<PAGE> 1
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-6544
SYSCO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 74-1648137
(State or other jurisdiction of (IRS employer
incorporation or organization identification number)
1390 ENCLAVE PARKWAY, HOUSTON, TEXAS 77077-2099
(Address of principal executive offices)
Registrant's telephone number, including area code: (281) 584-1390
Securities registered pursuant to section 12(b) of the act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
Common Stock, $1.00 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The aggregate market value of the voting stock of the registrant held by
stockholders who were not affiliates (as defined by regulations of the
Securities and Exchange Commission) of the registrant was approximately
$6,082,000,000 at September 12, 1997 (based on the closing sales price on the
New York Stock Exchange Composite Tape on September 12, 1997, as reported by
The Wall Street Journal (Southwest Edition)). At September 12, 1997, the
registrant had issued and outstanding an aggregate of 171,323,308 shares of its
common stock.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the proxy statement to be filed not later than 120 days after June
28, 1997 are incorporated by reference into Part III.
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<PAGE> 2
PART I
ITEM 1. BUSINESS
Sysco Corporation (together with its subsidiaries and divisions hereinafter
referred to as "SYSCO" or the "Company") is engaged in the marketing and
distribution of a wide range of food and related products to the foodservice or
"food-prepared-away-from-home" industry. The foodservice industry consists of
two major customer segments -- "traditional" and "chain restaurant".
Traditional foodservice customers include restaurants, hospitals, schools,
hotels and industrial caterers. SYSCO's chain restaurant customers include
regional pizza and national hamburger, chicken and steak chain operations.
Services to the Company's traditional foodservice and chain restaurant
customers are supported by similar physical facilities, vehicles, materials
handling equipment and techniques, and administrative and operating staffs.
CUSTOMERS AND PRODUCTS
The traditional foodservice segment includes businesses and organizations which
prepare and serve food to be eaten away from home. Products distributed by the
Company include a full line of frozen foods, such as meats, fully prepared
entrees, fruits, vegetables and desserts, and a full line of canned and dry
goods, fresh meats, imported specialties and fresh produce. The Company also
supplies a wide variety of nonfood items, including paper products such as
disposable napkins, plates and cups; tableware such as china and silverware;
restaurant and kitchen equipment and supplies; medical and surgical supplies;
and cleaning supplies. SYSCO distributes both nationally-branded merchandise
and products packaged under its own private brands.
The Company believes that prompt and accurate delivery of orders, close contact
with customers and the ability to provide a full array of products and services
to assist customers in their foodservice operations are of primary importance
in the marketing and distribution of products to the traditional customer
segment of the foodservice industry. SYSCO offers daily delivery to certain
customer locations and has the capability of delivering special orders on short
notice. Through its more than 9,900 sales, marketing and service
representatives, the Company keeps informed of the needs of its customers and
acquaints them with new products. SYSCO also provides ancillary services
relating to its foodservice distribution such as providing customers with
product usage reports and other data, menu-planning advice, contract services
for installing kitchen equipment, installation and service of beverage
dispensing machines and assistance in inventory control.
No single traditional foodservice customer accounted for as much as 5% of
SYSCO's sales for its fiscal year ended June 28, 1997. Approximately 5% of
traditional foodservice sales during fiscal 1997 resulted from a process of
competitive bidding. There are no material long-term contracts with any
traditional foodservice customer that may not be cancelled by either party at
its option.
The Company's SYGMA Network operations specialize in customized service to
chain restaurants, which service is also provided to a lesser extent by many of
the Company's traditional foodservice operations. SYSCO's sales to the chain
restaurant industry consist of a variety of food products necessitated by the
increasingly broad menus of chain restaurants. The Company believes that
consistent product quality and timely and accurate service are important
factors in the selection of a chain restaurant supplier. No chain
1
<PAGE> 3
restaurant customer accounted for as much as 3% of SYSCO's sales for its fiscal
year ended June 28, 1997, and there are no material long-term contracts with any
chain restaurant customer that may not be cancelled by either party at its
option.
SYSCO does not record sales on the basis of the type of foodservice industry
customer, but based upon available information, the Company estimates that
sales by type of customer during the past three fiscal years were as follows:
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
Type of Customer 1997 1996 1995
---------------- ------ ------ -----
<S> <C> <C> <C>
Restaurants 61% 61% 60%
Hospitals and nursing homes 11 11 12
Schools and colleges 7 7 7
Hotels and motels 6 6 6
Other 15 15 15
---- ---- ----
Totals 100% 100% 100%
==== ==== ====
</TABLE>
SOURCES OF SUPPLY
SYSCO estimates that it purchases from thousands of independent sources, none
of which accounts for more than 5% of the Company's purchases. These sources of
supply consist generally of large corporations selling brand name and private
label merchandise and independent private label processors and packers.
