<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1997.
REGISTRATION NO. 333-
================================================================================
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 to:
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>
8 7/8% New Senior Notes due
2006(1)..................... $350,000,000 100% $350,000,000 $106,060.61
- --------------------------------------------------------------------------------------------------
Guarantees for the New Senior
Notes due 2006(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 calculating 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 (972) 385-8595.
<PAGE> 3
EXPLANATORY NOTE
This Registration Statement covers the registration of an aggregate
principal amount of $350,000,000 of 8 7/8% New Senior Notes due 2006 (the "New
Senior Notes" or "New Notes") of AmeriServe Food Distribution, Inc. (the
"Company") that may be exchanged for equal principal amounts of the Company's
outstanding 8 7/8% Senior Notes due 2006 (the "Senior 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 Robertson Stephens 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 OCTOBER , 1997
PRELIMINARY PROSPECTUS
OFFER TO EXCHANGE
ALL OUTSTANDING
[AMERISERVE LOGO]
8 7/8% SENIOR NOTES DUE 2006
($350,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR
8 7/8% NEW SENIOR NOTES DUE 2006
($350,000,000 PRINCIPAL AMOUNT)
OF
AMERISERVE FOOD DISTRIBUTION, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, 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 $350,000,000 of its 8 7/8% New Senior Notes due 2006 (the
"New Senior Notes" or "New Notes") for an equal principal amount of its
outstanding 8 7/8% Senior Notes due 2006 (the "Senior Notes" or the "Notes"), in
integral multiples of $1,000. The New Notes will be fully and unconditionally
guaranteed on a senior unsecured basis (the "New Note Guarantees") by, and will
be joint and several obligations of, 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 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
October 15, 1997 (the "Registration Rights Agreement"). The Senior Notes have
been, and the New Senior Notes will be, issued under an Indenture dated as of
October 15, 1997 (the "Senior Note Indenture" or the "Indenture"), among the
Company, the Subsidiary Guarantors and State Street Bank & Trust Company, as
trustee (the "Senior 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 12:00 midnight 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 12:00 midnight, 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 October 15, 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, to a limited number of institutional accredited investors in a
manner exempt from registration under the Securities Act and to persons 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 Notes will bear interest from October 15, 1997, the date of
issuance of the Senior Notes that are tendered in exchange for the New Senior
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 8 7/8% per annum.
Interest on the New Notes will be payable semiannually on April 15 and October
15 of each year, commencing April 15, 1998. The New Notes are redeemable at the
option of the Company, in whole or in part, at any time on or after April 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 October 15, 2000, up to 33% of the initially outstanding aggregate
principal amount of New Senior 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 108.875% of the principal amount of the New Senior 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 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 Notes, together with accrued and
unpaid interest, and liquidated damages, if any, to the date of repurchase.
There can be no assurance that sufficient funds will be available at the time of
any Change of Control to make any required repurchase of the New Notes tendered.
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 senior unsecured obligations of the Company and will
rank pari passu in right of payment with all existing and future senior
unsecured indebtedness of the Company and senior in right of payment to all
existing and future subordinated indebtedness of the Company. The New Notes will
be effectively subordinated, however, to all secured obligations of the Company,
including the Company's borrowings, if any, under the New Credit Facility, to
the extent of the assets securing such obligations. As of June 28, 1997, on a
pro forma basis after giving effect to the Refinancing and the Transactions, the
New Notes and the New Note Guarantees would have been effectively subordinated
to approximately $24.1 million in aggregate principal amount of secured
obligations of the Company and the Subsidiary Guarantors. 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 Robertson Stephens ("BancAmerica
Robertson Stephens" 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" or the "Commission") 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. 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 (the
"Offering"), 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 NOVEMBER , 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 95. 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 fiscal year ended December
28, 1996, the Company generated pro forma net sales, pro forma EBITDA and pro
forma net loss of $4.9 billion, $126.7 million and $1.9 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 July 11, 1997, in furtherance of its strategy, NEHC acquired PFS, the
foodservice distribution business ("PFS") of PepsiCo, Inc. ("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.
4
<PAGE> 10
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:
MContinue 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.
MCapitalize 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.
MContinue 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.
MContinue 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 REFINANCING
The Offering was completed as part of the refinancing of certain
outstanding term indebtedness of the Company incurred under the New Credit
Facility in connection with the Acquisition to, among other things, (i) extend
the maturity of those borrowings, (ii) fix the interest rate of those borrowings
at a rate believed by the Company to be attractive for fixed rate financing, and
(iii) provide the Company with additional cash to be utilized for working
capital and to fund possible future acquisitions (collectively, the
"Refinancing"). See "The Refinancing," "The Business -- Business Strategy" and
"Description of the Indebtedness -- New Credit Facility."
THE TRANSACTIONS
In connection with the Acquisition, the Company: (i) consummated the Senior
Subordinated 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 October 15,
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
persons in transactions outside the United States
in reliance on Regulation S under the Securities
Act (the "Offering").
5
<PAGE> 11
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......... $350,000,000 in aggregate principal amount of the
Company's 8 7/8% New Senior Notes due 2006.
THE EXCHANGE OFFER......... $1,000 principal amount of 8 7/8% New Notes in
exchange for each $1,000 principal amount of the
Notes. As of the date hereof, $350,000,000
aggregate principal amount of Senior Notes are
outstanding. The Company will issue the New Notes
to Holders on or promptly after the Expiration
Date.
EXPIRATION DATE............ 12:00 midnight, 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 October 15,
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 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."
6
<PAGE> 12
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 12:00
midnight, New York City time, on the Expiration
Date pursuant to the procedures described under
"The Exchange Offer -- Terms of the Exchange
Offer."
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 12:00 midnight, 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
7
<PAGE> 13
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."
SUMMARY OF TERMS OF NEW 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.
SECURITIES OFFERED......... $350.0 million in aggregate principal amount of the
Company's 8 7/8% Senior Notes due 2006.
MATURITY DATE.............. October 15, 2006.
INTEREST RATE.............. The New Notes will bear interest at the rate of
8 7/8% per annum, payable semi-annually on April 15
and October 15 of each year, commencing April 15,
1998.
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 April 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 October 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 108.875% 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 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 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."
RANKING.................... The New Notes will be senior unsecured obligations
of the Company and will rank pari passu in right of
payment with all existing and future senior
unsecured indebtedness of the Company and senior in
right of
8
<PAGE> 14
payment to all existing and future subordinated
indebtedness of the Company. The New Notes will be
effectively subordinated, however, to all secured
obligations of the Company, including the Company's
borrowings, if any, under the New Credit Facility,
to the extent of the assets securing such
obligations. As of June 28, 1997, on a pro forma
basis after giving effect to the Offering and the
Transactions and the application of the estimated
net proceeds therefrom, the New Notes and the New
Notes Guarantees would have been effectively
subordinated to approximately $24.1 million in
aggregate principal amount of secured obligations
of the Company and the Subsidiary Guarantors. See
"Risk Factors -- Subordination to Senior Secured
Debt; Encumbrances on Assets."
NEW NOTE GUARANTEES........ The New Notes will be fully and unconditionally
guaranteed on a joint and several basis by all
direct or indirect domestic Restricted Subsidiaries
of the Company (together, the "Subsidiary
Guarantors"). The New Note Guarantees will be
general unsecured obligations of the Subsidiary
Guarantors and will rank pari passu in right of
payment to all existing and future senior unsecured
indebtedness of the Subsidiary Guarantors and
senior in right of payment to all existing and
future subordinated indebtedness of the Subsidiary
Guarantors.
CERTAIN COVENANTS.......... The Indenture will contain certain covenants that
will 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
9
<PAGE> 15
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 June 28, 1997 and summary unaudited pro forma consolidated
income statement data of the Company for the fiscal year ended December 28, 1996
and the six months ended June 28, 1997. The Company has a fiscal year ending on
the Saturday closest to the end of the calendar year. The Company's fiscal year
was 52 weeks. PFS had a fiscal year ending on the last Wednesday in December.
PFS' fiscal year was 52 weeks. The pro forma consolidated balance sheet data at
June 28, 1997 give effect to the Transactions and the Refinancing as if they had
occurred on June 28, 1997. The pro forma consolidated income statement data and
other data for the fiscal year ended December 28, 1996 and the six months ended
June 28, 1997 give effect to the Transactions and the Refinancing 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>
SIX MONTHS
ENDED
FISCAL YEAR JUNE 28,
1996 1997
------------ ----------
<S> <C> <C>
INCOME STATEMENT DATA:
Net sales............................................................. $4,874,980 $2,301,244
Gross profit.......................................................... 488,051 234,697
Operating expenses.................................................... 405,502 201,395
Operating income...................................................... 82,549 33,302
OTHER DATA:
Pro forma EBITDA(1)................................................... $ 126,653 $ 55,768
Depreciation and amortization......................................... 44,587 22,466
Capital expenditures.................................................. 41,510 19,775
Ratio of earnings to fixed charges(2)................................. N/A N/A
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 28, 1997
----------------------------
ACTUAL PRO FORMA
---------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................. $ 3,413 $ 161,856
Working capital....................................................... 213,067 169,895
Total assets.......................................................... 1,416,592 1,404,356
Long-term debt, including current portion............................. 995,615 874,070
Stockholder's equity.................................................. 41,630 147,907
</TABLE>
- ---------------
(1) Pro forma EBITDA represents pro forma operating income plus pro forma
depreciation and amortization and excludes one-time non-recurring gains and
losses.
Pro forma EBITDA is computed as follows:
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED
1996 JUNE 28, 1997
----------- --------------
<S> <C> <C>
Pro forma operating income........................................... $ 82,549 $ 33,302
Pro forma depreciation and amortization.............................. 44,587 22,466
New recurring gains/losses:
Gains on sale of assets............................................ (4,283) --
Integration costs.................................................. 3,800 --
-------- ----------
Pro forma EBITDA..................................................... $ 126,653 $ 55,768
======== ==========
</TABLE>
EBITDA is presented because management believes it is a widely accepted
financial indicator used by certain investors and analysts to analyze and
compare companies on the basis of operating performance. The Company
understands that 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. 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) 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 fiscal year ended December 28, 1996
and the six months ended June 28, 1997, on a pro forma basis, earnings were
inadequate to cover fixed charges by $3.1 million and $10.3 million,
respectively.
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 six
months 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
six months 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 SIX MONTHS
-------------------------------- --------------------
AMERISERVE 1994 1995 1996 1996 1997
-------------------------------------- -------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales........................... $358,516 $400,017 $1,280,598 $ 584,791 $741,009
Gross profit........................ 37,914 40,971 128,849 59,011 72,465
Operating expenses.................. 34,488 36,695 114,560 53,328 67,133
Operating income.................... 3,426 4,276 14,289 5,683 5,332
OTHER DATA:
EBITDA(1)........................... $ 6,710 $ 7,038 $ 26,041 $ 9,923 $ 11,743
Depreciation and amortization....... 3,284 2,762 10,061 4,240 6,411
Capital expenditures................ 1,331 2,496 12,518 2,783 7,275
Net cash provided by (used in):
Operating activities............. 4,276 4,505 1,213 (2,345) (8,543)
Investing activities............. (5,422) (5,574) (105,013) (100,659) (13,246)
Financing activities............. 490 619 105,387 103,733 23,040
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS
------------------------------------ -----------------------
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 $1,552,475 $1,498,345
Gross profit................... 326,672 344,777 341,484 154,852 155,686
Operating expenses............. 239,772 265,305 261,741 122,528 120,945
Operating income............... 86,900 79,472 79,743 32,324 34,741
OTHER DATA:
EBITDA(1)...................... $103,953 $98,236 $99,573 $41,143 $43,555
Depreciation and
amortization................ 17,053 18,764 19,830 8,819 8,814
Capital expenditures........... 21,310 25,245 28,771 14,214 12,291
Net cash provided by (used in):
Operating activities........ 64,717 29,580 78,437 897 7,972
Investing activities........ (20,263) (24,388) (27,561) (13,182) (4,048)
Financing activities........ (44,360) (5,163) (49,454) 12,661 (5,517)
</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 management believes 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
tendering Notes in 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
substantial indebtedness it has incurred in connection with the Transactions and
the Refinancing. After giving pro forma effect to the Refinancing and the
Transactions, the Company would have had total indebtedness of $874.1 million
and stockholder's equity of $147.9 million as of June 28, 1997, and the
Company's earnings would have been inadequate to cover fixed charges by $3.1
million for the year ended December 28, 1996. The Company may incur additional
indebtedness in the future, subject to limitations imposed by the Indenture, the
Senior Subordinated Note Indenture (as defined herein) and the New Credit
Facility. See "The Refinancing," "Capitalization," "Unaudited Pro Forma Combined
Financial Statements," "The Transactions--The Acquisition" and "Description of
Indebtedness."
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 and will continue to be
leveraged following the Offering 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, the Senior Subordinated Note 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," "The Transactions--The Acquisition," "Description of Indebtedness--New
Credit Facility" and "--Senior Subordinated Notes."
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EFFECTIVE SUBORDINATION; ENCUMBRANCES ON ASSETS
Under the New Credit Facility, NEHC has granted the lenders thereunder (the
"Lenders") security interests in all of the capital stock of the Company, and
the Company has 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. As a result, the secured assets of the Company would be available
to pay obligations on the New Notes only after borrowings under the New Credit
Facility and other secured indebtedness have been paid in full. If the 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." At June 28, 1997, on
a pro forma basis after giving effect to the Refinancing and the Transactions,
the New Notes and the New Note Guarantees would have been effectively
subordinated to approximately $24.1 million of secured obligations of the
Company and the Subsidiary Guarantors.
In addition, if the Company incurs any additional senior indebtedness which
would rank pari passu in right of payment with the New Notes, and even if such
indebtedness is not secured, 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.
RELIANCE ON 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 entered into a five-year
Distribution Agreement effective from the Transactions Closing (as defined
herein) with each of PepsiCo's chain restaurant businesses 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 the subsidiaries of
PepsiCo which hold each of the three restaurant businesses as of the
Transactions 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. Each of the subsidiaries which is a party to the
Distribution Agreement will be owned by TRICON Global Restaurants, Inc.
("TRICON") following PepsiCo's spin-off of its core restaurant businesses to its
shareholders. As a result, the spin-off of TRICON will have no impact on 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 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
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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
management information systems. There can be no assurance that such improvements
will be realized on a timely basis.
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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
As a result of the consummation of the Transactions, Holberg indirectly
owns 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 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 RISKS
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 and the Refinancing, 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 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
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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 unsecured basis, by each of the Subsidiary
Guarantors. Management of the Company believes that indebtedness represented by
the 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 and the Refinancing, 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 New 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 Robertson Stephens 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.
COMPLIANCE WITH EXCHANGE OFFER PROCEDURES; RESTRICTIONS ON RESALES
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
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<PAGE> 23
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."
FORWARD-LOOKING STATEMENTS
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 the sections of this Prospectus captioned "Prospectus Summary,"
"Risk Factors," "Management's Discussion of Financial Condition and Results of
Operations" and "The Business." 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.
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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 October 15, 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 Refinancing, 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 12:00 midnight, New York City time,
on the Expiration Date. The Company will issue $1,000 principal amount of New
Senior Notes in exchange for each $1,000 principal amount of outstanding Senior
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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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 12:00 midnight, 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 Notes will bear interest from October 15, 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
April 15 and October 15, commencing on April 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 12:00 midnight, 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
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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 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
21
<PAGE> 27
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 12:00 midnight 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 12:00 midnight 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 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
22
<PAGE> 28
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 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
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 Agent 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
23
<PAGE> 29
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 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 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 Robertson Stephens
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.
24
<PAGE> 30
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.
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.
25
<PAGE> 31
See also "Description of Certain Federal Income Tax Consequences."
THE REFINANCING
The Offering was completed as part of the refinancing of certain
outstanding term indebtedness of the Company incurred under the New Credit
Facility in connection with the Acquisition, to, among other things, (i) extend
the maturity of those borrowings, (ii) fix the interest rate of those borrowings
at a rate believed by the Company to be attractive for fixed rate financing, and
(iii) provide the Company with additional cash to be utilized for working
capital and to fund possible future acquisitions (collectively, the
"Refinancing"). See "The Business -- Business Strategy" and "Description of the
Indebtedness -- New Credit Facility."
THE TRANSACTIONS
In connection with the Acquisition, the Company: (i) consummated the Senior
Subordinated Notes 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 of the Transactions on July 11, 1997 (the "Transactions
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.
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.
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 $10.6
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."
26
<PAGE> 32
USE OF PROCEEDS
The net proceeds from the sale of the Notes were approximately $339.0
million (after deducting discounts and commissions and estimated expenses of the
Offering) and were used by the Company to repay the term loans and provide cash
for working capital and other general corporate purposes. The existing
indebtedness of the Company being repaid in connection with the Offering
includes approximately $205.0 million of borrowings under the Company's New
Credit Facility (which bears interest at a blended rate of approximately 9.0% at
June 28, 1997).
See "The Refinancing."
27
<PAGE> 33
CAPITALIZATION
(DOLLARS IN THOUSANDS)
The following table sets forth the consolidated cash and capitalization of
the Company as of June 28, 1997 and the pro forma consolidated capitalization of
the Company as of June 28, 1997, adjusted to reflect the Transactions and the
Refinancing. 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" and "The Refinancing."
<TABLE>
<CAPTION>
AS OF JUNE 28, 1997
-------------------------
ACTUAL PRO FORMA
---------- ----------
<S> <C> <C>
Cash and cash equivalents........................................... $ 3,413 $ 161,856
======== ========
Long-term debt (including current portion):
Existing credit facility.......................................... $ 138,800 $ --
Revolving Credit Facility......................................... -- --
Term Loans........................................................ -- --
Senior Notes due 2006............................................. -- 350,000
Capital lease obligations......................................... 21,239 24,070
Note payable to PepsiCo........................................... 830,000 --
Senior Subordinated Notes due 2007................................ -- 500,000
Other............................................................. 5,576 --
-------- --------
Total long-term debt...................................... 995,615 874,070
Stockholder's equity:
Preferred......................................................... 45,000 --
Common............................................................ (3,370) 147,907
-------- --------
Total stockholder's equity................................ 41,630 147,907
-------- --------
Total capitalization................................................ $1,037,245 $1,021,977
======== ========
</TABLE>
28
<PAGE> 34
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 six months 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
six months 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 six months
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," "The Refinancing," "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 SIX MONTHS
----------------------------------------------------- ---------------------
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 $584,791 $ 741,009
Gross profit................................... 33,827 35,153 37,914 40,971 128,849 59,011 72,465
Operating expenses............................. 30,347 32,054 34,488 36,695 114,560 53,328 67,133
----- ----- ----- ----- ----- ----- ---------
Operating income............................... 3,480 3,099 3,426 4,276 14,289 5,683 5,332
Interest expense............................... (3,404) (2,759) (3,294) (3,936) (10,999) (5,281) (7,243)
Interest income-Holberg and affiliate.......... 293 150 533 749 528 215 237
----- ----- ----- ----- ----- ----- ---------
Income (loss) before income taxes, 369 490 665 1,089 3,818 617 (1,674)
extraordinary loss, and cumulative effect of
accounting change............................
Provision (credit) for income taxes............ 223 172 523 583 1,300 340 (629)
----- ----- ----- ----- ----- ----- ---------
Income (loss) before extraordinary loss and 146 318 142 506 2,518 277 (1,045)
cumulative effect of accounting change.......
-- (613) -- -- -- -- --
Extraordinary loss on early extinguishment of debt...
Cumulative effect of change in method of -- (495) -- -- -- -- --
accounting for income taxes..................
----- ----- ----- ----- ----- ----- ---------
Net income (loss).............................. $ 146 $ (790) $ 142 $ 506 $ 2,518 $ 277 $ (1,045)
===== ===== ===== ===== ===== ===== =========
OTHER DATA:
EBITDA(1)...................................... $ 6,034 $ 6,195 $ 6,710 $ 7,038 $ 26,041 $ 9,923 $ 11,743
Depreciation and amortization.................. 2,554 3,096 3,284 2,762 10,061 4,240 6,411
Capital expenditures........................... 3,446 2,205 1,331 2,496 12,518 2,783 7,275
Net cash provided by (used in):
Operating activities......................... 10,462 4,680 4,276 4,505 1,213 (2,345) (8,543)
Investing activities......................... (3,352) (6,556) (5,422) (5,574) (105,013) (100,659) (13,246)
Financing activities......................... (6,462) 2,676 490 619 105,387 103,733 23,040
Ratio of earnings to fixed charges(2).......... 1.1x 1.1x 1.1x 1.2x 1.2x 1.1x N/A
BALANCE SHEET DATA:
Cash........................................... $ 882 $ 1,682 $ 1,025 $ 575 $ 2,162 $ 1,304 $ 3,413
Total assets................................... 68,040 75,265 79,218 77,503 291,103 291,908 1,416,592
Long-term debt, including current portion...... 34,065 34,170 32,160 32,779 129,905 119,893 995,615
Total stockholder's equity..................... 10,212 14,779 17,205 10,157 42,675 40,434 41,630
</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 management believes 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 six months of 1997, earnings
were inadequate to cover fixed charges by $1.7 million.
