (c) $42.3
million of Term Loan C, which matures in eight years; and (d) $42.3 million
of Term Loan D, which matures in nine years. The undrawn amount of $150.0
million under the Revolving Credit Facility is available for working capital
and general corporate purposes, including the issuance of letters of credit
which were $11.1 million at Closing, subject to the achievement of certain
financial ratios and compliance with certain conditions. See "Description of
Indebtedness -- New Credit Facility."
29
<PAGE> 35
SELECTED AMERISERVE HISTORICAL FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The following table presents selected historical financial data of the
Company at and for the fiscal years 1992, 1993, 1994, 1995 and 1996, which have
been derived from the audited financial statements of the Company, and at and
for the first quarters of 1996 and 1997, which have been derived from the
unaudited interim financial statements of the Company. The historical financial
statements of the Company for the fiscal years 1994, 1995 and 1996 were audited
by Ernst & Young LLP. The historical data of the Company at and for the first
quarter of 1996 and 1997 have been derived from, and should be read in
conjunction with, the unaudited financial statements of the Company and the
related notes thereto, included elsewhere herein. In the opinion of management,
such interim financial statements reflect all adjustments (consisting only of
normal and recurring adjustments) necessary to fairly present the information
presented for such periods. The results of operations for the first quarter of
1997 are not necessarily indicative of the results of operations to be expected
for the full year. The selected financial data set forth below should be read in
conjunction with "The Transactions," "Summary Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the historical financial statements of the Company and the
related notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
FISCAL YEAR FIRST QUARTER
------------------------------------------------------ -------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................. $293,621 $327,606 $358,516 $400,017 $1,280,598 $231,732 $308,727
Gross profit.......................... 33,827 35,153 37,914 40,971 128,849 23,709 31,641
Operating expenses.................... 30,347 32,054 34,488 36,695 114,560 22,204 30,396
-------- -------- -------- -------- ----------- -------- --------
Operating income...................... 3,480 3,099 3,426 4,276 14,289 1,505 1,245
Interest expense...................... (3,404) (2,759) (3,294) (3,936) (10,999) (2,405) (3,165)
Interest income-Holberg and
affiliate........................... 293 150 533 749 528 99 85
-------- -------- -------- -------- ----------- -------- --------
Income (loss) before income taxes,
extraordinary loss, and cumulative
effect of accounting change......... 369 490 665 1,089 3,818 (801) (1,835)
Provision (credit) for income taxes... 223 172 523 583 1,300 (242) (649)
-------- -------- -------- -------- ----------- -------- --------
Income (loss) before extraordinary
loss and cumulative effect of
accounting change................... 146 318 142 506 2,518 (559) (1,186)
Extraordinary loss on early
extinguishment of debt.............. -- (613) -- -- -- -- --
Cumulative effect of change in method
of accounting for income taxes...... -- (495) -- -- -- -- --
-------- -------- -------- -------- ----------- -------- --------
Net income (loss)....................... $ 146 $ (790) $ 142 $ 506 $ 2,518 $ (559) $ (1,186)
======== ======== ======== ======== =========== ======== ========
OTHER DATA:
EBITDA(1)............................. $ 6,034 $ 6,195 $ 6,710 $ 7,038 $ 26,041 $ 3,128 $ 3,983
Depreciation and amortization......... 2,554 3,096 3,284 2,762 10,061 1,623 2,738
Capital expenditures.................. 3,446 2,205 1,331 2,496 12,518 866 2,257
Net cash provided by (used in):
Operating activities................ 10,462 4,680 4,276 4,505 1,213 (4,599) (1,363)
Investing activities................ (3,352) (6,556) (5,422) (5,574) (105,013) (98,535) (6,801)
Financing activities................ (6,462) 2,676 490 619 105,387 102,559 9,997
Ratio of earnings to fixed
charges(2).......................... 1.1x 1.1x 1.1x 1.2x 1.2x N/A N/A
BALANCE SHEET DATA:
Cash.................................. $ 882 $ 1,682 $ 1,025 $ 575 $ 2,162 $ -- $ 3,995
Total assets.......................... 68,040 75,265 79,218 77,503 291,103 269,739 321,175
Long-term debt, including current
portion............................. 34,065 34,170 32,160 32,779 129,905 114,772 141,268
Total stockholder's equity............ 10,212 14,779 17,205 10,157 42,675 39,598 41,489
</TABLE>
- ---------------
(1) EBITDA represents operating income plus depreciation, amortization and
excludes one-time, non-recurring gains and losses. EBITDA in fiscal 1996
adds back a net one-time, non-recurring charge of $1.7 million. EBITDA is
presented because it is a widely accepted financial indicator used by
certain investors and analysts to analyze and compare companies on the basis
of operating performance. EBITDA is not intended to represent cash flows for
the period, nor has it been presented as an alternative to operating income
as an indicator of operating performance and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles. The Company
understands that, while EBITDA is frequently used by securities analysts in
the evaluation of companies, EBITDA, as used herein, is not necessarily
comparable to other similarly titled captions of other companies due to
potential inconsistencies in the method of calculation. See the historical
and unaudited pro forma financial statements of the Company and the related
notes thereto included elsewhere herein.
(2) For purposes of computing this ratio, earnings consist of income before
income taxes plus fixed charges. Fixed charges consist of interest expense,
amortization of deferred finance fees and one-third of the rent expense from
operating leases, which management believes is a reasonable approximation of
the interest factor of the rent. For the first quarter of 1996 and 1997,
earnings were inadequate to cover fixed charges by $0.8 million and $1.8
million, respectively.
30
<PAGE> 36
SELECTED PFS HISTORICAL FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The following table presents selected historical financial data of PFS at
and for the fiscal years 1992, 1993, 1994, 1995 and 1996, and the first quarters
of 1996 and 1997. The selected historical financial data for the fiscal years
1992, 1993, 1994, 1995 and 1996 have been derived from the audited financial
statements of PFS. The historical financial statements of PFS for the fiscal
years 1992, 1993, 1994, 1995 and 1996 were audited by KPMG Peat Marwick LLP. The
historical data of PFS at and for the first quarters of 1996 and 1997 have been
derived from, and should be read in conjunction with, the unaudited financial
statements of PFS and the related notes thereto, which are included elsewhere
herein. In the opinion of management, such interim financial statements reflect
all adjustments (consisting only of normal and recurring adjustments) necessary
to fairly present the information presented for such periods. The results of
operations for the first quarter of 1997 are not necessarily indicative of the
results of operations to be expected for the full year. The selected financial
data set forth below should be read in conjunction with "The Transactions,"
"Summary Selected Financial Data," "Management's Discussion and Analysis of
Financial Conditions and Results of Operations" and the historical financial
statements of PFS and the related notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
FISCAL YEAR(1) FIRST QUARTER(1)
-------------------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................. $2,799,673 $3,126,745 $3,279,837 $3,458,944 $3,422,086 $766,688 $720,524
Gross profit.......................... 273,858 304,030 326,672 344,777 341,484 77,038 75,682
Operating expenses.................... 199,796 220,834 239,772 265,305 261,741 60,995 61,225
--------- --------- --------- --------- --------- ------- -------
Operating income...................... 74,062 83,196 86,900 79,472 79,743 16,043 14,457
Interest expense...................... (9,311) (8,780) (12,934) (17,613) (15,566) (3,597) (3,996)
--------- --------- --------- --------- --------- ------- -------
Income before income taxes............ 64,751 74,416 73,966 61,859 64,177 12,446 10,461
Provision for income taxes............ 24,624 28,703 28,874 23,844 24,597 4,874 4,155
--------- --------- --------- --------- --------- ------- -------
Net income............................ $ 40,127 $ 45,713 $ 45,092 $ 38,015 $ 39,580 $ 7,572 $ 6,306
========= ========= ========= ========= ========= ======= =======
OTHER DATA:
EBITDA(2)............................. $ 87,264 $ 96,872 $ 103,953 $ 98,236 $ 99,573 $ 20,748 $ 19,363
Depreciation and amortization......... 13,202 13,676 17,053 18,764 19,830 4,705 4,906
Capital expenditures.................. 16,246 24,927 21,310 25,245 28,771 7,193 6,212
Ratio of earnings to fixed
charges(3).......................... 5.5x 6.1x 5.2x 3.8x 4.1x 3.7x 3.1x
BALANCE SHEET DATA:
Cash.................................. $ (441) $ 80 $ 174 $ 203 $ 1,625 $ 539 $ 176
Total assets.......................... 401,168 462,042 479,799 516,288 478,921 492,343 489,802
Long-term debt, including current
portion............................. -- -- -- -- -- -- --
Divisional equity..................... 77,997 100,146 85,707 88,579 93,405 90,567 89,941
</TABLE>
- ---------------
(1) PFS had a 52-53 week fiscal year ending on the last Wednesday in December.
Each fiscal year had 52 weeks, except 1994 contained 53 weeks. Each quarter
presented was 12 weeks.
(2) EBITDA represents operating income plus depreciation, amortization and
excludes one-time non-recurring gains and losses. EBITDA is presented
because it is a widely accepted financial indicator used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance. EBITDA is not intended to represent cash flows for
the period, nor has it been presented as an alternative to operating income
as an indicator of operating performance and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles. See the historical
financial statements of PFS and the related notes thereto included elsewhere
herein.
(3) For purposes of computing this ratio, earnings consist of income before
income taxes plus fixed charges. Fixed charges consist of interest expense,
amortization of deferred finance fees and one-third of the rent expense from
operating leases, which management believes is a reasonable approximation of
the interest factor of the rent.
31
<PAGE> 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
AmeriServe is North America's largest systems foodservice distributor
specializing in distribution to chain restaurants, the fastest growing segment
of the domestic restaurant industry. The Company serves over 30 different
restaurant chains and over 26,500 restaurant locations in North America. The
Company has long-standing relationships with such leading restaurant concepts as
Pizza Hut, Taco Bell, KFC, Wendy's, Arby's, Burger King, Dairy Queen, Subway and
Applebee's. Holberg was formed in 1986 to acquire and manage foodservice
distribution businesses. Management believes the Company's history of
successfully identifying and integrating acquisitions helped the Company achieve
its current market position.
Acquisitions prior to the Acquisition of PFS consisted of:
- The acquisition in December 1986 of NEBCO, a regional systems distributor
based in Omaha, Nebraska for $6.0 million. NEBCO had annual sales of
approximately $60 million at the time of such acquisition.
- The acquisition in January 1990 of Evans, a regional systems distributor
based in Waukesha, Wisconsin for $33.9 million. Evans had annual sales of
approximately $115 million at the time of such acquisition.
- The acquisition in December 1990 of L.L. Distribution Systems Inc., a
regional systems distributor based in Plymouth, Minnesota for $10.0
million. L.L. Distribution Systems Inc. had annual sales of approximately
$50 million at the time of such acquisition.
- The acquisition in March 1991 of Condon Supply Company, a regional
systems distributor based in St. Cloud, Minnesota for $3.4 million.
Condon Supply Company had annual sales of approximately $15 million at
the time of such acquisition.
- The acquisition in January 1996 of AmeriServ, a wholesale distributor of
food and other supply items based in Dallas, Texas for a purchase price
of $92.9 million. AmeriServ had annual sales of approximately $940
million at the time of such acquisition.
- The acquisition of Chicago Consolidated Corporation, an operator of
redistribution facilities for dry goods based in Chicago, Illinois for
approximately $2.0 million.
Primarily as a result of these acquisitions, the Company's net sales
increased from $277.9 million in 1991 to $1.3 billion in 1996. In May 1997, in
furtherance of its growth strategy, the Company entered into an agreement to
acquire PFS, subject to certain conditions. See "The Transactions."
RESULTS OF OPERATIONS OF AMERISERVE
The following financial information presents certain historical financial
information of AmeriServe, expressed as a percentage of net sales, for the
fiscal years 1994, 1995 and 1996 and for the first quarters of 1996 and 1997.
<TABLE>
<CAPTION>
FISCAL YEAR FIRST QUARTER
------------------------- ---------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales.................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit............................... 10.6 10.2 10.1 10.2 10.2
EBITDA..................................... 1.9 1.8 2.0 1.3 1.3
Operating income........................... 1.0 1.1 1.1 0.6 0.4
</TABLE>
32
<PAGE> 38
FIRST QUARTER OF 1997 COMPARED TO FIRST QUARTER OF 1996
AmeriServ was acquired on January 26, 1996. Therefore, the first quarter of
1996 includes only nine weeks of operations related to the acquisition of
AmeriServ.
Net Sales. Net sales increased by $77.0 million, or 33.2%, during the
first quarter of 1997 as compared to the first quarter of 1996. The pro forma
effect of the AmeriServ acquisition accounted for $55.1 million, or 71.6%, of
such increase, and increased account penetration and new store openings
accounted for the remaining $21.9 million, or 28.4%, of such increase. The
increased account penetration in new store openings was principally a result of
successful marketing of the Company's service capabilities and attractive
pricing.
Gross Profit. Gross profit increased by $7.9 million, or 33.5%, during the
first quarter of 1997 as compared to the first quarter of 1996. The increase was
due to the pro forma effect of the AmeriServ acquisition ($5.2 million) and the
increase in sales ($2.7 million). Gross margin remained constant at 10.2% during
the first quarter of 1997 as compared to the first quarter of 1996.
EBITDA. EBITDA increased by $0.9 million, or 27.3%, during the first
quarter of 1997 as compared to the first quarter of 1996. The increase was a
result of the increased gross margin, offset by increased operating costs that
were primarily due to costs related to preparation for the commencement of
service to Arby's. EBITDA margin remained constant at 1.3% during the first
quarter of 1997 as compared to the first quarter of 1996.
Operating Income. Operating income decreased by $0.3 million, or 17.3%,
during the first quarter of 1997 as compared to the first quarter of 1996. The
decrease was due to increased (i) depreciation resulting from capital projects
and capital expenditures associated with the integration of AmeriServ and (ii)
amortization resulting from goodwill associated with the acquisition of
AmeriServ. Operating income margin decreased from 0.6% during the first quarter
of 1996 to 0.4% during the first quarter of 1997.
FISCAL 1996 COMPARED TO FISCAL 1995
Net Sales. Net sales increased by $880.6 million, or 220.1%, during fiscal
1996 as compared to fiscal 1995. This increase was primarily due to the
acquisition of AmeriServ. The increase in net sales was net of certain account
resignations made during fiscal 1996. The Company regularly reviews the
profitability of its account portfolio, and at times decides to discontinue
relationships with accounts deemed not sufficiently profitable for the Company.
Gross Profit. Gross profit increased by $87.9 million, or 214.5%, during
fiscal 1996 as compared to fiscal 1995. The increase was due to the acquisition
of AmeriServ. Gross margin declined slightly from 10.2% during fiscal 1995 as
compared to 10.1% during fiscal 1996, due to the slightly higher cost of
products purchased by customers added through the AmeriServ acquisition.
EBITDA. EBITDA increased by $19.0 million, or 270.0%, during fiscal 1996
as compared to fiscal 1995. The overall increase was primarily due to the
AmeriServ acquisition. The EBITDA margin increased from 1.8% during fiscal 1995
to 2.0% during fiscal 1996, due to decreased operating costs offset by the
slight decline in gross margin.
Operating Income. Operating income increased by $10.0 million, or 234.2%,
during fiscal 1996 as compared to fiscal 1995. The increase was primarily due to
the increased EBITDA discussed above, offset by an increase in depreciation and
amortization of $7.3 million. The increased amortization and depreciation were a
result of the AmeriServ acquisition and the capital expenditures made by the
Company in 1996. Operating margin stayed the same at 1.1% in fiscal 1995 and
fiscal 1996.
FISCAL 1995 COMPARED TO FISCAL 1994
Net Sales. Net sales increased by $41.5 million, or 11.6%, during fiscal
1995 as compared to fiscal 1994. This increase was primarily due to new store
openings by existing customers, increased account penetration and expanded
geographical coverage.
33
<PAGE> 39
Gross Profit. Gross profit increased by $3.1 million, or 8.1%, during
fiscal 1995 as compared to fiscal 1994. The increase was due to new store
openings by existing customers, increased account penetration and expanded
geographical coverage, offset by lower gross margins. Gross margin decreased
from 10.6% during fiscal 1994 to 10.2% during fiscal 1995, consistent with
decreases in gross margin throughout the industry at that time.
EBITDA. EBITDA increased by $0.3 million, or 4.9%, during fiscal 1995 as
compared to fiscal 1994. The increase was primarily due to increased gross
profit dollars and lower operating expenses. EBITDA margin decreased from 1.9%
during fiscal 1994 to 1.8% during fiscal 1995 due to the lower gross margin,
offset by a decrease in operating expenses.
Operating Income. Operating income increased by $0.9 million, or 24.8%,
during fiscal 1995 as compared to fiscal 1994. The increase was primarily due to
the $0.3 million increase in EBITDA and a decrease of $0.5 million in
amortization and depreciation expense. As a result, operating income margin
increased from 1.0% during fiscal 1994 to 1.1% during fiscal 1995.
RESULTS OF OPERATIONS OF PFS
The following financial information presents certain historical financial
information of PFS, expressed as a percentage of net sales, for the fiscal years
1994, 1995 and 1996 and for the first quarter of 1996 and 1997.
<TABLE>
<CAPTION>
FISCAL YEAR FIRST QUARTER
------------------------- ---------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales.................. 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit............... 10.0 10.0 10.0 10.0 10.5
EBITDA..................... 3.2 2.8 2.9 2.7 2.7
Operating income........... 2.6 2.3 2.3 2.1 2.0
</TABLE>
FIRST QUARTER 1997 COMPARED TO FIRST QUARTER 1996
Net Sales. PFS net sales of $720.5 million declined by $46.2 million, or
6.0%, during the first quarter of 1997 as compared to the first quarter of 1996,
primarily due to higher volumes in the first quarter of 1996 related to sales of
promotional items and lower store volumes in the current period, offset slightly
by an increased market share in the first quarter of 1997.
Gross Profit. Gross profit decreased by $1.4 million, or 1.8%, during the
first quarter of 1997 as compared to the first quarter of 1996, due to the
decrease in revenue during the first quarter of 1997. Gross margin increased
from 10.0% during the first quarter of 1996 to 10.5% during the first quarter of
1997, due to a shift in sales to higher margin products.
EBITDA. EBITDA decreased by $1.4 million, or 6.7%, during the first
quarter of 1997 as compared to the first quarter of 1996, due to the decrease in
revenue during the first quarter of 1997, as well as the impact of both higher
general and administrative expenses for fees incurred to implement a new
computer system and interest charges incurred to prepay a guaranteed cost
casualty program. EBITDA margin remained constant at 2.7% during the first
quarter of 1996 as compared to the first quarter of 1997.
Operating Income. Operating income declined by $1.6 million, or 9.9%,
during the first quarter of 1997 as compared to the first quarter of 1996. The
decrease was due to the revenue shortfall and higher expenses as noted above.
Depreciation expense increased slightly due to the impact of center expansions
completed during the first quarter of 1996. Operating income margin decreased
from 2.1% during the first quarter of 1996 to 2.0% during the first quarter of
1997, due to the lower EBITDA margin and the increased depreciation.
FISCAL 1996 COMPARED TO FISCAL 1995
Net Sales. Net sales decreased by $36.9 million, or 1.1%, during fiscal
1996 as compared to fiscal 1995. This decrease was due to the impact of soft
sales in the equipment segment, which declined by $24.7 million
34
<PAGE> 40
from fiscal 1995. Food and supply revenues declined by $12.2 million during
fiscal 1996 as compared to fiscal 1995, due to soft volumes in our customer
base, offset slightly by increased market share.
Gross Profit. Gross profit decreased by $3.3 million, or 1.0%, during
fiscal 1996 as compared to fiscal 1995, due to the decrease in revenue during
fiscal 1996. Gross margin was consistent with prior year results during fiscal
1996.
EBITDA. EBITDA increased by $1.3 million, or 1.4%, during fiscal 1996 as
compared to fiscal 1995. A favorable performance in distribution, general and
administrative expenses of $2.4 million during fiscal 1995, due to savings
generated from an operations restructuring performed during fiscal 1995 and the
impact of higher bad debt expense during fiscal 1995, contributed to the
increase. These items were partially offset by the gross margin decline
described above. EBITDA margin increased from 2.8% during fiscal 1995 to 2.9%
during fiscal 1996, due to the lower operating expenses.
Operating Income. Operating income increased by $0.3 million, or 0.3%,
during fiscal 1996 as compared to fiscal 1995. This increase was primarily due
to favorable performance in distribution, general and administrative expenses
and other income, largely offset by a decline in gross margin and increased
depreciation expense due to several distribution center expansions and the
relocation of a facility in Southern California. Operating income margin during
fiscal 1996 was consistent with the prior year's margin of 2.3%.
FISCAL 1995 COMPARED TO FISCAL 1994
Net Sales. Net sales increased by $179.1 million, or 5.5%, during fiscal
1995 as compared to fiscal 1994, due to an increase in the number of units
served by an average of almost 1,000 stores, as well as increased product costs.
Strong food and supply sales were offset by soft sales in the equipment segment.
Gross Profit. Gross profit increased by $18.1 million, or 5.5%, during
fiscal 1995 as compared to fiscal 1994, due to the increase in revenue during
fiscal 1995. Gross margin was consistent with prior year results during fiscal
1995.
EBITDA. EBITDA decreased by $5.7 million, or 5.5%, during fiscal 1995 as
compared to fiscal 1994, despite a strong revenue performance, reflecting
increased bad debt expense and reduced leverage on distribution expense due to a
field restructuring during fiscal 1995. EBITDA margin decreased from 3.2% during
fiscal 1994 to 2.8% during fiscal 1995, due to the increased operating expenses.
Operating Income. Operating income decreased by $7.4 million, or 8.5%,
during fiscal 1995 as compared to fiscal 1994, due to increased distribution,
general and administrative expenses. Depreciation and amortization increased
during fiscal 1995 as compared to fiscal 1994, due to the relocation of a
distribution center and several center expansions. Operating income margin
decreased from 2.6% during fiscal 1994 to 2.3% during fiscal 1995 as a result of
the increased operating expenses.
LIQUIDITY AND CAPITAL RESOURCES
Historical
The Company had $26.6 million of working capital at March 29, 1997 as
compared to $18.0 million at the end of fiscal 1996. The increase of $8.6
million was primarily due to increased receivables of $5.5 million, increased
inventory of $15.2 million and decreased accrued liabilities of $5.0 million,
offset by increased accounts payable of $25.4 million. The changes in working
capital were due to the increased business needs of the second quarter versus
the first quarter and preparation for the start of service to Arby's.
The Company had $18.0 million of working capital at December 28, 1996
compared to $10.5 million of working capital at December 30, 1995. The increase
was due to the working capital required to service the customer base of
AmeriServ, which was acquired on January 25, 1996.
The Company had $10.5 million of working capital at December 30, 1995 as
compared to $10.9 million of working capital at December 31, 1994. The decrease
was due to an increase in accounts payable.
35
<PAGE> 41
During the first quarter of 1997, net cash used in operating activities was
$1.4 million. Net loss was $1.2 million and depreciation and amortization was
$2.7 million. Net cash used in investing activities was $6.8 million. Capital
expenditures were $2.3 million. Net cash provided by financing activities was
$10.0 million.
During the first quarter of 1996, net cash used in operating activities was
$4.6 million. Net loss was $0.6 million and depreciation and amortization was
$1.6 million. Net cash used in investing activities was $98.5 million. Capital
expenditures were $0.9 million. Net cash provided by financing activities was
$102.6 million.
During fiscal 1996, net cash provided by operating activities was $1.2
million. Net income was $2.5 million and depreciation and amortization was $10.1
million. Net cash used in investing activities was $105.0 million principally
used to purchase AmeriServ. Capital expenditures were $12.5 million. Net cash
provided by financing activities was $105.4 million.
During fiscal 1995, net cash provided by operating activities was $4.5
million. Net income was $0.5 million and depreciation and amortization was $2.8
million. Net cash used in investing activities was $5.6 million. Capital
expenditures were $2.5 million. Net cash provided by financing activities was
$0.6 million.
During fiscal 1994, net cash provided by operating activities was $4.3
million. Net income was $0.1 million and depreciation and amortization was $3.3
million. Net cash used in investing activities was $5.4 million. Capital
expenditures were $1.3 million. Net cash provided by financing activities was
$0.5 million.
Pro Forma
After the Transactions, the Company's primary capital requirements, on a
pro forma basis, will be for debt service, working capital and capital
expenditures. The Company believes that cash flow from operating activities,
cash and cash equivalents and borrowings under the New Credit Facility will be
adequate to meet the Company's short-term and long-term liquidity requirements
prior to the maturity of its long-term indebtedness, although no assurance can
be given in this regard. Under the New Credit Facility, the Revolving Credit
Facility will provide $150 million of revolving credit availability, of which
approximately $138.9 million will be available (after reductions of $11.1
million of letters of credit) for draw after Closing subject to customary
covenants. In addition, the Company may increase the Accounts Receivable
Program, further improving liquidity, although no assurance can be given that
the Receivables will be sufficient to increase the Accounts Receivable Program.
See "Risk Factors -- Substantial Leverage and Debt Service."
The Company estimates that capital expenditures for fiscal 1997 will be
approximately $35 million, which includes maintenance capital expenditures and
various planned and potential projects designed to increase efficiencies and
enhance the Company's competitiveness and profitability. Specifically, such
capital expenditures include the planned distribution center consolidation,
modification and expansion of certain distribution centers, integration and
upgrade of MIS and other general capital improvements.
SEASONALITY AND INFLATION
Historically, AmeriServe's sales and operating results have reflected
seasonal variations. The Company experiences lower net sales and income from
operations in the first and fourth quarters, with the effects being more
pronounced in the first quarter. Additionally, the effect of these seasonal
variations are more pronounced in regions where winter weather is generally more
inclement.
Inflation has not had a significant impact on the Company's operations.
Food price deflation could adversely affect the Company's profitability as a
significant portion of the Company's sales are at prices based on product cost
plus a percentage markup. The Company has not been adversely affected by food
price deflation in recent years.
36
<PAGE> 42
ENVIRONMENTAL MATTERS
Under applicable environmental laws, the Company may be responsible for
remediation of environmental conditions and may be subject to associated
liabilities (including liabilities resulting from lawsuits brought by private
litigants) relating to its distribution centers and the land on which its
distribution centers are situated, regardless of whether the Company leases or
owns the stores or land in question and regardless of whether such environmental
conditions were created by the Company or by a prior owner or tenant.
The Company believes it currently conducts its business, and in the past
has conducted its business, in substantial compliance with applicable
environmental laws and regulations. In addition, compliance with federal, state
and local laws enacted for protection of the environment has had no material
effect on the Company. However, there can be no assurance that environmental
conditions relating to prior, existing or future distribution centers or
distribution center sites will not have a material adverse effect on the
Company.
In connection with the Acquisition, the Company reviewed existing reports
and retained environmental consultants to conduct an environmental audit of
PFS's operations in order to identify conditions that could have material
adverse effects on the Company. The Company is in the process of obtaining final
reports on the results of such audit with regard to PFS and does not believe
such reports will reveal any environmental matter that is likely to have a
material adverse effect on the Company.
37
<PAGE> 43
THE BUSINESS
AmeriServe is North America's largest systems foodservice distributor
specializing in distribution to chain restaurants, the fastest growing segment
of the domestic restaurant industry. The Company is the primary supplier to its
customers of a wide variety of items, including fresh and frozen meat and
poultry, seafood, frozen foods, canned and dry goods, fresh and pre-processed
produce, beverages, dairy products, paper goods, cleaning supplies and
equipment. The Company serves over 30 different restaurant chains and over
26,500 restaurant locations in North America. The Company has had long-standing
relationships with such leading restaurant concepts as Pizza Hut, Taco Bell,
KFC, Wendy's, Burger King, Dairy Queen, Subway and Applebee's. The Company's
strategy is to capitalize on its market leading position, compelling industry
trends and management's extensive experience to: (i) pursue profitable internal
and external growth opportunities; (ii) capitalize on its nationwide network of
distribution centers to increase customer density and regional market
penetration; (iii) continue to provide low cost, superior customer service; and
(iv) maximize operating leverage by pursuing selective acquisitions within the
fragmented foodservice distribution industry. For the 12 months ended March 29,
1997, the Company generated pro forma net sales and Adjusted EBITDA of $4.8
billion and $145.2 million, respectively.
The Company has achieved a record of strong growth in net sales and EBITDA
by successfully implementing this strategy. From 1992 to 1996, exclusive of PFS,
the Company's net sales increased from $293.6 million to $1.3 billion,
representing a CAGR of 44.5%. During the same period, the Company's EBITDA,
exclusive of PFS, increased from $6.0 million to $26.0 million, representing a
CAGR of 44.1%. The Company believes it is well positioned to continue to expand
its presence in the systems foodservice distribution industry as a result of its
reputation for providing superior customer service as well as its ability to
provide low cost, efficient services. The Company believes that it was primarily
as a result of these factors that in January 1997 it was awarded a three-year
exclusive contract effective April 1997 to provide foodservice distribution to
approximately 2,600 Arby's restaurants. The Company estimates that this
contract, which management believes represents the single largest customer
migration in the systems foodservice distribution industry, will result in the
addition of approximately $325 million of net sales in the first 12 months of
such contract.
On May 23, 1997, in furtherance of its strategy, NEHC entered into an
agreement to acquire PFS, the foodservice distribution business of PepsiCo.
Prior to the Acquisition, PFS was North America's second largest systems
foodservice distributor, serving over 17,000 restaurants in the Pizza Hut, Taco
Bell and KFC restaurant systems. The Company expects to realize significant
benefits from the Acquisition, including: (i) enhanced customer and concept
diversification; (ii) increased customer density; (iii) broadened national and
international presence; and (iv) substantial cost savings and economies of
scale. In addition, in connection with the Acquisition, the Company has entered
into the Distribution Agreement, whereby it will be the exclusive distributor of
selected products for five years to the approximately 9,800 Pizza Hut, Taco Bell
and KFC restaurants in the continental United States owned by PepsiCo and
previously serviced by PFS. These restaurants accounted for approximately 68% of
PFS's 1996 net sales and 44% of the Company's 1996 pro forma net sales after
giving effect to the Arby's contract.
The Company believes it is well positioned to capitalize on the attractive
characteristics of the chain restaurant segment of the foodservice distribution
industry, which include: (i) the high growth rate of the segment, which
experienced an approximately 7.4% net sales CAGR from 1985 to 1995; (ii) the
uniformity of product offerings and consistency of demand by chain restaurant
customers; (iii) the increased focus by chain restaurants on foodservice
distributors that can provide consistent quality and reliable service on a
nationwide basis to maintain the chain's uniform standards; and (iv) the
fragmented nature of the industry, which includes over 3,000 foodservice
distribution companies. As the largest systems foodservice distributor serving
chain restaurants, the Company believes it is better positioned than its
competitors to offer consistent quality, reliable service and value on a
national scale in order to accommodate the growth of each customer.
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<PAGE> 44
FOODSERVICE DISTRIBUTION INDUSTRY
Generally
The foodservice distribution business involves the purchasing, receiving,
warehousing, marketing, selecting, loading and transportation of fresh and
frozen meat and poultry, seafood, frozen foods, canned and dry goods, fresh and
preprocessed produce, beverages, dairy products, paper goods, cleaning supplies,
equipment and other supplies from manufacturers and vendors to a broad range of
enterprises, including restaurants, cafeterias, nursing homes, hospitals, other
health care facilities and schools (but generally does not include supermarkets
and other retail grocery stores). The United States foodservice distribution
industry was estimated to generate $123 billion in sales in 1996.
Within the foodservice distribution industry, there are two primary types
of distributors: broadline foodservice distributors and specialist foodservice
distributors, such as the Company. Broadline foodservice distributors service a
wide variety of customers including both independent and chain restaurants,
schools, cafeterias and hospitals. Broadline distributors may purchase and
inventory as many as 25,000 different food and food-related items. Customers
utilizing broadline foodservice distributors typically purchase inventory from
several distributors. Specialist foodservice distributors may be segregated into
three categories: product specialists, which distribute a limited number of
products (such as produce or meat); market specialists, which distribute to one
type of restaurant (such as Mexican); and systems specialists, which focus on
one type of customer (such as chain restaurants or health care facilities).
Systems specialists, such as the Company, typically serve as a single source of
supply for their customers. In addition, chain restaurant foodservice
distributors are less vulnerable to customer migrations because much of their
inventory is proprietary to the restaurant concept. Also, broadline foodservice
distributors generally rely on sales representatives who must call on customers
regularly. Systems' distributors, however, regularly process orders
electronically without the need for a sales representative's involvement.
Systems Specialty -- Chain Restaurants
The Company operates as a systems distributor that specializes in servicing
chain restaurants. The chain restaurant segment represents a significant portion
of the foodservice distribution industry, with 1996 industry sales in this
segment estimated by the Company to be approximately $103 billion at the retail
level and approximately $44 billion at the distributor level. In addition,
retail sales in this segment are estimated to have grown at a CAGR of
approximately 7.4% from 1985 to 1995, reflecting both the growth of existing
chain restaurants and the introduction of new chain restaurant concepts. The
chain restaurant market at the retail level is projected to grow from $103
billion in 1996 to $162 billion by 2005, representing a ten-year inflation
adjusted CAGR of approximately 5%.
The Company believes a significant factor influencing growth in the systems
distribution market share segment is the ability of the systems distributor to
provide consistently high quality and reliable distribution services at
competitive prices, which has resulted in customers' forming long-term
relationships with their systems distributor in order to tailor specific
programs that meet the particular needs of the customer while creating operating
and cost efficiencies for both the customer and the systems distributor.
The Company believes that systems distributors are better able to service
chain restaurants than broadline distributors because the Company believes
systems distributors are often able to offer their customers a higher quality of
service at a lower cost. Given the uniformity of product offerings and the
consistency of demand of chain restaurants, a systems distributor has the
opportunity to reduce its overall costs and consequently those of its customers
through purchasing and holding fewer SKUs in inventory than a broadline
distributor. This reduces both the inbound and outbound freight costs through
higher volumes and larger drop sizes and provides more efficient and reliable
distribution schedules, thereby reducing labor costs of both the systems
distributor and its customer. In addition, systems distributors generally
require a smaller sales force than broadline distributors. The Company believes
that the uniformity of product offerings, frequency of deliveries and magnitude
of volumes allow a systems distributor to chain restaurants to significantly
improve net asset turnover as compared to a broadline distributor. In addition,
management believes that the larger systems distributors have the volume and
scale to offer chain restaurants an
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<PAGE> 45
opportunity to further reduce their costs through value-added services, such as
procurement of nonproprietary items and in-bound freight logistics management.
In addition, larger systems distributors can invest in technology and business
processes, such as electronic order entry, to reduce the cost of distributing to
the restaurants.
The Company believes that it has the leading market share in the chain
restaurant foodservice distribution segment. The foodservice distribution
industry remains highly fragmented and continues to experience significant
consolidation. The number of foodservice distributors has decreased from
approximately 3,600 in 1985 to approximately 3,000 in 1997, with a significant
increase in the market shares of the largest distributors. The Company
anticipates that further consolidation may take place in this segment and
intends to be a leading participant in any such further consolidation.
BUSINESS STRATEGY
The Company's objective is to continue to grow net sales and EBITDA by
implementing the following key elements of its business strategy:
- Continue to Pursue Internal and External Growth Opportunities. The
Company intends to continue to grow through a combination of the
development of new business from existing customers, the addition of new
chains, international expansion and selective acquisitions.
Growth From Existing Chains. As the primary foodservice distributor
to most of its customers, the Company expects to benefit from the continued
growth of the domestic chain restaurant industry, the fastest growing
sector of the restaurant industry. From 1985 to 1995, the chain restaurant
segment experienced an approximately 7.4% net sales CAGR, which exceeds the
estimated 3.0% CAGR experienced by the overall restaurant industry. The
Company expects to realize growth from its existing base of customers and
concepts primarily due to: (i) increased traffic within existing
restaurants; (ii) the addition of new product lines; (iii) new restaurant
development and restaurant acquisitions by existing customers; and (iv) the
addition of new customers within concepts currently serviced by the
Company.
Growth Through Addition of New Chains. The Company continually
monitors the marketplace for opportunities to expand its portfolio of
customers and concepts. The Company targets (i) chains operating in
geographic areas where the Company could benefit from increased customer
density, further enhancing its operating leverage, and (ii) concepts that
could benefit from the Company's national presence and superior customer
service. In April 1997, the Company began operating under a recently
awarded three-year exclusive contract to provide foodservice distribution
to over 2,600 Arby's restaurants nationwide. The Company estimates that
this contract, which management believes represents the single largest
customer migration in the systems foodservice distribution industry, will
result in the addition of approximately $325 million of net sales in the
first 12 months of such contract. In addition, the Company plans to pursue
additional export opportunities and further expand its operations in
international markets. After giving effect to the Acquisition, the Company
exports products from its distribution centers in the United States to
approximately 65 foreign countries.
Pursue Selective Acquisition Opportunities. As North America's
largest systems foodservice distributor serving chain restaurants, the
Company believes it is well positioned to capitalize on the consolidation
taking place in the fragmented foodservice distribution industry. The
number of foodservice distributors has decreased from approximately 3,600
in 1985 to approximately 3,000 in 1997, with a significant increase in the
market shares of the largest distributors. The Company intends to continue
to make strategic fold-in acquisitions in order to augment its operations
in existing markets, enhance customer density and further reduce costs.
- Capitalize on the Benefits of the PFS Acquisition. Management believes
that combining the operations of AmeriServe and PFS will present it with
opportunities to eliminate duplicative costs and realign the Company's
distribution center network to effectively capitalize on economies of
scale and the benefits of higher customer density. Management has
identified approximately $27 million of annual cost savings, which it
believes it can achieve through the elimination of general and
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<PAGE> 46
administrative expenses and the consolidation of distribution centers in
certain markets. Following the Acquisition, the Company expects to reduce
the number of current distribution centers from 39 to 29. In addition,
the five-year Distribution Agreement will further secure the Company's
customer base and provide for a long-term contract covering approximately
44% of the Company's pro forma 1996 net sales after giving effect to the
Arby's contract.
- Continue to Maximize Operating Leverage. As the largest systems
foodservice distributor in North America, the Company pursues a low-cost
operating strategy based primarily on achieving economies of scale in the
areas of warehousing, transportation, general and administrative
functions and management information systems. The Company generates
significant operating leverage by utilizing large distribution centers
strategically within each of its geographic markets, enabling it to: (i)
service multiple concepts from the same warehouse; (ii) maximize the
density of restaurants served from each facility; (iii) optimize delivery
routes; (iv) invest in advanced technology, which increases operational
efficiencies and enhances customer service; and (v) manage inventory more
efficiently.
- Continue to Provide Superior Customer Service. The Company believes it
enjoys a reputation for providing consistent, high quality service based
on its customer focus, its commitment to service excellence and the depth
of its management team. The Company has successfully implemented a
decentralized management structure that enables the Company to respond
quickly and flexibly to local customer needs. The Company typically
interacts with its customers on a daily basis, and generally makes
multiple deliveries to each restaurant each week. The Company measures
daily its service performance by continuously monitoring the accuracy and
promptness of deliveries. The Company's advanced computer systems are
linked to many of its customers' locations, enabling customers to
communicate electronically with the Company, thereby reducing the
Company's administrative costs, and enabling it to more efficiently
respond to customers' needs. In addition, the Company's national presence
allows it to provide consistent and reliable service to national
restaurant concepts with geographically diverse locations.
CUSTOMERS
The Company's customers are generally individual franchisees or
corporate-owned restaurants of chain restaurant concepts. The Company's
customers include over 30 restaurant concepts with over 26,500 restaurant
locations. The corporate owner or franchisor of the restaurant concept generally
reserves the right to designate one or more approved foodservice distributors
within a geographic region, and each franchisee is typically allowed to select
its foodservice distributor from such approved list.
Concept Mix and Concentration
On a pro forma basis after giving effect to the Transactions and the Arby's
contract, the Company's net sales in 1996 to its largest restaurants concepts
were as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF 1996 NET SALES
--------------------------------
PRO FORMA
CONCEPT AMERISERVE PFS COMBINED
------------------------------------------------------- ---------- --- ---------
<S> <C> <C> <C>
Pizza Hut restaurants(1)............................... 43% 28%
Taco Bell restaurants(2)............................... 43% 28%
KFC restaurants(3)..................................... 7% 14% 12%
Wendy's restaurants.................................... 30% 10%
Arby's restaurants..................................... 17% 6%
Burger King restaurants................................ 14% 5%
</TABLE>
- ---------------
(1) PepsiCo -- owned Pizza Hut restaurants accounted for approximately 17.4% of
pro forma combined net sales.
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<PAGE> 47
(2) PepsiCo -- owned Taco Bell restaurants accounted for approximately 18.3% of
pro forma combined net sales.
(3) PepsiCo -- owned KFC restaurants accounted for approximately 7.9% of pro
forma combined net sales.
On a pro forma basis after giving effect to the Transactions and to the
Arby's contract, aggregate sales to PepsiCo Chains would have represented 44% of
the Company's 1996 net sales. No other single customer accounted for more than
10% of the Company's pro forma net sales in fiscal 1996. See "Risk Factors --
Dependence on Certain Chains and Customers."
Length of Customer Relationships
The Company has enjoyed long and successful relationships with its
customers that, in many cases, date back to the initial start-up of the
concept's operations. The following table illustrates concepts that are serviced
by the Company and the number of years the Company has serviced customers within
these concepts:
<TABLE>
<CAPTION>
YEARS AS A
CONCEPT CUSTOMER
-------------------------------------------------- ----------
<S> <C>
Dairy Queen....................................... 46
Burger King....................................... 36
KFC............................................... 26
Wendy's........................................... 21
Pizza Hut......................................... 20
Taco Bell......................................... 18
Applebee's........................................ 8
Subway............................................ 6
</TABLE>
The Distribution Agreement entered into with PepsiCo will provide the
Company with exclusive distribution rights for certain restaurant products to
approximately 9,800 Pizza Hut, Taco Bell and KFC restaurants for a five-year
term. Historically, PFS has had great success retaining business with
restaurants formerly owned by PepsiCo that have been refranchised. The
increasing penetration of franchise restaurants and the strong refranchising
retention rate have resulted in an overall net increase in restaurants served
every year. PFS's high level of customer satisfaction is a direct result of
management's emphasis on customer service. PFS's field level management is
responsible for maintaining and reinforcing long-standing partnerships with the
Pizza Hut, Taco Bell and KFC restaurants.
In January 1997, the Company entered into a three-year agreement, which
became effective April 1997, to become the primary supplier to approximately
2,600 Arby's restaurants nationwide. Management believes this to be the single
largest customer migration in the systems foodservice distribution business. The
Company services these restaurants together with three other cooperating
distributors. The cooperating distributors currently serve Arby's restaurants
located outside the Company's pre-Acquisition primary service territory. The
Company expects to generate at least $325 million of net sales during the first
12 months of the Distribution Agreement. See "Risk Factors -- Key Contracts."
OPERATIONS AND DISTRIBUTION
The Company's operations generally can be categorized into three business
processes: product replenishment, product storage and order fulfillment. Product
replenishment involves the management of logistics from the vendors through the
delivery of products to the Company's distribution centers. Product storage
involves the warehousing and rotation of temperature-controlled inventory at the
distribution centers pending sale to customers. Order fulfillment involves all
activities from customer order placement and selecting and loading through
delivery from the distribution centers to the restaurant location. Supporting
these processes is the Company's nationwide network of distribution centers, its
fleet of approximately 900 tractors and 1,200 trailers and its management
information systems. Substantially all the Company's products are purchased,
stored and delivered in sealed cases, that the Company does not open or alter.
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<PAGE> 48
Product Replenishment
While the Company is responsible for purchasing products to be delivered to
its customers, chain restaurants typically approve the vendors and negotiate the
price for their proprietary products. The Company determines the distribution
centers that will warehouse products for each customer and the quantities in
which such products will be purchased. Order quantities for each product are
systematically determined for each distribution center, taking into account both
recent sales history and projected customer demand. The distribution centers
selected to serve a customer are based on the location of the restaurants to be
serviced.
The Company works with its chain customers in order to optimize
transportation from vendor locations to distribution centers. By utilizing the
collective demand of its customers for inbound transportation, its existing
fleet of trucks, and its expertise in managing transportation, the Company can,
in many instances, offer its customers inbound transportation on a more
economical basis than the vendors that have traditionally provided such
services. The Company believes it can offer its customers lower inbound
transportation costs through (i) the use of the Company's delivery fleet to
backhaul products, and (ii) the consolidation of products from more than one
vendor or for use by more than one customer to increase truckloads and brokering
freight to third-party carriers with whom the Company has negotiated lower
transportation rates.
Product Storage
The Company currently warehouses approximately 1,100 to 5,500 SKUs
(excluding the redistribution and equipment distribution centers) for its
customers at 36 facilities in 30 metropolitan areas. Upon receipt of the product
at the distribution centers, the product is inspected and stored in pallets, in
racks or in bulk in the appropriate temperature-controlled environment. Products
stored at the distribution centers are generally not reserved for a specific
customer. Rather, customer orders are filled from the common inventory at the
relevant distribution center. The Company's computer systems continuously
monitor inventory levels in an effort to maintain optimal levels, taking into
account required service levels, buying opportunities and capital requirements.
Each distribution center contains ambient, refrigerated (including cool docks)
and frozen space, as well as offices for operations, sales and customer service
personnel and a computer network, accessing systems at other distribution
centers and the Company's corporate support centers.
A majority of the Company's distribution centers are between 100,000 to
200,000 square feet with approximately 20% refrigerated storage space, 30%
frozen storage space and 50% dry storage area. The Company uses sophisticated
logistics programs to strategically locate new distribution centers in areas
near key highways with specific consideration given to the proximity of
customers and suppliers. The Company also employs consultants in distribution
center layout and product flow to design the distribution center with the
objective of maximizing product throughput. The Company estimates that each
distribution center can effectively service customers within a 350 mile radius,
although the Company's objective is to service customers within a 150 mile
radius.
Order Fulfillment
The Company places a significant emphasis on providing high quality service
in order fulfillment. By providing high quality service and reliability, the
Company believes that it can reduce the number of reorders and redeliveries,
reducing costs for both the Company and its customers. Each restaurant places
product orders based on recent usage, estimated sales and existing restaurant
inventories. The Company uses its management information systems to continually
update routes and delivery times with each customer in order to lower
fulfillment costs. Product orders are placed with the Company one to three times
a week either through the Company's customer service representatives or through
electronic transmission using specially designed software. Many of the
restaurants served by the Company transmit product orders electronically.
Once ordered by the customer, products are picked and labeled at each
distribution center, and the products are generally placed on a pallet for the
loading of outbound trailers. Delivery routes are scheduled to both fully
utilize the trailer's load capacity and minimize the number of miles driven in
order to exploit the cost benefit of customer density.
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<PAGE> 49
Fleet
The Company operates a fleet of approximately 900 tractors and 1,200
trailers. The Company leases approximately 300 of the tractors from General
Electric Capital Corp. pursuant to full-service leases that include maintenance,
licensing and fuel tax reporting. The Company owns approximately 600 tractors
and approximately 800 trailers. The remaining trailers are leased under similar
full-service leases from a variety of leasing companies. Lease terms average six
years for new tractors and nine years for new trailers.
Most of the Company's vehicles contain onboard computers. The computers
assist in managing fleet operations and provide expense controls, automated
service level data collection and real-time driver feedback, thereby enhancing
the Company's service level to customers. Data from the onboard computers are
loaded into the routing software after each route in order to continually
optimize the route structure. Substantially all of the Company's trailers
contain three temperature-controlled compartments, which allow the Company to
simultaneously deliver frozen food, refrigerated food and dry goods.
Management Information Systems
AmeriServe and PFS currently operate with different computer systems.
AmeriServe utilizes a variety of personal computer and IBM AS/400-based software
applications. PFS also operates with a variety of applications, the core of
which are mainframe-based. Both companies have invested significantly in their
systems, and both consider their systems to be among the leaders in the
industry. Programs in use include various customized and special-purpose
applications, such as warehouse management tools, remote order entry, automated
replenishment, delivery routing, and onboard computers for delivery trucks.
Following the Acquisition, the Company intends to replace its core
applications with software from J.D. Edwards in order to integrate the systems
of AmeriServe and PFS. This conversion process is expected to take 18 to 24
months to complete and will result in all of the Company's distribution centers
operating with the same computer systems and the same operating policies and
practices.
Procurement, Logistics and Re-Distribution
The Company procures a wide range of food, paper and cleaning products for
ultimate distribution to its chain restaurant customers. These products include
fresh and frozen meat and poultry, seafood, frozen foods, canned and dry goods,
fresh and preprocessed produce, beverages, dairy products, paper goods, cleaning
supplies and equipment. The Company is also exclusively responsible for the
inventory management of these items for its customers. The Company also operates
two re-distribution centers for the purpose of purchasing slow-moving inventory
items and consolidating these items into full truckload shipments to the
Company's distribution centers nationally, as well as to customers outside the
Company. The re-distribution division has been approved as a national
consolidation point for Burger King, Dairy Queen, Arby's, KFC, Taco Bell, Pizza
Hut and several other chains. The major benefits of consolidation are: (i)
effective reduction of inbound freight costs; and (ii) increased distributor
inventory turns, providing optimal quantity purchase opportunities and
optimizing the inventory management of both the Company's distribution centers
and the chain customers. The Company also offers re-distribution services to
customers outside of the continental U.S.
The Company operates a freight logistics division for the purpose of
achieving the lowest landed costs to its distribution centers through the review
of purchase orders generated at the various distribution centers. The Company
generates freight savings through leveraged purchasing, with key carriers
operating in defined traffic lanes. This division also provides logistical
services to a substantial number of customers outside of the Company on a fee
basis. Current inbound purchase orders controlled by this division exceed 2,500
truckloads monthly. Further, the Company operates a nationally registered common
carrier fleet of temperature-controlled tractor-trailer units. This division
serves as a "core-carrier" to several national food manufacturers and is an
integral part of the Company's inbound freight logistics initiative.
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<PAGE> 50
MARKETING AND CUSTOMER SERVICE
The Company employs national and regional marketing representatives who
service existing customers, as well as focus on developing new customers from
among other restaurant concepts. Additionally, each division President and
certain members of senior management are active in maintaining relationships
with current and potential customers. The Company compensates its sales and
marketing representatives under various compensation plans, which combine a base
pay with an incentive bonus.
The Company's customer service activities are highly customized to the
unique needs of each customer. Each customer has a dedicated account manager who
is responsible for overseeing all of a customer's needs and coordinating the
services provided to such customer. In order to manage problem resolution, the
Company tracks customer calls to ensure that appropriate action and follow-up
occur. The Company's representatives travel frequently to the customer's
restaurant or office for regularly scheduled meetings and key project reviews to
ensure close coordination between the Company and the customer.
A key component of the Company's marketing plan is the use of customized
information systems to improve customer service, and to assist the customer in
the daily operation of its business. The Company utilizes on-line order entry
inventory systems, which permit the Company to simultaneously take orders,
compare the order to previous orders, track and replenish inventory and schedule
the delivery. In addition to placing orders, certain customers may also access
their own accounts, and inventory information, and print copies of order
acknowledgments, invoices and account statements. This electronic data
interchange system provides certain customers with access to the Company's
information systems at their convenience and enables the Company to accept
orders 24 hours a day, seven days a week. The electronic data interchange not
only allows for greater efficiencies, but also produces reduced administrative
expenses and fewer ordering errors. The Company believes that this system
provides customers with superior value-added services, which strengthens the
relationship between the Company and its customers and creates certain
competitive strengths.
COMPETITION
The foodservice distribution industry is highly competitive. Competitors
include other systems distribu-
tion companies focused on the chain restaurants and captive, multi-unit
franchisor-owned distribution companies and broadline foodservice distributors.
The Company competes directly with other systems specialists that target
chain restaurant concepts. The Company's principal competitors are ProSource,
Inc., Sysco Corporation's Sygma division, Marriott Distribution Services Inc.,
Alliant Foodservice Inc. and MBM Corp. The Company also competes with regional
and local distributors in the foodservice industry, principally for business
from franchisee-owned chain restaurants. National and regional chain restaurant
concepts typically receive service from one or more systems distributors.
Distributors are appointed or approved to service these concepts and/or their
franchisees on either a national or regional basis. The Company believes that
distributors in the foodservice industry compete on the bases of quality,
reliability of service and price. Because a number of the Company's customers
prefer a distributor that is able to service their restaurants on a nationwide
basis, the Company believes that it is in a strong position to retain and
compete for national chain restaurant customers and concepts. The Company
believes that restaurant management, in general, is reluctant to change
distributors or use multiple distributors if service and prices are
satisfactory. Accordingly, the ability to provide quality service and deliver
the products in a timely, dependable manner is the key to building, as well as
maintaining, customer relationships. The Company believes it has an excellent
reputation as a prompt and reliable systems foodservice distributor with
competitive prices.
Opportunities for growth by gaining access to new chains typically occur at
the expense of a competitor and are awarded in a bid or negotiation situation,
in which large blocks of business are awarded to the most efficient distributor.
The Company believes that a key competitive advantage is continuously pursuing a
strategy of being the low-cost provider of distribution and other value-added
services within the industry. See "Risk Factors -- Competition."
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<PAGE> 51
LITIGATION
From time to time the Company is involved in litigation relating to claims
arising out of its normal business operations. The Company is not currently
engaged in any legal proceedings that are expected, individually or in the
aggregate, to have a material adverse effect on the Company.
REGULATORY MATTERS
The Company is subject to a number of federal, state and local laws,
regulations and codes, including those relating to the protection of human
health and the environment, compliance with which has required, and will
continue to require, capital and operating expenditures. The Company believes
that it is in compliance, in all material respects, with all such laws,
regulations and codes. The Company, however, is not able to predict the impact
of any changes in the requirements or mode of enforcement of these laws,
regulations and codes on its operating results.
EMPLOYEES
As of March 27, 1997, after giving effect to the Acquisition, the Company
had approximately 5,100 full-time employees, approximately 500 of whom were
employed in corporate support functions and approximately 4,600 of whom were
warehouse, transportation, sales, and administrative staff at the distribution
centers. As of such date, approximately 275 of the Company's employees were
covered by two collective bargaining agreements. One such collective bargaining
agreement, covering approximately 200 employees will expire in January 1998. The
other such collective bargaining agreement, covering approximately 75 employees,
will expire at the end of November 1998. The Company has not experienced any
significant labor disputes or work stoppages and believes that its relationships
with its employees are good. Substantially all full-time employees who are over
age 21 and have completed one year of service with the Company are eligible to
participate in the Company's 401(k) plans.
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<PAGE> 52
FACILITIES
The Company currently operates 39 distribution centers located throughout
the United States and Canada as follows:
<TABLE>
<CAPTION>
AMERISERVE PFS
- ------------------------------------------------- -------------------------------------------------
APPROXIMATE LEASED/ APPROXIMATE LEASED/
LOCATION SQUARE FEET OWNED LOCATION SQUARE FEET OWNED
- --------------------------- ----------- ------- --------------------------- ----------- -------
<S> <C> <C> <C> <C> <C>
Albuquerque, NM............ 65,000 Leased Albany, NY................. 104,000 Leased
Canton, MS................. 80,500 Leased Arlington, TX.............. 105,600 Leased
Charlotte, NC.............. 158,500 Owned Charlotte, NC.............. 91,771 Leased
Denver, CO................. 119,000 Leased Columbus, OH............... 143,903 Leased
Fort Worth, TX............. 113,000 Leased Denver, CO................. 74,360 Leased
Gainesville, FL............ 53,000 Leased Gulfport, MS............... 63,792 Leased
Grand Rapids, MI........... 180,000 Leased Houston, TX................ 69,800 Leased
Hebron, KY................. 124,000 Leased Indianapolis, IN........... 115,200 Leased
Jacksonville, FL........... 119,600 Leased Indianapolis, IN(3)........ 180,100 Leased
Lemont, IL(1).............. 105,000 Leased Jonesboro, GA.............. 124,076 Leased
Madison, WI(1)............. 123,000 Leased Lenexa, KS................. 105,600 Leased
Norcross, GA............... 169,900 Owned Manassas, VA............... 100,337 Owned
Omaha, NE.................. 105,000 Leased Memphis, TN................ 70,750 Leased
Orlando, FL(2)............. 268,000 Leased Milwaukee, WI.............. 123,185 Leased
Plymouth, MN............... 104,200 Leased Mississauga, Ontario....... 53,487 Leased
Salt Lake City, UT......... 31,000 Leased Mt. Holly, NJ.............. 126,637 Leased
Waukesha, WI(4)............ 196,000 Leased Novi, MI................... 72,830 Leased
Oklahoma City, OK.......... 52,500 Leased
Ontario, CA................ 201,454 Leased
Orlando, FL................ 115,240 Leased
Portland, OR............... 81,815 Leased
Stockton, CA............... 105,000 Leased
Tempe, AZ.................. 67,660 Leased
</TABLE>
- ---------------
(1) Re-distribution facilities
(2) Under construction
(3) PFS restaurant equipment distribution center
(4) Capital lease
Within five years of December 31, 1996, two of the Company's distribution
center leases are due to expire. The Company believes that it will be able to
renew expiring leases at reasonable rates in the future. The Company believes
that its existing distribution centers, together with planned modifications and
expansions, provide sufficient space to support its expected expansion over the
next several years.
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<PAGE> 53
THE ACQUISITION
Pursuant to the Asset Purchase Agreement, which was assigned to the Company
at the Closing (with the Canadian agreement being assigned to a Canadian
subsidiary of the Company at Closing), the Company acquired substantially all of
the assets and properties used or held for use by PFS for a price of $830.0
million in cash, subject to adjustment, and assumed certain liabilities.
The Asset Purchase Agreement contains customary representations and
warranties from PepsiCo with respect to the assets and liabilities of PFS.
PepsiCo has agreed to indemnify NEHC and its affiliates, including the Company,
for any loss (i) resulting from any breach of any such representation, warranty
or agreement made by PepsiCo, provided, however, that such indemnity is limited
to cover only losses in excess of $3.0 million in the aggregate; or (ii)
resulting from or arising out of any liability or obligation not expressly
assumed by the Company pursuant to the Asset Purchase Agreement. The Company has
agreed to indemnify PepsiCo and its affiliates for any loss resulting from any
breach of any representation, warranty or agreement made by the Company pursuant
to the Asset Purchase Agreement or the operation of PFS by the Company after the
Closing. PepsiCo has agreed to refrain from actively and directly soliciting any
officer, manager or key employee of the Company without the prior written
consent of the Company for the 12 months following the Closing.
On July 11, 1997, pursuant to the Asset Purchase Agreement, the Company and
its affiliates, on the one hand, and PepsiCo and its affiliates, on the other
hand, authorized Chase Manhattan Bank, N.A., as escrow agent (the "Escrow
Agent"), to deliver all of the documents to be delivered by such party at the
Closing. The Company also delivered the amount due under the escrow agreement
entered into on June 11, 1997 (as described hereafter). The transactions
effected at the Closing were effected without any further act or instrument of
either party.
DISTRIBUTION AGREEMENT
Upon consummation of the Acquisition, the Company was assigned and assumed
the Sales and Distribution Agreement (the "Distribution Agreement") dated as of
May 6, 1997, as amended as of May 29, 1997 by and among PFS and PepsiCo's chain
restaurant businesses (the "PepsiCo Chains"). The Distribution Agreement
provides that the Company will be the exclusive distributor of specified
restaurant products purchased by the Pizza Hut, Taco Bell and KFC restaurants
within the continental United States, which are owned by the PepsiCo Chains as
of the Closing (other than certain specified restaurants), or which are acquired
or built by the PepsiCo Chains during the term of the Distribution Agreement.
The Distribution Agreement will continue to cover restaurants refranchised by
PepsiCo (other than KFC restaurants) for the five-year term. Additionally, the
Distribution Agreement provides that the Company will be an approved distributor
of specified restaurant products sold to all Pizza Hut, Taco Bell and KFC
restaurants, whether franchised or owned by the PepsiCo Chains, in the United
States, Canada or the countries to which PFS currently exports restaurant
products from its distribution centers in the United States. The Distribution
Agreement will be effective from the Closing and through the fifth anniversary
of the Closing, unless renewed or extended by mutual agreement of the parties.
The Distribution Agreement may be terminated at any time (i) by any party in the
event that the other party breaches any material term and such breach remains
unremedied for a period of 30 calendar days after written notice of such breach
from the non-breaching party, (ii) by the PepsiCo Chains if the Company is in
material breach of the Distribution Agreement for failure to maintain specified
service levels for a specified period, or (iii) by any party in the event that
the other party becomes the subject of a bankruptcy, insolvency or other similar
proceeding. See "Risk Factors -- Key Contracts."
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<PAGE> 54
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information as of August 1, 1997,
with respect to each person who is an executive officer or director of the
Company, as indicated below:
<TABLE>
<CAPTION>
NAME AGE TITLE
----------------------------------- --- -----------------------------------
<S> <C> <C>
John V. Holten..................... 40 Director, Chairman and Chief
Executive Officer
John R. Evans...................... 57 Director and Vice Chairman
Raymond E. Marshall................ 47 Director, President and Treasurer
Daniel W. Crippen.................. 45 Director and Chief Operating
Officer
William F. Woodall................. 50 President and Chief Operating
Officer, Procurement Group
Donald J. Rogers................... 37 Chief Financial Officer and
Secretary
Edward Zielinski................... 45 Senior Vice President -- Operations
Stanley Szlauderbach............... 48 Senior Vice President -- Controller
Gunnar E. Klintberg................ 48 Director and Vice President
A. Petter Ostberg.................. 35 Vice President
Leif F. Onarheim................... 62 Director
Peter T. Grauer.................... 51 Director
Benoit Jamar....................... 42 Director
</TABLE>
John V. Holten. Mr. Holten has served as Chairman and Chief Executive
Officer of Holberg since its inception in 1986. Mr. Holten was Managing Director
of DnC Capital Corporation, a merchant banking firm in New York City, from 1984
to 1986. Mr. Holten received his M.B.A. from Harvard University in 1982 and he
graduated from the Norwegian School of Economics and Business Administration in
1980.
John R. Evans. Mr. Evans has been in the foodservice distribution industry
for nearly forty years, all of which have been with the Company or its
predecessors. Mr. Evans became President of Evans in 1971, and was named Chief
Executive Officer of the combined company when Evans merged with NEBCO in 1990.
Along with building Evans from its infancy, Mr. Evans has played an active
leadership role in the industry. Mr. Evans obtained his degree from Spencerian
College and serves on the Board of Directors of each of M&I Northern Bank,
Aerial Company, Inc., AFI Inc., and AmeriServe.
Raymond E. Marshall. Mr. Marshall has 27 years of foodservice distribution
experience, including 24 years with the Company or its predecessors. Mr.
Marshall progressed through management positions in virtually all areas of NEBCO
before being named President and Chief Executive Officer in 1980. In 1989, at
the time of the merger between NEBCO and Evans, Mr. Marshall was named President
and Chief Operating Officer of NEBCO EVANS. He took on his new position as
President of AmeriServe in April 1996. Mr. Marshall earned his PMD from Harvard
Business School in 1980 after attending the University of Omaha and serves on
the Board of Directors of each of NEHC, AmeriServe and Independent Distributors
of America ("IDA").
Daniel W. Crippen. Mr. Crippen has spent the last 20 years in the
foodservice distribution business with Post. In addition, Mr. Crippen was
appointed to his present position at AmeriServe in April 1997. He is Chairman of
the Board of Directors of IDA. Mr. Crippen received his B.A. from Augustana
College in Rock Island, Illinois in 1973 and is a certified public accountant.
William F. Woodall. Mr. Woodall has over 18 years' experience in the
distribution industry. Mr. Woodall worked as Transportation Director for
Perlman/Rocque Company from 1978 to 1980. From 1980 to 1982 he was Vice
President for Distribution of Chart House, Inc. In 1982, Mr. Woodall became
President of IDA, and in 1990 founded Chicago Consolidated Company ("CCC"). Mr.
Woodall was
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<PAGE> 55
appointed to his present position as President and Chief Operating Officer of
the Procurement Group at AmeriServe in April 1996. Mr. Woodall attended the
University of Illinois at Chicago. He is currently on the Board of Directors of
EMCO, Inc. and holds various other positions with industry organizations. He
served four years in the United States Navy -- Aviation, and was a police
officer for eight years.
Donald J. Rogers. Mr. Rogers joined AmeriServe in March 1993 after
spending five years with Holberg. While at Holberg, Mr. Rogers worked closely
with AmeriServe's management on a variety of projects. Before joining Holberg,
Mr. Rogers held financial analyst positions at The Dun & Bradstreet Corporation
and Keypoint Financial Corporation and spent three years in a management
training program at Metropolitan Life Insurance Company. Mr. Rogers earned an
M.B.A. from UCLA Graduate School of Management in 1987 and his B.S. degree from
The Wharton School, University of Pennsylvania in 1982.
Edward Zielinski. Mr. Zielinski joined AmeriServe in 1996 from Alliant
Foodservice Inc. (formerly Kraft Foodservice) where he held the position of
Director of Logistics and Field Operations since 1990, with responsibility for
the management and operating performance of all field operations throughout the
company. Prior to Alliant, Mr. Zielinski held a variety of logistics and
industrial engineering positions with various companies including Baxter
Healthcare Corporation, Edward Don, National Can Industries and Amway. Mr.
Zielinski holds a B.S. Degree from the University of Illinois and an M.B.A. from
the Rochester Institute of Technology.
Stanley Szlauderbach. Mr. Szlauderbach joined AmeriServe in 1996. Before
joining AmeriServe, Mr. Szlauderbach spent the past 14 years at PepsiCo, where
his experience included eight years as Corporate Director in charge of all
external financial reporting and three years as Assistant Controller at Pizza
Hut. Prior to PepsiCo, Mr. Szlauderbach spent seven years in various accounting
positions at Pullman, Inc. and four years with Price Waterhouse LLP. Mr.
Szlauderbach is a certified public accountant and earned his Bachelors Degree in
accounting from the University of Illinois.
Gunnar E. Klintberg. Mr. Klintberg has served as Vice Chairman of Holberg
since its inception in 1986. Mr. Klintberg was a Managing Partner of DnC Capital
Corporation, a merchant banking firm in New York City, from 1983 to 1986. From
1975 to 1983, Mr. Klintberg held various management positions with the Axel
Johnson Group, headquartered in Stockholm, Sweden. Mr. Klintberg headed up the
Axel Johnson Group's headquarters in Moscow from 1976 to 1979 and served as
assistant to the President of Axel Johnson Group's $1 billion operation in the
U.S., headquartered in New York City, from 1979 to 1983. Mr. Klintberg received
his undergraduate degree from Dartmouth College in 1972 and a degree in Business
Administration and Economics from the University of Uppsala, Sweden in 1974.
A. Petter Ostberg. Mr. Ostberg joined Holberg in 1994 and was appointed
Chief Financial Officer of Holberg in 1997. Prior to joining Holberg, Mr.
Ostberg held various finance positions from 1990 to 1994 with New York Cruise
Lines, Inc., including Group Vice President, Treasurer and Secretary. Prior to
joining New York Cruise Lines, Inc., Mr. Ostberg was General Manager of Planter
Technology Ltd. in Mountain View, California, and from 1985 to 1987, Mr. Ostberg
was a Financial Analyst with Prudential Securities, Inc. in New York. Mr.
Ostberg received a B.A. in International Relations and Economics from Tufts
University in 1985, and an M.B.A. from Stanford University Graduate School of
Business in 1989.
Leif F. Onarheim. Mr. Onarheim is one of Norway's leading industrialists
and for the last 4 years held the position as president of Norway's largest
business school. In 1996, Mr. Onarheim was elected chairman of NHO, the
country's largest association of business and industry. From 1980 to 1992 Mr.
Onarheim served as CEO of Nora Industries. When Nora merged with Orkla
Borregaard to form the Orkla Group in 1991, Onarheim briefly served as the new
group's Chairman. The Orkla Group is one of Scandinavia's largest branded goods
company with production facilities in the US, Germany, Poland and England. Mr.
Onarheim is a graduate of the Norwegian School of Business and Economics in
Bergen, Norway. He serves as Chairman of the Board of Directors of H. Aschehoug
& Co. publishers, Norwegian Fair, Netcom ASA and Narvesen ASA, Vice Chairman of
Saga Petroleum ASA and is a board member with Wilhelm Wihelmsen Ltd. (shipping).
He has been a director of AmeriServe since 1986 and a director of Holberg since
1997.
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<PAGE> 56
Peter T. Grauer. Mr. Grauer has been a Managing Director of DLJ Merchant
Banking, Inc. since September 1992. From April 1989 to September 1992, he was
Co-Chairman of Grauer & Wheat, Inc., an investment firm specializing in
leveraged buyouts. Prior thereto Mr. Grauer was a Senior Vice President of
Donaldson, Lufkin & Jenrette Securities Corporation. Mr. Grauer serves on the
Board of Directors of each of Doane Products Co. and Total Renal Care, Inc.
Benoit Jamar. Mr. Jamar is a Managing Director in the Mergers &
Acquisitions group at Donaldson, Lufkin & Jenrette Securities Corporation. Prior
to joining Donaldson, Lufkin & Jenrette Securities Corporation in 1989, he
worked at Lehman Brothers in its financial restructuring group. Mr. Jamar is a
director of the Company.
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<PAGE> 57
EXECUTIVE COMPENSATION
The following table sets forth the information for 1996 with regard to
compensation for services rendered in all capacities to the Company by the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company (collectively, the "Named Executive Officers"). Information set
forth in the table reflects compensation earned by such individuals for services
with the Company or its respective subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER
ANNUAL ALL OTHER
FISCAL SALARY BONUS COMPENSATION COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($) ($) ($)(2)
---------------------------- ------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
John V. Holten.............. 1996 -- -- -- --
Chairman and Chief 1995 -- -- -- --
Executive Officer 1994 -- -- -- --
Raymond E. Marshall......... 1996 273,793 265,000(3) -- 11,600
President and Treasurer 1995 212,492 109,220 -- 10,400
1994 202,000 64,000 -- 6,800
Daniel W. Crippen........... 1996 246,764 265,076 -- 9,659
Chief Operating Officer 1995 202,538 129,464 -- 9,788
1994 202,250 295,284 -- 9,394
Donald J. Rogers............ 1996 158,529 125,000(3) 33,000(4) 11,600
Chief Financial Officer 1995 115,671 45,000 33,000(4) 10,400
and Secretary 1994 106,050 15,000 34,000(4) 6,800
John R. Evans............... 1996 263,000 -- -- 4,800
Vice Chairman 1995 262,832 -- -- 4,800
1994 262,600 -- -- 4,800
</TABLE>
- ---------------
(1) The amounts shown in this column include amounts contributed by the Company
to its 401(k) plan under a contribution matching program.
(2) The amounts shown in this column reflect premiums paid by the Company on
behalf of Named Executive Officers for whole life insurance policies and
annuities to which the Named Executive Officers are entitled to the cash
surrender value.
(3) These amounts include discretionary cash bonuses paid by Holberg for
services provided during 1995 in connection with the acquisition of
Ameriserv Food Company.
(4) This amount reflects forgiveness by the Company of a portion of a $100,000
relocation assistance loan.
The Company will pay an annual management fee to Holberg for management
services. The amount of this fee is not set or allocated with respect to any
particular employee's compensation from Holberg.
DIRECTOR COMPENSATION
Directors of the Company do not receive compensation for serving on the
Company's Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee in fiscal 1996. The
Company intends to form a Compensation Committee in fiscal 1997. The members of
such committee have not yet been determined. During fiscal 1996, no executive
officer of the Company served as a member of the Compensation Committee of
another entity.
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<PAGE> 58
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Marshall's current employment agreement with the Company provides for a
three year term, scheduled to lapse on Jan. 1, default annual renewals, and an
annual base salary of $210,000, which will increase for 1997 to $285,000 plus an
annual bonus to be determined by the Chairman of the Board of Directors after
considering the Company's Reported Operating Profit, plus participation in any
employee benefit plan sponsored by the Company. Mr. Marshall agrees not to
disclose confidential information for so long as such information remains
competitively sensitive. During the term of the employment agreement and for one
year after its termination, Mr. Marshall agrees not to render services to, or
have any ownership interest in, any business which is competitive with the
Company. Mr. Marshall's employment agreement does not contain any change of
control provisions.
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<PAGE> 59
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT
All of the Company's capital stock is held by NEHC. The following table
sets forth certain information regarding the beneficial ownership of NEHC Common
Stock by (i) each person known to the Company to own beneficially more than 5%
of any class of NEHC Common Stock, (ii) each director of the Company, (iii) each
Named Executive Officer of the Company and (iv) all executive officers and
directors of the Company, as a group. All information with respect to beneficial
ownership has been furnished to the Company by the respective stockholders of
NEHC. Except as otherwise indicated in the footnotes, each beneficial owner has
the sole power to vote and to dispose of all shares held by such holder.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OUTSTANDING
- --------------------------------------------- ---------------------------------------- -----------
<S> <C> <C>
Nebco Evans Distributors, Inc. ("NED")....... 6,508 shares of Class A Common Stock 100%(+)
1,733 shares of Class B Common 100%(+)
Orkla ASA ("Orkla").......................... (1)
DLJ Merchant Banking, L.P. and affiliates Warrants to purchase 3,682 shares of 36.1%(++)
("DLJMB").................................. Class A Common Stock
Warrants to purchase 981 shares of Class 36.1%(++)
B Common Stock
John V. Holten............................... (2)
Daniel W. Crippen............................ (3)
John R. Evans................................ --
Peter T. Grauer.............................. (4)
Benoit Jamar................................. (4)
Gunnar E. Klintberg.......................... (5)
Raymond E. Marshall.......................... (6)
Leif F. Onarheim............................. (7)
Donald J. Rogers............................. (8)
</TABLE>
- ---------------
(+) Computed with respect to the currently outstanding shares of Class A and
Class B Common Stock of NEHC, and without taking into account any options
or convertible interests of NEHC.
(++) Computed with respect to the currently outstanding shares of Class A and
Class B Common Stock of NEHC and the warrants held by DLJMB, but without
taking into account any other options or convertible interests of NEHC.
(1) Orkla owns approximately 7% of the outstanding common stock of NED, and has
an additional interest in the common stock of NED of approximately 8%
through certain warrants to purchase such common stock. In addition, Orkla
owns approximately 30% of the outstanding common stock of Holberg (which
itself owns the balance of the common stock of NED not owned directly by
Orkla and has an additional interest in the common stock of NED of
approximately 75% through certain preferred stock convertible into common
stock), and an additional interest in the common stock of Holberg of
approximately 17% through certain preferred stock convertible into common
stock. The warrant and convertible interests described in this note have
been computed based upon the outstanding common shares of NED and Holberg,
without taking into account any options or convertible interests of NED or
Holberg. Orkla also has certain contractual rights as to NED and NEHC
pursuant to an Amended and Restated Investors Agreement among DLJMB, NEHC,
NED, Holberg and Orkla.
(2) Mr. Holten owns all of the outstanding common stock of the corporate parent
of Holberg, which entity owns approximately 70% of the outstanding common
stock of Holberg, and an additional interest in the common stock of Holberg
of approximately 25% through certain preferred stock convertible into
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<PAGE> 60
common stock. As noted above, Holberg owns approximately 93% of the
outstanding NED common stock and has an additional interest through certain
preferred stock convertible into common stock. The convertible interests
described in this note have been computed based upon the outstanding common
shares of Holberg and NED, without taking into account any options or
convertible interests of Holberg or NED.
(3) Mr. Crippen owns shares of a series of convertible preferred stock of NEHC
that, if converted, would result in his ownership of approximately 1.6% of
the outstanding common stock of NEHC, taking into account the actually
outstanding shares and the warrants held by DLJMB.
(4) Messrs. Grauer and Jamar are Managing Directors of DLJ, and may be
considered to have beneficial ownership of the interests of DLJMB in the
Company and NEHC. Messrs. Grauer and Jamar disclaim such beneficial
ownership.
(5) Mr. Klintberg is an officer and director of NED and certain of its
corporate parents, but disclaims beneficial ownership of any of the shares
owned by NED.
(6) Mr. Marshall has an interest of 5% in NED through certain options that have
been granted to him by NED. Such interest has been computed based upon the
outstanding common shares of NED, without taking into account any options
or convertible interests of NED.
(7) Mr. Onarheim has an interest of less than 1% in NED through certain options
that have been granted to him by NED. Such interest has been computed based
upon the outstanding common shares of NED, without taking into account any
options or convertible interests of NED. Mr. Onarheim has also had a long
affiliation with Orkla and acts as Orkla's representative on the Board of
Directors of the Company and NEHC, but disclaims beneficial ownership of
any interests held by Orkla.
(8) Mr. Rogers has an indirect interest of less than 1% in NEHC and the Company
through certain options that have been granted to him as an indirect
corporate shareholder of NEHC.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
DLJMB, an affiliate of DLJ, and certain of its affiliates beneficially own
approximately 36.1% of the common stock of NEHC. Peter T. Grauer, a principal of
DLJ, is a member of the Board of Directors of NEHC and the Company; Benoit
Jamar, a principal of DLJ, became a member of the Board of Directors of NEHC and
the Company as of Closing. Further, DLJ Capital Funding, Inc., an affiliate of
DLJ, is acting as documentation agent in connection with the New Credit Facility
for which it is receiving certain customary fees and expenses. In addition, DLJ
received a merger advisory fee of $4.0 million in cash from the Company after
consummation of the Transactions.
Holberg has received investment banking fees from the Company and its
affiliates in connection with certain prior transactions, and received a $4.0
million merger advisory fee upon consummation of the Transactions. In addition,
it is expected that the Company will pay Holberg a management fee of
approximately $4.0 million annually for 1997 and subsequent years. See
"Management -- Executive Compensation."
The Company leases a warehouse and office facility in Waukesha, Wisconsin
from an affiliated partnership owned by certain former shareholders of an
acquired company, including Mr. John Evans, for approximately $810,000 per year
through May 31, 2008.
With the January 1996 acquisition of AmeriServ, the Company acquired a
minority interest in Post Holdings, a 93.6% owner of Post. On November 25, 1996
NEHC acquired: (i) the Company's ownership interest in Post Holdings; and (ii)
Daniel W. Crippen's 50% ownership of Post Holdings. In connection with this
transaction, Mr. Crippen, the Company's Chief Operating Officer, received $4.4
million ($2.0 million cash and $2.4 million in NEHC 8% Senior Convertible
Preferred Stock) in exchange for his 50% equity interest in Post Holdings.
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<PAGE> 61
The Company participates in a self-insured group casualty (including
workers compensation and auto liability) risk program with an affiliate, which
determines the insurance expenses to be allocated to the Company. The Company
and Holberg also periodically engage in bi-lateral interest-bearing loans and
advances. See Note 10 to the Company's historical financial statements included
elsewhere herein.
In connection with the Acquisition, NEHC, pursuant to the Equity
Contribution, contributed $130.0 million of cash to the Company. This
contribution was financed in part through NEHC's sale of debt and equity
securities, as well as warrants to purchase NEHC Common Stock, to DLJMB II.
The equity securities sold by NEHC to affiliates of DLJ for an aggregate of
$115 million consisted of NEHC senior exchangeable preferred stock, junior
exchangeable preferred stock and warrants to purchase shares of NEHC Class A
Common Stock (representing the right to acquire an aggregate of up to 22.5% of
the common stock of NEHC).
In connection with the consummation of the Transactions, NEHC made an
offering of 12 3/8% Senior Discount Notes due 2007 (the "Senior Discount
Notes"). Upon consummation of such offering, all of the outstanding Old NEHC
Notes were redeemed with the proceeds of the issuance of the Senior Discount New
Notes, and the proceeds from such offering in excess of the amount used in such
redemption were retained by NEHC and used in the Equity Contribution.
In connection with the Transactions, DLJMB committed that in the event the
Senior Discount Notes were not sold in the offering thereof, it would (i)
purchase senior discount notes in an aggregate principal amount of $15 million
and (ii) exchange all of the Old NEHC Notes held by DLJMB for senior discount
notes with an aggregate principal amount equal to the accreted value of the Old
NEHC Notes so exchanged. Also in connection with the Transactions, each of Bank
of America NT&SA and an affiliate of DLJ committed to provide certain financing
in the amount of $350 million in the event the Notes were not sold at or prior
to the time of the Acquisition. Bank of America NT&SA and such affiliate of DLJ
received certain customary fees in connection with such commitment. In the event
the Notes were not sold at or prior to the time of the Acquisition, the balance
of the funds which would otherwise have been provided by the Offering were to be
provided under the New Credit Facility.
See "The Transactions," and "Plan of Distribution."
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<PAGE> 62
DESCRIPTION OF INDEBTEDNESS
The following sets forth information concerning the Company's indebtedness
outstanding immediately following the consummation of the Transactions.
ACCOUNTS RECEIVABLE PROGRAM
In connection with the Acquisition, the Company entered into the Accounts
Receivable Program. The Accounts Receivable Program is structured as an
off-balance sheet financing for accounting purposes.
Under the Accounts Receivable Program, the Company established AmeriServe
Funding Corporation ("AmeriServe Funding"), a wholly-owned, special purpose
bankruptcy-remote subsidiary that will acquire, on a revolving basis, all of the
trade receivables (the "Receivables") generated by the Company and/or one or
more of its subsidiaries. The purchase by AmeriServe Funding will be financed
through the transfer to a newly formed master trust, AmeriServe Master Trust
(the "Trust"), of the Receivables and the issuance of a series of certificates
by the Trust representing an undivided interest in the assets of the Trust. The
certificates will be purchased by any of Bank of America, a commercial paper
conduit administered by Bank of America NT&SA, and/or a group of banks (all of
the foregoing, collectively, referred to as the "Banks").
While the level of proceeds ultimately available under the Accounts
Receivable Program will be subject to the Banks' and BancAmerica Securities' due
diligence regarding the origination, servicing and performance of the accounts
receivable, it is expected that the Accounts Receivable Program will be
available in an amount up to $250.0 million, provided, however, that until the
Company can satisfy certain reporting requirements, not more than $225.0 million
will be available. The Accounts Receivable Program will be available to
AmeriServe Funding for five years from the Closing, subject to early termination
in accordance with the terms of the transaction documents.
All of the Receivables will be transferred on a daily basis to AmeriServe
Funding. The purchase price for the Receivables conveyed to AmeriServe Funding
shall be a dollar amount equal to the aggregate unpaid balance of the
Receivables less a discount specified in the transaction documents. AmeriServe
Funding may also pay the purchase price for such Receivables by increasing the
principal amount of notes payable by it to the Company and subsidiaries of the
Company rather than paying cash for such Receivables. Certain of the Receivables
will be transferred by the Company to AmeriServe Funding as a contribution of
capital rather than as a sale. AmeriServe Funding (and the Trust, in turn) will
obtain first priority, perfected ownership interest in the Receivable, and any
related security and proceeds thereof. The Company will serve as the initial
master servicer of the Accounts Receivable Program.
The Banks' yield on their Invested Amount will be based on either LIBOR or
a Base Rate plus a margin. The "Invested Amount" generally will be calculated as
the sum of the purchase prices paid by the Banks from time to time for undivided
interests in the Receivables in the Trust, reduced by the aggregate amount of
distributions made to the Banks on account of principal. As of March 29, 1997,
the Banks' yield would have been 6.875%.
After the Closing, a non-usage fee of 3/8 of 1% per annum on a daily
average of (i) the aggregate commitments of the Banks under the Accounts
Receivable Program minus (ii) the Invested Amount will be
payable by AmeriServe Funding monthly in arrears.
Prior to termination of the Banks' commitment under the Accounts Receivable
Program, AmeriServe Funding may cause the Trust to sell undivided interests in
the Receivables to the Banks from time to time so long as certain conditions are
satisfied, including, without limitation, that after giving effect to such sale,
the Invested Amount (less amounts held in certain Trust accounts) would not
exceed the Base Amount. The "Base Amount" generally will be equal to the result
of (a)(i) the Net Eligible Receivables, times (ii) 100% minus the Applicable
Reserve Ratio, minus (b) the Carrying Cost Receivables Reserve. The "Net
Eligible Receivables" generally will be calculated as the aggregate unpaid
balance of Receivables held by the Trust that satisfy certain eligibility
criteria, less unapplied cash held by the Trust, less funds not yet made
available by lockbox banks holding collections on Receivables, less the
aggregate amount of excess concentrations of Receivables as specified in the
transaction documents. The "Applicable Reserve Ratio" will be calculated
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<PAGE> 63
consistent with the trade receivable rating methodology of Standard & Poor's
and/or Duff & Phelps, will incorporate specified loss reserve ratios and
dilution reserve ratios, and will be subject to a floor of 15%. The "Carrying
Cost Receivables Reserve" generally will be calculated to reflect interest
payable to the Banks, the servicing fee payable from the Assets of the Trust,
certain accrued and unpaid expenses and certain additional amounts based on days
sales outstanding.
The Accounts Receivable Program contains customary conditions, including,
without limitation, delivery of true sale and non-consolidation opinions. In
addition, BancAmerica Securities shall be satisfied that structural enhancements
are in place so that the Accounts Receivable Program satisfies, at a minimum,
the "BBB" rating criteria of Standard & Poor's and/or Duff & Phelps. The
Accounts Receivable Program also contains customary termination events,
including, without limitation, bankruptcy or insolvency of the Company or
AmeriServe Funding, cross-acceleration to other material indebtedness of the
Company and Receivables performance triggers.
NEW CREDIT FACILITY
At the Closing, the Company entered into the New Credit Facility, pursuant
to which the Company has available a new revolving credit facility (the
"Revolving Credit Facility"), and four term loan facilities ("Term Loan A,"
"Term Loan B," "Term Loan C" and "Term Loan D" and, collectively, the "Term
Loans"). At the Closing, the following amounts were drawn under the New Credit
Facility: $205.0 million consisting of: (a) aggregate principal amount $78.1
million, Term Loan A, which matures in six years; (b) aggregate principal amount
$42.3 million, Term Loan B, which matures in seven years; (c) aggregate
principal amount $42.3 million, Term Loan C, which matures in eight years; and
(d) aggregate principal amount $42.3 million, Term Loan D, which matures in nine
years. The undrawn amount of $150.0 million under the Revolving Credit Facility
is available for working capital and general corporate purposes, including the
issuance of letters of credit, which were approximately $12 million at Closing,
subject to the achievement of certain financial ratios and compliance with
certain conditions.
Term Loan A will amortize by approximately $3.3 million in year two,
approximately $16.3 million in year three, and approximately $19.5 million in
each of years four, five and six. Term Loan B, Term Loan C and Term Loan D will
each have amortization of approximately $0.4 million per annum, beginning in
year two, with the remainder due in four equal quarterly installments ending on
the respective maturity dates.
The initial interest rate for borrowings under the Revolving Credit
Facility and the Term A Loan will be, at the option of the Company, LIBOR plus
2.50% or the Base Rate plus 1.25%. For the Term B, Term C and Term D Loans, the
exact spreads over LIBOR or the Base Rate, as the case may be, were determined
before closing based on market conditions. The interest rate for the Term B Loan
will be, at the option of the Company, LIBOR plus 3.00% or the Base Rate plus
1.75%. The interest rate for the Term C Loan will be, at the option of the
Company, LIBOR plus 3.25% or the Base Rate plus 2.00%. The rate for the Term D
Loan will be, at the option of the Company, LIBOR plus 3.50% or the Base Rate
plus 2.25%. The initial rates for borrowings under the Revolving Credit Facility
and the Term A Loan will remain in effect until December 31, 1997, at which time
they may be reduced according to a pricing grid to be negotiated. The Company
may elect interest periods of one, two, three or six months for LIBOR
borrowings. Calculation of interest shall be on the basis of actual days elapsed
in a year of 360 days (or 365 or 366 days, as the case may be, in the case of
the Base Rate Loans based on the Administrative Agent's "reference rate") and
interest shall be payable at the end of each interest period and, in any event,
at least every three months or 90 days, as the case may be. The "Base Rate" is
the higher of (i) the Administrative Agent's reference rate and (ii) the Federal
Funds Effective Rate plus one-half of 1%. LIBOR will at all times include
statutory reserves to the extent actually incurred.
NEHC and all domestic subsidiaries of the Company have guaranteed the
indebtedness under the New Credit Facility (the "Guarantors"). All extensions of
credit under the New Credit Facility to the Company and guaranties of
subsidiaries of the Company are secured by all existing and after-acquired
personal property (other than accounts receivable transferred in connection with
the Accounts Receivable Program or any securitization refinancing of the
Accounts Receivable Program) of the Company and its subsidiaries,
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including all outstanding capital stock of the Company and of all of its
domestic subsidiaries, 65% of outstanding capital stock of the Company's foreign
subsidiaries and any intercompany debt obligations, and, subject to exceptions
to be agreed upon, all existing and after-acquired real property fee and
leasehold interests. NEHC's guaranty is secured by a pledge of all outstanding
capital stock of the Company. With certain exceptions to be agreed upon, NEHC,
the Company and its subsidiaries are prohibited from pledging any of their
assets other than under the New Credit Facility.
Within 90 days of the Closing, the Company is required to obtain interest
rate protection by interest rate swaps, caps or other agreements satisfactory to
the Agents against increases in the interest rates with respect to a notional
amount of at least $150.0 million and for a period of at least three years.
Interest rate swaps or other hedging agreements provided by any Lender or
affiliate of any Lender will be equally and ratably secured by the collateral
described above and covered by the guarantees described above.
Under the New Credit Facility, the letter of credit fee will be 2.50% per
annum for standby letters of credit, which will be shared by all Lenders, and an
additional 0.25% per annum to be retained by the issuing bank for issuing the
standby letters of credit, based upon the amount available for drawing under
outstanding standby letters of credit. There will be adjustments, after December
31, 1997, in the letter of credit fees described above, according to a to be
determined pricing grid acceptable to the Agents, the Arranger and the Company.
Indebtedness under the New Credit Facility may be prepaid in whole or in
part without premium or penalty (subject in some cases to related breakage) and
the Lenders' commitments relative thereto reduced or terminated upon such notice
and in such amounts as may be agreed upon. Voluntary prepayments of the Term
Loans will be applied ratably among Term Loan A, Term Loan B, Term Loan C and
Term Loan D and shall be applied pro rata to scheduled amortization payments.
Notwithstanding the foregoing, in the case of any voluntary prepayment to be
applied to Term Loan B, Term Loan C or Term Loan D, the Company will be entitled
to elect to offer the holders of such term loans the opportunity to waive the
right to receive the amount of such voluntary prepayment. In the event any such
holders elect to waive such right, 50% of the amount, which otherwise would have
been applied as such voluntary prepayment of the applicable Term Loans of such
holders, shall be applied to the prepayment of Term Loan A, and 50% of such
amount shall be retained by the Company.
The Company will be required to make the following mandatory prepayments
(subject to certain exceptions and basket amounts to be set forth in the New
Credit Facility): (a) with respect to asset sales, prepayments in an amount
equal to 100% of (i) the net after-tax cash proceeds of the sale or other
disposition of any property or assets of AmeriServe or any of its subsidiaries
other than net cash proceeds of sales or certain other dispositions in the
ordinary course of business, or (ii) the net after-tax cash proceeds in excess
of $275 million from the sale or other disposition of receivables payable upon
receipt; (b) with respect to debt financings of the Company or any of its
subsidiaries, prepayments in an amount equal to 100% of the net cash proceeds
received from such debt financings (excluding, among other things, the New
Notes), payable upon receipt; (c) with respect to equity offerings of the
Company or any of its subsidiaries, prepayments in an amount equal to 50% of the
net cash proceeds received from the issuance of such equity securities, payable
upon receipt; and (d) with respect to excess cash flow (to be defined in the New
Credit Facility), prepayments in an amount equal to 75% of such excess cash
flow, payable within 90 days of fiscal year-end, reducing to 50% of such excess
cash flow after the outstanding aggregate principal amount of Term Loans has
been repaid to 50% of the Term Loans outstanding on the Closing.
All mandatory prepayments will be applied first to reduce the Term Loans
outstanding to the full extent thereof and thereafter to the permanent reduction
of the commitments under the Revolving Credit Facility. All mandatory
prepayments shall be applied ratably between Term Loan A, Term Loan B, Term Loan
C and Term Loan D and to scheduled amortization payments of the Term Loans as
follows: (a) with respect to asset sale proceeds, excess cash flow and equity
offerings, prepayment amount applied pro rata to all remaining scheduled
amortization payments; and (b) with respect to debt financings, prepayment
amount applied to remaining scheduled amortization payments in inverse order of
maturity. Notwithstanding the foregoing, in the case of any mandatory prepayment
to be applied to Term Loan B, Term Loan C or Term Loan D, the
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<PAGE> 65
Company may elect to offer the holders of such term loans the opportunity to
waive the right to receive the amount of such mandatory prepayment. In the event
any such holders elect to waive such right, 50% of the amount that would
otherwise have been applied as such mandatory prepayment of the applicable term
loans of such holders shall be applied to the prepayment of Term Loan A and 50%
of such amount shall be retained by the Company.
The New Credit Facility contains customary and appropriate representations
and warranties, including without limitation those relating to due organization
and authorization, no conflicts, financial condition, no material adverse
changes, title to properties, liens, litigation, payment of taxes, no material
adverse agreements, compliance with laws, environmental liabilities and full
disclosure.
The New Credit Facility contains customary conditions to all borrowings
which include representations and warranties, and the absence of any default or
potential event of default, and will otherwise be customary and appropriate for
financings of this type.
The New Credit Facility also contains customary affirmative and negative
covenants (including, where appropriate, certain exceptions and baskets to be
mutually agreed upon), including but not limited to furnishing information and
limitations on other indebtedness, liens, investments, guarantees, restricted
payments, restructuring and reserve costs, mergers and acquisitions, sales of
assets, capital expenditures, leases, and affiliate transactions. The New Credit
Facility also contains financial covenants, including without limitation, those
relating to: minimum interest coverage; minimum fixed charge coverage; and
maximum leverage.
Events of default under the New Credit Facility are usual and customary,
including without limitation, those relating to: (a) non-payment of interest,
principal or fees payable under the New Credit Facility; (b) non-performance of
certain covenants; (c) cross default to other material debt of the Company and
its subsidiaries; (d) bankruptcy or insolvency; (e) judgments in excess of
specified amounts; (f) impairment of security interests in collateral; (g)
invalidity of guarantees; (h) materially inaccurate or false representations or
warranties; and (i) change of control.
DESCRIPTION OF NEW NOTES
GENERAL
The New Notes will be issued pursuant to the same indenture (the
"Indenture") among the Company, the direct or indirect domestic Restricted
Subsidiaries of the Company (together, the "Subsidiary Guarantors"), and State
Street Bank and Trust Company, as trustee (the "Trustee"), under which the Notes
were issued. See "Notice to Investors." The terms of the New Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The New
Notes are subject to all such terms, and Holders of Notes are referred to the
Indenture and the Trust Indenture Act for a statement thereof. The following
summary of the material provisions of the Indenture does not purport to be
complete and is qualified in its entirety by reference to the Indenture and the
Registration Rights Agreement, including the definitions therein of certain
terms used below. Copies of the Indenture and Registration Rights Agreement are
available as set forth below under "-- Additional Information." The definitions
of certain terms used in the following summary are set forth below under
"-- Certain Definitions."
The New Notes will be general unsecured obligations of the Company,
subordinated in right of payment to all existing and future Senior Debt of the
Company, including Indebtedness pursuant to the New Credit Facility. The
Company's obligations under the New Notes will be guaranteed (the "New Note
Guarantees") on a senior subordinated basis by the Subsidiary Guarantors. See
"-- New Note Guarantees." As of March 29, 1997, on a pro forma basis giving
effect to the Offering and the application of the proceeds therefrom, the
Company would have had approximately $217.5 million of Senior Debt. The
Indenture will permit the incurrence of additional Senior Debt, pari passu
Indebtedness and subordinated Indebtedness in the future.
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The operations of the Company are conducted in part through its
Subsidiaries, and the Company may, therefore, be dependent upon the cash flow of
its Subsidiaries to meet its debt obligations, including its obligations under
the New Notes. All of the existing domestic Restricted Subsidiaries of the
Company are, and all future domestic Restricted Subsidiaries are expected to be,
Subsidiary Guarantors. As of the date of the Indenture, all of the Company's
Subsidiaries, except for the Receivables Subsidiary, will be Restricted
Subsidiaries. However, under certain circumstances, the Company will be able to
designate current or future Subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The New Notes will be limited in aggregate principal amount to $500.0
million and will mature on July 15, 2007. Interest on the New Notes will accrue
at the rate of 10 1/8% per annum and will be payable semi-annually in arrears on
July 15 and January 15 of each year, commencing on January 15, 1998, to Holders
of record on the immediately preceding July 1 and January 1. Interest on the New
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from July 11, 1997. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months. Principal,
premium and Liquidated Damages, if any, and interest on the New Notes will be
payable at the office or agency of the Company maintained for such purpose
within the City and State of New York or, at the option of the Company, payment
of interest and liquidated damages, if any, may be made by check mailed to the
Holders of the New Notes at their respective addresses set forth in the register
of Holders of New Notes; provided that all payments of principal, premium and
Liquidated Damages, if any, and interest with respect to New Notes the Holders
of which have given wire transfer instructions to the Company will be required
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Until otherwise designated by the Company, the
Company's office or agency in New York will be the office of the Trustee
maintained for such purpose. The New Notes will be issued in denominations of
$1,000 and integral multiples thereof.
SUBORDINATION
The payment of principal of, premium and liquidated damages, if any, and
interest on the New Notes will be subordinated in right of payment, as set forth
in the Indenture, to the prior payment in full of all Senior Debt, whether
outstanding on the date of the Indenture or thereafter created, incurred or
assumed and all permissible renewals, extensions, refundings or refinancings
thereof.
The Indenture provides that, upon any payment or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors in any Insolvency or Liquidation Proceeding with respect to the
Company all amounts due or to become due under or with respect to all Senior
Debt will first be paid in full in cash before any payment is made on account of
the New Notes, except that the Holders of New Notes may receive Reorganization
Securities. Upon any such Insolvency or Liquidation Proceeding, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (other than Reorganization Securities), to which the
Holders of the New Notes or the Trustee would be entitled will be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other person making such payment or distribution, or by the Holders of the New
Notes or by the Trustee if received by them, directly to the holders of Senior
Debt (pro rata to such holders on the basis of the amounts of Senior Debt held
by such holders) or their Representative or Representatives, as their interests
may appear, for application to the payment of the Senior Debt remaining unpaid
until all such Senior Debt has been paid in full in cash, after giving effect to
any concurrent payment, distribution or provision therefor to or for the holders
of Senior Debt.
The Indenture provides that (a) in the event of and during the continuation
of any default in the payment of principal of, interest or premium, if any, on
any Senior Debt, or any Obligation owing from time to time under or in respect
of Senior Debt, or in the event that any event of default (other than a payment
default) with respect to any Senior Debt will have occurred and be continuing
and will have resulted in such Senior Debt becoming or being declared due and
payable prior to the date on which it would otherwise have become
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due and payable, or (b) if any event of default other than as described in
clause (a) above with respect to any Designated Senior Debt will have occurred
and be continuing permitting the holders of such Designated Senior Debt (or
their Representative or Representatives) to declare such Designated Senior Debt
due and payable prior to the date on which it would otherwise have become due
and payable, then no payment will be made by or on behalf of the Company on
account of the New Notes (other than payments in the form of Reorganization
Securities) (x) in case of any payment or nonpayment default specified in (a),
unless and until such default will have been cured or waived in writing in
accordance with the instruments governing such Senior Debt or such acceleration
will have been rescinded or annulled, or (y) in case of any nonpayment event of
default specified in (b), during the period (a "Payment Blockage Period")
commencing on the date the Company or the Trustee receives written notice (a
"Payment Notice") of such event of default (which notice will be binding on the
Trustee and the Holders of New Notes as to the occurrence of such a payment
default or nonpayment event of default) from the Credit Agent (or other holders
of Designated Senior Debt or their Representative or Representatives) and ending
on the earliest of (A) 179 days after such date, (B) the date, if any, on which
such Designated Senior Debt to which such default relates is paid in full in
cash or such default is cured or waived in writing in accordance with the
instruments governing such Designated Senior Debt by the holders of such
Designated Senior Debt and (C) the date on which the Trustee receives written
notice from the Credit Agent (or other holders of Designated Senior Debt or
their Representative or Representatives), as the case may be, terminating the
Payment Blockage Period. During any consecutive 360-day period, the aggregate of
all Payment Blockage Periods shall not exceed 179 days and there shall be a
period of at least 181 consecutive days in each consecutive 360-day period when
no Payment Blockage Period is in effect. No event of default which existed or
was continuing with respect to the Senior Debt for which notice commencing a
Payment Blockage Period was given on the date such Payment Blockage Period
commenced shall be or be made the basis for the commencement of any subsequent
Payment Blockage Period unless such event of default is cured or waived for a
period of not less than 90 consecutive days.
As a result of the subordination provisions described above, in the event
of the Company's liquidation, dissolution, bankruptcy, reorganization,
insolvency, receivership or similar proceeding or in an assignment for the
benefit of the creditors or a marshalling of the assets and liabilities of the
Company, Holders of New Notes may recover less ratably than creditors of the
Company who are holders of Senior Debt. See "Risk Factors -- Subordination." The
Indenture limits, subject to certain financial tests, the amount of additional
Indebtedness, including Senior Debt, that the Company and its Restricted
Subsidiaries can incur. See " -- Certain Covenants -- Incurrence of Indebtedness
and Issuance of Preferred Stock."
NEW NOTE GUARANTEES
The Company's payment obligations under the New Notes are jointly and
severally guaranteed by the Subsidiary Guarantors. The New Note Guarantees are
subordinated to the prior payment in full of all Senior Debt of each Subsidiary
Guarantor (including such Subsidiary Guarantor's guarantee of the New Credit
Agreement, if any) to the same extent that the New Notes are subordinated to
Senior Debt of the Company. The obligations of any Subsidiary Guarantor under
its Note Guarantee are limited so as not to constitute a fraudulent conveyance
under applicable law.
The Indenture provides that no Subsidiary Guarantor may consolidate with or
merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person), another corporation, Person or entity whether or not affiliated with
such Subsidiary Guarantor unless, subject to the provisions of the following
paragraph, (i) the Person formed by or surviving any such consolidation or
merger (if other than such Subsidiary Guarantor) assumes all the obligations of
such Subsidiary Guarantor pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the New Notes and the
Indenture; (ii) immediately after giving effect to such transaction, no Default
or Event of Default exists; (iii) such Subsidiary Guarantor, or any Person
formed by or surviving any such consolidation or merger, would have Consolidated
Net Worth (immediately after giving effect to such transaction) equal to or
greater than the Consolidated Net Worth of such Subsidiary Guarantor immediately
preceding the transaction; and (iv) the Company would be permitted by virtue of
its pro forma Fixed Charge Coverage Ratio, immediately after giving effect to
such transaction, to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed
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Charge Coverage Ratio test set forth in the covenant described below under the
caption " -- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock." The requirements of clauses (iii) and (iv) of this paragraph
will not apply in the case of a consolidation with or merger with or into (a)
the Company or another Subsidiary Guarantor or (b) any other Person if the
acquisition of all of the Equity Interests in such Person would have complied
with the provisions of the covenants described below under the captions
" -- Certain Covenants -- Restricted Payments" and " -- Incurrence of
Indebtedness and Issuance of Preferred Stock."
The Indenture provides that (a) in the event of a sale or other disposition
of all of the assets of any Subsidiary Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the capital
stock of any Subsidiary Guarantor, or (b) in the event that the Company
designates a Subsidiary Guarantor to be an Unrestricted Subsidiary, or such
Subsidiary Guarantor ceases to be a Subsidiary of the Company, then such
Subsidiary Guarantor (in the event of a sale or other disposition, by way of
such a merger, consolidation or otherwise, of all of the capital stock of such
Subsidiary Guarantor or any such designation) or the entity acquiring the
property (in the event of a sale or other disposition of all of the assets of
such Subsidiary Guarantor) will be released and relieved of any obligations
under its Note Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of the
Indenture. See " -- Repurchase at the Option of Holders." In the case of a sale,
assignment, lease, transfer, conveyance or other disposition of all or
substantially all of the assets of a Subsidiary Guarantor, upon the assumption
provided for in clause (ii) of the covenant described under the caption " --
Certain Covenants -- Merger, Consolidation, or Sale of Assets," such Subsidiary
Guarantor shall be discharged from all further liability and obligation under
the Indenture.
OPTIONAL REDEMPTION
The New Notes will not be redeemable at the Company's option prior to July
15, 2002. Thereafter, the New Notes will be subject to redemption at any time at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the applicable redemption date, if
redeemed during the twelvemonth period beginning on July 15 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
-------------------------------------------------- ----------
<S> <C>
2002.............................................. 105.063%
2003.............................................. 103.375%
2004.............................................. 101.688%
2005 and thereafter............................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to July 15, 2000, the
Company may redeem up to 33% of the original aggregate principal amount of New
Notes at a redemption price of 110.125% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date, with the net cash proceeds of a Public Equity Offering;
provided that at least 67% of the original aggregate principal amount of New
Notes remains outstanding immediately after the occurrence of such redemption;
and provided, further, that such redemption shall occur within 45 days of the
date of the closing of such Public Equity Offering.
SELECTION AND NOTICE
If less than all of the New Notes are to be redeemed at any time, selection
of New Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
New Notes are listed, or, if the New Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no New Notes of $1,000 or less shall be redeemed in part. Notices
of redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each Holder of New Notes to be redeemed at
its registered address. Notices of redemption may not be conditional. If any New
Note is to be redeemed in part only, the
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notice of redemption that relates to such New Note shall state the portion of
the principal amount thereof to be redeemed. A new New Note in principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original New Note. New Notes called for
redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on New Notes or portions of them
called for redemption.
MANDATORY REDEMPTION
Except as set forth below under " -- Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the New Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each Holder of New Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's New Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within 30 days following any Change of
Control, the Company will mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase New Notes on the date specified in such notice, which date shall
be no earlier than 30 days and no later than 60 days from the date such notice
is mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by the Indenture and described in such notice. The Company will comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the New Notes as
a result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all New Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all New
Notes or portions thereof so tendered and (3) deliver or cause to be delivered
to the Trustee the New Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of New Notes or portions thereof being
purchased by the Company. The Paying Agent will promptly mail to each Holder of
New Notes so tendered the Change of Control Payment for such New Notes, and the
Trustee will promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new New Note equal in principal amount to any
unpurchased portion of the New Notes surrendered, if any; provided that each
such new New Note will be in a principal amount of $1,000 or an integral
multiple thereof. The Indenture provides that, prior to complying with the
provisions of this covenant, but in any event within 90 days following a Change
of Control, the Company will either repay all outstanding Senior Debt or obtain
the requisite consents, if any, under all agreements governing outstanding
Senior Debt to permit the repurchase of New Notes required by this covenant. The
Company will publicly announce the results of the Change of Control Offer on, or
as soon as practicable after, the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the New Notes to require that the Company
repurchase or redeem the New Notes in the event of a takeover, recapitalization
or similar transaction.
The New Credit Facility provides that certain change of control events with
respect to the Company would constitute a default thereunder. Any future credit
agreements or other agreements relating to Senior Debt to which the Company
becomes a party may contain similar restrictions and provisions. In the event a
Change of Control occurs at a time when the Company is prohibited from
purchasing New Notes, the Company could seek the consent of its lenders to
purchase the New Notes or could attempt to refinance the borrowings that contain
such prohibition. If the Company does not obtain such consent or repay such
borrowings, the Company will remain prohibited from purchasing New Notes. In
such case, the Company's
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failure to purchase tendered New Notes would constitute an Event of Default
under the Indenture which would, in turn, constitute a default under the New
Credit Facility. In such circumstances, the subordination provisions in the
Indenture would likely restrict payments to the Holders of New Notes. See
"Description of Indebtedness."
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all New Notes validly tendered and not withdrawn under such Change of
Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of that phrase under applicable
law. Accordingly, the ability of a Holder of New Notes to require the Company to
repurchase such New Notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of the assets of the Company and its
Subsidiaries taken as a whole to another Person or group may be uncertain.
Asset Sales
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale other than transfers
of Receivables to a Receivables Subsidiary in connection with a Receivables
Transaction unless (i) the Company (or the Restricted Subsidiary, as the case
may be) receives consideration at the time of such Asset Sale at least equal to
the fair market value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) of the assets or
Equity Interests issued or sold or otherwise disposed of and (ii) at least 80%
of the consideration therefor received by the Company or such Restricted
Subsidiary is in the form of cash; provided that the amount of (x) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet) of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the New Notes or any guarantee thereof) that are assumed by the transferee of
any such assets pursuant to a customary novation agreement that releases the
Company or such Restricted Subsidiary from further liability and (y) any
securities, notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are converted by the Company or
such Restricted Subsidiary into cash within 180 days (to the extent of the cash
received), shall be deemed to be cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to permanently repay
Senior Debt (and to correspondingly reduce commitments with respect thereto in
the case of revolving borrowings), or (b) to the acquisition of a controlling
interest in another business, the making of a capital expenditure or the
acquisition of other long-term assets, in each case, in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce the revolving Indebtedness under the New Credit Facility or
otherwise invest such Net Proceeds in any manner that is not prohibited by the
Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0
million, the Company will be required to make an offer to all Holders of New
Notes (an "Asset Sale Offer") to purchase the maximum principal amount of New
Notes that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase,
in accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of New Notes tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, the Company may use any remaining Excess Proceeds
for general corporate purposes. If the aggregate principal amount of New Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the New Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
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CERTAIN COVENANTS
Restricted Payments
The Indenture provides that from and after the date of the Indenture the
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the Company) or to the
direct or indirect holders of the Company's or any of its Restricted
Subsidiaries' Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
the Company); (ii) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company; (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is pari passu with or subordinated to the New Notes (other
than the Notes), except a payment of interest or principal at Stated Maturity;
or (iv) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
the covenant described below under caption "-- Incurrence of Indebtedness
and Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Subsidiaries after
the date of the Indenture (excluding Restricted Payments permitted by
clause (ii) of the next succeeding paragraph), is less than the sum of (i)
50% of the Consolidated Net Income of the Company for the period (taken as
one accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the Company from
the issue or sale since the date of the Indenture of Equity Interests of
the Company (other than Disqualified Stock) or of Disqualified Stock or
debt securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made after the date of the Indenture is sold
for cash or otherwise liquidated or repaid for cash, the lesser of (A) the
cash return of capital with respect to such Restricted Investment (less the
cost of disposition, if any) and (B) the initial amount of such Restricted
Investment, plus (iv) if any Unrestricted Subsidiary (A) is redesignated as
a Restricted Subsidiary, the fair market value of such redesignated
Subsidiary (as determined in good faith by the Board of Directors) as of
the date of its redesignation or (B) pays any cash dividends or cash
distributions to the Company or any of its Restricted Subsidiaries, 50% of
any such cash dividends or cash distributions made after the date of the
Indenture.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness or Equity Interests
of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale or issuance (other than to a Restricted Subsidiary
of the Company) of, other Equity Interests of the Company (other than any
Disqualified Stock); provided that the amount of any
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such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause
(c)(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase
or other acquisition of pari passu or subordinated Indebtedness with the net
cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the
payment of any dividend by a Restricted Subsidiary of the Company to the holders
of its Equity Interests on a pro rata basis; (v) the declaration or payment of
dividends to NEHC for expenses incurred by NEHC or Holberg in its capacity as a
holding company that are attributable to the operations of the Company and its
Restricted Subsidiaries, including, without limitation, (a) customary salary,
bonus and other benefits payable to officers and employees of NEHC or Holberg,
(b) fees and expenses paid to members of the Board of Directors of NEHC or
Holberg, (c) general corporate overhead expenses of NEHC or Holberg, (d)
foreign, federal, state or local tax liabilities paid by NEHC or Holberg, (e)
management, consulting or advisory fees paid to Holberg not to exceed $4.0
million in any fiscal year, and (f) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of NEHC or Holberg
held by any member of NEHC's or the Company's (or any of their Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement in effect as of the date of the Indenture;
provided, however, the aggregate amount paid pursuant to the foregoing clauses
(a) through (f) does not exceed $7.0 million in any fiscal year; (vi)
Investments in any Person (other than the Company or a Wholly-Owned Restricted
Subsidiary) engaged in a Permitted Business in an amount not to exceed $5.0
million; (vii) other Investments in Unrestricted Subsidiaries having an
aggregate fair market value, taken together with all other Investments made
pursuant to this clause (vii) that are at that time outstanding, not to exceed
$2.0 million; (viii) Permitted Investments; (ix) payments to NEHC or Holberg
pursuant to the tax sharing agreement among Holberg and other members of the
affiliated corporations of which Holberg is the common parent; or (x) other
Restricted Payments in an aggregate amount not to exceed $10.0 million.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default; provided
that in no event shall the business currently operated by any Subsidiary
Guarantor be transferred to or held by an Unrestricted Subsidiary. For purposes
of making such determination, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary
so designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this covenant. All such outstanding Investments will be
deemed to constitute Investments in an amount equal to the fair market value of
such Investments at the time of such designation (as determined in good faith by
the Board of Directors). Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. The fair market value of any
non-cash Restricted Payment shall be determined in good faith by the Board of
Directors whose resolution with respect thereto shall be delivered to the
Trustee; such determination will be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $10.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant "-- Restricted
Payments" were computed, together with a copy of any fairness opinion or
appraisal required by the Indenture.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company may incur Indebtedness (including
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Acquired Debt) or issue shares of Disqualified Stock if the Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 2.0 to 1, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock had
been issued, as the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company of term Indebtedness under the New
Credit Facility; provided that the aggregate principal amount of all term
Indebtedness outstanding under the New Credit Facility after giving effect
to such incurrence does not exceed the aggregate amount of term
Indebtedness borrowed under the New Credit Facility on July 11, 1997 less
the aggregate amount of all repayments, optional or mandatory, of the
principal of any term Indebtedness under the New Credit Facility (other
than repayments that are immediately reborrowed) that have been made since
July 11, 1997; provided that the foregoing proviso shall not limit the
principal amount of Permitted Refinancing Indebtedness that may be incurred
to refund, refinance or replace any Indebtedness incurred pursuant to this
clause (i);
(ii) the incurrence by the Company of revolving Indebtedness and
letters of credit pursuant to the New Credit Facility; provided that the
aggregate principal amount of all revolving Indebtedness (with letters of
credit being deemed to have a principal amount equal to the maximum
potential liability of the Company thereunder) outstanding under the New
Credit Facility after giving effect to such incurrence does not exceed
$150.0 million; provided that the foregoing proviso shall not limit the
principal amount of Permitted Refinancing Indebtedness that may be incurred
to refinance or replace any Indebtedness incurred pursuant to this clause
(ii);
(iii) the incurrence by the Company and its Restricted Subsidiaries of
the Existing Indebtedness;
(iv) the incurrence by the Company and the Subsidiary Guarantors of
Indebtedness represented by the New Notes and the New Note Guarantees,
respectively;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary (whether through the
direct purchase of assets or the Capital Stock of any Person owning such
Assets), in an aggregate principal amount not to exceed $125.0 million;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in connection with the acquisition of assets
or a new Restricted Subsidiary; provided that such Indebtedness was
incurred by the prior owner of such assets or such Restricted Subsidiary
prior to such acquisition by the Company or one of its Subsidiaries and was
not incurred in connection with, or in contemplation of, such acquisition
by the Company or one of its Subsidiaries; provided further that the
principal amount (or accreted value, as applicable) of such Indebtedness,
together with any other outstanding Indebtedness incurred pursuant to this
clause (vi), does not exceed $5.0 million;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
that was permitted by the Indenture to be incurred;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Wholly-Owned Restricted Subsidiaries; provided, however, that
(i) if the Company is the obligor on such Indebtedness and the payee is not
a Subsidiary Guarantor, such Indebtedness is expressly subordinated to the
prior payment in full in cash of all Obligations with respect to the New
Notes and (ii)(A) any subsequent issuance or transfer of Equity
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Interests that results in any such Indebtedness being held by a Person
other than the Company or a Wholly Owned Restricted Subsidiary and (B) any
sale or other transfer of any such Indebtedness to a Person that is not
either the Company or a Wholly Owned Restricted Subsidiary shall be deemed,
in each case, to constitute an incurrence of such Indebtedness by the
Company or such Restricted Subsidiary, as the case may be;
(ix) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging currency risk or interest rate risk with respect to any
floating rate Indebtedness that is permitted by the terms of this Indenture
to be outstanding;
(x) the guarantee by the Company or any of its Restricted Subsidiaries
of Indebtedness of the Company or a Restricted Subsidiary of the Company
that was permitted to be incurred by another provision of this covenant;
(xi) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company;
(xii) Asset Sales in the form of Receivables Transactions;
(xiii) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including without
limitation to letters of credit in respect to workers' compensation claims
or self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims; provided, however, that
upon the drawing of such letters of credit or the incurrence of such
Indebtedness, such obligations are reimbursed within 30 days following such
drawing or incurrence;
(xiv) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in
connection with the disposition of any business, asset to a Subsidiary,
other than guarantees of Indebtedness incurred by any Person acquiring all
or any portion of such business, assets or a Subsidiary for the purpose of
financing such acquisition; provided that the maximum aggregate liability
of all such Indebtedness shall at no time exceed 50% of the gross proceeds
actually received by the Company or a Restricted Subsidiary in connection
with such disposition;
(xv) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business;
(xvi) guarantees incurred in the ordinary course of business in an
aggregate principal amount not to exceed $5.0 millon at any time
outstanding; and
(xvii) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness, including Attributable Debt
incurred after the date of the Indenture, in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any other Indebtedness incurred pursuant to this clause (xvii), not to
exceed $25.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xvii) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant and such item of Indebtedness will be
treated as having been incurred pursuant to only one of such clauses or pursuant
to the first paragraph hereof. Accrual of interest and the accretion of accreted
value will not be deemed to be an incurrence of Indebtedness for purposes of
this covenant.
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Liens
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind securing trade payables
or Indebtedness that does not constitute Senior Debt (other than Permitted
Liens) upon any of their property or assets, now owned or hereafter acquired.
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1) on
its Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (b) pay any indebtedness owed to the Company or
any of its Restricted Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on July 11, 1997, (b) the New Credit Facility as in
effect as of July 11, 1997, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive in the aggregate (as determined by the Credit Agent in good faith)
with respect to such dividend and other payment restrictions than those
contained in the New Credit Facility as in effect on July 11, 1997, (c) the
Indenture and the New Notes, (d) any applicable law, rule, regulation or order,
(e) any instrument governing Indebtedness or Capital Stock of a Person acquired
by the Company or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of the Indenture to be incurred, (f) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired, (h) Permitted Refinancing Indebtedness, provided that the material
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced, (i) contracts for the sale of
assets, including without limitation customary restrictions with respect to a
Subsidiary pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary, and (j) restrictions on cash or other deposits or net worth imposed
by customers under contracts entered into in the ordinary course of business.
Merger, Consolidation, or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the
Company under the New Notes and the Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (iii) immediately
after such transaction no Default or Event of Default exists; and (iv) except in
the case of a merger of the Company with or into a Wholly-Owned
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Restricted Subsidiary of the Company, the Company or the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company), or
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made will, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of the covenant described above under the caption
" -- Incurrence of Indebtedness and Issuance of Preferred Stock."
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction")
involving consideration in excess of $3.0 million unless (i) such Affiliate
Transaction is on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustee (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $7.5 million, a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of Directors and (b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving either aggregate consideration in
excess of $15.0 million or an aggregate consideration in excess of $10.0 million
where there are no disinterested members of the Board of Directors, an opinion
as to the fairness to the Holders of such Affiliate Transaction from a financial
point of view issued by an accounting, appraisal or investment banking firm of
national standing; provided that the following shall not be deemed Affiliate
Transactions: (q) any employment agreement entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or such Restricted Subsidiary, (r)
transactions between or among the Company and/or its Restricted Subsidiaries,
(s) Permitted Investments and Restricted Payments that are permitted by the
provisions of the Indenture described above under the caption " -- Restricted
Payments," (t) customary loans, advances, fees and compensation paid to, and
indemnity provided on behalf of, officers, directors, employees or consultants
of the Company or any of its Restricted Subsidiaries, (u) annual management fees
paid to Holberg not to exceed $5.0 million in any one year, (v) transactions
pursuant to any contract or agreement in effect on the date of the Indenture as
the same may be amended, modified or replaced from time to time so long as any
such amendment, modification or replacement is no less favorable to the Company
and its Restricted Subsidiaries than the contract or agreement as in effect on
the Issue Date or is approved by a majority of the disinterested directors of
NEHC, (w) transactions between the Company or its Restricted Subsidiaries on the
one hand, and Holberg on the other hand, involving the provision of financial or
advisory services by Holberg; provided that fees payable to Holberg do not
exceed the usual and customary fees for similar services, (x) transactions
between the Company or its Restricted Subsidiaries on the one hand, and
Donaldson, Lufkin & Jenrette Securities Corporation or its Affiliates ("DLJ") on
the other hand, involving the provision of financial, advisory, placement or
underwriting services by DLJ; provided that fees payable to DLJ do not exceed
the usual and customary fees of DLJ for similar services, (y) the insurance
arrangements between NEHC and its Subsidiaries and an Affiliate of Holberg that
are not less favorable to the Company or any of its Subsidiaries than those that
are in effect on the date hereof provided such arrangements are conducted in the
ordinary course of business consistent with past practices, and (z) payments
under the tax sharing agreement among Holberg and other members of the
affiliated group of corporations of which it is the common parent.
Anti-Layering
The Indenture provides that (i) the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is both
(a) subordinate or junior in right of payment to any Senior
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Debt and (b) senior in any respect in right of payment to the New Notes and (ii)
no Subsidiary Guarantor will incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is both (a) subordinate or
junior in right of payment to its Senior Debt and (b) senior in right of payment
to its Note Guarantee.
Sale and Leaseback Transactions
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, enter into any sale and leaseback
transaction; provided that the Company may enter into a sale and leaseback
transaction if (i) the Company could have (a) incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
pursuant to the covenant described above under the caption " -- Incurrence of
Indebtedness and Issuance of Preferred Stock" and (b) incurred a Lien to secure
such Indebtedness pursuant to the covenant described above under the caption
" -- Liens," (ii) the gross cash proceeds of such sale and leaseback transaction
are at least equal to the fair market value (as determined in good faith by the
Board of Directors and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale and leaseback
transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, the covenant described above under the caption
" -- Repurchase at the Option of Holders -- Asset Sales."
Limitation on Issuances and Sales of Capital Stock of Wholly-Owned Restricted
Subsidiaries
The Indenture provides that the Company (i) will not, and will not permit
any Wholly-Owned Restricted Subsidiary of the Company to, transfer, convey,
sell, lease or otherwise dispose of any Capital Stock of any Wholly-Owned
Subsidiary of the Company to any Person (other than the Company or a
Wholly-Owned Restricted Subsidiary of the Company), unless (a) such transfer,
conveyance, sale, lease or other disposition is of all the Capital Stock of such
Wholly-Owned Restricted Subsidiary and (b) the cash Net Proceeds from such
transfer, conveyance, sale, lease or other disposition are applied in accordance
with the covenant described above under the caption " -- Asset Sales," and (ii)
will not permit any Wholly-Owned Restricted Subsidiary of the Company to issue
any of its Equity Interests (other than, if necessary, shares of its Capital
Stock constituting directors' qualifying shares) to any Person other than to the
Company or a Wholly-Owned Restricted Subsidiary of the Company.
Limitations on Issuances of Guarantees of Indebtedness
The Indenture provides that the Company will not permit any Restricted
Subsidiary, directly or indirectly, to Guarantee or pledge any assets to secure
the payment of any other Indebtedness of the Company unless either such
Restricted Subsidiary (x) is a Subsidiary Guarantor or (y) simultaneously
executes and delivers a supplemental indenture to the Indenture providing for
the Guarantee of the payment of the New Notes by such Restricted Subsidiary,
which Guarantee shall be senior to or pari passu with such Restricted
Subsidiary's Guarantee of or pledge to secure such other Indebtedness.
Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary of
the New Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon any sale, exchange or transfer, to
any Person not an Affiliate of the Company, of all of the Company's stock in, or
all or substantially all the assets of, such Restricted Subsidiary, which sale,
exchange or transfer is made in compliance with the applicable provisions of the
Indenture. The form of such Guarantee is attached as an exhibit to the
Indenture.
Business Activities
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than a Permitted Business, except to such extent as
would not be material to the Company and its Restricted Subsidiaries taken as a
whole.
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Additional Guarantees
The Indenture provides that (i) if the Company or any of its Restricted
Subsidiaries shall, after the date of the Indenture, transfer or cause to be
transferred, including by way of any Investment, in one or a series of
transactions (whether or not related), any assets, businesses, divisions, real
property or equipment having an aggregate fair market value (as determined in
good faith by the Board of Directors) in excess of $1.0 million to any
Restricted Subsidiary that is not a Subsidiary Guarantor or a Foreign
Subsidiary, (ii) if the Company or any of its Restricted Subsidiaries shall
acquire another Restricted Subsidiary other than a Foreign Subsidiary having
total assets with a fair market value (as determined in good faith by the Board
of Directors) in excess of $1.0 million, or (iii) if any Restricted Subsidiary
other than a Foreign Subsidiary shall incur Acquired Debt in excess of $1.0
million, then the Company shall, at the time of such transfer, acquisition or
incurrence, (i) cause such transferee, acquired Restricted Subsidiary or
Restricted Subsidiary incurring Acquired Debt (if not then a Subsidiary
Guarantor) to execute a Note Guarantee of the Obligations of the Company under
the New Notes in the form set forth in the Indenture and (ii) deliver to the
Trustee an Opinion of Counsel, in form reasonably satisfactory to the Trustee,
that such Note Guarantee is a valid, binding and enforceable obligation of such
transferee, acquired Restricted Subsidiary or Restricted Subsidiary incurring
Acquired Debt, subject to customary exceptions for bankruptcy, fraudulent
conveyance and equitable principles. Notwithstanding the foregoing, the Company
or any of its Restricted Subsidiaries may make a Restricted Investment in any
Wholly-Owned Restricted Subsidiary of the Company without compliance with this
covenant provided that such Restricted Investment is permitted by the covenant
described under the caption, " -- Restricted Payments."
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any New Notes are outstanding, the
Company will furnish to the Holders of New Notes (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports. In addition, whether or
not required by the rules and regulations of the Commission, the Company will
file a copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, the Company has agreed that, for so long as any New Notes
remain outstanding, it will furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the New Notes (whether or not prohibited by
the subordination provisions of the Indenture); (ii) default in payment when due
of the principal of or premium, if any, on the New Notes (whether or not
prohibited by the subordination provisions of the Indenture); (iii) failure by
the Company to comply with the provisions described under the captions
" -- Repurchase at the Option of Holders -- Change of Control," " -- Certain
Covenants -- Asset Sales," or " -- Certain Covenants -- Merger, Consolidation,
or Sale of Assets"; (iv) failure by the Company for 30 days after notice from
the Trustee or at least 25% in principal amount of the New Notes then
outstanding to comply with the provisions described under the captions
" -- Restricted Payments" or "-- Incurrence of Indebtedness and Issuance of
Preferred Stock"; (v) failure by the Company for 60 days after notice from the
Trustee or at least 25% in principal amount of the New Notes then outstanding to
comply with any of its other agreements in the Indenture or the New Notes; (vi)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
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borrowed by the Company or any of its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries) whether such Indebtedness
or Guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
or (b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $15.0 million or more; (vii) failure by the Company or
any of its Subsidiaries to pay final judgments aggregating in excess of $5.0
million, which judgments are not paid, discharged or stayed for a period of 60
days; and (viii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding New Notes
may declare all the New Notes to be due and payable immediately provided,
however, that if any Indebtedness or Obligation is outstanding pursuant to the
New Credit Facility, upon a declaration of acceleration by the holders of the
New Notes or the Trustee, all principal and interest under the Indenture shall
be due and payable upon the earlier of (x) the day which five Business Days
after the provision to the Company, the Credit Agent and the Trustee of such
written notice of acceleration or (y) the date of acceleration of any
Indebtedness under the New Credit Facility; and provided further that in the
event of an acceleration based upon an Event of Default set forth in clause (vi)
above, such declaration of acceleration shall be automatically annulled if the
holders of Indebtedness which is the subject of such failure to pay at maturity
or acceleration have rescinded their declaration of acceleration in respect of
such Indebtedness or such failure to pay at maturity shall have been cured or
waived within 30 days thereof and no other Event of Default has occurred during
such 30-day period which has not been cured, paid or waived. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company or any of its Subsidiaries
all outstanding New Notes will become due and payable without further action or
notice. Holders of the New Notes may not enforce the Indenture or the New Notes
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding New Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the New Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the New Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the New Notes. If an Event of Default occurs prior to
July 15, 2002 by reason of any willful action (or inaction) taken (or not taken)
by or on behalf of the Company with the intention of avoiding the prohibition on
redemption of the New Notes prior to July 15, 2002, then the premium specified
in the Indenture shall also become immediately due and payable to the extent
permitted by law upon the acceleration of the New Notes.
The Holders of a majority in aggregate principal amount of the New Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the New Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the New Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
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NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or the Subsidiary Guarantors, as such, shall have any liability for any
obligations of the Company or any Subsidiary Guarantor under the New Notes, the
Indenture, the New Note Guarantees or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each Holder of New Notes by
accepting a New Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the New Notes. Such waiver
may not be effective to waive liabilities under the federal securities laws and
it is the view of the Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding New Notes and all
obligations of the Subsidiary Guarantors under the New Note Guarantees ("Legal
Defeasance") except for (i) the rights of Holders of outstanding New Notes to
receive payments in respect of the principal of, premium and Liquidated Damages,
if any, and interest on such New Notes when such payments are due from the trust
referred to below, (ii) the Company's obligations with respect to the New Notes
concerning issuing temporary New Notes, registration of New Notes, mutilated,
destroyed, lost or stolen New Notes and the maintenance of an office or agency
for payment and money for security payments held in trust, (iii) the rights,
powers, trusts, duties and immunities of the Trustee, and the Company's
obligations in connection therewith and (iv) the Legal Defeasance provisions of
the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company and the Subsidiary Guarantors
released with respect to certain covenants that are described in the Indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the New Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "-- Events of Default" will no longer constitute an
Event of Default with respect to the New Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the New Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium and Liquidated Damages, if any, and interest on
the outstanding New Notes on the stated maturity or on the applicable redemption
date, as the case may be, and the Company must specify whether the New Notes are
being defeased to maturity or to a particular redemption date; (ii) in the case
of Legal Defeasance, the Company shall have delivered to the Trustee an opinion
of counsel in the United States reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of the Indenture, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm that,
the Holders of the outstanding New Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders of the outstanding New
Notes will not recognize income, gain or loss for federal income tax purposes as
a result of such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred; (iv) no Default or Event
of Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit) or insofar as Events of Default from bankruptcy
or insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
will not result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than the Indenture) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; (vi) the Company must have delivered to the Trustee an
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opinion of counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (vii) the Company must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of New Notes over the other creditors of the Company
with the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and (viii) the Company must deliver to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange New Notes in accordance with the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or exchange
any New Note selected for redemption. Also, the Company is not required to
transfer or exchange any New Note for a period of 15 days before a selection of
New Notes to be redeemed.
The registered Holder of a New Note will be treated as the owner of it for
all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture,
the New Notes or the New Note Guarantees may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the New
Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, New
Notes), and any existing default or compliance with any provision of the
Indenture, the New Notes or the New Note Guarantees may be waived with the
consent of the Holders of a majority in principal amount of the then outstanding
New Notes (including consents obtained in connection with a tender offer or
exchange offer for New Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any New Notes held by a non-consenting Holder): (i) reduce the
principal amount of New Notes whose Holders must consent to an amendment,
supplement or waiver; (ii) reduce the principal of or change the fixed maturity
of any Note or alter the provisions with respect to the redemption of the New
Notes (other than provisions relating to the covenants described above under the
caption "-- Repurchase at the Option of Holders"); (iii) reduce the rate of or
change the time for payment of interest on any Note; (iv) waive a Default or
Event of Default in the payment of principal of or premium, if any, or interest
on the New Notes (except a rescission of acceleration of the New Notes by the
Holders of at least a majority in aggregate principal amount of the New Notes
and a waiver of the payment default that resulted from such acceleration); (v)
make any Note payable in money other than that stated in the New Notes; (vi)
make any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of New Notes to receive payments of principal
of or premium, if any, or interest on the New Notes; (vii) waive a redemption
payment with respect to any Note (other than a payment required by one of the
covenants described above under the caption "-- Repurchase at the Option of
Holders") or (viii) make any change in the foregoing amendment and waiver
provisions. In addition, any amendment to the provisions of Article 10 of the
Indenture (which relate to subordination) will require the consent of the
Holders of at least 75% in aggregate principal amount of the New Notes then
outstanding if such amendment would adversely affect the rights of Holders of
New Notes.
Notwithstanding the foregoing, without the consent of any Holder of New
Notes, the Company, the Subsidiary Guarantors and the Trustee may amend or
supplement the Indenture, the New Notes or the New Note Guarantees to cure any
ambiguity, defect or inconsistency, to provide for uncertificated New Notes in
addition to or in place of certificated New Notes, to provide for the assumption
of the Company's and the Subsidiary Guarantors' obligations to Holders of New
Notes in the case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of New Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, to comply with requirements of the
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Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act or to allow any Subsidiary to guarantee the New
Notes.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount of the then outstanding New
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of New Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to AmeriServe,
Brookfield Lake Corporate Center, 117975 West Sarah Lane, Suite 100, Brookfield,
Wisconsin; Attention: Secretary.
BOOK-ENTRY, DELIVERY AND FORM
The New Notes initially being issued in exchange for the Notes generally
will be represented by one or more fully-registered global notes without
interest coupons (collectively the "Global New Note"). Notwithstanding the
foregoing, New Notes held in certificated form will be exchanged solely for New
Notes in certificated form as discussed below. The Global New Note will be
deposited upon issuance with the Depository Trust Company (the "DTC") and
registered in the name of DTC or its nominee (the "Global New Note Registered
Owner"), in each case for credit to an account of a direct or indirect
participant as described below. Except as set forth below, the Global New Note
may be transferred, in whole and not in part, only to another nominee of the DTC
or to a successor of the DTC or its nominee. See "-- Exchange of Book-Entry New
Notes for Certificated New Notes."
The New Notes may be presented for registration of transfer and exchange at
the offices of the Registrar.
Depository Procedures
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic
book-entry changes in accounts of Participants. The Participants include
securities brokers and dealers (including the Initial Purchaser), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are recorded on
the records of the Participants and Indirect Participants.
DTC has also advised the Company that pursuant to procedures established by
it, (i) upon deposit of the Global New Notes, DTC will credit the accounts of
Participants designated by the Initial Purchaser with
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portions of the principal amount of Global New Notes and (ii) ownership of such
interests in the Global New Notes will be shown on, and the transfer ownership
thereof will be effected only through, records maintained by DTC (with respect
to Participants) or by Participants and the Indirect Participants (with respect
to other owners of beneficial interests in the Global New Notes).
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NEW NOTES WILL
NOT HAVE NEW NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY
OF NEW NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED
OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal and premium and Liquidated Damages, if
any, and interest on a Global New Note registered in the name of DTC or its
nominee will be payable by the Trustee to DTC or its nominee in its capacity as
the registered holder under the Indenture. Under the terms of the Indenture, the
Company and the Trustee will treat the persons in whose names the New Notes,
including the Global New Notes, are registered as the owners thereof for the
purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, none of the Company, the Trustee nor any agent of the
Company or the Trustee has or will have any responsibility or liability for (i)
any aspect of DTC's records or any Participant's or Indirect Participant's
records relating to or payments made on account of beneficial ownership
interests in the Global New Notes, or for maintaining, supervising or reviewing
any of DTC's records or any Participant's or Indirect Participant's records
relating to the beneficial ownership interests in the Global New Notes or (ii)
any other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants.
DTC has advised the Company that its current practice, upon receipt of any
payment in respect of securities such as the New Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security
such as the Global New Notes as shown on the records of DTC. Payments by
Participants and the Indirect Participants to the beneficial owners of New Notes
will be governed by standing instructions and customary practices and will not
be the responsibility of DTC, the Trustee or the Company. Neither the Company
nor the Trustee will be liable for any delay by DTC or its Participants in
identifying the beneficial owners of the New Notes, and the Company and the
Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee as the registered owner of the New Notes
for all purposes.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of New Notes only at the direction of one or more Participants
to whose account DTC interests in the Global New Notes are credited and only in
respect of such portion of the aggregate principal amount of the New Notes as to
which such Participant or Participants have given direction. However, if there
is an Event of Default under the New Notes, DTC reserves the right to exchange
Global New Notes for legended New Notes in certificated form, and to distribute
such New Notes to its Participants.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global New Notes among Participants in DTC, it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Company, the Initial
Purchaser or the Trustee will have any responsibility for the performance by
DTC, or its Participants or indirect Participants of its obligations under the
rules and procedures governing their operations.
Exchange of Book-Entry New Notes for Certificated New Notes
A Global New Note is exchangeable for definitive New Notes in registered
certificated form if (i) DTC (x) notifies the Company that it is unwilling or
unable to continue as depositary for the Global New Note and the Company
thereupon fails to appoint a successor depositary or (y) has ceased to be a
clearing agency registered under the Exchange Act, (ii) the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance of
the New Notes in certificated form or (iii) there shall have occurred and be
continuing to occur a Default or an Event of Default with respect to the New
Notes. In addition, beneficial
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interests in a Global New Note may be exchanged for certificated New Notes upon
request but only upon at least 20 days' prior written notice given to the
Trustee by or on behalf of DTC in accordance with customary procedures. In all
cases, certificated New Notes delivered in exchange for any Global New Note or
beneficial interest therein will be registered in the names, and issued in any
approved denominations, requested by or on behalf of the depositary (in
accordance with its customary procedures).
Subject to the restrictions on the transferability of the New Notes
described in "Risk Factors -- Restrictions on Transfer," a New Note in
definitive form will be issued (i) in the Exchange Offer solely in exchange for
certificated Notes or (ii) following the Exchange Offer, upon the resale, pledge
or other transfer of any New Note or interest therein to any person or entity
that does not participate in the Depository. The exchange of certificated notes
in the Exchange Offer may be made only by presentation of the notes, duly
endorsed, together with a duly completed Letter of Transmittal and other
required documentation as described under "The Exchange Offer -- Procedures for
Tendering" and "-- Guaranteed Delivery Procedures." Transfers of certificated
New Notes may be made only by presentation of New Notes, duly endorsed, to the
Trustees for registration of transfer on the Note Register maintained by the
Trustees for such purposes.
The information in this section concerning the Depository and the
Depository's book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
CERTIFICATED NEW NOTES
Subject to certain conditions, any person having a beneficial interest in
the Global New Note may, upon request to the Trustee, exchange such beneficial
interest for New Notes in the form of Certificated New Notes. Upon any such
issuance, the Trustee is required to register such Certificated New Notes in the
name of, and cause the same to be delivered to, such person or persons (or the
nominee of any thereof). In addition, if (i) the Company notifies the Trustee in
writing that the DTC is no longer willing or able to act as a depositary and the
Company is unable to locate a qualified successor within 90 days or (ii) the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of New Notes in the form of Certificated New Notes under the
Indenture, then, upon surrender by the Global New Note Holder of its Global New
Note, New Notes in such form will be issued to each person that the Global New
Note Holder and the DTC identify as being the beneficial owner of the related
New Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global New Note Holder or the DTC in identifying the beneficial owners of New
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global New Note Holder or the DTC
for all purposes.
SAME DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the New Notes
represented by the Global New Note (including principal, premium, if any,
interest and Liquidated Damages, if any) be made by wire transfer of immediately
available next day funds to the accounts specified by the Global New Note
Holder. With respect to Certificated New Notes, the Company will make all
payments of principal, premium, if any, interest and Liquidated Damages, if any,
by wire transfer of immediately available funds to the accounts specified by the
Holders thereof or, if no such account is specified, by mailing a check to each
such Holder's registered address. The Company expects that secondary trading in
the Certificated New Notes will also be settled in immediately available funds.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company, the Subsidiary Guarantors and the Initial Purchasers entered
into the Registration Rights Agreement on the Closing date. Pursuant to the
Registration Rights Agreement, the Company and the Subsidiary Guarantors agreed
to file with the Commission the Exchange Offer Registration Statement of which
this Prospectus is a part on the appropriate form under the Securities Act with
respect to the New Notes. Upon the effectiveness of the Exchange Offer
Registration Statement, the Company will offer to the
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Holders of Transfer Restricted Securities pursuant to the Exchange Offer who are
able to make certain representations the opportunity to exchange their Transfer
Restricted Securities for New Notes. If any Holder of Transfer Restricted
Securities notifies the Company prior to the 20th day following consummation of
the Exchange Offer that (i) it is prohibited by law or Commission policy from
participating in the Exchange Offer or (ii) that it may not resell the New Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales or (iii) that it is a
broker-dealer and owns Notes acquired directly from the Company or an affiliate
of the Company, the Company and the Subsidiary Guarantors will file with the
Commission a Shelf Registration Statement to cover resales of the Notes by the
Holders thereof who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. The Company and
the Subsidiary Guarantors will use their best efforts to cause the applicable
registration statement to be declared effective as promptly as possible by the
Commission. For purposes of the foregoing, "Transfer Restricted Securities"
means each Note until (i) the date on which such Note has been exchanged by a
person other than a broker-dealer for a New Note in the Exchange Offer, (ii)
following the exchange by a broker-dealer in the Exchange Offer of a Note for a
New Note, the date on which such New Note is sold to a purchaser who receives
from such broker-dealer on or prior to the date of such sale a copy of the
prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Note has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement or (iv) the
date on which such Note is distributed to the public pursuant to Rule 144 under
the Act.
The Registration Rights Agreement provides, among other things, that (i)
unless the Exchange Offer would not be permitted by applicable law or Commission
policy, the Company and the Subsidiary Guarantors will commence the Exchange
Offer and use their best efforts to issue on or prior to 30 business days after
the date on which the Exchange Offer Registration Statement was declared
effective by the Commission, New Notes in exchange for all Notes tendered prior
thereto in the Exchange Offer and (ii) if obligated to file the Shelf
Registration Statement, the Company and the Subsidiary Guarantors will use their
best efforts to file the Shelf Registration Statement with the Commission on or
prior to 45 days after such filing obligation arises and to cause the Shelf
Registration to be declared effective by the Commission on or prior to 120 days
after such obligation arises. If (a) the Company and the Subsidiary Guarantors
fail to file any of the Registration Statements required by the Registration
Rights Agreement on or before the date specified for such filing, (b) any of
such Registration Statements is not declared effective by the Commission on or
prior to the date specified for such effectiveness (the "Effectiveness Target
Date"), (c) the Company and the Subsidiary Guarantors fail to consummate the
Exchange Offer within 30 business days of the Effectiveness Target Date with
respect to the Exchange Offer Registration Statement, or (d) the Shelf
Registration Statement or the Exchange Offer Registration Statement is declared
effective but thereafter ceases to be effective or usable in connection with
resales of Transfer Restricted Securities during the periods specified in the
Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then the Company will pay
Liquidated Damages to each Holder of Notes, with respect to the first 90-day
period immediately following the occurrence of the first Registration Default in
an amount equal to $.05 per week per $1,000 principal amount of Notes held by
such Holder. The amount of the Liquidated Damages will increase by an additional
$.05 per week per $1,000 principal amount of Notes with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal
amount of Notes. All accrued Liquidated Damages will be paid by the Company on
each Damages Payment Date to the Global Note Holder by wire transfer of
immediately available funds or by federal funds check and to Holders of
Certificated Notes by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
Holders of Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order
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to have their Notes included in the Shelf Registration Statement and benefit
from the provisions regarding Liquidated Damages set forth above.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory in the ordinary course of business
consistent with past practices and other than a Receivables Transaction
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole will be governed by the provisions of the Indenture described
above under the caption "-- Repurchase at Option of Holders -- Change of
Control" and/or the provisions described above under the caption "-- Certain
Covenants -- Merger, Consolidation or Sale of Assets" and not by the provisions
of the Asset Sale covenant), and (ii) the issue or sale by the Company or any of
its Restricted Subsidiaries of Equity Interests of any of the Company's
Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a
single transaction or a series of related transactions (a) that have a fair
market value in excess of $3.0 million or (b) for net proceeds in excess of $3.0
million. Notwithstanding the foregoing: (i) a transfer of assets by the Company
to a Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary, (ii)
an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the
Company or to another Wholly Owned Restricted Subsidiary, and (iii) a Restricted
Payment that is permitted by the covenant described above under the caption
"-- Certain Covenants -- Restricted Payments" will not be deemed to be Asset
Sales.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
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"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any lender party to the New Credit
Facility or with any domestic commercial bank having capital and surplus in
excess of $500 million and a Thompson Bank Watch Rating of "B" or better, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above, (v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each
case maturing within six months after the date of acquisition and (vi)
securities quoted by the Nasdaq National Market or listed on a United States,
Canadian or western European national securities exchange.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than the Principals or their Related Parties (as defined below), (ii)
the adoption of a plan relating to the liquidation or dissolution of the
Company, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
50% of the Voting Stock of the Company (measured by voting power rather than
number of shares), (iv) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors or (v) the
Company consolidates with, or merges with or into, any Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, or any Person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in which any of
the outstanding Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, other than any such transaction where the
Voting Stock of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person (immediately
after giving effect to such issuance).
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, plus (v) in connection with
any acquisition by the Company,
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projected quantifiable improvements in operating results (on an annualized
basis) due to cost reductions calculated in accordance with Article 11 of
Regulation S-X of the Securities Act and evidenced by (A) in the case of cost
reductions of less than $10.0 million, an Officers' Certificate delivered to the
Trustee and (B) in the case of cost reductions of $10.0 million or more, a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee, minus (vi) non-cash items increasing such Consolidated
Net Income for such period. Notwithstanding the foregoing, the provision for
taxes on the income or profits of, and the depreciation and amortization and
other non-cash charges of, a Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated Cash Flow only to the extent
that a corresponding amount would be permitted at the date of determination to
be dividended to the Company by such Subsidiary without prior governmental
approval (that has not been obtained), and without direct or indirect
restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Subsidiary or its stockholders,
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded, (iv) the cumulative effect of a change in accounting principles shall
be excluded and (v) the Net Income of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Company or one of its Restricted
Subsidiaries for purposes of the covenant described under the caption
"Incurrence of Indebtedness and Issuance of Preferred Stock" and shall be
included for purposes of the covenant described under the caption "Restricted
Payments" only to the extent of the amount of dividends or distributions paid in
cash to the Company or one of its Restricted Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of the Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Credit Agent" means the Bank of America, in its capacity as Administrative
Agent for the lenders party to the New Credit Facility, or any successor thereto
or any person otherwise appointed.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
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"Designated Senior Debt" means (i) any Indebtedness outstanding under the
New Credit Facility and (ii) any other Senior Debt permitted under the Indenture
the principal amount of which is $25.0 million or more and that has been
designated by the Company as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the New Notes mature; provided, however,
that any Capital Stock that would not qualify as Disqualified Stock but for
change of control provisions shall not constitute Disqualified Stock if the
provisions are not more favorable to the holders of such Capital Stock than the
provisions described under "-- Change of Control" applicable to the Holders of
the New Notes.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the New Credit Facility) in
existence on the date of the Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments (if any) pursuant to Hedging
Obligations) and (ii) the consolidated interest expense of such Person and its
Restricted Subsidiaries that was capitalized during such period, (iii) any
interest expense on Indebtedness of another Person that is Guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries (whether or not such Guarantee
or Lien is called upon) and (iv) the product of (a) all dividend payments,
whether or not in cash, on any series of preferred stock of such Person or any
of its Restricted Subsidiaries, other than dividend payments on Equity Interests
payable solely in Equity Interests of the Company, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in accordance
with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, (ii) the Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date,
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shall be excluded, but only to the extent that the obligations giving rise to
such Fixed Charges will not be obligations of the referent Person or any of its
Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
"Global Notes" means the Rule 144A Global Note, the Regulation S Temporary
Global Notes and the Regulation S Permanent Global Notes.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or bankers' acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"Insolvency or Liquidation Proceedings" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding, relative to the Company or to the creditors
of the Company, as such, or to the assets of the Company, or (ii) any
liquidation, dissolution, reorganization or winding up of the Company, whether
voluntary or involuntary, and involving insolvency or bankruptcy, or (iii) any
assignment for the benefit of creditors or any other marshalling of assets and
liabilities of the Company.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Restricted Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of
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such Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of the covenant described above under the
caption "-- Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"New Credit Facility" means that certain Credit Facility, dated as of the
date of the Indenture, by and among the Company and Bank of America, providing
for up to $150.0 million of revolving credit borrowings and $205.0 million of
term credit borrowings, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, renewed, refunded, replaced or refinanced from
time to time.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness (other than the New Notes
being offered hereby) of the Company or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Business" means any of the businesses and any other businesses
related to the businesses engaged in by the Company and its respective
Restricted Subsidiaries on the date of the Indenture.
"Permitted Investments" means (a) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company that is engaged in a Permitted
Business; (b) any Investment in Cash Equivalents; (c) any Investment by the
Company or any Restricted Subsidiary of the Company in a Person, if as a result
of such Investment (i) such Person becomes a Wholly Owned Restricted Subsidiary
of the Company that is engaged in a Permitted Business or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Wholly Owned
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Restricted Subsidiary of the Company that is engaged in a Permitted Business;
(d) any Restricted Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with the covenant described above under the caption "-- Repurchase at the Option
of Holders -- Asset Sales"; (e) any acquisition of assets solely in exchange for
the issuance of Equity Interests (other than Disqualified Stock) of the Company;
(f) loans and advances made after the date of the Indenture to Holberg
Industries, Inc. not to exceed $10.0 million at any time outstanding; (g) loans
and advances made after the date of the Indenture to NEHC not to exceed $10.0
million at any time outstanding; and (h) other Investments made after the date
of the Indenture in any Person having an aggregate fair market value (measured
on the date each such Investment was made and without giving effect to
subsequent changes in value), when taken together with all other Investments
made pursuant to this clause (h) that are at the time outstanding, not to exceed
$10.0 million.
"Permitted Liens" means (i) Liens securing Indebtedness under the New
Credit Facility that was permitted by the terms of the Indenture to be incurred;
(ii) Liens in favor of the Company; (iii) Liens on property of a Person existing
at the time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary of the Company, provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company, provided that such
Liens were in existence prior to the contemplation of such acquisition; (v)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vi) Liens existing on the date of the Indenture;
(vii) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (viii) Liens incurred in the ordinary course
of business of the Company or any Restricted Subsidiary of the Company with
respect to obligations that do not exceed $5.0 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Restricted Subsidiary, and (ix)
Liens on assets of Unrestricted Subsidiaries that (A) secure Non-Recourse Debt
of Unrestricted Subsidiaries or (B) are incurred in connection with a
Receivables Transaction.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (i) except for Indebtedness used to extend, refinance, renew,
replace, defease or refund the New Credit Facility, the principal amount (or
accreted value, if applicable) of such Permitted Refinancing Indebtedness does
not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the New Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the New Notes on terms at least as favorable to the Holders of New Notes as
those contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Principals" means Holberg Industries, Inc., John V. Holten, Orkla, ASA,
Nebco Evans Distributors, Inc., NEHC, DLJ Merchant Banking, L.P., DLJ
International Partners, C.V., DLJ Offshore Partners, C.V.,
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DLJ Merchant Banking Funding, Inc., DLJ Merchant Banking Partners II, L.P., DLJ
Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, C.V., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium
Partners, L.P., DLJ Millennium Partners-A, L.P., DLJMB Funding II, Inc., DLJ
First ESC LLC, DLJ EAB Partners, L.P. and UK Investment Plan 1997 Partners.
"Public Equity Offering" means a public offering of Equity Interests (other
than Disqualified Stock) of (i) the Company; or (ii) NEHC to the extent the net
proceeds thereof are contributed to the Company as a capital contribution, that,
in each case, results in the net proceeds to the Company of at least $25.0
million.
"Receivables" means, with respect to any Person or entity, all of the
following property and interests in property of such Person or entity, whether
now existing or existing in the future or hereafter acquired or arising: (i)
accounts, (ii) accounts receivable incurred in the ordinary course of business,
including, without limitation, all rights to payment created by or arising from
sales of goods, leases of goods or the rendition of services, no matter how
evidenced, whether or not earned by performance, (iii) all rights to any goods
or merchandise represented by any of the foregoing after creation of the
foregoing, including, without limitation, returned or repossessed goods, (iv)
all reserves and credit balances with respect to any such accounts receivable or
account debtors, (v) all letters of credit, security or guarantees for any of
the foregoing, (vi) all insurance policies or reports relating to any of the
foregoing, (vii) all collection or deposit accounts relating to any of the
foregoing, (viii) all proceeds of the foregoing and (ix) all books and records
relating to any of the foregoing.
"Receivables Subsidiary" means an Unrestricted Subsidiary exclusively
engaged in Receivables Transactions and activities related thereto; provided,
however, that (i) at no time shall the Company and its Subsidiaries have more
than one Receivables Subsidiary and (ii) all Indebtedness or other borrowings of
such Unrestricted Subsidiary shall be Non-Recourse Debt.
"Receivables Transaction" means (i) the sale or other disposition to a
third party of Receivables or an interest therein, or (ii) the sale or other
disposition of Receivables or an interest therein to a Receivables Subsidiary
followed by a financing transaction in connection with such sale or disposition
of such Receivables (whether such financing transaction is effected by such
Receivables Subsidiary or by a third party to whom such Receivables Subsidiary
sells such Receivables or interests therein); provided that in each of the
foregoing, the Company or its Subsidiaries receive at least 80% of the aggregate
principal amount of any Receivables financed in such transaction.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Notes" means the Regulation S Temporary Global Notes
or the Regulation S Permanent Global Notes as applicable.
"Regulation S Permanent Global Notes" means the permanent global Notes that
are deposited with and registered in the name of the Depository or its nominee,
representing a series of Notes sold in reliance on Regulation S.
"Regulation S Temporary Global Notes" means the temporary global Notes that
are deposited with and registered in the name of the Depository or its nominee,
representing a series of Notes sold in reliance on Regulation S.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
"Reorganization Securities" means securities distributed to the Holders of
the New Notes in an Insolvency or Liquidation Proceeding pursuant to a plan of
reorganization consented to by each class of the Senior Debt, but only if all of
the terms and conditions of such securities (including, without limitation,
term, tenor, interest, amortization, subordination, standstills, covenants and
defaults) are at least as favorable (and provide the same relative benefits) to
the holders of Senior Debt and to the holders of any security distributed
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in such Insolvency or Liquidation Proceeding on account of any such Senior Debt
as the terms and conditions of the New Notes and the Indenture are, and provide
to the holders of Senior Debt.