Generally, purchasing is carried out on a decentralized basis through centrally
developed purchasing programs (see "Corporate Headquarters' Services and
Controls" below) and direct purchasing programs established by the Company's
various operating subsidiaries and divisions. The Company continually develops
relationships with suppliers but has no material long-term purchase commitments
with any supplier.
ACQUISITIONS AND DIVESTITURES
Since its formation as a Delaware corporation in 1969 and commencement of
operations in March 1970, SYSCO has grown both through internal expansion of
existing operations and acquisitions of formerly independent companies. The
shareholders of nine companies exchanged their stock for SYSCO common stock at
the formation of the Company, and through the end of fiscal 1997, fifty-two
companies have been acquired, as follows:
2
<PAGE> 4
<TABLE>
<CAPTION>
Date
Company Acquired
------- --------
<S> <C>
The Grant Grocer Company June 1970
The Albany Frosted Foods, Inc. and Affiliated Companies September 1970
Arrow Food Distributors, Inc. January 1971
Koon Food Sales, Inc. March 1971
Rome Foods Company October 1971
Saunders Food Distributors, Inc. October 1971
Hallsmith Company, Inc. April 1972
The Miesel Company June 1972
Robert Orr & Company July 1972
Jay Rodgers Co. July 1972
Hardin's, Inc. August 1972
Baraboo Food Products, Inc. May 1973
E. R. Cochran Company December 1973
The Fialkow Company December 1973
Sterling-Keeleys Incorporated December 1973
Harrisonburg Fruit & Produce Co. April 1974
Alabama Complete Foods, Inc. July 1974
Swan Food Sales, Inc. October 1974
Tri-State General Food Supply Co., Inc. December 1974
Marietta Institutional Wholesalers, Inc. June 1975
Monticello Provision Company August 1975
Oregon Film Service, Inc. and Affiliated Companies September 1975
Mid-Central Fish & Frozen Foods, Inc. December 1975
Glen-Webb & Co. December 1978
Select-Union Foods, Inc. April 1979
S.E. Lankford, Jr. Produce, Inc. September 1981
General Management Corporation and Subsidiaries January 1982
Frosted Foods, Inc. January 1982
Pegler & Company October 1983
Bell Distributing Company December 1983
DiPaolo Food Distributors, Inc. June 1985
B. A. Railton Company September 1985
CML Company, Inc. September 1985
New York Tea Company September 1985
Operating divisions of PYA/Monarch, Inc. and
PYA/Monarch of Texas, Inc. (Wholly-owned
subsidiaries of Sara Lee Corporation)
Amarillo, Texas September 1985
Austin, Texas September 1985
Beaumont, Texas September 1985
Trammell, Temple & Staff, Inc. January 1986
Deaktor Brothers Provision Co. March 1986
Bangor Wholesale Foods, Inc. June 1986
General Foodservice Supply, Inc. December 1986
Vogel's June 1987
Major-Hosking's, Inc. July 1987
Foodservice distribution - related businesses of
Staley Continental, Inc. (CFS Continental) August 1988
Olewine's, Inc. December 1988
Oklahoma City-based foodservice distribution
businesses of Scrivner, Inc. April 1990
New York and Pennsylvania-based foodservice
distribution businesses of Scrivner, Inc. April 1991
Benjamin Polakoff & Son, Inc. May 1992
Perloff Brothers, Inc. (Tartan Foods) December 1992
St. Louis Division of Clark Foodservice, Inc. February 1993
Ritter Food Corporation August 1993
Strano Foodservice July 1996
</TABLE>
3
<PAGE> 5
CORPORATE HEADQUARTERS' SERVICES AND CONTROLS
SYSCO's corporate staff, consisting of approximately 720 persons, provides a
number of services to the Company's operating divisions and subsidiaries. These
persons possess experience and expertise in, among other areas, accounting and
finance, cash management, data processing, employee benefits, engineering and
insurance. Also provided are legal, marketing and tax compliance services as
well as warehousing and distribution services which provide assistance in space
utilization, energy conservation, fleet management and work flow.