29
<PAGE> 35
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 six
months 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 six months 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 six months 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," "The Refinancing," "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) SIX MONTHS(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 $1,552,475 $1,498,345
Gross profit.................... 273,858 304,030 326,672 344,777 341,484 154,852 155,686
Operating expenses.............. 199,796 220,834 239,772 265,305 261,741 122,528 120,945
---------- ---------- ---------- ---------- ---------- -------- --------
Operating income................ 74,062 83,196 86,900 79,472 79,743 32,324 34,741
Interest expense(4)............. (9,311) (8,780) (12,934) (17,613) (15,566) (7,102) (8,041)
---------- ---------- ---------- ---------- ---------- -------- --------
Income before income taxes...... 64,751 74,416 73,966 61,859 64,177 25,222 26,700
Provision for income taxes...... 24,624 28,703 28,874 23,844 24,597 9,928 9,924
---------- ---------- ---------- ---------- ---------- -------- --------
Net income...................... $ 40,127 $ 45,713 $ 45,092 $ 38,015 $ 39,580 $ 15,294 $ 16,776
========== ========== ========== ========== ========== ======== ========
OTHER DATA:
EBITDA(2)....................... $ 87,264 $ 96,872 $ 103,953 $ 98,236 $ 99,573 $ 41,143 $ 43,555
Depreciation and amortization... 13,202 13,676 17,053 18,764 19,830 8,819 8,814
Capital expenditures............ 16,246 24,927 21,310 25,245 28,771 14,214 12,291
Net cash provided by (used in):
Operating activities.......... 29,077 29,412 64,717 29,580 78,437 897 7,972
Investing activities.......... (18,709) (20,679) (20,263) (24,388) (27,561) (13,182) (4,048)
Financing activities.......... (10,377) (8,758) (44,360) (5,163) (49,454) 12,661 (5,517)
Ratio of earnings to fixed 5.5x 6.1x 5.2x 3.8x 4.1x 4.0x 3.8x
charges(3)....................
BALANCE SHEET DATA:
Cash............................ $ (441) $ 80 $ 174 $ 203 $ 1,625 $ 579 $ 32
Total assets.................... 401,168 462,042 479,799 516,288 478,921 521,014 508,455
Long-term debt, including -- -- -- -- -- -- --
current portion...............
Divisional equity............... 77,997 100,146 85,707 88,579 93,405 96,168 87,639
</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 six
months presented was 24 weeks.
(2) EBITDA represents operating income plus depreciation, amortization and
excludes one-time non-recurring gains and losses. EBITDA is presented
because management believes 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.
Management 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 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.
(4) Interest is paid on advances from PepsiCo, Inc. and affiliates at the prime
rate (8.35% at December 31, 1996). The advances are not subject to stated
repayment terms. PFS and PepsiCo, Inc. 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 agreements between PFS and
Pizza Hut, Inc. and its franchisees.
30
<PAGE> 36
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:
M 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.
M 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.
M 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.
M 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.
M 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.
M 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."
RECENT DEVELOPMENTS
During the third quarter of 1997, management of the Company performed an
extensive review of the existing operations including the recently acquired PFS
operations with the objective of developing a business plan for the
restructuring and consolidation of the organizations. The business plan, which
was approved by the Company's Board of Directors late in the third quarter,
identified a number of actions designed to significantly increase the efficiency
and effectiveness of the combined entity's warehouse and transportation network
and operational support infrastructure, and position the Company for continued
sales growth and increased penetration in the chain restaurant segment of the
foodservice distribution industry. These actions include construction of new
strategically located warehouse facilities, closures of certain existing
warehouse facilities and expansions of others, dispositions of property and
equipment, conversion of computer systems, reductions in workforce and
relocation of the Company's headquarters.
To reflect the impact of the business plan on existing operations, the
Company intends to record a restructuring charge of approximately $31.0 million,
to be recorded in the third quarter of 1997, which primarily relates to these
actions. Included in this charge are approximately: (i) $18.0 million related to
impairment of property, equipment and other assets; (ii) $9.0 million for exit
costs associated with future lease terminations and employee displacements; and
(iii) $4.0 million of integration expenses incurred in the third quarter of 1997
associated with a previous acquisition and certain incurred employee relocations
associated with the business plan.
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<PAGE> 37
Although the business plan action, when completed, is expected to result in
cost savings of $7.9 million, results in 1998 will be impacted by start-up costs
and other operating inefficiencies associated with the warehouse and
transportation network reconfiguration, including workforce hiring and training
and integration of customer delivery routes.
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 six months of 1996 and 1997.
<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS
------------------------- ---------------
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 10.1 9.8
Distribution, selling and administrative
expenses......................................... 9.6 9.1 9.0 9.1 9.1
Operating income................................... 1.0 1.1 1.1 1.0 0.7
</TABLE>
FIRST SIX MONTHS OF 1997 COMPARED TO FIRST SIX MONTHS OF 1996
AmeriServ was acquired on January 26, 1996. Therefore, the first six months
of 1996 include only five months of operations related to the acquisition of
AmeriServ.
Net Sales. Net sales increased by $156.2 million, or 26.7%, during the
first six months of 1997 as compared to the first six months of 1996. The pro
forma effect of the AmeriServ acquisition accounted for $55.1 million, or 35.3%,
of such increase, and increased account penetration, new store openings and
service to Arby's accounted for the remaining $101.1 million, or 64.7%, 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 $13.5 million, or 22.8%, during
the first six months of 1997 as compared to the first six months of 1996. The
increase was due to the pro forma effect of the AmeriServ acquisition ($5.2
million) and the increase in sales ($8.3 million). Gross margin decreased from
10.1% during the first six months of 1996 as compared to 9.8% for the first six
months of 1997 due to the slightly higher cost of products purchased by
customers added through the AmeriServ acquisition.
Distribution, Selling and Administrative Expenses. Distribution, selling
and administrative expenses increased by $13.8 million, or 25.9%, during the
first six months of 1997 as compared to the first six months of 1996. The
increase was primarily due to costs related to preparation for the commencement
of service to Arby's. Distribution, selling and administrative expenses as a
percent of net sales remained constant at 9.1% during the first six months of
1997 as compared to the first six months of 1996.
Operating Income. Operating income decreased by $0.4 million, or 6.2%,
during the first six months of 1997 as compared to the first six months 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, offset by the increase in net sales. Operating income margin
decreased from 1.0% during the first six months of 1996 to 0.7% during the first
six months 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
32
<PAGE> 38
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.
Distribution, Selling and Administrative Expenses. Distribution, selling
and administrative expenses increased by $77.9 million, or 212.2%, during fiscal
1996 as compared to fiscal 1995. The overall increase was primarily due to the
AmeriServ acquisition. Distribution, selling and administrative expenses as a
percent of net sales decreased from 9.1% during fiscal 1995 to 9.0% during
fiscal 1996, due to decreased operating costs 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 Income. Operating income increased by $10.0 million, or 234.2%,
during fiscal 1996 as compared to fiscal 1995 principally as a result of the
increase in net sales. Operating margin remained constant 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.
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.
Distribution, Selling and Administrative Expenses. Distribution, selling
and administrative expenses increased by $2.2 million, or 6.4%, during fiscal
1995 as compared to fiscal 1994. The increase was primarily due to several
distribution center expansions. Distribution, selling and administrative
expenses as a percent of net sales decreased from 9.6% during fiscal 1994 to
9.1% during fiscal 1995.
Operating Income. Operating income increased by $0.9 million, or 24.8%,
during fiscal 1995 as compared to fiscal 1994 for the reasons stated above. 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 six months of 1996 and 1997. PFS sales are
reported net of rebates as a result of profit limitation agreements with Pizza
Hut, Inc. and its franchisees. Such profit limitation agreements continue after
the Transactions Closing.
<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS
----------------------------- -----------------
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 10.4
Operating expenses......................... 7.4 7.7 7.7 7.9 8.1
Operating income........................... 2.6 2.3 2.3 2.1 2.3
</TABLE>
FIRST SIX MONTHS 1997 COMPARED TO FIRST SIX MONTHS 1996
Net Sales. PFS net sales of $1,498.3 million declined by $54.1 million, or
3.5%, during the first six months of 1997 as compared to the first six months of
1996, primarily due to new product rollouts and sales of promotional items in
the first six months of 1996 and lower store volumes in the current period,
offset slightly by an increased market share in the first six months of 1997.
Gross Profit. Gross profit increased by $0.8 million, or 0.5%, during the
first six months of 1997 as compared to the first six months of 1996, due to the
impact of low margin promotional sales on margins during the first six months of
1996. Gross margin increased from 10.0% during the first six months of 1996 to
10.4% during the first six months of 1997, due to a shift in sales to higher
margin products.
33
<PAGE> 39
Operating Expenses. Operating expenses decreased by $1.6 million, or 1.3%,
during the first six months of 1997 as compared to the first six months of 1996,
due to lower headcounts, lower computer processing charges and a decline in bad
debt expense, partially offset by costs associated with a new computer system,
which is expected to be implemented in 1998.
Operating Income. Operating income increased by $2.4 million, or 7.5%,
during the first six months of 1997 as compared to the first six months of 1996
due to the reasons stated above. As a result, operating income margin increased
from 2.1% during the first six months of 1996 to 2.3% during the first six
months of 1997.
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 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.
Operating Expenses. Operating expenses decreased by $3.6 million, or 1.3%,
during fiscal 1996 as compared to fiscal 1995. This decline reflected
temporarily higher field management expenses in fiscal 1995 and lower bad debt
expense in fiscal 1996, partially offset by increased depreciation expense in
fiscal 1996 due to several distribution center expansions and the relocation of
a distribution center.
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 a favorable performance in operating expenses, largely offset by a decline in
gross margin. 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.
Operating Expenses. Operating expenses increased by $25.5 million, or
10.6%, during fiscal 1995 as compared to fiscal 1994, reflecting increased bad
debt expense, costs associated with a short-term field management reorganization
and increased depreciation due to the relocation of a distribution center and
several center expansions.
Operating Income. Operating income decreased by $7.4 million, or 8.5%,
during fiscal 1995 as compared to fiscal 1994, for the reasons stated above.
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 AMERISERVE
The Company had $213.1 million of working capital at June 28, 1997 as
compared to $18.0 million at the end of fiscal 1996. The increase of $195.1
million was primarily due to increased receivables of $341.4 million and
increased inventory of $103.0 million, offset by increased accounts payable of
$202.1 million and increased accrued liabilities of $52.6 million. The changes
in working capital were due to the acquisition of PFS and the new business 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.
34
<PAGE> 40
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.
Net cash used in operating activities for the first six months of 1997 was
$8.5 million compared to net cash used in operating activities of $2.3 million
for the first six months of 1996. The increase in cash used in operating
activities was primarily due to the increase in working capital needs for the
new Arby's business.
Net cash used in investing activities during the first six months of 1997
was $13.2 million compared to net cash used in investing activities of $100.7
million for the first six months of 1996. The decrease in cash used in investing
activities was primarily due to the acquisition of AmeriServ for $92.9 million
during 1996, offset by an increase in capital expenditures of $4.5 million.
Net cash provided by financing activities during the first six months of
1997 was $23.0 million compared to net cash provided by financing activities of
$103.7 million for the first six months of 1996. The decrease in cash provided
by financing was primarily due to proceeds from the issuance of preferred stock
and borrowings under the Company's credit facility in order to fund the
acquisition of AmeriServ in 1996, offset by borrowings under the Company's
credit facilities in the first six months of 1997 to service the working capital
needs of Arby's.
Net cash provided by operating activities during fiscal 1996 was $1.2
million compared to $4.5 million in fiscal 1995. The decrease in cash provided
by operating activities was due to the increase in working capital at December
28, 1996 compared to December 30, 1995 (as discussed above), offset by an
increase in net income from $0.5 million during fiscal 1995 to $2.5 million in
fiscal 1996 and an increase in depreciation and amortization from $2.8 million
in fiscal 1995 to $10.1 million in fiscal 1996.
Net cash used in investing activities during fiscal 1996 increased $99.4
million to $105.0 million compared to $5.6 million in fiscal 1995. This increase
was principally due to the acquisition of AmeriServ for $92.9 million during
fiscal 1996. In addition, capital expenditures increased from $2.5 million in
fiscal 1995 to $12.5 million in fiscal 1996 as a result of expenditures to
modify and expand certain distribution centers.
Net cash provided by financing activities during fiscal 1996 was $105.4
million compared to $0.6 million in fiscal 1995. This increase was principally
due to proceeds from the issuance of preferred stock and borrowings under the
Company's credit facilities in order to fund the acquisition of AmeriServ.
Net cash provided by operating activities during fiscal 1995 was $4.5
million, which is comparable to the net cash provided by operating activities of
$4.3 million in fiscal 1994. Net cash used in investing activities during fiscal
1995 was $5.6 million compared to $5.4 million in fiscal 1995. Net cash provided
by financing activities during fiscal 1995 was $0.6 million compared to $0.5
million in fiscal 1994.
PRO FORMA
After the Transactions and the Refinancing, 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 provides $150 million of revolving
credit availability, of which approximately $138.9 million is available (after
reductions of $11.1 million of letters of credit) for draw 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.
35
<PAGE> 41
HISTORICAL PFS
Net cash provided by operating activities for the first six months of 1997
increased $7.1 million compared to the first six months of 1996. Growth in net
income contributed $1.5 million of this increase. Changes in receivables and
accounts payable resulted in a $1.2 million decline in cash outflows compared to
1996. An unfavorable change in accounts receivable reflected a recovery in sales
from the late 1996 decline. This impact was more than offset by a favorable
change in accounts payable that also reflected the recovery in sales from the
late 1996 decline, as well as timing of payments in the first six months of
1996. Accrued liabilities provided a favorable change of $2.9 million due to
increases in 1997 bonus accruals to be paid in 1998. Investing activities
provided a $9.1 million favorable change as compared to 1996, which included
$7.3 million in transfers of property to affiliates of the Parent in
anticipation of the sale of PFS and a $1.9 million decline in capital spending.
Financing activities, which largely represent net transfers of funds to/from the
Parent, reflected an $18.2 million change from a cash inflow in 1996 to a cash
outflow in 1997. This change includes $9.0 million representing the increase in
net cash provided by operating activities and a decrease in capital spending, as
well as the $7.3 million in transfers of property to affiliates of the Parent.
Net cash provided by operating activities in fiscal 1996 increased $48.9
million, or 165.2%, compared to fiscal 1995. This growth was driven by favorable
changes in working capital. Changes in receivables, inventories and accounts
payable provided net cash inflows of $22.7 million in 1996 compared to cash
outflows of $29.4 million in 1995. These changes reflect a decline in net sales
late in 1996, compared to sales growth in 1995. Investing activities reflected
capital spending growth over 1995 of $3.5 million to $28.8 million. Capital
spending activity was led by purchases of fleet and material handling equipment
and expenditures related to the expansion of a distribution center. Financing
activities, which largely represent net transfers of funds to/from the Parent,
reflected a $44.3 million increase in cash outflows compared to 1995. This
change primarily represents the increase in net cash provided by operating
activities, partially offset by the increase in capital spending.
Net cash provided by operating activities in fiscal 1995 decreased $35.1
million, or 54.3%, compared to fiscal 1994. Changes in accrued liabilities
accounted for $17.8 million of the decline reflecting timing of income and sales
tax payments. Unfavorable changes in accounts payable of $11.9 million were due
to timing of payments while unfavorable changes in inventories of $9.9 million
resulted from sales growth in fiscal 1995 and inventory control efforts late in
fiscal 1994. Investing activities reflected capital spending growth over 1994 of
$3.9 million to $25.2 million. Capital spending activity was led by purchases of
fleet and material handling equipment and expenditures related to the relocation
of two distribution centers. Financing activities, which largely represent net
transfers of funds to/from the Parent, reflected a $39.2 million decrease in
cash outflows compared to 1996. This change primarily represents the decline in
net cash provided by operating activities as well as the increase in capital
spending.
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 is 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.
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.
36
<PAGE> 42
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 has obtained final reports on the
results of such audit with regard to PFS, which concluded that there are no
environmental matters that are 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 fiscal year ended December
28, 1996, the Company generated pro forma net sales, pro forma EBITDA and pro
forma net loss of $4.9 billion, $126.7 million and $1.9 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 July 11, 1997, in furtherance of its strategy, NEHC acquired 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 opportunity to further reduce their costs
through value-added services, such as procurement of nonproprietary
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<PAGE> 45
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, and may also make larger acquisitions
as appropriate opportunities arise.
- 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 restaurant 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.
(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.
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<PAGE> 47
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.
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
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<PAGE> 48
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.
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.
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<PAGE> 49
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.
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.
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<PAGE> 50
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 distribution 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."
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 June 28, 1997, after giving effect to the Acquisition, the Company
had approximately 4,800 full-time employees, approximately 400 of whom were
employed in corporate support functions and approximately
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<PAGE> 51
4,400 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.
FACILITIES
The Company currently operates 39 distribution centers located throughout
the United States and Canada as follows:
<TABLE>
<CAPTION>
AMERISERVE PFS
- ------------------------------------------------- -------------------------------------------------
APPROXIMATE APPROXIMATE
LOCATION SQUARE FEET LEASED/OWNED LOCATION SQUARE FEET LEASED/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, 53,487 Leased
Salt Lake City, UT... 31,000 Leased Ontario..............
Waukesha, WI......... 196,000 Leased Mt. Holly, NJ........ 126,637 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
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> 52
THE ACQUISITION
Pursuant to the Asset Purchase Agreement, which was assigned to the Company
at the Transactions Closing (with the Canadian agreement being assigned to a
Canadian subsidiary of the Company), 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 Transactions Closing.
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 Transactions 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 Transactions Closing and
through the fifth anniversary of the Transactions 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 nonbreaching 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> 53
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 PFS Foodservice Group
Daniel W. Crippen........... 45 Director and President, AmeriServe Foodservice Group
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 Support
Susan E. Adzick............. 42 Senior Vice President--South Region
David Rader................. 49 President--Shared Services Group
Kurt E. Twining............. 42 Senior Vice President--Human Resources
Steve A. Johnson............ 52 Senior Vice President--Logistics
Diana M. Moog............... 38 Senior Vice President--Finance & Treasurer
Gene Meken.................. 39 Senior Vice President & Chief Financial Officer -- PFS
Foodservice Group
Kenneth W. Gerhardt......... 47 Chief Information Officer, Senior Vice
President--Information Technology
Robert W. Jorge............. 48 Senior Vice President--Western Region
Kenneth R. Lane............. 50 Senior Vice President--Northern Region
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").
48
<PAGE> 54
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 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.
Susan E. Adzick. Ms. Adzick joined AmeriServe as part of the acquisition
of PFS. At PFS, Ms. Adzick was Vice President of Operations for the South
Region. Prior to joining PFS in 1994, Ms. Adzick was Director of Quality
Management with Occidental Chemical Company at their headquarters in Dallas,
Texas. She has held various management and technical positions in the chemical
industry with Stouffer Chemical Company in phosphate based manufacturing for
nine years, and with DuPont Chemical Company for two years. Ms. Adzick received
her undergraduate degree in Biomedical Engineering from Vanderbilt University
and an M.B.A. from the same university.
David Rader. Mr. Rader assumed the position of Vice President, Finance and
Chief Financial Officer of PFS in 1993. Mr. Rader joined the PepsiCo
organization in 1975 as Financial Analyst for Frito-Lay. He then moved to Taco
Bell as Director of Business Planning. Mr. Rader then held the positions of Vice
President, Planning and Vice President, Controller for Taco Bell before joining
PFS as Vice President of Finance in 1987. He was previously with Chrysler
Corporation. Mr. Rader received his M.B.A. in marketing/finance and his B.S. in
electrical engineering from Ohio State University.
Kurt E. Twining. Mr. Twining joined AmeriServe in connection with the
acquisition of PFS. Mr. Twining joined PFS in 1986 as Manager, Employee
Relations. He then held positions of Manager, Staffing and Development;
Director, Employee Relations; Senior Director, Employee Relations; Senior
Director, Organization and Management Development; and Vice President, Field
Human Resources and Safety. Previously, he was employed by Texas Instruments.
Mr. Twining earned his B.S. in criminal justice and psychology and an M.S. in
labor relations from Michigan State University.
Steve A. Johnson. Mr. Johnson joined AmeriServe in connection with the
acquisition of PFS. Mr. Johnson joined the PepsiCo organization in 1974 as a
Distribution Engineer for Frito-Lay. He then held the positions of Group Manager
for Logistics; Warehouse Industrial Engineering; and Sales Productivity,
respectively. In 1989, Mr. Johnson joined PFS as Director of Logistics, followed
by his promotion to Senior Director of Logistics in 1991. He was previously
Owner/Consultant for Systems Research Corporation.
49
<PAGE> 55
Mr. Johnson received his Masters in industrial engineering and B.S. in
agriculture from Kansas State University and has completed coursework toward a
Ph.D. in operations research.
Diana M. Moog. Mrs. Moog joined AmeriServe as Senior Vice President and
Treasurer at the time of its acquisition of PFS. Most recently she had served as
Vice President, Controller of PFS. Mrs. Moog had held various positions at
PepsiCo, Inc. from 1989 to 1997 including Manager, Financial Reporting for
PepsiCo, Inc. and Assistant Controller, Frito-Lay. Prior to PepsiCo, Mrs. Moog
spent eight years with Ernst & Young as a Senior Manager. Mrs. Moog is a
certified public accountant and earned her Bachelors of Business Administration
in accounting from Texas Tech University in 1981.
Gene Meken. Mr. Meken joined AmeriServe in 1997 with the acquisition of
PFS from PepsiCo, Inc., where he worked for almost 12 years. In five years at
PFS, Mr. Meken was Vice President of Strategic Business Planning and Vice
President, Controller. He held a variety of other financial planning and
accounting positions at PepsiCo and its divisions, including Assistant
Controller of Pepsi-Cola International and Senior Manager of Planning at PepsiCo
Food Systems International. Prior to PepsiCo, he was a financial manager with
Thorn EMI (USA), Inc. and an audit senior at KPMG Peat Marwick. Mr. Meken holds
a BS in Accounting from the University of Connecticut and is a certified public
accountant.
Kenneth W. Gerhardt. Mr. Gerhardt joined AmeriServe in 1997 from PepsiCo
where he had served since 1991 in a variety of technology leadership roles. Most
recently, he served as Vice President, Information Technology for PFS where he
instigated the systems re-engineering initiatives adopted by AmeriServe. Prior
to joining PFS, Mr. Gerhardt served as Senior Director, Information Technology
for Pepsi Cola where he was responsible for financial, manufacturing, and
distribution systems. Mr. Gerhardt also served as Senior Director, Corporate
Systems for Pizza Hut, Inc. where he was responsible for financial,
marketing/sales, and customer access systems. Prior to joining PepsiCo, Mr.