"Representative" means the Trustee, agent or representative for any Senior
Debt.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary. "Rule 144A" means Rule 144A
promulgated under the Securities Act.
"Rule 144A Global Note" means a permanent global note that is deposited
with and registered in the name of the Depository or its nominee, representing a
series of Notes sold in reliance on Rule 144A.
"Senior Debt" means (i) all Indebtedness outstanding under the New Credit
Facility, including any Guarantees thereof and all Hedging Obligations with
respect thereto, (ii) any other Indebtedness permitted to be incurred by the
Company under the terms of the Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the New Notes and (iii) all Obligations with
respect to the foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (w) any liability for federal, state,
local or other taxes owed or owing by the Company, (x) any Indebtedness of the
Company to any of its Subsidiaries or other Affiliates, (y) any trade payables
or (z) any Indebtedness that is incurred in violation of the Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" means all direct and indirect Restricted
Subsidiaries of the Senior Subordinated New Notes.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Restricted Subsidiaries; and (e) has at least one director
on its board of directors that is not a director or executive officer of the
Company or any of its Restricted Subsidiaries and has at least one executive
officer that is not a director or executive officer of the Company or any of its
Restricted Subsidiaries. Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by the covenant described above under the caption "Certain
Covenants -- Restricted Payments." If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it
shall thereafter
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cease to be an Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant described under the
caption "Incurrence of Indebtedness and Issuance of Preferred Stock," the
Company shall be in default of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall be
permitted only if (i) such Indebtedness is permitted under the covenant
described under the caption "Certain Covenants -- Incurrence of Indebtedness and
Issuance of Preferred Stock," and (ii) no Default or Event of Default would be
in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
DESCRIPTION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain U.S. federal income tax
considerations relevant to the purchase, ownership and disposition of the New
Notes by the holders thereof. This summary does not purport to be a complete
analysis of all the potential federal income tax effects relating to the
purchase, ownership and disposition of the New Notes. There can be no assurance
that the U.S. Internal Revenue Service will take a similar view of such
consequences. Further, the discussion does not address all aspects of taxation
that may be relevant to particular purchasers in light of their individual
circumstances (including the effect of any foreign, state or local laws) or to
certain types of purchasers (including dealers in securities, insurance
companies, financial institutions, persons that hold New Notes that are a hedge
or that are hedged against currency risks or that are part of a straddle or
conversion transaction, persons whose functional currency is not the U.S. dollar
and tax-exempt entities) subject to special treatment under U.S. federal income
tax laws. The discussion below assumes that the New Notes are held as capital
assets.
The discussion of the U.S. federal income tax consequences set forth below
is based upon currently existing provisions of the Internal Revenue Code of
1986, as amended (the "Code"), judicial decisions, and administrative
interpretations. Because individual circumstances may differ, each prospective
purchaser of the New Notes is strongly urged to consult its own tax advisor with
respect to its particular tax situation and the particular tax effects of any
state, local, non-U.S. or other tax laws and possible changes in the tax laws.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
who or which is for U.S. federal income tax purposes either (i) a citizen or
resident of the U.S., (ii) a corporation, partnership or other entity created or
organized in or under the laws of the U.S. or of any political subdivision
thereof, (iii) an estate or trust the income of which is subject to U.S. federal
income taxation regardless of its source or (iv) a trust if a court within the
U.S. is able to exercise primary supervision over the administration of the
trust and one or more U.S. fiduciaries have the authority to control all
substantial decisions of the trust. The term also includes certain former
citizens of the U.S. whose income and gain on the New Notes will be subject to
U.S. taxation. As used herein, the term "U.S. Alien Holder" means a beneficial
owner of a Note that is not a U.S. Holder.
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PAYMENTS OF INTEREST
Interest paid on a Note will generally be taxable to a U.S. Holder as
ordinary interest income at the time it accrues or is received in accordance
with the U.S. Holder's method of accounting for federal income tax purposes.
MARKET DISCOUNT AND PREMIUM
If a U.S. Holder that acquires a New Note has a tax basis in the New Note
that is less than its "stated redemption price at maturity," the amount of the
difference will be treated as "market discount" for U.S. federal income tax
purposes, unless such difference is less than a specified de minimis amount.
Under the market discount rules of the Code, a U.S. Holder will be required to
treat any principal payment on, or any gain on the sale, exchange, retirement or
other disposition of, a New Note as ordinary income to the extent of any accrued
market discount that has not previously been included in income. Market discount
generally accrues on a straight-line basis over the remaining term of a New
Note. A U.S. Holder may not be allowed to deduct immediately all or a portion of
the interest expense on any indebtedness incurred or continued to purchase or to
carry such New Note. A U.S. Holder may elect to include market discount in
income currently as it accrues (either on a straight-line basis or, if the
United States Holder so elects, on a constant yield basis), in which case the
interest deferral rule set forth in the preceding sentence will not apply. Such
an election will apply to all bonds acquired by the U.S. Holder on or after the
first day of the first taxable year to which such election applies and may be
revoked only with the consent of the Internal Revenue Service.
If a U.S. Holder purchases a New Note for an amount that is greater than
the sum on all amounts payable on the New Note after the purchase date, other
than stated interest, such holder will be considered to have purchased such Note
with "amortizable bond premium" equal in amount to such excess, and may elect
(in accordance with applicable Code provisions) to amortize such premium, using
a constant yield method over the remaining term of the New Note. The amount
amortized in any year will be treated as a reduction of the U.S. Holder's
interest income from the New Note in such year. A U.S. Holder that elects to
amortize bond premium must reduce its tax basis in the New Note by the amount of
the premium amortized in any year. An election to amortize bond premium applies
to all taxable debt obligations then owned and thereafter acquired by the U.S.
Holder and may be revoked only with the consent of the Internal Revenue Service.
SALE, EXCHANGE OR RETIREMENT OF NEW NOTES
Upon the sale, exchange or retirement of a New Note, a U.S. Holder will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement (not including any amount
attributable to accrued but unpaid interest) and such holder's adjusted tax
basis in the New Note. A U.S. Holder's adjusted tax basis in a New Note will
equal the cost of the New Note to such holder, increased by the amount of any
market discount previously included in income by such holder with respect to
such New Note and reduced by any amortized bond premium and any principal
payment received by such holder.
Subject to the discussion of market discount above, gain or loss realized
on the sale, exchange or retirement of a New Note by a U.S. Holder will be
capital gain or loss, and will be long-term capital gain or loss if at the time
of the sale, exchange or retirement the New Note has been held for more than one
year. Net capital gain is taxed at a lower rate than ordinary income for certain
non-corporate taxpayers, but not for corporate taxpayers. The distinction
between capital gain or loss and ordinary income or loss is also relevant for
purposes of, among other things, limitations on the deductibility of capital
losses.
A U.S. Holder will recognize no gain or loss on the exchange of a Note for
a New Note pursuant to the Exchange Offer.
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TAX CONSEQUENCES TO U.S. ALIEN HOLDERS
Under present U.S. federal income and estate tax law, and subject to the
discussion below concerning backup withholding:
(a) payments of principal or interest on the New Notes by the Company
or any paying agent to a beneficial owner of a New Note that is a U.S.
Alien Holder will not be subject to U.S. federal withholding tax, provided
that, in the case of interest, (i) such Holder does not own, actually or
constructively, 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (ii) such Holder is not,
for U.S. federal income tax purposes, a controlled foreign corporation
related, directly or indirectly, to the Company through stock owner ship,
(iii) such Holder is not a bank receiving interest described in Section
881(c)(3)(A) of the Code, and (iv) the certification requirements under
Section 871(h) or Section 881(c) of the Code and Treasury Regulations
thereunder (summarized below) are met;
(b) a U.S. Alien Holder of a New Note will not be subject to U.S.
federal income tax on gains realized on the sale, exchange or other
disposition of such New Note, unless (i) such Holder is an individual who
is present in the U.S. for 183 days or more in the taxable year of sale,
exchange or other disposition, and certain conditions are met; (ii) such
gain is effectively connected with the conduct by such Holder of a trade or
business in the U.S. and, if certain tax treaties apply, is attributable to
a U.S. permanent establishment maintained by the U.S. Alien Holder or (iii)
the U.S. Alien Holder is subject to tax pursuant to the Code provisions
applicable to certain U.S. expatriates; and
(c) a New Note held by an individual who is not a citizen or resident
of the U.S. at the time of his death will not be subject to U.S. federal
estate tax as a result of such individual's death, provided that, at the
time of such individual's death, the individual does not own, actually or
constructively, 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote and payments with respect
to such New Note would not have been effectively connected with the conduct
by such individual of a trade or business in the U.S.
Sections 871(h) and 881(c) of the Code and current Treasury Regulations
thereunder require that, in order to obtain the exemption from withholding tax
described in paragraph (a) above, either (i) the beneficial owner of a New Note
must certify, under penalties of perjury, to the Company or paying agent, as the
case may be, that such owner is a U.S. Alien Holder and must provide such
owner's name and address, and U.S. taxpayer identification number ("TIN"), if
any, or (ii) a securities clearing organization, bank or other financial
institution that holds customers securities in the ordinary course of its trade
or business (a "Financial Institution") and holds the New Note on behalf of the
beneficial owner thereof must certify, under penalties of perjury, to the
Company or paying agent, as the case may be, that such certificate has been
received from the beneficial owner by it or by a Financial Institution between
it and the beneficial owner and must furnish the payor with a copy thereof. A
certificate described in this paragraph is effective only with respect to
payments of interest made to the certifying U.S. Alien Holder after delivery of
the certificate in the calendar year of its delivery and the two immediately
succeeding calendar years. Under temporary U.S. Treasury Regulations, such
requirement will be fulfilled if the beneficial owner of a New Note certifies on
Internal Revenue Service Form W-8, under penalties of perjury, that it is a U.S.
Alien Holder and provides its name and address, and any Financial Institution
holding the New Note on behalf of the beneficial owner files a statement with
the withholding agent to the effect that it has received such a statement from
the beneficial owner (and furnishes the withholding agent with a copy thereof).
Recently proposed Treasury Regulations (the "Proposed Regulations") would
provide alternative methods for satisfying the certification requirement
described above. The Proposed Regulations also would require, in the case of New
Notes held by a foreign partnership, that (x) the certification be provided by
the partners rather than by the foreign partnership and (y) the partnership
provide certain information, including a United States taxpayer identification
number. A lookthrough rule would apply in the case of tiered partnerships. The
Proposed Regulations are proposed to be effective for payments made after
December 31, 1997. There can be no assurance that the Proposed Regulations will
be adopted or as to the provisions that they will include if and when adopted in
temporary or final form.
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If a U.S. Alien Holder of a New Note is engaged in a trade or business in
the U.S., and if interest on the New Note, or gain realized on the sale,
exchange or other disposition of the New Note, is effectively connected with the
conduct of such trade or business and, if certain tax treaties apply, is
attributable to a U.S. permanent establishment maintained by the U.S. Alien
Holder, the U.S. Alien Holder, although exempt from U.S. withholding tax, will
generally be subject to regular U.S. income tax on such interest or gain in the
same manner as if it were a U.S. Holder. In lieu of the certificate described in
the preceding paragraph, such a Holder will be required to provide the Company a
properly executed Internal Revenue Service Form 4224 in order to claim an
exemption from withholding tax. In addition, if such U.S. Alien Holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% (or
such lower rate provided by an applicable treaty) of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments. For
purposes of the branch profits tax, interest on and any gain recognized on the
sale, exchange or other disposition of a New Note will be included in the
earnings and profits of such U.S. Alien Holder if such interest or gain is
effectively connected with the conduct by the U.S. Alien Holder of a trade or
business in the U.S. The Treasury has promulgated proposed regulations with
respect to withholding that are proposed to be effective for payments of income
after December 31, 1997, which, if finalized, would change some of the
withholding reporting requirements described above, subject to certain
grandfathering provisions.
BACKUP WITHHOLDING
Under current U.S. federal income tax law, a 31% backup withholding tax
requirement applies to certain payments of interest on, and the proceeds of a
sale, exchange or redemption of, the New Notes.
Backup withholding will generally not apply with respect to payments made
to certain exempt recipients, such as corporations or other tax-exempt entities.
In the case of a non-corporate U.S. Holder, backup withholding will apply only
if such Holder (i) fails to furnish its TIN, which, for an individual, would be
his Social Security number, (ii) furnishes an incorrect TIN, (iii) is notified
by the Internal Revenue Service that it has failed to properly report payments
of interest and dividends or (iv) under certain circumstances, fails to certify,
under penalties of perjury, that it has furnished a correct TIN and has not been
notified by the Internal Revenue Service that it is subject to backup
withholding for failure to report interest and dividend payments.
In the case of a U.S. Alien Holder, under current Treasury Regulations,
backup withholding will not apply to payments made by the Company or any paying
agent thereof on a New Note if such holder has provided the required
certification under penalties of perjury that it is not a U.S. Holder (as
defined above) or has otherwise established an exemption, provided in each case
that the Company or such paying agent, as the case may be, does not have actual
knowledge that the payee is a U.S. Holder.
Under current Treasury Regulations, if payments on a New Note are made to
or through a foreign office of a custodian, nominee or other agent acting on
behalf of a beneficial owner of a New Note, such custodian, nominee or other
agent acting will not be required to apply backup withholding to such payments
made to such beneficial owner. However, under proposed Treasury Regulations,
backup withholding may apply if such custodian, nominee or other agent has
actual knowledge that the payee is a U.S. Holder.
Under current Treasury Regulations, payments on the sale, exchange or other
disposition of a New Note made to or through a foreign office of a broker
generally will not be subject to backup withholding. However, under proposed
Treasury Regulations, backup withholding may apply if such broker has actual
knowledge that the payee is a U.S. Holder. In the case of proceeds from a sale
of a New Note by a U.S. Alien Holder paid to or through the foreign office of a
U.S. broker or a foreign office of a foreign broker that is (i) a controlled
foreign corporation for U.S. tax purposes or (ii) a person 50% or more of whose
gross income for the three-year period ending with the close of the taxable year
preceding the year of payment (or for the part of that period that the broker
has been in existence) is effectively connected with the conduct of a trade or
business within the U.S., information reporting is required unless the broker
has documentary evidence in its files that the payee is not a U.S. person and
certain other conditions are met, or the payee otherwise establishes an
exemption. Payments to or through the U.S. office of a broker will be subject to
backup withholding and information reporting unless the holder certifies, under
penalties of perjury, that it is not a U.S. Holder and that certain other
conditions are met or otherwise establishes an exemption.
93
<PAGE> 99
Holders of New Notes should consult their tax advisors regarding the
application of backup withholding in their particular situations, the
availability of an exemption therefrom, and the procedure for obtaining such an
exemption, if available. Any amounts withheld from payment under the backup
withholding rules will be allowed as a credit against a Holder's U.S. federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the Internal Revenue Service.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH PROSPECTIVE HOLDER OF NEW NOTES SHOULD CONSULT ITS OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO THE PROSPECTIVE HOLDER OF THE
NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR
NON-U.S. INCOME TAX LAWS AND ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX
LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account
("Participating Broker-Dealer") pursuant to the Exchange Offer must acknowledge
that it will deliver a Prospectus in connection with the initial sales of such
New Notes. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with the sales
of New Notes received in exchange for Notes where such Notes were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that it will make this Prospectus, as amended or supplemented, available
to any Participating Broker-Dealer for use in connection with any such resale
and Participating Broker-Dealers shall be authorized to deliver this prospectus
for a period not exceeding 120 days after the Expiration Date. In addition,
until , 1997 (90 days after the date of this Prospectus), all dealers
effecting transactions in the New Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sales of the New Notes
by participating Broker-Dealers. New Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time, in one or more transactions in the over-the counter market,
in negotiated transactions, through the writing of options on the New Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer that resells the New Notes
that were received by it for its own account pursuant to the Exchange Offer. Any
broker or dealer that participates in a distribution of such New Notes may be
deemed to be an "underwriter" within the meaning of the Securities Act and may
profit on any such resale of New Notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
The Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this prospectus to any Participating Broker-Dealer
that requests such documents in the Letter of Transmittal. See "The Exchange
Offer."
Bank of America NT&SA, an affiliate of BancAmerica Securities, is an agent
and lender under the Company's existing credit facility and will receive
proceeds from the Offering in connection with the repayment of loans under such
credit facility. See "Use of Proceeds." Bank of America NT&SA will be an agent
and lender under the New Credit Facility. It is expected that BancAmerica
Securities will receive an arrangement fee in connection with the New Credit
Facility and will be the syndication agent and an agent with respect to the
Accounts Receivable Program, for which, in each case, it is receiving certain
customary fees and expenses.
DLJMB, an affiliate of DLJ, and certain of its affiliates beneficially own
approximately 36.1% of the common stock of NEHC, the parent of the Company.
Peter T. Grauer, a principal of DLJ, is a member of the
94
<PAGE> 100
Board of Directors of NEHC and the Company; Benoit Jamar, a principal of DLJ,
became a member of the Board of Directors of NEHC and the Company as of the
Closing. Further, DLJ Capital Funding, Inc., an affiliate of DLJ, acted as an
agent and lender in connection with the New Credit Facility, for which it
received certain customary fees and expenses. In addition, DLJ received a merger
advisory fee of approximately $4.0 million in cash from the Company upon
consummation of the Transactions.
In connection with the Transactions, each of Bank of America NT&SA and an
affiliate of DLJ has received customary fees in connection with their agreement
to finance a portion of the purchase price for PFS to the extent the Company
cannot arrange alternative financing for the Acquisition prior to the Closing.
See "Certain Relationships and Related Party Transactions."
LEGAL MATTERS
Certain legal matters in connection with the New Notes offered hereby will
be passed upon for the Company by Wachtell, Lipton, Rosen & Katz, New York, New
York.
EXPERTS
The consolidated financial statements of the Company as of December 30,
1995 and December 28, 1996 and for each of the three years in the period ended
December 28, 1996, appearing in this Prospectus and in the Registration
Statement, and the financial statement schedule for each of the three years in
the period ended December 28, 1996 included in the Registration Statement have
been audited by Ernst & Young LLP ("Ernst & Young"), independent auditors, as
set forth in their reports thereon appearing elsewhere herein and in the
Registration Statement, and are included herein in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
The financial statements of PFS (A Division of PepsiCo, Inc. Held for Sale)
as of December 27, 1995 and December 25, 1996 and for each of the years in the
three-year period ended December 25, 1996 appearing in this Prospectus and in
the Registration Statement have been audited by KPMG Peat Marwick LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein, and are included herein in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated statements of operations, stockholders' equity, and cash
flows of Ameriserv Food Company for each of the two years in the period ended
December 30, 1995 appearing in this Prospectus and in the Registration Statement
have been audited by Ernst & Young, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included herein in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
CHANGE IN COMPANY'S ACCOUNTANT
Prior to the acquisition by the Company of AmeriServ, the Company's
principal independent auditors were Deloitte & Touche LLP ("Deloitte & Touche").
At the time of its acquisition by the Company the principal independent auditors
for AmeriServ were Ernst & Young LLP ("Ernst & Young"). In July 1996 the Company
invited both Deloitte & Touche and Ernst & Young to submit proposals to act as
principal independent auditors to the Company. On or about October 1, 1996, the
Company notified Deloitte & Touche that Deloitte & Touche had been dismissed as
the Company's principal accountants. On October 1, 1996, the Company selected
and retained Ernst & Young as the Company's principal independent auditors for
the Company's 1996 fiscal year. The Company's Board of Directors approved of
this change.
Deloitte & Touche's reports on the Company's financial statements, which
financial statements were prepared on a private entity basis and not in
accordance with the requirements of Regulation S-X, for the fiscal years ended
December 31, 1994 and December 30, 1995 did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or procedure, or accounting principles. During the fiscal years
ended December 31, 1994 and December 30, 1995
95
<PAGE> 101
and through October 1, 1996 there were no disagreements with Deloitte & Touche,
as described in Item 304(a)(1)(iv), nor were there any events that would be
"reportable events" pursuant to Item 304(a)(1)(v) of Regulation S-K.
The Company's financial statements, which financial statements have been
presented on a basis which will comply with the requirements of Regulation S-X
for the fiscal years ended December 31, 1994 and December 30, 1995 included in
this Prospectus have been audited by Ernst & Young.
As required pursuant to Item 304 of Regulation S-K, filed as Exhibit 16.1
hereto is a letter from Deloitte & Touche addressed to the Securities and
Exchange Commission (the "SEC") stating that Deloitte & Touche agrees with the
statements in the first and fourth sentences of the first paragraph and the
statements in the second paragraph (and has no basis to agree or disagree with
the other statements) of this section.
96
<PAGE> 102
INDEX OF CERTAIN DEFINED TERMS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Accounts Receivable Program...... 28
Acquisition...................... 2
Adjusted EBITDA.................. 11
Administrative Agent............. 27
Agents........................... 28
AmeriServe Funding............... 57
AmeriServ........................ 15
AmeriServe....................... 3
Applicable Reserve Ratio......... 57
Asset Purchase Agreement......... 26
BancAmerica Securities........... 28
Bank of America NT&SA............ 27
Banks............................ 57
Base Amount...................... 57
CAGR............................. 3
Carrying Cost Receivable
Reserve........................ 58
CCC.............................. 49
Certificate of Incorporation..... 16
Change of Control................ 80
Code............................. 90
Commission....................... 96
Company.......................... 1
Depository....................... ii
Distribution Agreement........... ii, 6
DLJ.............................. ii, 7
DLJMB............................ 54
EBITDA........................... 11
Equity Contribution.............. 27
Escrow Agent..................... 48
Evans............................ 10
Exchange Act..................... 2
Exchange Offer................... 1
Financial Institution............ 92
Global New Note.................. 77
Guarantors....................... 58
Holberg.......................... 15
IDA.............................. 49
Indebtedness..................... 77
Indenture........................ 1
Initial Purchasers............... ii
Invested Amount.................. 57
<CAPTION>
PAGE NO.
--------
<S> <C>
Lenders.......................... 14
market discount.................. 41
Named Executive Officers......... 52
NEBCO............................ 15
NEBCO EVANS...................... 15
NED.............................. 24
NEHC............................. 3
Net Eligible Receivables......... 57
New Credit Facility.............. 27
New Notes........................ 1
New Note Guarantees.............. 60
Participants..................... 47
PepsiCo Chains................... 48
Post............................. 3
Post Contribution................ 27
Post Holdings.................... 27
Preferred Stock Contribution..... 27
Proposed Regulations............. 92
Receivables...................... 57
Registration Rights Agreement.... 1
Regulation S Permanent Global
Notes.......................... 88
Regulation S Temporary Global
Notes.......................... 88
Restricted Subsidiary............ 89
Revolving Credit Facility........ 28
Rule 144A Global Note............ 89
Securities Act................... 1
Shelf Registration Statement..... 10
Subsidiary Guarantors............ 1
Term Loan A...................... 58
Term Loan B...................... 58
Term Loan C...................... 58
Term Loan D...................... 56
Term Loans....................... 28
TIN.............................. 42
Transactions..................... 6
Transfer Restricted Securities... 80
Trust............................ 57
Trustee.......................... 60
U.S. Alien Holder................ 90
U.S. Holder...................... 90
</TABLE>
97
<PAGE> 103
INDEX TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AMERISERVE FOOD DISTRIBUTION, INC.
Unaudited Pro Forma Consolidated Balance Sheet as of March 29, 1997............... P-2
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 29,
1997........................................................................... P-3
Unaudited Pro Forma Consolidated Statement of Income for the Fiscal Year 1996..... P-5
Unaudited Pro Forma Consolidated Statement of Income for the First Quarter of
1997........................................................................... P-6
Unaudited Pro Forma Consolidated Statement of Income for the First Quarter of
1996........................................................................... P-7
Notes to Unaudited Pro Forma Consolidated Statements of Income for Fiscal Year
1996, First Quarter of 1997 and First Quarter of 1996.......................... P-8
</TABLE>
P-1
<PAGE> 104
AMERISERVE FOOD DISTRIBUTION, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following sets forth the Unaudited Pro Forma Consolidated Balance Sheet
and the Unaudited Pro Forma Consolidated Statements of Income of AmeriServe Food
Distribution, Inc., in each case giving effect to the Transactions as if such
Transactions had been consummated on March 29, 1997 (in the case of the
Unaudited Pro Forma Consolidated Balance Sheet) and at the beginning of the
earliest period presented (in the case of the Unaudited Pro Forma Consolidated
Statements of Income). The Unaudited Pro Forma Consolidated Financial Statements
of the Company do not purport to present the financial position or results of
operations of the Company had the transactions assumed herein occurred on the
dates indicated, nor are they necessarily indicative of the results of
operations which may be expected to occur in the future.
AMERISERVE FOOD DISTRIBUTION, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 29, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL HISTORICAL PRO FORMA
AMERISERVE POST PFS ADJUSTMENTS PRO FORMA
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 3,995 $ 64 $ 176 $ 43,881(3) $ 48,116
Accounts receivable.................................. 74,087 12,451 284,116 (225,000)(4) 145,654
Inventories.......................................... 62,909 6,526 95,806 165,241
Other current assets................................. 12,907 4,765 21,109 (17,634)(1) 16,447
(4,700)(5)
------- ------ ------- -------- ----------
Total current assets........................... 153,898 23,806 401,207 (203,453) 375,458
Property and equipment, net............................ 35,720 1,928 88,247 (7,397)(1) 108,498
(10,000)(2)
Other assets:
Goodwill............................................. 99,421 3,725 218 588,846(2) 692,210
Other................................................ 31,807 61 130 24,100(3) 51,598
(2,000)(3)
(2,500)(5)
------- ------ ------- -------- ----------
$320,846 $ 29,520 $489,802 $ 387,596 $1,227,764
======= ====== ======= ======== ==========
LIABILITIES & STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt................. $ 2,474 $ 123 $ 397 $ (933)(3) $ 2,061
Accounts payable..................................... 114,870 10,857 177,688 (48,445)(1) 254,970
Due to PepsiCo....................................... -- -- 123,429 (123,429)(1) --
Accrued liabilities.................................. 9,917 666 69,041 (43,164)(1) 62,360
11,000(3)
14,900(2)
------- ------ ------- -------- ----------
Total current liabilities...................... 127,261 11,646 370,555 (190,071) 319,391
Non-current liabilities................................ 13,302 361 29,254 (25,006)(1) 33,011
15,100(2)
Long-term debt:
Existing credit facilities........................... 124,800 9,024 -- (133,824)(3) --
Term Loans........................................... -- -- -- 205,000(3) 205,000
Senior Subordinated New Notes due 2007............... -- -- -- 500,000(3) 500,000
Other................................................ 13,994 1,255 52 (4,862)(3) 10,439
------- ------ ------- -------- ----------
Total long-term debt............................. 138,794 10,279 52 566,314 715,439
------- ------ ------- -------- ----------
Total liabilities.............................. 279,357 22,286 399,861 366,337 1,067,841
------- ------ ------- -------- ----------
Stockholder's equity:
Preferred............................................ 45,000 -- -- (45,000)(5) --
Common............................................... (3,511) 7,234 -- 175,000(5) 159,923
(9,600)(3)
(2,000)(3)
(7,200)(5)
Divisional........................................... -- -- 89,941 (89,941)(5) --
------- ------ ------- -------- ----------
Total stockholder's equity..................... 41,489 7,234 89,941 21,259 159,923
------- ------ ------- -------- ----------
$320,846 $ 29,520 $489,802 $ 387,596 $1,227,764
======= ====== ======= ======== ==========
</TABLE>
See accompanying notes to unaudited pro forma consolidated balance sheet.
P-2
<PAGE> 105
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 29, 1997
(IN THOUSANDS)
Adjustments to reflect the Acquisition (the final purchase price allocation
will be based upon a final determination of the fair values of the net assets
acquired):
(1) Represents the elimination of assets and liabilities which will not be
acquired or assumed in the Acquisition. The reduction in other current
assets represents prepaid workers' compensation expense ($7,356) and
deferred taxes ($10,278). The reduction to property and equipment ($7,397)
represents leasehold improvements and data center equipment at facilities
being retained by PepsiCo. The reduction in accounts payable ($48,445)
represents certain accounts payable incurred by PFS as a division of PepsiCo
which will be paid by PepsiCo. The Due to PepsiCo ($123,429) entry
represents the net payable due to PepsiCo in connection with operating
activities, which will not be an obligation of the Company. The reduction in
accrued liabilities ($43,164) primarily represents income and other taxes to
be paid by PepsiCo. The reduction in non-current liabilities represents
deferred compensation and rent expense ($11,404) to be retained by PepsiCo,
deferred income tax liabilities of PepsiCo ($3,602) and postretirement
benefit obligations of PFS ($10,000) not assumed by the Company.
(2) Records excess of cost over fair value of assets acquired resulting from the
preliminary purchase price allocation as follows (the final purchase price
is subject to a negotiated price adjustment for working capital):
<TABLE>
<S> <C>
Cash purchase price............................................... $830,000
Post-closing purchase price adjustment............................ 8,000
Fees and expenses................................................. 15,800
--------
Total purchase price.............................................. 853,800
Purchase price allocated to:
Historical net assets of PFS less assets and liabilities not
transferred.................................................. 304,954
Leasehold improvements in duplicate facilities.................. (10,000)
Additional liabilities.......................................... (30,000)
--------
Subtotal................................................ 264,954
--------
Excess of cost over fair value of net assets acquired............. $588,846
========
</TABLE>
The additional liabilities of $30,000 represent the current ($14,900) and
non-current ($15,100) accruals for costs to be incurred by the Company
related to the termination of redundant administrative and operating
employees ($9,100); lease termination costs in connection with the closing
of facilities which will not be used by the Company ($19,800) and certain
other costs to exit PFS activities ($1,100).
P-3
<PAGE> 106
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET -- (CONTINUED)
(3) Represents the following:
<TABLE>
<S> <C>
Proceeds under the New Credit Facility............................ $205,000
Proceeds from the Offering........................................ 500,000
--------
$705,000
========
Use of Proceeds:
Reduction of existing indebtedness:
Current maturities of long-term debt............................ $ 933
Existing credit facilities...................................... 133,824
Other........................................................... 4,862
Deferred financing fees and offering costs........................ 24,100
One time commitment and securitization fees expensed at closing... 9,600
Cash for working capital.......................................... 43,881
Partially finance the Acquisition (excludes $11 million payable
subsequent to Closing).......................................... 487,800
--------
$705,000
========
</TABLE>
In connection with the reduction of existing indebtedness, $2,000 of
deferred financing costs were written off.
(4) Represents the sale of accounts receivable ($370,654) to a special-purpose
entity owned by the Company for $225,000 in cash pursuant to the Accounts
Receivable Program, and a $145,654 undivided interest in the accounts
receivable trust.
(5) Adjustments to stockholder's equity:
<TABLE>
<S> <C>
Equity Contribution of $130,000 by NEHC to partially finance the
Acquisition..................................................... $130,000
Addition to common stock pursuant to the Preferred Stock
Contribution.................................................... 45,000
Elimination of existing preferred stock pursuant to the Preferred
Stock Contribution.............................................. (45,000)
Represents the elimination of the divisional equity of PFS in
purchase accounting............................................. (89,941)
Non-capitalized expenses associated with the Transactions......... (9,600)
Write-off of deferred financing costs............................. (2,000)
Elimination of AmeriServe's investment in NEHC preferred stock
($2,500) and declaration of dividend ($4,700) on Post to
eliminate the intercompany balance.............................. (7,200)
--------
Increase in stockholder's equity.................................. $ 21,259
========
</TABLE>
P-4
<PAGE> 107
AMERISERVE FOOD DISTRIBUTION, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE FISCAL YEAR 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACQUISITION
HISTORICAL HISTORICAL HISTORICAL OF PRO FORMA
AMERISERVE POST PFS AMERISERV(10) ADJUSTMENTS PRO FORMA
---------- ---------- ---------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $1,280,598 $ 119,444 $3,422,086 $52,852 $ -- $4,874,980
Cost of goods sold...... 1,151,749 106,938 3,080,602 47,640 -- 4,386,929
---------- -------- ---------- ------- --------- ----------
Gross profit............ 128,849 12,506 341,484 5,212 -- 488,051
---------- -------- ---------- ------- --------- ----------
Operating expenses:
Distribution, selling
and
administrative..... 102,808 10,560 241,911 5,850 (11,100)(1) 353,098
(16,400)(2)
15,469(6)
4,000(4)
Depreciation.......... 5,251 295 19,830 134 (1,000)(3) 24,510
Amortization.......... 4,810 142 -- 404 14,721(7) 20,077
Integration costs..... 3,800 -- -- -- -- 3,800
Gain on sale of
assets............. -- (4,283) -- -- -- (4,283)
Other expense
(income)........... (2,109) -- -- -- 2,109(9) --
---------- -------- ---------- ------- --------- ----------
Total operating
expenses.............. 114,560 6,714 261,741 6,388 7,799 397,202
---------- -------- ---------- ------- --------- ----------
Operating income........ 14,289 5,792 79,743 (1,176) (7,799) 90,849
---------- -------- ---------- ------- --------- ----------
Interest expense........ 10,471 1,338 15,566 739 44,486(5) 72,600
---------- -------- ---------- ------- --------- ----------
Income before income
taxes................. 3,818 4,454 64,177 (1,915) (52,285) 18,249
Provision for income
taxes................. 1,300 1,886 24,597 17 (20,683)(8) 7,117
---------- -------- ---------- ------- --------- ----------
Net income.............. $ 2,518 $ 2,568 $ 39,580 $(1,932) $ (31,602) $ 11,132
========== ======== ========== ======= ========= ==========
OTHER DATA:
EBITDA.................. $ 26,041 $ 1,946 $ 99,573 $ (638) $ 8,031 $ 134,953
Depreciation and
amortization.......... 10,061 437 19,830 538 13,721 44,587
Capital expenditures.... 12,518 183 28,771 38 41,510
</TABLE>
See accompanying notes to unaudited pro forma consolidated statements of income.
P-5
<PAGE> 108
AMERISERVE FOOD DISTRIBUTION, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE FIRST QUARTER 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FIRST QUARTER 1997
-------------------------------------------------------------------
HISTORICAL HISTORICAL HISTORICAL PRO FORMA
AMERISERVE POST PFS ADJUSTMENTS PRO FORMA
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................. $308,727 $ 27,849 $ 720,524 $ (1,264)(11) $1,055,836
Cost of goods sold.................... 277,086 24,862 644,842 (1,264)(11) 945,526
-------- ------- -------- ------- ----------
Gross profit.......................... 31,641 2,987 75,682 -- 110,310
-------- ------- -------- ------- ----------
Operating expenses:
Distribution, selling and
administrative................... 27,658 2,724 56,319 (2,775)(1) 84,693
(4,100)(2)
3,867(6)
1,000(4)
Depreciation........................ 1,741 96 4,906 (250)(3) 6,493
Amortization........................ 997 37 3,680(7) 4,714
-------- ------- -------- ------- ----------
Total operating expenses.............. 30,396 2,857 61,225 1,422 95,900
-------- ------- -------- ------- ----------
Operating income...................... 1,245 130 14,457 (1,422) 14,410
Interest expense...................... 3,080 317 3,996 10,757(5) 18,150
-------- ------- -------- ------- ----------
Income (loss) before income taxes..... (1,835) (187) 10,461 (12,179) (3,740)
Provision (credit) for income taxes... (649) -- 4,155 (4,965)(8) (1,459)
-------- ------- -------- ------- ----------
Net income (loss)..................... $ (1,186) $ (187) $ 6,306 $ (7,214) $ (2,281)
======== ======= ======== ======= ==========
OTHER DATA:
EBITDA................................ $ 3,983 $ 263 $ 19,363 $ 2,008 $ 25,617
Depreciation and amortization......... 2,738 133 4,906 3,430 11,207
Capital expenditures.................. 2,257 88 6,212 -- 8,557
</TABLE>
See accompanying notes to unaudited pro forma consolidated statements of income.
P-6
<PAGE> 109
AMERISERVE FOOD DISTRIBUTION, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE FIRST QUARTER 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FIRST QUARTER 1996
-----------------------------------------------------------------------------------
HISTORICAL HISTORICAL HISTORICAL ACQUISITION OF PRO FORMA
AMERISERVE POST PFS AMERISERV(10) ADJUSTMENTS PRO FORMA
---------- ---------- ---------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................. $231,732 $ 27,372 $ 766,688 $ 55,109 $ -- $1,080,901
Cost of goods sold........ 208,023 24,460 689,650 49,897 -- 972,030
-------- ------- -------- ------- -------- ----------
Gross profit.............. 23,709 2,912 77,038 5,212 -- 108,871
-------- ------- -------- ------- -------- ----------
Operating expenses:
Distribution, selling
and administrative... 20,581 2,563 56,290 5,850 (2,775)(1) 83,276
(4,100)(2)
3,867(6)
1,000(4)
Depreciation............ 925 70 4,705 134 (250)(3) 5,584
Amortization............ 698 9 -- 404 3,680(7) 4,791
-------- ------- -------- ------- -------- ----------
Total operating
expenses................ 22,204 2,642 60,995 6,388 1,422 93,651
-------- ------- -------- ------- -------- ----------
Operating income.......... 1,505 270 16,043 (1,176) (1,422) 15,220
Interest expense.......... 2,306 319 3,597 -- 11,928(5) 18,150
-------- ------- -------- ------- -------- ----------
Income (loss) before
income taxes............ (801) (49) 12,446 (1,176) (13,350) (2,930)
Provision (credit) for
income taxes............ (242) -- 4,874 -- (5,775)(8) (1,143)
-------- ------- -------- ------- -------- ----------
Net income (loss)......... $ (559) $ (49) $ 7,572 $ (1,176) $ (7,575) $ (1,787)
======== ======= ======== ======= ======== ==========
OTHER DATA:
EBITDA.................... $ 3,128 $ 349 $ 20,748 $ (638) $ 2,008 $ 25,595
Depreciation and
amortization............ 1,623 79 4,705 538 3,430 10,375
Capital expenditures...... 866 8 7,193 38 -- 8,105
</TABLE>
See accompanying notes to unaudited pro forma consolidated statements of income.
P-7
<PAGE> 110
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
(1) Represents net cost reductions in accordance with the terms of the Asset
Purchase Agreement for the following items:
<TABLE>
<CAPTION>
FIRST QUARTER
FISCAL -----------------
1996 1996 1997
------- ------ ------
<S> <C> <C> <C>
Reduction in lease expense for existing PFS
facilities being retained by PepsiCo.......... $ 4,100 $1,025 $1,025
Net reduction in data processing costs charged
by PepsiCo to PFS under the terms of a one
year data processing service contract......... 4,100 1,025 1,025
Reduction of employee retirement expense due to
the termination of pension and retirement
plans of PepsiCo, net of amounts to be paid
under AmeriServe's plans...................... 1,900 475 475
Compensation of certain PFS employees retained
by PepsiCo.................................... 1,000 250 250
------- ------ ------
Net cost savings................................ $11,100 $2,775 $2,775
======= ====== ======
</TABLE>
(2) Represents the following initiatives in accordance with the Company's
business plan to integrate PFS:
<TABLE>
<CAPTION>
FIRST QUARTER
FISCAL -----------------
1996 1996 1997
------- ------ ------
<S> <C> <C> <C>
Payroll reductions for the elimination of
duplicative administrative personnel.......... $ 7,000 $1,750 $1,750
Reduction in warehouse facilities and operating
personnel..................................... 6,800 1,700 1,700
Reduction of marketing personnel................ 2,600 650 650
------- ------ ------
Net cost savings................................ $16,400 $4,100 $4,100
======= ====== ======
</TABLE>
(3) Represents reduction of $1,000 annually in depreciation expense as a result
of the closure of certain distribution centers.
(4) Represents an annual management fee of $4,000 to be paid by the Company to
Holberg Industries, Inc. in accordance with the management agreement.
P-8
<PAGE> 111
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME -- (CONTINUED)
(5) Represents the change in interest expense related to the Transactions:
<TABLE>
<CAPTION>
PRINCIPAL FIRST QUARTER
AMOUNT FISCAL -------------------
OF DEBT 1996 1996 1997
--------- -------- ------- -------
<S> <C> <C> <C> <C>
Recording of pro forma interest:
Term Loans at rates from 8.375% to
9.375%.......................... $ 205,000 $ 18,124 $ 4,531 $ 4,531
Revolving Credit Facility......... -- -- -- --
New Senior Subordinated Notes due
2007 at 10.125%................. 500,000 50,625 12,656 12,656
Letters of credit................. 12,000 300 75 75
Capital leases at 9.0%............ 770 193 193
-------- ------- -------
Cash interest expense............. 69,819 17,455 17,455
Amortization of deferred financing
costs........................... 2,781 695 695
-------- ------- -------
Total interest expense............ 72,600 18,150 18,150
Less: historical interest......... (28,114) (6,222) (7,393)
-------- ------- -------
Pro forma interest adjustment..... $ 44,486 $11,928 $10,757
======== ======= =======
</TABLE>
(6) Represents the discount of $15,469 annually and $3,867 quarterly on the
sale of accounts receivable pursuant to the Accounts Receivable Program
($225,000 at a rate of 6.875%).
(7) Represents the amortization of goodwill incurred in connection with the
Acquisition of $14,721 annually and $3,680 quarterly, assuming a 40-year
amortization period.
(8) Represents adjustments to reconcile income taxes to an effective income tax
rate of 39%.
(9) Eliminates AmeriServe's 45% equity interest in the net income of Post for
the period January 26, 1996 through November 25, 1996. Effective November
25, 1996, NEHC acquired the remaining 50% interest in Post.
(10) Represents AmeriServ net sales and expenses for the month of January 1996
prior to its acquisition by AmeriServe on January 26, 1996.
(11) Represents elimination of intercompany sales.
P-9
<PAGE> 112
INDEX TO HISTORICAL FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
AMERISERVE FOOD DISTRIBUTION, INC.
Report of Ernst & Young LLP, Independent Auditors.................................. F-2
Consolidated Balance Sheets as of December 30, 1995 and December 28, 1996, and as
of March 29, 1997 (unaudited)................................................... F-3
Consolidated Statements of Income for each of the three fiscal years in the period
ended December 28, 1996, and for the three month periods ended March 30, 1996
and March 29, 1997 (unaudited).................................................. F-4
Consolidated Statements of Stockholder's Equity for each of the three fiscal years
in the period ended December 28, 1996, and for the three month period ended
March 29, 1997 (unaudited)...................................................... F-5
Consolidated Statements of Cash Flows for each of the three fiscal years in the
period ended December 28, 1996, and for the three month periods ended March 30,
1996 and March 29, 1997 (unaudited)............................................. F-6
Notes to Consolidated Financial Statements......................................... F-7
PFS
Report of KPMG Peat Marwick LLP, Independent Auditors.............................. F-17
Balance Sheets as of December 27, 1995 and December 25, 1996, and as of March 19,
1997 (unaudited)................................................................ F-18
Statements of Income for each of the years in the three year period ended December
25, 1996, and for the three month periods ended March 20, 1996 and March 19,
1997 (unaudited)................................................................ F-19
Statements of Divisional Equity for each of the years in the three year period
ended December 25, 1996, and for the three month period ended March 19, 1997
(unaudited)..................................................................... F-20
Statements of Cash Flows for each of the years in the three year period ended
December 25, 1996, and for the three month periods ended March 20, 1996 and
March 19, 1997 (unaudited)...................................................... F-21
Notes to Financial Statements...................................................... F-22
AMERISERV FOOD COMPANY
Report of Ernst & Young LLP, Independent Auditors.................................. F-27
Consolidated Statements of Operations for each of the two fiscal years in the
period ended December 30, 1995.................................................. F-28
Consolidated Statements of Stockholders' Equity (Deficit) for each of the two
fiscal years in the period ended December 30, 1995.............................. F-29
Consolidated Statements of Cash Flows for each of the two fiscal years in the
period ended December 30, 1995.................................................. F-30
Notes to Consolidated Financial Statements......................................... F-31
</TABLE>
F-1
<PAGE> 113
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors
AmeriServe Food Distribution, Inc.
We have audited the accompanying consolidated balance sheets of AmeriServe
Food Distribution, Inc. (formerly known as NEBCO EVANS Distribution, Inc.) (the
Company) as of December 30, 1995 and December 28, 1996, and the related
consolidated statements of income, stockholder's equity and cash flows for each
of the three years in the period ended December 28, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company at
December 30, 1995 and December 28, 1996, and consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 28, 1996 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
August 6, 1997
F-2
<PAGE> 114
AMERISERVE FOOD DISTRIBUTION, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 29,
1997
DECEMBER 30, DECEMBER 28, ------------
1995 1996
------------ ------------ (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash................................................ $ 575 $ 2,162 $ 3,995
Accounts receivable, less allowance for doubtful
accounts of $1,170, $4,896 and $4,974,
respectively..................................... 25,127 68,635 74,087
Other receivables................................... 2,234 3,764 3,689
Inventories......................................... 15,230 47,714 62,909
Due from Holberg.................................... 623 -- 2,487
Prepaid expenses and other current assets........... 707 4,313 6,731
------- -------- --------
Total current assets........................ 44,496 126,588 153,898
Property and equipment, net........................... 6,912 33,837 35,720
Other assets:
Intangible assets, net.............................. 20,189 122,451 121,852
Note receivable from Holberg........................ 3,516 3,516 3,516
Other noncurrent assets............................. 2,390 4,711 5,860
------- -------- --------
$ 77,503 $291,103 $320,846
======= ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt................ $ -- $ 3,266 $ 2,474
Accounts payable.................................... 32,751 89,440 114,870
Due to Holberg...................................... -- 907 --
Accrued liabilities................................. 1,232 14,931 9,917
------- -------- --------
Total current liabilities................... 33,983 108,544 127,261
Noncurrent liabilities................................ 584 13,245 13,302
Long-term debt........................................ 32,779 126,639 138,794
Commitments
Stockholder's equity:
Senior preferred stock, $1 par value; 765 shares
authorized, 600 shares outstanding, $33,492
liquidation value................................ -- 30,000 30,000
Preferred stock, $50,000 par value; 150 shares
authorized and outstanding, $8,325 liquidation
value............................................ 7,500 7,500 7,500
Preferred stock, $25,000 par value; 400 shares
authorized, 300 shares outstanding, $8,213
liquidation value................................ 7,500 7,500 7,500
Common stock, $10 par value; 2,000 shares
authorized, 600 shares outstanding............... 6 6 6
Accumulated deficit................................. (4,849) (2,331) (3,517)
------- -------- --------
Total stockholder's equity.................. 10,157 42,675 41,489
------- -------- --------
$ 77,503 $291,103 $320,846
======= ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 115
AMERISERVE FOOD DISTRIBUTION, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
------------------------------------------------- -----------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28, MARCH 30, MARCH 29,
1994 1995 1996 1996 1997
------------- ------------- ------------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales.................... $ 358,516 $ 400,017 $ 1,280,598 $ 231,732 $ 308,727
Cost of goods sold........... 320,602 359,046 1,151,749 208,023 277,086
-------- -------- ---------- -------- --------
Gross profit................. 37,914 40,971 128,849 23,709 31,641
Distribution, selling and
administrative expenses.... 34,488 36,695 114,560 22,204 30,396
-------- -------- ---------- -------- --------
Operating income............. 3,426 4,276 14,289 1,505 1,245
Other income (expense):
Interest expense........... (3,294) (3,936) (10,999) (2,405) (3,165)
Interest income -- Holberg
and affiliate........... 533 749 528 99 85
-------- -------- ---------- -------- --------
(2,761) (3,187) (10,471) (2,306) (3,080)
-------- -------- ---------- -------- --------
Income (loss) before income
taxes...................... 665 1,089 3,818 (801) (1,835)
Provision (credit) for income
taxes...................... 523 583 1,300 (242) (649)
-------- -------- ---------- -------- --------
Net income (loss)............ $ 142 $ 506 $ 2,518 $ (559) $ (1,186)
======== ======== ========== ======== ========
</TABLE>
See accompanying notes.
F-4
<PAGE> 116
AMERISERVE FOOD DISTRIBUTION, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SENIOR PREFERRED PREFERRED ADDITIONAL
PREFERRED STOCK, STOCK, COMMON PAID-IN ACCUMULATED
STOCK $50,000 SERIES $25,000 SERIES STOCK CAPITAL DEFICIT TOTAL
--------- -------------- -------------- ------ ---------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 2, 1994...... $ -- $7,500 $5,000 $ 6 $ 5,068 $(2,795) $14,779
Issuance of 100 shares of
preferred stock, $25,000
Series................... -- -- 2,500 -- -- -- 2,500
Dividends on preferred
stock.................... -- -- -- -- (1,200) -- (1,200)
Contribution of capital..... -- -- -- -- 984 -- 984
Net income.................. -- -- -- -- -- 142 142
------- ------ ------ --- ------- ------- -------
Balance, December 31, 1994.... -- 7,500 7,500 6 4,852 (2,653) 17,205
Dividends:
Preferred stock.......... -- -- -- -- -- (2,494) (2,494)
Common stock............. -- -- -- -- (6,086) (208) (6,294)
Contribution of capital..... -- -- -- -- 1,234 -- 1,234
Net income.................. -- -- -- -- -- 506 506
------- ------ ------ --- ------- ------- -------
Balance, December 30, 1995.... -- 7,500 7,500 6 -- (4,849) 10,157
Issuance of 600 shares of
senior preferred stock... 30,000 -- -- -- -- -- 30,000
Net income.................. -- -- -- -- -- 2,518 2,518
------- ------ ------ --- ------- ------- -------
Balance, December 28, 1996.... 30,000 7,500 7,500 6 -- (2,331) 42,675
Net loss (unaudited)........ -- -- -- -- -- (1,186) (1,186)
------- ------ ------ --- ------- ------- -------
Balance, March 29, 1997
(unaudited)................. $ 30,000 $7,500 $7,500 $ 6 $ -- $(3,517) $41,489
======= ====== ====== === ======= ======= =======
</TABLE>
See accompanying notes.
F-5
<PAGE> 117
AMERISERVE FOOD DISTRIBUTION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
------------------------------------------ ---------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28, MARCH 30, MARCH 29,
1994 1995 1996 1996 1997
------------ ------------ ------------ --------- ---------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)......................... $ 142 $ 506 $ 2,518 $ (559) $ (1,186)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of
property and equipment............... 1,786 1,463 5,251 925 1,741
Amortization of intangible assets....... 1,498 1,299 4,810 698 997
Deferred income taxes................... (465) 48 -- -- --
Contribution of capital................. 984 1,234 -- -- --
Other................................... 83 131 83 83 29
Changes in assets and liabilities, net
of effect of businesses acquired:
Accounts receivable.................. (3,567) (1,645) (4,924) (4,275) (5,452)
Other receivables.................... (69) (645) (426) (571) 75
Inventories.......................... 237 (5) (6,497) (8,470) (15,195)
Prepaid expenses and other assets.... (261) (2,425) 1,696 946 (1,268)
Accounts payable..................... 2,831 5,035 6,741 7,378 25,430
Accrued liabilities.................. 1,077 (393) (5,309) (2,309) (5,014)
Noncurrent liabilities............... -- -- (66) (3,571) 28
Other................................ -- (98) (2,664) 5,126 (1,548)
------- ------- --------- -------- --------
Net cash provided by (used in) operating
activities.............................. 4,276 4,505 1,213 (4,599) (1,363)
------- ------- --------- -------- --------
INVESTING ACTIVITIES
Businesses acquired, net of cash
acquired................................ -- -- (94,411) (94,411) --
Expenditures for property and equipment... (1,331) (2,496) (12,518) (866) (2,257)
Proceeds from disposals of property and
equipment............................... 14 22 2,866 -- --
Net change in amounts due from/to
Holberg................................. (1,365) (1,690) 1,530 (1,378) (3,394)
Net increase in deposits with
affiliates.............................. (2,720) (315) (2,480) (1,880) (1,150)
Expenditures for intangible and other
assets.................................. (20) (1,095) -- -- --
------- ------- --------- -------- --------
Net cash used in investing activities..... (5,422) (5,574) (105,013) (98,535) (6,801)
------- ------- --------- -------- --------
FINANCING ACTIVITIES
Proceeds from issuance of preferred
stock................................... 2,500 -- 30,000 30,000 --
Net increase in borrowings under revolving
line of credit.......................... 15 4,635 120,000 110,900 10,700
Repayments of long-term debt.............. (2,025) (4,016) (44,613) (38,341) (703)
------- ------- --------- -------- --------
Net cash provided by financing
activities.............................. 490 619 105,387 102,559 9,997
------- ------- --------- -------- --------
Net increase (decrease) in cash........... (656) (450) 1,587 (575) 1,833
Cash at beginning of period............... 1,681 1,025 575 575 2,162
------- ------- --------- -------- --------
Cash at end of period..................... $ 1,025 $ 575 $ 2,162 $ -- $ 3,995
======= ======= ========= ======== ========
Supplemental cash flow information:
Cash paid during the period for:
Interest............................. $ 3,100 $ 3,622 $ 9,504 $ 1,111 $ 3,438
Income taxes, net of refunds......... 406 332 1,256 121 325
Businesses acquired:
Fair value of assets acquired........ -- -- 187,907 187,907 --
Cash paid............................ -- -- (94,411) (94,411) --
------- ------- --------- -------- --------
Liabilities assumed.................. $ -- $ -- $ 93,496 $ 93,496 $ --
======= ======= ========= ======== ========
Supplemental noncash investing and
financing activities:
Payment of dividends to reduce deposits
and advances with Holberg and
affiliate............................ $ 1,200 $ 8,788 $ -- $ -- $ --
Property and equipment purchased with
capital leases (included in long-term
debt)................................ -- -- 11,845 3,112 1,367
</TABLE>
See accompanying notes.
F-6
<PAGE> 118
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 28, 1996
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
AmeriServe Food Distribution, Inc. (formerly known as NEBCO EVANS
Distribution, Inc.) has four subsidiaries: AmeriServ Food Company, Inc., (100%
owned), Northland Transportation Services, Inc. (100% owned), Chicago
Consolidated Corporation (CCC) (87% owned), and Delta Transportation Inc. (100%
owned) (collectively, the Company). The Company, through its divisions and
subsidiaries, is a system foodservice distributor specializing in distribution
to chain restaurants. The Company distributes a wide variety of items, including
fresh and frozen meat and poultry, frozen foods, canned and dry goods, fresh and
preprocessed produce, beverages, dairy products, paper goods, cleaning and other
supplies and small equipment.
The majority of revenues arise from sales to franchisees and/or franchisers
of several national limited-menu restaurant concepts. One customer represented
approximately 11% of consolidated net sales for the year ended December 28,
1996. The Company's accounts receivable generally are unsecured.
The Company is a wholly owned subsidiary of Nebco Evans Holding Company
(NEHC), which is ultimately controlled by Holberg Industries, Inc. (Holberg).
Holberg Industries, Inc., is a diversified service company with subsidiaries
operating within the food distribution and parking services industries in North
America.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.
Fiscal Year
The Company has elected a 52- or 53-week fiscal year ending on the Saturday
nearest to December 31. The fiscal years ended December 31, 1994 (fiscal 1994),
December 30, 1995 (fiscal 1995) and December 28, 1996 (fiscal 1996) are 52-week
periods.
Inventories
Inventories, which consist of purchased goods held for sale, are stated at
the lower of cost (determined on a first-in, first-out basis) or market.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed over
the estimated useful lives of the assets, using either the straight-line or
double-declining balance method. Amortization of leasehold improvements is
recorded over the respective lease terms or useful lives of the assets,
whichever is shorter. Amortization of assets under capital leases is included in
depreciation expense. Useful lives for amortization and depreciation
calculations are as follows:
<TABLE>
<CAPTION>
DESCRIPTION LIFE
------------------------------------------------ ------------
<S> <C>
Buildings and improvements...................... 5 - 40 years
Delivery and automotive equipment............... 3 - 9 years
Warehouse equipment............................. 5 - 12 years
Furniture, fixtures and equipment............... 5 - 10 years
</TABLE>
F-7
<PAGE> 119
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During 1995, the Company completed a review of the estimated useful lives
of its property and equipment. The Company determined that, as a result of
preventative maintenance programs and improved product quality, actual useful
lives for certain assets were generally longer than the useful lives originally
estimated. Therefore, the Company extended the estimated useful lives of certain
categories of equipment, effective January 1, 1995. The effect of this change in
estimate reduced depreciation expense for the year ended December 30, 1995 by
$514,000 and increased net income by $308,000.
Goodwill and Other Intangibles
Costs in excess of the net identifiable assets of businesses acquired are
amortized on a straight line basis over periods not to exceed 40 years. Customer
lists and other intangible assets acquired in business acquisitions, deferred
financing costs and other intangibles are being amortized using primarily the
straight-line method over their respective estimated useful lives, which
generally range from 3 to 40 years. The Company periodically reviews the
carrying value of goodwill and other intangibles to assess recoverability and
other than temporary impairments by comparing the estimated future undiscounted
cash flows associated with the asset to the asset's carrying amount.
Investment in Affiliate
On May 30, 1995, the Company invested $550,000 to acquire 45% of the
outstanding common stock of Holberg Warehouse Properties, Inc. (HWPI), an
affiliate of Holberg. HWPI owns a warehouse and office facility in Omaha,
Nebraska, which is leased to the Company (see Note 7). The investment is
accounted for using the equity method and is included in other noncurrent assets
in the accompanying consolidated balance sheets. The results of operations of
HWPI are not significant.
Revenue Recognition
Revenue from the sale of the Company's products is recognized upon shipment
to the customer.
Income Taxes and Tax Sharing Agreement
The Company is part of a consolidated group for income tax purposes and,
accordingly, has a tax-sharing agreement with Holberg which requires the Company
to make tax sharing payments to Holberg for those entities within the Company's
consolidated subgroup that have taxable income. Income taxes have been provided
as if the Company were a separate taxpayer.
Deferred income tax assets or liabilities are recognized for the estimated
future tax effects attributable to temporary differences, including operating
loss carryforwards. The currently enacted statutory rate is used to estimate
differences between the financial statement and income tax bases of inventories,
property and equipment, intangible assets, certain accrued liabilities and
allowances and net operating losses. Because of the Company's prior operating
losses in certain of the Company's taxable entities, a valuation allowance has
been established to offset the entire amount of the net deferred tax assets.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-8
<PAGE> 120
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Fair Value Information
The Company believes the carrying value of its financial instruments
(notes, accounts and other receivables, accounts payable and long-term debt) are
a reasonable estimate of the fair value of these instruments. Related party
financial instruments are recorded at cost.
Reclassifications
Certain reclassifications have been made to the 1994 and 1995 financial
statements to conform to the 1996 presentation. In addition, the 1994 and 1995
Financial Statements have been restated to conform to the requirements of the
Securities and Exchange Commission Staff Accounting Bulletin Number 55.
Interim Financial Data
The unaudited consolidated balance sheet as of March 29, 1997, and the
related consolidated statements of income and cash flows for the three-month
periods ended March 30, 1996 and March 29, 1997 and the consolidated statement
of stockholder's equity for the three months ended March 29, 1997, have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of adjustments of a normal and
recurring nature) considered necessary for a fair presentation of the financial
position and results of operations have been included. Operating results for the
three-month period ended March 29, 1997, are not necessarily indicative of the
results that might be expected for the year ending January 3, 1998.
2. ACQUISITIONS AND DISPOSITIONS
On January 25, 1996, the Company acquired the common and preferred stock of
AmeriServ Food Company (AmeriServ), a system foodservice distributor
specializing in distribution of food and supplies to chain restaurants. The
total cash outlay for the acquisition, including all direct costs, was $92.9
million. Of this amount, $44 million related to the retirement of all of
AmeriServ's existing bank debt and accrued interest, which occurred concurrently
with the closing of the purchase transaction. The transaction was financed
through the issuance of $30 million of preferred stock issued to NEHC, as well
as borrowings under a new Credit Agreement.
The acquisition has been accounted for under the purchase method;
accordingly, its results are included in the consolidated financial statements
from the acquisition date. The purchase price was allocated based on the
estimated fair values of identifiable intangible and tangible assets acquired
and liabilities assumed at the acquisition date. The excess of the purchase
price over the net assets acquired was $85 million and has been recorded as
goodwill, which is being amortized on a straight-line basis over 40 years.
The following unaudited pro forma results of operations for the years ended
December 30, 1995 and December 28, 1996 assume the acquisition of AmeriServ
occurred at the beginning of each fiscal year (in thousands):
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Net sales................................... $1,224,200 $1,335,700
Net income (loss)........................... (7,134) 600
</TABLE>
This pro forma information does not purport to be indicative of the results
that actually would have been obtained if the combined operations had been
conducted during the periods presented and is not intended to be a projection of
future results.
F-9
<PAGE> 121
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At the time of the acquisition, the Company and AmeriServ held ownership
interests of 20% and 18%, respectively, in the outstanding common stock of CCC.
CCC operates redistribution facilities that sell dry goods to independent
wholesale distributors. In March 1996, the Company acquired 49% of CCC's
outstanding common stock for $1.5 million in cash, bringing the consolidated
ownership interest in CCC to approximately 87%. The acquisition has been
accounted for under the purchase method. The Company had accounted for its
original 20% investment in CCC under the cost method. The operating results of
CCC are not significant to the consolidated results of the Company.
At the time of the acquisition, AmeriServ (through a wholly owned holding
company) effectively owned approximately 47% of the outstanding common stock of
Harry H. Post Company (Post). Post was an operating division of AmeriServ, also
engaged in system foodservice distribution. As part of the acquisition, the
Company effectively acquired approximately 44% of the outstanding common stock
of Post. The Company has accounted for this investment under the equity method.
In November of 1996, the Company sold its interest in Post to NEHC for $2.5
million in preferred stock, which approximated the carrying value of the equity
investment. As a result of other concurrent transactions, NEHC owns 93.6% of the
outstanding common stock of Post.
At the time of the acquisition, both the Company and AmeriServ owned
minority interests in the common stock of Independent Distributors of America
(IDA), a nonprofit cooperative providing purchasing services to the Company and
AmeriServ as well as other foodservice distributors. As a result of the
acquisition, on a consolidated basis, the Company owns 40% of the outstanding
stock of IDA and accounts for approximately 75% of IDA's purchasing activity.
The operating results of IDA are not significant to the consolidated results of
the Company.
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 28,
1995 1996
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Land............................................... $ -- $ 1,479
Buildings and improvements......................... 2,379 10,036
Delivery and automotive equipment.................. 6,322 15,929
Warehouse equipment................................ 2,604 4,617
Furniture, fixtures and equipment.................. 3,413 11,842
Construction in progress........................... -- 2,412
------- -------
14,718 46,315
Less accumulated depreciation and amortization..... 7,806 12,478
------- -------
$ 6,912 $ 33,837
======= =======
</TABLE>
F-10
<PAGE> 122
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. INTANGIBLE ASSETS
Intangible assets consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 28,
1995 1996
------------ ------------
<S> <C> <C>
Goodwill, less accumulated amortization of $2,823
and $5,332....................................... $ 17,187 $100,201
Customer lists, deferred financing costs and other
intangibles, less accumulated amortization of
$6,076 and $8,370................................ 3,002 22,250
------- -------
$ 20,189 $122,451
======= =======
</TABLE>
5. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 28,
1995 1996
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Revolving credit facility under Bank Credit
Agreement........................................ $ 21,779 $ 69,100
Term loans under Credit Agreement.................. 11,000 45,000
Other notes payable................................ -- 6,034
------- -------
32,779 120,134
Capital lease obligations (see Note 7)............. -- 9,771
------- -------
32,779 129,905
Less current maturities............................ -- 3,266
------- -------
$ 32,779 $126,639
======= =======
</TABLE>
The weighted average interest rates on the outstanding bank borrowings at
December 30, 1995 and December 28, 1996, were 8.61% and 7.99%, respectively. The
Company paid Holberg a guarantee fee of $180,000, $180,000 and $14,000 in 1994,
1995 and 1996, respectively.
In January 1996, in connection with the AmeriServ acquisition (see Note 2),
the Company refinanced its borrowings under a new Credit Agreement. The new
credit facility provided for borrowings of $25,000,000 and $20,000,000 under a
Term A and Term B loan, respectively, and up to $85,000,000 under a revolving
credit facility.
In March 1997, the Credit Agreement was amended. The Amended and Restated
Credit Agreement (Current Agreement), provides for borrowings of $20,000,000 and
$30,000,000 under a Term A and Term B loan, respectively. The amount available
under the revolving credit facility was increased to $100,000,000. Borrowings
under the revolving credit facility are limited to percentages of eligible
accounts receivable and inventories, as defined, and are reduced for letters of
credit outstanding ($8,536,000 outstanding at December 28, 1996). The revolving
credit facility expires on January 25, 2001. The term loans mature in annual
installments through 2002. In addition, mandatory prepayments are required based
on excess cash flow, as defined, and proceeds from sales of assets or issuances
of shares of equity.
Depending on leverage ratios, as defined in the Current Agreement, interest
on the revolving credit facility and the Term A loan is payable at LIBOR plus
.75% to 2.5% or an alternate reference rate plus 0% to 1.25% as selected by the
Company. Interest on the Term B loan is payable at LIBOR plus 2.75% to 3.00% or
an alternate reference rate plus 1.5% to 1.75%, as selected by the Company. The
alternate rate is the higher of
F-11
<PAGE> 123
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the federal funds rate plus .50% and the prime rate, as defined. A commitment
fee of .25% to .50% is payable on the unutilized revolving line of credit.
Borrowings under the Current Agreement are collateralized by substantially
all the assets of the Company. The Current Agreement contains various
restrictive covenants with respect to additional borrowings, acquisitions and
dispositions of assets, rental liabilities, dividends, transactions with
affiliates and certain financial ratios and requirements.
Other notes payable represent indebtedness assumed in the acquisition of
AmeriServ and consist primarily of subordinated term notes payable to former
stockholders of companies acquired by AmeriServ. These notes mature in 1999 and
bear interest ranging from 8.5% to 10.0%.
In February 1996, the Company entered into an interest rate swap agreement
under which the Company receives a variable rate on a notional amount of
$30,000,000 based on three-month LIBOR and pays a fixed rate of 5.05% through
March 1, 1999. In March 1996, the Company entered into two additional interest
rate swap agreements under which the Company receives a variable rate on a
notional amount of $30,000,000 based on three-month LIBOR and pays a fixed rate
of 5.995% through March 26, 1999. The swap agreements effectively change a
portion of the Company's interest rate exposure from a floating rate to a fixed
rate. In August 1996, the Company entered into an interest rate cap agreement on
a notional amount of $5,000,000. The interest rate cap sets the maximum LIBOR
rate at 9% through August 1999. The initial cost of the interest rate cap
agreement is amortized over the term of the agreement. The counterparties to the
interest rate swap agreements are large financial institutions. Credit loss from
counterparty nonperformance is not anticipated. Net settlements are accrued over
the term of the swap agreements as an adjustment to interest expense.
Aggregate annual principal payments (excluding capital leases) required as
of December 28, 1996, are as follows (in thousands):
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
--------------------------------------------------
<S> <C>
1997.............................................. $ 933
1998.............................................. 7,968
1999.............................................. 8,833
2000.............................................. 6,450
2001.............................................. 80,625
Thereafter........................................ 15,325
--------
$120,134
========
</TABLE>
6. STOCKHOLDER'S EQUITY
The authorized capital of the Company consists of 2,000 shares of common
stock at a par value of $10; 765 shares of senior nonconvertible, nonvoting
preferred stock with a liquidation preference of $50,000 per share and
cumulative dividends at a rate of $6,250 per share; 150 shares of Series $50,000
par value nonconvertible, nonvoting preferred stock with a liquidation
preference of $50,000 per share and cumulative dividends at a rate of $5,500 per
share; and 400 shares of Series $25,000 par value nonconvertible, nonvoting
preferred stock with a liquidation preference of $25,000 per share and
cumulative dividends at a rate of $2,375 per share. In connection with the
AmeriServ acquisition, the Company issued 600 shares of senior nonconvertible
preferred stock for $30,000,000. In addition, the $50,000 and $25,000 series
preferred stock outstanding at December 30, 1995 was modified to be expressly
subordinate to the new issue, as well as to be nonconvertible. Accumulated
dividends in arrears at December 28, 1996 are $5,030,000.
F-12
<PAGE> 124
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. LEASE COMMITMENTS
The Company has noncancelable commitments under both capital and long-term
operating leases, primarily for office and warehouse facilities, transportation
and office equipment. The leases often contain fixed escalation features,
purchase and renewal options and provisions for payment of certain expenses by
the Company. Rent expense was approximately $5,408,000, $5,709,000 and
$13,757,000 (including contingent rentals based on miles driven) for the years
ended December 31, 1994, December 30, 1995 and December 28, 1996, respectively.
The Company leases a warehouse and office facility in Waukesha, Wisconsin
from an affiliated partnership owned by certain former shareholders of an
acquired company for approximately $810,000 per year through May 31, 2008.
On February 9, 1995, HWPI exercised the Company's option to purchase a
leased warehouse and office facility in Omaha, Nebraska. The Company will lease
the facility from HWPI for a fixed term of 13 years. Under the terms of the
lease, rent is $500,000 for the first 5-year period of the lease, and includes
fixed escalation provisions for the 8 years thereafter. The lease contains no
renewal or purchase options and the Company is responsible for all facility
expenses. In connection with the lease, the Company paid HWPI a security deposit
of $750,000, which is included in other noncurrent assets in the accompanying
consolidated balance sheets.
Property and equipment include the following amounts under capital leases
at December 28, 1996 (in thousands):
<TABLE>
<S> <C>
Delivery and automotive equipment.................................. $ 8,358
Furniture, fixtures and equipment.................................. 3,487
-------
11,845
Less accumulated amortization...................................... 1,741
-------
Property and equipment under capital leases, net................... $10,104
=======
</TABLE>
The following is a schedule of aggregate future minimum lease payments
(excluding contingent rentals) required under terms of the aforementioned leases
at December 28, 1996 (in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
FISCAL YEAR ENDING LEASES LEASES
-------------------------------------------------------- ------- --------
<S> <C> <C>
1997.................................................... $ 3,347 $ 9,414
1998.................................................... 2,398 9,389
1999.................................................... 2,064 9,429
2000.................................................... 1,656 8,667
2001.................................................... 1,246 7,646
Thereafter.............................................. 2,656 69,080
------- --------
Total................................................... 13,367 $113,625
========
Less amount representing interest....................... 3,596
-------
Present value of net minimum lease commitments.......... $ 9,771
=======
</TABLE>
F-13
<PAGE> 125
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. INCOME TAXES
The provision for income taxes consists of the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28,
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Current:
Federal......................................... $ 908 $ 437 $1,104
State........................................... 80 98 196
------ ------ ------
988 535 1,300
Deferred.......................................... (465) 48 --
------ ------ ------
$ 523 $ 583 $1,300
====== ====== ======
</TABLE>
The provision for income taxes differs from the amount computed by applying
the federal statutory rate of 34% to income before income taxes, as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28,
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Provision at statutory rate................... $ 226 $ 370 $1,298
State income taxes, net of federal tax 53 66 130
benefit.....................................
Nondeductible goodwill........................ 167 167 758
Equity in earnings of unconsolidated -- -- (644)
subsidiary..................................
Other......................................... 77 (20) (242)
------ ------ ------
Provision for income taxes.................... $ 523 $ 583 $1,300
====== ====== ======
</TABLE>
The components of the Company's deferred income tax assets and liabilities
are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 28,
1995 1996
------------ ------------
<S> <C> <C>
Deferred income tax liabilities:
Property and equipment................................... $ 380 $ --
Intangible assets other than nondeductible goodwill...... 582 7,974
Other.................................................... 38 --
------ --------
Total deferred tax liabilities........................ 1,000 7,974
Deferred income tax assets:
Allowances and reserves.................................. 682 3,155
Property and equipment................................... -- 1,701
Accrued liabilities...................................... 321 9,045
Federal net operating loss carryforwards................. -- 10,566
Other.................................................... 136 --
------ --------
1,139 24,467
Valuation allowance for deferred tax assets.............. (139) (16,493)
------ --------
Total deferred tax assets............................. 1,000 7,974
------ --------
Net deferred tax asset..................................... $ -- $ --
====== ========
</TABLE>
F-14
<PAGE> 126
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Under the Company's tax sharing agreement with Holberg, no current tax
benefit is provided for those entities within the Company with current operating
losses. As of December 28, 1996, the Company has net operating loss
carryforwards of $27,000,000, including $11,000,000 of losses incurred by
AmeriServ prior to its acquisition, which are subject to limitation under
Sections 382 and 1504 of the Internal Revenue Code. Under those Sections, after
a change of control, which occurred on January 25, 1996, with respect to
AmeriServ, no more than approximately $2,000,000 of operating loss carryforwards
incurred by AmeriServ prior to that date will be available annually and only to
the extent of future separate taxable income of AmeriServ during the permitted
carryover period.
The $11,000,000 separate return net operating loss carryforwards of
AmeriServ will expire in 2007 to 2010. The $16,000,000 balance of net operating
loss carryforwards of the Company will expire in 2011. As of its acquisition by
the Company, AmeriServ had net operating losses and other deferred tax benefits
(the Acquired Tax Attributes) of $46,000,000, which was entirely offset by a
valuation reserve. Goodwill will be reduced to the extent of any tax benefit
realized from the Acquired Tax Attributes.
9. BENEFIT PLANS
The Company and its subsidiaries have four 401(k) retirement savings plans
covering substantially all union and nonunion employees under which eligible
participants may elect to contribute a specified percentage of their earnings,
subject to certain limitations. The Company matches the contributions of
participating employees on the basis of percentages specified in the respective
plans. At its discretion, the Company may also elect to make a profit-sharing
contribution to the nonunion plans. Company contributions charged to operations
under the plans was approximately $67,000, $109,000 and $515,000 for the years
ended December 31, 1994, December 30, 1995 and December 28, 1996, respectively.
10. OTHER RELATED-PARTY TRANSACTIONS
The current amounts due from/to Holberg represent interest-bearing advances
which are made in the normal course of business as part of the cash management
strategy of Holberg. The note receivable from Holberg bears interest at 5% and
is due January 1, 2007.
The Company participates in a self-insured group casualty (including
workers' compensation and auto liability) risk program with an affiliate, which
determines the insurance expenses to be allocated to the Company. In fiscal year
1994 and 1995, the affiliate paid $1,694,000 and $1,128,000 of the Company's
casualty insurance expense, respectively. In addition, the affiliate paid
$378,000 of the health insurance expenses of the Company in 1995. These payments
have been charged to operations and reflected as contributed capital in the
accompanying consolidated financial statements. In connection with the insurance
program, the Company placed a deposit with an affiliate for insurance collateral
purposes of $2,480,000 as of December 28, 1996, which is included in prepaid
expenses and other current assets in the accompanying 1996 consolidated balance
sheet.
During 1995, distribution, selling and administrative expenses include
$554,000 for certain expenses, including salary, severance, relocation and
computer systems costs, which arose as a result of initiatives directed by
Holberg.
Interest income from Holberg and an affiliate of approximately $533,000,
$749,000 and $528,000 in fiscal 1994, 1995 and 1996, respectively, represents
interest on the advances and note receivable from Holberg and interest on the
insurance deposits with an affiliate, less the guarantee fee to Holberg.
F-15
<PAGE> 127
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. SUBSEQUENT EVENT
On May 23, 1997, NEHC entered into a definitive agreement to acquire, in an
asset purchase transaction, the U.S. and Canadian operations of the PFS division
of PepsiCo, Inc. PFS is engaged in the distribution of food products and
supplies to franchised and company-owned restaurants in PepsiCo, Inc.'s Pizza
Hut, Taco Bell and KFC systems. PepsiCo has announced its intentions to pursue a
spin-off of its restaurant operations. The U.S. and Canadian operations of PFS
posted revenues of $3.4 billion for the fiscal year ended December 28, 1996. The
cash purchase price of $830 million will be financed through a combination of
debt and preferred stock issuances. The transaction closed on July 11, 1997, at
which time NEHC assigned its interest in the agreement to the Company.
F-16
<PAGE> 128
REPORT OF KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS
The Management of PFS
(A Division of PepsiCo, Inc. Held for Sale):
We have audited the accompanying balance sheets of PFS (A Division of
PepsiCo, Inc. Held for Sale) as of December 27, 1995 and December 25, 1996, and
the related statements of income, divisional equity, and cash flows for each of
the years in the three-year period ended December 25, 1996. These financial
statements are the responsibility of the management of PFS. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PFS as of December 27, 1995
and December 25, 1996, and the results of its operations and its cash flows for
each of the years in the three-year period ended December 25, 1996, in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Dallas, Texas
April 18, 1997
F-17
<PAGE> 129
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 25, MARCH 19,
1995 1996 1997
------------ ------------ -----------
(UNAUDITED)
-----------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.................................................. $ 203 $ 1,625 $ 176
Receivables:
Franchisees and licensees, net of allowance for
doubtful accounts of $11,941 in 1995 and $7,733 in
1996............................................... 115,004 117,729 117,449
Affiliates............................................ 206,658 162,485 166,667
Inventories........................................... 101,767 94,418 95,806
Prepaid expenses and other current assets............. 1,877 4,690 10,831
Deferred income taxes (note 7)........................ 10,105 10,629 10,278
--------- --------- ---------
Total current assets.......................... 435,614 391,576 401,207
Property and equipment, net (notes 3 and 6)........... 80,351 87,017 88,247
Other assets.......................................... 323 328 348
--------- --------- ---------
$516,288 $478,921 $ 489,802
========= ========= =========
LIABILITIES AND DIVISIONAL EQUITY
Current liabilities:
Accounts payable -- trade............................. $196,695 $170,611 $ 177,688
Accrued liabilities (note 7).......................... 79,512 79,728 69,438
Advances from Parent and affiliates, net (note 4)..... 122,957 108,257 123,429
--------- --------- ---------
Total current liabilities..................... 399,164 358,596 370,555
Other liabilities and deferred credits (notes 6 and
9).................................................... 23,449 22,400 25,704
Deferred income taxes (note 7).......................... 5,096 4,520 3,602
Divisional equity (note 4).............................. 88,579 93,405 89,941
Commitments (note 6)
--------- --------- ---------
$516,288 $478,921 $ 489,802
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
F-18
<PAGE> 130
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED TWELVE WEEKS ENDED
-------------------------------------------- -----------------------
DECEMBER 28, DECEMBER 27, DECEMBER 25, MARCH 20, MARCH 19,
1994 1995 1996 1996 1997
(53 WEEKS) (52 WEEKS) (52 WEEKS) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales:
Affiliates (note 4)............. $2,378,963 $2,463,464 $2,292,423 $ 523,510 $ 459,522
Franchisees and licensees....... 905,874 999,988 1,136,201 244,459 262,896
---------- ---------- ---------- -------- --------
3,284,837 3,463,452 3,428,624 767,969 722,418
Less discounts and allowances... 5,000 4,508 6,538 1,281 1,894
---------- ---------- ---------- -------- --------
Net sales............... 3,279,837 3,458,944 3,422,086 766,688 720,524
---------- ---------- ---------- -------- --------
Costs and expenses:
Cost of sales and operating..... 3,155,422 3,331,866 3,297,381 739,470 694,570
General and administrative
(notes 4, 6 and 8)........... 37,515 47,606 44,962 11,175 11,497
---------- ---------- ---------- -------- --------
3,192,937 3,379,472 3,342,343 750,645 706,067
---------- ---------- ---------- -------- --------
Income from
operations............ 86,900 79,472 79,743 16,043 14,457
Interest expense to Parent (note
4).............................. 12,934 17,613 15,566 3,597 3,996
---------- ---------- ---------- -------- --------
Income before income
taxes................. 73,966 61,859 64,177 12,446 10,461
Provision for income taxes (note
7).............................. 28,874 23,844 24,597 4,874 4,155
---------- ---------- ---------- -------- --------
Net income.............. $ 45,092 $ 38,015 $ 39,580 $ 7,572 $ 6,306
========== ========== ========== ======== ========
</TABLE>
See accompanying notes to financial statements.
F-19
<PAGE> 131
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
STATEMENTS OF DIVISIONAL EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Divisional equity at December 29, 1993......................................... $100,146
Transfers to Advances from Parent and affiliates, net (note 4)................. (59,531)
Net income..................................................................... 45,092
--------
Divisional equity at December 28, 1994......................................... 85,707
Transfers to Advances from Parent and affiliates, net (note 4)................. (35,143)
Net income..................................................................... 38,015
--------
Divisional equity at December 27, 1995......................................... 88,579
Transfers to Advances from Parent and affiliates, net (note 4)................. (34,754)
Net income..................................................................... 39,580
--------
Divisional equity at December 25, 1996......................................... 93,405
Transfers to Advances from Parent and affiliates, net (note 4)(unaudited)...... (9,770)
Net income (unaudited)......................................................... 6,306
--------
Divisional equity at March 19, 1997 (unaudited)................................ $ 89,941
========
</TABLE>
See accompanying notes to financial statements.
F-20
<PAGE> 132
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED
------------------------------------------
TWELVE WEEKS ENDED
DECEMBER 28, DECEMBER 27, DECEMBER 25, ---------------------
1994 1995 1996
------------ ------------ ------------ MARCH 20, MARCH 19,
(53 WEEKS) (52 WEEKS) (52 WEEKS) 1996 1997
--------- ---------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows -- operating activities:
Net income.............................. $ 45,092 $ 38,015 $ 39,580 $ 7,572 $ 6,306
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 17,053 18,764 19,830 4,705 4,906
Loss on sale of property and
equipment.......................... 1,788 2,324 1,065 -- --
Deferred income taxes................ (6,800) (3,075) (1,100) 408 (567)
Change in assets and liabilities:
Receivables........................ (22,614) (22,051) 41,448 15,765 (3,902)
Inventories........................ 4,839 (5,046) 7,349 4,091 (1,388)
Accounts payable................... 9,524 (2,347) (26,084) (12,400) 7,077
Accrued liabilities................ 13,105 (4,672) 216 (12,251) (10,290)
Other.............................. 2,730 7,668 (3,867) (3,978) (2,857)
------- ------- ------- ------- -------
Net cash provided by (used in)
operating activities.......... 64,717 29,580 78,437 3,912 (715)
------- ------- ------- ------- -------
Cash flows -- investing activities:
Additions to property and equipment..... (21,310) (25,245) (28,771) (7,193) (6,212)
Proceeds from sale of property and
equipment............................ 1,047 857 1,210 1,481 76
------- ------- ------- ------- -------
Net cash used for investing
activities.................... (20,263) (24,388) (27,561) (5,712) (6,136)
------- ------- ------- ------- -------
Cash flows -- financing
activities -- (repayment of)/additions
to advances from Parent and affiliates,
net..................................... (44,360) (5,163) (49,454) 2,136 5,402
------- ------- ------- ------- -------
Net increase (decrease) in cash......... 94 29 1,422 336 (1,449)
Cash at beginning of period............. 80 174 203 203 1,625
------- ------- ------- ------- -------
Cash at end of period................... $ 174 $ 203 $ 1,625 $ 539 $ 176
======= ======= ======= ======= =======
</TABLE>
During 1994, 1995, and 1996 PFS made the following transfers to Parent
through the intercompany account:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
State income tax.............................. $ 4,135 $ 3,808 $ 3,475
======= ======= =======
Federal income tax............................ $18,876 $19,887 $18,800
======= ======= =======
Interest on advances.......................... $12,994 $17,613 $15,566
======= ======= =======
Divisional equity reclassifications........... $59,531 $35,143 $34,754
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
F-21
<PAGE> 133
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 27, 1995 AND DECEMBER 25, 1996
(IN THOUSANDS)
(1) GENERAL AND BASIS OF PRESENTATION
PFS (A Division of PepsiCo, Inc. Held for Sale) ("PFS") operates as a
division of PepsiCo, Inc. ("Parent") and has no separate legal status or
existence. In January 1997, the Parent announced its intent to spin off its
restaurant business. Concurrent with this announcement, the Parent also
announced that it would explore the possible sale of PFS. The accompanying
financial statements present the business of PFS which is being held for sale.
Accordingly, they include only the assets, liabilities and results of operations
of the PFS business to be sold. The principal nature of this business is to
provide food, equipment, and supply items primarily to Taco Bell, Pizza Hut and
KFC restaurants, which restaurants are either owned or franchised by the Parent
in both the United States and Canada. The Division also has other transactions
with the Parent and affiliates of the Parent ("Affiliates") (notes 4, 5, 7, 8
and 9). PFS' fiscal year ends on the last Wednesday in December and, as a
result, a fifty-third week is added every five or six years. The fiscal year
ended December 28, 1994 consisted of 53 weeks.
The financial statements of the Company as of March 19, 1997 and for the
periods ended March 20, 1996 and March 19, 1997 are unaudited, but in the
opinion of management reflect all adjustments (consisting only of normal
recurring accruals) which are necessary for a fair statement of the results of
the interim periods presented. Results for interim periods are not necessarily
indicative of the results to be expected for a full year or for periods which
have been previously reported.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Inventories
Inventories are valued at the lower of cost, as determined by the first-in,
first-out ("FIFO") method, or net realizable value.
(b) Income Taxes
PFS is included in the consolidated federal income tax return of the
Parent. For financial reporting purposes, federal income taxes are computed on a
separate return basis. State income taxes are computed at a composite rate (6.3%
in 1994 and 5.8% in 1995 and 1996) based upon actual taxes incurred by the
Parent on behalf of the Division.
PFS accounts for income taxes using the asset and liability method. Under
the asset and liability method of accounting for income taxes, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
(c) Property and Equipment
Property and equipment are stated at cost less accumulated depreciation.
Depreciation and amortization are calculated on a straight-line basis over the
estimated useful lives of the assets, generally 3 to 10 years.
F-22
<PAGE> 134
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(d) Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(3) PROPERTY AND EQUIPMENT
Property and equipment at December 27, 1995 and December 25, 1996 is
summarized as follows:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Land................................................... $ 756 $ 756
Transportation equipment............................... 81,741 87,039
Warehouse and office equipment......................... 33,654 38,916
Buildings and leasehold improvements .................. 38,490 46,651
Construction in progress............................... 2,656 2,937
Leased computer and material handling equipment........ 5,712 5,750
-------- --------
163,009 182,049
Less accumulated depreciation and amortization......... 82,658 95,032
-------- --------
$ 80,351 $ 87,017
======== ========
</TABLE>
(4) RELATED PARTY TRANSACTIONS
Transactions with the Parent include utilization of cash management
services under which net cash balances of PFS are transferred to or provided by
the Parent daily. In addition, the Parent provides payments under its incentive
compensation plans to certain key employees of PFS.
The Parent provides certain corporate general and administrative services
to PFS, including legal, treasury and benefits administration, among others. The
Company believes the inclusion of the costs of these services would not have a
material impact on the accompanying financial statements.
In 1994, 1995 and 1996, respectively, approximately 29%, 28% and 27% of the
gross sales of PFS were to restaurants owned by Pizza Hut, Inc., 31%, 31% and
28% of gross sales were to restaurants owned by Taco Bell Corp., and 13%, 11%
and 12% of gross sales were to restaurants owned by KFC Corporation.
PFS and the Parent have agreed to reclassify amounts between advances and
divisional equity in order to maintain a preestablished debt to equity ratio, as
defined, as part of the agreements between PFS and Pizza Hut, Inc. and its
franchisees.
Advances from Parent and Affiliates bear interest at the prime rate (8.25%
at December 25, 1996) and are not subject to stated repayment terms.
Accordingly, such advances are classified as current liabilities in the
accompanying balance sheets. The carrying amount of Advances from the Parent and
Affiliates at December 27, 1995 and December 25, 1996 approximates the fair
value since the borrowings bear interest at current market rates.
(5) PROFIT LIMITATION
"Gross profit" and "net pretax profit" on certain sales of PFS to Pizza Hut
restaurants, as defined in the agreements with Pizza Hut, Inc. and its
franchisees, are limited to amounts not to exceed 14% and 2.5% of
F-23
<PAGE> 135
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
sales, respectively. Such limitations apply only to sales of food, paper
products, and similar restaurant supplies and exclude other nonfood items such
as furnishings, interior and exterior decor items, and equipment. As a result of
the profit limitation, sales are reported net of $3,039, $4,449 and $5,249 in
1994, 1995 and 1996, respectively, for distributions to Pizza Hut, Inc. and its
franchisees.
(6) LEASE COMMITMENTS
PFS occupies warehouse and office facilities under noncancellable operating
lease agreements expiring at various dates through 2006. Most of the leases
contain renewal options for periods ranging from one to five years, with rentals
generally equal to those stated for the initial term of the lease.
PFS also rents transportation equipment under operating leases which
provide for both short-term and long-term rentals.
Rental expense for the years ended December 28, 1994, December 27, 1995 and
December 25, 1996 is summarized as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Transportation equipment:
Fixed rentals............................... $ 336 $ 409 $ 442
Variable rentals............................ 2,173 1,776 1,059
Warehouse and office space.................... 8,110 8,531 10,252
Equipment..................................... 3,993 2,773 2,947
------- ------- -------
$14,612 $13,489 $14,700
======= ======= =======
</TABLE>
The future minimum rental commitments as of December 25, 1996 for all
noncancellable operating transportation, warehouse, office, and other equipment
leases are as follows:
<TABLE>
<S> <C>
1997............................................... $10,783
1998............................................... 9,493
1999............................................... 8,110
2000............................................... 6,986
2001............................................... 7,020
Thereafter......................................... 17,027
-------
$59,419
=======
</TABLE>
PFS leases computer equipment and material handling equipment under capital
lease arrangements. The minimum lease payments as of December 25, 1996 for the
remainder of the lease periods are as follows:
<TABLE>
<S> <C>
1997.................................................. $692
1998.................................................. 118
----
Total minimum lease payments.......................... 810
Less amount representing interest..................... 22
----
Present value of net minimum lease payments........... 788
Less current obligations.............................. 673
----
Long-term obligations................................. $115
====
</TABLE>
F-24
<PAGE> 136
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Included in property and equipment as of December 25, 1996 are assets
recorded under capital leases as follows:
<TABLE>
<S> <C>
Computer and material handling equipment............ $5,750
Less accumulated amortization....................... 5,114
------
$ 636
======
</TABLE>
(7) INCOME TAXES
The provision for income taxes is comprised of the following:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Current:
Federal..................................... $29,875 $24,227 $23,127
State....................................... 5,799 2,692 2,570
Deferred:
Federal..................................... (5,780) (2,639) (846)
State....................................... (1,020) (436) (254)
------- ------- -------
$28,874 $23,844 $24,597
======= ======= =======
</TABLE>
The differences between the statutory and effective federal income tax
rates are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Statutory federal rate.................................. 35% 35% 35%
State income tax, net of federal benefit................ 4 4 4
Effective rate........................................ 39% 39% 39%
== == ==
</TABLE>
Federal income taxes currently payable to the Parent of $35,714 at December
27, 1995 and $36,441 at December 25, 1996 are included in accrued liabilities in
the accompanying balance sheets.
The primary components of deferred taxes result from accelerated
depreciation methods, bad debt provisions and the deferral of certain expenses
related to postretirement benefits for tax purposes.
(8) RETIREMENT PLANS
PFS participates in two defined benefit noncontributory pension plans for
salaried and nonsalaried employees (the "Plans") which are administered directly
or indirectly by the Parent. Substantially all employees of the Division are
covered by these Plans.
Generally, benefits for salaried and nonsalaried employees are based on
years of service and the employees' highest consecutive five-year average annual
earnings. The Parent funds the Plans in amounts not less than the minimum
statutory funding requirements nor more than the maximum amount which can be
deducted for federal income tax purposes by the Parent. The Plans' assets
consist principally of equity securities, government and corporate debt
securities, and other fixed income obligations. Capital stock of the Parent
accounted for approximately 24% and 22% of the total market value of the
domestic Parent sponsored Plans' assets for 1995 and 1996.
PFS was charged pension expense of $1,211, $1,174 and $2,374 in 1994, 1995
and 1996, respectively.
F-25
<PAGE> 137
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(9) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
PFS participates in a postretirement benefit plan administered by the
Parent. The plan provides postretirement health care and life insurance benefits
to eligible retired U.S. employees. Employees who have 10 years of service and
attain age 55 while in service with the Division are eligible to participate in
the postretirement benefit plan. The plan in effect through 1994 was largely
noncontributory and was not funded. PFS accrues the cost of postretirement
benefits over the years employees provide services to the date of their full
eligibility for such benefits.
Postretirement benefit expense amounted to $919, $481 and $1,047 in 1994,
1995 and 1996, respectively. The liability for postretirement benefits of $8,967
at December 25, 1995 and $9,962 at December 27, 1996 is included in other
liabilities and deferred credits in the accompanying balance sheets.
Effective in 1994, certain features of the plan were amended to expand
retiree cost-sharing provisions and limit the Division's share of future
increases in health care costs.
F-26
<PAGE> 138
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors
AmeriServ Food Company
We have audited the accompanying consolidated statements of operations,
stockholders' equity, and cash flows of AmeriServ Food Company (the Company) for
the years ended December 31, 1994 and December 30, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of the Company for the years ended December 31, 1994 and December 30, 1995, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Dallas, Texas
March 22, 1996
F-27
<PAGE> 139
AMERISERV FOOD COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------
DECEMBER 31, DECEMBER 30,
1994 1995
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Net sales............................................................ $873,309 $939,096
Operating expenses:
Cost of sales, including delivery and warehouse expenses........... 841,408 907,597
Selling, general, and administrative............................... 19,314 20,209
Depreciation....................................................... 2,778 2,768
Amortization of goodwill and covenants not to compete.............. 888 677
Losses of divested operations...................................... 313 --
-------- --------
Total operating expenses............................................. 864,701 931,251
-------- --------
Income from operations............................................... 8,608 7,845
Other expense:
Interest expense................................................... 6,442 7,465
Interest expense, related parties.................................. 226 216
Amortization of financing costs.................................... 236 302
Other expense, net................................................. 28 1,472
-------- --------
Income (loss) before minority interest............................... 1,676 (1,610)
Minority interest.................................................... 4 (2)
-------- --------
Income (loss) before income taxes.................................... 1,680 (1,612)
Income tax provision................................................. 108 270
-------- --------
Income (loss) before extraordinary items............................. 1,572 (1,882)
Extraordinary gain on early extinguishment of debt................... 312 --
-------- --------
Net income (loss).................................................... $ 1,884 $ (1,882)
======== ========
</TABLE>
See accompanying notes.
F-28
<PAGE> 140
AMERISERV FOOD COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
COMMON ADDITIONAL
STOCK PAID-IN ACCUMULATED
PAR VALUE CAPITAL DEFICIT TOTAL
--------- ---------- ----------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at January 1, 1994...................... $ 25 $ 8,742 $ (17,032) $(8,265)
Contribution of dividend promissory notes and
accrued interest to equity................. -- 5,678 -- 5,678
Accretion of redemption value of Series A
Redeemable Preferred Stock................. -- -- (1,125) (1,125)
Net income.................................... -- -- 1,884 1,884
---- ------- -------- -------
Balance at December 31, 1994.................... 25 14,420 (16,273) (1,828)
One for ten reverse stock split............... (22) 22 -- --
Accretion of redemption value of Series A
Redeemable Preferred Stock................. -- -- (675) (675)
Net loss...................................... -- -- (1,882) (1,882)
---- ------- -------- -------
Balance at December 30, 1995.................... $ 3 $ 14,442 $ (18,830) $(4,385)
==== ======= ======== =======
</TABLE>
See accompanying notes.
F-29
<PAGE> 141
AMERISERV FOOD COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------
DECEMBER 31, DECEMBER 30,
1994 1995
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss).................................................... $ 1,884 $ (1,882)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation....................................................... 2,778 2,768
Amortization of goodwill and covenants not to compete.............. 888 677
Amortization of financing costs.................................... 236 302
Other non-cash expenses............................................ -- 1,079
Deferred income tax provision...................................... (347) 45
Provision for doubtful accounts.................................... 410 181
Minority interest.................................................. (4) 2
Extraordinary gain................................................. (312) --
Changes in operating assets and liabilities:
Accounts and other receivables.................................. (3,116) (664)
Inventories..................................................... (5,929) (2,880)
Prepaid expenses and other...................................... (1,272) (730)
Accounts payable................................................ 10,143 7,228
Accrued liabilities............................................. 67 (844)
--------- ---------
Net cash provided by operating activities............................ 5,426 5,282
--------- ---------
INVESTING ACTIVITIES
Acquisitions of businesses........................................... (1,625) --
Capital expenditures for property, plant, and equipment.............. (1,263) (3,030)
Proceeds from sale of property, plant, and equipment................. 71 112
Other................................................................ 190 (229)
--------- ---------
Net cash used in investing activities................................ (2,627) (3,147)
--------- ---------
FINANCING ACTIVITIES
Borrowings under line of credit agreements........................... 929,724 960,744
Repayments under line of credit agreements........................... (933,505) (958,785)
Proceeds from long-term debt......................................... 5,896 --
Repayments of long-term debt......................................... (6,855) (3,617)
Maturity of certificates of deposit.................................. 1,620 --
Proceeds from issuance of Series A Redeemable Preferred Stock........ 2,000 --
Other................................................................ (1,335) (490)
--------- ---------
Net cash used in financing activities................................ (2,455) (2,148)
--------- ---------
Net increase (decrease) in cash...................................... 344 (13)
Cash at beginning of year............................................ 502 846
--------- ---------
Cash at end of year.................................................. $ 846 $ 833
========= =========
Supplemental disclosure of cash flow information -- Cash paid for
interest........................................................... $ 6,526 $ 7,097
</TABLE>
See accompanying notes.
F-30
<PAGE> 142
AMERISERV FOOD COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 1994 AND DECEMBER 30, 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Disposition
AmeriServ Food Company (the Company or AmeriServ) was formed in September
1989 and was majority owned by J. Lewis Partners, L.P. (Lewis Partners). On
January 26, 1996, all of the Company's outstanding stock (common and preferred)
was acquired by AmeriServe Food Distribution, Inc. (formerly NEBCO EVANS
Distribution, Inc.) (NEBCO). In conjunction with the acquisition, the Company's
revolving line of credit, its term notes payable to five co-lenders, and its
note to Signal Capital Corporation were paid off. The Company continues to
operate as a wholly-owned subsidiary of NEBCO with NEBCO providing any working
capital needed for the Company's operations.
The consolidated financial statements of the Company include the accounts
of the Company and the following subsidiaries:
<TABLE>
<CAPTION>
SUBSIDIARY OWNERSHIP
-------------------------------------------------- ---------
<S> <C>
Post Holding Company and subsidiary (Post)........ 50%
Delta Transportation, Ltd. (Delta)................ 100%
</TABLE>
The Company was formed through a series of acquisitions. Interstate
Distributors, Inc. (IDI), and The
Sonneveldt Company (Sonneveldt) represent holding companies formed for the
purpose of acquiring the respective operating subsidiaries. Lewis Partners
acquired a 70% ownership interest in Sonneveldt and an 81% ownership interest in
IDI on December 19, 1988, and August 1, 1989, respectively. In 1989, Lewis
Partners transferred its ownership interests in these two entities to the
Company in exchange for shares of the Company's common stock. Concurrent with
the transfer of Lewis Partners' ownership interests in the subsidiaries to the
Company, the Company acquired the remaining 30% minority interest in Sonneveldt
by exchanging shares of the Company's common stock for the minority interest
holders' shares of Sonneveldt. The Company acquired Post Holding Company (Post)
in 1989, First Choice Food Distributors, Inc. (FCF), in 1990, Alpha
Distributors, Ltd., Delta Transportation, Ltd., and Omega Distributions
Services, Ltd. (collectively Alpha), and Food Service Systems (FSS) in 1991. The
Company merged FSS into IDI in December 1992.
On January 11, 1994, the Company completed a series of transactions
including a private equity offering, a corporate restructuring, and a
refinancing of the majority of the Company's debt. As a part of these
transactions, the Company purchased the 19% minority interest in IDI, and
simultaneously merged all of its subsidiaries into AmeriServ, except Post and
Delta Transportation, Ltd. (Delta), which were not merged for regulatory
reasons.
Nature of Operations
The Company, through its divisions and subsidiaries, is a system
foodservice distributor specializing in distribution to chain restaurants. The
Company distributes a wide variety of items, including fresh and frozen meat and
poultry, frozen foods, canned and dry goods, fresh and pre-processed produce,
beverages, dairy products, paper goods, cleaning and other supplies and small
equipment.
At December 30, 1995, the Company served approximately 4,300 restaurant
locations within 38 different restaurant chains (or "concepts") in 38 states,
Mexico and the Caribbean from 14 distribution centers in the United States.
F-31
<PAGE> 143
AMERISERV FOOD COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries. Upon consolidation, all intercompany accounts,
transactions, and profits have been eliminated.
Fiscal Year
The Company's fiscal year is the 52- or 53-week period ending on the
Saturday closest to December 31. The fiscal years ended December 31, 1994
(fiscal 1994) and December 30, 1995 (fiscal 1995) are 52-week periods.
Inventories
Merchandise inventories are valued at the lower of cost (first-in,
first-out method) or market.
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost. Depreciation is computed
over the estimated useful lives of the assets, using either the straight-line or
double-declining balance method. Amortization of leasehold improvements is
recorded over the respective lease terms or useful lives, whichever are shorter;
and assets recorded under capital leases are amortized over the respective lease
terms. Amortization of capital leases is included in depreciation expense.
Useful lives for amortization and depreciation calculations are as follows:
<TABLE>
<S> <C>
Buildings and improvements..................... 5 - 40 years
Delivery and automotive equipment.............. 5 - 9 years
Warehouse equipment............................ 5 - 12 years
Furniture, fixtures, and equipment............. 5 - 10 years
</TABLE>
Other Assets
Goodwill represents the excess of the purchase prices over the fair values
of net assets of acquired businesses and is amortized over 40 years using the
straight-line method. On January 11, 1994, the Company purchased the remaining
minority interest in IDI resulting in additional goodwill of $1,160. The
carrying value of goodwill is reviewed if the facts and circumstances suggest it
may be impaired. If this review indicates that goodwill may not be recoverable,
as determined based on the estimated future undiscounted cash flows of the
entity acquired over the remaining amortization period, the Company's carrying
value of the goodwill is reduced by the estimated shortfall.
The costs of covenants not to compete, incurred in connection with
acquisitions, are being amortized over the lives of the respective covenants
(three to five years) using the straight-line method. Deferred financing costs
are being amortized over the terms of the respective agreements, generally three
to five years, using the straight-line method, which does not differ
significantly from the interest method.
Federal Income Taxes
The Company and its subsidiaries (excluding Post) file a consolidated
federal income tax return. Under federal tax regulations, Post is required to
file a separate consolidated federal income tax return.
F-32
<PAGE> 144
AMERISERV FOOD COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Losses of Divested Operations
In fiscal 1994, the Company incurred losses of $313, consisting of costs
incurred to close the two remaining FSS distribution facilities. The majority of
these expenses were related to operating, legal, severance, and shut-down costs
associated with the decision to close these facilities. The closing and
divesting of these operations was deemed necessary due to continued operating
losses with respect to these two facilities.
Other Expenses, Net
In fiscal 1995, other expense, net, of $1,472 in the consolidated statement
of operations, included expenses of $827 related to an attempted public offering
of the Company's common stock, and an accrual of $600 representing payments due
under contract to two former owners of a company acquired by AmeriServ in 1988.
As the two former owners are no longer involved in the business, these amounts
have been written off.
2. LEASES
The Company leases warehouse facilities and certain transportation
equipment under operating leases expiring at various dates through 1999. Minimum
annual rental commitments under noncancelable operating leases are as follows at
December 30, 1995:
<TABLE>
<S> <C>
1996............................................. $ 8,233
1997............................................. 7,509
1998............................................. 6,604
1999............................................. 5,134
2000............................................. 3,700
Thereafter....................................... 5,887
-------
$37,067
=======
</TABLE>
Rent expense for fiscal 1994 and 1995 was approximately $9,363 and $11,243,
respectively. Under certain truck leases, various subsidiaries of the Company
are obligated to pay contingent rentals based on miles driven each period.
The Madison, Wisconsin, warehouse facility lease grants the Company an
option to purchase the warehouse facility at any time during the initial or
extended lease terms for $6,000. Additionally, the lease grants the lessors a
put option to require the Company to purchase the warehouse facility for $6,000
should the Company either default on future monthly rental payments or fail to
exercise, or not be entitled under the terms of the lease to exercise, any of
its options to extend the initial 10-year term of the lease.
The Company leases operating facilities and certain delivery and warehouse
equipment under capital lease agreements. The leases are for various terms
through 2002, with interest payable at rates ranging from 10 to 12.75%. The
facilities are leased from a partnership, which is partially owned by
stockholders of the Company. Payments representing principal on the facility
leases totaled $133 and $150 in fiscal 1994 and 1995, respectively. The Company
is required to pay real estate and other occupancy costs under the leases.
3. STOCK COMPENSATION PLAN
In 1991, the Company adopted a Stock Compensation Plan (the Plan), which
became effective on December 31, 1991. The Plan covers the issuance of incentive
and nonqualified stock options and restricted stock grants to directors and key
employees of the Company and its subsidiaries. The Plan is administered by a
committee (the Committee) appointed by the Company's Board of Directors. The
Committee generally has the authority to fix the terms and numbers of options to
be granted and to determine the employees or other parties who will receive the
options and the grants. The number of shares that may be issued under the Plan
F-33
<PAGE> 145
AMERISERV FOOD COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
shall not exceed 56. Incentive stock options granted by the Committee shall
expire on the date determined by the Committee, but in no event shall any
incentive stock option expire later than 10 years after the grant date. The
exercise price per share for shares issued pursuant to the exercise of incentive
stock options shall not be less than the fair market value of common stock at
the time of the grant of the option. All options granted will expire between
January 1, 2002, and January 11, 2004.
Common share stock options outstanding at December 31, 1994, and December
30, 1995, are as follows adjusted for a 1 for 10 reverse stock split effective
September 1, 1995 (in thousands except per share data):
<TABLE>
<CAPTION>
NUMBER OF PRICE PER OPTIONS
SHARES SHARE EXERCISABLE
--------- --------------- -----------
<S> <C> <C> <C>
Outstanding at December 31, 1994................ 23 $53.33 -- $93.33 23
Outstanding at December 30, 1995................ 24 $53.33 -- $93.33 24
</TABLE>
4. INCOME TAXES
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------
DECEMBER 31, DECEMBER 30,
1994 1995
------------ ------------
<S> <C> <C>
Current:
Federal.................................................... $ 72 $ --
State...................................................... 383 289
---- ----
Total current................................................ 455 289
Deferred
Federal.................................................... (347) (19)
---- ----
Total deferred............................................... (347) (19)
---- ----
$108 $270
==== ====
</TABLE>
A reconciliation of the Company's income tax provision calculated at
federal statutory rates to the provision for income taxes reported is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------
DECEMBER 31, DECEMBER 30,
1994 1995
------------ ------------
<S> <C> <C>
Federal statutory tax rate (34%) applied to income
(loss) before taxes........................................ $571 $ (548)
Net operating losses not benefited........................... -- 267
Benefit of net operating loss carryovers..................... (827) --
AMT credit not benefited..................................... 72 --
State income taxes........................................... 383 289
Tax return settlements....................................... (347) --
Amortization of goodwill..................................... 124 124
Meals and entertainment...................................... 97 119
Other........................................................ 35 19
---- -----
$108 $ 270
==== =====
</TABLE>
At December 30, 1995, the Company has consolidated net operating loss
carryforwards of $8,707 for federal income tax purposes that expire in years
2004 through 2009. Additionally, at December 30, 1995, Post
F-34
<PAGE> 146
AMERISERV FOOD COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
has net operating loss carryforwards of $1,360, which are available to offset
Post's separate taxable income. The Company establishes a valuation allowance
for its deferred tax assets until, based on available evidence, it is more
likely than not that a portion or all of the deferred tax assets will be
realized.
Section 382 of the 1986 Internal Revenue Code provides for limitations on
the utilization of net operating loss carryovers subsequent to certain ownership
changes. If the Company experiences an ownership change, as defined under
Section 382, the availability of its net operating loss carryovers may be
limited.
5. OTHER RELATED PARTY TRANSACTIONS
The Company and its subsidiaries incurred monitoring and acquisition fees
of $415 to Lewis Partners for management advisory, investment banking, and
acquisition services during both fiscal 1994 and 1995.
6. CAPITAL STOCK
Effective November 10, 1994, the Board of Directors approved a
three-for-four reverse stock split and effective September 1, 1995, the Board of
Directors approved a one-for-ten reverse stock split. All references to stock
related data has been restated to reflect the effect of the splits.
The Board of Directors of the Company is authorized, without action by the
stockholders, to divide authorized preferred stock into one or more series and
to fix, for each series, the number of shares, powers, designations,
preferences, relative rights, qualifications, limitations, and restrictions. The
Company is authorized to issue 500 shares of Preferred Stock with a par value of
$0.01. The Company issued 45 shares of $.01 par value non-voting preferred
shares designated as Series A Redeemable Preferred Stock for $4,500. The
Preferred Stock is convertible into shares of common stock at a rate of 2.5
shares of common for each share of Series A Redeemable Preferred Stock. The
holders of shares of Series A Redeemable Preferred Stock are entitled to receive
dividends as declared by the Board of Directors from time to time. The Series A
Redeemable Preferred Stock is redeemable in whole at any time or from time to
time in part, at the option of the Company, at a redemption price of $125.00 per
share, with such redemption price increasing by 12% per year commencing on
January 1, 1995, and being increased by a per share amount equal to any then
declared but unpaid dividends. The redemption of the Series A Redeemable
Preferred Stock is mandatory on December 31, 2003, or earlier in the event of an
initial public offering, sale of the Company or merger, consolidation, or other
form of business combination in which the Company is not the surviving entity.
In the event of any form of liquidation of the Company, the holders of the
Series A Redeemable Preferred Stock hold preference over all other forms of
capital stock at an amount equal to $100.00 per share with the amount increasing
by 12% per year compounded annually. Commencing on January 1, 1995, this amount
is further increased by a per share amount equal to any then declared but unpaid
dividends.
Under the terms of an agreement with two of the Company's stockholders, the
Company must obtain an affirmative vote by at least one of the directors, if
any, nominated by each of the two stockholders and Lewis Partners, prior to the
consummation of any of the following events: (i) the issuance by the Company or
any subsidiary of any shares of its capital stock or other equity securities or
options, rights, or warrants; (ii) a transfer, as defined, by the Company of any
of the shares of capital stock of Post currently owned by it; (iii) the approval
of any amendments to the Certificate of Incorporation of the Company or its
subsidiaries; (iv) the merger, consolidation, liquidation, or dissolution of the
Company or any of its subsidiaries or the sale or other disposition of all, or
substantially all, of the assets of the Company or its subsidiaries; (v) the
declaration or payment of any dividend on or distribution to holders of the
common equity stock of the Company or any subsidiary that is not wholly owned by
the Company; or (vi) the amendment, modification, supplementation, or
termination of various agreements currently in effect or hereinafter to be
executed by the stockholders.
F-35
<PAGE> 147
AMERISERV FOOD COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In connection with the acquisition of Sonneveldt and the related financing
obtained, a warrant was issued to Signal Capital Corporation to purchase 25% of
the common stock of the Company's former subsidiary for an aggregate exercise
price of $0.25. The warrant was exercisable upon issuance. As a part of the
refinancing and restructuring completed January 11, 1994 (Note 9), the warrant
was purchased by the Company for $100.
7. CONCENTRATIONS OF CREDIT RISK
The Company and its subsidiaries perform periodic credit evaluations of its
customers' financial conditions and generally do not require collateral.
Franchiser-owned and franchisee-owned stores of three national limited-menu
concepts accounted for approximately 40%, 10%, and 10% in 1994 and 40%, 11%, and
10% in fiscal 1995 of the Company's consolidated revenues. One customer
represented approximately 15% and 14% of consolidated revenues for fiscal 1994
and 1995, respectively.
8. EMPLOYEE BENEFIT PLANS
The Company and its subsidiaries have two benefit plans, the AmeriServ
401(k) Savings Plan and The Sonneveldt Company 401(k) Plan. The AmeriServ 401(k)
Plan covers all hourly and salaried employees of AmeriServ and its subsidiaries,
except those covered in The Sonneveldt Plan. The Sonneveldt Company 401(k) Plan
covers all hourly warehouse and transportation employees of a former subsidiary,
The Sonneveldt Company. Under the plans, participants may elect to defer up to
15% of compensation, and the Company matches a portion of the participant's
salary deferral, up to plan-specified maximums. The Company's contributions to
the plans totaled $389 and $323 in fiscal 1994 and 1995, respectively.
9. REFINANCING
On January 11, 1994, the Company entered into a series of transactions that
resulted in capital contributions of $10,178, the refinancing of a majority of
the Company's debt, and the restructuring of the Company's corporate
organization.
The Company issued 45 shares of Series A Redeemable Preferred Stock for
$4,500 (Note 6). The consideration for these shares was a combination of cash
and the contribution of the Company's $2,500 promissory note payable to Lewis
Partners. Additionally, the stockholders of the Company, as a group, contributed
the $5,000 balance of the dividend promissory notes, together with accrued
interest of $678 thereon, to the Company in the form of additional paid-in
capital.
In fiscal 1994, the Company recognized a $313 extraordinary gain as a
result of the refinancing of its revolving credit notes payable and certain term
notes payable. The Company purchased the warrants in a subsidiary from one
lender for less than book value, generating a $275 gain, prepaid a note
obtaining a $263 discount in exchange for early extinguishment, and repaid
several issues of debt before the due date resulting in $225 in prepayment
penalties.
The corporate structure of the Company was also simplified with the merger
of all the Company's subsidiaries, except Post and Delta, into the Company. The
mergers were also consummated on January 11, 1994.
F-36
<PAGE> 148
=========================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE INITIAL PURCHASERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................... 3
The Company............................. 3
Risk Factors............................ 13
The Exchange Offer...................... 19
Certain Federal Income Tax Consequences
of the Exchange Offer................. 26
The Transactions........................ 26
Use of Proceeds......................... 28
Capitalization.......................... 29
Selected AmeriServe Historical Financial
Data.................................. 30
Selected PFS Historical Financial
Data.................................. 31
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 32
The Business............................ 38
The Acquisition......................... 48
Management.............................. 49
Security Ownership of Certain Beneficial
Holders and Management................ 54
Certain Relationships and Related Party
Transactions.......................... 55
Description of Indebtedness............. 57
Description of New Notes................ 60
Description of Certain Federal Income
Tax Consequences...................... 90
Plan of Distribution.................... 94
Legal Matters........................... 95
Experts................................. 95
Change in Company's Accountant.......... 96
Index of Certain Defined Terms.......... 97
Index to Unaudited Pro Forma Financial
Statements............................ P-1
Index to Historical Financial
Statements............................ F-1
</TABLE>
---------------------------------------------------------
- ---------------------------------------------------------
=========================================================
$500,000,000
AMERISERVE FOOD
DISTRIBUTION, INC.
OFFER TO EXCHANGE
10 1/8% NEW SENIOR
SUBORDINATED NOTES
DUE 2007
---------------------------------------------------------
- ---------------------------------------------------------
<PAGE> 149
PAGES TO BE USED IN MARKET-MAKING PROSPECTUS
<PAGE> 150
[ALTERNATE COVER FOR MARKET-MAKING PROSPECTUS]
[AMERISERVE LOGO]
AMERISERVE FOOD DISTRIBUTION, INC.
10-1/8% NEW SENIOR SUBORDINATED NOTES DUE 2007
------------------------
The 10 1/8% New Senior Subordinated Notes due 2007 (the "New Senior
Subordinated New Notes" or "New Notes") were issued in exchange for the 10 1/8%
Senior Subordinated Notes due 2007 (the "Senior Subordinated Notes" or "Notes")
by AmeriServe Food Distribution, Inc. (the "Company"), a Nebraska corporation.
The New Notes are guaranteed on a senior subordinated basis by AmeriServ Food
Company, a Delaware corporation and a subsidiary of the Company, AmeriServe
Transportation, Inc., a Nebraska corporation and a subsidiary of the Company,
Chicago Consolidated Corporation, an Illinois corporation and a subsidiary of
the Company, Northland Transportation Services, Inc., a Nebraska corporation and
a subsidiary of the Company, The Harry H. Post Company, a Colorado corporation
and a subsidiary of the Company, and Delta Transportation, Ltd., a Wisconsin
corporation and a subsidiary of the company (the "Subsidiary Guarantors"). See
"Description of New Notes."
The New Senior Subordinated Notes bear interest from July 11, 1997, the
date of issuance of the Senior Subordinated Notes that are tendered in exchange
for the New Senior Subordinated Notes (or the most recent Interest Payment Date
(as defined herein) to which interest on such Notes has been paid), at a rate
equal to 10 1/8% per annum. Interest on the New Senior Subordinated Notes will
be payable semiannually on January 15 and July 15 of each year, commencing
January 15, 1998.
The New Notes are redeemable at the option of the Company, in whole or in
part, at any time on or after July 15, 2002 in cash at the redemption prices set
forth herein, plus accrued and unpaid interest and liquidated damages, if any,
thereon to the date of redemption. Prior to July 15, 2000, up to 33% of the
initially outstanding aggregate principal amount of New Senior Subordinated
Notes will be redeemable at the option of the Company, on one or more occasions,
from the net proceeds of public or private sales of common stock of, or
contributions to the common equity capital of, the Company, at a price of
110.125% of the principal amount of the New Senior Subordinated Notes, together
with accrued and unpaid interest, and liquidated damages, if any, to the date of
redemption; provided that at least 67% of the initially outstanding aggregate
principal amount of New Senior Subordinated Notes remains outstanding
immediately after such redemption. Upon the occurrence of a Change of Control
(as defined herein), each Holder of New Notes may require the Company to
repurchase all or a portion of such Holder's New Notes at 101% of the aggregate
principal amount of the New Senior Subordinated Notes, together with accrued and
unpaid interest, and Liquidated Damages, if any, to the date of repurchase. See
"Risk Factors -- Payment Upon a Change of Control" and "Description of New
Notes -- Repurchase at the Option of Holders."
The New Notes are general, unsecured obligations of the Company, are
subordinated to all Senior Debt and rank senior or pari passu in right of
payment to all existing and future subordinated indebtedness of the Company. The
claims of holders of the New Notes are effectively subordinated to the Senior
Debt, which, as of July 11, 1997, on a pro forma basis, after giving effect to
the Acquisition, the related financing transactions, and other transactions
described herein, would have been approximately $217.5 million, $205.0 million
of which would have been fully secured borrowings under the New Credit Facility.
See "Capitalization."
------------------------
SEE "RISK FACTORS," COMMENCING ON PAGE [ ], FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NEW
NOTES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus is to be used by Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") and BancAmerica Securities, Inc. ("BancAmerica") in
connection with the offers and sales in market-making transactions at negotiated
prices related to prevailing market prices at the time of sale. The Company does
not intend to list the New Notes on any securities exchange or to seek admission
thereof to trading in the National Association of Securities Dealers Automated
Quotation System. DLJ and BancAmerica have advised the Company that they intend
to make a market in the New Notes; however, they are not obligated to do so and
any market-making may be discontinued at any time. The Company will receive no
portion of the proceeds of the sale of the New Notes and will bear expenses
incident to the registration thereof.
DONALDSON, LUFKIN & JENRETTE BANCAMERICA SECURITIES, INC.
SECURITIES CORPORATION
------------------------
The date of this Prospectus is , 1997.
A-1
<PAGE> 151
[ALTERNATE SECTION FOR MARKET-MAKING PROSPECTUS]
No dealer, salesperson or other person has been authorized to give
information or to make any representations not contained in this Prospectus,
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company, DLJ or BancAmerica. This
Prospectus does not constitute an offer to sell or the solicitation of an offer
to buy any security other than the New Notes offered hereby, nor does it
constitute an offer to sell or the solicitation of an offer to buy any of the
New Notes to any person in any jurisdiction in which it is unlawful to make such
an offer or solicitation to such person. Neither the delivery of this Prospectus
nor any sale made hereunder shall under any circumstances create any implication
that the information contained herein is correct as of any date subsequent to
the date hereof.
AVAILABLE INFORMATION
The Company and the Subsidiary Guarantors have filed with the Securities
and Exchange Commission ("SEC") a Registration Statement on Form S-4 under the
Securities Act for the registration of the New Notes offered hereby (the
"Registration Statement"). This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which are contained in exhibits and
schedules to the Registration Statement as permitted by the rules and
regulations of the SEC. For further information with respect to the Company or
the New Notes offered hereby, reference is made to the Registration Statement,
including the exhibits and financial statement schedules thereto, which may be
inspected without charge at the public reference facility maintained by the SEC
at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and copies of
which may be obtained from the SEC at prescribed rates. Statements made in this
Prospectus concerning the contents of any document referred to herein are not
necessarily complete. With respect to each such document filed with the SEC as
an exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference.
Upon the effectiveness of the Registration Statement, the Company became
subject to the information requirements of the Securities Exchange Act of 1934
(the "Exchange Act"), and in accordance therewith will file reports and other
information with the SEC. Such reports and other information filed by the
Company can be inspected and copied at the public reference facilities of the
SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at the Website
(http://www.sec.gov.) maintained by the SEC, and the regional offices of the SEC
located at 7 World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, 14th Floor, Chicago, Illinois 60661.
Copies of such materials may be obtained from the Public Reference Section of
the SEC, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
its public reference facilities in New York, New York and Chicago, Illinois at
prescribed rates.
So long as the Company is subject to the periodic reporting requirements of
the Exchange Act, it is required to furnish the information required to be filed
with the SEC to (i) State Street Bank and Trust Company as trustee (the "Senior
Subordinated Note Trustee"), under the Indenture dated as of July 11, 1997 (the
"Senior Subordinated Note Indenture") among the Company, the Subsidiary
Guarantors and the Senior Subordinated Note Trustee, pursuant to which the
outstanding 10 1/8% Senior Subordinated Notes due 2007 of the Company (the
"Senior Subordinated Notes") were, and the New Senior Subordinated New Notes
will be, issued and (ii) the holders of the Notes and the New Notes. The Company
has agreed that, even if they are not required under the Exchange Act to furnish
such information to the SEC, they will nonetheless continue to furnish
information that would be required to be furnished by the Company by Section 13
of the Exchange Act to the Trustees and the holders of the Notes or New Notes as
if they were subject to such periodic reporting requirements.
In addition, the Company and the Subsidiary Guarantors have agreed that for
so long as any of the Notes remain outstanding, they will make available to any
prospective purchaser of the Notes or Holder of the Notes in connection with any
sale thereof, the information required by Rule 144A(d)(4) under the Securities
Act.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
AMERISERVE FOOD DISTRIBUTION, INC., 17975 WEST SARAH LANE, SUITE 100,
BROOKFIELD, WISCONSIN 53045, (414) 792-9300. IN ORDER TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY AUGUST , 1997.
A-2
<PAGE> 152
[ALTERNATE SECTION FOR MARKET-MAKING PROSPECTUS]
TRADING MARKET FOR THE NEW NOTES
There is no existing trading market for the New Notes, and there can be no
assurance regarding the future development of a market for the New Notes or the
ability of the Holders of the New Notes to sell their New Notes or the price at
which such Holders may be able to sell their New Notes. If such market were to
develop, the New Notes could trade at prices that may be higher or lower than
their initial offering price depending on many factors, including prevailing
interest rates, the Company's operating results and the market for similar
securities. Although they are not obligated to do so, DLJ and BancAmerica intend
to make a market in the New Notes. Any such market-making activity may be
discontinued at any time, for any reason, without notice at the sole discretion
of DLJ and BancAmerica. No assurance can be given as to the liquidity of or the
trading market for the New Notes.
DLJ and BancAmerica may be deemed to be affiliates of the Company and, as
such, may be required to deliver a prospectus in connection with their
market-making activities in the New Notes. Pursuant to the Registration Rights
Agreement, the Company and the Subsidiary Guarantors agreed to use their
respective best efforts to file and maintain a registration statement that would
allow DLJ and BancAmerica to engage in market-making transactions in the New
Notes for up to 120 days from the date on which the Exchange Offer is
consummated. The Company has agreed to bear substantially all the costs and
expenses related to such registration statement.
A-3
<PAGE> 153
[ALTERNATE SECTION FOR MARKET-MAKING PROSPECTUS]
USE OF PROCEEDS
This Prospectus is delivered in connection with the sale of the New Notes
by DLJ and BancAmerica in market-making transactions. The Company will not
receive any of the proceeds from such transactions.
A-4
<PAGE> 154
[ALTERNATE SECTION FOR MARKET-MAKING PROSPECTUS]
PLAN OF DISTRIBUTION
This Prospectus is to be used by DLJ and BancAmerica (the "Initial
Purchasers") in connection with offers and sales of the New Notes in
market-making transactions effected from time to time. The Initial Purchasers
may act as a principal or agent in such transactions, including as agent for the
counterparty when acting as principal or as agent for both counterparties, and
may receive compensation in the form of discounts and commissions, including
from both counterparties when it acts as agent for both. Such sales will be made
at prevailing market prices at the time of sale, at prices related thereto or at
negotiated prices.
DLJMB, an affiliate of DLJ, and certain of its affiliates beneficially own
approximately 36.1% of the common stock of NEHC. Peter T. Grauer, a principal of
DLJ, is a member of the Board of Directors of NEHC and the Company; Benoit
Jamar, a principal of DLJ, became a member of the Board of Directors of NEHC and
the Company as of Closing. Further, DLJ Capital Funding, Inc., an affiliate of
DLJ, is acting as documentation agent in connection with the New Credit Facility
for which it is receiving certain customary fees and expenses. In addition, DLJ
received a merger advisory fee of $4.0 million in cash from the Company after
consummation of the Transactions. DLJ has informed the Company that it does not
intend to confirm sales of the New Notes to any accounts over which it exercises
discretionary authority without the prior specific written approval of such
transactions by the customer.
The Company has been advised by the Initial Purchasers that, subject to
applicable laws and regulations, the Initial Purchasers currently intend to make
a market in the New Notes following completion of the Exchange Offer. However,
the Initial Purchasers are not obligated to do so and any such market-making may
be interrupted or discontinued at any time without notice. In addition, such
market-making activity will be subject to the limits imposed by the Securities
Act and the Exchange Act. There can be no assurance that an active trading
market will develop or be sustained. See "Risk Factors -- Trading Market for the
New Notes."
DLJ has provided investment banking services to the Company in the past and
may provide such services and financial advisory services to the Company in the
future. DLJ acted as purchasers in connection with the initial sale of the Notes
and received an underwriting discount of approximately $12.0 million in
connection therewith. See "Certain Relationships and Related Party
Transactions."
The Initial Purchasers and the Company have entered into the Registration
Rights Agreement with respect to the use by the Initial Purchasers of this
Prospectus. Pursuant to such agreement, the Company agreed to bear all
registration expenses incurred under such agreement, and the Company agreed to
indemnify the Initial Purchasers against certain liabilities, including
liabilities under the Securities Act.
A-5
<PAGE> 155
[ALTERNATE SECTION FOR MARKET-MAKING PROSPECTUS]
=========================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE INITIAL PURCHASERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................
The Company.............................
Risk Factors............................
The Exchange Offer......................
Certain Federal Income Tax Consequences
of the Exchange Offer.................
The Transactions........................
Use of Proceeds.........................
Capitalization..........................
Selected AmeriServe Historical Financial
Data..................................
Selected PFS Historical Financial
Data..................................
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................
The Business............................
The Acquisition.........................
Management..............................
Security Ownership of Certain Beneficial
Holders and Management................
Certain Relationships and Related Party
Transactions..........................
Description of Indebtedness.............
Description of New Notes................
Description of Certain Federal Income
Tax Consequences......................
Plan of Distribution....................
Legal Matters...........................
Experts.................................
Change in Company's Accountant..........
Index of Certain Defined Terms..........
Index to Unaudited Pro Forma Financial
Statements............................ P-1
Index to Historical Financial
Statements............................ F-1
</TABLE>
---------------------------------------------------------
- ---------------------------------------------------------
=========================================================
$500,000,000
AMERISERVE FOOD
DISTRIBUTION, INC.
10 1/8% NEW SENIOR
SUBORDINATED NOTES
DUE 2007
------------------------------
PROSPECTUS
------------------------------
---------------------------------------------------------
- ---------------------------------------------------------
<PAGE> 156
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 103 of the Nebraska Business Corporation Act ("NBCA"), permits
indemnification of directors and officers for judgments, fines, settlements, and
expenses, including attorney's fees, incurred in connection with any threatened,
pending, or completed action, suit, or proceeding other than an action by or in
the right of the Company. This applies to any civil, criminal, investigative or
administrative action provided that the director or officer involved acted in
good faith, in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Indemnification of directors and officers may be also provided for
judgments, fines, settlements, and expenses, including attorney's fees, incurred
in connection with any threatened, pending, or completed action, or suit by or
in the right of the corporation if such director or officer acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation. However, no indemnification shall be made in
respect of any claim, issue or matter in which such person is adjudged to be
liable for negligence or misconduct in the performance of his duties to the
corporation unless the court in which the action is brought deems indemnity
proper.
Under NBCA, Section 107 the grant of indemnification to a director or
officer shall be made by a majority of a quorum of disinterested directors, by a
written opinion from independent legal counsel, or by the shareholders.
Under NBCA, Section 104 indemnification shall be provided to any directors
and officers for expenses, including attorney's fees, actually and reasonably
incurred in the defense of any action, suit or proceeding to the extent that he
or she has been successful on the merits.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<C> <S>
2.1 Purchase Agreement, by and among the Company, the Subsidiary Guarantors, Donaldson,
Lufkin & Jenrette Securities Corporation and BancAmerica Securities dated as of July
9, 1997.
2.2 Asset Purchase Agreement between PepsiCo, Inc. and Nebco Evans Holding Company.
2.3 Sales and Distribution Agreement by and among PFS, Pizza Hut, Inc., Taco Bell Corp.,
Kentucky Fried Chicken Corporation and Kentucky Fried Chicken of California, Inc.*
3.1 Certificate of Incorporation of the Company.
3.2 By-Laws of the Company.
3.3 Certificate of Incorporation of AmeriServ Food Company.
3.4 By-Laws of AmeriServ Food Company.
3.5 Articles of Incorporation of AmeriServe Transportation, Inc.
3.6 By-Laws of AmeriServe Transportation, Inc.
3.7 Articles of Incorporation of Chicago Consolidated Corporation.
3.8 By-Laws of Chicago Consolidated Corporation.
3.9 Articles of Incorporation of Northland Transportation Services, Inc.
3.10 By-Laws of Northland Transportation Services, Inc.
3.11 Articles of Incorporation of The Harry H. Post Company.
3.12 By-Laws of The Harry H. Post Company.
3.13 Articles of Incorporation of Delta Transportation, Ltd.
</TABLE>
II-1
<PAGE> 157
<TABLE>
<C> <S>
3.14 By-Laws of Delta Transportation, Ltd.
4.1 Indenture, dated as of July 11, 1997, by and among the Company, the Subsidiary
Guarantors and State Street Bank and Trust Company, with respect to the New Senior
Subordinated Notes.
4.2 Form of New Senior Subordinated Note.
4.3 Form of New Note Guarantee.
5.1 Opinion of Wachtell, Lipton, Rosen & Katz.*
10.1 Registration Rights Agreement, dated as of July 11, 1997, by and among the Company,
the Subsidiary Guarantors and Donaldson, Lufkin & Jenrette Securities Corporation.
10.2 Second Amended and Restated Credit Agreement, dated as of July 11, 1997 among the
Company, Bank of America National Trust and Savings Association, as Administrative
Agent, Donaldson, Lufkin & Jenrette Securities Corporation, as Documentation Agent,
Bank of America National Trust and Savings Association as Letter of Credit Issuing
Lender, the Other Financial Institutions Party thereto and BancAmerica Securities,
Inc. as Arranger.
10.3 Employment Agreement, dated as of December 23, 1986 between the Company and Raymond
E. Marshall, as amended by Amendment to Employment Agreement, dated as of January 1,
1995.
12.1 Statements re computation of ratios.
16.1 Letter from Deloitte & Touche LLP.
21.1 Subsidiaries of the Company.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Ernst & Young LLP.
23.4 Consent of Wachtell, Lipton, Rosen & Katz (contained in Exhibit 5.1).*
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 of State Street
Bank and Trust Company under the Trust Indenture Act of 1939.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal for the 10 1/8% New Senior Subordinated Notes due 2007.
99.2 Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.
99.3 Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
* To be filed by amendment.
(b) Financial Statement Schedule.
II-2
<PAGE> 158
22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(c) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore unenforceable. In the
event that a claim for indemnification against such liabilities (other than
payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 159
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on August 8, 1997.
AMERISERVE FOOD DISTRIBUTION, INC.
By /s/ RAYMOND E. MARSHALL
------------------------------------
Raymond E. Marshall
President
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, Petter Ostberg and Donald J.
Rogers, and each of them, his attorney-in-fact with power of substitution for
him in any and all capacities, to sign any amendments, supplements, subsequent
registration statements relating to the offering to which this Registration
Statement relates, or other instruments he deems necessary or appropriate, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitute may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on August 8, 1997.
<TABLE>
<CAPTION>
NAME TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ RAYMOND E. MARSHALL President, Treasurer and Director
- ---------------------------------------------
Raymond Marshall
/s/ DANIEL W. CRIPPEN Chief Operating Officer and Director
- ---------------------------------------------
Daniel W. Crippen
/s/ DONALD J. ROGERS Chief Financial Officer and Secretary
- ---------------------------------------------
Donald J. Rogers
/s/ JOHN R. EVANS Director
- ---------------------------------------------
John R. Evans
/s/ JOHN V. HOLTEN Chief Executive Officer and Director
- ---------------------------------------------
John V. Holten
/s/ GUNNAR E. KLINTBERG Director
- ---------------------------------------------
Gunnar E. Klintberg
</TABLE>
II-4
<PAGE> 160
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on August 8, 1997.
AMERISERV FOOD COMPANY.
By /s/ RAYMOND E. MARSHALL
------------------------------------
Raymond E. Marshall
President
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, Petter Ostberg and Donald J.
Rogers, and each of them, his attorney-in-fact with power of substitution for
him in any and all capacities, to sign any amendments, supplements, subsequent
registration statements relating to the offering to which this Registration
Statement relates, or other instruments he deems necessary or appropriate, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitute may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on August 8, 1997.
<TABLE>
<CAPTION>
NAME TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ RAYMOND E. MARSHALL President, Treasurer and Director
- ---------------------------------------------
Raymond E. Marshall
/s/ DONALD J. ROGERS Chief Financial Officer and Secretary
- ---------------------------------------------
Donald J. Rogers
</TABLE>
II-5
<PAGE> 161
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on August 8, 1997.
NORTHLAND TRANSPORTATION SERVICES, INC.
By /s/ RAYMOND E. MARSHALL
------------------------------------------
Raymond E. Marshall
President
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, Petter Ostberg and Donald J.
Rogers, and each of them, his attorney-in-fact with power of substitution for
him in any and all capacities, to sign any amendments, supplements, subsequent
registration statements relating to the offering to which this Registration
Statement relates, or other instruments he deems necessary or appropriate, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitute may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following person in the capacities
and on August 8, 1997.
<TABLE>
<CAPTION>
NAME TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ RAYMOND E. MARSHALL President and Director
- ---------------------------------------------
Raymond E. Marshall
/s/ DONALD J. ROGERS Chief Financial Officer and Secretary
- ---------------------------------------------
Donald J. Rogers
</TABLE>
II-6
<PAGE> 162
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on August 8, 1997.
DELTA TRANSPORTATION, LTD.
By /s/ RAYMOND E. MARSHALL
----------------------------------------
Raymond E. Marshall
President
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, Petter Ostberg and Donald J.
Rogers, and each of them, his attorney-in-fact with power of substitution for
him in any and all capacities, to sign any amendments, supplements, subsequent
registration statements relating to the offering to which this Registration
Statement relates, or other instruments he deems necessary or appropriate, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitute may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following person in the capacities
and on August 8, 1997.
<TABLE>
<CAPTION>
NAME TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ RAYMOND E. MARSHALL President, Treasurer and Director
- ---------------------------------------------
Raymond E. Marshall
</TABLE>
II-7
<PAGE> 163
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on August 8, 1997.
THE HARRY H. POST COMPANY
By /s/ RAYMOND E. MARSHALL
------------------------------------
Raymond E. Marshall
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, Petter Otbserg and Donald J.
Rogers, and each of them, his attorney-in-fact with power of substitution for
him in any and all capacities, to sign any amendments, supplements, subsequent
registration statements relating to the offering to which this Registration
Statement relates, or other instruments he deems necessary or appropriate, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitute may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on August 8, 1997.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------------------ -------------------------------------
<C> <S>
/s/ RAYMOND E. MARSHALL
- ------------------------------------------
Raymond E. Marshall Chief Executive Officer and Director
/s/ DANIEL W. CRIPPEN
- ------------------------------------------
Daniel W. Crippen Director
/s/ JOHN R. EVANS
- ------------------------------------------
John R. Evans Director
/s/ A. PETTER Ostberg
- ------------------------------------------
A. Petter Ostberg Assistant Treasurer & Director
/s/ DONN SCHAIBLE
- ------------------------------------------
Donn Schaible Director
</TABLE>
II-8
<PAGE> 164
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on August 8, 1997.
CHICAGO CONSOLIDATED CORPORATION
By /s/ RAYMOND E. MARSHALL
------------------------------------
Raymond E. Marshall
Vice President and Director
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, Petter Ostberg and Donald J.
Rogers, and each of them, his attorney-in-fact with power of substitution for
him in any and all capacities, to sign any amendments, supplements, subsequent
registration statements relating to the offering to which this Registration
Statement relates, or other instruments he deems necessary or appropriate, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitute may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on August 8, 1997.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------------------ --------------------------------------
<S> <C>
/s/ RAYMOND E. MARSHALL
- ------------------------------------------
Raymond E. Marshall Vice President and Director
/s/ DONALD J. ROGERS
- ------------------------------------------
Donald J. Rogers Chief Financial Officer and Secretary
</TABLE>
II-9
<PAGE> 165
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We have audited the consolidated financial statements of AmeriServe Food
Distribution, Inc. as of December 30, 1995 and December 28, 1996, and for each
of the three years in the period ended December 28, 1996, and have issued our
report thereon dated August 6 1997 (included elsewhere in this Registration
Statement). Our audit also included the financial statement schedule for each of
the three years in the period ended December 28, 1996, listed in Item 21(b) of
this Registration Statement. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
Milwaukee, Wisconsin ERNST & YOUNG LLP
August 6, 1997
II-10
<PAGE> 166
SCHEDULE II
AMERISERVE FOOD DISTRIBUTION, INC.
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-------------------------------
BALANCE CHARGED CHARGED
AT TO TO BALANCE
BEGINNING COSTS AND OTHER ACQUIRED AT END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS BALANCE(2) DEDUCTIONS(1) OF YEAR
- ------------------------------------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1994:
Deducted from asset accounts
Allowance for doubtful
accounts..................... $ 1,142 $ 359 $ -- $ -- $ (61) $ 1,440
====== ====== ====== ====== ====== ======
Reserve for inventory obsolescence .. $ 50 $ 5 $ -- $ -- $ -- $ 55
====== ====== ====== ====== ====== ======
Year ended December 30, 1995:
Deducted from asset accounts
Allowance for doubtful
accounts..................... $ 1,440 $ 134 $ -- $ -- $ (404) $ 1,170
====== ====== ====== ====== ====== ======
Reserve for inventory obsolescence .. $ 55 $ -- $ -- $ -- $ -- $ 55
====== ====== ====== ====== ====== ======
Year ended December 28, 1996:
Deducted from asset accounts
Allowance for doubtful
accounts..................... $ 1,170 $ 1,075 $ -- $ 3,173 $ (522) $ 4,896
====== ====== ====== ====== ====== ======
Reserve for inventory obsolescence .. $ 55 $ 317 $ -- $ 430 $ (51) $ 751
====== ====== ====== ====== ====== ======
</TABLE>
- ---------------
(1) Represents uncollectible accounts written off, net of recoveries.
(2) Balance of acquired company at date of acquisition.
II-11
<PAGE> 167
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- --------------------------------------------------------------------------
<C> <S> <C>
2.1 Purchase Agreement, by and among the Company, the Subsidiary Guarantors,
Donaldson, Lufkin & Jenrette Securities Corporation and BancAmerica
Securities dated as of July 9, 1997.
2.2 Asset Purchase Agreement between PepsiCo, Inc. and Nebco Evans Holding
Company.
2.3 Sales and Distribution Agreement by and among PFS, Pizza Hut, Inc., Taco
Bell Corp., Kentucky Fried Chicken Corporation and Kentucky Fried Chicken
of California, Inc.*
3.1 Certificate of Incorporation of the Company.
3.2 By-Laws of the Company.
3.3 Certificate of Incorporation of AmeriServ Food Company.
3.4 By-Laws of AmeriServ Food Company.
3.5 Articles of Incorporation of AmeriServe Transportation, Inc.
3.6 By-Laws of AmeriServe Transportation, Inc.
3.7 Articles of Incorporation of Chicago Consolidated Corporation.
3.8 By-Laws of Chicago Consolidated Corporation.
3.9 Articles of Incorporation of Northland Transportation Services, Inc.
3.10 By-Laws of Northland Transportation Services, Inc.
3.11 Articles of Incorporation of The Harry H. Post Company.
3.12 By-Laws of The Harry H. Post Company.
3.13 Articles of Incorporation of Delta Transportation, Ltd.
3.14 By-Laws of Delta Transportation, Ltd.
4.1 Indenture, dated as of July 11, 1997, by and among the Company, the
Subsidiary Guarantors and State Street Bank and Trust Company, with
respect to the New Senior Subordinated Notes.
4.2 Form of New Senior Subordinated Note.
4.3 Form of New Note Guarantee.
5.1 Opinion of Wachtell, Lipton, Rosen & Katz.*
10.1 Registration Rights Agreement, dated as of July 11, 1997, by and among the
Company, the Subsidiary Guarantors and Donaldson, Lufkin & Jenrette
Securities Corporation.
10.2 Second Amended and Restated Credit Agreement, dated as of July 11, 1997
among the Company, Bank of America National Trust and Savings Association,
as Administrative Agent, Donaldson, Lufkin & Jenrette Securities
Corporation, as Documentation Agent, Bank of America National Trust and
Savings Association as Letter of Credit Issuing Lender, the Other
Financial Institutions Party thereto and BancAmerica Securities, Inc. as
Arranger.
10.3 Employment Agreement, dated as of December 23, 1986 between the Company
and Raymond E. Marshall as amended by Amendment to Employment Agreement,
dated as of January 1, 1995.
12.1 Statements re computation of ratios.
16.1 Letter from Deloitte & Touche LLP.
21.1 Subsidiaries of the Company.
</TABLE>
<PAGE> 168
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- --------------------------------------------------------------------------
<C> <S> <C>
23.1 Consent of Ernst & Young LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Ernst & Young LLP.
23.4 Consent of Wachtell, Lipton, Rosen & Katz (contained in Exhibit 5.1).*
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 of State
Street Bank and Trust Company under the Trust Indenture Act of 1939.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal for the 10 1/8% New Senior Subordinated
Notes due 2007.
99.2 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
99.3 Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
Exhibit 2.1
EXECUTION COPY
================================================================================
AmeriServe Food Distribution, Inc.
------------------------------------------
$500,000,000
10 1/8% Senior Subordinated Notes due 2007
------------------------------------------
------------------------
PURCHASE AGREEMENT
DATED AS OF JULY 9, 1997
------------------------
Donaldson, Lufkin & Jenrette
Securities Corporation
BancAmerica Securities, Inc.
================================================================================
<PAGE> 2
AmeriServe Food Distribution, Inc.
$500,000,000 Principal Amount of
10 1/8% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
July 9, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BANCAMERICA SECURITIES, INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
AmeriServe Food Distribution, Inc., a Nebraska corporation (the
"Company"), proposes to issue and sell an aggregate of $500,000,000 in principal
amount of 10 1/8% Senior Subordinated Notes due 2007 (the "Senior Subordinated
Notes") of the Company, to Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ") and BancAmerica Securities, Inc. ("BancAmerica" and, together with DLJ,
the "Initial Purchasers") to be issued pursuant to an indenture (the
"Indenture") between the Company, each of the subsidiaries of the Company noted
on Schedule I hereto (the "Subsidiary Guarantors") and State Street Bank and
Trust Company of Connecticut, N.A., as trustee (the "Trustee"). The Senior
Subordinated Notes and the New Senior Subordinated Notes (as defined below)
issuable in exchange therefor are collectively referred to herein as the
"Notes." The Notes will be guaranteed on a senior subordinated basis by the
Subsidiary Guarantors pursuant to their guarantee (the "Note Guarantees"). The
Notes and the Note Guarantees are hereinafter collectively referred to as the
"Securities." Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Indenture.
The Senior Subordinated Notes are being issued and sold in connection with
an Asset Purchase Agreement (the "Asset Purchase Agreement") dated as of May 23,
1997, as amended, by and between the Company and the Pepsi Food Service division
of PepsiCo, Inc. ("PFS"). The Asset Purchase Agreement provides that, subject to
certain conditions as described therein, the Company will acquire substantially
all of the assets of PFS (the "Acquisition") for a purchase price of $830
million in cash and the assumption of certain liabilities (the "Asset Purchase
Consideration").
The proceeds to the Company from the sale to the Initial Purchasers
of the Senior Subordinated Notes (the "Proceeds") will be used to partially fund
the Asset Purchase Consideration.
1
<PAGE> 3
In addition to the Proceeds, the Company will generate funding for the
Acquisition through (i) borrowings under a credit facility (the "New Credit
Facility") with the financial institutions which are party thereto (the
"Lenders") and Bank of America National Trust and Savings Association, as agent
for the Lenders, to be entered into concurrently with the closing of the
Acquisition, (ii) Accounts Receivable Transactions and (iii) an equity
contribution from Nebco Evans Holding Company ("NEHC"), the corporate parent of
the Company.
1. ISSUANCE OF SECURITIES. The Senior Subordinated Notes will be offered
and sold to the Initial Purchasers pursuant to an exemption from the
registration requirements under the Securities Act of 1933, as amended (the
"Act"). The Company has prepared a preliminary offering memorandum, dated June
23, 1997 (the "Preliminary Offering Memorandum") and a final offering
memorandum, dated July 9, 1997 (the "Offering Memorandum" and, together with the
Preliminary Offering Memorandum, the "Offering Documents"), relating to the
Senior Subordinated Notes.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Senior
Subordinated Notes (and all securities issued in exchange therefor, in
substitution thereof or upon conversion thereof) shall bear the following
legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE UNITED STATES TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF THE SECURITIES
ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND,
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND,
IN THE CASE OF CLAUSE (b), (c), (d), or (e), BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
2
<PAGE> 4
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to the terms
and conditions contained herein, the Company agrees to issue and sell to the
Initial Purchasers, and each Initial Purchaser agrees, severally and not
jointly, to purchase from the Company, the principal amounts of Senior
Subordinated Notes set forth opposite the name of such Initial Purchaser on
Schedule II hereto at a purchase price equal to 97% of the principal amount
thereof (the "Purchase Price").
3. TERMS OF OFFERING. The Initial Purchasers will make offers (the
"Exempt Resales") of the Senior Subordinated Notes purchased hereunder on the
terms set forth in the Offering Memorandum, as amended or supplemented, solely
to persons (each, a "144A Purchaser") whom the Initial Purchasers reasonably
believe to be "qualified institutional buyers" as defined in Rule 144A under the
Act ("QIBs") or persons otherwise exempt under Regulation S of the Securities
Act (together with QIBs, "Eligible Purchasers"). The Initial Purchasers will
offer the Senior Subordinated Notes to Eligible Purchasers initially at a price
equal to 100% of the principal amount thereof. Such price may be changed at any
time without notice.
Holders (including subsequent transferees) of the Senior Subordinated
Notes will have the registration rights set forth in the registration rights
agreement (the "Registration Rights Agreement"), to be dated the Closing Date
(as defined below), in substantially the form of Exhibit A hereto, for so long
as such Senior Subordinated Notes constitute "Transfer Restricted Securities"
(as defined in the Registration Rights Agreement). Pursuant to the Registration
Rights Agreement, the Company will agree to file with the Securities and
Exchange Commission (the "Commission") under the circumstances set forth
therein, (i) a registration statement under the Act (the "Exchange Offer
Registration Statement") relating to (A) Company's 10 1/8% new Senior
Subordinated Notes due 2007 (the "New Senior Subordinated Notes") to be offered
in exchange for the Senior Subordinated Notes, (such offer to exchange being
referred to as the "Registered Exchange Offer") and (ii) a shelf registration
statement pursuant to Rule 415 under the Act (the "Shelf Registration Statement"
and, together with the Exchange Offer Registration Statement, the "Registration
Statements") relating to the resale by certain holders of the Senior
Subordinated Notes, and to use their best efforts to cause such Registration
Statements to be declared effective and consummate the Registered Exchange
Offer. This Agreement, the Indenture, the Notes, the Note Guarantees and the
Registration Rights Agreement are hereinafter referred to collectively as the
"Operative Documents."
4. DELIVERY AND PAYMENT. (a) Delivery of, and payment of the Purchase
Price for, the Senior Subordinated Notes shall be made at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street New York, New York 10019 or
at such other location as may be mutually acceptable. Such delivery and payment
shall be made at 9:00 a.m. New York City time, on July 11, 1997 or at such other
time as shall be agreed upon by the Company and the Initial Purchasers. The time
and date of such delivery and the payment are herein called the "Closing Date."
(b) One or more Senior Subordinated Notes in definitive form, registered
in the name of Cede & Co., as nominee of the Depository Trust Company ("DTC"),
or such other names as the Initial Purchasers may request upon at least one
business day's notice to the Company, having an aggregate principal amount
corresponding to the aggregate principal amount of Senior Subordinated Notes
sold pursuant to Exempt Resales to Eligible Purchasers (collectively, the
"Master Notes"), shall be delivered by the Company to the Initial Purchasers (or
as the Initial Purchasers direct) in each case with any taxes
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<PAGE> 5
thereon duly paid by the Company, against payment by the Initial Purchasers of
the Purchase Price thereof by wire transfer in same day funds to the order of
the Company or as the Company may direct. The Master Notes shall be made
available to the Initial Purchasers for inspection not later than 9:30 a.m., New
York City time, on the business day immediately preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY AND THE SUBSIDIARY GUARANTORS. The Company
and the Subsidiary Guarantors, jointly and severally, covenant and agree with
the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by
the Initial Purchasers, to confirm such advice in writing, (i) of the
issuance by any state securities commission of any stop order suspending
the qualification or exemption from qualification of any of the Senior
Subordinated Notes for offering or sale in any jurisdiction designated by
the Initial Purchasers pursuant to Section 5(e) hereof, or the initiation
of any proceeding for such purpose by any state securities commission or
other regulatory authority and (ii) of the happening of any event that
makes any statement of a material fact made in the Offering Documents (or
any amendment or supplement thereto) untrue or that requires the making of
any additions to or changes in the Offering Documents (or any amendment or
supplement thereto) in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading. The
Company shall use its best efforts to prevent the issuance of any stop
order or order suspending the qualification or exemption from
qualification of the Senior Subordinated Notes under any state securities
or Blue Sky laws, and, if at any time any state securities commission or
other regulatory authority shall issue any stop order or order suspending
the qualification or exemption from qualification of any of the Senior
Subordinated Notes under any state securities or Blue Sky laws, the
Company shall use its best efforts to obtain the withdrawal or lifting of
such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons identified
by the Initial Purchasers to the Company, without charge, as many copies
of the Offering Documents, and any amendments or supplements thereto, as
the Initial Purchasers may reasonably request. The Company consents to the
use of the Offering Documents, and any amendments or supplements thereto
required pursuant hereto, by the Initial Purchasers in connection with
Exempt Resales.
(c) During such period as in the written opinion of counsel for the
Initial Purchasers an Offering Memorandum is required by law to be
delivered in connection with the Exempt Resales by the Initial Purchasers
and in connection with market-making activities of the Initial Purchasers
for so long as the Senior Subordinated Notes are outstanding (i) not to
amend or supplement the Offering Documents, whether before or after the
Closing Date, unless the Initial Purchasers shall previously have been
advised thereof, and shall not have objected thereto within a reasonable
time after being furnished a copy thereof, and (ii) to promptly prepare,
upon the Initial Purchasers' reasonable request, any amendment or
supplement to the Offering Documents that the Initial Purchasers
reasonably believe necessary or advisable in connection with Exempt
Resales or such market-making activities.
(d) If, after the date hereof and prior to the earlier of the
completion of all Exempt Resales by the Initial Purchasers and the 90th
day after the Closing Date, any event shall occur as a result of which, in
the judgment of the Company or counsel to the Initial Purchasers, it
becomes necessary to amend or supplement the Offering Memorandum in order
to make the
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<PAGE> 6
statements therein, in the light of the circumstances when such Offering
Memorandum is delivered to an Eligible Purchaser, not misleading or if it
is necessary to amend or supplement the Offering Memorandum to comply with
any law, statute, rule or regulation, to forthwith prepare an appropriate
amendment or supplement to such Offering Memorandum so that the statements
therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such
Offering Memorandum will comply with applicable law.
(e) To cooperate with the Initial Purchasers and counsel to the
Initial Purchasers in connection with the registration or qualification of
the Senior Subordinated Notes under the state securities or Blue Sky laws
of such jurisdictions as the Initial Purchasers may request, to continue
such registration or qualification in effect so long as required for the
Exempt Resales and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided, however, that the Company shall not be required
in connection therewith to register or qualify as a foreign corporation in
any jurisdiction in which the Company is not now so qualified, or take any
action that would subject the Company to general consent to service of
process or taxation, other than as to matters and transactions relating to
Exempt Resales, in any jurisdiction in which the Company is not now so
subject.
(f) For so long as the Notes are outstanding, to furnish without
charge to the Initial Purchasers promptly upon their becoming available
(i) all reports or other publicly available information that the Company
shall mail or otherwise make available to the Company's stockholders and
(ii) all reports, financial statements and proxy or information statements
filed by the Company or its subsidiaries with the Commission or any
national securities exchange and such other publicly available information
concerning the business and financial condition of the Company or its
subsidiaries, including without limitation, press releases, as the Initial
Purchasers may reasonably request.
(g) To use the net proceeds from the sale of the Senior Subordinated
Notes in the manner described in the Offering Memorandum (and any
amendments or supplements thereto) under the caption "Use of Proceeds."