The corporate staff also administers a consolidated product procurement program
engaged in the task of developing, obtaining and assuring consistent quality
food and nonfood products. The program covers the purchasing and marketing of
SYSCO(R) Brand merchandise, as well as private label and national brand
merchandise, encompassing substantially all product lines. The Company's
operating subsidiaries and divisions may participate in the program at their
option.
CAPITAL IMPROVEMENTS
To maximize productivity and customer service, the Company continues to
construct and modernize its distribution facilities. During fiscal 1997, 1996
and 1995, approximately $211,000,000, $236,000,000, and $202,000,000,
respectively, were invested in facility expansions, fleet additions and other
capital asset enhancements. The Company estimates its capital expenditures in
fiscal 1998 should be in the range of $220,000,000 to $240,000,000. During the
three years ended June 28, 1997, capital expenditures have been financed
primarily by internally generated funds, the Company's commercial paper program
and bank borrowings.
EMPLOYEES
As of June 28, 1997, the Company had approximately 32,000 employees, 21% of
whom are represented by unions, primarily the International Brotherhood of
Teamsters. Contract negotiations are handled locally with monitoring and
assistance by the corporate staff. Collective bargaining agreements covering
approximately 10% of the Company's union employees expire during fiscal 1998.
SYSCO considers its labor relations to be satisfactory.
COMPETITION
The business of SYSCO is competitive with numerous companies engaged in
foodservice distribution. While competition is encountered primarily from local
and regional distributors, a few companies compete with SYSCO on a national
basis. The Company believes that, although price and customer contact are
important considerations, the principal competitive factor in the foodservice
industry is the ability to deliver a wide range of quality products and related
services on a timely and dependable basis. Although SYSCO has less than 10% of
the foodservice industry market in the United States and Canada, SYSCO
believes, based upon industry trade data, that its sales to the
"food-prepared-away-from-home" industry are the largest of any foodservice
distributor. While adequate industry statistics are not available, the Company
believes that in most instances its local operations are among the leading
distributors of food and related nonfood products to foodservice customers in
their respective trading areas.
4
<PAGE> 6
DEBT ISSUANCE
On April 22, 1997, in two separate offerings, SYSCO drew down the remaining
$150,000,000 of the $500,000,000 shelf registration filed with the Securities
and Exchange Commission in June 1995. SYSCO issued 7.16% debentures totaling
$50,000,000 due April 15, 2027. These debentures were priced at par, are
unsecured, are not subject to any sinking fund requirement and are redeemable
at the option of the holder on April 15, 2007, but otherwise are not redeemable
prior to maturity. SYSCO also issued 7.25% senior notes totaling $100,000,000
due April 15, 2007. These notes were priced at 99.611% of par and are
unsecured, not redeemable prior to maturity and not subject to any sinking fund
requirement.
In May 1996, the Company issued 7.0% senior notes totaling $200,000,000 due May
1, 2006. These notes, which were priced at par, are unsecured, not redeemable
prior to maturity and are not subject to any sinking fund requirement.
GENERAL
Except for the SYSCO (R) trademark, the Company does not own or have the right
to use any patents, trademarks, licenses, franchises or concessions, the loss
of which would have a materially adverse effect on the operations or earnings
of the Company.
SYSCO is not engaged in material research activities relating to the
development of new products or the improvement of existing products. In fiscal
1996 the Company completed an internally developed project that involved the
redesign and development of the computer operating systems through which
SYSCO's operating companies will process, control and report the results of all
transactions. Installation will continue company-wide through the next several
years and such installations are expected to provide the basis for business
expansion over this period without having a material adverse effect on the
business or operations of the Company. The costs of this project will be
amortized over future earnings as completed portions of the project are put
into use.
The Company's distribution facilities have tanks for the storage of diesel fuel
and other petroleum products which are subject to laws regulating such storage
tanks. Other federal, state and local provisions relating to the protection of
the environment or the discharge of materials do not materially impact the
Company's use or operation of its facilities. The Company anticipates that
compliance with these laws will not have a material effect on the capital
expenditures, earnings or competitive position of SYSCO and its subsidiaries.
Sales of the Company do not generally fluctuate on a seasonal basis, and
therefore, the business of the Company is not deemed to be seasonal.
The Company operates 96 facilities within the United States and three in
Canada.
5
<PAGE> 7
ITEM 2. PROPERTIES
The table below shows the number of distribution facilities and self-serve
centers occupied by the Company in each state or province and the aggregate
cubic footage devoted to cold and dry storage.