Gerhardt worked in the transportation industry from 1984-1991 as Director,
Airline Information Systems for Trans World Airlines. Mr. Gerhardt also served
as Manager, Systems Planning for the Indiana University System from 1979-1984.
Mr. Gerhardt holds a Masters Degree from Indiana University.
Robert W. Jorge. Mr. Jorge joined AmeriServe as part of the acquisition of
PFS. At PFS he was Vice President of Operations for the Western Region. He
joined PFS in 1990 as Distribution Services Manager in Grand Prairie, Texas and
was subsequently promoted to Director, Senior Director and Vice President of
Procurement Services. Prior to joining PFS, Mr. Jorge spent 12 years with
American Hospital Supply Corporation and Baxter Healthcare Corporation in
various field operating positions. Mr. Jorge received his undergraduate degree
from American International College in 1971 and spent 6 years as a U.S. Naval
Aviator and Human Resources Management Specialist.
Kenneth R. Lane. Mr. Lane joined AmeriServe in connection with the
acquisition of PFS. The prior 24 years were spent with PepsiCo as PFS Vice
President Operations, North, overseeing the Northern United States as well as
international operations in Mexico, Canada, and Puerto Rico. Prior to the PFS
assignment, other positions included Vice President Distribution for the Central
Division of Frito-Lay, Director of Sales Development for Frito-Lay, Division
Sales Manager for Frito-Lay, and Department Manager, Financial Services for
Frito-Lay. Before Frito-Lay, he served as Retail Control Manager for Shop-Rite
Foods, Inc. for three years.
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
50
<PAGE> 56
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.
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.
51
<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
COMPEN- COMPEN-
FISCAL SALARY BONUS SATION SATION
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 $4.0 million 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
Non-employee directors who are unaffiliated with DLJ receive $15,000 annual
compensation for serving on the Company's Board of Directors. Other directors of
the Company do not receive compensation for such service.
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 January 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 Stock 100%(+)
Orkla ASA ("Orkla")............ (1)
DLJ Merchant Banking, L.P. and Warrants to purchase 3,682 shares of
affiliates ("DLJMB")......... Class A Common Stock 36.1%(++)
Warrants to purchase 981 shares of
Class B Common Stock 36.1%(++)
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.
Holberg has exercised a contractual right to repurchase from DLJMB and
affiliates (i) 55% of the junior exchangeable preferred stock of NEHC
acquired by DLJMB and affiliates in connection with the Acquisition (see
"Certain Relationships and Related Party Transactions"), and (ii)
warrants conferring the right to acquire 851.84 shares of the Common
Stock. The consummation of such repurchase is expected to be in or before
January 1998. The ownership information reported herein does not give
effect to such expected repurchase, but reflects actual ownership as of
the date hereof.
(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.
54
<PAGE> 60
(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 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.
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<PAGE> 61
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, is a member of the Board of Directors of NEHC and the
Company. Further, DLJ Capital Funding, Inc., an affiliate of DLJ, acted as
documentation agent 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 $4.0 million in cash from the Company upon consummation of the
Transactions.
Holberg has received customary investment banking and advisory 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
financial advisory and arrangement fee of $1.0 million in connection with the
Refinancing, as well as 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.
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.
DLJ and BancAmerica Robertson Stephens have, from time to time, provided
investment banking and other financial advisory services for which they have
received customary compensation, including fees received in connection with the
offering of the Senior Subordinated Notes.
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 consist 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
Notes, and the proceeds from such offering in excess of the amount used in such
redemption were used by NEHC in the Equity Contribution.
See "The Transactions," and "Plan of Distribution."
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DESCRIPTION OF INDEBTEDNESS
The following sets forth information concerning the Company's indebtedness,
other than the Notes, outstanding immediately following the consummation of the
Refinancing.
ACCOUNTS RECEIVABLE PROGRAM
In connection with the Acquisition, the Company entered into the Accounts
Receivable Program (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").
Up to $225.0 million of proceeds are presently available under the Accounts
Receivable Program. However, when the Company satisfies certain reporting
requirements, up to $250.0 million of total proceeds will be available. The
Accounts Receivable Program is available to AmeriServe Funding for five years
from the Transactions Closing, subject to early termination in accordance with
the terms of the transaction documents.
All of the Receivables are transferred on a daily basis to AmeriServe
Funding. The purchase price for the Receivables conveyed to AmeriServe Funding
is 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 have been
transferred by the Company to AmeriServe Funding as a contribution of capital
rather than as a sale. AmeriServe Funding (and the Trust, in turn) has obtained
first priority, perfected ownership interests in the Receivables, and any
related security and proceeds thereof. The Company serves as the initial master
servicer of the Accounts Receivable Program.
The Banks' yield on their Invested Amount is based on either LIBOR or a
Base Rate plus a margin. The "Invested Amount" is generally 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 June 30, 1997,
the Banks' yield would have been 6.875%.
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 is 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
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
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"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 Robertson Stephens has been 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
The Company has entered into the New Credit Facility, pursuant to which the
Company has available a new revolving credit facility (the "Revolving Credit
Facility"), and, prior to the Refinancing, four term loan facilities (the "Term
Loans"). At the Closing, the Company used a portion of the Notes proceeds to
repay in full the Term Loans. The undrawn amount of $150.0 million under the
Revolving Credit Facility will remain available for working capital and general
corporate purposes, including the issuance of letters of credit, which were
$11.1 million at the Transactions Closing, subject to the achievement of certain
financial ratios and compliance with certain conditions.
The initial interest rate for borrowings under the Revolving Credit
Facility will be, at the option of the Company, LIBOR plus 2.50% or the Base
Rate plus 1.25%. The initial rates for borrowings under the Revolving Credit
Facility will remain in effect until December 31, 1997, at which time they may
be reduced according to a pricing grid contained in the New Credit Facility
agreements. 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 guarantee 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, 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, NEHC, the Company and its subsidiaries are prohibited from
pledging any of their assets other than under the New Credit Facility.
Under the New Credit Facility, the letter of credit fee is 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 contained in the New Credit Facility agreements.
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.
The Company is required to make the following mandatory prepayments and
permanent reduction of the commitments under the Revolving Credit Facility
(subject to certain exceptions and basket amounts set forth
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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 the Company 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 Senior
Subordinated Notes and, with respect to the Revolving Credit Facility, the
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 (as defined in the New
Credit Facility), prepayments in an amount equal to 50% of Excess Cash Flow,
payable within 90 days of fiscal year-end.
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 also contains customary and appropriate conditions
to all borrowings under the Revolving Credit Facility including requirements
relating to prior written notice of borrowing, the accuracy of representations
and warranties, and the absence of any default or potential event of default.
The New Credit Facility also contains customary affirmative and negative
covenants (including, where appropriate, certain exceptions and baskets),
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 relating to minimum interest coverage, minimum
fixed charge coverage, and maximum leverage.
Events of default under the New Credit Facility include 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.
10 1/8% SENIOR SUBORDINATED NOTES DUE 2007 (THE "SENIOR SUBORDINATED NOTES").
On July 9, 1997, the Company issued and sold $500,000,000 principal amount
of the Senior Subordinated Notes pursuant to an Indenture, dated as of July 11,
1997, by and among the Company, the Subsidiary Guarantors and State Street Bank
and Trust Company as Trustee (the "Senior Subordinated Note Indenture"). The
Senior Subordinated Notes were sold pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. The Company expects to consummate an offer
to exchange the Senior Subordinated Notes for new Senior Subordinated Notes,
which will be registered under the Securities Act with terms substantially
identical to the Senior Subordinated Notes.
The Senior Subordinated Notes will mature on July 15, 2007. Interest
accrues at the rate of 10 1/8% per annum and is payable semi-annually in arrears
on January 15 and July 15 each year. Payment of principal, premium and interest
on the Senior Subordinated Notes are subordinated, as set forth in the Senior
Subordinated Indenture, to the prior payment in full of the Company's Senior
Debt (as defined in the Senior Subordinated Note Indenture), including the
Notes.
The Senior Subordinated Notes may not be redeemed at the option of the
Company any time prior to July 15, 2002. Thereafter, the Senior Subordinated
Notes may be prepaid with a premium that declines each year until July 5, 2005
when the Senior Subordinated Notes may be prepaid in whole or in part at 100% of
their principal amount. Upon a Change of Control, each holder can require the
Company to redeem such
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holder's Senior Subordinated Notes at an offer price equal to 101% of their
principal amount plus accrued and unpaid interest, subject to restrictions
contained in the New Credit Facility and the Indenture.
The Senior Subordinated Note Indenture contains various restrictive
covenants that, among other things, limit (i) the incurrence of indebtedness by
the Company and its subsidiaries and the issuance of preferred stock by the
Company, (ii) the payment of dividends on capital stock of the Company and its
subsidiaries and certain other Restricted Payments (as defined in the Senior
Subordinated Note Indenture), (iii) transactions with affiliates, (iv) the
business activities of the Company, (v) the creation of liens on the assets of
the Company and (vi) consolidations, mergers, conveyances, transfers and leases
of all or substantially all of the Company's assets. All of these limitations,
however, are subject to a number of important qualifications.
Events of default under the Senior Subordinated Indenture include, among
other things, (i) a default continuing for 30 days in payment of interest or
Liquidated Damages when due, (ii) a default in the payment of any principal or
premium when due, (iii) the failure to comply with covenants in the Senior
Subordinated Note Indenture, subject in certain instances to grace periods, (iv)
a default under other indebtedness of the Company or any Subsidiary in excess of
$15 million which is caused by a failure to make a required payment beyond any
applicable grace period or which results in the acceleration of such
indebtedness prior to its stated maturity, (v) certain events of bankruptcy or
insolvency with respect to the Company of any subsidiary, and (vi) the failure
to pay any judgment in excess of $5 million for a period of 60 days. However,
certain of these defaults will not constitute an Event of Default (as defined
under the Senior Subordinated Indenture) until the Trustee or the holders of 25%
in principal amount of the outstanding Senior Subordinated Notes notify the
Company of the default and the Company does not cure such default within the
time required after receipt of such notice.
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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. 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 New 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, including the definitions therein of
certain terms used below. Copies of the proposed form of 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 and will
rank pari passu in right of payment with all current and future unsecured senior
Indebtedness of the Company. The Company's obligations under the New Notes will
be fully and unconditionally guaranteed (the "New Note Guarantees") on an
unsecured senior basis by, and will be joint and several obligations of, the
Subsidiary Guarantors. See "--New Note Guarantees." As of June 28, 1997, on a
pro forma basis giving effect to the Refinancing and the Transactions, the New
Notes and the New Note Guarantees would have been effectively subordinated to
approximately $24.1 million of secured obligations of the Company and the
Subsidiary Guarantors. The Indenture will permit the incurrence of additional
secured Indebtedness in the future.
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 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 $350.0
million and will mature on October 15, 2006. Interest on the New Notes will
accrue at the rate of 8 7/8% per annum and will be payable semi-annually in
arrears on April 15 and October 15 of each year, commencing on April 15, 1998,
to Holders of record on the immediately preceding April 1 and October 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 October 15, 1997,
the date of original issuance of the Notes. 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.
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NEW NOTE GUARANTEES
The Company's payment obligations under the New Notes will be fully and
unconditionally guaranteed by the Subsidiary Guarantors on a joint and several
basis. The New Note Guarantees will be general unsecured obligations of the
Subsidiary Guarantors, will rank senior in right of payment to all subordinated
Indebtedness of the Subsidiary Guarantors and pari passu in right of payment to
all existing and future senior Indebtedness of the Subsidiary Guarantors, if
any. The obligations of any Subsidiary Guarantor under its New Note Guarantee
will be limited so as not to constitute a fraudulent conveyance under applicable
law.
The Indenture will provide 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 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 will provide 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 New 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 April
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
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applicable redemption date, if redeemed during the twelve-month period beginning
on April 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
------------------------------------------------------------------ ----------
<S> <C>
2002.............................................................. 104.438%
2003.............................................................. 102.219%
2004 and thereafter............................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to October 15, 2000, the
Company may redeem up to 33% of the original aggregate principal amount of New
Notes at a redemption price of 108.875% 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 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
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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 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 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
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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.
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 New Notes), except scheduled payments of interest or principal at Stated
Maturity of such Indebtedness; 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
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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 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; (x) optional and
mandatory prepayments on any Indebtedness incurred under the New Credit Facility
or other senior secured Indebtedness allowed to be incurred pursuant to the
covenant described below under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock"; or (xi) 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
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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 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 and its Restricted Subsidiaries of
Indebtedness represented by the Senior Subordinated Notes and the
guarantees thereof, respectively;
(ii) the incurrence by the Company of Indebtedness and letters of
credit pursuant to the New Credit Facility; provided that the aggregate
principal amount of all such 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 the sum of $225.0 million
plus the Borrowing Base.
(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;
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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 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 Subsidiary, other
than guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or 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 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.
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
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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.
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 (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 the date of the Indenture, (b) the New Credit
Facility as in effect as of the date of the Indenture, 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 of the Indenture, (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
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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 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.
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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 will be 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.
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
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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 New 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 New 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; (ii) default in payment when
due of the principal of or premium, if any, on the New Notes; (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 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
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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. 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
April 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 April 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.
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 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
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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
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.
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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 New 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 New 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 New 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 New 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.
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 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.
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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, 17975 West Sarah Lane, Suite 100, Brookfield,
Wisconsin 53045; 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, 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 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.
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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 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.
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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. Pursuant to the Exchange Offer, the Company is
offering to the Holders of Transfer Restricted Securities 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.
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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 have commenced the
Exchange Offer and used 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 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.
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"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).
"Borrowing Base" means, as of any date, an amount equal to the sum of (i)
85% of the sum of (a) the face amount of the Receivables of the Company and its
Restricted Subsidiaries and (b) the book value of the Company's undivided
interest in the assets of the AmeriServe Master Trust plus (ii) 65% of the book
value of all inventory of the Company and the Restricted Subsidiaries, all
calculated as of the end of the most recently completed month on a consolidated
basis and in accordance with GAAP.
"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.
"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
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"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, 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
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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.
"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
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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), (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, 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.
"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
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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 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.
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"New Credit Facility" means that certain Credit Facility, dated as of July
11, 1997, by and among the Company and Bank of America, providing for up to
$150.0 million of revolving 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 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
or other Indebtedness allowed to be incurred under clause (ii) of the covenant
described above under the caption "Incurrence of Indebtedness and Issuance of
Preferred Stock"; (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
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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., 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.
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"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 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, 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 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.
"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
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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 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 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
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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 New
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 New Note that is not a U.S. Holder.
PAYMENTS OF INTEREST
Interest paid on a New 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 New
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
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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. In the case of individual U.S. Holders, net capital gain is taxed at a
maximum rate of 28% if the U.S. Holder's holding period is more than one year
but not more than 18 months and at a maximum rate of 20% if the U.S. Holder's
holding period is more than 18 months. 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.
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 ownership,
(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 currently effective 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
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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 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).
Treasury Regulations released on October 6, 1997 (the "New Regulations")
and effective for payments made after December 31, 1998 will provide alternative
methods for satisfying the certification requirement described above. The New
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 look through rule
would apply in the case of tiered partnerships.
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 New Regulations will change some of the withholding
reporting requirements described above, effective for payments made after
December 31, 1998, 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 currently effective 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
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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 currently effective Treasury Regulations, if payments on a 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 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 the New Regulations,
backup withholding may apply to payments made after December 31, 1998 if such
custodian, nominee or other agent has actual knowledge that the payee is a U.S.
Holder.
Under currently effective 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 to payments made
after December 31, 1998 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.
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, the procedure for obtaining such an
exemption, if available, and the impact of the New Regulations on payments made
with respect to New Notes after December 31, 1998. 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 AND THE EFFECT OF THE NEW REGULATIONS WITH RESPECT TO PAYMENTS MADE AFTER
DECEMBER 31, 1998.
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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 Robertson Stephens, is
an agent and lender under the Company's New Credit Facility and will receive
proceeds from the Offering in connection with the repayment of term Indebtedness
loans under such New Credit Facility. See "Use of Proceeds."
DLJ and BancAmerica Robertson Stephens have, from time to time, provided
investment banking and other financial advisory services for which they have
received customary compensation, including fees received in connection with the
offering of the Senior Subordinated Notes.
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 Managing Director of DLJ, is a member of the Board of
Directors of NEHC and the Company; Benoit Jamar, a Managing Director of DLJ, is
a member of the Board of Directors of NEHC and the Company.
See "Certain Relationships and Related Party Transactions."
93
<PAGE> 99
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 in the Registration Statement 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 in the Registration Statement 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 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 and Registration Statement 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.
94
<PAGE> 100
INDEX OF CERTAIN DEFINED TERMS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Accounting Receivable Program....... 57
Acquisition......................... 3
AmeriServe Funding.................. 57
AmeriServ........................... 15
AmeriServe.......................... 3
Applicable Reserve Ratio............ 57
Asset Purchase Agreement............ 26
BancAmerica Robertson Stephens...... ii
Banks............................... 57
Base Amount......................... 57
CAGR................................ 3
Carrying Cost Receivables Reserve... 57
CCC................................. 49
Certificate of Incorporation........ 16
Change of Control................... 80
Code................................ 89
Commission.......................... 2
Company............................. 1
Depository.......................... ii
Distribution Agreement.............. 47
DLJ................................. ii
DLJMB............................... 54
EBITDA.............................. 12
Equity Contribution................. 26
Evans............................... 15
Exchange Act........................ 2
Exchange Offer...................... 1
Financial Institution............... 91
Guarantors.......................... 58
Holberg............................. 15
IDA................................. 48
Indebtedness........................ 77
Indenture........................... 1
Initial Purchasers.................. ii
Lenders............................. 14
Named Executive Officers............ 52
NEBCO............................... 15
NEBCO EVANS......................... 15
<CAPTION>
PAGE NO.
<S> <C>
NED................................. 54
NEHC................................ 3
Net Eligible Receivables............ 57
New Credit Facility................. 85
New Note Guarantee.................. 1
New Notes........................... 1
New Regulations..................... 91
Notes............................... 1
Participants........................ 76
PepsiCo............................. 3
PepsiCo Chains...................... 47
PFS................................. 3
Post................................ 3
Post Contribution................... 26
Post Holdings....................... 26
Preferred Stock Contribution........ 26
Receivables......................... 57
Registration Rights Agreement....... 1
Regulation S Permanent Global
Notes............................. 87
Regulation S Temporary Global
Notes............................. 87
Restricted Subsidiary............... 87
Revolving Credit Facility........... 58
Rule 144A Global Note............... 81
SEC................................. 2
Securities Act...................... 1
Shelf Registration Statement........ 9
Subsidiary Guarantors............... 9
Term Loans.......................... 58
TIN................................. 85
Transactions........................ 5
Transactions Closing................ 26
Transfer Restricted Securities...... 78
Trust............................... 57
Trustee............................. 61
U.S. Alien Holder................... 89
U.S. Holder......................... 89
</TABLE>
95
<PAGE> 101
INDEX TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
AMERISERVE FOOD DISTRIBUTION, INC.
Unaudited Pro Forma Consolidated Balance Sheet as of June 28, 1997.................. P-2
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 28,
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 Six Months Ended June
28, 1997......................................................................... P-6
Notes to Unaudited Pro Forma Consolidated Statements of Income for Fiscal Year 1996
and the Six Months Ended June 28, 1997........................................... P-7
</TABLE>
P-1
<PAGE> 102
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 and the
Refinancing as if such Transactions and Refinancing had been consummated on June
28, 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 JUNE 28, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PRO FORMA PRO FORMA ADJUSTMENTS FOR
HISTORICAL HISTORICAL ADJUSTMENTS FOR FOR FOR TRANSACTIONS
AMERISERVE POST TRANSACTIONS TRANSACTIONS REFINANCING AND REFINANCING
---------- ---------- --------------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..... $ 3,413 $ 61 $ 24,382(1) $ 27,856 $ 134,000(5) $ 161,856
Accounts receivable........... 410,074 14,505 (378,821)(2) 45,758 -- 45,758
Undivided interest in accounts
receivable
trust....................... -- -- 153,821(2) 153,821 -- 153,821
Inventories................... 150,759 6,644 -- 157,403 -- 157,403
Other current assets.......... 13,448 6,086 (4,700)(4) 14,834 -- 14,834
---------- ------- --------- ---------- ------- ----------
Total current assets........ 577,694 27,296 (205,318) 399,672 134,000 533,672
Property and equipment, net..... 122,232 3,426 -- 125,658 -- 125,658
Other assets:
Goodwill...................... 684,085 4,630 -- 688,715 -- 688,715
Other......................... 32,581 230 24,100(1) 52,411 11,000(5) 56,311
(2,000)(1) (7,100)(6)
(2,500)(4)
---------- ------- --------- ---------- ------- ----------
$1,416,592 $ 35,582 $(185,718) $1,266,456 $ 137,900 $1,404,356
========== ======= ========= ========== ======= ==========
LIABILITIES & STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of
long-term debt.............. $ 5,540 $ 489 $ (1,958)(1) $ 4,071 $ -- $ 4,071
Accounts payable.............. 291,572 12,935 -- 304,507 -- 304,507
Accrued liabilities........... 67,515 484 (12,800)(1) 55,199 -- 55,199
---------- ------- --------- ---------- ------- ----------
Total current liabilities... 364,627 13,908 (14,758) 363,777 -- 363,777
Non-current liabilities......... 20,260 2,413 -- 22,673 -- 22,673
Long-term debt:
Existing credit facilities.... 137,650 10,642 (148,292)(1) -- -- --
Note payable to PepsiCo,
Inc. ....................... 830,000 -- (830,000)(1,2,3) -- -- --
Term Loans.................... -- -- 205,000(1) 205,000 (205,000)(5) --
Senior Notes.................. -- -- -- -- 350,000(5) 350,000
Senior Subordinated Notes..... -- -- 500,000(1) 500,000 -- 500,000
Other......................... 22,425 2,342 (4,768)(1) 19,999 -- 19,999
---------- ------- --------- ---------- ------- ----------
Total long-term debt........ 990,075 12,984 (278,060) 724,999 145,000 869,999
---------- ------- --------- ---------- ------- ----------
Total liabilities......... 1,374,962 29,305 (292,818) 1,111,449 145,000 1,256,449
---------- ------- --------- ---------- ------- ----------
Stockholder's equity:
Preferred..................... 45,000 -- (45,000)(3) -- -- --
Common........................ (3,370) 6,277 175,000(3) 155,007 (7,100)(6) 147,907
(13,700)(1)
(2,000)(3)
(7,200)(4)
---------- ------- --------- ---------- ------- ----------
Total stockholder's
equity.................... 41,630 6,277 107,100 155,007 (7,100) 147,907
---------- ------- --------- ---------- ------- ----------
$1,416,592 $ 35,582 $(185,718) $1,266,456 $ 137,900 $1,404,356
========== ======= ========= ========== ======= ==========
</TABLE>
See accompanying notes to unaudited pro forma consolidated balance sheet.