(h) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
(i) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated to
pay and be responsible for all costs, expenses, fees and taxes in
connection with or incident to:
(1) the preparation, printing, processing, duplicating, filing
and distribution of the Offering Documents (including, without
limitation, financial statements and exhibits) and all amendments
and supplements thereto;
(2) the preparation, printing and delivery of the Operative
Documents, the preliminary and final Blue Sky memoranda and all
other agreements, memoranda, correspondence and other documents
printed, distributed and delivered in connection herewith and with
the Exempt Resales (including in each case any disbursements of
counsel to the Initial Purchasers relating to such printing and
delivery);
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<PAGE> 7
(3) the issuance, transfer and delivery by the Company and the
Subsidiary Guarantors of the Senior Subordinated Notes and the Note
Guarantees to the Initial Purchasers;
(4) the registration or qualification of the Notes and the
Note Guarantees for offer and sale under the securities or Blue Sky
laws of the jurisdictions referred to in Section 5(e) (including,
in each case, the fees and disbursements of counsel to the Initial
Purchasers relating to such registration or qualification and
memoranda relating thereto);
(5) furnishing such copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and all amendments and
supplements thereto, as may be requested for use in connection with
the Exempt Resales;
(6) the preparation of certificates for the Notes (including,
without limitation, printing and engraving thereof);
(7) the rating of the Notes by investment rating agencies;
(8) the fees, disbursements and expenses of the Company's and
the Subsidiary Guarantors' counsel and accountants;
(9) all expenses and listing fees in connection with the
application for quotation of the Senior Subordinated Notes in the
National Association of Securities Dealers, Inc. ("NASD") Automated
Quotation System - PORTAL ("PORTAL");
(10) the fees and expenses of the Trustee and the Trustee's
counsel in connection with the Indenture and the Notes;
(11) all fees and expenses (including fees and expenses of
counsel to the Company) of the Company in connection with approval
of the Notes by DTC for "book-entry" transfer; and
(12) the performance by the Company of its other obligations
under this Agreement and the other Operative Documents.
(j) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than a default by the Initial Purchasers) or if
for any reason the Company shall be unable or unwilling to perform their
obligations hereunder, the Company shall, except as otherwise agreed by
the parties hereto, reimburse the Initial Purchasers for the fees and
expenses to be paid or reimbursed pursuant to Section 5(i) above, and
reimburse the Initial Purchasers for all out-of-pocket expenses (including
the fees and expenses of counsel to the Initial Purchasers) reasonably
incurred by the Initial Purchasers in connection with the transactions
contemplated by this Agreement.
(k) Prior to the consummation of the Exchange Offer, to furnish to
the Initial Purchasers, as soon as they have been prepared by the Company,
a copy of any consolidated financial statements of the Company for any
period subsequent to the period covered by the financial statements
appearing in the Offering Memorandum.
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<PAGE> 8
(l) Not to distribute prior to the Closing Date any offering
material in connection with the offering and sale of the Senior
Subordinated Notes other than the Offering Memorandum.
(m) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Senior Subordinated Notes in
a manner that would require the registration under the Act of the sale to
the Initial Purchasers or the Eligible Purchasers of the Senior
Subordinated Notes.
(n) For so long as any of the Notes remain outstanding and during
any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act, to make available to any holder of Notes in connection
with any sale thereof and any prospective purchaser of such Notes from
such holder, the information ("Rule 144A Information") required by Rule
144A(d)(4) under the Act.
(o) To comply with all of their agreements set forth in the
Registration Rights Agreement, and all agreements set forth in the
representation letters of the Company to DTC relating to the approval of
the Notes by DTC for "book-entry" transfer.
(p) To cause the Exchange Offer to be made in the appropriate form
to permit registered New Senior Subordinated Notes to be offered in
exchange for the Senior Subordinated Notes and to comply with all
applicable federal and state securities laws in connection with the
Registered Exchange Offer.
(q) To use their respective best efforts to cause the Notes to be
eligible for trading through PORTAL and to obtain approval of the Notes by
DTC for "book-entry" transfer.
6. REPRESENTATIONS AND WARRANTIES. The Company and the Subsidiary
Guarantors represent and warrant to each of the Initial Purchasers that:
(a) The Offering Documents have been prepared in connection with the
Exempt Resales. The Preliminary Offering Memorandum and the Offering
Memorandum do not and any supplement or amendment thereto will not,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
contained in this paragraph (a) shall not apply to statements in or
omissions from the Offering Documents (or any amendment or supplement
thereto) made in reliance upon information relating to the Initial
Purchasers furnished to the Company in writing by the Initial Purchasers
expressly for use therein. The Company acknowledges for all purposes under
this Agreement that the statements set forth in the last paragraph on the
cover page, the legend on the bottom of the inside cover page and in the
first sentence of the third paragraph, the first sentence of the fourth
paragraph and the third sentences of the seventh and ninth paragraphs
under the caption "Plan of Distribution" in the Offering Memorandum
constitute the only written information furnished to the Company by the
Initial Purchasers expressly for use in the Offering Documents (or any
amendment or supplement thereto). No stop order preventing the use of the
Offering Documents, or any amendment or supplement thereto, or any order
asserting that any of the transactions contemplated by this Agreement are
subject to the registration requirements of the Act, has been issued.
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<PAGE> 9
(b) Each of the Company and its subsidiaries (i) has been, and after
giving effect to the Acquisition pursuant to the terms of the Asset
Purchase Agreement will be, duly organized and validly existing as a
corporation in good standing under the laws of its respective
jurisdiction, (ii) has, and after giving effect to the Acquisition
pursuant to the terms of the Asset Purchase Agreement will have, all
requisite corporate power and authority to carry on its business as
described in the Offering Memorandum and to own, lease and operate its
properties, and (iii) is, and after giving effect to the Acquisition
pursuant to the terms of the Asset Purchase Agreement will be, duly
qualified and in good standing as a foreign corporation authorized to do
business in each other jurisdiction in which the nature of its business or
its ownership or leasing of property requires such qualification, except
where the failure to be so qualified would not have a Material Adverse
Effect. As used herein, "Material Adverse Effect" shall mean, with respect
to any Person, any effect or group of related or unrelated effects that
(i) would be reasonably expected to result in a material adverse effect on
the assets, properties, business, results of operations, condition
(financial or otherwise) or prospects of the Company and its subsidiaries,
taken as a whole or (ii) would reasonably be expected to interfere with,
adversely affect or question the validity of the execution, delivery and
performance of any of the Operative Documents, the issuance of the Notes
and the Note Guarantees or the consummation of this Agreement.
(c) All of the issued and outstanding shares of capital stock of the
Company and each of its subsidiaries have been duly and validly authorized
and issued, and all of the shares of capital stock of each such subsidiary
are owned, directly or indirectly, by the Company. All such shares of
capital stock are fully paid and non-assessable and have not been issued
in violation of any preemptive or similar rights and are owned free and
clear of any security interest, mortgage, pledge, claim, lien, limitation
on voting rights or encumbrance (each, a "Lien"), except for Liens granted
pursuant to the New Credit Facility. There are not currently, and will not
be as a result of the Offering or the consummation of the Acquisition
pursuant to the terms of the Asset Purchase Agreement, any outstanding
subscriptions, rights, warrants, options, calls, convertible securities,
commitments of sale or Liens related to or entitling any person to
purchase or otherwise to acquire any shares of the capital stock of, or
other securities evidencing equity ownership interests in, the Company or
any of its subsidiaries.
(d) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Operative Documents
to which it is a party, and to consummate the transactions contemplated
hereby and thereby, including, without limitation, the corporate power and
authority to issue, sell and deliver the Senior Subordinated Notes to the
Initial Purchasers.
(e) The Subsidiary Guarantors have all necessary corporate power and
authority to enter into and perform their obligations under the Operative
Documents to which they are parties, and to issue, sell and deliver the
Note Guarantees to the Initial Purchasers.
(f) Neither the Company nor any of its subsidiaries is, and after
giving effect to the Offering and the Acquisition pursuant to the terms of
the Asset Purchase Agreement will be, (i) in violation of its charter or
bylaws, (ii) in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument, in each
case, which is material to the conduct of the business of the Company, to
which the Company is a party or by which it or any of the Company's
subsidiaries or their respective property is bound, or (iii) in violation
8
<PAGE> 10
of any local, state or federal law, statute, ordinance, rule, regulation,
requirement, judgment or court decree (including, without limitation,
environmental laws, statutes, ordinances, rules, regulations, judgments or
court decrees) applicable to the Company, its subsidiaries or any of its
assets or properties (whether owned or leased), other than violations or
defaults that would not reasonably be expected to have a Material Adverse
Effect. To the best knowledge of the Company, there exists no condition
that, with notice, the passage of time or otherwise, would constitute a
default under any such document or instrument, except for such defaults
that could not reasonably be expected to have a Material Adverse Effect.
(g) None of (i) the execution, delivery or performance by the
Company or the Subsidiary Guarantors of this Agreement and the other
Operative Documents, (ii) the performance by the Company of the Asset
Purchase Agreement and consummation of the Acquisition pursuant to the
terms of the Asset Purchase Agreement, (iii) the issuance and sale of the
Notes by the Company or the issuance of the Note Guarantees by the
Subsidiary Guarantors and (iv) the consummation by the Company of the
transactions described in the Offering Memorandum under the caption "Use
of Proceeds," will conflict with or constitute a breach of any of the
terms or provisions of, or, after giving effect to the Acquisition
pursuant to the terms of the Asset Purchase Agreement, will violate,
conflict with or constitute a breach of any of the terms or provisions of,
or a default under, or result in the imposition of a lien or encumbrance
on any properties of the Company or the Subsidiary Guarantors, as the case
may be, or an acceleration of indebtedness pursuant to, (1) the respective
charter or bylaws of the Company or the Subsidiary Guarantors, as the case
may be, (2) any bond, debenture, note, indenture, mortgage, deed of trust
or other agreement or instrument to which the Company or the Subsidiary
Guarantors, as the case may be, is a party or by which any of their
respective property is bound, or (3) any law or administrative regulation
applicable to the Company or the Subsidiary Guarantors, as the case may
be, or any of their assets or properties, or any judgment, order or decree
of any court or governmental agency or authority entered in any proceeding
to which the Company or the Subsidiary Guarantors, as the case may be, was
or is now a party or to which any of their respective properties may be
subject. No consent, approval, authorization or order of, or filing or
registration with, any regulatory body, administrative agency, or other
governmental agency (except as securities or Blue Sky laws of the various
states may require) is required for the execution, delivery and
performance of the Operative Documents and the valid issuance and sale of
the Securities. No consents or waivers from any person are required to
consummate the transactions contemplated by the Operative Documents or the
Offering Documents, other than such consents and waivers as have been or
will be obtained prior to the Closing Date or, in the case of the
Registration Rights Agreement and the transactions contemplated thereby,
will be obtained and made under the Act, the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act") and state securities or Blue Sky
laws and regulations.
(h) This Agreement has been duly authorized and, when validly
executed by the Company and the Subsidiary Guarantors and (assuming the
due execution and delivery thereof by the Initial Purchasers) is a legally
valid and binding obligation of the Company and the Subsidiary Guarantors,
enforceable against each in accordance with its terms, except as the
enforceability thereof may be (i) subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect which
affect the enforcement of creditors' rights generally, (ii) limited by
general principles of equity (whether considered in a proceeding at law or
in equity) and (iii) limited by securities laws prohibiting or limiting
the availability of, and public policy against, indemnification or
contribution.
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<PAGE> 11
(i) The Company and the Subsidiary Guarantors have duly authorized
the Indenture, and when the Company and the Subsidiary Guarantors have
duly executed and delivered the Indenture (assuming the due
authorization, execution and delivery thereof by the Trustee), the
Indenture will be the legally valid and binding obligation of each,
enforceable against each in accordance with its terms, except as the
enforceability thereof may be (i) subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect which
affect the enforcement of creditors' rights generally and (ii) limited by
general principles of equity (whether considered in a proceeding at law or
in equity).
(j) The Company has duly authorized the Senior Subordinated Notes
and, when issued and authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms hereof, will be the legally valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except as the enforceability thereof may be (i) subject
to applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect which affect the enforcement of creditors' rights
generally and (ii) limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(k) The Subsidiary Guarantors have duly authorized the Note
Guarantees to be endorsed on the Senior Subordinated Notes and, when the
Senior Subordinated Notes are issued and authenticated in accordance with
the terms of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms hereof, the Note Guarantees will
be the legally valid and binding obligations of the Subsidiary Guarantors,
enforceable against the Subsidiary Guarantors in accordance with their
terms, except as the enforceability thereof may be (i) subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar
laws in effect which affect the enforcement of creditors' rights generally
and (ii) limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(l) The Company has duly authorized the New Senior Subordinated
Notes and, when issued and authenticated in accordance with the terms of
the Registered Exchange Offer and the Indenture, the New Senior
Subordinated Notes will be the legally valid and binding obligations of
the Company, enforceable against the Company in accordance with their
terms, except as the enforceability thereof may be (i) subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar
laws in effect which affect the enforcement of creditors' rights generally
and (ii) limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(m) The Subsidiary Guarantors have duly authorized the Note
Guarantees to be endorsed on the New Senior Subordinated Notes and, when
the New Senior Subordinated Notes are issued and authenticated in
accordance with the terms of the Registered Exchange Offer and the
Indenture, the Note Guarantees will be the legally valid and binding
obligations of the Subsidiary Guarantors, enforceable against the
Subsidiary Guarantors in accordance with their terms, except as the
enforceability thereof may be (i) subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect which
affect the enforcement of creditors' rights generally and (ii) limited by
general principles of equity (whether considered in a proceeding at law or
in equity).
(n) The Registration Rights Agreement has been duly authorized and
when validly executed by the Company and the Subsidiary Guarantors will be
(assuming the due execution and
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<PAGE> 12
delivery thereof by the Initial Purchasers) the legally valid and binding
obligation of each, enforceable against each in accordance with its terms,
except as the enforceability thereof may be (i) subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws in
effect which affect the enforcement of creditors' rights generally and
(ii) limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(o) The Asset Purchase Agreement has been duly and validly
authorized by the Company and is a legally valid and binding agreement of
the Company, enforceable against it in accordance with its terms, except
as enforcement may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, moratorium, reorganization or other similar laws
and court decisions affecting or relating to the rights of creditors
generally or by general principles of equity, and except as rights to
indemnification may be limited by applicable law.
(p) The New Credit Facility has been duly authorized and when
validly executed by the Company and the subsidiaries of the Company that
are obligors thereunder will be the legally valid and binding obligation
of each, enforceable against each in accordance with its terms, except as
the enforceability thereof may be (i) subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect which
affect the enforcement of creditors' rights generally and (ii) limited by
general principles of equity (whether considered in a proceeding at law or
in equity).
(q) There is, and after giving effect to the Acquisition pursuant to
the terms of the Asset Purchase Agreement will be, (i) no action, suit,
proceeding or investigation before or by any court, arbitrator or
governmental agency, body or official, domestic or foreign, now pending,
threatened, or, to the knowledge of the Company, contemplated to which the
Company or the Subsidiary Guarantors is or may be a party or to which the
business or property of the Company or the Subsidiary Guarantors is or,
after giving effect to the Acquisition pursuant to the terms of the Asset
Purchase Agreement, may be subject, (ii) no statute, rule, regulation or
order that has been enacted, adopted or issued by any governmental agency
or, to the best knowledge of the Company, proposed by any governmental
body or (iii) no injunction, restraining order or order of any nature
issued by a federal or state court of competent jurisdiction to which the
Company or the Subsidiary Guarantors is or may be subject that, in the
case of clauses (i), (ii) and (iii) above, (1) is required to be disclosed
in the Offering Memorandum and that is not so disclosed, (2) could
reasonably be expected to have a Material Adverse Effect or (3) would
interfere with or adversely affect the issuance of the Senior Subordinated
Notes or the Note Guarantees.
(r) There are no holders of any security of the Company or the
Subsidiary Guarantors who by reason of the execution by the Company and
the Subsidiary Guarantors of this Agreement or any other Operative
Document or the consummation of the transactions contemplated hereby and
thereby, have the right to request or demand that the Company or the
Subsidiary Guarantors register under the Act, or analogous foreign laws
and regulations, securities held by them.
(s) The Company has delivered to the Initial Purchasers true and
correct executed copies of the Asset Purchase Agreement and all documents
and agreements related thereto and there have been no amendments,
alterations, modifications or waivers thereto or in the exhibits or
schedules thereto, except as have been delivered to the Initial
Purchasers.
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<PAGE> 13
(t) The Company is not, and after giving effect to the Acquisition
pursuant to the terms of the Asset Purchase Agreement will not be,
involved in any material labor dispute nor, to the knowledge of the
Company, is any material dispute threatened which, if such dispute were to
occur, could have a Material Adverse Effect.
(u) The Company has not violated any safety or similar law
applicable to its business, nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or the rules and regulations promulgated thereunder, except for such
instances of noncompliance that, either singly or in the aggregate, could
not have a Material Adverse Effect.
(v) The Company is, and after giving effect to the Acquisition
pursuant to the terms of the Asset Purchase Agreement will be, in
compliance with all applicable existing federal, state, local and foreign
laws and regulations (collectively, "Environmental Laws") relating to the
protection of human health or the environment or imposing liability or
standards of conduct concerning any Hazardous Material (as defined below),
except for such instances of noncompliance that, either singly or in the
aggregate, could not have a Material Adverse Effect. The term "Hazardous
Material" means (i) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (ii) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (iii) any petroleum or
petroleum product, (iv) any polychlorinated biphenyl and (v) any pollutant
or contaminant or hazardous, dangerous or toxic chemical, material, waste
or substance regulated under or within the meaning of any other
Environmental Law. Except as set forth in the Offering Memorandum, there
is no alleged liability, or, to the best knowledge and information of the
Company, potential liability (including, without limitation, alleged or
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resource damages, property damages, personal
injuries, or penalties) of the Company or any of its subsidiaries arising
out of, based on, or resulting from (1) the presence or release into the
environment of any Hazardous Material at any location currently or
previously owned by the Company or any of its subsidiaries or at any
location currently or previously used or leased by the Company or any of
its subsidiaries, or (2) any violation or alleged violation of any
Environmental Law, except in each case with respect to clause (1) and (2),
alleged or potential liabilities that, singly or in the aggregate, could
not have a Material Adverse Effect.
(w) The Company and each of its Subsidiaries has and, after giving
effect to the Acquisition pursuant to the terms of the Asset Purchase
Agreement, will have, such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits"),
including, without limitation, under any applicable Environmental Laws, as
are necessary or will be necessary, to own, lease and operate their
respective properties and to conduct their respective businesses in the
manner described in the Offering Memorandum, except for those permits the
absence of which could not reasonably be expected to have a Material
Adverse Effect; the Company and each of its Subsidiaries has and, after
giving effect to the Acquisition pursuant to the terms of the Asset
Purchase Agreement, will have, fulfilled and performed all of its
obligations with respect to such permits, except for such obligations the
failure of which to be fulfilled or performed could not reasonably be
expected to have a Material Adverse Effect and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the
rights of the holder of any such permit, except for such event, that,
individually or in the aggregate, could not reasonably
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<PAGE> 14
be expected to have a Material Adverse Effect; and, except as described in
the Offering Memorandum, such permits contain no restrictions that are or
will be materially burdensome to the Company or any of its Subsidiaries.
(x) In connection with the Acquisition, the Company has reviewed the
effect of Environmental Laws and the disposal of hazardous or toxic
substances or wastes, pollutants or contaminants on the business, assets,
operations and properties of PFS and identified and evaluated associated
costs and liabilities (including, without limitation, all material capital
and operating expenditures required for clean-up, closure of properties
and compliance with Environmental Laws, all permits, licenses and
approvals, all related constraints on operating activities and all
potential liabilities to third parties). On the basis of such reviews,
including the indemnification provided by the Asset Purchase Agreement,
the Company has reasonably concluded that such associated costs and
liabilities could not reasonably be expected to have a Material Adverse
Effect.
(y) The Company and its subsidiaries own or possess free and clear
of all Liens or has the right to use free and clear of any rights of third
parties that adversely affect such use by the Company and its subsidiaries
and, after giving effect to the Acquisition pursuant to the terms of the
Asset Purchase Agreement, will own or possess free and clear of all Liens
or have the right to use free and clear of any rights of third parties
that adversely affect such use by the Company and its subsidiaries, all
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "Intellectual
Property") presently employed by either of them or which are proposed to
be employed by either of them in connection with the businesses now
operated by either of them or which are proposed to be operated by them,
except where the failure to own or possess such Intellectual Property
could not, either singly or in the aggregate, have a Material Adverse
Effect. The use of such Intellectual Property in connection with the
business and operations of the Company and its subsidiaries does not to
the Company's knowledge, infringe on the rights or claimed rights of any
person. No other person is, to the Company's knowledge, infringing upon
any of the Intellectual Property of the Company or has notified the
Company or any of its subsidiaries that it is claiming ownership of, or
the right to use any Intellectual Property owned by the Company or its
subsidiaries. The Company and its subsidiaries have taken all reasonable
steps to protect the Intellectual Property from infringement by any other
person, except where the failure to take such steps would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company. Other than in connection with the use of so-called
"off-the-shelf" software and except as otherwise disclosed in the Offering
Memorandum, neither the Company nor its subsidiaries are obligated or
under any liability whatsoever to make any payment in excess of $150,000
per fiscal year, in the aggregate, by way of royalties, fees or otherwise
to any persons with respect to the use of the Intellectual Property.
Neither the Company nor any of its subsidiaries has received (i) any
notice of infringement of or conflict with assessed rights of others with
respect to any Intellectual Property or (ii) any notice of an action or
proceeding seeking to limit, cancel or question the validity of any
Intellectual Property, which singly or in the aggregate, if the subject of
any unfavorable decision, ruling or finding, might have a Material Adverse
Effect on the Company.
(z) All tax returns required to be filed by the Company or any of
its subsidiaries in any jurisdiction have been filed, and all material
taxes (including, without limitation, withholding taxes, penalties and
interest, assessments, fees and other charges due or claimed to be due
from
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<PAGE> 15
any taxing authority) have been paid other than those being contested in
good faith and for which adequate reserves have been provided. To the
knowledge of the Company, there are, and after giving effect to the
Acquisition pursuant to the terms of the Asset Purchase Agreement will be,
no material proposed additional tax assessments against the Company, any
of its subsidiaries or the assets or property of the Company or any of its
subsidiaries.
(aa) The Company and its subsidiaries have and, after giving effect
to the Acquisition pursuant to the terms of the Asset Purchase Agreement,
will have all certificates, consents, exemptions, orders, permits,
franchises, licenses, authorizations, or other approvals (each, an
"Authorization") of and from, and has made all declarations and filings
with and notices to, all federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, necessary or required to own, lease, license, operate and use
their respective properties and assets and to conduct their business in
the manner described in the Offering Memorandum except for such
Authorizations the absence of which could not reasonably be expected to
have a Material Adverse Effect on the Company; all such Authorizations are
and, after giving effect to the Acquisition pursuant to the terms of the
Asset Purchase Agreement, will be valid and in full force and effect; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Authorizations and with the rules and regulations
of the regulatory authorities and governing bodies having jurisdiction
with respect thereto; and neither the Company nor any of its subsidiaries
has received any notice, or has any knowledge or belief (or any basis
therefor), that any governmental body or agency is considering limiting,
suspending or revoking any such Authorization.
(ab) Except as set forth in the Offering Memorandum and except as
could not reasonably be expected to have a Material Adverse Effect on the
Company, (i) the Company and its subsidiaries has and, after giving effect
to the Acquisition pursuant to the terms of the Asset Purchase Agreement,
will have good and marketable title, free and clear of all Liens except
Liens for taxes not yet due and payable and Liens granted pursuant to the
New Credit Facility, to all property and assets described in the Offering
Memorandum as being owned by each of them. All leases to which the Company
or any of its subsidiaries is a party are and, after giving effect to the
Acquisition pursuant to the terms of the Asset Purchase Agreement, will be
legally valid and binding and, to the best of the Company's knowledge, no
default has occurred or is continuing thereunder which could reasonably be
expected to have a Material Adverse Effect on the Company, and the Company
and its subsidiaries enjoy peaceful and undisturbed possession under all
such leases to which the Company and its subsidiaries are a party as
lessee with such exceptions as do not materially interfere with the use
currently made by the Company or its subsidiaries, as the case may be.
(ac) The Company maintains and, after giving effect to the
Acquisition pursuant to the terms of the Asset Purchase Agreement, will
endeavor to maintain adequate insurance for its business and the value of
its properties (including, without limitation, public liability insurance,
third party property damage insurance and replacement value insurance),
and, to the best of the Company's knowledge, all such insurance is
outstanding and in force as of the date hereof.
(ad) The financial statements, together with related notes forming
part of the Offering Documents (and any amendment or supplement thereto),
present fairly the consolidated financial position, results of operations
and changes in financial position of the Company on the basis stated in
the Offering Documents at the respective dates or for the respective
periods to which they apply, and such financial statements and related
schedules and notes have been prepared in
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<PAGE> 16
accordance with generally accepted accounting principles consistently
applied throughout the periods involved, except as disclosed therein and
the other financial and statistical information and data set forth in the
Offering Documents (and any amendment or supplement thereto) is, in all
material respects, accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Company.
The pro forma financial data are, in all material respects, accurately
presented and prepared in good faith on the basis of the assumptions
described therein, and such assumptions are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(ae) The Company and the Subsidiary Guarantors maintain and, after
giving effect to the Acquisition pursuant to the terms of the Asset
Purchase Agreement, will maintain a system of internal accounting controls
sufficient to provide assurance that: (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to maintain accountability for assets; and (iii) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect thereto.
(af) Subsequent to the dates for which information is given in the
Offering Documents and up to the Closing Date, unless set forth in the
Offering Memorandum or the Company has notified the Initial Purchasers:
(i) neither the Company nor the Subsidiary Guarantors has incurred any
liabilities or obligations, direct or contingent, which are or, after
giving effect to the Acquisition pursuant to the terms of the Asset
Purchase Agreement, could reasonably be expected to have a Material
Adverse Effect on the Company or the Subsidiary Guarantors, nor has either
entered into any material transactions not in the ordinary course of
business; (ii) there has not been any decrease in the Company's or the
Subsidiary Guarantors' capital stock or any increase in long-term
indebtedness to meet working capital requirements or any material increase
in short-term indebtedness of the Company or the Subsidiary Guarantors or
any payment of or declaration to pay any dividends or any other
distribution with respect to the Company's or the Subsidiary Guarantors'
capital stock; and (iii) there has not been any event or series of events
that could reasonably be expected to have a Material Adverse Effect.
(ag) Prior to and immediately after the issuance of the Senior
Subordinated Notes and, after giving effect to the Acquisition pursuant to
the terms of the Asset Purchase Agreement, (i) the present fair saleable
value of the assets of the Company and its subsidiaries exceeded and will
exceed the amount that will be required to be paid on, or in respect of,
the debts and other liabilities (including contingent liabilities) of the
Company and its subsidiaries as they become absolute and matured, (ii) the
assets of the Company and its subsidiaries do not constitute and will not
constitute unreasonably small capital to carry out their businesses as
conducted or as proposed to be conducted, and (iii) the Company and its
subsidiaries do not intend to, or believe that it will, incur debts or
other liabilities beyond its ability to pay such debts and liabilities as
they mature. In computing the amount of such contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount
that, in light of all the facts and circumstances existing at such time,
represents the amount than can reasonably be expected to become an actual
or matured liability.
(ah) Except as would not otherwise be unlawful, the Company has not
(i) taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of any
15
<PAGE> 17
security of the Company to facilitate the sale or resale of the Notes or
(ii) since the date of the Preliminary Offering Memorandum (A) sold, bid
for, purchased, or paid anyone other than the Initial Purchasers any
compensation for soliciting purchases of, the Senior Subordinated Notes or
(B) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
(ai) Neither the Company nor any of its subsidiaries nor any agent
thereof acting on the behalf of them, has taken or will take any action
that might cause this Agreement or the issuance or sale of the Notes to
violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part
220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part
224) of the Board of Governors of the Federal Reserve System, in each case
as in effect now or as the same may hereafter be in effect on the Closing
Date.
(aj) Neither the Company nor any of its subsidiaries is or, after
giving effect to the Acquisition pursuant to the terms of the Asset
Purchase Agreement, will be an "investment company" or a company
"controlled" by an investment company within the meaning of the Investment
Company Act of 1940, as amended.
(ak) The accountants, Ernst & Young LLP, that have certified the
financial statements and supporting schedules included in the Offering
Memorandum are independent public accountants, as required by the Act and
the Exchange Act. The historical financial statements, together with
related schedules and notes, set forth in the Offering Memorandum comply
as to form in all material respects with the requirements applicable to
registration statements on Form S-1 under the Act.
(al) When the Senior Subordinated Notes are issued and delivered
pursuant to this Agreement, such Senior Subordinated Notes will not be of
the same class (within the meaning of Rule 144A under the Act) as
securities of the Company that are listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are quoted
in a United States automated inter-dealer quotation system.
(am) Assuming (i) that the representations and warranties of the
Initial Purchasers in Section 7 hereof are true, (ii) that the Initial
Purchasers complied with their covenants as set forth in Section 7 hereof,
(iii) that none of the Eligible Purchasers is an affiliate of the Company
and (iv) that each of the Eligible Purchasers is a QIB or is purchasing
the Senior Subordinated Notes pursuant to the exemption provided for under
Regulation S, the purchase and resale of the Senior Subordinated Notes
pursuant hereto (including pursuant to the Exempt Resales) is exempt from
the registration requirements of the Act. No form of general solicitation
or general advertising was used by the Company or any of its
representatives (other than the Initial Purchasers, as to whom the Company
makes no representation) in connection with the offer and sale of the
Senior Subordinated Notes, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising. No securities of the same class as the Senior
Subordinated Notes have been issued and sold by the Company within the
six-month period immediately prior to the date hereof.
(an) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Securities to be purchased by the
Eligible Purchasers will not involve any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code
16
<PAGE> 18
with respect to any employee benefit plan of the Company. The
representation made by the Company in the preceding sentence is made in
reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible
Purchasers as set forth in the Offering Documents under the Section
entitled "Notice to Investors."
(ao) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date contains, and as of the Closing Date will
contain, all the information specified in, and meeting the requirements
of, Rule 144A(d)(4) under the Act.
(ap) None of the Company, its subsidiaries or any of its or their
affiliates or any person acting on its or their behalf has engaged or will
engage in any directed selling efforts within the meaning of Regulation S
with respect to the Senior Subordinated Notes, and the Company, its
subsidiaries and its or their affiliates and all persons acting on its or
their behalf have complied or will comply with the offering restrictions
requirements of Regulation S in connection with the offering of the Senior
Subordinated Notes outside the United States.
(aq) There is no "substantial U.S. market interest" as defined in
rule 902(n) of Regulation S for the Senior Subordinated Notes or any
security of the same class as the Senior Subordinated Notes.
(ar) The sale of the Senior Subordinated Notes in offshore
transactions pursuant to Regulation S is not part of a plan or scheme to
evade the registration provisions of the Act.
(as) The Company and its subsidiaries have complied with all of the
provisions of Florida H.B. 1771, codified as Section 517.075, of the
Florida statutes, and all regulations promulgated thereunder relating to
issuers doing business with the Government of Cuba or with any person or
any affiliate located in Cuba.
7. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE INITIAL
PURCHASERS. Each of the Initial Purchasers, severally and not jointly,
represents and warrants to the Company as follows:
(a) Such Initial Purchaser is a QIB with such knowledge and
experience in financial and business matters as is necessary in order to
evaluate the merits and risks of an investment in the Senior Subordinated
Notes.
(b) Such Initial Purchaser (i) is not acquiring the Senior
Subordinated Notes with a view to any distribution thereof that would
violate the Act or the securities laws of any state of the United States
or any other applicable jurisdiction and (ii) will be reoffering and
reselling the Senior Subordinated Notes only to QIBs in reliance on the
exemption from the registration requirements of the Act provided by Rule
144A and to persons outside the United States in reliance on the exemption
from the registration requirements of the Act provided by Regulation S.
(c) No form of general solicitation or general advertising (within
the meaning of Regulation D under the Act) has been or will be used by
such Initial Purchaser or any of its
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<PAGE> 19
representatives in connection with the offer and sale of any of the Senior
Subordinated Notes, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising.
(d) Such Initial Purchaser agrees that, in connection with the
Exempt Resales, it will solicit offers to buy the Senior Subordinated
Notes only from, and will offer to sell the Senior Subordinated Notes only
to, Eligible Purchasers. Such Initial Purchaser further agrees that it
will offer to sell the Senior Subordinated Notes only to, and will solicit
offers to buy the Senior Subordinated Notes only from, persons who in
purchasing such Senior Subordinated Notes will be deemed to have
represented and agreed (i) if such Eligible Purchasers are QIBs, that they
are purchasing the Senior Subordinated Notes for their own account or
accounts with respect to which they exercise sole investment discretion
and that they or such accounts are QIBs, (ii) that such Senior
Subordinated Notes will not have been registered under the Act and may be
resold, pledged or otherwise transferred, only (1) (a) inside the United
States to a person who the seller reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A under the Act in a
transaction meeting the requirements of Rule 144A, (b) in a transaction
meeting the requirements of Rule 144 under the Act, (c) outside the United
States to a foreign person in a transaction meeting the requirements of
Rule 904 under the Act or (d) in accordance with another exemption from
the registration requirements of the Act (and based in the case of clauses
(b) and (c) above upon an opinion of counsel if the Company so requests),
(2) to the Company or (3) pursuant to an effective registration statement
under the Act, in each case, in accordance with any applicable securities
laws of any state of the United States or any other applicable
jurisdiction, and (iii) that the holder will, and each subsequent holder
is required to, notify any purchaser from it of the security evidenced
thereby of the resale restrictions set forth in (ii) above. Accordingly,
the Initial Purchaser represents and agrees that neither it, its
affiliates nor any persons acting on its or their behalf has engaged or
will engage in any directed selling efforts within the meaning of Rule
90l(b) of Regulation S with respect to the Senior Subordinated Notes, and
it, or its affiliates and all persons acting on its or their behalf have
complied and will comply with the offering restrictions requirements of
Regulation S.
(e) Such Initial Purchaser represents and agrees that the Senior
Subordinated Notes offered and sold in reliance on Regulation S have been
and will be offered and sold only in offshore transactions and that such
securities have been and will be represented upon issuance by a global
security that may not be exchanged for definitive securities until the
expiration of the Restricted Period and only upon certification of
beneficial ownership of the securities by a non-U.S. person or a U.S.
person who purchased such securities in a transaction that was exempt from
the registration requirements of the Act, which U.S. person will acquire
an interest in a Transfer Restricted Security.
(f) Such Initial Purchaser agrees that, at or prior to confirmation
of a sale of Senior Subordinated Notes (other than a sale pursuant to Rule
144A), it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases the Senior
Subordinated Notes from it during the Restricted Period a confirmation or
notice to substantially the following effect:
"The Senior Subordinated Notes covered hereby have not been
registered under the U.S. Securities Act of 1933, as amended (the
"Securities Act") and may not be offered and sold within the United
States or to, or for the account or benefit of, U.S. persons (i) as
part
18
<PAGE> 20
of their distribution at any time or (ii) otherwise until 40 days
after the later of the commencement of the offering and the closing
date, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used above
have the same meanings assigned to them in Regulation S."
The Initial Purchaser further agrees that it has not entered and
will not enter into any contractual arrangement with respect to the
distribution or delivery of the Senior Subordinated Notes, except with its
affiliates or with the prior written consent of the Company.
(g) Such Initial Purchaser further represents and agrees that (i) it
has not offered or sold and will not offer or sell any Senior Subordinated
Notes to persons in the United Kingdom prior to the expiry of the period
of six months from the issue date of the Senior Subordinated Notes, except
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995, (ii) it has complied and will comply with all applicable provisions
of the Financial Services Act 1986 with respect to anything done by it in
relation to the Senior Subordinated Notes in, from or otherwise involving
the United Kingdom, and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issuance of the Senior Subordinated Notes to a person
who is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to
whom the document may otherwise lawfully be issued or passed on.
(h) Such Initial Purchaser agrees that it will not offer, sell or
deliver any of the Senior Subordinated Notes in any jurisdiction outside
the United States except under circumstances that will result in
compliance with the applicable laws thereof, and that it will take at its
own expense whatever action is required to permit its purchase and resale
of the Senior Subordinated Notes in such jurisdictions. Such Initial
Purchaser understands that no action has been taken to permit a public
offering in any jurisdiction outside the United States where action would
be required for such purpose.
(i) Such Initial Purchaser agrees not to cause any advertisement of
the Senior Subordinated Notes to be published in any newspaper or
periodical or posted in any public place and not to issue any circular
relating to the Senior Subordinated Notes, except such advertisements as
include the statements required by Regulation S.
(j) The sale of the Senior Subordinated Notes in offshore
transactions pursuant to Regulation S is not part of a plan or scheme to
evade the registration provisions of the Act.
(k) Such Initial Purchaser is not a pension or welfare plan (as
defined in Section 3 of ERISA) and is not acquiring the Senior
Subordinated Notes on behalf of a pension or welfare plan.
(l) Prior to consummating the Eligible Resales, the Initial
Purchasers shall have delivered a copy of the Offering Memorandum and any
supplements or amendments thereto to each Eligible Purchaser.
(m) Such Initial Purchaser also understands that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Sections 9(d) and (e) hereof,
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<PAGE> 21
counsel to the Company and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and such
Initial Purchaser hereby consents to such reliance.
8. INDEMNIFICATION.
(a) The Company and the Subsidiary Guarantors agree, jointly and
severally, to indemnify and hold harmless (i) each Initial Purchaser, (ii)
each person, if any, who controls (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) any Initial Purchaser (any of the
persons referred to in this clause (ii) being hereinafter referred to as a
"controlling person"), and (iii) the respective officers, directors,
partners, employees, representatives and agents of the Initial Purchasers
or any controlling person (any person referred to in clause (i), (ii) or
(iii) in such capacity may hereinafter be referred to as an "Indemnified
Person") to the fullest extent lawful, from and against any and all
losses, claims, damages, liabilities, judgments, actions and expenses
(including, without limitation and as incurred, reimbursement of all
reasonable costs of investigating, preparing, pursuing or defending any
claim or action, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, including the reasonable fees and
expenses of counsel to any Indemnified Person) directly or indirectly
caused by, related to, based upon, arising out of or in connection with
any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Offering Memorandum, the Offering Memorandum
or any Rule 144A Information provided by the Company or the Subsidiary
Guarantors to any holder or prospective purchaser of Senior Subordinated
Notes pursuant to Section 5(n) (or any amendment or supplement thereto),
or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
(in the light of the circumstances under which they were made) not
misleading, except insofar as such losses, claims, damages, liabilities,
judgments, actions or expenses are caused by an untrue statement or
omission or alleged untrue statement or omission that is made in reliance
upon and in conformity with information relating to any of the Initial
Purchasers furnished in writing to the Company by any of the Initial
Purchasers expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum (or any amendment or supplement thereto); provided
however, that the indemnification contained in this paragraph (a) with
respect to the Preliminary Offering Memorandum shall not inure to the
benefit of any Initial Purchaser (or to the benefit of any person
controlling any Initial Purchaser) on account of any such loss, claim,
damage, liability, judgment, action or expense arising from the sale of
Senior Subordinated Notes by such Initial Purchaser to any person if a
copy of the Offering Memorandum, as it may be amended or supplemented,
shall not have been delivered or sent to such person, at or prior to the
confirmation of such sale, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in
the Preliminary Offering Memorandum was corrected in the Offering
Memorandum, as it may have been amended or supplemented; provided that the
Company delivered the Offering Memorandum, as it may be amended or
supplemented, to such Initial Purchaser in requisite quantity on a timely
basis to permit such delivery or sending. The Company and the Subsidiary
Guarantors also agree, jointly and severally, to reimburse each
Indemnified Person for any and all reasonable fees and expenses
(including, without limitation, the reasonable fees and expenses of
counsel) as they are incurred in connection with enforcing such
Indemnified Person's rights under this Agreement (including, without
limitation, its rights under this Section 8). The Company shall notify the
Initial Purchasers promptly of the institution, threat or assertion of any
claim, proceeding (including any governmental investigation)
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or litigation in connection with the matters addressed by this Agreement
which involves the Company or an Indemnified Person.
(b) In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted
against any of the Indemnified Persons with respect to which indemnity may
be sought against the Company or the Subsidiary Guarantors, such
Indemnified Person shall promptly notify the Company in writing (provided,
that the failure to give such notice shall not relieve the Company of its
obligations pursuant to this Agreement) and the Company shall assume the
defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person and payment of all reasonable fees
and expenses (regardless of whether it is ultimately determined that an
Indemnified Person is not entitled to indemnification hereunder). Such
Indemnified Person shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the employment of such counsel shall have been
specifically authorized in writing by the Company, (ii) the Company shall
have failed to assume the defense and employ counsel or (iii) the named
parties to any such action (including any impleaded parties) include both
such Indemnified Person and the Company and such Indemnified Person shall
have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Company or the Subsidiary Guarantors (in which case the
Company shall not have the right to assume the defense of such action on
behalf of such Indemnified Person, it being understood, however, that the
Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition
to any local counsel) for all such Indemnified Persons, which firm shall
be designated in writing by the Initial Purchasers and that all such
reasonable fees and expenses shall be reimbursed as they are incurred).
None of the Company nor the Subsidiary Guarantors shall be liable for any
settlement of any such action or proceeding effected without the prior
written consent of the Company, but if settled with the written consent of
the Company, which consent will not be unreasonably withheld, the Company
and the Subsidiary Guarantors agree, jointly and severally, to indemnify
and hold harmless any Indemnified Person from and against any loss, claim,
damage, liability or expense by reason of any such settlement.
Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested the Company or the Subsidiary Guarantors to
reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by the second sentence of this paragraph, the Company and the
Subsidiary Guarantors agree that they shall be liable for any settlement
of any proceeding effected without the Company's written consent if (i)
such settlement is entered into more than thirty (30) business days after
receipt by the Company of the aforesaid request, and (ii) none of the
Company nor the Subsidiary Guarantors shall have reimbursed the
Indemnified Person in accordance with such request prior to the date of
such settlement or contested the reasonableness of such fees and expenses
prior to the date of such settlement. Neither the Company nor the
Subsidiary Guarantors shall, without the prior written consent of each
Indemnified Person (which consent shall not unreasonably be withheld),
settle or compromise or consent to the entry of judgment in or otherwise
seek to terminate any pending or threatened action, claim, litigation or
proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not any Indemnified Person is a party
thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each Indemnified Person from all
liability arising out of such action, claim, litigation or proceeding.
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<PAGE> 23
(c) Each of the Initial Purchasers agrees, severally and not
jointly, to indemnify and hold harmless the Company, any person
controlling (within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act) the Company and the officers, directors, partners,
employees, representatives and agents of each such person to the same
extent as the foregoing indemnity from the Company and the Subsidiary
Guarantors to each of the Indemnified Persons, but only with respect to
claims and actions, losses, damages, liabilities, judgments or expenses,
based on information relating to such Initial Purchasers furnished in
writing by such Initial Purchasers expressly for use in the Preliminary
Offering Memorandum or the Offering Memorandum (or any amendments or
modifications thereto); provided however, that in no case shall any
Initial Purchaser be liable or responsible for any amount in excess of the
discounts and commissions received by such Initial Purchaser, as set forth
on the cover page of the Offering Memorandum.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities, judgments, actions or expenses referred to herein,
then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities, judgments,
actions and expenses (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party (or parties, as
applicable) on the one hand and the indemnified party (or parties, as
applicable) on the other hand from the offering of the Senior Subordinated
Notes or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the indemnifying party (or parties, as
applicable) and the indemnified party, (or parties, as applicable) as well
as any other relevant equitable considerations. The relative benefits
received by the Company and the Subsidiary Guarantors on the one hand, and
the Initial Purchasers, on the other hand, shall be deemed to be in the
same proportion as the total proceeds from the Offering (net of Initial
Purchasers' discounts and commissions but before deducting expenses)
received by the Company bear to the total discounts and commissions
received by the Initial Purchasers, in each case, as set forth on the
table on the cover page of the Offering Memorandum. The relative fault of
the Company and the Subsidiary Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a material
fact related to information supplied by the Company and the Subsidiary
Guarantors, on the one hand, or the Initial Purchasers, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, the Subsidiary Guarantors and the Initial Purchasers
agree that it would not be just and equitable if contribution pursuant to
this Section 8(d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities, judgments, actions or expenses referred to
in the immediately preceding paragraph shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 8, the Initial Purchasers (and the Initial Purchasers' related
Indemnified Persons) shall not be required to contribute, in the
aggregate, any amount in excess of the amount by which the total discount
applicable to the Senior Subordinated Notes purchased by such Initial
Purchaser pursuant to this Agreement exceeds the amount equal to (i) the
amount of any damages which the Initial Purchaser has otherwise been
required to pay by
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<PAGE> 24
reason of such untrue or alleged untrue statement or omission or alleged
omission plus (ii) any amount paid or contributed by the Initial Purchaser
pursuant to the Registration Rights Agreement. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(e) The indemnity and contribution agreements of the Company and the
Subsidiary Guarantors contained in this Section 8 are in addition to any
liability or obligation which the Company and the Subsidiary Guarantors
may otherwise have to the Indemnified Persons and the indemnity and
contribution agreements of the Initial Purchasers contained in this
Section 8 are in addition to any liability or obligation which the Initial
Purchasers may otherwise have to the Company, any person controlling
(within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act) the Company and the officers, directors, partners, employees,
representatives and agents of each such person.
9. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The several
obligations of the Initial Purchasers to purchase and pay for the Senior
Subordinated Notes as provided herein, shall be subject to the satisfaction of
each of the following conditions:
(a) All the representations and warranties of the Company and the
Subsidiary Guarantors contained in this Agreement shall be true and
correct on the Closing Date, with the same force and effect as if made on
and as of the date hereof and the Closing Date, respectively. Each of the
Company and the Subsidiary Guarantors shall have performed or complied
with its obligations and agreements and satisfied the conditions to be
performed, complied with or satisfied by it on or prior to the Closing
Date.
(b) (1) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers not later than 9:00 a.m., New
York City time, on the day following the date of this Agreement, or
at such later date and time as to which the Initial Purchasers may
approve;
(2) no action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by
any governmental agency that would, as of the Closing Date, prevent
the issuance of the Senior Subordinated Notes or the Note
Guarantees;
(3) no injunction, restraining order or order of any nature by
a federal or state court of competent jurisdiction shall have been
issued as of the Closing Date or, to the best knowledge of the
Company, threatened against, the Company or the Subsidiary
Guarantors which would prevent the issuance of the Senior
Subordinated Notes or the Note Guarantors; and
(4) no stop order preventing the use of the Offering
Documents, or any amendment or supplement thereto, or suspending the
qualification or exemption from qualification of the Senior
Subordinated Notes for sale in any jurisdiction designated by the
Initial Purchasers pursuant to Section 5(f) hereof shall have been
issued and no proceedings for that purpose shall have been commenced
or shall be pending, threatened or, to the Company's knowledge
contemplated.
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<PAGE> 25
(c) (1) (i)Since the date of the latest balance sheet in the
Offering Memorandum, there shall not have been any material adverse
change, or any development involving a prospective material adverse
change, in the assets, properties, business, results of operations,
condition (financial or otherwise) or prospects, whether or not
arising in the ordinary course of business, of the Company and its
subsidiaries, taken as a whole, (ii) since the date of the latest
balance sheet included in the Offering Memorandum, there shall not
have been any material change, or any development that is reasonably
likely to result in a material change, in the capital stock or in
the long-term debt, or material increase in short-term debt, of the
Company and its subsidiaries, taken as a whole, from that set forth
in the Offering Memorandum and (iii) except as set forth in the
Offering Memorandum, neither the Company nor any of its subsidiaries
shall have any liability or obligation, direct or contingent, which
is material to the Company;
(2) The Company and the Subsidiary Guarantors shall not have
any material liability or obligation, direct or contingent, other
than those reflected in the Offering Memorandum; and
(3) the Initial Purchasers shall have received certificates
dated the Closing Date, signed on behalf of the Company and each of
the Subsidiary Guarantors by (i) the President and (ii) the Chief
Financial Officer of the Company and the Subsidiary Guarantors,
confirming all matters set forth in Sections 9(a), (b) and (c)
hereof.
(d) On the Closing Date, the Initial Purchasers shall have received
an opinion (satisfactory to the Initial Purchasers and counsel to the
Initial Purchasers) dated the Closing Date, of Wachtell, Lipton, Rosen &
Katz, counsel for the Company and the Subsidiary Guarantors, substantially
to the effect that:
(1) AmeriServ Food Company ("AmeriServ") (i) is duly organized
and validly existing as a corporation in good standing under the
laws of its jurisdiction, (ii) has all requisite corporate power and
authority to carry on its business as described in the Offering
Memorandum and to own, lease and operate its properties, and (iii)
is duly qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires
such qualification except where the failure to be so qualified would
not have a Material Adverse Effect.
(2) All of the issued and outstanding shares of capital stock
of, or other securities evidencing equity ownership interests in,
AmeriServ or its subsidiaries have been duly and validly authorized
and issued, and, except as otherwise disclosed in the Offering
Memorandum, all of the shares of capital stock of, or other
securities evidencing equity ownership interests in, each such
subsidiary are owned, directly or indirectly, by AmeriServ. All such
shares of capital stock are fully paid and non-assessable and have
not been issued in violation of any preemptive or similar rights and
are owned free and clear of any Lien, except for Liens granted
pursuant to the New Credit Facility. There are not currently, and
will not be as a result of the Offering any outstanding
subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or Liens related to or entitling any
person to purchase or otherwise to acquire any shares of the capital
stock of, or other securities evidencing equity ownership interests
in, AmeriServ or any of its subsidiaries.
24
<PAGE> 26
(3) AmeriServ has all necessary corporate power and authority
to enter into and perform its obligations under the Operative
Documents, and to issue, sell and deliver the Note Guarantees to
the Initial Purchasers.
(4) Neither AmeriServ nor any of its subsidiaries is, and
after giving effect to the Offering will be, (i) in violation of its
charter or bylaws or partnership agreement, as the case may be, (ii)
in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any other agreement, indenture or
instrument, in each case which is material to the conduct of the
business of AmeriServ, to which AmeriServ is a party or by which it
or any of its subsidiaries or their respective property is bound, or
(iii) in violation of any local, state or federal law, statute,
ordinance, rule, regulation, requirement, judgment or court decree
(including, without limitation, environmental laws, statutes,
ordinances, rules, regulations, judgments or court decrees)
applicable to AmeriServ, its subsidiaries or any of its assets or
properties (whether owned or leased), other than violations or
defaults that would not reasonably be expected to have a Material
Adverse Effect. To the best knowledge of AmeriServ, there exists no
condition that, with notice, the passage of time or otherwise, would
constitute a default under any such document or instrument, except
for such defaults that could not reasonably be expected to have a
Material Adverse Effect.
(5) None of (i) the execution, delivery or performance by
AmeriServ of this Agreement and the other Operative Documents and
(ii) the issuance of the Note Guarantees by AmeriServ will conflict
with or constitute a breach of any of the terms or provisions of any
of the terms or provisions of, or a default under, or result in the
imposition of a lien or encumbrance on any properties of AmeriServ,
or an acceleration of indebtedness pursuant to, (1) the charter or
bylaws of AmeriServ, (2) to the best of its knowledge, any bond,
debenture, note, indenture, mortgage, deed of trust or other
agreement or instrument to which AmeriServ is a party or by which
any of its property is bound, or (3) any law or administrative
regulation applicable to AmeriServ or any of its assets or
properties, or any judgment, order or decree of any court or
governmental agency or authority entered in any proceeding to which
AmeriServ was or is now a party or to which any of its properties
may be subject except as would not have a Material Adverse Effect.
No consent, approval, authorization or order of, or filing or
registration with, any regulatory body, administrative agency, or
other governmental agency (except as securities or Blue Sky laws of
the various states may require) is required for the execution,
delivery and performance of the Operative Documents and the valid
issuance and sale of the Securities. No consents or waivers from any
person are required to consummate the transactions contemplated by
the Operative Documents or the Offering Documents, other than such
consents and waivers as have been or will be obtained prior to the
Closing Date or, in the case of the Registration Rights Agreement
and the transactions contemplated thereby, will be obtained and made
under the Act, the Trust Indenture Act and state securities or Blue
Sky laws and regulations.
(6) This Agreement has been duly authorized and, when validly
executed by AmeriServ and (assuming the due execution and delivery
thereof by the Initial Purchasers) is a legally valid and binding
obligation of AmeriServ, enforceable against AmeriServ in accordance
with its terms, except as the enforceability thereof may be (i)
subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws
25
<PAGE> 27
in effect which affect the enforcement of creditors' rights
generally, (ii) limited by general principles of equity (whether
considered in a proceeding at law or in equity) and (iii) limited by
securities laws prohibiting or limiting the availability of and
public policy against, indemnification or contribution.
(7) AmeriServ has duly authorized the Indenture, and when
AmeriServ has duly executed and delivered the Indenture (assuming
the due authorization, execution and delivery thereof by the
Trustee), the Indenture will be the legally valid and binding
obligation of AmeriServ, enforceable against AmeriServ in accordance
with its terms, except as the enforceability thereof may be (i)
subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the
enforcement of creditors' rights generally and (ii) limited by
general principles of equity (whether considered in a proceeding at
law or in equity).
(8) AmeriServ has duly authorized the Note Guarantees to be
endorsed on the Senior Subordinated Notes and, when the Senior
Subordinated Notes are issued and authenticated in accordance with
the terms of the Indenture and delivered to and paid for by the
Initial Purchasers in accordance with the terms hereof, the Note
Guarantees will be the legally valid and binding obligations of
AmeriServ, enforceable against AmeriServ in accordance with their
terms, except as the enforceability thereof may be (i) subject to
applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect which affect the enforcement of creditors'
rights generally and (ii) limited by general principles of equity
(whether considered in a proceeding at law or in equity).
(9) AmeriServ has duly authorized the Note Guarantees to be
endorsed on the New Senior Subordinated Notes and, when the New
Senior Subordinated Notes are issued and authenticated in accordance
with the terms of the Registered Exchange Offer and the Indenture,
the Note Guarantees will be the legally valid and binding
obligations of AmeriServ, enforceable against AmeriServ in
accordance with their terms, except as the enforceability thereof
may be (i) subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the
enforcement of creditors' rights generally and (ii) limited by
general principles of equity (whether considered in a proceeding at
law or in equity).
(10) The Registration Rights Agreement has been duly
authorized and when validly executed by AmeriServ will be (assuming
the due execution and delivery thereof by the Initial Purchasers)
the legally valid and binding obligation of AmeriServ, enforceable
against AmeriServ in accordance with its terms, except as the
enforceability thereof may be (i) subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors' rights generally and (ii)
limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(11) The New Credit Facility has been duly authorized and when
validly executed by AmeriServ will be the legally valid and binding
obligation of AmeriServ, enforceable against AmeriServ in accordance
with its terms, except as the enforceability thereof may be (i)
subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the
enforcement of creditors' rights
26
<PAGE> 28
generally and (ii) limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(12) To the best knowledge of such counsel, there is and,
after giving effect to the Acquisition pursuant to the terms of the
Asset Purchase Agreement, will be (i) no action, suit, proceeding or
investigation before or by any court, arbitrator or governmental
agency, body or official, domestic or foreign, now pending,
threatened, or contemplated to which the Company or the Subsidiary
Guarantors is or may be a party or to which the business or property
of the Company or the Subsidiary Guarantors is or, after giving
effect to the Acquisition pursuant to the terms of the Asset
Purchase Agreement, may be subject, (ii) no statute, rule,
regulation or order that has been enacted, adopted or issued by any
governmental agency or proposed by any governmental body or (iii) no
injunction, restraining order or order of any nature issued by a
federal or state court of competent jurisdiction to which the
Company or the Subsidiary Guarantors is or may be subject that, in
the case of clauses (i), (ii) and (iii) above, (1) is required to be
disclosed in the Offering Memorandum and that is not so disclosed,
(2) might have a Material Adverse Effect or (3) would interfere with
or adversely affect the issuance of the Senior Subordinated Notes or
the Note Guarantees.
(13) To the best knowledge of such counsel, there is no
contract or document concerning the Company of a character required
to be described in the Offering Memorandum that is not so described.
(14) To the best knowledge of such counsel, there are no
holders of any security of the Company or the Subsidiary Guarantors
who by reason of the execution by the Company and the Subsidiary
Guarantors of this Agreement or any other Operative Document or the
consummation of the transactions contemplated hereby and thereby,
have the right to request or demand that the Company or the
Subsidiary Guarantors register under the Act, or analogous foreign
laws and regulations, securities held by them.
(15) The statements under the captions "Description of Notes,"
"Description of Indebtedness," "The Acquisition," "The
Transactions--The Acquisition" and "The Business--Litigation" in the
Offering Memorandum, insofar as such statements constitute a summary
of legal matters, documents or proceedings referred to therein, are
correct in all material respects.
(16) Neither the Company nor any of its subsidiaries nor any
agent thereof acting on the behalf of them, has taken or will take
any action that might cause this Agreement or the issuance or sale
of the Notes to violate Regulation G (12 C.F.R. Part 207),
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221)
or Regulation X (12 C.F.R. Part 224) of the Board of Governors of
the Federal Reserve System, in each case as in effect now or as the
same may hereafter be in effect on the Closing Date.
(17) Neither the Company nor any of its subsidiaries is or,
after giving effect to the Acquisition pursuant to the terms of the
Asset Purchase Agreement, will be an "investment company" or a
company "controlled" by an investment company within the meaning of
the Investment Company Act of 1940, as amended.
27
<PAGE> 29
(18) When the Senior Subordinated Notes are issued and
delivered pursuant to this Agreement, such Senior Subordinated Notes
will not be of the same class (within the meaning of Rule 144A under
the Act) as securities of the Company that are listed on a national
securities exchange registered under Section 6 of the Exchange Act
or that are quoted in a United States automated inter-dealer
quotation system.
(19) The Indenture is not required to be qualified under the
Trust Indenture Act prior to the first to occur of (i) the
Registered Exchange Offer and (ii) the effectiveness of the Shelf
Registration Statement.
(20) Assuming (i) that the representations and warranties of
the Initial Purchasers in Section 7 hereof are true, (ii) that the
Initial Purchasers complied with their covenants as set forth in
Section 7 hereof, (iii) that none of the Eligible Purchasers is an
affiliate of the Company and (iv) that each of the Eligible
Purchasers is a QIB or is purchasing in a transaction pursuant to
Regulation S, the purchase and resale of the Senior Subordinated
Notes pursuant hereto (including pursuant to the Exempt Resales) is
exempt from the registration requirements of the Act.
(21) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, and each amendment or
supplement thereto, as of its date (except for the financial
statement and the notes thereto and schedules and other financial,
statistical and accounting data included therein, as to which no
opinion need be expressed), complied as to form in all material
respects with the requirements of Rule 144A of the Act.
In addition, such counsel shall state that it has participated in
conferences with representatives of the Company, representatives of the
Company's accountants, the Initial Purchasers' representatives and counsel
for the Initial Purchasers, at which conferences the contents of the
Offering Documents and related matters were discussed, and, although such
counsel has not independently verified and is not passing upon and assumes
no responsibility for the accuracy, completeness or fairness of the
statements contained in the Offering Documents (other than those that such
counsel must opine on pursuant to Section 9(d)(15) of this Agreement), no
facts have come to such counsel's attention which led it to believe that
the Offering Memorandum, on the date thereof or on the date of such
opinion, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
contained therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express
no view with respect to the financial statements and data and related
notes, the financial statement schedules and other financial, statistical
and accounting data included in the Offering Documents).
(e) On the Closing Date, the Initial Purchasers shall have received
an opinion (satisfactory to the Initial Purchasers and counsel to the
Initial Purchasers) dated the Closing Date, of Cassem, Tierney, Adams,
Gotch and Douglas, counsel for the Company and the Subsidiary Guarantors,
substantially to the effect that:
(1) Each of the Company and the non-Delaware Subsidiary
Guarantors (i) is, and after giving effect to the Acquisition
pursuant to the terms of the Asset Purchase Agreement will be, duly
organized and validly existing as a corporation in good standing
under the laws of its respective jurisdiction, (ii) has, and after
giving effect to the
28
<PAGE> 30
Acquisition pursuant to the terms of the Asset Purchase Agreement
will have, all requisite corporate power and authority to carry on
its business as described in the Offering Memorandum and to own,
lease and operate its properties, and (iii) is, and after giving
effect to the Acquisition pursuant to the terms of the Asset
Purchase Agreement will be, duly qualified and is in good standing
as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification except where the
failure to be so qualified would not have a Material Adverse Effect.
(2) All of the issued and outstanding shares of capital stock
of, or other securities evidencing equity ownership interests in,
the Company and each of its subsidiaries have been duly and validly
authorized and issued, and, except as otherwise disclosed in the
Offering Memorandum, all of the shares of capital stock of, or other
securities evidencing equity ownership interests in, each such
subsidiary are owned, directly or indirectly, by the Company. All
such shares of capital stock are fully paid and non-assessable and
have not been issued in violation of any preemptive or similar
rights and are owned free and clear of any Lien, except for Liens
granted pursuant to the New Credit Facility. There are not
currently, and will not be as a result of the Offering or the
consummation of the Acquisition pursuant to the terms of the Asset
Purchase Agreement, any outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or Liens
related to or entitling any person to purchase or otherwise to
acquire any shares of the capital stock of, or other securities
evidencing equity ownership interests in, the Company or any of its
subsidiaries.
(3) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Operative Documents to which it is a party, and to consummate the
transactions contemplated thereby, including, without limitation,
the corporate power and authority to issue, sell and deliver the
Senior Subordinated Notes to the Initial Purchasers.
(4) The non-Delaware Subsidiary Guarantors have all necessary
corporate power and authority to enter into and perform their
obligations under the Operative Documents, and to issue, sell and
deliver the Note Guarantees to the Initial Purchasers.
(5) Neither the Company nor any of its non-Delaware Subsidiary
Guarantors is, and after giving effect to the Offering and the
Acquisition pursuant to the terms of the Asset Purchase Agreement
will be, (i) in violation of its charter or bylaws or partnership
agreement, as the case may be, (ii) in default in the performance of
any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any
other agreement, indenture or instrument, in each case which is
material to the conduct of the business of the Company, to which the
Company is a party or by which it or any of the Company's
non-Delaware Subsidiary Guarantors or their respective property is
bound, or (iii) in violation of any local, state or federal law,
statute, ordinance, rule, regulation, requirement, judgment or court
decree (including, without limitation, environmental laws, statutes,
ordinances, rules, regulations, judgments or court decrees)
applicable to the Company, its non-Delaware Subsidiary Guarantors or
any of its assets or properties (whether owned or leased), other
than violations or defaults that could not reasonably be expected to
have a Material Adverse Effect. To the best knowledge of the
Company, there exists no condition that, with notice, the passage of
29
<PAGE> 31
time or otherwise, would constitute a default under any such
document or instrument, except for such defaults that could not
reasonably be expected to have a Material Adverse Effect.
(6) None of (i) the execution, delivery or performance by the
Company or the non-Delaware Subsidiary Guarantors of this Agreement
and the other Operative Documents, (ii) the performance by the
Company of the Asset Purchase Agreement and consummation of the
Acquisition pursuant to the terms of the Asset Purchase Agreement,
(iii) the issuance and sale of the Notes by the Company or the
issuance of the Note Guarantees by the non-Delaware Subsidiary
Guarantors and (iv) the consummation by the Company of the
transactions described in the Offering Memorandum under the caption
"Use of Proceeds," will conflict with or constitute a breach of any
of the terms or provisions of, or, after giving effect to the
Acquisition pursuant to the terms of the Asset Purchase Agreement,
will violate, conflict with or constitute a breach of any of the
terms or provisions of, or a default under, or result in the
imposition of a lien or encumbrance on any properties of the Company
or the non-Delaware Subsidiary Guarantors, as the case may be, or an
acceleration of indebtedness pursuant to, (1) the respective charter
or bylaws of the Company or the non-Delaware Subsidiary Guarantors,
as the case may be, (2) to the best of its knowledge, any bond,
debenture, note, indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or the non-Delaware
Subsidiary Guarantors, as the case may be, is a party or by which
any of their respective property is bound, or (3) any law or
administrative regulation applicable to the Company or the
non-Delaware Subsidiary Guarantors, as the case may be, or any of
their assets or properties, or any judgment, order or decree of any
court or governmental agency or authority entered in any proceeding
to which the Company or the non-Delaware Subsidiary Guarantors, as
the case may be, was or is now a party or to which any of their
respective properties may be subject except as would not have a
Material Adverse Effect. No consent, approval, authorization or
order of, or filing or registration with, any regulatory body,
administrative agency, or other governmental agency (except as
securities or Blue Sky laws of the various states may require) is
required for the execution, delivery and performance of the
Operative Documents and the valid issuance and sale of the
Securities. No consents or waivers from any person are required to
consummate the transactions contemplated by the Operative Documents
or the Offering Documents, other than such consents and waivers as
have been or will be obtained prior to the Closing Date or, in the
case of the Registration Rights Agreement and the transactions
contemplated thereby, will be obtained and made under the Act, the
Trust Indenture Act and state securities or Blue Sky laws and
regulations.
(7) This Agreement has been duly authorized and, when validly
executed by the Company and the non-Delaware Subsidiary Guarantors
and (assuming the due execution and delivery thereof by the Initial
Purchasers) is a legally valid and binding obligation of the Company
and the non-Delaware Subsidiary Guarantors, enforceable against each
in accordance with its terms, except as the enforceability thereof
may be (i) subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the
enforcement of creditors' rights generally, (ii) limited by general
principles of equity (whether considered in a proceeding at law or
in equity) and (iii) limited by securities laws prohibiting or
limiting the availability of, and public policy against,
indemnification or contribution.
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<PAGE> 32
(8) The Company and the non-Delaware Subsidiary Guarantors
have duly authorized the Indenture, and when the Company and the
non-Delaware Subsidiary Guarantors have duly executed and delivered
the Indenture (assuming the due authorization, execution and
delivery thereof by the Trustee), the Indenture will be the legally
valid and binding obligation of each, enforceable against each in
accordance with its terms, except as the enforceability thereof may
be (i) subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the
enforcement of creditors' rights generally and (ii) limited by
general principles of equity (whether considered in a proceeding at
law or in equity).
(9) The Company has duly authorized the Senior Subordinated
Notes and, when issued and authenticated in accordance with the
terms of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms hereof, will be the legally
valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, except as the
enforceability thereof may be (i) subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors' rights generally and (ii)
limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(10) The non-Delaware Subsidiary Guarantors have duly
authorized the Note Guarantees to be endorsed on the Senior
Subordinated Notes and, when the Senior Subordinated Notes are
issued and authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms hereof, the Note Guarantees will be the
legally valid and binding obligations of the non-Delaware Subsidiary
Guarantors, enforceable against the non-Delaware Subsidiary
Guarantors in accordance with their terms, except as the
enforceability thereof may be (i) subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors' rights generally and (ii)
limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(11) The Company has duly authorized the New Senior
Subordinated Notes and, when issued and authenticated in accordance
with the terms of the Registered Exchange Offer and the Indenture,
the New Senior Subordinated Notes will be the legally valid and
binding obligations of the Company, enforceable against the Company
in accordance with their terms, except as the enforceability thereof
may be (i) subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the
enforcement of creditors' rights generally and (ii) limited by
general principles of equity (whether considered in a proceeding at
law or in equity).
(12) The non-Delaware Subsidiary Guarantors have duly
authorized the Note Guarantees to be endorsed on the New Senior
Subordinated Notes and, when the New Senior Subordinated Notes are
issued and authenticated in accordance with the terms of the
Registered Exchange Offer and the Indenture, the Note Guarantees
will be the legally valid and binding obligations of the
non-Delaware Subsidiary Guarantors, enforceable against the
non-Delaware Subsidiary Guarantors in accordance with their terms,
except as the enforceability thereof may be (i) subject to
applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect which affect the enforcement of creditors'
rights generally and (ii) limited by general principles of equity
(whether considered in a proceeding at law or in equity).
31
<PAGE> 33
(13) The Registration Rights Agreement has been duly
authorized and when validly executed by the Company and the
non-Delaware Subsidiary Guarantors will be (assuming the due
execution and delivery thereof by the Initial Purchasers) the
legally valid and binding obligation of each, enforceable against
each in accordance with its terms, except as the enforceability
thereof may be (i) subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect which affect
the enforcement of creditors' rights generally and (ii) limited by
general principles of equity (whether considered in a proceeding at
law or in equity).
(14) The Asset Purchase Agreement has been duly and validly
authorized by the Company and is a legally valid and binding
agreement of the Company, enforceable against it in accordance with
its terms, except as the enforceability thereof may be (i) subject
to applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect which affect the enforcement of creditors'
rights generally, (ii) limited by general principles of equity
(whether considered in a proceeding at law or in equity) and (iii)
limited by securities laws prohibiting or limiting the availability
of, and public policy against, indemnification or contribution.
(15) The New Credit Facility has been duly authorized and when
validly executed by the Company and the subsidiaries of the Company
that are obligors thereunder will be the legally valid and binding
obligation of each, enforceable against each in accordance with its
terms, except as the enforceability thereof may be (i) subject to
applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect which affect the enforcement of creditors'
rights generally and (ii) limited by general principles of equity
(whether considered in a proceeding at law or in equity).
(16) To the best knowledge of such counsel, there is and,
after giving effect to the Acquisition pursuant to the terms of the
Asset Purchase Agreement, will be (i) no action, suit, proceeding or
investigation before or by any court, arbitrator or governmental
agency, body or official, domestic or foreign, now pending,
threatened, or, to the knowledge of the Company, contemplated to
which the Company or the non-Delaware Subsidiary Guarantors is or
may be a party or to which the business or property of the Company
or the non-Delaware Subsidiary Guarantors is or, after giving effect
to the Acquisition pursuant to the terms of the Asset Purchase
Agreement, may be subject, (ii) no statute, rule, regulation or
order that has been enacted, adopted or issued by any governmental
agency or, to the best knowledge of the Company, proposed by any
governmental body or (iii) no injunction, restraining order or order
of any nature issued by a federal or state court of competent
jurisdiction to which the Company or the non-Delaware Subsidiary
Guarantors is or may be subject that, in the case of clauses (i),
(ii) and (iii) above, (1) is required to be disclosed in the
Offering Memorandum and that is not so disclosed, (2) might have a
Material Adverse Effect or (3) would interfere with or adversely
affect the issuance of the Senior Subordinated Notes or the Note
Guarantees.
(17) To the best knowledge of such counsel, there are no
holders of any security of the Company or the non-Delaware
Subsidiary Guarantors who by reason of the execution by the Company
and the non-Delaware Subsidiary Guarantors of this Agreement or any
other Operative Document or the consummation of the transactions
contemplated hereby and thereby, have the right to request or demand
that the Company
32
<PAGE> 34
or the non-Delaware Subsidiary Guarantors register under the Act, or
analogous foreign laws and regulations, securities held by them.
In addition, such counsel shall state that it has participated in
conferences with representatives of the Company, representatives of the
Company's accountants, the Initial Purchasers' representatives and counsel
for the Initial Purchasers, at which conferences the contents of the
Offering Documents and related matters were discussed, and, although such
counsel has not independently verified and is not passing upon and assumes
no responsibility for the accuracy, completeness or fairness of the
statements contained in the Offering Documents, no facts have come to such
counsel's attention which led it to believe that the Offering Memorandum,
on the date thereof or on the date of such opinion, contained or contains
an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no view with respect to
the financial statements and data and related notes, the financial
statement schedules and other financial, statistical and accounting data
included in the Offering Documents).
(f) The Initial Purchasers shall have received on the Closing Date
an opinion, dated the Closing Date, of Latham & Watkins, in form and
substance satisfactory to the Initial Purchasers.
(g) The Initial Purchasers shall have received customary comfort
letters from (i) Ernst & Young LLP, independent public accountants for the
Company and (ii) KPMG Peat Marwick LLP, independent public accountants for
PFS, in each case, dated as of the date of this Agreement and as of the
Closing Date, in form and substance satisfactory to the Initial Purchaser
and counsel to the Initial Purchasers, with respect to the financial
statements and certain financial information contained in the Offering
Memorandum.
(h) The Company, the Subsidiary Guarantors and the Trustee shall
have entered into the Indenture and the Initial Purchasers shall have
received counterparts, conformed as executed, thereof.
(i) The Company, the Subsidiary Guarantors and the Initial
Purchasers shall have entered into the Registration Rights Agreement for
the benefit of the Initial Purchasers and the benefit of the other
purchasers, in the form attached hereto as Exhibit A, and the Initial
Purchasers shall have received counterparts, conformed as executed,
thereof.
(j) The Company shall have entered into the New Credit Facility (the
form and substance of which shall be acceptable to the Initial Purchasers)
and the Initial Purchasers shall have received counterparts, conformed as
executed thereof and of all other documents and agreements entered into in
connection therewith.
(k) The Company shall have fully performed or complied with any of
the agreements herein contained and required to be performed or complied
with by the Company on or prior to the Closing Date.
(l) Latham & Watkins shall have been furnished with such documents
and opinions, in addition to those set forth above, as they may reasonably
require for the purpose of enabling them to review or pass upon the
matters referred to in this Section 9 and in order to evidence the
33
<PAGE> 35
accuracy, completeness or satisfaction in all material respects of any of
the representations, warranties or conditions herein contained.
10. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective upon the execution and
delivery of this Agreement by the parties hereto. The Initial Purchasers
may terminate this Agreement at any time prior to the Closing Date by
written notice to the Company if any of the following has occurred: (i)
since the respective dates as of which information is given in the
Offering Documents, any adverse change or development involving a
prospective adverse change which would cause a Material Adverse Effect on
the Company, whether or not arising in the ordinary course of business,
which would, in the Initial Purchasers' reasonable judgment, make it
impracticable to market the Senior Subordinated Notes on the terms and in
the manner contemplated in the Offering Documents; (ii) any outbreak or
escalation of hostilities or other national or international calamity or
crisis or material change in economic conditions, if the effect of such
outbreak, escalation, calamity, crisis or change on the financial markets
of the United States or elsewhere would, in the Initial Purchasers'
reasonable judgment, be material and adverse and make it impracticable to
market the Senior Subordinated Notes on the terms and in the manner
contemplated in the Offering Documents; (iii) the suspension or material
limitation of trading in securities on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market System or limitation
on prices for securities on any such exchange or national market system;
(iv) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which in the Initial Purchasers' reasonable opinion
causes or will cause a Material Adverse Effect; (v) the declaration of a
banking moratorium by either federal or New York State authorities; or
(vi) the taking of any action by any federal, state or local government or
agency in respect of its monetary or fiscal affairs which in the Initial
Purchasers' reasonable opinion has a material adverse effect on the
financial markets in the United States.
(b) If on the Closing Date, any of the Initial Purchasers shall fail
or refuse to purchase Senior Subordinated Notes which it has agreed to
purchase hereunder on such date, and the aggregate principal amount of
such Senior Subordinated Notes that such defaulting Initial Purchaser
agreed but failed or refused to purchase does not exceed 10% of the total
principal amount of such Senior Subordinated Notes that all of the Initial
Purchasers are obligated to purchase on such Closing Date, the
non-defaulting Initial Purchasers shall be obligated to purchase the
Senior Subordinated Notes that such defaulting Initial Purchasers agreed
but failed or refused to purchase on such date. If, on the Closing Date,
any of the Initial Purchasers shall fail or refuse to purchase Senior
Subordinated Notes in an aggregate principal amount that exceeds 10% of
such total principal amount of the Senior Subordinated Notes and
arrangements satisfactory to the other Initial Purchasers and the Company
for the purchase of such Senior Subordinated Notes are not made within 48
hours after such default, this Agreement shall terminate without liability
on the part of the non-defaulting Initial Purchasers or the Company,
except as otherwise provided in this Section 10. In any such case that
does not result in termination of this Agreement, the Initial Purchasers
or the Company may postpone the Closing Date for not longer than seven
days, in order that the required changes, if any, in the Offering
Memorandum or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve a defaulting Initial
Purchaser from liability in respect of any default by any such Initial
Purchaser under this Agreement.
34
<PAGE> 36
(c) If this Agreement shall be terminated by the Initial Purchasers
pursuant to clause (i) of paragraph (a) of this Section 10 or because of
the failure or refusal on the part of the Company to comply with the terms
or to fulfill any of the conditions of this Agreement, the Company agrees
to reimburse the Initial Purchasers for all out-of-pocket expenses
(including, without limitation, the reasonable fees and disbursements of
counsel) reasonably incurred by the Initial Purchasers. Notwithstanding
any termination of this Agreement, the Company shall be liable for all
expenses which it has agreed to pay pursuant to Section 5(i) hereof.
11. AGREEMENT OF THE INITIAL PURCHASERS.
Each Initial Purchaser agrees, severally and not jointly, that, upon its
receipt of any written notice from the Company of the existence of any fact or
the happening of any event that requires the making of any additions to or
changes in any offering memorandum, registration statement or prospectus, or
amendment or supplement thereto, referred to in Section 5(d) hereof in order
that such document will not contain any untrue statement of a material fact or
omission to state any material fact necessary in order to make the statements
therein, in the light of the circumstances existing as of the date such document
was delivered, not misleading, such Initial Purchaser shall forthwith
discontinue disposition of the applicable Notes pursuant to such document until
(i) such Initial Purchaser receives from the Company copies of an amended or
supplemented document that the Company states in writing may be used by such
Initial Purchaser or (ii) such Initial Purchaser is advised in writing by the
Company that the use of such document may be resumed.
12. MISCELLANEOUS.
(a) Notices given pursuant to any provision of this Agreement shall
be addressed as follows: (i) if to the Company, to AmeriServe Food
Distribution, Inc., Brookfield Lake Corporate Center, 17975 W. Sarah Lane,
Suite 100, Brookfield, Wisconsin 53045, Attention: President, (ii) if to
the Initial Purchasers, c/o Donaldson, Lufkin & Jenrette Securities
Corporation, 277 Park Avenue, New York, New York 10172, Attention:
Syndicate Department, and (iii) if to the Initial Purchasers pursuant to
Section 11 hereof, (A) to Donaldson, Lufkin & Jenrette Securities
Corporation, 277 Park Avenue, New York, New York 10172, Attention:
Syndicate Department & Compliance Department and (B) to BancAmerica
Securities, Inc., 231 South LaSalle Street, Chicago, Illinois 60697,
Attention: Syndicate Department & Compliance Department or in any case to
such other address as the person to be notified may have requested in
writing.
(b) The respective indemnities, contribution agreements,
representations, warranties and other statements set forth in or made
pursuant to this Agreement shall remain operative and in full force and
effect, and will survive delivery of and payment for the Senior
Subordinated Notes, regardless of (i) any investigation, or statement as
to the results thereof, made by or on behalf of any such person, (ii)
acceptance of the Senior Subordinated Notes and payment for them hereunder
and (iii) termination of this Agreement.
(c) Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Subsidiary Guarantors, the Initial Purchasers, any controlling persons
referred to herein and their respective successors and assigns, all as and
to the extent provided in this Agreement, and no other person shall
acquire or have any
35
<PAGE> 37
right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Senior Subordinated
Notes from any of the Initial Purchasers merely because of such purchase.
(d) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS
MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
(e) This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument. Please confirm that
the foregoing correctly sets forth the agreement between the Company, the
Subsidiary Guarantors and the Initial Purchasers.
(f) In any provision hereunder purporting to give effect to the
Acquisition, such statements are made with respect to facts known as of
the date hereof (and not future events other than the consummation of the
Acquisition) and are meant only to account for consummation of the
Acquisition in accordance with the terms of the Asset Purchase Agreement.
(g) All representations and warranties hereunder made by the Company
or the Subsidiary Guarantors, and the opinions of Wachtell, Lipton, Rosen
& Katz and Cassem, Tierney, Adams, Gotch and Douglas are qualified by the
information contained in the Preliminary Offering Memorandum and the
Offering Memorandum.
[signature pages follow]
36
<PAGE> 38
Very truly yours,
AMERISERVE FOOD DISTRIBUTION, INC.
By: /s/ Raymond E. Marshall
-------------------------------
Name: Raymond E. Marshall
Title: President
AMERISERV FOOD COMPANY
By: /s/ Raymond E. Marshall
-------------------------------
Name: Raymond E. Marshall
Title: President
CHICAGO CONSOLIDATED CORPORATION
By: /s/ Raymond E. Marshall
-------------------------------
Name: Raymond E. Marshall
Title: President
NORTHLAND TRANSPORTATION SERVICES, INC.
By: /s/ Raymond E. Marshall
-------------------------------
Name: Raymond E. Marshall
Title: President
THE HARRY H. POST COMPANY
By: /s/ Raymond E. Marshall
-------------------------------
Name: Raymond E. Marshall
Title: President
DELTA TRANSPORTATION, LTD.
By: /s/ Raymond E. Marshall
-------------------------------
Name: Raymond E. Marshall
Title: President
<PAGE> 39
AMERISERVE TRANSPORTATION, INC.
By: /s/ Raymond E. Marshall
-------------------------------
Name: Raymond E. Marshall
Title: President
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written
by Donaldson, Lufkin & Jenrette
Securities Corporation on behalf
of the Initial Purchasers.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Tyler T. Wolfram
-----------------------------
Name: Tyler T. Wolfram
Title: Vice President
<PAGE> 40
SCHEDULE I
Subsidiary Guarantors
AmeriServ Food Company
Chicago Consolidated Corporation
Northland Transportation Services, Inc.
The Harry H. Post Company
Delta Transportation, Ltd.
AmeriServe Transportation, Inc.
<PAGE> 41
SCHEDULE II
PRINCIPAL AMOUNT
OF SENIOR SUBORDINATED NOTES
INITIAL PURCHASERS TO BE PURCHASED
- ------------------ ---------------
Donaldson, Lufkin & Jenrette
Securities Corporation ......................................... $400,000,000
BancAmerica Securities, Inc. ..................................... $100,000,000
$500,000,000
<PAGE> 42
EXHIBIT A
Form of Registration Rights Agreement
<PAGE> 1
EXHIBIT 2.2
STRICTLY CONFIDENTIAL
================================================================================
AmeriServe Food Distribution, Inc.
================================================================================
ASSET PURCHASE AGREEMENT
between
PepsiCo, Inc. and
Nebco Evans Holding Company
----------
May 23, 1997
================================================================================
<PAGE> 2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and entered into
as of the 23rd day of May, 1997, between PepsiCo, Inc., a North Carolina
corporation (the "Seller"), and Nebco Evans Holding Company, a Delaware
corporation (the "Buyer").
PRELIMINARY STATEMENTS
A. The Seller, through its unincorporated division called PFS ("PFS"),
owns and operates a distribution business which sells food, supplies, equipment,
smallwares, uniforms, beverages, promotional items and point of purchase
materials to (i) all of the Pizza Hut, Taco Bell and KFC restaurants currently
owned by the Seller and its subsidiaries within the contiguous 48 States of the
United States (the "Continental United States"), except for 53 KFC restaurants,
and (ii) a portion of the Pizza Hut, Taco Bell and KFC restaurants which have
been franchised to independent franchisees within the Continental United States,
and (iii) a limited number of Pizza Hut, Taco Bell and KFC restaurants outside
the Continental United States by exporting such food, supplies, equipment,
smallwares, uniforms, beverages, promotional items and point of purchase
materials from PFS distribution centers in the United States (as currently
conducted, the "PFS Business").
B. The Buyer desires to acquire, and the Seller desires to sell, the
assets and properties of the Seller used or held for use in the PFS Business,
and, subject to the terms and subject to the conditions set forth in this
Agreement, the Buyer desires to assume certain liabilities and obligations of
the PFS Business as hereinafter specified.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
ARTICLE 1
AGREEMENT TO PURCHASE AND SELL
SECTION 1.01. Sale of Assets arid Assumption of Liabilities.
(a) Subject to and upon the terms and conditions set forth in this
Agreement: (i) the Seller agrees to sell, transfer, assign, convey, set over and
deliver to the Buyer, and the Buyer agrees to purchase, acquire and receive from
<PAGE> 3
the Seller, all of the PFS Assets (as defined below), and (ii) the Buyer agrees
to assume all of the PFS Liabilities (as defined below), in each case at a
closing (the "Closing") to be held at the offices of Wachtell, Lipton, Rosen &
Katz, 51 West 52nd Street, New York, New York, 10019, or at such other location
as the parties hereto may agree, on the later of (i) the third business day
after satisfaction or waiver of the conditions set forth in Article 9 (subject
to Article 11) and (ii) June 25, 1997, or on such other date as shall be
mutually agreed in writing by the parties hereto (the "Closing Date"). All
transactions consummated at the Closing shall be deemed to have been made
simultaneously and shall all be effective at and as of the close of business on
the Closing Date.
(b) On or prior to the Escrow Date (as defined in Article 10), Pepsi-Cola
Canada, Ltd. ("PCL"), a Canadian corporation and wholly owned subsidiary of the
Seller, the Seller and the Buyer shall enter into a Canadian Asset Purchase
Agreement substantially similar to this Agreement but with such reasonable and
customary provisions as may be necessary or desirable under Canadian law (the
"Canadian Sale Agreement") pursuant to which PCL will agree to sell to the Buyer
and the Buyer will agree to purchase from PCL the PFS Canadian Business
comprised of the PFS Canadian Assets and the PFS Canadian Liabilities (as such
terms will be defined in the Canadian Sale Agreement).
SECTION 1.02. PFS Assets. The term "PFS Assets" shall mean all of the
Seller's (and each of the Seller's subsidiaries' other than PCL) right, title
and interest in and to all of the following assets, properties and rights:
(a) Owned Real Property. The parcel of real property in Manassas, Virginia
more specifically described in Exhibit A attached hereto, and operating as a
distribution center, together with all easements, rights of way, privileges,
licenses, appurtenances and other rights and benefits running with such parcel
of real property (the "Owned Real Property");
(b) Leased Real Property. All of the Seller's rights and leasehold
interests in the real property leased or subleased to the Seller pursuant to the
real estate lease agreements (or sublease agreements) described in Exhibit B
attached hereto (collectively, the "Leased Real Property"; the Owned Real
Property and the Leased Real Property are together referred to herein as the
"Real Property"). The Leased Real Property includes all 21 leased distribution
centers of the PFS Business within the Continental United States;
(c) Owned Tangible Personal Property. All fixtures, machinery, leasehold
improvements, equipment and all other tangible personal property (other than the
Vehicles and the Inventory, as such terms are defined below) owned by the Seller
and located at or forming part of the Real Property on the Closing Date,
including, without limitation, all furniture, office equipment (including all
computer
2
<PAGE> 4
hardware, copiers, fax machines and other business machines), refrigeration
equipment, material handling equipment, supplies and miscellaneous items
(collectively, the "Owned Tangible Personal Property"). Attached as Exhibit C is
a list of the refrigeration equipment owned by the Seller on the date hereof
which have been installed in the distribution centers of the PFS Business and a
separate list of substantially all of the material handling equipment of the PFS
Business owned by the Seller on the date hereof;
(d) Leased Tangible Personal Property. All of the Seller's rights and
interests in the equipment and other tangible personal property which are leased
to the Seller as of the Closing Date and are used or held for use primarily in
the PFS Business pursuant to equipment or vehicle lease agreements
(collectively, the "Leased Tangible Personal Property"; the Owned Tangible
Personal Property and the Leased Tangible Personal Property are together
referred to herein as the "Tangible Personal Property"). Exhibit D attached
hereto lists all material lease agreements existing on the date hereof relating
to the Leased Tangible Personal Property;
(e) Tractors, Trailers and Other Motor Vehicles. All of the route
tractors, yard tractors, route trailers and yard trailers and other motor
vehicles owned by the Seller as of the Closing Date and used or held for use
primarily in the PFS Business (collectively, the "Vehicles"), together with any
titles and licenses of the Seller relating to the Vehicles. Attached hereto as
Exhibit E is a list of all such Vehicles existing as of the date hereof;
(f) Intangible Property. All rights, title and interests of the Seller in
and to the following intangible property (collectively, the "Intangible
Property"):
(i) The Sourcelink automated order entry computer software system
owned by the Seller and more fully described in Exhibit F attached hereto;
(ii) the exclusive rights of the Seller to market, sell and install
in Taco Bell franchised restaurants the Home Office 360 computer software
system licensed by the Seller from Peavine Creek Software, Inc. pursuant
to the License and Marketing Agreement dated July 1, 1994 between Peavine
Creek Software, Inc. and the Seller, which Home Office 360 computer
software system is more fully described in Exhibit F attached hereto;
(iii) all computer applications, programs and other software, data
and databases (including all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions,
improvements, enhancements, updates and accessions thereto), all technical
3
<PAGE> 5
manuals and documentation made in connection with the foregoing, and all
licenses and rights with respect to the foregoing or of like nature,
including operating software, network software, firmware, middleware,
design software, design tools, systems documentation and instructions, in
each case to the extent owned by the Seller and used or held for use
exclusively in the PFS Business as of the Closing Date including, without
limitation, the Seller's rights in the Manugistics inbound transportation
software, the ASI inventory forecasting software, SAILS replenishment
program, and J.D. Edwards software package;
(iv) all service and parts records, warranty records, maintenance
and repair records and similar records of the Seller and all warranties
issued to the Seller as of the Closing Date relating to the PFS Assets;
and
(v) all material licenses and permits (collectively, the "Permits")
issued to the Seller as of the Closing Date by any governmental or
quasi-governmental agency or authority or any private party relating to or
affecting the ownership, use or enjoyment of the PFS Assets or required to
carry on the PFS Business, to the extent the Permits are transferable.
(g) Contracts. All of the rights, title and interest of the Seller in, to
and under the agreements, arrangements, contracts and commitments of the PFS
Business, including those agreements, arrangements, contracts and commitments
which are listed in Exhibits B, D, G, L and R attached hereto and purchase
orders for Goods in Transit (as defined herein) being transferred to the Buyer
pursuant to this Agreement, subject to the assumption by the Buyer of the
Seller's obligations thereunder as described in Section 1.03 below;
(h) Inventory. All of the inventory of finished goods, work in progress,
goods, commodities, supplies and raw materials owned by the Seller and located
on, or in transit to or from, the Real Property or used or sold in the operation
of the PFS Business and existing on the Closing Date (collectively, the
"Inventory");
(i) Goods in Transit. Anything falling under the description Owned
Tangible Personal Property or Inventory above ordered by the Seller from third
party vendors in the ordinary course of business for use in the PFS Business but
not yet received by the Seller prior to the Closing Date (the "Goods in
Transit");
(j) Prepaid Expenses. All prepaid expenses of Seller relating to the PFS
Business and included in the calculation of the Final Working Capital (defined
in Section 1.06 below);
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(k) Accounts Receivable. All of the accounts receivable of the Seller
arising out of the operations of the PFS Business and included in the
calculation of the Final Working Capital;
(l) Cash and Cash Equivalents. All cash equivalents and all cash included
in the calculation of the Final Working Capital or in bank accounts used
exclusively for the operation of the PFS Business and existing on the Closing
Date;
(m) Records. All records of the PFS Business in the Seller's possession on
the Closing Date, including sales and credit records, studies and reports,
advertising and sales material, customer lists, vendor lists, costs and supply
data, purchasing records, distribution and transportation records, inventory
records, historical product velocity reports, historical Department of
Transportation logs, financial records, copies of property and sales tax
records, personnel and payroll records for PFS employees, computer data and
records and other materials and information used in the PFS Business; provided,
however, that if the records or other information described in this clause (m)
is included within information relating to the businesses of the Seller and its
subsidiaries other than the PFS Business, then only the data relating to PFS
shall be provided by the Seller;
(n) Claims. All claims, rights of action and similar rights of the Seller
against third parties arising out of the Seller's ownership of the PFS Assets;
(o) Intellectual Property. All rights, title and interests of Seller as of
the Closing Date in and to the following intellectual property (collectively,
the "Intellectual Property") to the extent used or held for use primarily in the
PFS Business: any and all United States (i) patents (including design patents,
industrial designs and utility models) and patent applications (including
docketed patent disclosures awaiting filing, reissues, divisions, continuations
in part and extensions), patent disclosures awaiting filing determination,
inventions and improvements thereto; (ii) trademark, tradename, service mark and
brand name rights of the Seller to the PFS name, the PFS Globe design and the
Sourcelink name pursuant to the trademark registrations and applications listed
in Exhibit F attached hereto in the respective countries listed therein; (iii)
copyrights (including software) and registrations thereof; (iv) inventions,
processes, designs, formulae, trade secrets, know-how, industrial models,
confidential and technical information, manufacturing, engineering and technical
drawings, product specifications and confidential business information; (v) mask
work and other semiconductor chip rights and registrations thereof; and (vi)
copies and tangible embodiments thereof (in whatever form or medium, including
electronic media), including, but not limited to, rights to sue for and remedies
against past, present and future infringements thereof; and rights of priority
and protection of interests therein under the laws of any jurisdiction worldwide
and all tangible embodiments thereof; and
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(p) The PFS Business as an ongoing concern and the goodwill thereof.
SECTION 1.03. PFS Liabilities. The term "PFS Liabilities" shall mean:
(a) All obligations and liabilities of the Seller under any and all of the
leases, contracts, licenses and commitments of the PFS Business which are
described in Section 1.02 as part of the PFS Assets;
(b) Those liabilities and obligations in respect of the employees of the
PFS Business on the Closing Date to be assumed in accordance with Article 6
below;
(c) All liabilities of the PFS Business with respect to any litigation
disclosed pursuant to Section 2.10 below; provided, however, that the total
amount of liabilities assumed by the Buyer pursuant to this clause (c) shall not
exceed $2,000,000;
(d) All liabilities (including, without limitation, accounts payable)
arising out of the operation of the PFS Business or the ownership of the PFS
Assets existing on the Closing Date and included in the calculation of the Final
Working Capital described in Section 1.06 hereof;
(e) Up to $3,000,000 of sales, transfer and similar taxes on the transfer
of the PFS Assets to the Buyer pursuant to this Agreement plus any additional
such taxes occasioned by the failure of the Buyer to file appropriate and timely
resale certificates or take similar action to avoid such taxes; and
(f) No liability, obligation, claim or other matter shall in any event be
a PFS Liability except as expressly set forth in this Section 1.03.
SECTION 1.04. Purchase Price. The purchase price (the "Purchase Price")
for the PFS Assets and the PFS Canadian Assets is US$830,000,000, as adjusted
pursuant to Sections 1.06 and 1.07 below. The Purchase Price is in addition to
the assumption of the PFS Liabilities and the PFS Canadian Liabilities by the
Buyer, as described herein and in the Canadian Sale Agreement. The Purchase
Price for the PFS Assets and the PFS Canadian Assets shall be paid at the
Closing by wire transfer of immediately available funds to a bank account
designated by the Seller prior to the Closing.
SECTION 1.05. Allocation of Purchase Price. The Seller and the Buyer shall
use their reasonable best efforts to agree, within sixty (60) days after the
Closing Date, to an allocation of the Purchase Price (together with liabilities
assumed hereunder and other relevant items) among the PFS Assets and the PFS
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Canadian Assets. Such allocation will comply with the requirements of Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code"), and will be
determined through arm's length negotiations. The Seller and the Buyer each
agrees that, to the extent permitted by applicable law, it will adopt and
utilize the amounts so allocated to each asset or class of assets for purposes
of all federal, state and other tax returns or reports of any nature filed by it
and that, except as may be required by applicable law or regulation, it will not
take any position inconsistent therewith upon examination of any such tax
returns or reports, in any claim for refund, in any litigation or otherwise with
respect to such tax returns or reports.
SECTION 1.06. Closing Balance Sheet.
(a) As promptly as practicable, but no later than 90 days after the
Closing Date, the Buyer (through the management of the PFS Business) will cause
to be prepared and delivered to the Seller a balance sheet (the "Closing Balance
Sheet"), and a certificate based on such Closing Balance Sheet setting forth in
detail the Buyer's calculation of the Closing Working Capital (as such term is
hereinafter defined). The Closing Balance Sheet shall fairly present the
consolidated financial position of the PFS Business and the PFS Canadian
Business as of the close of business on the Closing Date on a basis consistent
with those principles used in preparation of the Financial Statements referred
to in Section 2.07 below but including only those assets that are PFS Assets,
only those liabilities that are PFS Liabilities and reflecting all valuation and
other reserves with respect to PFS Assets recorded in any of the books and
records of the Seller or any division or affiliate of the Seller. For purposes
of this Agreement, the "Closing Working Capital" shall mean an amount equal to
(A) the sum of all current assets of the PFS Business and the PFS Canadian
Business, as defined by United States generally accepted accounting principles
("GAAP") and applied in a manner consistent with the Financial Statements
referred to in Section 2.07 below, less (B) the sum of all current liabilities
(but excluding all accounts payable cash management account liabilities
determined in accordance with the historical accounting practices and statements
of the PFS Business) of the PFS Business and the PFS Canadian Business, as
defined by GAAP and applied in a manner consistent with the Financial Statements
referred to in Section 2.07 below, but in each case excluding any items excluded
from the calculation of the Statement of Net Assets To Be Sold (as hereinafter
defined).
(b) After delivery of its calculation of the Closing Working Capital, the
Buyer shall make available to the Seller all books, records, work papers,
personnel and other materials and sources used by the Buyer to prepare the
calculation of the Closing Working Capital delivered pursuant to subsection
1.06(a). If the Seller disagrees with the Buyer's calculation of the Closing
Working Capital delivered pursuant to subsection 1.06(a), the Seller may within
60 days after receipt of the
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Buyer's calculation of the Closing Working Capital, send a notice to the Buyer
disagreeing with such calculation and setting forth the Seller's calculation of
such amount. Any such notice of disagreement shall specify those items or
amounts as to which the Seller disagrees.
(c) If a notice of disagreement is given by the Seller pursuant to
subsection 1.06(b), the Buyer and the Seller shall, during the 15 business days
following receipt of such notice, use their best efforts to reach agreement on
the disputed items or amounts in order to determine the Closing Working Capital.
If, during such period, the Buyer and the Seller are unable to reach such
agreement, they shall promptly thereafter cause a nationally recognized firm of
independent accountants chosen and mutually accepted by the Buyer and the Seller
(the "Accounting Referee") to review this Agreement and the disputed items or
amounts for the purpose of calculating the Closing Working Capital. In making
such calculation, the Accounting Referee shall consider only those items or
amounts in the Buyer's calculation of the Closing Working Capital as to which
the Seller has disagreed. The Accounting Referee shall deliver to the Buyer and
the Seller, as promptly as practicable, a report setting forth such calculation.
Such report shall be final and binding upon the Buyer and the Seller and shall
constitute an arbitral award upon which a judgment may be entered in any court
having jurisdiction thereof. The cost of such review and report by the
Accounting Referee shall be borne (i) by the Buyer if (A) the difference between
the Final Working Capital (as such term is hereinafter defined) and the Buyer's
calculation of the Closing Working Capital delivered pursuant to subsection
1.06(a) is greater than (B) the difference between the Seller's calculation of
the Closing Working Capital delivered pursuant to subsection 1.06(b) and the
Final Working Capital, and (ii) by the Seller if the amount referred to in
clause (A) above is less than the amount referred to in clause (B) above. For
purposes of this Agreement, the "Final Working Capital" shall mean the Closing
Working Capital, (x) as shown in the Buyer's calculation delivered pursuant to
subsection 1.06(a) if no notice of disagreement with respect thereto is
delivered by the Seller pursuant to subsection 1.06(b), or (y) if such a notice
of disagreement is delivered by the Seller, as agreed by the parties pursuant to
this subsection 1.06(c) or, in the absence of such agreement, as shown in the
Accounting Referee's calculation delivered pursuant to this subsection 1.06(c).
(d) The Buyer and the Seller agree that they will cooperate and assist in
the preparation of the Closing Balance Sheet and the calculation of the Closing
Working Capital and in the conduct of the audits and reviews referred to in this
Section 1.06, including, without limitation, making available to the extent
necessary books, records, work papers and personnel.
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SECTION 1.07. Adjustment of Purchase Price.
(a) If the Final Working Capital is less than US$232,342,000 (the amount
of Closing Working Capital estimated by the Seller immediately prior to the date
hereof), the Seller shall pay to the Buyer, as an adjustment to the Purchase
Price, in the manner provided in subsection 1.07(b), the amount of such
difference. If the Final Working Capital is greater than US$232,342,000, the
Buyer shall pay to the Seller, in the manner provided in subsection 1.07(b),
the amount of such difference.
(b) Any payment due pursuant to subsection 1.07(a) shall be made by wire
transfer of immediately available funds within 10 days after the Final Working
Capital has been determined pursuant to Section 1.06(c), to such bank account of
the other party as may be designated by such other party. If the payment due
pursuant to subsection 1.07(a) is not made within such 10 day period, interest
shall be due on such late payment at a rate equal to the lesser of: (i) 18% per
annum (calculated on the basis of the number of days elapsed and a 365 day year)
or (ii) the maximum rate permitted to be charged under applicable state law.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLER
In order to induce the Buyer to enter into this Agreement, the Seller
hereby represents and warrants as follows:
SECTION 2.01. Organization and Standing of the Seller. The Seller (i) is a
duly organized and validly existing corporation, in good standing under the laws
of the State of North Carolina, (ii) has all requisite corporate power and
authority to own, lease, use and operate the PFS Assets and to transact the PFS
Business where and as now conducted, and (iii) is duly qualified and in good
standing in each jurisdiction in which the conduct of the PFS Business, as now
conducted, makes such qualification necessary.
SECTION 2.02. Corporate Power and Authority. The Seller has full corporate
power and authority to carry out its obligations hereunder. The execution and
delivery of this Agreement and the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of the Seller. No other
corporate acts or proceedings on the part of the Seller or its stockholders are
necessary to authorize the exclusion and delivery of this Agreement or the
consummation of the transactions contemplated hereby. When duly executed and
delivered by the parties hereto, this Agreement will constitute a valid and
legally
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binding obligation of, and will be enforceable against, the Seller in accordance
with its terms.
SECTION 2.03. Conflicts, Consents and Approvals.
(a) Except as described in subsection 2.03(b) below, neither the execution
and delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, nor compliance by the Seller with any of the provisions
hereof, will: (i) result in the creation of any lien, security interest, charge,
or encumbrance upon any of the PFS Assets; (ii) violate any order, writ,
injunction, decree, or any statute, rule or regulation applicable to the Seller
or any of the PFS Assets; (iii) violate the certificate of incorporation or
bylaws or other organizational documents of the Seller; or (iv) require the
consent or approval of any third party, court, or governmental body or agency,
instrumentality, or authority, other than as required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act").
(b) Exhibits B, D, G and R attached hereto identify all of the leases and
other agreements listed in such Exhibits which require the consents of certain
of the other parties thereto to assign to the Buyer such leases and agreements.
As described in Section 4.05 below certain of the Permits (including local,
state and federal vehicle, dairy and food licenses) are not transferable.
SECTION 2.04. Title to Properties; Absence of Liens and Encumbrances.
(a) Exhibits A and B hereto list and describe all of the Real Property of
the PFS Business. Exhibit C hereto lists and describes all of the refrigeration
equipment installed in the distribution centers of the PFS Business and a
separate list of substantially all of the material handling equipment of the PFS
Business owned by the Seller on the date hereof. Exhibit D hereto lists all
Leased Tangible Personal Property of the PFS Business. Exhibit E hereto lists
all Vehicles of the PFS Business.
(b)(i) Exhibit A sets forth a complete and accurate list and
description of all Owned Real Property. Exhibit B also sets forth a
complete and accurate list and description of all Leased Real Property,
such description including, for each Leased Real Property, an
identification of the lease or sublease agreement therefor, the names of
the lessor and lessee (or sublessor and sublessee) thereunder, the title
and date thereof, the address and approximate size of the premises leased
thereunder, the rental and term thereunder, including any extension
options, and the use of such premises.
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(ii) Seller holds good and marketable fee or leasehold title (as the
case may be) to the Owned Real Property and the Leased Real Property, free
and clear of any liens, mortgages, easements, rights-of-way, licenses, use
restrictions, claims, charges, options, title defects or encumbrances of
any nature whatsoever, except for the Permitted Encumbrances (as defined
below). The Permitted Encumbrances do not impair or adversely affect the
value of any Real Property in any material respect, the current use,
occupancy or operation thereof, or the business, operations or financial
condition of the PFS Business. As used herein, the term "Permitted
Encumbrances" means (A) liens for taxes not yet due and payable or which
are being contested by Seller in good faith and by appropriate
proceedings; (B) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like liens arising in the ordinary course of business
which are less than $50,000 in amount and which are being contested in
good faith and by appropriate proceedings; or (C) easements,
rights-of-way, encroachments, restrictions, conditions and other similar
encumbrances incurred or suffered in the ordinary course of business and
which, individually or in the aggregate, (1) are not substantial in
character, amount or extent in relation to the applicable Real Property
and (2) do not materially detract from the use, utility or value of the
applicable Real Property or otherwise materially impair Seller's present
business operations at such location.
(iii) No condemnation or eminent domain proceeding against any
material part of the Real Property is pending or (to Seller's knowledge)
threatened, and no material damage or destruction has occurred with
respect to any of the Real Property.
(iv) Seller has granted no outstanding options and has entered into
no outstanding contracts with others for the sale, mortgage, pledge,
hypothecation, assignment, sublease, lease or other transfer of all or any
part of the Real Property. No person or entity has any right or option to
acquire, or right of first refusal with respect to, Seller's interest in
the Real Property or any part thereof.
(v) All of the leases or subleases of the Leased Property (the "Real
Property Leases") are valid, binding and in full force and effect. No Real
Property Lease is subject to any pledge, lien, sublease, assignment,
license or other agreement pursuant to which the Seller granted to any
third party any interest in such Real Property Lease or any right to the
use or occupancy of any Leased Real Property. True and complete copies of
the Real Property Leases have previously been delivered to Buyer,
including, without limitation all amendments or modifications thereof and
all side letters or other instruments affecting in any material way the
obligations of
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any party thereunder. The lessee under each Real Property Lease is now in
possession of the applicable Leased Real Property. There is no pending or,
to the knowledge of the Seller, threatened proceeding against the Seller
which might interfere with the quiet enjoyment of each tenant. There are
no outstanding defaults or circumstances which, upon the giving of notice
or passage of time or both, would constitute a default or breach by the
Seller under any Real Property Lease. As used herein, the term "lease"
shall also include subleases, the term "lessor" shall also include any
sublessor, and the term "lessee" shall also include any sublessee.
(c) The Seller owns and has good and marketable title to (or, in the case
of leased property, has a valid leasehold interest in) the PFS Assets (other
than the Real Property, which is addressed in subparagraph 2.04(b) above), free
and clear of any liens, claims, charges, pledges, mortgages, security interests
or encumbrances (collectively "Encumbrances"), except for immaterial
Encumbrances which do not materially adversely affect the full use or enjoyment
of the PFS Assets and liens for taxes or assessments not yet due and payable.
SECTION 2.05. Condition of PFS Assets. All of the PFS Assets (i) are in
good operating condition, ordinary, wear and tear excepted and (ii) are fit for
the purposes for which they are intended and for which they are presently being
used in the operation of the PFS Business.
SECTION 2.06. Agreements and Commitments. Exhibits B, D, G, L and R list
all material contracts or agreements (including lease agreements and employment
agreements) of the PFS Business to which the Seller or any Affiliate of the
Seller is a party (collectively, the "Material Contracts"). Contracts and
agreements involving a total commitment of more than $50,000 (other than
purchase orders made in the ordinary course of business) shall be deemed to be
material for purposes of this Section 2.06. Each Material Contract is a valid
and binding agreement of the Seller and, to the Seller's knowledge, of the other
parties thereto. The Seller is not in default in any material respect under the
terms of such material contracts or agreements of the PFS Business and, to the
knowledge of the Seller, there is no existing default by the other party to such
material contracts or agreements.
SECTION 2.07. Financial Statements. Attached hereto as Exhibit H are true
and complete copies of:
(i) The audited consolidated balance sheets of PFS Business and the
PFS Canadian Business as at December 25, 1996 (the "Balance Sheet Date")
and December 27, 1995;
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(ii) The audited consolidated income statements and statements of
cash flows and divisional equity of the PFS Business and the PFS Canadian
Business for each of the three years ended December 25, 1996, December 27,
1995 and December 28, 1994;
(iii) The unaudited consolidated balance sheet of the PFS Business
and the PFS Canadian Business as of March 19, 1997 (the "Quarterly Balance
Sheet Date");
(iv) The unaudited consolidated income statements and statements of
cash flow and divisional equity of the PFS Business and the PFS Canadian
Business for the 12 week periods ended March 19, 1997 and March 23, 1996;
and
(v) The unaudited statement of the net PFS Assets and PFS
Liabilities (and the PFS Canadian Assets and PFS Canadian Liabilities) to
be sold as at the Balance Sheet Date (such statement, the "Statement of
Net Assets To Be Sold").
The balance sheets, income statements and statements of cash flows and
divisional equity referred to in paragraphs (i), (ii), (iii) and (iv) above have
been prepared in accordance with GAAP applied on a consistent basis and present
fairly the consolidated financial position of the PFS Business and the PFS
Canadian Business as of the dates indicated and the consolidated results of
operations and cash flows of the PFS Business and the PFS Canadian Business for
the years and periods indicated.
Except as reflected in the adjustments reflected in the statements
referred to in paragraph (v) above, the balance sheet referred to in paragraph
(i) above does not include any material assets that do not constitute a part of
the PFS Business and the PFS Canadian Business.
Except as set forth in Exhibit H, and without prejudice to the
classification of any claim, liability or obligation as a PFS Liability, to the
Seller's knowledge, there is no outstanding claim, liability or obligation of
any nature, whether absolute, accrued, known or unknown, contingent or
otherwise, affecting the PFS Assets or the PFS Business, other than (i)
liabilities and obligations that are fully reflected, accrued or reserved
against on the Financial Statements, (ii) liabilities and obligations that are
not required under GAAP to be reflected, accrued or reserved on the Financial
Statements, or (iii) other liabilities and obligations incurred since the
Quarterly Balance Sheet Date in the ordinary course of business consistent with
the prior practices of the PFS Business and the PFS Canadian Business, none of
which, individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the assets, liabilities, results of
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operations, business or financial condition of the PFS Business (a "Material
Adverse Effect").
SECTION 2.08. Insurance. The Seller carries insurance sufficient in type
and amount to protect the PFS Assets and the PFS Business. The Seller has
provided to the Buyer a description of the insurance policies carried by it for
the PFS Business. The premiums for such insurance policies are fully paid and
there are no loans outstanding against any of such policies. All such insurance
will be maintained through the Closing Date but not thereafter.
SECTION 2.09. Taxes. Except as set forth in Exhibit I attached hereto, (i)
all tax returns and reports relating to the PFS Business which were required by
law to be filed for all periods prior to or including the Closing Date have been
timely filed or will be prepared and timely filed and are true and correct in
all material respects, (ii) all Taxes (as defined below) upon the PFS Business,
or upon any of its properties, assets or income, which are due and payable for
Pre-Closing Tax Periods (as defined below) have been paid or adequately
reserved, other than those presently payable without penalty or interest and
other than in connection with any sales or use tax arising as a result of the
transaction contemplated by this Agreement and (iii) the Seller has received no
written notice from any governmental authority, and has no actual knowledge,
that any deficiency or claim for additional taxes or any special tax or
assessment is to be levied against any PFS Asset. For purposes of this
Agreement, (i) "Tax" or "Taxes" shall mean any income, capital stock, sales,
use, ad valorem, payroll, occupation, property, excise taxes or governmental
charges (including interest and penalties), and (ii) "Pre-Closing Tax Periods"
shall mean all Tax periods ending on or before the Closing Date, and, with
respect to any Tax period that includes but does not end on the Closing Date,
the portion of such period that ends on and includes the Closing Date.
SECTION 2.10. No Litigation. Except as set forth in Exhibit J attached
hereto, there is no claim, arbitration, litigation or other legal proceeding or
governmental investigation pending or, to the knowledge of the Seller,
threatened against or affecting the PFS Business or the PFS Assets. For purposes
of this Agreement, the "knowledge of the Seller" shall mean the knowledge of the
officers, directors and management of the Seller and its subsidiaries and
divisions, including without limitation, the officers and management of the PFS
Business. The Seller is not in default with respect to any judgment, order,
injunction or decree of any court or other governmental authority affecting the
PFS Business.
SECTION 2.11. Compliance with Laws. The PFS Business is in compliance in
all respects, other than noncompliance which is individually or in the aggregate
immaterial with respect to the operations of the PFS Business, with all federal,
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state and local laws (statutory, judicial or otherwise), ordinances and
regulations, including, but not limited to "Environmental Laws" (hereinafter
defined).
Except as to matters that would not reasonably be expected to have a
Material Adverse Effect:
(a) the Seller has obtained or caused to be obtained all environmental
permits necessary for the operation of the PFS Business by the Seller to comply
with all Environmental Laws; all such permits are in good standing; the Seller
is in compliance with all terms and conditions of such permits, and the PFS
Business is in compliance with all other applicable Environmental Laws;
(b) during the two year period prior to the date hereof; no written
notice, request for information, order, complaint or penalty has been received
by Seller relating to, and Seller has not filed any notice pursuant to the
requirements of, any Environmental Law relating to the PFS Business;
(c) there are no judicial, administrative or other actions, suits or
proceedings pending or, to the Seller's knowledge, threatened which allege a
violation of any Environmental Law by Seller in connection with its operation of
the PFS Business; and
(d) there has been no written audit conducted by Seller of any properties
currently used in connection with the PFS Business which has not been delivered
to Buyer prior to the date hereof.
For purposes of this section, the term "Environmental Law" shall mean all
federal, state and local laws, ordinances and regulations of any governmental
entity now in effect and all judicial or administrative rulings, consent
decrees, orders, judgments or binding opinions, relating to the regulation and
protection of the environment or natural resources, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, the Clean Air Act, the Federal Water Pollution Control Act,
the Emergency Planning Community Right to Know Act, the Toxic Substances Control
Act, the Federal Insecticide, Fungicide, and Rodenticide Act and the Hazardous
Materials Transportation Act and applicable state laws.
SECTION 2.12. Permits. The Seller has all material Permits required for
the conduct of the PFS Business or to utilize the PFS Assets, which Permits are
listed in Exhibit K attached hereto. All such Permits are in full force and
effect, valid and outstanding, and the Seller has duly complied with all of the
terms and
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conditions under which each is held. Substantially all of the permits listed
in Exhibit K are not transferable.
SECTION 2.13. Employee Matters. The Seller has in relation to the
employees of the PFS Business, including, without limitation, those on lay-off,
short or long term disability, family leave or other leave of absence (the "PFS
Employees"), complied in all material respects with all federal, state and local
laws, ordinances and regulations. The Seller is not a party to any union
contract or collective bargaining agreements with the PFS Employees. Exhibit L
lists all employment agreements between the Seller and the PFS Employees. There
are no labor strikes or work stoppages pending or, to the knowledge of the
Seller, threatened against the PFS Business, nor have there been any such labor
strikes or work stoppages at any time within two years prior to the date of this
Agreement.
SECTION 2.14. Conduct of Business. Except as expressly contemplated
pursuant to the terms of this Agreement or disclosed in any Exhibit hereto,
since the Balance Sheet Date the Seller has not:
(a) sold, assigned, transferred or otherwise disposed of, mortgaged,
pledged or subjected to lien, charge, security interest or any other
encumbrance, any material PFS Asset, or any of the Seller's interest in any
material PFS Asset, except inventory and other items of personal property
disposed of in the ordinary course of the PFS Business;
(b) suffered any material damage, destruction or loss to the PFS Assets,
which damage or loss is not fully covered by insurance, or suffered any other
significant change, event or condition which a reasonable person could expect to
have a material adverse effect on the PFS Business (taken as a whole);
(c) taken any action, or failed to take any action, or permitted any act
or omission which would have a material adverse effect on the PFS Business
(taken as a whole);
(d) cancelled any material claim of or debt for borrowed money owed to the
PFS Business outside the ordinary course of business;
(e) subjected to or suffered the imposition of any lien on any material
PFS Asset, except for Permitted Encumbrances;
(f) made any material amendment or modification to or terminated any
Material Contract except in the ordinary course of business;
(g) except as disclosed to the Buyer prior to the date hereof,
increased, or committed to increase, the compensation for services payable or
to become
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payable to any officer, director or employee of the PFS Business, or any bonus
payment or similar arrangement for services made to or with any of such
officers, directors or employees, other than routine increases made in the
ordinary course of business not exceeding ten percent (10%) per annum for any of
them individually, in each case which will be an obligation or liability of the
Buyer (other than those obligations or liabilities assumed by the Buyer pursuant
hereto);
(h) incurred, assumed, or taken any property subject to, any indebtedness
that would be a PFS Liability (excluding trade payable and other liabilities
incurred in the ordinary course of business and consistent with past practices);
(i) except as disclosed to the Buyer prior to the date hereof, adopted any
material plan or agreement or made any material amendment to any plan or
agreement providing any new or additional "fringe benefits" for the employees of
the PFS Business, in each case which will be an obligation or liability of the
Buyer (other than those obligations or liabilities assumed by the Buyer pursuant
hereto);
(j) made any material alteration in the manner of keeping the books,
accounts or records of the Seller as to the PFS Business, or in the accounting
practices therein reflected; or
(k) agreed, orally or in writing, or granted any other person or entity an
option, to do any of the things specified in paragraphs (a) through (j) above.
SECTION 2.15. Brokerage and Finder's Fees. Neither the Seller nor any of
its officers or employees has incurred or will incur any brokerage, finder's or
similar fee in connection with the transaction contemplated by this Agreement,
except that Merrill Lynch & Company ("ML") has acted as financial advisor to
the Seller. All fees of ML will be borne by the Seller.
SECTION 2.16. Intellectual Property. The Seller owns the Intangible
Property and the Intellectual Property including, but not limited to, the
trademarks, tradenames, service marks and brand names set forth in Exhibit F
attached hereto, and, except as disclosed in that Exhibit, has not granted any
options, licenses or rights therein. Except as disclosed in Exhibit F, the
Seller, as of the date hereof, possesses the right to use in perpetuity (without
royalty or payment except as disclosed in Exhibit F) all of the property rights
disclosed on Exhibit F. To the Seller's knowledge, it is not infringing on the
intangible property rights of any person or entity in the operation of the PFS
Business, and the Seller does not know of any third party who has asserted any
claim concerning such an infringement.
SECTION 2.17. All Distribution Businesses. Except through PFS and PCL, the
Seller does not own and operate any distribution businesses which sell
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food (excluding snacks and beverages), supplies, equipment, smallwares,
uniforms, promotional items or point of purchase materials to Pizza Hut, Taco
Bell or KFC restaurants within the United States or Canada.
SECTION 2.18. All Assets. The PFS Assets include all of the assets and
properties of the Seller (i) used or held for use primarily in the PFS Business,
except for (x) the administrative services currently provided by the Seller or
its Subsidiaries to the PFS Business and (y) services and rights provided to the
PFS Business as expressly contemplated by this Agreement or (ii) included in
"Property and Equipment, Net" in the Statement of Net Assets to be Sold (subject
to change in the ordinary course of business since the date of the Statement of
Net Assets to be Sold). The PFS Assets include all of the assets and properties
of the Seller required for the continued conduct by the Buyer of the PFS
Business as now being conducted, except for (x) the administrative services
currently provided by the Seller or its Subsidiaries to the PFS Business and (y)
services and rights provided to the PFS Business as expressly contemplated by
this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER
In order to induce the Seller to enter into this Agreement, the Buyer
hereby represents and warrants as follows:
SECTION 3.01. Organization and Standing. (a) The Buyer is a duly organized
and validly existing corporation, in good standing under the laws of the State
of Delaware.
(b) Holberg Industries, Inc. (the "Guarantor") is a duly organized and
validly existing corporation, in good standing under the laws of the State of
Delaware.
SECTION 3.02. Corporate Power and Authority. The Buyer and the Guarantor
each have full corporate power and authority to carry out their respective
obligations hereunder. The execution and delivery of this Agreement and the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Buyer and the execution and delivery of the Guaranty
has been duly and validly authorized by the Board of Directors of the Guarantor.
No other corporate acts or proceedings on the part of the Buyer are necessary to
authorize this Agreement or the consummation of the transactions contemplated
hereby and no other corporate acts or proceedings on the part of the Guarantor
are necessary to authorize the Guarantee. When duly executed and delivered by
the parties hereto, this Agreement will constitute a valid and legally
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binding obligation of, and will be enforceable against, the Buyer in accordance
with its terms. When duly executed and delivered by the Guarantor, the Guarantee
will constitute a valid and legally binding obligation of, and will be
enforceable against, the Guarantor in accordance with its terms.
SECTION 3.03. Conflicts, Consents and Approvals. Neither the execution and
delivery of this Agreement nor the creation and delivery of the Guarantee, nor
the consummation of the transactions contemplated hereby, nor compliance by the
Buyer with any provision hereof, nor compliance by the Guarantor with any
provisions of the Guarantee will: (i) violate any order, writ, injunction,
decree or any statute, rule or regulation applicable to the Buyer or the
Guarantor; or (ii) require the consent or approval of any third party, court, or
governmental body or agency, instrumentality, or authority, other than as
required by the HSR Act.
SECTION 3.04. Financial Information. True and complete copies of the most
recent financial statements concerning the Guarantor have previously been
delivered to the Seller. Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis and present fairly the
financial position of the Guarantor as of the dates indicated.
SECTION 3.05. Brokerage and Finder's Fees. Neither the Buyer nor any of
its officers or employees has incurred or will incur any brokerage, finder's or
similar fee in connection with the transaction contemplated by this Agreement,
except that Donaldson, Lufkin and Jenrette Securities Corporation ("DLJ") has
acted as financial advisor to the Buyer. All fees of DLJ will be borne by the
Buyer.
ARTICLE 4
INTERIM COVENANTS OF THE SELLER
The Seller agrees that subsequent to the date hereof and prior to the
Closing Date:
SECTION 4.01. Access. The Seller will afford to the officers, employees
and authorized representatives of the Buyer full access during normal business
hours to the PFS Assets (including all contracts, commitments, books and records
of the PFS Business) and to the management, employees, accountants and other
agents and representatives of the PFS Business to discuss matters relating to
the PFS Business. Any information relating to the PFS Assets and the PFS
Business provided to the Buyer or its authorized representatives pursuant to
this Agreement shall be held by the Buyer and its representatives prior to the
Closing in accordance with the Confidentiality Agreement, dated March 13, 1997,
by and between Holberg Industries, Inc. and the Seller, except paragraphs 3 and
5 thereof.
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No investigations made by the Buyer shall affect the representations, warranties
and agreements made by the Seller pursuant to this Agreement, and each such
representation, warranty and agreement shall survive any such investigation.
SECTION 4.02. Management of the PFS Business. The Seller shall cause the
PFS Business to be maintained in a manner consistent with the present operation
of the PFS Business and the Seller shall not sell, transfer, convey or encumber
the PFS Assets, or any part thereof or interest therein without the Buyer's
prior written consent (which consent shall not be unreasonably withheld), other
than sales in the ordinary course of business. The Seller shall use reasonable
and good faith efforts to retain the services of the key employees of the PFS
Business, to maintain all of the PFS Assets in their current condition (normal
wear and tear excepted) and to preserve the present goodwill and advantageous
relationships of the Seller with respect to the PFS Business. The Seller shall
not, without the prior written consent of the Buyer:
(a) take any action described in Section 2.14;
(b) enter into any agreements or contracts that would require payments by
the Seller or the Buyer of more than $1,000,000 over any period of twelve (12)
months or more or impose material restrictions that would affect the continued
operation of the PFS Business by the Buyer in whole or in part; or
(c) take any action, or omit to take any actions, that would cause any of
the representations and warranties set forth in Article 2 (Representations and
Warranties of the Seller) to become untrue in any material respect as of or
prior to the Closing Date.
SECTION 4.03. Governmental Consents and Approvals. The Seller shall make
all required filings and obtain all consents or other approvals required to be
obtained by the Seller from any appropriate governmental agency or authority in
connection with the consummation of the transactions contemplated by this
Agreement, including, without limitation, any filing required to be made by the
Seller under the HSR Act.
SECTION 4.04. Third Party Consents.
(a) To the extent that any of the agreements, leases, licenses or any
other contract included in the PFS Assets and listed in the Exhibits hereto to
be transferred to the Buyer under this Agreement are not transferable without
the consent of a third party as described in the Exhibits hereto (the
"Nontransferable Agreements"), the Seller and the Buyer agree to use their
respective best efforts prior or subsequent to the Closing Date to identify and
secure the required third party consent to the transfer of each Nontransferable
Agreement to the Buyer, and
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shall afford the Buyer the opportunity in cooperation with the Seller to
negotiate directly with each third party in the event that such consent shall
initially be denied. For purposes of this Section 4.04, the term "best efforts"
by the Seller or the Buyer, as the case may be, shall not require the Seller or
the Buyer, as the case may be, to execute any guaranty, incur any other
obligation, or pay any money to the third party under any Nontransferable
Agreement or commence any legal, administrative or other proceeding.
Notwithstanding the foregoing, (i) in no event shall Seller require that, in
connection with the assignment or transfer to the Buyer of any Real Property
Lease or other contract or agreement, the landlord or other party to such
contract or agreement release Seller, in whole or in part, from any liability
under such Real Property Lease or other contract or agreement following the
Closing, and (ii) Seller shall, if required by a landlord or other third party
as a condition to obtaining a required consent from such landlord or other third
party, confirm in writing Seller's continuing liability under such Real Property
Lease or other contract or agreement; provided, however, that the Buyer shall
agree to fully indemnify the Seller for such continuing liability.
(b) The Seller and the Buyer agree that, so long as the required consent
for the transfer of a Nontransferable Agreement has not been obtained, the
Seller and the Buyer shall enter into satisfactory arrangements on the Closing
Date (i) to afford to the Buyer the material economic and practical benefits of
each such Nontransferable Agreement and (ii) to eliminate any liability of the
Seller with respect to the Nontransferable Agreement after the Closing.
SECTION 4.05. Permits. Certain of the Permits of the PFS Business
(including certain local, state and federal vehicle, dairy and food licenses)
are not transferable and as a result the Buyer will need its own permits to
distribute certain products. To the extent the Buyer does not already have such
Permits, the Seller will assist the Buyer in its efforts to identify, apply and
receive such Permits prior to the Closing Date.
SECTION 4.06. Communications. The Seller will promptly advise the Buyer of
all material communications which it receives from any governmental agencies or
authorities or any person or entity alleging that the consent of such person or
entity is required in connection with the transactions contemplated by this
Agreement; and any claim, action, lawsuit or proceeding commenced or, to the
Seller's knowledge, threatened, relating to the consummation of the transactions
contemplated by this Agreement or any person or entity alleging that the consent
of such person or entity is required in connection with the transactions
contemplated by this Agreement; and any claim, action, lawsuit or proceeding
commenced or, to the Seller's knowledge, threatened, relating to the
consummation of the transactions contemplated by this Agreement.
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SECTION 4.07. Announcements. Neither party will, without the prior consent
of the other party, make any announcement to the public concerning the
transactions contemplated by this Agreement, except as may be required by law.
SECTION 4.08. No Waiver. Nothing in this Article 4 shall in any way waive
or modify the conditions to Closing provided for herein.
ARTICLE 5
INTERIM COVENANTS OF THE BUYER
The Buyer agrees that subsequent to the date hereof and prior to the
Closing Date:
SECTION 5.01. Government Consents and Approvals. The Buyer shall make
all required filings and obtain all licenses, consents or other approvals
required to be obtained by the Buyer from any appropriate governmental agency or
authority or other person in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation, any
required filing to be obtained by the Buyer under the HSR Act.
SECTION 5.02. Communications. The Buyer will promptly advise the Seller of
all material communications which it receives from any governmental agencies or
authorities or any person or entity alleging that the consent of such person or
entity is required in connection with the transactions contemplated by this
Agreement; and any claim, action, lawsuit or proceeding commenced or, to the
Buyer's knowledge, threatened, relating to the consummation of the transactions
contemplated by this Agreement.
SECTION 5.03. Announcements. The Buyer will not, without the prior consent
of the Seller, make any announcement to the public concerning the transactions
contemplated by this Agreement, except as may be required by law.
ARTICLE 6
EMPLOYEE MATTERS
SECTION 6.01. Employment and Compensation of PFS Employees. (a) The Buyer
agrees that immediately after the Closing Date, the Buyer shall employ all of
the employees of the PFS Business on the Closing Date who are listed in Exhibit
M hereto, except as otherwise agreed by the Buyer and the Seller in writing;
including without limitation, those employees on lay-off, short-term
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disability, family leave or any other leave of absence as of the Closing Date
(collectively "Transferred Employees"). Employees on long-term disability as of
the closing date are not to be considered Transferred Employees unless, later,
on recovery the Buyer accepts them into employment.
(b) Buyer agrees to provide Transferred Employees with cash bonuses equal
to the full 1997 cash bonuses due under the Seller's Middle Management
Incentive Program and Executive Incentive Program, such bonuses to be paid
during the first quarter of 1998 in accordance with the terms and conditions set
forth in Exhibit M-1, including without limitation the condition that no
Transferred Employee shall be entitled to any such bonus if the employment of
such Transferred Employee is terminated for cause or voluntarily by such
Transferred Employee before January 1, 1998.
(c) Employee Payroll Information. Seller shall transfer to Buyer any
records relating to withholding and payment of income and unemployment taxes
(federal, state and local) and FICA and FUTA taxes and any and all state
unemployment payment reserves and/or charge history with respect to wages paid
to Transferred Employees for the calendar year in which the Closing occurs
(including, without limitation, Forms W-4 and Employees' Withholding Allowance
Certificate). Buyer shall provide Transferred Employees with Forms W-2, Wage and
Tax Statement, for the calendar year in which the Closing occurs setting forth
the wages paid and taxes withheld with respect to the Transferred Employees for
such calendar year by Seller and Buyer as predecessor and successor employers,
respectively, as provided in Revenue Procedure 96-60.
SECTION 6.02. Employee Matters.
(a) Exhibit N attached hereto identifies certain Employee Benefit Plans,
(as defined in Section 3(3) of the Employee Retirement Income Security Act, as
amended ("ERISA")) and certain Employee Arrangements, including employment and
consulting contracts, bonus and other incentive compensation, deferred
compensation, disability, severance, vacation, stock awards, stock options,
worker's compensation agreements, plans, programs, policies and arrangements
with respect to the employment and termination of employment of the Transferred
Employees maintained by the Seller as of the date hereof.
(b) The Seller hereby represents to the Buyer as follows: (1) the Seller
has provided or made available to the Buyer true, correct and complete copies of
the following with respect to each such Employee Benefit Plans: (i) all plan
documents, benefit schedules, and insurance contracts, as applicable; (ii) the
most recent summary plan descriptions, if any; and (iii) the most recent annual
financial reports, if any; (2) no liability currently exists, and under no
circumstances could the Seller or any of its ERISA Affiliates incur a liability
under plans sponsored by
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the Seller on or before the Closing Date, pursuant to the provisions of Title I,
II or IV of ERISA or Section 412, 4971 or 4980B of the Code that could become a
liability of Buyer after the consummation of the transactions contemplated by
this Agreement; and (3) neither this Agreement nor the consummation of the
transactions contemplated by this Agreement will entitle any employee, including
but not limited to, Transferred Employees, to any severance benefits other than
those described in Section 6.05(d) below nor will it (either alone or in
conjunction with a termination of employment) accelerate compensation due any
such Transferred Employee as of the Closing Date.
(c) Effective as of the Closing Date, Transferred Employees shall cease
participation in all Employee Benefit Plans and Employee Arrangements maintained
by the Seller, except as otherwise provided herein. The Buyer agrees that for a
period of twelve months commencing on the Closing Date, the Buyer shall maintain
such Employee Benefit Plans and Employee Arrangements necessary to provide each
Transferred Employee with (i) Welfare Plan benefits including post-retirement
welfare benefits (as defined in Section 3(1) of ERISA) and compensation that are
in the aggregate equal in value to the compensation and Welfare Plan benefits
which such Transferred Employees received from Seller under the Employee Benefit
Plans and Employee Arrangements identified in Exhibit N, but disregarding for
this purpose any compensation paid in the form of stock, options to acquire
stock or any other equity-based compensation, (ii) benefits under "Pension
Plans" (as defined in Section 3(2) of ERISA) of Buyer and/or its affiliates on
the same basis as other similarly situated employees of Buyer and its
affiliates, and (iii) benefits as set forth below.
SECTION 6.03. Pension Plans. (a) As of the Closing Date, (i) the Seller
shall cease benefit accruals for all Transferred Employees who are then
Participants in the PepsiCo Salaried Employees Retirement Plan and the PepsiCo
Retirement Plan for Transportation Employees (the "Qualified Pension Plans") and
the PepsiCo Pension Equalization Plan (the "Non-qualified Pension Plan"), and
(ii) Transferred Employees who have not yet satisfied participation requirements
under such Plans shall thereafter not become eligible to participate thereunder.
Notwithstanding the foregoing, all Transferred Employees who are participants in
the Qualified Pension Plans and the Non-qualified Pension Plan as of the Closing
Date shall continue to accrue Service (as such term is defined in the Qualified
Pension Plans and the Non-qualified Pension Plan) for purposes of satisfying the
vesting and early retirement requirements under such Plans during the time such
Transferred Employees continue employment with the Buyer or, with Seller's prior
approval, any successor or affiliate of the Buyer.
(b) In connection with the Pension benefits provided under subsection (a)
above, the Buyer shall pay to the Seller by wire transfer of immediately
available funds to a bank account designated by the Seller prior to the Closing
(i)
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US$4,000,000.00 within ninety (90) days after the Closing and (ii)
US$4,000,000.00 within two hundred seventy (270) days after the Closing.
SECTION 6.04. Savings Plans. As of the Closing Date, the Buyer shall have
established one or more defined contribution plans that are qualified under
Section 401(a) of the Code and that allow for participant loans ("Defined
Contribution Plans") and shall have established related trusts for such plans
that are exempt under Section 501(a) of the Code. As soon as practicable after
the Closing Date, the Buyer shall provide the Seller with an opinion of counsel
acceptable to the Seller that the Buyer has established the Defined Contribution
Plans and the Seller shall provide the Buyer with an opinion of counsel
acceptable to the Buyer that the PepsiCo Long Term Savings Program (the "Savings
Plan") is in form and operation qualified under Section 401(a) of the Code and
that the related trust is exempt under Section 501(a) of the Code. After both
such opinions have been delivered, the Seller shall cause the trustee of the
PepsiCo Long Term Savings Program (the "Savings Plan") to transfer, in cash and
to the extent a participant has any outstanding loans, all promissory notes
issued in connection therewith, to the Defined Contribution Plans, the Savings
Plan account balances and related assets, including promissory notes covering
outstanding employee loan balances, allocated to Transferred Employees. Such
account balances and assets shall be valued as of the business day immediately
preceding the transfer date to the Defined Contribution Plans.
As of the effective date of the transfer, but subject to audit, all
obligations and liabilities with respect to the Savings Plan account balances,
including outstanding loans, of Transferred Employees shall be assumed by the
Buyer. Following such date, the Seller shall have no further liability with
respect to the Savings Plan account balances of the Transferred Employees, and
the Buyer shall indemnify and hold the Seller harmless from any claims and
losses with respect thereto. Notwithstanding the foregoing, the Seller shall
indemnity and hold the Buyer harmless from any liabilities, claims and losses
arising as a result of a failure of the Savings Plan to be qualified under
Section 401(a) of the Code and/or a failure of the related trust to be exempt
under Section 501(a) of the Code.
SECTION 6.05. Welfare Plans and Vacation Pay.
(a) Neither the Seller nor any of its subsidiaries and affiliates nor any
of the Welfare Plans maintained by the Seller, shall have any obligation to
provide coverage to any Transferred Employee under any Employee Benefit Plans or
Employee Arrangements, including any health care, short-term disability,
long-term disability, accident, educational assistance or life insurance or any
other Welfare Plan after the Closing Date. The Seller shall be responsible for
payment of all claims incurred by Transferred Employees and their eligible
beneficiaries and dependents prior to the Closing Date under any Employee
Benefit Plans or
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Employee Arrangements maintained by the Seller. All claims incurred with respect
to Transferred Employees and their eligible spouses and dependents after the
Closing Date for any Employee Benefit Plans or Employee Arrangements maintained
by the Buyer shall be the responsibility of the Buyer.
(b) The Buyer agrees to provide continuation coverage to "qualified
beneficiaries" (as such term is defined in Section 602 of ERISA and Section
4980B of the Code) of the PFS Business as of the Closing Date and to provide
"continuation coverage" to Transferred Employees, their spouses and their
dependents who become "qualified beneficiaries" subsequent to the Closing Date.
(c) For the remainder of the calendar year including the Closing Date, the
Buyer agrees to continue to maintain any and all health care plans maintained by
the Seller as of the Closing Date.
(d) As of the Closing Date, the Buyer agrees to waive all pre-existing
condition exclusions under any health care plan it maintains with respect to
Transferred Employees and for the remainder of the fiscal year which includes
the Closing Date, Buyer agrees to take into account any deductibles and out-of
pocket expenses incurred by Transferred Employees or their beneficiaries prior
to the Closing in determining satisfaction of deductibles and out-of-pocket
limits under health care plans maintained by the Buyer for the benefit of
Transferred Employees.
(e) Severance Plans. Transferred Employees shall not be entitled to any
severance benefits from the Seller, its divisions or subsidiaries.
Notwithstanding the provisions of the immediately preceding sentence, or the
provisions of any severance plan of the Buyer, if the Buyer terminates any
Transferred Employee within twelve months following the Closing Date, other than
for good cause, the Buyer shall pay a severance benefit to such Transferred
Employee in an amount computed as set forth on Exhibit 0 attached hereto based
upon (i) the Transferred Employee's number of years of service with the Seller,
and its subsidiaries, affiliates and predecessors through the date of his or her
termination and (ii) the Transferred Employee's job classification with the PFS
Business as of the Closing Date.
(f) Vacation Policy. The Buyer agrees to continue for Transferred
Employees the Seller's vacation pay policy for the remainder of the calendar
year in which the Closing occurs.
SECTION 6.06. Past Service Granted. The Buyer shall grant full past
service credit (including credit for eligibility, benefit accrual and for
vesting) to the Transferred Employees for service with the Seller and its
affiliates and
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predecessors under any and all of the Buyer's Employee Benefit Plans, severance
plans, service award plans, vacation pay plans and employee arrangements.
SECTION 6.07. Rights. Except as provided in Section 6.05(c) and 6.02(c),
no provision of this Article 6 shall be construed (a) to limit the right of the
Buyer or any of its affiliates to amend any employee benefit plan or terminate
any employee benefit plan, or (b) to create any right or entitlement whatsoever
in any Transferred Employee or any beneficiary or dependent thereof, including
without limitation a right to continued employment or to any benefit under a
plan or any other compensation.
SECTION 6.08. Employee Communications. The Seller and the Buyer shall use
their reasonable best efforts to cooperate with one another in making any
required communications with Transferred Employees regarding any Employee
Benefit Plans or Employee Arrangements.
ARTICLE 7
TAX MATTERS
SECTION 7.01. Overlap Taxes. Any real and personal property Taxes (and any
other Taxes not measured or measurable, in whole or in part, by net or gross
income or receipts), with respect to the PFS Assets that relate to a tax period
beginning before the Closing Date and ending after the Closing Date (an "Overlap
Period") shall be apportioned between the Seller and the Buyer on a per diem
basis; provided, however, that this Article shall not apply to (i) any sales,
transfer and similar taxes on the transfer of the PFS Assets to the Buyer
pursuant to this Agreement or (ii) any taxes which have been accrued on the
Closing Balance Sheet as a prepaid tax asset and reflected in the Closing
Working Capital described in Section 1.06 hereof. Overlap Period returns shall
be prepared and timely filed by the entity responsible for filing such returns
under local law, regulation or custom, and the Seller or the Buyer, as the case
may be, shall cause such entity to timely file such returns and timely pay any
Tax due with respect to such returns when due or assessed. Such returns shall be
prepared in a manner consistent with past practice of the Seller and in a manner
that does not distort the taxable income or loss of tax liability of the Seller
or the Buyer, except as required by law or regulation or otherwise agreed to by
the Seller and the Buyer. To the extent an Overlap Period Tax is paid in full by
the Seller after the Closing, the Buyer shall pay to the Seller, within fifteen
days of receipt of written notice from the Seller (which notice shall set forth
in reasonable detail the calculations regarding the Buyer's share of the Overlap
Taxes), the amount of any such Taxes apportioned to the Buyer under the first
sentence of this paragraph, except to the extent the Buyer has made such payment
to the Seller pursuant to the purchase price adjustment in
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Section 1.07. In the case where the Buyer is responsible for filing the
applicable Overlap Tax Return or paying the applicable Overlap Period Tax, the
Seller shall pay to the Buyer, within fifteen days of receipt of written notice
from the Buyer (which notice shall set forth in reasonable detail the
calculations regarding the Seller's share of the Overlap Taxes), the amount of
any such Taxes apportioned to the Seller under the first sentence of this
paragraph, in each case except to the extent the Seller has paid such Tax or
accrued or otherwise reflected such Tax as a liability on the Closing Balance
Sheet.
ARTICLE 8
DISTRIBUTION AGREEMENT
SECTION 8.01 Distribution Agreement with Company Owned Pizza Hut, Taco
Bell and KFC Restaurants. The Buyer understands that the Seller, through its
subsidiaries, Pizza Hut, Inc., Taco Bell Corp., Kentucky Fried Chicken
Corporation and Kentucky Fried Chicken of California, Inc., and their respective
subsidiaries (the "Restaurant Companies"), currently own approximately 9,000
Pizza Hut, Taco Bell and KFC restaurants (such restaurants, except for 53 KFC
restaurants currently operated by a subsidiary of the Restaurant Companies
called WMCR Corporation which are not customers of the PFS Business, are
hereinafter referred to as the "Company Owned Restaurants") within the United
States. At the Closing the Seller will assign its rights to the Buyer and the
Buyer shall assume the Seller's obligations under the Sales and Distribution
Agreement dated as of May 6, 1997 among the Seller and the Restaurant Companies
(the "Exclusive Distribution Agreement") in the form attached hereto as Exhibit
P pursuant to which the Buyer shall become the exclusive distributor after the
Closing Date of certain food, restaurant supplies and smallwares for the Company
Owned Restaurants which are owned by Restaurant Companies on the Closing Date.
Attached hereto as Exhibit Q is a list of the Company Owned Restaurants on the
date hereof. The Buyer understands that the number of such Company Owned
Restaurants on the Closing Date, and covered by the Exclusive Distribution
Agreement, may be less than the number of Company Owned Restaurants on the date
hereof as a result of the ongoing refranchising process by the Restaurant
Companies. As provided in the Exclusive Distribution Agreement, if the
Restaurant Companies sell any Pizza Hut or Taco Bell Company Owned Restaurants
after the Closing Date and during the term of the Exclusive Distribution
Agreement, the new franchisees of such restaurants will be required as part of
the refranchise terms to assume the Distribution Agreement with respect to such
Pizza Hut or Taco Bell restaurants for the remaining term of the Distribution
Agreement.
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SECTION 8.02. Franchised Pizza Hut, Taco Bell and KFC Restaurants. The
Buyer understands that the Restaurant Companies have also entered into franchise
agreements to franchise Pizza Hut, Taco Bell and KFC Restaurants (the
"Franchised Restaurants") within the United States. The Buyer further
understands that while PFS is currently the distributor of food, restaurant
supplies and restaurant equipment for many of the Franchised Restaurants within
the United States, PFS has not been appointed by any Franchised Restaurants as
the exclusive distributor of any products purchased by Franchised Restaurants,
except for the exclusive appointments by certain Taco Bell franchised
restaurants which are described in Exhibit R attached hereto. As a result,
except as described in Exhibit R, the Buyer will have no legal commitment from
any Franchised Restaurants currently serviced by PFS that the Buyer will
continue to be the distributor for such Franchised Restaurants after the Closing
Date.
ARTICLE 9
CONDITIONS PRECEDENT
SECTION 9.01. Mutual Conditions Precedent. The obligations of the Seller
and the Buyer to consummate the transactions contemplated herein shall be
subject, in each instance, to the fulfillment or written waiver of each of the
following conditions at or prior to the Closing:
(a) Pre-merger Notification. The parties hereto shall have made all
filings required by the HSR Act with respect to the transaction contemplated
hereby, and all waiting periods under the HSR Act shall have expired or been
terminated without the institution of a proceeding challenging the transactions
contemplated hereby by the United States Federal Trade Commission or Department
of Justice, and all comparable requirements under Canadian Law applicable to the
transactions contemplated by the Canadian Asset Purchase Agreement shall also
have been satisfied.
(b) Exclusive Distribution Agreement. The Seller shall have duly assigned
the Exclusive Distribution Agreement to the Buyer, and the amendment thereto
attached hereto as Exhibit P-1 shall have been duly executed and delivered by
the Buyer and the Restaurant Companies at the Closing.
SECTION 9.02. Conditions Precedent to the Buyer's Obligations. The
obligations of the Buyer hereunder to consummate the transactions contemplated
herein shall be subject, in each instance, to the fulfillment, or written waiver
by the Buyer, of each of the following conditions at or prior to the Closing:
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(a) Correctness of Warranties. All of the representations and warranties
of the Seller contained in this Agreement shall be true, complete and correct in
all material respects, except for such representations and warranties which are
qualified as to materiality, which shall be true, complete and correct in all
respects, at and as of the Closing Date as though such representations and
warranties were then made in exactly the same language as contained herein, and
the Seller shall have performed all obligations and complied with all covenants
required by this Agreement to be performed or complied with by it at or prior to
the Closing Date.
(b) Legal Action. No temporary restraining order, preliminary injunction
or permanent injunction or other order preventing the consummation of the
transactions contemplated hereby or materially adversely affecting the right of
the Buyer to own the PFS Assets or to operate the PFS Business shall have been
issued by any federal or state court or other governmental authority and remain
in effect and no action, suit or proceeding shall have been brought by any
governmental authority seeking any of the foregoing.
(c) Adverse Change. There shall have been no material adverse change in
the assets, liabilities, results of operations, business or financial condition
of the PFS Business from the date hereof to the Closing Date.
(d) Documents and Instruments to be Delivered at the Closing. The Seller
shall deliver or cause to be executed and delivered to the Buyer at the Closing
the following documents, each dated the Closing Date unless otherwise specified
below:
(i) A limited warranty deed in respect of each parcel of Owned Real
Property, duly executed and acknowledged and in recordable form, conveying
to the Buyer fee simple title to the Real Property;
(ii) Such other deeds, assignments, bills of sale and other
instruments of transfer duly executed by and on behalf of the Seller,
reasonably satisfactory in form and substance to counsel to the Buyer, as
are necessary or desirable to effect the conveyance, sale, assignment,
transfer and delivery of all rights, interests and properties constituting
the PFS Assets, including, without limitation, all contracts, leases,
licenses and Intangible Property to be assigned to the Buyer as part of
the PFS Assets;
(iii) A certificate of the Seller's good standing as a domestic
corporation in the State of North Carolina, certified by the Secretary of
State of the State of North Carolina as of a date no more than 15 days
prior to the Closing Date;
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(iv) A certificate duly executed by a Vice President of the Seller
certifying: (i) that the representations and warranties made by the Seller
in this Agreement are true and correct as of the Closing Date with the
same effect as if made at and as of such date, and (ii) that the Seller is
not in material breach of any covenants made pursuant to this Agreement;
(v) Copies of the resolutions, certified by the Secretary or an
Assistant Secretary of the Seller as being in full force and effect on
the Closing Date, duly adopted by the Board of Directors of the Seller
evidencing the approval and authorization of the execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby;
(vi) A certificate of the Secretary or an Assistant Secretary of the
Seller as to the incumbency and specimen signatures of each officer of the
Seller who executes this Agreement or any other documents or instrument
contemplated hereby; and
(vii) Such affidavits, certifications, evidence of corporate
authority, indemnities and other instruments as Buyer's title insurance
company shall require in order to issue any title insurance policy to be
obtained by Buyer at Closing with respect to the Owned Real Property.
(e) Services Agreement. Buyer and Seller shall have executed the services
agreement pursuant to Section 11.03 hereof
SECTION 9.03. Conditions Precedent to the Seller's Obligations. The
obligations of the Seller hereunder to consummate the transactions contemplated
herein shall be subject, in each instance, to the fulfillment, or written waiver
by the Seller, of each of the following conditions at or prior to the Closing:
(a) Correctness of Warranties. All of the representations and warranties
of the Buyer contained in this Agreement shall be true, complete and correct in
all material respects at and as of the Closing Date as though such
representations and warranties were then made in exactly the same language as
contained herein, and the Buyer shall have performed all obligations and
complied with all covenants required by this Agreement to be performed or
complied with by it at or prior to the Closing Date.
(b) Legal Action. No temporary restraining order, preliminary injunction
or permanent injunction or permanent injunction or other order preventing the
consummation of the transactions contemplated hereby shall have been issued by
any federal or state court or other governmental body and remain in effect and
no
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action, suit or proceeding shall have been brought by any governmental authority
seeking any of the foregoing.
(c) Documents and Instruments to be Delivered at the Closing. The Buyer
shall deliver or cause to be executed and delivered to the Seller at the Closing
the following documents, each dated the Closing Date unless otherwise specified
below:
(i) One or more assumption agreements, in a form reasonably
satisfactory in form and substance to counsel to the Seller, pursuant to
which the Buyer assumes and agrees to perform or pay the PFS Liabilities;
(ii) A certificate of the Buyer's good standing as a domestic
corporation in the State of Delaware, certified by the Secretary of State
of the State of Delaware as of a date no more than 15 days prior to the
Closing Date;
(iii) A certificate duly executed by a Vice President of the Buyer
certifying: (i) that the representations and warranties made by the Buyer
in this Agreement are true and correct as of the Closing Date with the
same effect as if made at and as of such date and (ii) that the Buyer is
not in material breach of any covenant made pursuant to this Agreement;
(iv) Copies of the resolutions, certified by the Secretary or an
Assistant Secretary of the Buyer as being in full force and effect on the
Closing Date, duly adopted by the Board of Directors of the Buyer
evidencing the approval and authorization of the execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby; and
(v) A certificate of the Secretary or an Assistant Secretary of the
Buyer as to the incumbency and specimen signatures of each officer of the
Buyer who executes this Agreement or any other document or instrument
contemplated hereby.
ARTICLE 10
ESCROW AND GUARANTEED NOTE
The parties shall use their reasonable best efforts to satisfy all of the
conditions set forth in Article 9 hereof on or before June 5, 1997 (the "Escrow
Date").
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(a) If on the Escrow Date, all of the conditions to Closing set forth in
Article 9 hereof (except for Section 9.0l(a), which need not be satisfied as of
such date) shall have been satisfied or waived, but even if the conditions set
forth in Section 9.01(a) shall have been satisfied as of such date, the
following shall occur:
(i) Each of the Buyer and the Seller shall execute and deliver to
Chase Manhattan Bank, N.A. (or such other escrow agent as is mutually
acceptable to both Buyer and Seller) all of the documents to be delivered
by such party at the Closing pursuant to Article 9, all in such form so
that upon release from escrow in accordance with the terms hereof and of
the escrow agreement the matters and transactions contemplated to be
effected at the Closing will be effected or will be capable of being
effected by the other party by use of such documents without any further
act or instrument of such party. The escrow agreement shall provide for
the release of such documents held in escrow to the Buyer and the Seller
at the Closing. Following the Escrow Date, the Closing shall take place on
the later of (x) June 25, 1997 and (y) the third business day after
satisfaction of the condition set forth in Section 9.01(a). Following the
Escrow Date, there shall be no conditions to Closing other than the
condition set forth in Section 9.01(a), and all other conditions to
Closing set forth in Article IX shall be irrevocably deemed to have been
satisfied.
(ii) The Buyer shall execute and deliver to Seller a promissory note
in the form attached hereto as Exhibit S (the "Note") and Holberg
Industries, Inc. shall execute an unconditional guarantee (the
"Guarantee") in the form attached hereto as Exhibit T. The Note shall be
in the principal amount equal to the Purchase Price. The Note shall become
immediately due and payable by the Buyer on the Closing Date,
simultaneously with the release of the documents from the escrow and the
consummation of the Closing.
(iii) At the Closing, the Buyer will pay the Note in full by wire
transfer of immediately available funds, together with interest thereon
from the Escrow Date to the Closing Date, against delivery of all the
documents held in escrow, which payment shall satisfy in full its
obligation to pay the Purchase Price. In addition, at the Closing, by wire
transfer or immediately available funds, the Seller shall deliver to the
Buyer an amount of cash equal to the Net Cash (as defined below). The term
"Net Cash" means the net amount of cash generated by the PFS Business for
the period from the Escrow Date through the Closing Date, as determined
from the change in the intercompany accounts between the Escrow Date and
the Closing Date between the PFS Business and the Seller, including cash
payments made to or from the PFS Business and payments made by the Seller
on behalf of the PFS Business and adjusted for the amount of the
outstanding checks on the
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Escrow Date compared to the amount of the outstanding checks on the
Closing Date. Such Net Cash shall be computed and determined as if the PFS
Business had been operated on a stand-alone basis during the period from
the Escrow Date to the Closing Date. The Seller will provide to the Buyer
a statement of the Net Cash, and, if requested by the Buyer, KPMG will,
within 10 days of the Closing, provide a report of their findings on the
Seller's statement of Net Cash, based upon agreed procedures. In the
unlikely event that the Net Cash is actually negative, the Buyer shall
deliver the Seller the amount of such negative Net Cash. Any dispute as to
the amount of Net Cash will be determined in a manner comparable to the
procedure as to Closing Working Capital and Final Working Capital.
(iv) Notwithstanding any provision contained herein to the contrary,
(x) for the purposes of Section 1.06, the Closing Working Capital and the
Final Working Capital shall be determined by reference to the current
assets and current liabilities of the PFS Business measured as such assets
and liabilities existed on the Escrow Date (not the Closing Date) and (y)
for purposes of the asset transfer and liability assumption provisions of
Section 1.02, all PFS Assets and PFS Liabilities determined by reference
to Final Working Capital shall instead be determined by reference to such
Final Working Capital (computed as if the Escrow Date were the Closing
Date) as the same may have changed in the ordinary course of business from
the Escrow Date to the Closing Date.