<TABLE>
<CAPTION>
Number of Cold Storage Dry Storage
Facilities (Thousands (Thousands
Location and Centers Cubic Feet) Cubic Feet)
-------- ----------- ------------ -----------
<S> <C> <C> <C>
Alabama 1 65 324
Alaska 1 331 965
Arizona 1 1,485 3,410
Arkansas 1 1,200 1,145
California 10 8,021 16,155
Colorado 5 2,759 5,476
Connecticut 1 2,489 2,737
Florida 4 8,245 9,355
Georgia 2 3,264 7,017
Idaho 1 998 1,154
Illinois 2 2,824 3,500
Indiana 1 1,404 1,832
Iowa 1 687 1,215
Kansas 1 1,975 2,592
Kentucky 1 2,330 2,648
Louisiana 1 2,575 1,875
Maine 1 429 1,008
Maryland 4 6,308 6,746
Massachusetts 3 4,130 3,696
Michigan 3 4,976 8,107
Minnesota 1 2,085 2,370
Mississippi 2 2,155 2,790
Missouri 1 1,128 1,348
Montana 1 2,043 1,830
Nebraska 1 2,092 2,618
New Jersey 2 1,659 4,145
New Mexico 2 1,856 2,024
New York 8 5,504 9,125
North Carolina 1 1,929 2,421
Ohio 4 6,152 10,778
Oklahoma 3 1,145 2,519
Oregon 2 3,431 3,455
Pennsylvania 4 4,359 6,010
South Dakota 1 5 100
Tennessee 4 6,305 7,351
Texas 8 11,179 17,573
Utah 1 1,810 1,845
Virginia 1 1,186 1,672
Washington 2 2,609 2,812
Wisconsin 2 4,083 3,782
British Columbia, Canada 2 1,426 1,855
Ontario, Canada 1 1,073 1,030
--- -------- --------
Total 99 121,709 170,410
=== ======== ========
</TABLE>
6
<PAGE> 8
The Company owns approximately 256,000,000 cubic feet of its distribution
facilities and self-serve centers (or 87.6% of the total cubic feet), and the
remainder is occupied under leases expiring at various dates from fiscal 1998
to 2010, exclusive of renewal options. Certain of the facilities owned by the
Company are either subject to mortgage indebtedness or industrial revenue bond
financing arrangements totaling $59,271,000 at June 28, 1997. Such mortgage
indebtedness and industrial revenue bond financing arrangements mature at
various dates to 2026.
Facilities in Nashville, Tennessee and Jacksonville, Florida (which in the
aggregate account for approximately 4% of total sales) are operating near
capacity and the Company is currently constructing expansions for these
distribution facilities. The Company is planning to complete construction of
full service distribution facilities near West Palm Beach, Florida and San
Diego, California during fiscal 1998.
The Company's fleet of approximately 5,380 delivery vehicles consists of
tractor and trailer combinations, vans and panel trucks, most of which are
either wholly or partially refrigerated for the transportation of frozen or
perishable foods. The Company owns approximately 89% of these vehicles and
leases the remainder.
ITEM 3. LEGAL PROCEEDINGS
SYSCO is engaged in various legal proceedings which have arisen but have not
been fully adjudicated. These proceedings, in the opinion of management, will
not have a material adverse effect upon the consolidated balance sheets or
results of operations of the Company when ultimately concluded.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
7
<PAGE> 9
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following are the executive officers of the Company, each of whom holds the
office opposite his name below until the meeting of the Board of Directors
immediately preceding the next Annual Meeting of Stockholders or until his
successor has been elected or qualified. Executive officers who are also
directors serve as directors until the expiration of their terms which, with
respect to each individual, occurs at the Annual Meeting of Stockholders in the
calendar year specified in parentheses below or until their successors have
been elected and qualified.