P-2
<PAGE> 103
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 28, 1997
(IN THOUSANDS)
(1) Represents the following:
<TABLE>
<S> <C>
Sources of funds:
Proceeds under the New Credit Facility............................ $205,000
Proceeds from the Senior Subordinated Notes Offering.............. 500,000
--------
$705,000
========
Use of Proceeds:
Reduction of existing indebtedness:
Current maturities of long-term debt............................ $ 1,958
Existing credit facilities...................................... 148,292
Other........................................................... 4,768
Deferred financing fees and offering costs........................ 24,100
One time commitment and securitization fees and other costs
expensed at closing............................................. 13,700
Partially repay PepsiCo, Inc. note payable (excludes $11 million
payable subsequent to closing).................................. 475,000
Payment of accrued transaction costs at closing................... 12,800
Cash for working capital.......................................... 24,382
--------
$705,000
========
</TABLE>
In connection with the reduction of existing indebtedness, $2,000 of
deferred financing costs were written off.
(2) Represents the sale of accounts receivable ($378,821) to AmeriServe Funding
Corporation (Funding), a wholly owned, special purpose, bankruptcy remote
subsidiary of the Company, for $225,000 in cash (which was used to partially
repay the PepsiCo, Inc. note payable), and a $153,821 undivided interest in
the AmeriServe Master Trust (Trust). Under the Accounts Receivable Program,
Funding will acquire, on a daily basis, all of the trade receivables
generated by the Company and its subsidiaries. The purchases by Funding will
be financed through the transfer of the receivables to the Trust, which will
issue a series of short-term notes to investors, currently yielding 6.875%,
representing undivided interests in the assets of the Trust. Currently,
$225,000 under the Accounts Receivable Program is available to Funding for a
period of five years. Under the provisions of Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," the transaction has
been recorded as a sale of receivables to an unconsolidated, special purpose
entity.
(3) Adjustments to stockholder's equity:
<TABLE>
<S> <C>
Equity Contribution of $130,000 by NEHC to partially repay
PepsiCo, Inc. note payable...................................... $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)
Write off deferred financing costs................................ (2,000)
</TABLE>
(4) In connection with the contribution of Post to AmeriServe by NEHC, eliminate
AmeriServe's investment in NEHC preferred stock of $2,500 and declare a
dividend of $4,700 on Post to eliminate the intercompany balance.
P-3
<PAGE> 104
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET -- (CONTINUED)
AS OF JUNE 28, 1997
(IN THOUSANDS)
(5) Represents the following:
<TABLE>
<S> <C>
Proceeds from the Senior Notes Offering........................... $350,000
========
Use of Proceeds:
Repay Term Loans.................................................. $205,000
Deferred financing fees and offering costs........................ 8,750
Payment of accrued transaction costs at closing................... 2,250
Cash for working capital.......................................... 134,000
--------
$350,000
========
</TABLE>
(6) Represents write-off of the deferred financing costs of $7,100 related to
the Term Loans.
P-4
<PAGE> 105
AMERISERVE FOOD DISTRIBUTION, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE FISCAL YEAR 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACQUISITION PRO FORMA
HISTORICAL HISTORICAL HISTORICAL OF ADJUSTMENTS FOR
AMERISERVE PFS POST AMERISERV(9) TRANSACTIONS
---------- ---------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales(13)................................ $1,280,598 $3,422,086 $ 119,444 $ 52,852 $ --
Cost of goods sold........................... 1,151,749 3,080,602 106,938 47,640 --
---------- ---------- -------- ------- --------
Gross profit................................. 128,849 341,484 12,506 5,212 --
---------- ---------- -------- ------- --------
Operating expenses:
Distribution, selling and administrative... 102,808 241,911 10,560 5,850 (11,100)(1)
(8,100)(2)
15,469(6)
4,000(4)
Depreciation............................... 5,251 19,830 295 134 (1,000)(3)
Amortization............................... 4,810 -- 142 404 14,721(7)
Other -- net............................... 1,691 -- (4,283) -- 2,109(10)
---------- ---------- -------- ------- --------
Total operating expenses..................... 114,560 261,741 6,714 6,388 16,099
---------- ---------- -------- ------- --------
Operating income............................. 14,289 79,743 5,792 (1,176) (16,099)
Interest expense............................. 10,471 15,566 1,338 739 44,485(5)
---------- ---------- -------- ------- --------
Income (loss) before income taxes............ 3,818 64,177 4,454 (1,915) (60,584)
Provision (credit) for income taxes.......... 1,300 24,597 1,886 17 (23,920)(8)
---------- ---------- -------- ------- --------
Net income (loss)............................ $ 2,518 $ 39,580 $ 2,568 $ (1,932) $ (36,664)
========== ========== ======== ======= ========
<CAPTION>
PRO FORMA
PRO FORMA PRO FORMA FOR
FOR ADJUSTMENTS TRANSACTIONS
TRANSACTIONS FOR REFINANCING AND REFINANCING
------------ --------------- ---------------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales(13)................................ $ 4,874,980 $ -- $ 4,874,980
Cost of goods sold........................... 4,386,929 -- 4,386,929
---------- ------- ----------
Gross profit................................. 488,051 -- 488,051
---------- ------- ----------
Operating expenses:
Distribution, selling and administrative... 361,398 -- 361,398
Depreciation............................... 24,510 -- 24,510
Amortization............................... 20,077 -- 20,077
Other -- net............................... (483) -- (483)
---------- ------- ----------
Total operating expenses..................... 405,502 -- 405,502
---------- ------- ----------
Operating income............................. 82,549 -- 82,549
Interest expense............................. 72,599 13,080(12) 85,679
---------- ------- ----------
Income (loss) before income taxes............ 9,950 (13,080) (3,130)
Provision (credit) for income taxes.......... 3,880 (5,101)(8) (1,221)
---------- ------- ----------
Net income (loss)............................ $ 6,070 $(7,979) $ (1,909)
========== ======= ==========
</TABLE>
See accompanying notes to unaudited pro forma consolidated statements of income.
P-5
<PAGE> 106
AMERISERVE FOOD DISTRIBUTION, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 28, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA PRO FORMA
ADJUSTMENTS PRO FORMA ADJUSTMENTS FOR
HISTORICAL HISTORICAL HISTORICAL FOR FOR FOR TRANSACTIONS
AMERISERVE PFS POST TRANSACTIONS TRANSACTIONS REFINANCING AND REFINANCING
---------- ---------- ---------- ------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales(13).......... $741,009 $1,498,345 $ 65,467 $ (3,577)(11) $2,301,244 $ -- $ 2,301,244
Cost of goods sold..... 668,544 1,342,659 58,731 (3,387)(11) 2,066,547 -- 2,066,547
-------- ---------- ------- -------- ---------- ------- ----------
Gross profit........... 72,465 155,686 6,736 (190) 234,697 -- 234,697
-------- ---------- ------- -------- ---------- ------- ----------
Operating expenses:
Distribution, selling
and
administrative..... 60,722 112,131 5,752 (5,550)(1) 178,929 -- 178,929
190(11)
(4,050)(2)
7,734(6)
2,000(4)
Depreciation......... 4,092 8,814 315 (500)(3) 12,721 -- 12,721
Amortization......... 2,319 -- 65 7,361(7) 9,745 -- 9,745
-------- ---------- ------- -------- ---------- ------- ----------
Total operating
expenses............. 67,133 120,945 6,132 7,185 201,395 -- 201,395
-------- ---------- ------- -------- ---------- ------- ----------
Operating income....... 5,332 34,741 604 (7,375) 33,302 -- 33,302
Interest expense....... 7,006 8,041 804 21,169(5) 37,020 6,540(12) 43,560
-------- ---------- ------- -------- ---------- ------- ----------
Income (loss) before
income taxes......... (1,674) 26,700 (200) (28,544) (3,718) (6,540) (10,258)
Provision (credit) for
income taxes......... (629) 9,924 -- (10,745)(8) (1,450) (2,551)(8) (4,001)
-------- ---------- ------- -------- ---------- ------- ----------
Net income (loss)...... $ (1,045) $ 16,776 $ (200) $(17,799) $ (2,268) $(3,989) $ (6,257)
======== ========== ======= ======== ========== ======= ==========
</TABLE>
See accompanying notes to unaudited pro forma consolidated statements of income.
P-6
<PAGE> 107
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>
FISCAL SIX MONTHS ENDED
1996 JUNE 28, 1997
------- ----------------
<S> <C> <C>
Reduction in lease expense for existing PFS facilities
being retained by PepsiCo, Inc. ...................... $ 4,100 $2,050
Net reduction in data processing costs charged by
PepsiCo, Inc. to PFS under the terms of a one year
data processing service contract...................... 4,100 2,050
Reduction of employee retirement expense due to the
termination of pension and retirement plans of
PepsiCo, Inc., net of amounts to be paid under
AmeriServe's plans.................................... 1,900 950
Compensation of certain PFS employees retained by
PepsiCo, Inc. ........................................ 1,000 500
------- -------
Net cost savings........................................ $11,100 $5,550
======= =============
</TABLE>
(2) Represents the net reduction in costs in accordance with the Company's
business plan to integrate PFS:
<TABLE>
<CAPTION>
FISCAL SIX MONTHS ENDED
1996 JUNE 28, 1997
------- ----------------
<S> <C> <C>
Payroll reductions for the elimination of duplicative
administrative personnel.............................. $ 3,800 $1,900
Reduction in warehouse facilities and operating
personnel............................................. 1,800 900
Reduction of MIS costs.................................. 2,500 1,250
------ ------
Net cost savings........................................ $ 8,100 $4,050
====== ======
</TABLE>
In addition, there are $7,900 of anticipated cost savings that have not
been reflected in the pro forma statements of income because they are not
directly attributable to the acquisition of the PFS business but result
from actions taken by the Company in the third quarter of 1997 to
restructure existing AmeriServe operations. The restructuring charge taken
by the Company in the third quarter of 1997 is $31,000 (composed of $18,000
related to impairment of assets, $9,000 related to future lease
terminations and employee displacements and $4,000 related to current
integration costs associated with a previous acquisition). The Company has
also identified $28,800 of synergistic cost savings related primarily to
transportation and insurance which also are not included in the pro forma
statements of income.
(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-7
<PAGE> 108
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
(5) Represents the change in interest expense related to the Transactions:
<TABLE>
<CAPTION>
SIX MONTHS
PRINCIPAL ENDED
AMOUNT FISCAL JUNE 28,
OF DEBT 1996 1997
-------- -------- ----------
<S> <C> <C> <C>
Recording of pro forma interest:
Term Loans at rates from 8.375% to 9.375%...... $205,000 $ 18,124 $ 9,062
Revolving Credit Facility...................... -- -- --
Senior Subordinated Notes due 2007 at
10.125%..................................... 500,000 50,625 25,313
Letters of credit.............................. 12,000 300 150
Capital leases at 9.0%......................... 770 1,105
------- -------
Cash interest expense.......................... 69,819 35,630
Amortization of deferred financing costs....... 2,780 1,390
------- -------
Total interest expense........................... 72,599 37,020
Less: historical interest........................ (28,114) (15,851)
------- -------
Pro forma interest adjustment.................... $ 44,485 $ 21,169
======= =======
</TABLE>
(6) Represents the discount of $15,469 annually and $7,734 for six months 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 $7,361 for six months, assuming a
40-year amortization period.
(8) Represents adjustments to reconcile income taxes to an effective income tax
rate of 39%.
(9) Represents AmeriServ net sales and expenses for the month of January 1996
prior to its acquisition by AmeriServe on January 26, 1996.
(10) 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 and AmeriServe's
equity interest was transferred to NEHC. Post is being contributed to
AmeriServe in connection with the Transactions.
(11) Represents elimination of intercompany sales.
(12) Represents adjustment to record interest expense and amortization of
deferred financing costs on the Senior Notes incurred to repay the Term
Loans, calculated as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL JUNE 28,
1996 1997
-------- ----------
<S> <C> <C>
Senior Notes ($350,000 at 8 7/8%)............................. $ 31,062 $ 15,531
Eliminate interest on Term Loans.............................. (18,124) (9,062)
-------- ----------
12,938 6,469
Amortization of deferred financing costs...................... 1,222 611
Elimination of amortization of deferred financing costs on
Term Loans.................................................. (1,080) (540)
-------- ----------
$ 13,080 $ 6,540
======== ========
</TABLE>
(13) PFS sales are reported net of $5,694 and $4,957, for the fiscal year 1996
and the six months ended June 28, 1997, respectively, as a result of profit
limitation agreements with Pizza Hut, Inc. and its franchisees. Such profit
limitation agreements continue after the Transactions Closing.
P-8
<PAGE> 109
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
June 28, 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 six month periods ended June 29, 1996 and
June 28, 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 six month period ended June
28, 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 six month periods ended June 29, 1996
and June 28, 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 June 11,
1997 (unaudited)................................................................. F-18
Statements of Income for each of the years in the three year period ended December
25, 1996, and for the six month periods ended June 12, 1996 and June 11, 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 six month period ended June 11, 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 six month periods ended June 12, 1996 and June 11,
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> 110
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> 111
AMERISERVE FOOD DISTRIBUTION, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 28, JUNE 28,
1995 1996 1997
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash................................................ $ 575 $ 2,162 $ 3,413
Accounts receivable, less allowance for doubtful
accounts of $1,170, $4,896 and $4,824,
respectively..................................... 25,127 68,635 410,074
Other receivables................................... 2,234 3,764 3,750
Inventories......................................... 15,230 47,714 150,759
Due from Holberg.................................... 623 -- 2,709
Prepaid expenses and other current assets........... 707 4,313 6,989
------- -------- --------
Total current assets........................ 44,496 126,588 577,694
Property and equipment, net........................... 6,912 33,837 122,232
Other assets:
Intangible assets, net.............................. 20,189 122,451 707,086
Note receivable from Holberg........................ 3,516 3,516 3,516
Other noncurrent assets............................. 2,390 4,711 6,064
------- -------- --------
$ 77,503 $291,103 $ 1,416,592
======= ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt................ $ -- $ 3,266 $ 5,540
Accounts payable.................................... 32,751 89,440 291,572
Due to Holberg...................................... -- 907 --
Accrued liabilities................................. 1,232 14,931 67,515
------- -------- --------
Total current liabilities................... 33,983 108,544 364,627
Noncurrent liabilities................................ 584 13,245 20,260
Note payable to PepsiCo, Inc. ........................ -- -- 830,000
Long-term debt........................................ 32,779 126,639 160,075
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) (3,376)
------- -------- --------
Total stockholder's equity.................. 10,157 42,675 41,630
------- -------- --------
$ 77,503 $291,103 $ 1,416,592
======= ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 112
AMERISERVE FOOD DISTRIBUTION, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
------------------------------------------------- ---------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28, JUNE 29, JUNE 28,
1994 1995 1996 1996 1997
------------- ------------- ------------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales.................... $ 358,516 $ 400,017 $ 1,280,598 $584,791 $741,009
Cost of goods sold........... 320,602 359,046 1,151,749 525,780 668,544
-------- -------- ---------- -------- --------
Gross profit................. 37,914 40,971 128,849 59,011 72,465
Distribution, selling and
administrative expenses.... 34,488 36,695 114,560 53,328 67,133
-------- -------- ---------- -------- --------
Operating income............. 3,426 4,276 14,289 5,683 5,332
-------- -------- ---------- -------- --------
Other income (expense):
Interest expense........... (3,294) (3,936) (10,999) (5,281) (7,243)
Interest income -- Holberg
and affiliate........... 533 749 528 215 237
-------- -------- ---------- -------- --------
(2,761) (3,187) (10,471) (5,066) (7,006)
-------- -------- ---------- -------- --------
Income (loss) before income
taxes...................... 665 1,089 3,818 617 (1,674)
Provision (credit) for income
taxes...................... 523 583 1,300 340 (629)
-------- -------- ---------- -------- --------
Net income (loss)............ $ 142 $ 506 $ 2,518 $ 277 $ (1,045)
======== ======== ========== ======== ========
</TABLE>
See accompanying notes.
F-4
<PAGE> 113
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)........ -- -- -- -- -- (1,045) (1,045)
------- ------ ------ --- ------- ------- -------
Balance, June 28, 1997
(unaudited)................. $ 30,000 $7,500 $7,500 $ 6 $ -- $(3,376) $41,630
======= ====== ====== === ======= ======= =======
</TABLE>
See accompanying notes.
F-5
<PAGE> 114
AMERISERVE FOOD DISTRIBUTION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
------------------------------------------ ----------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28, JUNE 29, JUNE 28,
1994 1995 1996 1996 1997
------------ ------------ ------------ --------- ----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................ $ 142 $ 506 $ 2,518 $ 277 $ (1,045)
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 2,137 4,092
Amortization of intangible assets.............. 1,498 1,299 4,810 2,103 2,319
Deferred income taxes.......................... (465) 48 -- -- --
Contribution of capital........................ 984 1,234 -- -- --
Other.......................................... 83 131 83 36 --
Changes in assets and liabilities, net of
effect of businesses acquired:
Accounts receivable......................... (3,567) (1,645) (4,924) (13,015) (17,689)
Other receivables........................... (69) (645) (426) (237) 14
Inventories................................. 237 (5) (6,497) (10,726) (16,935)
Prepaid expenses and other assets........... (261) (2,425) 1,696 (188) 725
Accounts payable............................ 2,831 5,035 6,741 20,986 29,663
Accrued liabilities......................... 1,077 (393) (5,309) 1,369 (4,031)
Noncurrent liabilities...................... -- -- (66) (6,979) (2,985)
Other....................................... -- (98) (2,664) 1,892 (2,671)
------- ------- --------- ---------- --------
Net cash provided by (used in) operating
activities..................................... 4,276 4,505 1,213 (2,345) (8,543)
------- ------- --------- ---------- --------
INVESTING ACTIVITIES
Businesses acquired, net of cash acquired........ -- -- (94,411) (94,411) --
Expenditures for property and equipment.......... (1,331) (2,496) (12,518) (2,783) (7,275)
Proceeds from disposals of property and
equipment...................................... 14 22 2,866 -- --
Amounts received from Holberg.................... 6,432 28,969 11,121 4,616 12,261
Amounts paid to Holberg.......................... (7,797) (30,659) (9,591) (6,201) (15,877)
Net increase in deposits with affiliates......... (2,720) (315) (2,480) (1,880) (2,355)
Expenditures for intangible and other assets..... (20) (1,095) -- -- --
------- ------- --------- ---------- --------
Net cash used in investing activities............ (5,422) (5,574) (105,013) (100,659) (13,246)
------- ------- --------- ---------- --------
FINANCING ACTIVITIES
Proceeds from issuance of preferred stock........ 2,500 -- 30,000 30,000 --
Proceeds from long-term debt..................... -- -- -- -- 5,000
Net increase in borrowings under revolving line
of credit...................................... 15 4,635 120,000 116,700 19,700
Repayments of long-term debt..................... (2,025) (4,016) (44,613) (42,967) (1,660)
------- ------- --------- ---------- --------
Net cash provided by financing activities........ 490 619 105,387 103,733 23,040
------- ------- --------- ---------- --------
Net increase (decrease) in cash.................. (656) (450) 1,587 729 1,251
Cash at beginning of period...................... 1,681 1,025 575 575 2,162
------- ------- --------- ---------- --------
Cash at end of period............................ $ 1,025 $ 575 $ 2,162 $ 1,304 $ 3,413
======= ======= ========= ========== ========
Supplemental cash flow information:
Cash paid during the period for:
Interest.................................... $ 3,100 $ 3,622 $ 9,504 4,638 7,317
Income taxes, net of refunds................ 406 332 1,256 733 2,443
Businesses acquired:
Fair value of assets acquired............... -- -- 187,907 187,907 1,069,117
Cash paid/note payable issued............... -- -- (94,411) (94,411) (830,000)
------- ------- --------- ---------- --------
Liabilities assumed......................... $ -- $ -- $ 93,496 93,496 $ 239,117
======= ======= ========= ========== ========
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 3,487 12,670
</TABLE>
See accompanying notes.
F-6
<PAGE> 115
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> 116
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
estimated 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.
Group Insurance
The Company participates in a self-insured group casualty risk program with
an affiliate, which determines the insurance expenses to be allocated to the
Company. The Company accrues for incurred but not yet reported or settled
claims.
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
F-8
<PAGE> 117
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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 (SAB 55).
SAB 55 requires the historical financial statements of the Company to
reflect all of its costs of doing business. Accordingly, the financial
statements have been revised to include expenses incurred by Holberg or
affiliates on the Company's behalf. The expenses that have been included in the
Company's financial statements are described in Note 10.
Interim Financial Data
The unaudited consolidated balance sheet as of June 28, 1997, and the
related consolidated statements of income and cash flows for the six-month
periods ended June 29, 1996 and June 28, 1997 and the consolidated statement of
stockholder's equity for the six months ended June 28, 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
six-month period ended June 28, 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.