If on the Escrow Date, all of the conditions to Closing set forth in
Article 9 (other than Section 9.01(a)) have not been satisfied, the parties
shall use their reasonable best efforts to cause such conditions to be satisfied
as promptly as possible so that the transactions contemplated by clause (a)
above can be completed.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Hart-Scott-Rodino Act. As soon as practicable after the
date hereof the Buyer and the Seller shall, in cooperation with each other, file
any reports or notifications that may be required to be filed by them under the
HSR Act in connection with the transactions contemplated by this Agreement, and
shall use their respective best efforts to obtain early termination of all
waiting periods under the HSR Act. All fees due from any party to the Department
of Justice or the Federal Trade Commission in connection with the filing of
those reports or notifications shall be borne by the Buyer.
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SECTION 11.02. Aberdeen Building Sublease. Prior to the Closing the Buyer
and the Seller shall agree upon the terms of a sublease agreement pursuant to
which the Seller shall sublease to the Buyer the space currently occupied by PFS
in the Aberdeen Building at 14841 Dallas Parkway, Dallas, Texas. The initial
term of the sublease shall be for one year after the Closing Date during which
period the aggregate annual rent payable by the Buyer to the Seller shall be
$500,000. The sublease shall further provide that the Buyer shall have the
right, upon written notice given to Seller not later than 90 days prior to the
end of the initial term, to extend the term of the sublease for one additional
year (at Buyer's option), which extension term may apply (at Buyer's option) to
all or any portion of the subleased premises. The rent during any such extension
term shall be based on all the costs of the Aberdeen Building, including,
without limitation, the rental and other payments to the landlord of the
Aberdeen Building, and will be allocated to the sublet space based on the
percentage of the total space occupied by all Seller-affiliated tenants of the
Aberdeen Building (Pizza Hut, PepsiCo Restaurants International and PFS) which
is sublet to the Buyer. The Seller has made available to the Buyer a copy of the
Seller's lease of the Aberdeen Building. The Buyer understands that the Seller
may assign and transfer all of its rights and obligations under the lease of the
Aberdeen Building to Pizza Hut, Inc. or one of its other restaurant subsidiaries
as part of the planned spin off of the Seller's restaurant operations. If the
Seller transfers its leasehold interest in the Aberdeen Building to Pizza Hut,
Inc. or one of its other restaurant subsidiaries, the sublease to the Buyer will
be assigned by the Seller to Pizza Hut, Inc. or such other restaurant
subsidiary, as the case may be, which will thereafter be responsible for all of
the Seller's obligations under said sublease.
SECTION 11.03. PepsiCo Data Center. The Buyer understands that a data
center (the "Data Center") owned and operated by the Seller at Hillcrest Oaks,
6600 & 6606 LBJ Freeway, Dallas, Texas currently provides the mainframe computer
services required by the PFS Business. Prior to the Closing the Buyer and the
Seller will agree upon a services agreement where the Data Center will provide
such mainframe computer services to the Buyer after the Closing. The term of
such services agreement shall be one year and Buyer shall pay a total service
fee to Seller of $l,000,000 paid in equal monthly installments. The specific
services to be provided will be agreed upon by the Buyer and the Seller prior to
the Closing. The Buyer understands that the Seller may transfer the Data Center
to Pizza Hut, Inc. or one of its other restaurant subsidiaries as part of the
planned spin off of the Seller's restaurant operations. If the Seller transfers
the Data Center to a restaurant subsidiary, the Buyer agrees that the services
agreement between the Data Center and the Buyer shall be assigned by the Seller
to such restaurant subsidiary which shall thereafter be responsible for
performing the computer services under the services agreement.
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SECTION 11.04. Survival of Representations and Warranties and Agreements.
The representations and warranties and agreements made by the parties pursuant
to this Agreement shall survive the Closing and continue for a period of two
years from and after the Closing Date except that (i) the representations and
warranties contained in Section 2.09 regarding tax matters shall survive until
the expiration of the applicable statute of limitations, and (ii) the
representations and warranties contained in Section 2.11 as to environmental
matters shall survive for a period of four years from and after the Closing Date
and thereafter in each case no claims (for indemnification or otherwise) may be
brought with respect to such representations and warranties and agreements,
except to the extent that the party making such claim shall have notified the
other party of any such breach or failure to perform prior to the end of such
two year period or such expiration of the statute of limitations, respectively.
This Section 11.04 shall not limit any agreement of the parties herein which by
its terms contemplates performance after two years from the Closing.
SECTION 11.05. Indemnification.
(a) The Seller agrees to indemnify, defend and hold the Buyer and its
officers, directors, employees and subsidiaries and other affiliates entirely
harmless, on an after-tax basis and net of any insurance proceeds, against and
from any claim, demand, cause of action, judgment, loss, liability, cost or
other expense whatsoever, including, without limitation, reasonable attorneys'
fees (each such claim, demand, cause of action, judgment, loss, liability, cost
or other expense is referred to herein individually as a "Loss" and collectively
as "Losses"), which any of them may suffer, sustain, incur or otherwise become
subject to (i) as a result of any breach of any representation, warranty or
agreement made either (x) by the Seller pursuant to this Agreement or (y) by PCL
pursuant to the Canadian Sale Agreement; provided, however, that Buyer shall not
be entitled to indemnification for Losses pursuant to this Section 11.05(a)
arising out of any breach of any representation or warranty contained in Article
2 or 6 hereof or Article 2 of the Canadian Sales Agreement unless and until the
aggregate of all such Losses exceeds $3,000,000, whereupon the Buyer shall be
entitled to indemnification pursuant to this Section 11.05(a) arising out of any
breach of any representation or warranty contained in Articles 2 and 6 of this
Agreement and Article 2 of the Canadian Sale Agreement only to the extent such
Losses exceed $3,000,000 or (ii) resulting from or arising out of any liability
or obligation not expressly assumed by Buyer pursuant to this Agreement or the
Canadian Sale Agreement. Notwithstanding the foregoing, the provision of the
preceding sentence setting forth the $3,000,000 amount before indemnification
claims may be made shall not apply to the obligations of either party to make a
payment after the Closing to the other as an adjustment to the Purchase Price as
described in Section 1.07 hereof.
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(b) The Buyer agrees to indemnify, defend and hold the Seller and its
officers, directors, employees and subsidiaries and other affiliates (including,
without limitation, PCL) entirely harmless, on an after-tax basis and net of any
insurance proceeds, against and from any claim, demand, cause of action,
judgment, loss, liability, cost or other expense, including, without limitation,
reasonable attorneys' fees, which any of them may suffer, sustain, incur or
otherwise become subject to as a result of (i) any breach of any representation,
warranty or agreement made by the Buyer pursuant to this Agreement or the
Canadian Sale Agreement, or (ii) the operation of the PFS Business or the PFS
Canadian Business by the Buyer after the Closing Date.
(c) With respect to any claims or demands by third parties, whenever the
party to be indemnified (the "Indemnified Party") shall have notice that such a
claim or demand has been asserted or threatened which, if true, would constitute
a basis for indemnification hereunder, the Indemnified Party shall notify the
indemnifying party (the "Indemnifying Party") of such claim or demand and of the
facts within the knowledge of the Indemnified Party which relate thereto. The
Indemnifying Party shall then have the right to contest, negotiate or settle any
such claim or demand through counsel of its own selection, reasonably
satisfactory to the Indemnified Party, and solely at the cost, risk and expense
of the Indemnifying Party; provided, however, that the Indemnifying Party shall
not, without the prior written consent of the Indemnified Party (which consent
shall not be unreasonably withheld), settle, compromise or offer to settle or
compromise any such claim or demand on a basis which would or could reasonably
be expected to result in the imposition of a consent order, injunction or decree
which would or could reasonably be expected to restrict the future activity or
conduct of the Indemnified Party. The Indemnified Party may, if it so elects and
entirely within its discretion, defend any such claim or demand in the event the
Indemnifying Party fails to give notice of its intention to contest or settle
any such claim or demand, in which event the Indemnifying Party shall be
required to indemnify the Indemnified Party for any and all Losses related to
such claim or demand to the extent the Indemnified Party is entitled to be
indemnified pursuant to this Section 11.05.
(d) The Indemnified Party shall make demand to the Indemnifying Party in
writing for payment of any claim by the Indemnified Party (whether such claim is
based upon payment of a third party claim or a claim of the Indemnified Party
arising under this Agreement) under the provisions of this Section 11.05.
(e) Any payments made pursuant to the provisions of this Section 11.05
shall be treated as an adjustment to the Purchase Price.
SECTION 11.06. Bulk Sales. The Buyer hereby waives compliance by the
Seller with any bulk-sales notice requirements of applicable law, and the Seller
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shall indemnify and hold the Buyer harmless from any tax or other liability
which shall be incurred by the Buyer for the failure to comply with such
requirements.
SECTION 11.07. Expenses. Unless otherwise expressly provided herein, each
of the parties hereto shall bear the expenses incurred by that party incident to
this Agreement and the transactions contemplated hereby, including, without
limitation, all fees and disbursements of counsel and accountants retained by
such party, whether or not the transactions contemplated hereby shall be
consummated.
SECTION 11.08. Further Assurances. The Seller and the Buyer each agree
that subsequent to the Closing, at the request of the other party, it will
execute and deliver to the other party such further instruments, documents,
conveyances or assurances and take such other action as may be necessary or
otherwise reasonably requested by Buyer to carry out the transactions
contemplated by this Agreement.
SECTION 11.09. Entire Agreement. This Agreement, together with the
Canadian Sale Agreement and the Exhibits attached hereto, contains the entire
understanding of the parties hereto with respect to the transactions
contemplated hereby and may be amended, modified, supplemented or altered only
by a writing duly executed by all of the parties hereto, and any prior
agreements or understandings, whether oral or written, are entirely superseded
hereby. All Exhibits attached hereto are hereby incorporated by reference herein
and made a part hereof as if fully set forth herein.
SECTION 11.10. Assignment; Binding Effect. This Agreement shall be binding
upon all of the parties hereto and upon all of their respective successors and
permitted assigns. This Agreement shall not, however, be assignable or
transferable, in whole or in part, by either the Buyer or the Seller except upon
the express prior written consent of the other party provided that the Buyer may
assign this Agreement to any Subsidiary, of the Buyer, provided, further, that
no such assignment shall relieve the Buyer from any of its obligations under
this Agreement. Any attempt to assign or otherwise transfer this Agreement or
any rights or obligations hereunder in violation of the foregoing shall be void.
Nothing contained in this Agreement is intended to confer upon any person, other
than the parties hereto and their respective successors and permitted assigns,
any rights, remedies or obligations under, or by reason of, this Agreement.
SECTION 11.11. Modification, Waiver and Extensions. The Buyer and the
Seller may, by written instrument, extend the time for the performance of any of
the obligations or other acts of the other, waive any inaccuracies of the other
in the representations and warranties contained herein or in any document
delivered pursuant to this Agreement, waive compliance with any of the covenants
of the other contained in this Agreement, and waive the other's performance of
any of the obligations set out in this Agreement. No modification, waiver or
extension of
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any of the provisions of this Agreement and no consent by the Buyer or the
Seller to any departure therefrom by the other shall be effective unless such
modification, waiver or extension shall be in writing and signed by the party or
parties to be bound, and the same shall then be effective only for the period
and on the conditions and for the specific instances and purposes specified in
such writing.
SECTION 11.12. Notices. All notices, demands, consents or other
communications required or permitted hereunder shall be in writing and shall be
personally delivered or sent by overnight air courier, addressed as follows: if
to the Seller to: PepsiCo, Inc., 700 Anderson Hill Road, Purchase, New York
10577 Attn: Chief Financial Officer, with a copy to the General Counsel; and if
to the Buyer to: Nebco Evans Holding Company, c/o Holberg Industries, Inc., 545
Steamboat Road, Greenwich, Connecticut 06830, Attn: A. Petter Ostberg, with a
copy to Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York
10019, Attn: Adam O. Emmerich; or to such other addresses as may hereafter be
furnished in writing to the other party in the manner described above. Any
notice, demand, consent or communication given hereunder in the manner described
above shall be deemed to have been effected and received as of the date hand
delivered or as of the date received if sent by overnight air courier.
SECTION 11.13. Choice of Law.
THIS AGREEMENT, AND ALL INSTRUMENTS DELIVERED PURSUANT HERETO OR
INCORPORATED HEREIN, UNLESS OTHERWISE EXPRESSLY PROVIDED THEREIN, SHALL IN ALL
RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
SECTION 11.14. Captions. The captions of the various articles and sections
of this Agreement have been inserted for the purpose of convenience of reference
only, and such captions are not a part of this Agreement and shall not be deemed
in any manner to modify, explain, enlarge or restrict any of the provisions of
this Agreement.
SECTION 11.15. Counterparts. This Agreement may be executed by the parties
in one or more counterparts, each of which shall be an original and all of which
shall together constitute one and the same agreement.
SECTION 11.16. Severability. If any provision or provisions of this
Agreement, or any portion of any provision hereof, shall be deemed invalid or
unenforceable pursuant to a final determination of any court of competent
jurisdiction, such determination or action shall be construed so as not to
affect the validity or enforceability of any other provisions of this Agreement.
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SECTION 11.17. Non-Solicitation. Without the prior written consent of the
Buyer, the Seller agrees that, for a period of 12 months from the date of this
Agreement, neither the Seller nor its Representatives (as defined in the
Confidentiality Agreement referred to in Section 4.01) will actively and
directly solicit any officer, manager or key employee of the Buyer to become
employed by the Seller or any of its affiliates, except that the Seller shall
not be precluded from hiring any such officer, manager or key employee who (i)
initiates discussions regarding such employment without any solicitation by the
Seller, (ii) responds to any advertisement placed by the Seller, or (iii) has
been terminated by the Buyer.
SECTION 11.18. Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties to this Agreement and, except for the agreements set
forth in Article 6, nothing in this Agreement should be deemed to confer upon
third parties any remedy, claim, liability, reimbursement, claim of action or
other right.
SECTION 11.19. Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(a) Mutual Consent. By mutual consent of the parties hereto;
(b) Failure of Conditions. By the Buyer, on the one hand, or the Seller,
on the other hand, if the transactions contemplated hereby are not consummated
on or before July 14, 1997, and by the Seller at any time after June 5, 1997 if
the matters contemplated by Article 10(a)(i) and (ii) have not occurred by the
Escrow Date; provided that in each case each party shall have the right to
terminate under this clause only if the failure to consummate such transactions
on or before such date did not result from the breach of any representation,
warranty or agreement herein of the party seeking such termination (including
without limitation the failure of such party to satisfy any condition to the
other party's obligation to close hereunder).
Termination shall be effected by the giving of written notice to that effect by
one party to the other. If this Agreement is validly terminated and the
transactions contemplated hereby are not consummated, this Agreement shall
become null and void and of no further force and effect and no party shall be
obligated to the other hereunder except as provided in the next sentence.
Notwithstanding the foregoing or anything to the contrary in this Agreement,
termination shall not effect the rights and remedies available to one or more of
the parties as a result of the breach or default by another party or parties
hereunder.
SECTION 11.20. Accounts Receivable. After the Closing, the Buyer shall
have the right to collect, for the account of the Buyer, all receivables, claims
and
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other assets to be transferred to the Buyer as provided herein and to endorse in
the name of the Seller any checks received on the account thereof. The Seller
will promptly transfer and deliver to the Buyer, as received from time to time
after the Closing, any cash or other property that the Seller may receive in
respect of such receivables, claims or other assets which are the property of
the Buyer.
SECTION 11.21. Sales Tax. The Seller agrees that it shall not seek after
the Closing to recover from the Buyer or any customer of the PFS Business any
sales, use, syrup or similar tax, levy, impost or similar charge due, but not
previously charged to and collected from customers of the PFS Business whether
arising as a results of audits or assessments from any governmental or
quasi-governmental taxing authority or otherwise.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
PepsiCo, Inc.
By: /s/
-------------------------------
Nebco Evans Holding Company
By: /s/
-------------------------------
41
<PAGE> 1
Exhibit 3.1
STATE OF NEBRASKA
[GRAPHIC OF STATE FLAG OMITTED]
United States of America, ) Department of State
) ss. Lincoln, Nebraska
State of Nebraska )
I, Scott Moore, Secretary of State of the State of Nebraska do hereby
certify;
The attached is a true and correct copy of the Articles of Incorporation
as filed in this office on May 25, 1961, and all amendments thereto of
AMERISERVE FOOD DISTRIBUTION, INC.
with its registered office located in OMAHA, Nebraska.
I further certify that said corporation is in good standing as of this
date.
In Testimony Whereof, I have hereunto set my hand and affixed the
Great Seal of the State of Nebraska on July
I in the year of our Lord, one thousand nine
hundred and ninety-seven.
[SEAL OF THE STATE OF NEBRASKA] /s/ Scott Moore
----------------------------
SECRETARY OF STATE
<PAGE> 2
Articles of Incorporation
of
Nebraska Concession Supply, Inc.
Lincoln
Filing 10.00
Recording 2.50
perpetual
R.A. William I. Aitken, Philip M. Aitken, Richard W. Smith, Room 402, 1241 N
St., Lincoln, Nebr.
Mail: Room 402, 1241 N St.,
Lincoln, Nebr.
STATE OF NEBRASKA )
) SS.
SECRETARY'S OFFICE )
MAY 25 1961
Received and filed for record
and recorded in book 300
Misc Inc at page 526
/s/ Frank Marsh
- --------------------
Secretary of State
By /s/ L. B. Weyers
-----------------
INDEXED
PHOTO-COPIED
RECORDED
<PAGE> 3
ARTICLES OF INCORPORATION
OF
NEBRASKA CONCESSION SUPPLY, INC.
FIRST: The name of the corporation is NEBRASKA CONCESSION SUPPLY,
INC.
SECOND: Its principal office in the State of Nebraska is located at
Room 402, 1241 N Street, in the City of Lincoln, County of Lancaster. The names
of its resident agents are WILLIAM I. AITKEN, PHILIP M. AITKEN, and RICHARD W.
SMITH, and their address is Room 402, 1241 N. Street, CITY OF LINCOLN, COUNTY OF
LANCASTER, NEBRASKA.
THIRD: The nature of the business or objects or purposes to be
transacted, promoted or carried on are:
To manufacture, deal in, buy and sell candies, popcorn, gum,
confections of any nature and description, non-intoxicating beverages, toys,
novelties, and all kinds of personal property, either at retail or wholesale, or
both; also to own, operate or manage theatres, whether motion picture,
television or otherwise; also to own, operate or lease vending concessions of
any kind and description; also to act as manufacturers' or other's agents in the
buying, selling and dealing in all of said articles and products; and to do all
things expedient in doing any of the foregoing; to purchase or acquire and sell,
own and hold unlimitedly such real and personal property of every kind and
description within and without the State of Nebraska, and in any part of the
world, suitable, necessary, useful or advisable in connection with any and all
the objects hereinbefore set forth; and to convey, sell, assign, transfer,
lease, mortgage,
-1-
<PAGE> 4
pledge, exchange or otherwise dispose of any of such property.
To manufacture, purchase, or otherwise acquire, invest in, own,
mortgage, pledge, sell, assign and transfer, or otherwise dispose of, trade,
deal in and deal with goods, wares and merchandise and personal property of
every class and description.
To acquire, and pay for in cash, stock or bonds of this corporation
or otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in
respect of, mortgage or otherwise dispose of letters patent of the United States
or any foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trade-marks and trade names, relating to
or useful in connection with any business of this corporation.
To guarantee, purchase, hold, sell, assign, transfer, mortgage,
pledge or otherwise dispose of, shares of the capital stock of, or any bonds,
securities or evidences or indebtedness created by any other corporation or
corporations organized under the laws or this state or any other state, country,
nation or government, and while the owner thereof to exercise all the rights,
powers and privileges of ownership, including the right to vote thereon.
To enter into, make and perform contracts of every kind and
description with any person, firm, association, corporation, municipality,
county, state body politic or government or colony or dependency thereof.
To borrow or raise moneys for any of the purposes of the corporation
and, from time to time, without limit as to amount, to draw, make, accept,
endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds,
-2-
<PAGE> 5
debentures and other negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the interest
thereon by mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the property of the corporation, whether at the time owned
or thereafter acquired and to sell, pledge or otherwise dispose of such bonds or
other obligations of the corporation for its corporate purposes.
To buy, sell or otherwise deal in notes, open accounts, and other
similar evidences of debt, and to loan money and take notes, open accounts, and
other similar evidences of debt as collateral security therefor.
To purchase, hold, sell and transfer the shares of its own capital
stock; provided it shall not use its funds or property for the purchase of its
own shares of capital stock when such use would cause any impairment of its
capital except as otherwise permitted by law, and provided further that shares
of its own capital stock belonging to it shall not be voted upon directly or
indirectly.
To have one or more offices, to carry on all or any of its
operations and business and without restriction or limit as to amount to
purchase or otherwise acquire, hold, own, mortgage, sell, convey, or otherwise
dispose of real and personal property of every class and description in any of
the States, Districts, Territories or Colonies of the United States, and in any
and all foreign countries, subject to the laws of such State, District,
Territory, Colony or Country.
In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the
-3-
<PAGE> 6
powers conferred by the laws of Nebraska upon corporations formed under the act
hereinafter referred to, and to do any or all of the things hereinbefore set
forth to the same extent as natural persons might or could do.
The objects and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in nowise limited or restricted by
reference to, or inference from, the terms of any other clause in these articles
of incorporation, but the objects and purposes specified in each of the
foregoing clauses of this article shall be regarded as independent objects and
purposes.
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is one hundred (100) shares of the par value of
One Hundred Dollars ($100) each, amounting in the aggregate to Ten Thousand
Dollars ($l0,000).
FIFTH: The minimum amount of capital with which the corporation
shall commence business is Five Hundred Dollars ($500).
SIXTH: The names and places of residence of the incorporators are as
follows:
Names Residences
----- ----------
Joseph I. Swietlik 208 E. Wisconsin Ave., Milwaukee, Wis.
Albert C. Zimmermann 208 E. Wisconsin Ave., Milwaukee, Wis.
Kathleen Riordan 208 E. Wisconsin Ave., Milwaukee, Wis.
SEVENTH: The corporation is to have perpetual existence.
-4-
<PAGE> 7
EIGHTH: The private property of the stock orders shall not be
subject to the payment of corporate debts to any extent whatever.
NINTH: In furtherance, and not in limitation of the powers conferred
by statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the
real and personal property of the corporation, except as hereinafter provided.
To set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purpose or to abolish any
such reserve in the manner in which it was created.
By resolution or resolutions, passed by a majority of the whole
board, to designate one or more committees, each committee to consist of two or
more of the directors of the corporation, which, to the extent provided in said
resolution or resolutions or in the by-laws of the corporation, shall have and
may exercise the powers of the board of directors in the management of the
business and affairs of the corporation, and may have power to authorize the
seal of the corporation to be affixed to allpapers which may require it. Such
committee or committees shall have such name or names as may be stated in the
by-laws of the corporation or as may be determined from time to time by
resolution adopted by the board of directors.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding given at a stockholders' meeting
duly called for that purpose, or
-5-
<PAGE> 8
when authorized by the written consent of the holders of a majority of the stock
issued and outstanding, to mortgage, sell, Lease or exchange all of the property
and assets of the corporation, including its good will and its corporate
franchises, upon such terms and conditions and for such consideration, which may
be in whole or in part shares of stock in, and/or other securities of, any other
corporation or corporations, as its board of directors shall deem expedient and
for the best interests of the corporation.
TENTH: Meetings of stockholders and directors may be held outside
the State of Nebraska and an office or offices of the corporation may be
established and maintained outside the State of Nebraska, if the by-laws so
provide. The books of the corporation may be kept (subject to any provision
contained in the statutes) outside of the State of Nebraska at such place or
places as may be from time to time designated by the board of directors.
ELEVENTH: The corporation reserves the right to amend, alter, change
or repeal any provision contained in these articles of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore
named for the purpose of forming a corporation in pursuance of the General
Corporation Law of the State of Nebraska, do execute these articles, hereby
declaring and certifying that the facts herein stated are true, and
-6-
<PAGE> 9
accordingly have hereunto set our hands and seals this 22nd day of May, 1961.
/s/ Joseph I. Swietlik (SEAL)
------------------------
Joseph I. Swietlik
/s/ Albert C. Zimmermann (SEAL)
------------------------
Albert C. Zimmermann
/s/ Kathleen Riordan (SEAL)
------------------------
Kathleen Riordan
STATE OF WISCONSIN )
( ss.
MILWAUKEE COUNTY )
BE IT REMEMBERED, That on this 22nd day of May, 1961, personally
came before me, a Notary Public in and for the County and State aforesaid, all
of the parties to the foregoing articles of incorporation, known to me
personally to be such, and severally acknowledged the said articles to be the
act and deed of the signers respectively and that the facts therein stated are
truly set forth.
GIVEN under my hand and seal of office the day and year aforesaid.
/s/ Mildred R. Schmidt
---------------------------
Mildred R. Schmidt
Notary Public, Milwaukee County, Wis.
My commission expires: Sept. 6, 1964
(NOTARIAL SEAL)
-7-
<PAGE> 10
PROOF OF PUBLICATION
AFFIDAVIT
State of Nebraska, Lancaster County, ss:
Robert L. Gant, being duly sworn, deposes and says that he is an editor
and manager of The Daily Reporter, a legal daily newspaper printed, published
and of general circulation in the County of Lancaster and State of Nebraska, and
that the attached printed notice was published in the said newspaper once each
week 3 successive weeks, the first insertion having been on the 1 day of June A.
D., 1961, and thereafter on June 8 and 15 1961, and that said newspaper is a
legal newspaper under the statutes of the State of Nebraska. The above facts are
within my personal knowledge.
/s/ Robert L. Gant
--------------------------------------
Subscribed in my presence and sworn to
before me June 25, 1961
/s/ [ILLEGIBLE]
--------------------------------------
Notary Public
filed 6/17/61
Printer's Fee $14.70
[COPY OF NEWSPAPER NOTICE]
Lafkin, Jacobson & Swietlik
Attorneys
Bankers Bldg., Milwawkee 2, Wis.
NEBRASKA CONCESSION
SUPPLY, INC.
NOTICE OF INCORPORATION
The undersigned, having associated themselves together for the purpose of
forming a corporation pursuant to the general corporation law of the State of
Nebraska, hereby give notice that (1) the name of the corporation is NEBRASKA
CONCESSION SUPPLY, INC., (2) its principal place of business is in the City of
Lincoln, Nebraska, (3) the general nature of the business to be transacted is to
manufacture, deal in, buy and sell candy, popcorn, gum, confections of any
nature and description, nonintoxicating beverages, toys, novelties, and all
kinds of personal property, either at retail or wholesale, etc., (4) the amount
of capital stock authorized is $10,000.00 of which at least $200.00 shall be
subscribed and fully paid in before the corporation shall commence business and
subscription for the balance of said stock may be made and the same shall be
issued upon payment of the par value thereof, at such times and upon such
conditions as ordered by the board of directors, (5) the times of the
commencement of the corporation is May 25, 1961, and the corporation shall have
perpetual existence, and, (6) the affairs of the corporation shall be conducted
by a board of at least three directors and a president, a secretary and a
treasurer, and such other officers as may be appointed.
Joseph I. Swietlik
Albert Zimmermann
Kathleen Riordan
June 15 (Thurs) June 1-8-15
<PAGE> 11
Certificate of Revival
of
Nebraska Concession Supply, Inc.
Lincoln
now:
Omaha
Filing 5.00
Recording 1.00
perpetual
R.A.
Gerald Toohey
1120 Capitol Ave.
Omaha
Receipt No. C14898
STATE OF NEBRASKA ) SS JAN 8 1973
SECRETARY'S OFFICE )
Received and filed for record
and recorded [ILLEGIBLE] No. 61
[ILLEGIBLE] at page 684
Allen J. Beermann
- ------------------
Secretary of State
By D.B. Weyers
INDEXED
MICROFILMED
RECORDED
<PAGE> 12
To:
ALLEN J. BEERMANN
Secretary of State
State Capitol Building
Lincoln, Nebraska 68509
CERTIFICATE OF REVIVAL
KNOW ALL MEN BY THESE PRESENTS:
Now comes Gerald Toohey and J. Sorg, who on
--------------------- ---------------------------------------
name of PRESIDENT name of SECRETARY OR TREASURER
and at the filing hereof
March 1, 1972, were the duly elected, qualified and are
- ----------------------------------------
acting President and Secretary of
------------------------------- ------------------------------------
MUST BE PRESIDENT MUST BE SECRETARY OR TREASURER
Nebraska Concession Supply, Inc., located at
- ----------------------------------------------------------------------
name of corporation
1102 Capitol Avenue, Omaha, Nebraska a corporation duly organized under
- ---------------------------
city
and by virtue of the laws of the State of Nebraska, and for the purposes of
reviving or renewing said corporation does hereby certify, state and affirm.
1. That the existence of this corporation became inoperative on August 3,
1971, because of dissolution by the Secretary of State for non-payment of taxes.
2. That this corporation was duly and regularly organized under the laws
of the State of Nebraska.
3. That the name of this corporation is Nebraska Concession Supply, Inc.
- --------------------------------------------------------------------------------
(must be the correct corporate name)
4. The street address of the registered office is:
1120 Capitol Avenue, Omaha, Douglas, Nebraska,
- --------------------------------------------------------------------------------
Street address city county
and the name of the registered agent at such address is Gerald Toohey.
(THE ADDRESS OF THE REGISTERED AGENT AND REGISTERED OFFICE MUST BE IDENTICAL.)
5. That the time for which this revival or renewal shall extend shall be
perpetual dating from 19
- ------------------------ ----------------------- ----------------
perpetual or otherwise RENEWAL ONLY
unless sooner dissolved by due process of law.
Signed /s/ Gerald Toohey
----------------------------------
PRESIDENT Gerald Toohey
Signed /s/ J. Sorg
---------------------------------
SECRETARY OR TREASURER J. Sorg
================================================================================
INSTRUCTIONS:
Submit to the Secretary of State's office in DUPLICATE. Every item must be
completed. This document must be signed by two officers of the corporation.
Filing fees:
Domestic corporation $7.00
Nonprofit corporation $3.0O
THE LAW REQUIRES THAT THESE DOCUMENTS MUST BE SIGNED BY THE PRESIDENT AND
SECRETARY OR TREASURER.
<PAGE> 13
change of R.O.
of
Nebraska Concession Supply, Inc.
Omaha
filing 5.00
recording 2.00
R.A.
Gerald Toohey
4808 G St.
Omaha, NE 68117
Receipt No. C-86561
STATE OF NEBRASKA ) SS APR 13 1977
SECRETARY'S OFFICE )
Received and filed for record
and recorded on roll No. 77-6
[ILLEGIBLE] at page 1108
Allen J. Beermann
- ------------------
Secretary of State
By [ILLEGIBLE]
---------------------
INDEXED
MICROFILMED
RECORDED
<PAGE> 14
Form 3-76
DOMESTIC
CHANGE OF REGISTERED AGENT AND/OR REGISTERED OFFICE
(Submit in Duplicate)
TO: ALLEN J. BEERMANN, Secretary of State, Lincoln, Nebraska 68509
The following corporation, pursuant to the laws of the State of Nebraska, does
hereby wish to change its Registered Agent and/or Registered Office in the State
of Nebraska.
Nebraska Concession Supply, Inc.
- --------------------------------------------------------------------------------
Name of Corporation
================================================================================
Before Change:
Registered Agent: Gerald Toohey
Registered Office: 1120 Capitol Ave. Omaha, Douglas Nebraska 68102
--------------------------------- -----
Street Address City County Zip Code
The following change of registered office, registered agent, or both, were
authorized by a resolution duly adopted by the board of directors on the 11 day
of April 1977
The registered office of this corporation in Nebraska shall be 4808 "G" Street
------------------
Street Address
Omaha Douglas Nebraska 68117 and their registered agent
- ------------------------------
City County Zip Code
at such address shall be Gerald Toohey
-------------------------------------------------------
Name of Registered Agent
*Address shall be complete, using full street address. A box number is
acceptable only in those cases where street addresses are not available.
Such statement shall be executed by the corporation by its president or a vice
president:
Dated: April 11, 1977 President: /s/ Gerald Toohey
-----------------------------
or
Vice President:
================================================================================
If the Secretary of State finds that such
statement conforms to the provisions of sections
21-2001 to 21-20,144, he shall file such statement
in his office. The duplicate statement, bearing
the date of filing in the office of the Secretary
of State shall be recorded in the office of the
county clerk of the county where the registered
office of the corporation is located in Nebraska.
If the statement changes the location of the
registered office to another county, the statement
bearing the date of the filing in the office of
the Secretary of State shall be filed in both
counties.
Filing Fee: $7.00
<PAGE> 15
ARTICLES OF AMENDMENT
OF
NEBRASKA CONCESSION SUPPLY, INC.
Omaha
Filing 5.00
Recording 6.00
Increase 10.00
Receipt No. C-26971
STATE OF NEBRASKA ) SS
SECRETARY'S OFFICE )
Received and filed for record NOV 26 1979
and recorded on film roll No. 79-33
[ILLEGIBLE] at page 484
/s/ Allen J. Beermann
- -----------------------
Secretary of State
By /s/ [ILLEGIBLE]
---------------------
INDEXED
MICROFILMED
RECORDED
<PAGE> 16
ARTICLES OF AMENDMENT
OF
NEBRASKA CONCESSION SUPPLY, INC.
Nebraska Concession Supply, Inc., a Nebraska corporation, hereby adopts
the following Articles of Amendment to its Articles of Incorporation:
1. The name of the corporation is Nebraska Concession Supply, Inc.
2. Nebraska Concession Supply, Inc., hereby amends Article FOURTH of its
Articles of Incorporation to read as follows in its entirety:
"FOURTH: The aggregate number of shares
which the corporation shall have
authority to issue is 100 shares of
common stock and 100 shares of preferred
stock. Each share of common stock shall
have a par value of One Hundred Dollars
($100.00) and shall be designated common
stock. Each share of preferred stock
shall have a par value of One Hundred
Dollars ($100.00) and shall be
designated the Series I preferred stock
and shall have the following preferences
and rights with the limitations and
restrictions as follows:
A. REDEMPTION. The corporation may by
majority vote of its Board of Directors,
from time to time, redeem any or all
outstanding shares of its SERIES I
PREFERRED stock at the par value
thereof.
<PAGE> 17
B. DIVIDENDS. The corporation shall not
pay any dividends on its common stock in
any calendar year unless its has first
authorized a dividend of at least Six
Dollars ($6.00) per share with respect
to its SERIES I PREFERRED stock. This
dividend preference shall be
non-cumulative.
C. LIQUIDATION. Each share of SERIES I
PREFERRED stock shall be entitled to a
liquidation preference, upon voluntary
or involuntary liquidation of the
corporation, equal to its par value plus
any declared but unpaid dividends.
D. VOTING. The holders of the SERIES I
PREFERRED shares shall have no voting
rights.
E. CONVERSION. The SERIES I PREFERRED
shares are not convertible into common
shares.
3. The shareholders of Nebraska Concession Supply, Inc. adopted the above
amendment on the 28th day of September, 1979.
4 . A consent to the amendment has been given in writing by all of the
directors and by the holders of all of the shares entitled to vote on such
amendment.
These Articles of Amendment are executed by Nebraska Concession Supply,
Inc., by its president (or vice-president) and by its secretary (or an assistant
secretary) effective the 29th day of September, 1979.
NEBRASKA CONCESSION SUPPLY, INC.
By /s/ Gerald Toohey
--------------------------
President
<PAGE> 18
NEBRASKA CONCESSION SUPPLY, INC.
By /s/ H Schartow
---------------------
Secretary
<PAGE> 19
[ILLEGIBLE NEWSPAPER NOTICE]
5-25-61
RECEIVED
DEC 26 1979
SECRETARY OF STATE
CORPORATION DIVISION
THE DAILY RECORD
OF OMAHA
A. H. HENNINGSEN, Publisher
PROOF OF PUBLICATION
UNITED STATES OF AMERICA )
THE STATE OF NEBRASKA )
DISTRICT OF NEBRASKA ) SS.
COUNTY OF DOUGLAS )
CITY OF OMAHA )
JOHN P. EGLSAER
- --------------------------------------------------------------------------------
being duly sworn, deposes and says that he is
ADVERTISING MANAGER
- --------------------------------------------------------------------------------
of THE DAILY RECORD, of Omaha, a legal newspaper, printed and published daily in
the English language, having a bona fide paid circulation in Douglas County in
excess of 300 copies, printed in Omaha, in said County of Douglas, for more than
fifty-two weeks last past: that the printed notice hereto attached was published
in THE DAILY RECORD,
of Omaha, for 3 consecutive weeks, or the same day of each week, beginning on
November 30, 1979
and ending on December 21, 1979
That said Newspaper during that time was regularly published and in general
circulation in the County of Douglas, and State of Nebraska.
[ILLEGIBLE SEAL] /s/ John P. Eglsaer
----------------------------------------
Subscribed in my presence and sworn to
before me this 21st day of
December 1979
/s/ [ILLEGIBLE]
----------------------------------------
Notary Public in and for Douglas County,
State of Nebraska
<PAGE> 20
APR 2 1984
Receipt No. 12455
STATE OF NEBRASKA )
) SS
SECRETARY'S OFFICE )
Filed and recorded on film roll
84-16 page 648
/s/ Allen J. Beermann
-------------------------------
Secretary of State
By /s/ LM
--------------------------------
$28 pd.
ARTICLES OF AMENDMENT
(BY WRITTEN CONSENT)
TO THE
ARTICLES OF INCORPORATION
OF
NEBRASKA CONCESSION SUPPLY, INC.
- --------------------------------------------------------------------------------
Pursuant to the provision of the Nebraska Business Corporation Act,
the undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is Nebraska Concession Supply,
Inc.
SECOND: The amendment of the Articles of Incorporation duly adopted
by the shareholders of the corporation is to change ARTICLE FIRST thereof so
that, as amended, said ARTICLE shall be read as follows:
"NEBCO Distribution of Omaha, Inc."
THIRD: The date of the adoption of the amendment by the sole
shareholder was March 15, 1984.
FOURTH: Consent in writing has been given by all of the directors
and by the holders of all of the shares entitled to vote on such amendment.
IN WITNESS WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be executed in its name by its President and Assistant
Secretary, this 15th day of March, 1984.
NEBRASKA CONCESSION SUPPLY, INC.
--------------------------------
(Name of Corporation)
By /s/ Raymond L. Marshall
-----------------------------
Raymond Marshall, President
and /s/ Helen Schartow
----------------------------
Helen Schartow, Assistant Secretary
<PAGE> 21
AFFIDAVIT OF PUBLICATION
State of Nebraska )
) SS.
LANCASTER COUNTY, )
[ILLEGIBLE NEWSPAPER NOTICE]
RECEIVED
MAY 4 1984
SECRETARY OF STATE
CORPORATION DIVISION
The undersigned, being first duly sworn, deposes and says that she/he is a Clerk
of The Lincoln Star and Lincoln Journal, legal newspapers printed, published and
having a general circulation in the County of Lancaster and State of Nebraska,
and that the attached printed notice was published in said newspaper three
successive times the first insertion having been on the 19 day of April A.D.
1984, and thereafter on April 26, May 3, 1984, and that said newspapers are
legal newspapers under the statutes of the State of Nebraska. The above facts
are within my personal knowledge and are further verified by my personal
inspection of each notice in each of said issues.
/s/ Jean Fager
------------------------------
Subscribed in my presence and sworn to before me this 3 day of May, 1984.
/s/ G.L. Powell Notary Public
---------------
Printer's Fee, $______
---------------------
G.L. POWELL
GENERAL NOTARIAL
SEAL
STATE OF NEBRASKA
Commission Expires
Oct. 7, 1986
---------------------
84-19
<PAGE> 22
STATEMENT OF CANCELLATION OF REACQUIRED SHARES
(Prepare in Duplicate)
Except from Nebraska Business Corporation Act:
Sec. 21-2063 RRS Nebr. 1943. Reissue 1 [Illegible] 4: SHARES; REACQUIRED;
CANCELLATION STATEMENT; FILING. (1) A corporation may at any time by resolution
of its board of directors, cancel all or any part of the shares of the
corporation of any class reacquired by it, other than redeemable shares redeemed
or purchased and in such event a statement of cancellation shall be filed and
recorded as provided in this section.
(a) NEBCO Distribution of Omaha, Inc.
---------------------------------------
Name of the Corporation
(b) The number of reacquired shares canceled by resolution duly adopted by the
board of directors itemized by classes and series, and the date of its
adoption:
Required shares Class and Series Date
54 Common -$100 par 10/12/87
--------------- ------------------------------ ---------
100 Series I Preferred -$100 par 10/12/87
--------------- ------------------------------ ---------
(c) The aggregate number of issued shares, itemized by classes and series,
after giving effect to such cancellation:
Required shares Class and Series Date
46 Common -$100 par 10/12/87
--------------- ------------------------------ ---------
NONE Series I Preferred -$100 par 10/12/87
--------------- ------------------------------ ---------
(d) The amount, expressed in dollars, of the stated capital of the
corporation after giving effect to such cancellation: $ 4,600.00
----------
The statement of cancellation shall be executed by the corporation by its
president or vice president and by its secretary or an assistant secretary,
signatures of two officers required:
Date: October 12, 1987 1) /s/ Raymond Marshall
-------------------------
President
2) /s/ Gerald Toohey
-------------------------
Secretary
- --------------------------------------------------------------------------------
Duties of the Office of the Secretary of State
(2) The original and duplicate copy of such statement of cancellation shall be
delivered to the Secretary of State, who shall, when all fees provided by
law shall have been paid:
(a) File the original in his office; and
(b) Return to the corporation or its representative the duplicate copy
stamped with the date of filing in the office of Secretary of State.
- --------------------------------------------------------------------------------
Duties of the Officers of the Corporation Filing Statement
The duplicate copy of such statement of cancellation bearing the date of filing
in the office of the Secretary of State shall be recorded in the office of the
county clerk of the county where the registered office of the corporation is
located in this state.
- --------------------------------------------------------------------------------
Upon filing and recording in the office of the Secretary of State of such
statement of cancellation, the stated capital of the corporation shall be deemed
to be reduced by that part of the stated capital which was, at the time of such
cancellation, represented by the shares so canceled, and the shares so canceled
shall be restored to the status of authorized but unissued shares.
Nothing contained in this section shall be construed to forbid a cancellation of
shares or a reduction of stated capital in any other manner permitted by
sections 21-2001 to 21-20,134.
OCT 26 1987
78766
STATE OF NEBRASKA )
)ss
SECRETARY'S OFFICE )
Received and filed for
record ___ and recorded on
film roll No. 87-32 at page 1072
/s/ Allen J. Beermann
- ----------------------
Secretary of State
By /s/ BS Pd. $18.00
------------------
<PAGE> 23
ARTICLES OF AMENDMENT OF ARTICLES OF INCORPORATION
NEBCO DISTRIBUTION OF OMAHA, INC.
NEBCO Distribution of Omaha, Inc., a Nebraska corporation, hereby adopts
the following Articles of Amendment to its Articles of Incorporation:
1. The name of the Corporation is: NEBCO Distribution of Omaha, Inc.
2. NEBCO Distribution of Omaha, Inc. hereby amends Article FOURTH of its
Articles of Incorporation to read as follows in its entirety:
FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is 640 shares of common stock and each such
share of common stock shall have a par value of $10.00 per share.
3. The Amendment was adopted by the Shareholder on December 5, 1988.
4. The number of shares outstanding as of the adoption of the Amendment
was 46 shares of common stock having a par value of $100.00 per share and each
of said shares was entitled to vote thereon.
5. The holder of 46 shares voted for such Amendment and no holder of any
shares voted against such Amendment.
6. Upon adoption of the Amendment, the holder of 46 shares of the
Corporation's $100.00 par value stock shall be entitled to a certificate for 460
shares of the common stock of the
DEC 10 1988
STATE OF NEBRASKA )
)ss
SECRETARY'S OFFICE )
Received and filed for
record ___ and recorded on
film roll No. 88-43 at page 401
/s/ Allen J. Beermann
- ----------------------
Secretary of State
By /s/ [Illegible] $18.00
-----------------------
1822
<PAGE> 24
Corporation, par value $10.00 per share, upon presentation for cancellation of
the holder's certificate representing 46 shares of the Corporation's common
stock, par value $100.00.
7. Upon adoption of said Amendment, the amount of the stated capital of
the Corporation shall remain $4,600.00.
8. A written Consent in writing has been given in lieu of a Board of
Directors' meeting and meeting of the holders of all of the shares entitled to
vote on said Amendment.
These Articles of Amendment have been executed by and on behalf of the
Corporation by its President and Secretary on this 5th day of December, 1988.
NEBCO DISTRIBUTION OF OMAHA, INC.
By /s/ Raymond Marshall
--------------------------------
Raymond Marshall, President
ATTEST:
/s/ Pete Hoefer
- ----------------------------
Pete Hoefer, Secretary
<PAGE> 25
ARTICLES OF AMENDMENT OF ARTICLES OF INCORPORATION
NEBCO DISTRIBUTION OF OMAHA
The undersigned president and secretary hereby adopt the following
Articles of Amendment pursuant to the provisions of the Nebraska Business
Corporation Act:
FIRST: The name of the Corporation is: NEBCO Distribution of Omaha, Inc.
SECOND: The amendment of the Articles of Incorporation duly adopted by the
shareholders of the Corporation is to change ARTICLE FIRST thereof so that, as
amended, said ARTICLE shall be and read as follows:
FIRST: The name of the Corporation is NEBCO
EVANS Distribution, Inc.
THIRD: The date of the adoption of the Amendment by the shareholders was
February 6, 1990.
FOURTH: Consent in writing has been by all of the directors and by the
holders of all of the shares entitled to vote on said Amendment.
IN WITNESS WHEREOF, the undersigned Corporation has caused these Articles
of Amendment to be executed in its name by its President and Secretary on this
8th day of February, 1990.
NEBCO DISTRIBUTION OF OMAHA, INC.
By /s/ Raymond Marshall
--------------------------------
Raymond Marshall, President
ATTEST:
/s/ Pete Hoefer
- ----------------------------
Pete Hoefer, Secretary
FEB 8 1990
STATE OF NEBRASKA )
)ss
SECRETARY'S OFFICE )
Received and filed for
record ___ and recorded on
film roll No. [Illegible] at page [Illegible]
/s/ Allen J. Beermann
- ----------------------
Secretary of State
By /s/ [Illegible]Pd. $18.00
------------------------
23713
<PAGE> 26
DOMESTIC
CHANCE OF REGISTERED AGENT AND/OR REGISTERED OFFICE
(Submit in Duplicate)
TO: ALLEN J. BEERMANN, Secretary of State, Lincoln, Nebraska 68509
The following corporation. pursuant to the laws of the State of Nebraska, does
hereby wish to change its Registered Agent and/or Registered Office in the State
of Nebraska.
NEBCO Distribution of Omaha, Inc.
---------------------------------
Name of Corporation
- --------------------------------------------------------------------------------
Before Change:
Registered Agent: Gerald Toohey
------------------------------------------------------------
Registered Office: 4808 "G" Street, Omaha Douglas Nebraska 68117
------------------------------------------------------------
Street address City County zip Code
The following change of registered office, registered agent, or both, were
authorized by a resolution duly adopted by the board of directors on the
1st day of February 1990
- ------------------------
The registered office of this corporation in Nebraska shall be
6905 North 97th Circle,
- ------------------------
Street Address
Omaha Douglas Nebraska 68122 and the registered agent
- --------------------------------------------------------------------------------
City County Zip Code
at such address shall be Raymond E. Marshall
------------------------
Name of Registered Agent
* Address stall be complete, using full street address. A box number is
acceptable only in those cases where street addresses are not available.
Such statement shall be executed by the corporation by its president or a vice
president:
Dated: February 1, 1990 President: /s/ Raymond Marshall
-----------------------------
Raymond Marshall
or
Vice President
-------------------------
If the Secretary of State finds that such statement conforms to the provisions
of sections 21-2001 to 21-20,144, he shall file such statement in his office.
The duplicate statement, bearing the date of filing in the office of the
Secretary of State shall be recorded in the office of the county clerk of the
county where the registered office of the corporation is located in Nebraska. If
the statement changes the location of the registered office to another county,
the statement bearing the date of the filing in the office of the Secretary of
State shall be filed in both counties.
[Stamped Text Illegible]
Filing Fee: $18.00
<PAGE> 27
ARTICLES OF MERGER OF EVANS BROS. CO., INC. [Subsidiary]
INTO NEBCO EVANS DISTRIBUTION, INC. [Parent]
This action is taken pursuant to Section 21-2074 of the Nebraska Business
Corporation Act, as amended, and Sections 180.68 and 180.685 of the Wisconsin
Statutes, as amended.
The undersigned being the president and assistant secretary, respectively
of NEBCO EVANS Distribution, Inc., a Nebraska corporation (Parent and Surviving
Corporation), owner of 100% of the outstanding shares of each class of Evans
Bros. Inc., a Wisconsin corporation (Subsidiary Corporation), hereby execute
and adopt these Articles of Merger in duplicate:
1. The following Plan of Merger was adopted by the unanimous resolution of
the Board of Directors of the Parent and Surviving Corporation:
a) The name of the Subsidiary Corporation is Evans Bros. Co., Inc.
and the name of the Corporation owning l00% of the Subsidiary Corporation shares
is NEBCO EVANS Distribution, Inc.
b) Upon the effective date of the merger, all outstanding shares of
the Subsidiary Corporation and all rights in respect thereof shall cease to
exist and, on that date, the Surviving Corporation shall cause all stock
certificates of the Subsidiary Corporation to be cancelled.
c) The business purpose for the merger is to simplify and
consolidate administration and accounting of the Parent and Surviving
Corporation and its subsidiary corporations.
[Stamped Text Illegible]
<PAGE> 28
2. The Subsidiary Corporation has 30,294 shares of its common stock
outstanding and the Surviving Corporation owns 30,294 shares of said common
stock. The Subsidiary Corporation has no other classes of issued and outstanding
capital stock.
3. The Surviving Corporation, as owner of all the outstanding shares of
the Subsidiary Corporation, has waived the mailing of a copy of the Plan of
Merger to it.
4. The Nebraska registered office of the Surviving Corporation is in
Douglas County. The Wisconsin registered office for both the Surviving
Corporation and the Subsidiary Corporation is in Waukesha County.
5. This merger shall become effective upon February 23, 1990.
IN WITNESS WHEREOF, the undersigned hereby make and sign these Articles of
Merger on the 12th day of February, 1990 and affirm the statements contained
herein are true under penalties of perjury.
NEBCO EVANS Distribution, Inc.
By /s/ Raymond Marshall
--------------------------------
Raymond Marshall, President
ATTEST:
/s/ Helen Schartow
- -----------------------
Helen Schartow
Assistant Secretary
[NEBCO EVANS Distribution,
Inc. has no corporate seal]
<PAGE> 29
United States of America
State of Wisconsin
OFFICE OF THE SECRETARY OF STATE
---------
To All to Whom These Presents Shall Come:
I, DOUGLAS La FOLLETTE, Secretary of State of Wisconsin, do hereby certify
that articles of incorporation of
EVANS BROS. CO., INC.
were duly filed in this office on November 17, 1937 and that thereafter a
certificate of such filing and grant of corporate powers and privileges was duly
issued to said organization under the hand and seal of the Secretary of State of
Wisconsin, as provided by law.
I further certify that it appears from the records of this office that
said organization continued and now is a body corporate, duly and legally
incorporated, organized and existing by and under the laws of this state, and is
in good standing.
IN TESTIMONY WHEREOF, I have hereunto
set my hand and affixed my official seal
at Madison, on February 14, 1990
/s/ Douglas La Follette
------------------------
DOUGLAS La FOLLETTE
Secretary of State
By: {illegible]
<PAGE> 30
ARTICLES OF MERGER OF
NEBCO DISTRIBUTION OF DES MOINES, INC. [Subsidiary]
INTO NEBCO EVANS DISTRIBUTION, INC. [Parent]
This action is taken pursuant to Section 21-2074 of the Nebraska Business
Corporation Act, as amended.
The undersigned being the president and assistant secretary, respectively,
of NEBCO EVANS Distribution, Inc., a Nebraska corporation (Parent and Surviving
Corporation) owner of 100% of the outstanding shares of each class of NEBCO
Distribution of Des Moines, Inc., a Nebraska corporation (Subsidiary
Corporation) hereby execute and adopt these Articles of Merger in duplicate:
1. The following Plan of Merger was adopted by the unanimous resolution of
the Board of Directors of the Parent and Surviving Corporation:
a) The name of the Subsidiary Corporation is NEBCO Distribution of
Des Moines, Inc. and the name of the Corporation owning 100% of the Subsidiary
Corporation shares is NEBCO EVANS Distribution, Inc.
b) Upon the effective date of the merger, all outstanding shares of
the Subsidiary Corporation and all rights in respect thereof shall cease to
exist and, on that date, the Surviving Corporation shall cause all stock
certificates of the Subsidiary Corporation to be cancelled.
<PAGE> 31
c) The business purpose for the merger is to simplify and
consolidate administration and accounting of the Parent and Surviving
Corporation and its subsidiary corporations.
2. The Subsidiary Corporation has 10 shares of its common stock
outstanding and the Surviving Corporation owns 10 shares of said common stock.
The Subsidiary Corporation has no other classes of issued and outstanding
capital stock.
3. The Surviving Corporation, as owner of all the outstanding shares of
the Subsidiary Corporation, has waived the mailing of a copy of the Plan of
Merger to it.
4. The Nebraska registered office for both the Surviving Corporation and
the Subsidiary Corporation is in Douglas County.
5. This merger shall become effective upon February 23, 1990.
In WITNESS WHEREOF, the undersigned hereby make and sign these Articles of
Merger on the 12th day of February, 1990 and affirm the statements contained
herein are true under penalties of perjury.
NEBCO EVANS Distribution, Inc.
By /s/ Raymond Marshall
--------------------------------
Raymond Marshall, President
ATTEST:
/s/ Helen Schartow
- -----------------------
Helen Schartow
Assistant Secretary
[NEBCO EVANS Distribution,
Inc. has no corporate seal]
<PAGE> 32
ARTICLES OF MERGER OF
WISCONSIN CONCESSION SUPPLY, INC. [Subsidiary]
INTO NEBCO EVANS DISTRIBUTION, INC. [Parent]
This action is taken pursuant to Section 21-2074 of the Nebraska Business
Corporation Act, as amended.
The undersigned being the president and assistant secretary, respectively,
of NEBCO EVANS Distribution, Inc., a Nebraska corporation (Parent and Surviving
Corporation), owner of 100% of the outstanding shares of each class of
Wisconsin Concession Supply, Inc., a Nebraska corporation (Subsidiary
Corporation), hereby execute and adopt these Articles of Merger in duplicate:
1. The following Plan of Merger was adopted by the unanimous
resolution of the Board of Directors of the Parent and Surviving
Corporation:
a) The name of the Subsidiary Corporation is Wisconsin Concession
Supply, Inc. and the name of the Corporation owning 100% of the Subsidiary
Corporation shares is NEBCO EVANS Distribution, Inc.
b) Upon the effective date of the merger, all outstanding shares of
the Subsidiary Corporation and all rights in respect thereof shall cease to
exist and, on that date, the Surviving Corporation shall cause all stock
certificates of the Subsidiary Corporation to be cancelled.
<PAGE> 33
c) The business purpose for the merger is to simplify and
consolidate administration and accounting of the Parent and Surviving
Corporation and its subsidiary corporations.
2. The Subsidiary Corporation has 10 shares of its common stock
outstanding and the Surviving Corporation owns 10 shares of said common stock.
The Subsidiary Corporation has no other classes of issued and outstanding
capital stock.
3. The Surviving Corporation, as owner of all the outstanding shares of
the Subsidiary Corporation, has waived the mailing of a copy of the Plan of
Merger to it.
4. The Nebraska registered office for both the Surviving Corporation and
the Subsidiary Corporation is in Douglas County.
5. This merger shall become effective upon February 23, l990.
IN WITNESS WHEREOF, the undersigned hereby make and sign these Articles of
Merger on the 12th day of February, 1990 and affirm the statements contained
herein are true under penalties of perjury.
NEBCO EVANS Distribution, Inc.
By /s/ Raymond Marshall
--------------------------------
Raymond Marshall, President
ATTEST:
/s/ Helen Schartow
- -----------------------
Helen Schartow
Assistant Secretary
[NEBCO EVANS Distribution,
Inc. has no corporate seal]
<PAGE> 34
ARTICLES 0F MERGER OF
NEBCO DISTRIBUTION OF KANSAS CITY, INC. [Subsidiary]
INTO NEBCO EVANS DISTRIBUTION, INC. [Parent]
The action is taken pursuant to Section 21-2074 of the Nebraska Business
Corporation Act, as amended.
The undersigned being the president and assistant secretary, respectively,
of NEBCO EVANS Distribution, Inc., a Nebraska corporation (Parent and Surviving
Corporation) owner of 100% of the outstanding shares of each class of NEBCO
Distribution of Kansas City, Inc., a Nebraska corporation (Subsidiary
Corporation), hereby execute and adopt these Articles of Merger in duplicate:
1. The following Plan of Merger was adopted by the unanimous
resolution of the Board of Directors of the Parent and Surviving Corporation:
a) The name of the Subsidiary Corporation is NEBCO Distribution of
Kansas City, Inc. and the name of the Corporation owning 100% of the Subsidiary
Corporation shares is NEBCO EVANS Distribution, Inc.
b) Upon the effective date of the merger, all outstanding shares of
the Subsidiary Corporation and all rights in respect thereof shall cease to
exist and, on that date, the Surviving Corporation shall cause all stock
certificates of the Subsidiary Corporation to be cancelled.
[Stamped Text Illegible]
<PAGE> 35
c) The business purpose for the merger is to simplify and
consolidate administration and accounting of the Parent and Surviving
Corporation and its subsidiary corporations.
2. The Subsidiary Corporation has 100 shares of its common stock
outstanding and the Surviving Corporation owns 100 shares of said common
stock. The Subsidiary Corporation has no other classes of issued and outstanding
capital stock.
3. The Surviving Corporation, as owner of all the outstanding shares of
the Subsidiary Corporation, has waived the mailing of a copy of the Plan of
Merger to it.
4. The Nebraska registered office for both the Surviving Corporation and
the Subsidiary Corporation is in Douglas County.
5. This merger shall become effective upon February 23, 1990.
IN WITNESS WHEREOF, the undersigned hereby make and sign these Articles of
Merger on the 12th day of February, l990 and affirm the statements contained
herein are true under penalties of perjury.
NEBCO EVANS Distribution, Inc.
By /s/ Raymond Marshall
--------------------------------
Raymond Marshall, President
ATTEST:
/s/ Helen Schartow
- -----------------------
Helen Schartow
Assistant Secretary
[NEBCO EVANS Distribution,
Inc. has no corporate seal]
<PAGE> 36
ARTICLES 0F MERGER OF
NEBCO DISTRIBUTION OF MINNEAPOLIS, INC. [Subsidiary]
INTO NEBCO EVANS DISTRIBUTION, INC. [Parent]
This action is taken pursuant to Section 21-2074 of the Nebraska Business
Corporation Act, as amended, and Sections 302A.62l and 302A.65l of the Minnesota
Statutes, as amended.
The undersigned being the president and assistant secretary, respectively,
of NEBCO EVANS Distribution, Inc., a Nebraska corporation (Parent and Surviving
Corporation), owner of 100% of the outstanding shares of each class of NEBCO
Distribution of Minneapolis, Inc., a Minnesota corporation (Subsidiary
Corporation), hereby execute and adopt these Articles of Merger in duplicate:
1. The following Plan of Merger was adopted by the unanimous resolution of
the Board of Directors of the Parent and Surviving Corporation:
a) The name of the Subsidiary Corporation is NEBCO Distribution of
Minneapolis, Inc. and the name of the Corporation owning 100% of the Subsidiary
Corporation shares is NEBCO EVANS Distribution, Inc.
b) Upon the effective date of the merger, all outstanding shares of
the Subsidiary Corporation and all rights in respect thereof shall cease to
exist and, on that date, the Surviving Corporation shall cause all stock
certificates of the Subsidiary Corporation to be cancelled.
<PAGE> 37
c) The business purpose for the merger is to simplify and
consolidate administration and accounting of the Parent and Surviving
Corporation and its subsidiary Corporations.
2. The Subsidiary Corporation has 10 shares of its common stock
outstanding and the Surviving Corporations owns 10 shares of said common stock.
The Subsidiary Corporation has no other classes of issued and outstanding
capital stock.
3. The Surviving Corporation, as owner of all the outstanding shares of
the Subsidiary Corporation, has waived the mailing of a copy of the Plan of
Merger to it.
4. The Nebraska registered office of the Surviving Corporation is in
Douglas County. The Minnesota registered office for both the Surviving
Corporation and the Subsidiary Corporation is in Hennepin County.
5. This merger shall become effective upon February 23, 1990.
IN WITNESS WHEREOF, the undersigned hereby make and sign these Articles of
Merger on the 12th day of February, 1990 and affirm the statements contained
herein are true under penalties of perjury.
NEBCO EVANS Distribution, Inc.
By /s/ Raymond Marshall
--------------------------------
Raymond Marshall, President
ATTEST:
/s/ Helen Schartow
- -----------------------
Helen Schartow
Assistant Secretary
[NEBCO EVANS Distribution,
Inc. has no corporate seal]
<PAGE> 38
State of Minnesota
--------------------
SECRETARY OF STATE
--------------------
Certificate of Good Standing
I, Joan Anderson Growe, Secretary of State of Minnesota, do certify that:
The corporation listed below is a corporation formed under the laws of
Minnesota; that the corporation was formed by the filing of Articles of
Incorporation with the Office of the Secretary of State on the date listed
below; that the corporation is governed by the chapter of Minnesota Statutes
listed below; and that this corporation is authorized to do business as a
corporation at the time this certificate is issued.
Name: NEBCO Distribution of Minneapolis, Inc.
Date Formed: 05/26/[Illegible]
Chapter Governed By: 302A
This Certificate has been issued on 02/14/90
/s/ Joan Anderson Growe
-----------------------
Joan Anderson Growe
Secretary of State
<PAGE> 39
MAR 22 1991
STATE OF NEBRASKA ) SS
SECRETARY'S OFFICE )
Received and filed for record 44485
and recorded on film roll No. _____
[ILLEGIBLE] at page 299
/s/ Allen J. Beermann
---------------------
Secretary of State
By /s/ JVB
-----------------
6,045.00 pd.
ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION
OF
NEBCO EVANS DISTRIBUTION, INC.
NEBCO EVANS Distribution, Inc., a Nebraska corporation, hereby adopts the
following Articles of Amendment to its Articles of Incorporation.
1. The name of the Corporation is NEBCO EVANS Distribution, Inc.
2. NEBCO EVANS Distribution, Inc. hereby amends Article Fourth of its
Articles of Incorporation to read as follows in its entirety:
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is (a) 640 shares of common stock and each such share of
common stock shall have a par value of $10.00 per share; and (b) 300,000 shares
of preferred stock and each such preferred share shall have a par value of
$10.00 and such relative rights and preferences as may be fixed and determined
by resolution of the Board of Directors.
3. The Amendment was adopted by the shareholders on the 18th day of
February, 1991.
4. The number of shares outstanding as of the adoption of the Amendment
was 600 shares of common stock having a par value of $10.00 per share and each
of said shares was entitled to vote thereon.
5. The holder of 600 shares voted for such amendment and no holder of any
shares voted against such amendment.
<PAGE> 40
6. A written unanimous Consent in writing has been given in lieu of a
Board of Directors' meeting and meeting of the holders of all of the shares
entitled to vote on said Amendment.
7. These Articles of Amendment have been executed by and on behalf of the
Corporation by its president and secretary on this 15th day of March, 1991.
NEBCO EVANS DISTRIBUTION, INC.
By /s/ Raymond E. Marshall
-----------------------------------
Raymond E. Marshall, President
ATTEST:
/s/ Peter Hoefer
- ------------------------------
Peter Hoefer, Secretary
<PAGE> 41
NEBCO EVANS DISTRIBUTION, INC.
300,000 Series 91 Preferred Shares
The NEBCO EVANS Distribution, Inc. Series 91 Preferred Series (Series)
shall consist of 300,000 shares, $10.00 par value, each having the following
rights and preferences:
(1) Dividends. The holders of record of shares of this Series shall
be entitled to receive when and as declared by the Board of Directors out
of funds legally available therefore, cash dividends at the rate of $1.00
per share per annum payable quarterly on such dates as may from time to
time be determined by the Board of Directors, in preference to and in
priority over dividends upon the common shares or any other shares of the
Corporation. Dividends on each share of this series shall accumulate,
whether or not declared, from the date of its issuance. The holders of
shares of this Series shall not be entitled to any dividends other than
the cash dividend provided for in this Section (1). No dividends shall be
declared or paid on the common shares or an other shares of the
Corporation during any period when the Corporation has failed to pay a
quarterly dividend on this Series for any preceding quarter.
(2) Liquidation. In the event of a liquidation, dissolution or
winding up of the Corporation, the holders of shares of this Series shall
be entitled to receive out of the assets of the Corporation an amount
equal to $10.00 per share, plus any accumulated and unpaid dividends
thereon to the date fixed for distribution, in preference to and in
priority over any such distribution upon the common shares or any other
shares of the Corporation.
(3) Redemption. This Series may be redeemed, in whole or in part, at
the option of the Corporation by resolution Of its Board of Directors, at
any time and from time to time, at the redemption price per share of
$10.00 plus any accumulated and unpaid dividends thereon at the date fixed
for redemption. In the event that less than the entire number of shares of
this Series outstanding is at any time redeemed by the Corporation, the
shares to be redeemed shall be selected by lot in a manner determined by
the Board of Directors of the Corporation unless they shall have been
advised by the unanimous agreement of the holders of all shares of this
Series to effect the redemption in some other manner. This Series must be
redeemed, in whole, not later than seven (7) years after the issuance of
any share of this Series.
Not less than 30 nor more than 40 days prior to the date fixed for
any redemption of this Series or any part thereof, a notice specifying the
time and place of such redemption shall be given by first class mail,
postage prepaid, to the
<PAGE> 42
holders of record of the shares of this Series selected for redemption at
their respective addresses as the same shall appear on the books of the
Corporation, but no failure to mail such notice or any defect therein or
in the mailing thereof shall affect the validity of the proceedings for
redemption. Any notice which was mailed in the manner herein provided
shall be conclusively presumed to have been duly given whether or not the
holders receive the notice.
After the date fixed for the redemption of shares of this Series by
the Corporation, the holders of shares selected for redemption shall cease
to be shareholders with respect to such shares and shall have no interest
in or claims against the Corporation by virtue thereof except the right to
receive the monies payable upon such redemption from the Corporation,
without interest thereon, upon surrender (and endorsement, if required by
the Corporation) of their certificates and the shares represented thereby
shall no longer be deemed to be outstanding. The Corporation may, at its
option, at any time after a notice of redemption has been given, deposit
the redemption price for all shares of this Series designated for
redemption and not yet redeemed in escrow with a national bank as a trust
fund for the benefit of the holders of the shares of this Series
designated for redemption. From and after the making of such deposit, the
holders of shares designated for redemption shall cease to be shareholders
with respect to such shares and shall have no interest in or claim against
the Corporation by virtue thereof except the right to receive from such
trust fund the monies payable upon such redemption, without interest
thereon, upon surrender (and endorsement, if required by the Corporation)
of their certificates and the shares represented thereby shall no longer
be deemed to be outstanding.
(4) Voting Rights. No holder of this Series shall be entitled to
vote on any matters brought to a vote before the shareholders of the
Corporation, except as otherwise provided by the Business Corporation Law
of the State of Nebraska.
(5) Consideration for Issuance of Shares. All shares of this Series
shall be deemed to be fully paid and non-assessable upon the issuance
thereof.
(6) Notice to Holders of Certain Transactions. The Corporation shall
cause a notice to be mailed to the holders of record of shares of this
Series at their respective addresses as the same shall appear on the books
of the Corporation, in case:
(a) The Corporation shall declare a dividend (or any other
distribution) on its common shares or other shares;
(b) Of any reclassification of capital stock
<PAGE> 43
of the Corporation or of any consolidation or merger to which the
Corporation is a party and for which approval of any shareholders of
the Corporation is required, or of the sale or transfer of all or
substantially all of the assets of the Corporation;
(c) Of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation.
Such notice shall be mailed at least 20 days prior to the applicable
record date or other date hereinafter referred to and shall specify (i)
the date on which a record is to be taken for the purpose of such
dividend, redemption, distribution of rights or, if a record is not to be
taken, the date as of which the holders of common shares of record to be
entitled to such dividend, distribution, redemption or rights are to be
determined, or (ii) the date on which, in connection with such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, it is expected that holders of common shares of
record shall be entitled to exchange their common shares for securities or
other property deliverable upon such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up.
(7) Limitation on Cash Dividends and Distributions on Shares. So
long as any shares of this Series are outstanding, the Corporation may not
pay any cash dividend or make any other distribution in cash on its common
shares or any other shares.
(8) Limitation on Certain Actions. So long as any shares of this
Series are outstanding, the Corporation shall not: (a) authorize, create
or issue any other class or classes of preferred shares or any other
shares having rights, powers or preferences equal to or senior to the
shares of this Series, (b) redeem, purchase or otherwise acquire any
shares of its common shares or other shares, and (c) merge, consolidate,
sell or otherwise dispose of substantially all of its assets.
(9) No Other Rights. The shares of this Series shall not have any
relative, participating, optional or other special rights or powers other
than as set forth above and in the Certificate of Incorporation of the
Corporation as amended.
(10) Certificates. Each certificate for shares of this Series shall
bear a legend incorporating a certified copy of this resolution which
shall be authenticated by the President or Vice President of the
Corporation and appended to each such certificate.
<PAGE> 44
[ILLEGIBLE]
ARTICLES OF MERGER
L. L. DISTRIBUTION SYSTEMS, INC. [Subsidiary]
INTO NEBCO EVANS DISTRIBUTION, INC. [Parent]
This action is taken pursuant to Section 21-2074 of the Nebraska Business
Corporation Act, as amended, and Sections 302A.621 and 302A.651 of the Minnesota
Statutes, as amended.
The undersigned being president and secretary, respectively, of NEBCO
EVANS Distribution, Inc., a Nebraska corporation (Parent and Surviving
Corporation), owner of 100% of the outstanding shares of each class of L. L.
Distribution Systems, Inc., a Minnesota corporation (Subsidiary Corporation),
hereby execute and adopt these Articles of Merger in duplicate:
1. The following Plan of Merger was adopted by the unanimous resolution of
the Board of Directors of the Parent and Surviving Corporation:
a) The name of the Subsidiary Corporation is L. L. Distribution
Systems, Inc. and the name of the Corporation owning 100% of the Subsidiary
Corporation shares is NEBCO EVANS Distribution, Inc.
b) Upon the effective date of the merger, all outstanding shares of
the Subsidiary Corporation and all rights in respect hereof shall cease to exist
and, on that date, the Surviving Corporation shall cause all stock certificates
of the Subsidiary Corporation to be cancelled.
<PAGE> 45
c) The business purpose for the merger is to simplify and
consolidate administration and accounting of the Parent and Surviving
Corporation and its subsidiary corporation.
2. The Subsidiary Corporation has 6,000 shares of its common stock
outstanding and the Surviving Corporation owns 6,000 shares of said common
stock. The Subsidiary Corporation has no other classes of issued and outstanding
capital stock.
3. The Surviving Corporation, as owner of all the outstanding shares of
the Subsidiary Corporation, has waived the mailing of a copy of the Plan of
Merger to it.
4. The Nebraska registered office of the Surviving Corporation is in
Douglas County. The Minnesota registered office for both the Surviving
Corporation and the Subsidiary Corporation is in Hennepin County.
5. This merger shall become effective upon December 31, 1991.
IN WITNESS WHEREOF, the undersigned hereby make and sign these Articles of
Merger on the 10th day of December, 1991 and affirm the statements contained
herein are true under penalties of perjury.
NEBCO EVANS DISTRIBUTION, INC.
ATTEST:
By /s/ Raymond E. Marshall
-------------------------------
Raymond E. Marshall, President
/s/ Peter S. Hoefer
- --------------------------------
Peter S. Hoefer, Secretary
[NEBCO EVANS Distribution,
Inc. has no corporate seal]
<PAGE> 46
DEC 31 1991
Receipt No. 59335 $9,034.00
---------------------
STATE OF NEBRASKA ) SS
SECRETARY'S OFFICE )
Filed and recorded on film roll
91-31 page 78
-------- -------------------
/s/ Allen J. Beermann
---------------------------------
Secretary of State
By /s/ JKR
---------------------------
ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION
OF
NEBCO EVANS DISTRIBUTION, INC.
NEBCO EVANS Distribution, Inc., a Nebraska corporation, hereby adopts the
following Articles of Amendment to its Articles of Incorporation.
1. The name of the Corporation is NEBCO EVANS Distribution, inc.
2. NEBCO EVANS Distribution, INC. hereby amends Article Fourth of its
Articles of Incorporation to read as follows in its entirety:
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is (a) 1,000 shares of common stock and each such share of
common stock shall have a par value of $10.00 per share; and (b) 150 shares of
convertible preferred shares and each such convertible preferred share shall
have a par value of $50,000.00 and such relative rights and preferences as may
be fixed and determined by resolution of the Board of Directors.
3. The Amendment was adopted by the shareholders on the 10th day of
December, 1991.
4. The number of shares outstanding as of the adoption of the Amendment
was 600 shares of common stock having a par value of $10.00 per share and each
of said shares was entitled to vote thereon.
<PAGE> 47
5. The holder of 600 shares voted for such amendment and no holder of any
shares voted against such amendment.
6. A written unanimous Consent in writing has been given in lieu of a
Board of Directors' meeting and meeting of the holders of all of the shares
entitled to vote on said Amendment.
7. These Articles of Amendment have been executed by and on behalf of the
Corporation by its president and secretary on this 31st day of December, 1991.
NEBCO EVANS DISTRIBUTION, INC.
BY /s/ Raymond E. Marshall
--------------------------------
Raymond E. Marshall, President
ATTEST:
/s/ Peter Hoefer
- --------------------------------
Peter Hoefer, Secretary
<PAGE> 48
NEBCO EVANS DISTRIBUTION, INC.
Series $50,000 Par Value Convertible Preferred Shares
The NEBCO EVANS Distribution, Inc. Series $50,000 Par Value Convertible
Preferred Series (Series) shall consist of 150 shares, $50,000.00 par value,
each having the following rights and preferences:
(1) Dividends. The holders of record of shares of this Series shall
be entitled to receive when and as declared by the Board of Directors out
of funds legally available therefore, cash dividends at the rate of
$5,500.00 per share per annum payable monthly on such dates as may from
time to time be determined by the Board of Directors, in preference to and
in priority over dividends upon the common shares or any other shares of
the Corporation. Dividends on each share of this Series shall accumulate,
whether or not declared, front the date of its issuance. The holders of
shares of this Series shall not be entitled to any dividends other than
the cash dividend provided for in this Section (1). No dividends shall be
declared or paid on the common shares or any other shares of the
Corporation during any period when the Corporation has failed to pay a
monthly dividend on this Series for any preceding month.
(2) Liquidation. In the event of a liquidation, dissolution or
winding up of the Corporation, the holders of shares of this Series shall
be entitled to receive out of the assets of the Corporation an amount
equal to $50,000.00 per share, plus any accumulated and unpaid dividends
thereon to the date fixed for distribution, in preference to and in
priority over any such distribution upon the common shares or any other
shares of the Corporation.
(3) Redemption. This Series may be redeemed, in whole or in part, at
the option of the Corporation by resolution of its Board of Directors, at
any time and from time to time, at the redemption price per share of
$50,000.00 plus any accumulated and unpaid dividends thereon at the date
fixed for redemption. In the event that less than the entire number of
shares of this Series outstanding is at any time redeemed by the
Corporation, the shares to be redeemed shall be selected by lot in a
manner determined by the Board of Directors of the Corporation unless they
shall have been advised by the unanimous agreement of the holders of all
shares of this Series to effect the redemption in some other manner.
-1-
<PAGE> 49
Not less than sixty (60) nor more than seventy-five (75) days prior
to the date fixed for any redemption of this Series or any part thereof, a
notice specifying the time and place of such redemption shall be given by
first class mail, postage prepaid, to the holders of record of the shares
of this Series selected for redemption at their respective addresses as
the same shall appear on the books of the Corporation, but no failure to
mail such notice or any defect therein or in the mailing thereof shall
affect the validity of the proceedings for redemption. Any notice which
was mailed in the manner herein provided shall be conclusively presumed to
have been duly given whether or not the holders receive the notice.
Subject to the conversion rights provided for hereinbelow, after the
date fixed for the redemption of shares of this Series by the Corporation,
the holders of shares selected for redemption shall cease to be
shareholders with respect to such shares and shall have no interest in or
claims against the Corporation by virtue thereof except the right to
receive the monies payable upon such redemption from the Corporation,
without interest thereon, upon surrender (and endorsement, if required by
the Corporation) of their certificates and the shares represented thereby
shall no longer be deemed to be outstanding.
(4) Voting Rights. No holder this Series shall be entitled to vote
on any matters brought to a vote before the shareholders of the
Corporation, except as otherwise provided by the Business Corporation Law
of the State of Nebraska.
(5) Consideration for Issuance of Shares. All shares of this Series
shall be deemed to be fully paid and non-assessable upon the issuance
thereof.
(6) Notice of Holders of Certain Transactions. The Corporation shall
cause a notice to be mailed to the holders of record of shares of this
Series at their Respective addresses as the same shall appear on the books
of the Corporation, in case:
(a) The Corporation shall declare a dividend (or any other
distribution) on its common shares or other shares;
(b) Of any reclassification of capital stock of the Corporation or
of any consolidation or merger to which the Corporation is a party
and for which approval of any shareholders of the Corporation is
required, or of the sale or transfer of all or substantially all of
the assets of the Corporation;
-2-
<PAGE> 50
(c) Of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation.
Such notice shall be mailed at least 20 days prior to the applicable
record date or other date hereinafter referred to and shall specify (i)
the date on which a record is to be taken for the purpose of such
dividend, redemption, distribution of rights or, if a record is not to be
taken, the date as of which the holders of common shares of record to be
entitled to such dividend, distribution, redemption or rights are to be
determined, or (ii) the date on which, in connection with such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, it is expected that holders of common shares of
record shall be entitled to exchange their common shares for securities or
other property deliverable upon such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up.
(7) Limitation on Cash Dividends and Distributions on Shares. So
long as any shares of this Series are outstanding, the Corporation may not
pay any cash dividend or make any other distribution in cash on its common
shares or any other shares.
(8) Limitation on certain Actions. So long as any shares of this
Series are outstanding, the Corporation shall not: (a) authorize, create
or issue any other class or classes of preferred shares or any other
shares having rights, powers or preferences equal to or senior to the
shares of this Series, (b) redeem, purchase or otherwise acquire any
shares of its common shares or other shares, and (c) merge, consolidate,
sell or otherwise dispose of substantially all of its assets.
(9) Conversion. The holders of each share of this Series shall have
the right at their option to convert each such share into one common share
of the Corporation at any time upon sixty (60) days notice (or if such
share is called for redemption, at any time without notice up to and
including, but not after, the close of business on the day prior to the
date fixed for redemption). In the event the Corporation recapitalizes or
declares dividends payable in its common shares, the number of common
shares into which one convertible share is convertible shall be equitably
adjusted but no adjustment shall be required in the event additional
common shares of the Corporation are issued due to the exercise of stock
options outstanding as of the date of issuance of this Series. The
Corporation shall, so long as any share of this Series is outstanding,
reserve and keep available out of its authorized and unissued common
shares sufficient number of common shares required to effect conversation
of all shares of this Series
-3-
<PAGE> 51
(10) No Other Rights. The shares of this Series shall not have any
relative, participating, optional or other special rights or powers other
than as set forth above and in the Certificate of Incorporation of the
Corporation as amended.
(11) Certificates. Each certificate for shares of this Series shall
bear a legend incorporating a certified copy of this Resolution which
shall be authenticated by the President or Vice President of the
Corporation and appended to each such certificate.
-4-
<PAGE> 52
MAR 2 1994
STATE OF NEBRASKA ) SS
SECRETARY'S OFFICE )
Received and filed for record 1277
and recorded on film roll No. ____
94-5 at page 577
---------- ---------------
/s/ Allen J. Beermann
---------------------------------
Secretary of State
By /s/ [ILLEGIBLE] $20045.00 pd
---------------------------
ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION
OF
NEBCO EVANS DISTRIBUTION, INC.
NEBCO EVANS Distribution, Inc., a Nebraska corporation, hereby adopts the
following Articles of Amendment to its Articles of Incorporation.
1. The name of the Corporation is NEBCO EVANS Distribution, Inc.
2. NEBCO EVANS Distribution, Inc. hereby amends Article Fourth of its
Articles of Incorporation to read as follows in its entirety:
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is (1) 2,000 shares of common stock and each such share of
common stock shall have a par value of $10.00 per share; (b) 150 shares of
convertible preferred shares and each such convertible preferred share shall
have a par value of $50,000.00 and such relative rights and preferences as may
be fixed and determined by resolution of the Board of Directors; and (c) 400
shares of convertible preferred shares and each such convertible preferred share
shall have a par value of $25,000.00 and such relative rights and preferences as
may be fixed and determined by resolution of the Board of Directors which
relative rights and preferences are set forth in the attached designation.
3. The Amendment was adopted by the shareholders at a meeting on April 1,
1993.
<PAGE> 53
4. The number of shares outstanding as of the adoption of the Amendment
was 600 shares of common stock having a par value of $10.00 per share and 150
shares of its Series $50,000 Par Value Convertible Preferred Shares. Each of
said common shares was entitled to vote thereon. None of the Series $50,000 Par
Value Convertible Preferred Shares were entitled to vote thereon.
5. The holders of more than two thirds (2/3) of the common shares voted
for such Amendment and no holder of any common shares voted against such
amendment.
6. These Articles of Amendment have been executed by and on behalf of the
Corporation by its President (or Vice President) and Secretary (or Assistant
Secretary) on this 19 day of February, 1994.
NEBCO EVANS DISTRIBUTION, INC.
By /s/ Raymond E. Marshall, Pres.
---------------------------------
President
ATTEST:
/s/ Donald J. Rogers
- -------------------------------
Secretary
<PAGE> 54
NEBCO EVANS DISTRIBUTION, INC.
Series $25,000 Par Value Convertible Preferred Shares
The NEBCO EVANS Distribution, Inc. Series $25,000 Par Value Convertible
Preferred Series (Series) shall consist of 400 shares, $25,000.00 par value,
each having the following rights and preferences:
1. Dividends. The holders of record of shares of this Series shall be
entitled to receive when and as declared by the Board of Directors out of funds
legally available therefore, cash dividends at the rate of $2,375.00 per share
per annum payable semi-annually on such dates as may from time to time be
determined by the Board of Directors, in preference to and in priority over
dividends upon the common shares but not in priority over dividends upon the
Series $50,000 Par Value Convertible Preferred Shares of the Corporation.
Dividends on each share of this Series shall accumulate, whether or not
declared, from the date of its issuance. The holders of shares of this Series
shall not be entitled to any dividends other than the cash dividend provided for
in this Section (1). No dividends shall be declared or paid on the common shares
of the Corporation during any period when the Corporation has failed to pay a
semi-annual dividend on this Series for any preceding six-month period.
2. Liquidation. In the event of a liquidation, dissolution or winding up
of the Corporation, the holders of shares of this Series shall be entitled to
receive out of the assets of the Corporation an amount equal to $25,000.00 per
share, plus any accumulated and unpaid dividends thereon to the date fixed for
distribution, in preference to and in priority over any such distribution upon
the common shares but not in priority over any such distribution upon the Series
$50,000 Par Value Convertible Preferred Shares or any other shares of the
Corporation.
3. Redemption. This Series may be redeemed, in whole or in part, at the
option of the Corporation by resolution of its Board of Directors, at any time
and from time to time, at the redemption price per share of $25,000.00 plus any
accumulated and unpaid dividends thereon at the date fixed for redemption. In
the event that less than the entire number of shares of this Series outstanding
is at any time redeemed by the Corporation, the shares to be redeemed shall be
selected by lot in a manner determined by the Board of Directors of the
Corporation unless they shall have been advised by the unanimous agreement of
the holders of all shares of this Series to effect the redemption in some other
manner. Not less than sixty (60) nor more than seventy-five (75) days prior to
the date fixed for any redemption of this Series or
<PAGE> 55
any part thereof, a notice specifying the time and place of such redemption
shall be given by first class mail, postage prepaid, to the holders of record of
the shares of this Series selected for redemption at their respective addresses
as the same shall appear on the books of the Corporation, but no failure to mail
such notice or any defect therein or in the mailing thereof shall affect the
validity of the proceedings for redemption. Any notice which was mailed in the
manner herein provided shall be conclusively presumed to have been duly given
whether or not the holders receive the notice.
Subject to the conversion rights provided for hereinbelow, after the date
fixed for the redemption of shares of this Series by the Corporation, the
holders of shares selected for redemption shall cease to be shareholders with
respect to such shares and shall have no interest in or claims against the
Corporation by virtue thereof except the right to receive the monies payable
upon such redemption from the Corporation, without interest thereon, upon
surrender (and endorsement, if required by the Corporation) of their
certificates and the shares represented thereby shall no longer be deemed to be
outstanding.
4. Voting Rights. No holder this series shall be entitled to vote on any
matters brought to a vote before the shareholders of the Corporation, except as
otherwise provided by the Business Corporation Law of the State of Nebraska.
5. Consideration for Issuance of Shares. All shares of this Series shall
be deemed to be fully paid and nonassessable upon the issuance thereof.
6. Notice of Holders of Certain Transactions. The Corporation shall cause
a notice to be mailed to the holders of record of shares of this Series at their
Respective addresses as the same shall appear on the books of the Corporation,
in case:
a) The Corporation shall declare a dividend (or any other
distribution) on its common shares;
b) Of any reclassification of capital stock of the Corporation or of
any consolidation or merger to which the Corporation is a party and for which
approval of any shareholders of the Corporation is required, or of the sale or
transfer of all or substantially all of the assets of the Corporation;
c) Of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation.
Such notice shall be mailed at least 20 days prior to the applicable
record date or other date hereinafter referred to and shall specify (i) the date
on which a record is to be taken for the purpose of such dividend, redemption,
distribution of rights or, if a record is not to be taken, the date as of which
the holders of common shares of record to be entitled to such
<PAGE> 56
dividend, distribution, redemption or rights are to be determined, or (ii) the
date on which, in connection with such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up, it is expected that
holders of common shares of record shall be entitled to exchange their common
shares for securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
7. Limitation on Cash Dividends and Distributions on Shares. So long as
any shares of this Series are outstanding, the Corporation may not pay any cash
dividend or make any other distribution in cash on its common shares.
8. Limitation on certain Actions. So long as any shares of this Series are
outstanding, the Corporation shall not: (a) authorize, create or issue any other
class or classes of preferred shares or any other shares having rights, powers
or preferences equal to or senior to the shares of this Series, (b) redeem,
purchase or otherwise acquire any of its common shares, and (c) merge,
consolidate, sell or otherwise dispose of substantially all of its assets.
9. Conversion. The holders of each share of this Series shall have the
right at their option to convert each such share into one-half (1/2) common
share of the Corporation at any time upon sixty (60) days notice (or if such
share is called for redemption, at any time without notice up to and including,
but not after, the close of business on the day prior to the date fixed for
redemption). In the event the Corporation recapitalizes or declares dividends
payable in its common shares, the number of common shares into which one
convertible share is convertible shall be equitably adjusted but no adjustment
shall be required in the event additional common shares of the Corporation are
issued due to the exercise of stock options outstanding as of the date of
issuance of this Series. The Corporation shall, so long as any share of this
Series is outstanding, reserve and keep available out of its authorized and
unissued common shares sufficient number of common shares required to effect
conversation of all shares of this Series.
10. No Other Rights. The shares of this Series shall not have any
relative, participating, optional or other special rights or powers other than
as set forth above and in the Certificate of Incorporation of the Corporation as
amended.
11. Certificates. Each certificate for shares of this Series shall bear a
legend incorporating a certified copy of this Resolution which shall be
authenticated by the President or Vice President of the Corporation and appended
to each such certificate.
<PAGE> 57
Rev 1 85
CERTIFICATE OF REVIVAL OR RENEWAL
OF A DOMESTIC OR NONPROFIT CORPORATION
To be submitted, in duplicate, to:
Secretary of State, Suite 2300 State Capitol, Lincoln, Nebraska 68509
KNOW ALL MEN BY THESE PRESENTS:
1. Now comes Raymond Marshall, President, and Donald J. Rogers, Secretary
and/or Treasurer, who on June 2, 1994, were duly elected as officers of
NEBCO EVANS Distribution, Inc.
--------------------------------------------------------------------------
Correct Corporate Name as stated in Articles of Incorporation
or most recent Amendment
located at 6905 N. 97th Circle, Omaha, Nebraska 68122
---------------------------------------------------------------
Full Address of Principal Place of Business
a Nebraska corporation duly organized under and by virtue of the laws of
the state of Nebraska, for the purposes of revising or renewing said
corporation.
2. The existence of this corporation became (or will become) inoperative on
April 16, 1994, because of dissolution by the office of the Secretary of
State by expiration of existence, or for nonpayment of occupational taxes
or annual fees. The revival of this corporation shall be perpetual unless
sooner dissolved by proper action of its stockholders, or by due process
of law.
3. The registered office of this corporation in Nebraska shall be
6905 N. 97th Circle, Omaha, NE 68
--------------------------------------------------------------------------
Street Address*
Omaha Douglas Nebraska 68122 and the registered agent at such
---------------------- --------
City County Zip Code
address shall be Raymond Marshall. **
-------------------------
Name of Registered Agent
* Address shall be complete, using full street address. A box number is
acceptable only in those cases where street addresses are not
available.
** If the above-named registered agent or registered office constitutes a
change from the previous designation, this information will be entered
onto the corporation's records in this office. No further notification
or filing of a separate form is necessary.
SIGNATURE OF AT LEAST TWO OFFICERS REQUIRED:
FILING FEES:
President /s/ Raymond E. Marshall
Domestic Revival $28.00 ---------------------------
Secretary /s/ Donald J. Rogers
Nonprofit Revival $15.00 ---------------------------
Treasurer
---------------------------
==========================================================================
CERTIFICATE OF GOOD STANDING IN THE STATE OF NEBRASKA
I, ALLEN J. BEERMANN, Secretary of State, do hereby certify the
above-named corporation to be in good standing
IN TESTIMONY WHEREOF, the Secretary of State of Nebraska has hereby
affixed his signature or facsimile thereof and seal on the date set out in
the recording data.
JUN 21 1994
STATE OF NEBRASKA ) SS
SECRETARY'S OFFICE )
Received and filed for record 7
and recorded on film roll No. ____
(State Seal) 94-12 at page 568
---------- ---------------
/s/ Allen J. Beermann
---------------------------------
Secretary of State
By /s/ [ILLEGIBLE] $6559.26 pd
---------------------------
<PAGE> 58
JAN 25 1996
STATE OF NEBRASKA ) SS
SECRETARY'S OFFICE )
Received and filed for record ___
and recorded on film roll No. ___
962 at page 896
----------- -------------
/s/ [ILLEGIBLE] 40260
---------------------------------
Secretary of State
By 4:45 pm /s/ JD 95.00 pd
------------------------------
ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION
OF
NEBCO EVANS DISTRIBUTION, INC.
NEBCO EVANS Distribution, Inc. hereby adopts the following Articles of
Amendment to its Articles of Incorporation.
1. The Corporation's name is NEBCO EVANS Distribution, Inc.
2. NEBCO EVANS Distribution, Inc. hereby amends Article Fourth of its
Articles of Incorporation to read as follows in its entirety:
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is (a) 2,000 shares of common having a par value of $10.00
per share; (b) 150 shares of preferred having a par value of $50,000.00 per
share and such preferences, limitations and relative rights as may be fixed and
determined by resolution of the Board of Directors, which preferences,
limitations and relative rights were set forth in a designation recorded on
December 31, 1991 with the Nebraska Secretary of State's office, said
designation has, with the unanimous vote and consent of the holder of all issued
and outstanding Series $50,000.00 Par Value Convertible Preferred Shares, been
amended to eliminate the convertibility of the shares, to redesignate the shares
as Series $50,000.00 Par Value Preferred Shares and to provide the shares with
the preferences, limitations and relative rights as set forth on the attached
Exhibit "A", which is incorporated herein by reference; (c) 400 shares of
preferred having a par value of $25,000.00 per share and such preferences,
limitations and relative rights as may be fixed and determined by resolution of
the Board of Directors, which preferences, limitations and relative rights were
set forth in a designation recorded on March 2, 1994 with the Nebraska Secretary
of State's office, said designation has, with the unanimous vote and consent of
the holder of all issued and outstanding Series $25,000.00 Par Value Convertible
Preferred Shares, been amended to eliminate the
<PAGE> 59
convertibility of the shares, to redesignate the shares as Series $25,000.00 Par
Value Preferred Shares and to provide the shares with the preferences,
limitations and relative rights as set forth on the attached Exhibit "B", which
is incorporated herein by reference; and (d) 765 shares of Senior
Non-Convertible Preferred Shares having a par value of $1.00 per share and such
preferences, limitations and relative rights as may be fixed and determined by
resolution of the Board of Directors, which preferences, limitations and
relative rights were determined by the Board of Directors by resolution dated
the 25th day of January, 1996 and are set forth in the attached designation
identified as Exhibit "C" which is incorporated herein by reference.
3. This Amendment to the Articles of Incorporation was adopted by the
unanimous vote and consent of the shareholder(s) on the 25th day of January,
1996.
4. The number of shares of the Corporation outstanding as of the adoption
of this Amendment was 600 shares of its common having a par value of $10.00 per
share, 150 shares of its Series $50,000.00 Par Value Convertible Preferred
Shares and 300 shares of its Series $25,000.00 Par Value Convertible Preferred
Shares. Each of said common shares was entitled to vote separately thereon. Each
of the Series $50,000.00 Par Value Convertible Preferred Shares was entitled to
vote separately thereon. Each of the Series $25,000.00 Par Value Convertible
Preferred Shares was entitled to vote separately thereon.
5. The holders of 600 of the Corporation's common shares voted for such
Amendment and no holder of any common shares voted against such Amendment. The
holder of 150 of the Corporation's Series $50,000.00 Par Value Convertible
Preferred Shares voted for and consented to the Amendment and no holder of such
Series voted against such Amendment. The holder of 300 shares of the
Corporation's Series $25,000.00 Par Value Convertible Preferred Shares voted for
and consented to the Amendment and no holder of such Series voted against such
Amendment. The number of votes cast for the Amendment by each voting group was
sufficient for approval by that voting group.
-2-
<PAGE> 60
IN WITNESS WHEREOF, these Articles of Amendment have been executed by and
on behalf of the Corporation by its President on this 25th day of January, 1996.
NEBCO EVANS DISTRIBUTION, INC.
By /s/ Raymond Marshall
----------------------------------
Raymond Marshall, President
-3-
<PAGE> 61
NEBCO EVANS DISTRIBUTION, INC.
Series $50,000 Par Value Preferred Shares
[Amended January 1996]
The NEBCO EVANS Distribution, Inc. Series $50,000 Par Value Preferred
Shares (Series) shall consist of 150 shares, $50,000.00 par value, each having
the following rights and preferences.
1. Dividends. The holders of record of shares of this Series shall be
entitled to receive when and as declared by the Board of Directors out of funds
legally available therefore, cash dividends at the rate of $5,500.00 per share
per annum payable monthly on such dates as may from time to time be determined
by the Board of Directors, in preference to and in priority over dividends upon
the common shares or upon the Series $25,000 Par Value Preferred Shares of the
Corporation but not in priority over dividends upon the Senior Non-Convertible
Preferred Shares of the Corporation. Dividends on each share of this Series
shall accumulate, whether or not declared, from the date of its issuance. The
holders of shares of this Series shall not be entitled to any dividends other
than the cash dividend provided for in this Section 1. No dividends shall be
declared or paid on the common shares or any other shares of the Corporation
except the Senior Non-Convertible Preferred Shares during any period when the
Corporation has failed to pay a monthly dividend on this Series for any
preceding month.
2. Liquidation. In the event of a liquidation, dissolution or winding up
of the Corporation, the holders of shares of this Series shall be entitled to
receive out of the assets of the Corporation an amount equal to $50,000.00 per
share, plus any accumulated and unpaid dividends thereon to the date fixed for
distribution, in preference to and in priority over any such distribution upon
the common shares or upon the Series $25,000 Par Value Preferred Shares of the
Corporation but not in priority over any such distribution upon the Senior
Non-Convertible Preferred Shares of the Corporation.
3. Redemption. This Series may be redeemed, in whole or in part, at the
option of the Corporation by resolution of its Board of Directors, at any time
and from time to time, at the redemption price per share of $50,000.00 plus any
accumulated and unpaid dividends thereon at the date fixed for redemption. In
the event that less than the entire number of shares of this Series outstanding
is at any time redeemed by the Corporation, the shares to be redeemed shall be
selected by lot in a manner determined by the Board of Directors of the
Corporation unless they shall have been advised by the unanimous agreement of
the holders of all shares of this Series to effect the redemption in some other
manner.
-1-
EXHIBIT "A"
<PAGE> 62
Not less than sixty (60) nor more than seventy-five (75) days prior to the
date fixed for any redemption of this Series or any part thereof, a notice
specifying the time and place of such redemption shall be given by first class
mail, postage prepaid, to the holders of record of the shares of this Series
selected for redemption at their respective addresses as the same shall appear
on the books of the Corporation, but no failure to mail such notice or any
defect therein or in the mailing thereof shall affect the validity of the
proceedings for redemption. Any notice which was mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not
the holders receive the notice.
After the date fixed for the redemption of shares of this Series by the
Corporation, the holders of shares selected for redemption shall cease to be
shareholders with respect to such shares and shall have no interest in or claims
against the Corporation by virtue thereof except the right to receive the monies
payable upon such redemption from the Corporation, without interest thereon,
upon surrender (and endorsement, if required by the Corporation) of their
certificates and the shares represented thereby shall no longer be deemed to be
outstanding.
4. Voting Rights. No holder of this Series shall be entitled to vote on
any matters brought to a vote before the shareholders of the Corporation, except
as otherwise provided by the Business Corporation Act of the State of Nebraska.
5. Consideration for Issuance of Shares. All shares of this Series shall
be deemed to be fully paid and nonassessable upon the issuance thereof.
6. Notice of Holders of Certain Transactions. The Corporation shall cause
a notice to be mailed to the holders of record of shares of this Series at their
respective addresses as the same shall appear on the books of the Corporation,
in case:
a) The Corporation shall declare a dividend (or any other
distribution) on its common shares or other shares;
b) Of any reclassification of capital shares of the Corporation or
of any consolidation or merger to which the Corporation is a party and for which
approval of any shareholders of the Corporation is required, or of the sale or
transfer of all or substantially all of the assets of the Corporation;
c) Of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation.
Such notice shall be mailed at least twenty (20) days prior to the
applicable record date or other date hereinafter referred to and shall specify
(i) the date on which a record is to be taken for the purpose of such dividend,
redemption, distribution of rights or, if a record is not to be taken, the date
as of which the
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<PAGE> 63
holders of common shares of record to be entitled to such dividend, redemption,
distribution or rights are to be determined, or (ii) the date on which, in
connection with such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up, it is expected that holders of common
shares of record shall be entitled to exchange their common shares for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
7. Limitation on Cash Dividends and Distributions on Shares. So long as
any shares of this Series are outstanding, the Corporation may not pay any cash
dividend or make any other distribution in cash on its common shares or any
other shares except its Senior Non-Convertible Preferred Shares.
8. Limitation on Certain Actions. So long as any shares of this Series are
outstanding, the Corporation shall not: (a) authorize, create or issue any other
class or classes of preferred shares or any other shares having rights, powers
or preferences equal to or senior to the shares of this Series except for the
Senior Non-Convertible Preferred Shares, (b) redeem, purchase or otherwise
acquire any shares of its common shares or other shares except the Senior
Non-Convertible Preferred Shares, or (c) merge, consolidate, sell or otherwise
dispose of substantially all of its assets.
9. Conversion. The holders of the shares of this Series shall have no
rights to convert their shares into common shares of the Corporation or any
other shares of the Corporation.
10. No Other Rights. The shares of this Series shall not have any
relative, participating, optional or other special rights or powers other than
as set forth above and in the Articles of Incorporation of the Corporation as
amended.
11. Certificates. Each certificate for shares of this Series shall bear a
legend incorporating a certified copy of this Resolution which shall be
authenticated by the President or Vice President of the Corporation and appended
to each such certificate.
-3-
<PAGE> 64
NEBCO EVANS DISTRIBUTION, INC.
Series $25,000 Par Value Preferred Shares
[Amended January 1996]
The NEBCO EVANS Distribution, Inc. Series $25,000 Par Value Preferred
Shares (Series) shall consist of 400 shares, $25,000.00 par value, each having
the following rights and preferences.
1. Dividends. The holders of record of shares of this Series shall be
entitled to receive when and as declared by the Board of Directors out of funds
legally available therefor, cash dividends at the rate of $2,375.00 per share
per annum payable semi-annually on such dates as may from time to time be
determined by the Board of Directors, in preference to and in priority over
dividends upon the common shares but not in priority over dividends upon the
Series $50,000 Par Value Preferred Shares of the Corporation or upon the Senior
Non-Convertible Preferred Shares of the Corporation. Dividends on each share of
this Series shall accumulate, whether or not declared, from the date of its
issuance. The holders of shares of this Series shall not be entitled to any
dividends other than the cash dividend provided for in this Section 1. No
dividends shall be declared or paid on the common shares of the Corporation
during any period when the Corporation has failed to pay a semi-annual dividend
on this Series for any preceding six-month period.
2. Liquidation. In the event of a liquidation, dissolution or winding up
of the Corporation, the holders of shares of this Series shall be entitled to
receive out of the assets of the Corporation an amount equal to $25,000.00 per
share, plus any accumulated and unpaid dividends thereon to the date fixed for
distribution, in preference to and in priority over any such distribution upon
the common shares but not in priority over any such distribution upon the Series
$50,000 Par Value Preferred Shares of the Corporation or upon the Senior
Non-Convertible Preferred Shares of the Corporation.
3. Redemption. This Series may be redeemed, in whole or in part, at the
option of the Corporation by resolution of its Board of Directors, at any time
and from time to time, at the redemption price per share of $25,000.00 plus any
accumulated and unpaid dividends thereon at the date fixed for redemption. In
the event that less than the entire number of shares of this Series outstanding
is at any time redeemed by the Corporation, the shares to be redeemed shall be
selected by lot in a manner determined by the Board of Directors of the
Corporation unless they shall have been advised by the unanimous agreement of
the holders of all shares of this Series to effect the redemption in some other
manner.
-1-
<PAGE> 65
Not less than sixty (60) nor more than seventy-five (75) days prior to the
date fixed for any redemption of this Series or any part thereof, a notice
specifying the time and place of such redemption shall be given by first class
mail, postage prepaid, to the holders of record of the shares of this Series
selected for redemption at their respective addresses as the same shall appear
on the books of the Corporation, but no failure to mail such notice or any
defect therein or in the mailing thereof shall affect the validity of the
proceedings for redemption. Any notice which was mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not
the holders receive the notice.
After the date fixed for the redemption of shares of this Series by the
Corporation, the holders of shares selected for redemption shall cease to be
shareholders with respect to such shares and shall have no interest in or claims
against the Corporation by virtue thereof except the right to receive the monies
payable upon such redemption from the Corporation, without interest thereon,
upon surrender (and endorsement, if required by the Corporation) of their
certificates and the shares represented thereby shall no longer be deemed to be
outstanding.
4. Voting Rights. No holder of this Series shall be entitled to vote on
any matters brought to a vote before the shareholders of the Corporation, except
as otherwise provided by the Business Corporation Act of the State of Nebraska.
5. Consideration for Issuance of Shares. All shares of this Series shall
be deemed to be fully paid and nonassessable upon the issuance thereof.
6. Notice of Holders of Certain Transactions. The Corporation shall cause
a notice to be mailed to the holders of record of shares of this Series at their
respective addresses as the same shall appear on the books of the Corporation,
in case:
a) The Corporation shall declare a dividend (or any other
distribution) on its common shares or other shares;
b) Of any reclassification of capital stock of the Corporation or of
any consolidation or merger to which the Corporation is a party and for which
approval of any shareholders of the Corporation is required, or of the sale or
transfer of all or substantially all of the assets of the Corporation;
c) Of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation.
Such notice shall be mailed at least twenty (20) days prior to the
applicable record date or other date hereinafter referred to and shall specify
(i) the date on which a record is to be taken for the purpose of such dividend,
redemption, distribution of rights or, if a record is not to be taken, the date
as of which
-2-
<PAGE> 66
the holders of common shares of record to be entitled to such dividend,
redemption, distribution or rights are to be determined, or (ii) the date on
which, in connection with such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up, it is expected that holders of
common shares of record shall be entitled to exchange their common shares for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
7. Limitation on Cash Dividends and Distributions on Shares. So long as
any shares of this Series are outstanding, the Corporation may not pay any cash
dividend or make any other distribution in cash on its common shares.
8. Limitation on Certain Actions. So long as any shares of this Series are
outstanding, the Corporation shall not: (a) authorize, create or issue any other
class or classes of preferred shares or any other shares having rights, powers
or preferences equal to or senior to the shares of this Series except for the
Senior Non-Convertible Preferred Shares and the Series $50,000.00 Par Value
Preferred Shares, (b) redeem, purchase or otherwise acquire any of its common
shares, or (c) merge, consolidate, sell or otherwise dispose of substantially
all of its assets.
9. Conversion. The holders of the shares of this Series shall have no
rights to convert their shares into common shares of the Corporation or any
other shares of the Corporation.
10. No Other Rights. The shares of this Series shall not have any
relative, participating, optional or other special rights or powers other than
as set forth above and in the Articles of Incorporation of the Corporation as
amended.
11. Certificates. Each certificate for shares of this Series shall bear a
legend incorporating a certified copy of this Resolution which shall be
authenticated by the President or Vice President of the Corporation and appended
to each such certificate.
-3-
<PAGE> 67
NEBCO EVANS DISTRIBUTION, INC.
Senior Non-Convertible Preferred Shares
The NEBCO EVANS Distribution, Inc. Senior Non-Convertible Preferred Shares
(Senior Non-Convertible Preferred) shall consist of 765 shares, $1.00 par value,
each having the following rights and preferences:
1. Dividends. (a) The holders of record of shares of Senior
Non-Convertible Preferred shall be entitled to receive when and as
declared by the Board of Directors out of funds legally available
therefor, cash dividends at the rate of $6,250.00 per share per annum
payable semi-annually on such dates as may from time to time be determined
by the Board of Directors, in preference to and in priority over dividends
upon the common shares or any other preferred shares of the Corporation
(collectively, the "Junior Shares"). Dividends on each share of Senior
Non-Convertible Preferred shall accumulate, whether or not declared, from
the date of its issuance. The holders of shares of Senior Non-Convertible
Preferred shall not be entitled to any dividends other than the cash
dividend provided for in this Section 1(a). During any period when the
Corporation has failed to pay a semi-annual dividend on the Senior
Non-Convertible Preferred for any preceding six-month period and until all
unpaid dividends payable, whether or not declared, on the outstanding
Senior Non-Convertible Preferred shall have been paid in full or declared
and set apart for payment, the Corporation shall not: (i) declare or pay
dividends, or make any other distributions, on any Junior Shares, other
than dividends or distributions payable in Junior Shares, or (ii) redeem,
purchase or otherwise acquire for consideration any Junior Shares, other
than redemptions, purchases or other acquisitions of Junior Shares in
exchange for any Junior Shares.
(b) Notwithstanding anything in Section 1(a) above to the contrary,
from and after the first date on which any shares of the Senior
Non-Convertible Preferred are issued until the second anniversary of such
date, any
EXHIBIT "C"
<PAGE> 68
dividend on the Senior Non-Convertible Preferred accrued and payable as
provided in Section 1(a) above shall be payable by the Corporation, in
lieu of cash, by the issuance of a number of additional shares (or
fractional shares) of Senior Non-Convertible Preferred in respect of each
such share (or fractional share) of Senior Non-Convertible Preferred then
outstanding equal to the dividend then payable on each such share (or
fractional share) of Senior Non-Convertible Preferred (expressed as a
dollar amount) divided by the liquidation value of one share of Senior
Non-Convertible Preferred (expressed as a dollar amount).
2. Liquidation. In the event of a liquidation, dissolution or
winding up of the Corporation, the holders of shares of Senior
Non-Convertible Preferred shall be entitled to receive out of the assets
of the Corporation an amount in cash equal to $50,000.00 per share, plus
any accumulated and unpaid dividends thereon to the date fixed for
distribution, in preference to and in priority over any such distribution
upon Junior Shares.
3. Redemption. The Senior Non-Convertible Preferred may be redeemed,
in whole or in part, at the option of the holder of the shares thereof, in
connection with any repayment of Nebco Evans Holding Company's 12 1/2%
Senior Notes due 2006 (the "Senior Notes") or in the event that the shares
of the Senior Non-Convertible Preferred have been transferred to a trustee
for the holders of the Senior Notes in satisfaction of or as a result of
foreclosure upon the Senior Notes, at the redemption price per share of
$50,000.00 plus any accumulated and unpaid dividends thereon at the date
fixed for redemption. The holders of shares of Senior Non-Convertible
Preferred opting to have the Corporation redeem their shares shall, not
less than ten (10) nor more than sixty (60) days prior to the date that
such holders desire to have their shares redeemed pursuant to this Section
3, provide the Corporation with written notice specifying the desired date
of such redemption, such notice to be sent by first class mail, postage
prepaid, to the Corporation at its registered office in the State of
Nebraska.
After the date fixed for the redemption of shares of Senior
Non-Convertible Preferred, the holders of shares who have opted for
redemption shall cease to be shareholders with respect to such shares and
shall have
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<PAGE> 69
no interest in or claims against the Corporation by virtue thereof except
the right to receive the monies payable upon such redemption from the
Corporation, without interest thereon, upon surrender (and endorsement, if
required by the Corporation) of their certificates and the shares
represented thereby shall no longer be deemed to be outstanding.
4. Voting Rights. No holder of shares of Senior Non-Convertible
Preferred shall be entitled to vote on any matters brought to a vote
before the shareholders of the Corporation, except as otherwise provided
by the Business Corporation Law of the State of Nebraska.
5. Consideration for Issuance of Shares. All shares of Senior
Non-Convertible Preferred shall be deemed to be fully paid and
nonassessable upon the issuance thereof.
6. Notice of Holders of Certain Transactions. The Corporation shall
cause a notice to be mailed to the holders of record of shares of Senior
Non-Convertible Preferred at their respective addresses as the same shall
appear on the books of the Corporation, in case:
a. The Corporation shall declare a dividend (or any other
distribution) on its common shares or other shares;
b. Of any reclassification of capital stock of the Corporation
or of any consolidation or merger to which the Corporation is a
party and for which approval of any shareholders of the Corporation
is required, or of the sale or transfer of all or substantially all
of the assets of the Corporation;
c. Of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation.
Such notice shall be mailed at least twenty (20) days prior to the
applicable record date or other date hereinafter referred to and shall
specify (i) the date on which a record is to be taken for the purpose of
such dividend, redemption, distribution of rights or, if a record is not
to be taken, the date as of which the holders of common shares of record
to be entitled to such dividend, distribution, redemption or rights are to
be determined, or (ii) the date on which, in connection with such
reclassification, consolidation, merger, sale,
-3-
<PAGE> 70
transfer, dissolution, liquidation or winding up, it is expected that
holders of common shares of record shall be entitled to exchange their
common shares for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up.
7. Conversion. The holders of the shares of Senior Non-Convertible
Preferred shall have no rights to convert their shares into common shares
of the Corporation or into shares of any other capital shares of the
Corporation.
8. No Other Rights. The shares of Senior Non-Convertible Preferred
shall not have any relative, participating, optional or other special
rights or powers other than as set forth above and in the Articles of
Incorporation.
9. Certain Restrictions. Notwithstanding anything to the contrary in
this Certificate of Designation, the Senior Non-Convertible Preferred and
the powers, designations, preferences and relative, participating,
optional and other rights thereof, and the qualifications, limitations and
restrictions thereon as set forth in this Certificate of Designation are
subject to certain restrictions set forth in a Credit Agreement, dated as
of January 25, 1996, among the Corporation, Bank of America National Trust
and Savings Association, Bank of America Illinois and The Other Financial
Institutions Party Thereto, as arranged by BA Securities, Inc., in an
Investors Agreement, dated as of January 25, 1996, by and among DLJ
Merchant Banking Partners, L.P., DLJ International Partners, C.V., DLJ
Offshore Partners, C.V., DLJ Merchant Banking Funding, Inc., Orkla a.s.,
Holberg Industries, Inc., NED Holdings, Inc. and Nebco Evans Holding
Company, in the Indenture relating to the Senior Notes, dated as of
January 25, 1996, by and between Nebco Evans Holding Company and IBJ
Schroder Bank & Trust Company, as Trustee, and in a Pledge Agreement,
dated as of January 25, 1996, between Nebco Evans Holding Company and IBJ
Schroder Bank & Trust Company, as Agent.
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<PAGE> 71
10. Certificates. Each certificate for shares of Senior
Non-Convertible Preferred shall bear a legend incorporating a certified
copy or this Resolution which shall be authenticated by the President or
Vice President of the Corporation and appended to each such certificate.
-5-
<PAGE> 72
APR 9 1997 11:05am
STATE OF NEBRASKA
SECRETARY'S OFFICE
Received filed and recorded on
film roll no. 97.9
-------------------
at page 1143
-------------------------
/s/ [ILLEGIBLE] 66941
---------------------------------
Secretary of State
By /s/ [ILLEGIBLE] $30.00 pd
------------------------------
ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF
NEBCO EVANS DISTRIBUTION, INC.
NEBCO EVANS Distribution, Inc. hereby adopts the following Articles of
Amendment to its Articles of Incorporation.
1. The Corporation's name is NEBCO EVANS Distribution, Inc.
2. NEBCO EVANS Distribution, Inc. hereby amends Article First of its
Articles of Incorporation to read as follows in its entirety:
FIRST: The name of the Corporation is AmeriServe Food Distribution,
Inc.
3. The Board of Directors of the Corporation recommended this amendment to
the shareholders and it was adopted by the unanimous written consent of all
shareholders entitled to vote with respect thereto on the 28th day of February,
1997.
4. The number of shares of the Corporation outstanding as of the adoption
of this amendment entitled to vote with respect thereto was 600 shares of its
common having a par value of $10.00 per share. The holders of 600 shares of the
Corporation's common shares having a par value of $10.00 per share voted for
such amendment and no holders of any common shares voted against such amendment.
The number of votes cast for the amendment by the only group entitled to vote
with respect thereto was sufficient for approval of the amendment.
IN WITNESS WHEREOF, these Articles of Amendment have been executed by and
on behalf of the Corporation by its President on this 12th day of March, 1997.
NEBCO EVANS DISTRIBUTION, INC.
By /s/ Raymond Marshall
---------------------------
Raymond Marshall, President
<PAGE> 73
To:
ALLEN J. BEERMANN
Secretary of State
State Capitol Building
Lincoln, Nebraska 68509
CERTIFICATE OF REVIVAL
KNOW ALL MEN BY THESE PRESENTS:
Now comes Gerald Toohey and J. Sorg , who on
------------------- -------------------------------
name of PRESIDENT name of SECRETARY OR TREASURER
March 1, 1972, were and at the filing hereof are the duly elected, qualified and
acting President and Secretary of
------------------ ----------------------------------
MUST BE PRESIDENT MUST BE SECRETARY OR TREASURER
Nebraska Concession Supply, Inc., located at
- -------------------------------------------------
name of corporation
1102 Capitol Avenue, Omaha, Nebraska, a corporation duly organized under
- --------------------------
city
and by virtue of the laws of the State of Nebraska, and for the purposes of
reviving or renewing said corporation does hereby certify, state and affirm:
1. That the existence of this corporation became inoperative on August 3,
1971, because of dissolution by the Secretary of State for non-payment of taxes
2. That this corporation was duly and regularly organized under the laws
of the State of Nebraska.
3. That the name of this corporation is Nebraska Concession Supply, Inc.
----------------------------------
(must be the correct corporate name)
4. The street address of the registered office is:
<PAGE> 1
Exhibit 3.2
7/11/97
AMENDED AND RESTATED BYLAWS
OF
AMERISERVE FOOD DISTRIBUTION, INC.
ARTICLE I
SHAREHOLDERS' MEETINGS
1. The annual meeting of the shareholders shall be held on the last
Monday of February in each year at a place selected by the Board of Directors.
At the annual meeting the shareholders shall elect a Board of Directors, who
need not be elected by ballot, to serve for a term of one year, or until their
successors are elected and qualified.
2. Special meetings of the shareholders may be held at anytime upon call
of the Chairman of the Board of Directors or the President or a Vice President.
Not less than ten (10) nor more than fifty (50) days' written or telegraphic
notice stating the place, day and hour of any special meeting of the
shareholders, specifying the purpose or purposes of the special meeting, shall
be mailed or telegraphed to each shareholder of record at his last known address
as shown by the books of the Corporation. Any shareholder may waive such notice
either before or after the time when such meeting is held.
<PAGE> 2
3. The presence, either in person or by proxy, of the holders of the
majority of the capital stock issued and outstanding, shall constitute a quorum
at all meetings of the shareholders. The vote of a majority of shares present at
any meeting at which there is a quorum shall be required to constitute an action
by shareholders.
ARTICLE II
DIRECTORS
1. The Board of Directors shall consist of not less than three (3)
members nor more than seven (7) members, the exact number to be determined from
time to time by the Board of Directors; provided, that in cases when all of the
shares of the Corporation are owned of record by either one or two shareholders,
the number of Directors may be less than three (3) but not less than the number
of shareholders. The Directors need not be shareholders and shall have the power
to fill vacancies on the Board.
2. The annual meeting of the Board of Directors shall be held at the same
place as the annual meeting of the shareholders, immediately following the
annual meeting of the shareholders, at which meeting the officers of the
Corporation to serve
- 2 -
<PAGE> 3
the ensuing year, or until their successors are elected ad qualify, shall be
elected, and such other business as may be presented to the meeting may be
transacted. No notice of the annual meeting need be given.
3. Special meetings of the Board of Directors may be called for any
purpose by the Chairman of the Board, or the President, or a Vice President, or
the Secretary or an Assistant Secretary. At least two (2) days' notice of the
time and place of a special meeting shall be mailed or telegraphed to a Director
at his last known post office address, or delivered to a Director personally;
but any Director may waive such notice in writing or by telegram either before
or after the time when such meeting is held.
4. The Board of Directors may remove any officer at any time, with or
without cause and elect his successor.
5. Meetings of the Board of Directors may be held at any place within or
without the State of Nebraska.
ARTICLE III
OFFICERS
1. The officers of the Corporation shall consist of a CEO, a President, a
Vice President, a Secretary, a Treasurer,
- 3 -
<PAGE> 4
and may include an Assistant Secretary and an Assistant Treasurer, and such
other officers as may be designated from time to time by the Board of Directors.
Any two (2) or more offices may be held by the same person.
2. The CEO shall be an executive officer of the Corporation and shall
have such duties as may be prescribed by the Board of Directors from time to
time.
3. The President shall preside at all meetings of the Board of Directors
at which he may be present and he shall have and exercise such powers and duties
as may be enjoined upon him in these Bylaws.
4. The President shall be the principal executive officer of the
Corporation and shall have general direction and management of its business and
internal affairs. He shall preside at all meetings of shareholders.
5. A Vice President shall have and exercise the usual powers and duties
of a vice president, subject to any enlargement or restriction of said powers or
duties by the Board of Directors.
6. The Secretary and Treasurer shall respectively have and exercise the
usual power and authority and perform the
- 4 -
<PAGE> 5
usual duties of a secretary or a treasurer, subject to any enlargement or
restriction of said duties by the Board of Directors.
7. An Assistant Secretary or an Assistant Treasurer shall respectively
perform the duties of the Secretary or the Treasurer when necessary or
convenient.
ARTICLE IV
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution or motion
of the Board of Directors and in absence of such formality shall be shown on the
tax records of the Corporation.
ARTICLE V
MISCELLANEOUS
1. Whenever any notice is required in these Bylaws to be given, such
notice shall be deemed to be sufficient and duly and properly given when mailed,
or, if telegraphed, when delivered to the telegraph company. Such notice shall
be deemed to have been given on the date of such mailing or delivery to the
telegraph company.
- 5 -
<PAGE> 6
2. The Board of Directors shall have the power and authority by motion or
resolution to conduct the affairs of the Corporation as to any matter not
covered by these Bylaws.
3. The presence of a shareholder or a Director at any meeting provided
for in these Bylaws constitutes a waiver by him of notice of the time, place and
purpose of such meeting.
4. Vacancies in any of the offices by death, resignation, removal, or
otherwise, may be filled by the Directors.
5. Any notice required to be given under these Bylaws may be waived in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein.
ARTICLE VI
AMENDMENTS
These Bylaws may be amended from time to time by the Board of Directors.
ARTICLE VII
INVESTORS AGREEMENT
These Bylaws are subject to an Amended and Restated Investors Agreement,
dated as of July 11, 1997, among DLJ Merchant Banking Partners, L.P., DLJ
International Partners,
- 6 -
<PAGE> 7
C.V., DLJ Offshore Partners, C.V., DLJ Merchant Banking Funding, Inc., DLJ
Capital Corporation, Sprout Growth II, L.P., Sprout CEO Fund, L.P., DLJ Merchant
Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ
Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ Diversified
Partners-A, L.P., DLJMB Funding II, Inc., DLJ First ESC LLC, DLJ EAB Partners,
L.P., DLJ Millenium Partners, L.P., UK Investment Plan 1997 Partners, Nebco
Evans Holding Company, Nebco Evans Distributors, Inc., Orkla ASA, Holberg
Industries, Inc. and Holberg Incorporated and the provisions of Article 2 of
such Amended and Restated Investors Agreement are, subject to the terms,
provisions and limitations of such Amended and Restated Investors Agreement, and
as the same may be amended from time to time in accordance therewith, hereby
incorporated by reference herein and made a part hereof.
- 7 -
<PAGE> 1
Exhibit 3.3
State of Delaware PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"AMERISERV FOOD COMPANY", FILED IN THIS OFFICE ON THE TWENTIETH DAY OF MARCH,
A.D. 1996, AT 3:30 O'CLOCK P.M.
[SEAL] /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8529535
2205647 8100 DATE: 06-25-97
971210632
<PAGE> 2
3/20/96
RESTATED CERTIFICATE OF INCORPORATION
of
AMERISERV FOOD COMPANY
(Originally incorporated on August 21, 1989
under the name Cypress Food Company)
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
AmeriServ Food Company
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington,
County of New Castle. The name of the Corporation's registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
ARTICLE IV
Section A. The Corporation shall be authorized to issue 1,500 shares of
capital stock, of which 1,000 shares shall be shares of Common Stock, $0.01 par
value ("Common Stock"), and 500 shares shall be shares of Preferred Stock, $0.01
par value ("Preferred Stock"). At the effective time of this Amended and
Restated Certificate of Incorporation, and without any further action on the
part of the Corporation or its stockholders, all of the shares of Series A
Preferred Stock of the Corporation issued and outstanding immediately prior to
such effective time, consisting of 45,000 shares, shall automatically be
converted into 31.25 fully paid and nonassessable shares of Common Stock, and
all of the shares of Common Stock issued and outstanding immediately prior to
such effective
<PAGE> 3
time, consisting of 247,574.4 shares, shall automatically be converted into
68.75 fully paid and nonassessable shares of Common Stock. Each certificate
representing one or more shares of Common Stock or Preferred Stock issued and
outstanding immediately prior to the effective time of this Amended and Restated
Certificate of Incorporation shall thereafter for all purposes be deemed to
represent the number of shares of Common Stock into which the number of shares
of Common Stock or Preferred Stock formerly represented by such certificate was
converted; and each holder of record of a certificate for one or more shares of
Common Stock or Preferred Stock shall be entitled to receive, as soon as is
practicable, and upon surrender of such certificate to the officer or agent
having charge of the stock transfer books for shares of the Corporation, a
certificate or certificates representing the number of shares of Common Stock
into which the number of shares of Common Stock or Preferred Stock formerly
represented by such certificate or certificates was converted. The shares of
Common Stock represented by certificates issued pursuant to this paragraph upon
such surrender shall be validly issued, fully paid and nonassessable.
Section B. Shares of Preferred Stock may be issued from time to time in one
or more series. The Board (as defined below) is hereby authorized to fix the
voting rights, if any, designations, powers, preferences and the relative,
participation, optional or other rights, if any, and the qualifications,
limitations or restrictions thereof, of any unissued series of Preferred Stock;
and to fix the number of shares constituting such series, and to increase or
decrease the number of shares of any such series (but not below the number of
shares thereof then outstanding).
Section C. Except as otherwise provided by law or by the resolution or
resolutions adopted by the Board designating the rights, powers and preferences
of any series of Preferred Stock, the Common Stock shall have the exclusive
right to vote for the election of directors and for all other purposes. Each
share of Common Stock shall have one vote, and the Common Stock shall vote
together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation shall
so require, the election of directors of the Corporation need not be by written
ballot.
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ARTICLE VI
In furtherance and not in limitation of the powers conferred by law, the
Board of Directors of the Corporation (the "Board") is expressly authorized and
empowered to make, alter and repeal the By-Laws of the Corporation by a majority
vote at any regular or special meeting of the Board or by written consent,
subject to the power of the stockholders of the Corporation to alter or repeal
any By-Laws made by the Board.
ARTICLE VII
The Corporation reserves the right at any time and from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section A. Elimination of Certain Liability of Directors. A director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit.
Section B. Indemnification and Insurance.
1. Right to Indemnification. Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or
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<PAGE> 5
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the General Corporation Law
of the State of Delaware, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines,
amounts paid or to be paid in settlement, and excise taxes or penalties arising
under the Employee Retirement Income Security Act of 1974) reasonably incurred
or suffered by such person in connection therewith and such indemnification
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph (2)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation Law of the State of Delaware requires,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise. The Corporation may, by action of the Board, provide indemnification
to employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
2. Right of Claimant to Bring Suit. If a claim under paragraph (1) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid
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<PAGE> 6
amount of the claim and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation Law of the State
of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
3. Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
4. Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the General Corporation Law of the State of Delaware.
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* * * * *
IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which
restates and integrates and further amends the provisions of the Certificate of
Incorporation of this Corporation, and which has been duly adopted in accordance
with Sections 228, 242 and 245 of the General Corporation Law of the State of
Delaware, has been executed by its duly authorized officer this 20th day of
March, 1996.
AMERISERV FOOD COMPANY
By: /s/ Raymond Marshall
-------------------------
Name: Raymond Marshall
Title: Secretary
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<PAGE> 1
Exhibit 3.4
AMENDED AND RESTATED BYLAWS
OF
AMERISERV FOOD COMPANY
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I - OFFICES
Section 1. Registered Office .......................................... 1
Section 2. Other Offices .............................................. 1
ARTICLE II - STOCKHOLDERS
Section 1. Place of Meetings .......................................... 1
Section 2. Annual Meeting ............................................. 1
Section 3. List of Stockholders ....................................... 1
Section 4. Special Meetings ........................................... 2
Section 5. Notice ..................................................... 2
Section 6. Quorum ..................................................... 2
Section 7. Voting ..................................................... 2
Section 8. Method of Voting ........................................... 2
Section 9. Record Date ................................................ 3
Section 10. Action by Consent .......................................... 3
ARTICLE III - BOARD OF DIRECTORS
Section 1. Management ................................................. 3
Section 2. Qualification; Election; Term .............................. 3
Section 3. Number ..................................................... 4
Section 4. Removal .................................................... 4
Section 5. Vacancies .................................................. 4
Section 6. Place of Meetings .......................................... 4
Section 7. Annual Meeting ............................................. 4
Section 8. Regular Meetings ........................................... 4
Section 9. Special Meetings ........................................... 4
Section 10. Quorum ..................................................... 5
Section 11. Interested Directors ....................................... 5
Section 12. Committees ................................................. 5
Section 13. Action by Consent .......................................... 5
Section 14. Compensation of Directors .................................. 6
ARTICLE IV - NOTICE
Section 1. Form of Notice ............................................. 6
Section 2. Waiver ..................................................... 6
ARTICLE V - OFFICERS AND AGENTS
Section 1. In General ................................................. 6
Section 2. Election ................................................... 6
Section 3. Other Officers and Agents .................................. 6
Section 4. Compensation ............................................... 7
Section 5. Term of Office and Removal ................................. 7
Section 6. Employment and Other Contracts ............................. 7
Section 7. Chairman of the Board of Directors ......................... 7
<PAGE> 3
Section 8. President .................................................. 7
Section 9. Vice Presidents ............................................ 7
Section 10. Secretary .................................................. 8
Section 11. Assistant Secretaries ...................................... 8
Section 12. Treasurer .................................................. 8
Section 13. Assistant Treasurers ....................................... 8
Section 14. Bonding .................................................... 8
ARTICLE VI- CERTIFICATES REPRESENTING SHARES
Section 1. Form of Certificates ....................................... 8
Section 2. Lost Certificates .......................................... 9
Section 3. Transfer of Shares ......................................... 9
Section 4. Registered Stockholders .................................... 9
ARTICLE VII- GENERAL PROVISIONS
Section 1. Dividends .................................................. 10
Section 2. Reserves ................................................... 10
Section 3. Telephone and Similar Meetings ............................. 10
Section 4. Books and Records .......................................... 10
Section 5. Fiscal Year ................................................ 10
Section 6. Seal ....................................................... 10
Section 7. Advances of Expenses ....................................... 11
Section 8. Indemnification ............................................ 11
Section 9. Insurance .................................................. 12
Section 10. Resignation ................................................ 12
Section 11. Amendment of Bylaws ........................................ 12
Section 12. Invalid Provisions ......................................... 12
Section 13. Relation to the Certificate of Incorporation ............... 12
<PAGE> 4
AMENDED AND RESTATED BYLAWS
OF
AMERISERV FOOD COMPANY
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office and registered agent of
AmeriServ Food Company (the "Corporation") will be as from time to time set
forth in the Corporation's Certificate of Incorporation or in any certificate
filed with the Secretary of State of the State of Delaware, and the appropriate
county Recorder or Recorders, as the case may be, to amend such information.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders for the
election of Directors will be held at such place, within or without the State of
Delaware, as may be fixed from time to time by the Board of Directors. Meetings
of stockholders for any other purpose may be held at such time and place, within
or without the State of Delaware, as may be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2. Annual Meeting. An annual meeting of the stockholders will be
held at such time as may be determined by the Board of Directors, at which
meeting the stockholders will elect a Board of Directors, and transact such
other business as may properly be brought before the meeting.
Section 3. List of Stockholders. At least ten days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at said
meeting, arranged in alphabetical order, with the address of and the number of
voting shares registered in the name of each, will be prepared by the officer or
agent having charge of the stock transfer books. Such list will be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
will be specified in the notice of the meeting, or if not so specified at the
place where the meeting is to be held. Such list will be produced and kept open
at the time and place of the meeting during the whole time thereof, and will be
subject to the inspection of any stockholder who may be present.
<PAGE> 5
Section 4. Special Meetings. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by law, the Certificate of
Incorporation or these Bylaws, may be called by the Chairman of the Board, the
President or the Board of Directors. Business transacted at all special meetings
will be confined to the purposes stated in the notice of the meeting unless all
stockholders entitled to vote are present and consent.
Section 5. Notice. Written or printed notice stating the place, day and
hour of any meeting of the stockholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called, will be delivered not less
than ten nor more than sixty days before the date of the meeting, either
personally or by mail, by or at the direction of the Chairman of the Board, the
President, the Secretary, or the officer or person calling the meeting, to each
stockholder of record entitled to vote at the meeting. If mailed, such notice
will be deemed to be delivered when deposited in the United States mail,
addressed to the stockholder at his address as it appears on the stock transfer
books of the Corporation, with postage thereon prepaid.
Section 6. Quorum. At all meetings of the stockholders, the presence in
person or by proxy of the holders of a majority of the shares issued and
outstanding and entitled to vote will be necessary and sufficient to constitute
a quorum for the transaction of business except as otherwise provided by law,
the Certificate of Incorporation or these Bylaws. If, however, such quorum is
not present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, will have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum is present or represented. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting will
be given to each stockholder of record entitled to vote at the meeting. At such
adjourned meeting at which a quorum is present or represented, any business may
be transacted that might have been transacted at the meeting as originally
notified.
Section 7. Voting. When a quorum is present at any meeting of the
Corporation's stockholders, the vote of the holders of a majority of the shares
entitled to vote on, and voted for or against, any matter will decide any
questions brought before such meeting, unless the question is one upon which, by
express provision of law, the Certificate of Incorporation or these Bylaws, a
different vote is required, in which case such express provision will govern and
control the decision of such question. The stockholders present in person or by
proxy at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum.
Section 8. Method of Voting. Each outstanding share of the Corporation's
capital stock, regardless of class, will be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders, except to the extent that the
voting rights of the shares of any class or classes are limited or denied by the
Certificate of Incorporation, as amended from time to time. At any meeting of
the stockholders, every stockholder having the right to vote will be entitled to
vote in person, or by proxy appointed by an instrument in writing subscribed by
such stockholder and bearing a date not more than three years prior to such
meeting, unless such instrument provides for a longer period. Each proxy will be
revocable unless expressly provided therein to be
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<PAGE> 6
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the Corporation generally. Such
proxy will be filed with the Secretary of the Corporation prior to or at the
time of the meeting. Voting on any question or in any election, other than for
directors, may be by voice vote or show of hands unless the presiding officer
orders, or any stockholder demands, that voting be by written ballot.
Section 9. Record Date. The Board of Directors may fix in advance a record
date for the purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, which record date will not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date will not be less than ten nor more than sixty
days prior to such meeting. In the absence of any action by the Board of
Directors, the close of business on the date next preceding the day on which the
notice is given will be the record date, or, if notice is waived, the close of
business on the day next preceding the day on which the meeting is held will be
the record date.
Section 10. Action by Consent. Any action required or permitted by law, the
Certificate of Incorporation or these Bylaws to be taken at a meeting of the
stockholders of the Corporation may be taken without a meeting if a consent or
consents in writing, setting forth the action so taken, is signed by the holders
of outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and will be delivered to the
Corporation by delivery to its registered office in Delaware, its principal
place of business or an officer or agent of the Corporation having custody of
the minute book.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Management. The business and affairs of the Corporation will be
managed by or under the direction of its Board of Directors who may exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by law, by the Certificate of Incorporation or by these Bylaws directed or
required to be exercised or done by the stockholders.
Section 2. Qualification; Election; Term. None of the Directors need be a
stockholder of the Corporation or a resident of the State of Delaware. The
Directors shall be classified, with respect to the time for which they severally
hold office, into three classes (Class A, Class B and Class C), as nearly equal
in number as possible, as determined by the Board of Directors, one class to
hold office initially for a term expiring at the annual meeting of stockholders
to be held in 1996, another class to hold office initially for a term expiring
at the annual meeting of stockholders to be held in 1997 and another class to
hold office for a term expiring at the annual meeting of stockholders to be held
in 1998, with members of each class to hold office until whichever of the
following occurs first: his successor is elected and qualified, his resignation,
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his removal from office by the stockholders or his death. At each annual meeting
of stockholder of the Corporation, the successors to the class of directors
whose term expires at the meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the third year following
the year of their election. Directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy and entitled to
vote on the election of Directors at any annual or special meeting of
stockholders. Such election shall be by written ballot.
Section 3. Number. The number of Directors of the Corporation will be at
least one and not more than eleven. The number of Directors authorized will be
fixed as the Board of Directors may from time to time designate, or if no such
designation has been made, the number of Directors will be the same as the
number of members of the initial Board of Directors as set forth in the
Certificate of Incorporation.
Section 4. Removal. Any Director may be removed only for cause, at any
special meeting of stockholders by the affirmative vote of a majority in number
of shares of the stockholders present in person or represented by proxy at such
meeting and entitled to vote for the election of such Director; provided that
notice of the intention to act upon such matter has been given in the notice
calling such meeting.
Section 5. Vacancies. Newly created directorships resulting from any
increase in the authorized number of Directors and any vacancies occurring in
the Board of Directors caused by death, resignation, retirement,
disqualification or removal from office of any Directors or otherwise, may be
filled by the vote of a majority of the Directors then in office, though less
than a quorum, or a successor or successors may be chosen at a special meeting
of the stockholders called for that purpose, and each successor Director so
chosen will hold office until the next election of the class for which such
Director has been chosen or until whichever of the following occurs first: his
successor is elected and qualified, his resignation, his removal from office by
the stockholders or his death.
Section 6. Place of Meetings. Meetings of the Board of Directors, regular
or special, may be held at such place within or without the State of Delaware as
may be fixed from time to time by the Board of Directors.
Section 7. Annual Meeting. The first meeting of each newly elected Board of
Directors will be held without further notice immediately following the annual
meeting of stockholders and at the same place, unless by unanimous consent, the
Directors then elected and serving change such time or place.
Section 8. Regular Meetings. Regular meetings of the Board of Directors may
be held without notice at such time and place as is from time to time determined
by resolution of the Board of Directors.
Section 9. Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman of the Board or the President on oral or written
notice to each Director, given
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either personally, by telephone, by telegram or by mail; special meetings will
be called by the Chairman of the Board, President or Secretary in like manner
and on like notice on the written request of at least two Directors. The purpose
or purposes of any special meeting will be specified in the notice relating
thereto.
Section 10. Quorum. At all meetings of the Board of Directors the presence
of a majority of the number of Directors fixed by these Bylaws will be necessary
and sufficient to constitute a quorum for the transaction of business, and the
affirmative vote of at least a majority of the Directors present at any meeting
at which there is a quorum will be the act of the Board of Directors, except as
may be otherwise specifically provided by law, the Certificate of Incorporation
or these Bylaws. If a quorum is not present at any meeting of the Board of
Directors, the Directors present thereat may adjourn the meeting from time to
time without notice other than announcement at the meeting, until a quorum is
present.
Section 11. Interested Directors. No contract or transaction between the
Corporation and one or more of its Directors or officers, or between the
Corporation and any other corporation, partnership, association or other
organization in which one or more of the Corporation's Directors or officers are
directors or officers or have a financial interest, will be void or voidable
solely for this reason, solely because the Director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof that
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if: (i) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee, and the Board of Directors or committee in
good faith authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested Directors, even though the disinterested Directors
be less than a quorum, (ii) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified by the Board of Directors, a committee thereof
or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee that authorizes the contract or transaction.
Section 12. Committees. The Board of Directors may, by resolution passed by
a majority of the entire Board, designate committees, each committee to consist
of two or more Directors of the Corporation, which committees will have such
power and authority and will perform such functions as may be provided in such
resolution. Such committee or committees will have such name or names as may be
designated by the Board and will keep regular minutes of their proceedings and
report the same to the Board of Directors when required.
Section 13. Action by Consent. Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee of the Board of
Directors may be taken without such a meeting if a consent or consents in
writing, setting forth the action so taken, is signed by all the members of the
Board of Directors or such committee, as the case may be.
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Section 14. Compensation of Directors. Directors will receive such
compensation for their services and reimbursement for their expenses as the
Board of Directors, by resolution, may establish; provided that nothing herein
contained will be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
ARTICLE IV
NOTICE
Section 1. Form of Notice. Whenever by law, the Certificate of
Incorporation or of these Bylaws, notice is to be given to any Director or
stockholder, and no provision is made as to how such notice will be given, such
notice may be given in writing, by mail, postage prepaid, addressed to such
Director or stockholder at such address as appears on the books of the
Corporation. Any notice required or permitted to be given by mail will be deemed
to be given at the time the same is deposited in the United States mails.
Section 2. Waiver. Whenever any notice is required to be given to any
stockholder or Director of the Corporation as required by law, the Certificate
of Incorporation or these Bylaws, a waiver thereof in writing signed by the
person or persons entitled to such notice, whether before or after the time
stated in such notice, will be equivalent to the giving of such notice.
Attendance of a stockholder or Director at a meeting will constitute a waiver of
notice of such meeting, except where such stockholder or Director attends for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened.
ARTICLE V
OFFICERS AND AGENTS
Section 1. In General. The officers of the Corporation will be elected by
the Board of Directors and will be a President, a Vice President, a Secretary
and a Treasurer. The Board of Directors may also elect a Chairman of the Board,
additional Vice Presidents, Assistant Vice Presidents and one or more Assistant
Secretaries and Assistant Treasurers. Any two or more offices may be held by the
same person.
Section 2. Election. The Board of Directors, at its first meeting after
each annual meeting of stockholders, will elect the officers, none of whom need
be a member of the Board of Directors.
Section 3. Other Officers and Agents. The Board of Directors may also elect
and appoint such other officers and agents as it deems necessary, who will be
elected and appointed for such terms and will exercise such powers and perform
such duties as may be determined from time to time by the Board.
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Section 4. Compensation. The compensation of all officers and agents of the
Corporation will be fixed by the Board of Directors or any committee of the
Board, if so authorized by the Board.
Section 5. Term of Office and Removal. Each officer of the Corporation will
hold office until his death, his resignation or removal from office, or the
election and qualification of his successor whichever occurs first. Any officer
or agent elected or appointed by the Board of Directors may be removed at any
time, for or without cause, by the affirmative vote of a majority of the entire
Board of Directors, but such removal will not prejudice the contract rights, if
any, of the person so removed. If the office of any officer becomes vacant for
any reason, the vacancy may be filled by the Board of Directors.
Section 6. Employment and Other Contracts. The Board of Directors may
authorize any officer or officers or agent or agents to enter into any contract
or execute and deliver any instrument in the name or on behalf of the
Corporation, and such authority may be general or confined to specific
instances. The Board of Directors may, when it believes the interest of the
Corporation will best be served thereby, authorize executive employment
contracts that will have terms no longer than ten years and contain such other
terms and conditions as the Board of Directors deems appropriate. Nothing herein
will limit the authority of the Board of Directors to authorize employment
contracts for shorter terms.
Section 7. Chairman of the Board of Directors. If the Board of Directors
has elected a Chairman of the Board, he will preside at all meetings of the
stockholders and the Board of Directors. Except where by law the signature of
the President is required, the Chairman will have the same power as the
President to sign all certificates, contracts and other instruments of the
Corporation. During the absence or disability of the President, the Chairman
will exercise the powers and perform the duties of the President.
Section 8. President. The President will be the chief executive officer of
the Corporation and, subject to the control of the Board of Directors, will
supervise and control all of the business and affairs of the Corporation. He
will, in the absence of the Chairman of the Board, preside at all meetings of
the stockholders and the Board of Directors. The President will have all powers
and perform all duties incident to the office of President and will have such
other powers and perform such other duties as the Board of Directors may from
time to time prescribe.
Section 9. Vice Presidents. Each Vice President will have the usual and
customary powers and perform the usual and customary duties incident to the
office of Vice President, and will have such other powers and perform such other
duties as the Board of Directors or any committee thereof may from time to time
prescribe or as the President may from time to time delegate to him. In the
absence or disability of the President and the Chairman of the Board, a Vice
President designated by the Board of Directors, or in the absence of such
designation the Vice Presidents in the order of their seniority in office, will
exercise the powers and perform the duties of the President.
-7-
<PAGE> 11
Section 10. Secretary. The Secretary will attend all meetings of the
stockholders and record all votes and the minutes of all proceedings in a book
to be kept for that purpose. The Secretary will perform like duties for the
Board of Directors and committees thereof when required. The Secretary will
give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors. The Secretary will keep in safe
custody the seal of the Corporation. The Secretary will be under the supervision
of the President. The Secretary will have such other powers and perform such
other duties as the Board of Directors may from time to time prescribe or as the
President may from time to time delegate to him.
Section 11. Assistant Secretaries. The Assistant Secretaries in the order
of their seniority in office, unless otherwise determined by the Board of
Directors, will, in the absence or disability of the Secretary, exercise the
powers and perform the duties of the Secretary. They will have such other powers
and perform such other duties as the Board of Directors may from time to time
prescribe or as the President may from time to time delegate to them.
Section 12. Treasurer. The Treasurer will have responsibility for the
receipt and disbursement of all corporate funds and securities, will keep full
and accurate accounts of such receipts and disbursements, and will deposit or
cause to be deposited all moneys and other valuable effects in the name and to
the credit of the Corporation in such depositories as may be designated by the
Board of Directors. The Treasurer will render to the Directors whenever they may
require it an account of the operating results and financial condition of the
Corporation, and will have such other powers and perform such other duties as
the Board of Directors may from time to time prescribe or as the President may
from time to time delegate to him.
Section 13. Assistant Treasurers. The Assistant Treasurers in the order of
their seniority in office, unless otherwise determined by the Board of
Directors, will, in the absence or disability of the Treasurer, exercise the
powers and perform the duties of the Treasurer. They will have such other powers
and perform such other duties as the Board of Directors may from time to time
prescribe or as the President may from time to time delegate to them.
Section 14. Bonding. The Corporation may secure a bond to protect the
Corporation from loss in the event of defalcation by any of the officers, which
bond may be in such form and amount and with such surety as the Board of
Directors may deem appropriate.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
Section 1. Form of Certificates. Certificates, in such form as may be
determined by the Board of Directors, representing shares to which stockholders
are entitled will be delivered to each stockholder. Such certificates will be
consecutively numbered and will be entered in the stock book of the Corporation
as they are issued. Each certificate will state on the face thereof the holder's
name, the number, class of shares, and the par value of such shares or a
statement
-8-
<PAGE> 12
that such shares are without par value. They will be signed by the President or
a Vice President and the Secretary or an Assistant Secretary, and may be sealed
with the seal of the Corporation or a facsimile thereof. If any certificate is
countersigned by a transfer agent, or an assistant transfer agent or registered
by a registrar, either of which is other than the Corporation or an employee of
the Corporation, the signatures of the Corporation's officers may be facsimiles.
In case any officer or officers who have signed, or whose facsimile signature or
signatures have been used on such certificate or certificates, ceases to be such
officer or officers of the Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates have been delivered by the
Corporation or its agents, such certificate or certificates may nevertheless be
adopted by the Corporation and be issued and delivered as though the person or
persons who signed such certificate or certificates or whose facsimile signature
or signatures have been used thereon had not ceased to be such officer or
officers of the Corporation.
Section 2. Lost Certificates. The Board of Directors may direct that a new
certificate be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be lost or
destroyed. When authorizing such issue of a new certificate, the Board of
Directors, in its discretion and as a condition precedent to the issuance
thereof, may require the owner of such lost or destroyed certificate, or his
legal representative, to advertise the same in such manner as it may require
and/or to give the Corporation a bond, in such form, in such sum, and with such
surety or sureties as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost or destroyed. When a certificate has been lost, apparently destroyed
or wrongfully taken, and the holder of record fails to notify the Corporation
within a reasonable time after such holder has notice of it, and the Corporation
registers a transfer of the shares represented by the certificate before
receiving such notification, the holder of record is precluded from making any
claim against the Corporation for the transfer of a new certificate.
Section 3. Transfer of Shares. Shares of stock will be transferable only on
the books of the Corporation by the holder thereof in person or by such holder's
duly authorized attorney. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it will be the duty of the Corporation or the transfer agent of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
Section 4. Registered Stockholders. The Corporation will be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, will not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it has express or other notice thereof, except as otherwise
provided by law.
-9-
<PAGE> 13
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the outstanding shares of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting. Dividends may be declared and paid in cash, in property, or in shares
of the Corporation, subject to the provisions of the General Corporation Law of
the State of Delaware and the Certificate of Incorporation. The Board of
Directors may fix in advance a record date for the purpose of determining
stockholders entitled to receive payment of any dividend, such record date will
not precede the date upon which the resolution fixing the record date is
adopted, and such record date will not be more than sixty days prior to the
payment date of such dividend. In the absence of any action by the Board of
Directors, the close of business on the date upon which the Board of Directors
adopts the resolution declaring such dividend will be the record date.
Section 2. Reserves. There may be created by resolution of the Board of
Directors out of the surplus of the Corporation such reserve or reserves as the
Directors from time to time, in their discretion, deem proper to provide for
contingencies, or to equalize dividends, or to repair or maintain any property
of the Corporation, or for such other purpose as the Directors may deem
beneficial to the Corporation, and the Directors may modify or abolish any such
reserve in the manner in which it was created. Surplus of the Corporation to the
extent so reserved will not be available for the payment of dividends or other
distributions by the Corporation.
Section 3. Telephone and Similar Meetings. Stockholders, directors and
committee members may participate in and hold meetings by means of conference
telephone or similar communications equipment by which all persons participating
in the meeting can hear each other. Participation in such a meeting will
constitute presence in person at the meeting, except where a person participates
in the meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the ground that the meeting has
not been lawfully called or convened.
Section 4. Books and Records. The Corporation will keep correct and
complete books and records of account and minutes of the proceedings of its
stockholders and Board of Directors, and will keep at its registered office or
principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
Section 5. Fiscal Year. The fiscal year of the Corporation will be fixed by
resolution of the Board of Directors.
Section 6. Seal. The Corporation may have a seal, and the seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise. Any officer of the Corporation will have authority to affix the seal
to any document requiring it.
-10-
<PAGE> 14
Section 7. Advances of Expenses. The Corporation will advance to its
directors and officers expenses incurred by them in connection with any
"Proceeding," which term includes any threatened, pending or completed action,
suit or proceeding, whether brought by or in the right of the Corporation or
otherwise and whether of a civil, criminal, administrative or investigative
nature (including all appeals therefrom), in which a director or officer may be
or may have been involved as a party or otherwise, by reason of the fact that he
is or was a director or officer of the Corporation, by reason of any action
taken by him or of any inaction on his part while acting as such, or by reason
of the fact that he is or was serving at the request of the Corporation as a
director, officer, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
("Official," which term also includes directors and officers of the Corporation
in their capacities as directors and officers of the Corporation), whether or
not he is serving in such capacity at the time any liability or expense is
incurred; provided that the Official undertakes to repay all amounts advanced
unless:
(i) in the case of all Proceedings other than a Proceeding by or in
the right of the Corporation, the Official establishes to the satisfaction
of the disinterested members of the Board of Directors that he acted in
good faith or in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation and, with respect to any criminal
proceeding, that he did not have reasonable cause to believe his conduct
was unlawful; provided that the termination of any such Proceeding by
judgment, order of court, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not by itself create a presumption as
to whether the Official acted in good faith or in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation
and, with respect to any criminal proceeding, as to whether he had
reasonable cause to believe his conduct was unlawful; or
(ii) in the case of a Proceeding by or in the right of the
Corporation, the Official establishes to the satisfaction of the
disinterested members of the Board of Directors that he acted in good faith
or in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation; provided that if in such a Proceeding the
Official is adjudged to be liable to the Corporation, all amounts advanced
to the Official for expenses must be repaid except to the extent that the
court in which such adjudication was made shall determine upon application
that despite such adjudication, in view of all the circumstances, the
Official is fairly and reasonably entitled to indemnity for such expenses
as the court may deem proper.
Section 8. Indemnification. The Corporation will indemnify its directors to
the fullest extent permitted by the General Corporation Law of the State of
Delaware and may, if and to the extent authorized by the Board of Directors, so
indemnify its officers and any other person whom it has the power to indemnify
against any liability, reasonable expense or other matter whatsoever.
-11-
<PAGE> 15
Section 9. Insurance. The Corporation may at the discretion of the Board of
Directors purchase and maintain insurance on behalf of the Corporation and any
person whom it has the power to indemnify pursuant to law, the Certificate of
Incorporation, these Bylaws or otherwise.
Section 10. Resignation. Any director, officer or agent may resign by
giving written notice to the President or the Secretary. Such resignation will
take effect at the time specified therein or immediately if no time is specified
therein. Unless otherwise specified therein, the acceptance of such resignation
will not be necessary to make it effective.
Section 11. Amendment of Bylaws. These Bylaws may be altered, amended, or
repealed at any meeting of the Board of Directors at which a quorum is present,
by the affirmative vote of a majority of the Directors present at such meeting.
Section 12. Invalid Provisions. If any part of these Bylaws is held invalid
or inoperative for any reason, the remaining parts, so far as possible and
reasonable, will be valid and operative.
Section 13. Relation to the Certificate of Incorporation. These Bylaws are
subject to, and governed by, the Certificate of Incorporation of the
Corporation.
-2-
<PAGE> 1
Exhibit 3.5
STATE OF NEBRASKA
[FLAG]
United States of America, } Department of State
State of Nebraska } ss. Lincoln, Nebraska
I, Scott Moore, Secretary of State of the State of Nebraska do hereby
certify;
The attached is a true and correct copy of the Articles of Incorporation of
AMERISERVE TRANSPORTATION, INC.
with its registered office located in LINCOLN, Nebraska, as filed and
recorded in this office on June 9, 1997.
I further certify that said corporation is in good standing as of this
date.
In Testimony Whereof, I have hereunto set my hand and
affixed the Great Seal of the State
of Nebraska on July 3
[SEAL] in the year of our Lord, one thousand
nine hundred and ninety-seven.
/s/ Scott Moore
---------------
SECRETARY OF STATE
<PAGE> 2
JUN 09 1997
STATE OF NEBRASKA
SECRETARY'S OFFICE
Received filed and recorded on
film roll no. 9714
at page 982
/s/ Scott Moore
------------------
Secretary of State
By CB 75.00 pd
---------------
5:00 pm
ARTICLES OF INCORPORATION
OF
AMERISERVE TRANSPORTATION, INC.
The undersigned acting as the incorporator of a corporation under the
Nebraska Business Corporation Act, adopts the following Articles of
Incorporation for such corporation:
ARTICLE I.
The name of the Corporation shall be: AmeriServe Transportation, Inc.
ARTICLE II.
The aggregate number of shares which the Corporation shall have authority
to issue is 1,000 shares, having par value of $1,000.00 each, all of which shall
be common stock.
All transfers of the shares of this Corporation shall be made in accordance
with the provisions of the Bylaws of the Corporation.
ARTICLE III.
The Corporation reserves the right to amend or repeal any provisions
contained in these Articles of Incorporation in the manner now and hereafter
permitted by law, and all rights conferred upon shareholders herein are granted
subject to this reservation.