<TABLE>
<CAPTION>
SERVED IN THIS
NAME OF OFFICER CAPACITY POSITION SINCE AGE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John F. Baugh Senior Chairman of the Board of 1985 81
Directors (1997)
John F. Woodhouse Chairman of the Board 1985 66
of Directors (1998)
Bill M. Lindig President and Chief 1985, 1995 60
Executive Officer and & 1983
Director (1999)
Charles H. Cotros Executive Vice President and 1988, 1995 60
Chief Operating Officer and & 1985
Director (1997)
O. Wayne Duncan Senior Vice President, 1995 59
Operations
George L. Holm Senior Vice President, 1996 41
Operations
Thomas E. Lankford Senior Vice President, 1995 49
Operations
Gregory K. Marshall Senior Vice President 1993 50
Richard J. Schnieders Senior Vice President, 1992 & 49
Merchandising/Multi-Unit Sales 1997
and Director (1997)
John K. Stubblefield, Jr. Senior Vice President and 1993 & 51
Chief Financial Officer 1994
Arthur J. Swenka Senior Vice President, 1995 60
Operations and Director (1997)
James D. Wickus Senior Vice President, 1995 54
Operations
Diane Day Sanders Vice President and Treasurer 1994 48
</TABLE>
Each of the executive officers listed above has been employed by the Company,
or a subsidiary or division of the Company, in an executive capacity throughout
the past five years.
8
<PAGE> 10
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The principal market for SYSCO's Common Stock is the New York Stock Exchange.
The table below sets forth the high and low sales prices per share for SYSCO's
Common Stock as reported on the New York Stock Exchange Composite Tape and the
cash dividends paid for the periods indicated.
<TABLE>
<CAPTION>
Common Stock Prices Dividends
---------------------- ---------
High Low Paid
------- ------- ---------
<S> <C> <C> <C>
Fiscal 1996
First Quarter $31-3/8 $26-7/8 $.11
Second Quarter 32-5/8 26-3/4 .11
Third Quarter 34-7/8 29-1/2 .13
Fourth Quarter 35-1/4 30-3/4 .13
Fiscal 1997
First Quarter $34-1/2 $27-1/8 $.13
Second Quarter 35-1/2 31-5/8 .13
Third Quarter 35-5/8 29-1/4 .15
Fourth Quarter 38-1/4 33 .15
</TABLE>
The approximate number of record owners of SYSCO's Common Stock as of June 28,
1997 was 17,890.
9
<PAGE> 11
ITEM 6.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Fiscal Year Ended
- ----------------------------------------------------------------------------------------------------------------------------
1993
(In thousands except for share data) 1997 1996 1995 1994 (53 Weeks)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $ 14,454,589 $ 13,395,130 $ 12,118,047 $ 10,942,499 $ 10,021,513
Earnings before income taxes 495,955 453,943 417,618 367,582 331,977
Income taxes 193,422 177,038 165,794 150,830 130,170
------------------------------------------------------------------------------------
Net earnings 302,533 276,905 251,824 216,752 201,807
====================================================================================
Earnings per share 1.71 1.52 1.38 1.18 1.08
====================================================================================
Cash dividends per share .56 .48 .40 .32 .26
Total assets 3,436,611 3,325,405 3,097,161 2,811,729 2,530,043
Capital expenditures 210,868 235,891 201,577 161,485 127,879
Long-term debt 685,620 581,734 541,556 538,711 494,062
Shareholders' equity 1,400,472 1,474,678 1,403,603 1,240,909 1,137,216
------------------------------------------------------------------------------------
Total capitalization 2,086,092 2,056,412 1,945,159 1,779,620 1,631,278
====================================================================================
Ratio of long-term debt
to capitalization 32.9% 28.3% 27.8% 30.3% 30.3%
</TABLE>
10
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ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
SYSCO provides marketing and distribution services to foodservice customers and
suppliers throughout the contiguous United States, Alaska and western and
central Canada. The company intends to continue to expand its market share
through profitable sales growth and constant emphasis on the development of its
consolidated buying programs. The company also strives to increase the
effectiveness of its marketing associates and the productivity of its
warehousing and distribution activities. These objectives require continuing
investment. SYSCO's resources include cash provided by operations and access to
capital from financial markets.
SYSCO's operations historically have produced significant cash flow. Cash
generated from operations is first allocated to working capital requirements;
investments in facilities, fleet and other equipment required to meet
customers' needs; cash dividends; and acquisitions fitting within the company's
overall growth strategy. Cash generated from operations also is applied toward
a portion of the cost of shares repurchased in the buyback program, while the
remainder of the cost is financed with additional long-term debt. SYSCO's
initial share repurchase program was used primarily to offset shares issued
under various employee benefit and compensation plans. The company
significantly accelerated the repurchase program beginning in February 1996.
The share repurchase program reduces outstanding shares and increases earnings
per share, while maintaining long-term debt to total capital within its
intended target range of 30% to 40%. This ratio was 33% and 28% at June 28,
1997 and June 29, 1996, respectively.