F-9
<PAGE> 118
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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 investment in IDA is accounted for using the cost method which approximates
the equity method. Patronage dividends received from IDA are accounted for on
the accrual basis. IDA patronage dividends recognized by the Company for the
years ended December 31, 1994, December 30, 1995 and December 28, 1996 were
$403, $488, and $1,761, respectively. 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> 119
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> 120
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> 121
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> 122
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> 123
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> 124
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. SUBSEQUENT EVENT (UNAUDITED)
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. for $830 million in cash, subject to adjustment, and assumption
of certain liabilities (the Acquisition). 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 effective date of the Acquisition was June 11,
1997, the end of PFS's second quarter. The table below reflects the estimated
current value of the net assets acquired from PFS (the final purchase price
allocation will be based upon a final determination of the fair value of the net
assets acquired):
<TABLE>
<S> <C>
Accounts receivable.............................................. $ 323,750
Inventories...................................................... 86,110
Property and equipment........................................... 72,542
Goodwill......................................................... 585,300
Other assets..................................................... 1,415
Accounts payable................................................. (172,502)
Accrued liabilities.............................................. (46,615)
Restructuring reserves........................................... (20,000)
--------
Note payable to PepsiCo, Inc. ................................... $ 830,000
========
</TABLE>
The consolidated balance sheet of the Company as of June 28, 1997 includes
the current value of the net assets acquired from PFS as of June 11, 1997. The
final purchase price is subject to a negotiated price adjustment for working
capital. The operations of PFS for the period from June 12, 1997 through June
28, 1997 will be included in the third quarter results of operations of the
Company.
In connection with the Acquisition, on July 11, 1997, the Company (i)
issued $500 million principal amount of 10 1/8% Senior Subordinated Notes due
2007 in a Rule 144A private placement, (ii) entered into a $355 million senior
credit facility, (iii) entered into a $250 million accounts receivable program,
whereby 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, (iv) received an equity
contribution of $130 million from NEHC, (v) acquired the remaining 6.4% of the
outstanding common stock of Post from the minority stockholder and the capital
stock of Post was transferred to the Company from NEHC, and (vi) paid in full
the $830 million note payable to PepsiCo, Inc.
The Company's subsidiaries fully, unconditionally, jointly and severally
guarantee the Senior Subordinated Notes issued in the private placement
discussed above. The guarantor subsidiaries are direct or indirect wholly owned
subsidiaries of the Company and the Company and the guarantor subsidiaries
conduct substantially all of the operations of the Company and its subsidiaries
on a consolidated basis. The only subsidiary of the Company that is not a
guarantor subsidiary is the unconsolidated special purpose bankruptcy-remote
subsidiary that the Company established on July 11, 1997 which holds and
transfers certain of the Company's trade receivables to an unaffiliated
corporation. Separate financial statements of the guarantor subsidiaries are not
separately presented because, in the opinion of management, such financial
statements are not material to investors.
F-16
<PAGE> 125
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is summarized combined financial information (in accordance
with Rule 1-02(bb) of Regulation S-X) for the guarantor subsidiaries of the
Company at December 28, 1996 (in thousands):
<TABLE>
<S> <C>
Current assets.................................................... $ 63,910
Current liabilities............................................... 78,961
Non current assets................................................ 31,772
Non current liabilities........................................... 5,495
Net sales......................................................... $820,882
Gross profit...................................................... 90,175
Net income........................................................ 956
</TABLE>
F-17
<PAGE> 126
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-18
<PAGE> 127
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 25, JUNE 11,
1995 1996 1997
------------ ------------ -----------
(UNAUDITED)
-----------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.................................................. $ 203 $ 1,625 $ 32
Receivables:
Franchisees and licensees, net of allowance for
doubtful accounts of $11,941 in 1995 and $7,733 in
1996............................................... 115,004 117,729 132,679
Affiliates............................................ 206,658 162,485 191,006
Inventories........................................... 101,767 94,418 86,068
Prepaid expenses and other current assets............. 1,877 4,690 5,915
Deferred income taxes (note 7)........................ 10,105 10,629 9,975
--------- --------- ---------
Total current assets.......................... 435,614 391,576 425,675
Property and equipment, net (notes 3 and 6)........... 80,351 87,017 82,460
Other assets.......................................... 323 328 320
--------- --------- ---------
$516,288 $478,921 $ 508,455
========= ========= =========
LIABILITIES AND DIVISIONAL EQUITY
Current liabilities:
Accounts payable -- trade............................. $196,695 $170,611 $ 200,026
Accrued liabilities (note 7).......................... 79,512 79,728 71,395
Advances from Parent and affiliates, net (note 4)..... 122,957 108,257 125,282
--------- --------- ---------
Total current liabilities..................... 399,164 358,596 396,703
Other liabilities and deferred credits (notes 6 and
9).................................................... 23,449 22,400 20,568
Deferred income taxes (note 7).......................... 5,096 4,520 3,545
Divisional equity (note 4).............................. 88,579 93,405 87,639
Commitments (note 6)
--------- --------- ---------
$516,288 $478,921 $ 508,455
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
F-19
<PAGE> 128
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED TWENTY-FOUR WEEKS ENDED
-------------------------------------------- -------------------------
DECEMBER 28, DECEMBER 27, DECEMBER 25, JUNE 12, JUNE 11,
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 $1,058,666 $ 957,528
Franchisees and licensees.... 905,874 999,988 1,136,201 497,003 544,425
---------- ---------- ---------- -------- --------
3,284,837 3,463,452 3,428,624 1,555,669 1,501,953
Less discounts and
allowances................ 5,000 4,508 6,538 3,194 3,608
---------- ---------- ---------- -------- --------
Net sales............ 3,279,837 3,458,944 3,422,086 1,552,475 1,498,345
---------- ---------- ---------- -------- --------
Costs and expenses:
Cost of sales and
operating................. 3,155,422 3,331,866 3,297,381 1,498,587 1,443,274
General and administrative
(notes 4, 6 and 8)........ 37,515 47,606 44,962 21,564 20,330
---------- ---------- ---------- -------- --------
3,192,937 3,379,472 3,342,343 1,520,151 1,463,604
---------- ---------- ---------- -------- --------
Income from
operations......... 86,900 79,472 79,743 32,324 34,741
Interest expense to Parent
(note 4)..................... 12,934 17,613 15,566 7,102 8,041
---------- ---------- ---------- -------- --------
Income before income
taxes.............. 73,966 61,859 64,177 25,222 26,700
Provision for income taxes
(note 7)..................... 28,874 23,844 24,597 9,928 9,924
---------- ---------- ---------- -------- --------
Net income........... $ 45,092 $ 38,015 $ 39,580 $ 15,294 $ 16,776
========== ========== ========== ======== ========
</TABLE>
See accompanying notes to financial statements.
F-20
<PAGE> 129
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)...... (22,542)
Net income (unaudited)......................................................... 16,776
--------
Divisional equity at June 11, 1997 (unaudited)................................. $ 87,639
========
</TABLE>
See accompanying notes to financial statements.
F-21
<PAGE> 130
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED
------------------------------------------ TWENTY-FOUR WEEKS
DECEMBER 28, DECEMBER 27, DECEMBER 25, ENDED
1994 1995 1996 -------------------
------------ ------------ ------------ JUNE 12, JUNE 11,
(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 $ 15,294 $ 16,776
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 17,053 18,764 19,830 8,819 8,814
Loss on sale of property and
equipment.......................... 1,788 2,324 1,065 72 (209)
Deferred income taxes................ (6,800) (3,075) (1,100) (274) (321)
Change in assets and liabilities:
Receivables........................ (22,614) (22,051) 41,448 (6,769) (43,471)
Inventories........................ 4,839 (5,046) 7,349 8,429 8,350
Accounts payable................... 9,524 (2,347) (26,084) (8,519) 29,415
Accrued liabilities................ 13,105 (4,672) 216 (11,278) (8,333)
Other.............................. 2,730 7,668 (3,867) (4,877) (3,049)
------- ------- ------- ------- -------
Net cash provided by operating
activities.................... 64,717 29,580 78,437 897 7,972
------- ------- ------- ------- -------
Cash flows -- investing activities:
Additions to property and equipment..... (21,310) (25,245) (28,771) (14,214) (12,291)
Transfers of property and equipment to
affiliates........................... -- -- -- -- 7,338
Proceeds from sale of property and
equipment............................ 1,047 857 1,210 1,032 905
------- ------- ------- ------- -------
Net cash used for investing
activities.................... (20,263) (24,388) (27,561) (13,182) (4,048)
------- ------- ------- ------- -------
Cash flows -- financing
activities -- (repayment of)/additions
to advances from Parent and affiliates,
net..................................... (44,360) (5,163) (49,454) 12,661 (5,517)
------- ------- ------- ------- -------
Net increase (decrease) in cash......... 94 29 1,422 376 (1,593)
Cash at beginning of period............. 80 174 203 203 1,625
------- ------- ------- ------- -------
Cash at end of period................... $ 174 $ 203 $ 1,625 $ 579 $ 32
======= ======= ======= ======= =======
</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-22
<PAGE> 131
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 June 11, 1997 and for the
periods ended June 12, 1996 and June 11, 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-23
<PAGE> 132
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.
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 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
F-24
<PAGE> 133
PFS
(A DIVISION OF PEPSICO, INC. HELD FOR SALE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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-25
<PAGE> 134
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. PFS's participation is accounted for as a multiemployer
plan.
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 allocated pension expense of $1,211, $1,174 and $2,374 in 1994,
1995 and 1996, respectively.
F-26
<PAGE> 135
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-27
<PAGE> 136
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-28
<PAGE> 137
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-29
<PAGE> 138
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-30
<PAGE> 139
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-31
<PAGE> 140
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-32
<PAGE> 141
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-33
<PAGE> 142
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-34
<PAGE> 143
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-35
<PAGE> 144
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-36
<PAGE> 145
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-37
<PAGE> 146
=========================================================
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................. 25
The Transactions........................ 26
Use of Proceeds......................... 27
Capitalization.......................... 28
Selected AmeriServe Historical Financial
Data.................................. 29
Selected PFS Historical Financial
Data.................................. 30
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 31
The Business............................ 38
The Acquisition......................... 47
Management.............................. 48
Security Ownership of Certain Beneficial
Holders and Management................ 54
Certain Relationships and Related Party
Transactions.......................... 56
Description of Indebtedness............. 57
Description of New Notes................ 61
Description of Certain Federal Income
Tax Consequences...................... 88
Plan of Distribution.................... 93
Legal Matters........................... 94
Experts................................. 94
Change in Company's Accountant.......... 94
Index of Certain Defined Terms.......... 95
Index to Unaudited Pro Forma Financial
Statements............................ P-1
Index to Historical Financial
Statements............................ F-1
</TABLE>
---------------------------------------------------------
- ---------------------------------------------------------
=========================================================
$350,000,000
AMERISERVE FOOD
DISTRIBUTION, INC.
OFFER TO EXCHANGE
8 7/8% NEW SENIOR NOTES DUE 2006
---------------------------------------------------------
- ---------------------------------------------------------
<PAGE> 147
PAGES TO BE USED IN MARKET-MAKING PROSPECTUS
<PAGE> 148
PAGES TO BE USED IN MARKET-MAKING PROSPECTUS
<PAGE> 149
[ALTERNATE COVER FOR MARKET-MAKING PROSPECTUS]
[AMERISERVE LOGO]
AMERISERVE FOOD DISTRIBUTION, INC.
8 7/8% NEW SENIOR NOTES DUE 2006
------------------------
The 8 7/8% New Senior Notes due 2006 (the "New Senior Notes" or "New
Notes") were issued in exchange for the 8 7/8% Senior Notes due 2006 (the
"Senior Notes" or "Notes") by AmeriServe Food Distribution, Inc. (the
"Company"), a Nebraska corporation. The New Notes are fully and unconditionally
guaranteed on a senior unsecured basis by, and are joint and several obligations
of, 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 Notes bear interest from October 15, 1997, the date of
issuance of the Senior Notes that are tendered in exchange for the New Senior
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 8 7/8% per annum.
Interest on the New Senior Notes will be payable semiannually on April 15 and
October 15 of each year, commencing April 15, 1998.
The New Notes are redeemable at the option of the Company, in whole or in
part, at any time on or after April 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 October 15, 2000, up to 33% of
the initially outstanding aggregate principal amount of New Senior 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 108.875% of the principal
amount of the New Senior 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 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 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 and will
rank pari passu in right of payment to all existing and future senior unsecured
indebtedness of the Company and senior in right of payment to all existing and
future subordinated indebtedness of the Company. The New Notes will be
effectively subordinated, however, to all secured obligations of the Company,
including the Company's borrowings under the New Credit Facility and the sales
of receivables under the Accounts Receivable Program, in each case, to the
extent of the assets securing such obligations. The New Notes will be fully and
unconditionally guaranteed (the "New Note Guarantees") on a joint and several
basis by the Subsidiary Guarantors (as defined herein). The New Note Guarantees
will be general unsecured obligations of the Subsidiary Guarantors and will rank
pari passu in right of payment to all existing and future senior unsecured
indebtedness of the Subsidiary Guarantors and senior in right of payment to all
existing and future subordinated indebtedness of the Subsidiary Guarantors. As
of June 28, 1997, on a pro forma basis, after giving effect to the Refinancing
and the Transactions (each, as defined herein), the New Notes and the New Note
Guarantees would have been effectively subordinated to approximately $24.1
million of secured obligations of the Company and the Subsidiary Guarantors.
------------------------
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 Robertson Stephens ("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 ROBERTSON STEPHENS
SECURITIES CORPORATION
------------------------
The date of this Prospectus is , 1997.
A-1
<PAGE> 150
[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
Note Trustee"), under the Indenture dated as of October 15, 1997 (the "Senior
Note Indenture") among the Company, the Subsidiary Guarantors and the Senior
Note Trustee, pursuant to which the Notes and the New Notes were 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 New Notes remain outstanding, they will make available to
any prospective purchaser of the New Notes or Holder of the New 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 NOVEMBER , 1997.
A-2
<PAGE> 151
[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
Robertson Stephens 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 Robertson Stephens. No
assurance can be given as to the liquidity of or the trading market for the New
Notes.
DLJ and BancAmerica Robertson Stephens 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 Robertson Stephens 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> 152
[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> 153
[ALTERNATE SECTION FOR MARKET-MAKING PROSPECTUS]
PLAN OF DISTRIBUTION
This Prospectus is to be used by DLJ and BancAmerica Robertson Stephens
(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, is a member of the Board of Directors of NEHC and the
Company. Further, DLJ Capital Funding, Inc., an affiliate of DLJ, is acting as
documentation agent 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 $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 and BancAmerica Robertson Stephens have, from time to time, provided
investment banking and other financial advisory services to the Company in the
past for which they have received customary compensation, including fees
received in connection with the offering of the Senior Subordinated Notes, 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> 154
[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>
---------------------------------------------------------
- ---------------------------------------------------------
=========================================================
$350,000,000
AMERISERVE FOOD
DISTRIBUTION, INC.
8 7/8% NEW SENIOR NOTES
DUE 2006
------------------------------
PROSPECTUS
------------------------------
---------------------------------------------------------
- ---------------------------------------------------------
<PAGE> 155
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 Asset Purchase Agreement between PepsiCo, Inc. and Nebco Evans Holding Company
(incorporated by reference to Exhibit 2.2 to the Registrant's Registration Statement
Form S-4 No. 333-33225 filed August 8, 1997).
3.1 Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1
to the Registrant's Registration Statement on Form S-4 filed August 8, 1997).
3.2 By-Laws of the Company (incorporated by reference to Exhibit 3.2 to the Registrant's
Registration Statement on Form S-4 filed August 8, 1997).
3.3 Certificate of Incorporation of AmeriServ Food Company (incorporated by reference to
Exhibit 3.3 to the Registrant's Registration Statement on Form S-4 filed August 8,
1997).
3.4 By-Laws of AmeriServ Food Company (incorporated by reference to Exhibit 3.4 to the
Registrant's Registration Statement on Form S-4 filed August 8, 1997).
3.5 Articles of Incorporation of AmeriServe Transportation, Inc. (incorporated by
reference to Exhibit 3.5 to the Registrant's Registration Statement on Form S-4 filed
August 8, 1997).
3.6 By-Laws of AmeriServe Transportation, Inc. (incorporated by reference to Exhibit 3.6
to the Registrant's Registration Statement on Form S-4 filed August 8, 1997).
</TABLE>
II-1
<PAGE> 156
<TABLE>
<C> <S>
3.7 Articles of Incorporation of Chicago Consolidated Corporation (incorporated by
reference to Exhibit 3.7 to the Registrant's Registration Statement on Form S-4 filed
August 8, 1997).
3.8 By-Laws of Chicago Consolidated Corporation (incorporated by reference to Exhibit 3.8
to the Registrant's Registration Statement on Form S-4 filed August 8, 1997).
3.9 Articles of Incorporation of Northland Transportation Services, Inc. (incorporated by
reference to Exhibit 3.9 to the Registrant's Registration Statement on Form S-4 filed
August 8, 1997).
3.10 By-Laws of Northland Transportation Services, Inc. (incorporated by reference to
Exhibit 3.10 to the Registrant's Registration Statement on Form S-4 filed August 8,
1997).
3.11 Articles of Incorporation of The Harry H. Post Company (incorporated by reference to
Exhibit 3.11 to the Registrant's Registration Statement on Form S-4 filed August 8,
1997).
3.12 By-Laws of The Harry H. Post Company (incorporated by reference to Exhibit 3.12 to
the Registrant's Registration Statement on Form S-4 filed August 8, 1997).
3.13 Articles of Incorporation of Delta Transportation, Ltd. (incorporated by reference to
Exhibit 3.13 to the Registrant's Registration Statement on Form S-4 filed August 8,
1997).
3.14 By-Laws of Delta Transportation, Ltd (incorporated by reference to Exhibit 3.14 to
the Registrant's Registration Statement on Form S-4 No. 333-33225 filed August 8,
1997).
4.1 Indenture, dated as of October 15, 1997, by and among the Company, the Subsidiary
Guarantors and State Street Bank and Trust Company, with respect to the Senior Notes.
4.2 Form of New Senior Note (included as Exhibit A to Exhibit 4.1).
4.3 Form of New Note Guarantee (included as Exhibit D to Exhibit 4.1).
4.4 Purchase Agreement, by and among the Company, the Subsidiary Guarantors, Donaldson,
Lufkin & Jenrette Securities Corporation and BancAmerica Robertson Stephens dated as
of October 8, 1997.
4.5 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 (incorporated by reference to Exhibit 4.1 of the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed August 8, 1997).
4.6 Purchase Agreement, by and among the Company, the Subsidiary Guarantors, Donaldson,
Lufkin & Jenrette Securities Corporation and BancAmerica Securities dated as of July
9, 1997 (incorporated by reference to Exhibit 4.4 to the Registrant's Registration
Statement Form S-4 No. 333-33225 filed August 8, 1997).
5.1 Opinion of Wachtell, Lipton, Rosen & Katz.
10.1 Registration Rights Agreement, dated as of October 15, 1997, by and among the
Company, the Subsidiary Guarantors and Donaldson, Lufkin & Jenrette Securities
Corporation.
10.2 Registration Rights Agreement, dated as of July 11, 1997, by and among the Company,
the Subsidiary Guarantors and Donaldson, Lufkin & Jenrette Securities Corporation
(incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement
on Form S-4 No. 333-33225 filed August 8, 1997).
10.3 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 (incorporated by reference to Exhibit 10.3 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed August 8, 1997).
</TABLE>
II-2
<PAGE> 157
<TABLE>
<C> <S>
10.4 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 (incorporated by reference to Exhibit 10.4 to the Registrant's Registration
Statement on Form S-4 No. 333-33225 filed August 8, 1997).
10.5 Sales and Distribution Agreement dated as of May 6, 1997, by and among PFS, Pizza
Hut, Taco Bell, Kentucky Fried Chicken Corporation and Kentucky Fried Chicken of
California, Inc. (incorporated by reference to Exhibit 10.5 to Amendment No. 1 to the
Registrant's Registration Statement on Form S-4 No. 333-33225 filed October 21,
1997).
12.1 Statements re computation of ratios (incorporated by reference to Amendment No. 1 to
Exhibit 12.1 to the Registrant's Registration Statement on Form S-4 No. 333-33225
filed October 21, 1997).
16.1 Letter from Deloitte & Touche LLP (incorporated by reference to Exhibit 16.1 to the
Registrant's Registration Statement on Form S-4 No. 333-33225 filed August 8, 1997).
21.1 Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the
Registrant's Registration Statement on Form S-4 No. 333-33225 filed August 8, 1997).
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).
24.1 Power of Attorney.
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 (incorporated by reference to Exhibit 27.1 to Amendment No. 1
to the Registrant's Registration Statement on Form S-4 No. 333-33225 filed October
21, 1997).
99.1 Form of Letter of Transmittal for the 8 7/8% New Senior Subordinated Notes due 2006.
99.2 Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.
99.3 Form of Notice of Guaranteed Delivery.
</TABLE>
(b) Financial Statement Schedule.
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.
II-3
<PAGE> 158
(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-4
<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 October 17, 1997.
AMERISERVE FOOD DISTRIBUTION, INC.
By /s/ RAYMOND E. MARSHALL
------------------------------------
Raymond E. Marshall
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, A. 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 indicated and on October 17, 1997.
<TABLE>
<CAPTION>
NAME TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ RAYMOND E. MARSHALL President, Treasurer and Director
- ---------------------------------------------
Raymond Marshall
* Chief Operating Officer and Director
- ---------------------------------------------
Daniel W. Crippen
/s/ DONALD J. ROGERS Chief Financial Officer and Secretary
- ---------------------------------------------
Donald J. Rogers
* Director
- ---------------------------------------------
John R. Evans
* Chief Executive Officer and Director
- ---------------------------------------------
John V. Holten
* Director
- ---------------------------------------------
Gunnar E. Klintberg
By /s/ DONALD J. ROGERS
- ---------------------------------------------
Donald J. Rogers
Attorney-in-fact
</TABLE>
II-5
<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 October 17, 1997.
AMERISERV FOOD COMPANY
By /s/ RAYMOND E. MARSHALL
------------------------------------
Raymond E. Marshall
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, A. 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 indicated and on October 17, 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-6
<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 October 17, 1997.