ARTICLE IV.
The address of the Corporation's initial registered office is: 206 South
13th Street, Suite 1500, Lincoln, Nebraska 68508 (Lancaster County) and the name
of the initial registered agent at such address shall be: C.T. Corporation
System.
ARTICLE V.
The name and street address of the incorporator is Daniel J. Duffy, 8805
Indian Hills Drive, Suite 300, Omaha, Nebraska 68114.
DATED this 9th day of June, 1997.
/s/ Daniel J. Duffy
----------------------------------
Daniel J. Duffy, Incorporator
<PAGE> 1
Exhibit 3.6
BYLAWS
OF
AMERISERVE TRANSPORTATION, INC.
ARTICLE I
SHAREHOLDERS' MEETINGS
1. The annual meeting of the shareholders shall be held on the third
Monday of the second month following the close of the Corporation's fiscal year,
at the offices of the Corporation in Omaha, Nebraska, or it may be held at such
other place within or without the State of Nebraska when agreed to in writing or
by telegram by a majority of the shares entitled to vote thereat. Ten (10) days,
written notice of said meeting shall be necessary to be given by the Secretary
or an Assistant Secretary. At the annual meeting the shareholders shall elect a
Board of Directors, who need not be elected by ballot, to serve for a term of
one year, or until their successors are elected and qualified.
2. Special meetings of the shareholders may be held at anytime upon call
of the Chairman of the Board of Directors or the President or a Vice President.
Not less than ten (10) nor more than fifty (50) days' written or telegraphic
notice stating the place, day and hour of any special meeting of the
shareholders, specifying the purpose or purposes of the special meeting, shall
be mailed or telegraphed to each shareholder of record at his last known address
as shown by the books of the Corporation. Any shareholder may waive such notice
either before or after the time when such meeting is held.
<PAGE> 2
3. The presence, either in person or by proxy, of the holders of the
majority of the capital stock issued and outstanding, shall constitute a quorum
at all meetings of the shareholders. The vote of a majority of shares present at
any meeting at which there is a quorum shall be required to constitute an action
by shareholders.
ARTICLE II
DIRECTORS
1. The Board of Directors shall consist of not less than three (3)
members nor more than seven (7) members, the exact number to be determined each
year by the shareholders at their annual meeting; provided, that in cases when
all of the shares of the Corporation are owned of record by either one or two
shareholders, the number of Directors may be less than three (3) but not less
than the number of shareholders. The Directors need not be shareholders and
shall have the power to fill vacancies on the Board.
2. The annual meeting of the Board of Directors shall be held at the same
place as the annual meeting of the shareholders, immediately following the
annual meeting of the shareholders, at which meeting the officers of the
Corporation to serve the ensuing year, or until their successors are elected and
qualify, shall be elected, and such other business as may be presented to the
meeting may be transacted. No notice of the annual meeting need be given.
3. Special meetings of the Board of Directors may be called for any
purpose by the Chairman of the Board, or the President, or a Vice President, or
the Secretary or an Assistant Secretary. At least two (2) days' notice of the
time and place of a special meeting shall be mailed or telegraphed to a Director
at his last known past office
2
<PAGE> 3
address, or delivered to a Director personally; but any Director may waive such
notice in writing or by telegram either before or after the time when such
meeting is held.
4. The Board of Directors may remove any officer at any time, with or
without cause and elect his successor.
5. Meetings of the Board of Directors may be held at any place within or
without the State of Nebraska.
ARTICLE III
OFFICERS
1. The officers of the Corporation shall consist of a Chairman of the
Board, a President, a Vice President, a Secretary, a Chief Financial Officer, a
Treasurer, and may include an Assistant Secretary and an Assistant Treasurer,
and such other officers as may be designated from time to time by the Board of
Directors. Any two (2) or more offices may be held by the same person.
2. The Chairman of the Board shall preside at all meetings of the Board
of Directors at which he may be present and he shall have and exercise such
powers and duties as may be enjoined upon him in these Bylaws.
3. The President shall be the Chief Executive officer of the Corporation
and shall have general direction and management of its business and internal
affairs. He shall preside at all meetings of shareholders.
4. A Vice President shall have and exercise the usual powers and duties
of a vice president, subject to any enlargement or restriction of said powers or
duties by the Board of Directors.
3
<PAGE> 4
5. A Chief Financial Officer shall have and exercise the usual powers and
duties of a Chief Financial Officer, subject to any enlargement or restriction
of said powers or duties by the Board of Directors,
6. The Secretary and Treasurer shall respectively have and exercise the
usual power and authority and perform the usual duties of a secretary or a
treasurer, subject to any enlargement or restriction of said duties by the Board
of Directors.
7. An Assistant Secretary or an Assistant Treasurer shall respectively
perform the duties of the Secretary or the Treasurer when necessary or
convenient.
ARTICLE IV
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution or motion
of the Board of Directors and in absence of such formality shall be shown on the
tax records of the Corporation.
ARTICLE V
MISCELLANEOUS
1. Whenever any notice is required in these Bylaws to be given, such
notice shall be deemed to be sufficient and duly and properly given when mailed,
or, if telegraphed, when delivered to the telegraph company. Such notice shall
be deemed to have been given on the date of such mailing or delivery to the
telegraph company.
2. The Board of Directors shall have the power and authority by motion or
resolution to conduct the affairs of the Corporation as to any matter not
covered by these Bylaws.
4
<PAGE> 5
3. The presence of a shareholder or a Director at any meeting provided
for in these Bylaws constitutes a waiver by him of notice of the time, place and
purpose of such meeting.
4. Vacancies in any of the offices by death, resignation, removal, or
otherwise, may be filled by the Directors.
5. Any notice required to be given under these Bylaws may be waived in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein.
ARTICLE VI
AMENDMENTS
These Bylaws may be amended from time to time by the Board of Directors
5
<PAGE> 1
Exhibit 3.7
File Number 5581-459-7
[SEAL OF THE STATE OF ILLINOIS]
WHEREAS, ARTICLES OF INCORPORATION OF CHICAGO CONSOLIDATED CORPORATION
INCORPORATED UNDER THE LAWS 0F THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, Jim Edgar, Secretary of State of the State of Illinois, by
virtue of the powers vested in me by law, do hereby issue this certificate and
attach hereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, [ILLEGIBLE] set my hand and cause to be affixed the Great
Seal of the State of Illinois, at the City of Springfield, this 24th day of
January AD 1990 and of the Independence of the United States the two hundred and
14th.
/s/ Jim Edgar
------------------
Secretary of State
<PAGE> 2
BCA 2.10 (Rev. Jul, 1984) File 0
JIM EDGAR
Secretary of State
State of Illinois
ARTICLES OF INCORPORATION
- ---------------------------------- --------------------------------
Submit in Duplicate This Space For Use By
[ILLEGIBLE] Secretary of State
[ILLEGIBLE] Date 1-24-90
[ILLEGIBLE]
Check or Money order payable to License Fee $ 350.00
"Secretary of State." Franchise Tax $ 760.00
DO NOT SEND CASH Filing Fee $ 75.00
- ---------------------------------- --------
Clerk C 1125.00
--------------------------------
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned incorporator(s) hereby adopt the following Articles of
Incorporation.
ARTICLE ONE The name of the corporation is CHICAGO CONSOLIDATED CORPORATION
-----------------------------------
(Shall contain the word
"corporation", "company",
"incorporated", "limited", or an
abbreviation thereof)
ARTICLE TWO The name and address of the initial registered agent and its
registered office are:
Registered Agent
William F Woodall
------------------------------------------------
First Name Middle Name Last Name
Registered Office
125 Windsor Drive, Suite 124
------------------------------------------------
Number Street Suite # (A P.O.
Box alone is not
acceptable)
Oak Brook 60521
------------------------------------------------
City Zip Code County
ARTICLE THREE The purpose or purposes for which the corporation is
organized are:
If not sufficient space to cover this point, add one or more sheets of this size
To carry on any lawful business for which corporations may be organized under
the laws of Illinois.
ARTICLE FOUR Paragraph 1: The authorized shares shall be:
Class *Par Value per share Number of shares authorized
-----------------------------------------------------------------
common No Par Value 100,000
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
Paragraph 2: The preferences, qualifications, limitations,
restrictions and the special or relative rights in respect of the
shares of each class are:
If not sufficient space to cover this point, add one or more sheets of this size
ARTICLE FIVE The number of shares to be issued initially, and the
consideration be received by the corporation therefor, are:
Par Value Number of shares Consideration to be
Class per share proposed to be issued received therefor
-----------------------------------------------------------------
common No Par Value 10,000 $700,000.00
-----------------------------------------------------------------
PAID $
JAN 24 1990 -----------------------------------------------------------------
$
-----------------------------------------------------------------
$
-----------------------------------------------------------------
TOTAL $700,000.00
----------------
* A declaration as to a "par value" is optional. This space may be marked "n/a"
when no reference to a par value is desired.
<PAGE> 3
ARTICLE SIX OPTIONAL
The number of directors constituting the initial board of
directors of the corporation is_______ and the names and
addresses of the persons who are to serve as directors until the
first annual meeting of shareholders or until their successors be
elected and qualify are:
Name Residential Address
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
ARTICLE SEVEN OPTIONAL
(a) It is estimated that the value of all property to be $ _________
owned by the corporation for the following year
wherever located will be:
(b) It is estimated that the value of the property to be $ _________
located within the State of Illinois during the
following year will be:
(c) It is estimated that the gross amount of business $ _________
which will be transacted by the corporation during
the following year will be:
(d) It is estimated that the gross amount of business $ _________
which will be transacted from places of business in
the State of Illinois during the following year will
be:
ARTICLE EIGHT OTHER PROVISIONS
Attach a separate sheet of this size for any other provision to be
included in the Articles of Incorporation, e.g., authorizing
preemptive rights; denying cumulative voting; regulating internal
affairs; voting majority requirements; fixing a duration other than
perpetual; etc
NAMES AND ADDRESSES OF INCORPORATORS
The undersigned incorporator(s) hereby declare(s), under penalties of
perjury, that the statements made in the foregoing Articles of Incorporation are
true.
Dated January 17, 1990
---------- ----
Signatures and Names Post Office Address
1. /s/ William F. Woodall 1. 125 Windsor Drive, Suite 124
------------------------------ ------------------------------
Signature Street
William F. Woodall Oak Brook IL 60521
------------------------------ ------------------------------
Name (please print) City/Town State Zip
2. 2.
------------------------------ ------------------------------
Signature Street
------------------------------ ------------------------------
Name (please print) City/Town State Zip
3. 3.
------------------------------ ------------------------------
Signature Street
------------------------------ ------------------------------
Name (please print) City/Town State Zip
(Signatures must be in ink or original document. Carbon copy, zerox or rubber
stamp signatures may only be used on conformed copies)
NOTE: If a corporation acts as incorporator, the name of the corporation and the
state of incorporation shall be shown and the execution shall be by its
President or Vice President and verified by him and attested by its Secretary or
an Assistant Secretary.
Form BCA-2.10
File No. _______________________________________________________________________
================================================================================
ARTICLES OF INCORPORATION
FILED
JAN 24 1990
Illinois Secretary of State
FEE SCHEDULE
The following fees are required to be paid at the time of issuing the
Certificate of Incorporation: Filing Fee $75.00: INITIAL LICENSE FEE of 1/20th
of 1% of the consideration to be received for initial issued shares (See Art.
5). MINIMUM $.50; INITIAL FRANCHISE TAX of 1/10 of 1% of the consideration to be
received for initial issued shares (see Art. 5). MINIMUM $25.00.
EXAMPLES OF TOTAL DUE
Consideration to TOTAL
be Received Due*
================================================================================
up to $1,000 $100.50
- --------------------------------------------------------------------------------
$ 5,000 $107.50
- --------------------------------------------------------------------------------
$ 10,000 $10[ILLEGIBLE].00
- --------------------------------------------------------------------------------
$ 25,000 $112.50
- --------------------------------------------------------------------------------
$ 50,000 $150.00
- --------------------------------------------------------------------------------
$ 100,000 $225.00
- --------------------------------------------------------------------------------
Includes Filing Fee + License Fee + Franchise Tax
RETURN TO:
Corporation Department
Secretary of State
Springfield, Illinois 62756
Telephone: (217) 782-6961
<PAGE> 4
1995
YEAR OF 01/01/95 CORPORATION
File Prior to FILE NO
D 5581-459-7
STATE OF ILLINOIS
DOMESTIC CORPORATION ANNUAL REPORT
PLEASE TYPE OR PRINT CLEARLY IN BLACK INK
1.) CHANGES ONLY: REGISTERED AGENT
REGISTERED OFFICE 20 W 151 101st Street
CITY, IL ZIP CODE Lemont, IL 60439 COUNTY DuPage
FILED
JAN 19 1995
GEORGE H. RYAN
SECRETARY OF STATE
2.) CORPORATE NAME, REGISTERED AGENT, REGISTERED OFFICE, CITY, IL ZIP CODE
CHICAGO CONSOLIDATED CORPORATION
% WILLIAM F WOODALL 011091
20W267 101ST ST UNIT D COOK
LEMONT, IL. 60439-9672 COUNTY
3a.) State or Country of incorporation IL 3b.) Date Qualified To Do Business
in IL 01/24/1990
4.) The names and residential addresses of ALL officers & directors MUST be
listed here!
OFFICE NAME NUMBER AND STREETCITY STATE ZIP
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President SEE ATTACHED LIST
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Secretary
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Treasurer
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Director
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Director
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Director
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5.) If 51 % or more of the stock is owned by a minority or female, please check
appropriate box |_| Minority Owned |_| Female Owned
6.) Number of shares authorized and issued (as of 10/31/94)
CLASS SERIES PAR VALUE NUMBER AUTHORIZED NUMBER ISSUED
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COMM 100000 9992.000
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IMPORTANT! Whenever the amount in item 6 [ILLEGIBLE]
7a.) The amount of paid in capital as of 10/31/94 is $ 781047
7b.) The Paid in Capital on record with the Secretary of State is $ 767547
8.) By: /s/ [ILLEGIBLE]
----------------------------------------
(Any Authorized Officer's Signature)
ITEM 8 MUST BE SIGNED !
RETURN TO Under the penalty of perjury and as an
authorized officer, I declare that this
Department of Business Services annual report and if applicable, the
Secretary of State statement of change ([ILLEGIBLE]
Springfield, IL 62756 registered agent and/or office, pursuant
Phone (217) 782-7808 to provisions of the Business
Corporation Act, has been examined by me
and is to the best of my knowledge and
belief true correct and complete
(PLEASE COMPLETE THE REVERSE SIDE OF THIS REPORT)
<PAGE> 5
STATE OF ILLINOIS EXPEDITED
[SEAL OF THE Office of the Secretary of State SECRETARY OF STATE
STATE OF I hereby certify that this is a true and
ILLINOIS] correct copy, consisting of Four pages, JUN 26 1997
as taken from the original on file in EXP. FEES 25.00
this office. -------
COPY-CERT. 10.00
------
/s/ George H. Ryan
--------------------
George H. Ryan
Secretary of State
DATED: June 26, 1997
------------------------
By: [ILLEGIBLE]
---------------------------
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Exhibit 3.8
BY-LAWS
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OF
CHICAGO CONSOLIDATED CORPORATION
ARTICLE I
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OFFICES
The corporation shall continuously maintain in the State of Illinois a
registered office and a registered agent whose business office is identical with
such registered office, and may have other offices within or without the state.
ARTICLE II
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SHAREHOLDERS
SECTION 1. ANNUAL MEETINGS. An annual meeting of the shareholders shall be
held on the 1st day in May of each year or at such time as the board of
directors may designate for the purpose of electing directors and for the
transaction of such other business as may come before the meeting. If the day
fixed for the annual meeting shall be a legal holiday, such meeting shall be
held on the next succeeding business day.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders may be
called either by the president, by the board of directors or by the holders of
not less than one-fifth of all the outstanding shares of the corporation
entitled to vote, for the purpose or purposes stated in the call of the meeting.
SECTION 3. PLACE OF MEETING. The board of directors may designate any
place, as the place of meeting for any annual meeting or for any special meeting
called by the board of directors. If no designation is made, or if a special
meeting be otherwise called, the place of Meeting shall be at the registered
office of the corporation.
SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, date, and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than 10
nor more than 60 days before the date of the meeting, or in the case of a
merger, consolidation, share exchange, dissolution or sale, lease or exchange of
assets not less than 20 nor more than 60 days before the date of the meeting,
either personally or by mail, by or at the direction of the president, or the
secretary, or the officer or persons calling the meeting, to each shareholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States
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mail addressed to the shareholder at his, her or its address as it appears on
the records of the corporation, with postage thereon prepaid. When a meeting is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment in taken.
SECTION 5. FIXING OF RECORD DATE For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
shareholders entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the board of
directors of the corporation may fix in advance a date as the record date such
date in any case to be not more than 60 day and for a meeting of shareholders,
not less than 10 days, or in the case of a merger, consolidation, share
exchange, dissolution or sale, lease or exchange of assets, not less than 20
days before the date of such meeting. If no record date is fixed in the manner
described immediately above for the determination of shareholders entitled to
vote, or shareholders entitled to receive payment of a dividend, the date on
which notice of the meeting is mailed or the date on which the resolution of the
board of directors declaring such dividend is adopted, as the case may be, shall
be the record date for such determination of shareholders. A determination of
shareholders shall apply to any adjournment of the meeting.
SECTION 6. VOTING LISTS. The officer or agent having charge of the
transfer book for shares of the corporation shall make, within 20 days after the
record date for a meeting of shareholders or 10 days before such meeting,
whichever is earlier, a complete list of the shareholders entitled to vote at
such meeting, arranged in alphabetical order, with the address of and the number
of shares held by each, which list, for a period or 10 days prior to such
meeting, shall be kept on file at the registered office of the corporation and
shall be subject to inspection by any shareholder, and to copying at the
shareholder's expense, at any time during usual business hours. Such list shall
also be produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole time of the
meeting. The original share ledger or transfer book, or a duplicate thereof kept
in this State, shall be prima facie evidence as to who are the shareholders
entitled to examine such list or share ledger or transfer book or to vote at any
meeting of shareholders.
SECTION 7. QUORUM. The holders of a majority of the outstanding shares of
the corporation entitled to vote on a matter, represented in person or by proxy,
shall constitute a quorum for consideration of such matter at any meeting of
shareholders, but in no event shall a quorum consist of less than one-half of
the outstanding shares entitled so to vote; provided that if less than a
majority of the outstanding shares are represented at said meeting, a majority
of the shares so represented may adjourn the meeting at any time without further
notice. If a quorum is pre-
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sent, the affirmative vote or the majority of the shares represented at the
meeting shall be the act of the shareholders, unless the vote or a greater
number or voting by classes is required by the Business Corporation Act, the
articles of incorporation or these by-laws. At any adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the original meeting. Withdrawal of shareholders from any meeting
shall not cause failure of a duly constituted quorum at that meeting.
SECTION 8. PROXIES. Each shareholder may appoint a proxy to vote or
otherwise act for him or her by signing an appointment form and delivering it to
the person so appointed, but no such proxy shall be valid after 11 months from
the date of its execution, unless otherwise provided in the proxy.
SECTION 9. VOTING OF SHARES. Each outstanding share, regardless of class,
shall be entitled to one vote in each matter submitted to vote at a meeting of
shareholders, and in all elections for directors, every shareholder shall have
the right to vote the number of shares owned by such shareholder for as many
persons as there are directors to be elected, or to cumulate such votes and give
one candidate as many votes as shall equal the number of directors multiplied by
the number of shares or to distribute such cumulative votes in any proportion
among any number of candidates. Each shareholder may vote either in person or by
proxy as provided in SECTION 8 hereof.
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares held by the
corporation in a fiduciary capacity may be voted and shall be counted in
determining the total number of outstanding shares entitled to vote at any given
time.
Shares registered in the name of another corporation, domestic or foreign,
may be voted by any officer, agent, proxy or other legal representative
authorized to vote such shares under the law of the state of incorporation of
such corporation.
Shares registered in the name of a deceased person, a minor ward or a
person under legal disability, may be voted by his or her administrator,
executor or court appointed guardian, either in person or by proxy without a
transfer of such shares into the name of such administrator, executor or court
appointed guardian. Shares registered in the name of a trustee may be voted by
him or her, either in person or by proxy.
Shares registered in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his or her name if authority to do so
is contained in an appropriate order of the court by which such receiver was
appointed.
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A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Any number of shareholders may create a voting trust for the purpose of
conferring upon a trustee or trustees the right to vote or otherwise represent
their shares, for a period not to exceed 10 years, by entering into a written
voting trust agreement specifying the terms and conditions of the voting trust,
and by transferring their shares to such trustee or trustees for the purpose of
the agreement. Any such trust agreement shall not become effective until a
counterpart of the agreement is deposited with the corporation at its registered
office. The counterpart of the voting trust agreement so deposited with the
corporation shall be subject to the same right of examination by a shareholder
of the corporation, in person or by agent or attorney, as are the books and
records of the corporation, and shall be subject to examination by any holder of
a beneficial interest in the voting trust, either in person or by agent or
attorney, at any reasonable time for any proper purpose.
Shares of its own stock belonging to this corporation shall not be voted,
directly or indirectly, at any meeting and shall not be counted in determining
the total number of outstanding shares at any given time, but shares of its own
stock held by it in a fiduciary capacity may be voted and shall be counted in
determining the total number of outstanding shares at any given time.
SECTION 11. INSPECTORS. At any meeting of shareholders, the presiding
officer may, or upon the request of any shareholder, shall appoint one or more
persons as inspectors for such meeting.
Such inspectors shall ascertain and report the number of shares
represented at the meeting, based upon their determination of the validity and
effect of proxies; count all votes and report the results; and do such other
acts as are proper to conduct the election and voting with impartiality and
fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by him or her
or by a majority of them if there be more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
SECTION 12. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting and without a
vote, if a consent
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in writing, setting forth the action so taken shall be signed (a) if 5 days
prior notice of the proposed action is given in writing to all of the
shareholders entitled to vote with respect to the subject matter thereof, by the
holders of outstanding shares having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voting or (b) by all of the
shareholders entitled to vote with respect to the subject matter thereof.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given in writing to those
shareholders who have not consented in writing. In the event that the action
which is consented to is such as would have required the filing of a certificate
under any section of the Business Corporation Act if such action had been voted
on by the shareholders at a meeting thereof, the certificate filed under such
section shall state, in lieu of any statement required by such section
concerning any vote of shareholders, that written consent has been given in
accordance with the provisions of SECTION 7.10 of the Business Corporation Act
and that written notice has been given as provided in such SECTION 7.10.
SECTION 13. VOTING BY BALLOT. Voting on any question or in any election
may be by voice unless the presiding officer shall order or any shareholder
shall demand that voting be by ballot.
ARTICLES III
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DIRECTORS
SECTION 1. GENERAL POWERS. The business of the corporation shall be
managed by or under the direction of its board of directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of
the corporation shall be between four (4) and nine (9), inclusive. Each director
shall hold office until the next annual meeting of shareholders; or until his
successor shall have been elected and qualified. Directors need not be residents
of Illinois. The number of directors may be increased or decreased from time to
time by the amendment of this section. No decrease shall have the effect of
shortening the term of any incumbent director.
SECTION 3. REGULAR MEETINGS.A regular meeting of the board of directors,
shall be held without other notice than this by-law, immediately after the
annual meeting of shareholders. The board of directors may provide by
resolution, the time and place for holding of additional regular meetings
without other notice than such resolution.
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SECTION 4. SPECIAL MEETINGS. Special meetings of the board or directors
may be called by or at the request of the president or any two directors. The
person or persons authorized to call special meetings of the board of directors
may fix any place as the place for holding any special meeting of the board of
directors called by them.
SECTION 5. NOTICE. Notice of any special meeting shall be given at least 5
days previous thereto by written notice to each director at his business
address. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon prepaid. If notice
be given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegram company. The attendance of a director at
any meeting, either in person or by phone, shall constitute a waiver of notice
of such meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
SECTION 6. QUORUM. A majority of the number or directors fixed by these
by-laws shall constitute a quorum for transaction of business at any meeting of
the board of directors, provided that if less than a majority of such number of
directors are present at said meeting, a majority of the directors present may
adjourn the meeting at any time without further notice.
SECTION 7. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless the act of a greater number is required by statute, these
by-laws, or the articles of incorporation.
SECTION 8. VACANCIES. Any vacancy on the board of directors may be filled
by election at the next annual or special meeting of shareholders. Any vacancy
prior to such annual or special meeting of shareholders may be filled by the
shareholder who elected such director by notifying the board of directors in
writing of the identity at the replacement selected by such shareholder.
SECTION 9. RESIGNATION AND REMOVAL OF DIRECTORS. A director may resign at
any time upon written notice to the board of directors. A director may be
removed with or without cause, by the shareholder electing such director to the
board of directors. A director shall resign in the event the shareholder who
elected such director should sell all but not less than all of such
shareholder's shares.
SECTION 10. INFORMAL ACTION BY DIRECTORS. The authority of the board of
directors may be exercised without a meeting if a
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consent in writing, setting forth the action taken, is signed by all of the
directors entitled to vote.
SECTION 11. COMPENSATION. The board of directors, by the affirmative vote
of a majority of directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all officers for services to the corporation as officers
notwithstanding any director conflict of interest. The directors may establish
and receive reasonable compensation for services to the corporation as
directors; provided, however, such compensation shall be approved by majority
vote of the outstanding shares prior to any payment thereof. By resolution of
the board of directors, the directors may be reimbursed for their expenses, if
any, of attendance at each meeting of the board. No such payment previously
mentioned in this section shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
SECTION 12. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be conclusively presumed to have assented to the action
taken unless his or her dissent shall be entered in the minutes of the meeting
or unless he or she shall file his or her written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered or certified mail to the secretary
of the secretary of the corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in favor
of such action.
SECTION 13. COMMITTEES. A majority of the board of directors may create
one or wore committees of two or more members to exercise appropriate authority
of the board of directors. A majority of such committee shall constitute a
quorum for transaction of business. A committee may transact business without a
meeting by unanimous written consent.
ARTICLE IV
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OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be a president,
one or more vice-presidents, a treasurer, a secretary, and such other officers
as many be elected or appointed by the board of directors. Any two or more
offices may be held by the same person.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the board of directors at the first meeting of the
board of directors held after each annual meeting of shareholders. If the
election of officers
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shall not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be. Vacancies may be filled or new offices
created and filled at any meeting of the board of directors. Each officer shall
hold office until his successor shall have been duly elected and shall have
qualified or until his death or until he shall resign or shall have been removed
in the manner hereinafter provided. Election of an officer shall not of itself
create contract rights.
SECTION 3. REMOVAL. Any officer elected or appointed by the board of
directors my be removed by the board of directors whenever in its judgment the
best interest of the corporation would be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
SECTION 4. PRESIDENT. The president shall be the principal executive
officer of the corporation. Subject to the direction and control of the board of
directors, he/she shall be in charge of the business of the corporation; he
shall see that the resolutions and directions of the board of directors are
carried into effect except in those instances in which that responsibility is
specifically assigned to some other person by the board of directors; and, in
general, he/she shall discharge all duties incident to the office of president
and such other duties as may be prescribed by the board of directors from time
to time. He shall preside at all meetings of the shareholders and of the board
of directors. Except in those instances in which the authority to execute is
expressly delegated to another officer or agent of the corporation or a
different mode of execution expressly prescribed by the board of directors or
these by-laws, he may execute for the corporation certificates for its shares,
and any contracts, deeds, mortgages, bonds or other instruments which the board
of directors has authorized to be executed, and he may accomplish such execution
either under or without the seal of the corporation and either individually or
with the secretary, any assistant secretary, or any other officer thereunto
authorized by the board of directors, according to the requirements of the form
of the instrument. He may vote all securities which the corporation is entitled
to vote except as and to the except such authority shall be vested in a
different officer or agent of the corporation by the board of directors.
SECTION 5. THE VICE-PRESIDENTS. The vice-president, (or in the event there
be more than one vice-president. each of the vice-presidents) shall assist the
president in the discharge of his/her duties as the president may direct and
shall perform much other duties as from time to time may be assigned to him/her
by the president or by the board of directors. In the absence of the president
or in the event of his/her inability or refusal to act, the vice-president (or
in the event there be more than one vice-president, the vice-presidents in the
order designated by the board of directors, or by the president if the board of
directors has not made such a designation, or in the absence of any designation,
then in the order of seniority of tenure as
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vice-president) shall perform the duties of the president, and when so acting,
shall have the powers of and be subject to all the restrictions upon the
president. Except in those instances in which the authority to execute is
expressly delegated to another officer or agent or the corporation or a
different mode of execution is expressly prescribed by the board of directors or
these by-laws, the vice-president (or each of them if there are more than one)
may execute for the corporation certificates for its shares and any contracts,
deeds, mortgages, bonds or other instruments which the board of directors has
authorized to be executed, and he/she may accomplish such execution either under
or without the seal of the corporation and either individually or with the
secretary, any assistant secretary, or any other officer thereunto authorized by
the board of directors, according to the requirements of the form of the
instrument.
SECTION 6. THE TREASURER. The treasurer shall be the principal accounting
and financial officer of the corporation. He shall: (a) have charge of and be
responsible for the maintenance of adequate books of account for the
corporation; (b) have charge and custody of all funds and securities of the
corporation, and be responsible therefor and for the receipt and disbursement
thereof; and (c) perform all the duties incident to the office of treasurer and
such other duties as from time to time may be assigned to him by the president
or by the board of directors. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the board of directors may determine.
SECTION 7. THE SECRETARY. The secretary shall: (a) record the minutes of
the shareholders' and of the board of directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these by-laws or as required by-law; (c) be custodian of
the corporate records and of the seal of the corporation: (d) keep a register of
the post-office address of each shareholder; (e) sign with the president, or a
vice-president, or any other officer thereunto authorized by the board of
directors, certificates for shares of the corporation, the issue of which shall
have been authorized by the board of directors, and any contracts, deeds,
mortgages, bonds, or other instruments which the board of directors has
authorized to be executed, according to the requirements of the form of the
instrument, except when a different mode of execution is expressly prescribed by
the board of directors or these by-laws: (C) have general charge of the stock
transfer books at the corporation; (g) have authority to certify the by-laws,
resolutions of the shareholders and board of directors and committees thereof,
and other documents of the corporation as true and correct copies thereof, and
(h) perform all duties incident to the office of secretary and such other duties
as from time to time may be assigned to him/her by the president or by the board
of directors.
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SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The assistant
treasurers and assistant secretaries shall perform such duties as shall be
assigned to them by the treasurer or the secretary, respectively, or by the
president or the board of directors. The assistant secretaries may sign with the
president, or a vice-president, or any other officer thereunto authorized by the
board of directors, certificates for shares of the corporation, the issue of
which shall have been authorized by the board of directors, and any contracts,
deeds, mortgages, bonds, or other instruments which the board of directors has
authorized to be executed, according the requirements of the form of the
instrument, except when a different mode of execution is expressly prescribed by
the board of directors or these by-laws. The assistant treasurers shall
respectively, if required by the board of directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as the board of
directors shall determine.
SECTION 9. SALARIES. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V
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CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation and such authority
may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers, agent or agents of
the corporation and in such manner as shall form time to time be determined by
resolution of the board of directors.
SECTION 4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositaries as the board of directors may
select.
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ARTICLE VI
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SHARES AND THEIR TRANSFER
SECTION 1. SHARES REPRESENTED BY CERTIFICATES AND UNCERTIFICATED SHARES.
Shares either shall be represented by certificates or shall be uncertificated
shares.
Certificates representing shares of the corporation shall be signed by the
appropriate officers and may be sealed with the seal or a facsimile of the seal
of the corporation. If a certificate is countersigned by a transfer agent or
registrar, other than the corporation or its employee, any other signatures may
be facsimile. Each certificate representing shares shall be consecutively
numbered or otherwise identified, and shall also state the name of the person to
whom issued, the number and class of shares (with designation of series, if
any), the date of issue and that the corporation is organized under Illinois
law. If the corporation is authorized to issue shares of more than one class or
of series within a class, the certificate shall also contain such information or
statement as may be required by law.
Unless prohibited by the articles of incorporation, the board of directors
may provide by resolution that some or all of any class or series of shares
shall be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate has been surrendered to the
corporation. Within a reasonable time after the issuance or transfer of
uncertificated shares, the corporation shall send the registered owner thereof a
written notice of all information that would appear on a certificate. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of uncertificated shares shall be identical to those of the holders of
certificates representing shares of the same class and series.
The name and address of each shareholder, the number and class of shares
held and the date on which the shares were issued shall be entered on the books
of the corporation. The person in whose name shares stand on the books of the
corporation shall be deemed the owner thereof for all purposes as regards the
corporation.
SECTION 2. LOST CERTIFICATES. If a certificate representing shares has
allegedly been lost or destroyed the board of directors may in its discretion,
except as may be required by law, direct that a new certificate be issued upon
such indemnification and other reasonable requirements as it may impose.
SECTION 3. TRANSFERS OF SHARES. Transfer of shares of the corporation
shall be recorded on the books of the corporation. Transfer of shares
represented by a certificates except in the case of a lost or destroyed
certificate, shall be made on surrender for cancellation of the certificate for
such shares. A certificate presented for transfer must be duly endorsed and
accom-
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panied by proper guaranty of signature and other appropriate assurances that the
endorsement is effective. Transfer of an uncertificated share shall be made on
receipt by the corporation of an instruction from the registered owner or other
appropriate person. The instruction shall be in writing or a communication in
such form as may be agreed upon in writing by the corporation.
ARTICLE VII
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FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the board of
directors.
ARTICLE VIII
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DISTRIBUTIONS
The board of directors may authorize, and the corporation may make,
distributions to its shareholders, subject to any restrictions in its articles
of incorporation or provided by law.
ARTICLE IX
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SEAL
The corporate seal shall have inscribed thereon the name of the corporation and
the words "Corporate Seal, Illinois." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner reproduced,
provided that the affixing of the corporate seal to an instrument shall not give
the instrument additional force or effect, or change the construction thereof,
and the use of the corporate seal is not mandatory.
ARTICLE X
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WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of these
by-laws or under the provisions of the articles of incorporation or under the
provisions of The Business Corporation Act of the State of Illinois, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Attendance at any meeting shall constitute waiver of
notice thereof unless the person at the meeting objects to the holding of the
meeting because proper notice was not given.
-12-
<PAGE> 13
ARTICLE XI
----------
INDEMNIFICATION OF OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS
SECTION 1. The corporation shall indemnity any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent at another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the corporation. and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment or settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interest of the corporation and with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
SECTION 2. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only to
the extent that the court in which such action or suit was brought shall
determine upon application that despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
-13-
<PAGE> 14
SECTION 3. To the extent that a director, officer, employee or agent of
the corporation has been successful, on the merits or otherwise, in the defense
of any action, suit or proceeding referred to in sections 1 and 2, or in defense
of any claim, issue or matter therein, such person shall be indemnified against
expenses actually and reasonably incurred by such person in connection
therewith.
SECTION 4. Any indemnification under sections 1 and 2 shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in sections 1 and 2. Such determination shall be made (a) by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceedings, or (b) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
shareholders.
SECTION 5. Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding, as authorized by the board of directors in
the specific case, upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount, unless it shall
ultimately be determined that he or she is entitled to be indemnified by the
corporation as authorized in this article.
SECTION 6. The indemnification provided by this article shall not be
deemed exclusive of any other rights to which the person seeking indemnification
may be entitled under any by-law, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
SECTION 7. The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of his or her status as such, whether or not the corporation
would have the power to indemnify such person against such liability under the
provisions of these sections.
SECTION 8. If the corporation has paid indemnity or had advanced expenses
to a director, officer, employee or agent, the corporation shall report the
indemnification or advance in writ-
-14-
<PAGE> 15
ing to the shareholders with or before the notice of the next shareholders'
meeting.
SECTION 9. References to "the corporation" shall include, in addition to
the surviving corporation, any merging corporation, including any corporation
having merged with a merging corporation, absorbed in a merger which otherwise
would have lawfully been entitled to indemnify its directors, officers, and
employees or agents.
ARTICLE XII
-----------
AMENDMENTS
Unless the power to make, alter, amend or repeal the by-laws is reserved to the
shareholders by the articles of incorporation, the by-laws of the corporation
may be made, altered, amended or repealed by the shareholders or the board of
directors, but no by-law adopted by the shareholders may be altered, amended or
repealed by the board of directors if the by-laws so provide. The by-laws may
contain any provision for the regulation and management of the affairs of the
corporation not inconsistent with the law or the articles of incorporation.
-15-
<PAGE> 1
Exhibit 3.9
STATE OF NEBRASKA
[FLAG OF STATE OF NEBRASKA]
United States of America, } ss. Department of State
State of Nebraska } ss. Lincoln, Nebraska
I, Scott Moore, Secretary of State of the State of Nebraska do hereby
certify;
NORTHLAND TRANSPORTATION SERVICES, INC.
was duly incorporated under the laws of this state on November 4, 1994,
and do further certify that no occupation taxes assessed are unpaid and no
annual reports are delinquent; articles of dissolution have not been
filed; and said corporation is in existence as of the date of this
certificate.
In Testimony whereof,
[SEAL OF THE STATE I have hereunto set my hand and affixed the Great Seal
OF NEBRASKA] of the State of Nebraska on June 27 in the year of our
Lord, one thousand nine hundred and ninety-seven.
/s/ Scott Moore
SECRETARY OF STATE
<PAGE> 2
STATE OF NEBRASKA
[FLAG OF STATE OF NEBRASKA]
United States of America, } ss. Department of State
State of Nebraska } ss. Lincoln, Nebraska
I, Scott Moore, Secretary of State of the State of Nebraska do hereby
certify;
The attached is a true and correct copy of the Articles of Incorporation
of
NORTHLAND TRANSPORTATION SERVICES, INC.
with its registered office located in LINCOLN, Nebraska, as filed and
recorded in this office on November 4, 1994.
I further certify that said corporation is in good standing as of this
date.
In Testimony whereof,
[SEAL OF THE STATE I have hereunto set my hand and affixed the Great Seal
OF NEBRASKA] of the State of Nebraska on June 27 in the year of our
Lord, one thousand nine hundred and ninety-seven.
/s/ Scott Moore
SECRETARY OF STATE
<PAGE> 3
ARTICLES OF INCORPORATION
OF
NORTHLAND TRANSPORTATION SERVICES, INC.
ARTICLE I.
NAME
----
The name of the corporation is: Northland Transportation Services, Inc.
ARTICLE II.
DURATION
--------
The period of the corporation's duration is perpetual.
ARTICLE III.
PURPOSES
The purposes for which this corporation is organized are:
1. To act as a common carrier of freight and to engage in and do any
lawful acts concerning any and all lawful businesses for which corporations may
be organized.
2. To do everything necessary, proper, advisable and convenient for the
accomplishment of the purposes hereinabove set forth, and to do all other things
which are not forbidden by the laws of the State of Nebraska, or by these
Articles of Incorporation.
ARTICLE IV.
AUTHORIZED SHARES
-----------------
The aggregate number of shares which the corporation shall have authority
to issue is 100 shares of common stock and the par value of each of said shares
shall be $100.00.
<PAGE> 4
ARTICLE V.
INITIAL REGISTERED AGENT AND INITIAL REGISTERED OFFICE
------------------------------------------------------
The initial registered agent of the corporation is: C T Corporation
System. The street address of its initial registered office is: 206 South 13th
Street, Suite 1500, Lincoln, Nebraska 68508.
ARTICLE VI.
NAME AND ADDRESS OF INCORPORATOR
--------------------------------
The name and address of the incorporator is Daniel J. Duffy, 8805 Indian
Hills Drive, Suite 303, Omaha, Nebraska 68114.
The undersigned, being the sole incorporator hereinbefore named, for the
purpose of forming a corporation under the Nebraska Business Corporation Act
does hereby adopt and sign these Articles of Incorporation this 26th day of
October, 1994.
/s/ Daniel J. Duffy
------------------------------------------
DANIEL J. DUFFY, Sole Incorporator
<PAGE> 5
CONSENT
TO: ALLEN J. BEERMAN
Secretary of State of Nebraska
NORTHLAND TRANSPORTATION, INC. hereby consents to the use of the name
NORTHLAND TRANSPORTATION SERVICES, INC. by Daniel J. Duffy as incorporator of a
Nebraska business corporation.
DATED at Laurel, Nebraska this _______ day of November, 1994,
NORTHLAND TRANSPORTATION, INC.
By /s/ Rob Morris
------------------------------------
Rob Morris, President
<PAGE> 6
Cassem, Tierney, Adams, Gotch
& Soudlas, Attorneys
8805 Indian Hills Dr., Omaha
NOTICE OF INCORPORATION OF
NORTHLAND TRANSPORTATION
SERVICES, INC.
NOTICE IS HEREBY GIVEN that the undersigned has formed a corporation under
the laws of the State of Nebraska as follows:
1. The name of the corporation is Northland Transportation Services, Inc.
2. The address of the initial registered office is 206 South 13th Street,
Suite 1500, Lincoln, Nebraska 68508 and the initial registered agent at that
address is CT Corporation System.
3. The general nature of the business to be transacted is to act as a
common carrier of freight.
4. The authorized capital stock of the corporation is 100 shares of common
stock with a par value of $100.00, each of which may be issued for any medium
permissable under the laws of the State of Nebraska, and as is determined from
time to time by the Board of Directors.
5. The corporation commenced existence on the filing and recording of its
Articles of Incorporation with the Secretary of State and it shall have
perpetual existence.
6. The affairs of the corporation shall be conducted by a Board of
Directors, president, vice president, secretary, treasurer and such subordinate
officers and agents as may be prescribed by the Bylaws or appointed by the Board
of Directors.
Daniel J. Duffy, Incorporator
Dec 19 (Mon) Dec 5-12-19
PROOF OF PUBLICATION
AFFIDAVIT
State of Nebraska, Lancaster County, ss:
Scott G. Stewart, being duly sworn, desposes and says that he/she is an
editor or manager of The Daily Reporter, a legal daily newspaper printed,
published and of general circulation in the County of Lancaster and the State of
Nebraska, and that the attached printed notice was published in the said
newspaper once each week three successive weeks, the first insertion having been
on the 5 day of December A.D., 1994, and thereafter on December 12, 19 1994, and
that said newspaper is a legal newspaper under the statutes of the State of
Nebraska. The above facts are within my personal knowledge.
/s/ [ILLEGIBLE]
-----------------------------------------
Subscribed in my presence and sworn to
before me 19 December 1994
RECEIVED
DEC 20 1994
SECRETARY OF STATE
CORPORATION DIVISION
/s/ Patricia J. [ILLEGIBLE]
-----------------------------------------
Notary Public
Printer's Fee $63.12 [NOTARY STAMP ILLEGIBLE]
<PAGE> 1
Exhibit 3.10
BYLAWS
OF
NORTHLAND TRANSPORTATION SERVICES, INC.
ARTICLE I
SHAREHOLDERS' MEETINGS
----------------------
1. The annual meeting of the shareholders shall be held on the second
Tuesday of the second month following the close of the Corporation's fiscal
year, at the offices of the Corporation in Omaha, Nebraska, or it may be held at
such other place within or without the State of Nebraska when agreed to in
writing or by telegram by a majority of the shares entitled to vote thereat. Ten
(10) days' written notice of said meeting shall be necessary to be given by the
Secretary or an Assistant Secretary. At the annual meeting the shareholders
shall elect a Board of Directors, who need not be elected by ballot, to serve
for a term of one year, or until their successors are elected and qualified.
2. Special meetings of the shareholders may be held at anytime upon call
of the Chairman of the Board of Directors or the President or a Vice President.
Not less than ten (10) nor more than fifty (50) days' written or telegraphic
notice stating the place, day and hour of any special meeting of the
shareholders, specifying the purpose or purposes of the special meeting, shall
be mailed or telegraphed to each shareholder of record at his last known address
as shown by the books of the Corporation. Any shareholder may waive such notice
either before or after the time when such meeting is held.
<PAGE> 2
3. The presence, either in person or by proxy, of the holders of the
majority of the capital stock issued and outstanding, shall constitute a quorum
at all meetings of the shareholders. The vote of a majority of shares present at
any meeting at which there is a quorum shall be required to constitute an action
by shareholders.
ARTICLE II
DIRECTORS
---------
1. The Board of Directors shall consist of not less than three (3) members
nor more than seven (7) members, the exact number to be determined each year by
the shareholders at their annual meeting; provided, that in cases when all of
the shares of the Corporation are owned of record by either one or two
shareholders, the number of Directors may be less than three (3) but not less
than the number of shareholders. The Directors need not be shareholders and
shall have the power to fill vacancies on the Board.
2. The annual meeting of the Board of Directors shall be held at the same
place as the annual meeting of the shareholders, immediately following the
annual meeting of the shareholders, at which meeting the officers of the
Corporation to serve the ensuing year, or until their successors are elected and
qualify, shall be elected, and such other business as may be presented to the
meeting may be transacted. No notice of the annual meeting need be given.
3. Special meetings of the Board of Directors may be called for any
purpose by the Chairman of the Board, or the President, or a Vice President, or
the Secretary or an Assistant Secretary. At
<PAGE> 3
least two (2) days' notice of the time and place of a special meeting shall be
mailed or telegraphed to a Director at his last known post office address, or
delivered to a Director personally; but any Director may waive such notice in
writing or by telegram either before or after the time when such meeting is
held.
4. The Board of Directors may remove any officer at any time, with or
without cause and elect his successor.
5. Meetings of the Board of Directors may be held at any place within or
without the State of Nebraska.
ARTICLE III
OFFICERS
--------
1. The officers of the Corporation shall consist of a President, a Vice
President, a Secretary, a Treasurer, and may include an Assistant Secretary and
an Assistant Treasurer, and such other officers as may be designated from time
to time by the Board of Directors. Any two (2) or more offices may be held by
the same person.
2. The President shall preside at all meetings of the Board of Directors
at which he may be present and he shall have and exercise such powers and duties
as may be enjoined upon him in these By-laws.
3. The President shall be the Chief Executive officer of the Corporation
and shall have general direction and management of its business and internal
affairs. He shall preside at all meetings of shareholders.
<PAGE> 4
4. A Vice president shall have and exercise the usual powers and duties of
a vice president, subject to any enlargement or restriction of said powers or
duties by the Board of Directors.
5. The Secretary and Treasurer shall respectively have and exercise the
usual power and authority and perform the usual duties of a secretary or a
treasurer, subject to any enlargement or restriction of said duties by the Board
of Directors.
6. An Assistant Secretary or an Assistant Treasurer shall respectively
perform the duties of the Secretary or the Treasurer when necessary or
convenient.
ARTICLE IV
FISCAL YEAR
-----------
The fiscal year of the Corporation shall be fixed by resolution or motion
of the Board of Directors and in absence of such formality shall be shown on the
tax records of the Corporation.
ARTICLE V
MISCELLANEOUS
-------------
1. Whenever any notice is required in these Bylaws to be given, such
notice shall be deemed to be sufficient and duly and properly given when mailed,
or, if telegraphed, when delivered to the telegraph company. Such notice shall
be deemed to have been given on the date of such mailing or delivery to the
telegraph company.
2. The Board of Directors shall have the power and authority by motion or
resolution to conduct the affairs of the Corporation as to any matter not
covered by these Bylaws.
<PAGE> 5
3. The presence of a shareholder or a Director at any meeting provided for
in these Bylaws constitutes a waiver by him of notice of the time, place and
purpose of such meeting.
4. Vacancies in any of the offices by death, resignation, removal, or
otherwise, may be filled by the Directors.
5. Any notice required to be given under these By-laws may be waived in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein.
ARTICLE VI
AMENDMENTS
----------
These Bylaws may be amended from time to time by the Board of Directors.
<PAGE> 1
Exhibit 3.11
================================================================================
[LOGO OF THE STATE OF COLORADO]
STATE OF COLORADO
DEPARTMENT OF
STATE
CERTIFICATE
I, VICTORIA BUCKLEY, SECRETARY OF STATE OF THE STATE OF COLORADO
HEREBY CERTIFY THAT ACCORDING TO THE RECORDS OF THIS OFFICE, THE FOLLOWING
DOCUMENTS ARE ON FILE FOR
THE HARRY H. POST COMPANY
(COLORADO CORPORATION)
ARTICLES OF INCORPORATION - JULY 1, 1920
CERTIFICATE OF RENEWAL - AUGUST 12, 1940
CHANGE OF REGISTERED AGENT AND/OR OFFICE - JANUARY 2, 1959
CHANGE OF REGISTERED AGENT AND/OR OFFICE - FEBUARY 20, 1977
CHANGE OF REGISTERED AGENT AND/OR OFFICE - MAY 12, 1980
ARTICLES OF AMENDMENT - NOVERMBER 4, 1981
ARTICLES OF AMENDMENT - FEBUARY 2, 1983
ARTICLES OF MERGER - JANUARY 26, 1987 AMENDED AND RESTATED
ARTICLES - JUNE 17, 1987
CHANGE OF REGISTERED AGENT AND/OR OFFICE - MAY 1, 1990
AND SAID CORPORATION IS DULY ORGANIZED AND IN GOOD STANDING
AND IS AUTHORIZED AND COMPETENT TO TRANSACT ITS BUSINESS OR
CONDUCT ITS AFFAIRS WITHIN THE STATE OF COLORADO.
Dated: June 16, 1997
/s/ Victoria Buckley
--------------------
SECRETARY OF STATE
================================================================================
<PAGE> 2
================================================================================
[LOGO OF THE STATE OF COLORADO]
STATE OF COLORADO
DEPARTMENT OF
STATE
CERTIFICATE
I, VICTORIA BUCKLEY, SECRETARY OF STATE OF THE STATE OF
COLORADO HEREBY CERTIFY THAT THE ATTACHED IS A FULL, TRUE AND COMPLETE
COPY OF ARTICLES OF INCORPORATION AND ALL AMENDMENTS THERETO OF
THE HARRY H. POST COMPANY
(COLORADO CORPORATION)
AS FILED IN THIS OFFICE AND ADMITTED TO RECORD.
Dated: June 20, 1997
/s/ Victoria Buckley
--------------------
SECRETARY OF STATE
================================================================================
<PAGE> 3
ARTICLES OF INCORPORATION
OF
THE HARRY H. POST COMPANY
- - oOo - -
WHEREAS, MOSES J. POST, GEORGE M. POST and LON S. POST, of the City and
County of Denver, State of Colorado, have associated themselves together for the
purpose of incorporation, under the general Incorporation Acts of the State of
Colorado, they do therefore make, sign and acknowledge these duplicate
certificates in writing, which, when filed, shall constitute the Articles of
Incorporation of the within named Company.
ARTICLE I.
NAME. The name of said Company shall be THE HARRY H. POST COMPANY.
ARTICLE II.
OBJECT. The object for which said Company is created are, to buy, sell,
trade and deal in, maunfacture and produce goods, wares and merchandise, of all
kinds, wholesale and retail, similar to the business formerly conducted by Harry
H. Post and Company; to acquire by gift, purchase, exchange or lease suitable
property in which to conduct said business; or for any purpose incident thereto,
and to sell, trade or otherwise dispose of any interest in property so acquired;
to borrow money for the purposes of said business, and to pledge the property of
said Company as security therefor; to acquire and hold securities in other
companies and to buy, sell and deal in securities and other
-1-
<PAGE> 4
personal property of all kinds, and to do all things customarily done by
business created for like purposes.
ARTICLE III.
DURATION. The term of existence of said Compnay shall be twenty (20)
years.
ARTICLE IV.
SHARES The capital stock of said Company shall be Two Hundred Fifty
Thousand Dollars ($250,000,000), divided into twenty-five hunndred (2500) shares
of a par value One Hundred Dollars ($l00.00) each.
ARTICLE V.
DIRECTORS. The number of Directors of said Company shall be five (5), and
the names of those who shall manage the affairs of the Company for the first
year of its existence are: MOSES J. POST, GEORGE M. POST, LON S. POST, RALPH S.
POST and G.W. DEMING.
ARTICLE VI.
CUMULATIVE VOTING. Cumulative voting shall be allowed at all meetings of
the stockholders of said Company.
ARTICLE VII.
OFFICE. The principle office of said Company shall be maintained in the
City and County of Denver, and the principal business of said Company shall be
carried on in the City and County of Denver, State of Colorado, said Company to
have the right to do business in any other counties of the State, or beyond the
limits of the State of Colorado, as the Directors may determine.
-2-
<PAGE> 5
BY-LAWS. The Board of Directors shall have power to make such prudential
by-laws as they may deem proper for the management of the affairs of the
Company, for the purpose of carrying on the business within the objects and
purposes of said Company.
IN WITNESS WHEREOF, The said incorporators have hereunto set have hereunto
set their hands and seals this 29th day of June, 1920.
Moses J. Post
------------------------------------
George M. Post
------------------------------------
Lon. S. Post
------------------------------------
STATE OF COLORADO, )
) SS.
City and County of Denver. )
I, Bernard J. Seeman, a Notary Public in and for said City and County in
the State aforesaid, do hereby certify that MOSES J. POST, GEORGE M. POST, and
LON S. POST, who are personally known to me to be the persons described in and
who executed the within Articles of Incorporation, personally appeared before me
this day, and acknowledged that they signed, sealed and delivered the same as
their free and voluntary act and deed.
Witness my and and notarial seal this 29th day of June, A.D. 1920.
My commission expires June 19, 1923.
/s/ Bernard J. Seeman
------------------------
Notary Public.
<PAGE> 6
[ILLEGIBLE]
Certificate of Incorporation
The Harry H. Post Company
DOMESTIC
[ILLEGIBLE]
[ILLEGIBLE]
<PAGE> 7
STATE OF COLORADO, } [ILLEGIBLE]
COUNTY OF Denver }
To Whom It May Concern:
This to certify that a special meeting of the stockholders of The Harry H.
Post Company, a Colorado corporation, was held at Denver, Colorado, on the 8th
day of August, A. D. 1940, such meeting having been called by the stockholders
representing at least ten per cent (10%) of the entire capital stock of the
company outstanding. Notice of such meeting, as provided by law, was published
at least once not more than thirty days and at least ten days prior to the date
fixed for said meeting in a newspaper printed at Denver, Colorado, State of
Colorado, and notice of said meeting was delivered personally or mailed to each
stockholder thirty (30) days prior to the date of such meeting, there being
represented at such meeting 1087 1/2 shares of the capital stock of said company
out of a total of 1087 1/2 shares outstanding.
At said meeting a resolution was passed to extend the corporate existence
of this said corporation* perpetually, from and after the date of the expiration
of its corporate life,+ the resolution receiving a MAJORITY vote of all the
outstanding stock of the corporation. The president and secretary were
authorized to certify this resolution under the corporate seal of the company,
to file such certificate with the Secretary of State of the State of Colorado,
and to file duplicate certificate under seal of the company in the office of the
Recorder of Deeds in each county or counties wherein the company may do business
in the State of Colorado, and in pursuance of such resolution, we do hereby
certify the same under the seal of the company.
/s/ Lon S. Post
------------------------
President.
[SEAL OF COLORADO]
* Corporate existence may be renewed perpetually or for any specified
number of years.
+ This certificate of renewal shall be filed before or within one year
after the expiration of the charter to be so renewed.
Fee for filing certificate of renewal is $20.00 for $50,000 or less and
twenty cents for each additional or fractional part of one thousand dollars of
authorized capital stock, plus $3.00 for certificate of authority.
<PAGE> 8
105527
============================
CERTIFICATE OF RENEWAL
OF THE
CERTIFICATE OF INCORPORATION
OF
The Harry H. Post
----------------------------
Post Company
----------------------------
----------------------------
============================
This document has been [ILLEGIBLE] and properly entered on the records of the
Flat Tax Department.
Date Aug. 13 1940
/s/ [ILLEGIBLE]
- ---------------------
DOMESTIC
RECORDED
BOOK 441 PAGE 16
FILED in the office of the Secretary of State of the State of
Colorado, on the 12 day of August A.D. 1940, 9 o'clock A.M.
[ILLEGIBLE]
<PAGE> 9
DOMESTIC
DESIGNATION OF REGISTERED OFFICE AND REGISTERED AGENT
THE HARRY H. POST COMPANY, a corporation
--------------------------
(Name of Corporation)
organized and existing under the laws of the State of COLORADO, hereby certifies
that, pursuant to a duly adopted resolution of its board of directors, the
address of the registered office of the corporation in the State of Colorado
shall be Denver, Colorado; that the registered agent of the corporation whose
business of the corporation in Colorado is: 2308-15 Street Denver
---------------------
Number Street City
(if same address as registered office, insert "same as above")
IN WITNESS WHEREOF, the undersigned corporation has caused this certificate to
be executed in its name by its -- President, this tenth day of November , 1958.
The Harry H. Post Company
----------------------------
(Name of Corporation)
By /s/ Donald R. Post
------------------------
(Signature of officer)
STATE OF Colorado )
)ss
COUNTY OF Jefferson )
Before me, [ILLEGIBLE] a Notary Public in and for the said County and State,
personally appeared Donald R. Post who acknowledged before me that he is the
President of Harry H. Post Co., that he signed the foregoing, and that the
---------------------
(Name of Corporation)
statements contained therein are true.
In witness whereof I have hereunto set my hand and seal this 17th day of
November, A.D. 1958.
My commission expires [ILLEGIBLE]
/s/ Gv. Robinson
------------------------
Notary Public
NOTE:
Effective January 1, 1959, each corporation shall have and continuously maintain
in the State of Colorado:
(a) A registered office which may be, but need not be, The same as Its
place of business.
(b) A registered agent, which agent may be either an individual resident,
or a domestic corporation, or a foreign corporation authorized to do business in
Colorado, having a business office identical with such registered office.
<PAGE> 10
RQ-HA 6287
DESIGNATION OF REGISTERED OFFICE AND REGISTERED AGENT
--------------------------
--------------------------
--------------------------
D O M E S T I C
FILED in the office of the Secretary of
State of the State of Colorado, on the
2nd day of January, A.D. 1959.
GEORGE J. BAKER
Secretary of State
[ILLEGIBLE]
<PAGE> 11
STATEMENT OF CHANGE OF REGISTERED OFFICE
OR REGISTERED AGENT, OR BOTH.
To the Secretary of State
of the State of Colorado
Pursuant to the provisions of the Colorado Corporation Act, the
undersigned corporation, organized under the laws of the State of Colorado
submits the following statement for the purpose of changing its registered
office of its registered agent or both, in the State of Colorado
First: The name of corporation is The Harry H. Post Company
Second: The address of its REGISTERED OFFICE is 2308 15th, Denver,
Colorado 80202
Third: The name of its REGISTERED AGENT is David A. Engster
Fourth: The address of its registered office and the address of the
business office of its registered agent, as changed, will be identical.
Fifth: The address of its place of business in Colorado is 2308
15th, Denver, Colorado 80202
The Harry H. Post Company (Note 1)
----------------------
By /s/ Donald J. Brown (Note 2)
----------------------
Donald J. Brown
STATE OF COLORADO
CITY & County of DENVER
Before me, Fred E. Abernathy, a Notary Public in and for the said
County and State, personally appeared Donald J. Brown who acknowledged
before me that __ he is the President of The Harry H. Post Company
(President) (Vice President)
a Colorado corporation, that ___ he signed the foregoing, and that the
--------
(State of Corporation)
statements contained therein are true.
In witness whereof I have hereunto set my hand and seal this 21st
day of February A.D. 1977.
My commission expires April 11, 1979
/s/ [ILLEGIBLE]
----------------------
Notary Public
Notes: [ILLEGIBLE]
<PAGE> 12
FILING FEE: $5.00 [ ] DP 0072207
CHANGE of REGISTERED OFFICE and/or REGISTERED AGENT
- --------------------------------------------------------------------------------
NAME OF NEW REGISTERED AGENT B. ADDRESS OF NEW REGISTERED OFFICE
Bruce L. Marshall FIRM OR BUILDING
1881 Bassett
P.O. Box 897
===================================---------------------------------------------
STATE OR COUNTY OF INCORPORATION STREET ADDRESS
Colorado Denver 80202
CITY ZIP CODE
I UNDERSTAND THAT COLORADO LAW
REQUIRED THAT THE CORPORATIONS CO
ENTERED OFFICE AND THE BUSINESS
OF THE CORPORATIONS REGISTERED AGENT, AS CHANGED MUST BE IDENTICAL
================================================================================
DECLARATION AND NOTARIZATION
STATE Colorado COUNTY Denver
PERSUANT TO THE PROVISIONS OF TITLE 1 CRS 1873 1. Danielle Cripper
[ILLEGIBLE]
[ILLEGIBLE]
COMPLETE THIS FORM ONLY WHEN THE AGENT NAME AND /OR
ADDRESS IN BOX G ARE TO BE CHANGED FOR THE CORPORATION
NAMED IN THAT BOX
G. THE EXACT CORPORATE NAME CURRENT REGISTERED OFFICE AND CURRENT REGISTERED
AGENT NAME
DAVID A. ENGSTER (02/26/77)
AGENT FOR -
HARRY H. POST COMPANY (THE)
2308 - 15TH STREET
DENVER, CO 80202
DO NOT ALTER THIS INFORMATION
MAIL TO
COLORADO DEPARTMENT OF STATE
P.O. BOX [ILLEGIBLE]
DENVER, CO 08117
<PAGE> 13
ARTICLES OF AMENDMENT
in the
ARTICLES OF INCORPORATION
[ILLEGIBLE]
<PAGE> 14
STATEMENT OF CANCELLATION
FOR THE HARRY H. POST COMPANY
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned of the following Statement of Cancellation:
A. The name of the corporation is THE HARRY H. POST COMPANY;
B. The number of reacquired shares cancelled by resolution duly
adopted by the Board or Directors is 1,168.5 shares, and the date of the
adoption of the resolution was July 30, 1982;
C. The aggregate number of issued shares after giving effect to such
cancellation is 972.5 shares of the capital stock of the corporation;
D. This cancellation is being effected under Section 7-6-104 of the
Colorado Revised Statutes, 1973, as amended, and upon filing of this Statement
of Cancellation, the stated capital of the corporation shall be deemed to be
reduced by that part of the stated capital which was, at the time of the
cancellation, represented by the shares cancelled hereunder, and the shares so
cancelled shall be restored to the status of authorized but unissued shares.
THE HARRY H. POST COMPANY
By: /s/ by Daniel D. Crippen
----------------------------
Its: President
By: /s/ Bruce L. Marshall
----------------------------
Its: Secretary
STATE OF COLORADO )
) ss.
COUNTY OF Denver )
The foregoing Statement of Cancellation of The Harry H. Post Company
was acknowledged before me by Daniel W. Crippen as President and Bruce L.
Marshall as Secretary of The Harry H. Post Company
Dated this 30 day of July, 1982.
My commission expires: [ILLEGIBLE].
/s/ Denna L. Gram
------------------------
Notary Public
1660 Lincoln, #1910
------------------------
Denver, Colorado 80264
------------------------
Address
COMPUTER UPDATE COMPLETE
AB
<PAGE> 15
ARTICLES OF MERGER
OF
H.H. POST COMPANY,
a New Mexico Corporation
INTO
THE HARRY H. POST COMPANY,
a Colorado corporation
------------------------------
Pursuant to Section 7-7-107 of
the Colorado Corporation Code
------------------------------
H.H. Post Company, a corporation formed under the laws of the State of New
Mexico ("H.H.") and The Harry H. Post Company, a corporation formed under the
laws of the State of Colorado ("Post") desire to merge pursuant to the
provisions of Section 7-7-107 of the Colorado Corporation Code and therefore
certify as follows:
FIRST: The name and state of incorporation of each of the constituent
corporations are as follows:
Name State of Incorporation
---- ----------------------
H.H. Post Company New Mexico
The Harry H. Post Company Colorado
SECOND: Pursuant to ss. 7-7-l07 of the Colorado Corporation Code, an
Agreement of Merger dated as of January 13, 1987 (the "Merger Agreement")
between H.H. and Post (together called the "Constituent Corporations"), setting
forth the terms and conditions of the merger, was duly approved and adopted by
the Boards of Directors and Shareholders of H.H and Post as of January 13, 1987,
a copy of which Agreement of Merger is attached hereto as Exhibit A.
THIRD: The authorized capital stock of H.H. consists of 50,000 shares of
Common Stock. no par value, of which 10,000,000 shares are outstanding.
FOURTH: The authorized capital stock of Post consists of 10,000,000 shares
of Class A Common Stock, $.01 par value, of which 1,095,035 shares are
outstanding and 5,000,000 shares of Class B Common Stock, $1.00 par value of
which 75,000 shares are outstanding.
FIFTH. The number of shares voting for the proposed merger was sufficient
for approval.
<PAGE> 16
SIXTH. The name of the surviving corporation will the The Harry H. Post
Company, a Colorado corporation.
SEVENTH: The Articles of Incorporation of the surviving corporation shall
be the Articles of Incorporation of Post as filed with the Secretary of State of
the State 0f Colorado.
IN WITNESS WHEREOF, these Articles of Merger have been executed on this
23rd day of January, 1987.
THE HARRY H. POST COMPANY,
a Colorado corporation
By: /s/ Daniel W. Crippen
---------------------------
President
/s/ Bruce L. Marshall
---------------------------
Secretary
H. H. POST COMPANY,
a New Mexico corporation
By: /s/ Daneil W. Crippen
---------------------------
President
/s/ Bruce L. Marshall
---------------------------
Secretary
STATE OF Colorado )
) ss.
COUNTY OF Denver )
I, George Rutherford Jr., a notary public, do hereby certify that on this
23rd day January, 1987, personally appeared before me Daniel W. Crippen , who,
being first duly sworn, declared that he is the President of The Harry H. Post
Company, a Colorado Corporation, that he signed the foregoing documents as
President of the corporation, and that the statements therein contained are
true.
[SEAL] /s/ George Rutherford Jr.
-----------------------------
Notary Public
My Commission expires Jan. 21, 1989
1881 Besset St. Denver, CO 80201
-2-
<PAGE> 17
STATE OF Colorado )
) ss.
COUNTY OF Denver )
I, George Rutherford Jr., a notary public, do hereby certify that on
this 23rd day January, 1987, personally appeared before me Daniel W. Crippen ,
who, being first duly sworn, declared that he is the President of The H. H. Post
Company, a New Mexico Corporation, that he signed the foregoing documents as
President of the corporation, and that the statements therein contained are
true.
[SEAL] /s/ George Rutherford Jr.
-----------------------------
Notary Public
My Commission expires Jan. 21, 1989
1881 Besset St. Denver, CO 80201
<PAGE> 18
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Merger Agreement"), dated as of January 23,
1987, is between H.H. Post Company, a New Mexico corporation ("H.H."), and The
Harry H. Post Company, a Colorado corporation ("Post"). H.H. and Post are
hereafter sometimes collectively referred to as the "Constituent Corporations."
WHEREAS, H.H. is a corporation duly organized and existing under the laws
of the State of New Mexico;
WHEREAS, Post is a corporation duly organized and existing under the laws
of the State of Colorado;
WHEREAS, on the date of this Merger Agreement H.H. has authority to issue
50,000 shares of Common Stock, no par value, ("H.H. Common Stock"), of which
10,000 shares are issued and outstanding;
WHEREAS, on the date of this Merger Agreement Post has authority to issue
10,000,000 shares of Class A Common Stock, par value $.O1 per share ("Post Class
A Common"), 1,095,035 of which shares are issued and outstanding, and 5,000,000
shares of Class B Common Stock, par value $1.00 per share ("Post Class B
Common"), 75,000 of which shares are issued and outstanding;
WHEREAS, the respective Board of Directors of H.H. and Post have
determined that it is; advisable and in the best interests of each of such
corporations that H.H. merge with and into Post upon the terms and subject to
the conditions of this Merger Agreement; and
WHEREAS, the respective Boards of Directors and Shareholders of H.H. and
Post have, by resolutions duly adopted, approved this Merger Agreement.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, H.H. and Post hereby agree as follows:
1. Merger. H.H. shall be merged with and into Post (the "Merger"), and
Post shall be the surviving corporation (hereafter sometimes referred to as the
"Surviving Corporation"). The Merger shall become effective upon the time and
date of filing of the Articles of Merger of H.H. and Post (the "Effective
Time").
2. Governing Documents. The Certificate of Incorporation of Post, as in
effect immediately prior to the Effective Time, without change or amendment
until thereafter amended in accordance with the provisions thereof and
applicable laws, and the Bylaws of the surviving Corporation shall be the
Certificate
<PAGE> 19
of Incorporation of the Surviving Corporation without change or amendment until
thereafter amended in accordance with the provisions thereof and applicable
1aws.
3. Succession. At the Effective Time, the separate corporate existence of
H.H. shall cease, and Post shall possess all the rights, privileges, powers and
franchises of a public and private nature and be subject to all the
restrictions, disabilities and duties of H.H.; and all and singular, the rights,
privileges, powers and franchises of H.H., and all property, real, personal and
mixed, and all debts due to H.H. on whatever account, as well for share
subscriptions as all other things in action or belonging to H.H., shall be
vested in the Surviving Corporation; and all property, rights, privileges,
powers and franchises, and all and every other interest shall be thereafter as
effectually the property of the Surviving Corporation as they were of H.H.; and,
the title to any real estate vested by deed or otherwise, under the laws of the
State of New Mexico, in H.H., shall not revert or be in any way impaired by
reason of the General Corporation Law of the State of Colorado, but, all rights
of creditors and all liens upon any property of H.H. shall be preserved
unimpaired; and all debts, liabilities and duties of H.H. shall henceforth
attach to the Surviving Corporation and may be enforced against it to the same
extent as if such debts, liabilities and duties had been incurred or contracted
by it. All corporate acts, plans policies, agreements, arrangements, approvals
and authorizations of H.H., its shareholders, Board of Directors and committees
thereof, officers and agents which were valid and effective immediately prior to
the Effective Time, shall be taken for all purposes as the acts, plans,
policies, agreements, arrangements, approvals and authorizations of Post and
shall be as effective and binding thereon as the same were with respect to H.H..
The employees end agents of H.H. shall become the employees and agents of Post
and continue to be entitled to the same rights and benefits which they employed
as employees and agents of H.H.. The requirements of any plans or agreements of
H.H. involving the issuance or purchase by H.H. of certain shares of its capital
stock shall be satisfied by the issuance or purchase of a like number of shares
of Post.
4. Further Assurances. From time to time, as and when required by Post, or
by its successors and assigns, there shall be executed and delivered on behalf
of H.H. such deeds and other instruments, and there shall be taken or caused to
be taken by it all such further and other action, as shall be appropriate or
necessary in order to vest, perfect or confirm, of record or otherwise, in Post
the title to and possession of all property, interests, assets, rights,
privileges, immunities, powers, franchises and authority of H.H., and otherwise
to carry out the purposes of this Merger Agreement, and the officers and
directors of Post are fully authorized in the name and on behalf of H.H. or
otherwise, to take any and all such action and to execute and deliver any and
all such deeds and other instruments.
<PAGE> 20
5. Cancellation of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof, the shares of H.H.
Common Stock presently issued and outstanding shall be cancelled and retired,
and no shares of Post Class A Common or Post Class B Common or other securities
of Post shall be issued in respect thereof.
6. Payment for Shares. As payment for the cancellation of their shares of
H.H. Common Stock, the Shareholders of H.H. shall receive $100.00 and other good
and valuable consideration the receipt and adequacy of which is hereby
acknowledged.
7. Condition to Merger. A condition precedent to the effectiveness of the
merger shall be the receipt of the requisite approval of the shareholders of New
Mexico Common Stock.
8. Other Employee Benefit Plans. As of the Effective Time, Post hereby
assumes all obligations of H.H. under any and all employee benefit plans in
effect as of the Effective Time or with respect to which employee rights or
accrued benefits are outstanding as of the Effective Time.
9. Amendment. Subject to applicable law, this Merger Agreement may be
amended, modified or supplemented by written agreement of the parties hereto at
any time prior to the Effective Time with respect to any of the terms contained
herein.
10. Abandonment. At any time prior to the Effective Time, this Merger
Agreement may be terminated and the Merger may be abandoned by the Board of
Directors of either H.H. or Post, or both, notwithstanding approval of this
Merger Agreement by the stockholders of Post or the shareholders of H.H., or
both, if circumstances arise which, in the opinion of the Board of Directors of
H.H. or Post, make the Merger inadvisable.
12. Counterparts. In order to facilitate the filing; and recording of this
Merger Agreement, the same may be executed in two or more counterparts, each of
which shall be deemed to be an original and the same agreement.
IN WITNESS WHEREOF, H.H. and Post have caused this Merger Agreement to be
signed by their respective duly authorized
-3-
<PAGE> 21
officers as of the date first above written.
H.H. POST COMPANY,
a New Mexico corporation
By: /s/ Daniel W. Crippen
------------------------
President
ATTEST: /s/ [ILLEGIBLE]
---------------------
Secretary
THE HARRY H. POST COMPANY,
a Colorado corporation
By: /s/ Daniel W. Crippen
------------------------
President
ATTEST: /s/ [ILLEGIBLE]
---------------------
Secretary
STATE OF Colorado )
) ss.
COUNTY OF Denver )
I, George A. Rutherford Jr., a notary public, do hereby certify that
on this 23rd day of January, 1987, personally appeared before me Daniel W.
Crippen, who, being by me first duly sworn, declared that he is the President of
The H. H. Post Company, a New Mexico Corporation, that he signed the foregoing
documents as President of the corporation, and that the statements therein
contained are true.
[SEAL] /s/ George A. Rutherford Jr.
-----------------------------
Notary Public
My Commission expires Jan. 29, 1989
1881 Basset St. Denver, CO 80201
STATE OF Colorado )
) ss.
COUNTY OF Denver )
I, George A. Rutherford Jr., a notary public, do hereby certify that
on this 23rd day of January, 1987, personally appeared before me Daniel W.
Crippen, who, being by me first
-4-
<PAGE> 22
duly sworn, declared that he is the President of The Harry H. Post
Company, a Colorado corporation, that he signed the foregoing document as
President of the corporation, and that the statements therein contained are
true.
[SEAL] /s/ George A. Rutherford Jr.
-----------------------------
Notary Public
My Commission expires Jan. 29, 1989
1881 Basset St. Denver, CO 80201
-5-
<PAGE> 23
MERGER
XX ARTICLES OF MERGER CERTIFIED COPY OF ART. OF MERGER
- --- ---
WITH AMENDEMNTS WITH CHANGE OF NAME AMENDMENT
- --- ---
XX DOMESTIC FOREIGN XX PROFIT NONPROFIT
- --- --- --- ---
================================================================================
H.H. POST COMPANY
(NEW MEXICO CORPORATION-NOT QUALIFIED)
INTO
THE HARRY H. POST COMPANY DP0072207
(COLORADO CORPORATION)
THE SURVIVOR
<PAGE> 24
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
HARRY H. POST COMPANY
These Amended and Restated Articles of Incorporation for The Harry
H. Post Company ("Corporation") correctly set forth the provisions of the
Articles of Incorporation of The Harry H. Post Company, as amended,
originally filed with the Secretary of State of Colorado on July 1, 1920.
All amendments to the Articles of Incorporation have been duly adopted by
law. These Amended and Restated Articles of Incorporation shall be
effective and shall supersede the original Articles of Incorporation and
all amendments thereto.
ARTICLE 1
The name of this corporation shall be THE HARRY H. POST COMPANY.
ARTICLE 2
The term of existence of this corporation shall be perpetual unless
sooner dissolved according to law.
ARTICLE 3
This corporation is organized for the purpose of engaging in any and
all lawful activities and business as permitted within the State of
Colorado.
ARTICLE 4
In the furtherance of and subject to the purposes set forth in
Article 3 of these Restated Articles of Incorporation, this corporation
may exercise all the rights, powers and privileges now or hereafter
conferred upon corporations organized under and pursuant to the laws of
the State of Colorado.
ARTICLE 5
The aggregate number of shares which the corporation shall have
authority to issue is 15.000.000, which shall be divided into two classes
as follows: 10,000,000 shares shall be Class A Common Stock with a par
value of $.01 per share, and 5,000,000 shares shall be Class B Common
Stock with a par value of $1.00 per share.
<PAGE> 25
ARTICLE 6
Each share of the capital stock of this corporation issued and
outstanding as of the date of these Amended and Restated Articles of
Incorporation shall automatically become and be converted into 1,126
shares of fully paid and non-assessable Class A Common Stock. This
conversion shall be by virtue of the adoption of these Amended and
Restated Articles of Incorporation and without any further action on the
part of the holder.
ARTICLE 7
The Class A Common Stock and the Class B Common Stock shall have
identical rights except an follows:
7.1 Voting. The holders of the Class A Common Stock shall be
entitled to one vote, for each share of the Class A Common Stock held by
the holder. The holders of the Class B Common Stock shall have no voting
rights except as specifically required by law.
7.2 Dividends. If the Board of Directors of the corporation
declares any dividends, the holders of the Class B Common Stock shall be
entitled to receive a dividend equal to 12% of the par value of each share
of Class B Common Stock before any dividend is paid to the holders of the
Class A Common Stock. Dividends on the Class B Common Stock shall be
non-cumulative.
7.3 Voting Requirements. When, with respect to any action to be
taken by shareholders of this corporation, the Colorado Corporation Code
requires the vote or concurrence of the holders of two-thirds of the
outstanding shares of the shares entitled to vote thereon, such
requirement shall be reduced to the vote or concurrence of holders of a
majority of such shares.
ARTICLE 8
Cumulative voting shall be permitted in voting shares in the
election of directors of this corporation.
ARTICLE 9
The holders of the shares of stock of this corporation shall no
pre-emptive right to purchase or subscribe for any unissued shares,
treasury shares or additional shares to be issued by this corporation.
ARTICLE 10
The management and control of the affairs of this corporation shall
be vested in a Board of Directors. The Board of Directors is expressly
authorized to make, alter, amend and
-2-
<PAGE> 26
repeal such Bylaws for the government and management of the affairs of
this corporation as to them shall seem necessary and proper, and also to
hold meetings beyond the limits of the State of Colorado. The number of
directors shall be as specified in the Bylaws of this corporation.
ARTICLE 11
The principal office of this corporation shall be located in the
City and County of Denver, State of Colorado, or at such other place as
the Board of Directors may frost time to taste direct. This corporation
shall have the power to carry on part or all of its business beyond the
limits of the State of Colorado. This corporation shall have the right to
establish such branch offices as it may deem desirable from time to time.
ARTICLE 12
Each person herein named, or hereafter elected a director or officer
of this corporation, shall be indemnified by the corporation against
expenses actually and necessarily incurred by him in connection with the
defense of any action, suit or proceeding in which he is made a party by
reason of being or having been such director or officer, except in
relation to matters as to which he shall be adjudged in such action, suit
or proceeding to be liable for negligence or misconduct in the performance
of duty. Such right of indemnification shall not be exclusive of any other
right or remedy to which such director or officer may be entitled under
any contract, bylaw, vote of shareholders or other arrangement whatsoever.
ARTICLE 13
Shares of stock may be issued subject to such reasonable
restrictions upon the transfer thereof as may be imposed by the Board of
Directors by resolution at the time of issuance or by bylaw in effect at
the time of issuance, and/or as imposed by contract of the Board of
Directors subsequent to issuance. Restrictions upon transfers so imposed
shall be evidenced by an appropriate notation upon the face of the
certificate or certificates representing such restricted shares, in
compliance with law, and a complete and true copy of all restrictions so
imposed shall be set forth in or attached to the minutes of proceedings of
the Board of Directors and shall be available for inspection by parties
entitled thereto at the principal office of the corporation during
reasonable business hours. Nothing herein shall be deemed to invalidate
any agreement between shareholders restricting transfer of their shares,
which agreement is otherwise in accordance with law.
-3-
<PAGE> 27
ARTICLE 14
The corporation shall be entitled to treat the registered holder or
any shares of the corporation as the owner thereof for all purposes,
including all rights deriving from such shares, and shall not be bound to
recognize any equitable or other claim to, or interest in, such shares or
rights deriving from such shares, on the part of any other person.
including, but without limiting the generality hereof, a purchaser,
assignee, beneficiary or transferee of such shares or rights deriving from
such shares, unless and until such purchaser, assignee, beneficiary,
transferee or other person becomes the registered holder of such shares,
whether or not the corporation shall have either actual or constructive
notice of the interest of such purchaser, assignee, beneficiary or
transferee of any of the shares of the corporation and said party shall
not be entitled to: receive notice of the meetings of the shareholders;
vote at such meetings; examine a list of the shareholders; be paid
dividends or other sums payable to property or rights deriving from such
shares against the corporation, until such purchaser, assignee,
beneficiary or transferee has become the registered holder of such shares.
Pursuant to the provisions of the Colorado Corporation Code, the
Articles of incorporation of The Harry H. Post Company were amended by
these Amended and Restated Articles of Incorporation. These Amended and
Restated Articles of Incorporation were approved by a vote of the
shareholders. The number of shares voting for the Amended and Restated
Articles was sufficient for approval. Adopted April 21, 1987.
THE HARRY H. POST COMPANY.
a Colorado Corporation
By: /s/ Daniel W. Crippen
----------------------
Its: President
By: /s/ Bruce L. Marshall
----------------------
its: Secretary
STATE OF Colorado )
) ss.
COUNTY OF Denver )
The foregoing Amended and Restated Articles of incorporation of The
Harry H. Post Company was acknowledged before me by Daniel W. Crippen, as
President and Bruce Marshall as Secretary of The Harry H. Post Company.
-4-
<PAGE> 28
Dated this 29th day of April, 1987.
My commission expires: My Commission expires Jan. 21, 1989
1881 Besset St. Denver, CO 80201
George Rutherford Jr.
----------------------
Notary Public
<PAGE> 29
THIS DOCUMENT MUST BE TYPED
- --------------------------------------------------------------------------------
1. PRINCIPAL PLACE OF BUSINESS IN COLORADO (INCLUDE ZIP CODE) DO NOT WRITE
1881m BASSETT ST. IN THIS SPACE
DENVER, CO 80201 OFFICE SPACE
ONLY
- --------------------------------------------------------------------------------
2. PRINCIPAL PLACE OF BUSINESS IN HOME STATE (INCLUDE ZIP CODE)
1881m BASSETT ST.
DENVER, CO 80201
OUT OF
STATE CORPS. ONLY
- --------------------------------------------------------------------------------
3. STATE OR COUNTRY OF INCORPORATION 4 CHARACTER OF BUSINESS OR AFFAIRS
CONDUCTED IN COLORADO
COLORADO WHOLESALE DISTRIBUTION OF FOOD & RELATED
FOOD PRODUCTS
- --------------------------------------------------------------------------------
5. ALL PROFIT (BUSINESS) CORPORATIONS MUST COMPLETE A, B, AND C. ATTACHMENTS
ARE ACCEPTABLE.
-----------------------------------------------------------------------------
SHARES AUTHORIZED AND ISSUED (ON DATE OF THIS REPORT OR IMMEDIATELY PRIOR
FISCAL YEAR)
CLASS SERIES A. NUMBER AUTHORIZED B. PAR VALUE C. NUMBER ISSUED
A 10,000,000 $ .01 1,095,035
B 5,000,000 $ 1.00 75,000
- --------------------------------------------------------------------------------
6. OFFICERS' NAMES AND ADDRESSES Colorado corporations must list at least two
different individuals: the offices of President and Secretary may not be
held by the same individual.
NAME ADDRESS ZIP CODE
PRESIDENT: DANIEL W. CRIPPEN P.O. BOX 899 DENVER, CO 80201
VICE-PRESIDENT:
SECRETARY: TREAS DONN A. SCHAILBE P.O. BOX 899 DENVER, CO 80201
ASST. SECRETARY:
TREASURER:
- --------------------------------------------------------------------------------
7. DIRECTORS' NAMES AND ADDRESSES ATTACHMENTS ARE ACCEPTABLE
Colorado Profit Corporations must list at least three, except that there
need be only as many directors as there are shareholders in the event that
the outstanding shares are held of record by fewer than three shareholders:
COLORADO NONPROFIT CORPORATIONS MUST LIST AT LEAST ONE DIRECTOR.
NAME ADDRESS ZIP CODE
DIRECTOR DAVID A. BUNNELL 13355 NOEL RD. STE #2210 DALLAS, TX. 75240
DIRECTOR
DIRECTOR
- --------------------------------------------------------------------------------
(FEE) (PENALTY)
IF SUBMITTED IF SUBMITTED TOTAL AMOUNT
IF THE CORPORATION IS BY MAY 1 AFTER MAY 1 DUE IS
- --------------------- -------- ----------- ------
DOMESTIC BUSINESS OR PROFIT (DP) $ 25.00 $ 25.00 $ 50.00
DOMESTIC NONPROFIT (DN) 10.00 10.00 20.00
FOREIGN BUSINESS OR PROFIT (FP) 100.00 25.00 125.00
FOREIGN NONPROFIT (FN) 10.00 10.00 20.00
- --------------------------------------------------------------------------------
DP 871372207
[ILLEGIBLE]
[ILLEGIBLE]
1881 BASSETT
P.O. BOX 899
DENVER CO 80201
- --------------------------------------------------------------------------------
8. If your registered agent and/or office has changed, please indicate the
new name and address and Include an additional $10.00 fee. Signatures and
title of officer signing for the corporation must be president or
vice-president. FOR A FOREIGN CORPORATION WITHOUT SUCH OFFICERS, THE
AUTHORIZED AGENT. Nonprofit corporations making the change must be
notarized. P.O. BOX NOT ACCEPTABLE.
- --------------------------------------------------------------------------------
A) The complete street address of the Corporation's REGISTERED OFFICE
shall be changed to:
------------------------------------------------------------------------------
B) The name of the corporation's REGISTERED AGENT shall be changed to:
DONN A. SCHAIBLE
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9 Colorado law requires the Corporate Report to be signed by ONLY the
Corporation's President, a Vice-President, Secretary (or assistant) or
Treasurer. For a FOREIGN corporation without such officers, an authorized
agent may sign.
Under penalties prescribed in Title 7 CRS. I declare this report has been
examined by me and to the best of my knowledge and belief, is true, correct
and complete.
DATE 05-01-90 /s/ Daniel W. Crippen TITLE: SECY/TREAS.
-------- --------------------- ------------------
(Signature)
- --------------------------------------------------------------------------------
IMPORTANT: IF THIS IS A NONPROFIT
CORPORATION WHICH IS CHANGING THE
REGISTERED AGENT AND/OR OFFICE,
STATE OF ____________________ THIS DOCUMENT MUST BE NOTARIZED.
COUNTY OF ________________
Subscribed and sworn to before me this ________ day of
------------------------
My commission expires __________________________ ___________________________
Notary Public
- --------------------------------------------------------------------------------
<PAGE> 1
Exhibit 3.12
BYLAWS
OF
THE HARRY H. POST COMPANY
ARTICLE I
Offices
The principal office of the Corporation in the State of Colorado shall be
located in the City and County of Denver. The Corporation may have such other
offices, either within or without the state of incorporation, as the Board of
Directors may designate or as the business of the Corporation may from time to
time require.
ARTICLE II
Shareholders
1. Annual Meeting. Unless otherwise provided by the Directors, the annual
meeting of the Shareholders shall be held on the first Monday of April in each
year, at the hour of ten o'clock a.m., for the purpose of electing directors and
for the transaction of such other business as may come before the meeting. If
the day fixed for the annual meeting shall be a legal holiday, such meeting
shall be held on the next succeeding business day.
2. Special Meetings. Special meetings of the Shareholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the President or by the Directors, and shall be called by the President at the
request of the holders of not less than twenty percent (20%) of all the
outstanding shares of the Corporation entitled to vote at the meeting.
3. Place of Meeting. The Directors may designate any place, either within
or without the State unless otherwise prescribed by statute, as the place of
meeting for any annual meeting or for any special meeting called by the
Directors. A waiver of notice signed by all Shareholders entitled to vote at a
meeting may designate any place, either within or without the State unless
otherwise prescribed by statute, as the place for holding such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the Corporation.
4. Notice of Meeting. Written or printed notice stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than fifty (50) days before the date of the meeting, either
personally or by mail, by or at the direction of the President, or the
Secretary, or the officer or persons calling the meeting, to each Shareholder of
record entitled to vote at such meeting. If
<PAGE> 2
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, addressed to the Shareholder at his address as it appears on the
stock transfer books of the Corporation, with postage thereon prepaid.
5. Closing of Transfer Books or Fixing of Record Date. For the purpose of
determining Shareholders entitled to notice of or to vote at any meeting of
Shareholders or any adjournment thereof, or Shareholders entitled to receive
payment of any dividend, or in order to make a determination of Shareholders for
any other proper purpose, the Directors of the Corporation may provide that the
stock transfer books shall be closed for a stated period but not to exceed, in
any case, fifty (50) days. If the stock transfer books shall be closed, for the
purpose of determining Shareholders entitled to notice of or to vote at a
meeting of Shareholders, such books shall be closed at least ten (10) days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the directors may fix in advance a date as the record date for any such
determination of Shareholders, such date in any case to be not more than fifty
(50) days and, in case of a meeting of Shareholders, not less than ten (10) days
prior to the date on which the particular action requiring such determination of
Shareholders is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of Shareholders entitled to notice of
or to vote at a meeting of Shareholders, or Shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
Shareholders. When a determination of Shareholders entitled to vote at any
meeting of Shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof.
6. Voting Lists. The officer or agent having charge of the stock transfer
books for shares of the Corporation shall make, at least ten (10) days before
each meeting of Shareholders, a complete list of the Shareholders entitled to
vote at such meeting, or any adjournment thereof, arranged in alphabetical order
with the address of and the number of shares held by each, which list, for a
period of ten (10) days prior to such meeting, shall be kept on file at the
principal office of the Corporation and shall be subject to inspection by any
Shareholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Shareholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to who are the
Shareholders entitled to examine such list or transfer books or to vote at the
meeting of Shareholders.
-2-
<PAGE> 3
7. Quorum. At any meeting of Shareholders, a majority of the outstanding
shares of the Corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of Shareholders. If less than said number
of the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further notice.
At any meeting at which a quorum shall be present or represented, any business
may be transacted which might have been transacted at the meeting as originally
notified. The Shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum.
8. Proxies. At all meetings of Shareholders, a Shareholder may vote by
proxy executed in writing by the Shareholder or by his duly authorized attorney-
in-fact. Such proxy shall be filed with the Secretary of the Corporation before
or at the time of the meeting.
9. Voting. Each Shareholder entitled to vote in accordance with the terms
and provisions of the Certificate of Incorporation and these Bylaws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled to
vote held by such Shareholder. Upon the demand of any Shareholder, the vote for
Directors and any question before the meeting shall be by ballot. All elections
for Directors shall be decided by plurality vote; all other questions shall be
decided by majority vote except as otherwise provided by the Certificate of
Incorporation, these Bylaws or the laws of this State.
10. Order of Business. The order of business at all meetings of the
Shareholders shall be as follows:
(a) Roll call;
(b) Proof of notice of meeting or waiver of notice;
(c) Reading of minutes of preceding meeting;
(d) Reports of Officers;
(e) Reports of Committees;
(f) Election of Directors;
(g) Unfinished business;
-3-
<PAGE> 4
(h) New business; and
(i) Adjournment or conclusion.
11. Informal Action by Shareholders. Unless otherwise provided by law, any
action required to be taken at a meeting of the Shareholders, or any other
action which may be taken at a meeting of the Shareholders, may be taken without
a meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the Shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE III
Board of Directors
1. General Powers. The business and affairs of the Corporation shall be
managed by its Board of Directors. The Directors shall in all cases act as a
Board, and they may adopt such rules and regulations for the conduct of their
meetings and the management of the Corporation, as they may deem proper, not
inconsistent with these Bylaws and the laws of this State.
2. Number, Tenure and Term of Office. The business and affairs of the
Corporation shall be managed by a Board of Directors consisting of five (5)
directors who shall be elected to serve a term of one (1) year, but shall hold
office until their successors shall be duly elected and shall take office.
3. Regular Meeting. A regular meeting of the Directors shall be held
without other notice than this Bylaw immediately after, and at the same place
as, the annual meeting of Shareholders. The Directors may provide, by
resolution, the time and place for the holding of additional regular meetings
without other notice than such resolution.
4. Special Meetings. Special meetings of the Directors may be called by
or at the request of the President or any one (1) Director. The person or
persons authorized to call special meetings of the Directors may fix the place
for holding any special meeting of the Directors called by them.
5. Notice. Written notice of any special meeting shall be given by either
personal delivery, telegram or mail to each Director at his address as it
appears on the records of the Corporation at least five (5) days prior to such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail, addressed to the Director at his address as it
appears in the records of the Corporation, with postage prepaid thereon. If
notice be given by telegram, such notice shall be deemed to be delivered when
the telegram is delivered to the telegraph company, addressed to the Director at
his address as it appears in the records of the Corporation. The attendance of a
Director at a meeting shall constitute a waiver of
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<PAGE> 5
notice of such meeting, except where a Director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
6. Meetings by Telephone. Any meeting of the Board of Directors or any
committee designated by the Board may be held by means of telephone conference
or similar communications equipment by which all persons participating in the
meeting can hear each other at the same time. Such participation shall
constitute presence in person at the meeting.
7. Quorum. A quorum for any meeting of the Board of Directors shall
consist of at least three (3) Directors of the Corporation.
8. Newly Created Directorships and Vacancies. Newly created directorships
resulting from an increase in the number of Directors and vacancies occurring in
the Board for any reason may be filled by a vote of a majority of the Directors
then in office, although less than a quorum exists. A Director elected to fill a
vacancy caused by resignation, death or removal shall be elected to hold office
for the unexpired term of his predecessor.
9. Removal of Directors. Any or all of the Directors may be removed, with
or without cause, by vote of the Shareholders.
10. Resignation. Any or all of the Directors may resign at any time by
giving written notice to the Board, the President or the Secretary of the
Corporation. Unless otherwise specified in the notice, the resignation shall
take effect upon receipt thereof by the Board or such officer, and the
acceptance of the resignation shall not be necessary to make it effective.
11. Compensation. No compensation shall be paid to Directors, as such, for
their services, but by resolution of the Board a fixed sum and expenses for
actual attendance at each regular or special meeting of the Board may be
authorized. Nothing herein contained shall be construed to preclude any Director
from serving the Corporation in any other capacity and receiving compensation
therefor.
12. Presumption of Assent. A Director of the Corporation who is present at
a meeting of the Directors at which action on any corporate matter is taken
shall be presumed to have assented to the action taken unless his dissent shall
be entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the Secretary of the meeting
before the adjournment thereof or shall forward such dissent by registered mail
to the Secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a Director who voted in favor
of such action.
-5-
<PAGE> 6
13. Executive and Other Committees. The Board, by resolution, may
designate an Executive Committee and other committees, each consisting of two
(2) or more members. Each such committee, to the extent provided in such
resolution, shall have and may exercise all of the authority of the Board of
Directors in the management of the Corporation; but the designation of such
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed
upon the Board or the members by law.
14. Informal Action By Directors. Unless otherwise provided by law, any
action required to be taken at a meeting of the Directors, or any other action
which may be taken at a meeting of the Directors, may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the Directors entitled to vote with respect to the subject matter
thereof.
15. Vote Required. Any action to be taken by the Board of Directors of the
Corporation, whether at any annual or special meeting duly called or by the
written consent of the Board of Directors, shall require the approval of at
least three (3) Directors of the Corporation. When, with respect to any action
to be taken by the Board of Directors of the Corporation, the Shareholders of a
majority of the issued and outstanding shares of the Corporation have entered
into a written agreement which requires the vote or concurrence of a number of
Directors greater than three, the provisions of such agreement shall control.
ARTICLE IV
Officers
1. Number. The officers of the Corporation shall be a Chairman of the
Board, a President, one or more Vice-Presidents, and Secretary and a Treasurer,
each of whom shall be elected by the Directors. Such other officers and
assistant officers as may be deemed necessary may be elected or appointed by the
Directors.
2. Election and Term of Office. The officers of the Corporation to be
elected by the Directors shall be elected annually at the first meeting of the
Directors held after each annual meeting of the Shareholders. Each officer shall
hold office until his successor shall have been duly elected and qualified or
until his death or until he shall resign or shall have been removed in the
manner hereinafter provided.
3. Removal. Any officer or agent elected or appointed by the Directors
may be removed by the Directors whenever in their judgment the best interests of
the Corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
-6-
<PAGE> 7
4. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise may be filled by the Directors for the
unexpired portion of the term.
5. Chairman of the Board. The Chairman of the Board, if one be elected,
shall be the chief executive officer of the Corporation, with all of the powers
and authority generally appertaining to that position, and shall be in charge of
the overall management of the business of the Corporation. The Chairman of the
Board shall preside when present at all meetings of the Board of Directors and
shall preside at all meetings of the Shareholders. He shall advise and counsel
the President and other officers of the Corporation, and shall exercise such
powers and perform such duties as shall be assigned to or required of him from
time to time by the Board of Directors.
6. President. The President shall be the chief operating officer of the
Corporation. In the absence of the Chairman of the Board, the President shall
preside at all meetings of the Board of Directors and of the Shareholders. The
President shall in general supervise and control all of the daily business and
operations of the Corporation. He may sign, with the Secretary or any other
proper officer of the Corporation thereunto authorized by the Directors,
certificates for shares of the Corporation, any deeds, mortgages, bonds,
contracts, or other instruments which the Directors have authorized to be
executed, except in cases where the signing and execution thereof shall be
expressly delegated by the Directors or by these Bylaws to some other officer or
agent of the Corporation, or shall be required by law to be otherwise signed or
executed; and in general shall perform all duties incident to the office of
President and such other duties as may be prescribed by the Directors from time
to time.
7. Vice-Presidents. In the absence of the President or in the event of
his death, inability or refusal to act, the Vice-President (or in the event
there be more than one Vice-President, the Vice-Presidents in the order
designated by the Board of Directors) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. The Vice-President shall perform such other
duties as from time to time may be assigned to him by the President or by the
Directors.
8. Secretary. The Secretary shall keep the minutes of the Shareholders'
and of the Directors' meetings in one or more books provided for that purpose,
see that all notices are duly given in accordance with the provisions of these
Bylaws or as required, be custodian of the corporate records and of the seal of
the Corporation, and keep a register of the post office address of each
Shareholder and Director which shall be furnished to the Secretary by such
Shareholder and Director, have general charge of the stock transfer books of the
Corporation and in general perform all
-7-
<PAGE> 8
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him by the President or by the Directors.
9. Treasurer. If required by the Directors, the Treasurer shall give a
bond for the faithful discharge of his duties in such sum and with such surety
or sureties as the Directors shall determine. He shall have charge and custody
of and be responsible for all funds and securities of the Corporation; receive
and give receipts for monies due and payable to the Corporation from any source
whatsoever, and deposit all such monies in the name of the Corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these Bylaws and in general perform all of the duties as from time to time
may be assigned to him by the President or by the Directors.
10. Assistant Executive Officers. Any assistant executive officers shall
act on behalf of the primary executive officer when that officer is not
available and shall also act in supplementation of the primary officer.
11. Salaries. The salaries of the officers shall be fixed from time to
time by the Directors and no officer shall be prevented from receiving such
salary by reason of the fact that he is also a Director of the Corporation.
ARTICLE V
Contracts, Loans, Checks and Deposits
1. Contracts. The Directors may authorize any officer or officers, agent
or agents, to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation, and such authority may be general
or confined to specific instances.
2. Loans. No loans shall be contracted on behalf of the Corporation and
no evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Directors. Such authority may be general or confined to
specific instances.
3. Checks, Drafts, Et Cetera. All checks, drafts, or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or officers, agent or agents of
the Corporation and in such manner as shall from time to time be determined by
resolution of the Directors.
4. Deposits. All funds of the Corporation not otherwise employed shall be
deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Directors may select.
-8-
<PAGE> 9
ARTICLE VI
Certificates for Shares and Their Transfer
1. Certificates for Shares. Certificates representing shares of the
Corporation shall be in such form as shall be determined by the Directors. Such
certificates shall be signed by the President and by the Secretary or by such
other officers authorized by law or by the Directors. All certificates for
shares shall be consecutively numbered or otherwise identified. The name and
address of the Shareholders, the number of shares and date of issue, shall be
entered on the stock transfer books of the Corporation. All certificates
surrendered to the Corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except that in cases of a
lost, destroyed or mutilated certificate a new one may be issued therefor upon
such terms and indemnity to the Corporation as the Directors may prescribe.
2. Transfer of Shares. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, and cancel the old certificate; every such transfer
shall be entered on the transfer book of the Corporation which shall be kept at
its principal office.
3. Holder of Record. The Corporation shall be entitled to treat the
holder of record of any share as the holder in fact thereof, and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any person whether or not it shall have actual or
constructive notice thereof, except as expressly provided by the laws of this
State.
ARTICLE VII
Fiscal Year
The fiscal year of the Corporation shall be determined by the Board of
Directors of the Corporation.
ARTICLE VIII
Dividends
The Directors may from time to time declare, and the Corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
-9-
<PAGE> 10
ARTICLE IX
Seal
The Directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the Corporation, the state of
incorporation, and the word, "Seal."
ARTICLE X
Waiver of Notice
Unless otherwise provided by law, whenever any notice is required to be
given to any Shareholder or Director of the Corporation under the provisions of
these Bylaws or under the provisions of the Articles of Incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI
Amendments
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by a vote of the Directors at a meeting of the Directors.
ARTICLE XIII
Certification
The undersigned, being the duly elected and acting Secretary of the
Corporation, hereby certifies that the foregoing constitutes the true and
original record of the Corporation's Bylaws as of June 15, 1990.
/s/ Donn Schaible
------------------------------
Donn Schaible, Secretary
The Harry H. Post Company
Date: 6/15/90
-------------------------
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<PAGE> 1
Exhibit 3.13
DFI/CCS/Corp
Fm 33 (7/96)
United States of America
State of Wisconsin
DEPARTMENT OF FINANCIAL INSTITUTIONS
I, RICHARD L. DEAN, Secretary, Department of Financial Institutions, do
hereby certify that the annexed copy has been compared by me with the record on
file in the Corporations unit of the Division of Corporate & Consumer Services
of this department and that the same is a true copy thereof, and of the whole of
such record; and that I am the legal custodian of such record, and that this
certification is in due form.
[SEAL] IN TESTIMONY WHEREOF, I have
hereunto set my hand and affixed
the official seal of the Department.
/s/ Richard. L. Dean
--------------------
Richard. L. Dean, Secretary
Department of Financial Institutions
DATE: JUL 3 1997 BY: /s/ Patricia Weber
================================================================================
Effective July 1, 1996, the Department of Financial Institutions assumed the
functions previously performed by the Corporations Division of the Secretary of
State and is the successor custodian of corporate records formerly held by the
Secretary of State.
<PAGE> 2
ARTICLES OF INCORPORATION
Executed by the undersigned for the purpose of forming a Wisconsin
corporation under the "Wisconsin Business Law", Chapter 180 of the Wisconsin
Statutes:
MAR 17 12:00 PM
[ILLEGIBLE]
148027 DCORP 90 90.00
Article 1. The name of the corporation is Delta Transportation Ltd.
Article 2. The period of existence shall be perpetual.
Article 3. The purposes shall be to engage in any lawful activities
authorized by Chapter 180 of the Wisconsin Statutes.
Article 4. The number of shares which it shall have authority to issue,
itemized by classes, par value of shares, shares without par value, and series,
if any, within a class is:
Par value per
Series Number of share or statement
Class (if any) Shares shares are without par value
----- -------- ------ ----------------------------
Common Stock None 2800 Shares are without par value
Article 5. The preferences, limitations, designations, and relative rights
of each class or series of stock, are none.
MAR 17 12:00 PM
[ILLEGIBLE]
148026 EXPED 25 25.00
Article 6. Address of initial registered office is
CT Corporation System
44 East Mifflin Street
Madison, Wisconsin 53703
Article 7. Name of initial registered agent at such address is CT
Corporation System.
Article 8. The number of directors constituting the board of directors
shall be fixed by the Bylaws.
Article 9. The name of the initial directors are:
John P. Lewis
William R. Burgess
Article 10. (Other provisions)
The President acting alone or any other two (2) duly elected officers of
the Corporation, is empowered pursuant to Wisconsin Statute 180.70(2) to sell,
lease, mortgage, pledge, exchange, encumber or otherwise convey or dispose of
the Corporation's real property, fixtures,
<PAGE> 3
improvements or chattels by instruments duly executed according to law
without further evidence of authorization or consent of the shareholders or
directors of the Corporation.
Article 11. These articles may be amended in the manner authorized by law
at the time of amendment.
Article 12. The name and address of incorporator (or incorporators) is
NAME ADDRESS
---- -------
Brad L. Whitlock 901 Main Street, Suite 6000
Dallas, Texas 75234
Executed in duplicate on the 15th day of March, 1994.
/s/ Brad L. Whitlock
-------------------------------
This document was drafted by Brad L. Whitlock.
<PAGE> 4
-------------
ARTICLES OF Chapter 180
INCORPORATION
-------------
$90.00
$25.00 Expedited fee
Return to:
Attn Beth ------------------
CT Corporation System State of Wisconsin
44 E. Mifflin St. Filed
Madison, WI 53703 -----------
Mar 16 1994
-----------
Douglas [ILLEGIBLE]
Secretary of State
------------------
<PAGE> 1
Exhibit 3.14
Exhibit C
BY-LAWS
OF
DELTA TRANSPORTATION, LTD.
ARTICLE I.
OFFICES
1.1) Registered Office. The registered office of the corporation required
by Chapter 180, Wisconsin Statutes, to be maintained in the State of Wisconsin
is as provided and designated in the Articles of Incorporation. The Board of
Directors of the corporation may, from time to time, change the location of the
registered office. On or before the day that such change is to become effective,
a statement of such change and of location and post office address of the new
registered office shall be filed with the Secretary of State of the State of
Wisconsin.
1.2) Other Offices. The corporation may establish and maintain such other
offices, within or without the State of Wisconsin, as are from time to time
authorized by the Board of Directors.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
2.1) The annual meeting of the shareholders of the Corporation shall be
held at the principal office of the Corporation on the third Wednesday of July
beginning with the year 1983, or at such other place, within or without the
State of Wisconsin, or at such other time as shall be designated by the Board of
Directors, or by written consent of all the shareholders entitled to vote
thereat. At the annual meeting, the shareholders shall elect Directors and shall
transact such other business as shall properly come before the meeting. If for
any reason the annual meeting is not held or the Directors are not elected
thereat, Directors may be elected at a special meeting held for that purpose,
and it shall be the duty of the chief executive officer or secretary, upon
demand of any shareholder entitled to vote, to call such special meeting.
2.2) Special Meetings. Special meetings of the shareholders entitled to
vote shall be called by the Secretary at any time upon request by the chief
executive officer or the Board of Directors (acting upon majority vote), or upon
request by shareholders holding ten percent (10%) or more of the voting power of
the Corporation's Capital Stock.
EXHIBIT A
<PAGE> 2
2.3) Notice of Meetings. There shall be mailed to each shareholder entitled
to vote, at his address as shown by the books of the Corporation, a notice
setting out the place, date and hour of the annual meeting or any special
meeting, which notice shall be mailed at least ten (10) days prior to the date
of the meeting; provided, that notice of a meeting at which an agreement or
merger or consolidation is to be considered shall be mailed to all shareholders
of record, whether or not entitled to vote, at least two (2) weeks prior to the
date of the meeting. Notice of any special meeting shall state the purpose or
purposes of the proposed meeting, and the business transacted at all special
meetings shall be confined to the purposes stated in the notice. Attendance at a
meeting by any shareholder, without objection in writing by him, shall
constitute his waiver of notice of the meeting.
2.4) Quorum and Adjourned Meetings. The holders of a majority of all shares
of Capital Stock outstanding and entitled to vote, represented either in person
or by proxy, shall constitute a quorum for the transaction of business at any
annual or special meeting of the shareholders. In case a quorum is not present
at any meeting, those shareholders present shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until the requisite number of voting shares of the Corporation's
Capital Stock shall be represented. At such adjourned meetings at which the
required amount of voting shares of the Corporation's Capital Stock shall be
represented, any business may be transacted which might have been transacted at
the original meeting.
2.5) Voting. At each meeting of the shareholders, every shareholder having
the right to vote shall be entitled to vote in person or by proxy duly appointed
by an instrument in writing subscribed by such shareholder. Each shareholder
shall have one (1) vote for each share of the Corporation's Capital Stock having
voting power standing in his name on the books of the Corporation. Upon the
demand of any shareholder, the vote for Directors or the vote upon any question
before the meeting shall be by written ballot. All elections shall be determined
and all questions decided by a majority vote of the number of shares of the
Corporation's Capital Stock entitled to vote and represented at any meeting at
which there is a quorum except in such cases as shall otherwise be required by
statute, the Articles of Incorporation or these By-Laws. Directors shall be
elected by a plurality of the votes cast by holders of the shares of the
Corporation's Capital Stock entitled to vote thereon.
2.6) Proxy. Shareholders of this Corporation may vote by proxy at any
shareholders' meeting and each shareholder shall be entitled to one (1) vote for
each share of voting capital stock outstanding in his name upon the records of
the Corporation at the time of the closing of the transfer books for said
meeting. All proxies shall be in writing signed by the shareholder or by his
duly authorized attorney in fact. Such proxies shall be
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<PAGE> 3
filed with the Secretary of the Corporation before or at the time of the
meeting. No proxy shall be valid after eleven (11) months from the date of its
execution, unless otherwise provided in the proxy.
2.7) Record Date. The Board of Directors may fix a time, not exceeding
sixty (60) days preceding the date of any meeting of shareholders, as a record
date for the determination of the shareholders entitled to notice of and to vote
at such meeting, notwithstanding any transfer of any shares on the books of the
Corporation after any record date so fixed. The Board of Directors may close the
books of the Corporation against transfer of shares during the whole or any part
of such period. In the absence of action by the Board, only shareholders of
record fifty-five (55) days prior to a meeting may vote at such meeting.
2.8) Shareholder List. The officer or agent having charge of the stock
transfer books for the shares of Capital Stock of the Corporation shall make, at
least ten (10) days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each, which list, for a period of five (5) days prior to such meeting,
shall be kept on file at the registered office of the Corporation and shall be
subject to inspection by any shareholder at any time during usual business
hours. Such list shall also be produced and kept open at the meeting and shall
be open to the inspection of any shareholder during the time of the meeting. The
original stock transfer books of the corporation shall be prima facie evidence
of the shareholders entitled to examine such list or transfer books or to vote
at any meeting of the shareholders. Failure to comply with the requirements of
this section shall not affect the validity of any action taken at any meeting of
the shareholders.
2.9) Voting by Certain Shareholders. Shares outstanding in the name of
another corporation may be voted by its chief executive officer or by proxy
appointed by him, unless some other person, by resolution of its Board of
Directors, shall be appointed to vote such shares, in which case such person
shall be entitled to vote said shares by producing a certified copy of such
resolution.
Shares of this Corporation's Capital Stock held by an administrator,
executor, guardian, conservator, receiver or assignee for creditors may be voted
by him, either in person or by proxy, without a transfer of such shares into his
name provided that there is filed with the Secretary before or at the time of
the meeting proper evidence of his incumbency and the number of shares held.
Shares standing in the name of a fiduciary may be voted by him, either in person
or by proxy.
A shareholder whose shares of Capital Stock are pledged shall be entitled
to vote such shares until the shares have been
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transferred into the name of the pledgee, and thereafter the pledgee shall be
entitled to vote the shares so transferred.
Shares of the Corporation's Capital Stock owned by the Corporation or held
by it in a fiduciary capacity shall not be voted, directly or indirectly, at any
meeting, and shall not be counted in determining the total number of outstanding
shares of Capital Stock entitled to vote at any given time.
2.10) Organization. The chief executive officer, and in his absence, any
shareholder chosen by the shareholders present, shall call the meetings of the
shareholders to order and shall act as Chairman of such meetings and the
Secretary of the Corporation shall act as Secretary of all meetings of the
shareholders, but in the absence of the Secretary, and in her absence, the
presiding officer may appoint any shareholder to act as Secretary of the
meeting.
2.11) Order of Business. The suggested order of business at the annual
meeting and, to the extent appropriate, at all other meetings of the
shareholders shall, unless modified by the presiding Chairman, be:
(a) Call of roll.
(b) Proof of due notice of meeting or waiver of notice.
(c) Determination of existence of quorum.
(d) Reading and disposal of any unapproved minutes.
(e) Annual reports of officers and committees.
(f) Election of Directors.
(g) Unfinished business.
(h) New business.
(i) Adjournment.
ARTICLE III.
DIRECTORS
3.1) General Powers. The business and affairs of the Corporation shall be
managed by the Board of Directors, except as otherwise provided by Chapter 180,
Wisconsin Statutes.
3.2) Number, Term and Qualifications. The number of Directors shall be
determined (but at not less than one) by the shareholders at each annual
meeting; provided, that between annual meetings the authorized number of
Directors may be increased by the shareholders or by the Board of Directors or
decreased by the shareholders. Directors need not be shareholders. Each Director
at each annual meeting of shareholders shall be elected for a term of one (1)
year and shall hold office until his successor is elected and qualified, or
until his resignation or removal as provided by law.
3.3) Vacancies. Vacancies on the Board of Directors shall be filled by the
remaining members of the Board, though less than a quorum; provided that newly
created directorships resulting
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from an increase in the authorized number of Directors shall be filled by two-
thirds (2/3) of the Directors serving at the time of such increase. Persons
elected by the shareholders, who may make such election at their next annual
meeting or at any special meeting duly called for that purpose.
3.4) Quorum. A majority of the entire Board of Directors shall constitute a
quorum for the transaction of business except that when a vacancy or vacancies
exist, a majority of the remaining Directors (provided such majority consists of
not less than the lesser of (i) the then authorized number of directors; or (ii)
two directors shall constitute a quorum.
3.5) First Meeting. As soon as practicable after each annual election of
Directors, the Board of Directors shall meet for the purpose of organization,
electing or appointing officers of the Corporation, and transaction of other
business, at the place where the shareholders' meeting is held or at the place
where regular meetings of the Board of Directors are held. No notice of such
meeting need be given. Such first meeting may be held at any other time and
place specified in a notice given as hereinafter provided for special meetings
or in a waiver of notice signed by all the Directors.
3.6) Regular Meetings. Regular meetings of the Board of Directors shall be
held from time to time at such time and place as may from time to time be fixed
by resolution adopted by a majority of the entire Board of Directors. No notice
need be given of any regular meeting.
3.7) Special Meetings. Special meetings of the Board of Directors may be
held at such time and place as may be designated in the notice or the waiver of
notice of the meeting. Special meetings of the Board of Directors may be called
by the chief executive officer or by any one (1) Director. Unless notice shall
be waived by all Directors, notice of such special meeting (including a
statement of the purposes thereof) shall be given to each Director at least
twenty-four (24) hours in advance of the meeting if oral or two (2) days in
advance of the meeting if notice is given by mail, telegraph or other written
communication; provided, however, that meetings may be held without waiver of
notice from or giving notice to any director while he is in the Armed Forces of
the United States or outside the continental limits of the United States.
Attendance at a meeting by any Director, without objection in writing by him,
shall constitute a waiver of notice of such meeting.
3.8) Compensation. Directors shall receive such compensation as shall be
determined from time to time by resolution of the Board of Directors. All
Directors shall be reimbursed for travel and other expenses that they incur in
attending meetings of the Board of Directors. Nothing herein shall be construed
to preclude any Director from serving the
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<PAGE> 6
Corporation in any other capacity and from receiving proper compensation
therefor.
3.9) Executive Committee. The Board of Directors may;, by unanimous vote,
designate one or more of its members to constitute an Executive Committee,
which, to the extent determined by unanimous affirmative vote, shall have and
exercise the authority of the Board of Directors in the management of the
business of the Corporation. Any such Executive Committee shall act only in the
interval between meetings of the Board of Directors and shall be subject at all
times to the control and direction of the Board of Directors.
3.10) Presumption of Assent. A Director of the Corporation who is present
at a meeting of the Board of Directors or a committee thereof at which action on
any corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall his written dissent to such action with the Secretary of the
meeting before the adjournment thereof or unless such dissent is sent by
registered mail to the Secretary of the Corporation within five (5) days after
the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
3.11) Organization. Any Director chosen by the Directors present shall call
the meetings of the Board of Directors to order and shall act as Chairman of
such meeting and the Secretary of the Corporation shall act as Secretary at all
meetings of the Board of Directors but in the absence of the Secretary, the
presiding officer shall appoint any Director to act as Secretary of the meeting.
3.12) Order of Business. The suggested order of business at any meeting of
the Board of Directors shall, to the extent appropriate and unless modified by
the presiding Chairman be:
(a) Roll call.
(b) Proof of due notice of meeting or waiver of notice, or unanimous
presence and declaration by President.
(c) Determination of existence of quorum.
(d) Reading and disposal of any unapproved minutes.
(e) Reports of officers and committees.
(f) Election of officers.
(g) Unfinished business.
(h) New business.
(i) Adjournment.
3.13) Action Without Meeting. In compliance with Chapter 180, Wisconsin
Statutes, an action required or permitted to be taken at a board meeting may be
taken by written action signed by all of the Directors unless the action need
not be approved by the shareholders and the articles so provide, in which case,
the action may be taken by written action signed by the number of
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<PAGE> 7
directors that would be required to take the same action at a meeting of the
board at which all Directors were present. The written action is effective when
signed by the required number of Directors, unless a different effective time is
provided in the written action. When written action is permitted to be taken by
less than all Directors, all Directors shall be notified immediately of its text
and effective date. Failure to provide the notice does not invalidate the
written action. A director who does not sign or consent to the written action
has no liability for the action or actions taken thereby.
3.14) Electronic Communications.
(a) A conference among Directors by any means of communication through
which the Directors may simultaneously hear each other during the
conference constitutes a board meeting, if the same notice is given of
the conference as would be required by these by-laws for a meeting,
and if the number of Directors participating in the conference would
be sufficient to constitute a quorum at a meeting. Participation in a
meeting by that means constitutes presence in person at the meeting.
(b) A director may participate in a board meeting not described in
paragraph (a) by any means of communication through which the
director, other directors so participating, and all directors
physically present at the meeting may simultaneously hear each other
during the meeting. Participation in a meeting by that means
constitutes presence in person at the meeting.
ARTICLE IV.
OFFICERS
4.1) Number and Designation. The Board of Directors shall elect one or more
natural persons exercising the functions of the offices of chief executive
officer and chief financial officer, a secretary, and such other offices or
agents as the Board of Directors deems necessary for the operation and
management of the Corporation.
4.2) Election, Term of Office and Qualifications. At each annual meeting of
the Board of Directors, the Board shall elect the officers provided for in
Section 4.1 and such officers shall hold office until the next annual meeting of
the Board of Directors or until their successors are elected or appointed and
qualify; provided, however, that any officer may be removed with or without
cause by the affirmative vote of a majority of the Board of Directors at a duly
convened meeting (without prejudice, however, to any contract rights of such
officer).
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<PAGE> 8
4.3) Resignation. Any officer may resign at any time by giving written
notice to the Board of Directors or to the chief executive officer or secretary.
The resignation shall take effect at the same time specified in the notice and,
unless otherwise specified therein, acceptance of the resignation shall not be
necessary to make it effective.
4.4) Vacancies in Office. If there be a vacancy in any office of the
Corporation, by reason of death, resignation, removal or otherwise, such vacancy
shall be filled for the unexpired term by the Board of Directors at any regular
or special meeting.
4.5) Chief Executive Officer. The chief executive officer shall:
(a) Have general active management of the business of the corporation;
(b) When present, preside at all meetings of the board and of the
shareholders;
(c) See that all orders and resolutions of the board are carried into
effect;
(d) Sign and deliver in the name of the corporation any deeds, mortgages,
bonds, contracts or other instruments pertaining to the business of
the corporation, except in cases in which the authority to sign and
deliver is required by law to be exercised by another person or is
expressly delegated by the articles or by-laws or by the board to some
other officer or agent of the corporation;
(e) Maintain records of and, whenever necessary, certify all proceedings
of the board and the shareholders; and
(f) Perform other duties prescribed by the board.
4.6) Chief Financial Officer. The chief financial officer shall:
(a) Keep accurate financial records for the corporation;
(b) Deposit all money, drafts and checks in the name of and to the credit
of the corporation in the banks and depositories designated by the
board.
(c) Endorse for deposit all notes, checks and drafts received by the
corporation as ordered by the board, making proper vouchers therefor;
(d) Disburse corporate funds and issue checks and drafts in the name of
the corporation, as ordered by the board;
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<PAGE> 9
(e) Render to the chief executive officer and the board, whenever
requested, an account of all transactions by the chief financial
officer and of the financial condition of the corporation; and
(f) Perform other duties prescribed by the board or by the chief executive
officer.
4.7) Secretary. The Secretary shall be Secretary of and shall attend all
meetings of the shareholders and Board of Directors. He shall act as clerk
thereof and shall record all the proceedings of such meetings in the minute book
of the Corporation. He shall give proper notice of meetings of shareholders and
Directors. He, with the chief executive officer, shall sign all certificates
representing shares of the Capital Stock of the Corporation and shall perform
the duties usually incident to his office and such other duties as may be
prescribed by the Board of Directors from time to time.
4.8) Other Officers. The board may elect or appoint, in a manner set forth
in the articles or by-laws or in a resolution approved by the affirmative vote
of a majority of the directors present, any other officers or agents the board
deems necessary for the operation and management of the corporation, each of
whom shall have the powers, rights, duties, responsibilities, and terms in
office provided for in the articles or by-laws or determined by the board.
ARTICLE V.
5.1) Indemnification of Certain Persons. Unless prohibited or limited by
the Board of Directors pursuant to Chapter 180, Wisconsin Statutes, the
Corporation shall indemnify a person made or threatened to be made a part to a
proceeding by reason of the former or present official capacity of the person
against judgments, penalties, fines, including, without limitation, excise taxes
assessed against the person with respect to an employee benefit plan,
settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by the person in connection with the proceeding, in
compliance with, and under the terms and conditions of Chapter 180, Wisconsin
Statutes.
5.2) Insurance. The corporation may purchase and maintain insurance on
behalf of a person in that person's official capacity against any liability
asserted against and incurred by the person in or arising from that capacity,
whether or not the corporation would have been required to indemnify the person
against the liability under the provisions of this ARTICLE V.
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ARTICLE VI.
SHARES AND THEIR TRANSFER
6.1) Certificate of Stock. Every owner of Capital Stock of the Corporation
shall be entitled to a certificate, in such form as the Board of Directors may
prescribe, certifying the number of shares of Capital Stock of the Corporation
owned by him. The certificates shall be numbered (separately for each class) in
the order in which they shall be issued and shall be signed in the name of the
Corporation by the chief executive officer or a vice president, and by the
Secretary or any other proper officer of the Corporation thereunto authorized by
the Board of Directors signatures of the officers upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent or registered
by a registrar other than the Corporation. Certificates on which a facsimile
signature of a former officer appears may be issued with the same effect as if
he were such officer on the date of issue.
6.2) Stock Record. As used in these By-Laws, the term "shareholder" shall
mean the person, firm or corporation in whose name outstanding shares of capital
stock of the Corporation are currently registered on the stock record books of
the Corporation. A record shall be kept of the name of the person, firm or
corporation owning the Capital Stock represented by such certificates
respectively, the respective dates thereof and, in the case of cancellation, the
respective dates of cancellation. Every certificate surrendered to the
Corporation for exchange or transfer shall be cancelled and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so cancelled (except as provided for
in Section 6.4 of this ARTICLE VI).
6.3) Transfer of Shares. Transfer of shares of Capital Stock on the stock
record books of the Corporation may be authorized only by the shareholder named
in the certificate (or his legal representative or duly authorized attorney-in-
fact) and upon surrender for cancellation of the certificate or certificates for
such shares of Capital Stock. The shareholder in whose name shares of Capital
Stock stand on the stock record books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation; provided, that when
any transfer of shares of Capital Stock shall be made as collateral security and
not absolutely, such fact, if known to the Secretary of the Corporation or to
the transfer agent, shall be so expressed in the entry of transfer.
6.4) Lost Certificate. Any shareholder claiming a certificate of stock to
be lost or destroyed shall make an affidavit or affirmation of that fact in such
form as the Board of Directors may require, and shall, if the Directors so
require, give the Corporation a bond of indemnity in a form and with one
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or more sureties satisfactory to the Board of Directors of at least double the
value, as determined by such certificate in order to indemnify the Corporation
against any claim that may be made against it on account of the alleged loss or
destruction of such certificate, whereupon a new certificate may be issued in
the same tenor and for the same number of shares of Capital Stock as the one
alleged to have been destroyed or lost.
6.5) Treasury Stock. Treasury Stock shall be held by the Corporation
subject to disposal by the Board of Directors in accordance with the Articles of
Incorporation and these by-laws, and shall not have voting rights or participate
in dividends.
6.6) Inspection of Books by Shareholders. Shareholders shall be permitted
to inspect the books of the Corporation for a proper purpose at all reasonable
times.
6.7) Consideration. When Capital Stock without par value is issued by this
Corporation, it may be issued from time to time for such consideration of money,
labor or property estimated at market value as may be fixed from time to time by
the Board of Directors.
6.8) Stock Regulations. The Board of Directors shall have the power and
authority to make all such further rules and regulations not inconsistent with
the federal securities laws, rules and regulations or the statutes of the State
of Wisconsin as they may deem expedient concerning the issue, transfer and
registration of certificates representing shares of Capital Stock of the
Corporation.
ARTICLE VII.
GENERAL PROVISIONS
7.1) Distributions. Subject to the provisions of the Articles of
Incorporation, these by-laws or any applicable contract, the Board of Directors
may authorize, and this Corporation may make, a distribution only if the
Corporation is able to pay its debts in the ordinary course of business after
making the distribution, as defined in Chapter 180, Wisconsin Statutes.
7.2) Surplus and Reserves. Subject to the provisions of the Articles of
Incorporation and of these by-laws, the Board of Directors, in its discretion,
may use and apply any of the net earnings or net assets of the Corporation
available for such purpose to purchase or acquire any of the shares of the
capital stock of the Corporation in accordance with law, or any of its bonds,
debentures, notes, script or other securities or evidences of indebtedness, or
from time to time may set aside from its net assets or net earnings such sums as
it, in its absolute discretion, may think proper as a reserve fund to meet
contingencies, for the purpose of maintaining or increasing the
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<PAGE> 12
property of business of the Corporation, or for any other purpose it may; think
conducive to the bests interests of the Corporation.
7.3) Fiscal Year. The fiscal year of the Corporation shall be established
by the Board of Directors.
7.4) Audit of Books and Accounts. The books and accounts of the Corporation
shall be audited at such times as may be ordered by the Board of Directors.
7.5) Seal. The Corporation shall have no corporate seal.
ARTICLE VIII.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
8.1) Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such
authorization may be general or confined to specific instances.
8.2) Loans. No loans shall be contracted on behalf of the Corporation and
no evidence of indebtedness shall be issued in its name unless authorized by or
under the authority of a resolution of the Board of Directors. Such
authorization may be general or confined to specific instances.
8.3) Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or officers, agent or agents of
the Corporation and in such manner as shall from time to time be determined by
or under the authority or resolution of the Board of Directors.
8.4) Deposits. All funds of the Corporation not otherwise employed shall be
deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as may be selected by or under the
authority of the Board of Directors.
ARTICLE IX.
CALL AND PAYMENT OF SUBSCRIPTIONS
9.1) Calls. The Board of Directors may call the subscriptions to the
capital stock of this Corporation in such proportion and at such time as they
shall deem proper by giving not less than ten (10) days notice by registered
mail or personal service to each shareholder of the time and place where payment
may be made, the terms of payment and the amount due from the shareholder so
notified.
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9.2) Payment. When any unpaid portion of subscriptions to the Capital Stock
of the Corporation are called and declared due by resolution of the Board of
Directors, the same shall be payable within ten (10) days after the shareholder
receives notice of the demand for payment. Unpaid subscriptions shall bear
simple interest at the rate set by the Board of Directors, but in no event
greater than that allowed by law.
ARTICLE X.
WAIVER OF NOTICE AND UNANIMOUS CONSENT
10.1) Waiver of Notice. Whenever any notice whatsoever is required to be
given by these By-Laws, the Articles of Incorporation or any of the laws of the
State of Wisconsin, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before, at or after the time stated therein,
shall be deemed equivalent to the actual required notice.
10.2) Authorization Without Meeting. Any action of the shareholders, the
Board of Directors, or any lawfully constituted Executive Committee of the
Corporation which may be taken at a meeting thereof, may be taken without a
meeting if authorized by a writing signed by all of the holders of shares of
Capital Stock of the Corporation who would be entitled to notice of a meeting
for such purpose, by all of the Directors, or by all of the members such
Executive Committee, as the case may be.
ARTICLE XI.
AMENDMENTS OF BY-LAWS
11.1) Amendments. These By-Laws may be altered, amended, added to or
repealed by the affirmative vote of the majority of the members of the Board of
Directors or at any special meeting of the Board of Directors called for that
purpose, subject to the power of the shareholders to change or repeal such By-
Laws and subject to any other limitations provided by Chapter 180, Wisconsin
Statutes, provided, however, that after the date hereof the Board of Directors
shall not adopt, amend or repeal a by-law fixing a quorum for meetings of
shareholders, prescribing procedures for remaining directors or filling
vacancies in the Board of Directors, or fixing the number of directors or their
classifications, qualifications, or terms of office, but may adopt or amend a
by-law to increase the number of Directors.
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Exhibit 4.1
EXECUTION COPY
================================================================================
AmeriServe Food Distribution, Inc.
--------------------------------------
$500,000,000
10 1/8% SENIOR SUBORDINATED NOTES DUE 2007
--------------------------------------
---------------------
INDENTURE
DATED AS OF JULY 11, 1997
---------------------
State Street Bank and Trust Company
Trustee
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1) ........................................ 7.10
(a)(2) ........................................ 7.10
(a)(3) ........................................ N.A.
(a)(4) ........................................ N.A.
(a)(5) ........................................ 7.10
(b) ........................................... 7.03; 7.10
(c) ........................................... N.A.
311(a) ........................................... 7.11
(b) ........................................... 7.11
(c) ........................................... N.A.
312(a) ........................................... 2.05
(b) ........................................... 13.03
(c) ........................................... 13.03
313(a) ........................................... 7.06
(b)(1) ........................................ 7.06
(b)(2) ........................................ 7.06; 7.07
(c) ........................................... 7.06;13.02
(d) ........................................... 7.06
314(a) ........................................... 4.03;13.05
(b) ........................................... N.A.
(c)(1) ........................................ 13.04
(c)(2) ........................................ 13.04
(c)(3) ........................................ N.A.
(d) ........................................... N.A.
(e) ........................................... 13.05
(f) ........................................... N.A.
315(a) ........................................... 7.01
(b) ........................................... 7.05,13.02
(c) ........................................... 7.01
(d) ........................................... 7.01
(e) ........................................... 6.11
316(a)(last sentence) ............................ 2.09
(a)(1)(A) ..................................... 6.05
(a)(1)(B) ..................................... 6.04
(a)(2) ........................................ N.A.
(b) ........................................... 6.07
(c) ........................................... 2.13
317(a)(1) ........................................ 6.08
(a)(2) ........................................ 6.09
(b) ........................................... 2.04
318(a) ........................................... 13.01
(b) ........................................... N.A.
(c) ........................................... 13.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions ................................... 1
Section 1.02. Other Definitions ............................. 15
Section 1.03. Incorporation by Reference of
Trust Indenture Act ........................... 16
Section 1.04. Rules of Construction ......................... 16
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating ............................... 16
Section 2.02. Execution and Authentication .................. 18
Section 2.03. Registrar and Paying Agent .................... 19
Section 2.04. Paying Agent to Hold Money in Trust ........... 19
Section 2.05. Holder Lists .................................. 19
Section 2.06. Transfer and Exchange ......................... 20
Section 2.07. Replacement Notes ............................. 27
Section 2.08. Outstanding Notes ............................. 27
Section 2.09. Treasury Notes ................................ 28
Section 2.10. Temporary Notes ............................... 28
Section 2.11. Cancellation .................................. 28
Section 2.12. Defaulted Interest ............................ 29
Section 2.13. Record Date ................................... 29
Section 2.14. Computation of Interest ....................... 29
Section 2.15. CUSIP Number .................................. 29
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee ............................ 29
Section 3.02. Selection of Notes to be Redeemed
or Purchased .................................. 30
Section 3.03. Notice of Redemption .......................... 30
Section 3.04. Effect of Notice of Redemption ................ 31
Section 3.05. Deposit of Redemption or Purchase
Price ......................................... 31
Section 3.06. Notes Redeemed in Part ........................ 31
Section 3.07. Optional Redemption ........................... 32
Section 3.08. Mandatory Redemption .......................... 32
Section 3.09. Repurchase Offers ............................. 32
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes .............................. 34
Section 4.02. Maintenance of Office or Agency ............... 34
i
<PAGE> 4
Section 4.03. Commission Reports ............................ 35
Section 4.04. Compliance Certificate ........................ 35
Section 4.05. Taxes ......................................... 36
Section 4.06. Stay, Extension and Usury Laws ................ 36
Section 4.07. Restricted Payments ........................... 36
Section 4.08. Dividends and Other Payment
Restrictions Affecting Restricted
Subsidiaries .................................. 39
Section 4.09. Incurrence of Indebtedness and
Issuance of Preferred Stock ................... 39
Section 4.10. Assets Sales .................................. 42
Section 4.11. Transactions With Affiliates .................. 43
Section 4.12. Liens ......................................... 43
Section 4.13. Sale and Leaseback Transactions ............... 44
Section 4.14. Offer to Purchase Upon Change of Control ...... 44
Section 4.15. Corporate Existence ........................... 45
Section 4.16. Limitation on Issuances of Capital
Stock of Wholly Owned Restricted
Subsidiaries .................................. 45
Section 4.17. Limitations on Issuances of Guarantees
of Indebtedness ............................... 45
Section 4.18. Business Activities ........................... 46
Section 4.19. Additional Guarantees ......................... 46
Section 4.20. Payment for Consents .......................... 46
Section 4.21. Anti-Layering ................................. 46
ARTICLES 5
SUCCESSORS
Section 5.01. Merger, Consolidation of Sale of Assets ....... 47
Section 5.02. Successor Corporation Substituted ............. 47
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default ............................. 47
Section 6.02. Acceleration .................................. 49
Section 6.03. Other Remedies ................................ 50
Section 6.04. Waiver of Past Defaults ....................... 50
Section 6.05. Control by Majority ........................... 51
Section 6.06. Limitation on Suits ........................... 51
Section 6.07. Rights of Holders of Notes to
Receive Payment ............................... 51
Section 6.08. Collection Suit by Trustee .................... 51
Section 6.09. Trustee May File Proofs of Claim .............. 52
Section 6.10. Priorities .................................... 52
Section 6.11. Undertaking for Costs ......................... 53
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee ............................. 53
Section 7.02. Rights of Trustee ............................. 54
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Section 7.03. Individual Rights of Trustee .................. 55
Section 7.04. Trustee's Disclaimer .......................... 55
Section 7.05. Notice of Defaults ............................ 55
Section 7.06. Reports by Trustee to Holders of the
Notes ......................................... 55
Section 7.07. Compensation and Indemnity .................... 55
Section 7.08. Replacement of Trustee ........................ 56
Section 7.09. Successor Trustee by Merger, etc .............. 57
Section 7.10. Eligibility; Disqualification ................. 57
Section 7.11. Preferential Collection of Claims
Against The Company ........................... 57
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance
or Covenant Defeasance ........................ 58
Section 8.02. Legal Defeasance and Discharge ................ 58
Section 8.03. Covenant Defeasance ........................... 58
Section 8.04. Conditions to Legal or Covenant
Defeasance .................................... 59
Section 8.05. Deposited Money and Government
Securities to be Held in Trust;
Other Miscellaneous Provisions ................ 60
Section 8.06. Repayment to The Company ...................... 60
Section 8.07. Reinstatement ................................. 61
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of the Notes ....... 61
Section 9.02. With Consent of Holders of Notes .............. 62
Section 9.03. Compliance with Trust Indenture Act ........... 63
Section 9.04. Revocation and Effect of Consents ............. 63
Section 9.05. Notation on or Exchange of Notes .............. 63
Section 9.06. Trustee to Sign Amendments, etc ............... 64
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate ...................... 64
Section 10.02. Liquidation; Dissolution; Bankruptcy .......... 64
Section 10.03. Default on Designated Senior Debt ............. 64
Section 10.04. Acceleration of Notes ......................... 65
Section 10.05. When Distribution Must Be Paid Over ........... 65
Section 10.06. Notice by the Company ......................... 66
Section 10.07. Subrogation ................................... 66
Section 10.08. Relative Rights ............................... 66
Section 10.09. Subordination May Not Be
Impaired by the Company ....................... 66
Section 10.10. Distribution or Notice to
Representative ................................ 67
Section 10.11. Rights of Trustee and Paying Agent ............ 67
Section 10.12. Authorization to Effect
Subordination ................................. 68
Section 10.13. Amendments .................................... 68
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ARTICLE 11
GUARANTEE OF NOTES
Section 11.01. Note Guarantee ................................ 68
Section 11.02. Execution and Delivery of Note Guarantee ...... 69
Section 11.03. Subsidiary Guarantors May Consolidate,
etc., on Certain Terms ........................ 69
Section 11.04. Releases Following Sale of Assets,
Merger, Sale of Capital Stock Etc. ............ 70
Section 11.05. Additional Subsidiary Guarantors .............. 71
Section 11.06. Limitation on Subsidiary Guarantor Liability .. 71
Section 11.07. "Trustee" to Include Paying Agent ............. 71
ARTICLE 12
SUBORDINATION OF NOTE GUARANTEE
Section 12.01. Agreement to Subordinate ...................... 71
Section 12.02. Liquidation; Dissolution;
Bankruptcy .................................... 72
Section 12.03. Default on Designated Guarantor
Senior Debt ................................... 72
Section 12.04. Acceleration of Note Guarantees ............... 73
Section 12.05. When Distribution Must Be Paid Over ........... 73
Section 12.06. Notice by Subsidiary Guarantor ................ 73
Section 12.07. Subrogation ................................... 73
Section 12.08. Relative Rights ............................... 74
Section 12.09. Subordination May Not Be Impaired
by Subsidiary Guarantor ....................... 74
Section 12.10. Distribution or Notice to Representative ...... 75
Section 12.11. Rights of Trustee and Paying Agent ............ 75
Section 12.12. Authorization to Effect Subordination ......... 75
Section 12.13. Amendments .................................... 76
ARTICLE 13
MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls .................. 76
Section 13.02. Notices ....................................... 76
Section 13.03. Communication by Holders of Notes
with Other Holders of Notes ................... 77
Section 13.04. Certificate and Opinion as to
Conditions Precedent .......................... 77
Section 13.05. Statements Required in Certificate
or Opinion .................................... 78
Section 13.06. Rules by Trustee and Agents ................... 78
Section 13.07. No Personal Liability of Directors,
Officers, Employees and Stockholders .......... 78
Section 13.08. Governing Law ................................. 78
Section 13.09. No Adverse Interpretation of Other
Agreements .................................... 79
Section 13.10. Successors .................................... 79
Section 13.11. Severability .................................. 79
Section 13.12. Counterpart Originals ......................... 79
Section 13.13. Table of Contents, Headings, etc .............. 79
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EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFEROR
Exhibit C FORM OF CERTIFICATE FROM ACQUIRING
INSTITUTIONAL ACCREDITED INVESTOR
Exhibit D FORM OF NOTE GUARANTEE
Exhibit E FORM OF SUPPLEMENTAL INDENTURE
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<PAGE> 8
Indenture, dated as of July 11, 1997, among AmeriServe Food Distribution,
Inc., a Nebraska corporation (the "Company"), AmeriServ Food Company, a
Delaware corporation ("AmeriServ"), Chicago Consolidated Corporation, an
Illinois corporation ("CCC"), Northland Transportation Services, Inc., a
Nebraska corporation ("Northland"), The Harry H. Post Company, a Colorado
corporation ("Post"), Delta Transportation, Ltd., a Wisconsin corporation
("Delta") and AmeriServe Transportation, Inc., a Nebraska corporation ("ATI")
(each of AmeriServ, CCC, Northland, Post, Delta and ATI a "Subsidiary Guarantor"
and together with any Subsidiary of the Company that executes a Note Guarantee
substantially in the form of EXHIBIT D attached hereto, the "Subsidiary
Guarantors") and State Street Bank and Trust Company, as trustee (the
"Trustee").
The Company, the Subsidiary Guarantors and the Trustee agree as follows
for the benefit of each other and for the equal and ratable benefit of the
holders of the Company's 10 1/8% Senior Subordinated Notes due 2007 (the "Senior
Subordinated Notes") and the new 10 1/8% Senior Subordinated Notes due 2007 (the
"Senior Subordinated Notes" and, together with the Senior Subordinated Notes,
the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange of
beneficial interests in a Global Note, the rules and procedures of the
Depositary that apply to such transfer and exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory in the ordinary course of business
consistent with past practices and other than a Receivables Transaction
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole will be governed by Section 4.14 and/or Article 5 hereof and
not by the provisions of Section 4.10 hereof), and (ii) the issue or sale by the
Company or any of its Restricted Subsidiaries of Equity Interests of any of the
Company's Restricted Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $3.0 million or (b) for net proceeds in
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excess of $3.0 million. Notwithstanding the foregoing: (i) a transfer of assets
by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned
Restricted Subsidiary to the Company or to another Wholly Owned Restricted
Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary, and
(iii) a Restricted Payment that is permitted by Section 4.07 hereof will not be
deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Board of Directors " means the board of directors of the Company or any
authorized committee of such board of directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any lender party to the New Credit
Facility or with any domestic commercial bank having capital and surplus in
excess of $500 million and a Thompson Bank Watch Rating of "B" or better, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above, (v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each
case maturing within six months after the date of acquisition and (vi)
securities quoted by the Nasdaq National Market or listed on a United States,
Canadian or Western European national securities exchange.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as
2
<PAGE> 10
a whole to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act) other than the Principals or their Related Parties (as defined
below), (ii) the adoption of a plan relating to the liquidation or dissolution
of the Company, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
50% of the Voting Stock of the Company (measured by voting power rather than
number of shares), (iv) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors or (v) the
Company consolidates with, or merges with or into, any Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, or any Person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in which any of
the outstanding Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, other than any such transaction where the
Voting Stock of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person (immediately
after giving effect to such issuance).
"Commission" means the Securities and Exchange Commission.
"Company" means AmeriServe Food Distribution, Inc., a Nebraska
corporation.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, plus (v) in connection with
any acquisition by the Company or a Restricted Subsidiary, projected
quantifiable improvements in operating results (on an annualized basis) due to
cost reductions calculated in accordance with Article 11 of Regulation S-X of
the Securities Act and evidenced by (A) in the case of cost reductions of less
than $10.0 million, an Officers' Certificate delivered to the Trustee and (B) in
the case of cost reductions of $10.0 million or more, a resolution of the Board
of Directors set forth in an Officers' Certificate delivered to the Trustee,
minus (vi) non-cash items increasing such Consolidated Net Income for such
period. Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization and other non-cash charges of,
a Subsidiary of the referent
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<PAGE> 11
Person shall be added to Consolidated Net Income to compute Consolidated Cash
Flow only to the extent that a corresponding amount would be permitted at the
date of determination to be dividended to the Company by such Subsidiary without
prior governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Subsidiary or its stockholders,
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded, (iv) the cumulative effect of a change in accounting principles shall
be excluded and (v) the Net Income of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Company or one of its Restricted
Subsidiaries for purposes of Section 4.09 hereof and shall be included for
purposes of Section 4.07 hereof only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of the Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person. (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture, (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election or (iii) any successor Continuing Directors appointed by
such Continuing Directors (or their successors).
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agent" means the Bank of America, in its capacity as
Administrative Agent for the lenders party to the New Credit Facility or any
successor thereto or any person otherwise appointed.
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<PAGE> 12
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Notes" means Notes that are in the form of EXHIBIT A-1
attached hereto (but without including the text referred to in footnotes 1 and 3
thereto).
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to Section 2.06 of this Indenture, and,
thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
New Credit Facility and (ii) any other Senior Debt permitted under the Indenture
the principal amount of which is $25.0 million or more and that has been
designated by the Company as "Designated Senior Debt.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature; provided, however,
that any Capital Stock that would not qualify as Disqualified Stock but for
change of control provisions shall not constitute Disqualified Stock if the
provisions are not more favorable to the holders of such Capital Stock than the
provisions described under Section 4.14 hereof.
"DLJ" means Donaldson, Lufkin & Jenrette Securities Corporation.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, the Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer by the Company to Holders to exchange
Senior Subordinated Notes for New Senior Subordinated Notes.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the New Credit Facility) in
existence on the date of the Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments (if any)
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<PAGE> 13
pursuant to Hedging Obligations) and (ii) the consolidated interest expense of
such Person and its Restricted Subsidiaries that was capitalized during such
period, and (iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such Guarantee or Lien is called upon) and (iv) the product of (a) all
dividend payments, whether or not in cash, on any series of preferred stock of
such Person or any of its Restricted Subsidiaries, other than dividend payments
on Equity Interests payable solely in Equity Interests of the Company, times (b)
a fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
"Global Notes" means the Rule 144A Global Notes, the Regulation S
Temporary Global Notes and the Regulation S Permanent Global Notes and any Notes
exchanaged for any of the foregoing in the Exchange Offer.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without
6
<PAGE> 14
limitation, letters of credit and reimbursement agreements in respect thereof),
of all or any part of any Indebtedness.
"Guarantor Senior Debt" means Senior Debt of a Subsidiary Guarantor.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency rates.
"Holberg" means Holberg Industries, Inc., a Delaware corporation, the
indirect parent of the Company.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Indirect Participant" means a Person who holds an interest through a
Participant.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
Corporation and BancAmerica Securities, Inc.
"Insolvency or Liquidation Proceedings" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding, relative to the Company or to the creditors
of the Company, as such, or to the assets of the Company, or (ii) any
liquidation, dissolution, reorganization or winding up of the Company, whether
voluntary or involuntary and involving insolvency or bankruptcy, or (iii) any
assignment for the benefit of creditors or any other marshalling of assets and
liabilities of the Company.
"Institutional Accredited Investor" means an "accredited investor" as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances
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to officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of in an amount determined as provided in the final paragraph of the
covenant described under Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the city in which the principal Corporate
Trust Office of the Trustee is located or at a place of payment are authorized
by law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday, payment shall be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"NEHC" means Nebco Evans Holding Company, a Delaware corporation, the
parent of the Company.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"New Credit Facility" means that certain Credit Facility, dated as of the
date of the Indenture, by and among the Company and Bank of America, providing
for up to $150.0 million of revolving credit borrowings and $205.0 million of
term credit borrowings, including any related notes, guarantees,
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collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced or
refinanced from time to time.
"New Senior Subordinated Notes" means the Company's 10 1/2% Senior
Subordinated Notes due 2007, which will be issued in exchange for the Company's
Senior Subordinated Notes.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness (other than the Notes being
offered hereby) of the Company or any of its Restricted Subsidiaries to declare
a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.
"Note Custodian" means the Trustee, when serving as custodian for the
Depositary with respect to the Notes in global form, or any successor entity
thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offer and sale of the Senior Subordinated Notes as
contemplated by the Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum, dated July 9, 1997,
relating to the Company's offering and placement of the Senior Subordinated
Notes.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 13.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 13.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"Participant" means, with respect to DTC, Euroclear or Cedel, a Person who
has an account with DTC, Euroclear or Cedel, respectively (and, with respect to
DTC, shall include Euroclear and Cedel).
"payment in full" (together with any correlative phrases e.g. paid in
full" and "pay in full") means (i) with respect to any Senior Debt other than
Senior Debt under or in respect of the New Credit Facility, payment in full
thereof or due provision for payment thereof (x) in accordance with the terms of
the agreement or instrument pursuant to which such Senior Debt was issued or is
governed or (y) otherwise to the reasonable satisfaction of the holders of such
Senior Debt, which shall include, in any
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Insolvency or Liquidation Proceeding, approval by such holders individually or
as a class, of the provision for payment thereof, and (ii) with respect to
Senior Debt under or in respect of the New Credit Facility, payment in full
thereof in cash or Cash Equivalents.
"Permitted Business" means any of the businesses and any other businesses
related to the businesses engaged in by the Company and its respective
Restricted Subsidiaries on the date of the Indenture.
"Permitted Investments" means (a) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company that is engaged in a Permitted
Business; (b) any Investment in Cash Equivalents; (c) any Investment by the
Company or any Restricted Subsidiary of the Company in a Person, if as a result
of such Investment (i) such Person becomes a Wholly Owned Restricted Subsidiary
of the Company that is engaged in a Permitted Business or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Wholly Owned Restricted Subsidiary of the Company that is engaged in a Permitted
Business; (d) any Restricted Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof; (e) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock) of
the Company; (f) loans and advances made after the date of the Indenture to
Holberg not to exceed $10.0 million at any time outstanding; (g) loans and
advances made after the date of the Indenture to NEHC not to exceed $10.0
million at any time outstanding; and (h) other Investments made after the date
of the Indenture in any Person having an aggregate fair market value (measured
on the date each such Investment was made and without giving effect to
subsequent changes in value), when taken together with all other Investments
made pursuant to this clause (h) that are at the time outstanding, not to exceed
$10.0 million.
"Permitted Liens" means (i) Liens securing Indebtedness under the New
Credit Facility that was permitted by the terms of the Indenture to be incurred;
(ii) Liens in favor of the Company; (iii) Liens on property of a Person existing
at the time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company, provided that such
Liens were in existence prior to the contemplation of such acquisition; (v)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vi) Liens existing on the date of the Indenture;
(vii) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (viii) Liens incurred in the ordinary course
of business of the Company or any Restricted Subsidiary of the Company with
respect to obligations that do not exceed $5.0 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Restricted Subsidiary and (ix)
Liens on assets of Unrestricted Subsidiaries that (A) secure Non-Recourse Debt
of Unrestricted Subsidiaries or (B) are incurred in connection with a
Receivables Transaction.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance,
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renew, replace, defease or refund other Indebtedness of the Company or any of
its Restricted Subsidiaries; provided that: (i) except for Indebtedness used to
extend, refinance, renew, replace, defease or refund the New Credit Facility,
the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Principals" means Holberg, John V. Holten, Orkla ASA, Nebco Evans
Distributors, Inc., NEHC, DLJ Merchant Banking, L.P., DLJ International
Partners, C.V., DLJ Offshore Partners, C.V., DLJ Merchant Banking Funding, Inc.,
DLJ Merchant Banking Partners II, L.P., DLJ Merchant Banking Partners II-A,
L.P., DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ
Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ Millennium
Partners-A, L.P., DLJMB Funding II, Inc., DLJ First ESC LLC, and DLJ EAB
Partners, L.P.
"Private Placement Legend" means the legend initially set forth on the
Senior Subordinated Notes in the form set forth in Section 2.06(f) hereof.
"Public Equity Offering" means a public offering of Equity Interests
(other than Disqualified Stock) of (i) the Company; or (ii) NEHC to the extent
the net proceeds thereof are contributed to the Company as a capital
contribution, that, in each case, results in the net proceeds to the Company of
at least $25.0 million.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A
under the Securities Act.
"Receivables" means, with respect to any Person or entity, all of the
following property and interests in property of such Person or entity, whether
now existing or existing in the future or hereafter acquired or arising: (i)
accounts, (ii) accounts receivable incurred in the ordinary course of business,
including without limitation, all rights to payment created by or arising from
sales of goods, leases of goods or the rendition of services no matter how
evidenced, whether or not earned by performance, (iii) all rights to any goods
or merchandise represented by any of the foregoing after creation of the
foregoing, including, without limitation, returned or repossessed goods, (iv)
all reserves and credit balances with respect to any such accounts receivable or
account debtors, (v) all letters of credit, security, or guarantees for any of
the foregoing, (vi) all insurance policies or reports relating to any of the
foregoing, (vii) all collection or deposit accounts relating to any of the
foregoing, (viii) all proceeds of the foregoing and (ix) all books and records
relating to any of the foregoing.
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"Receivables Subsidiary" means an Unrestricted Subsidiary exclusively
engaged in Receivables Transactions and activities related thereto; provided,
however, that (i) at no time shall the Company and its Subsidiaries have more
than one Receivables Subsidiary and (ii) all Indebtedness or other borrowings of
such Unrestricted Subsidiary shall be Non-Recourse Debt.
"Receivables Transaction" means (i) the sale or other disposition to a
third party of Receivables or an interest therein, or (ii) the sale or other
disposition of Receivables or an interest therein to a Receivables Subsidiary
followed by a financing transaction in connection with such sale or disposition
of such Receivables (whether such financing transaction is effected by such
Receivables Subsidiary or by a third party to whom such Receivables Subsidiary
sells such Receivables or interests therein); provided that in each of the
foregoing, the Company or its Subsidiaries receive at least 80% of the aggregate
principal amount of any Receivables financed in such transaction.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the date hereof, by and among the Company, the Subsidiary Guarantors
and the Initial Purchasers.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Notes" means the Regulation S Temporary Global Notes
or the Regulation S Permanent Global Notes as applicable.
"Regulation S Permanent Global Notes" means the permanent global notes
that do not contain the paragraphs referred to in footnote 1 to the form of the
Note attached hereto as EXHIBIT A-2, and that are deposited with and registered
in the name of the Depositary or its nominee, representing a series of Notes
sold in reliance on Regulation S.
"Regulation S Temporary Global Notes" means the temporary global notes
that contain the paragraphs referred to in footnote 1 to the form of the Note
attached hereto as EXHIBIT A-2, and that are deposited with and registered in
the name of the Depositary or its nominee, representing a series of Notes sold
in reliance on Regulation S.
"Related Party" with respect to any Principal means (A) any controlling
stockholder or partner, 80% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership, limited liability company or other entity, the
beneficiaries, stockholders, partners, members, owners or Persons beneficially
holding an 80% or more controlling interest of which consist of such Principal
and/or such other Persons referred to in the immediately preceding clause (A).
"Reorganization Securities" means securities distributed to the Holders of
the Notes in an Insolvency or Liquidation Proceeding pursuant to a plan of
reorganization consented to by each class of the Senior Debt, but only if all of
the terms and conditions of such securities (including, without limitation,
term, tenor, interest, amortization, subordination, standstills, covenants and
defaults), are at least as favorable (and provide the same relative benefits) to
the holders of Senior Debt and to the holders of any security distributed in
such Insolvency or Liquidation Proceeding on account of any such Senior Debt as
the terms and conditions of the Notes and the Indenture are, and provide to the
holders of Senior Debt.