The February 1996 repurchase program authorized a 6,000,000 share buyback of
SYSCO's common stock during calendar 1996. Additionally, in November 1996, the
Board authorized an additional 6,000,000 share buyback to be completed in
calendar 1997 and in July 1997 authorized an additional 6,000,000 share buyback
to be completed in fiscal 1998. The number of shares acquired and their cost
for the past three years was 9,016,400 shares for $305,301,000 in fiscal 1997,
7,314,100 shares for $232,070,000 in fiscal 1996 and 2,100,000 shares for
$53,166,000 in fiscal 1995.
Net cash generated from operating activities was $498,108,000 in 1997,
$350,434,000 in 1996 and $336,903,000 in 1995. Expenditures for facilities,
fleet and other equipment were $210,868,000 in 1997, $235,891,000 in 1996 and
$201,577,000 in 1995. Expenditures in fiscal 1998 should be in the range of
$220,000,000 to $240,000,000.
In April, 1997, in two separate offerings, SYSCO drew down the remaining
$150,000,000 of the $500,000,000 shelf registration filed with the Securities
and Exchange Commission in June 1995. SYSCO issued 7.16% debentures totaling
$50,000,000 due April 15, 2027. These debentures were priced at par, are
unsecured, are not subject to any sinking fund requirement and are redeemable
at the option of the holder on April 15, 2007, but otherwise are not redeemable
prior to maturity. Also issued were 7.25% senior notes totaling $100,000,000
due April 15, 2007. These notes were priced at 99.611% of par and are
unsecured, not redeemable prior to maturity and not subject to any sinking fund
requirement. In May 1996, SYSCO issued 7.0% senior notes totaling $200,000,000
due May 1, 2006. These notes, which were priced at par, are unsecured, not
redeemable prior to maturity and are not subject to any sinking fund
requirement.
The net cash provided by operations less cash utilized for capital
expenditures, the stock repurchase program, cash dividends and other uses
resulted in long-term debt of $685,620,000 at June 28, 1997. About 94% of the
long-term debt is at fixed rates averaging 7.28% and the remainder is at
floating rates averaging 5.25%. Long-term debt to capitalization was 33% at
June 28, 1997, up 5% from the 28% at June 29, 1996 and July 1, 1995. SYSCO
continues to have borrowing capacity available and alternative financing
arrangements are evaluated as appropriate.
SYSCO has a commercial paper program which is currently supported by a
$300,000,000 bank credit facility. During fiscal 1997, 1996 and 1995,
commercial paper and short-term bank borrowings ranged from approximately
$23,376,000 to $263,782,000, from approximately $69,200,000 to $355,000,000,
and from approximately $146,200,000 to $425,100,000, respectively.
11
<PAGE> 13
In summary, SYSCO believes that through continual monitoring and management
of assets together with the availability of additional capital in the financial
markets, it will meet its cash requirements while maintaining proper liquidity
for normal operating purposes.
SALES
The annual increases in sales of 8% in fiscal 1997 and 11% in fiscal 1996
resulted from several factors. Sales in fiscal 1997 and 1996 were affected by
the relatively modest growth in the U.S. economy, as well as in the foodservice
industry. After adjusting for food price increases, real sales growth was about
5% in 1997 and 8% in 1996. The cost of SYSCO's foodservice products is estimated
to have averaged an increase of about 2.3% from the beginning to the end of
fiscal 1997 compared to an increase of approximately 2.9% in fiscal 1996.
Industry sources estimate the total foodservice market experienced real growth
of approximately 2% in calendar 1996 and 1995.
Sales for fiscal 1995 through 1997 were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Year Sales % Increase
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1997 $ 14,454,589,000 8%
1996 13,395,130,000 11
1995 12,118,047,000 11
</TABLE>
A comparison of the sales mix in the principal product categories during
the last three years is presented below:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
-----------------------------------------
<S> <C> <C> <C>
Medical supplies 1% 1% 1%
Dairy products 9 9 8
Fresh and frozen meats 15 15 15
Seafoods 5 5 6
Poultry 10 10 9
Frozen fruits, vegetables, bakery and other 15 14 15
Canned and dry products 23 24 25
Paper and disposables 8 8 7
Janitorial products 2 2 2
Equipment and smallwares 3 3 3
Fresh produce 6 6 6
Beverage products 3 3 3
---------------------------------------
100% 100% 100%
=======================================
</TABLE>
A comparison of sales by type of customer during the last three years is
presented below:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
-----------------------------------------
<S> <C> <C> <C>
Restaurants 61% 61% 60%
Hospitals and nursing homes 11 11 12
Schools and colleges 7 7 7
Hotels and motels 6 6 6
All other 15 15 15
--------------------------------------
100% 100% 100%
======================================
</TABLE>
12
<PAGE> 14
COST OF SALES
Cost of sales increased about 8% in 1997 and 11% in 1996. These increases were
generally in line with the increases in sales. The rate of increase is
influenced by SYSCO's overall customer and product mix as well as economies
realized in product acquisition.