NORTHLAND TRANSPORTATION SERVICES, INC.
By /s/ RAYMOND E. MARSHALL
------------------------------------------
Raymond E. Marshall
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, A. 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
indicated and on October 17, 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-7
<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 October 17, 1997.
DELTA TRANSPORTATION, LTD.
By /s/ RAYMOND E. MARSHALL
----------------------------------------
Raymond E. Marshall
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, A. 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
indicated and on October 17, 1997.
<TABLE>
<CAPTION>
NAME TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ RAYMOND E. MARSHALL President, Treasurer and Director
- ---------------------------------------------
Raymond E. Marshall
</TABLE>
II-8
<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 October 17, 1997.
THE HARRY H. POST COMPANY
By /s/ RAYMOND E. MARSHALL
------------------------------------
Raymond E. Marshall
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, A. 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 indicated and on October 17, 1997.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------------------ -------------------------------------
<C> <S>
/s/ RAYMOND E. MARSHALL Chief Executive Officer and Director
- ------------------------------------------
Raymond E. Marshall
* Director
- ------------------------------------------
Daniel W. Crippen
* Director
- ------------------------------------------
John R. Evans
* Assistant Treasurer & Director
- ------------------------------------------
A. Petter Ostberg
* Director
- ------------------------------------------
Gunnar E. Klintberg
</TABLE>
II-9
<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 October 17, 1997.
CHICAGO CONSOLIDATED CORPORATION
By /s/ RAYMOND E. MARSHALL
------------------------------------
Raymond E. Marshall
Vice President and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, A. 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 indicated and on October 17, 1997.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------------------ --------------------------------------
<S> <C>
/s/ RAYMOND E. MARSHALL Vice President and Director
- ------------------------------------------
Raymond E. Marshall
/s/ DONALD J. ROGERS Chief Financial Officer and Secretary
- ------------------------------------------
Donald J. Rogers
</TABLE>
II-10
<PAGE> 165
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 October 17, 1997.
AMERISERVE TRANSPORTATION, INC.
By /s/ RAYMOND E. MARSHALL
------------------------------------
Raymond E. Marshall
President and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Raymond E. Marshall, A. 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 indicated and on October 17, 1997.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------------------ --------------------------------------
<S> <C>
/s/ RAYMOND E. MARSHALL President and Director
- ------------------------------------------
Raymond E. Marshall
/s/ DONALD J. ROGERS Secretary
- ------------------------------------------
Donald J. Rogers
</TABLE>
II-11
<PAGE> 166
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-12
<PAGE> 167
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-13
<PAGE> 168
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- -------------------------------------------------------------------------- ------------
<C> <S> <C>
2.1 Asset Purchase Agreement between PepsiCo, Inc. and Nebco Evans Holding
Company (incorporated by reference to Exhibit 2.2 to the Registrant's
Registration Statement Form S-4 No. 333-33225 filed August 8, 1997).
3.1 Certificate of Incorporation of the Company (incorporated by reference to
Exhibit 3.1 to the Registrant's Registration Statement on Form S-4 filed
August 8, 1997).
3.2 By-Laws of the Company (incorporated by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form S-4 filed August 8, 1997).
3.3 Certificate of Incorporation of AmeriServ Food Company (incorporated by
reference to Exhibit 3.3 to the Registrant's Registration Statement on
Form S-4 filed August 8, 1997).
3.4 By-Laws of AmeriServ Food Company (incorporated by reference to Exhibit
3.4 to the Registrant's Registration Statement on Form S-4 filed August 8,
1997).
3.5 Articles of Incorporation of AmeriServe Transportation, Inc. (incorporated
by reference to Exhibit 3.5 to the Registrant's Registration Statement on
Form S-4 filed August 8, 1997).
3.6 By-Laws of AmeriServe Transportation, Inc. (incorporated by reference to
Exhibit 3.6 to the Registrant's Registration Statement on Form S-4 filed
August 8, 1997).
3.7 Articles of Incorporation of Chicago Consolidated Corporation
(incorporated by reference to Exhibit 3.7 to the Registrant's Registration
Statement on Form S-4 filed August 8, 1997).
3.8 By-Laws of Chicago Consolidated Corporation (incorporated by reference to
Exhibit 3.8 to the Registrant's Registration Statement on Form S-4 filed
August 8, 1997).
3.9 Articles of Incorporation of Northland Transportation Services, Inc.
(incorporated by reference to Exhibit 3.9 to the Registrant's Registration
Statement on Form S-4 filed August 8, 1997).
3.10 By-Laws of Northland Transportation Services, Inc. (incorporated by
reference to Exhibit 3.10 to the Registrant's Registration Statement on
Form S-4 filed August 8, 1997).
3.11 Articles of Incorporation of The Harry H. Post Company (incorporated by
reference to Exhibit 3.11 to the Registrant's Registration Statement on
Form S-4 filed August 8, 1997).
3.12 By-Laws of The Harry H. Post Company (incorporated by reference to Exhibit
3.12 to the Registrant's Registration Statement on Form S-4 filed August
8, 1997).
3.13 Articles of Incorporation of Delta Transportation, Ltd. (incorporated by
reference to Exhibit 3.13 to the Registrant's Registration Statement on
Form S-4 filed August 8, 1997).
3.14 By-Laws of Delta Transportation, Ltd. (incorporated by reference to
Exhibit 3.14 to the Registrant's Registration Statement on Form S-4 No.
333-33225 filed August 8, 1997).
4.1 Indenture, dated as of October 15, 1997, by and among the Company, the
Subsidiary Guarantors and State Street Bank and Trust Company, with
respect to the Senior Notes.
</TABLE>
<PAGE> 169
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- -------------------------------------------------------------------------- ------------
<C> <S> <C>
4.2 Form of New Senior Note (included as Exhibit A to Exhibit 4.1).
4.3 Form of New Note Guarantee (included as Exhibit D to Exhibit 4.1).
4.4 Purchase Agreement, by and among the Company, the Subsidiary Guarantors,
Donaldson, Lufkin & Jenrette Securities Corporation and BancAmerica
Robertson Stephens dated as of October 8, 1997.
4.5 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 (incorporated by reference to
Exhibit 4.1 of the Registrant's Registration Statement on Form S-4 No.
333-33225 filed August 8, 1997).
4.6 Purchase Agreement, by and among the Company, the Subsidiary Guarantors,
Donaldson, Lufkin & Jenrette Securities Corporation and BancAmerica
Securities dated as of July 9, 1997 (incorporated by reference to Exhibit
4.4 to the Registrant's Registration Statement Form S-4 No. 333-33225
filed August 8, 1997).
5.1 Opinion of Wachtell, Lipton, Rosen & Katz.
10.1 Registration Rights Agreement, dated as of October 15, 1997, by and among
the Company, the Subsidiary Guarantors and Donaldson, Lufkin & Jenrette
Securities Corporation.
10.2 Registration Rights Agreement, dated as of July 11, 1997, by and among the
Company, the Subsidiary Guarantors and Donaldson, Lufkin & Jenrette
Securities Corporation (incorporated by reference to Exhibit 10.1 to the
Registrant's Registration Statement on Form S-4 No. 333-33225 filed August
8, 1997).
10.3 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 (incorporated by reference to Exhibit 10.3 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed August 8, 1997).
10.4 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 (incorporated by reference to Exhibit 10.4 to
the Registrant's Registration Statement on Form S-4 No. 333-33225 filed
August 8, 1997).
10.5 Sales and Distribution Agreement dated as of May 6, 1997, by and among
PFS, Pizza Hut, Taco Bell, Kentucky Fried Chicken Corporation and Kentucky
Fried Chicken of California, Inc. (incorporated by reference to Exhibit
10.5 to Amendment No. 1 to the Registrant's Registration Statement on Form
S-4 No. 333-33225 filed October 21, 1997).
12.1 Statements re computation of ratios (incorporated by reference to
Amendment No. 1 to Exhibit 12.1 to the Registrant's Registration Statement
on Form S-4 No. 333-33225 filed October 21, 1997).
16.1 Letter from Deloitte & Touche LLP (incorporated by reference to Exhibit
16.1 to the Registrant's Registration Statement on Form S-4 No. 333-33225
filed August 8, 1997).
</TABLE>
<PAGE> 170
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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<C> <S> <C>
21.1 Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to
the Registrant's Registration Statement on Form S-4 No. 333-33225 filed
August 8, 1997).
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).
24.1 Power of Attorney.
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 (incorporated by reference to Exhibit 27.1 to
Amendment No. 1 to the Registrant's Registration Statement on Form S-4 No.
333-33225 filed October 21, 1997).
99.1 Form of Letter of Transmittal for the 8 7/8% New Senior Subordinated Notes
due 2006.
99.2 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
99.3 Form of Notice of Guaranteed Delivery.
</TABLE>
<PAGE> 1
EXHIBIT 4.1
EXECUTION COPY
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- -------------------------------------------------------------------------------
AMERISERVE FOOD DISTRIBUTION, INC.
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$350,000,000
87/8% SENIOR NOTES DUE 2006
----------------------------------------
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INDENTURE
DATED AS OF OCTOBER 15, 1997
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STATE STREET BANK AND TRUST COMPANY
Trustee
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- -------------------------------------------------------------------------------
<PAGE> 2
Indenture, dated as of October 15, 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 87/8% Senior Notes due 2006 (the "Senior Notes") and
the new 87/8% Senior Notes due 2006 (the "New Senior Notes" and, together with
the Senior 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.
"AmeriServe Master Trust" means that certain trust created pursuant to
the Pooling and Servicing Agreement, dated as of July 1, 1997, among AmeriServe
Funding Corporation, the Company and Norwest Bank Minnesota, National
Association.
"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
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<PAGE> 3
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 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.
"Borrowing Base" means, as of any date, an amount equal to the sum of
(i) 85% of the sum of (a) the face amount of the Receivables of the Company and
its Restricted Subsidiaries and (b) the book value of the Company's undivided
interest in the assets of the AmeriServe Master Trust plus (ii) 65% of the book
value of all inventory of the Company and the Restricted Subsidiaries, all
calculated as of the end of the most recently completed month on a consolidated
basis and in accordance with GAAP.
"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.
2
<PAGE> 4
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 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
3
<PAGE> 5
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 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
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<PAGE> 6
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 11.02 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.
"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.
"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 Notes for New Senior 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.
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<PAGE> 7
"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,
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.
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<PAGE> 8
"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.
"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 Robertson Stephens
"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.
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<PAGE> 9
"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 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 at a place of payment, 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.
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<PAGE> 10
"New Credit Facility" means that certain Credit Facility, dated as of
July 11, 1997, by and among the Company and Bank of America, providing for up to
$150.0 million of revolving 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.
"New Senior Notes" means the Company's 87/8% Senior Notes due 2006,
which will be issued in exchange for the Company's Senior 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 Notes as
contemplated by the Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum, dated October 13,
1997, relating to the Company's offering and placement of the Senior 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 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 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).
"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.
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<PAGE> 11
"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
or other Indebtedness allowed to be incurred under clause (ii) of Section 4.09
hereof; (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
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<PAGE> 12
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 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.
"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
11
<PAGE> 13
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.
"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.
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<PAGE> 14
"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 secured 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 Notes" means the Company's 87/8% Senior Notes due 2006.
"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
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).
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<PAGE> 15
"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 Section
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 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
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<PAGE> 16
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.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"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
"Excess Proceeds Offer Triggering Event"..............................................................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
</TABLE>
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;
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<PAGE> 17
"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 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.
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<PAGE> 18
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 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.
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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 Notes for original issuance in
exchange for a like principal amount of Senior Notes exchanged in the Exchange
Offer or otherwise exchanged for New Senior 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.
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
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<PAGE> 20
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 6.01(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 Section 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 Section 312(a).
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
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<PAGE> 21
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
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
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<PAGE> 22
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):
(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
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<PAGE> 23
(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 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
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<PAGE> 24
(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 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,
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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 (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,
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
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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):
(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
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<PAGE> 27
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 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
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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 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.
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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.
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.
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<PAGE> 30
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 Section 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 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
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<PAGE> 31
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
(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
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<PAGE> 32
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.
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 April 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
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<PAGE> 33
unpaid interest and Liquidated Damages thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month period beginning on April
15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C> <C>
2002 .................................................................. 104.438%
2003 .................................................................. 102.219%
2004 and thereafter.................................................... 100.000%
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to October 15,
2000, the Company may redeem up to 33% of the original aggregate principal
amount of Notes at a redemption price of 108.875% 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
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
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<PAGE> 34
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).
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,
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<PAGE> 35
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 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.
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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 Section 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
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.
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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.
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 scheduled payments of
interest or principal at Stated Maturity of such Indebtedness; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively
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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
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,
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(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; (x) optional and
mandatory prepayments on any Indebtedness incurred under the New Credit Facility
or other senior secured Indebtedness allowed to be incurred pursuant to Section
4.09 hereof; or (xi) 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 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
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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 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 and its Restricted Subsidiaries of
Indebtedness represented by the 101/8% Senior Subordinated Notes due 2007 and
the guarantees thereof, respectively;
(ii) the incurrence by the Company of Indebtedness and letters of
credit pursuant to the New Credit Facility; provided that the aggregate
principal amount of all such 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 the sum of $225.0 million plus the
Borrowing Base;
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(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 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;
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(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 Subsidiary, other than guarantees
of Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or 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.
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
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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 ("Excess Proceeds Offer Triggering Event"), 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.
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
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
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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 (other than Permitted Liens) upon any of their
property or assets, now owned or hereafter acquired.
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 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.
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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.
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 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.
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<PAGE> 46
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.
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,
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<PAGE> 47
waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
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
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<PAGE> 48
SECTION 6.01. EVENTS OF DEFAULT.
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
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<PAGE> 49
(e) generally is not paying its debts as
they become due; or
(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. 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
April 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 April 15, 2002, then the amount
payable in respect of such Notes for purposes of this paragraph for each of the
twelve-month periods beginning on April 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
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<PAGE> 50
the provisions of this sentence, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of payment:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C> <C>
1997....................................................................................108.875%
1998....................................................................................107.988%
1999....................................................................................107.100%
2000....................................................................................106.213%
2001....................................................................................105.325%
</TABLE>
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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<PAGE> 51
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 Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
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<PAGE> 52
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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<PAGE> 53
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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<PAGE> 54
(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.
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
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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 Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b). The Trustee shall also transmit by mail all reports as
required by TIA Section 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 Section 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 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
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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 6.01(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 Section 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;
(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
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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 Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
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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 10.01 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 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.
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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;
(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;
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(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 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.
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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 10 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.
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.
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SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, 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 and 6.07, 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);
(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;
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(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.
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
10.04 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.
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ARTICLE 10
GUARANTEE OF NOTES
SECTION 10.01. NOTE GUARANTEE.
Subject to Section 10.06 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 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.
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SECTION 10.02. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 10.01, 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 10.01 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 10.03. 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.
(b) Subject to Section 10.04 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
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<PAGE> 66
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 10.04. 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 10.03(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 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 10.
SECTION 10.05. 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 10.06. 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
65
<PAGE> 67
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 10.07. "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 10 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 10 in place of the Trustee.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 11.02. 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
66
<PAGE> 68
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 O. 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 Section 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 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 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 Section 312(c).
SECTION 11.04. 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 Notes), the Company or Subsidiary Guarantor
shall furnish to the Trustee upon request:
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<PAGE> 69
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.05 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 11.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been
satisfied.
SECTION 11.05. 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 Section 314(a)(4)) shall comply with the provisions of TIA
Section 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 11.06. 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 11.07. 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 11.08. 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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<PAGE> 70
SECTION 11.09. 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 11.10. 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 11.11. 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 11.12. 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 11.13. 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]
69
<PAGE> 71
SIGNATURES
Dated as of October 15, 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> 72
AMERISERVE TRANSPORTATION, INC.
By:_________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:_________________________________
Name:
Title:
<PAGE> 73
EXHIBIT A
(Face of Senior Note)
87/8% Senior Notes due 2006
No.___ $_______________
CUSIP NO. 03072JAB1
AMERISERVE FOOD DISTRIBUTION, INC.
promises to pay to _________________ or registered assigns, the principal sum of
___________ Dollars on October 15, 2006.
Interest Payment Dates: October 15 and April 15
Record Dates: October 1 and April 1
AMERISERVE FOOD DISTRIBUTION, INC.
By:______________________________
Name:
Title:
This is one of the
Senior Notes referred to in the
within-mentioned Indenture:
Dated:___________
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:__________________________________
A-1-1
<PAGE> 74
(Back of Senior Note)
87/8% Senior Notes due 2006
[Unless and until it is exchanged in whole or in part for Senior
Notes in definitive form, this Senior 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)(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.]2
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
- ----------
1 This paragraph should be included only if the Senior Note is issued in
global form.
2 This paragraph should be removed upon the exchange of Senior Notes for New
Senior Notes in the Exchange Offer or upon the registration of the Senior Notes
pursuant to the terms of the Registration Rights Agreement.
A-1-2
<PAGE> 75
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 Note at the rate of
87/8% 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 October 15 and April
15, commencing on April 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 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 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 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 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 Notes
(except defaulted interest) and Liquidated Damages, if any, on the
applicable Interest Payment Date to the Persons who are registered
Holders of Senior Notes at the close of business on the October 1 or
April 1 next preceding the Interest Payment Date, even if such
Senior 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 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 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 Notes under an Indenture
dated as of October 15, 1997 ("Indenture") among the Company, the
Subsidiary Guarantors and the Trustee. The terms of the Senior 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 Sections 77aaa-77bbbb) (the "TIA"). The
Senior 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 Notes are general unsecured Obligations of the Company
limited to $350,000,000 in aggregate principal amount, plus
A-1-3
<PAGE> 76
amounts, if any, sufficient to pay premium or Liquidated Damages, if
any, and interest on outstanding Senior Notes as set forth in
Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
Except as set forth in the next paragraph, the Senior Notes
shall not be redeemable at the Company's option prior to April 15,
2002. Thereafter, the Senior 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 April 15 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002................................................... 104.438%
2003................................................... 102.219%
2004 and thereafter.................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to October
15, 2000, the Company may redeem up to 33% of the original aggregate
principal amount of Senior Notes at a redemption price of 108.875%
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 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 Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of
Senior 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 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 Notes (an
"Asset Sale Offer") to purchase the maximum principal amount of
Senior 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
A-1-4
<PAGE> 77
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 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 Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall
select the Senior 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 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 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 Notes are to be redeemed at its registered
address. Senior 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 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 Notes or portions thereof called for
redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in
registered form without coupons in initial denominations of $1,000
and integral multiples of $1,000. The transfer of the Senior Notes
may be registered and the Senior 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
Note or portion of a Senior Note selected for redemption, except for
the unredeemed portion of any Senior Note being redeemed in part.
Also, it need not exchange or register the transfer of any Senior
Notes for a period of 15 days before a selection of Senior Notes to
be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following
paragraphs, the Indenture, the Senior 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 Notes then
outstanding (including, without limitation, consents obtained in
connection with a purchase of or, tender offer or exchange offer for
Senior Notes), and any existing Default or Event of Default or
compliance with any provision of the Indenture, the Senior 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 Notes
(including consents obtained in connection with a tender offer or
exchange offer for Senior Notes).
Without the consent of any Holder of Senior Notes, the Company
and the Trustee may amend or supplement the Indenture, the Note
Guarantees or the Senior Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Senior Notes in
addition to or in place of certificated Senior Notes, to provide for
the assumption of the Company's or a Subsidiary Guarantor's
obligations to Holders of Senior Notes in the case of a merger or
A-1-5
<PAGE> 78
consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Senior 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 Notes.
12. 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 Notes; (ii) default in payment
when due of the principal of or premium, if any, on the Senior
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 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 Notes then outstanding to comply with its other
agreements in the Indenture or the Senior 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 Notes may declare all the Senior Notes to be due
and payable immediately. 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 Notes will become due and
payable without further action or notice. Holders of the Senior
Notes may not enforce the Indenture or the Senior Notes except as
provided in the Indenture. Subject to certain limitations, Holders
of a majority in principal amount of the then outstanding Senior
Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Senior 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.
13. 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.
A-1-6
<PAGE> 79
14. 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 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 Notes by accepting a Senior Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Senior Notes and any Note
Guarantee.
15. AUTHENTICATION. This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
16. 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).
17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Senior 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").
18. 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 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 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 53045
Telecopy: (414) 792-0202
Chief Financial Officer
A-1-7
<PAGE> 80
ASSIGNMENT FORM
To assign this Senior Note, fill in the form below: (I) or (we) assign and
transfer this Senior 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 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 Note)
Signature Guarantee:
A-1-8
<PAGE> 81
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior 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 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 Note)
Tax Identification No.:_____________________
Signature Guarantee.
A-1-9
<PAGE> 82
SCHEDULE OF EXCHANGES OF SENIOR NOTES(3)
THE FOLLOWING EXCHANGES OF A PART OF THIS GLOBAL NOTE FOR OTHER SENIOR NOTES
HAVE BEEN MADE:
<TABLE>
<CAPTION>
Principal Amount of
Amount of decrease in Amount of increase in this Global Note Signature of authorized
Principal Amount of Principal Amount of following such decrease officer of Trustee or
Date of Exchange this Global Note this Global Note (or increase) Senior Note Custodian
- ---------------- ---------------- ---------------- ------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(3) This should be included only if the Senior Note is issued in global form.
A-1-10
<PAGE> 83
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
87/8% Senior Notes due 2006
No._____ $_______________
CIN NO. U0308AB9
AMERISERVE FOOD DISTRIBUTION, INC.
promises to pay to ________________ or registered assigns, the principal sum of
________ Dollars on October 15, 2007.
Interest Payment Dates: October 15 and April 15
Record Dates: October 1 and April 1
AMERISERVE FOOD DISTRIBUTION, INC.