"Representative" means the trustee, agent or representative for any Senior
Debt.
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"Responsible Officer" when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Beneficial Interest" means any beneficial interest of a
Participant or Indirect Participant in the Rule 144A Global Note or the
Regulation S Global Note.
"Restricted Broker Dealer" has the meaning set forth in the Registration
Rights Agreement.
"Restricted Global Notes" means the Rule 144A Global Notes and the
Regulation S Global Notes, all of which shall bear the Private Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Notes" means the permanent global notes that contain the
paragraph referred to in footnote 1 and the additional schedule referred to in
footnote 3 to the form of the Note attached hereto as EXHIBIT A-1, and that is
deposited with and registered in the name of the Depositary or its nominee,
representing a series of Notes sold in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means (i) all Indebtedness outstanding under the New Credit
Facility, including any Guarantees thereof and all Hedging Obligations with
respect thereto, (ii) any other Indebtedness permitted to be incurred by the
Company under the terms of this Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes and (iii) all Obligations with
respect to the foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (w) any liability for federal, state,
local or other taxes owed or owing by the Company, (x) any Indebtedness of the
Company to any of its Subsidiaries or other Affiliates, (y) any trade payables
or (z) any Indebtedness that is incurred in violation of this Indenture.
"Senior Subordinated Notes " means the Company's 10 1/8% Senior
Subordinated Notes due 2007.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
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repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" means all Subsidiaries of the Company that execute
a Note Guarantee of the Notes substantially in the form of EXHIBIT D attached
hereto.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss
77aaa-77bbbb), as amended, as in effect on the date hereof.
"Transfer Restricted Securities" means Notes or beneficial interests
therein that bear or are required to bear the Private Placement Legend.
"Trustee" means State Street Bank and Trust Company until a successor
replaces it in accordance with the applicable provisions of this Indenture, and
thereafter means the successor.
"Unrestricted Global Notes" means one or more Global Notes that do not and
are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Restricted Subsidiaries; and (e) has at least one director
on its board of directors that is not a director or executive officer of the
Company or any of its Restricted Subsidiaries and has at least one executive
officer that is not a director or executive officer of the Company or any of its
Restricted Subsidiaries. Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of the
Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under Section 4.09
hereof, the Company shall be in default of such covenant). The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided
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that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under Section 4.09 hereof, and (ii) no Default or
Event of Default would be in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction" 4.11
"Asset Sale Offer" 4.10
"Change of Control Offer" 4.14
"Change of Control Payment" 4.14
"Change of Control Payment Date" 4.14
"Covenant Defeasance" 8.03
"Custodian" 6.01
"DTC" 2.03
"Event of Default" 6.01
"Excess Proceeds" 4.10
"incur" 4.09
"Legal Defeasance" 8.02
"Offer Amount" 3.09
"Offer Period" 3.09
"Paying Agent" 2.03
"Payment Default" 6.01
"Permitted Debt" 4.09
"Purchase Date" 3.09
"Registrar" 2.03
"Repurchase Offer" 3.09
"Restricted Payments" 4.07
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SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company, each Subsidiary Guarantor
and any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by the Commission rule
under the TIA have the meanings so assigned to them therein.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein;
(2) an accounting term not otherwise defined herein has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement or successor sections or
rules adopted by the Commission from time to time.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of EXHIBIT A-1 or EXHIBIT A-2 attached hereto. The
Notes may have notations, legends or endorsements
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<PAGE> 24
required by law, stock exchange rule or usage. Each Note shall be dated
the date of its authentication. The Notes initially shall be issued in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company, the Subsidiary
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
(a) Global Notes. Notes offered and sold to QIBs in reliance on Rule
144A shall be issued initially in the form of Rule 144A Global Notes, which
shall be deposited on behalf of the purchasers of the Notes represented thereby
with a custodian of the Depositary, and registered in the name of the Depositary
or a nominee of the Depositary, duly executed by the Company and authenticated
by the Trustee as hereinafter provided. The aggregate principal amount of the
Rule 144A Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its nominee
as hereinafter provided.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, as custodian for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Cedel, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The "40-day restricted
period" (as defined in Regulation S) shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Notes (except to the
extent of any beneficial owners thereof who acquired an interest therein
pursuant to another exemption from registration under the Securities Act and who
will take delivery of a beneficial ownership interest in a Rule 144A Global
Note, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers'
Certificate from the Company certifying as to the same matters covered in clause
(i) above. Following the termination of the 40-day restricted period, beneficial
interests in the Regulation S Temporary Global Note shall be exchanged for
beneficial interests in Regulation S Permanent Global Notes pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary
Global Notes. The aggregate principal amount of the Regulation S Temporary
Global Notes and the Regulation S Permanent Global Notes may from time to time
be increased or decreased by adjustments made on the records of the Trustee and
the Depositary or its nominee, as the case may be, in connection with transfers
of interest as hereinafter provided.
Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges,
redemptions and transfers of interests. Any endorsement of a Global Note to
reflect the amount of any increase or decrease in the amount of outstanding
Notes represented thereby shall be made by the Trustee or the Note Custodian, at
the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 2.06 hereof.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations" and "Instructions to Participants" of Cedel shall be applicable to
interests in the Regulation S Temporary Global Notes and the Regulation S
Permanent Global Notes that are held by Participants through Euroclear or Cedel.
The
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Trustee shall have no obligation to notify Holders of any such procedures or to
monitor or enforce compliance with the same.
Except as set forth in Section 2.06 hereof, the Global Notes may be
transferred, in whole and not in part, only to another nominee of the Depositary
or to a successor of the Depositary or its nominee.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply only to
Rule 144A Global Notes and Regulation S Permanent Global Notes deposited with or
on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(b), authenticate and deliver the Global Notes that (i) shall
be registered in the name of the Depositary or the nominee of the Depositary and
(ii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions or held by the Trustee as custodian for the
Depositary.
Participants shall have no rights either under this Indenture with
respect to any Global Note held on their behalf by the Depositary or by the Note
Custodian as custodian for the Depositary or under such Global Note, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Participants, the
operation of customary practices of such Depositary governing the exercise of
the rights of an owner of a beneficial interest in any Global Note.
(c) Definitive Notes. Notes issued in certificated form shall be
substantially in the form of EXHIBIT A-1 attached hereto (but without including
the text referred to in footnotes 1 and 3 thereto).
SECTION 2.02. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Notes shall be substantially as
set forth in EXHIBIT A-1 or EXHIBIT A-2 hereto.
The Trustee shall, upon a written order of the Company signed by an
Officer directing the Trustee to authenticate the Notes, authenticate Notes for
original issue up to the aggregate principal amount stated in paragraph 4 of the
Notes. The Trustee shall, upon written order of the Company signed by an
Officer, authenticate New Senior Subordinated Notes for original issuance in
exchange for a like principal amount of Senior Subordinated Notes exchanged in
the Exchange Offer or otherwise exchanged for New Senior Subordinated Notes
pursuant to the terms of the Registration Rights Agreement. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.
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The Trustee may (at the Company's expense) appoint an authenticating
agent acceptable to the Company to authenticate Notes. An authenticating agent
may authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with the
Company or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii) an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and Paying
Agent with respect to the Definitive Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
shall notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
the occurrence of events specified in Section 6.0l(vii) through (ix) hereof, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss 312(a). If the Trustee is not
the Registrar, the Company and/or the Subsidiary Guarantors shall furnish to the
Trustee at least seven (7) Business Days before each interest payment date and
at such other times as the Trustee may request in writing, a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders of Notes and the Company and the Subsidiary Guarantors
shall otherwise comply with TIA ss 312(a).
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SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. The transfer and exchange
of Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act. Beneficial
interests in a Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the same Global Note in
accordance with the transfer restrictions set forth in the legend in subsection
(g) of this Section 2.06. Transfers of beneficial interests in the Global Notes
to Persons required to take delivery thereof in the form of an interest in
another Global Note shall be permitted as follows:
(i) Rule 144A Global Note to Regulation S Global Note. If, at any
time, an owner of a beneficial interest in a Rule 144A Global
Note deposited with the Depositary (or the Trustee as
custodian for the Depositary) wishes to transfer its
beneficial interest in such Rule 144A Global Note to a Person
who is required or permitted to take delivery thereof in the
form of an interest in a Regulation S Global Note, such owner
shall, subject to the Applicable Procedures, exchange or cause
the exchange of such interest for an equivalent beneficial
interest in a Regulation S Global Note as provided in this
Section 2.06(a)(i). Upon receipt by the Trustee of (1)
instructions given in accordance with the Applicable
Procedures from a Participant directing the Trustee to credit
or cause to be credited a beneficial interest in the
Regulation S Global Note in an amount equal to the beneficial
interest in the Rule 144A Global Note to be exchanged, (2) a
written order given in accordance with the Applicable
Procedures containing information regarding the Participant
account of the Depositary and the Euroclear or Cedel account
to be credited with such increase, and (3) a certificate in
the form of EXHIBIT B-1 hereto given by the owner of such
beneficial interest stating that the transfer of such interest
has been made in compliance with the transfer restrictions
applicable to the Global Notes and pursuant to and in
accordance with Rule 903 or Rule 904 of Regulation S, then the
Trustee, as Registrar, shall instruct the Depositary to reduce
or cause to be reduced the aggregate principal amount at
maturity of the applicable Rule 144A Global Note and to
increase or cause to be increased the aggregate principal
amount at maturity of the applicable Regulation S Global Note
by the principal amount at maturity of the beneficial interest
in the Rule 144A Global Note to be exchanged or transferred,
to credit or cause to be credited to the account of the Person
specified in such instructions, a beneficial interest in the
Regulation S Global Note equal to the reduction in the
aggregate principal amount at maturity of the Rule 144A Global
Note, and to debit, or cause to be debited, from the account
of the Person making such exchange or transfer the beneficial
interest in the Rule 144A Global Note that is being exchanged
or transferred.
(ii) Regulation S Global Note to Rule 144A Global Note. If, at any
time, after the expiration of the 40-day restricted period, an
owner of a beneficial interest in a Regulation S Global Note
deposited with the Depositary or with the Trustee as custodian
for the Depositary wishes to transfer its beneficial interest
in such Regulation S Global Note to a Person who is required
or permitted to take delivery thereof in the form of an
interest in a Rule 144A Global Note, such owner shall, subject
to the Applicable Procedures, exchange or cause the exchange
of such interest for an equivalent beneficial interest in a
Rule 144A
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Global Note as provided in this Section 2.06(a)(ii). Upon
receipt by the Trustee of (1) instructions from Euroclear or
Cedel, if applicable, and the Depositary, directing the
Trustee, as Registrar, to credit or cause to be credited a
beneficial interest in the Rule 144A Global Note equal to the
beneficial interest in the Regulation S Global Note to be
exchanged, such instructions to contain information regarding
the Participant account with the Depositary to be credited
with such increase, (2) a written order given in accordance
with the Applicable Procedures containing information
regarding the participant account of the Depositary and (3) a
certificate in the form of EXHIBIT B-2 attached hereto given
by the owner of such beneficial interest stating (A) if the
transfer is pursuant to Rule 144A, that the Person
transferring such interest in a Regulation S Global Note
reasonably believes that the Person acquiring such interest
in a Rule 144A Global Note is a QIB and is obtaining such
beneficial interest in a transaction meeting the requirements
of Rule 144A and any applicable blue sky or securities laws
of any state of the United States, (B) that the transfer
complies with the requirements of Rule 144 under the
Securities Act, (C) if the transfer is to an Institutional
Accredited Investor that such transfer is in compliance with
the Securities Act and a certificate in the form of EXHIBIT C
attached hereto and, if such transfer is in respect of an
aggregate principal amount of less than $100,000, an Opinion
of Counsel acceptable to the Company that such transfer is in
compliance with the Securities Act or (D) if the transfer is
pursuant to any other exemption from the registration
requirements of the Securities Act, that the transfer of such
interest has been made in compliance with the transfer
restrictions applicable to the Global Notes and pursuant to
and in accordance with the requirements of the exemption
claimed, such statement to be supported by an Opinion of
Counsel from the transferee or the transferor in form
reasonably acceptable to the Company and to the Registrar and
in each case, in accordance with any applicable securities
laws of any state of the United States or any other
applicable jurisdiction, then the Trustee, as Registrar,
shall instruct the Depositary to reduce or cause to be
reduced the aggregate principal amount at maturity of such
Regulation S Global Note and to increase or cause to be
increased the aggregate principal amount at maturity of the
applicable Rule 144A Global Note by the principal amount at
maturity of the beneficial interest in the Regulation S
Global Note to be exchanged or transferred, and the Trustee,
as Registrar, shall instruct the Depositary, concurrently
with such reduction, to credit or cause to be credited to the
account of the Person specified in such instructions a
beneficial interest in the applicable Rule 144A Global Note
equal to the reduction in the aggregate principal amount at
maturity of such Regulation S Global Note and to debit or
cause to be debited from the account of the Person making
such transfer the beneficial interest in the Regulation S
Global Note that is being exchanged or transferred.
(b) Transfer and Exchange of Definitive Notes. When Definitive Notes are
presented by a Holder to the Registrar with a request to register the transfer
of the Definitive Notes or to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized denominations, the
Registrar shall register the transfer or make the exchange as requested only if
the Definitive Notes are presented or surrendered for registration of transfer
or exchange, are endorsed and contain a signature guarantee or accompanied by a
written instrument of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney and contains a signature guarantee,
duly authorized in writing and the Registrar received the following
documentation (all of which may be submitted by facsimile):
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(i) in the case of Definitive Notes that are Transfer Restricted
Securities, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being delivered
to the Registrar by a Holder for registration in the
name of such Holder, without transfer, or such Transfer
Restricted Security is being transferred to the Company
or any of its Subsidiaries, a certification to that
effect from such Holder (in substantially the form of
EXHIBIT B-3 hereto); or
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form
of EXHIBIT B-3 hereto); or
(C) if such Transfer Restricted Security is being
transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 904 under the
Securities Act, a certification to that effect from such
Holder (in substantially the form of EXHIBIT B-3
hereto);
(D) if such Transfer Restricted Security is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration
requirements of the Securities Act other than those
listed in subparagraphs (B) and (C) above, a
certification to that effect from such Holder (in
substantially the form of EXHIBIT B-3 hereto), a
certification substantially in the form of EXHIBIT C
hereto, and, if such transfer is in respect of an
aggregate principal amount of Notes of less than
$100,000, an Opinion of Counsel acceptable to the
Company that such transfer is in compliance with the
Securities Act; or
(E) if such Transfer Restricted Security is being
transferred in reliance on any other exemption from the
registration requirements of the Securities Act, a
certification to that effect from such Holder (in
substantially the form of EXHIBIT B-3 hereto) and an
Opinion of Counsel from such Holder or the transferee
reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act.
(c) Transfer of a Beneficial Interest in a Rule 144A Global Note or
Regulation S Permanent Global Note for a Definitive Note.
(i) Any Person having a beneficial interest in a Rule 144A Global
Note or Regulation S Permanent Global Note may upon request,
subject to the Applicable Procedures, exchange such beneficial
interest for a Definitive Note. Upon receipt by the Trustee of
written instructions or such other form of instructions as is
customary for the Depositary (or Euroclear or Cedel, if
applicable), from the Depositary or its nominee on behalf of
any Person having a beneficial interest in a Rule 144A Global
Note or Regulation S Permanent Global Note, and, in the
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case of a Transfer Restricted Security, the following
additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the
beneficial owner, a certification to that effect from
such Person (in substantially the form of EXHIBIT B-4
hereto);
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities
Act or pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act or
pursuant to an effective registration statement under
the Securities Act, a certification to that effect from
the transferor (in substantially the form of EXHIBIT B-4
hereto);
(C) if such beneficial interest is being transferred to an
Institutional Accredited Investor, pursuant to a private
placement exemption from the registration requirements
of the Securities Act (and based on an opinion of
counsel if the Company so requests), a certification to
that effect from such Holder (in substantially the form
of EXHIBIT B-4 hereto) and a certificate from the
applicable transferee (in substantially the form of
EXHIBIT C hereto); or
(D) if such beneficial interest is being transferred in
reliance on any other exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferor (in substantially the
form of EXHIBIT B-4 hereto) and an Opinion of Counsel
from the transferee or the transferor reasonably
acceptable to the Company and to the Registrar to the
effect that such transfer is in compliance with the
Securities Act, in which case the Trustee or the Note
Custodian, at the direction of the Trustee, shall, in
accordance with the standing instructions and procedures
existing between the Depositary and the Note Custodian,
cause the aggregate principal amount of Rule 144A Global
Notes or Regulation S Permanent Global Notes, as
applicable, to be reduced accordingly and, following
such reduction, the Company shall execute and, the
Trustee shall authenticate and deliver to the transferee
a Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial interest
in a Rule 144A Global Note or Regulation S Permanent Global
Note, as applicable, pursuant to this Section 2.06(c) shall be
registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its direct or
Indirect Participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered.
Following any such issuance of Definitive Notes, the Trustee,
as Registrar, shall instruct the Depositary to reduce or cause
to be reduced the aggregate principal amount at maturity of
the applicable Global Note to reflect the transfer.
(d) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding
any other provision of this Indenture (other than the provisions set forth in
subsection (f) of this Section 2.06), a
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Global Note may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(e) Transfer and Exchange of a Definitive Note for a Beneficial Interest
in a Global Note. A definitive Note may not be transferred or exchanged for a
beneficial interest in a Global Note.
(f) Authentication of Definitive Notes in Absence of Depositary. If at any
time:
(i) the Depositary for the Notes notifies the Company that
the Depositary is unwilling or unable to continue as
Depositary for the Global Notes and a successor
Depositary for the Global Notes is not appointed by the
Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance
of Definitive Notes under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each Note certificate evidencing Global
Notes and Definitive Notes (and all Notes issued in
exchange therefor or substitution thereof) shall bear
the legend (the "Private Placement Legend") in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED
HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (l)(a) INSIDE THE UNITED STATES TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER
THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE
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501(a)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN
"INSTITUTIONAL ACCREDITED INVESTOR"), THAT PRIOR TO
SUCH TRANSFER, FURNISHED THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE
FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES LESS THAN $100,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, OR (e) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND, IN THE CASE OF
CLAUSE (b), (c), (d) OR (e), BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY
OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY
OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Note) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act:
(A) in the case of any Transfer Restricted Security that
is a Definitive Note, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted
Security for a Definitive Note that does not bear the
legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer
Restricted Security upon receipt of a certification
from the transferring holder substantially in the
form of EXHIBIT B-4 hereto; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer
Restricted Security shall not be required to bear the
legend set forth in (i) above, but shall continue to
be subject to the provisions of Section 2.06(a) and
(b) hereof; provided, however, that with respect to
any request for an exchange of a Transfer Restricted
Security that is represented by a Global Note for a
Definitive Note that does not bear the legend set
forth in (i) above, which request is made in reliance
upon Rule 144, the Holder thereof shall certify in
writing to the Registrar that such request is being
made pursuant to Rule 144 (such certification to be
substantially in the form of EXHIBIT B-4 hereto).
(iii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Note) in reliance on any exemption from the
registration requirements of the Securities Act (other than
exemptions pursuant to Rule 144A or Rule 144 under the
Securities Act) in which the Holder or the transferee provides
an Opinion of Counsel to the Company and the Registrar in form
and substance reasonably acceptable to the Company and the
Registrar (which Opinion of Counsel shall also state that the
transfer restrictions contained in the legend are no longer
applicable):
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(A) in the case of any Transfer Restricted Security that is
a Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security
for a Definitive Note that does not bear the legend set
forth in (i) above and rescind any restriction on the
transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted
Security shall not be required to bear the legend set
forth in (i) above, but shall continue to be subject to
the provisions of Section 2.06(a) and (b) hereof.
(iv) Notwithstanding the foregoing, upon the consummation of the
Exchange Offer in accordance with the Registration Rights
Agreement, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02
hereof, the Trustee shall authenticate (i) one or more
Unrestricted Global Notes in aggregate principal amount
equal to the principal amount of the Restricted Beneficial
Interests tendered for acceptance by persons that are not
(x) broker-dealers, (y) Persons participating in the
distribution of the Notes or (z) Persons who are affiliates
(as defined in Rule 144) of the Company and accepted for
exchange in the Exchange Offer and (ii) Definitive Notes
that do not bear the Private Placement Legend in an
aggregate principal amount equal to the principal amount of
the Restricted Definitive Notes accepted for exchange in
the Exchange Offer. Concurrently with the issuance of such
Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be
reduced accordingly and the Company shall execute and the
Trustee shall authenticate and deliver to the Persons
designated by the Holders of Definitive Notes so accepted
Definitive Notes in the appropriate principal amount.
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in Global Notes have been exchanged for Definitive
Notes, redeemed, repurchased or cancelled, all Global Notes shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Notes Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the
Trustee shall authenticate Global Notes and
Definitive Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for
any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to
cover any stamp or transfer tax or similar
governmental charge payable in connection
therewith (other than any such stamp or transfer
taxes or similar governmental charge
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payable upon exchange or transfer pursuant to
Sections 2.10, 3.06, 4.10, 4.14 and 9.05 hereto).
(iii) All Global Notes and Definitive Notes issued upon
any registration of transfer or exchange of Global
Notes or Definitive Notes shall be the valid
obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this
Indenture, as the Global Notes or Definitive Notes
surrendered upon such registration of transfer or
exchange.
(iv) The Registrar shall not be required:(A) to
issue, to register the transfer of or to
exchange Notes during a period beginning at the
opening of fifteen (15) Business Days before
the day of any selection of Notes for
redemption under Section 3.02 hereof and ending
at the close of business on the day of
selection, (B) to register the transfer of or
to exchange any Note so selected for redemption
in whole or in part, except the unredeemed
portion of any Note being redeemed in part, or
(C) to register the transfer of or to exchange
a Note between a record date and the next
succeeding interest payment date.
(v) Prior to due presentment for the registration
of a transfer of any Note, the Trustee, any
Agent and the Company may deem and treat the
Person in whose name any Note is registered as
the absolute owner of such Note for the purpose
of receiving payment of principal of and
interest on such Notes and for all other
purposes, and neither the Trustee, any Agent
nor the Company shall be affected by notice to
the contrary.
(vi) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions
of Section 2.02 hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receives evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by an Officer of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company and the Trustee may
charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note
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effected by the Trustee in accordance with the provisions hereof, and those
described in this Section 2.08 as not outstanding. Except as set forth in
Section 2.09 hereof, a Note does not cease to be outstanding because the Company
or any Subsidiary Guarantor or an Affiliate of the Company or any Subsidiary
Guarantor holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or any Subsidiary Guarantor, or by any Affiliate of the Company or any
Subsidiary Guarantor shall be considered as though not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes shown on the
Trustee's register as being so owned shall be so disregarded. Notwithstanding
the foregoing, Notes that are to be acquired by the Company or any Subsidiary
Guarantor or an Affiliate of the Company or any Subsidiary Guarantor pursuant to
an exchange offer, tender offer or other agreement shall not be deemed to be
owned by such entity until legal title to such Notes passes to such entity.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by an Officer of the Company. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee shall upon receipt of a written order
of the Company signed by an Officer authenticate Definitive Notes in exchange
for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder or which the Company may
have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly cancelled by the Trustee. All Notes surrendered for registration of
transfer, exchange or payment, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation. Subject to Section 2.07 hereof, the Company may not
issue new Notes to replace Notes that it has redeemed or paid or that have been
delivered to the Trustee for cancellation. All cancelled Notes held by the
Trustee shall be destroyed and certification of their destruction delivered to
the Company, unless by a written order, signed by an Officer of the Company, the
Company shall direct that cancelled Notes be returned to it.
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SECTION 2.12. DEFAULTED INTEREST.
If the Company or any Subsidiary Guarantor defaults in a payment of
interest on the Notes, it shall pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, which date shall be
at the earliest practicable date but in all events at least five (5) Business
Days prior to the payment date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall fix or cause to be fixed each such
special record date and payment date, and shall promptly thereafter, notify the
Trustee of any such date. At least fifteen (15) days before the special record
date, the Company (or the Trustee, in the name and at the expense of the
Company) shall mail or cause to be mailed to Holders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of Holders of the
Notes entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be determined as provided for in TIA [ss.]
316 (c).
SECTION 2.14. COMPUTATION OF INTEREST
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
SECTION 2.15. CUSIP NUMBER.
The Company in issuing the Notes may use a "CUSIP" number, and if it does
so, the Trustee shall use the CUSIP number in notices of redemption or exchange
as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 45
days but not more than 60 days before a redemption date (unless a shorter period
is acceptable to the Trustee) an Officers' Certificate setting forth (i) the
Section of this Indenture pursuant to which the redemption shall occur, (ii) the
redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the
redemption price.
If the Company is required to make an offer to purchase Notes pursuant to
Section 4.10 or 4.14 hereof, it shall furnish to the Trustee, at least 45 days
before the scheduled purchase date, an Officers' Certificate setting forth (i)
the section of this Indenture pursuant to which the offer to purchase shall
occur, (ii) the terms of the offer, (iii) the principal amount of Notes to be
purchased, (iv) the purchase
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<PAGE> 37
price, (v) the purchase date and (vi) and further setting forth a statement to
the effect that (a) the Company or one its Subsidiaries has affected an Asset
Sale and there are Excess Proceeds aggregating more than $15.0 million or (b) a
Change of Control has occurred, as applicable.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED OR PURCHASED.
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note. Notes called
for redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on Notes or portions of them called
for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date, the
Company shall mail or cause to be mailed by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price for the Notes and accrued interest,
and Liquidated Damages, if any;
(3) if any Note is being redeemed in part, the portion of the
principal amount of such Notes to be redeemed and that, after
the redemption date, upon surrender of such Note, a new Note
or Notes in principal amount equal to the unredeemed portion
shall be issued upon surrender of the original Note;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption
payment, interest and Liquidated Damages, if any, on Notes
called for redemption ceases to accrue on and after the
redemption date;
(7) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being
redeemed; and
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(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or
printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date (or such shorter period as shall be acceptable to the Trustee),
an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in the notice as provided in the
preceding paragraph. The notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note shall not affect the validity of the
proceeding for the redemption of any other Note.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price plus accrued and unpaid interest and
Liquidated Damages, if any, to such date. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION OR PURCHASE PRICE.
On or before 10:00 a.m. (New York City time) on each redemption date or
the date on which Notes must be accepted for purchase pursuant to Section 4.10
or 4.14, the Company shall deposit with the Trustee or with the Paying Agent
money sufficient to pay the redemption price of and accrued and unpaid interest
and Liquidated Damages, if any, on all Notes to be redeemed or purchased on that
date. The Trustee or the Paying Agent shall promptly return to the Company upon
its written request any money deposited with the Trustee or the Paying Agent by
the Company in excess of the amounts necessary to pay the redemption price of
(including any applicable premium), accrued interest and Liquidated Damages, if
any, on all Notes to be redeemed or purchased.
If Notes called for redemption or tendered in an Asset Sale Offer or
Change of Control Offer are paid or if the Company has deposited with the
Trustee or Paying Agent money sufficient to pay the redemption or purchase price
of, unpaid and accrued interest and Liquidated Damages, if any, on all Notes to
be redeemed or purchased, on and after the redemption or purchase date interest
and Liquidated Damages, if any, shall cease to accrue on the Notes or the
portions of Notes called for redemption or tendered and not withdrawn in an
Asset Sale Offer or Change of Control Offer (regardless of whether certificates
for such securities are actually surrendered). If a Note is redeemed or
purchased on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest and Liquidated
Damages, if any, shall be paid to the Person in whose name such Note was
registered at the close of business on such record date. If any Note called for
redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, interest shall be
paid on the unpaid principal and Liquidated Damages, if any, from the redemption
or purchase date until such principal and Liquidated Dames, if any, is paid, and
to the extent lawful on any interest not paid on such unpaid principal, in each
case, at the rate provided in the Notes and in Section 4.01 hereof.
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SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in the next paragraph, the Notes will not be
redeemable at the Company's option prior to July 15, 2002. Thereafter, the Notes
will be subject to redemption at any time at the option of the Company, in whole
or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on July 15 of the years indicated below:
Year Percentage
2002 ............................................. 105.063%
2003 ............................................. 103.357%
2004 ............................................. 101.688%
2005 and thereafter .............................. 100.000%
(b) Notwithstanding the foregoing, at any time prior to July 15, 2000, the
Company may redeem up to 33% of the original aggregate principal amount of Notes
at a redemption price of 110.125% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages thereon, if any, to the redemption
date, with the net cash proceeds of a Public Equity Offering; provided that at
least 67% of the original aggregate principal amount of Notes remains
outstanding immediately after the occurrence of such redemption; and provided,
further, that such redemption shall occur within 45 days of the date of the
closing of such Public Equity Offering.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 3.09, 4.10 and 4.14 hereof, the
Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
SECTION 3.09. REPURCHASE OFFERS.
In the event that the Company shall be required to commence an offer to
all Holders to repurchase Notes (a "Repurchase Offer") pursuant to Section 4.10
hereof, an "Excess Proceeds Offer," or pursuant to Section 4.14 hereof, a
"Change of Control Offer," the Company shall follow the procedures specified
below.
A Repurchase Offer shall commence no earlier than 30 days and no later
than 60 days after a Change of Control (unless the Company is not required to
make such offer pursuant to Section 4.14(c) hereof) or an Excess Proceeds Offer
Triggering Event (as defined below), as the case may be, and remain open for a
period of twenty (20) Business Days following its commencement and no longer,
except to the extent that a longer period is required by applicable law (the
"Offer Period"). No later than five (5) Business Days after the termination of
the Offer Period (the "Purchase Date"), the Company shall purchase the principal
amount of Notes required to be purchased pursuant to Section 4.10 hereof, in the
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case of an Excess Proceeds Offer, or 4.14 hereof, in the case of a Change of
Control Offer (the "Offer Amount") or, if less than the Offer Amount has been
tendered, all Notes tendered in response to the Repurchase Offer. Payment for
any Notes so purchased shall be made in the same manner as interest payments are
made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest and
Liquidated Damages, if any, shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest or Liquidated Damages, if any, shall be payable to Holders who tender
Notes pursuant to the Repurchase Offer.
Upon the commencement of a Repurchase Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to such Repurchase
Offer. The Repurchase Offer shall be made to all Holders. The notice, which
shall govern the terms of the Repurchase Offer, shall describe the transaction
or transactions that constitute the Change of Control or Excess Proceeds Offer
Triggering Event, as the case may be and shall state:
(a) that the Repurchase Offer is being made pursuant to this Section 3.09
and Section 4.10 or 4.14 hereof, as the case may be, and the length of
time the Repurchase Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Repurchase Offer shall cease to
accrue interest and Liquidated Damages, if any, after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to a
Repurchase Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note,
duly completed, or transfer by book-entry transfer, to the Company, the
Depositary, or the Paying Agent at the address specified in the notice
not later than the close of business on the last day of the Offer Period;
(f) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Note the Holder delivered for
purchase and a statement that such Holder is withdrawing his election to
have such Note purchased;
(g) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to
be purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(h) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
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On or before 10:00 a.m. (New York City time) on each Purchase Date, the
Company shall irrevocably deposit with the Trustee or Paying Agent in
immediately available funds the aggregate purchase price with respect to a
principal amount of Notes equal to the Offer Amount, together with accrued and
unpaid interest and Liquidated Damages, if any, thereon, to be held for payment
in accordance with the terms of this Section 3.09. On the Purchase Date, the
Company shall, to the extent lawful, (i) accept for payment, on a pro rata basis
to the extent necessary, the Offer Amount of Notes or portions thereof tendered
pursuant to the Repurchase Offer, or if less than the Offer Amount has been
tendered, all Notes tendered, (ii) deliver or cause the Paying Agent or
depository, as the case may be, to deliver to the Trustee Notes so accepted and
(iii) deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than three (3)
Business Days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, plus any accrued and unpaid interest and
Liquidated Damages, if any, thereon, and the Company shall promptly issue a new
Note, and the Trustee, shall authenticate and mail or deliver such new Note, to
such Holder, equal in principal amount to any unpurchased portion of such
Holder's Notes surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce in a newspaper of general circulation or in a press release provided to
a nationally recognized financial wire service the results of the Repurchase
Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01, 3.02, 3.05 and 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. The Company shall pay all Liquidated Damages, if any, in the same manner
on the dates and in the amounts set forth in the Registration Rights Agreement.
Principal, premium and Liquidated Damages, if any, and interest, shall be
considered paid for all purposes hereunder on the date the Paying Agent if other
than the Company or a Subsidiary thereof holds, as of 10:00 a.m. (New York City
time) money deposited by the Company in immediately available funds and
designated for and sufficient to pay all such principal, premium and Liquidated
Damages, if any, and interest, then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New
York an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee or Registrar) where Notes may be surrendered for registration of
transfer or for exchange and where notices and demands to or
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upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03 hereof.
SECTION 4.03. COMMISSION REPORTS.
From and after the earlier of the effective date of the Exchange Offer
Registration Statement or the effective date of the Shelf Registration
Statement, whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company shall furnish to
the Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms 10-Q
and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (ii) all current reports
that would be required to be filed with the Commission on Form 8-K if the
Company were required to file such reports. In addition, whether or not required
by the rules and regulations of the Commission, the Company shall file a copy of
all such information and reports with the Commission for public availability
(unless the Commission will not accept such a filing) within the time periods
that would have been applicable had the Company been subject to such rules and
regulations and make such information available to securities analysts and
prospective investors upon request. In addition, the Company has agreed that,
for so long as any Notes remain outstanding, it shall furnish to the Holders, to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act. The Company shall at all times comply with TIA ss. 314(a).
The financial information to be distributed to Holders of Notes shall be
filed with the Trustee and mailed to the Holders at their addresses appearing in
the register of Notes maintained by the Registrar, within 90 days after the end
of the Company's fiscal years and within 45 days after the end of each of the
first three quarters of each such fiscal year.
The Company shall provide the Trustee with a sufficient number of copies
of all reports and other documents and information and, if requested by the
Company, the Trustee will deliver such reports to the Holders under this Section
4.03.
SECTION 4.04. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee, within 90 days after the end of
each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
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determining whether each has kept, observed, performed and fulfilled its
obligations under this Indenture (including, with respect to any Restricted
Payments made during such year, the basis upon which the calculations required
by Section 4.07 hereof were computed, which calculations may be based on the
Company's latest available financial statements), and further stating, as to
each such Officer signing such certificate, that, to the best of his or her
knowledge, each entity has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto) and
that, to the best of his or her knowledge, no event has occurred and remains in
existence by reason of which payments on account of the principal of, premium or
Liquidated Damages, if any, or interest on the Notes is prohibited or if such
event has occurred, a description of the event and what action the Company is
taking or proposes to take with respect thereto.
So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, in connection with the
year-end financial statements delivered pursuant to Section 4.03 hereof, the
Company shall use its best efforts to deliver a written statement of the
Company's independent public accountants (who shall be a firm of established
national reputation) that in making the examination necessary for certification
of such financial statements, nothing has come to their attention that would
lead them to believe that the Company has violated any provisions of Article
Four or Section 5.01 hereof or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation. In the event that such
written statement of the Company's independent public accountants cannot be
obtained, the Company shall deliver an Officers' Certificate certifying that it
has used its best efforts to obtain such statements and was unable to do so.
The Company shall, so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith upon any Officer becoming aware of any Default or Event
of Default, an Officers' Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency all material taxes, assessments and governmental levies,
except such as are contested in good faith and by appropriate proceedings and
with respect to which appropriate reserves have been taken in accordance with
GAAP.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each Subsidiary Guarantor covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each Subsidiary Guarantor (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
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From and after the date hereof the Company shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or
pay any dividend or make any other payment or distribution on account of the
Company's or any of its Restricted Subsidiaries' Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company) or to the direct or indirect holders of the Company's or
any of its Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company; (ii) purchase, redeem or otherwise acquire
or retire for value (including without limitation, in connection with any merger
or consolidation involving the Company) any Equity Interests of the Company or
any direct or indirect parent of the Company; (iii) make any payment on or with
respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is pari passu with or subordinated to the Notes
(other than Notes), except a payment of interest or principal at Stated
Maturity; or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first paragraph
of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Subsidiaries
after the date hereof (excluding Restricted Payments permitted by clause
(ii) of the next succeeding paragraph), is less than the sum of (i) 50% of
the Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indenture to the end of the Company's
most recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by
the Company from the issue or sale since the date of the Indenture of
Equity Interests of the Company (other than Disqualified Stock) or of
Disqualified Stock or debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or convertible debt
securities that have been converted into Disqualified Stock), plus (iii)
to the extent that any Restricted Investment that was made after the date
of the Indenture is sold for cash or otherwise liquidated or repaid for
cash, the lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment plus (iv) if any Unrestricted
Subsidiary (A) is redesignated as a Restricted Subsidiary, the fair market
value of such redesignated Subsidiary (as determined in good faith by the
Board of Directors) as of the date of its redesignation or (B) pays any
cash dividends or cash distributions to the Company or any of its
Restricted Subsidiaries, 50% of any such cash dividends or cash
distributions made after the date hereof.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions hereof; (ii)
the redemption, repurchase, retirement, defeasance or other acquisition of any
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pari passu or subordinated Indebtedness or Equity Interests of the Company in
exchange for, or out of the net cash proceeds of the substantially concurrent
sale or issuance (other than to a Restricted Subsidiary of the Company) of,
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c) (ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of pari passu or
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the payment of any dividend by a
Restricted Subsidiary of the Company to the holders of its Equity Interests on a
pro rata basis; (v) the declaration or payment of dividends to NEHC for expenses
incurred by NEHC or Holberg in its capacity as a holding company that are
attributable to the operations of the Company and its Restricted Subsidiaries,
including, without limitation, (a) customary salary, bonus and other benefits
payable to officers and employees of NEHC or Holberg, (b) fees and expenses paid
to members of the Board of Directors of NEHC or Holberg, (c) general corporate
overhead expenses of NEHC or Holberg, (d) foreign, federal, state or local tax
liabilities paid by NEHC or Holberg and (e) management, consulting or advisory
fees paid to Holberg not to exceed $4.0 million in any fiscal year, and (f) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of NEHC or Holberg held by any member of NEHC's or the
Company's (or any of their Restricted Subsidiaries') management pursuant to any
management equity subscription agreement or stock option agreement in effect as
of the date of the Indenture; provided, however, the aggregate amount paid
pursuant to the foregoing clauses (a) through (f) does not exceed $7.0 million
in any fiscal year; (vi) Investments in any Person (other than the Company or a
Wholly-Owned Restricted Subsidiary) engaged in a Permitted Business in an amount
not to exceed $5.0 million; (vii) other Investments in Unrestricted Subsidiaries
having an aggregate fair market value, taken together with all other Investments
made pursuant to this clause (vii) that are at that time outstanding, not to
exceed $2.0 million; (viii) Permitted Investments; (ix) payments to NEHC or
Holberg pursuant to the tax sharing agreement among Holberg and other members of
the affiliated corporations of which Holberg is the common parent; or (x) other
Restricted Payments in an aggregate amount not to exceed $10.0 million.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default;
provided that in no event shall the business currently operated by any
Subsidiary Guarantor be transferred to or held by an Unrestricted Subsidiary.
For purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation (as
determined in good faith by the Board of Directors). Such designation shall only
be permitted if such Restricted Payment would be permitted at such time and if
such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined in good
faith by the Board of Directors whose resolution with respect thereto shall be
delivered to the Trustee such determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $10.0 million. Not later
than the date of making any Restricted Payment, the Company shall deliver to the
Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the
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covenant "Restricted Payments" were computed, together with a copy of any
fairness opinion or appraisal required by the Indenture.
SECTION 4.08. DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date hereof, (b) the New Credit Facility as in effect as of the
date hereof, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacement or refinancings are no more restrictive in
the aggregate (as determined by the Credit Agent in good faith) with respect to
such dividend and other payment restrictions than those contained in the New
Credit Facility as in effect on the date hereof, (c) this Indenture and the
Notes, (d) any applicable law, rule, regulation or order, (e) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Restricted Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, provided that,
in the case of Indebtedness, such Indebtedness was permitted by the terms hereof
to be incurred, (f) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (h) Permitted Refinancing Indebtedness,
provided that the material restrictions contained in the agreements governing
such Permitted Refinancing Indebtedness are no more restrictive than those
contained in the agreements governing the Indebtedness being refinanced, (i)
contracts for the sale of assets, including without limitation customary
restrictions with respect to a Subsidiary pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary, and (j) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into in
the ordinary course of business.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company will not issue any Disqualified Stock and will not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 2.0 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been
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incurred, or the Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company of term Indebtedness under the New
Credit Facility; provided that the aggregate principal amount of all term
Indebtedness outstanding under the New Credit Facility after giving effect to
such incurrence does not exceed the aggregate amount of term Indebtedness
borrowed under the New Credit Facility on the date hereof less the aggregate
amount of all repayments, optional or mandatory, of the principal of any term
Indebtedness under the New Credit Facility (other than repayments that are
immediately reborrowed) that have been made since the date hereof; provided,
that the foregoing proviso shall not limit the principal amount of Permitted
Refinancing Indebtedness that may be incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (i);
(ii) the incurrence by the Company of revolving Indebtedness and letters
of credit pursuant to the New Credit Facility; provided that the aggregate
principal amount of all revolving Indebtedness (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability of
the Company thereunder) outstanding under the New Credit Facility after giving
effect to such incurrence does not exceed $150.0 million; provided that the
foregoing proviso shall not limit the principal amount of Permitted Refinancing
Indebtedness that may be incurred to refinance or replace any Indebtedness
incurred pursuant to this clause (ii);
(iii) the incurrence by the Company and its Restricted Subsidiaries of
the Existing Indebtedness;
(iv) the incurrence by the Company and the Subsidiary Guarantors of
Indebtedness represented by the Notes and the Note Guarantees, respectively;
(v) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case incurred for the purpose of financing
all or any part of the purchase price or cost of construction or improvement of
property, plant or equipment used in the business of the Company or such
Restricted Subsidiary (whether through the direct purchase of assets or the
Capital Stock of any Person owning such Assets), in an aggregate principal
amount not to exceed $125.0 million;
(vi) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness in connection with the acquisition of assets or a new Restricted
Subsidiary; provided that such Indebtedness was incurred by the prior owner of
such assets or such Restricted Subsidiary prior to such acquisition by the
Company or one of its Subsidiaries and was not incurred in connection with, or
in contemplation of, such acquisition by the Company or one of it Subsidiaries;
provided further that the principal amount (or accreted value, as applicable) of
such Indebtedness, together with any other outstanding Indebtedness incurred
pursuant to this clause (vi), does not exceed $5.0 million;
(vii) the incurrence by the Company or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness that was permitted
by this Indenture to be incurred;
(viii) the incurrence by the Company or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the Company and any of its Wholly
Owned Restricted Subsidiaries; provided, however, that (i) if the Company is the
obligor on such Indebtedness and the payee is not a
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Subsidiary Guarantor, such Indebtedness is expressly subordinated to the prior
payment in full in cash of all Obligations with respect to the Notes and (ii)(A)
any subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Wholly Owned
Restricted Subsidiary and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Wholly Owned
Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence
of such Indebtedness by the Company or such Restricted Subsidiary, as the case
may be;
(ix) the incurrence by the Company or any of its Restricted Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or hedging
currency risk or interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be outstanding;
(x) the guarantee by the Company or any of its Restricted Subsidiaries of
Indebtedness of the Company or a Restricted Subsidiary of the Company that was
permitted to be incurred by another provision of this covenant;
(xi) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of the
Company;
(xii) Asset Sales in the form of Receivables Transactions;
(xiii) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters of
credit issued in the ordinary course of business, including without limitation
to letters of credit in respect to workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims; provided, however, that upon
the drawing of such letters of credit or the incurrence of such Indebtedness,
such obligations are reimbursed within 30 days following such drawing or
incurrence;
(xiv) Indebtedness arising from agreements of the Company or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with the
disposition of any business, asset or a Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or a Subsidiary for the purpose of financing such acquisition;
provided that the maximum aggregate liability of all such Indebtedness shall at
no time exceed 50% of the gross proceeds actually received by the Company and
its Restricted Subsidiaries in connection with such disposition;
(xv) obligations in respect of performance and surety bonds and completion
guarantees provided by the Company or any Restricted Subsidiary in the ordinary
course of business;
(xvi) guarantees incurred in the ordinary course of business in an
aggregate principal amount not to exceed $5.0 million at any time outstanding;
and
(xvii) the incurrence by the Company or any of its Restricted Subsidiaries
of additional Indebtedness, including Attributable Debt incurred after the date
of the Indenture, in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any other Indebtedness
incurred pursuant to this clause (xvii), not to exceed $25.0 million.
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For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xvii) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this Section 4.09 and such item of Indebtedness
will be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Accrual of interest and the accretion of
accreted value will not be deemed to be an incurrence of Indebtedness for
purposes of this Section 4.09.
SECTION 4.10. ASSETS SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale other than transfers of Receivables to
a Receivables Subsidiary in connection with a Receivables Transaction unless (i)
the Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 80% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash; provided that the amount of (x) any liabilities (as shown
on the Company's or such Restricted Subsidiary's most recent balance sheet), of
the Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (y) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary into
cash within 180 days (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to permanently repay
Senior Debt (and to correspondingly reduce commitments with respect thereto in
the case of revolving borrowings), or (b) to the acquisition of a controlling
interest in another business, the making of a capital expenditure or the
acquisition of other long-term assets, in each case, in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce the revolving Indebtedness under the New Credit Facility or
otherwise invest such Net Proceeds in any manner that is not prohibited by this
Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0
million, the Company will be required to make an offer to all Holders of Notes
(an "Asset Sale Offer") to purchase the maximum principal amount of Notes that
may be purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase, in
accordance with the procedures set forth in Section 3.09 hereof. To the extent
that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, the Company may use any remaining Excess Proceeds
for general corporate purposes. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
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The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction") involving
consideration in excess of $3.0 million unless (i) such Affiliate Transaction is
on terms that are no less favorable to the Company or the relevant Restricted
Subsidiary than those that would have been obtained in a comparable transaction
by the Company or such Restricted Subsidiary with an unrelated Person and (ii)
the Company delivers to the Trustee (a) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $7.5 million, a resolution of the Board of Directors
set forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors
(if such disinterested members exist) and (b) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving either
aggregate consideration in excess of $15.0 million or an aggregate consideration
in excess of $10.0 million where there are no disinterested members of the Board
of Directors, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing; provided that the following shall
not be deemed Affiliate Transactions: (q) any employment agreement entered into
by the Company or any of its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of the Company or such Restricted
Subsidiary, (r) transactions between or among the Company and/or its Restricted
Subsidiaries, (s) Permitted Investments and Restricted Payments that are
permitted by the provisions of Section 4.07 hereof, (t) customary loans,
advances, fees and compensation paid to, and indemnity provided on behalf of,
officers, directors, employees or consultant of the Company or any of its
Restricted Subsidiaries, (u) annual management fees paid to Holberg not to
exceed $5.0 million in any one year, (v) transaction pursuant to any contract or
agreement in effect on the date hereof as the same may be amended, modified or
replaced from time to time so long as any such amendment, modification or
replacement is no less favorable to the Company and its Restricted Subsidiaries
than contract or agreement as in effect on the Issue Date or is approved by a
majority of the disinterested directors of NEHC, (w) transactions between the
Company or its Restricted Subsidiaries on the one hand, and Holberg on the other
hand, involving the provision of financial or advisory services by Holberg;
provided that fees payable to Holberg do not exceed the usual and customary fees
for similar services, (x) transactions between the Company or its Restricted
Subsidiaries on the one hand, and DLJ or its Affiliates on the other hand,
involving the provision of financial, advisory, lending, placement or
underwriting services by DLJ; provided that fees payable to DLJ do not exceed
the usual and customary fees of DLJ for similar services, (y) the insurance
arrangements between NEHC and its Subsidiaries and an Affiliate of Holberg that
are not less favorable to the Company or any of its Subsidiaries than those that
are in effect on the date hereof provided such arrangements are conducted in the
ordinary course of business consistent with past practices, and (z) payments
under the tax sharing agreement among Holberg and other members of the
affiliated group of corporations of which it is the common parent.
SECTION 4.12. LIENS.
The Company shall not and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind securing trade payables or Indebtedness
that does not constitute Senior Debt (other than Permitted Liens) upon any of
their property or assets, now owned or hereafter acquired.
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SECTION 4.13. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company may, and may permit its Restricted Subsidiaries to, enter into a
sale and leaseback transaction if (i) the Company could have (a) incurred
Indebtedness in an amount equal to the Attributable Debt relating to such sale
and leaseback transaction pursuant to Section 4.09 hereof and (b) incurred a
Lien to secure such Indebtedness pursuant to Section 4.12 hereof, (ii) the gross
cash proceeds of such sale and leaseback transaction are at least equal to the
fair market value (as determined in good faith by the Board of Directors and set
forth in an Officers' Certificate delivered to the Trustee) of the property that
is the subject of such sale and leaseback transaction and (iii) the transfer of
assets in such sale and leaseback transaction is permitted by, and the Company
applies the proceeds of such transaction in compliance with, Section 4.10
hereof.
SECTION 4.14. OFFER TO PURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by
Section 3.09 hereof and described in such notice. The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. Prior to complying with the
provisions of this Section 4.14, but in any event within 90 days following a
Change of Control, the Company shall either repay all outstanding Senior Debt or
obtain the requisite consents, if any, under all agreements governing
outstanding Senior Debt to permit the repurchase of Notes required by this
Section 4.14. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
The Change of Control provisions described above will be applicable
whether or not any other provisions of this Indenture are applicable. Except as
described above with respect to a Change of Control, this Indenture does not
contain provisions that permit the Holders of the Notes to require that
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the Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
The Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
herein applicable to a Change of Control Offer made by the Company and purchases
all Notes validly tendered and not withdrawn under such Change of Control Offer.
SECTION 4.15. CORPORATE EXISTENCE.
Subject to Section 4.14 and Article 5 hereof, as the case may be, the
Company and each Subsidiary Guarantor shall do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate, partnership or other existence of each of its Subsidiaries in
accordance with the respective organizational documents (as the same may be
amended from time to time) of the Company or any such Subsidiary and the rights
(charter and statutory), licenses and franchises of the Company and its
Subsidiaries; provided that the Company shall not be required to preserve any
such right, license or franchise, or the corporate, partnership or other
existence of any of its Subsidiaries, if the Board of Directors of the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries, taken as a whole,
and that the loss thereof is not adverse in any material respect to the Holders
of the Notes.
SECTION 4.16. LIMITATION ON ISSUANCES OF CAPITAL STOCK OF WHOLLY OWNED
RESTRICTED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Wholly Owned
Restricted Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Wholly Owned Subsidiary of the
Company to any Person (other than the Company or a Wholly Owned Restricted
Subsidiary of the Company), unless (a) such transfer, conveyance, sale, lease or
other disposition is of all the Capital Stock of such Wholly Owned Restricted
Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with Section 4.10 hereof
and (ii) will not permit any Wholly Owned Restricted Subsidiary of the Company
to issue any of its Equity Interests (other than, if necessary, shares of its
Capital Stock constituting directors' qualifying shares) to any Person other
than to the Company or a Wholly Owned Restricted Subsidiary of the Company.
SECTION 4.17. LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS.
The Company shall not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any other
Indebtedness of the Company unless either such Restricted Subsidiary (x) is a
Subsidiary Guarantor or (y) simultaneously executes and delivers a supplemental
indenture to the Indenture providing for the Guarantee of the payment of the
Notes by such Restricted Subsidiary, which Guarantee shall be senior to or pari
passu with such Restricted Subsidiary's Guarantee of or pledge to secure such
other Indebtedness. Notwithstanding the foregoing, any such Guarantee by a
Restricted Subsidiary of the Notes shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon any sale,
exchange or transfer, to any Person not an Affiliate of the Company, of all of
the Company's stock in, or all or substantially all the assets of, such
Restricted Subsidiary, which sale, exchange or transfer is made in compliance
with the applicable provisions hereof. The form and substance of such Guarantee
shall be substantially similar to EXHIBIT D hereto.
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SECTION 4.18. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Restricted Subsidiaries taken as a
whole.
SECTION 4.19. ADDITIONAL GUARANTEES.
If (i) the Company or any of its Restricted Subsidiaries shall, after the
date hereof, transfer or cause to be transferred, including by way of any
Investment, in one or a series of transactions (whether or not related), any
assets, businesses, divisions, real property or equipment having an aggregate
fair market value (as determined in good faith by the Board of Directors) in
excess of $1.0 million to any Restricted Subsidiary that is not a Subsidiary
Guarantor or a foreign Subsidiary, (ii) the Company or any of its Restricted
Subsidiaries shall acquire another Restricted Subsidiary other than a foreign
Subsidiary having total assets with a fair market value (as determined in good
faith by the Board of Directors) in excess of $1.0 million, or (iii) any
Restricted Subsidiary other than a foreign Subsidiary shall incur Acquired Debt
in excess of $1.0 million, then the Company shall, at the time of such transfer,
acquisition or incurrence, (A) cause such transferee, acquired Restricted
Subsidiary or Restricted Subsidiary incurring Acquired Debt (if not then a
Subsidiary Guarantor) to execute a Note Guarantee of the Obligations of the
Company under the Notes in the form and substance substantially similar to
EXHIBIT D hereto and (B) deliver to the Trustee an Opinion of Counsel, in form
reasonably satisfactory to the Trustee, that such Note Guarantee is a valid,
binding and enforceable obligation of such transferee, acquired Restricted
Subsidiary or Restricted Subsidiary incurring Acquired Debt, subject to
customary exceptions for bankruptcy, fraudulent conveyance and equitable
principles. Notwithstanding the foregoing, the Company or any of its Restricted
Subsidiaries may make a Restricted Investment in any Wholly Owned Restricted
Subsidiary of the Company without compliance with this Section 4.19, provided
that such Restricted Investment is permitted by Section 4.07 hereof.
SECTION 4.20. PAYMENT FOR CONSENTS.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions hereof or
the Notes unless such consideration is offered to be paid or is paid to all
Holders of the Notes that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
SECTION 4.21. ANTI-LAYERING.
The Company shall not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is both (a) subordinate or junior in
right of payment to any Senior Debt and (b) senior in any respect in right of
payment to the Notes. No Subsidiary Guarantor shall incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is both
(a) subordinate or junior in right of payment to its Senior Debt and (b) senior
in right of payment to its Note Guarantee.
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ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OF SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Notes
and this Indenture pursuant to a supplemental indenture in a form substantially
similar to EXHIBIT E hereto; (iii) immediately after such transaction no Default
or Event of Default exists; (iv) except in the case of a merger of the Company
with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or
the entity or Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and shall exercise every
right and power of the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein; provided, that, (i)
solely for the purposes of computing Consolidated Net Income for purposes of
clause (b) of the first paragraph of Section 4.07 hereof, the Consolidated Net
Income of any person other than the Company and its Subsidiaries shall be
included only for periods subsequent to the effective time of such merger,
consolidation, combination or transfer of assets; and (ii) in the case of any
sale, assignment, transfer, lease, conveyance, or other disposition of less than
all of the assets of the predecessor Company, the predecessor Company shall not
be released or discharged from the obligation to pay the principal of or
interest and Liquidated Damages, if any, on the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
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Each of the following constitutes an "Event of Default":
(i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes;
(ii) default in payment when due of principal of or premium, if any,
on the Notes;
(iii) failure by the Company to comply with the provisions described under
Sections 4.10 or 4.14 or Article 5 hereof;
(iv) failure by the Company for 30 days after notice from the Trustee or
at least 25% in principal amount of the Notes then outstanding to
comply with the provisions described under Sections 4.07 or 4.09
hereof;
(v) failure by the Company for 60 days after notice from the Trustee or
at least 25% in principal amount of the Notes then outstanding to
comply with any of its other agreement in this Indenture or the
Notes;
(vi) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Subsidiaries) whether such Indebtedness or
Guarantee now exists, or is created after the date hereof, which
default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on
the date of such default (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or
the maturity of which has been so accelerated, aggregates $15.0
million or more;
(vii) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which judgments are
not paid, discharged or stayed for a period of 60 days;
(viii)the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary, pursuant to or within the meaning of Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief
against it in an involuntary case,
(c) consents to the appointment of a Custodian of
it or for all or substantially all of its
property,
(d) makes a general assignment for the benefit of
its creditors, or
(e) generally is not paying its debts as they
become due; or
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(ix) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(a) is for relief against the Company or any of its
Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an
involuntary case;
(b) appoints a Custodian of the Company or any of
its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all
or substantially all of the property of the
Company or any of its Significant Subsidiaries
or any group of Subsidiaries that, taken as a
whole, would constitute a Significant
Subsidiary; or
(c) orders the liquidation of the Company or any of
its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately provided, however, that
if any Indebtedness or Obligation is outstanding pursuant to the New Credit
Facility, upon a declaration of acceleration by the holders of the Notes or the
Trustee, all principal and interest under this Indenture shall be due and
payable upon the earlier of (x) the day five Business Days after the provision
to the Company, the Credit Agent and the Trustee of such written notice of
acceleration or (y) the date of acceleration of any Indebtedness under the New
Credit Facility; and provided, further, that in the event of an acceleration
based upon an Event of Default set forth in clause (vi) above, such declaration
of acceleration shall be automatically annulled if the holders of Indebtedness
which is the subject of such failure to pay at maturity or acceleration have
rescinded their declaration of acceleration in respect of such Indebtedness or
such failure to pay at maturity shall have been cured or waived within 30 days
thereof and no other Event of Default has occurred during such 30-day period
which has not been cured, paid or waived. Notwithstanding the foregoing, in the
case of an Event of Default as described in (viii) and (ix) of Section 6.01
hereof, all outstanding Notes will become due and payable without further action
or notice. Holders of the Notes may not enforce this Indenture or the Notes
except as provided in this Indenture.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of Section 3.07(a) hereof, an equivalent premium
shall also become and be immediately due and payable to the extent permitted by
law upon the acceleration of the Notes. If an Event of Default occurs prior to
July 15, 2002 by reason of any willful action (or inaction) taken (or not taken)
by or on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to July 15, 2002, then the amount payable in
respect of such Notes for
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purposes of this paragraph for each of the twelve-month periods beginning on
July 15 of the years indicated below shall be set forth below, expressed as
percentages of the principal amount that would otherwise be due but for the
provisions of this sentence, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of payment:
Year Percentage
---- ----------
1997 ................................................... ll0.l25%
1998 ................................................... 109.113%
1999 ................................................... l08.l00%
2000 ................................................... 107.088%
2001 ................................................... 106.075%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any,
interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under this Indenture (including any acceleration (other than an automatic
acceleration) resulting from an Event of Default under clause (viii) or (ix) of
Section 6.01 hereof) except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes (other than as a result
of an acceleration), which shall require the consent of all of the Holders of
the Notes then outstanding.
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SECTION 6.05. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust power
conferred on it. However, (i) the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve
the Trustee in personal liability, and (ii) the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction. In case an Event of Default shall occur (which shall not be cured),
the Trustee will be required, in the exercise of its power, to use the degree of
care of a prudent man in the conduct of his own affairs. Notwithstanding any
provision to the contrary in this Indenture, the Trustee is under no obligation
to exercise any of its rights or powers under this Indenture at the request of
any Holder of Notes, unless such Holder shall offer to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture, the
Note Guarantees or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default or the Trustee receives such notice from
the Company;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, interest, and
Liquidated Damages, if any, on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(i) or (ii) hereof
occurs and is continuing, the
Trustee is authorized to recover judgment in its own name and as trustee of
an express trust against the
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Company for the whole amount of principal of, premium and Liquidated Damages, if
any, and interest remaining unpaid on the Notes and interest on overdue
principal and, to the extent lawful, interest and such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
securities or property payable or deliverable upon the conversion or exchange of
the Notes or on any such claims and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, interest, and Liquidated Damages, if any,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium, if any, interest, and
Liquidated Damages, if any, respectively;
Third: without duplication, to the Holders for any other
Obligations owing to the Holders under this Indenture and the Notes; and
Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
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SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture or
in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant
to Section 6.07 hereof, or a suit by Holders of more than 10% in principal
amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing of which a
Responsible Officer of the Trustee has knowledge, the Trustee shall
exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise,
as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture or the TIA and the
Trustee need perform only those duties that are specifically
set forth in this Indenture or the TIA and no others, and no
implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
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(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under
this Indenture at the request of any Holders, unless such Holder
shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely on the truth of the statements and
correctness of the opinions contained in, and shall be protected
from acting or refraining from acting upon, any document believed by
it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of
Counsel. Prior to taking, suffering or admitting any action, the
Trustee may consult with counsel of the Trustee's own choosing and
the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company or any
Subsidiary Guarantor shall be sufficient if signed by an Officer of
the Company or Subsidiary Guarantor, as applicable.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have
offered to the Trustee reasonable security or indemnity satisfactory
to the Trustee against the costs, expenses and liabilities that
might be incurred by it in compliance with such request or
direction.
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SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner
of Notes and may otherwise deal with the Company, the Subsidiary Guarantors or
any Affiliate of the Company or any Subsidiary Guarantor with the same rights it
would have if it were not Trustee. However, in the event that the Trustee
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue as Trustee or resign.
Any Agent may do the same with like rights and duties. The Trustee is also
subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture, the Note Guarantees or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders
of Notes a notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default or Event of Default in payment on any
Note pursuant to Section 6.01(i) or (ii) hereof, the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of the
Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA ss. 313(a) (but if no event described in TIA ss.
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA ss. 313(b).
The Trustee shall also transmit by mail all reports as required by TIA ss.
313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the Commission and each stock
exchange on which the Company has informed the Trustee in writing the Notes are
listed in accordance with TIA ss. 313(d). The Company shall promptly notify the
Trustee when the Notes are listed on any stock exchange and of any delisting
thereof.
SECTION 7.07 COMPENSATION AND INDEMNITY.
The Company and the Subsidiary Guarantors shall pay to the Trustee from
time to time reasonable compensation for its acceptance of this Indenture and
services hereunder. To the extent permitted by law, the Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation
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for its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company and the Subsidiary Guarantors shall indemnify the Trustee
against any and all losses, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture, including the costs and expenses of enforcing this Indenture
against the Company and the Subsidiary Guarantors (including this Section 7.07)
and defending itself against any claim (whether asserted by the Company, the
Subsidiary Guarantors or any Holder or any other person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify the
Company and the Subsidiary Guarantors promptly of any claim for which it may
seek indemnity. Failure by the Trustee to so notify the Company and the
Subsidiary Guarantors shall not relieve the Company and the Subsidiary
Guarantors of its obligations hereunder. The Company and the Subsidiary
Guarantors shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel and the Company and the
Subsidiary Guarantors shall pay the reasonable fees and expenses of such
counsel. The Company and the Subsidiary Guarantors need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
The obligations of the Company and the Subsidiary Guarantors under this
Section 7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Subsidiary Guarantors' payment obligations
in this Section 7.07, the Trustee shall have a Lien prior to the Notes on all
money or property held or collected by the Trustee, except that held in trust to
pay principal, interest and Liquidated Damages, if any, on particular Notes.
Such Lien shall survive the satisfaction and discharge of this Indenture and the
resignation or removal of the Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.0l(viii) or (ix) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the
extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy
Law;
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(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10
hereof, such Holder of a Note may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and the duties of the Trustee under
this Indenture. The successor Trustee shall mail a notice of its succession to
the Holders of the Notes. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided that all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee or any Agent consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee or any Agent, as applicable.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION .
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities. The Trustee and its direct parent shall at all times have a
combined capital surplus of at least $50.0 million as set forth in its most
recent annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
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ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company and the Subsidiary Guarantors may, at the option of their
respective Boards of Directors evidenced by a resolution set forth in an
Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03
hereof be applied to all outstanding Notes and Note Guarantees upon compliance
with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and each Subsidiary Guarantor
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be deemed to have been discharged from their respective obligations with
respect to all outstanding Notes and Note Guarantees on the date the conditions
set forth below are satisfied (hereinafter, "Legal Defeasance"). For this
purpose, Legal Defeasance means that the Company and each Subsidiary Guarantor
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Notes and Note Guarantees, which shall thereafter be deemed
to be "outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all their respective other obligations under such Notes and Note
Guarantees and this Indenture (and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging the same), except
for the following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
payments in respect of the principal of, premium, if any, and interest and
Liquidated Damages, if any, on such Notes when such payments are due from the
trust referred to in Section 8.04(a); (b) the Company's obligations with respect
to such Notes under Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.10 and 4.02
hereof; (c) the rights, powers, trusts, duties and immunities of the Trustee
including without limitation thereunder Section 7.07, 8.05 and 8.07 hereof and
the Company's obligations in connection therewith and (d) the provisions of this
Article 8. Subject to compliance with this Article 8, the Company may exercise
its option under this Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and each Subsidiary Guarantor
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be released from its obligations under the covenants contained in
Sections 3.09,4.05,4.07,4.08, 4.09, 4.10,4.11, 4.12,4.13,4.14,4.15, 4.16,4.17,
4.18,4.19, 5.01 and 11.01 hereof with respect to the outstanding Notes and Note
Guarantees on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes and Note Guarantees shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes and Note Guarantees shall not be deemed outstanding for accounting
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purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes and Note Guarantees, the Company or any of its Subsidiaries
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes and Note Guarantees shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(iii) through 6.01(v) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section 8.02
or 8.03 hereof to the outstanding Notes and Note Guarantees:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in
such amounts as shall be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the
principal of, premium and Liquidated Damages, if any, and interest
on the outstanding Notes on the stated maturity or on the applicable
redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming that
(A) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling or (B) since the date hereof,
there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the Holders of the outstanding Notes
shall not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and shall be subject
to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal Defeasance
had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming that
the Holders of the outstanding Notes shall not recognize income,
gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and shall be subject to federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on
the 91st day after the date of deposit;
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(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than this Indenture) to which the
Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit,
the trust funds shall not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company
with the intent of preferring the Holders of Notes over the other
creditors of the Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance
or the Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, interest and
Liquidated Damages, if any, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the written request
of the Company and be relieved of all liability with respect to any money or
non-callable Government Securities held by it as provided in Section 8.04 hereof
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are
in excess of the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO THE COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any,
interest or Liquidated Damages, if any, on any Note and remaining unclaimed for
one year after such principal, and premium, if any, or interest or Liquidated
Damages, if any, has become due and payable shall be paid to the Company on its
written
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request or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Note shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining shall be repaid to the Company.
SECTION 8.07 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the obligations of the Company and the Subsidiary Guarantors
under this Indenture, the Notes and the Note Guarantees shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03
hereof until such time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 8.02 or 8.03 hereof, as the case may be;
provided, however, that, if the Company makes any payment of principal of,
premium, if any, interest or Liquidated Damages, if any, on any Note following
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF THE NOTES.
Notwithstanding Section 9.02 of this Indenture, without the consent of any
Holder of Notes the Company and the Trustee may amend or supplement this
Indenture, the Notes or the Note Guarantees:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's or a Subsidiary
Guarantor's obligations to the Holders of the Notes in the case of a
merger, or consolidation pursuant to Article 5 or Article 11 hereof,
as applicable;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely
affect the legal rights hereunder of any Holder of the Notes;
(e) to comply with requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to allow any Subsidiary to Guarantee the Notes.
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Upon the written request of the Company accompanied by a resolution of its
Board of Directors of the Company authorizing the execution of any such amended
or supplemental indenture, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the Company and
the Subsidiary Guarantors in the execution of any amended or supplemental
indenture authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations that may be therein contained,
but the Trustee shall not be obligated to enter into such amended or
supplemental indenture that affects its own rights, duties or immunities under
this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, or as provided in
Section 10.13 or Section 12.13, this Indenture, the Notes or the Note Guarantees
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer, for Notes), and, any existing default or compliance with any
provision of this Indenture, the Notes or the Note Guarantees may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with or a tender
offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 9.06 hereof, the Trustee shall
join with the Company and the Subsidiary Guarantors in the execution of such
amended or supplemental indenture unless such amended or supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may, but shall not be obligated to, enter
into such amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof. After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of each Note affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver.
Subject to Sections 6.02, 6.04, 6.07, 10.13 and 12.13 hereof, the Holders
of a majority in aggregate principal amount of the Notes then outstanding may
amend or waive compliance in a particular instance by the Company or the
Subsidiary Guarantors with any provision of this Indenture, the Notes or the
Note Guarantees. However, without the consent of each Holder affected, an
amendment, or waiver may not (with respect to any Note held by a non-consenting
Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes
(other than provisions relating to Sections 3.09, 4.10 and 4.14
hereof);
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(c) reduce the rate of or change the time for payment of interest on any
Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in Section 6.04 or 6.07 hereof;
(g) waive a redemption or repurchase payment with respect to any Note
(other than a payment required by Section 4.10 or 4.14 hereof); or
(h) make any change in the amendment and waiver provisions of this
Article 9.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture, the Note Guarantees or
the Notes shall be set forth in an amended or supplemental indenture that
complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder of a Note may revoke the
consent as to its Note if the Trustee receives written notice of revocation
before the date the waiver, supplement or amendment becomes effective. When an
amendment, supplement or waiver becomes effective in accordance with its terms,
it thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date for
determining which Holders of the Notes must consent to such amendment,
supplement or waiver. If the Company fixes a record date, the record date shall
be fixed at (i) the later of 30 days prior to the first solicitation of such
consent or the date of the most recent list of Holders of Notes furnished for
the Trustee prior to such solicitation pursuant to Section 2.05 hereof or (ii)
such other date as the Company shall designate.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
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SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
and the Subsidiary Guarantors may not sign an amendment or supplemental
indenture until their respective Boards of Directors approve it. In signing or
refusing to sign any amended or supplemental indenture the Trustee shall be
entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
11.04 hereof, an Officers' Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture, that it is not inconsistent herewith, and that it
will be valid and binding upon the Company and the Subsidiary Guarantors in
accordance with its terms.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder of Notes by accepting a Note agrees,
that the Indebtedness evidenced by the Note is subordinated in right of payment,
to the extent and in the manner provided in this Article, to the prior payment
in full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors in any
Insolvency or Liquidation Proceeding with respect to the Company, all amounts
due or to become due under or with respect to all Senior Debt shall first be
paid in full in cash before any payment is made on account of the Notes, except
that the Holders of Notes may receive Reorganization Securities. Upon any such
Insolvency or Liquidation Proceeding, any payment or distribution of assets of
the Company of any kind or character, whether in cash, property or securities
(other than Reorganization Securities), to which the Holders of the Notes or the
Trustee would be entitled shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, or by the Holders of the Notes or by the Trustee if
received by them, directly to the holders of Senior Debt (pro rata to such
holders on the basis of the amounts of Senior Debt held by such holders) or
their Representative or Representatives, as their interests may appear, for
application to the payment of the Senior Debt remaining unpaid until all such
Senior Debt has been paid in full in cash, after giving effect to any concurrent
payment, distribution or provision therefor to or for the holders of Senior
Debt.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
(a) In the event of and during the continuation of any default in the
payment of principal of, interest or premium, if any, on any Senior Debt, or any
Obligation owing from time to time under or in respect of Senior Debt, or in the
event that any event of default (other than a payment default) with respect to
any Senior Debt shall have occurred and be continuing and shall have resulted in
such Senior Debt becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, or (b) if any event of
default other than as described in clause (a) above with respect to any
Designated Senior Debt shall have occurred and be continuing permitting the
holders of
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such Designated Senior Debt (or their Representative or Representatives) to
declare such Designated Senior Debt due and payable prior to the date on which
it would otherwise have become due and payable, then no payment shall be made by
or on behalf of the Company on account of the Notes (other than payments in the
form of Reorganization Securities) (x) in case of any payment or nonpayment
default specified in (a), unless and until such default shall have been cured or
waived in writing in accordance with the instruments governing such Senior Debt
or such acceleration shall have been rescinded or annulled, or (y) in case of
any nonpayment event of default specified in (b), during the period (a "Payment
Blockage Period") commencing on the date the Company and the Trustee receive
written notice (a "Payment Notice") of such event of default specifically
referring to this Article 10 (which notice shall be binding on the Trustee and
the Holders of Notes as to the occurrence of such a payment default or
nonpayment event of default) from the Credit Agent (or other holders of
Designated Senior Debt or their Representative or Representatives) and ending on
the earliest of (A) 179 days after such date, (B) the date, if any, on which the
Trustee receives written notice from the Credit Agent (or other holders of
Designated Senior Debt or their Representative or Representatives), as the case
may be, stating that such Designated Senior Debt to which such default relates
is paid in full in cash or such default is cured or waived in writing in
accordance with the instruments governing such Designated Senior Debt by the
holders of such Designated Senior Debt and (C) the date on which the Trustee
receives written notice from the Credit Agent (or other holders of Designated
Senior Debt or their Representative or Representatives), as the case may be,
terminating the Payment Blockage Period. During any consecutive 360-day period,
the aggregate of all Payment Blockage Periods shall not exceed 179 days and
there shall be a period of at least 181 consecutive days in each consecutive
360-day period when no Payment Blockage Period is in effect. No event of default
which existed or was continuing with respect to the Senior Debt for which notice
commencing a Payment Blockage Period was given on the date such Payment Blockage
Period commenced shall be or be made the basis for the commencement of any
subsequent Payment Blockage Period unless such event of default is cured or
waived for a period of not less than 90 consecutive days.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder of a Note receives any payment
of any Obligations with respect to the Notes at a time when such payment is
prohibited by Section 10.03 hereof, such payment shall be held by the Trustee or
such Holder, in trust for the benefit of, and shall be paid forthwith over and
delivered, upon written request, to, the holders of Senior Debt as their
interests may appear or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent necessary
to pay such Obligations in full in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders of the Notes or
the Company or any other Person money or assets to which any holders of Senior
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Debt shall be entitled by virtue of this Article 10, except if such payment is
made as a result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.06. NOTICE BY THE COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article, which notice shall specifically
refer to this Article 10, but failure to give such notice shall not affect the
subordination of the Notes to the Senior Debt as provided in this Article.
SECTION 10.07 SUBROGATION.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of the Notes shall be subrogated (equally and ratably with all
other pari passu indebtedness) to the rights of holders of Senior Debt to
receive distributions applicable to Senior Debt to the extent that distributions
otherwise payable to the Holders of the Notes have been applied to the payment
of Senior Debt. A distribution made under this Article to holders of Senior Debt
that otherwise would have been made to Holders of the Notes is not, as between
the Company and Holders of the Notes, a payment by the Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of the Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of the Notes, the
obligations of the Company, which are absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of the Notes and creditors
of the Company other than their rights in relation to holders of Senior
Debt; or
(3) prevent the Trustee or any Holder of the Notes from exercising
its available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of the Notes.
If the Company fails because of this Article to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.09. SUBROGATION MAY NOT BE IMPAIRED BY THE COMPANY.
No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any Holder or by the failure of the Company or any Holder
to comply with this Indenture.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt, or any of them, may, at any time and from time to time,
without the consent of or notice to the Holders of the Notes, without incurring
any liabilities to any Holder of any Notes and without impairing or releasing
the subordination and other benefits provided in this Indenture or the
obligations of the Holders of the Notes to the holders of the Senior Debt, even
if any right of reimbursement or subrogation
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or other right or remedy of any Holder of Notes is affected, impaired or
extinguished thereby, do any one or more of the following:
(1) change the manner, place or terms of payment or change or extend
the time of payment of, or renew, exchange, amend, increase or alter, the
terms of any Senior Debt, any security therefor or guaranty thereof or any
liability of any obligor thereon (including any guarantor) to such holder,
or any liability incurred directly or indirectly in respect thereof or
otherwise amend, renew, exchange, extend, modify, increase or supplement
in any manner any Senior Debt or any instrument evidencing or guaranteeing
or securing the same or any agreement under which Senior Debt is
outstanding;
(2) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing Senior Debt or any liability of any
obligor thereon, to such holder, or any liability incurred directly or
indirectly in respect thereof;
(3) settle or compromise any Senior Debt or any other liability of
any obligor of the Senior Debt to such holder or any security therefor or
any liability incurred directly or indirectly in respect thereof and apply
any sums by whomsoever paid and however realized to any liability
(including, without limitation, Senior Debt) in any manner or order; and
(4) fail to take or to record or to otherwise perfect, for any
reason or for no reason, any lien or security interest securing Senior
Debt by whomsoever granted, exercise or delay in or refrain from
exercising any right or remedy against any obligor or any guarantor or any
other person, elect any remedy and otherwise deal freely with any obligor
and any security for the Senior Debt or any liability of any obligor to
such holder or any liability incurred directly or indirectly in respect
thereof.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of the Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of the Notes for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Debt and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least three Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article, which notice shall
specifically refer to this Article 10. Only the Company or a Representative may
give the notice. Nothing in this
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Article 10 shall impair the claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes, including without limitation the timely filing of a
claim for the unpaid balance of the Notes held by such Holder in the form
required in any Insolvency or Liquidation Proceeding and causing such claim to
be approved. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 6.09 hereof
at least 30 days before the expiration of the time of such claim, the
Representatives of the Designated Senior Debt, including the Credit Agent, are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Notes.
SECTION 10.13. AMENDMENTS.
Any amendment to the provisions of this Article 10 shall require the
consent of the Holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the rights of the Holders
of Notes.
ARTICLE 11
GUARANTEE OF NOTES
SECTION 11.01. NOTE GUARANTEE.
Subject to Section 11.06 hereof, each of the Subsidiary Guarantors
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes and the Obligations of the Company hereunder and
thereunder, that: (a) the principal of, premium, if any, interest and Liquidated
Damages, if any, on the Notes will be promptly paid in full when due, subject to
any applicable grace period, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal, premium, if any, (to the
extent permitted by law) interest on any interest, if any, and Liquidated
Damages, if any, on the Notes, and all other payment Obligations of the Company
to the Holders or the Trustee hereunder or thereunder will be promptly paid in
full and performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at stated maturity, by acceleration,
redemption or otherwise. Failing payment when so due of any amount so guaranteed
for whatever reason the Subsidiary Guarantors will be jointly and severally
obligated to pay the same immediately. An Event of Default under this Indenture
or the Notes shall constitute an event of default under the Note Guarantees, and
shall entitle the Holders to accelerate the Obligations of the Subsidiary
Guarantors hereunder in the same manner and to the same extent as the
Obligations of the Company. The Subsidiary Guarantors hereby agree that their
Obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or
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this Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Subsidiary Guarantor. Each Subsidiary Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that this Note Guarantee will not be discharged except by complete
performance of the Obligations contained in the Notes and this Indenture. If any
Holder or the Trustee is required by any court or otherwise to return to the
Company, the Subsidiary Guarantors, or any Note Custodian, Trustee, liquidator
or other similar official acting in relation to either the Company or the
Subsidiary Guarantors, any amount paid by either to the Trustee or such Holder,
this Note Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect. Each Subsidiary Guarantor agrees that it shall not be
entitled to, and hereby waives, any right of subrogation in relation to the
Holders in respect of any Obligations guaranteed hereby. Each Subsidiary
Guarantor further agrees that, as between the Subsidiary Guarantors, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the Obligations guaranteed hereby may be accelerated as provided in Article 6
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article 6 hereof, such Obligations (whether or
not due and payable) shall forthwith become due and payable by the Subsidiary
Guarantors for the purpose of this Note Guarantee. The Subsidiary Guarantors
shall have the right to seek contribution from any non-paying Subsidiary
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Note Guarantees.
SECTION 11.02. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 11.01, each Subsidiary
Guarantor hereby agrees that a notation of such Note Guarantee substantially in
the form of EXHIBIT D shall be endorsed by an Officer of such Subsidiary
Guarantor on each Note authenticated and delivered by the Trustee and that this
Indenture shall be executed on behalf of such Subsidiary Guarantor, by manual or
facsimile signature, by an Officer of such Subsidiary Guarantor.
Each Subsidiary Guarantor hereby agrees that its Note Guarantee set forth
in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Note Guarantee set forth in this
Indenture on behalf of the Subsidiary Guarantors.
SECTION 11.03. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
(a) Except as set forth in Articles 4 and 5 hereof, nothing contained in
this Indenture shall prohibit a merger between a Subsidiary Guarantor and
another Subsidiary Guarantor or a merger between a Subsidiary Guarantor and the
Company.
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(b) Subject to Section 11.04 hereof, no Subsidiary Guarantor may
consolidate with or merge with or into (whether or not such Subsidiary Guarantor
is the surviving Person), another corporation, Person or entity whether or not
affiliated with such Subsidiary Guarantor unless, subject to the provisions of
the following paragraph, (i) the Person formed by or surviving any such
consolidation or merger (if other than such Subsidiary Guarantor) assumes all
the obligations of such Subsidiary Guarantor pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the Trustee, under
the Notes and this Indenture; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; (iii) such Subsidiary
Guarantor, or any Person formed by or surviving any such consolidation or
merger, would have Consolidated Net Worth (immediately after giving effect to
such transaction), equal to or greater than the Consolidated Net Worth of such
Subsidiary Guarantor immediately preceding the transaction; and (iv) the Company
would be permitted by virtue of its pro forma Fixed Charge Coverage Ratio,
immediately after giving effect to such transaction, to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.09. The requirements of clauses (iii)
and (iv) of this paragraph will not apply in the case of a consolidation with or
merger with or into any other Person if the acquisition of all of the Equity
Interests in such Person would have complied with the provisions of Sections
4.07 and 4.09 hereof.
(c) In the case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and substantially in the form of EXHIBIT E hereto,
of the Note Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Subsidiary Guarantor, such successor Person shall succeed to
and be substituted for the Subsidiary Guarantor with the same effect as if it
had been named herein as a Subsidiary Guarantor; provided that, solely for
purposes of computing Consolidated Net Income for purposes of clause (b) of the
first paragraph of Section 4.07 hereof, the Consolidated Net Income of any
Person other than the Company and its Restricted Subsidiaries shall only be
included for periods subsequent to the effective time of such merger,
consolidation, combination or transfer of assets. Such successor Person
thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All of the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
SECTION 11.04. RELEASES FOLLOWING SALE OF ASSETS, MERGER, SALE OF CAPITAL STOCK
ETC..
In the event (a) of a sale or other disposition of all of the assets of
any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a
sale or other disposition of all of the capital stock of any Subsidiary
Guarantor, or (b) that the Company designates a Subsidiary Guarantor to be an
Unrestricted Subsidiary, or such Subsidiary Guarantor ceases to be a Subsidiary
of the Company, then such Subsidiary Guarantor (in the event of a sale or other
disposition, by way of such a merger, consolidation or otherwise, of all of the
capital stock of such Subsidiary Guarantor or any such designation) or the
entity acquiring the property (in the event of a sale or other disposition of
all of the assets of such Subsidiary Guarantor) shall be released and relieved
of any obligations under its Note Guarantee; provided that the Net Proceeds of
such sale or other disposition are applied in accordance with the provisions of
Section 4.10 and, if applicable, Section 4.14 hereof. In the case of a sale,
assignment, lease, transfer, conveyance or other disposition of all or
substantially all of the assets of a Subsidiary Guarantor, upon the assumption
provided for in clause (i) of the Section 11.03(b) hereof, such Subsidiary
Guarantor shall be discharged from all further liability and obligation under
this Indenture. Upon delivery by the Company to the Trustee of an Officers'
Certificate to the effect of the foregoing, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Subsidiary
Guarantor from
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its Obligation under its Note Guarantee. Any Subsidiary Guarantor not released
from its Obligations under its Note Guarantee shall remain liable for the full
amount of principal of, premium, if any, interest and Liquidated Damages, if
any, on the Notes and for the other Obligations of such Subsidiary Guarantor
under the Indenture as provided in this Article 11.
SECTION 11.05. ADDITIONAL SUBSIDIARY GUARANTORS.
Any Person that was not a Subsidiary Guarantor on the date of this
Indenture may become a Subsidiary Guarantor by executing and delivering to the
Trustee (a) a supplemental indenture in substantially the form of EXHIBIT E, and
(b) an Opinion of Counsel to the effect that such supplemental indenture has
been duly authorized and executed by such Person and constitutes the legal,
valid, binding and enforceable obligation of such Person (subject to such
customary exceptions concerning creditors rights', fraudulent transfers, public
policy and equitable principles as may be acceptable to the Trustee in its
discretion).
SECTION 11.06. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY.
For purposes hereof, each Subsidiary Guarantor's liability shall be
limited to the lesser of (i) the aggregate amount of the Obligations of the
Company under the Notes and this Indenture and (ii) the amount, if any, which
would not have (A) rendered such Subsidiary Guarantor "insolvent" (as such term
is defined in the United States Bankruptcy Code and in the Debtor and Creditor
Law of the State of New York) or (B) left such Subsidiary Guarantor with
unreasonably small capital at the time its Note Guarantee of the Notes was
entered into; provided that, it will be a presumption in any lawsuit or other
proceeding in which a Subsidiary Guarantor is a party that the amount guaranteed
pursuant to the Note Guarantee is the amount set forth in clause (i) above
unless any creditor, or representative of creditors of such Subsidiary
Guarantor, or debtor in possession or trustee in bankruptcy of the Subsidiary
Guarantor, otherwise proves in such a lawsuit that the aggregate liability of
the Subsidiary Guarantor is the amount set forth in clause (ii) above. In making
any determination as to solvency or sufficiency of capital of a Subsidiary
Guarantor in accordance with the previous sentence, the right of such Subsidiary
Guarantor to contribution from other Subsidiary Guarantors, and any other rights
such Subsidiary Guarantor may have, contractual or otherwise, shall be taken
into account.
SECTION 11.07 "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 11 shall in each case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 11 in place of the Trustee.
ARTICLE 12
SUBORDINATION OF NOTE GUARANTEE
SECTION 12.01. AGREEMENT TO SUBORDINATE.
The Subsidiary Guarantors agree, and each Holder by accepting a Note
agrees, that all Note Guarantee Obligations, shall be subordinated in right of
payment, to the extent and in the manner provided in this Article 12, to the
prior payment in full of all Guarantor Senior Debt, whether outstanding
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on the date hereof or thereafter incurred and that the subordination is for the
benefit of the holders of Guarantor Senior Debt.
SECTION 12.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution of assets of the Subsidiary Guarantors of
any kind or character, whether in cash, property or securities, to creditors in
any Insolvency or Liquidation Proceeding with respect to any Subsidiary
Guarantor all amounts due or to become due under or with respect to all
Guarantor Senior Debt shall first be paid in full before any payment is made on
account of the Note Guarantees, except that the Holders of Note Guarantees may
receive Reorganization Securities. Upon any such Insolvency or Liquidation
Proceeding, any payment or distribution of assets of any Subsidiary Guarantor of
any kind or character, whether in cash, property or securities (other than
Reorganization Securities), to which the Holders of the Note Guarantees or the
Trustee would be entitled shall be paid by the Subsidiary Guarantors or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, or by the Holders of the Note Guarantees or
by the Trustee if received by them, directly to the holders of Guarantor Senior
Debt (pro rata such holders on the basis of the amounts of Guarantor Senior Debt
held by such holders) or their Representative or Representatives, as their
interests may appear, for application to the payment of the Guarantor Senior
Debt remaining unpaid until all such Guarantor Senior Debt has been paid in
full, after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of Guarantor Senior Debt.
SECTION 12.03. DEFAULT ON DESIGNATED GUARANTOR SENIOR DEBT.
(a) In the event of and during the continuation of any default in the
payment of principal of, interest or premium, if any, on any Guarantor Senior
Debt, or any Obligation owing from time to time under or in respect of Guarantor
Senior Debt, or in the event that any event of default (other than a payment
default) with respect to any Guarantor Senior Debt shall have occurred and be
continuing and shall have resulted in such Guarantor Senior Debt becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable, or (b) if any event of default other than as
described in clause (a) above with respect to any Designated Senior Debt shall
have occurred and be continuing permitting the holders of such Designated Senior
Debt (or their Representative or Representatives) to declare such Designated
Senior Debt due and payable prior to the date on which it would otherwise have
become due and payable, then no payment shall be made by or on behalf of any
Subsidiary Guarantor on account of the Note Guarantees (other than payments in
the form of Reorganization Securities) (x) in case of any payment or nonpayment
default specified in (a), unless and until such default shall have been cured or
waived in writing in accordance with the instruments governing such Guarantor
Senior Debt or such acceleration shall have been rescinded or annulled, or (y)
in case of any nonpayment event of default specified in (b), during the period
(a "Payment Blockage Period") commencing on the date the Subsidiary Guarantors
and the Trustee receive written notice (a "Payment Notice") of such event of
default specifically referring to this Article 12 (which notice shall be binding
on the Trustee and the Holders of Note Guarantees as to the occurrence of such a
payment default or nonpayment event of default) from the Credit Agent (or other
holders of Designated Senior Debt or their Representative or Representatives)
and ending on the earliest of (A) 179 days after such date, (B) the date, if
any, on which the Trustee receives written notice from the Credit Agent (or
other holders of Designated Senior Debt or their Representative or
Representatives), as the case may be, stating that such Designated Senior Debt
to which such default relates is paid in full or such default is cured or waived
in writing in accordance with the instruments governing such Designated Senior
Debt by the holders of such Designated Senior Debt and (C) the date on which the
Trustee receives written notice from the Credit Agent (or other holders of
Designated Senior Debt or their Representative or Representatives), as the case
may be, terminating the Payment Blockage Period. During any consecutive
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360-day period, the aggregate of all Payment Blockage Periods shall not exceed
179 days and there shall be a period of at least 181 consecutive days in each
consecutive 360-day period when no Payment Blockage Period is in effect. No
event of default which existed or was continuing with respect to the Guarantor
Senior Debt to which notice commencing a Payment Blockage Period was given on
the date such Payment Blockage Period commenced shall be or be made the basis
for the commencement of any subsequent Payment Blockage Period unless such event
of default is cured or waived for a period of not less than 90 consecutive days.
SECTION 12.04. ACCELERATION OF NOTE GUARANTEES.
If payment of the Note Guarantees is accelerated because of an Event of
Default, the Subsidiary Guarantor shall promptly notify such Representatives of
Guarantor Senior Debt of the acceleration.
SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder of a Note Guarantee receives
any payment of any Obligations with respect to the Note Guarantees at a time
when such payment is prohibited by Section 12.03 hereof, such payment shall be
held by the Trustee or such Holder, in trust for the benefit of, and shall be
paid forthwith over and delivered, upon written request, to, the holders of
Guarantor Senior Debt as their interests may appear or their Representative
under the indenture or other agreement (if any) pursuant to which Guarantor
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Guarantor Senior
Debt remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Guarantor Senior Debt.
With respect to the holders of Guarantor Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 12, and no implied covenants or
obligations with respect to the holders of Guarantor Senior Debt shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Guarantor Senior Debt, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders of the Note Guarantees or the Company or any other Person
money or assets to which any holders of Guarantor Senior Debt shall be entitled
by virtue of this Article 12, except if such payment is made as a result of the
willful misconduct or gross negligence of the Trustee.
SECTION 12.06. NOTICE BY SUBSIDIARY GUARANTOR.
The Subsidiary Guarantors shall promptly notify the Trustee and the Paying
Agent of any facts known to the Subsidiary Guarantors that would cause a payment
of any Obligations with respect to the Note Guarantees to violate this Article,
which notice shall specifically refer to this Article 12, but failure to give
such notice shall not affect the subordination of the Note Guarantees to the
Guarantor Senior Debt as provided in this Article.
SECTION 12.07 SUBROGATION.
After all Guarantor Senior Debt is paid in full and until the Notes are
paid in full, Holders of the Note Guarantees shall be subrogated (equally and
ratably with all pari passu indebtedness) to the rights of holders of Guarantor
Senior Debt to receive distributions applicable to Guarantor Senior Debt to the
extent that distributions otherwise payable to the Holders of the Note
Guarantees have been applied to the payment of Guarantor Senior Debt. A
distribution made under this Article to holders of Guarantor Senior Debt that
otherwise would have been made to Holders of the Note Guarantees is not, as
between
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the Subsidiary Guarantors and Holders of the Note Guarantees, a payment by the
Subsidiary Guarantors on the Note Guarantees.
SECTION 12.08. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of the Note Guarantees
and holders of Guarantor Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Subsidiary Guarantors and Holders of the
Note Guarantees, the obligations of the Subsidiary Guarantors, which are
absolute and unconditional, to pay principal of and interest on the Notes
in accordance with the terms of the Note Guarantees;
(2) affect the relative rights of Holders of the Note Guarantees and
creditors of the Subsidiary Guarantors other than their rights in relation
to holders of Guarantor Senior Debt; or
(3) prevent the Trustee or any Holder of the Note Guarantees from
exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Guarantor Senior Debt to
receive distributions and payments otherwise payable to Holders of the
Note Guarantees.
If the Subsidiary Guarantors fail because of this Article to pay principal
of or interest on a Note on the due date in accordance with the terms of the
Note Guarantees, the failure is still a Default or Event of Default.
SECTION 12.09. SUBORDINATION MAY NOT BE IMPAIRED BY SUBSIDIARY GUARANTOR.
No right of any holder of Guarantor Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Note Guarantees shall be
impaired by any act or failure to act by the Subsidiary Guarantors or any Holder
or by the failure of the Subsidiary Guarantors or any Holder to comply with this
Indenture.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Guarantor Senior Debt, or any of them, may, at any time and from time
to time, without the consent of or notice to the Holders of the Note Guarantees,
without incurring any liabilities to any Holder of any Note Guarantees and
without impairing or releasing the subordination and other benefits provided in
this Indenture or the obligations of the Holders of the Note Guarantees to the
holders of the Guarantor Senior Debt, even if any right of reimbursement or
subrogation or other right or remedy of any Holder of Note Guarantees is
affected, impaired or extinguished thereby, do any one or more of the following:
(1) change the manner, place or terms of payment or change or extend
the time of payment of, or renew, exchange, amend, increase or alter, the
terms of any Guarantor Senior Debt, any security therefor or guaranty
thereof or any liability of any obligor thereon (including any guarantor)
to such holder, or any liability incurred directly or indirectly in
respect thereof or otherwise amend, renew, exchange, extend, modify,
increase or supplement in any manner any Guarantor Senior Debt or any
instrument evidencing or guaranteeing or securing the same or any
agreement under which Guarantor Senior Debt is outstanding;
(2) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing Guarantor
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Senior Debt or any liability of any obligor thereon, to such holder, or
any liability incurred directly or indirectly in respect thereof;
(3) settle or compromise any Guarantor Senior Debt or any other
liability of any obligor of the Guarantor Senior Debt to such holder or
any security therefor or any liability incurred directly or indirectly in
respect thereof and apply any sums by whomsoever paid and however realized
to any liability (including, without limitation, Guarantor Senior Debt) in
any manner or order; and
(4) fail to take or to record or to otherwise perfect, for any
reason or for no reason, any lien or security interest securing Guarantor
Senior Debt by whomsoever granted, exercise or delay in or refrain from
exercising any right or remedy against any obligor or any guarantor or any
other person, elect any remedy and otherwise deal freely with any obligor
and any security for the Guarantor Senior Debt or any liability of any
obligor to such holder or any liability incurred directly or indirectly in
respect thereof.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Guarantor Senior Debt, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of any Subsidiary Guarantor
referred to in this Article 12, the Trustee and the Holders of the Note
Guarantees shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction or upon any certificate of such Representative or of
the liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of the Note Guarantees for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Guarantor Senior Debt and other Indebtedness of the Company or any Subsidiary
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 12.
SECTION 12.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 12 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes or the Note Guarantees, unless the Trustee shall
have received at its Corporate Trust Office at least three Business Days prior
to the date of such payment written notice of facts that would cause the payment
of any Obligations with respect to the Notes or the Note Guarantees to violate
this Article, which notice shall specifically refer to this Article 12. Only the
Company, the Subsidiary Guarantors or a Representative may give the notice.
Nothing in this Article 12 shall impair the claims of, or payments to, the
Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Guarantor
Senior Debt with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights.
SECTION 12.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note Guarantee by the Holder's acceptance thereof
authorizes and directs the Trustee on the Holder's behalf to take such action as
may be necessary or appropriate to effectuate the subordination as provided in
this Article 12, and appoints the Trustee to act as the Holder's
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attorney-in-fact for any and all such purposes, including without limitation the
timely filing of a claim for the unpaid balance of the Notes held by such Holder
in the form required in any Insolvency or Liquidation Proceeding and causing
such claim to be approved. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.09 hereof at least 30 days before the expiration of the time of such claim,
the Representatives of the Designated Senior Debt, including the Credit Agent,
are hereby authorized to file an appropriate claim for and on behalf of the
Holders of the Note Guarantees.
SECTION 12.13. AMENDMENTS.
Any amendment to the provisions of this Article 12 shall require the
consent of the Holders of at least 75 % in aggregate amount of Notes then
outstanding if such amendment would adversely affect the rights of the Holders
of Note Guarantees.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 13.02. NOTICES.
Any notice or communication by the Company, the Subsidiary Guarantors or
the Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company or the Subsidiary Guarantors:
AmeriServe Food Distribution, Inc.
17975 West Sarah Lane
Suite 100
Brookfield, Wisconsin 53045
Telecopier No.: (414) 792-0202
Attention: President
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<PAGE> 84
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019-6188
Telecopier No.: (212) 403-2000
Attention: Adam 0. Emmerich
If to the Trustee:
State Street Bank and Trust Company
P.O. Box 230177
Hartford, Connecticut 06123-0177
Telecopier No.: (860) 986-7920
Attention: Corporate Trust Department
The Company, the Subsidiary Guarantors or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier promising next Business Day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail or by overnight air courier promising next Business Day delivery to its
address shown on the register kept by the Registrar. Any notice or communication
shall also be so mailed to any Person described in TIA ss. 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or the Subsidiary
Guarantors to the Trustee to take any action under this Indenture (other than
the initial issuance of the Senior Subordinated Notes), the Company or
Subsidiary Guarantor shall furnish to the Trustee upon request:
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<PAGE> 85
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 13.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 13.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 3 14(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 13.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the Company
or the Subsidiary Guarantors, as such, shall have any liability for any
obligations of the Company or any Subsidiary Guarantor under the Notes, this
Indenture, the Note Guarantees or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the Notes.
SECTION 13.08. GOVERNING LAW
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES.
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SECTION 13.09. No ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 13.10. SUCCESSORS.
All agreements of the Company and the Subsidiary Guarantors in this
Indenture, the Notes and the Note Guarantees shall bind their respective
successors and assigns. All agreements of the Trustee in this Indenture shall
bind its successors and assigns.
SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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<PAGE> 87
SIGNATURES
Dated as of , 1997 AMERISERVE FOOD DISTRIBUTION, INC.
By:
-------------------------------
Name:
Title:
AMERISERV FOOD COMPANY
By:
-------------------------------
Name:
Title:
CHICAGO CONSOLIDATED CORPORATION
By:
-------------------------------
Name:
Title:
NORTHLAND TRANSPORTATION SERVICES,
INC.
By:
-------------------------------
Name:
Title:
THE HARRY H. POST COMPANY
By:
-------------------------------
Name:
Title:
DELTA TRANSPORTATION, LTD.
By:
-------------------------------
Name:
Title:
<PAGE> 88
AMERISERVE TRANSPORTATION, INC.
By:
-------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
-------------------------------
Name:
Title:
<PAGE> 89
EXHIBIT A
(Face of Senior Subordinated Note) 10 1/8% Senior
Subordinated Notes due 2007
No. ___ $__________
CUSIP NO. 03072JAA3
AMERISERVE FOOD DISTRIBUTION, INC.
promises to pay to ____________________ or registered assigns, the principal sum
of _____________ Dollars on July 15, 2007.
Interest Payment Dates: July 15 and January 15
Record Dates: July 1 and January 15
AMERISERVE FOOD DISTRIBUTION, INC.
By:________________________
Name:
Title:
This is one of the
Senior Subordinated Notes referred to
in the within-mentioned Indenture:
Dated: ____________
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
---------------------------------
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<PAGE> 90
(Back of Senior Subordinated Note)
10 1/8% Senior Subordinated Notes due 2007
[Unless and until it is exchanged in whole or in part for Senior
Subordinated Notes in definitive form, this Senior Subordinated Note may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary. Unless this certificate is presented by
an authorized representative of The Depository Trust Company (55 Water Street,
New York, New York) ("DTC"), to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the registered owner hereof, Cede & Co., has an
interest herein.] 1
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE UNITED STATES TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 OF THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(l), (2), (3) OR (7) OF THE SECURITIES
ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR"), THAT PRIOR TO SUCH TRANSFER,
FURNISHED THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND,
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR
(e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND, IN THE CASE OF CLAUSE (b), (c),
(d) or (e), BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS),
(2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.] (2)
- ----------
1. This paragraph should be included only if the Senior Subordinated Note is
issued in global form.
2. This paragraph should be removed upon the exchange of Senior Subordinated
Notes for New Senior Subordinated Notes in the Exchange Offer or upon the
registration of the Senior Subordinated Notes pursuant to the terms of the
Registration Rights Agreement.
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<PAGE> 91
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. AmeriServe Food Distribution, Inc., a Nebraska
corporation, or its successor (the "Company"), promises to pay
interest on the principal amount of this Senior Subordinated Note at
the rate of 101/8% per annum and shall pay the Liquidated Damages,
if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and
Liquidated Damages, if any, in United States dollars (except as
otherwise provided herein) semi-annually in arrears on July 15 and
January 15, commencing on January 15, 1998, or if any such day is
not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Senior Subordinated Notes
shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance;
provided that if there is no existing Default or Event of Default in
the payment of interest, and if this Senior Subordinated Note is
authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue
from such next succeeding Interest Payment Date, except in the case
of the original issuance of Senior Subordinated Notes, in which case
interest shall accrue from the date of authentication. The Company
shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1 % per annum in excess of the then applicable
interest rate on the Senior Subordinated Notes to the extent lawful;
it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable
grace period) at the same rate to the extent lawful. Interest shall
be computed on the basis of a 360-day year comprised of twelve
30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Senior
Subordinated Notes (except defaulted interest) and Liquidated
Damages, if any, on the applicable Interest Payment Date to the
Persons who are registered Holders of Senior Subordinated Notes at
the close of business on the July 1 or January 1 next preceding the
Interest Payment Date, even if such Senior Subordinated Notes are
cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture
with respect to defaulted interest. The Senior Subordinated Notes
shall be payable as to principal, premium and Liquidated Damages, if
any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Liquidated
Damages, if any, may be made by check mailed to the Holders at their
addresses set forth in the register of Holders; provided that
payment by wire transfer of immediately available funds shall be
required with respect to principal of, premium and Liquidated
Damages, if any, and interest on, all Global Notes and all other
Senior Subordinated Notes the Holders of which shall have provided
written wire transfer instructions to the Company and the Paying
Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, shall act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.
4. INDENTURE. The Company issued the Senior Subordinated Notes under an
Indenture dated as of July 11, 1997 ("Indenture") among the Company,
the Subsidiary Guarantors and the A-1-3
A-1-3
<PAGE> 92
Trustee. The terms of the Senior Subordinated Notes include those
stated in the Indenture and those made a part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 77aaa-77bbbb) (the "TIA"). The Senior Subordinated Notes
are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. The Senior
Subordinated Notes are general unsecured Obligations of the Company
limited to $500,000,000 in aggregate principal amount, plus amounts,
if any, sufficient to pay premium or Liquidated Damages, if any, and
interest on outstanding Senior Subordinated Notes as set forth in
Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
Except as set forth in the next paragraph, the Senior
Subordinated Notes shall not be redeemable at the Company's option
prior to July 15, 2002. Thereafter, the Senior Subordinated Notes
shall be subject to redemption at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of
principal amount) set forth below together with accrued and unpaid
interest and any Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month
period beginning on July 15 of the years indicated below:
Year Percentage
---- ----------
2002 ............................................. 105.063%
2003 ............................................. 103.375%
2004 ............................................. 101.688%
2005 and thereafter .............................. 100.000%
Notwithstanding the foregoing, at any time prior to July 15,
2000, the Company may redeem up to 33% of the original aggregate
principal amount of Senior Subordinated Notes at a redemption price
of 110.125% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the redemption date,
with the net proceeds of a Public Equity Offering; provided that at
least 67% of the original aggregate principal amount of Senior
Subordinated Notes remains outstanding immediately after the
occurrence of such redemption; and provided, further, that such
redemption shall occur within 45 days of the date of the closing of
such Public Equity Offering.
6. MANDATORY REDEMPTION
Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption or sinking fund
payments with respect to the Senior Subordinated Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of
Senior Subordinated Notes will have the right to require the Company
to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder's Senior Subordinated Notes
pursuant to the offer described below (the "Change of Control
Offer") at an offer price in cash equal to 101 % of the aggregate
principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon, to the date of purchase. Within
30 days following any Change of Control, the Company will mail a
notice to each Holder describing the transaction or transactions
that
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<PAGE> 93
constitute the Change of Control setting forth the procedures
governing the Change of Control Offer required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $15.0
million, the Company shall offer to all Holders of Senior
Subordinated Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of Senior Subordinated Notes that may be purchased
out of the Excess Proceeds at an offer price in cash equal to 100%
of principal amount thereof, plus accrued and unpaid interest, and
Liquidated Damages thereon, if any, to the date of purchase in
accordance with the procedures set forth in the Indenture. To the
extent that the aggregate amount of Senior Subordinated Notes
tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for any
general corporate purposes. If the aggregate principal amount of
Senior Subordinated Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Senior
Subordinated Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.
(c) Holders of the Senior Subordinated Notes that are the subject of
an offer to purchase will receive a Change of Control Offer or Asset
Sale Offer from the Company prior to any related purchase date and
may elect to have such Senior Subordinated Notes purchased by
completing the form titled "Option of Holder to Elect Purchase"
appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each
Holder whose Senior Subordinated Notes are to be redeemed at its
registered address. Senior Subordinated Notes in denominations
larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Senior Subordinated Notes
held by a Holder are to be redeemed. On and after the redemption
date, interest and Liquidated Damages, if any, ceases to accrue on
the Senior Subordinated Notes or portions thereof called for
redemption.
9. SUBORDINATION. The Notes are subordinated to Senior Debt, which is
(i) all Indebtedness outstanding under the New Credit Facility,
including any Guarantees thereof and all Hedging Obligations with
respect thereto, (ii) any other Indebtedness permitted to be
incurred by the Company under the terms of this Indenture, unless
the instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of
payment to the Notes and (iii) all Obligations with respect to the
foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (w) any liability for
federal, state, local or other taxes owed or owing by the Company,
(x) any Indebtedness of the Company to any of its Subsidiaries or
other Affiliates, (y) any trade payables or (z) any Indebtedness
that is incurred in violation of this Indenture. To the extent
provided in the Indenture, Senior Debt must be paid before the Notes
may be paid. The Company agrees and each Holder of Notes by
accepting a Note consents and agrees to the subordination provided
in the Indenture and authorizes the Trustee to give it effect.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes are
in registered form without coupons in initial denominations of
$1,000 and integral multiples of $1,000. The transfer of the Senior
Subordinated Notes may be registered and the Senior Subordinated
Notes may be exchanged as provided in the Indenture. The Registrar
and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or
register the transfer of any Senior
A-1-5
<PAGE> 94
Subordinated Note or portion of a Senior Subordinated Note selected
for redemption, except for the unredeemed portion of any Senior
Subordinated Note being redeemed in part. Also, it need not exchange
or register the transfer of any Senior Subordinated Notes for a
period of 15 days before a selection of Senior Subordinated Notes to
be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Senior
Subordinated Note may be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following
paragraphs, the Indenture, the Senior Subordinated Notes and the
Note Guarantees may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Senior
Subordinated Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of or, tender offer
or exchange offer for Senior Subordinated Notes), and any existing
Default or Event of Default or compliance with any provision of the
Indenture, the Senior Subordinated Notes or the Note Guarantees may
be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Senior Subordinated Notes (including
consents obtained in connection with a tender offer or exchange
offer for Senior Subordinated Notes).
Without the consent of any Holder of Senior Subordinated
Notes, the Company and the Trustee may amend or supplement the
Indenture, the Note Guarantees or the Senior Subordinated Notes to
cure any ambiguity, defect or inconsistency, to provide for
uncertificated Senior Subordinated Notes in addition to or in place
of certificated Senior Subordinated Notes, to provide for the
assumption of the Company's or a Subsidiary Guarantor's obligations
to Holders of Senior Subordinated Notes in the case of a merger or
consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Senior Subordinated Notes or
that does not adversely affect the legal rights under the Indenture
of any such Holder, to comply with the requirements of the
Commission in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act or to allow any Subsidiary
to guarantee the Senior Subordinated Notes. Any amendments with
respect to subordination provisions of the Notes or the Note
Guarantees would require the consent of the Holders of at least 75%
in aggregate amount of Notes then outstanding if such amendment
would adversely affect the rights of the Holders of Notes.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest on or Liquidated Damages,
if any, with respect to the Senior Subordinated Notes; (ii) default
in payment when due of the principal of or premium, if any, on the
Senior Subordinated Notes; (iii) failure by the Company or any
Restricted Subsidiary to comply with the provisions described in
Sections 4.10, 4.14 or 5.01 of the Indenture; (iv) failure by the
Company or any Restricted Subsidiary for 30 days after notice from
the Trustee or at least 25 % in principal amount of the Senior
Subordinated Notes to comply with the provisions described in
Sections 4.07 and 4.09, of the Indenture; (v) failure by the Company
or any Subsidiary for 60 days after notice from the Trustee or the
Holders of at least 25 % in principal amount of the Senior
Subordinated Notes then outstanding to comply with its other
agreements in the Indenture or the Senior Subordinated Notes; (vi)
default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of their
its Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture,
which default
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<PAGE> 95
(A) (i) is caused by a failure to pay when due at final stated
maturity (giving effect to any grace period related thereto) any
principal of or premium, if any, or interest on such Indebtedness (a
"Payment Default") or (ii) results in the acceleration of such
Indebtedness prior to its express maturity and (B) in each case, the
principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there
has been a Payment Default or the maturity of which has been so
accelerated, aggregates $15.0 million or more; (vii) failure by the
Company or any of its Subsidiaries to pay final judgments
aggregating in excess of $5.0 million, which judgments are not paid
discharged or stayed within 60 days after their entry; and (viii)
certain events of bankruptcy or insolvency with respect to the
Company, any of its Significant Subsidiaries or any group of
Subsidiaries that, taken together, would constitute a Significant
Subsidiary.
If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then
outstanding Senior Subordinated Notes may declare all the Senior
Subordinated Notes to be due and payable immediately provided,
however, that if any Indebtedness or Obligation is outstanding
pursuant to the New Credit Facility, upon a declaration of
acceleration by the holders of the Senior Subordinated Notes or the
Trustee, all principal and interest under the Indenture shall be due
and payable upon the earlier of (x) the day five Business Days after
the provision to the Company, the Credit Agent and the Trustee of
such written notice of acceleration or (y) the date of acceleration
of any Indebtedness under the New Credit Facility; and provided,
further, that in the event of an acceleration based upon an Event of
Default set forth in clause (vi) above, such declaration of
acceleration shall be automatically annulled if the holders of
Indebtedness which is the subject of such failure to pay at maturity
or acceleration have rescinded their declaration of acceleration in
respect of such Indebtedness or such failure to pay at maturity
shall have been cured or waived within 30 days thereof and no other
Event of Default has occurred during such 30-day period which has
not been cured, paid or waived. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company or any of its
Significant Subsidiaries all outstanding Senior Subordinated Notes
will become due and payable without further action or notice.
Holders of the Senior Subordinated Notes may not enforce the
Indenture or the Senior Subordinated Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Senior Subordinated Notes
may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of the Senior Subordinated Notes
notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their
interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform
services for the Company, the Subsidiary Guarantors or their
respective Affiliates, and may otherwise deal with the Company, the
Subsidiary Guarantors or their respective Affiliates, as if it were
not the Trustee.
15. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder, of the Company or any Subsidiary
Guarantor, as such, shall have any liability for any obligations of
the Company or any Subsidiary Guarantor under the Senior
Subordinated Notes, the Indenture or the Note Guarantees or for any
claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Senior Subordinated Notes by
accepting a Senior Subordinated Note waives and releases all such
liability. The waiver and release are part of the consideration for
the issuance of the Senior Subordinated Notes and any Note
Guarantee.
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<PAGE> 96
16. AUTHENTICATION. This Senior Subordinated Note shall not be valid
until authenticated by the manual signature of the Trustee or an
authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST
(=Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Senior
Subordinated Notes under the Indenture, Holders of Transferred
Restricted Securities (as defined in the Registration Rights
Agreement) shall have all the rights set forth in the Registration
Rights Agreement, dated as of the date hereof, among the Company,
the Subsidiary Guarantors and the Initial Purchaser (the
"Registration Rights Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company
has caused CUSIP numbers to be printed on the Senior Subordinated
Notes and the Trustee may use CUSIP numbers in notices of redemption
as a convenience to the Holders. No representation is made as to the
accuracy of such numbers either as printed on the Senior
Subordinated Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers
placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
AmeriServe Food Distribution, Inc.
17975 West Sarah Lane, Suite 100
Brookfield, Wisconsin
Telecopy: (414) 792-0202
Chief Financial Officer
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<PAGE> 97
ASSIGNMENT FORM
To assign this Senior Subordinated Note, fill in the form below: (I) or
(we) assign and transfer this Senior Subordinated Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Senior Subordinated Note on the books of the Company. The
agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: ____________________
Your Signature:
---------------------------------
(Sign exactly as your name appears on the face of this
Senior Subordinated Note)
Signature Guarantee:
----------------------------
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<PAGE> 98
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Subordinated Note purchased by
the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box
below:
|_| Section 4.10 |_| Section 4.14
If you want to elect to have only part of the Senior Subordinated Note
purchased by the Company pursuant to Section 4.10 or Section 4.14 of the
Indenture, state the amount you elect to have purchased: $____________
Date: ____________________ Your Signature:
---------------------------------
(Sign exactly as your name appears on the
Senior Subordinated Note)
Tax Identification No.:______________
Signature Guarantee:
----------------------------
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<PAGE> 99
SCHEDULE OF EXCHANGES OF SENIOR SUBORDINATED NOTE (3)
The following exchanges of a part of this Global Note for other Senior
Subordinated Notes have been made:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Principal Amount of Signature of authorized
Amount of decrease in Amount of increase in this Global Note officer of Trustee or
Principal Amount of Principal Amount of following such decrease Senior Subordinated
Date of Exchange this Global Note this Global Note (or increase) Note Custodian
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
3. This should be included only if the Senior Subordinated Note is issued in
global form.
A-1-11
<PAGE> 100
EXHIBIT A-2
(Face of Regulation S Global Note)
10 1/8% Senior Subordinated Notes due 2007
No. ___ $__________
CIN NO. UO3O38AA1
AMERISERVE FOOD DISTRIBUTION, INC.
promises to pay to _________________ or registered assigns, the principal sum of
_________ Dollars on July 15, 2007.
Interest Payment Dates: July 15 and January 15
Record Dates: July 1 and January 1
AMERISERVE FOOD DISTRIBUTION, INC.
By:
-------------------------------
Name:
Title:
This is one of the
Senior Subordinated Notes referred to in the
within-mentioned Indenture:
Dated: _____________________________
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
---------------------------------
A-2-1
<PAGE> 101
(Back of Regulation S Temporary Global Note)
10 1/8% Senior Subordinated Note due 2007
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR
SUBORDINATED NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) ("DTC"),TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY RE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
OF THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(l), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), THAT PRIOR TO SUCH TRANSFER, FURNISHED THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $100,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND, IN THE CASE OF CLAUSES
(b), (c), (d) or (e), BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE SENIOR
SUBORDINATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
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<PAGE> 102
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON
PRIOR TO THE EXCHANGE OF THIS SENIOR SUBORDINATED NOTE FOR A REGULATION S
TEMPORARY GLOBAL NOTE AS CONTEMPLATED BY THE INDENTURE.](1)
Until the Regulation S Temporary Global Note is exchanged for Regulation S
Permanent Global Notes, the Holder hereof shall not be entitled to receive
payments of interest or Liquidated Damages, if any, hereon although interest and
Liquidated Damages, if any, will continue to accrue; until so exchanged in full,
the Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Senior Subordinated Notes under the Indenture.
The Regulation S Temporary Global Note is exchangeable in whole or in part
for one or more Regulation S Permanent Global Notes or Rule 144A Global Notes
only (i) on or after the termination of the 40-day restricted period (as defined
in Regulation S) and (ii) upon presentation of certificates (accompanied by an
Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon
exchange of the Regulation S Temporary Global Note for one or more Regulation S
Permanent Global Notes or Rule 144A Global Notes, the Trustee shall cancel the
Regulation S Temporary Global Note.
The Regulation S Global Note shall not become valid or obligatory until
the certificate of authentication hereon shall have been duly manually signed by
the Trustee in accordance with the Indenture. The Regulation S Global Note shall
be governed by and construed in accordance with the laws of the State of the New
York. All references to "$," "Dollars," "dollars" or "U.S. $" are to such coin
or currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts therein.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. AmeriServe Food Distribution, Inc., a Nebraska
corporation, or its successor (the "Company"), promises to pay
interest on the principal amount of this Senior Subordinated Note at
the rate of 10 1/8% per annum and shall pay the Liquidated Damages,
if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and
Liquidated Damages, if any, in United States dollars (except as
otherwise provided herein) semi-annually in arrears on July 15 and
January 15, commencing on January 15, 1998, or if any such day is
not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Senior Subordinated Notes
shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance;
provided that if there is no existing Default or Event of Default in
the payment of interest, and if this Senior Subordinated Note is
authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue
from such next succeeding Interest Payment Date, except in the case
of the original issuance of Senior Subordinated Notes, in which case
interest shall accrue from the date of authentication. The Company
shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the then applicable
interest rate on the Senior Subordinated Notes to the extent lawful;
it shall pay interest (including post-petition interest in any
proceeding
- ----------
1. These paragraphs should be removed upon the exchange of Regulation S
Temporary Global Notes for Regulation S Permanent Global Notes pursuant to the
Indenture.
A-2-3
<PAGE> 103
under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful. Interest shall be computed on
the basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Senior
Subordinated Notes (except defaulted interest) and Liquidated
Damages, if any, on the applicable Interest Payment Date to the
Persons who are registered Holders of Senior Subordinated Notes at
the close of business on the July 1 or January 1 next preceding the
Interest Payment Date, even if such Senior Subordinated Notes are
cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture
with respect to defaulted interest. The Senior Subordinated Notes
shall be payable as to principal, premium and Liquidated Damages, if
any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Liquidated
Damages, if any, may be made by check mailed to the Holders at their
addresses set forth in the register of Holders; provided that
payment by wire transfer of immediately available funds shall be
required with respect to principal of, premium and Liquidated
Damages, if any, and interest on, all Global Notes and all other
Senior Subordinated Notes the Holders of which shall have provided
written wire transfer instructions to the Company and the Paying
Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, shall act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.
4. INDENTURE. The Company issued the Senior Subordinated Notes under an
Indenture dated as of July 11, 1997 ("Indenture") among the Company,
the Subsidiary Guarantors and the Trustee. The terms of the Senior
Subordinated Notes include those stated in the Indenture and those
made a part of the Indenture by reference to the Trust Indenture Act
of 1939, as amended (15 U.S. Code ss.ss.77aaa-77bbbb) (the "TIA").
The Senior Subordinated Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement
of such terms. The Senior Subordinated Notes are general unsecured
Obligations of the Company limited to $500,000,000 in aggregate
principal amount, plus amounts, if any, sufficient to pay premium or
Liquidated Damages, if any, and interest on outstanding Senior
Subordinated Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
Except as set forth in the next paragraph, the Senior
Subordinated Notes shall not be redeemable at the Company's option
prior to July 15, 2002. Thereafter, the Senior Subordinated Notes
shall be subject to redemption at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of
principal amount) set forth below together with accrued and unpaid
interest and any Liquidated Damages, if any, thereon to the
A-2-4
<PAGE> 104
applicable redemption date, if redeemed during the twelve-month
period beginning on July 15 of the years indicated below:
Year Percentage
---- ----------
2002 .............................................. 105.063%
2003 .............................................. 103.375%
2004 .............................................. 101.688%
2005 and thereafter ............................... 100.000%
Notwithstanding the foregoing, at any time prior to July 15, 2000,
the Company may redeem up to 33 % of the original aggregate principal
amount of Senior Subordinated Notes at a redemption price of 110.125% of
the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date, with the net proceeds
of a Public Equity Offering; provided that at least 67% of the original
aggregate principal amount of Senior Subordinated Notes remains
outstanding immediately after the occurrence of such redemption; and
provided, further, that such redemption shall occur within 45 days of the
date of the closing of such Public Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with
respect to the Senior Subordinated Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of
Senior Subordinated Notes will have the right to require the Company
to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder's Senior Subordinated Notes
pursuant to the offer described below (the "Change of Control
Offer") at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon, to the date of purchase. Within
30 days following any Change of Control, the Company will mail a
notice to each Holder describing the transaction or transactions
that constitute the Change of Control setting forth the procedures
governing the Change of Control Offer required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $15.0
million, the Company shall offer to all Holders of Senior
Subordinated Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of Senior Subordinated Notes that may be purchased
out of the Excess Proceeds at an offer price in cash equal to 100%
of principal amount thereof, plus accrued and unpaid interest, and
Liquidated Damages thereon, if any, to the date of purchase in
accordance with the procedures set forth in the Indenture. To the
extent that the aggregate amount of Senior Subordinated Notes
tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for any
general corporate purposes. If the aggregate principal amount of
Senior Subordinated Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Senior
Subordinated Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.
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(c) Holders of the Senior Subordinated Notes that are the subject of
an offer to purchase will receive a Change of Control Offer or Asset
Sale Offer from the Company prior to any related purchase date and
may elect to have such Senior Subordinated Notes purchased by
completing the form titled "Option of Holder to Elect Purchase"
appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each
Holder whose Senior Subordinated Notes are to be redeemed at its
registered address. Senior Subordinated Notes in denominations
larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Senior Subordinated Notes
held by a Holder are to be redeemed. On and after the redemption
date, interest and Liquidated Damages, if any, ceases to accrue on
the Senior Subordinated Notes or portions thereof called for
redemption.
9. SUBORDINATION. The Notes are subordinated to Senior Debt, which is
(i) all Indebtedness outstanding under the New Credit Facility,
including any Guarantees thereof and all Hedging Obligations with
respect thereto, (ii) any other Indebtedness permitted to be
incurred by the Company under the terms of this Indenture, unless
the instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of
payment to the Notes and (iii) all Obligations with respect to the
foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (w) any liability for
federal, state, local or other taxes owed or owing by the Company,
(x) any Indebtedness of the Company to any of its Subsidiaries or
other Affiliates, (y) any trade payables or (z) any Indebtedness
that is incurred in violation of this Indenture. To the extent
provided in the Indenture, Senior Debt must be paid before the Notes
may be paid. The Company agrees and each Holder of Notes by
accepting a Note consents and agrees to the subordination provided
in the Indenture and authorizes the Trustee to give it effect.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes are
in registered form without coupons in initial denominations of
$1,000 and integral multiples of $1,000. The transfer of the Senior
Subordinated Notes may be registered and the Senior Subordinated
Notes may be exchanged as provided in the Indenture. The Registrar
and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or
register the transfer of any Senior Subordinated Note or portion of
a Senior Subordinated Note selected for redemption, except for the
unredeemed portion of any Senior Subordinated Note being redeemed in
part. Also, it need not exchange or register the transfer of any
Senior Subordinated Notes for a period of 15 days before a selection
of Senior Subordinated Notes to be redeemed or during the period
between a record date and the corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Senior
Subordinated Note may be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following
paragraphs, the Indenture, the Senior Subordinated Notes and the
Note Guarantees may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Senior
Subordinated Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of or, tender offer
or exchange offer for Senior Subordinated Notes), and any existing
Default or Event of Default or compliance with any provision of the
Indenture, the Senior Subordinated Notes or the Note Guarantees may
be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Senior Subordinated Notes (including
A-2-6
<PAGE> 106
consents obtained in connection with a tender offer or exchange
offer for Senior Subordinated Notes).
Without the consent of any Holder of Senior Subordinated
Notes, the Company and the Trustee may amend or supplement the
Indenture, the Note Guarantees or the Senior Subordinated Notes to
cure any ambiguity, defect or inconsistency, to provide for
uncertificated Senior Subordinated Notes in addition to or in place
of certificated Senior Subordinated Notes, to provide for the
assumption of the Company's or a Subsidiary Guarantor's obligations
to Holders of Senior Subordinated Notes in the case of a merger or
consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Senior Subordinated Notes or
that does not adversely affect the legal rights under the Indenture
of any such Holder, to comply with the requirements of the
Commission in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act or to allow any Subsidiary
to guarantee the Senior Subordinated Notes. Any amendments with
respect to subordination provisions of the Notes or the Note
Guarantees would require the consent of the Holders of at least 75 %
in aggregate amount of Notes then outstanding if such amendment
would be adversely affect the rights of the Holders of Notes.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest on or Liquidated Damages,
if any, with respect to the Senior Subordinated Notes; (ii) default
in payment when due of the principal of or premium, if any, on the
Senior Subordinated Notes; (iii) failure by the Company or any
Restricted Subsidiary to comply with the provisions described in
Sections 4.10, 4.14 or 5.01 of the Indenture; (iv) failure by the
Company or any Restricted Subsidiary for 30 days after notice from
the Trustee or at least 25 % in principal amount of the Senior
Subordinated Notes to comply with the provisions described in
Sections 4.07 and 4.09, of the Indenture; (v) failure by the Company
or any Subsidiary for 60 days after notice from the Trustee or the
Holders of at least 25% in principal amount of the Senior
Subordinated Notes then outstanding to comply with its other
agreements in the Indenture or the Senior Subordinated Notes; (vi)
default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of their
its Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture,
which default (A) (i) is caused by a failure to pay when due at
final stated maturity (giving effect to any grace period related
thereto) any principal of or premium, if any, or interest on such
Indebtedness (a "Payment Default") or (ii) results in the
acceleration of such Indebtedness prior to its express maturity and
(B) in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $15.0 million or more;
(vii) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which judgments are
not paid discharged or stayed within 60 days after their entry; and
(viii) certain events of bankruptcy or insolvency with respect to
the Company, any of its Significant Subsidiaries or any group of
Subsidiaries that, taken together, would constitute a Significant
Subsidiary.
If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25 % in principal amount of the then
outstanding Senior Subordinated Notes may declare all the Senior
Subordinated Notes to be due and payable immediately provided,
however, that if any Indebtedness or Obligation is outstanding
pursuant to the New Credit Facility, upon a declaration of
acceleration by the holders of the Senior Subordinated Notes or the
Trustee, all
A-2-7
<PAGE> 107
principal and interest under the Indenture shall be due and payable
upon the earlier of (x) the day five Business Days after the
provision to the Company, the Credit Agent and the Trustee of such
written notice of acceleration or (y) the date of acceleration of
any Indebtedness under the New Credit Facility; and provided,
further, that in the event of an acceleration based upon an Event of
Default set forth in clause (vi) above, such declaration of
acceleration shall be automatically annulled if the holders of
Indebtedness which is the subject of such failure to pay at maturity
or acceleration have rescinded their declaration of acceleration in
respect of such Indebtedness or such failure to pay at maturity
shall have been cured or waived within 30 days thereof and no other
Event of Default has occurred during such 30-day period which has
not been cured, paid or waived. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company or any of its
Significant Subsidiaries all outstanding Senior Subordinated Notes
will become due and payable without further action or notice.
Holders of the Senior Subordinated Notes may not enforce the
Indenture or the Senior Subordinated Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Senior Subordinated Notes
may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of the Senior Subordinated Notes
notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their
interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform
services for the Company, the Subsidiary Guarantors or their
respective Affiliates, and may otherwise deal with the Company, the
Subsidiary Guarantors or their respective Affiliates, as if it were
not the Trustee.
15. No RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder, of the Company or any Subsidiary
Guarantor, as such, shall have any liability for any obligations of
the Company or any Subsidiary Guarantor under the Senior
Subordinated Notes, the Indenture or the Note Guarantees or for any
claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Senior Subordinated Notes by
accepting a Senior Subordinated Note waives and releases all such
liability. The waiver and release are part of the consideration for
the issuance of the Senior Subordinated Notes and any Note
Guarantee.
16. AUTHENTICATION. This Senior Subordinated Note shall not be valid
until authenticated by the manual signature of the Trustee or an
authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Senior
Subordinated Notes under the Indenture, Holders of Transferred
Restricted Securities (as defined in the Registration Rights
Agreement) shall have all the rights set forth in the Registration
Rights Agreement, dated as of the date hereof, among the Company,
the Subsidiary Guarantors and the Initial Purchaser (the
"Registration Rights Agreement").
A-2-8
<PAGE> 108
19. CIN NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company
has caused CIN numbers to be printed on the Senior Subordinated
Notes and the Trustee may use CIN numbers in notices of redemption
as a convenience to the Holders. No representation is made as to the
accuracy of such numbers either as printed on the Senior
Subordinated Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers
placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
AmeriServe Food Distribution, Inc.
17975 West Sarah Lane, Suite 100
Brookfield, Wisconsin
Telecopy: (414) 792-0202
Chief Financial Officer
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<PAGE> 109
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Subordinated Note purchased by
the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box
below:
|_| Section 4.10 |_| Section 4.14
If you want to elect to have only part of the Senior Subordinated Note
purchased by the Company pursuant to Section 4.10 or Section 4.14 of the
Indenture, state the amount you elect to have purchased: $____________
Date: ____________________ Your Signature:
---------------------------------
(Sign exactly as your name appears on the face of this
Senior Subordinated Note)
Tax Identification No.:______________
Signature Guarantee.
A-2-10
<PAGE> 110
SCHEDULE OF EXCHANGES FOR GLOBAL NOTES
The following exchanges of a part of the Regulation S Global Note for
other Global Notes have been made:
<TABLE>
<CAPTION>
Signature of
Amount of decrease in Amount of increase in Principal Amount of this authorized officer of
Principal Amount Principal Amount Global Note Trustee or Senior
of this Global of this Global following such decrease Subordinated Note
Date of Exchange Note Note (or increase) Custodian
- ---------------- ---- ---- ------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
A-2-11
<PAGE> 111
EXHIBIT B-I
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE
(Pursuant to Section 2.06(a)(1) of the Indenture)
State Street Bank and Trust Company
777 Main Street, 11th Floor
Hartford, Connecticut 06123-4236
Re: 10 1/8% Senior Subordinated Notes due 2007 of AmeriServe Food
Distribution, Inc.
Reference is hereby made to the Indenture, dated as of July 11, 1997 (the
"Indenture"), among AmeriServ Food Distribution, Inc., a Nebraska corporation
(the "Company"), AmeriServ Food Company, a Delaware corporation ("Ameriserv"),
Chicago Consolidated Corporation, an Illinois corporation ("CCC"), Northland
Transportation Services, Inc., a Nebraska corporation ("Northland"), The Harry
H. Post Company, a Colorado corporation ("Post"), Delta Transportation, Ltd., a
Wisconsin corporation ("Delta") and AmeriServ Transportation, Inc., a Nebraska
corporation ("ATI") (each of AmeriServ, CCC, Northland, Post, Delta and ATI a
"Subsidiary Guarantor" and together with any Subsidiary of the Company that
executes a Note Guarantee substantially in the form of EXHIBIT D to the
Indenture, the "Subsidiary Guarantors) and State Street Bank and Trust Company,
as trustee (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $ __________________ principal amount of Senior
Subordinated Notes which are evidenced by one or more Rule 144A Global Notes and
held with the Depositary in the name of ________________________ (the
"Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Senior Subordinated Notes to a Person who will take delivery
thereof in the form of an equal principal amount of Senior Subordinated Notes
evidenced by one or more Regulation S Global Notes, which amount, immediately
after such transfer, is to be held with the Depositary through Euroclear or
Cedel or both.
In connection with such request and in respect of such Senior Subordinated
Notes, the Transferor hereby certifies that such transfer has been effected in
compliance with the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with Rule 903 or Rule 904 under the United States
Securities Act of 1933, as amended (the "Securities Act"), and accordingly the
Transferor hereby further certifies that:
(1) The offer of the Senior Subordinated Notes was not made to a person
in the United States;
(2) either:
B-1-1
<PAGE> 112
(a) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person
acting on its behalf reasonably believed and believes that the
transferee was outside the United States; or
(b) the transaction was executed in, on or through the facilities
of a designated offshore securities market and neither the
Transferor nor any person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade the
registration provisions of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary
through Euroclear or Cedel or both.
Upon giving effect to this request to exchange a beneficial interest in a
Rule 144A Global Note for a beneficial interest in a Regulation S Global Note,
the resulting beneficial interest shall be subject to the restrictions on
transfer applicable to Regulation S Global Notes pursuant to the Indenture and
the Securities Act and, if such transfer occurs prior to the end of the 40-day
restricted period associated with the initial offering of Senior Subordinated
Notes, the additional restrictions applicable to transfers of interest in the
Regulation S Temporary Global Note.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Donaldson,
Lulkin & Jenrette Securities Corporation and BancAmerica Securities, Inc., the
initial purchasers of such Senior Subordinated Notes being transferred. Terms
used in this certificate and not otherwise defined in the Indenture have the
meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By: ______________
Name:
Title:
Dated:
cc: AmeriServ Food Distribution, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
BancAmerica Securities, Inc.
B-1-2
<PAGE> 113
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE
(Pursuant to Section 2.06(a)(ii) of the Indenture)
State Street Bank and Trust Company
777 Main Street, 11th Floor
Hartford, Connecticut 06123-4236
Re: 10 1/8% Senior Subordinated Notes due 2007 of AmeriServ Food
Distribution, Inc.
Reference is hereby made to the Indenture, dated as of July 11, 1997 (the
"Indenture"), among AmeriServ Food Distribution, Inc., a Nebraska corporation
(the "Company"), AmeriServ Food Company, a Delaware corporation ("Ameriserv"),
Chicago Consolidated Corporation, an Illinois corporation ("CCC"), Northland
Transportation Services, Inc., a Nebraska corporation ("Northland"), The Harry
H. Post Company, a Colorado corporation ("Post"), Delta Transportation, Ltd., a
Wisconsin corporation ("Delta") and AmeriServ Transportation, Inc., a Nebraska
corporation ("ATI") (each of AmeriServ, CCC, Northland, Post, Delta and ATI a
"Subsidiary Guarantor" and together with any Subsidiary of the Company that
executes a Note Guarantee substantially in the form of EXHIBIT D to the
Indenture, the "Subsidiary Guarantors) and State Street Bank and Trust Company,
as trustee (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $__________ principal amount of Senior Subordinated
Notes which are evidenced by one or more Regulation S Global Notes and held with
the Depositary through Euroclear or Cedel in the name of
_____________________________ (the "Transferor"). The Transferor has requested a
transfer of such beneficial interest in the Senior Subordinated Notes to a
Person who will take delivery thereof in the form of an equal principal amount
of Senior Subordinated Notes evidenced by one or more Rule 144A Global Notes, to
be held with the Depositary.
In connection with such request and in respect of such Senior Subordinated
Notes, the Transferor hereby certifies that:
[CHECK ONE]
|_| such transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, the Transferor hereby further
certifies that the Senior Subordinated Notes are being transferred to a
Person that the Transferor reasonably believes is purchasing the Senior
Subordinated Notes for its own account, or for one or more accounts with
respect to which such Person exercises sole investment discretion, and
such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A in a transaction meeting the requirements
of Rule 144A;
or
B-2-1
<PAGE> 114
|_| such transfer is being effected pursuant to and in accordance with Rule
144 under the Securities Act;
or
|_| such transfer is being effected pursuant to an exemption under the
Securities Act other than Rule 144A, Rule 144 or Rule 904 and the
Transferor further certifies that the Transfer complies with the transfer
restrictions applicable to beneficial interests in Global Notes and
Definitive Senior Subordinated Notes bearing the Private Placement Legend
and the requirements of the exemption claimed, which certification is
supported by (x) if such transfer is in respect of a principal amount of
Senior Subordinated Notes at the time of Transfer of $100,000 or more, a
certificate executed by the Transferee in the form of EXHIBIT C to the
Indenture, or (y) if such Transfer is in respect of a principal amount of
Senior Subordinated Notes at the time of transfer of less than $100,000,
(1) a certificate executed in the form of EXHIBIT C to the Indenture and
(2) an Opinion of Counsel provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification), to the
effect that (1) such Transfer is in compliance with the Securities Act and
(2) such Transfer complies with any applicable blue sky securities laws of
any state of the United States;
or
|_| such transfer is being effected pursuant to an effective registration
statement under the Securities Act;
or
|_| such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel, provided by the transferor or the transferee (a
copy of which the Transferor has attached to this certification) in form
reasonably acceptable to the Company and to the Registrar, to the effect
that such transfer is in compliance with the Securities Act;
and such Senior Subordinated Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial interest in
Regulation S Global Notes for a beneficial interest in 144A Global Senior
Subordinated Notes, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to Rule 144A Global Notes pursuant to the
Indenture and the Securities Act.
B-2-2
<PAGE> 115
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Donaldson,
Lufkin & Jenrette Securities Corporation, and BancAmerica Securities, Inc., the
initial purchasers of such Senior Subordinated Notes being transferred. Terms
used in this certificate and not otherwise defined in the Indenture have the
meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By: _______________
Name:
Title:
Dated:
cc: AmeriServ Food Distribution, Inc.
Donaldson, Lulkin & Jenrette Securities Corporation
BancAmerica Securities, Inc.
B-2-3
<PAGE> 116
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF DEFINITIVE SENIOR SUBORDINATED NOTES
(Pursuant to Section 2.06(b) of the Indenture)
State Street Bank and Trust Company
777 Main Street, 11th Floor
Hartford, Connecticut 06123-4236
Re: 10 1/8% Senior Subordinated Notes due 2007 of AmeriServ Food
Distribution, Inc.
Reference is hereby made to the Indenture, dated as of July 11, 1997 (the
"Indenture"), among AmeriServ Food Distribution, Inc., a Nebraska corporation
(the "Company"), AmeriServ Food Company, a Delaware corporation ("AmeriServ"),
Chicago Consolidated Corporation, an Illinois corporation ("CCC"), Northland
Transportation Services, Inc., a Nebraska corporation ("Northland"), The Harry
H. Post Company, a Colorado corporation ("Post"), Delta Transportation, Ltd., a
Wisconsin corporation ("Delta") and AmeriServ Transportation, Inc., a Nebraska
corporation ("ATI") (each of AmeriServ, CCC, Northland, Post, Delta and ATI a
"Subsidiary Guarantor" and together with any Subsidiary of the Company that
executes a Note Guarantee substantially in the form of EXHIBIT D to the
Indenture, the "Subsidiary Guarantors) and State Street Bank and Trust Company,
as trustee (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This relates to $ _______ principal amount of Senior Subordinated Notes
which are evidenced by one or more Definitive Senior Subordinated Notes in the
name of ____________ (the "Transferor"). The Transferor has requested an
exchange or transfer of such Definitive Senior Subordinated Note(s) in the form
of an equal principal amount of Senior Subordinated Notes evidenced by one or
more Definitive Senior Subordinated Notes, to be delivered to the Transferor or,
in the case of a transfer of such Senior Subordinated Notes, to such Person as
the Transferor instructs the Trustee.
In connection with such request and in respect of the Senior Subordinated
Notes surrendered to the Trustee herewith for exchange (the "Surrendered Senior
Subordinated Notes"), the Holder of such Surrendered Senior Subordinated Notes
hereby certifies that:
[CHECK ONE]
|_| the Surrendered Senior Subordinated Notes are being acquired for the
Transferor's own account, without transfer;
or
|_| the Surrendered Senior Subordinated Notes are being transferred to the
Company;
or
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<PAGE> 117
|_| the Surrendered Senior Subordinated Notes are being transferred pursuant
to and in accordance with Rule 144A under the United States Securities Act
of 1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Surrendered Senior
Subordinated Notes are being transferred to a Person that the Transferor
reasonably believes is purchasing the Surrendered Senior Subordinated
Notes for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person
and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A, in each case in a transaction meeting the
requirements of Rule 144A;
or
|_| the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
|_| the Surrendered Senior Subordinated Notes are being transferred pursuant
to an exemption under the Securities Act other than Rule 144A, Rule 144 or
Rule 904 and the Transferor further certifies that the Transfer complies
with the transfer restrictions applicable to beneficial interests in
Global Notes and Definitive Senior Subordinated Notes bearing the Private
Placement Legend and the requirements of the exemption claimed, which
certification is supported by (x) if such transfer is in respect of a
principal amount of Senior Subordinated Notes at the time of Transfer of
$100,000 or more, a certificate executed by the Transferee in the form of
EXHIBIT C to the Indenture, or (y) if such Transfer is in respect of a
principal amount of Senior Subordinated Notes at the time of transfer of
less than $100,000, (1) a certificate executed in the form of EXHIBIT C to
the Indenture and (2) an Opinion of Counsel provided by the Transferor or
the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that (1) such Transfer is in compliance with
the Securities Act and (2) such Transfer complies with any applicable blue
sky securities laws of any state of the United States;
or
|_| the Surrendered Senior Subordinated Notes are being transferred pursuant
to an effective registration statement under the Securities Act;
or
|_| such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel, provided by the transferor or the transferee (a
copy of which the Transferor has attached to this certification) in form
reasonably acceptable to the Company and to the Registrar, to the effect
that such transfer is in compliance with the Securities Act;
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
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<PAGE> 118
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Donaldson,
Lufkin & Jenrette Securities Corporation and BancAmerica Securities, Inc., the
initial purchasers of such Senior Subordinated Notes being transferred. Terms
used in this certificate and not otherwise defined in the Indenture have the
meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By: _______________
Name:
Title:
Dated:
cc: AmeriServ Food Distribution, Inc.
Donaldson, Lulkin & Jenrette Securities Corporation
BancAmerica Securities, Inc.
B-3-3
<PAGE> 119
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE OR REGULATION S
PERMANENT GLOBAL NOTE
TO DEFINITIVE SENIOR SUBORDINATED NOTE
(Pursuant to Section 2.06(c) of the Indenture)
State Street Bank and Trust Company
777 Main Street, 11th Floor
Hartford, Connecticut 06123-4236
Re: 10 1/8% Senior Subordinated Notes due 2007 of AmeriServ Food
Distribution, Inc.
Reference is hereby made to the Indenture, dated as of July 11, 1997 (the
"Indenture"), among AmeriServ Food Distribution, Inc., a Nebraska corporation
(the "Company"), AmeriServ Food Company, a Delaware corporation ("AmeriServ"),
Chicago Consolidated Corporation, an Illinois corporation ("CCC"), Northland
Transportation Services, Inc., a Nebraska corporation ("Northland"), The Harry
H. Post Company, a Colorado corporation ("Post"), Delta Transportation, Ltd., a
Wisconsin corporation ("Delta") and AmeriServ Transportation, Inc., a Nebraska
corporation ("ATI") (each of AmeriServ, CCC, Northland, Post, Delta and ATI a
"Subsidiary Guarantor" and together with any Subsidiary of the Company that
executes a Note Guarantee substantially in the form of EXHIBIT D to the
Indenture, the "Subsidiary Guarantors) and State Street Bank and Trust Company,
as trustee (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $____________ principal amount of Senior
Subordinated Notes which are evidenced by a beneficial interest in one or more
Rule 144A Global Notes or Regulation S Permanent Global Notes in the name of
_________________ (the "Transferor"). The Transferor has requested an exchange
or transfer of such beneficial interest in the form of an equal principal amount
of Senior Subordinated Notes evidenced by one or more Definitive Senior
Subordinated Notes, to be delivered to the Transferor or, in the case of a
transfer of such Senior Subordinated Notes, to such Person as the Transferor
instructs the Trustee.
In connection with such request and in respect of the Senior Subordinated
Notes surrendered to the Trustee herewith for exchange (the "Surrendered Senior
Subordinated Notes"), the Holder of such Surrendered Senior Subordinated Notes
hereby certifies that:
[CHECK ONE]
|_| the Surrendered Senior Subordinated Notes are being transferred to the
beneficial owner of such Senior Subordinated Notes;
or
|_| the Surrendered Senior Subordinated Notes are being transferred pursuant
to and in accordance with Rule 144A under the United States Securities Act
of 1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Surrendered Senior
Subordinated Notes
B-4-1
<PAGE> 120
are being transferred to a Person that the Transferor reasonably believes is
purchasing the Surrendered Senior Subordinated Notes for its own account, or for
one or more accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is a "qualified institutional
buyer" within the meaning of Rule 144A, in each case in a transaction meeting
they requirements of Rule 144A;
or
|_| the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
|_| the Surrendered Senior Subordinated Notes are being transferred pursuant
to an effective registration statement under the Securities Act;
or
|_| the Surrendered Senior Subordinated Notes are being transferred pursuant
to an exemption under the Securities Act other than Rule 144A, Rule 144 or
Rule 904 and the Transferor further certifies that the Transfer complies
with the transfer restrictions applicable to beneficial interests in
Global Notes and Definitive Senior Subordinated Notes bearing the Private
Placement Legend and the requirements of the exemption claimed, which
certification is supported by (x) if such transfer is in respect of a
principal amount of Senior Subordinated Notes at the time of Transfer of
$100,000 or more, a certificate executed by the Transferee in the form of
EXHIBIT C to the Indenture, or (y) if such Transfer is in respect of a
principal amount of Senior Subordinated Notes at the time of transfer of
less than $100,000, (1) a certificate executed in the form of EXHIBIT C to
the Indenture and (2) an Opinion of Counsel provided by the Transferor or
the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that (1) such Transfer is in compliance with
the Securities Act and (2) such Transfer complies with any applicable blue
sky securities laws of any state of the United States;
or
|_| such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel, provided by the transferor or the transferee (a
copy of which the Transferor has attached to this certification) in form
reasonably acceptable to the Company and to the Registrar, to the effect
that such transfer is in compliance with the Securities Act;
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
B-4-2
<PAGE> 121
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Donaldson,
Lufkin & Jenrette Securities Corporation, the initial purchaser of such Senior
Subordinated Notes being transferred. Terms used in this certificate and not
otherwise defined in the Indenture have the meanings set forth in Regulation S
under the Securities Act.
[Insert Name of Transferor]
By: _______________
Name:
Title:
Dated:
cc: AmeriServ Food Distribution, Inc.
Donaldson, Lulkin & Jenrette Securities Corporation
BancAmerica Securities, Inc.
B-4-3
<PAGE> 122
EXHIBIT C
---------
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
State Street Bank and Trust Company
777 Main Street, 11th Floor
Hartford, Connecticut 06123-4236
Re: 10 1/8% Senior Subordinated Notes due 2007 of AmeriServ Food
Distribution, Inc.
Reference is hereby made to the Indenture, dated as of July 11, 1997 (the
"Indenture"), among AmeriServ Food Distribution, Inc., a Nebraska corporation
(the "Company"), AmeriServ Food Company, a Delaware corporation ("AmeriServ"),
Chicago Consolidated Corporation, an Illinois corporation ("CCC"), Northland
Transportation Services, Inc., a Nebraska corporation ("Northland"), The Harry
H. Post Company, a Colorado corporation ("Post"), Delta Transportation, Ltd., a
Wisconsin corporation ("Delta") and AmeriServ Transportation, Inc., a Nebraska
corporation ("ATI") (each of AmeriServ, CCC, Northland, Post, Delta and ATI a
"Subsidiary Guarantor" and together with any Subsidiary of the Company that
executes a Note Guarantee substantially in the form of EXHIBIT D to the
Indenture, the "Subsidiary Guarantors) and State Street Bank and Trust Company,
as trustee (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
In connection with our proposed purchase of $___________ aggregate
principal amount of:
(a) |_| Beneficial interests, or
(b) |_| Definitive Senior Subordinated Notes,
we confirm that:
1. We understand that any subsequent transfer of the Senior
Subordinated Notes of any interest therein is subject to certain restrictions
and conditions set forth in the Indenture and the undersigned agrees to be bound
by, and not to resell, pledge or otherwise transfer the Senior Subordinated
Notes or any interest therein except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Senior Subordinated
Notes have not been registered under the Securities Act, and that the Senior
Subordinated Notes and any interest therein may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on behalf
of any accounts for which we are acting as hereinafter stated, that if we should
sell the Senior Subordinated Notes or any interest therein, (A) we will do so
only (l)(a) to a person who the Seller reasonably believes is a qualified
institutional buyer (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of 144A, (b) in a transaction meeting the
requirements of Rule 144 under the Securities Act, (c) outside the United States
to a foreign person in a transaction meeting the requirements of Rule 904 of the
Securities Act, or (d) in accordance with another exemption
C-1
<PAGE> 123
from the registration requirements of the Securities Act (and based upon an
opinion of counsel), (2) to the Company or any of its subsidiaries or (3)
pursuant to an effective registration statement and, in each case, in accordance
with any applicable securities laws of any State of the United States or any
other applicable jurisdiction and (B) we will, and each subsequent holder will
be required to, notify any purchaser from it of the security evidenced hereby of
the resale restrictions set forth in (A) above."
3. We understand that, on any proposed resale of the Senior
Subordinated Notes or beneficial interests, we will be required to furnish to
you and the Company such certifications, legal opinions and other information as
you and the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the Senior
Subordinated Notes purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(l), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Senior Subordinated
Notes, and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Senior Subordinated Notes or beneficial
interests therein purchased by us for our own account or for one or more
accounts (each of which is an institutional "accredited investor") as to each of
which we exercise sole investment discretion.
6. We are not acquiring the Senior Subordinated Notes with a view to
any distribution thereof that would violate the Securities Act or the securities
laws of any State of the United States.
C-2
<PAGE> 124
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
____________________________________________
[Insert Name of Accredited Investor]
By:_________________________________________
Name:
Title:
Dated: _______________, _______
C-3
<PAGE> 125
EXHIBIT D
---------
Note Guarantee
Subject to Section 11.06 of the Indenture, each Subsidiary Guarantor
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Senior Subordinated Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Senior Subordinated Notes and the
Obligations of the Company under the Senior Subordinated Notes or under the
Indenture, that: (a) the principal of, premium, if any, interest and Liquidated
Damages, if any, on the Senior Subordinated Notes will be promptly paid in full
when due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on overdue principal,
premium, if any, (to the extent permitted by law) interest on any interest, if
any, and Liquidated Damages, if any, on the Senior Subordinated Notes and all
other payment Obligations of the Company to the Holders or the Trustee under the
Indenture or under the Senior Subordinated Notes will be promptly paid in full
and performed, all in accordance with the terms thereof; and (b) in case of any
extension of time of payment or renewal of any Senior Subordinated Notes or any
of such other payment Obligations, the same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
subject to any applicable grace period, whether at stated maturity, by
acceleration, redemption or otherwise. Failing payment when so due of any amount
so guaranteed or any performance so guaranteed for whatever reason, the
Subsidiary Guarantors will be jointly and severally obligated to pay the same
immediately.
The obligations of the Subsidiary Guarantor to the Holders and to the
Trustee pursuant to this Note Guarantee and the Indenture are expressly set
forth in Article 11 of the Indenture, and reference is hereby made to such
Indenture for the precise terms of this Note Guarantee. The terms of Article 11
of the Indenture are incorporated herein by reference. This Note Guarantee is
subject to release as and to the extent provided in Section 11.04 of the
Indenture.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon each Subsidiary Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the Company's Obligations under the Senior Subordinated
Notes and the Indenture and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This is a Note Guarantee of payment and not a guarantee of collection.
This Note Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Senior Subordinated Note upon which
this Note Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
For purposes hereof, each Subsidiary Guarantor's liability shall be
limited to the lesser of (i) the aggregate amount of the Obligations of the
Company under the Senior Subordinated Notes and the Indenture and (ii) the
amount, if any, which would not have (A) rendered such Subsidiary Guarantor
"insolvent" (as such term is defined in the Bankruptcy Law and in the Debtor and
Creditor Law of the State of New York) or (B) left such Subsidiary Guarantor
with unreasonably small capital at the time its Note Guarantee of the Senior
Subordinated Notes was entered into; provided that, it will be a presumption in
any lawsuit or other proceeding in which a Subsidiary Guarantor is a party that
the amount guaranteed pursuant to the Note Guarantee is the amount set forth in
clause (i) above unless any creditor, or representative of creditors of such
Subsidiary Guarantor, or debtor in possession or trustee in bankruptcy
D-1
<PAGE> 126
of such Subsidiary Guarantor, otherwise proves in such a lawsuit that the
aggregate liability of the Subsidiary Guarantor is limited to the amount set
forth in clause (ii) above. The Indenture provides that, in making any
determination as to the solvency or sufficiency of capital of a Subsidiary
Guarantor in accordance with the previous sentence, the right of such Subsidiary
Guarantors to contribution from other Subsidiary Guarantors and any other rights
such Subsidiary Guarantors may have, contractual or otherwise, shall be taken
into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated as of _________, 1997 AMERISERV FOOD COMPANY, INC.
By:_________________________________________
Name:
Title:
Dated as of __________, 1997 CHICAGO CONSOLIDATED CORPORATION
By:_________________________________________
Name:
Title:
Dated as of __________, 1997 NORTHLAND TRANSPORTATION SERVICES, INC.
By:_________________________________________
Name:
Title:
Dated as of __________, 1997 THE HARRY H. POST COMPANY
By:_________________________________________
Name:
Title:
Dated as of ___________, 1997 DELTA TRANSPORTATION, LTD.
By:_________________________________________
Name:
Title:
Dated as of ___________, 1997 AMERISERVE TRANSPORTATION, INC.
By:_________________________________________
Name:
Title:
D-2
<PAGE> 127
Exhibit E
---------
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
,between Subsidiary Guarantor (the "New Subsidiary Guarantor"), a subsidiary of
AmeriServ Food Distribution, Inc., a Nebraska corporation (the "Company"), and ,
as trustee under the indenture referred to below (the "Trustee"). Capitalized
terms used herein and not defined herein shall have the meaning ascribed to them
in the Indenture (as defined below).
WITNESSETH
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of July 11, 1997, providing for the
issuance of an aggregate principal amount of $500,000,000 of 10 1/8% Senior
Subordinated Notes due 2007 (the "Senior Subordinated Notes");
WHEREAS, Section 11.05 of the Indenture provides that under certain
circumstances the Company may cause, and Section 11.03 of the Indenture provides
that under certain circumstances the Company must cause, certain of its
subsidiaries to execute and deliver to the Trustee a supplemental indenture
pursuant to which such subsidiaries shall unconditionally guarantee all of the
Company's Obligations under the Senior Subordinated Notes pursuant to a Note
Guarantee on the terms and conditions set forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Senior Subordinated Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO NOTE GUARANTEE. The New Subsidiary Guarantor hereby
agrees, jointly and severally with all other Subsidiary Guarantors, to guarantee
the Company's Obligations under the Senior Subordinated Notes and the Indenture
on the terms and subject to the conditions set forth in Article 11 of the
Indenture and to be bound by all other applicable provisions of the Indenture.