OPERATING EXPENSES
Operating expenses include the costs of warehousing and delivering products as
well as selling and administrative expenses. These expenses as a percent of
sales were 14.4% for fiscal 1997 and 14.3% for fiscal 1996 and 1995. Changes
in the percentage relationship of operating expenses to sales result from an
interplay of several economic influences. Inflationary increases in operating
costs generally have been offset through improved productivity.
INTEREST EXPENSE
Interest expense increased $5,483,000 or approximately 13% in fiscal 1997
as compared to an increase of $2,440,000 or approximately 6% in fiscal 1996.
The increases in fiscal 1997 and 1996 were due primarily to increased
borrowings. Interest capitalized during the past three years was $2,215,000 in
1997, $2,783,000 in 1996 and $2,833,000 in 1995.
OTHER INCOME, NET
Other income decreased $842,000 or about 84% in fiscal 1997 and decreased
$1,219,000 or about 55% in fiscal 1996. Changes between the years result from
fluctuations in miscellaneous activities, primarily gains and losses on the
sale of surplus facilities.
EARNINGS BEFORE INCOME TAXES
Earnings before income taxes rose $42,012,000, or approximately 9%, above
fiscal 1996 which had increased $36,325,000, or approximately 9%, over the
prior year. Additional sales and realization of operating efficiencies
contributed to the increases.
PROVISION FOR INCOME TAXES
The effective tax rate for 1997 and 1996 was approximately 39%, compared to 40%
in 1995.
NET EARNINGS
Fiscal 1997 represents the twenty-first consecutive year of increased earnings
for SYSCO. Net earnings for the year rose $25,628,000 or approximately 9% above
fiscal 1996, which had increased $25,081,000 or approximately 10% over the
prior year.
DIVIDENDS
The quarterly dividend rate of fifteen cents per share was established in
November 1996 when it was increased from the thirteen cents per share set in
November 1995.
RETURN ON SHAREHOLDERS' EQUITY
The return on average shareholders' equity for 1997 was approximately 21%
compared to 19% in 1996 and 1995. Since inception SYSCO has averaged in excess
of a 16% return on shareholders' equity.
FORWARD LOOKING STATEMENTS
Statements made herein regarding management's estimates, including those with
respect to allocation of capital, potential "fold-outs" and acquisitions,
consistency and predictability of earnings growth, improvement in pretax
margins, and continuation of the share repurchase program are forward-looking
statements under the Private Securities Litigation Reform Act of 1995. They are
based on current expectations and actual results may differ materially. Capital
expenditures for "fold-outs" and acquisitions could vary depending upon
construction schedules and the timing of other purchases, such as fleet and
equipment. Acquisitions may depend upon the availability and suitability of
potential candidates and management's allocation of capital. Consistency and
predictability of earnings growth and pretax margin improvement could be
affected by industry growth and share repurchases could be affected by market
prices of the company's stock as well as management's decision to utilize its
capital for other purposes.
13
<PAGE> 15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
SYSCO CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 28, 1997
Financial Statements:
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Management on Internal Accounting Controls....................................... 15
Report of Independent Public Accountants................................................... 17
Consolidated Financial Statements:
Consolidated Balance Sheets.......................................................... 18
Consolidated Results of Operations................................................... 19
Consolidated Shareholders' Equity.................................................... 20
Consolidated Cash Flows.............................................................. 21
Summary of Accounting Policies....................................................... 22
Additional Financial Information..................................................... 23
Schedule:
II Valuation and Qualifying Accounts.......................................................... S-1
All other schedules are omitted because they are not applicable
or the information is set forth in the consolidated financial
statements or notes thereto.