By:______________________________
Name:
Title:
This is one of the
Senior Notes referred to in the
within-mentioned Indenture:
Dated:_________________________
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:_____________________________
A-2-1
<PAGE> 84
(Back of Regulation S Temporary Global Note)
87/8% Senior Notes due 2006
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR NOTES IN
DEFINITIVE FORM, THIS SENIOR 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 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)(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 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 NOTES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
A-2-2
<PAGE> 85
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 NOTE FOR A REGULATION S TEMPORARY GLOBAL
NOTE AS CONTEMPLATED BY THE INDENTURE.](1)
Until this 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, this Regulation S Temporary Global Note shall in all other
respects be entitled to the same benefits as other Senior Notes under the
Indenture.
This 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 this Regulation S Temporary Global Note for one or more
Regulation S Permanent Global Notes or Rule 144A Global Notes, the Trustee shall
cancel this Regulation S Temporary Global Note.
This Regulation S Temporary 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. This Regulation
S Temporary 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 Note at the
rate of 87/8% 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 October 15 and April 15, commencing on April 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 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 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 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 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
- ----------
(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> 86
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
Notes (except defaulted interest) and Liquidated Damages, if
any, on the applicable Interest Payment Date to the Persons
who are registered Holders of Senior Notes at the close of
business on the October 1 or April 1 next preceding the
Interest Payment Date, even if such Senior 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 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
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 Notes under an
Indenture dated as of October 15, 1997 ("Indenture") among the
Company, the Subsidiary Guarantors and the Trustee. The terms
of the Senior 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 Sections
77aaa-77bbbb) (the "TIA"). The Senior 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 Notes are
general unsecured Obligations of the Company limited to
$350,000,000 in aggregate principal amount, plus amounts, if
any, sufficient to pay premium or Liquidated Damages, if any,
and interest on outstanding Senior Notes as set forth in
Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
Except as set forth in the next paragraph, the Senior
Notes shall not be redeemable at the Company's option prior to
April 15, 2002. Thereafter, the Senior 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 April 15 of the years
indicated below:
A-2-4
<PAGE> 87
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002............................................. 104.438%
2003............................................. 102.219%
2004 and thereafter.............................. 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to October
15, 2000, the Company may redeem up to 33% of the original aggregate
principal amount of Senior Notes at a redemption price of 108.875%
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 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 Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of
Senior 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 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 Notes (an
"Asset Sale Offer") to purchase the maximum principal amount of
Senior 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
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 Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Senior 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 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 Notes purchased by completing the form titled
"Option of Holder to Elect Purchase" appearing below.
A-2-5
<PAGE> 88
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 Notes are to be redeemed at its registered
address. Senior 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 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 Notes or portions thereof called for
redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in
registered form without coupons in initial denominations of $1,000
and integral multiples of $1,000. The transfer of the Senior Notes
may be registered and the Senior 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
Note or portion of a Senior Note selected for redemption, except for
the unredeemed portion of any Senior Note being redeemed in part.
Also, it need not exchange or register the transfer of any Senior
Notes for a period of 15 days before a selection of Senior Notes to
be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following
paragraphs, the Indenture, the Senior 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 Notes then
outstanding (including, without limitation, consents obtained in
connection with a purchase of or, tender offer or exchange offer for
Senior Notes), and any existing Default or Event of Default or
compliance with any provision of the Indenture, the Senior 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 Notes
(including consents obtained in connection with a tender offer or
exchange offer for Senior Notes).
Without the consent of any Holder of Senior Notes, the Company
and the Trustee may amend or supplement the Indenture, the Note
Guarantees or the Senior Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Senior Notes in
addition to or in place of certificated Senior Notes, to provide for
the assumption of the Company's or a Subsidiary Guarantor's
obligations to Holders of Senior 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 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 Notes.
12. 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 Notes; (ii) default in payment
when due of the principal of or premium, if any, on the Senior
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 Notes to comply with the
provisions described in Sections 4.07 and 4.09, of the Indenture;
(v) failure by
A-2-6
<PAGE> 89
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 Notes then outstanding to comply with its other agreements in
the Indenture or the Senior 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 Notes may declare all the Senior Notes to be due
and payable immediately. 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 Notes will become due and
payable without further action or notice. Holders of the Senior
Notes may not enforce the Indenture or the Senior Notes except as
provided in the Indenture. Subject to certain limitations, Holders
of a majority in principal amount of the then outstanding Senior
Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Senior 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.
13. 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.
14. 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 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 Notes by accepting a Senior Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Senior Notes and any Note
Guarantee.
15. AUTHENTICATION. This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
16. 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
A-2-7
<PAGE> 90
(= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Senior 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").
18. 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 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 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 53045
Telecopy: (414) 792-0202
Chief Financial Officer
A-2-8
<PAGE> 91
SCHEDULE OF EXCHANGES FOR GLOBAL NOTES
The following exchanges of a part of this Regulation S Temporary Global Note for
other Global Notes have been made:
<TABLE>
<CAPTION>
Amount of decrease in Amount of increase in Principal Amount of this Signature of
Principal Amount Principal Amount Global Note authorized officer of
of this Global of this Global following such decrease Trustee or Senior Note
Date of Exchange Note Note (or increase) Custodian
- ---------------- ---- ---- ------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
A-2-9
<PAGE> 92
EXHIBIT B-1
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: 87/8% Senior Notes due 2006 of AmeriServe Food Distribution, Inc.
Reference is hereby made to the Indenture, dated as of October 15,
1997 (the "Indenture"), 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 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
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
Notes to a Person who will take delivery thereof in the form of an equal
principal amount of Senior 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 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 Notes was not made to a person in the United
States;
(2) either:
B-1-1
<PAGE> 93
(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 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,
Lufkin & Jenrette Securities Corporation and BancAmerica Robertson Stephens, the
initial purchasers of such Senior 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: AmeriServe Food Distribution, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
BancAmerica Robertson Stephens
B-1-2
<PAGE> 94
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: 87/8% Senior Notes due 2006 of AmeriServe Food Distribution, Inc.
Reference is hereby made to the Indenture, dated as of October 15,
1997 (the "Indenture"), 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 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 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 Notes to a Person
who will take delivery thereof in the form of an equal principal amount of
Senior 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 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 Notes are being transferred to a Person that the
Transferor reasonably believes is purchasing the Senior 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> 95
[ ] 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 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 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 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
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 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
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> 96
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 Robertson
Stephens, the initial purchasers of such Senior 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: AmeriServe Food Distribution, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
BancAmerica Robertson Stephens
B-2-3
<PAGE> 97
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF DEFINITIVE SENIOR 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: 87/8% Senior Notes due 2006 of AmeriServe Food Distribution, Inc.
Reference is hereby made to the Indenture, dated as of October 15,
1997 (the "Indenture"), 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 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 Notes which are
evidenced by one or more Definitive Senior Notes in the name of (the
"Transferor"). The Transferor has requested an exchange or transfer of such
Definitive Senior Note(s) in the form of an equal principal amount of Senior
Notes evidenced by one or more Definitive Senior Notes, to be delivered to the
Transferor or, in the case of a transfer of such Senior Notes, to such Person as
the Transferor instructs the Trustee.
In connection with such request and in respect of the Senior Notes
surrendered to the Trustee herewith for exchange (the "Surrendered Senior
Notes"), the Holder of such Surrendered Senior Notes hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Senior Notes are being acquired for the Transferor's own
account, without transfer;
or
[ ] the Surrendered Senior Notes are being transferred to the Company;
or
[ ] the Surrendered Senior 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,
B-3-1
<PAGE> 98
accordingly, the Transferor hereby further certifies that the Surrendered
Senior Notes are being transferred to a Person that the Transferor
reasonably believes is purchasing the Surrendered Senior 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 Notes are being transferred in a transaction
permitted by Rule 144 under the Securities Act;
or
[ ] the Surrendered Senior 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 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 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 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 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
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 Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
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 Robertson
Stephens, the initial purchasers of such Senior Notes being transferred. Terms
B-3-2
<PAGE> 99
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: AmeriServe Food Distribution, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
BancAmerica Robertson Stephens
B-3-3
<PAGE> 100
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 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: 87/8% Senior Notes due 2006 of AmeriServe Food Distribution, Inc.
Reference is hereby made to the Indenture, dated as of October 15, 1997
(the "Indenture"), 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 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 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 Notes
evidenced by one or more Definitive Senior Notes, to be delivered to the
Transferor or, in the case of a transfer of such Senior Notes, to such Person as
the Transferor instructs the Trustee.
In connection with such request and in respect of the Senior Notes
surrendered to the Trustee herewith for exchange (the "Surrendered Senior
Notes"), the Holder of such Surrendered Senior Notes hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Senior Notes are being transferred to the beneficial
owner of such Senior Notes;
or
[ ] the Surrendered Senior 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 Notes are being transferred
to a Person that the Transferor reasonably believes is purchasing the
Surrendered Senior Notes for its own account, or for one or more accounts
with respect to which such Person exercises sole investment
B-4-1
<PAGE> 101
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 Notes are being transferred in a transaction
permitted by Rule 144 under the Securities Act;
or
[ ] the Surrendered Senior Notes are being transferred pursuant to an effective
registration statement under the Securities Act;
or
[ ] the Surrendered Senior 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 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 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 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 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 Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
B-4-2
<PAGE> 102
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
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: AmeriServe Food Distribution, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
BancAmerica Robertson Stephens
B-4-3
<PAGE> 103
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: 87/8% Senior Notes due 2006 of AmeriServe Food Distribution, Inc.
Reference is hereby made to the Indenture, dated as of October 15, 1997
(the "Indenture"), 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 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 Notes,
we confirm that:
1. We understand that any subsequent transfer of the Senior 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 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 Notes have
not been registered under the Securities Act, and that the Senior 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 Notes or any
interest therein, (A) we will do so only (1)(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 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
C-1
<PAGE> 104
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 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 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)(1), (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
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 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 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> 105
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> 106
EXHIBIT D
NOTE GUARANTEE
Subject to Section 10.06 of the Indenture, each Subsidiary Guarantor
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Senior 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 Notes and the Obligations of the Company under the
Senior Notes or under the Indenture, that: (a) the principal of, premium, if
any, interest and Liquidated Damages, if any, on the Senior 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 Notes and all
other payment Obligations of the Company to the Holders or the Trustee under the
Indenture or under the Senior 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 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 10 of the Indenture, and reference is hereby made to such
Indenture for the precise terms of this Note Guarantee. The terms of Article 10
of the Indenture are incorporated herein by reference. This Note Guarantee is
subject to release as and to the extent provided in Section 10.04 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 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 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 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 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 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
D-1
<PAGE> 107
(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 October 15, 1997 AMERISERV FOOD COMPANY, INC.
By:_________________________________________
Name:
Title:
Dated as of October 15, 1997 CHICAGO CONSOLIDATED CORPORATION
By:_________________________________________
Name:
Title:
Dated as of October 15, 1997 NORTHLAND TRANSPORTATION SERVICES, INC.
By:_________________________________________
Name:
Title:
Dated as of October 15, 1997 THE HARRY H. POST COMPANY
By:_________________________________________
Name:
Title:
Dated as of October 15, 1997 DELTA TRANSPORTATION, LTD.
By:_________________________________________
Name:
Title:
Dated as of October 15, 1997 AMERISERVE TRANSPORTATION, INC.
By:_________________________________________
Name:
Title:
D-2
<PAGE> 108
Exhibit E
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
___________, between Subsidiary Guarantor (the "New Subsidiary Guarantor"), a
subsidiary of AmeriServe 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).
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of October 15, 1997, providing
for the issuance of an aggregate principal amount of $350,000,000 of 87/8%
Senior Notes due 2006 (the "Senior Notes");
WHEREAS, Section 10.05 of the Indenture provides that under certain
circumstances the Company may cause, and Section 10.03 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 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 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 Notes and the Indenture on the terms
and subject to the conditions set forth in Article 10 of the Indenture and to be
bound by all other applicable provisions of the Indenture.
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 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 Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Senior 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.
E-1
<PAGE> 109
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> 110
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> 111
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).......................................................... 11.03
(c) ......................................................... 11.03
313 (a) ......................................................... 7.06
(b)(1) ...................................................... 7.06
(b)(2) ...................................................... 7.06; 7.07
(c) ......................................................... 7.06;11.02
(d).......................................................... 7.06
314 (a) ......................................................... 4.03;11.05
(b) ......................................................... N.A.
(c)(1) ....................................................... 11.04
(c)(2) ...................................................... 11.04
(c)(3) ...................................................... N.A.
(d).......................................................... N.A.
(e) ........................................................ 11.05
(f).......................................................... N.A.
315 (a).......................................................... 7.01
(b).......................................................... 7.05,11.02
(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).......................................................... 11.01
(b).......................................................... N.A.
(c).......................................................... 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 112
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..... 15
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................................. 19
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................................... 31
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> 113
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............................... 38
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock................................................. 39
Section 4.10. Assets Sales.......................................... 41
Section 4.11. Transactions With Affiliates.......................... 42
Section 4.12. Liens................................................. 43
Section 4.13. Sale and Leaseback Transactions....................... 43
Section 4.14. Offer to Purchase Upon Change of Control.............. 43
Section 4.15. Corporate Existence................................... 44
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................................... 45
Section 4.19. Additional Guarantees................................. 46
Section 4.20. Payment for Consents.................................. 46
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation of Sale of Assets............... 46
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........................................ 49
Section 6.04. Waiver of Past Defaults............................... 50
Section 6.05. Control by Majority................................... 50
Section 6.06. Limitation on Suits................................... 50
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...................... 51
Section 6.10. Priorities............................................ 51
Section 6.11. Undertaking for Costs................................. 52
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee..................................... 52
Section 7.02. Rights of Trustee..................................... 53
Section 7.03. Individual Rights of Trustee.......................... 54
ii
<PAGE> 114
Section 7.04. Trustee's Disclaimer.................................. 54
Section 7.05. Notice of Defaults.................................... 54
Section 7.06. Reports by Trustee to Holders of the Notes............ 54
Section 7.07. Compensation and Indemnity............................ 55
Section 7.08. Replacement of Trustee................................ 56
Section 7.09. Successor Trustee by Merger, etc...................... 56
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............................................ 57
Section 8.02. Legal Defeasance and Discharge........................ 57
Section 8.03. Covenant Defeasance................................... 58
Section 8.04. Conditions to Legal or Covenant Defeasance............ 58
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions......... 59
Section 8.06. Repayment to The Company.............................. 60
Section 8.07. Reinstatement......................................... 60
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of the Notes............... 60
Section 9.02. With Consent of Holders of Notes...................... 61
Section 9.03. Compliance with Trust Indenture Act................... 62
Section 9.04. Revocation and Effect of Consents..................... 62
Section 9.05. Notation on or Exchange of Notes...................... 63
Section 9.06. Trustee to Sign Amendments, etc....................... 63
ARTICLE 10
GUARANTEE OF NOTES
Section 10.01. Note Guarantee........................................ 63
Section 10.02. Execution and Delivery of Note Guarantee.............. 64
Section 10.03. Subsidiary Guarantors May Consolidate, etc., on
Certain Terms......................................... 64
Section 10.04. Releases Following Sale of Assets, Merger, Sale of
Capital Stock Etc..................................... 65
Section 10.05. Additional Subsidiary Guarantors...................... 66
Section 10.06. Limitation on Subsidiary Guarantor Liability.......... 66
Section 10.07. "Trustee" to Include Paying Agent..................... 66
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.......................... 66
iii
<PAGE> 115
Section 11.02. Notices............................................... 67
Section 11.03. Communication by Holders of Notes with Other
Holders of Notes...................................... 68
Section 11.04. Certificate and Opinion as to Conditions Precedent.... 68
Section 11.05. Statements Required in Certificate or Opinion......... 68
Section 11.06. Rules by Trustee and Agents........................... 68
Section 11.07. No Personal Liability of Directors, Officers,
Employees and Stockholders............................ 69
Section 11.08. Governing Law......................................... 69
Section 11.09. No Adverse Interpretation of Other Agreements......... 69
Section 11.10. Successors............................................ 69
Section 11.11. Severability.......................................... 69
Section 11.12. Counterpart Originals................................. 69
Section 11.13. Table of Contents, Headings, etc...................... 69
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
iv
<PAGE> 1
EXHIBIT 4.4
EXECUTION COPY
------------------------------------------------------------------------------
------------------------------------------------------------------------------
AMERISERVE FOOD DISTRIBUTION, INC.
----------------------------------------
$350,000,000
87/8% Senior Notes due 2006
----------------------------------------
-------------------
PURCHASE AGREEMENT
DATED AS OF OCTOBER 8, 1997
-------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BANCAMERICA ROBERTSON STEPHENS
------------------------------------------------------------------------------
------------------------------------------------------------------------------
<PAGE> 2
AMERISERVE FOOD DISTRIBUTION, INC.
$350,000,000 Principal Amount of
87/8% Senior Notes due 2006
PURCHASE AGREEMENT
October 8, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BANCAMERICA ROBERTSON STEPHENS
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 $350,000,000 in principal
amount of 87/8% Senior Notes due 2006 (the "Senior Notes") of the Company, to
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and BancAmerica
Robertson Stephens ("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 Notes and the New Senior Notes (as
defined below) issuable in exchange therefor are collectively referred to herein
as the "Notes." The Notes will be guaranteed on a senior unsecured 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.
1. ISSUANCE OF SECURITIES. The Senior 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 October 8, 1997
(the "Preliminary Offering Memorandum") and a final offering memorandum, dated
October 13, 1997 (the "Offering Memorandum" and, together with the Preliminary
Offering Memorandum, the "Offering Documents"), relating to the Senior 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 Notes
(and all securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
1
<PAGE> 3
"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. 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 Notes set
forth opposite the name of such Initial Purchaser on Schedule II hereto at a
purchase price equal to 97.5% of the principal amount thereof (the "Purchase
Price").
3. TERMS OF OFFERING. The Initial Purchasers will make offers (the "Exempt
Resales") of the Senior 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
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.
2
<PAGE> 4
Holders (including subsequent transferees) of the Senior 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 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) the Company's 87/8% new Senior Notes due 2006 (the "New Senior Notes") to
be offered in exchange for the Senior 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 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 Notes shall be made at the offices of Latham & Watkins,
885 Third Avenue, New York, New York 10022 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 October 15, 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 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 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 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
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
3
<PAGE> 5
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 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 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 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 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 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.
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(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 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);
(3) the issuance, transfer and delivery by the Company and the
Subsidiary Guarantors of the Senior 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;
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<PAGE> 7
(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 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.
(l) Not to distribute prior to the Closing Date any offering
material in connection with the offering and sale of the Senior 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 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 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.
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<PAGE> 8
(p) To cause the Exchange Offer to be made in the appropriate form
to permit registered New Senior Notes to be offered in exchange for the
Senior 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 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, the fourth sentence of the seventh paragraph and the third and
fourth sentences of the eighth paragraph 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.
(b) Each of the Company and its subsidiaries (i) is duly organized
and validly existing as a corporation in good standing under the laws of
its respective 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 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
7
<PAGE> 9
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, 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 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 (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 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 issuance and sale of the Notes by the
Company or the issuance of the Note Guarantees by the Subsidiary
Guarantors and (iii) 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 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
8
<PAGE> 10
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.
(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 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 Notes and, when the Senior 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).
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<PAGE> 11
(l) The Company has duly authorized the New Senior Notes and, when
issued and authenticated in accordance with the terms of the Registered
Exchange Offer and the Indenture, the New Senior 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 Notes and, when the New Senior
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 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) There is (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 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 Notes
or the Note Guarantees.
(p) 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.
(q) The Company is not 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.
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<PAGE> 12
(r) 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.
(s) The Company is 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.
(t) The Company and each of its Subsidiaries has 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 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 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.
(u) The Company and its subsidiaries 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
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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.
(v) 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 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 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.
(w) The Company and its subsidiaries 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 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.
(x) 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
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its subsidiaries 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 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.
(y) The Company maintains 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.
(z) 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 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.
(aa) The Company and the Subsidiary Guarantors 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.
(bb) 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 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
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<PAGE> 15
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.
(cc) Prior to and immediately after the issuance of the Senior Notes
(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.
(dd) 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
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 Notes or (B) paid or
agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(ee) 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.
(ff) Neither the Company nor any of its subsidiaries is an
"investment company" or a company "controlled" by an investment company
within the meaning of the Investment Company Act of 1940, as amended.
(gg) 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.
(hh) When the Senior Notes are issued and delivered pursuant to this
Agreement, such Senior 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.
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<PAGE> 16
(ii) Assuming (i) that the representations and warranties of the
Initial Purchasers in Section 7 hereof are true, (ii) that the Initial
Purchasers complied with its 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 Notes pursuant to the exemption provided for under Regulation
S, the purchase and resale of the Senior 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 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 Notes have been issued and sold by the
Company within the six-month period immediately prior to the date hereof.
(jj) 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 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."
(kk) 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.
(ll) 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 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 Notes outside
the United States.
(mm) There is no "substantial U.S. market interest" as defined in
rule 902(n) of Regulation S for the Senior Notes or any security of the
same class as the Senior Notes.
(nn) The sale of the Senior Notes in offshore transactions pursuant
to Regulation S is not part of a plan or scheme to evade the registration
provisions of the Act.
(oo) 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.
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<PAGE> 17
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 Notes.
(b) Such Initial Purchaser (i) is not acquiring the Senior 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 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 representatives in connection with
the offer and sale of any of the Senior 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 Notes only from,
and will offer to sell the Senior Notes only to, Eligible Purchasers. Such
Initial Purchaser further agrees that it will offer to sell the Senior
Notes only to, and will solicit offers to buy the Senior Notes only from,
persons who in purchasing such Senior Notes will be deemed to have
represented and agreed (i) if such Eligible Purchasers are QIBs, that they
are purchasing the Senior 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 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, such 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 901(b) of Regulation S
with respect to the Senior 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.
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<PAGE> 18
(e) Such Initial Purchaser represents and agrees that the Senior
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 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 Notes from
it during the Restricted Period a confirmation or notice to substantially
the following effect:
"The Senior 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 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."
Such 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 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 Notes to
persons in the United Kingdom prior to the expiry of the period of six
months from the issue date of the Senior 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 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 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 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 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.