E-1
<PAGE> 128
3. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, shareholder or agent of any Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Company
or any Subsidiary Guarantor under the Senior Subordinated Notes, any Note
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Senior Subordinated Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Senior Subordinated Notes.
4. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall
govern and be used to construe this Supplemental Indenture.
5. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the correctness of the recitals of fact
contained herein, all of which recitals are made solely by the New Subsidiary
Guarantor.
E-2
<PAGE> 129
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed and attested, all as of the date first above written.
Dated: ______________ [NAME OF NEW SUBSIDIARY GUARANTOR]
By:____________________________________
Name:
Title:
Dated: __________________ as Trustee
By:____________________________________
Name:
Title:
E-3
<PAGE> 130
SIGNATURES
Dated as of July 11, 1997 AMERISERVE FOOD DISTRIBUTION, INC
By: /s/ Raymond E. Marshall
-----------------------------------------
Name: Raymond E. Marshall
Title: President
AMERISERV FOOD COMPANY
By: /s/ Raymond E. Marshall
-----------------------------------------
Name: Raymond E. Marshall
Title: President
CHICAGO CONSOLIDATED CORPORATION
By: /s/ Raymond E. Marshall
-----------------------------------------
Name: Raymond E. Marshall
Title: Vice President
NORTHLAND TRANSPORTATION SERVICES, INC.
By: /s/ Raymond E. Marshall
-----------------------------------------
Name: Raymond E. Marshall
Title: President
THE HARRY H. POST COMPANY
By: /s/ Raymond E. Marshall
-----------------------------------------
Name: Raymond E. Marshall
Title: Chief Executive Officer
DELTA TRANSPORTATION, LTD
By: /s/ Raymond E. Marshall
-----------------------------------------
Name: Raymond E. Marshall
Title: President
<PAGE> 131
AMERISERVE TRANSPORTATION, INC.
By: /s/ Raymond E. Marshall
-----------------------------------------
Name: Raymond E. Marshall
Title: President
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ KD Woods
-----------------------------------------
Name: KD Woods
Title: Vice President
<PAGE> 1
EXHIBIT 4.2
(FACE OF NEW SENIOR SUBORDINATED NOTE)
100% NEW SENIOR SUBORDINATED NOTES DUE 2007
No. $
- ---------------
CUSIP NO. 03072JAA3
AMERISERVE FOOD DISTRIBUTION, INC.
promises to pay to or registered assigns, the principal sum
of Dollars on July 5, 2007.
Interest Payment Dates: July 15 and January 15
Record Dates: July 1 and January 15
AMERISERVE FOOD DISTRIBUTION, INC.
By:
------------------------------------------------------------------------
Name:
Title:
This is one of the New Senior Subordinated Notes referred to in the
within-mentioned Indenture:
Dated:
- ---------------
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
- ------------------------------
1
<PAGE> 2
(BACK OF NEW SENIOR SUBORDINATED NOTE)
10 1/8% NEW SENIOR SUBORDINATED NOTES DUE 2007
[Unless and until it is exchanged in whole or in part for New Senior
Subordinated Notes in definitive form, this New Senior Subordinated Note may not
be transferred except as a whole by the Depositary to a Nominee of the
Depositary or by an nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as may be
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.](1)
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. AmeriServe Food Distribution, Inc., a Nebraska corporation,
or its successor (the "Company"), promises to pay interest on the principal
amount of this New Senior Subordinated Note at the rate of 10 1/8% per annum and
shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company will pay interest
and Liquidated Damages, if any, in United States dollars (except as otherwise
provided herein) semi-annually in arrears on July 15 and January 15, commencing
on January 15, 1998, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest on the New
Senior Subordinated Notes shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default or Event of Default in
the payment of interest, and if this New Senior Subordinated Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date, except in the case of the original issuance of
New Senior Subordinated Notes, in which case interest shall accrue from the date
of authentication. The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the then applicable interest rate on the
New Senior Subordinated Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages (without regard to any
applicable grace period) at the same rate to the extent lawful. Interest shall
be computed on the basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the New Senior
Subordinated Notes (except defaulted interest) and Liquidated Damages, if any,
on the applicable Interest Payment Date to the Persons who are registered
Holders of New Senior Subordinated Notes at the close of business on the July 1
or January 1 next preceding the Interest Payment Date, even if such New Senior
Subordinated Notes are cancelled after such record date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest. The New Senior Subordinated Notes shall be
payable as to principal, premium and Liquidated Damages, if any, and interest at
the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the Company,
payment of interest and Liquidated Damages, if any, may be made by check mailed
to the Holders at their addresses set forth in the register of Holders; provided
that payment by wire transfer of immediately available funds shall be required
with respect to principal of, premium and Liquidated Damages, if any, and
interest on, all Global New Notes and all other New Senior Subordinated Notes
the Holders of which shall have provided written wire transfer instructions to
the Company and the Paying Agent. Such
- ---------------
(1) This paragraph should be included only if the New Senior Subordinated Note
is issued in global form.
2
<PAGE> 3
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, shall act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the New Senior Subordinated Notes under
an Indenture dated as of July 11, 1997 ("Indenture") among the Company, the
Subsidiary Guarantors and the Trustee. The terms of the New Senior Subordinated
Notes include those stated in the Indenture and those made a part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code sec.sec. 77aaa-77bbbb) (the "TIA"). The New Senior Subordinated Notes are
subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. The New Senior Subordinated Notes are general
unsecured Obligations of the Company limited to $500,000,000 in aggregate
principal amount, plus amounts, if any, sufficient to pay premium or Liquidated
Damages, if any, and interest on outstanding New Senior Subordinated Notes as
set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
Except as set forth in the next paragraph, the New Senior Subordinated
Notes shall not be redeemable at the Company's option prior to July 15, 2002.
Thereafter, the New Senior Subordinated Notes shall be subject to redemption at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below together with accrued and unpaid interest and
any Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on July 15 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
-------------------------------------------------------------------------- ----------
<S> <C>
2002...................................................................... 105.063%
2003...................................................................... 103.375%
2004...................................................................... 101.688%
2005 and thereafter....................................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to July 15, 2000, the
Company may redeem up to 33% of the original aggregate principal amount of New
Senior Subordinated Notes at a redemption price of 110.125% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
to the redemption date, with the net proceeds of a Public Equity Offering;
provided that at least 67% of the original aggregate principal amount of New
Senior Subordinated Notes remains outstanding immediately after the occurrence
of such redemption; and provided, further, that such redemption shall occur
within 45 days of the date of the closing of such Public Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption or sinking fund payments with respect to the New
Senior Subordinated Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of New Senior
Subordinated Notes will have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
New Senior Subordinated Notes pursuant to the offer described below (the "Change
of Control Offer") at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, thereon, to the date of purchase. Within 30 days following any
Change of Control, the Company will mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control setting forth
the procedures governing the Change of Control Offer required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $15.0 million, the
Company shall offer to all Holders of New Senior Subordinated Notes (an "Asset
Sale Offer") to purchase the maximum principal
3
<PAGE> 4
amount of Senior Subordinated Notes that may be purchased out of the Excess
Proceeds at an offer price in cash equal to 100% of principal amount thereof,
plus accrued and unpaid interest, and Liquidated Damages thereon, if any, to the
date of purchase in accordance with the procedures set forth in the Indenture.
To the extent that the aggregate amount of New Senior Subordinated Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds for any general corporate
purposes. If the aggregate principal amount of New Senior Subordinated Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the New Senior Subordinated Notes to be purchased on a pro
rata basis. Upon completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero.
(c) Holders of the New Senior Subordinated Notes that are the subject of an
offer to purchase will receive a Change of Control Offer or Asset Sale Offer
from the Company prior to any related purchase date and may elect to have such
New Senior Subordinated Notes purchased by completing the form titled "Option of
Holder to Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
New Senior Subordinated Notes are to be redeemed at its registered address. New
Senior Subordinated Notes in denominations larger than $1,000 may be redeemed in
part but only in whole multiples of $1,000, unless all of the New Senior
Subordinated Notes held by a Holder are to be redeemed. On and after the
redemption date, interest and Liquidated Damages, if any, ceases to accrue on
the New Senior Subordinated Notes or portions thereof called for redemption.
9. SUBORDINATION. The New Notes are subordinated to New Senior Debt, which
is (i) all Indebtedness outstanding under the New Credit Facility, including any
Guarantees thereof and all Hedging Obligations with respect thereto, (ii) any
other Indebtedness permitted to be incurred by the Company under the terms of
this Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the New Notes and (iii) all Obligations with respect to the
foregoing. Notwithstanding anything to the contrary in the foregoing, Senior
Debt will not include (w) any liability for federal, state, local or other taxes
owed or owing by the Company, (x) any Indebtedness of the Company to any of its
Subsidiaries or other Affiliates, (y) any trade payables or (z) any Indebtedness
that is incurred in violation of this Indenture. To the extent provided in the
Indenture, Senior Debt must be paid before the New Notes may be paid. The
Company agrees and each Holder of New Notes by accepting a New Note consents and
agrees to the subordination provided in the Indenture and authorizes the Trustee
to give it effect.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The New Senior Subordinated Notes
are in registered form without coupons in initial denominations of $1,000 and
integral multiples of $1,000. The transfer of the New Senior Subordinated Notes
may be registered and the New Senior Subordinated Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any New Senior Subordinated Note or portion of a New Senior
Subordinated Note selected for redemption, except for the unredeemed portion of
any New Senior Subordinated Note being redeemed in part. Also, it need not
exchange or register the transfer of any New Senior Subordinated Notes for a
period of 15 days before a selection of New Senior Subordinated Notes to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a New Senior
Subordinated Note may be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following paragraphs,
the Indenture, the New Senior Subordinated Notes and the New Note Guarantees may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the New Senior Subordinated Notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of or, tender offer or exchange offer for New Senior Subordinated
Notes), and any existing Default or Event of Default or compliance with any
provision of the Indenture, the New Senior Subordinated Notes or the New Note
4
<PAGE> 5
Guarantees may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding New Senior Subordinated Notes
(including consents obtained in connection with a tender offer or exchange offer
for New Senior Subordinated Notes).
Without the consent of any Holder of New Senior Subordinated Notes, the
Company and the Trustee may amend or supplement the Indenture, the New Note
Guarantees or the New Senior Subordinated Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated New Senior Subordinated Notes in
addition to or in place of certificated New Senior Subordinated Notes, to
provide for the assumption of the Company's or a Subsidiary Guarantor's
obligations to Holders of New Senior Subordinated Notes in the case of a merger
or consolidation, to make any change that would provide any additional rights or
benefits to the Holders of New Senior Subordinated Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act or to allow any
Subsidiary to guarantee the New Senior Subordinated Notes. Any amendments with
respect to subordination provisions of the New Notes or the New Note Guarantees
would require the consent of the Holders of at least 75% in aggregate amount of
New Notes then outstanding if such amendment would adversely affect the rights
of the Holders of New Notes.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest on or Liquidated Damages, if any, with
respect to the New Senior Subordinated Notes; (ii) default in payment when due
of the principal of or premium, if any, on the New Senior Subordinated Notes;
(iii) failure by the Company or any Restricted Subsidiary to comply with the
provisions described in Sections 4.10, 4.14 or 5.01 of the Indenture; (iv)
failure by the Company or any Restricted Subsidiary for 30 days after notice
from the Trustee or at least 25% in principal amount of the New Senior
Subordinated Notes to comply with the provisions described in Sections 4.07 and
4.09, of the Indenture; (v) failure by the Company or any Subsidiary for 60 days
after notice from the Trustee or the Holders of at least 25% in principal amount
of the New Senior Subordinated Notes then outstanding to comply with its other
agreements in the Indenture or the New Senior Subordinated Notes; (vi) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of their its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries) whether such Indebtedness
or guarantee now exists, or is created after the date of the Indenture, which
default (A) (i) is caused by a failure to pay when due at final stated maturity
(giving effect to any grace period related thereto) any principal of or premium,
if any, or interest on such Indebtedness (a "Payment Default") or (ii) results
in the acceleration of such Indebtedness prior to its express maturity and (B)
in each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$15.0 million or more; (vii) failure by the Company or any of its Subsidiaries
to pay final judgments aggregating in excess of $5.0 million, which judgments
are not paid discharged or stayed within 60 days after their entry; and (viii)
certain events of bankruptcy or insolvency with respect to the Company, any of
its Significant Subsidiaries or any group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding New Senior
Subordinated Notes may declare all the New Senior Subordinated Notes to be due
and payable immediately provided, however, that if any Indebtedness or
Obligation is outstanding pursuant to the New Credit Facility, upon a
declaration of acceleration by the holders of the New Senior Subordinated Notes
or the Trustee, all principal and interest under the Indenture shall be due and
payable upon the earlier of (x) the day five Business Days after the provision
to the Company, the Credit Agent and the Trustee of such written notice of
acceleration or (y) the date of acceleration of any Indebtedness under the New
Credit Facility; and provided, further, that in the event of an acceleration
based upon an Event of Default set forth in clause (vi) above, such declaration
of acceleration shall be automatically annulled if the holders of Indebtedness
which is the subject of such failure to pay at maturity or acceleration have
rescinded their declaration of acceleration in respect of such Indebtedness or
such failure to pay at maturity shall have been cured or waived within 30 days
thereof and no other Event of Default has occurred
5
<PAGE> 6
during such 30-day period which has not been cured, paid or waived.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company or any
of its Significant Subsidiaries all outstanding New Senior Subordinated Notes
will become due and payable without further action or notice. Holders of the New
Senior Subordinated Notes may not enforce the Indenture or the New Senior
Subordinated Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
New Senior Subordinated Notes may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders of the New Senior
Subordinated Notes notice of any continuing Default or Event of Default (except
a Default or Event of Default relating to the payment of principal or interest)
if it determines that withholding notice is in their interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company, the Subsidiary Guarantors or their respective Affiliates, and
may otherwise deal with the Company, the Subsidiary Guarantors or their
respective Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder, of the Company or any Subsidiary Guarantor, as
such, shall have any liability for any obligations of the Company or any
Subsidiary Guarantor under the New Senior Subordinated Notes, the Indenture or
the Note Guarantees or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of New Senior Subordinated Notes
by accepting a New Senior Subordinated Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the New Senior Subordinated Notes and any New Note Guarantee.
16. AUTHENTICATION. This New Senior Subordinated Note shall not be valid
until authenticated by the manual signature of the Trustee or an authenticating
agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the New Senior Subordinated Notes
under the Indenture, Holders of Transferred Restricted Securities (as defined in
the Registration Rights Agreement) shall have all the rights set forth in the
Registration Rights Agreement, dated as of July 11, 1997, among the Company, the
Subsidiary Guarantors and the Initial Purchasers (the "Registration Rights
Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the New Senior Subordinated Notes and the Trustee
may use CUSIP numbers in notices of redemption as a convenience to the Holders.
No representation is made as to the accuracy of such numbers either as printed
on the New Senior Subordinated Notes or as contained in any notice of redemption
and reliance may be placed only on the other identification numbers placed
thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
AmeriServe Food Distribution, Inc.
17975 West Sarah Lane, Suite 100
Brookfield, Wisconsin
Telecopy: (414) 792-0202
Chief Financial Officer
6
<PAGE> 7
ASSIGNMENT FORM
To assign this New Senior Subordinated Note, fill in the form below: (I) or (we)
assign and transfer this New Senior Subordinated Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
-------------------------------------------------------------
to transfer this New Senior Subordinated Note on the books of the Company. The
agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date:
-----------------------------------
Your Signature:
-----------------------------
(Sign exactly as your name appears on
the face of this New Senior
Subordinated Note)
Signature Guarantee:
7
<PAGE> 8
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this New Senior Subordinated Note purchased by
the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box
below:
[ ] Section 4.10 [ ] Section 4.14
If you want to elect to have only part of the New Senior Subordinated Note
purchased by the Company pursuant to Section 4.10 or Section 4.14 of the
Indenture, state the amount you elect to have purchased: $
- ------------------
Date:
- ------------------------------
Your Signature:
- --------------------------------------------------------------------------------
(Sign exactly as your name appears on
the face of this New Senior
Subordinated Note)
Tax Identification No.:
-------------------------------------------------------------------------
Signature Guarantee.
8
<PAGE> 9
SCHEDULE OF EXCHANGES OF NEW SENIOR SUBORDINATED NOTES*
THE FOLLOWING EXCHANGES OF A PART OF THIS GLOBAL NEW NOTE FOR OTHER NEW SENIOR
SUBORDINATED NOTES HAVE BEEN MADE:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT OF SIGNATURE OF AUTHORIZED
AMOUNT OF DECREASE IN AMOUNT OF INCREASE IN THIS GLOBAL NEW NOTE OFFICER OF TRUSTEE OR
DATE OF PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF FOLLOWING SUCH DECREASE NEW SENIOR SUBORDINATED
EXCHANGE THIS GLOBAL NEW NOTE THIS GLOBAL NEW NOTE (OR INCREASE) NOTE CUSTODIAN
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ---------------
* To be included only if the New Senior Subordinated Note is issued in
global form.
9
<PAGE> 1
EXHIBIT 4.3
NEW NOTE GUARANTEE
Subject to Section 11.06 of the Indenture, each Subsidiary Guarantor
hereby, jointly and severally, unconditionally guarantees to each Holder of a
New Senior Subordinated Note authenticated and delivered by the Trustee and to
the Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the New Senior Subordinated Notes and the
Obligations of the Company under the New Senior Subordinated Notes or under the
Indenture, that: (a) the principal of, premium, if any, interest and Liquidated
Damages, if any, on the New Senior Subordinated Notes will be promptly paid in
full when due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on overdue principal,
premium, if any, (to the extent permitted by law) interest on any interest, if
any, and Liquidated Damages, if any, on the New Senior Subordinated Notes and
all other payment Obligations of the Company to the Holders or the Trustee under
the Indenture or under the New Senior Subordinated Notes will be promptly paid
in full and performed, all in accordance with the terms thereof; and (b) in case
of any extension of time of payment or renewal of any New Senior Subordinated
Notes or any of such other payment Obligations, the same will be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, subject to any applicable grace period, whether at stated maturity, by
acceleration, redemption or otherwise. Failing payment when so due of any amount
so guaranteed or any performance so guaranteed for whatever reason, the
Subsidiary Guarantors will be jointly and severally obligated to pay the same
immediately.
The obligations of the Subsidiary Guarantor to the Holders and to the
Trustee pursuant to this New Note Guarantee and the Indenture are expressly set
forth in Article 11 of the Indenture, and reference is hereby made to such
Indenture for the precise terms of this New Note Guarantee. The terms of Article
11 of the Indenture are incorporated herein by reference. This New Note
Guarantee is subject to release as and to the extent provided in Section 11.04
of the Indenture.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon each Subsidiary Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the Company's Obligations under the New Senior
Subordinated Notes and the Indenture and shall inure to the benefit of the
successors and assigns of the Trustee and the Holders and, in the event of any
transfer or assignment of rights by any Holder or the Trustee, the rights and
privileges herein conferred upon that party shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. This is a New Note Guarantee of payment and not a guarantee of
collection.
This New Note Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the New Senior
<PAGE> 2
Subordinated Note upon which this New Note Guarantee is noted shall have been
executed by the Trustee under the Indenture by the manual signature of one of
its authorized officers.
For purposes hereof, each Subsidiary Guarantor's liability shall be limited
to the lesser of (i) the aggregate amount of the Obligations of the Company
under the New Senior Subordinated Notes and the Indenture and (ii) the amount,
if any, which would not have (A) rendered such Subsidiary Guarantor "insolvent"
(as such term is defined in the Bankruptcy Law and in the Debtor and Creditor
Law of the State of New York) or (B) left such Subsidiary Guarantor with
unreasonably small capital at the time its New Note Guarantee of the New Senior
Subordinated Notes was entered into; provided that, it will be a presumption in
any lawsuit or other proceeding in which a Subsidiary Guarantor is a party that
the amount guaranteed pursuant to the New Note Guarantee is the amount set forth
in clause (i) above unless any creditor, or representative of creditors of such
Subsidiary Guarantor, or debtor in possession or trustee in bankruptcy of such
Subsidiary Guarantor, otherwise proves in such a lawsuit that the aggregate
liability of the Subsidiary Guarantor is limited to the amount set forth in
clause (ii) above. The Indenture provides that, in making any determination as
to the solvency or sufficiency of capital of a Subsidiary Guarantor in
accordance with the previous sentence, the right of such Subsidiary Guarantors
to contribution from other Subsidiary Guarantors and any other rights such
Subsidiary Guarantors may have, contractual or otherwise, shall be taken into
account.
Capitalized terms used herein have the same meanings given in the Indenture
unless otherwise indicated.
Dated as of ___________, 1997 AMERISERV FOOD COMPANY, INC.
By:______________________________
Name:
Title:
Dated as of ___________, 1997 CHICAGO CONSOLIDATED CORPORATION
By:______________________________
Name:
Title:
Dated as of ___________, 1997 NORTHLAND TRANSPORTATION INC.
By:______________________________
Name:
-2-
<PAGE> 3
Title:
Dated as of ___________, 1997 HARRY H. POST COMPANY
By:______________________________
Name:
Title:
Dated as of ___________, 1997 DELTA TRANSPORTATION INC.
By:______________________________
Name:
Title:
Dated as of ___________, 1997 AMERISERVE TRANSPORTATION, INC.
By:______________________________
Name:
Title:
-3-
<PAGE> 1
Exhibit 10.1
EXECUTION COPY
================================================================================
AmeriServe Food Distribution, Inc.
--------------------
$500,000,000
10 1/8% SENIOR SUBORDINATED NOTES DUE 2007
--------------------
----------
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JULY 11, 1997
----------
Donaldson, Lufkin & Jenrette
Securities Corporation
BancAmerica Securities, Inc.
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and entered
into as of July 11, 1997, by and among AmeriServe Food Distribution, Inc., a
Nebraska corporation ("AmeriServe" or the "Company"), AmeriServ Food Company, a
Delaware corporation ("AmeriServ"), Chicago Consolidated Corporation, an
Illinois corporation ("CCC"), Northland Transportation Services, Inc., a
Nebraska corporation ("Northland"), The Harry H. Post Company, a Colorado
corporation ("Post"), Delta Transportation, Ltd., a Wisconsin corporation
("Delta") and AmeriServe Transportation, Inc., a Nebraska corporation ("ATI")
(each of AmeriServ, CCC, Northland, Post, Delta and ATI a "Subsidiary Guarantor"
and together with any Subsidiary of the Company that executes a Note Guarantee,
the "Subsidiary Guarantors"), Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") and BancAmerica Securities, Inc. ("BancAmerica" and,
together with DLJ, the "Initial Purchasers"), who have agreed to purchase the
Company's 10 1/8% Senior Subordinated Notes due 2007 (the "Senior Subordinated
Notes") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated July 11,
1997 (the "Purchase Agreement"), by and among the Company, the Subsidiary
Guarantors and the Initial Purchasers. In order to induce the Initial Purchasers
to purchase the Senior Subordinated Notes, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchasers set
forth in the Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or other day in the City
of New York, or in the city of the corporate trust office of the Trustee, on
which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: New Senior Subordinated
Notes that are acquired by a Broker-Dealer in the Exchange Offer in exchange for
Senior Subordinated Notes that such Broker-Dealer acquired for its own account
as a result of market-making activities or other trading activities (other than
Senior Subordinated Notes acquired directly from the Company or any of its
respective affiliates).
Certificated Securities: As defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the New Senior
Subordinated Notes to be issued in the Exchange Offer, (b) the maintenance of
such Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the minimum period required
pursuant to Section 3(b) hereof and (c) the delivery by the Company to the
Registrar under the Indenture of New Senior Subordinated Notes in the same
aggregate principal amount as the aggregate principal amount of Senior
Subordinated Notes tendered by Holders thereof pursuant to the Exchange Offer.
<PAGE> 3
Damages Payment Date: With respect to the Transfer Restricted Securities,
each Interest Payment Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the New
Senior Subordinated Notes pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities for New Senior Subordinated Notes in an aggregate
principal amount equal to the aggregate principal amount of the Transfer
Restricted Securities tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
to sell the Senior Subordinated Notes (i) to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act or (ii) outside the
United States in reliance upon Regulation S under the Securities Act to non-U.S.
persons.
Global Note Holder: As defined in the Indenture.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated the Closing Date, among the Company, the
Subsidiary Guarantors and the Bank of New York, as trustee (the "Trustee"),
pursuant to which the Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
Offering Memorandum: As defined in the Purchase Agreement.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
2
<PAGE> 4
Record Holder: With respect to any Damages Payment Date, each Person who
is a Holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company and the
Subsidiary Guarantors relating to (a) an offering of New Senior Subordinated
Notes pursuant to an Exchange Offer or (b) the registration for resale of
Transfer Restricted Securities held by such holders pursuant to the Shelf
Registration Statement, in each case, (i) which is filed pursuant to the
provisions of this Agreement and (ii) including the Prospectus included therein,
all amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
Notes: The Senior Subordinated Notes and the New Senior Subordinated
Notes.
New Senior Subordinated Notes: The Company's 10 1/8% New Senior
Subordinated Notes due 2007 to be issued pursuant to the Indenture (i) in the
Exchange Offer or (ii) upon the request of any Holder of Senior Subordinated
Notes covered by a Shelf Registration Statement, in exchange for such Senior
Subordinated Notes.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
(a) the date on which such Note is exchanged in the Exchange Offer and entitled
to be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Note has
been disposed of in accordance with a Shelf Registration Statement, (c) the date
on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the Act.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
3
<PAGE> 5
3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal law
(after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Subsidiary Guarantors shall (i) cause to be filed
with the Commission, on or prior to 30 days after the Closing Date, the Exchange
Offer Registration Statement, (ii) use their respective best efforts to cause
such Exchange Offer Registration Statement to become effective at the earliest
possible time, but in no event later than 120 days after the Closing Date, (iii)
in connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause such
Exchange Offer Registration Statement to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, in connection with the registration and qualification of the
New Senior Subordinated Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified, or take any
action which would subject it to General Service of Process in any jurisdiction
where it is not now so subject, and (iv) upon the effectiveness of such Exchange
Offer Registration Statement, use its reasonable best efforts to commence and
Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate
form permitting registration of the New Senior Subordinated Notes to be offered
in exchange for the Senior Subordinated Notes that are Transfer Restricted
Securities and to permit sales of Broker-Dealer Transfer Restricted Securities
by Restricted Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company and the Subsidiary Guarantors shall use their respective best
efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open, for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; provided, however, that in no event shall
such period be less than 20 Business Days. The Company and the Subsidiary
Guarantors shall cause the Exchange Offer to comply with all applicable federal
and state securities laws. No securities other than the Notes shall be included
in the Exchange Offer Registration Statement. The Company and the Subsidiary
Guarantors shall use their respective best efforts to cause the Exchange Offer
to be Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the Prospectus
contained in the Exchange Offer Registration Statement and indicate therein that
any Restricted Broker-Dealer who holds Senior Subordinated Notes that are
Transfer Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Senior Subordinated Notes (other than Transfer
Restricted Securities acquired directly from the Company or any affiliate of the
Company) pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Act and must, therefore,
deliver a prospectus meeting
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<PAGE> 6
the requirements of the Act in connection with the initial sales of the New
Senior Subordinated Notes received by such Broker-Dealer in the Exchange Offer,
which prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers that the Commission may require in order
to permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Notes held by any such
Broker-Dealer except to the extent required by the Commission.
The Company and the Subsidiary Guarantors shall use their respective best
efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required by the provisions of Section
6(c) below to the extent necessary to ensure that it is available for sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers, and
to ensure that such Registration Statement conforms with the requirements of
this Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of 120 days from the
date on which the Exchange Offer is Consummated.
The Company and the Subsidiary Guarantors shall provide sufficient copies
of the latest version of such Prospectus to such Restricted Broker-Dealers
promptly upon request, and in no event later than two days after such request,
at any time during such 120-day period in order to facilitate such sales.
4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement with respect to the New Senior
Subordinated Notes because the Exchange Offer is not permitted by applicable law
(after the procedures set forth in Section 6(a)(i) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within 20 Business Days following the Consummation of the Exchange Offer
that (A) such Holder who holds at least $2.0 million in aggregate principal
amount of the Senior Subordinated Notes is prohibited by law or Commission
policy from participating in the Exchange Offer or (B) such Holder may not
resell the New Senior Subordinated Notes acquired by it in the Exchange Offer to
the public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Senior
Subordinated Notes acquired directly from the Company or one of its respective
affiliates, then the Company and the Subsidiary Guarantors shall (x) cause to be
filed on or prior to the earliest of (1) 45 days after the date on which the
Company is notified by the Commission or otherwise determines that they are not
required to file the Exchange Offer Registration Statement pursuant to clause
(i) above and (2) 45 days after the date on which the Company receives the
notice specified in clause (ii) above, a shelf registration statement pursuant
to Rule 415 under the Act, (which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "Shelf Registration Statement")),
relating to all Transfer Restricted Securities the Holders of which shall have
provided the information required pursuant to Section 4(b) hereof, and (y) use
their respective best efforts to cause such Shelf Registration Statement to be
declared effective by the Commission at the earliest possible time, but in no
event later than 120
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<PAGE> 7
days after the date on which the Company becomes obligated to file such Shelf
Registration Statement. If, after the Company has filed an Exchange Offer
Registration Statement which satisfies the requirements of Section 3(a) above,
the Company is required to file and make effective a Shelf Registration
Statement solely because the Exchange Offer shall not be permitted under
applicable federal law, then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above. Such
an event shall have no effect on the requirements of clause (y) above, or on the
Effectiveness Target Date as defined in Section 5 below. The Company and the
Subsidiary Guarantors shall use their respective best efforts to keep the Shelf
Registration Statement discussed in this Section 4(a) continuously effective,
supplemented and amended as required by and subject to the provisions of
Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a), and to ensure that it conforms
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of at
least two years (as extended pursuant to Section 6(c)(i)) following the date on
which such Shelf Registration Statement first becomes effective under the Act or
such shorter period ending when all of the Transfer Restricted Securities
available for sale thereunder have been sold pursuant thereto.
(b) Provision bv Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, such
information specified in Item 507 of Regulation S-K under the Act for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder has provided all such information. Each Holder as to which any Shelf
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the date specified for such filing in this
Agreement, (ii) any such Registration Statement has not been declared effective
by the Commission on or prior to the date specified for such effectiveness in
this Agreement (the "Effectiveness Target Date"), (iii) the Exchange Offer has
not been Consummated within 30 Business Days after the Effectiveness Target Date
with respect to the Exchange Offer Registration Statement or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded immediately by a post-effective
amendment to such Registration Statement that cures such failure and that is
itself immediately declared effective (each such event referred to in clauses
(i) through (iv), a "Registration Default"), the Company hereby agrees to pay to
each Holder of Transfer Restricted Securities, for the first 90-day period
immediately following the occurrence of such Registration Default, liquidated
damages in an amount equal to $.05 per week per $1,000 principal amount of Notes
constituting Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. The amount of the
liquidated damages payable to each Holder shall increase by an additional $.05
per week per $1,000 in principal amount of Transfer Restricted Securities with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of liquidated damages of $.50 per week per
$1,000 principal
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<PAGE> 8
amount of Transfer Restricted Securities held by such Holder. Notwithstanding
anything to the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (ii) above, (3) upon Consummation of the Exchange
Offer, in the case of (iii) above, or (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration Statement
that causes the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement) to again be declared effective or made usable
in the case of (iv) above, the liquidated damages payable with respect to the
Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Global Note Holder by wire
transfer of immediately available funds or by federal funds check and to Holders
of Certificated Securities by wire transfer to the accounts specified by them or
by mailing checks to their registered addresses if no such accounts have been
specified on each Damages Payment Date. Following the cure of all Registration
Defaults relating to any particular Transfer Restricted Securities, the accrual
of liquidated damages with respect to such Transfer Securities will cease. All
obligations of the Company and the Subsidiary Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
security shall have been satisfied in full.
6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company and the Subsidiary Guarantors shall comply with all
applicable provisions of Section 6(c) below, shall use their respective best
efforts to effect such exchange and to permit the sale of Broker-Dealer Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (which shall be in a manner consistent with the
terms of this Agreement), and shall comply with all of the following provisions:
(i) If, following the date hereof and prior to Consummation of
the Exchange Offer, there has been published a change in Commission
policy with respect to exchange offers such as the Exchange Offer,
such that in the reasonable judgment of counsel to the Company there
is a substantial question as to whether the Exchange Offer is
permitted by applicable federal law or Commission policy, the
Company and the Subsidiary Guarantors hereby agree to seek a
no-action letter or other favorable decision from the Commission
allowing the Company and the Subsidiary Guarantors to Consummate an
Exchange Offer for such Senior Subordinated Notes. The Company and
the Subsidiary Guarantors hereby agree to pursue the issuance of
such a decision to the Commission staff level but shall not be
required to take commercially unreasonable action to effect a change
of Commission policy. In connection with the foregoing, the Company
and the Subsidiary Guarantors hereby agree, however, but subject to
the proviso set forth above, to take all such other actions as are
reasonably requested by the Commission or otherwise required in
connection with the issuance of such decision, including without
limitation to (A) participate in telephonic conferences with the
Commission, (B) deliver to the Commission staff an analysis prepared
by counsel to the Company setting forth the legal bases, if any,
upon which such counsel has concluded that such an Exchange Offer
should be permitted and (C) diligently pursue a resolution (which
need not be favorable) by the Commission staff of such submission.
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<PAGE> 9
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Subsidiary Guarantors (which
may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is
not an affiliate of the Company, (B) it is not engaged in, and does
not intend to engage in, and has no arrangement or understanding
with any person to participate in, a distribution of the New Senior
Subordinated Notes to be issued in the Exchange Offer and (C) it is
acquiring the New Senior Subordinated Notes in its ordinary course
of business. In addition, all such holders of Transfer Restricted
Securities shall otherwise cooperate in the Company's preparation
for the Exchange Offer. Each Holder hereby acknowledges and agrees
that any Broker-Dealer and any such Holder using the Exchange Offer
to participate in a distribution of the securities to be acquired in
the Exchange Offer (1) could not under Commission policy as in
effect on the date of this Agreement rely on the position of the
Commission enunciated in Morgan Stanley and Co., Inc. (available
June 5, 1991) and Exxon Capital Holdings Corporation (available May
13, 1988), as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993, and similar no-action letters
(including, if applicable, any no-action letter obtained pursuant to
clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a
secondary resale transaction and that such a secondary resale
transaction must be covered by an effective registration statement
containing the selling security holder information required by Item
507 or 508, as applicable, of Regulation S-K if the resales are of
New Senior Subordinated Notes obtained by such Holder in exchange
for Senior Subordinated Notes acquired by such Holder directly from
the Company or an affiliate thereof.
(iii) To the extent required by the Commission, prior to
effectiveness of the Exchange Offer Registration Statement, the
Company and the Subsidiary Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the
Subsidiary Guarantors are registering the Exchange Offer in reliance
on the position of the Commission enunciated in Exxon Capital
Holdings Corporation (available May 13, 1988), Morgan Stanley and
Co., Inc. (available June 5, 1991) and, if applicable, any no-action
letter obtained pursuant to clause (i) above, (B) including a
representation that neither the Company nor any Subsidiary Guarantor
has entered into any arrangement or understanding with any Person to
distribute the New Senior Subordinated Notes to be received in the
Exchange Offer and that, to the best of the Company's and the
Subsidiary Guarantors' information and belief, each Holder
participating in the Exchange Offer is acquiring the New Senior
Subordinated Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the New Senior Subordinated Notes received in the
Exchange Offer and (C) any other undertaking or representation
required by the Commission as set forth in any no-action letter
obtained pursuant to clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement the Company and the Subsidiary Guarantors shall comply
with all the provisions of Section 6(c) below and shall use their respective
best efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company
and the Subsidiary Guarantors will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method
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<PAGE> 10
or methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement to permit the sale or resale
of Transfer Restricted Securities (including, without limitation, any Exchange
Offer Registration Statement and the related Prospectus, to the extent that the
same are required to be available to permit sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers), the Company and the
Subsidiary Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement,
as applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain
a material misstatement or omission or (B) not to be effective and usable
for resale of Transfer Restricted Securities during the period required by
this Agreement, the Company and the Subsidiary Guarantors shall file
promptly an appropriate amendment to such Registration Statement, (1) in
the case of clause (A), correcting any such misstatement or omission, and
(2) in the case of either clause (A) or (B), use their respective best
efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for
their intended purpose(s) as soon as practicable thereafter.
Notwithstanding the foregoing, at any time after Consummation of the
Exchange Offer, the Company may allow the Shelf Registration Statement to
cease to be effective and usable if (x) the Board of Directors of the
Company determines in good faith that it is in the best interests of the
Company not to disclose the existence of or facts surrounding any proposed
or pending material corporate transaction involving the Company, and the
Company notifies the Holders within two business days after the Board
makes such determination, or (y) the Prospectus contained in the Shelf
Registration Statement contains an untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with
Rules 424, 430A and 462 as applicable, under the Act in a timely manner;
and comply with the provisions of the Act with respect to the disposition
of all securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution bv the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when the
same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement
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<PAGE> 11
under the Act or of the suspension by any state securities commission of
the qualification of the Transfer Restricted Securities, as applicable,
for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, (D) of the existence of any
fact or the happening of any event that makes any statement of a material
fact made in the Registration Statement, the Prospectus, any amendment or
supplement thereto or any document incorporated by reference therein
untrue, or that requires the making of any additions to or changes in the
Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. If at any
time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Company
and the Subsidiary Guarantors shall use their respective best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time;
(iv) furnish to the Initial Purchasers, each selling Holder named in
any Registration Statement or Prospectus and each of the underwriter(s) in
connection with such sale, if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and comment of such Holders and underwriter(s) in
connection with such sale, if any, for a period of at least five Business
Days, and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated by
reference) if the selling Holders of the Transfer Restricted Securities
covered by such Registration Statement or the underwriter(s) in connection
with such sale shall not have had an opportunity to participate in the
preparation thereof;
(v) prior to the filing of any document that is to be incorporated
by reference into a Registration Statement or Prospectus, provide copies
of such document to the selling Holders and to the underwriter(s) in
connection with such sale, if any, make the Company's and the Subsidiary
Guarantors' representatives available for discussion of such document and
other customary due diligence matters, and include such information in
such document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times at the Company's principal
place of business for inspection by the selling Holders of Transfer
Restricted Securities, any managing underwriter participating in any
disposition pursuant to such Registration Statement and any attorney or
accountant retained by such selling Holders or any of such underwriter(s),
who shall certify to the Company that they have a current intention to
sell Transfer Restricted Securities pursuant to a Shelf Registration
Statement, all pertinent financial and other pertinent information of the
Company and each of the Subsidiary Guarantors, as reasonably requested,
and cause the Company's and the Subsidiary Guarantors' officers, directors
and employees to respond to such inquiries as shall be reasonably
necessary; in the reasonable judgment of counsel to such Holders, to
conduct a reasonable investigation; provided, however, that each such
party shall be required to maintain in confidence and not to disclose to
any other person any information or records reasonably designated by the
Company in writing as being confidential, until such time as (A)
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<PAGE> 12
such information becomes a matter of public record (whether by virtue of
its inclusion in such Registration Statement or otherwise), or (B) such
person shall be required so to disclose such information pursuant to the
subpoena or order of any court or other governmental agency or body having
jurisdiction over the matter (subject to the requirements of such order,
and only after such person shall have given the Company prompt prior
written notice of such requirement), or (C) such information is required
to be set forth in such Registration Statement or the Prospectus included
therein or in an amendment or supplement to such Registration Statement or
an amendment or supplement to such Prospectus in order that such
Registration Statement, Prospectus, amendment or supplement, as the case
may be, does not contain an untrue statement of a material fact or omit to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(vii) if requested by any selling Holders or the underwriter(s), as
applicable, in connection with such sale, if any, promptly include in any
Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information that is required
by the Act as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, and make all required filings
of such Prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be included in
such Prospectus supplement or post-effective amendment;
(viii) furnish to each selling Holder and each of the underwriter(s)
in connection with such sale, if any, without charge, at least one copy of
the Registration Statement, as first filed with the Commission, and of
each amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(ix) deliver to each selling Holder and each of the underwriter(s),
if any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company and the Subsidiary Guarantors
hereby consent to the use (in accordance with law) of the Prospectus and
any amendment or supplement thereto by each of the selling Holders and
each of the underwriter(s), if any, in connection with the offering and
the sale of the Transfer Restricted Securities covered by the Prospectus
or any amendment or supplement thereto. Notwithstanding the foregoing, at
any time after Consummation of the Exchange Offer, the Company may allow
the Shelf Registration Statement to cease to be effective and usable if
(x) the Board of Directors of the Company determines in good faith that it
is in the best interests of the Company not to disclose the existence of
or facts surrounding any proposed or pending material corporate
transaction involving the Company, and the Company notifies the Holders
within two business days after the Board makes such determination, or (y)
the Prospectus contained in the Shelf Registration Statement contains an
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(x) enter into such agreements (including an underwriting agreement)
and make such representations and warranties and take all such other
actions in connection therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement as may be reasonably
requested by any Holder who holds at least 5 % in aggregate principal
amount of such class of Transfer Restricted Securities or underwriter in
connection with any sale or resale pursuant to any Registration
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<PAGE> 13
Statement contemplated by this Agreement, provided, that, the Company
shall not be required to enter into any such agreement more than once with
respect to all of the Transfer Restricted Securities, and in the case of a
Shelf Registration Statement, may delay entering into such agreement if
the Board of Directors of the Company determines in good faith that it is
in the best interests of the Company not to disclose the existence of or
facts surrounding any proposed or pending corporate transaction involving
the Company; and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
Underwritten Registration, the Company and the Subsidiary Guarantors
shall:
(A) furnish to each selling Holder who holds at least 5% in
aggregate principal amount of such class of Transfer Restricted
Securities and each underwriter, if any, in such substance and scope
as they may request and as is customarily made in connection with an
offering of debt securities pursuant to a Registration Statement,
upon the effectiveness of the Shelf Registration Statement and to
each Restricted Broker-Dealer upon Consummation of the Exchange
Offer:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed on behalf
of each of the Company and the Subsidiary Guarantors by (x)
the President or any Vice President and (y) a principal
financial or accounting officer of the Company and each of the
Subsidiary Guarantors confirming, as of the date thereof, the
matters set forth in paragraphs (a) through (c) of Section 9
of the Purchase Agreement and such other similar matters as
the Holders, underwriter(s) and/or Restricted Broker-Dealers
may reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company and the Subsidiary Guarantors, covering matters
customarily covered in opinions requested in Underwritten
Offerings and dated the date of effectiveness of the Shelf
Registration Statement or the date of Consummation of the
Exchange Offer, as the case may be; and
(3) customary comfort letters, dated as of the date of
effectiveness of the Shelf Registration Statement or the date
of Consummation of the Exchange Offer, as the case may be,
from the Company's independent accountants, in the customary
form and covering matters of the type customarily covered in
comfort letters to underwriters in connection with an offering
of debt securities pursuant to a Registration Statement, and
affirming the matters set forth in the comfort letters
delivered pursuant to Section 9(f) of the Purchase Agreement,
without exception;
(B) set forth in full or incorporated by reference in the
underwriting agreement, if any, in connection with any sale or
resale pursuant to any Shelf Registration Statement the
indemnification provisions and procedures of Section 8 hereof with
respect to all parties to be indemnified pursuant to said Section;
and
(C) deliver such other documents and certificates as may be
reasonably
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<PAGE> 14
requested by the selling Holders, the underwriter(s), if any, and
Restricted Broker-Dealers, if any, to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the
Company and the Subsidiary Guarantors pursuant to this clause (x).
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any
time the representations and warranties of the Company and the Subsidiary
Guarantors contemplated in (A)(1) above cease to be true and correct, the
Company and the Subsidiary Guarantors shall so advise the underwriter(s),
if any, selling Holders who hold at least 5% in aggregate principal amount
of such class of Transfer Restricted Securities and each Restricted
Broker-Dealer promptly and if requested by such Persons, shall confirm
such advice in writing;
(xi) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification
of the Transfer Restricted Securities under the securities or Blue Sky
laws of such jurisdictions as the selling Holders or underwriter(s), if
any, may reasonably request and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that neither the
Company nor any Subsidiary Guarantor shall be required to register or
qualify as a foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of process in suits
or to taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
(xii) issue, upon the request of any Holder of Senior Subordinated
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, New Senior Subordinated Notes, having an aggregate principal
amount equal to the aggregate principal amount of Senior Subordinated
Notes surrendered to the Company by such Holder in exchange therefor or
being sold by such Holder; such New Senior Subordinated Notes to be
registered in the name of such Holder or in the name of the purchaser(s)
of such Notes, as the case may be; in return, the Senior Subordinated
Notes held by such Holder shall be surrendered to the Company for
cancellation;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and to enable such Transfer Restricted Securities to
be in such denominations and registered in such names as such Holders or
the underwriter(s), if any, may request at least two Business Days prior
to such sale of Transfer Restricted Securities;
(xiv) use their respective best efforts to cause the disposition of
the Transfer Restricted Securities covered by the Registration Statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or
the underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xi)
above;
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<PAGE> 15
(xv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(xvi) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering
such Transfer Restricted Securities and provide the Trustee under the
Indenture with printed certificates for the Transfer Restricted Securities
which are in a form eligible for deposit with the Depository Trust
Company;
(xvii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of
the NASD;
(xviii) otherwise use their respective best efforts to comply with
all applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period (A) commencing at the end of any fiscal
year in which Transfer Restricted Securities are sold to underwriters in a
firm or best efforts underwritten offering or (B) if not sold to
underwriters in such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the
Registration Statement;
(xix) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith, cooperate with the Trustee
and the Holders of Notes to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the
terms of the TIA; and execute and use their respective best efforts to
cause the Trustee to execute, all documents that may be required to effect
such changes and all other forms and documents required to be filed with
the Commission to enable such Indenture to be so qualified in a timely
manner; and
(xx) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security or Broker-Dealer Transfer Restricted Securities, as
applicable, that, upon receipt of the notice referred to in Section 6(c)(i) or
any notice from the Company of the existence of any fact of the kind described
in Section 6(c)(iii)(D) hereof, such Holder will immediately discontinue
disposition of Transfer Restricted Securities pursuant to the applicable
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof, or
until it is advised in writing by the Company that the use of the Prospectus may
be resumed, and has received copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus (the "Advice"). If so
directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus
14
<PAGE> 16
covering such Transfer Restricted Securities or Broker-Dealer Transfer
Restricted Securities that was current at the time of receipt of either such
notice. In the event the Company shall give any such notice, the time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(i) or Section 6(c)(iii)(D) hereof to and including the date when
each selling Holder covered by such Registration Statement shall have received
the copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xv) hereof or shall have received the Advice.
The Company may require each Holder of Transfer Restricted Securities or
Broker-Dealer Transfer Restricted Securities as to which any registration is
being effected to furnish to the Company such information regarding such Holder
and such Holder's intended method of distribution of the applicable Transfer
Restricted Securities as the Company may from time to time reasonably request in
writing, but only to the extent that such information is required in order to
comply with the Act. Each such Holder agrees to notify the Company as promptly
as practicable of (i) any inaccuracy or change in information previously
furnished by such Holder to the Company, or (ii) the occurrence of any event, in
either case, as a result of which any prospectus relating to such registration
contains or would contain an untrue statement of a material fact regarding such
Holder or such Holder's intended method of distribution of the applicable
Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities
or omits to state any material fact regarding such Holder or such Holder's
intended method of distribution of the applicable Transfer Restricted Securities
or Broker-Dealer Transfer Restricted Securities required to be stated therein or
necessary to make the statements therein not misleading and promptly to furnish
to the Company any additional information required to correct and update any
previously furnished information or required so that such Prospectus shall not
contain, with respect to such Holder or the distribution of the applicable
Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities
an 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 not misleading.
7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Subsidiary Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
filings made by any Initial Purchaser or Holder with the NASD (and, if
applicable, the fees and expenses of any "qualified independent underwriter")
and its counsel that may be required by the rules and regulations of the NASD);
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all expenses of printing (including printing
certificates for the New Senior Subordinated Notes to be issued in the Exchange
Offer and printing of Prospectuses); (iv) all fees and disbursements of counsel
for the Company, the Subsidiary Guarantors and, in accordance with Section 7(b)
below, the Holders of Transfer Restricted Securities; (v) all messenger and
delivery services and telephone expenses of the Company and the Subsidiary
Guarantors; (vi) all application and filing fees in connection with listing the
Notes on a national securities exchange or automated quotation system pursuant
to the requirements hereof and (vii) all fees and disbursements of independent
certified public accountants of the Company and the Subsidiary Guarantors
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
(b) The Company will, in any event, bear its and the Subsidiary
Guarantors' internal expenses
15
<PAGE> 17
(including, without limitation, all salaries and expenses of any of their
respective officers and employees performing legal or accounting duties), the
expenses of any annual audit and the fees and expenses of any Person, including
special experts, retained by the Company or the Subsidiary Guarantors.
(c) In connection with any Registration Statement required by this
Agreement, as applicable, (including, without limitation, the Exchange Offer
Registration Statement and the Shelf Registration Statement), the Company and
the Subsidiary Guarantors will reimburse the Initial Purchasers and the Holders
of Transfer Restricted Securities being tendered in the Exchange Offer and/or
pursuant to the "Plan of Distribution" contained in the Exchange Offer
Registration Statement or registered pursuant to the Shelf Registration
Statement, as applicable, for the reasonable fees and disbursements of not more
than one counsel, who shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.
8. INDEMNIFICATION
(a) The Company and each of the Subsidiary Guarantors agree, jointly and
severally, to indemnify and hold harmless (i) each Initial Purchaser, (ii) each
Holder, (iii) each person, if any, who controls (within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) any Initial Purchaser or Holder
(any of the persons referred to in this clause (iii) being hereinafter referred
to as a "controlling person") and (iv) the respective officers, directors,
partners, employees, representatives and agents of the Initial Purchasers or any
Holder or any controlling person (any person referred to in clause (i), (ii),
(iii) or (iv) in such capacity may hereinafter be referred to as an "Indemnified
Holder"), from and against any and all losses, claims, damages, liabilities,
judgments, actions and expenses (including without limitation and as incurred,
reimbursement of all reasonable costs of investigating, preparing, pursuing or
defending any claim or action, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, including the fees and
expenses of counsel to any Indemnified Holder) directly or indirectly caused by,
related to, based upon, arising out of or in connection with any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary prospectus or Prospectus (or any amendment
or supplement thereto), or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages, liabilities,
judgments, actions or expenses are caused by any untrue statement or omission or
alleged untrue statement or omission that is made in reliance upon and in
conformity with information furnished to the Company by any of the Initial
Purchasers or any of the Holders expressly for use therein; and except insofar
as such losses, claims, damages, liabilities, judgments, actions or expenses are
caused by an untrue statement or omission or alleged untrue statement or
omission that was contained or made in the Preliminary Offering Memorandum and
corrected in the Offering Memorandum or Registration Statement; and (1) any such
losses, claims, damages, liabilities, judgments, actions or expenses suffered or
incurred by any Indemnified Person resulted from an action, claim, or suit by
any person who purchased the Notes from any Initial Purchaser in an Exempt
Resale, (2) the Initial Purchasers failed to deliver or provide a copy of the
Preliminary Offering Memorandum or Offering Memorandum to such person at or
prior to the confirmation of the sale of the Notes and (3) the Preliminary
Offering Memorandum or the Offering Memorandum, as the case may be, (as so
amended or supplemented) would have cured the defect giving rise to such losses,
claims, damages, liabilities, judgments, actions, or expenses. The Company and
each of the Subsidiary Guarantors also agree, jointly and severally, to
reimburse each Indemnified Holder for any and all reasonable fees and expenses
(including, without limitation, the reasonable fees and expenses of counsel) as
they are incurred in connection with enforcing such Indemnified Holder's rights
under this Agreement (including, without
16
<PAGE> 18
limitation, its rights under this Section 8). The Company shall notify the
Initial Purchasers and any Holder promptly of the institution, threat or
assertion of any claim, proceeding (including any governmental investigation) or
litigation in connection with the matters addressed by this Agreement which
involves the Company or an Indemnified Holder.
In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
of the Indemnified Holders with respect to which indemnity may be sought against
the Company or any of the Subsidiary Guarantors, such Indemnified Holder shall
promptly notify the Company in writing (provided, that the failure to give such
notice shall not relieve either the Company or the Subsidiary Guarantors of
their respective obligations pursuant to this Agreement), and the Company shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Holder and payment of all fees and expenses
(regardless of whether it is ultimately determined that an Indemnified Holder is
not entitled to indemnification hereunder). Such Indemnified Holder shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Holder unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Company, (ii) the
Company shall have failed to assume the defense and employ counsel or (iii) the
named parties to any such action (including any impleaded parties) include both
such Indemnified Holder and the Company or any of the Subsidiary Guarantors, and
such Indemnified Holder shall have been advised by such counsel that there may
be one or more legal defenses available to it which are different from or
additional to those available to the Company or any Subsidiary Guarantor (in
which case the Company shall not have the right to assume the defense of such
action on behalf of such Indemnified Holder, it being understood, however, that
the Company and the Subsidiary Guarantors shall not, in connection with any one
such action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all such Indemnified Holders, which firm
shall be designated in writing by the Indemnified Holders, and that all such
reasonable fees and expenses shall be reimbursed as they are incurred). Neither
the Company nor any of the Subsidiary Guarantors shall be liable for any
settlement of any such action or proceeding effected without the prior written
consent of the Company, but if settled with the written consent of the Company,
which consent will not be unreasonably withheld, the Company and the Subsidiary
Guarantors agree, jointly and severally, to indemnify and hold harmless any
Indemnified Holder from and against any loss, claim, damage, liability,
judgment, action or expense by reason of any such settlement. Notwithstanding
the foregoing sentence, if at any time an Indemnified Holder shall have
requested either the Company or the Subsidiary Guarantors to reimburse the
Indemnified Holder for fees and expenses of counsel as contemplated by the
second sentence of this paragraph, the Company and the Subsidiary Guarantors
agree that they shall be liable for any settlement of any proceeding effected
without the Company's written consent if (i) such settlement is entered into
more than thirty (30) business days after receipt by either of the Company or
the Subsidiary Guarantors of the aforesaid request, and (ii) the Company nor any
of the Subsidiary Guarantors shall have reimbursed the Indemnified Holder in
accordance with such request or contested the reasonableness of such fees and
expenses prior to the date of such settlement. Neither the Company nor the
Subsidiary Guarantors shall, without the prior written consent of the
Indemnified Holder (which consent shall not be unreasonably withheld) settle,
compromise or consent to the entry of judgment in or otherwise seek to terminate
any pending or threatened action, claim, litigation or proceeding in respect of
which indemnification or contribution may be sought hereunder by such (whether
or not any Indemnified Holder is a party thereto), unless such settlement,
compromise, consent or termination includes an unconditional release of such
Indemnified Holder from all liability arising out of such action, claim,
litigation or proceeding.
17
<PAGE> 19
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and each of the
Subsidiary Guarantors, any person controlling (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act) the Company or any Subsidiary
Guarantor, and the officers, directors, partners, employees, representatives and
agents of each such person (the "Company Indemnified Parties"), to the same
extent as the foregoing indemnity from the Company and each of the Subsidiary
Guarantors to each of the Indemnified Holders, but only with respect to claims
and actions based on information relating to such Holder furnished in writing by
such Holder expressly for use in any Registration Statement; provided however,
that in no case shall any Holder be liable or responsible for any amount in
excess of the amount by which the total received by such Holder with respect to
its sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds (i) the amount paid by such Holder for such Transfer Restricted
Securities and (ii) the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. In case any action shall be brought against any
Company Indemnified Party in respect of which indemnity may be sought against a
Holder of Transfer Restricted Securities, such Holder shall have the rights and
duties given the Company and the Subsidiary Guarantors, and the Company
Indemnified Parties shall have the rights and duties given to each Holder by the
preceding paragraph.
(c) If the indemnification provided for in this Section 8 is unavailable
to an indemnified party in respect of any losses, claims, damages, liabilities,
judgments, actions or expenses referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities, judgments, actions or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party (or parties, as applicable), on the one hand, and the
indemnified party (or parties, as applicable), on the other hand, from the
initial placement and the sale of Transfer Restricted Securities pursuant to the
applicable Registration Statement or (ii) if such allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the indemnifying party (or parties, as
applicable), and of the indemnified party (or parties, as applicable), as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Subsidiary Guarantors shall be deemed to be equal to the
total proceeds from the initial placement (net of the Initial Purchasers'
commissions, but before deducting expenses) as set forth on the cover page of
the Offering Memorandum. The relative benefits of the Initial Purchasers shall
be deemed to be equal to the total purchase discounts and commissions as set
forth on the cover page of the Offering Memorandum and benefits received by any
other Indemnified Holders shall be deemed to be equal to the total proceeds
received by such Holder upon its sale of Senior Subordinated Notes. The relative
fault of each of the Company and the Subsidiary Guarantors, on the one hand, and
the Indemnified Holders, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact related to
information supplied by either of the Company and the Subsidiary Guarantors, on
the one hand or by the Indemnified Holders, on the other hand and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company, the Subsidiary Guarantors, the Initial Purchasers and
each Holder of Transfer Restricted Securities agree that it would not be just
and equitable if contribution pursuant to this Section 8(c) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities,
18
<PAGE> 20
judgments, actions or expenses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Initial Purchaser (and such
Initial Purchaser's related Indemnified Holders, shall be required to
contribute, in the aggregate, any amount in excess of the amount equal to (A)
the amount of the total purchase discounts and commissions applicable to such
Transfer Restricted Securities less (B) any amount paid or contributed by the
Initial Purchasers under the Purchase Agreement; nor shall any Holder or its
related Indemnified Holders be required to contribute, in the aggregate, any
amount in excess of the amount by which the total received by such Holder with
respect to the sale of its Transfer Restricted Securities pursuant to a
Registration Statement exceeds the sum of (A) the amount paid by such Holder for
such Transfer Restricted Securities plus (B) the amount of any damages which
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements of the Company and each of the
Subsidiary Guarantors contained in this Section 8 are in addition to any
liability or obligation which the Company and the Subsidiary Guarantors may
otherwise have to the Indemnified Holders. The obligations of the Initial
Purchasers, any Holder, Underwriter or agent thereof contemplated by this
section 8 shall be in addition to any liability which the respective Initial
Purchaser, Holder, Underwriter (or agent thereof) may otherwise have and shall
extend upon the same terms and conditions to each officer and director of the
Company and to each person, if any, who controls the Company within the meaning
of the Act.
9. RULE 144A
The Company and the Subsidiary Guarantors hereby agree with each Holder,
for so long as any Transfer Restricted Securities remain outstanding and during
any period in which the Company and the Subsidiary Guarantors are not subject to
Section 13 or 15(d) of the Securities Exchange Act, to make available, upon
request of any Holder of Transfer Restricted Securities, to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A.
10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, lock-up letters and other documents required
under the terms of such underwriting arrangements.
19
<PAGE> 21
11. SELECTION OF UNDERWRITERS
For any Underwritten Offering of Notes, the investment banker or
investment bankers and manager or managers for any Underwritten Offering of
Notes, that will administer such offering will be selected by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities
included in such offering provided, however, that such investment bankers and
managers must be reasonably satisfactory to the Company. Such investment bankers
and managers are referred to herein as the "underwriters."
12. MISCELLANEOUS
(a) Remedies. The Company and the Subsidiary Guarantors agree that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by them of the provisions of this Agreement and hereby agree
to waive the defense in any action for specific performance that a remedy at law
would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Subsidiary
Guarantor will, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither the Company nor any Subsidiary Guarantor has previously entered into any
agreement granting any registration rights with respect to its securities to any
Person. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of the
Company's and the Subsidiary Guarantors' securities under any agreement in
effect on the date hereof.
(c) Adjustments Affecting the Notes. Neither the Company nor any
Subsidiary Guarantor will take any action, or voluntarily permit any change to
occur, with respect to the Notes that would materially and adversely affect the
ability of the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of the Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof that relates exclusively to the rights of
Holders whose securities are being tendered pursuant to the Exchange Offer and
that does not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be given
by the Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities subject to such Exchange Offer.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
20
<PAGE> 22
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture;
With a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Telecopier No.: (212) 751-4864
Attention:Philip E. Coviello, Jr.
(ii) if to the Company or any Subsidiary Guarantor:
AmeriServe Food Distribution, Inc.
Brookfield Lake Corporate Center
17975 West Sarah Lane, Suite 100
Brookfield, Wisconsin 53045
Telecopier No.: (414) 792-0202
Attention: Donald J. Rogers
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopier No.: (212) 403-2000
Attention: Adam 0. Emmerich
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities directly from such Holder at a time when such
Holder could not transfer such Transfer Restricted Securities pursuant to a
Shelf Registration Statement. Each Holder of Transfer Restricted Securities
agrees to be bound by and comply with the terms and provisions of this
Agreement.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an
21
<PAGE> 23
original and all of which taken together shall constitute one and the same
agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK WITHOUT
REGARD TO THE CONFLICT OF LAW RULES.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such subject matter.
[signature page follows]
22
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
AMERISERVE FOOD DISTRIBUTION, INC
By:/s/ Raymond E. Marshall
--------------------------
Name: Raymond E. Marshall
Title: President
AMERISERV FOOD COMPANY
By:/s/ Raymond E. Marshall
--------------------------
Name: Raymond E. Marshall
Title: President
CHICAGO CONSOLIDATED CORPORATION
By:/s/ Raymond E. Marshall
--------------------------
Name: Raymond E. Marshall
Title: Vice President
NORTHLAND TRANSPORTATION SERVICES, INC
By:/s/ Raymond E. Marshall
--------------------------
Name: Raymond E. Marshall
Title: President
THE HARRY H. POST COMPANY
By:/s/ Raymond E. Marshall
--------------------------
Name: Raymond E. Marshall
Title: Chief Executive Officer
<PAGE> 25
DELTA TRANSPORTATION, LTD.
By:/s/ Raymond E. Marshall
--------------------------
Name: Raymond E. Marshall
Title: President
AMERISERVE TRANSPORTATION, INC.
By:/s/ Raymond E. Marshall
--------------------------
Name: Raymond E. Marshall
Title: President
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above
written by Donaldson, Lufkin & Jenrette
Securities Corporation on behalf
of the Initial Purchasers.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
----------------------------------
Name:
Title:
<PAGE> 26
DELTA TRANSPORTATION, LTD.
By:
----------------------------------
Name:
Title:
AMERISERVE TRANSPORTATION, INC.
By:
----------------------------------
Name:
Title:
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above
written by Donaldson, Lufkin & Jenrette
Securities Corporation on behalf
of the Initial Purchasers.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Benoit Jamar
---------------------------
Name: Benoit Jamar
Title: Managing Director
<PAGE> 1
EXHIBIT 10.2
================================================================================
- --------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of July 11, 1997
among
AMERISERVE FOOD DISTRIBUTION, INC.,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent,
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION,
as Documentation Agent,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Letter of Credit Issuing Lender
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged by
BANCAMERICA SECURITIES, INC.
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TABLE OF CONTENTS
Section Page
ARTICLE I DEFINITIONS ................................................... 1
1.1 Certain Defined Terms ........................................ 1
1.2 Other Interpretive Provisions ................................ 29
1.3 Accounting Principles ........................................ 29
ARTICLE II THE CREDITS .................................................. 30
2.1 Amounts and Terms of Commitments ............................. 30
(a) The Term A Credit ........................................ 30
(b) The Term B Credit ........................................ 30
(c) The Term C Credit ........................................ 30
(d) The Term D Credit ........................................ 30
(e) The Revolving Credit ..................................... 30
2.2 Loan Accounts ................................................ 31
2.3 Procedure for Borrowing ...................................... 31
2.4 Conversion and Continuation Elections ........................ 32
2.5 Voluntary Termination or Reduction of Commitments ............ 33
2.6 Optional Prepayments ......................................... 34
2.7 Mandatory Prepayments of Loans; Mandatory Commitment
Reductions ................................................. 34
2.8 Repayment .................................................... 36
(a) The Term A Credit ........................................ 36
(b) The Term B Credit ........................................ 37
(c) The Term C Credit ........................................ 38
(d) The Term D Credit ........................................ 39
(e) The Revolving Credit ..................................... 40
2.9 Interest ..................................................... 40
2.10 Fees ......................................................... 41
(a) Arrangement, Agency Fees ................................. 41
(b) Commitment Fees .......................................... 41
2.11 Computation of Fees and Interest ............................. 42
2.12 Payments by the Company ...................................... 42
2.13 Payments by the Lenders to the Administrative Agent .......... 42
2.14 Sharing of Payments, etc. .................................... 43
ARTICLE III THE LETTERS OF CREDIT ....................................... 44
3.1 The Letter of Credit Subfacility ............................. 44
3.2 Issuance, Amendment and Renewal of Letters of Credit ......... 45
3.3 Existing Letters of Credit; Risk Participations,
Drawings and Reimbursements ................................ 47
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Section Page
3.4 Repayment of Participations .................................. 49
3.5 Role of the Issuing Lender ................................... 49
3.6 Obligations Absolute ......................................... 50
3.7 Cash Collateral Pledge ....................................... 51
3.8 Letter of Credit Fees ........................................ 51
3.9 Uniform Customs and Practice ................................. 52
ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY ....................... 52
4.1 Taxes ........................................................ 52
4.2 Illegality ................................................... 53
4.3 Increased Costs and Reduction of Return ...................... 54
4.4 Funding Losses ............................................... 54
4.5 Inability to Determine Rates ................................. 55
4.6 Substitution of Affected Lender .............................. 55
4.7 Certificates of Lenders ...................................... 55
4.8 Survival ..................................................... 56
ARTICLE V COLLATERAL AND GUARANTY ....................................... 56
5.1 Collateral--Personal Property ................................ 56
5.2 Mortgages .................................................... 56
5.3 Guaranty ..................................................... 56
5.4 Company Stock ................................................ 56
5.5 Intercreditor Agreement ...................................... 56
ARTICLE VI CONDITIONS PRECEDENT ......................................... 57
6.1 Conditions of Restatement .................................... 57
(a) Credit Agreement and Notes ............................... 57
(b) Resolutions; Incumbency .................................. 57
(c) Organization Documents ................................... 57
(d) Legal Opinions ........................................... 57
(e) Certificate .............................................. 57
(f) Collateral Documents ..................................... 58
(g) Insurance Policies ....................................... 59
(h) Environmental Review ..................................... 59
(i) Other Documents .......................................... 59
6.2 Other Conditions to Effectiveness of Restatement ............. 59
(a) PFS Acquisition .......................................... 59
(b) Equity Contribution ...................................... 59
(c) Subordinated Debt ........................................ 60
(d) Accounts Receivables Securitization ...................... 60
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Section Page
(e) Post ..................................................... 60
(f) Existing Preferred Stock ................................. 60
(g) Indebtedness ............................................. 60
(h) Governmental Approvals ................................... 60
(i) Certificate .............................................. 60
(j) Purchase by Lenders ...................................... 60
6.3 Conditions to All Credit Extensions .......................... 61
(a) Notice, Application ...................................... 61
(b) Continuation of Representations and Warranties ........... 61
(c) No Existing Default ...................................... 61
ARTICLE VII REPRESENTATIONS AND WARRANTIES .............................. 61
7.1 Corporate Existence and Power ................................ 61
7.2 Corporate Authorization; No Contravention .................... 62
7.3 Governmental Authorization ................................... 62
7.4 Binding Effect ............................................... 62
7.5 Litigation ................................................... 62
7.6 No Default ................................................... 63
7.7 ERISA Compliance ............................................. 63
7.8 Use of Proceeds; Margin Regulations .......................... 63
7.9 Title to Properties .......................................... 63
7.10 Taxes ........................................................ 64
7.11 Financial Condition .......................................... 64
7.12 Environmental Matters ........................................ 65
7.13 Regulated Entities ........................................... 66
7.14 No Burdensome Restrictions ................................... 66
7.15 Copyrights, Patents, Trademarks and Licenses, etc. ........... 66
7.16 Subsidiaries ................................................. 66
7.17 Insurance .................................................... 66
7.18 Full Disclosure .............................................. 66
ARTICLE VIII AFFIRMATIVE COVENANTS ...................................... 67
8.1 Financial Statements ......................................... 67
8.2 Certificates; Other Information .............................. 68
8.3 Notices ...................................................... 69
8.4 Preservation of Corporate Existence, etc. .................... 70
8.5 Maintenance of Property ...................................... 70
8.6 Insurance .................................................... 70
8.7 Payment of Obligations ....................................... 70
8.8 Compliance with Laws ......................................... 71
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Section Page
8.9 Compliance with ERISA ........................................ 71
8.10 Inspection of Property and Books and Records ................. 71
8.11 Environmental Laws ........................................... 71
8.12 Hedging Agreements ........................................... 71
8.13 Use of Proceeds .............................................. 71
8.14 Further Assurances ........................................... 72
ARTICLE IX NEGATIVE COVENANTS ........................................... 72
9.1 Limitation on Liens .......................................... 72
9.2 Asset Dispositions, etc. ..................................... 74
9.3 Consolidations and Mergers ................................... 75
9.4 Loans and Investments ........................................ 75
9.5 Limitation on Indebtedness ................................... 76
9.6 Transactions with Affiliates ................................. 77
9.7 Use of Proceeds .............................................. 77
9.8 Contingent Obligations ....................................... 77
9.9 Joint Ventures ............................................... 78
9.10 Rental Obligations ........................................... 78
9.11 Restricted Payments .......................................... 78
9.12 Minimum Fixed Charge Coverage ................................ 79
9.13 Minimum Interest Coverage .................................... 79
9.14 Maximum Leverage ............................................. 80
9.15 ERISA ........................................................ 80
9.16 Modification of Certain Agreements ........................... 80
9.17 Negative Pledges, Restrictive Agreements, etc. ............... 80
9.18 Maximum Capital Expenditures ................................. 81
9.19 Change in Business ........................................... 81
9.20 Accounting Changes ........................................... 81
9.21 Restructuring Costs .......................................... 81
ARTICLE X EVENTS OF DEFAULT ............................................. 82
10.1 Event of Default ............................................. 82
(a) Non-Payment .............................................. 82
(b) Representation or Warranty ............................... 82
(c) Specific Defaults ........................................ 82
(d) Other Defaults ........................................... 82
(e) Cross-Default ............................................ 82
(f) Insolvency; Voluntary Proceedings ........................ 83
(g) Involuntary Proceedings .................................. 83
(h) ERISA .................................................... 83
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Section Page
(i) Monetary Judgments ....................................... 84
(j) Non-Monetary Judgments ................................... 84
(k) Change of Control ........................................ 84
(l) Impairment of Security, etc. ............................. 84
10.2 Remedies ..................................................... 84
10.3 Rights Not Exclusive ......................................... 85
ARTICLE XI THE AGENTS ................................................... 85
11.1 Appointment and Authorization ................................ 85
11.2 Delegation of Duties ......................................... 86
11.3 Liability of Administrative Agent ............................ 86
11.4 Reliance by Administrative Agent ............................. 86
11.5 Notice of Default ............................................ 87
11.6 Credit Decision .............................................. 87
11.7 Indemnification of Administrative Agent ...................... 87
11.8 Administrative Agent in Individual Capacity .................. 88
11.9 Successor Agent .............................................. 88
11.10 Withholding Tax .............................................. 88
11.11 Collateral Matters ........................................... 90
11.12 Documentation Agent .......................................... 91
ARTICLE XII MISCELLANEOUS ............................................... 91
12.1 Amendments and Waivers ....................................... 91
12.2 Notices ...................................................... 92
12.3 No Waiver; Cumulative Remedies ............................... 92
12.4 Costs and Expenses ........................................... 93
12.5 Company Indemnification ...................................... 93
12.6 Payments Set Aside ........................................... 93
12.7 Successors and Assigns ....................................... 94
12.8 Assignments, Participations, etc. ............................ 94
12.9 Confidentiality .............................................. 95
12.10 Set-off ...................................................... 96
12.11 Automatic Debits of Fees ..................................... 96
12.12 Notification of Addresses, Lending Offices, etc. ............. 97
12.13 Counterparts ................................................. 97
12.14 Severability ................................................. 97
12.15 No Third Parties Benefited ................................... 97
12.16 Governing Law and Jurisdiction ............................... 97
12.17 Waiver of Jury Trial ......................................... 97
12.18 Entire Agreement ............................................. 98
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SCHEDULES
Schedule 2.1 Commitments
Schedule 3.3 Existing Letters of Credit
Schedule 7.5 Litigation
Schedule 7.7 ERISA
Schedule 7.11 Permitted Obligations
Schedule 7.12 Environmental Matters
Schedule 7.15 Copyrights, Patents, Trademarks, Licenses and Related Matters
Schedule 7.16 Subsidiaries and Minority Interests
Schedule 7.17 Insurance Matters
Schedule 9.1 Permitted Liens
Schedule 9.4 Existing Investments
Schedule 9.5 Permitted Indebtedness
Schedule 9.8 Contingent Obligations
Schedule 12.2 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Note
Exhibit E Form of Legal Opinion of Wachtell, Lipton, Rosen & Katz
Exhibit F Form of Legal Opinion of Cassem, Tierney, Adams, Gotch and
Douglas
Exhibit G Form of Assignment and Acceptance
Exhibit H Form of Guaranty
Exhibit I Form of NEHC Guaranty
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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
July 11, 1997, among AmeriServe Food Distribution, Inc. (formerly known as Nebco
Evans Distribution, Inc.), a Nebraska corporation (the "Company"), the several
financial institutions from time to time party to this Agreement (collectively
the "Lenders"; individually each a "Lender"), Bank of America National Trust
and Savings Association, as letter of credit issuing bank, Bank of America
National Trust and Savings Association, as administrative agent for the Lenders,
and Donaldson, Lufkin & Jenrette Securities Corporation, as documentation agent.
WHEREAS, the Company, certain financial institutions, Bank of America
Illinois, as letter of credit issuing bank, and Bank of America National Trust
and Savings Association, as agent, are parties to an Amended and Restated Credit
Agreement dated as of March 26, 1997, as heretofore amended (as so amended the
"Existing Credit Agreement"); and
WHEREAS, the parties hereto have agreed to amend and restate the Existing
Credit Agreement so as to, among other things, (a) increase the amount of the
facilities, in part to finance the purchase of PFS, a division of PepsiCo, Inc.,
(b) amend the pricing, certain covenants and certain various other provisions of
the Existing Credit Agreement and (c) revise in certain respects the composition
of the lender group; and
WHEREAS, the parties hereto intend that this Agreement and the Loan
Documents executed in connection herewith not effect a novation of the
obligations of the Company under the Existing Credit Agreement and the "Loan
Documents" (as defined in the Existing Credit Agreement), but merely a
restatement, and where applicable, an amendment to the terms governing such
obligations;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the Existing Credit Agreement shall be amended and
restated to read in its entirety as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms have the following
meanings:
Acquisition means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of
50% of the capital stock, partnership interests, membership interests or
equity of any Person, or otherwise causing any Person to
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become a Subsidiary, or (c) a merger or consolidation or any other
combination with another Person (other than a Person that is a Subsidiary)
provided that the Company or the Subsidiary is the surviving entity.
Acquisition EBITDA means for any four fiscal quarter period, if the
Company makes an Acquisition during such period, the EBITDA of such
acquired entity as if the Acquisition had taken place on the first day of
such period.
Adjusted EBITDA means as at the end of any fiscal quarter for the
four fiscal quarters (or, if shorter, the period from the Closing Date)
then ending (a) the Company's consolidated EBITDA plus (b) Receivables
Financing Costs deducted in the calculation of EBITDA plus (c) any cash
restructuring charges taken in the 1997, 1998, and 1999 fiscal years
related to the AmeriServ Acquisition or the PFS Acquisition which are
reflected in the operating expenses of the Company's income statement (but
not in excess of $15,000,000 in each of fiscal years 1997, 1998 and 1999)
plus (d) APA Cost Reductions for the four fiscal quarter period ended on
or before March 31, 1998 plus (e) Arby's EBITDA for any four fiscal
quarter period ended on or before December 31, 1997 plus (f) LTM EBITDA
for any four fiscal quarter period ended on or before March 31, 1998;
provided that for the purpose of the calculation of the Leverage Ratio
only, Acquisition EBITDA will be added in the calculation of Adjusted
EBITDA.
Adjusted Funded Debt means all Indebtedness plus the Invested Amount
of the Company and its Subsidiaries, excluding Indebtedness of the Company
to Subsidiaries or of Subsidiaries to the Company or other Subsidiaries;
provided, however, that cash and Cash Equivalent Investments shall be
subtracted from Indebtedness in the calculation of Adjusted Funded Debt at
any time on or before December 31, 1997.
Adjusted Interest Expense means Interest Expense plus Receivables
Financing Costs.
Administrative Agent means BofA in its capacity as agent for the
Lenders hereunder, and any successor agent arising under Section 11.9.
Administrative Agent's Payment Office means the address for payments
set forth on Schedule 12.2 hereto in relation to the Administrative Agent,
or such other address as the Administrative Agent may from time to time
specify.
Affected Lender means any Lender that has given notice to the
Company (which has not been rescinded) of (i) any obligation by the
Company to pay any amount pursuant to Section 4.1 or 4.3 or (ii) the
occurrence of any circumstances of the nature described in Section 4.2.
Affiliate means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person
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possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by
contract, or otherwise, or in the case of any Lender which is an
investment fund, any other fund which is advised by the same investment
advisor or an Affiliate thereof.
Agent-Related Persons means BofA and any successor Administrative
Agent arising under Section 11.9 and any successor letter of credit
issuing bank hereunder, together with their respective Affiliates
(including, in the case of BofA, the Arranger), and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
Agents means the Administrative Agent and the Documentation Agent.
Agreement means this Credit Agreement.
AmeriServ Acquisition means the acquisition by the Company of the
stock of AmeriServ Food Company in January 1996.
APA Cost Reductions means those cost reductions described in the PFS
Acquisition Agreement, which shall be $8,325,000 for the four fiscal
quarter period ended September 30, 1997, $5,550,000 for the four fiscal
quarter period ended December 31, 1997 and $2,775,000 for the four fiscal
quarter period ended March 31, 1998.
Applicable Base Rate Margin means (a) initially, 1.25% in the case
of any Revolving Loan or Term A Loan, (b) 1.75% in the case of any Term B
Loan, (c) 2.00% in the case of any Term C Loan, (d) 2.25% in the case of
any Term D Loan and (b) on and after any date specified below on which the
Applicable Base Rate Margin is to be adjusted for Revolving Loans and Term
A Loans, the rate per annum set forth in the table below for the
applicable Loan opposite the applicable Leverage Ratio:
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Leverage Ratio Applicable Base Rate Margin for
Revolving Loans and Term A
Loans
--------------------------------------------------------------------------
Less than 4.0 to 1.0 0%
--------------------------------------------------------------------------
Less than 4.5 to 1.0 0.25%
but greater than or equal to 4.0 to 1.0
--------------------------------------------------------------------------
Less than 5.0 to 1.0 0.375%
but greater than or equal to 4.5 to 1.0
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Less than 5.75 to 1.0 1.0%
but greater than or equal to 5.0 to 1.0
--------------------------------------------------------------------------
Equal to or greater than 5.75 to 1.0 1.25%
--------------------------------------------------------------------------
The Applicable Base Rate Margin shall be adjusted, to the extent
applicable, 45 days (or, in the case of the last calendar quarter of any
year, 90 days) after the end of each calendar quarter, based on the
Leverage Ratio as of the last day of such calendar quarter commencing with
the calendar quarter ending December 31, 1997; it being understood that if
the Company fails to deliver the financial statements as required by
subsection 8.1(a) or 8.1 (b), as applicable, and the related Compliance
Certificate required by subsection 8.2(b) by the 45th day (or, if
applicable, the 90th day) after any calendar quarter the Applicable Base
Rate Margin shall be 1.25% for any Revolving Loan or Term A Loan bearing
interest based on the Base Rate until such financial statements and
Compliance Certificate are delivered.
Applicable Offshore Rate Margin means (a) initially 2.50% in the
case of any Revolving Loan or Term A Loan, (B) 3.00% in the case of any
Term B Loan, (C) 3.25% in the case of any Term C Loan, (d) 3.50% in the
case of any Term D Loan and (e) on and after any date specified below on
which the Applicable Offshore Rate Margin is to be adjusted for Revolving
Loans and Term A Loan, the rate per annum set forth in the table below for
the applicable Loan opposite the applicable Leverage Ratio:
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Leverage Ratio Applicable Offshore Rate Margin
for Revolving Loans and Term A
Loans
--------------------------------------------------------------------------
Less than 3.0 to 1.0 0.75%
--------------------------------------------------------------------------
Less than 3.5 to 1.0 1.0%
but greater than or equal to 3.0 to 1.0
--------------------------------------------------------------------------
Less than 4.0 to 1.0 1.25%
but greater than or equal to 3.5 to 1.0
--------------------------------------------------------------------------
Less than 4.5 to 1.0 1.50%
but greater than or equal to 4.0 to 1.0
--------------------------------------------------------------------------
Less than 5.0 to 1.0 1.875%
but greater than or equal to 4.5 to 1.0
--------------------------------------------------------------------------
Less than 5.75 to 1.0 2.25%
but greater than or equal to 5.0 to 1.00
--------------------------------------------------------------------------
Equal to or greater than 5.75 to 1.0 2.50%
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The Applicable Offshore Rate Margin shall be adjusted, to the extent
applicable, 45 days (or, in the case of the last calendar quarter of any
year, 90 days) after the end of each calendar quarter, based on the
Leverage Ratio as of the last day of such quarter commencing with the
calendar quarter ending December 31, 1997; it being understood that if the
Company fails to deliver the financial statements required by subsection
8.1(a) or 8.1(b), as applicable, and the related Compliance Certificate
required by subsection 8.2(b) by the 45th day (or, if applicable, the 90th
day) after any calendar quarter, the Applicable Offshore Rate Margin shall
be 2.50% for Revolving Loans and Term A Loans bearing interest based on
the Offshore Rate until such financial statements and Compliance
Certificate are delivered.
Approved Bank has the meaning specified in the definition of "Cash
Equivalent Investments".
Arby's EBITDA means $2,900,000 for the four fiscal quarter period
ended September 30, 1997, and $1,800,000 for the four fiscal quarter
period ended December 31, 1997.
Arranger means BancAmerica Securities, Inc., a Delaware corporation.
Assignee has the meaning specified in subsection 12.8(a).
Attorney Costs means and includes all fees and disbursements of any
law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
Bankruptcy Code means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. ss.101, et seq.).
Base Rate means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; and (b) the rate of interest in
effect for such day as publicly announced from time to time by BofA in San
Francisco, California, as its "reference rate." (The "reference rate" is a
rate set by BofA based upon various factors including BofA's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate.)
Any change in the reference rate announced by BofA shall take effect
at the opening of business on the day specified in the public announcement
of such change.
Base Rate Loan means a Revolving Loan, a Term Loan A, a Term B Loan,
a Term C Loan or Term D Loan that bears interest based on the Base Rate or
an L/C Advance.
BofA means Bank of America National Trust and Savings Association, a
national banking association.
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Borrowing means a borrowing hereunder consisting of Revolving Loans
or Term Loans of the same Type made to the Company on the same day by the
Lenders under Article II, and, other than in the case of Base Rate Loans,
having the same Interest Period.
Borrowing Date means any date on which a Borrowing occurs under
Section 2.3.
Bridge Loan means the up to $350,000,000 of senior subordinated
increasing rate debt issued pursuant to the Securities Purchase Agreement
among DLJ Bridge Finance, Inc., BofA and the Company dated the date
hereof.
Business Day means any day other than a Saturday, Sunday or other
day on which commercial banks in San Francisco are authorized or required
by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in
the applicable offshore dollar interbank market.
Capital Adequacy Regulation means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law, in
each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
Capital Expenditures means all expenditures which, in accordance
with GAAP, would be required to be capitalized and shown on the
consolidated balance sheet of the Company, but (i) excluding expenditures
made in connection with the replacement, substitution or restoration of
assets to the extent financed (A) from insurance proceeds (or other
similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (B) with awards of compensation arising from
the taking by eminent domain or condemnation of the assets being replaced
and (ii) excluding expenditures incurred by the creation of Capitalized
Lease Obligations and financed thereby.
Capitalized Lease Obligations means all monetary obligations of the
Company or any of its Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, would be classified as
capitalized leases, and, for purposes of this Agreement and each other
Loan Document, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a penalty.
Cash Collateralize means to pledge and deposit with or deliver to
the Administrative Agent, for the benefit of the Agents, the Issuing
Lender and the Lenders, as additional collateral for the L/C Obligations,
cash or deposit account balances pursuant to documentation in form and
substance satisfactory to the
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Administrative Agent and the Issuing Lender (which documents are hereby
consented to by the Lenders). Derivatives of such term shall have a
corresponding meaning. The Company hereby grants the Administrative Agent,
for the benefit of the Agents, the Issuing Lender and the Lenders, a
security interest in all such cash and deposit account balances. Cash
collateral shall be maintained in blocked, interest bearing deposit
accounts at BofA.
Cash Equivalent Investments shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of America
or any agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than one year from the date of acquisition,
(ii) marketable direct obligations issued by any State of the United
States of America or any local government or other political subdivision
thereof rated (at the time of acquisition of such security) at least AA by
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. ("S&P") or the equivalent thereof by Moody's Investors
Service, Inc. ("Moody's") having maturities of not more than one year from
the date of acquisition, (iii) U.S. dollar denominated time deposits,
certificates of deposit and bankers' acceptances of (x) any Lender, (y)
any domestic commercial bank of recognized standing having capital and
surplus in excess of $250,000,000 or (z) any bank whose short-term
commercial paper rating (at the time of acquisition of such security) by
S&P is at least A-1 or the equivalent thereof (any such bank, an "Approved
Bank"), in each case with maturities of not more than six months from the
date of acquisition, (iv) commercial paper and variable or fixed rate
notes issued by any Lender or Approved Bank or by the parent company of
any Lender or Approved Bank and commercial paper and variable rate notes
issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating (at the time of acquisition of such
security) of at least A-1 or the equivalent thereof by S&P or at least P-1
or the equivalent thereof by Moody's, or guaranteed by any industrial
company with a long-term unsecured debt rating (at the time of acquisition
of such security) of at least AA or the equivalent thereof by S&P or at
least Aa or the equivalent thereof by Moody's and in each case maturing
within one year after the date of acquisition and (v) repurchase
agreements with any Lender or any primary dealer maturing within one year
from the date of acquisition that are fully collateralized by investment
instruments that would otherwise be Cash Equivalent Investments; provided
that the terms of such repurchase agreements comply with the guidelines
set forth in the Federal Financial Institutions Examination Council
Supervisory Policy -- Repurchase Agreements of Depository Institutions
With Securities Dealers and Others, as adopted by the Comptroller of the
Currency on October 31, 1985.
Change of Control means the failure of (a) Holberg or its
shareholders, or any thereof, to own directly or indirectly, in excess of
50% of the outstanding shares of voting stock of the Company; (b) the
failure of NEHC to own directly 100% of the outstanding shares of voting
stock of the Company (other than shares under stock options held by, or
issued under stock options to, directors, officers, employees and former
directors not in excess of 10% of the shares of voting stock of the
Company);
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<PAGE> 15
or (c) Holberg Inc. or its shareholders as of the date hereof, or any
thereof, to own at least 50% of the outstanding shares of voting stock of
Holberg. For purposes of this definition, voting stock of a corporation
shall not include capital stock of such corporation if such stock has only
the minimal voting rights required by such corporation's jurisdiction of
organization with respect to any capital stock issued by such corporation.
Closing Date means the date on which all conditions precedent set
forth in Sections 6.1 and 6.2 are satisfied or waived by all Lenders.
Code means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
Collateral means any collateral granted to the Administrative Agent
for the benefit of the Agents, or the Lenders, to secure the Obligations
of the Company, or any Guarantor, under any Loan Document.
Collateral Documents means the Security Agreement, the Pledge
Agreement, the Subsidiary Pledge Agreement, the Trademark Security
Agreement and the NEHC Pledge Agreement.
Commitment means, as to each Lender, such Lender's Revolving
Commitment, Term A Commitment, Term B Commitment, Term C Commitment and
Term D Commitment, as applicable.
Commitment Fee Rate means (a) initially, 0.50% and (b) on and after
any date specified below on which the Commitment Fee Rate is to be
adjusted, the rate per annum set forth in the table below opposite the
applicable Leverage Ratio:
--------------------------------------------------------------------------
Leverage Ratio Commitment Fee Rate
--------------------------------------------------------------------------
Less than 3.0 to 1.0 0.25%
--------------------------------------------------------------------------
Less than 3.5 to 1.0 0.30%
but greater than or equal to 3.0 to 1.0
--------------------------------------------------------------------------
Less than 4.5 to 1.0 0.375%
but greater than or equal to 3.5 to 1.0
--------------------------------------------------------------------------
Equal to or greater than 4.5 to 1.0 0.50%
--------------------------------------------------------------------------
The Commitment Fee Rate shall be adjusted, to the extent applicable, 45
days (or, in the case of the last calendar quarter of any year, 90 days)
after the end of each
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<PAGE> 16
calendar quarter, based on the Leverage Ratio as of the last day of such
calendar quarter commencing with the calendar quarter ending December 31,
1997; it being understood that if the Company fails to deliver the
financial statements required by subsection 8.1(a) or 8.1(b), as
applicable, and the related Compliance Certificate required by subsection
8.2(b) by the 45th day (or, if applicable, the 90th day) after any
calendar quarter, the Commitment Fee Rate shall be 0.50% until such
financial statements and Compliance Certificate are delivered.
Compliance Certificate means a certificate substantially in the form
of Exhibit C.
Computation Period means as at any fiscal quarter end, the period of
four consecutive quarters then ending or, if shorter, the period
commencing the Closing Date.
Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and
its Subsidiaries for such period.
Contingent Obligation means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend
(declared and not paid), letter of credit or other obligation (the
"primary obligations") of another Person (the "primary obligor"),
including any obligation of that Person (i) to purchase, repurchase or
otherwise acquire such primary obligations or any security therefor, (ii)
to advance or provide funds for the payment or discharge of any such
primary obligation, or to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or
any balance sheet item, level of income or financial condition of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation, or (iv) otherwise to assure or hold harmless the
holder of any such primary obligation against loss in respect thereof
(each, a "Guaranty Obligation"); (b) with respect to any Surety Instrument
(other than any Letter of Credit) issued for the account of that Person or
as to which that Person is otherwise liable for reimbursement of drawings
or payments; (c) to purchase any materials, supplies or other property
from, or to obtain the services of, another Person if the relevant
contract or other related document or obligation requires that payment for
such materials, supplies or other property, or for such services, shall be
made regardless of whether delivery of such materials, supplies or other
property is ever made or tendered, or such services are ever performed or
tendered; or (d) in respect of any Hedging Agreement. The amount of any
Contingent Obligation shall, in the case of Guaranty Obligations, be
deemed equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made or, if not
stated or if indeterminable, the maximum reasonably anticipated liability
in respect thereof, and in the case of other
9
<PAGE> 17
Contingent Obligations, shall be equal to the maximum reasonably
anticipated liability in respect thereof.
Contractual Obligation means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
Conversion/Continuation Date means any date on which, under Section
2.4, the Company (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
Corporate Allocations means the amount paid by the Company to
Holberg for managerial and administration services performed by Holberg
for the Company.
Credit Extension means and includes (a) the making of any Loans
hereunder, and (b) the Issuance of any Letters of Credit hereunder
(including the Existing Letters of Credit).
Default means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
DLJ means Donaldson, Lufkin & Jenrette Securities Corporation.
Documentation Agent means Donaldson, Lufkin & Jenrette Securities
Corporation in its capacity as documentation agent for the Lenders
hereunder.
Dollars, dollars and $ each mean lawful money of the United States.
EBITDA means, for any Computation Period, the sum of
(a) Consolidated Net Income of the Company for such period
excluding, to the extent reflected in determining such Consolidated Net
Income, extraordinary gains and losses for such period and non-recurring
gains and charges,
plus
(b) to the extent deducted in determining Consolidated Net Income,
Interest Expense, income tax expense, depreciation, depletion and
amortization for such period.
Effective Amount means (i) with respect to any Revolving Loans and
Term Loans on any date, the aggregate outstanding principal amount thereof
after giving effect to any Borrowings and prepayments or repayments of
Revolving Loans and
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<PAGE> 18
Term Loans occurring on such date; and (ii) with respect to any
outstanding L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any Issuances of Letters
of Credit occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including as a result of
any reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing under
Letters of Credit taking effect on such date.
Eligible Assignee means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (ii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the country in which it is organized
or another country which is also a member of the OECD; (iii) a Person that
is primarily engaged in the business of commercial banking and that is (A)
a Subsidiary of a Lender, (B) a Subsidiary of a Person of which a Lender
is a Subsidiary, or (C) a Person of which a Lender is a Subsidiary and
(iv) as to the Term Loans, an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D under the Securities Act of 1933,
as amended (other than the Company or an Affiliate of the Company).
Environmental Claims means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
Environmental Laws means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with
all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and
land use matters.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and regulations promulgated thereunder.
ERISA Affiliate means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
ERISA Event means (a) a Reportable Event with respect to a Pension
Plan; (b) the failure to make a required contribution to a Pension Plan if
such failure is sufficient to give rise to a Lien under Section 302(f) of
ERISA; (c) a withdrawal by the Company or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in
11
<PAGE> 19
Section 4001(a)(2) of ERISA) or a cessation of operations which is treated
as such a withdrawal under Section 4062(e) of ERISA; (d) a complete or
partial withdrawal by the Company or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (e) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan; (f) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (g) the imposition of any liability
under Title IV of ERISA, other than PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon the Company or any ERISA Affiliate.
Event of Default means any of the events or circumstances specified
in Section 8.1.
Excess Cash Flow means, for any period, without duplication, (a)
EBITDA for such period; plus (b) net cash extraordinary gains and
nonrecurring gains included in determining Consolidated Net Income for
such period; plus (c) decreases in Working Capital; less (d) increases in
Working Capital; less (e) the amount of cash income taxes deducted in
determining Consolidated Net Income for such period; less (f) the amount
of cash Interest Expense deducted in determining Consolidated Net Income
for such period; less (g) Capital Expenditures (less the amount of any
Indebtedness incurred to finance such Capital Expenditures other than the
Loans hereunder) permitted by Section 9.18 hereof (even if not expended
but without giving effect to any carry-over from a prior year); less (h)
scheduled amortization on the Term Loans or any other Indebtedness
actually paid during such period; less (i) the aggregate of all mandatory
prepayments of the Loans made during such period in accordance with
Section 2.7(c) (other than Section 2.7(c)(v)); less (j) net cash
extraordinary losses and non-recurring charges deducted in determining
Consolidated Net Income for such period; less (k) Restructuring Costs paid
by the Company during such period and not previously deducted in
determining EBITDA and not deducted in determining Consolidated Net Income
for such period; less (l) dividends paid in cash.
Exchange Act means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
Existing Credit Agreement has the meaning specified in the recitals.
Existing Letters of Credit means the letters of credit described in
Schedule 3.3.
Federal Funds Rate means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite
the caption "Federal Funds (Effective)"; or,
12
<PAGE> 20
if for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Administrative Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of three leading brokers of Federal
funds transactions in New York City selected by the Administrative Agent.
Fee Letter has the meaning specified in subsection 2.10(a).
Fixed Charge Coverage Ratio means, for the Computation Period most
recently ended on or before such date, the ratio of (a) Adjusted EBITDA
for such Computation Period less (i) Capital Expenditures for such
Computation Period less (ii) cash taxes paid by the Company and its
Subsidiaries for such Computation Period, to (b) the sum of (i) Adjusted
Interest Expense for such Computation Period, (ii) cash dividends paid by
the Company during such Computation Period, (iii) the required
installments of principal of the Term Loans and (iv) principal
amortization of Capitalized Lease Obligations for such Computation Period.
FRB means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
GAAP means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature
and authority within the U.S. accounting profession); provided that for
the purpose of calculating any financial covenant or financial ratio, GAAP
shall mean such generally accepted accounting principles which are
applicable to the circumstances as of the date hereof and provided further
that upon a change in GAAP which would, if applicable, affect the
calculation of financial covenants or financial ratios, the parties shall
discuss the amendment of such covenants and ratios and the definition of
GAAP.
Governmental Authority means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
Guarantor means (a) NEHC; (b) as of the date hereof, each Subsidiary
listed on Schedule 7.16; and (c) thereafter, the Persons referred to in
clauses (a) and (b) and each other Person which from time to time executes
and delivers a counterpart of the Guaranty.
13
<PAGE> 21
Guaranty means the guaranty of the Guarantors (other than NEHC) in
substantially the form of Exhibit H.
Guaranty Obligation has the meaning specified in the definition of
Contingent Obligation.
Hedging Agreement means any agreement (including any master
agreement and any agreement, whether or not in writing, relating to any
single transaction) that is an interest rate swap agreement, basis swap,
forward rate agreement, commodity swap, commodity option, equity or equity
index swap or option, bond option, interest rate option, forward foreign
exchange agreement, rate cap, collar or floor agreement, currency swap
agreement, cross-currency rate swap agreement, swaption, currency option
or any other, similar agreement (including any option to enter into any of
the foregoing).
Holberg means Holberg Industries, Inc., a Delaware corporation.
Honor Date has the meaning specified in subsection 3.3(c).
Impermissible Qualification means, relative to the opinion or
certification of any independent public accountant as to any financial
statement of any Obligor, any qualification or exception to such opinion
or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
such Obligor to be in default of any of its obligations under Sections
9.12, 9.13 or 9.14.
Indebtedness of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments (it being understood that undrawn letters of
credit are contingent reimbursement obligations); (d) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses; (e) all indebtedness created or arising
under any conditional sale or other title retention agreement, or incurred
as financing, in either case with respect to property acquired by the
Person (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale
of such property); (f) all Capital Lease Obligations; (g) all net
obligations with respect
14
<PAGE> 22
to Hedging Agreements; (h) all indebtedness referred to in clauses (a)
through (g) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including accounts and
contracts rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness; and
(i) all Guaranty Obligations in respect of indebtedness or obligations
of others of the kinds referred to in clauses (a) through (g) above.
Indemnified Obligations has the meaning specified in Section 12.5.
Indemnified Person has the meaning specified in Section 12.5.
Independent Auditor has the meaning specified in Section 8.1(b).
Initial Financial Projections means the ten-year projections
provided to the Lenders prior to the date hereof included in the
Information Memorandum dated June, 1997.
Insolvency Proceeding means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors, or
other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; undertaken under U.S. federal, state
or foreign law, including the Bankruptcy Code.
Intercreditor Agreement means the Intercreditor Agreement dated as
of July 11, 1997 between the Administrative Agent and Norwest Bank
Minnesota, National Association as Trustee under the Pooling and Servicing
Agreement.
Interest Coverage Ratio means, for the Computation Period most
recently ended on or before such date, the ratio of (a) Adjusted EBITDA
for such Computation Period to (b) Adjusted Interest Expense for such
Computation Period.
Interest Expense means, for any period, the consolidated interest
expense of the Company and its Subsidiaries for such period including
interest expense related to Capitalized Lease Obligations.
Interest Payment Date means, as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the last Business Day of each calendar quarter;
provided, however, that if any Interest Period for an Offshore Rate Loan
exceeds three months, the date that falls three months after the beginning
of such Interest Period is also an Interest Payment Date.
15
<PAGE> 23
Interest Period means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period;
(iii) no Interest Period for any Revolving Loan shall extend
beyond the Revolving Termination Date; and
(iv) no Interest Period applicable to a Term A Loan, a Term B
Loan, a Term C Loan or a Term D Loan or portion of any thereof shall
extend beyond any date upon which is due any scheduled principal
payment in respect of the Term A Loans, Term B Loans, Term C Loans
or Term D Loans, as applicable, unless the aggregate principal
amount of Term A Loans, Term B Loans, Term C Loans or Term D Loans,
as applicable, represented by Base Rate Loans, or by Offshore Rate
Loans having Interest Periods that will expire on or before such
date, equals or exceeds the amount of such principal payment.
Invested Amount means, at any time, the outstanding principal amount
that is owed to holders (other than Subsidiaries of the Company) of
securities issued by, or loans to, the trust established under the Pooling
and Servicing Agreement or any other trust established with respect to a
Qualified Receivables Transaction.
IRS means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
Issuance Date has the meaning specified in subsection 3.1(a).
Issue means, with respect to any Letter of Credit, to incorporate
the Existing Letters of Credit into this Agreement, or to issue or to
extend the expiry of, or to renew or increase the amount of, such Letter
of Credit; and the terms "Issued," "Issuing" and "Issuance" have
corresponding meanings.
16
<PAGE> 24
Issuing Lender means BofA in its capacity as issuer of one or more
Letters of Credit hereunder, together with any replacement letter of
credit issuer arising under subsection 11.1(b) or Section 11.9.
Joint Venture means a single-purpose corporation, partnership,
limited liability company, joint venture or other similar legal
arrangement (whether created by contract or conducted through a separate
legal entity) now or hereafter formed by the Company or any of its
Subsidiaries with another Person in order to conduct a common venture or
enterprise with such Person. No Receivables Subsidiary or Special Purpose
Vehicle shall be considered a Joint Venture.
L/C Advance means each Lender's participation in any L/C Borrowing
in accordance with its Revolving Percentage.
L/C Amendment Application means an application form for amendment of
outstanding standby or commercial documentary letters of credit as shall
at any time be in use at the Issuing Lender, as the Issuing Lender shall
request.
L/C Application means an application form for issuances of standby
or commercial documentary letters of credit as shall at any time be in use
at the Issuing Lender, as the Issuing Lender shall request.
L/C Borrowing means an extension of credit resulting from a drawing
under any Letter of Credit which shall not have been reimbursed on the
date when made nor converted into a Borrowing of Revolving Loans under
subsection 3.3(c).
L/C Commitment means the commitment of the Issuing Lender to Issue,
and the commitment of the Lenders severally to participate in Letters of
Credit (including the Existing Letters of Credit) from time to time Issued
or outstanding under Article III, in an aggregate amount not to exceed on
any date the amount of $30,000,000, as the same shall be reduced as a
result of a reduction in the L/C Commitment pursuant to Section 2.5;
provided that the L/C Commitment is a part of the combined Commitments,
rather than a separate, independent commitment.
L/C Fee Rate means, at any time, the Applicable Offshore Rate Margin
for Revolving Loans; provided that each of the foregoing rates shall be
increased by 2% at any time an Event of Default exists.
L/C Obligations means, at any time, the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all unreimbursed drawings under all Letters of Credit, including
all outstanding L/C Borrowings.
L/C-Related Documents means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of
17
<PAGE> 25
Credit, including any of the Issuing Lender's standard form documents for
letter of credit issuances.
Lender has the meaning specified in the introductory clause hereto.
References to the "Lenders" shall include BofA, including in its capacity
as Issuing Lender; for purposes of clarification only, to the extent that
BofA may have any rights or obligations in addition to those of the
Lenders due to its status as Issuing Lender, its status as such will be
specifically referenced.
Lending Office means, as to any Lender, the office or offices of
such Lender specified as its "Lending Office" or "Domestic Lending Office"
or "Offshore Lending Office", as the case may be, on Schedule 12.2, or
such other office or offices as such Lender may from time to time notify
the Company and the Agent.
Letters of Credit means the Existing Letters of Credit and any
letters of credit (whether standby letters of credit or commercial
documentary letters of credit) Issued by the Issuing Lender pursuant to
Article III.
Leverage Ratio means, as at any fiscal quarter end for the Company
and its Subsidiaries on a consolidated basis, the ratio of
(i) Adjusted Funded Debt as of such fiscal quarter end
to
(ii) Adjusted EBITDA.
Lien means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preferential arrangement of any kind or
nature whatsoever in respect of any property (including those created by,
arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a capital lease, any
financing lease having substantially the same economic effect as any of
the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the Uniform
Commercial Code or any comparable law) and any contingent or other
agreement to provide any of the foregoing, but not including the interest
of a lessor under an operating lease.
Loan means an extension of credit by a Lender to the Company under
Article II or Article III in the form of a Revolving Loan, Term Loan or
L/C Advance.
Loan Documents means this Agreement, any Notes, the Fee Letter, the
L/C-Related Documents, the Pledge Agreement, the Subsidiary Pledge
Agreements, the Guaranty, the NEHC Guaranty, the Security Agreement, the
Trademark Security Agreement, the Mortgages, and all other documents
delivered to the Agent or any Lender in connection herewith.
18
<PAGE> 26
LTM EBITDA means $94,000,000 for the four fiscal quarter period
ended September 30, 1997, $62,000,000 for the four fiscal quarter period
ended December 31, 1997 and $37,000,000 for the four fiscal quarter period
ended March 31, 1998.
Margin Stock means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company or the
Company and its Subsidiaries taken as a whole; (b) a material impairment
of the ability of the Company, NEHC or any Subsidiary to perform under any
Loan Document and to avoid any Event of Default; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability
against the Company or any Subsidiary of any Loan Document.
Moody's has been specified in the definition of "Cash Equivalent
Investments".
Mortgage means a mortgage, leasehold mortgage, deed of trust or
similar document granting a Lien on real property in appropriate form for
filing or recording in the applicable jurisdiction and otherwise
reasonably satisfactory to the Administrative Agent.
Mortgaged Property means the real property subject to a Mortgage.
Multiemployer Plan means a "multiemployer plan", within the meaning
of Section 4001(a)(3) of ERISA, to which the Company or any ERISA
Affiliate may have any liability.
NEHC means Nebco Evans Holding Company, a Delaware corporation.
NEHC Guaranty means the guaranty of NEHC in substantially the form
of Exhibit I.
NEHC Pledge Agreement means the Pledge Agreement dated the date
hereof between NEHC and the Administrative Agent.
Net Cash Proceeds means
(a) with respect to the sale, transfer, or other disposition by
the Company or any Subsidiary of any asset (including any
stock of any Subsidiary), the aggregate cash proceeds
(including cash proceeds received by way of deferred payment
of principal pursuant to a note, installment receivable or
otherwise, but only as and when received) received by the
Company or any Subsidiary pursuant to such sale, transfer or
other disposition, net of (i) the direct costs relating to
such sale, transfer or
19
<PAGE> 27
other disposition (including, without limitation, sales
commissions and legal, accounting and investment banking
fees), (ii) taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions
and any tax sharing arrangements), (iii) amounts required to
be applied to the repayment of any Indebtedness secured by a
Lien on the asset subject to such sale, transfer or other
disposition (other than the Loans) and (iv) any reserve for
adjustment in respect of the sale price of such asset (until
such amount is available to the Company or the applicable
Subsidiary); and
(b) with respect to any issuance of equity securities or
Indebtedness, the aggregate cash proceeds received by the
Company or any Subsidiary pursuant to such issuance, net of
the direct costs relating to such issuance (including, without
limitation, sales and underwriter's commissions and legal,
accounting and investment banking fees).
Note means a promissory note executed by the Company in favor of a
Lender pursuant to subsection 2.2(b), in substantially the form of Exhibit
D.
Notice of Borrowing means a notice in substantially the form of
Exhibit A.
Notice of Conversion/Continuation means a notice in substantially
the form of Exhibit B.
Ob1igations means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company
or any Subsidiary to any Lender, the Agent, or any Indemnified Person,
whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter
arising.
OECD has the meaning specified in the definition of "Eligible
Assignee".
Offshore Rate means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined by
the Administrative Agent as follows:
Offshore Rate = LIBOR
----------------------------------------------
1.00 - Eurodollar Reserve Percentage
where,
Eurodollar Reserve Percentage means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day
(whether or not applicable to any Lender) under regulations issued
from time to time by the FRB for
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determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
LIBOR means the rate of interest per annum determined by the Agent
as the rate at which dollar deposits in the approximate amount of
BofA's Offshore Rate Loan for such Interest Period would be offered
by BofA's Grand Cayman Branch, Grand Cayman B.W.I. (or such other
office as may be designated for such purpose by BofA), to major
banks in the offshore dollar interbank market at their request at
approximately 11:00 a.m. (New York City time) two Business Days
prior to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
Offshore Rate Loan means a Loan that bears interest based on the
Offshore Rate.
Organization Documents means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
Other Taxes means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other
Loan Documents.
Participant has the meaning specified in subsection 12.8(d).
PBGC means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
Pension Plan means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA, other than a Multiemployer Plan, with
respect to which a Company or any ERISA Affiliate may have any liability.
Permitted Indebtedness has the meaning specified in Section 9.5.
Permitted Liens has the meaning specified in Section 9.1.
Person means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
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PFS means PFS, a division of the Seller.
PFS Acquisition means the acquisition of PFS by the Company pursuant
to the PFS Acquisition Agreement.
PFS Acquisition Agreement means the Asset Purchase Agreement between
PepsiCo, Inc. and NEHC dated May 23, 1997.
Plan means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
Pledge Agreement means the Amended and Restated Pledge Agreement
dated the date hereof between the Company and the Administrative Agent.
Pooling and Servicing Agreement means the Pooling and Servicing
Agreement dated as of July 1, 1997 among AmeriServe Funding Corporation,
AmeriServe Food Distribution, Inc., and Norwest Bank Minnesota, National
Association, as Trustee, as amended, amended and restated, supplemented or
otherwise modified from time to time.
Post means The Harry H. Post Company, a Colorado corporation.
Post Contribution means the contribution of all the capital stock of
Post to the Company.
Preferred Stock means preferred stock of the Company issued on terms
acceptable to the Required Lenders.
Purchase Money Note means a promissory note evidencing the
obligation of a Receivables Subsidiary to pay all or any portion of the
purchase price for Receivables and other Receivables Program Assets to the
Company or any other Receivables Seller in connection with a Qualified
Receivables Transaction, which note shall be repaid from cash available to
the maker of such note, other than (i) cash required to be held as
reserves pursuant to Receivables Documents, (ii) amounts paid in respect
of interest, principal and (iii) other amounts owing under Receivables
Documents and amounts paid in connection with the purchase of newly
generated Receivables.
Qualified Receivables Transaction means (i) the Receivables Bridge
Facility and (ii) any transaction or series of transactions that may be
entered into by the Company and/or any Subsidiary pursuant to which the
Company and/or any Subsidiary may sell, convey or otherwise transfer to a
Receivables Subsidiary (in the case of a transfer by the Company and/or
any other Receivables Seller) and any other Person (in the case of a
transfer by a Receivables Subsidiary), or may grant a security interest
in, any Receivables Program Assets (whether now existing or arising in the
future); provided that:
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<PAGE> 30
(a) no portion of the indebtedness or any other obligations
(contingent or otherwise) of a Receivables Subsidiary or Special Purpose
Vehicle (i) is guaranteed by the Company or any other Receivables Seller
(excluding guarantees of obligations pursuant to Standard Securitization
Undertakings), (ii) is recourse to or obligates the Company or any other
Receivables Seller in any way other than pursuant to Standard
Securitization Undertakings or (iii) subjects any property or asset of the
Company or any other Receivables Seller, directly or indirectly,
contingently or otherwise, to the satisfaction of obligations incurred in
such transactions, other than pursuant to Standard Securitization
Undertakings;
(b) neither the Company nor any other Receivables Seller has any
material contract, agreement, arrangement or understanding with a
Receivables Subsidiary or a Special Purpose Vehicle (except in connection
with a Purchase Money Note or Qualified Receivables Transaction) other
than on terms no less favorable to the Company or such Receivables Seller
than those that might be obtained at the time from Persons that are not
affiliates of the Company, other than fees payable in the ordinary course
of business in connection with servicing accounts receivable; and
(c) the Company and the other Receivables Sellers do not have any
obligation to maintain or preserve the financial condition of a
Receivables Subsidiary or a Special Purpose Vehicle or cause such entity
to achieve certain levels of operating results.
Receivable Stated Amount means, with respect to a Receivables
Investor Instrument, the maximum amount of the funding commitment with
respect thereto.
Receivables means all rights of the Company or any other Receivables
Seller to payments (whether constituting accounts, chattel paper,
instruments, general intangibles or otherwise) arising from the sale of
goods, services or future services by the Company and/or a Receivables
Seller, and includes the right to payment of any interest or finance
charge and other obligations with respect thereto and any other rights to
payment recorded as a receivable.
Receivables Bridge Facility means the Receivables Documents in
effect at, or becoming effective contemporaneously with, the Closing Date.
Receivables Documents means (x) each and every receivables purchase
agreement, pooling and servicing agreement, series supplement thereto,
certificate purchase agreement, guaranty, Purchase Money Note, license
agreement, sublicense agreement, credit agreement, agreement to acquire
undivided interests or other agreement to transfer, or create a security
interest in, Receivables Program Assets, in each case as amended,
modified, supplemented or amended and restated and in effect from time to
time entered into by the Company, another Receivables Seller and/or a
Receivables Subsidiary, and (y) each other instrument, agreement and other
document entered into by the Company, any other Receivables Seller and/or
a Receivables Subsidiary relating to the transactions contemplated by the
items referred to in clause
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(x) above, in each case as amended, modified, supplemented or amended and
restated and in effect from time to time.
Receivables Financing Costs means any loss attributable to the sale
of Receivables Program Assets.
Receivables Investor Instruments means trust certificates, purchased
interests or any other securities, instruments or agreements evidencing an
interest in the Receivables Program Assets held by a Person other than the
Company and its Subsidiaries (excluding Receivables Subsidiaries).
Receivables Program Assets means (a) all Receivables which are
described as being transferred by the Company, another Receivables Seller
and/or a Receivables Subsidiary pursuant to the Receivables Documents, (b)
all Receivables Related Assets, and (c) all collections (including
recoveries) and other proceeds of the assets described in the foregoing
clauses.
Receivables Program Obligations means (a) notes, trust certificates,
undivided interests, partnership interests or other interests representing
the right to be paid a specified principal amount from the Receivables
Program Assets, and (b) related obligations of the Company, a Subsidiary
and/or a Special Purpose Vehicle (including, without limitation, rights in
respect of interest or yield, breach of warranty claims and expense
reimbursement and indemnity provisions). The Receivables Program
Obligations shall also include Purchase Money Notes and guarantees by the
Company of obligations pursuant to Standard Securitization Undertakings.
Receivables Related Assets means (i) any rights arising under the
documentation governing or relating to Receivables (including rights in
respect of liens securing such Receivables and other credit support in
respect of such Receivables), (ii) any collections and other proceeds of
such Receivables, (iii) any lockboxes or bank accounts, all documents,
instruments and agreements relating to such lockboxes or bank accounts,
and any amounts from time to time deposited therein, (iv) spread accounts,
trust accounts and other similar accounts (and any amounts on deposit
therein) established in connection with a Qualified Receivables
Transaction, (v) any warranty, indemnity, dilution and other intercompany
claim arising out of Receivables Documents and (vi) other assets
(including those contemplated by Receivables Documents) which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
Receivables Seller means the Company and any Subsidiary of the
Company (other than a Receivables Subsidiary) which is a party to a
Receivables Document.
Receivables Subsidiary means a special purpose wholly-owned
subsidiary of the Company created in connection with the transactions
contemplated by a Qualified Receivables Transaction, which subsidiary
engages in no activities other than those
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incidental to such Qualified Receivables Transaction and which is
designated as a Receivables Subsidiary by the Company's Board of
Directors. Any such designation by the Board of Directors shall be
evidenced by filing with the Administrative Agent a certified copy of the
resolution of the Board of Directors of the Company giving effect to such
designation and an officers' certificate certifying, to the best of such
officer's knowledge and belief after consulting with counsel, that such
designation, and the transactions in which the Receivables Subsidiary will
engage, comply with the requirements of the definition of Qualified
Receivables Transaction.
Register has the meaning specified in Section 12.8.
Reportable Event means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
Required Lenders means, at any time, Lenders having an aggregate
Total Percentage of 51% or more.
Requirement of Law means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
of a Governmental Authority, in each case applicable to or binding upon
the Person or any of its property or to which the Person or any of its
property is subject.
Responsible Officer means the chief executive officer or the
president of the Company, or any other officer having substantially the
same authority and responsibility; or, with respect to compliance with
financial covenants, the chief financial officer or the treasurer of the
Company, or any other officer having substantially the same authority and
responsibility.
Restructuring Costs means any cash integration expenditures related
to the AmeriServ Acquisition or the PFS Acquisition incurred by the
Company reflected as (i) a non-operating expense in the Company's income
statement, (ii) a reduction of the restructuring reserve on the Company's
balance sheet, or (iii) restructuring charges taken in the years 1997,
1998, and 1999 to the extent added to Adjusted EBITDA pursuant to clause
(c) of the definition of "Adjusted EBITDA".
Revolving Commitment means, as to any Lender, the commitment of such
Lender to make Revolving Loans pursuant to subsection 2.1(e). The initial
amount of each Lender's Revolving Commitment is set forth on Schedule 2.1.
Revolving Loan has the meaning specified in Section 2.1, and may be
a Base Rate Loan or an Offshore Rate Loan (each a "Type" of Revolving
Loan).
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Revolving Percentage means, as to any Lender, the percentage which
(a) the amount of such Lender's Revolving Commitment is of (b) the
aggregate amount of all of the Lenders' Revolving Commitments.
Revolving Termination Date means the earlier to occur of:
(a) June 30, 2003; and
(b) the date on which the Commitments terminate in accordance
with the provisions of this Agreement.
S&P has the meaning specified in the definition of "Cash Equivalent
Investments".
SEC means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
Seller means PepsiCo, Inc., a North Carolina corporation.
Security Agreement means the Amended and Restated Security Agreement
dated the date hereof between the Company, its Subsidiaries and the
Administrative Agent.
Senior Subordinated Notes means the senior subordinated notes due
July 15, 2007 in a principal amount not in excess of $500,000,000, with
subordination provisions no less favorable to the Lenders than the
subordination provisions described in the Preliminary Offering Memorandum
dated June 23, 1997, with an interest rate which will not require cash
interest payments in excess of 12% per annum and with no scheduled
principal payments prior to July 1, 2007.
Special Purpose Vehicle means a trust, partnership or other special
purpose Person established by the Company and/or its Subsidiaries to
implement a Qualified Receivables Transaction.
Standard Securitization Undertakings means representations,
warranties, covenants and indemnities entered into by the Company and/or
any Subsidiary which are reasonably customary in an accounts receivable
transaction.
Subordinated Debt means all unsecured Indebtedness of the Company
for money borrowed which is subordinated, upon terms reasonably
satisfactory to the Required Lenders, in right of payment to the payment
in full in cash of all Obligations.
Subsidiary of a Person means any corporation, association,
partnership, limited liability company, limited liability partnership,
joint venture or other business entity of which more than 50% of the
voting stock, membership interests or other equity
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interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company. No Special Purpose Vehicle will be considered a
"Subsidiary".
Subsidiary Pledge Agreement means the Amended and Restated Pledge
Agreement dated the date hereof between AmeriServ Food Company and the
Administrative Agent.
Supermajority Lenders means, at any time, Lenders having an
aggregate Total Percentage of 66-2/3% or more.
Surety Instruments means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
Tax Sharing Agreement means that certain Tax Sharing Agreement
effective as of the first day of the 1989 consolidated return year between
Holberg and the Company as successor by merger to certain former
subsidiaries of the Company.
Taxes means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured
by each Lender's net income by the jurisdiction (or any political
subdivision thereof) under the laws of which such Lender or the Agent, as
the case may be, is organized or maintains a lending office.
Term A Commitment means, as to any Lender, the commitment of such
Lender to make a Term A Loan pursuant to subsection 2.1(a). The amount of
each Lender's Term A Commitment is set forth on Schedule 2.1.
Term A Loan - see subsection 2.1(a).
Term A Percentage means, as to any Lender, the percentage which (a)
the Term A Commitment of such Lender (or, after the making of the Term A
Loans, the principal amount of such Lender's Term A Loan) is of (b) the
aggregate amount of Term A Commitments (or after the making of the Term A
Loans, the aggregate principal amount of all Term A Loans). The initial
amount of the Term A Loan Percentage for each Lender is set forth opposite
such Lender's name on Schedule 2.1.
Term B Commitment means, as to any Lender, the commitment of such
Lender to make a Term B Loan pursuant to subsection 2.1(b). The amount of
each Lender's Term B Commitment is set forth opposite such Lender's name
on Schedule 2.1.
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Term B Loan - see subsection 2.1(b).
Term B Percentage means, as to any Lender, the percentage which (a)
the Term B Commitment of such Lender (or, after the making of the Term B
Loans, the principal amount of such Lender's Term B Loan) is of (b) the
aggregate amount of Term B Commitments (or after the making of the Term B
Loans, the aggregate principal amount of all Term B Loans). The initial
amount of the Term B Loan Percentage for each Lender is set forth such
Lender's name on Schedule 2.1.
Term C Commitment means as to any Lender, the commitment of such
Lender to make a Term C Loan pursuant to subsection 2.1(c). The amount of
each Lender's Term C Commitment is set forth opposite such Lender's name
on Schedule 2.1.
Term C Loan - see subsection 2.1(c).
Term C Percentage means, as to any Lender, the percentage which (a)
the Term C Commitment of such Lender (or, after the making of the Term C
Loans, the aggregate amount of such Lender's Term C Loan) is of (b) the
aggregate amount of Term C Commitments (or after the making of the Term C
Loans, the aggregate principal amount of all Term C Loans). The initial
amount of the Term C Loan Percentage for each Lender is set forth opposite
such Lender's name on Schedule 2.1.
Term D Commitment means to any Lender, the commitment of such Lender
to make a Term D Loan pursuant to subsection 2.1(d). The amount of each
Lender's Term D Commitment is set forth in Schedule 2.1.
Term D Loan - see subsection 2.1(d).
Term D Percentage means, as to any Lender, the percentage which (a)
the Term D Commitment of, such Lender (or, after the making of the Term D
Loans, the aggregate amount of such Lender's Term D Loan) is of (a) the
aggregate amount of Term D Commitments (or after the making of the Term D
Loans, the aggregate principal amount of all Term D Loans). The initial
amount of the Term D Loan Percentage for each Lender is set forth opposite
such Lender's name on Schedule 2.1.
Term Loan means a Term A Loan, a Term B Loan, a Term C Loan or a
Term D Loan.
Total Percentage means, as to any Lender the percentage which
(a) the aggregate amount of (i) such Lender's Revolving Commitment plus
(ii) such Lender's Term A Commitment (or, after the making of the Term A
Loans, the outstanding principal amount of such Lender's Term A Loans)
plus (iii) such Lender's Term B Commitment (or, after the making of the
Term B Loans, the outstanding principal amount of such Lender's Term B
Loans) plus, (iv) such Lender's Term C Commitment (or, if after the making
of the Term C Loans, the outstanding principal amount of such Lender's
Term C Loans) plus (v) such Lender's Term D Commitment
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<PAGE> 36
(or if after the making of the Term D Loans, the outstanding principal
amount of such Lender's Term D Loans) is of (b) the aggregate amount of
(i) the Revolving Commitments of all Lenders plus (ii) the Term A
Commitments of all Lenders (or, after the making of the Term A Loans, the
outstanding principal amount of all Term A Loans) plus (iii) the Term B
Commitments of all Lenders (or, after the making of the Term B Loans, the
outstanding principal amount of all Term B Loans), plus (iv) the Term C
Commitments of all Lenders (or, if after the making of the Term C Loans,
the outstanding principal amount of all Term C Loans) plus (v) the Term D
Commitments of all Lenders (or, if after the making of the Term D Loans,
the outstanding principal amount of all Term D Loans); provided that after
the Revolving Commitments have been terminated, "Total Percentage" shall
mean, as to any Lender, the percentage which the aggregate principal
amount of such Lender's Loans is of the aggregate principal amount of all
Loans. The initial Total Percentage for each Lender is set forth opposite
such Lender's name on Schedule 2.1.
Trademark Security Agreement means the Amended and Restated
Trademark Security Agreement dated the date hereof between AmeriServ Food
Company and the Administrative Agent.
Transportation Equipment Sale and Leaseback means the purchase,
sale and leaseback of transportation equipment subject to purchase orders
of PFS on the date hereof.
Type has the meaning specified in the definition of "Revolving
Loan."
UCP has the meaning specified in Section 3.9.
Unfunded Pension Liability means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
United States and U.S. each means the United States of America.
Wholly-Owned Subsidiary means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of
each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination
is being made, is owned, beneficially and of record, by the Company, or by
one or more of the other Wholly-Owned Subsidiaries, or both.
Working Capital means the excess of:
(a) (i) the consolidated current assets of the Company and its
Subsidiaries, less (ii) the amount of cash and cash equivalents included
in such consolidated current assets;
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over
(b) (i) consolidated current liabilities of the Company and its
Subsidiaries less, (ii) the amount of short-term Indebtedness (including
current maturities of long-term Indebtedness) of the Company and its
Subsidiaries included in such consolidated current liabilities.
1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding", and
the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agents, the Company
and the
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other parties, and are the products of all parties. Accordingly, they shall not
be construed against the Lenders or the Agents merely because of the Agents' or
Lenders' involvement in their preparation.
1.3 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments. (a) The Term A Credit. Each Lender
severally agrees, on the terms and conditions set forth herein, to make a single
loan to the Company (each such loan, a "Term A Loan") on the Closing Date in an
amount not to exceed such Lender's Term A Percentage of $78,095,238.10. Amounts
borrowed as Term A Loans which are repaid or prepaid by the Company may not be
reborrowed. The Term A Commitments shall expire concurrently with the making of
the Term A Loans on the Closing Date.
(b) The Term B Credit. Each Lender severally agrees, on the terms
and conditions set forth herein, to make a single loan to the Company (each such
loan, a "Term B Loan") on the Closing Date in an amount not to exceed such
Lender's Term B Percentage of $42,301,587.30. Amounts borrowed as Term B Loans
which are repaid or prepaid by the Company may not be reborrowed. The Term B
Commitments shall expire concurrently with the making of the Term B Loans on the
Closing Date.
(c) The Term C Credit. Each Lender severally agrees, on the terms
and conditions set forth herein, to make a single loan to the Company (each such
loan, a "Term C Loan") on the Closing Date in an amount not to exceed such
Lender's Term C Percentage of $42,301,587.30. Amounts borrowed as Term C Loans
which are repaid or prepaid by the Company may not be reborrowed. The Term C
Commitments shall expire concurrently with the making of the Term C Loans on the
Closing Date.
(d) The Term D Credit. Each Lender severally agrees, on the terms
and conditions set forth herein, to make a single loan to the Company (each such
loan, a "Term D Loan") on the Closing Date in an amount not to exceed such
Lender's Term D Percentage of $42,301,587.30. Amounts borrowed as Term D Loans
which are repaid or prepaid by the Company may not be reborrowed. The Term D
Commitments shall expire concurrently with the making of the Term D Loans on the
Closing Date.
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(e) The Revolving Credit. Each Lender severally agrees, on the terms
and conditions set forth herein, to make loans to the Company (each such loan, a
"Revolving Loan"), from time to time on any Business Day during the period from
the Closing Date to the Revolving Termination Date, in an aggregate amount not
to exceed at any time outstanding such Lender's Revolving Percentage of
$150,000,000; provided that, after giving effect to any Borrowing of Revolving
Loans, the aggregate amount of all Revolving Loans plus the Effective Amount of
all L/C Obligations shall not exceed the Revolving Commitments. Within the
foregoing limits, and subject to the other terms and conditions hereof, the
Company may borrow under this subsection 2.1(e), prepay under Section 2.6 and
reborrow under this subsection 2.1(e).
2.2 Loan Accounts. (a) The Loans made by each Lender and the Letters of
Credit Issued by the Issuing Lender shall be evidenced by one or more accounts
or records maintained by such Lender or Issuing Lender, as the case may be, in
the ordinary course of business. The accounts or records maintained by the
Administrative Agent, the Issuing Lender and each Lender shall be rebuttable
presumptive evidence of the amount of the Loans made by the Lenders to the
Company and the Letters of Credit Issued for the account of the Company, and the
interest and payments thereon. Any failure so to record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the Company
hereunder to pay any amount owing with respect to the Loans or any Letter of
Credit.
(b) Upon the request of any Lender made through the Administrative
Agent, the Loans made by such Lender may be evidenced by one or more Notes,
instead of loan accounts. Each such Lender shall endorse on the schedules
annexed to its Note(s) the date, amount and maturity of each Loan made by it and
the amount of each payment of principal made by the Company with respect
thereto. Each such Lender is irrevocably authorized by the Company to endorse
its Note(s) and each Lender's record shall be conclusive absent manifest error;
provided, however, that the failure of a Lender to make, or an error in making,
a notation thereon with respect to any Loan shall not limit or otherwise affect
the obligations of the Company hereunder or under any such Note to such Lender.
2.3 Procedure for Borrowing. (a) Each Borrowing of Revolving Loans or Term
Loans shall be made upon the Company's irrevocable written notice delivered to
the Administrative Agent in the form of a Notice of Borrowing, which notice must
be received by the Administrative Agent (i) prior to 8:30 a.m. (San Francisco
time) three Business Days prior to the requested Borrowing Date, in the case of
Offshore Rate Loans; and (ii) prior to 8:30 a.m. (San Francisco time) on the
requested Borrowing Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $500,000 and, as to Revolving Loans, a
multiple of $100,000 provided, that if the amount of any unused
Commitment is less than $500,000, then the Company may borrow such
amount in Base Rate Loans;
32
<PAGE> 40
(B) the requested Borrowing Date, which shall be a
Business Day;
(C) the Type of Loans comprising the Borrowing; and
(D) the duration of the Interest Period applicable to
such Loans included in such notice. If the Notice of Borrowing fails
to specify the duration of the Interest Period for any Borrowing
comprised of Offshore Rate Loans, such Interest Period shall be one
month.
(b) The Administrative Agent will promptly notify each Lender of its
receipt of any Notice of Borrowing and of the amount of such Lender's share of
that Borrowing based upon such Lender's Revolving Percentage, Term A Percentage,
Term B Percentage, Term C Percentage or Term D Percentage as the case may be.
(c) Each Lender will make the amount of its share of each Borrowing
available to the Administrative Agent for the account of the Company at the
Administrative Agent's Payment Office by 11:00 a.m. (San Francisco time) on the
Borrowing Date requested by the Company in funds immediately available to the
Administrative Agent. The proceeds of all such Loans will then be made available
to the Company by the Administrative Agent at such office by crediting the
account of the Company on the books of BofA with the aggregate of the amounts
made available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent or as otherwise set forth in the Notice of
Borrowing.
(d) After giving effect to any Borrowing, there may not be more than
twenty different Interest Periods in effect.
2.4 Conversion and Continuation Elections. (a) The Company may, upon
irrevocable written notice to the Administrative Agent in accordance with
subsection 2.4(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the
case of any other Type of Loans, to convert any such Loans (or any part
thereof in an amount not less than $500,000, or, in the case of Revolving
Loans, that is in an integral multiple of $100,000 in excess thereof) into
Loans of any other Type; or
(ii) elect as of the last day of the applicable Interest
Period, to continue any Loans having Interest Periods expiring on such day
(or any part thereof in an amount not less than $500,000, or, in the case
of Revolving Loans, that is in an integral multiple of $100,000 in excess
thereof);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $500,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Company to continue such Loans as, and convert such Loans into, Offshore
Rate Loans shall terminate.
33
<PAGE> 41
(b) The Company shall deliver a Notice of Conversion/Continuation to
be received by the Administrative Agent (i) not later than 8:30 a.m. (San
Francisco time) at least three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Offshore Rate Loans; and (ii) not later than 8:30 a.m. (San Francisco time)
on the Conversion/Continuation Date, if the Loans are to be converted into Base
Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or
renewed;
(C) the Type of Loans resulting from the proposed
conversion or continuation; and
(D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to timely select a new Interest
Period to be applicable to such Offshore Rate Loans, or if any Default or Event
of Default then exists, the Company shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.
(d) The Administrative Agent will promptly notify each Lender of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Company, the Administrative Agent will promptly notify each
Lender of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given held
by each Lender.
(e) Unless the Required Lenders otherwise agree, during the
existence of a Default or Event of Default, the Company may not elect to have a
Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than twenty different Interest Periods in effect.
2.5 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than five Business Days' prior notice to the Administrative Agent,
terminate the Revolving Commitments, or permanently reduce the Revolving
Commitments by an aggregate minimum amount of $5,000,000 or any multiple of
$100,000 in excess thereof; unless, after giving effect thereto and to any
prepayments of Revolving Loans made on the effective date thereof, (a) the
Effective Amount of all Revolving Loans, and L/C Obligations together would
exceed the amount of the Revolving Commitments then in effect, or (b) the
Effective Amount of all L/C Obligations then outstanding would exceed the L/C
Commitment. Once reduced in accordance with this Section, the Revolving
Commitments
34
<PAGE> 42
may not be increased. Any reduction of the Revolving Commitments shall be
applied to each Lender according to its Revolving Percentage. If and to the
extent specified by the Company in the notice to the Administrative Agent, some
or all of the reduction in the combined Revolving Commitments shall be applied
to reduce the L/C Commitment. All accrued commitment and letter of credit fees
to, but not including, the effective date of any reduction or termination of
Commitments, shall be paid on the effective date of such reduction or
termination.
2.6 Optional Prepayments. (a) Subject to Section 4.4, (i) the Company may,
from time to time, upon irrevocable written notice to the Administrative Agent
(which notice must be received by 8:30 a.m. (San Francisco time) on the day of
prepayment in the case of Base Rate Loans and 8:30 a.m. (San Francisco time) two
Business Days prior to the date of prepayment in the case of Offshore Rate
Loans), ratably prepay any Borrowing of Revolving Loans in whole or in part, in
an aggregate amount of $500,000 or a higher integral multiple of $100,000; and
(ii) the Company may, from time to time, upon not less than five Business Days'
irrevocable notice to the Administrative Agent, prepay any Borrowing of Term
Loans in whole or in part, in an aggregate amount of $1,000,000 or a higher
integral multiple of $100,000.
(b) Each notice of prepayment shall specify the date and amount of
such prepayment and the Loans to be prepaid. The Administrative Agent will
promptly notify each Lender of its receipt of any such notice and of such
Lender's share of such prepayment based upon such Lender's Revolving Percentage,
in the case of a prepayment of Revolving Loans, Term A Percentage, in the case
of a prepayment of Term A Loans, Term B Percentage in the case of a prepayment
of Term B Loans, Term C Percentage in the case of prepayment of Term C Loans and
Term D Percentage in the case of prepayment of Term D Loans. If any such notice
is given by the Company, the Company shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to such date on the amount prepaid and
any amounts required pursuant to Section 4.4. Each prepayment of Revolving Loans
shall be applied to each Lender's Revolving Loans according to such Lender's
Revolving Percentage. Each prepayment of Term Loans shall be applied pro rata to
the Term Loans and as to any Term Loan, shall be applied to its unpaid
installments pro rata; provided that the Company may offer Lenders holding Term
B Loans, Term C Loans or Term D Loans the right to waive such prepayment. If any
Lender so elects, by notice to the Administrative Agent and the Company not
later than three Business Days after the date such notice is given, the portion
of any prepayment which would have been applied to such Lender's Term B Loans,
Term C Loans or Term D Loans, as applicable, shall be applied pro rata to the
remaining installments of the Term A Loans of all Lenders.
2.7 Mandatory Prepayments of Loans; Mandatory Commitment Reductions.
(a) If on any date the Effective Amount of L/C Obligations exceeds
the L/C Commitment, the Company shall Cash Collateralize on such date the
outstanding Letters of Credit in an amount equal to the excess of the maximum
amount then available to be drawn under the Letters of Credit over the Aggregate
L/C Commitment.
35
<PAGE> 43
(b) Subject to Section 4.4, if on any date after giving effect to
any Cash Collateralization made on such date pursuant to the preceding sentence,
the Effective Amount of all Revolving Loans then outstanding plus the Effective
Amount of all L/C Obligations exceeds the Revolving Commitments, the Company
shall immediately, and without notice or demand, prepay the outstanding
principal amount of the Revolving Loans and L/C Advances by an amount equal to
the applicable excess.
(c) The Company (or, in the case of subsection (ii), if the
Administrative Agent is holding the proceeds of insurance as additional
Collateral pursuant to the terms of the Security Agreement, the Administrative
Agent upon the Company's instruction) shall make a prepayment of the Loans at
the following times and in the following amounts:
(i) Within 60 days after any sale, transfer or other disposition by
the Company or any Subsidiary of any asset outside the ordinary course of
its business (other than sales of Receivables Program Assets to the extent
the Invested Amount does not exceed $275,000,000 at any time outstanding,
the sale and leaseback of the Grand Rapids, Michigan distribution center
at any time prior to March 31, 1998 and sales in an amount not in excess
of $10,000,000 prior to January 11, 1998 in connection with the
Transportation Equipment Sale and Leaseback) and to a Person other than
the Company or a Subsidiary, in an amount equal to 100% of the Net Cash
Proceeds of such sale, transfer or other disposition to the extent the
aggregate of such Net Cash Proceeds from any such sale, transfer or
disposition exceeds $3,000,000 or from all such sales, transfers or
dispositions received after the date hereof exceeds $10,000,000.
(ii) Within 60 days after the receipt of any insurance proceeds (or
other similar recoveries) by the Company or any Subsidiary or by the
Administrative Agent (to the extent the Administrative Agent is holding
the insurance proceeds as additional Collateral pursuant to Section 6 of
the Security Agreement) from any casualty loss incurred by the Company or
any Subsidiary, in an amount equal to 100% of such insurance proceeds (or
other similar recoveries) net of any collection expenses; provided that no
such prepayment shall be required to the extent such proceeds are or,
within one year, will be used by the Company for the financing of the
replacement, substitution or restoration of the assets sustaining such
casualty loss.
(iii) Concurrently with the receipt of any Net Cash Proceeds from
any issuance of Indebtedness of the Company or any of its Subsidiaries
(other than Permitted Indebtedness), in an amount equal to 100% of such
Net Cash Proceeds.
(iv) Concurrently with the receipt of any Net Cash Proceeds from any
issuance of equity securities of the Company or any Subsidiary (including
a Public Offering, but excluding the issuance of shares of common stock of
the Company pursuant to any employee, officer or director stock option
program, benefit plan or compensation program), in an amount equal to 50%
of such Net Cash Proceeds.
(v) Within 90 days after the end of each fiscal year, in an amount
equal to 75 % (or after the aggregate principal amount of the Term Loans
is less than
36
<PAGE> 44
$157,500,000, 50%) of Excess Cash Flow for such fiscal year (rounded to
the nearest, or if there is no nearest the next highest, integral multiple
of $10,000).
All prepayments of Loans pursuant to this Section 2.7 shall be applied ratably
to the Term A Loans, the Term B Loans, the Term C Loans and the Term D Loans.
The prepayment of any Term Loan pursuant to this Section 2.7(c) shall be applied
to its installments pro rata except that any prepayment pursuant to clause (iii)
shall be applied to the installments of any Term Loan in the inverse order of
their maturities; provided that the Company may offer Lenders holding Term B
Loans, Term C Loans or Term D Loans the right to waive such mandatory
prepayment. If any such Lender so elects, by notice to the Administrative Agent
and the Company not later than five Business Days after such notice is given,
50% of the portion of any prepayment which would have been applied to such
Lender's Term B Loans, Term C Loans or Term D Loans shall be applied pro rata to
the remaining installments of the Term A Loans of all Lenders (except that any
prepayment pursuant to clause (iii) shall be applied to such installments in the
inverse order of their maturities) and the remaining portion of such prepayment
shall be retained by the Company. Once all of the Term Loans have been paid in
full (or the Term A Loans have been paid in full and the Lenders holding Term B
Loans, Term C Loans or Term D Loans have declined such prepayment), any
prepayment pursuant to this Section 2.7 shall be applied to the Revolving Loans;
and the Revolving Loan Commitments shall be correspondingly reduced.
2.8 Repayment. (a) The Term A Credit. Subject to Sections 2.6 and 2.7, the
Company shall repay the Term A Loans in quarterly installments on the last day
of each calendar quarter, commencing on September 30, 1998 in the amount set
forth opposite the following dates:
--------------------------------------------------------------------
Date Amount
--------------------------------------------------------------------
09/30/98 $ 813,492.06
--------------------------------------------------------------------
12/31/98 $ 813,492.06
--------------------------------------------------------------------
03/31/99 $ 813,492.06
--------------------------------------------------------------------
06/30/99 $ 813,492.06
--------------------------------------------------------------------
09/30/99 $4,067,460.32
--------------------------------------------------------------------
12/31/99 $4,067,460.32
--------------------------------------------------------------------
03/31/00 $4,067,460.32
--------------------------------------------------------------------
06/30/00 $4,067,460.32
--------------------------------------------------------------------
09/30/00 $4,880,952.38
--------------------------------------------------------------------
12/31/00 $4,880,952.38
--------------------------------------------------------------------
03/31/01 $4,880,952.38
--------------------------------------------------------------------
37
<PAGE> 45
--------------------------------------------------------------------
Date Amount
--------------------------------------------------------------------
06/30/01 $4,880,952.38
--------------------------------------------------------------------
09/30/01 $4,880,952.38
--------------------------------------------------------------------
12/31/01 $4,880,952.38
--------------------------------------------------------------------
03/31/02 $4,880,952.38
--------------------------------------------------------------------
06/30/02 $4,880,952.38
--------------------------------------------------------------------
09/30/02 $4,880,952.38
--------------------------------------------------------------------
12/31/02 $4,880,952.38
--------------------------------------------------------------------
03/31/03 $4,880,952.38
--------------------------------------------------------------------
06/30/03 $4,880,952.38
--------------------------------------------------------------------
(b) The Term B Credit. Subject to Sections 2.6 and 2.7, the Company
shall repay the Term B Loans in quarterly installments on the last day of each
calendar quarter, commencing on September 30, 1998 in the amount set forth
opposite the following dates:
--------------------------------------------------------------------
Date Amount
--------------------------------------------------------------------
09/30/98 $ 105,753.97
--------------------------------------------------------------------
12/31/98 $ 105,753.97
--------------------------------------------------------------------
03/31/99 $ 105,753.97
--------------------------------------------------------------------
06/30/99 $ 105,753.97
--------------------------------------------------------------------
09/30/99 $ 105,753.97
--------------------------------------------------------------------
12/31/99 $ 105,753.97
--------------------------------------------------------------------
03/31/00 $ 105,753.97
--------------------------------------------------------------------
06/30/00 $ 105,753.97
--------------------------------------------------------------------
09/30/00 $ 105,753.97
--------------------------------------------------------------------
12/31/00 $ 105,753.97
--------------------------------------------------------------------
03/31/01 $ 105,753.97
--------------------------------------------------------------------
06/30/01 $ 105,753.97
--------------------------------------------------------------------
09/30/01 $ 105,753.97
--------------------------------------------------------------------
38
<PAGE> 46
--------------------------------------------------------------------
12/31/01 $ 105,753.97
--------------------------------------------------------------------
03/31/02 $ 105,753.97
--------------------------------------------------------------------
06/30/02 $ 105,753.97
--------------------------------------------------------------------
09/30/02 $ 105,753.97
--------------------------------------------------------------------
12/31/02 $ 105,753.97
--------------------------------------------------------------------
03/31/03 $ 105,753.97
--------------------------------------------------------------------
06/30/03 $ 105,753.97
--------------------------------------------------------------------
09/30/03 $10,046,626.98
--------------------------------------------------------------------
12/31/03 $10,046,626.98
--------------------------------------------------------------------
03/31/04 $10,046,626.98
--------------------------------------------------------------------
06/30/04 $10,046,626.98
--------------------------------------------------------------------
(c) The Term C Credit. Subject to Sections 2.6 and 2.7, the Company
shall repay the Term C Loans in quarterly installments on the last day of each
calendar quarter commencing September 30, 1998 in the amount set forth opposite
the following dates;
--------------------------------------------------------------------
Date Amount
--------------------------------------------------------------------
09/30/98 $ 105,753.97
--------------------------------------------------------------------
12/31/98 $ 105,753.97
--------------------------------------------------------------------
03/31/99 $ 105,753.97
--------------------------------------------------------------------
06/30/99 $ 105,753.97
--------------------------------------------------------------------
09/30/99 $ 105,753.97
--------------------------------------------------------------------
12/31/99 $ 105,753.97
--------------------------------------------------------------------
03/31/00 $ 105,753.97
--------------------------------------------------------------------
06/30/00 $ 105,753.97
--------------------------------------------------------------------
09/30/00 $ 105,753.97
--------------------------------------------------------------------
12/31/00 $ 105,753.97
--------------------------------------------------------------------
03/31/01 $ 105,753.97
--------------------------------------------------------------------
06/30/01 $ 105,753.97
--------------------------------------------------------------------
39
<PAGE> 47
--------------------------------------------------------------------
Date Amount
--------------------------------------------------------------------
09/30/01 $ 105,753.97
--------------------------------------------------------------------
12/31/01 $ 105,753.97
--------------------------------------------------------------------
03/31/02 $ 105,753.97
--------------------------------------------------------------------
06/30/02 $ 105,753.97
--------------------------------------------------------------------
09/30/02 $ 105,753.97
--------------------------------------------------------------------
12/31/02 $ 105,753.97
--------------------------------------------------------------------
03/31/03 $ 105,753.97
--------------------------------------------------------------------
06/30/03 $ 105,753.97
--------------------------------------------------------------------
09/30/03 $ 105,753.97
--------------------------------------------------------------------
12/31/03 $ 105,753.97
--------------------------------------------------------------------
03/31/04 $ 105,753.97
--------------------------------------------------------------------
06/30/04 $ 105,753.97
--------------------------------------------------------------------
09/30/04 $ 9,940,873.02
--------------------------------------------------------------------
12/31/04 $ 9,940,873.02
--------------------------------------------------------------------
03/31/05 $ 9,940,873.02
--------------------------------------------------------------------
06/30/05 $ 9,940,873.02
--------------------------------------------------------------------
(d) The Term D Credit. Subject to Sections 2.6 and 2.7, the Company
shall repay the Term D Loans in quarterly installments on the last day of each
calendar quarter, commencing on September 30, 1998 in the amount set forth
opposite the following dates;
--------------------------------------------------------------------
Date Amount
--------------------------------------------------------------------
09/30/98 $ 105,753.97
--------------------------------------------------------------------
12/31/98 $ 105,753.97
--------------------------------------------------------------------
03/31/99 $ 105,753.97
--------------------------------------------------------------------
06/30/99 $ 105,753.97
--------------------------------------------------------------------
09/30/99 $ 105,753.97
--------------------------------------------------------------------
12/31/99 $ 105,753.97
--------------------------------------------------------------------
40
<PAGE> 48
--------------------------------------------------------------------
Date Amount
--------------------------------------------------------------------
03/31/00 $ 105,753.97
--------------------------------------------------------------------
06/30/00 $ 105,753.97
--------------------------------------------------------------------
09/30/00 $ 105,753.97
--------------------------------------------------------------------
12/31/00 $ 105,753.97
--------------------------------------------------------------------
03/31/01 $ 105,753.97
--------------------------------------------------------------------
06/30/01 $ 105,753.97
--------------------------------------------------------------------
09/30/01 $ 105,753.97
--------------------------------------------------------------------
12/31/01 $ 105,753.97
--------------------------------------------------------------------
03/31/02 $ 105,753.97
--------------------------------------------------------------------
06/30/02 $ 105,753.97
--------------------------------------------------------------------
09/30/02 $ 105,753.97
--------------------------------------------------------------------
12/31/02 $ 105,753.97
--------------------------------------------------------------------
03/31/03 $ 105,753.97
--------------------------------------------------------------------
06/30/03 $ 105,753.97
--------------------------------------------------------------------
09/30/03 $ 105,753.97
--------------------------------------------------------------------
12/31/03 $ 105,753.97
--------------------------------------------------------------------
03/31/04 $ 105,753.97
--------------------------------------------------------------------
06/30/04 $ 105,753.97
--------------------------------------------------------------------
09/30/04 $ 105,753.97
--------------------------------------------------------------------
12/31/04 $ 105,753.97
--------------------------------------------------------------------
03/31/05 $ 105,753.97
--------------------------------------------------------------------
06/30/05 $ 105,753.97
--------------------------------------------------------------------
09/30/05 $ 9,835,119.05
--------------------------------------------------------------------
12/31/05 $ 9,835,119.05
--------------------------------------------------------------------
03/31/06 $ 9,835,119.05
--------------------------------------------------------------------
06/30/06 $ 9,835,119.05
--------------------------------------------------------------------
41
<PAGE> 49
(e) The Revolving Credit. The Company shall pay to the
Administrative Agent, for the account of the Lenders, on the Revolving
Termination Date the aggregate principal amount of all Revolving Loans
outstanding on such date.
2.9 Interest. (a) Each Revolving Loan and Term Loan shall bear interest on
the outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to the Offshore Rate or the Base Rate, as the case may be
(and subject to the Company's right to convert to other Types of Loans under
Section 2.4), plus the Applicable Offshore Rate Margin or Applicable Base Rate
Margin, as the case may be.
(b) Interest on each Revolving Loan and Term Loan shall be paid in
arrears on each Interest Payment Date. Interest shall also be paid on the date
of any prepayment of Loans under Section 2.6 or 2.7 for the portion of the Loans
so prepaid and upon payment (including prepayment) in full thereof and, during
the existence of any Event of Default, interest shall be paid on demand of the
Agent at the request or with the consent of the Required Lenders.
(c) Notwithstanding subsection (a) of this Section, while any Event
of Default exists or after acceleration, the Company shall pay interest (after
as well as before entry of judgment thereon to the extent permitted by law) on
the principal amount of all outstanding Loans, at a rate per annum which is
determined by adding 2% per annum to the Applicable Base Rate Margin or
Applicable Offshore Rate Margin then in effect for such Loans; provided,
however, that, on and after the expiration of any Interest Period applicable to
any Offshore Rate Loan outstanding on the date of occurrence of such Event of
Default or acceleration, the principal amount of such Loan shall, during the
continuation of such Event of Default or after acceleration, bear interest at a
rate per annum equal to the Base Rate plus the Applicable Base Rate Margin then
in effect plus 2%.
(d) Anything herein to the contrary notwithstanding, the obligations
of the Company to any Lender hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Lender would be contrary to the provisions of
any law applicable to such Lender limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Lender, and in such
event the Company shall pay such Lender interest at the highest rate permitted
by applicable law.
2.10 Fees. In addition to certain fees described in Section 3.8:
(a) Arrangement, Agency Fees. The Company shall pay to the Agents
for each Agent's own account and the Arranger's own account, the fees as
required by the letter agreement ("Fee Letter") between the Company and the
Arranger and Agents dated June 11, 1997, as amended.
(b) Commitment Fees. The Company shall pay to the Administrative
Agent for the account of each Lender a commitment fee equal to the applicable
Commitment Fee Rate times the average daily unused portion of such Lender's
Revolving Commitment, computed
42
<PAGE> 50
on a quarterly basis in arrears on the last Business Day of each calendar
quarter. For purposes of calculating utilization under this subsection, the
Commitments shall be deemed used to the extent of the Effective Amount of
Revolving Loans then outstanding, plus the Effective Amount of L/C Obligations
then outstanding. Such commitment fee shall accrue from the Closing Date to the
Revolving Termination Date and shall be due and payable quarterly in arrears on
the last Business Day of each fiscal quarter commencing on the first such date
after the date hereof through the Revolving Termination Date, with the final
payment to be made on the Revolving Termination Date; provided that, in
connection with any reduction or termination of Commitments under Section 2.5 or
Section 2.7, the accrued commitment fee calculated for the period ending on such
date shall also be paid on the date of such reduction or termination, with the
following quarterly payment being calculated on the basis of the period from
such reduction or termination date to such quarterly payment date. The
commitment fees provided in this subsection shall accrue at all times after the
above-mentioned commencement date, including at any time during which one or
more conditions in Article VI are not met.
2.11 Computation of Fees and Interest. (a) All computations of interest
for Base Rate Loans when the Base Rate is determined by BofA's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year). Interest
and fees shall accrue during each period during which interest or such fees are
computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Administrative
Agent shall be conclusive and binding on the Company and the Lenders in the
absence of manifest error.
2.12 Payments by the Company. (a) All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Administrative Agent for the account of the Lenders at the Administrative
Agent's Payment Office, and shall be made in dollars and in immediately
available funds, no later than 11:00 a.m. (San Francisco time) on the date
specified herein. The Administrative Agent will promptly distribute to each
Lender its Revolving Percentage of any portion of such payment related to the
Revolving Loans, its Term A Percentage of any portion of such payment relating
to the Term Loans, its Term B Percentage of any portion of such payment relating
to the Term B Loans, its Term C Percentage of any portion of such payment
relating to the Term C Loan and its Term D Percentage of any portion of such
payment relating to the Term D Loan. Any payment received by the Administrative
Agent later than 2:00 p.m. (San Francisco time) shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall
continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
43
<PAGE> 51
(c) Unless the Administrative Agent receives notice from the Company
prior to the date on which any payment is due to the Lenders that the Company
will not make such payment in full as and when required, the Administrative
Agent may assume that the Company has made such payment in full to the
Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Company has not made such
payment in full to the Administrative Agent, each Lender shall repay to the
Administrative Agent on demand such amount distributed to such Lender, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
2.13 Payments by the Lenders to the Administrative Agent. (a) Unless the
Administrative Agent receives notice from a Lender on or prior to the Closing
Date or, with respect to any Borrowing after the Closing Date, at least one
Business Day prior to the date of such Borrowing, that such Lender will not make
available as and when required hereunder to the Administrative Agent for the
account of the Company the amount of that Lender's Revolving Percentage, Term A
Percentage, Term B Percentage, Term C Percentage or Term D Percentage as
applicable, the Administrative Agent may assume that each Lender has made such
amount available to the Administrative Agent in immediately available funds on
the Borrowing Date and the Administrative Agent may (but shall not be so
required), in reliance upon such assumption, make available to the Company on
such date a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to the Administrative Agent in immediately
available funds and the Administrative Agent in such circumstances has made
available to the Company such amount, that Lender shall on the Business Day
following such Borrowing Date make such amount available to the Administrative
Agent, together with interest at the Federal Funds Rate for each day during such
period. A notice of the Administrative Agent submitted to any Lender with
respect to amounts owing under this subsection (a) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the
Administrative Agent shall constitute such Lender's Loan on the date of
Borrowing for all purposes of this Agreement. If such amount is not made
available to the Administrative Agent on the Business Day following the
Borrowing Date, the Administrative Agent will notify the Company of such failure
to fund and, upon demand by the Administrative Agent, the Company shall pay such
amount to the Administrative Agent for the Administrative Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable at the time
to the Loans comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any Borrowing Date
shall not relieve any other Lender of any obligation hereunder to make a Loan on
such Borrowing Date, but no Lender shall be responsible for the failure of any
other Lender to make the Loan to be made by such other Lender on any Borrowing
Date.