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<PAGE> 19
(i) Such Initial Purchaser agrees not to cause any advertisement of
the Senior 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
Notes, except such advertisements as include the statements required by
Regulation S.
(j) The sale of the Senior 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 Notes on
behalf of a pension or welfare plan.
(l) Prior to consummating the Eligible Resales, such Initial
Purchaser 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 such Initial Purchaser
pursuant to Sections 9(d) and (e) hereof, 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 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
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<PAGE> 20
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 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) 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
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<PAGE> 21
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.
(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 Purchaser furnished in
writing by such Initial Purchaser 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 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
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<PAGE> 22
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 Notes purchased by such Initial Purchaser
pursuant to this Agreement exceeds the amount equal to (i) the amount of
any damages which such Initial Purchaser has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or
alleged omission plus (ii) any amount paid or contributed by such 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 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;
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<PAGE> 23
(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 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 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 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.
(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
22
<PAGE> 24
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.
(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 or 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
23
<PAGE> 25
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 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 Notes and, when the Senior 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 Notes and, when the New Senior 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
24
<PAGE> 26
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) To the best knowledge of such counsel, there is (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 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 Notes or the Note
Guarantees.
(12) 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.
(13) 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.
(14) The statements under the captions "Description of Notes,"
"Description of Indebtedness," 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.
(15) 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
25
<PAGE> 27
System, in each case as in effect now or as the same may hereafter
be in effect on the Closing Date.
(16) Neither the Company nor any of its subsidiaries is an
"investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as
amended.
(17) When the Senior Notes are issued and delivered pursuant
to this Agreement, such Senior 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.
(18) 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.
(19) 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 Notes pursuant
hereto (including pursuant to the Exempt Resales) is exempt from the
registration requirements of the Act.
(20) 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)(14) 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,
26
<PAGE> 28
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 duly organized and validly existing as a
corporation in good standing under the laws of its respective
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,
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, 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 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 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
27
<PAGE> 29
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 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 issuance and sale of the
Notes by the Company or the issuance of the Note Guarantees by the
non-Delaware Subsidiary Guarantors and (iii) 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 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.
(8) The Company and the non-Delaware Subsidiary Guarantors
have duly authorized the Indenture, and when the Company and the
non-Delaware Subsidiary
28
<PAGE> 30
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 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 Notes
and, when the Senior 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 Notes and,
when issued and authenticated in accordance with the terms of the
Registered Exchange Offer and the Indenture, the New Senior 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
Notes and, when the New Senior 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).
29
<PAGE> 31
(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) To the best knowledge of such counsel, there is (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 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 Notes or the Note Guarantees.
(15) 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 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).
30
<PAGE> 32
(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 Ernst & Young LLP, independent public accountants for the
Company dated as of the date of this Agreement and as of the Closing Date,
in form and substance satisfactory to the Initial Purchasers 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 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.
(k) 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
accuracy, completeness or satisfaction in all material respects of any of
the representations, warranties or conditions herein contained.
(l) The Board of Directors of the Company shall have designated the
Senior Notes to be Designated Senior Debt pursuant to the indenture
governing the Company's 101/8% Senior Subordinated Notes due 2007.
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 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
31
<PAGE> 33
Senior 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 Notes which it has agreed to purchase
hereunder on such date, and the aggregate principal amount of such Senior
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 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 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 Notes in an aggregate principal amount that exceeds 10% of
such total principal amount of the Senior Notes and arrangements
satisfactory to the other Initial Purchasers and the Company for the
purchase of such Senior 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.
(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
32
<PAGE> 34
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
Robertson Stephens, 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 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 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 right under or by virtue of this Agreement. The term
"successors and assigns" shall not include a purchaser of any of the
Senior 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) 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.
33
<PAGE> 35
[signature pages follow]
34
<PAGE> 36
Very truly yours,
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> 37
AMERISERVE TRANSPORTATION, INC.
By:______________________________________
Name:
Title:
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: _________________________________
Name:
Title:
<PAGE> 38
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> 39
SCHEDULE II
PRINCIPAL AMOUNT
OF SENIOR NOTES
INITIAL PURCHASERS TO BE PURCHASED
- ------------------ ---------------
Donaldson, Lufkin & Jenrette
Securities Corporation.........................................$297,500,000
BancAmerica Robertson Stephens................................... $52,500,000
-----------
$350,000,000
<PAGE> 1
Exhibit 5.1
[LETTERHEAD OF WACHTELL, LIPTON, ROSEN & KATZ]
October 17, 1997
AmeriServe Food Distribution, Inc.
AmeriServ Food Company
Chicago Consolidated Corporation
Delta Transportation, Ltd.
Northland Transportation Services, Inc.
The Harry H. Post Company
17975 West Sarah Lane, Suite 100
Brookfield, Wisconsin 53045
AmeriServe Transportation, Inc.
14841 Dallas Parkway
Dallas, Texas 75240
Ladies and Gentlemen:
We have acted as special counsel to AmeriServe Food Distribution,
Inc., a Nebraska corporation (the "Company"), in connection with the
preparation of the Company's Registration Statement on Form S-4 (the
"Registration Statement"), under the Securities Act of 1933, as amended (the
"Securities Act"), first filed with the Securities and Exchange Commission on
August 8, 1997, and as amended on October 17, 1997, relating to an offer to
exchange (the "Exchange Offer") the Company's 8 7/8% New Senior Notes due
2006 (the "New Notes") for an equal principal amount of the Company's
outstanding 8 7/8 % Senior Notes due 2006 (the "Notes"). The New Notes will
be fully and unconditionally guaranteed on a senior unsecured basis (the "New
Note Guarantees") by, and will be joint and several obligations of, AmeriServ
Food Company, a Delaware 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, Delta Transportation, Ltd., a
Wisconsin corporation and a subsidiary of the Company and AmeriServe
Transportation, Inc., a Nebraska corporation and a subsidiary of the Company
(the above being referred to herein as the "Subsidiary Guarantors").
The Notes were issued, and the New Notes will be issued, under an
Indenture (the "Indenture") dated as of October 15, 1997, among the Company,
the Subsidiary Guarantors, and State Street Bank and Trust Company, as
Trustee (the "Trustee").
In connection with this opinion, we have examined the
Registration Statement, the Indenture, (included as Exhibit 4.1 to the
Registration Statement), the form of the New Notes (included as Exhibit 4.2
to the Registration Statement), and originals or copies certified or
otherwise identified to our satisfaction of such other documents, corporate
records and other instruments as we have deemed necessary or appropriate for
the purposes of the opinion set forth herein.
We have, with your approval, assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals,
the conformity to authentic original documents of all documents submitted to
us as certified, facsimile, conformed, electronic, or photostatic copies and
the authenticity of the originals of such copies, and we have assumed the
legal capacity of all individuals executing such documents. In addition, as
to all questions of fact material to this opinion that have not been
independently established, we have relied upon certificates or comparable
documents, and oral and written statements and representations of, officers
and representatives of the Company and the Subsidiary Guarantors. We have
not
<PAGE> 2
AmeriServe Food Distribution, Inc.
October 17, 1997
Page 2
independently verified such information and assumptions. Capitalized
terms used and not defined herein shall have the meanings ascribed to such
terms in the Purchase Agreement (included as Exhibit 2.1 to the Registration
Statement).
Based upon and subject to the foregoing, assuming that the
Indenture has been duly authorized, executed and delivered by, and represents
the valid and binding obligation of, the Trustee, and when the Registration
Statement, including any amendment thereto, shall have become effective under
the Securities Act and the Indenture shall have been duly qualified under the
Trust Indenture Act, and subject to the limitations and qualifications set
forth herein, we are of the opinion that:
(1) the New Notes, when duly executed and delivered by or on behalf
of the Company in the form contemplated by the Indenture upon the
terms set forth in the Exchange Offer and authenticated by the
Trustee or an authenticating agent appointed by the Trustee in
accordance with the terms of the Indenture, will constitute the
legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms; and
(2) the New Note Guarantees, when duly executed and delivered by or
on behalf of the Subsidiary Guarantors in the form contemplated
by the Indenture upon the terms set forth in the Exchange Offer,
will constitute the legal, valid and binding obligations of the
Subsidiary Guarantors, enforceable against the Subsidiary
Guarantors in accordance with their terms;
subject, in each case, to (a) bankruptcy, insolvency, moratorium,
reorganization and other laws of general applicability, relating to or
affecting creditors' rights from time to time in effect, (b) application of
general principles of equity (regardless of whether considered in proceedings
in equity or at law) and the discretion of the court before which any
proceeding therefor may be brought, (c) standards of commercial
reasonableness and the implied covenant of good faith, and (d) public policy.
In addition, the opinions expressed herein are subject to the
following assumptions, exceptions, limitations, qualifications and comments:
A. We express no opinion as to the effect of the laws of any
jurisdiction other than the laws of the State of New York and
the laws of the United States, wherein any holder of the New
Notes may be located which limit rates of interest that may be
charged or collected by such holder.
B. We express no opinion with respect to the lawfulness or
enforceability of:
(i) provisions relating to delay or omission of enforcement of
rights or remedies, waivers of defenses, or waivers of
benefits of any usury,
<PAGE> 3
AmeriServe Food Distribution, Inc.
October 17, 1997
Page 3
appraisal, valuation, stay, extension, moratorium, redemption,
statutes of limitation or other non-waivable benefits bestowed
by operation of law;
(ii) exculpation provisions, provisions relating to releases of
unmatured claims, provisions purporting to waive immaterial
rights, severability provisions and provisions similar in
substance and nature to those described in the foregoing
clause (i) and this clause (ii), insofar as any of the
foregoing are contained in the Indenture; and
(iii) indemnification or contribution provisions to the extent
they purport to relate to liabilities from or based upon
negligence or any violation of, or relate to rights of
contribution or indemnification that are violative of, any
law, rule or regulation of the public policy underlying any
law, rule or regulation (including any federal, state or
foreign securities law, rule or regulation).
C. Certain of the remedial provisions and waivers with respect to
the New Note Guarantees contained in the Indenture may be
unenforceable in whole or in part, but the inclusion of such
provisions does not affect the validity of the New Note
Guarantees, taken as a whole, and the New Note Guarantees, taken
as a whole, together with the laws of the State of New York,
contain adequate provision for the practical realization of the
benefits of the guarantees created thereby.
D. We express no opinion as to the effect on the Indenture, the New
Notes, the New Note Guarantees or on the opinions expressed
herein, of any fraudulent conveyance laws. In addition, we
express no opinion as to the effects of either (i) Section 548 of
Title 11 of the United States Code or (ii) Article 10 of the New
York Debtor and Creditor Law, relating to fraudulent transfers,
on any obligation under the New Note Guarantees of the Subsidiary
Guarantors that are direct or indirect subsidiaries of the
Company.
We are admitted to practice only in the State of New York and
express no opinion as to the effect on the matters covered by this opinion of
the laws of any jurisdiction other than the laws of the State of New York
and the laws of the United States.
This opinion is rendered to you and is solely for your benefit in
connection with the Exchange Offer. This opinion may not be used or relied
upon by you for any other purpose, or furnished to, quoted to, or relied upon
by any other person, firm or corporation for any purpose, without our prior
written consent, except that we hereby consent (i) to the use of this opinion
as an Exhibit to the Registration Statement and to the reference to our firm
under the caption "Legal Matters" in the prospectus that is a part of the
Registration Statement and (ii) to your filing copies of this opinion as an
Exhibit to the Registration Statement with agencies of such states
<PAGE> 4
AmeriServe Food Distribution, Inc.
October 17, 1997
Page 4
as you deem necessary in the course of complying with the laws of such states
regarding the Exchange Offer. In giving any such consent, we do not hereby admit
that we are in the category of persons whose consent is required under Section 7
of the Securities Act.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
- ------------------------------------------------------------------------------
AMERISERVE FOOD DISTRIBUTION, INC.
----------------------------------------
$350,000,000
87/8% SENIOR NOTES DUE 2007
----------------------------------------
-------------------
REGISTRATION RIGHTS AGREEMENT
DATED AS OF OCTOBER 15, 1997
-------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BANCAMERICA ROBERTSON STEPHENS
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and entered
into as of October 15, 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 Robertson Stephens ("BancAmerica" and,
together with DLJ, the "Initial Purchasers"), who have agreed to purchase the
Company's 87/8% Senior Notes due 2007 (the "Senior Notes") pursuant to the
Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated October
8, 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 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 Notes that are
acquired by a Broker-Dealer in the Exchange Offer in exchange for Senior Notes
that such Broker-Dealer acquired for its own account as a result of
market-making activities or other trading activities (other than Senior 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
Notes to be issued in the Exchange Offer, (b) the maintenance of such
Registration Statement continuously effective and the keeping of the Exchange
Offer
1
<PAGE> 3
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 Notes in the same aggregate principal amount as the
aggregate principal amount of Senior Notes tendered by Holders thereof pursuant
to the Exchange Offer.
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 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 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 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.
Notes: The Senior Notes and the New Senior Notes.
New Senior Notes: The Company's 87/8% New Senior 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 Notes covered by a Shelf Registration Statement,
in exchange for such Senior Notes.
Offering Memorandum: As defined in the Purchase Agreement.
2
<PAGE> 4
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.
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 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.
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. REGISTERED EXCHANGE OFFER
3
<PAGE> 5
(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 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 Notes to be offered in exchange for the Senior 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 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 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 the
requirements of the Act in connection with the initial sales of the New Senior
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.
4
<PAGE> 6
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 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 Notes is prohibited by law or Commission policy from participating in the
Exchange Offer or (B) such Holder may not resell the New Senior 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 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 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
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<PAGE> 7
when all of the Transfer Restricted Securities available for sale thereunder
have been sold pursuant thereto.
(b) Provision by 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 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
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<PAGE> 8
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 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
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<PAGE> 9
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.
(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 Notes to be issued in the Exchange Offer
and (C) it is acquiring the New Senior 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 Notes obtained by such
Holder in exchange for Senior Notes acquired by such Holder directly from
the Company or an
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<PAGE> 10
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 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 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 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 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
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<PAGE> 11
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 by 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 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
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<PAGE> 12
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) 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
11
<PAGE> 13
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 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
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<PAGE> 14
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 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
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<PAGE> 15
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 Notes covered
by any Shelf Registration Statement contemplated by this Agreement, New
Senior Notes, having an aggregate principal amount equal to the aggregate
principal amount of Senior Notes surrendered to the Company by such Holder
in exchange therefor or being sold by such Holder; such New Senior 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
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;
(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
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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 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
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<PAGE> 17
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
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
1. 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 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).
(a) The Company will, in any event, bear its and the Subsidiary
Guarantors' internal expenses (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.
(b) 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
16
<PAGE> 18
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
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
17
<PAGE> 19
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.
(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
18
<PAGE> 20
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 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, 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.
19
<PAGE> 21
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.
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
20
<PAGE> 22
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:
(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
21
<PAGE> 23
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopier No.: (212) 403-2000
Attention: Adam O. 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 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.
22
<PAGE> 24
[signature page follows]
23
<PAGE> 25
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
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:
<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:_____________________________________
Name:
Title:
<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 $350,000,000 of 8 7/8% Senior Notes.
Milwaukee, Wisconsin ERNST & YOUNG LLP
October 16, 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
October 17, 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
$350,000,000 of 8 7/8% Senior Notes.
Dallas, Texas ERNST & YOUNG LLP
October 16, 1997
<PAGE> 1
Exhibit 24.1
AMERISERV FOOD COMPANY
CONSENT OF DIRECTORS IN LIEU OF
BOARD OF DIRECTORS' MEETING
The undersigned, being all of the directors of AmeriServ Food
Company, a Delaware corporation (the "Corporation"), do hereby consent without a
Board of Directors' meeting, pursuant to Section 141(f) of the General
Corporation Law of the State of Delaware, to the adoption of the resolutions
attached hereto.
Dated as of the 15th day of October, 1997.
/s/ John V. Holten
-------------------------------
John V. Holten
/s/ Daniel W. Crippen
-------------------------------
Daniel W. Crippen
/s/John R. Evans
-------------------------------
John R. Evans
/s/ Gunnar Klintberg
-------------------------------
Gunnar Klintberg
/s/ Raymond E. Marshall
-------------------------------
Raymond E. Marshall
<PAGE> 2
DELTA TRANSPORTATION, LTD.
CONSENT OF DIRECTORS IN LIEU OF
BOARD OF DIRECTORS' MEETING
The undersigned, being the sole director of Delta Transportation,
Ltd., a Wisconsin corporation (the "Corporation"), does hereby consent without a
Board of Directors' meeting, pursuant to Section 180.0821 of the Wisconsin
Business Corporation Law, to the adoption of the following resolutions:
Dated as of the 15th day of October, 1997.
/s/ Raymond E. Marshall
-------------------------------
Raymond E. Marshall
<PAGE> 3
THE HARRY H. POST COMPANY
CONSENT OF DIRECTORS IN LIEU OF
BOARD OF DIRECTORS' MEETING
The undersigned, being all of the directors of The Harry H. Post
Company, a Colorado corporation (the "Corporation"), do hereby consent without a
Board of Directors' meeting, pursuant to Section 7-108-202 of the Colorado
Business Corporation Act, to the adoption of the following resolutions:
Dated as of the 15th day of October, 1997.
/s/ Raymond E. Marshall
-------------------------------
Raymond E. Marshall
/s/ Daniel W. Crippen
-------------------------------
Daniel W. Crippen
/s/John R. Evans
-------------------------------
John R. Evans
/s/ Gunnar Klintberg
-------------------------------
Gunnar Klintberg
/s/ A. Petter Ostberg
-------------------------------
A. Petter Ostberg
<PAGE> 4
CHICAGO CONSOLIDATED CORPORATION
CONSENT OF DIRECTORS IN LIEU OF
BOARD OF DIRECTORS' MEETING
The undersigned, being the sole director of Chicago Consolidated
Corporation, an Illinois corporation (the "Corporation"), does hereby consent
without a Board of Directors' meeting, pursuant to Section 5/8.45 of the
Illinois Business Corporation Act of 1983, to the adoption of the following
resolutions:
Dated as of the 15th day of October, 1997.
/s/ Raymond E. Marshall
-------------------------------
Raymond E. Marshall
<PAGE> 5
NORTHLAND TRANSPORTATION, SERVICES, INC.
CONSENT OF DIRECTORS IN LIEU OF
BOARD OF DIRECTORS' MEETING
The undersigned, being the sole director of Northland
Transportation, Services, Inc., a Nebraska corporation (the "Corporation"), does
hereby consent without a Board of Directors' meeting, pursuant to Section
21-2090 of the Nebraska Business Corporation Act (the "NBCA"), to the adoption
of the resolutions attached hereto.
Dated as of the 15th day of October, 1997.
/s/ Raymond E. Marshall
-------------------------------
Raymond E. Marshall
<PAGE> 6
AMERISERVE TRANSPORTATION, INC.
CONSENT OF DIRECTORS IN LIEU OF
BOARD OF DIRECTORS' MEETING
The undersigned, being the sole director of AmeriServe
Transportation, Inc., a Nebraska corporation (the "Corporation"), does hereby
consent without a Board of Directors' meeting, pursuant to Section 21-2090 of
the Nebraska Business Corporation Act (the "NBCA"), to the adoption of the
resolutions attached hereto.
Dated as of the 15th day of October, 1997.
/s/ Raymond E. Marshall
-------------------------------
Raymond E. Marshall
<PAGE> 7
Power of Attorney
RESOLVED, that each of the officers and directors who may be
required to execute the Registration Statement (whether on behalf of the
Corporation or as an officer or director thereof or by attesting the seal
of the Corporation or otherwise) be, and each of them individually hereby
is, authorized to execute and deliver a power of attorney appointing
Donald J. Rogers and Raymond E. Marshall, and each of them, his true and
lawful attorneys and agents, to execute in his name, place and stead (in
any capacity) the Registration Statement and any and all amendments
(including post-effective amendments) and supplements to the Registration
Statement relating to the Notes and/or the Exchange Notes and any other
instruments, contracts, documents or writing necessary or appropriate in
connection therewith, to attest the seal of the Corporation thereon, and
to file the same with the SEC, granting to said attorneys and agents, and
each of them, the full power and authority to do and perform in the name
and on behalf of each of said officers and directors, or both, as the case
may be, every act whatsoever which may be necessary or desirable as set
forth in such Registration Statement, and to take or cause to be taken any
and all such further actions in connection therewith in the name and on
behalf of the Corporation as they, in their sole discretion, deem
necessary or appropriate.
<PAGE> 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.
(Exact name of obligor as specified in its charter)
NEBRASKA 47-0464089
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17975 WEST SARAH LANE, SUITE 100
BROOKFIELD, WISCONSIN 53045
(Address of principal executive offices) (Zip Code)
8.875% NEW SENIOR NOTES DUE 2006
(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 Hartford and The
State of Connecticut, on the 17th of October 1997.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Michael M. Hopkins
______________________________________
NAME: MICHAEL M. HOPKINS
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 8.875% NEW SENIOR NOTES DUE 2006, 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/ Michael. Hopkins
_____________________________________
NAME: MICHAEL M. HOPKINS
TITLE: VICE PRESIDENT
DATED: OCTOBER 17, 1997
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
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
AMERISERVE FOOD DISTRIBUTION, INC.
OFFER TO EXCHANGE
ALL OUTSTANDING
8 7/8% SENIOR NOTES DUE 2006
FOR
8 7/8% NEW SENIOR NOTES DUE 2006
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, 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 8 7/8% New Senior Notes due 2006 (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 8 7/8% Senior Notes due 2006 (the
"Notes"), respectively. The term "Expiration Date" shall mean 12:00 midnight,
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 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--
- ---------------------------------------------------------
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)
- ---------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ---------------------------------------------------------
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
8 7/8% SENIOR NOTES DUE 2006
(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 8 7/8% Senior Notes Due 2006 of the Company
(the "Senior 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
12:00 midnight, 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 12:00 midnight, 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
- --------------------------------------------------------- ---------------
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
----------------------------------- Date:
Area Code and -----------------------
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.