2.14 Sharing of Payments, etc. If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its ratable share of such payment
(determined in accordance with the provisions of this Agreement),
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such Lender shall immediately (a) notify the Administrative Agent of such fact,
and (b) purchase from the other Lenders such participations in the Loans made by
them as shall be necessary to cause such purchasing Lender to share the excess
payment pro rata with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from the purchasing
Lender, such purchase shall to that extent be rescinded and each other Lender
shall repay to the purchasing Lender the purchase price paid therefor, together
with an amount equal to such paying Lender's ratable share (according to the
proportion of (i) the amount of such paying Lender's required repayment to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Company agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 12.10 hereof) with respect to such participation as fully as if such
Lender were the direct creditor of the Company in the amount of such
participation. The Administrative Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Lenders following
any such purchases or repayments.
ARTICLE III
THE LETTERS OF CREDIT
3.1 The Letter of Credit Subfacility. (a) On the terms and conditions set
forth herein (i) the Issuing Lender agrees, (A) from time to time on any
Business Day during the period from the Closing Date to the Revolving
Termination Date to issue Letters of Credit for the account of the Company, and
to amend or renew Letters of Credit previously issued by it, in accordance with
subsections 3.2(c) and 3.2(d), and (B) to honor drafts under the Letters of
Credit; and (ii) the Lenders severally agree to participate in Letters of Credit
Issued for the account of the Company; provided, that the Issuing Lender shall
not be obligated to Issue, and no Lender shall be obligated to participate in,
any Letter of Credit if as of the date of Issuance of such Letter of Credit (the
"Issuance Date") (1) the Effective Amount of all L/C Obligations plus the
Effective Amount of all Revolving Loans exceeds the combined Revolving
Commitments, (2) the participation of any Lender in the Effective Amount of all
L/C Obligations plus the Effective Amount of the Revolving Loans of such Lender
exceeds such Lender's Revolving Commitment, or (3) the Effective Amount of L/C
Obligations exceeds the L/C Commitment. Within the foregoing limits, and subject
to the other terms and conditions hereof, the Company's ability to obtain
Letters of Credit shall be fully revolving, and, accordingly, the Company may,
during the foregoing period, obtain Letters of Credit to replace Letters of
Credit which have expired or which have been drawn upon and reimbursed.
(b) The Issuing Lender is under no obligation to Issue any Letter of
Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain
the Issuing Lender from
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Issuing such Letter of Credit, or any Requirement of Law applicable to the
Issuing Lender or any request or directive (whether or not having the
force of law) from any Governmental Authority with jurisdiction over the
Issuing Lender shall prohibit, or request that the Issuing Lender refrain
from, the Issuance of letters of credit generally or such Letter of Credit
in particular or shall impose upon the Issuing Lender with respect to such
Letter of Credit any restriction, reserve or capital requirement (for
which the Issuing Lender is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the Issuing Lender any
unreimbursed loss, cost or expense which was not applicable on the Closing
Date and which the Issuing Lender in good faith deems material to it;
(ii) the Issuing Lender has received written notice from any
Lender, the Administrative Agent or the Company, on or prior to the
Business Day prior to the requested date of Issuance of such Letter of
Credit, that one or more of the applicable conditions contained in Article
VI is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is (A)
more than 365 days after the date of Issuance, unless the Required Lenders
have approved such expiry date in writing, or (B) after the Revolving
Termination Date, unless all of the Lenders have approved such expiry date
in writing;
(iv) the expiry date of any requested Letter of Credit is
prior to the maturity date of any financial obligation to be supported by
the requested Letter of Credit;
(v) any requested Letter of Credit does not provide for
drafts, or is not otherwise in form and substance acceptable to the
Issuing Lender, or the Issuance of a Letter of Credit shall violate any
applicable policies of the Issuing Lender;
(vi) any standby Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other Person,
except the Letter of Credit dated January 25, 1996 for the benefit of
Provident Bank in the amount of $516,750;
(vii) such Letter of Credit is in a face amount less than
$25,000 or denominated in a currency other than Dollars; or
(viii) it is not a standby letter of credit.
3.2 Issuance, Amendment and Renewal of Letters of Credit. (a) Each Letter
of Credit shall be issued upon the irrevocable written request of the Company
received by the Issuing Lender (with a copy sent by the Company to the
Administrative Agent) at least four days (or such shorter time as the Issuing
Lender may agree in a particular instance in its sole discretion) prior to the
proposed date of issuance. Each such request for issuance of a Letter of Credit
shall be by facsimile, confirmed immediately in an original writing, in the form
of an L/C Application, and shall specify in form and detail satisfactory to the
Issuing Lender: (i) the proposed date of issuance of the Letter of Credit (which
shall be a Business Day); (ii) the face amount of the Letter of Credit; (iii)
the expiry date of the Letter of Credit; (iv) the
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name and address of the beneficiary thereof; (v) the documents to be presented
by the beneficiary of the Letter of Credit in case of any drawing thereunder;
(vi) the full text of any certificate to be presented by the beneficiary in case
of any drawing thereunder; and (vii) such other matters as the Issuing Lender
may require.
(b) At least two Business Days prior to the Issuance of any Letter
of Credit, the Issuing Lender will confirm with the Administrative Agent (by
telephone or in writing) that the Administrative Agent has received a copy of
the L/C Application or L/C Amendment Application from the Company and, if not,
the Issuing Lender will provide the Administrative Agent with a copy thereof.
Unless the Issuing Lender has received notice on or before the Business Day
immediately preceding the date the Issuing Lender is to issue a requested Letter
of Credit from the Administrative Agent (A) directing the Issuing Lender not to
issue such Letter of Credit because such issuance is not then permitted under
subsection 3.1(a) as a result of the limitations set forth in clauses (1)
through (3) thereof or subsection 3.1(b)(ii); or (B) that one or more conditions
specified in Article VI are not then satisfied; then, subject to the terms and
conditions hereof, the Issuing Lender shall, on the requested date, issue a
Letter of Credit for the account of the Company in accordance with the Issuing
Lender's usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, the Issuing Lender will, upon the
written request of the Company received by the Issuing Lender (with a copy sent
by the Company to the Administrative Agent) at least five days (or such shorter
time as the Issuing Lender may agree in a particular instance in its sole
discretion) prior to the proposed date of amendment, amend any Letter of Credit
issued by it. Each such request for amendment of a Letter of Credit shall be
made by facsimile, confirmed immediately in an original writing, made in the
form of an L/C Amendment Application and shall specify in form and detail
satisfactory to the Issuing Lender: (i) the Letter of Credit to be amended; (ii)
the proposed date of amendment of the Letter of Credit (which shall be a
Business Day); (iii) the nature of the proposed amendment; and (iv) such other
matters as the Issuing Lender may require. The Issuing Lender shall be under no
obligation to amend any Letter of Credit if: (A) the Issuing Lender would have
no obligation at such time to issue such Letter of Credit in its amended form
under the terms of this Agreement; or (B) the beneficiary of any such Letter of
Credit does not accept the proposed amendment to the Letter of Credit. No Lender
shall be obligated to participate in any amended Letter of Credit if such Lender
would have no obligation at such time to participate in such Letter of Credit in
its amended form under the terms of this Agreement if such Letter of Credit were
newly issued pursuant to Section 3.1. The Administrative Agent will promptly
notify the Lenders of the receipt by it of any L/C Application or L/C Amendment
Application.
(d) The Issuing Lender and the Lenders agree that, while a Letter of
Credit is outstanding and prior to the Revolving Termination Date, at the option
of the Company and upon the written request of the Company received by the
Issuing Lender (with a copy sent by the Company to the Administrative Agent) at
least five days (or such shorter time as the Issuing Lender may agree in a
particular instance in its sole discretion) prior to the proposed date of
notification of renewal, the Issuing Lender shall be entitled to authorize the
automatic renewal of any Letter of Credit issued by it. Each such request for
renewal of a
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Letter of Credit shall be made by facsimile, confirmed immediately in an
original writing, in the form of an L/C Amendment Application, and shall specify
in form and detail satisfactory to the Issuing Lender: (i) the Letter of Credit
to be renewed; (ii) the proposed date of notification of renewal of the Letter
of Credit (which shall be a Business Day); (iii) the revised expiry date of the
Letter of Credit; and (iv) such other matters as the Issuing Lender may require.
The Issuing Lender shall be under no obligation so to renew any Letter of Credit
if: (A) the Issuing Lender would have no obligation at such time to issue or
amend such Letter of Credit in its renewed form under the terms of this
Agreement; or (B) the beneficiary of any such Letter of Credit does not accept
the proposed renewal of the Letter of Credit. No Lender shall be obligated to
participate in any renewal of any Letter of Credit if such Lender would have no
obligation at such time to participate in such Letter of Credit in its renewed
form under the terms of this Agreement if such Letter of Credit were newly
issued pursuant to Section 3.1. If any outstanding Letter of Credit shall
provide that it shall be automatically renewed unless the beneficiary thereof
receives notice from the Issuing Lender that such Letter of Credit shall not be
renewed, and if at the time of renewal the Issuing Lender would be entitled to
authorize the automatic renewal of such Letter of Credit in accordance with this
subsection 3.2(d) upon the request of the Company but the Issuing Lender shall
not have received any L/C Amendment Application from the Company with respect to
such renewal or other written direction by the Company with respect thereto, the
Issuing Lender shall nonetheless be permitted to allow such Letter of Credit to
renew, and the Company and the Lenders hereby authorize such renewal, and,
accordingly, the Issuing Lender shall be deemed to have received an L/C
Amendment Application from the Company requesting such renewal.
(e) The Issuing Lender may, at its election (or as required by the
Administrative Agent at the direction of the Required Lenders), deliver any
notices of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of such Letter of Credit to be a date not later than the Revolving
Termination Date.
(f) This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Lender will also deliver to the Administrative
Agent, concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or amendment
to or renewal of a Letter of Credit.
3.3 Existing Letters of Credit; Risk Participations, Drawings and
Reimbursements. (a) On and after the Closing Date, the Existing Letters of
Credit shall be deemed for all purposes, including for purposes of the fees to
be collected pursuant to subsections 3.8(a) and 3.8(c), and reimbursement of
costs and expenses to the extent provided herein, Letters of Credit outstanding
under this Agreement and entitled to the benefits of this Agreement and the
other Loan Documents, and shall be governed by the applications and agreements
pertaining thereto and by this Agreement. Each Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the Issuing
Lender on the Closing
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Date a participation in each such Letter of Credit and each drawing thereunder
in an amount equal to the product of (i) such Lender's Revolving Percentage
times (ii) the maximum amount available to be drawn under such Letter of Credit
and the amount of such drawing, respectively. For purposes of subsection 2.1(e)
and subsection 2.10(b), the Existing Letters of Credit shall be deemed to
utilize pro rata the Commitment of each Lender.
(b) Immediately upon the Issuance of each Letter of Credit in
addition to those described in subsection 3.3(a), each Lender shall be deemed
to, and hereby irrevocably and unconditionally agrees to, purchase from the
Issuing Lender a participation in such Letter of Credit and each drawing
thereunder in an amount equal to the product of (i) the Revolving Percentage of
such Lender, times (ii) the maximum amount available to be drawn under such
Letter of Credit and the amount of such drawing, respectively. For purposes of
subsection 2.1(e), each Issuance of a Letter of Credit shall be deemed to
utilize the Commitment of each Lender by an amount equal to the amount of such
participation.
(c) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Lender will
promptly notify the Company. The Company shall reimburse the Issuing Lender
prior to 10:00 a.m. (San Francisco time), on each date that any amount is paid
by the Issuing Lender under any Letter of Credit (each such date, an "Honor
Date"), in an amount equal to the amount so paid by the Issuing Lender. In the
event the Company fails to reimburse the Issuing Lender for the full amount of
any drawing under any Letter of Credit by 10:00 a.m. (San Francisco time) on the
Honor Date, the Issuing Lender will promptly notify the Administrative Agent and
the Administrative Agent will promptly notify each Lender thereof, and the
Company shall be deemed to have requested that Revolving Loans consisting of
Base Rate Loans be made by the Lenders to be disbursed on the Honor Date under
such Letter of Credit, subject to the amount of the unutilized portion of the
Revolving Commitment and subject to the conditions set forth in Section 6.3. Any
notice given by the Issuing Lender or the Agent pursuant to this subsection
3.3(c) may be oral if immediately confirmed in writing (including by facsimile);
provided that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
(d) Each Lender shall upon any notice pursuant to subsection 3.3(e)
make available to the Administrative Agent for the account of the Issuing Lender
an amount in Dollars and in immediately available funds equal to its Revolving
Percentage of the amount of the drawing, whereupon the participating Lenders
shall (subject to subsection 3.3(e)) each be deemed to have made a Revolving
Loan consisting of a Base Rate Loan to the Company in that amount. If any Lender
so notified fails to make available to the Administrative Agent for the account
of the Issuing Lender the amount of such Lender's Revolving Percentage of the
amount of the drawing by no later than 12:00 noon (San Francisco time) on the
Honor Date, then interest shall accrue on such Lender's obligation to make such
payment, from the Honor Date to the date such Lender makes such payment, at a
rate per annum equal to the Federal Funds Rate in effect from time to time
during such period. The Administrative Agent will promptly give notice of the
occurrence of the Honor Date, but failure of the Administrative Agent to give
any such notice on the Honor Date or in sufficient time to enable any Lender to
effect such payment on such date shall not relieve such Lender from its
obligations under this Section 3.3.
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(e) With respect to any unreimbursed drawing that is not converted
into Revolving Loans consisting of Base Rate Loans to the Company in whole or in
part, because of the Company's failure to satisfy the conditions set forth in
Section 6.3 or for any other reason, the Company shall be deemed to have
incurred from the Issuing Lender an L/C Borrowing in the amount of such drawing,
which L/C Borrowing shall be due and payable on demand (together with interest)
and shall bear interest at a rate per annum equal to the Base Rate plus the
Applicable Base Rate Margin plus 2% per annum, and each Lender's payment to the
Issuing Lender pursuant to subsection 3.3(d) shall be deemed payment in respect
of its participation in such L/C Borrowing and shall constitute an L/C Advance
from such Lender in satisfaction of its participation obligation under this
Section 3.3.
(f) Each Lender's obligation in accordance with this Agreement to
make the Revolving Loans or L/C Advances, as contemplated by this Section 3.3,
as a result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to the Issuing Lender and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against the
Issuing Lender, the Company or any other Person for any reason whatsoever; (ii)
the occurrence or continuance of a Default, an Event of Default or a Material
Adverse Effect; or (iii) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing; provided, however, that each
Lender's obligation to make Revolving Loans under this Section 3.3 is subject to
the conditions set forth in Section 6.3.
3.4 Repayment of Participations. (a) Upon (and only upon) receipt by the
Agent for the account of the Issuing Lender of immediately available funds from
the Company (i) in reimbursement of any payment made by the Issuing Lender under
the Letter of Credit with respect to which any Lender has paid the
Administrative Agent for the account of the Issuing Lender for such Lender's
participation in the Letter of Credit pursuant to Section 3.3 or (ii) in payment
of interest thereon, the Administrative Agent will pay to each Lender, in the
same funds as those received by the Administrative Agent for the account of the
Issuing Lender, the amount of such Lender's Revolving Percentage of such funds,
and the Issuing Lender shall receive the amount of the Revolving Percentage of
such funds of any Lender that did not so pay the Agent for the account of the
Issuing Lender.
(b) If the Administrative Agent or the Issuing Lender is required at
any time to return to the Company, or to a trustee, receiver, liquidator,
custodian, or any official in any Insolvency Proceeding, any portion of the
payments made by the Company to the Administrative Agent for the account of the
Issuing Lender pursuant to subsection 3.4(a) in reimbursement of a payment made
under the Letter of Credit or interest or fee thereon, each Lender shall, on
demand of the Administrative Agent, forthwith return to the Agent or the Issuing
Lender the amount of its Revolving Percentage of any amounts so returned by the
Administrative Agent or the Issuing Lender plus interest thereon from the date
such demand is made to the date such amounts are returned by such Lender to the
Administrative Agent or the Issuing Lender, at a rate per annum equal to the
Federal Funds Rate in effect from time to time.
3.5 Role of the Issuing Lender. (a) Each Lender and the Company agree
that, in paying any drawing under a Letter of Credit, the Issuing Lender shall
not have any
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responsibility to obtain any document (other than any sight draft and
certificates expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of the Issuing Lender shall be liable
to any Lender for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Lenders (including the Required Lenders, as
applicable); (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Company hereby assumes all risks of the acts or omissions of
any beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
preclude the Company's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of the Issuing Lender, shall be liable or responsible for any of the
matters described in clauses (i) through (vii) of Section 3.6; provided,
however, anything in such clauses to the contrary notwithstanding, that the
Company may have a claim against the Issuing Lender, and the Issuing Lender may
be liable to the Company, to the extent, but only to the extent, of any direct,
as opposed to consequential or exemplary, damages suffered by the Company which
the Company proves were caused by the Issuing Lender's willful misconduct or
gross negligence or the Issuing Lender's willful failure to pay under any Letter
of Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing: (i) the Issuing
Lender may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) the Issuing Lender shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.
3.6 Obligations Absolute. The obligations of the Company under this
Agreement and any L/C-Related Document to reimburse the Issuing Lender for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing
under a Letter of Credit converted into Revolving Loans, shall be unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all circumstances,
including the following:
(i) any lack of validity or enforceability of this Agreement
or any L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Company in
respect of any Letter of Credit or any other amendment or waiver of or any
consent to departure from all or any of the L/C-Related Documents;
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(iii) the existence of any claim, set-off, defense or other
right that the Company may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Lender or
any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C-Related Documents or any
unrelated transaction;
(iv) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under any Letter of Credit;
(v) any payment by the Issuing Lender under any Letter of
Credit against presentation of a draft or certificate that does not
strictly comply with the terms of any Letter of Credit; or any payment
made by the Issuing Lender under any Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee
for the benefit of creditors, liquidator, receiver or other representative
of or successor to any beneficiary or any transferee of any Letter of
Credit, including any arising in connection with any Insolvency
Proceeding;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any other guarantee, for all or any of the obligations of
the Company in respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including any other circumstance
that might otherwise constitute a defense available to, or a discharge of,
the Company or a guarantor.
3.7 Cash Collateral Pledge. Upon (i) the request of the Agent, (A) if the
Issuing Lender has honored any full or partial drawing request on any Letter of
Credit and such drawing has resulted in an L/C Borrowing hereunder, or (B) if,
as of the Revolving Termination Date, any Letters of Credit may for any reason
remain outstanding and partially or wholly undrawn, or (ii) the occurrence of
the circumstances described in subsection 2.7(a) requiring the Company to Cash
Collateralize Letters of Credit, then, the Company shall immediately Cash
Collateralize the Obligations in an amount equal to the L/C Obligations.
3.8 Letter of Credit Fees. (a) The Company shall pay to the Administrative
Agent for the account of each of the Lenders a letter of credit fee with respect
to the Letters of Credit equal to L/C Fee Rate of the average daily maximum
amount available to be drawn of the outstanding Letters of Credit, computed on a
quarterly basis in arrears on the last Business Day of each calendar quarter
based upon Letters of Credit outstanding for that quarter as calculated by the
Administrative Agent. Such letter of credit fees shall be due and payable
quarterly in arrears on the last Business Day of each calendar quarter during
which Letters of Credit are outstanding, commencing on the first such quarterly
date to occur after the Closing Date, through the Revolving Termination Date (or
such later date upon which the
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outstanding Letters of Credit shall expire), with the final payment to be made
on the Revolving Termination Date (or such later expiration date).
(b) The Company shall pay to the Issuing Lender a letter of credit
fronting fee for each Letter of Credit Issued after the Closing Date by the
Issuing Lender equal to the rate set forth in the Fee Letter on the face amount
(or increased face amount, as the case may be) of such Letter of Credit. Such
Letter of Credit fronting fee shall be due and payable on each date of Issuance
of a Letter of Credit.
(c) The Company shall pay to the Issuing Lender from time to time on
demand the normal issuance, presentation, amendment and other processing fees,
and other standard costs and charges, of the Issuing Lender relating to letters
of credit as from time to time in effect.
3.9 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce
("UCP") most recently at the time of issuance of any Letter of Credit shall
(unless otherwise expressly provided in the Letters of Credit) apply to the
Letters of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 Taxes. (a) Any and all payments by the Company to each Lender or the
Administrative Agent under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes. In
addition, the Company shall pay all Other Taxes.
(b) The Company agrees to indemnify and hold harmless each Lender
and the Administrative Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by the Lender or the Administrative Agent and
any liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. Payment under this indemnification
shall be made within 30 days after the date the Lender or the Administrative
Agent makes written demand therefor.
(c) If the Company shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section) such Lender or the Administrative Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made;
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(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) the Company shall also pay to each Lender or the
Administrative Agent for the account of such Lender, at the time interest
is paid, all additional amounts which the respective Lender specifies as
necessary to preserve the after-tax yield the Lender would have received
if such Taxes or Other Taxes had not been imposed.
The Company shall not, however, be required to pay any amounts pursuant to
clause (i) of the preceding sentence to any Lender or the Issuing Lender, as the
case may be, organized under the laws of a jurisdiction outside of the United
States, unless such Lender or the Issuing Lender, as the case may be, has
provided to the Company, within sixty (60) days after the receipt by such Lender
or the Issuing Lender of a written request therefor, either (x) a facially
complete Internal Revenue Service Form 4224, Form 1001 or Form W-8 or other
applicable form, certificate or document prescribed by the Internal Revenue
Service of the United States certifying as to such Lender's or the Issuing
Lender's entitlement to an exemption from, or reduction of, United States
withholding tax on payments to be made hereunder or under any other Loan
Document or in respect of any Letter of Credit or tax on payments to made
hereunder or thereunder or (y) a letter stating that such Lender or the Issuing
Lender is unable lawfully to provide a properly completed and executed Form 4224
or Form 1001.
(d) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish the Administrative Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(e) If the Company is required to pay additional amounts to any
Lender or the Administrative Agent pursuant to subsection (c) of this Section,
then such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so as
to eliminate any such additional payment by the Company which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
4.2 Illegality. (a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Lender to the Company
through the Administrative Agent, any obligation of that Lender to make Offshore
Rate Loans shall be suspended until the Lender notifies the Administrative Agent
and the Company that the circumstances giving rise to such determination no
longer exist.
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(b) If a Lender determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of such fact
and demand from such Lender (with a copy to the Administrative Agent), prepay in
full such Offshore Rate Loans of that Lender then outstanding, together with
interest accrued thereon and amounts required under Section 4.4, either on the
last day of the Interest Period thereof, if the Lender may lawfully continue to
maintain such Offshore Rate Loans to such day, or immediately, if the Lender may
not lawfully continue to maintain such Offshore Rate Loan. If the Company is
required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Lender, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Lender to make or maintain Offshore
Rate Loans has been so terminated or suspended, the Company may elect, by giving
notice to the Lender through the Administrative Agent that all Loans which would
otherwise be made by the Lender as Offshore Rate Loans shall be instead Base
Rate Loans.
(d) Before giving any notice to the Administrative Agent under this
Section, the affected Lender shall designate a different Lending Office with
respect to its Offshore Rate Loans if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of the
Lender, be illegal or otherwise disadvantageous to the Lender.
4.3 Increased Costs and Reduction of Return. (a) If any Lender determines
that, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) the compliance by that Lender
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Lender of agreeing to make or making, funding or maintaining
any Offshore Rate Loan or participating in Letters of Credit, or, in the case of
the Issuing Lender, any increase in the cost to the Issuing Lender of agreeing
to issue, issuing or maintaining any Letter of Credit or of agreeing to make or
making, funding or maintaining any unpaid drawing under any Letter of Credit,
then the Company shall be liable for, and shall from time to time, upon demand
(with a copy of such demand to be sent to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender, additional amounts as are
sufficient to compensate such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Lender (or its Lending Office) or any corporation controlling the Lender
with any Capital Adequacy Regulation, affects or would affect the amount of
capital required or expected to be maintained by the Lender or any corporation
controlling the Lender and (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy and such Lender's
desired return on capital) that the amount of such capital is increased as a
consequence of its Commitments, loans, credits or obligations under this
Agreement, then, upon demand of such Lender to the Company through the
Administrative Agent, the Company shall pay to the Lender, from time
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to time as specified by the Lender, additional amounts sufficient to compensate
the Lender (or such corporation) for such increase.
4.4 Funding Losses. The Company shall reimburse each Lender and hold each
Lender harmless from any loss or expense which the Lender may sustain or incur
as a consequence of:
(a) the failure of the Company to make on a timely basis any payment
of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert a Loan
after the Company has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment in accordance
with any notice delivered under Section 2.6;
(d) the prepayment (including pursuant to Section 2.7) or other
payment (including after acceleration thereof) of an Offshore Rate Loan on a day
that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.4 of any Offshore Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Lenders under this Section and
under subsection 4.3(a), each Offshore Rate Loan made by a Lender (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the LIBOR used in determining the Offshore Rate
for such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.
4.5 Inability to Determine Rates. If the Administrative Agent determines
that for any reason adequate and reasonable means do not exist for determining
the Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate applicable pursuant to subsection
2.9(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to the Lenders of
funding such Loan the Administrative Agent will promptly so notify the Company
and each Lender. Thereafter, the obligation of the Lenders to make or maintain
Offshore Rate Loans, hereunder shall be suspended until the Administrative Agent
revokes such notice in writing. Upon receipt of such notice, the Company may
revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted by it. If the Company does not revoke such Notice, the Lenders shall
make, convert or continue the Loans, as proposed by the Company, in the amount
specified in the applicable notice submitted by the Company, but
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such Loans shall be made, converted or continued as Base Rate Loans instead of
Offshore Rate Loans.
4.6 Substitution of Affected Lender. At any time any Lender is an Affected
Lender, the Company may replace such Affected Lender as a party to this
Agreement with one or more other bank(s) or financial institution(s)
satisfactory to the Agent (and upon notice from the Company such Affected Lender
shall assign pursuant to an Assignment and Acceptance Agreement, and without
recourse or warranty, its Commitments, if any, its Loans, its Note, its
participation in Letters of Credit, if any, and all of its other rights and
obligations hereunder to such replacement bank(s) or other financial
institution(s) for a purchase price equal to the sum of the principal amount of
the Loans so assigned, all accrued and unpaid interest thereon, its ratable
share of all accrued and unpaid non-use fees and Letter of Credit fees, any
amounts payable under Section 4.4 as a result of such Lender receiving payment
of any Eurodollar Loan prior to the end of an Interest Period therefor and all
other obligations owed to such Affected Lender hereunder).
4.7 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article IV shall deliver to the Company (with a copy to
the Administrative Agent) a certificate setting forth in reasonable detail the
amount payable to the Lender hereunder and such certificate shall be conclusive
and binding on the Company in the absence of manifest error.
4.8 Survival. The agreements and obligations of the Company in this
Article IV shall survive the payment of all other Obligations.
ARTICLE V
COLLATERAL AND GUARANTY
5.1 Collateral--Personal Property. The Obligations shall be secured by a
first lien and security interest, subject only to Permitted Liens, in all
personal property of the Company and the Guarantors (other than NEHC) to the
Security Agreement, covering the Company's and such Guarantor's presently
existing and after-acquired Inventory, Accounts Receivable, General Intangibles,
Equipment, and the other collateral more particularly described therein and in
all stock owned by the Company and its Subsidiaries pursuant to the Pledge
Agreement and the Subsidiary Pledge Agreement; provided, however, that (i) the
Company will pledge not more than 65% of the stock owned in foreign Subsidiaries
and (ii) the Obligations shall not be secured by Receivables Program Assets
transferred to a Receivables Subsidiary with respect to a Qualified Receivables
Transaction.
5.2 Mortgages. The Obligations shall be secured by a first lien and
security interest, subject to Permitted Liens, in all owned real property of the
Company and its Subsidiaries (except foreign Subsidiaries) pursuant to the
Mortgages.
5.3 Guaranty. The Obligations shall be guaranteed by the Guarantors
pursuant to the Guaranty and the NEHC Guaranty. The Company shall cause each
Subsidiary hereafter
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acquired (other than a foreign Subsidiary) to become a Guarantor and to become a
party to the Security Agreement and, if it owns stock, the Subsidiary Pledge
Agreement.
5.4 Company Stock. The Obligations shall be secured by a first lien and
security interest in the stock of the Company pursuant to the NEHC Pledge
Agreement.
5.5 Intercreditor Agreement. The Lenders and other parties hereto hereby
authorize and direct the Administrative Agent to enter into the Intercreditor
Agreement. All of the parties to this Agreement hereby agree to be bound by the
Intercreditor Agreement as if they were parties thereto. No Lender or other
party hereto shall assign any of its rights or obligations under this Agreement
to any other Person unless such other Person shall have agreed in writing to be
bound by the terms of the Intercreditor Agreement as if such Person were a party
thereto.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions of Restatement. The amendment and restatement of the
Existing Credit Agreement and the obligation of each Lender to make its initial
Credit Extension hereunder is subject to the condition that the Administrative
Agent shall have received on or before the date of the initial Credit Extension
all of the following, in form and substance satisfactory to the Administrative
Agent and each Lender, and in sufficient copies for each Lender:
(a) Credit Agreement and Notes. This Agreement and the Notes
executed by each party thereto;
(b) Resolutions: Incumbency.
(i) Copies of the resolutions of the board of directors of the
Company and each Subsidiary that may become party to a Loan Document
authorizing the transactions contemplated hereby, certified as of the
Closing Date by the Secretary or an Assistant Secretary of such Person; and
(ii) A certificate of the Secretary or Assistant Secretary of
the Company, and each Subsidiary that may become party to a Loan Document
certifying the names and true signatures of the officers of the Company or
such Subsidiary authorized to execute, deliver and perform, as applicable,
this Agreement, and all other Loan Documents to be delivered by it
hereunder;
(c) Organization Documents. Each of the articles or certificate of
incorporation and the bylaws of the Company and each Subsidiary party to any
Loan Document as in effect on the Closing Date, certified by the Secretary or
Assistant Secretary of the Company or such Subsidiary as of the Closing Date.
(d) Legal Opinions.
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(i) Opinions of Wachtell, Lipton, Rosen & Katz and Cassem,
Tierney, Adams, Gotch and Douglas, counsel to the Company and its
Subsidiaries and addressed to the Agents and the Lenders, substantially in
the form of Exhibits E and F;
(ii) To the extent required by the Administrative Agent,
opinions of local counsel to the Company and its Subsidiaries with respect
to the Mortgages in form satisfactory to the Administrative Agent.
(e) Certificate. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article
VII are true and correct on and as of such date, as though made on and
as of such date;
(ii) no Default or Event of Default exists or would result
from the Credit Extension; and
(iii) there has occurred since the date of the applicable
fiscal year end financial statement referred to in Section 7.11 no event or
circumstance that has resulted or could reasonably be expected to result in
a Material Adverse Effect.
(f) Collateral Documents. The Collateral Documents (excluding
Mortgages of leased property), executed by the Company or the applicable
Guarantor, in appropriate form for recording, where necessary, together with:
(i) copies of all UCC-1 and UCC-3 statements filed, registered
or recorded to perfect the security interests of the Administrative Agent
for the benefit of the Lenders, together with other evidence satisfactory
to the Administrative Agent that there has been filed, registered or
recorded all financing statements and other filings, registrations and
recordings necessary and advisable to perfect the Liens of the
Administrative Agent for the benefit of the Lenders in accordance with
applicable law;
(ii) written advice relating to such Liens and judgment
searches as the Administrative Agent shall have requested, and such
termination statements or other documents as may be necessary to confirm
that the Collateral is subject to no other Liens in favor of any Persons
(other than Permitted Liens);
(iii) all certificates and instruments representing the pledged
Collateral, together with stock transfer powers executed in blank with
signatures guaranteed as the Administrative Agent or the Lenders may
specify;
(iv) evidence that all other actions necessary or, in the
opinion of the Administrative Agent or the Lenders, desirable to perfect
and protect the first priority security interest created by the Collateral
Documents have been taken;
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(v) funds sufficient to pay any filing or recording tax or
fee in connection with any and all UCC-1 and UCC-3 financing statements
and the Mortgages;
(vi) with respect to the owned Mortgaged Property, an A.L.T.A.
1992 (or other form acceptable to the Administrative Agent and the Lenders)
mortgagee policy of title insurance or a binder issued by a title insurance
company satisfactory to the Administrative Agent and the Lenders insuring
(or undertaking to insure, in the case of a binder) that the Mortgage
creates and constitutes a valid first Lien against the Mortgaged Property
in favor of the Administrative Agent, subject only to exceptions acceptable
to the Administrative Agent and the Lenders, such endorsements and
affirmative insurance as the Administrative Agent or any Lender may
reasonably request together with copies of all title exception documents;
(vii) evidence that the Administrative Agent has been named as
loss payee under all policies of casualty insurance, and as additional
insured under all policies of liability insurance, required by the
Mortgage;
(viii) current ALTA surveys and surveyor's certification as to
all owned real property in respect of which there is delivered a Mortgage,
or as may be reasonably required by the Administrative Agent, each in form
and substance satisfactory to the Administrative and the Lenders;
(ix) proof of payment of all title insurance premiums,
documentary stamp or intangible taxes, recording fees and mortgage taxes
payable in connection with the recording of any Mortgage or the issuance of
the title insurance policies (whether due on the Closing Date or in the
future) including sums due in connection with any future advances;
(x) evidence that all other actions necessary or, in the
opinion of the Administrative Agent or the Lenders, desirable to perfect
and protect the first priority Lien created by the Collateral Documents,
and to enhance the Administrative Agent's ability to preserve and protect
its interests in and access to the Collateral, have been taken;
(g) Insurance Policies. Standard lenders' payable endorsements with
respect to the insurance policies or other instruments or documents evidencing
insurance coverage on the properties of the Company in accordance with Section
8.6;
(h) Environmental Review. Copies of all pertinent environmental due
diligence of Pilko & Associates; and
(i) Other Documents. Such other approvals, opinions, documents or
materials as the Administrative Agent or any Lender may reasonably request.
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6.2 Other Conditions to Effectiveness of Restatement. The amendment and
restatement of the Existing Credit Agreement shall be subject, in addition to
the conditions set forth in Section 6.1, to the following conditions:
(a) PFS Acquisition. The PFS Acquisition shall have occurred
pursuant to the terms of the PFS Acquisition Agreement without material
amendment or waiver and NEHC shall have assigned its rights under the PFS
Acquisition Agreement to the Company.
(b) Equity Contribution. At least $130,000,000 in proceeds shall be
contributed to the Company pursuant to a common equity contribution.
(c) Subordinated Debt. The Company shall have available to it not
less than $350,000,000 or more than $500,000,000 less underwriting spreads and
other associated fees in proceeds from the Bridge Loan on terms and conditions
satisfactory to the Administrative Agent or the Senior Subordinated Notes,
substantially on the terms described in the Preliminary Offering Memorandum
dated June 23, 1997.
(d) Accounts Receivables Securitization. Concurrently with the
initial Loan, the Company shall have received not less than $200,000,000 in
proceeds from the Receivables Bridge Facility or another Qualified Receivables
Transaction.
(e) Post. The stock of Post shall have been contributed to AmeriServ
Food Company.
(f) Existing Preferred Stock. The existing preferred stock of the
Company shall have been converted to common stock.
(g) Indebtedness. All indebtedness for borrowed money (other than
capitalized leases and industrial revenue bonds not in excess of $350,000) of
the Company, PFS and the Subsidiaries of the Company shall have been paid in
full and all related Liens shall have been released.
(h) Governmental Approvals. All governmental, shareholder and third
party consents, including Hart-Scott-Rodino clearance, and approvals necessary
in connection with the PFS Acquisition and the Post Contribution, the financings
and equity issuances contemplated hereby and the continued operations of the
business of the Company and its Subsidiaries shall have been obtained and be in
full force and effect, and all applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority which
would restrain, prevent or otherwise impose adverse conditions upon the PFS
Acquisition, the Post Contribution or the financing thereof, in each case except
for such governmental and third party approvals which the failure to obtain
would not, individually or in the aggregate, have a Material Adverse Effect.
(i) Certificate. Company shall have delivered a Certificate of its
Chief Financial Officer to the effect that all the conditions set forth in
Sections 6.2(a) - (h) above shall have been accomplished.
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(j) Purchase by Lenders. The Lenders shall have purchased and sold
appropriate amounts of the outstanding Loans under the Existing Credit
Agreement, to cause each Lender to hold its Term A Percentage, Term B
Percentage, Term C Percentage, Term D Percentage and Revolving Percentage of the
appropriate Loans, after giving effect to this amendment and restatement. Each
Lender, which shall have its Total Percentage reduced to zero, shall have no
further obligations under the Existing Credit Agreement or this Agreement. If
any Lender shall suffer a loss as a result of the effectiveness of such purchase
or sale being during an Interest Period, the Company shall reimburse such Lender
the amount of such loss. Each such Lender shall furnish the Company with a
certificate setting forth the basis for determining the amount to be paid to it
under this Section.
(k) Revolving Loans. After giving effect to the PFS Acquisition, no
Revolving Loans will be outstanding.
6.3 Conditions to All Credit Extensions. The obligation of each Lender to
make any Revolving Loan to be made by it (including its initial Revolving Loan)
or to continue or convert any Revolving Loan under Section 2.4 and the
obligation of the Issuing Lender to Issue any Letter of Credit (including the
initial Letter of Credit) is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date, Conversion/Continuation
Date or Issuance Date:
(a) Notice, Application. The Administrative Agent shall have
received (with, in the case of the initial Revolving Loan only, a copy for each
Lender) a Notice of Borrowing or a Notice of Conversion/Continuation, as
applicable, or in the case of any Issuance of any Letter of Credit, the Issuing
Lender and the Administrative Agent shall have received an L/C Application or
L/C Amendment Application, as required under Section 3.2;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article VII shall be true and correct on and
as of such Borrowing Date or Conversion/Continuation Date with the same effect
as if made on and as of such Borrowing Date or Conversion/Continuation Date
(except to the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of such earlier
date); and
(c) No Existing Default. No Default or Event of Default shall exist
or shall result from such Borrowing or continuation or conversion.
Each Notice of Borrowing, L/C Application or L/C Amendment Application submitted
by the Company hereunder shall constitute a representation and warranty by the
Company hereunder, as of the date of each such notice and as of each Borrowing
Date, or Issuance Date, as applicable, that the conditions in this Section 6.3
are satisfied.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Agent and each Lender that:
7.1 Corporate Existence and Power. The Company and each of its
Subsidiaries:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation and is licensed and
in good standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such
qualification or license; and
(d) is in compliance with all Requirements of Law; except, in each
case referred to in clause (c) or clause (d), to the extent that the failure to
do so could not reasonably be expected to have a Material Adverse Effect.
7.2 Corporate Authorization; No Contravention. The execution, delivery and
performance by the Company and its Subsidiaries of this Agreement and each other
Loan Document to which such Person is party, have been duly authorized by all
necessary corporate action, and do not and will not:
(a) contravene the terms of any of that Person's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its property is
subject; or
(c) violate any Requirement of Law.
7.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any of its Subsidiaries of this Agreement or any other Loan Document.
7.4 Binding Effect. This Agreement and each other Loan Document to which
the Company or any of its Subsidiaries is a party constitute the legal, valid
and binding obligations of the Company and any of its Subsidiaries to the extent
it is a party thereto, enforceable against such Person in accordance with their
respective terms, except as
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enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
7.5 Litigation. Except as specifically disclosed in Schedule 7.5, there
are no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Company, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Company, or its
Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) would reasonably be expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
7.6 No Default. No Default or Event of Default exists or would result from
the incurring of any Obligations by the Company. As of the Closing Date, neither
the Company nor any Subsidiary is in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults, could reasonably be expected to have a Material Adverse Effect,
or that would, if such default had occurred after the Closing Date, create an
Event of Default under subsection 10.1(e).
7.7 ERISA Compliance. Except as specifically disclosed in Schedule 7.7:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best knowledge of the
Company, nothing has occurred which would cause the loss of such qualification.
The Company and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of the Company,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Company nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of
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ERISA with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither the Company nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with respect
to a Multiemployer Plan; and (v) neither the Company nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) or
ERISA.
7.8 Use of Proceeds: Margin Regulations. The proceeds of the Loans are to
be used solely for the purposes set forth in and permitted by Section 8.12 and
Section 9.7. Neither the Company nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
7.9 Title to Properties. The Company and each Subsidiary have good record
and marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Company and its Subsidiaries is subject to no Liens, other than
Permitted Liens.
7.10 Taxes. The Company and its Subsidiaries have filed all federal and
other material tax returns and reports required to be filed, and have paid all
federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Company or
any Subsidiary that would, if made, have a Material Adverse Effect.
7.11 Financial Condition. (a) (i) The audited consolidated financial
statements of the Company and its Subsidiaries dated December 28, 1996, and the
related consolidated statements of income or operations, shareholders' equity
and cash flows for the fiscal year ended on that date and (ii) the unaudited
consolidated financial statements of the Company and its Subsidiaries dated
March 29, 1997, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for the fiscal quarter ended on that date:
(A) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, subject in the case of the March 29, 1997 statements to ordinary,
good faith year end audit adjustments;
(B) fairly present the financial condition of the Company and
its Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(C) except as specifically disclosed in Schedule 7.11, show all
material indebtedness and other liabilities, direct or contingent, of the
Company and its
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consolidated Subsidiaries as of the date thereof, including liabilities for
taxes, material commitments and Contingent Obligations.
(b) (i) The audited financial statements of Post dated December 28,
1996, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for the fiscal year ended on that date and
(ii) the unaudited financial statements of Post dated March 29, 1997, and the
related consolidated statements of income or operations, shareholders' equity
and cash flows for the fiscal quarter ended on that date:
(A) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, subject in the case of the March 29, 1997 statements to ordinary,
good faith year end audit adjustments;
(B) fairly present the financial condition of Post as of the
date thereof and results of operations for the period covered thereby; and
(C) except as specifically disclosed in Schedule 7.11, show all
material indebtedness and other liabilities, direct or contingent, of Post
as of the date thereof, including liabilities for taxes, material
commitments and Contingent Obligations.
(c) The audited consolidated financial statements of PFS dated
December 28, 1994, December 27, 1995, and December 25, 1996, and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for the fiscal years ended on those dates:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein;
(ii) fairly present the financial condition of PFS as of
the date thereof and results of operations for the period covered
thereby; and
(iii) except as specifically disclosed in Schedule 7.11, show
all material indebtedness and other liabilities, direct or contingent, of
PFS as of the date thereof, including liabilities for taxes, material
commitments and Contingent Obligations.
(d) The pro forma consolidated closing balance sheet of the Company
and its Subsidiaries dated as of March 29, 1997:
(i) after giving effect to the PFS Acquisition, the Post
Contribution, the repayment of indebtedness described in Section 6.2(g),
the financings and equity contributions described in Section 6.2 and any
transaction adjustments as provided in the PFS Acquisition Agreement or
related to the PFS Acquisition, fairly presents the financial condition of
the Company and its Subsidiaries as of the date thereof; and
(ii) except as specifically disclosed in Schedule 7.11,
after giving effect to the PFS Acquisition, to the Post Contribution, the
repayment of indebtedness
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described in Section 6.2(g), the financing and equity contributions
described in Section 6.2 and any transaction adjustments as provided in the
PFS Acquisition Agreement or related to the PFS Acquisition shows all
material indebtedness and other liabilities, direct or contingent, of the
Company and its consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent Obligations.
(e) The Initial Financial Projections delivered to the Agents and
the Lenders prior to the execution of this Agreement were prepared by the
Company in good faith and based upon historical financial information and
assumptions the Company deems reasonable and appropriate in light of current
circumstances.
(f) Since the dates of the financial statements referred to in
subsections (a)-(d) above, there has been no Material Adverse Effect.
7.12 Environmental Matters. The Company conducts in the ordinary course of
business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Company has reasonably concluded that, except as specifically
disclosed in Schedule 7.12, such Environmental Laws and Environmental Claims
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
7.13 Regulated Entities. None of the Company, any Person controlling the
Company, or any Subsidiary, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. The Company is not subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other federal
or state statute or regulation limiting its ability to incur Indebtedness.
7.14 No Burdensome Restrictions. Neither the Company nor any Subsidiary is
a party to or bound by any Contractual Obligation, or subject to any restriction
in any Organization Document, or any Requirement of Law, which, in the absence
of a default thereunder, could reasonably be expected to have a Material Adverse
Effect.
7.15 Copyrights, Patents, Trademarks and Licenses. etc. The Company or its
Subsidiaries own or are licensed or otherwise have the right to use all of the
patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Company, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Company or any
Subsidiary infringes upon any rights held by any other Person. Except as
specifically disclosed in Schedule 7.15, no claim or litigation regarding any of
the foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Company, proposed, which, in either case,
could reasonably be expected to have a Material Adverse Effect.
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7.16 Subsidiaries. As of the Closing Date, the Company has no Subsidiaries
other than those specifically disclosed in part (a) of Schedule 7.16 hereto and
has no equity investments in any other corporation or entity other than those
specifically disclosed in part (b) of Schedule 7.16.
7.17 Insurance. Except as specifically disclosed in Schedule 7.17, the
properties of the Company and its Subsidiaries are insured with insurance
companies not Affiliates of the Company rated at least "A" by A.M. Best Company,
in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Company or such Subsidiary operates.
7.18 Full Disclosure. None of the representations or warranties made by
the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Lenders prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
7.19 PFS Acquisition Agreement. The representations and warranties
contained in the PFS Acquisition Agreement (a true and correct copy of which PFS
Acquisition Agreement, together with all schedules and exhibits thereto, has
been delivered to the Lenders), are true and correct in all respects except
where the failure to be so true and correct, upon consummation of the PFS
Acquisition, could not reasonably be expected to have a Material Adverse Effect.
As of the date of the PFS Acquisition, (i) the Company shall have taken all
necessary corporate actions to authorize the PFS Acquisition; and (ii) no
representation made by the Company in any notices or filings with the
shareholders of the Company, with the SEC or any applicable state securities
commissions or with any governmental authority, including, without limitation,
any representations concerning any agreement with, or financing provided by, the
Lenders, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered. Notwithstanding the
foregoing, all representations made in this Section 7.19 with respect to
representations of the Seller, shall be made only to the best of the Company's
knowledge.
ARTICLE VIII
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Required Lenders waive compliance in
writing:
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8.1 Financial Statements. The Company shall deliver to the Administrative
Agent, in form and detail satisfactory to the Administrative Agent and the
Required Lenders, with sufficient copies for each Lender:
(a) as soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Company, (i) consolidated balance sheet of the Company and its
Subsidiaries as of the end of such fiscal quarter, (ii) consolidated
statement of earnings and cash flow of the Company and its Subsidiaries
for such fiscal quarter and for the period commencing at the end of the
previous fiscal year and ending with the end of such fiscal quarter
setting forth in each case a comparison of the results with the
corresponding fiscal quarter of the previous year, certified by the chief
financial officer of the Company and (iii) to the extent prepared by the
Company, summary financial reports by division;
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Company, a copy of the annual audit report
for such fiscal year for the Company and its Subsidiaries, including
therein consolidated balance sheet of the Company and its Subsidiaries as
of the end of such fiscal year and consolidated statement of earnings and
cash flow of the Company and its Subsidiaries for such fiscal year,
together with, in comparative form, the figures for the previous fiscal
year, certified (without any Impermissible Qualification) in a manner
reasonably acceptable to the Administrative Agent and the Required Lenders
by independent public accountants reasonably acceptable to the
Administrative Agent and the Required Lenders (the "Independent Auditor");
and
(c) as soon as available and in any event by January 31 of each
year, for the three year period commencing on the first day of that Fiscal
Year, the following pro forma projected financial information, each
certified as true and correct by the president or chief financial officer
of the Company to the best of such officer's knowledge: (i) the Company's
pro forma balance sheets prepared in accordance with GAAP for the next
three fiscal years, and (ii) projected pro forma statements of earnings
and cash flows and other operating information for the Company which
information presents fairly, on a pro forma basis, the balance sheets of
the Company and the Company's best good faith estimate and projections of
the Company's financial position and results of operations as of the dates
and for the periods indicated.
8.2 Certificates; Other Information. The Company shall furnish to the
Administrative Agent, with sufficient copies for each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 8.1(b), a certificate of the Independent Auditor
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate or that the computation of compliance with the financial ratios and
restrictions contained in Sections 9.10 through 9.15, 9.18 and 9.21 provided to
the Lenders and the Administrative Agent does not fairly present the information
set forth therein;
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(b) concurrently with the delivery of the financial statements
referred to in subsections 8.1(a) and (b), a Compliance Certificate executed by
a Responsible Officer and, concurrently with respect to the financial statements
referred to in subsection 8.1(b), a certificate executed by a Responsible
Officer setting forth the calculation of Excess Cash Flow for the fiscal year
then ended;
(c) annually, a schedule of insurance carried by the Company and its
Subsidiaries including the amounts of such insurance, deductibles and risks
covered;.
(d) promptly, (i) if the Company has capital stock that is publicly
traded, copies of all financial statements and reports that the Company sends to
its shareholders, and (ii) copies of all financial statements and regular,
periodical or special reports (including Forms 10K, 10Q and 8K) that the Company
or any Subsidiary may file with the SEC; and
(e) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the
Administrative Agent, at the request of any Lender, may from time to time
reasonably request.
8.3 Notices. The Company shall promptly notify the Administrative Agent
and each Lender:
(a) of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that the Company reasonably
expects will become a Default or Event of Default;
(b) of any matter that has resulted or may result in a Material
Adverse Effect, including (i) breach or non-performance of, or any default
under, a Contractual Obligation of the Company or any Subsidiary; (ii) any
dispute, litigation, investigation, proceeding or suspension between the Company
or any Subsidiary and any Governmental Authority; or (iii) the commencement of,
or any material development in, any litigation or proceeding affecting the
Company or any Subsidiary, including pursuant to any applicable Environmental
Laws;
(c) of the occurrence of any of the following events affecting the
Company or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to the Administrative Agent and each Lender a copy of any
notice with respect to such event that is filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Company or any ERISA
Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability
of any Pension Plan;
(iii) the adoption of, or the commencement of contributions
to, any Plan subject to Section 412 of the Code by the Company or any
ERISA Affiliate;
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(iv) the adoption of any amendment to a Plan subject to Section
412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability;
(d) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries;
(e) of the occurrence of any material labor dispute;
(f) of the occurrence of an "Early Amortization Event", as defined
in the Pooling and Servicing Agreement; or
(g) any event which will give rise to a prepayment pursuant to
Section 2.7(c).
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under subsection 8.3(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.
8.4 Preservation of Corporate Existence, etc. The Company shall, and shall
cause each Subsidiary to:
(a) preserve and maintain in lull force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation except in connection with transactions permitted by Section 9.3
and sales of assets permitted by Section 9.2;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business except in connection with
transactions permitted by Section 9.3 and sales of assets permitted by Section
9.2;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation or non-renewal of which
could reasonably be expected to have a Material Adverse Effect.
8.5 Maintenance of Property. The Company shall maintain, and shall cause
each Subsidiary to maintain, and preserve all its property which is used or
useful in its business in good working order and condition, ordinary wear and
tear excepted, and make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
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8.6 Insurance. The Company shall maintain, and shall cause each Subsidiary
to maintain, with financially sound and reputable independent insurers,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.
8.7 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due arid payable, all
its respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; and
(c) all indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
8.8 Compliance with Laws. The Company shall comply, and shall cause each
Subsidiary to comply, in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
8.9 Compliance with ERISA. The Company shall, and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
8.10 Inspection of Property and Books and Records. The Company shall
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Company and such Subsidiary. The
Company shall permit, and shall cause each Subsidiary to permit, representatives
and independent contractors of the Administrative Agent or any Lender at the
expense of the Administrative Agent or Lender, as the case may be, to visit and
inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public accountants, all at
such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Company; provided,
however, when an Event of Default exists the Administrative Agent or any Lender
may do any of the
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foregoing at the expense of the Company at any time during normal business hours
and without advance notice, otherwise the expenses of only one field audit by
the Administrative Agent per year shall be paid by the Company.
8.11 Environmental Laws. The Company shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws.
8.12 Use of Proceeds. The Company shall use the proceeds of the Loans to
repay existing Indebtedness, fund the PFS Acquisition and pay related fees and
expenses and to provide for working capital, capital expenditures and other
general corporate purposes not in contravention of any Requirement of Law or of
any Loan Document.
8.13 Further Assurances. Promptly upon the written request of the
Administrative Agent, or the Required Lenders, the Company shall, and shall
cause each Subsidiary to, execute, acknowledge, deliver, record, re-record,
file, re-file, register and re-register, any and all such further acts, deeds,
conveyances, security agreements, mortgages, assignments, estoppel certificates,
financing statements and continuations thereof, termination statements, notices
of assignment, transfers, certificates, assurances and other instruments the
Administrative Agent or the Required Lenders as the case may be, may reasonably
request from time to time in order (a) to ensure that (i) the Obligations are
secured by substantially all assets of the Company and (ii) the Obligations are
secured by substantially all of the assets of each Subsidiary (including,
promptly upon the acquisition or creation thereof, any Subsidiary created or
acquired after the date hereof), (b) to perfect and maintain the validity,
effectiveness and priority of any of the Loan Documents and the Liens intended
to be created thereby, and (c) to better assure, convey, grant, assign,
transfer, preserve, protect and confirm to the Administrative Agent and the
Lenders the rights granted or now or hereafter intended to be granted to the
Administrative Agent and the Lenders under any Loan Documents or under any other
document executed in connection therewith. Contemporaneously with the execution
and delivery of any document referred to above, the Company shall, and shall
cause each Subsidiary to, deliver all resolutions, opinions and corporate
documents as the Administrative Agent or the Required Lenders may reasonably
request to confirm the enforceability of such document and the perfection of the
security interest created thereby, if applicable.
8.14 INTENTIONALLY LEFT BLANK
8.15 Post-Closing Real Estate Matters. Within 90 days after the date
hereof the Company shall deliver to the Administrative Agent the following:
(a) unless otherwise agreed to by the Supermajority Lenders,
consents from the Landlord of each leased property to be subject to a Mortgage
in form and substance reasonably satisfactory to the Administrative Agent;
(b) unless otherwise agreed to by the Supermajority Lenders, the
Mortgages;
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(c) unless otherwise agreed to by the Supermajority Lenders, UCC
financing statements related to the Mortgages;
(d) unless otherwise agreed to by the Supermajority Lenders, with
respect to the Mortgaged Property, an A.L.T.A. 1992 (or other form acceptable to
the Administrative Agent and the Supermajority Lenders) mortgagee policy of
title insurance issued by a title insurance company satisfactory to the
Administrative Agent and the Supermajority Lenders insuring that the Mortgage
creates and constitutes at valid first Lien against the Mortgaged Property in
favor of the Administrative Agent, subject only to exceptions acceptable to the
Administrative Agent and the Supermajority Lenders, such endorsements and
affirmative insurance as the Administrative Agent or the Supermajority Lenders
may reasonably request;
(e) copies of all documents creating exceptions to title reflected
in the title policies delivered pursuant to (d) above; and
(f) to the extent required by the Administrative Agent, opinions of
local counsel in form and substance satisfactory to the Administrative Agent.
The Lenders and the Company hereby acknowledge and agree that (a) the Company
has previously granted to the Administrative Agent (and has obtained landlord
consents for) leasehold mortgages on certain of the distribution centers leased
by AmeriServ Food Company prior to its acquisition by the Company in January
1996 (such leased distribution centers being collectively referred to herein as
the "AmeriServ Food Company Distribution Centers"); and (b) the obligations of
the Company under this Section 8.15 shall be applicable only to the leased real
property acquired by the Company in connection with the PFS Acquisition, and the
Company has no obligation to grant to Administrative Agent any additional
leasehold mortgages with respect to the AmeriServ Food Company Distribution
Centers.
ARTICLE IX
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Required Lenders waive compliance in
writing:
9.1 Limitation on Liens. The Company shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):
(a) any Lien existing on property of the Company or any Subsidiary
on the Closing Date and set forth in Schedule 9.1 securing Indebtedness
outstanding on such date;
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secured by any and all such purchase money security interests shall not at any
tune exceed, together with Indebtedness permitted under subsection 9.5(d),
$1,500,000;
(k) Liens securing obligations in respect of capital leases on
assets subject to such leases, provided that such capital leases are otherwise
permitted hereunder;
(l) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution;
(m) other Liens to secure obligations, so long as the aggregate
amount secured by such Liens does not exceed $2,000,000 at any time;
(n) Liens on Receivables Program Assets; and
(o) Liens on assets of foreign Subsidiaries securing Indebtedness
not in excess of $10,000,000 at any time outstanding.
9.2 Asset Dispositions, etc. The Company will not, and will not permit any
of its Subsidiaries to, sell, transfer, lease, contribute or otherwise convey,
or grant options, warrants or other rights with respect to, all or any
substantial part of its assets (including accounts receivable and capital stock
of Subsidiaries) to any Person, unless
(a) such sale, transfer, lease, contribution or conveyance is in the
ordinary course of its business or is permitted by Section 9.3, is a sale and
leaseback made prior to March 31, 1998 of the Company's property in Grand
Rapids, Michigan and is on commercially reasonable terms or is a sale and
leaseback in an amount not in excess of $10,000,000 made prior to January 11,
1998 in connection with the Transportation Equipment Sale and Leaseback;
(b) with respect to any sale, transfer, lease, contribution or
conveyance which is not made in connection with the acquisition of assets by the
Company, the net book value of such assets, together with the net book value of
all other assets sold, transferred, leased, contributed or conveyed otherwise
than in the ordinary course of business by the Company or any of its
Subsidiaries pursuant to this clause since the Closing Date, does not exceed
$10,000,000;
(c) with respect to any sale, transfer, lease, contribution or
conveyance which is made in connection with the acquisition of assets by the
Company, the net book value of such assets does not exceed the net book value of
the assets acquired by the Company in connection with any such acquisition;
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(d) such sale, transfer, lease, contribution or conveyance is of
obsolete or unuseful Equipment and the aggregate proceeds of all such sales,
transfers, leases, contributions or conveyance of such Equipment is $1,000,000
or less in any fiscal year;
(e) such sale, transfer, lease, contribution or conveyance shall be
of Receivables Program Assets pursuant to a Qualified Receivables Transaction to
a Receivables Subsidiary, and the Invested Amount with respect thereto shall not
exceed $300,000,000; or
(f) such sale, transfer, lease, contribution or conveyance shall be
of Receivables Program Assets pursuant to a Qualified Receivables Transaction by
a Receivables Subsidiary to a Special Purpose Vehicle, and the Invested Amount
with respect thereto shall not exceed $300,000,000.
9.3 Consolidations and Mergers. The Company shall not, and shall not
suffer or permit any Subsidiary to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any one or
more Subsidiaries; provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation and if any transaction shall be between
a Guarantor and a Subsidiary which is not a Guarantor, the Guarantor shall be
the continuing or surviving corporation;
(b) any Subsidiary may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise) to the Company or another Wholly-Owned
Subsidiary, which wholly-owned Subsidiary is a Guarantor if the selling
Subsidiary is a Guarantor; or
(c) so long as no Default has occurred and is continuing, or would
occur after giving effect thereto, the Company or any of its Subsidiaries may
purchase all or substantially all of the assets of any Person, or acquire such
Person by merger, if such acquisition is approved by the Administrative Agent
and all the Lenders; or
(d) as permitted by Section 9.2.
9.4 Loans and Investments. The Company shall not purchase or acquire, or
suffer or permit any Subsidiary to purchase or acquire, or make any commitment
therefor, any capital stock, equity interest, or any obligations or other
securities of, or any interest in, any Person, or make or commit to make any
Acquisitions, or make or commit to make any advance, loan, extension of credit
or capital contribution to or any other investment in, any Person including any
Affiliate of the Company, except for:
(a) investments in Cash Equivalents Investments;
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(b) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in the
ordinary course of business;
(c) in the ordinary course of business extensions of credit by the
Company to any of its Subsidiaries or by any of its Subsidiaries to another of
its Subsidiaries;
(d) until such time as a Default shall have occurred and be
continuing, loans and advances to Holberg made on or after the Closing Date not
to exceed $5,000,000 at any time outstanding; provided that upon the occurrence
of such a Default, any outstanding loans and advances permitted by this clause
(d) must be immediately repaid in full;
(e) investments in a Receivables Subsidiary, consisting of
Receivables Program Assets and Purchase Money Notes in payment for Receivables
Program Assets;
(f) investments by a Receivables Subsidiary in a Special Purpose
Vehicle;
(g) (i) Acquisitions (other than those permitted under Section
9.3(c)) and investments in amounts (including cash paid and Indebtedness assumed
or refinanced) aggregating not in excess of $25,000,000 for any single
acquisition or series of related acquisitions or $60,000,000 in the aggregate
after the date hereof, so long as, in the case of an Acquisition, (A) the entity
acquired had a positive operating income for the 12 months prior to the
Acquisition, (B) the entity acquired engaged only in lines of business in which
the Company is engaged, (C) in the case of a stock Acquisition, the Acquisition
is approved by the Board of Directors of the acquired entity, and (D) giving
effect to the Acquisition (x) the Company would have been in compliance with all
covenants hereof as if such Acquisition took place on the first day of the
fiscal quarter period ending at the end of the last fiscal quarter as
demonstrated by a certificate of a Responsible Officer delivered prior to such
Acquisition and (y) at least $50,000,000 of the Revolving Commitments remain
unused, and (ii) existing investments listed on Schedule 9.4; and
(h) loans and advances to employees not to exceed $3,000,000 at any
time outstanding.
9.5 Limitation on Indebtedness. The Company shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, other than the following ("Permitted Indebtedness"):
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations permitted
pursuant to Section 9.8;
(c) Indebtedness existing on the Closing Date and set forth in
Schedule 9.5;
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(d) Indebtedness secured by Liens permitted by subsection 9.1(j) in
an aggregate amount outstanding not to exceed $1,500,000.
(e) Subordinated Debt (including without limitation the Subordinated
Debt identified in Schedule 9.5 ("Original Indebtedness") of the Disclosure
Schedule);
(f) Indebtedness with respect to any assets acquired by the Company
or any of its Subsidiaries (or assets owned by Subsidiaries the stock of which
is acquired by the Company or any of its Subsidiaries) in existence at the time
of the acquisition of such assets or stock, which Indebtedness was not incurred
in contemplation of the acquisition; provided that such Indebtedness does not in
an aggregate amount outstanding exceed $5,000,000;
(g) Capitalized Lease Obligations not in excess of $40,000,000
created in any one fiscal year and not in excess of $75,000,000 at any time
outstanding;
(h) Other notes payable to vendors not in excess of $2,000,000 at
any time outstanding;
(i) The Bridge Loan or, if the Bridge Loan is repaid with the
proceeds of the Senior Subordinated Notes, the Senior Subordinated Notes;
(j) Indebtedness of foreign Subsidiaries not in excess of
$10,000,000 at any time outstanding;
(k) Other Indebtedness not in excess of $2,000,000 at any time
outstanding;
(l) Receivables Program Obligations, pursuant to a Qualified
Receivables Transaction.
9.6 Transactions with Affiliates. The Company will not, and will not
permit any of its Subsidiaries to, enter into, or cause, suffer or permit to
exist any arrangement or contract with any of its other Affiliates (a) unless
such arrangement or contract is fair and equitable to the Company or such
Subsidiary and is an arrangement or contract of the kind which would be entered
into by a prudent Person in the position of the Company or such Subsidiary with
a Person which is not one of its Affiliates, it being understood that any
Qualified Receivables Transaction shall be deemed to satisfy this clause (a);
(b) except (i) the arrangement between Holberg and the Company under the Tax
Sharing Agreement, and (ii) the insurance arrangement between NEHC and its
Subsidiaries and an affiliate of Holberg, the fees with respect to which shall
not exceed the usual and customary fees for such services; (c) except
arrangements or contracts which provide for investments in Affiliates of the
Company or any of its Subsidiaries to the extent such investments are permitted
pursuant to Section 9.4 provided, however, that unless an Event of Default shall
have occurred and be continuing, Corporate Allocations permitted under Section
9.11 can be paid; (d) transactions between the Company or its Subsidiaries on
the one hand and DLJ or its Affiliates on the other hand involving the provision
of financial, investment banking, lending, management, consulting or
underwriting services by DLJ or its Affiliates; provided that the fees payable
to DLJ or its Affiliates do not exceed the usual and customary fees of DLJ or
its Affiliates, as the case
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may be, for such services or the usual and customary fees of other New York
investment banking firms for such services; or (e) transactions between the
Company and Holberg involving the provision of financial, management or
consulting services in connection with acquisitions provided that (i) the fees
payable by the Company for such services do not exceed the usual and customary
fees for such services (it being agreed that a payment of $4,000,000 with
respect to PFS Acquisition and related transactions shall be permitted) and (ii)
the payment of any such fees shall be subject to the consent of the
Administrative Agent or, if in excess of $2,000,000 in any fiscal year, the
Required Lenders.
9.7 Use of Proceeds. The Company shall not, and shall not suffer or permit
any Subsidiary to, use any portion of the Loan proceeds or any Letter of Credit,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance indebtedness of the Company or others incurred to purchase
or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or
carrying any Margin Stock or (iv) to acquire any security in any transaction
that is subject to Section 13 or 14 of the Exchange Act.
9.8 Contingent Obligations. The Company shall not, and shall not suffer or
permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) Hedging Agreements entered into in the ordinary course of
business as bona fide hedging transactions;
(c) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 9.8;
(d) other Contingent Obligations so long as the aggregate amount of
such Contingent Obligations outstanding at any one time does not exceed
$1,000,000;
(e) Receivables Program Obligations; and
(f) guarantees of the Obligations and the Senior Subordinated Notes.
9.9 Joint Ventures. The Company shall not, and shall not suffer or permit
any Subsidiary to enter into any Joint Venture, other than in the ordinary
course of business and other than as permitted by Section 9.4(g).
9.10 Rental Obligations. The Company will not, and will not permit any of
its Subsidiaries to, enter into at any time any arrangement which does not
create a Capitalized Lease Liability and which involves the leasing by the
Company or any of its Subsidiaries from any lessor of any real or personal
property (or any interest therein), except arrangements which, together with all
other such arrangements which shall then be in effect, will not require the
payment of an aggregate amount of rentals by the Company and its Subsidiaries in
excess of (excluding escalations resulting from a rise in the consumer price or
similar index) $50,000,000 for any fiscal year; provided, however, that any
calculation made
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for purposes of this section shall exclude any amounts required to be expended
for maintenance and repairs, insurance, taxes, assessments, and other similar
charges.
9.11 Restricted Payments. On and at all times after the Closing Date:
(a) the Company will not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any class
of capital stock (now or hereafter outstanding) of the Company or on any
warrants, options or other rights with respect to any shares of any class
of capital stock (now or hereafter outstanding) of the Company (other than
dividends or distributions payable in its common stock or warrants to
purchase its common stock or splitups or reclassifications of its stock
into additional or other shares of its common stock) or apply, or permit
any of its Subsidiaries to apply, any of its funds, property or assets to
the purchase, redemption, sinking fund or other retirement of, or agree or
permit any of its Subsidiaries to purchase or redeem, any shares of any
class of capital stock (now or hereafter outstanding) of the Company, or
warrants, options or other rights with respect to any shares of any class
of capital stock (now or hereafter outstanding) of the Company;
(b) the Company will not, and will not permit any of its
Subsidiaries to
(i) other than repayments of the Bridge Loan with proceeds of
Senior Subordinated Notes, make any payment or prepayment of principal of,
or make any payment of interest on, any Subordinated Debt on any day other
than the stated, scheduled date for such payment or prepayment set forth
in the documents and instruments memorializing such Subordinated Debt, or
which would violate the subordination provisions of such Subordinated
Debt; or
(ii) redeem, purchase or defease any Subordinated Debt;
(c) except as otherwise permitted under this Section 9.11, the
Company will not make any payment to NEHC or Holberg, including without
limitation, in respect of Corporate Allocations and will not make any payment
with respect to annual management fees; and
(d) the Company will not, and will not permit any Subsidiary to,
make any deposit for any of the foregoing purposes;
provided, however, that, unless immediately before or after giving effect
thereto, any Event of Default shall have occurred and be continuing, the Company
may declare, pay or make payments in respect of
(i) Corporate Allocations during any fiscal year of the
Company in an aggregate amount not to exceed $4,000,000 in any fiscal
year;
(ii) Payments with respect to the insurance arrangements
permitted pursuant to Section 9.6(b)(ii);
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(iii) Payments permitted pursuant to Section 9.6(e);
(iv) Payments under the Tax Sharing Agreement;
(v) commencing after five and one half years after the date of
this Agreement, payments of dividends so long as (A) the amounts of such
payments do not exceed $13,000,000 in any fiscal year after the date
hereof, and (B) the Company would be in pro forma compliance w1th all
covenants hereunder, as if such dividends were paid on the last day of the
last fiscal quarter ended before such proposed payment; and
(vi) fees and expenses not to exceed $2,500,000 incurred by
NEHC in connection with its issuance of the Senior Discount Notes due
2007.
9.12 Minimum Fixed Charge Coverage. The Company will not permit the Fixed
Charge Coverage Ratio for any Computation Period ending on or after December 31,
1997 to be less than 1.10 to 1.0.
9.13 Minimum Interest Coverage. The Company will not permit the Interest
Coverage Ratio for any Computation Period to be less than the ratio set forth
below opposite the period in which such Computation Period ends:
Period Ratio
------ -----
December 31, 1997 through March 31, 1998 1.35 to 1.0
April 1, 1998 through March 31, 2000 1.50 to 1.0
April 1, 2000 through March 31, 2001 1.75 to 1.0
April 1, 2001 through March 31, 2002 2.00 to 1.0
April 1, 2002 through March 31, 2003 2.25 to 1.0
April 1, 2003 and thereafter 2.50 to 1.0
9.14 Maximum Leverage. The Company will not permit the Leverage Ratio at
any time to exceed the following ratios during the following periods:
Period Ratio
------ -----
September 30, 1997 through June 30, 1998 6.95 to 1.0
July 1, 1998 through March 31, 1999 6.75 to 1.0
April 1, 1999 through March 31, 2000 6.50 to 1.0
April 1, 2000 through March 31, 2001 5.75 to 1.0
April 1, 2001 through March 31, 2002 5.25 to 1.0
April 1, 2002 through March 31, 2003 4.75 to 1.0
April 1, 2003 and thereafter 4.25 to 1.0
9.15 ERISA. The Company shall not, and shall not suffer or permit any of
its ERISA Affiliates to: (a) engage in a prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan which has
resulted or could reasonably expected
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to result in liability of the Company in an aggregate amount in excess of
$5,000,000 or (b) engage in a transaction that could be subject to Section 4069
or 4212(c) of ERISA.
9.16 Modification of Certain Agreements. The Company will not consent to
any amendment, supplement or other modification of any of the terms or
provisions contained in, or applicable to, the Tax Sharing Agreement or any
document or instrument evidencing or applicable to any Subordinated Debt, other
than any amendment, supplement or other modification which extends the date or
reduces the amount of any required repayment or redemption.
9.17 Negative Pledges, Restrictive Agreements, etc. The Company will not,
and will not permit any of its Subsidiaries to, enter into any agreement
(excluding this Agreement, any other Loan Document and any agreement governing
any Indebtedness permitted either by clause (c) or clause (i) of Section 9.5 as
in effect on the Closing Date or by either of clause (d) or clause (f) of
Section 9.5 as to the assets financed with the proceeds of such Indebtedness)
prohibiting
(a) the creation or assumption of any Lien upon its properties,
revenues or assets (other than Receivables Program Assets), whether now owned or
hereafter acquired, or the ability of the Company or any Subsidiary to amend or
otherwise modify this Agreement or any other Loan Document; or
(b) the ability of any Subsidiary (other than a Receivables
Subsidiary) to make any payments, directly or indirectly, to the Company by way
of dividends, advances, repayments of loans or advances, reimbursements of
management and other intercompany charges, expenses and accruals or other
returns on investments, or any other agreement or arrangement which restricts
the ability of any Subsidiary (other than a Receivables Subsidiary) to make any
payment, directly or indirectly, to the Company.
9.18 Maximum Capital Expenditures. The Company will not permit the
aggregate amount of all Capital Expenditures made by the Company and its
Subsidiaries in the period from the Closing Date through December 31, 1998, to
exceed $50,000,000, and in any fiscal year thereafter, to exceed $22,000,000;
provided, that the Company may, in addition to the foregoing, make Capital
Expenditures of up to $8,000,000 on or before March 31, 1998 in respect of the
sale and leaseback of the Grand Rapids, Michigan distribution center; provided,
further, that the Company may, in addition to the foregoing, make Capital
Expenditures of up to $10,000,000 on or before January 11, 1998 in respect of
the Transportation Equipment Sale and Leaseback and provided, further, that if
the Company and its Subsidiaries do not expend the full amount scheduled to be
permitted in any period, the amount not so expended may be carried over for
expenditures in the next fiscal year but not after such next fiscal year.
9.19 Change in Business. The Company shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Company and its
Subsidiaries on the date hereof.
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9.20 Accounting Changes. The Company shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Company or of any Subsidiary.
9.21 Restructuring Costs. The Company shall not, and shall not suffer or
permit any Subsidiary to, incur Restructuring Costs in excess of the following
amounts in the following periods:
Period Amount
------ ------
Closing Date through December 31, 1998 $55,000,000
January 1, 1999 through December 31, 1999 $20,000,000
January 1, 2000 through December 31, 2000 $ 5,000,000
Each year thereafter $ 3,000,000;
provided, however, that if the Company and its Subsidiaries do not incur the
full amount of restructuring costs scheduled to be permitted in any such period,
the amount not so incurred may be carried over for incurrence in the next period
but not after such next period.
9.22 Receivables Facility. The Company and its Subsidiaries shall not
amend or modify, or permit the amendment or modification of, any provision of a
Receivables Document if, as a result of such amendment or modification:
(a) a Receivables Subsidiary would not be required to apply all
funds available to it (after giving effect to the allocation of funds to
reserves required under the terms of the Receivables Documents and to the
payment of interest, principal and other amounts owed under the
Receivables Documents) to pay the purchase price for Receivables
(including any deferred portion of the purchase price);
(b) the degree of recourse to the Company or its Subsidiaries under
or in the respect of the Receivables Documents is increased in any
material respect; or
(c) the Invested Amount with respect thereto shall exceed
$300,000,000.
Notwithstanding anything to the contrary contained in this Section, any
changes to the Receivables Documents which relate to the Company's and/or any
other Receivables Seller's servicing or origination of Receivables Program
Assets shall be permitted.
ARTICLE X
EVENTS OF DEFAULT
10.1 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Company fails to pay, (i) when and as required
to be paid herein, any amount of principal of any Loan or of any L/C Obligation
or (ii) within 5
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days after the same becomes due, any interest, fee or any other amount payable
hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by
the Company, NEHC, or any Subsidiary made or deemed made herein, in any other
Loan Document, or which is contained in any certificate, document or financial
or other statement by the Company, NEHC, any Subsidiary or any Responsible
Officer, furnished at any time under this Agreement, or in or under any other
Loan Document, is incorrect in any material respect on or as of the date made
or deemed made; or
(c) Specific Defaults. The Company fails to perform or observe any
term, covenant or agreement contained in any of Section 8.1, 8.2, 8.3 or 8.9 or
in Article IX; or
(d) Other Defaults. The Company, any Subsidiary party thereto or
NEHC fails to perform or observe any other term or covenant contained in this
Agreement or any other Loan Document, and such default shall continue unremedied
for a period of 20 days after the date upon which written notice thereof is
given to the Company by the Administrative Agent or any Lender; or
(e) Cross-Default. NEHC, the Company or any Subsidiary (other than a
Receivables Subsidiary) (i) fails to make any payment (including any mandatory
prepayment or redemption) in respect of any Indebtedness or Contingent
Obligation having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $5,000,000 when due
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) and such failure continues after the applicable grace or notice
period, if any, specified in the relevant document on the date of such failure;
or (ii) fails to perform or observe any other condition or covenant, or any
other event shall occur or condition exist, under any agreement or instrument
relating to any such Indebtedness or Contingent Obligation, and such failure
continues after the applicable grace or notice period, if any, specified in the
relevant document on the date of such failure if the effect of such failure,
event or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause such Indebtedness to be declared to be due and payable prior to its stated
maturity, or such Contingent Obligation to become payable or cash collateral in
respect thereof to be demanded or; or
(f) Insolvency; Voluntary Proceedings. The Company, NEHC or any
Subsidiary other than a Receivables Subsidiary (i) ceases or fails to be
solvent, or generally fails to pay, or admits in writing its inability to pay,
its debts as they become due, subject to applicable grace periods, if any,
whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its
business in the ordinary course; (iii) commences any Insolvency Proceeding with
respect to itself; or (iv) takes any action to effectuate or authorize any of
the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company, NEHC or any Subsidiary
other than a Receivables
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Subsidiary, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Company's, NEHC's
or any Subsidiary's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Company, NEHC or any Subsidiary other
than a Receivables Subsidiary admits the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or similar
order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the
Company, NEHC or any Subsidiary other than a Receivables Subsidiary acquiesces
in the appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension Plan
or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of the Company under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $5,000,000
unless the ERISA Event is a contribution failure sufficient to give rise to a
Lien under Section 302(f) of ERISA in which case the dollar liability threshold
does not apply; the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds $5,000,000; or (iii) the Company or any ERISA
Affiliate shall fail to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of $5,000,000; or
(i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Company, NEHC or any Subsidiary other than a Receivables Subsidiary involving in
the aggregate a liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as to any single or
related series of transactions, incidents or conditions, of $1,000,000 or more,
and the same shall remain unsatisfied, unvacated and unstayed pending appeal for
a period of 10 days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or decree is
entered against the Company, NEHC or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(k) Change of Control. There occurs any Change of Control or any "Change
of Control" or like event as defined in any other indenture or other agreement
or instrument pursuant to which Indebtedness or equity is issued or Receivables
are sold by NEHC, the Company or any Subsidiary; or
(l) Impairment of Security, etc. Any Loan Document, or any Lien granted
thereunder, shall (except in accordance with its terms), in whole or in part,
terminate, cease to be effective or cease to be the legally valid, binding and
enforceable obligation of the Company, NEHC or any Subsidiary party thereto; the
Company, NEHC, or any Subsidiary shall, directly or indirectly, contest in any
manner such effectiveness, validity, binding nature
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or enforceability; or any Lien securing any Liability shall, in whole or in
part, cease to be a perfected first priority Lien; provided, however, no Event
of Default hereunder shall exist to the extent (A) the failure of such Lien to
remain effective is due solely to the negligence of the Agent or the Lenders or
(B) the failure to maintain perfection of such Lien is due solely to the failure
of the Agent to file appropriate Uniform Commercial Code continuation
statements.
10.2 Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Required Lenders,
(a) declare the commitment of each Lender to make Loans and any
obligation of the Issuing Lender to Issue Letters of Credit to be terminated,
whereupon such commitments and obligation shall be terminated;
(b) declare an amount equal to the maximum aggregate amount that is
or at any time thereafter may become available for drawing under any outstanding
Letters of Credit (whether or not any beneficiary shall have presented, or shall
be entitled at such time to present, the drafts or other documents required to
draw under such Letters of Credit) to be immediately due and payable, and
declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 10.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each
Lender to make Loans and any obligation of the Issuing Lender to Issue Letters
of Credit shall automatically terminate and the unpaid principal amount of all
outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Administrative
Agent, the Issuing Lender or any Lender.
10.3 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE XI
THE AGENTS
11.1 Appointment and Authorization. (a) Each Lender hereby irrevocably
(subject to Section 11.9) appoints, designates and authorizes the Administrative
Agent to take such
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action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with
any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Administrative Agent.
(b) The Issuing Lender shall act on behalf of the Lenders with
respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Administrative Agent may
agree at the request of the Required Lenders to act for such Issuing Lender with
respect thereto; provided, however, that the Issuing Lender shall have all of
the benefits and immunities (i) provided to the Administrative Agent in this
Article XI with respect to any acts taken or omissions suffered by the Issuing
Lender in connection with Letters of Credit Issued by it or proposed to be
Issued by it and the application and agreements for letters of credit pertaining
to the Letters of Credit as fully as if the term "Administrative Agent," as used
in this Article XI, included the Issuing Lender with respect to such acts or
omissions and (ii) as additionally provided in this Agreement with respect to
the Issuing Lender.
11.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
11.3 Liability of Administrative Agent. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct) or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by the Company or any
Subsidiary or Affiliate of the Company, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Company or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Company or any
of the Company's Subsidiaries or Affiliates.
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11.4 Reliance by Administrative Agent. (a) The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Company), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a request or
consent of the Required Lenders (or the Supermajority Lenders or all Lenders as
required herein) and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 6.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Lender
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lender unless
such Lender has provided written notice to the Agent of its lack of consent,
approval or satisfaction.
11.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Administrative Agent for the account of the Lenders,
unless the Administrative Agent shall have received written notice from a Lender
or the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." The
Administrative Agent will promptly notify the Lenders of its receipt of any such
notice. The Administrative Agent shall take such action with respect to such
Default or Event of Default as may be requested by the Required Lenders in
accordance with Article X; provided, however, that unless and until the
Administrative Agent has received any such request, the Administrative Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable or in the best interest of the Lenders.
11.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Administrative Agent hereinafter taken, including any review of the
affairs of the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition
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and creditworthiness of the Company and its Subsidiaries, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to the
Company hereunder. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company.
Except for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Administrative Agent, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Company which may come
into the possession of any of the Agent-Related Persons.
11.7 Indemnification of Administrative Agent. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Company and without limiting the obligation of the Company to do
so), pro rata, from and against any and all Indemnified Obligations; provided,
however, that no Lender shall be liable for the payment to the Agent-Related
Persons of any portion of such Indemnified Obligations resulting solely from
such Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse the Administrative Agent upon demand for
its ratable share of any costs or out-of-pocket expenses (including Attorney
Costs) incurred by the Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that the Administrative Agent is not reimbursed for such expenses by or
on behalf of the Company. The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of the
Administrative Agent.
11.8 Administrative Agent in Individual Capacity. BofA and its Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company and
its Subsidiaries and Affiliates as though BofA were not the Administrative Agent
or BofA were not the Issuing Lender hereunder and without notice to or consent
of the Lenders. The Lenders acknowledge that, pursuant to such activities, BofA
or its Affiliates may receive information regarding the Company or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Subsidiary) and acknowledge that the
Administrative Agent shall be under no obligation to provide such information to
them. With respect to its Loans, BofA shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though it
were not the Administrative Agent or the Issuing Lender.
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11.9 Successor Agent. The Administrative Agent may, and at the request of
the Required Lenders shall, resign as Administrative Agent upon 30 days' notice
to the Lenders. If the Administrative Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of the Administrative Agent, the Administrative Agent may appoint,
after consulting with the Lenders and the Company, a successor agent from among
the Lenders. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent"
shall mean such successor agent and the retiring Agent's appointment, powers and
duties as Administrative Agent shall be terminated. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article XI and Sections 12.4 and 12.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor agent has accepted
appointment as Administrative Agent by the date which is 30 days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. Notwithstanding the foregoing, however, BofA may
not be removed as the Administrative Agent at the request of the Required
Lenders unless BofA shall also simultaneously be replaced as "Issuing Lender"
hereunder pursuant to documentation in form and substance reasonably
satisfactory to BofA.
11.10 Withholding Tax. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code or if any Lender claims exemption from withholding tax pursuant
to Section 871(h) or 881(c) of the Code, such Lender agrees with and in favor of
the Administrative Agent, to deliver to the Administrative Agent:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly completed
IRS Form 1001 before the payment of any interest in the first calendar
year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224 before
the payment of any interest is due in the first taxable year of such
Lender and in each succeeding taxable year of such Lender during which
interest may be paid under this Agreement, and IRS Form W-9;
(iii) in the case of any Lender that is exempt from
withholding tax pursuant to Section 881(h) or 881(c) of the Code, properly
completed IRS Form W-8 or any applicable successor form before the payment
of any interest is due; and
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(iv) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Administrative Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Company to such Lender, such Lender agrees
to notify the Administrative Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Company to such Lender. To the
extent of such percentage amount, the Administrative Agent will treat such
Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Administrative Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations of the
Company to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest payment
to such Lender an amount equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or other documentation required
by subsection (a) of this Section are not delivered to the Administrative Agent,
then the Administrative Agent may withhold from any interest payment to such
Lender not providing such forms or other documentation an amount equivalent to
the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent did
not properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Administrative Agent.
11.11 Collateral Matters.
(a) The Administrative Agent is authorized on behalf of all the
Lenders; without the necessity of any notice to or further consent from the
Lenders, from time to time to take any action with respect to any Collateral or
the Loan Documents which may be
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necessary to perfect and maintain perfected the security interest in and Liens
upon the Collateral granted pursuant to the Loan Documents.
(b) The Lenders irrevocably authorize the Administrative Agent, at
its option and in its discretion, to release any Lien granted to or held by the
Administrative Agent upon any Collateral (i) upon termination of the Commitments
and payment in full of all Loans and all other obligations known to the
Administrative Agent and payable under this Agreement or any other Loan
Document; (ii) constituting property sold or to be sold or disposed of as part
of or in connection with any disposition permitted hereunder; (iii) constituting
property in which the Company or any Subsidiary owned no interest at the time
the Lien was granted or at any time thereafter; (iv) constituting property
leased to the Company or any Subsidiary under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about to expire
and which has not been, and is not intended by the Company or such Subsidiary to
be, renewed or extended; (v) consisting of an instrument evidencing Indebtedness
or other debt instrument, if the indebtedness thereby has been paid in full; or
(vi) if approved, authorized or ratified in writing by the Required Lenders or,
if required by Section 12.1(e), all the Lenders. Upon request by the
Administrative Agent at any time, the Lenders will confirm in writing the
Administrative Agent's authority to release particular types or items of
Collateral pursuant to this subsection 11.11(b).
11.12 Documentation Agent. No Lender identified as a "Documentation Agent"
shall have any right, power, obligation, liability, responsibility or duty under
this Agreement other than those applicable to all Lenders as such. Without
limiting the foregoing, none of the Lenders so identified as a "Documentation
Agent" shall have or be deemed to have any fiduciary responsibility with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on
any of the Lenders so identified and decided to enter into this Agreement or in
taking or not taking action hereunder.
ARTICLE XII
MISCELLANEOUS
12.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement, any other Loan Document or the Intercreditor Agreement, and no
consent with respect to any departure by the Company, NEHC or any applicable
Subsidiary therefrom, shall be effective unless the same shall be in writing and
signed by the Required Lenders (or by the Administrative Agent at the written
request of the Required Lenders) and the Company and acknowledged by the
Administrative Agent, and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Lenders and the Company and acknowledged by the
Administrative Agent, do any of the following:
(a) increase or extend the Commitment of any Lender (or reinstate
any Commitment terminated pursuant to Section 10.2);
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(b) reduce the amount of, postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment or prepayment of principal,
interest, fees or other amounts due to the Lenders (or any of them) hereunder or
under any other Loan Document or amend the application of payments with respect
thereto;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Lenders or any of
them to take any action hereunder;
(e) release all or any substantial part of the Collateral or release
any Guarantor;
(f) extend any Letter of Credit expiration date to a date beyond the
Revolving Termination Date; or
(g) amend this Section, or Section 2.14, or any provision herein
providing for consent or other action by all Lenders;
and, provided further that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Lender in addition to the Required Lenders or
all the Lenders, as the case may be, affect the rights or duties of the Issuing
Lender under this Agreement or any L/C-Related Document relating to any Letter
of Credit Issued or to be Issued by it, (ii) no amendment, waiver or consent
shall, unless in writing and signed by the Administrative Agent in addition to
the Required Lenders or all the Lenders, as the case may be, affect the rights
or duties of the Administrative Agent under this Agreement or any other Loan
Document, and (iii) the Fee Letters may be amended, or rights or privileges
thereunder waived, in a writing executed by the parties thereto and; provided,
further, that, at the Company's request, the Administrative Agent shall, without
the consent of any Lender, release the security interest of the Administrative
Agent and the Lenders in any property subject to Capitalized Lease Obligations
permitted under Section 9.5(g).
12.2 Notices. (a) All notices, requests and other communications shall be
in writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Company by
facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on Schedule 12.2 and (ii) shall be followed
promptly by delivery of a hard copy original thereof) and mailed, faxed or
delivered to the address or facsimile number specified for notices on Schedule
12.2; or, as directed to the Company or the Administrative Agent, to such other
address as shall be designated by such party in a written notice to the other
parties, and as directed to any other party, at such other address as shall be
designated by such party in a written notice to the Company and the
Administrative Agent.
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(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II, III or XI shall not be effective until actually
received by the Administrative Agent, and notices to the Issuing Lender pursuant
to Article III shall not be effective until actually received by the Issuing
Lender at the address specified for the Issuing Lender on Schedule 12.2.
(c) Any agreement of the Administrative Agent and the Lenders herein
to receive certain notices by telephone or facsimile is solely for the
convenience and at the request of the Company. The Administrative Agent and the
Lenders shall be entitled to rely on the authority of any Person purporting to
be a Person authorized by the Company to give such notice and the Administrative
Agent and the Lenders shall not have any liability to the Company or other
Person on account of any action taken or not taken by the Administrative Agent
or the Lenders in reliance upon such telephonic or facsimile notice. The
obligation of the Company to repay the Loans and L/C Obligations shall not be
affected in any way or to any extent by any failure by the Administrative Agent
and the Lenders to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Administrative Agent and the Lenders of a
confirmation which is at variance with the terms understood by the
Administrative Agent and the Lenders to be contained in the telephonic or
facsimile notice.
12.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.
12.4 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Administrative
Agent and Issuing Lender) and DLJ (including in its capacity as Documentation
Agent) within five Business Days after demand for all costs and expenses
incurred by BofA (including in its capacity as Administrative Agent and Issuing
Lender) and DLJ (including in its capacity as Documentation Agent) in connection
with the development, preparation, delivery, administration and execution of,
and any amendment, supplement, waiver or modification to (in each case, whether
or not consummated), this Agreement, any Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including reasonable Attorney
Costs incurred by BofA (including in its capacity as Administrative Agent and
Issuing Lender) and DLJ (including in its capacity as Documentation Agent) with
respect thereto; and
(b) pay or reimburse the Administrative Agent, the Arranger and each
Lender within five Business Days after demand for all costs and expenses
(including Attorney Costs) incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or any other Loan Document
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during the existence of an Event of Default or after acceleration of the Loans
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding).
12.5 Company Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Company shall indemnify and hold the Agent-Related
Persons, and each Lender and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person")
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans, the termination of
the Letters of Credit and the termination, resignation or replacement of any
Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the Loans
or Letters of Credit or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Obligations"); provided, that the Company shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Obligations
resulting solely from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive payment of all
other Obligations.
12.6 Payments Set Aside. To the extent that the Company makes a payment to
the Administrative Agent or the Lenders, or the Administrative Agent or the
Lenders exercise their right of set-off, and such payment or the proceeds of
such set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred and (b) each Lender
severally agrees to pay to the Administrative Agent upon demand its pro rata
share of any amount so recovered from or repaid by the Administrative Agent,
which had previously been received by such Lender.
12.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Administrative Agent and each Lender.
12.8 Assignments, Participations, etc. (a) Any Lender may, with the
written consent of the Company at all times other than during the existence of
an Event of Default and the Administrative Agent, which consents shall not be
unreasonably withheld, at any time assign and delegate to one or more Eligible
Assignees (provided that no written consent of the
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Company, or the Administrative Agent shall be required in connection with an
assignment and delegation by BofA or DLJ or in connection with any assignment
and delegation by a Lender to an Eligible Assignee that is an Affiliate of such
Lender) (each an "Assignee") all, or any part of all, of the Loans, the
Revolving Commitment, the L/C Obligations and the other rights and obligations
of such Lender hereunder, in a minimum amount of $5,000,000 (provided that no
minimum amount shall be applicable to any assignment and delegation to an
existing Lender or an Affiliate of a Lender or to an assignment of the entire
remaining amount of the Loans and Commitment of a Lender) provided, however,
that the Company and the Administrative Agent may continue to deal solely and
directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Company and the Administrative Agent by such Lender
and the Assignee; (ii) such Lender and its Assignee shall have delivered to the
Company and the Agent an Assignment and Acceptance substantially in the form of
Exhibit G ("Assignment and Acceptance"), together with any Note or Notes subject
to such assignment, (iii) the assignor Lender or Assignee has paid to the
Administrative Agent a processing fee in the amount of $3,000 and (iv) the
information in the Assignment and Acceptance is recorded in the Register
pursuant to subsection (d) hereof.
(b) From and after the date that the Administrative Agent notifies
the assignor Lender that it has received (and provided its consent with respect
to) an executed Assignment and Acceptance and payment of the above-referenced
processing fee and it has recorded the information in the Register, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee (and provided that it consents to such
assignment in accordance with subsection 12.8(a)), the Company shall execute and
deliver to the Administrative Agent, new Notes evidencing such Assignee's
assigned Loans and Commitment and, if the assignor Lender has retained a portion
of its Loans and its Commitments, replacement Notes in the principal amount of
the Loans retained by the assignor Lender (such Notes to be in exchange for, but
not in payment of, the Notes held by such Lender). Immediately upon each
Assignee making its processing fee payment under the Assignment and Acceptance,
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Lender pro tanto.
(d) The Company hereby designates the Administrative Agent to serve
as the Company's agent, solely for purposes of this Section 12.8(d), to maintain
a register (the
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"Register") on which it will record the Commitments from time to time of each of
the Lenders, the address and any U.S. federal taxpayers identification number of
each Lender, the Loans made by each of the Lenders and each repayment in respect
of the principal amount of the Loans of each Lender. Failure to make any such
recordation, or any error in such recordation shall not affect Lender's
obligations in respect of such Loans. With respect to any Lender, the transfer
of the Commitments of such Lender and the rights to the principal of, and
interest on, any Loan made pursuant to such Commitments shall not be effective
until such transfer is recorded on the Register maintained by the Administrative
Agent with respect to ownership of such Commitments and loans and prior to such
recordation all amounts owing to the transferor with respect to such Commitments
and Loans shall remain owing to the transferor. The registration of assignment
or transfer of all or part of any Commitments and Loans shall be recorded by the
Administrative Agent on the Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment and
Acceptance pursuant to this Section 12.8. Coincident with the delivery of such
an Assignment and Acceptance to the Administrative Agent for acceptance and
registration of assignment or transfer of all or part of a Loan, or as soon
thereafter as practicable, the assigning or transferor Lender shall surrender
the Note evidencing such Loan, and thereupon one or more new Notes in the same
aggregate principal amount shall be issued to the assigning or transferor Lender
and/or the new Lender. The Company agrees to indemnify the Administrative Agent
from and against any and all losses, claims, damages and liabilities of
whatsoever nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its duties under this Section 12.8(d).
(e) Any Lender may at any time sell to one or more commercial banks
or other Persons not Affiliates of the Company (a "Participant") participating
interests in any Loans, the Commitment of that Lender and the other interests of
that Lender (the "originating Lender") hereunder and under the other Loan
Documents; provided, however, that (i) the originating Lender's obligations
under this Agreement shall remain unchanged, (ii) the originating Lender shall
remain solely responsible for the performance of such obligations, (iii) the
Company, the Issuing Lender and the Administrative Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of the Lenders as described in the first proviso to Section
12.1. In the case of any such participation, the Participant shall be entitled
to the benefit of Sections 4.1, 4.3 and 12.5 as though it were also a Lender
hereunder, and if amounts outstanding under this Agreement are due and unpaid,
or shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and
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interest in this Agreement and the Note held by it in favor of any Federal
Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
12.9 Confidentiality. Each Lender agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Company and provided to it by the Company or any Subsidiary, or
by the Administrative Agent on such Company's or Subsidiary's behalf, under this
Agreement or any other Loan Document, and neither it nor any of its Affiliates
shall use any such information other than in connection with or in enforcement
of this Agreement and the other Loan Documents or in connection with other
business now or hereafter existing or contemplated with the Company or any
Subsidiary; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Lender, or
(ii) was or becomes available on a non-confidential basis from a source other
than the Company, provided that such source is not bound by a confidentiality
agreement with the Company known to the Lender; provided, however, that any
Lender may disclose such information (A) at the request or pursuant to any
requirement of the National Association of Insurance Commissioners or any
Governmental Authority to which the Lender is subject or in connection with an
examination of such Lender by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent, any
Lender or their respective Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Lender's independent auditors and other
professional advisors; (G) to any Participant or Assignee, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Lenders hereunder; (H) as to any
Lender or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Company or any
Subsidiary is party or is deemed party with such Lender or such Affiliate; and
(I) to its Affiliates.
12.10 Set-off. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Company, any such notice being waived by the Company
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held by, and other indebtedness at any time owing by, such Lender to or for the
credit or the account of the Company against any and all Obligations owing to
such Lender, now or hereafter existing, irrespective of whether or not the Agent
or such Lender shall have made demand under this Agreement or any Loan Document
and although such Obligations may be contingent or unmatured. Each Lender agrees
promptly to notify the Company and the Administrative Agent after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application.
99
<PAGE> 106
12.11 Automatic Debits of Fees. With respect to any commitment fee,
arrangement fee, letter of credit fee or other fee, or any other cost or expense
(including Attorney Costs) due and payable to the Administrative Agent, the
Issuing Lender, BofA or the Arranger under the Loan Documents, the Company
hereby irrevocably authorizes BofA to debit any deposit account of the Company
with BofA in an amount such that the aggregate amount debited from all such
deposit accounts does not exceed such fee or other cost or expense. If there are
insufficient funds in such deposit accounts to cover the amount of the fee or
other cost or expense then due, such debits will be reversed (in whole or in
part, in BofA's sole discretion) and such amount not debited shall be deemed to
be unpaid. No such debit under this Section shall be deemed a set-off.
12.12 Notification of Addresses, Lending Offices, etc. Each Lender shall
notify the Administrative Agent in writing of any changes in the address to
which notices to the Lender should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Agent shall
reasonably request.
12.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
12.14 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
12.15 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and legal benefit of the Company, the Lenders, the
Agents and the Agent-Related Persons, and their permitted successors and
assigns, and no other Person shall be a direct or indirect legal beneficiary of,
or have any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.
12.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
ILLINOIS; PROVIDED THAT THE AGENT, THE LENDERS AND THE BORROWER SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS OR
OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENTS AND THE LENDERS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENTS AND THE LENDERS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
100
<PAGE> 107
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENTS AND
THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS LAW.
12.17 Waiver of Jury Trial. THE COMPANY, THE LENDERS AND THE AGENTS EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE
LENDERS AND THE AGENTS EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL
BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
12.18 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Lenders and the Agents, and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof.
101
<PAGE> 108
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
AMERISERVE FOOD DISTRIBUTION, INC.
By: /s/ Donald J. Rogers
-----------------------------------------
Donald J. Rogers
Title: CFO
<PAGE> 109
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent
By: /s/ William J. Stafeil
-----------------------------------------
William J. Stafeil
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Issuing Lender
By: /s/ William J. Stafeil
-----------------------------------------
William J. Stafeil
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Lender
By: /s/ William J. Stafeil
-----------------------------------------
William J. Stafeil
Title: Vice President
<PAGE> 110
CREDIT LYONNAIS CHICAGO BRANCH,
as a Lender
By: /s/ [ILLEGIBLE]
-----------------------------------------
Title: Vice President
<PAGE> 111
CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.
As: Attorney-in-Fact and on behalf of First
Allmerica Financial Life Insurance
Company
By: /s/ John W. Fraser
-----------------------------------------
Name: John W. Fraser
Title: Managing Director
<PAGE> 112
ORIX USA Corporation, as a Lender
By: /s/ Hiroyuki Miyauchi
-----------------------------------------
Hiroyuki Miyauchi
Title: Executive Vice President
<PAGE> 113
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as a Lender
By: /s/ Terrell W. Harm
-----------------------------------------
Title: Vice President
<PAGE> 114
PRIME INCOME TRUST, as a Lender
By: /s/ Rafael Scolari
-----------------------------------------
Rafael Scolari
Title: V.P. Portfolio Manager
<PAGE> 115
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., NEW YORK BRANCH, as a Lender
By: /s/ [ILLEGIBLE]
-----------------------------------------
Title: Joint General Manager
<PAGE> 116
FLOATING RATE PORTFOLIO
By: Chancellor LGT Senior Secured
Management Inc., as attorney in
fact
By: /s/ Stephen M. [ILLEGIBLE]
-----------------------------------------
Title: Managing Director
<PAGE> 117
NATEXIS BANQUE, as a Lender
By: /s/ G. K. DOOLEY
-----------------------------------------
Kevin Dooley
Title: Vice President
By: /s/ William C. Maier
-----------------------------------------
WILLIAM C. MAIER
Title: VP-GROUP MANAGER
<PAGE> 118
ROYALTON COMPANY, as a Lender
By: Pacific Investment Management
Company, as its Investment Advisor
By: /s/ Raymond Kennedy
-----------------------------------------
Raymond Kennedy
Title: Vice President
Address:
Royalton Company
c/o Pacific Investment Management
Company
840 Newport Beach, CA 92658
Attn: Raymond Kennedy
Telephone: (714) 717-7363
Facsimile: (714) 640-3419
<PAGE> 119
THE DAI-ICHI KANGYO BANK, LTD.,
CHICAGO BRANCH, as a Lender
By: /s/ Mikio Nishimura
-----------------------------------------
Mikio Nishimura
Title: General Manager
<PAGE> 120
THE MITSUBISHI TRUST AND BANKING
CORPORATION, CHICAGO BRANCH
as a Lender
By: /s/ Masaaki Yamagishi
-----------------------------------------
Masaaki Yamagishi
Title: Chief Manager
<PAGE> 121
BankBoston, N.A.
as a Lender
By: /s/ [ILLEGIBLE]
-----------------------------------------
Title: Division Executive
<PAGE> 122
FLEET NATIONAL BANK,
as a Lender
By: /s/
-----------------------------------------
Title: Senior Vice President
<PAGE> 123
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST, as a Lender
By: /s/ Jeffrey W. Maillet
-----------------------------------------
Jeffrey W. Maillet
Title: Sr. Vice Pres. - Portfolio Mgr.
<PAGE> 124
METROPOLITAN LIFE INSURANCE COMPANY,
as a Lender
By: /s/ James R. [ILLEGIBLE]
-----------------------------------------
Title: Assistant Vice President
<PAGE> 125
CHRISTIANIA BANK OG KREDITKASSE
ASA, as a Lender
By: /s/ William S. Phillips /s/ Peter M. Dodge
------------------------------------------
William S. Phillips Peter M. Dodge
Title: Vice President First Vice President
<PAGE> 126
NATIONAL WESTMINSTER BANK PLC,
as a Lender
By: /s/ Stefanie Warner - Grise
-----------------------------------------
Title: Vice President
<PAGE> 127
BANK ONE, WISCONSIN, as a Lender
By: /s/ [ILLEGIBLE]
-----------------------------------------
Title: V.P.
<PAGE> 128
SOUTHERN PACIFIC THRIFT &
LOAN ASSOCIATION, as a Lender
By: /s/ Charles W. Martocano
-----------------------------------------
Title: Senior Vice President
<PAGE> 129
HELLER FINANCIAL, INC., as a Lender
By: /s/ Linda W. Wolf
-----------------------------------------
Title: S V P
<PAGE> 130
BANK OF TOKYO - MITSUBISHI TRUST
COMPANY, as a Lender
By: /s/ [illegible]
-----------------------------------------
Title: Vice President
<PAGE> 131
NORTHERN LIFE INSURANCE COMPANY
By: ING Capital Advisors, Inc.,
as Investment Advisor
By: /s/ Michael D. Hatley
-----------------------------------------
Michael D. Hatley
Title: Vice President & Portfolio Manager
<PAGE> 132
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO (a Unit of The Chase
Manhattan Bank), as a Lender
By: /s/ Ronald W. Stewart
-----------------------------------------
Ronald W. Stewart
Title: Managing Director
<PAGE> 133
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY, as a Lender
By: /s/ John B. Wheeler
-----------------------------------------
Title: Managing Director
<PAGE> 134
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender
By: /s/ J. Bowne
-----------------------------------------
Title: Authorized Agent
<PAGE> 135
THE FUJI BANK, LIMITED,
as a Lender
By: /s/ Tetsuo Kamatsu
-----------------------------------------
Tetsuo Kamatsu (K-219)
Title: Joint General Manager
<PAGE> 136
THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH, as a Lender
By: /s/ John H. Kemper
-----------------------------------
Title: Senior Vice President
<PAGE> 137
PILGRIM AMERICA PRIME RATE TRUST,
as a Lender
By: /s/ Michael J. Bacevich
-----------------------------------
Michael J. Bacevich
Title: Vice President
<PAGE> 138
DEEPROCK & COMPANY, as a Lender
By: Eaton Vance Management
as Investment Advisor
/s/ Payson F. Swaffield
---------------------------------------------
Name: Payson F. Swaffield
Title: Vice President
<PAGE> 139
KZH-ING-I CORPORATION
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
<PAGE> 140
KZH-SOLEIL CORPORATION,
as a Lender
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
<PAGE> 141
KZH - CRESCENT CORPORATION,
as a Lender
By: /s/ Virginia Conway
-----------------------------------------
Title: Authorized Agent
<PAGE> 142
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
AMERISERVE FOOD DISTRIBUTION, INC.
By: /s/ Donald J. Rogers
-----------------------------------------
Donald J. Rogers
Title: VP
<PAGE> 143
DONALDSON LUFKIN & JENRETTE
SECURITIES CORPORATION, as
Documentation Agent
By: /s/ [ILLEGIBLE]
-----------------------------------------
Title:
---------------------------------------
<PAGE> 144
CRESCENT - MACH I PARTNERS, L.P.
by: TCW Asset Management Company,
its investment manager
By: /s/ Justin L. Driscoll
-----------------------------------------
Justin L. Driscoll
Title: Senior Vice President
<PAGE> 145
Continental Assurance Company
Separate Account (E)
By: TCW Asset Management Company
as Attorney-in-Fact
By: /s/ Mark L. Gold
-----------------------------------------
Name: Mark L. Gold
Title: Managing Director
By: /s/ Justin L. Discoll
-----------------------------------------
Name: Justin L. Discoll
Title: Senior Vice President
<PAGE> 146
PPM AMERICA, INC., as attorney in
fact, on behalf of Jackson National
Life Insurance Company
By: /s/ Michael [ILLEGIBLE]
-----------------------------------------
Title: Managing Director
<PAGE> 1
Exhibit 10.3
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (Amendment) is entered into
effective the 1st day of January 1995, by and between NEBCO EVANS DISTRIBUTION,
INC., a Nebraska corporation (Employer) and RAYMOND E. MARSHALL (Employee).
WHEREAS, Employer and Employee entered into an Employment Agreement as of
December 23, 1986 (Employment Agreement); and
WHEREAS, said Employment Agreement has been informally extended to the
effective date hereof at increased compensation with Employee's title being that
of President and Chief Operating Officer; and
WHEREAS, Employer and Employee desire to embody in a written agreement the
amended terms and conditions under which the Employee shall be employed by
Employer from and after the Effective Date.
NOW, THEREFORE, in consideration of the mutual benefits, obligations,
covenants and promises herein contained, and intending to be legally bound
hereby, the parties agree as follows:
1. The Employment Agreement is amended as of the Effective Date hereof as
follows:
a) Title/Duties. Employer shall employ Employee as an Executive with
Employee initially having the title of President and Chief Operating Officer.
Employee acknowledges that his current job title may be changed in the
discretion of the Employer's Board of Directors as acquisitions of additional
operating units may be accomplished. Employer acknowledges that regardless of
any change of Employee's title, Employee's duties shall be in the nature of
those entrusted to a senior executive officer.
b) Term. The term of this Employment Agreement shall commence as of
the Effective Date hereof and end at the close of business on the third
anniversary date of the Effective Date hereof unless sooner terminated in
accordance with the provisions
-1-
<PAGE> 2
of Article IV of the Employment Agreement or extended as provided for herein.
The term shall be renewed for a period of one (1) year ending at the close of
business on the fourth anniversary date of the Effective Date of this Amendment
(subject to earlier termination under Article IV of the Employment Agreement),
unless the Employer gives notice in writing to the Employee of its intention not
to renew his employment for such one (1) year term on or before the second
anniversary date of the Effective Date of this Amendment. The term shall be
renewed for successive one (1) year periods in a like manner (always subject to
earlier termination under Article IV of the Employment Agreement), unless the
Employer gives notice in writing to the Employee of its intention not no renew
his employment for such one (1) year term more than two (2) years prior to the
first day of such one (1) year renewal term. The term of this Amendment,
including any renewal term, shall hereinafter be referred to as the "Term".
c) Compensation.
(i) salary. The Employer shall pay the Employee during the Term a
base salary at the rate of Two Hundred Ten Thousand Dollars ($210,000.00) per
annum, or such greater rate as the Employer's Board of Directors may hereafter
determine on an annual basis, payable in accordance with the Employer's payroll
procedure as presently in effect or as hereafter amended from time to time, less
such deductions as shall be required to be withheld by applicable law and
regulations.
(ii) Annual CPI Adjustment. The Employee's base salary shall be
adjusted annually on a calendar year basis in accordance with the change in the
Consumer Price Index for all urban consumers (CPI-U) with the base period of
December 1994. The first such adjustment to Employee's base salary shall be for
calendar year 1996.
(iii) Annual Bonus. The Employee shall be entitled to an annual
bonus for the fiscal year of the corporation ending on the 31st day of December,
1994 and for each subsequent fiscal year (52/53 week year) during the Term, in
each event payable on March
-2-
<PAGE> 3
1 immediately following the last day of the Employer's fiscal year. The annual
bonus shall be calculated using the Employer's "reported basis" statements and
no adjustment shall be made in the calculation of Reported Operating Profit
except that if the Employer's profit & loss statement is supported in any way by
the Employer's parent, the Employee shall benefit from such support. The formula
for determining the annual bonus is set forth hereinbelow.
(iv) Bonus Formula. The Employee's annual bonus shall be determined
in good faith by the Chairman of the Board of Directors of the Employer after
first considering the amount by which Reported Operating Profit exceeds then
current reasonable return on the Employer's invested capital. The annual bonus
due Employee for a fiscal year may exceed Employee's salary as adjusted by the
CPI-U for such fiscal year. The annual bonus shall be consistent with past
practices and subject to satisfactory performance of the business of Employer.
Employee shall have the right to suggest an amount which Employee believes would
be an appropriate annual bonus.
(v) In the event an Annual Bonus shall be payable with respect to a
period in the fiscal year in which the Term expires that is less than an entire
fiscal year, the Annual Bonus for such period shall be a prorata bonus
determined by multiplying the Annual Bonus which the Employee would have
received for the entire fiscal year in which the Term expires, by a fraction,
the numerator of which shall be the number of days in that calendar year
preceding the expiration of the Term and the denominator of which shall be 365.
2. Effective Date. The Effective Date of this Amendment shall be January
1, 1995.
3. Reaffirmation. In all other respects, Employer and Employee hereby
reaffirm the provisions of Employee's original Employment Agreement as if the
same had been executed on the Effective Date hereof.
-3-
<PAGE> 4
4. Authorization. Employer hereby represents that the provisions of the
above Amendment have been authorized by its Board of Directors.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Employment Agreement an of the Effective Date hereof.
NEBCO EVANS DISTRIBUTION, INC.,
Employer
By /s/ John V. Holten
-----------------------------
John V. Holten
Chairman of the Board
/s/ Raymond E. Marshall
-----------------------------
RAYMOND E. MARSHALL, Employee
-4-
<PAGE> 5
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the 23rd day of December, 1986, is made
by and between Nebco Distribution of Omaha, Inc., a Nebraska corporation
("Employer"), and Raymond Marshall ("Employee").
This Agreement shall be effective only upon the acquisition by Nebco
a.s, a Norwegian corporation ("Nebco a.s"), of the entire equity interest in
Employer (the "Effective Date"), and if Nebco a.s does not acquire the entire
such interest, this Agreement shall be void and of no effect whatsoever.
Employer and Employee desire to embody in a written agreement the
terms and conditions under which the Employee shall be employed by Employer
after the Effective Date.
Accordingly, in consideration of the mutual benefits, obligations,
covenants and promises herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows;
I. EMPLOYER AGREES:
1. To employ Employee as President and Chief
<PAGE> 6
Executive Officer for a period of three years, commencing on the Effective Date,
at an annual compensation of $90,000 in 1987, $100,000 in 1988, and $110,000
in 1989. To pay Employee an additional annual bonus the amount of which will be
based on a new bonus system that Employer expects to adopt within the next six
months, provided that under such bonus system Employee is expected to receive
not less than he has received under previous bonus plans of the Employer,
subject to satisfactory performance of the business of Employer.
2. In addition to this annual compensation, to grant to Employee at
the Effective Date a non-qualified option to purchase 3,000 shares of common
stock of Employer upon the terms and subject to the conditions set forth in a
Non-Qualified Option Agreement in the form annexed hereto as Exhibit A.
3. During such employment, to provide Employee with holiday,
vacation, group medical, disability and life insurance coverage and any other
fringe benefits as Nebco may in its sole discretion from time to time elect to
make available to Employee; provided that such benefits, taken as a whole, will
be at least comparable to those that he currently receives.
<PAGE> 7
4. To reimburse Employee for the initiation fees (not to exceed
$l8,000), dues or other expenses reasonably incurred by him at one country club
joined by him in order to promote the Employer's business. Employee shall
immediately select and apply for membership at Omaha Country Club, Happy Hollow
Country Club or Highland Country Club after consultation with Gerald T. Toohey.
II. EMPLOYEE AGREES:
1. To perform such management and employment duties as are
customarily performed by senior executives and may reasonably be requested.
2. To accept employment by Employer upon the terms and conditions
set forth in this Agreement, to the exclusion of all other employment, and
during the term of employment to undertake no planning for or organization of
any business activity competitive with the business of Employer.
3. To devote Employee's full time and best efforts in good faith to
performance hereunder, and not actively to engage in any other business in any
capacity whatsoever except upon the written approval of the Board of Directors
of Employer, to whom Employee shall from time to time report; provided, that,
subject to Section V.5 hereof,
<PAGE> 8
Employee shall not be prevented hereby from investing his assets in a manner
that will not detract from his ability to fulfill his duties hereunder.
4. To take no intentional action contrary to the best interest of
Employer.
5. To, in good faith and at all times during the term of this
Agreement, comply with all existing rules, customs, policies and procedures of
Employer, as they may be changed from time to time.
III. CONFIDENTIAL INFORMATION, POST-EMPLOYMENT COMPETITION:
1. Employee has been an employee of Employer, and in such capacity
acquired knowledge of Employer's business systems, techniques and methods of
operation that are unique assets of Employer's business. Employee shall not,
during or after the term of the employment, directly or indirectly, in any
manner utilize or disclose to any person, firm, corporation, association or
other entity, except where required by law: (a) any such systems, techniques and
methods of operation, or (b) any sales prospects, customer lists, products,
research or data of any kind, or (c) any information relating to strategic
plans, sales costs, profits or the financial condition of Employer or any of its
customers or prospective customers, that are not generally known to the
<PAGE> 9
public or recognized as standard practice in the industries in which Nebco
shall be engaged. Business systems shall include but not be limited to policy
and procedure manuals, computer programs, financial forms and information,
supplier information, recipes, accounting forms and procedures, personnel
policies and information on the needs of clients, all of which information is
not publicly disclosed and is considered by Employer to be confidential trade
secrets.
2. Employee agrees that all business systems, techniques and methods
of operation developed by him, and all product developments made by him, in the
course of his work for Employer, and any rights acquired by him in the course of
such work, shall inure to and be the property of Employer, and Employee shall
cause appropriate assignments in respect thereof to be made and delivered to
Employer upon Employer's request.
3. Subject to the provisions of paragraph 4 of this article,
Employee, for a period of one year following termination of his employment,
shall not, without Employer's written permission, directly or indirectly, on
Employee's behalf or on behalf of any other person, firm, corporation,
association or other entity, engage in or in any way be concerned with or
negotiate for, or acquire or maintain any ownership interest in, any business or
activity that is the
<PAGE> 10
same, similar to or competitive with that conducted by, engaged in or developed
for later implementation by Employer at any time during the term of Employee's
employment.
4. The provisions set forth in paragraph 3 above shall apply to all
fifty states and, in addition, to each foreign country, possession or territory,
in which Nebco may be engaged in business at the termination of Employee's
employment or at any time within 12 months prior thereto.
5. Employee further agrees that Employee shall not for a period of
one year following termination of his employment, directly or indirectly, at any
time in any manner, induce or attempt to influence any employees of Employer to
terminate their employment with Employer.
6. Employee acknowledges that in the event of any violation by
Employee of the provisions set forth in this article, Employer will sustain
serious, irreparable and substantial harm to its business, the extent of which
will be difficult to determine and impossible to remedy by an action at law for
money damages. Accordingly, Employee agrees that, in the event of such violation
or threatened violation by Employee, Employer shall be entitled to an injunction
before trial from any court of competent jurisdiction as a matter of course upon
the posting of not more than a nominal bond, in addition to all such other legal
and
<PAGE> 11
equitable remedies as may be available to Employer. Employee further agrees
that, in the event any of the provisions of this Agreement are determined by a
court or competent jurisdiction to be contrary to any applicable statute, law or
rule, or for any reason unenforceable as written, such court may modify any of
such provisions so as to permit enforcement thereof as thus modified.
IV. EFFECTIVENESS; TERMINATION:
1. This Agreement shall be effective at the Effective Date.
2. In the event of Employee's death, this Agreement shall
automatically terminate.
3. "Good and Sufficient Cause" shall mean intentionally engaging in
acts of dishonesty or other conduct intended to be injurious to the business of
Employer, conviction of a felony or the willful and material failure to perform
the employee's duties and to correct such failure after warning.
V. GENERAL PROVISIONS:
1. Employee's initial assignment and title hereunder may not
necessarily be continued and, after consultation with Employee aimed at reaching
a mutually satisfactory
<PAGE> 12
arrangement, Employer may assign Employee to a city other than Omaha, Nebraska.
2. The term "Employer", as used in this Agreement, shall also
include Employer's subsidiaries or affiliates, if any, on whose payroll Employee
is carried from time to time under this Agreement, and with respect to
Employee's duties, obligations and restrictions, shall also include all
subsidiaries and affiliated corporations, as the same may exist from time to
time.
3. If at the time this Agreement is entered into, Employee is
currently employed by Employer at will or under other terms and conditions,
whether written or oral, the parties agree: that this Agreement shall supersede
and be substituted for all such employment agreements on the Effective Date, and
that this Agreement is entered into in consideration of the mutual undertakings
of the parties, the cancellation of all previous employment contracts, and the
release by the parties of their respective rights and obligations under any
previous employment contracts excepting only such rights and obligations which
by their nature are intended to survive termination or cancellation of such
employment contract or relationship.
4. This is a severable Agreement. In the event any portions hereof
(particularly portions relating to
<PAGE> 13
restrictions against competition and the enforcement thereof) are held to be
unenforceable to any extent under the law of any state, it is the intention of
the parties that such portion(s) be enforced to the full extent permitted under
the law of such state, and shall remain enforceable in all other states, and in
any event, that all other parts of this Agreement shall remain valid and fully
enforceable as if the unenforceable part or parts had never been a part hereof.
Further, the part or parts of this Agreement relating to
restrictions against competition by Employee and the enforcement of such part
or parts shall be construed as a covenant independent of any other provision in
this Agreement and the existence of any claim or cause of action by Employee
against Employer, whether based upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by Nebco of the part or parts relating
to restrictions against competition by Employee.
5. Employee may acquire and hold up to 2% of the outstanding stock
of a corporation that is a supplier or that engages in any business in which
Employer is engaged, if such shares of stock are available to the general public
on a national or regional securities exchange or in the over-the-counter
securities markets. Otherwise, Employee
<PAGE> 14
may not own any shares of or any interest in any entity that is a supplier of
Employer or with which Employer does business.
<PAGE> 15
6. This Agreement contains the entire agreement between the parties.
No change, addition or amendment shall be made except by written agreement
executed by both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first set forth above.
/s/ Raymond Marshall
----------------------------
Raymond Marshall
NEBCO DISTRIBUTION
OF OMAHA, INC.
By: /s/ [Illegible]
-------------------
<PAGE> 1
EXHIBIT 12.1
AMERISERVE FOOD DISTRIBUTION, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN THOUSANDS, EXCEPT RATIO DATA)
<TABLE>
<CAPTION>
PRO FORMA
FISCAL YEAR FIRST QUARTER FISCAL YEAR
------------------------------------------- ---------------- ---------------
1992 1993 1994 1995 1996 1996 1997 1996
------- ------- ------- ------- ------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before
income taxes...... $ 369 $ 490 $ 665 $ 1,089 $ 3,818 $ (801) $(1,835) $18,249
Fixed charges....... 5,148 4,774 5,323 6,065 16,307 3,681 4,610 80,719
------- ------- ------- ------- ------- ------- ------- -------
Earnings............ $ 5,517 $ 5,264 $ 5,988 $ 7,154 $20,125 $ 2,880 $ 2,775 $98,968
======= ======= ======= ======= ======= ======= ======= =======
Interest expense.... $ 3,404 $ 2,759 $ 3,294 $ 3,936 $10,999 $ 2,405 $ 3,165 $69,819
Amortization of de-
ferred financing
costs............. 214 234 226 226 722 146 177 2,781
Interest portion of
rent expense...... 1,530 1,781 1,803 1,903 4,586 1,130 1,268 8,119
------- ------- ------- ------- ------- ------- ------- -------
Fixed charges....... $ 5,148 $ 4,774 $ 5,323 $ 6,065 $16,307 $ 3,681 $ 4,610 $80,719
======= ======= ======= ======= ======= ======= ======= =======
Ratio of earnings to
fixed charges..... 1.07 1.10 1.12 1.18 1.23 Note 1 Note 1 1.23
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
- ---------------
Note 1: Earnings were less than fixed charges by $801 and $1,835 for the first
quarter 1996 and 1997, respectively.
<PAGE> 1
Exhibit 16.1
August 8, 1997
Securities and Exchange Commission
Mail Stop 9-5
450 5th Street, N.W.
Washington, D.C. 20549
Dear Sirs/Madams:
We were previously engaged as independent certified public accountants for NEBCO
EVANS Distribution, Inc. (predecessor company to AmeriServe Food Distribution,
Inc.) (the "Company") for the years ended December 30, 1995 and December 31,
1994. Our engagement as independent certified public accountants ceased on or
about October 1, 1996. We have read the four paragraphs under the caption
"Change in Company's Accountant" on page 95 of the Company's registration
statement on Form S-4 to be filed with the Securities and Exchange Commission on
August 8, 1997 and, except for the statements contained in the second, third,
fifth and sixth sentences of the first paragraph and the entire third paragraph,
which we have no basis to agree or disagree with, we agree with the statements
made therein.
Your truly,
DELOITTE & TOUCHE
Milwaukee, Wisconsin
<PAGE> 1
Exhibit 21.1
Subsidiaries of AmeriServe Food Distribution, Inc.
Subsidiaries
Name of Entity Organized Under Laws of
-------------- -----------------------
AmeriServ Food Company Delaware
AmeriServe Funding Corporation Delaware
AmeriServe Transportation, Inc. Nebraska
Chicago Consolidated Corporation Illinois
Delta Transportation, Ltd. Wisconsin
The Harry H. Post Company Colorado
Northland Transportation Services, Inc. Nebraska
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Experts," "Summary
Selected Financial Data" and "Selected AmeriServe Historical Financial Data" and
to the use of our reports dated August 6, 1997, in the Registration Statement
(Form S-4) and related Prospectus of AmeriServe Food Distribution, Inc. for the
registration of $500,000,000 of 10 1/8% Senior Subordinated Notes.
Milwaukee, Wisconsin ERNST & YOUNG LLP
August 6, 1997
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
Management of PFS
(A Division of PepsiCo, Inc. Held for Sale):
We consent to the use of our report included herein and to the reference to
our firm under the headings "Summary Selected Financial Data," "Selected PFS
Historical Financial Data" and "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
Dallas, Texas
August 7, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and to the
use of our report dated March 22, 1996, with respect to the financial statements
of AmeriServ Food Company included in the Registration Statement (Form S-4) and
related Prospectus of AmeriServe Food Distribution, Inc. for the registration of
$500,000,000 of 10 1/8% Senior Subordinated Notes.
Dallas, Texas ERNST & YOUNG LLP
August 6, 1997
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
---------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) __
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617)654-3253
(Name, address and telephone number of agent for service)
---------------------
AmeriServe Food Distribution, Inc.
NEBRASKA 47-0464089
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
AMERISERVE FOOD DISTRIBUTION, INC.
17975 WEST SARAH LANE
SUITE 100
BROOKFIELD, WISCONSIN 53045
TELECOPIER NO: (414) 792-0202
ATTENTION: PRESIDENT
(Address of principal executive offices) (Zip Code)
SENIOR SUBORDINATED NOTES DUE 2007
(Title of indenture securities)
<PAGE> 2
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH
IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its parent,
State Street Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN EFFECT.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission as
Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee to
commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No.
1 to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by reference
thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST
POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS SPECIFIED
IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise corporate
trust powers is on file with the Securities and Exchange
Commission as Exhibit 3 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with
the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4 to
the Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Eastern Edison
Company (File No. 33-37823) and is incorporated herein by
reference thereto.
1
<PAGE> 3
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY SECTION
321(b) OF THE ACT.
The consent of the trustee required by Section 321(b) of the Act
is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority is annexed hereto as Exhibit 7 and made a
part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the {July, 25,1997}.
STATE STREET BANK AND TRUST COMPANY
By: /s/ E C HAMMER
--------------------------------------
NAME ELIZABETH C. HAMMER
TITLE VICE PRESIDENT
2
<PAGE> 4
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by AMERISERVE FOOD
DISTRIBUTION, INC. of its SENIOR SUBORDINATED NOTES DUE 2007, we hereby consent
that reports of examination by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ E C HAMMER
--------------------------------------
NAME ELIZABETH C. HAMMER
TITLE VICE PRESIDENT
DATED:
3
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business March 31, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ................ 1,665,142
Interest-bearing balances ......................................... 8,193,292
Securities ................................................................. 10,238,113
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary ............................... 5,853,144
Loans and lease financing receivables:
Loans and leases, net of unearned income ..... 4,936,454
Allowance for loan and lease losses .......... 70,307
Allocated transfer risk reserve .............. 0
Loans and leases, net of unearned income and allowances ........... 4,866,147
Assets held in trading accounts ............................................ 957,478
Premises and fixed assets .................................................. 380,117
Other real estate owned .................................................... 884
Investments in unconsolidated subsidiaries ................................. 25,835
Customers' liability to this bank on acceptances outstanding ............... 45,548
Intangible assets .......................................................... 158,080
Other assets ............................................................... 1,066,957
-----------
Total assets ............................................................... 33,450,737
===========
LIABILITIES
Deposits:
In domestic offices ............................................... 8,270,845
Noninterest-bearing ................. 6,318,360
Interest-bearing .................... 1,952,485
In foreign offices and Edge subsidiary ............................ 12,760,086
Noninterest-bearing ................. 53,052
Interest-bearing .................... 12,707,034
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary ............................... 8,216,641
Demand notes issued to the U.S. Treasury and Trading Liabilities ........... 926,821
Other borrowed money ....................................................... 671,164
Subordinated notes and debentures .......................................... 0
Bank's liability on acceptances executed and outstanding ................... 46,137
Other liabilities .......................................................... 745,529
Total liabilities .......................................................... 31,637,223
-----------
EQUITY CAPITAL
Perpetual preferred stock and related
surplus .................................................................... 0
Common stock ............................................................... 29,931
Surplus .................................................................... 360,717
Undivided profits and capital reserves/Net unrealized holding
gains (losses) ............................................................ 1,426,881
Cumulative foreign currency translation adjustments ........................ (4,015)
Total equity capital ....................................................... 1,813,514
-----------
Total liabilities and equity capital ....................................... 33,450,737
===========
</TABLE>
4
<PAGE> 6
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
5
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements of the Company for the three fiscal years
ended December 31, 1994, December 30, 1995 and December 28, 1996 and for the
three months ended March 30, 1996 and March 29, 1997, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<CIK> 0001042743
<NAME> AMERISERVE FOOD DISTRIBUTION INC
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-30-1995 DEC-28-1996 DEC-28-1996 DEC-28-1997
<PERIOD-START> JAN-02-1994 JAN-01-1995 DEC-31-1995 DEC-31-1995 DEC-29-1996
<PERIOD-END> DEC-31-1994 DEC-30-1995 DEC-25-1996 MAR-30-1996 MAR-29-1997
<EXCHANGE RATE> 1 1 1 1 1
<CASH> 0 575,000 2,162,000 0 3,995,000
<MARKETABLE SECURITIES> 0 0 0 0 0
<NOTES AND ACCOUNTS RECEIVABLES> 0 26,297,000 73,531,000 0 79,061,000
<ALLOWANCES FOR DOUBTFUL
ACCOUNTS> 0 (1,170,000) (4,896,000) 0 (4,974,000)
<INVENTORY> 0 15,230,000 47,714,000 0 62,909,000
<TOTAL CURRENT ASSETS> 0 44,496,000 126,588,000 0 153,898,000
<PROPERTY, PLANT & EQUPMENT> 0 14,718,000 46,315,000 0 49,731,000
<ACCUMULATED DEPRECIATION> 0 (7,806,000) (12,478,000) 0 (14,011,000)
<TOTAL-ASSETS> 0 77,503,000 291,103,000 0 320,846,000
<TOTAL-CURRENT-LIABILITIES> 0 33,983,000 108,544,000 0 127,281,000
<BONDS, MORTGAGES AND SIMILAR
DEBT> 0 0 0 0 0
0 0 0 0 0
<PREFERRED-NO MANDATORY 0 15,000,000 45,000,000 0 45,000,000
<COMMON STOCK> 0 6,000 6,000 0 6,000
<OTHER-STOCKHOLDERS EQUITY> 0 (4,849,000) (2,331,000) 0 (3,517,000)
<TOTAL-LIABILITY-&-EQUITY> 0 77,503,000 291,103,000 0 320,846,000
<NET SALES> 358,516,000 400,017,000 1,280,000 231,732,000 308,727,000
<TOTAL-REVENUES> 358,516,000 400,017,000 1,280,000 231,732,000 308,727,000
<COST OF GOODS SOLD> (320,602,000) (359,046,000) (1,151,749,000) (208,023,000) (277,086,000)
<TOTAL-COST OF GOODS SOLD> (320,602,000) (359,046,000) (1,151,749,000) (208,023,000) (277,086,000)
<OTHER-COSTS AND EXPENSES> 34,488,000 36,695,000 114,560,000 22,204,000 30,396,000
<PROVISION FOR DOUBTFUL
ACCOUNTS> 0 0 0 0 0
<INTEREST-EXPENSE> 3,294,000 3,936,000 10,999,000 2,405,000 3,165,000
<INCOME-BEFORE TAXES AND
OTHER ITEM> 665,000 1,089,000 3,818,000 (801,000) (1,835,000)
<INCOME-TAX EFFECT> 523,000 583,000 1,300,000 (242,000) (649,000)
<INCOME/LOSS-CONTINUING
OPERATIONS> 142,000 506,000 2,518,000 (559,000) (1,186,000)
<DISCONTINUED OPERATIONS> 0 0 0 0 0
<EXTRAORDINARY ITEMS> 0 0 0 0 0
<CUMULATIVE EFFECT> 0 0 0 0 0
<NET-INCOME/LOSS> 142,000 506,000 2,516,000 (559,000) (1,186,000)
<EARNINGS PER SHARE-PRIMARY> 0 0 0 0 0
<EARNINGS PER SHARE-
FULLY DILUTED> 0 0 0 0 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
AMERISERVE FOOD DISTRIBUTION, INC.
OFFER TO EXCHANGE
ALL OUTSTANDING
10 1/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR
10 1/8% NEW SENIOR SUBORDINATED NOTES DUE 2007
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 1997,
UNLESS THE OFFER IS EXTENDED
STATE STREET BANK AND TRUST COMPANY
(the "Exchange Agent")
BY MAIL, HAND OR OVERNIGHT COURIER:
State Street Bank and Trust Company
777 Main Street, 11th Floor
Hartford, CT 06123-0177
Attention: Corporate Trust Department
BY FACSIMILE TRANSMISSION
(FOR ELIGIBLE INSTITUTIONS ONLY):
(860) 986-7920
CONFIRM BY TELEPHONE:
(860) 986-4236
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONES LISTED
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.
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1997 (the "Prospectus") of AmeriServe Food Distribution, Inc. (the
"Company") and this Letter of Transmittal, which together constitute the
Company's offer (the "Exchange Offer") to exchange $1,000 principal amount of
its 10 1/8% New Senior Subordinated Notes due 2007 (the "New Notes"), which have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to a Registration Statement of which the Prospectus is a part,
for each $1,000 principal amount of its outstanding 10 1/8% Senior Subordinated
Notes due 2007 (the "Notes"), respectively. The term "Expiration Date" shall
mean 5:00 p.m., New York City time, on , 1997, unless the Company,
in its reasonable judgment, extends the Exchange Offer, in which case the term
shall mean the latest date and time to which the Exchange Offer is extended.
Capitalized terms used but not defined herein have the meaning given to them in
the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List on the next page the Notes to which this Letter of Transmittal
relates. If the space indicated is inadequate, the Certificate or Registration
Numbers and Principal Amounts should be listed on a separately signed schedule
affixed hereto.
<PAGE> 2
- --------------------------------------------------------------------------------
DESCRIPTION OF SENIOR SUBORDINATED NOTES TENDERED HEREBY
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
NAME(S) AND ADDRESS(ES) OF CERTIFICATE AMOUNT PRINCIPAL
REGISTERED OWNER(S) OR REGISTRATION REPRESENTED AMOUNT
(PLEASE FILL IN) NUMBERS* BY NOTES TENDERED**
------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered the
full aggregate principal amount represented by such Notes. All tenders must
be in integral multiples of $1,000.
- --------------------------------------------------------------------------------
This Letter of Transmittal is to be used (i) if certificates of Notes are
to be forwarded herewith, (ii) if delivery of Notes is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository Trust
Company, (the "Depository") pursuant to the procedures set forth in "The
Exchange Offer -- Procedures for Tendering Notes" in the Prospectus or (iii)
tender of the Notes is to be made according to the guaranteed delivery
procedures described in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2. Delivery of
documents to a book-entry transfer facility does not constitute delivery to the
Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Notes are registered on the books of the Company or any other person
who has obtained a properly completed bond power from the registered holder. The
undersigned has completed, executed and delivered this Letter of Transmittal to
indicate the action the undersigned desires to take with respect to the Exchange
Offer. Holders who wish to tender their Notes must complete this letter in its
entirety.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DEPOSITORY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
[ ] The Depository Trust Company
Account Number
Transaction Code Number
Holders whose Notes are not immediately available or who cannot deliver
their Notes and all other documents required hereby to the Exchange Agent on or
prior to the Expiration Date must tender their Notes according to the guaranteed
delivery procedure set forth in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2.
<PAGE> 3
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
Name of Eligible Institution that Guaranteed Delivery
If delivery by book-entry transfer:
Account Number
Transaction Code Number
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name
Address
<PAGE> 4
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the Notes
indicated above. Subject to, and effective upon, the acceptance for exchange of
such Notes tendered hereby, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such Notes as are being tendered hereby, including all rights to accrued
and unpaid interest thereon as of the Expiration Date. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent the true and lawful
agent and attorney-in-fact of the undersigned (with full knowledge that said
Exchange Agent acts as the agent of the Company in connection with the Exchange
Offer) to cause the Notes to be assigned, transferred and exchanged. The
undersigned represents and warrants that it has full power and authority to
tender, exchange, assign and transfer the Notes and to acquire New Notes
issuable upon the exchange of such tendered Notes, and that when the same are
accepted for exchange, the Company will acquire good and unencumbered title to
the tendered Notes, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim.
The undersigned represents to the Company that (i) the New Notes acquired
pursuant to the Exchange Offer are being obtained in the ordinary course of
business of the person receiving such New Notes, whether or not such person is
the undersigned, and (ii) neither the undersigned nor any such other person has
an arrangement or understanding with any person to participate in the
distribution of such New Notes. If the undersigned or the person receiving the
New Notes covered hereby is a broker-dealer that is receiving the New Notes for
its own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities, the undersigned
acknowledges that it or such other person will deliver a prospectus in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. The undersigned
and any such other person acknowledge that, if they are participating in the
Exchange Offer for the purpose of distributing the New Notes, (i) they cannot
rely on the position of the staff of the Securities and Exchange Commission
enunciated in Exxon Capital Holdings Corporation (available April 13, 1989),
Morgan Stanley & Co., Inc. (available June 5, 1991) or similar no-action letters
and, in the absence of an exemption therefrom, must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
the resale transaction and (ii) failure to comply with such requirements in such
instance could result in the undersigned or any such other person incurring
liability under the Securities Act for which such persons are not indemnified by
the Company. If the undersigned or the person receiving the New Notes covered by
this letter is an affiliate (as defined under Rule 405 of the Securities Act) of
the Company, the undersigned represents to the Company that the undersigned
understands and acknowledges that such New Notes may not be offered for resale,
resold or otherwise transferred by the undersigned or such other person without
registration under the Securities Act or an exemption therefrom.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
tendered Notes or transfer ownership of such Notes on the account books
maintained by a book-entry transfer facility. The undersigned further agrees
that acceptance of any tendered Notes by the Company and the issuance of New
Notes in exchange therefor shall constitute performance in full by the Company
of its obligations under the Registration Rights Agreement and that the Company
shall have no further obligations or liabilities thereunder for the registration
of the Notes or the New Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Company), as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the Notes tendered hereby
and, in such event, the Notes not exchanged will be returned to the undersigned
at the address shown below the signature of the undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered Notes may be withdrawn at any time
prior to the Expiration Date.
<PAGE> 5
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instruction" in this Letter
of Transmittal, certificates for all New Notes delivered in exchange for
tendered Notes, and any Notes delivered herewith but not exchanged, will be
registered in the name of the undersigned and shall be delivered to the
undersigned at the address shown below the signature of the undersigned. If a
New Note is to be issued to a person other than the person(s) signing this
Letter of Transmittal, or if the New Note is to be mailed to someone other than
the person(s) signing this Letter of Transmittal or to the person(s) signing
this Letter of Transmittal at an address different than the address shown on
this Letter of Transmittal, the appropriate boxes of this Letter of Transmittal
should be completed. If Notes are surrendered by Holder(s) that have completed
either the box entitled "Special Registration Instructions" or the box entitled
"Special Delivery Instructions" in this Letter of Transmittal, signature(s) on
this Letter of Transmittal must be guaranteed by an Eligible Institution
(defined in Instruction 4).
<PAGE> 6
------------------------------------------------------------
SPECIAL REGISTRATION INSTRUCTIONS
To be completed ONLY if the New Notes are to be issued in the name of
someone other than the undersigned.
Name:
----------------------------------------------------
Address:
--------------------------------------------------
------------------------------------------------------------
Book-Entry Transfer Facility Account:
------------------------------------------------------------
Employer Identification or Social Security Number:
------------------------------------------------------------
(Please print or type)
============================================================
SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the New Notes are to be sent to someone other
than the undersigned, or to the undersigned at an address other than that
shown under "Description of Notes Tendered Hereby."
Name:
----------------------------------------------------
Address:
--------------------------------------------------
------------------------------------------------------------
(Please print or type)
------------------------------------------------------------
REGISTERED HOLDER(S) OF NOTES SIGN HERE
(IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF REGISTERED HOLDER(S))
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Notes or on a security position listing as the owner of the Notes or by
person(s) authorized to become registered holder(s) by properly completed bond
powers transmitted herewith. If signature is by attorney-in-fact, trustee,
executor, administrator, guardian, officer of a corporation or other person
acting in a fiduciary capacity, please provide the following information.
(PLEASE PRINT OR TYPE).
Name and Capacity (full title):
- --------------------------------------------------------------------------------
Address (including zip code):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.:
- ---------------------------------------------------------------------
Dated:
- ---------------------------------
SIGNATURE GUARANTEE
(IF REQUIRED - SEE INSTRUCTION 4)
Authorized Signature:
----------------------------------------------------------------
(SIGNATURE OF REPRESENTATIVE OF SIGNATURE GUARANTOR)
Name and Title:
- --------------------------------------------------------------------------------
Name of Plan:
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
-----------------------------------------------------
(PLEASE PRINT OR TYPE)
Dated:
- ---------------------------------
<PAGE> 7
PAYOR'S NAME: AMERISERVE FOOD DISTRIBUTION, INC.
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
Please provide your social security number or other taxpayer identification
number on the following Substitute Form W-9 and certify therein that you are
subject to backup withholding.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Social security number
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN -----------------------------------
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY SIGNING OR
AND DATING BELOW -----------------------------------
Employer identification number
----------------------------------------------------------------------------
Part 2 -- Check the box if you are NOT subject to backup withholding under
Department of the Treasury the provisions of Section 3406(A)(1)(C) of the Internal Revenue Code
Internal Revenue Service because (1) you are exempt from backup withholding, (2) you have not been
notified that you are subject to backup withholding as a result of failure
to report all interest or dividends or (3) the Internal Revenue Service has
notified you that you are no longer subject to backup withholding. [ ]
----------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CER- Part 3 --
IDENTIFICATION NUMBER (TIN) TIFY THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE,
CORRECT AND COMPLETE.
SIGNATURE: ------------------------- DATE: Awaiting TIN [ ]
---------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO YOU.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within 60 days, 31% of all reportable
payments made to me thereafter will be withheld, until I provide a number.
<TABLE>
<S> <C>
- ---------------------------------------------- ---------------------------------------------
Signature Date
</TABLE>
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
All physically delivered Notes or confirmation of any book-entry transfer
to the Exchange Agent's account at a book-entry transfer facility of Notes
tendered by book-entry transfer, as well as a properly completed and duly
executed copy of this Letter of Transmittal or facsimile thereof, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at any of its addresses set forth herein on or prior to the
Expiration Date (as defined in the Prospectus). The method of delivery of this
Letter of Transmittal, the Notes and any other required documents is at the
election and risk of the Holder, and except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange Agent.
If such delivery is by mail, it is suggested that registered mail with return
receipt requested, properly insured, be used.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Notes for exchange.
Delivery to an address other than as set forth herein, or instructions via
a facsimile number other than the ones set forth herein, will not constitute a
valid delivery.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their Notes, but whose Notes are not immediately
available and thus cannot deliver their Notes, the Letter of Transmittal or any
other required documents to the Exchange Agent (or comply with the procedures
for book-entry transfer) prior to the Expiration Date, may effect a tender if:
(a) the tender is made through 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 or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution");
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the certificate number(s)
of such Notes and the principal amount of Notes tendered, stating that the
tender is being made thereby and guaranteeing that, within three New York
Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof), together with the Notes (or a
confirmation of book-entry transfer of such Notes into the Exchange Agent's
account at the Depository) and any other documents required by the Letter
of Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Notes in proper form for
transfer (or a confirmation of book-entry transfer of such Notes into the
Exchange Agent's account at the Depository) and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within three New York Stock Exchange trading days after the Expiration
Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above. Any Holder who wishes to tender Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery relating to such
Notes prior to the Expiration Date. Failure to complete the guaranteed delivery
procedures outlined above will not, of itself, affect the validity or effect a
revocation of any Letter of Transmittal form properly completed and executed by
a Holder who attempted to use the guaranteed delivery procedures.
3. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of Notes evidenced by a submitted
certificate is tendered, the tendering Holder should fill in the principal
amount tendered in the column entitled "Principal Amount Tendered" of the box
entitled "Description of Notes Tendered Hereby." A newly issued Note for the
principal amount of Notes submitted but not tendered will be sent to such Holder
as soon as practicable after the Expiration Date. All Notes delivered to the
Exchange Agent will be deemed to have been tendered in full unless otherwise
indicated.
<PAGE> 9
Notes tendered pursuant to the Exchange Offer may be withdrawn at any time
prior to the Expiration Date, after which tenders of Notes are irrevocable. To
be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Exchange Agent. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Notes to
be withdrawn (the "Depositor"), (ii) identify the Notes to be withdrawn
(including the registration number(s) and principal amount of such Notes, or, in
the case of Notes transferred by book-entry transfer, the name and number of the
account at the Depository to be credited), (iii) be signed by the Holder in the
same manner as the original signature on this Letter of Transmittal (including
any required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Notes register the transfer
of such Notes into the name of the person withdrawing the tender and (iv)
specify the name in which any such notes are to be registered, if different from
that of the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Notes so withdrawn are validly retendered. Any Notes which have been
tendered but which are not accepted for exchange, will be returned to the Holder
thereof without cost to such Holder as soon as practicable after withdrawal,
rejection of tender or termination of Exchange Offer.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered Holder(s) of the
Notes tendered hereby, the signature must correspond with the name(s) as written
on the face of the certificates without alternation or enlargement or any change
whatsoever. If this Letter of Transmittal is signed by a participant in the
Depository, the signature must correspond with the name as it appears on the
security position listing as the owner of the Notes.
If any of the Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Notes registered in different names are tendered, it will be
necessary to complete, sign and submit as many separate copies of this Letter of
Transmittal as there are different registrations of Notes.
Signatures on this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution unless the Notes
tendered hereby are tendered (i) by a registered Holder who has not completed
the box entitled "Special Registration Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or Holders
of Notes (which term, for the purposes described herein, shall include a
participant in the Depository whose name appears on a security listing as the
owner of the Notes) listed and tendered hereby, no endorsements of the tendered
Notes or separate written instruments of transfer or exchange are required. In
any other case, the registered Holder (or acting Holder) must either properly
endorse the Notes or transmit properly completed bond powers with this Letter of
Transmittal (in either case, executed exactly as the name(s) of the registered
Holder(s) appear(s) on the Notes, and, with respect to a participant in the
Depository whose name appears on a security position listing as the owner of
Notes, exactly as the name of the participant appears on such security position
listing), with the signature on the Notes or bond power guaranteed by an
Eligible Institution (except where the Notes are tendered for the account of an
Eligible Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS.
Tendering Holders should indicate, in the applicable box, the name and
address (or account at the Depository) in which the New Notes or substitute
Notes for principal amounts not tendered or not accepted for exchange are to be
issued (or deposited), if different from the names and addresses or accounts of
the person signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification number or social security number of
the person named must also be indicated and the tendering Holder should complete
the applicable box.
If no instructions are given, the New Notes (and any Notes not tendered or
not accepted) will be issued in the name of and sent to the acting Holder of the
Notes or deposited at such Holder's account at the Depository.
<PAGE> 10
6. TRANSFER TAXES.
The Company shall pay all transfer taxes, if any, applicable to the
transfer and exchange of Notes to it or its order pursuant to the Exchange
Offer. If a transfer tax is imposed for any other reason other than the transfer
and exchange of Notes to the Company or its order pursuant to the Exchange
Offer, the amount of any such transfer taxes (whether imposed on the registered
Holder or any other person) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exception therefrom is not
submitted herewith, the amount of such transfer taxes will be collected from the
tendering Holder by the Exchange Agent.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the Notes listed in this Letter of Transmittal.
7. WAIVER OF CONDITIONS.
The Company reserves the right, in its reasonable judgment, to waive, in
whole or in part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any Holder whose Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number(s) set forth
above. In addition, all questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus and this Letter
of Transmittal, may be directed to AmeriServe Food Distribution, Inc., 17975
West Sarah Lane, Suite 100, Brookfield, Wisconsin, telephone (414) 792-9300.
10. VALIDITY AND FORM.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Notes not properly tendered or any Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right, in its reasonable judgment, to waive any defects,
irregularities or conditions of tender as to particular Notes. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in this Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Notes must be cured within such time as the Company shall determine. Although
the Company intends to notify Holders of defects or irregularities with respect
to tenders of Notes, neither the Company, the Exchange Agent nor any other
person shall incur any liability for failure to give such notification. Tenders
of Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holder as soon as practicable following the Expiration
Date.
<PAGE> 11
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Notes is required to
provide the Exchange Agent with such Holder's correct TIN on Substitute Form W-9
above. If such Holder is an individual, the TIN is the Holder's social security
number. The Certificate of Awaiting Taxpayer Identification Number should be
completed if the tendering Holder has not been issued a TIN and has applied for
a number or intends to apply for a number in the near future. If the Exchange
Agent is not provided with the correct TIN, the Holder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that are
made to such Holder with respect to tendered Notes may be subject to backup
withholding.
Certain Holders (including, among others, all domestic corporations and
certain foreign individuals and foreign entities) are not subject to these
backup withholding and reporting requirements. Such a Holder, who satisfies one
or more of the conditions set forth in Part 2 of the Substitute Form W-9 should
execute the certification following such Part 2. In order for a foreign Holder
to qualify as an exempt recipient, that Holder must submit to the Exchange Agent
a properly completed Internal Revenue Service Form W-9, signed under penalties
of perjury, attesting to that Holder's exempt status. Such forms can be obtained
from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any amounts otherwise payable to the Holder. 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.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Holder with
respect to Notes tendered for exchange, the Holder is required to notify the
Exchange Agent of his or her correct TIN by completing the form herein
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
Holder is awaiting a TIN) and that (i) each Holder is exempt, (ii) such Holder
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 (iii) the Internal Revenue Service has notified such Holder that he or she is
no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder(s) of the Notes.
If Notes are in more than one name or are not in the name of the actual Holder,
consult the instructions on Internal Revenue Service Form W-9, which may be
obtained from the Exchange Agent, for additional guidance on which number to
report.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
If the tendering Holder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, write "Applied For"
in the space for the TIN or Substitute Form W-9, sign and date the form and the
Certificate of Awaiting Taxpayer Identification Number and return them to the
Exchange Agent. If such certificate is completed and the Exchange Agent is not
provided with the TIN within 60 days, the Exchange Agent will withhold 31% of
all payments made thereafter until a TIN is provided to the Exchange Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS)
OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR
PRIOR TO THE EXPIRATION DATE.
<PAGE> 1
EXHIBIT 99.2
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: e.g.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: e.g., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
=========================================================
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ---------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent
ward, minor, or incompetent person(3)
person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
- ---------------------------------------------------------
9. A valid trust, estate, or Legal entity (Do
pension trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- ---------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. You may also enter your business or "doing
business as" name. Furnish the owner's social security number or the
employer identification number of the sole proprietorship.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
EXHIBIT 99.2 (CONT)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at an office of the Social Security
Administration or the Internal Revenue Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part I, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer identification
number within 60 days, backup withholding, if applicable, will begin and will
continue until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government or a political subdivision, agency or instrumentality
thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the United
States 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 entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if (i) this interest is $600 or more, (ii) the
interest is paid in the course of the payer's trade or business and (iii)
you have not provided your correct taxpayer identification number to the
payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file tax returns.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct 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 STATEMENTS 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.--If you falsify certifications
or affirmations, you are subject to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR
TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE
Unless otherwise noted herein, all references to section numbers or to
regulations are references to the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
<PAGE> 1
EXHIBIT 99.3
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
10- 1/8% SENIOR SUBORDINATED NOTES DUE 2007
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
AMERISERVE FOOD DISTRIBUTION, INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of AmeriServe Food Distribution, Inc. (the "Company") made
pursuant to the Prospectus, dated , 1997 (the "Prospectus"), if
certificates for the outstanding 10- 1/8% Senior Subordinated Notes Due 2007 of
the Company (the "Senior Subordinate Notes" or the "Notes") are not immediately
available or if the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Exchange Agent prior to 5:00 p.m., New York time, on the Expiration Date of the
Exchange Offer. Such form may be delivered or transmitted by telegram, telex,
facsimile transmission, mail or hand delivery to State Street Bank and Trust
Company (the "Exchange Agent") as set forth below. In addition, in order to
utilize the guaranteed delivery procedure to tender Notes pursuant to the
Exchange Offer, a completed, signed and dated Letter of Transmittal (or
facsimile thereof) must also be received by the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date. Capitalized terms not defined
herein are defined in the Prospectus.
STATE STREET BANK AND TRUST COMPANY, EXCHANGE AGENT
BY MAIL, HAND OR OVERNIGHT COURIER:
State Street Bank and Trust Company
777 Main Street, 11th Floor
Hartford, CT 06123-0177
Attention: Corporate Trust Department
By Facsimile Transmission
(For Eligible Institutions Only):
(860) 986-7920
Confirm by Telephone:
(860) 986-4236
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL
NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Notes set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of Notes Tendered:*
$
-------------------------------------------------------------------------------
Certificate Nos. (if available):
- --------------------------------------------------------------------------------
Total Principal Amount Represented by Certificate(s):
$
-------------------------------------------------------------------------------
*Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
<TABLE>
<S> <C>
X
- --------------------------------------------------------- ------------------------------
- --------------------------------------------------------- ------------------------------
Signature(s) of Owner(s) Date
or Authorized Signatory
</TABLE>
Area Code and Telephone Number:
-----------------------------------------------------------------------------
Must be signed by the holder(s) of Notes as their name(s) appear(s) on
certificates for Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below. If Notes will be delivered by book-entry
transfer to The Depository Trust Company, provide account number.
<TABLE>
<CAPTION>
Please print name(s) and address(es)
<S> <C>
Name(s):
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Capacity:
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Address(es):
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Account Number:
---------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the undersigned will deliver to the Exchange Agent the certificates
representing the Notes being tendered hereby or confirmation of book-entry
transfer of such Notes into the Exchange Agent's account at The Depository Trust
Company, in proper form for transfer, together with any other documents required
by the Letter of Transmittal within three New York Stock Exchange trading days
after the Expiration Date.
<TABLE>
<S> <C>
Name of Firm:
AUTHORIZED SIGNATURE
Address: Name:
(Please Type or Print)
Title:
Zip Code
Area Code and Date:
Telephone Number:
</TABLE>
NOTE: DO NOT SEND CERTIFICATES OF NOTES WITH THIS FORM. CERTIFICATES OF NOTES
SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED LETTER OF
TRANSMITTAL.