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
14
<PAGE> 16
REPORT OF MANAGEMENT ON INTERNAL ACCOUNTING CONTROLS
The management of SYSCO is responsible for the preparation and integrity of the
consolidated financial statements of the Company. The accompanying consolidated
financial statements have been prepared by the management of the Company, in
accordance with generally accepted accounting principles, using management's
best estimates and judgment where necessary. Financial information appearing
throughout this Annual Report is consistent with that in the consolidated
financial statements.
To help fulfill its responsibility, management maintains a system of internal
controls designed to provide reasonable assurance that assets are safeguarded
against loss or unauthorized use and that transactions are executed in
accordance with management's authorizations and are reflected accurately in the
Company's records. The concept of reasonable assurance is based on the
recognition that the cost of maintaining a system of internal accounting
controls should not exceed benefits expected to be derived from the system.
SYSCO believes that its long-standing emphasis on the highest standards of
conduct and ethics, embodied in comprehensive written policies, serves to
reinforce its system of internal controls. The Company's operations review
function monitors the operation of the internal control system and reports
findings and recommendations to management and the Board of Directors. It also
oversees actions taken to address control deficiencies and seeks opportunities
for improving the effectiveness of the system.
Arthur Andersen LLP, independent public accountants, has been engaged to
express an opinion regarding the fair presentation of the Company's financial
condition and operating results. As part of their audit of the Company's
financial statements, Arthur Andersen LLP considered the Company's system of
internal controls to the extent they deemed necessary to determine the nature,
timing and extent of their audit tests.
The Board of Directors oversees the Company's financial reporting through its
Audit Committee which consists entirely of outside directors. The Board, after
a recommendation from the Audit Committee, selects and engages the independent
public accountants annually. The Audit Committee reviews both the scope of the
accountants' audit and recommendations from both the independent public
accountants and the internal operations review function for improvements in
internal controls. The independent public accountants have free access to the
Audit Committee and from time to time confer with them without management
representation.
15
<PAGE> 17
SYSCO recognizes its responsibility to conduct business in accordance with high
ethical standards. This responsibility is reflected in a comprehensive code of
business conduct that, among other things, addresses potentially conflicting
outside business interests of Company employees and provides guidance as to the
proper conduct of business activities. Ongoing communications and review
programs are designed to help ensure compliance with this code.
The Company believes that its system of internal controls is effective and
adequate to accomplish the objectives discussed above.
/s/ BILL M. LINDIG /s/ JOHN K. STUBBLEFIELD, JR.
- -------------------------------------- -----------------------------------
Bill M. Lindig John K. Stubblefield, Jr.
President and Chief Executive Officer Senior Vice President and
Chief Financial Officer
16
<PAGE> 18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Sysco Corporation
We have audited the accompanying consolidated balance sheets of Sysco
Corporation (a Delaware corporation) and subsidiaries as of June 28, 1997 and
June 29, 1996, and the related statements of consolidated results of
operations, shareholders' equity and cash flows for each of the three years in
the period ended June 28, 1997. These financial statements and the schedule
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the
schedule 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Sysco Corporation
and subsidiaries as of June 28, 1997 and June 29, 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended June 28, 1997, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 14(a) is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in our audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Houston, Texas
July 30, 1997
17
<PAGE> 19
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
(In thousands except for share data) JUNE 28, 1997 June 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
Assets
Current assets
<S> <C> <C>
Cash $ 117,696 $ 107,759
Accounts and notes receivable, less allowances of $17,240 and $16,380 1,065,002 1,039,759
Inventories 733,782 723,937
Deferred taxes 26,508 32,429
Prepaid expenses 21,429 18,443
-----------------------------
Total current assets 1,964,417 1,922,327
Plant and equipment at cost, less depreciation 1,058,432 990,642
Other assets
Goodwill and intangibles, less amortization 247,423 250,473
Other 166,339 161,963
-----------------------------
Total other assets 413,762 412,436
-----------------------------
Total assets $ 3,436,611 $ 3,325,405
=============================
Liabilities and shareholders' equity
Current liabilities
Notes payable $ 14,267 $ 9,390
Accounts payable 827,593 779,124
Accrued expenses 240,928 212,746
Income taxes 17,741 23,330
Current maturities of long-term debt 13,285 12,934
-----------------------------
Total current liabilities 1,113,814 1,037,524
Long-term debt 685,620 581,734
Deferred taxes 236,705 231,469
Contingencies
Shareholders' equity
Preferred stock, par value $1 per share
Authorized 1,500,000 shares, issued none -- --
Common stock, par value $1 per share
Authorized 500,000,000 shares, issued 191,293,725 shares 191,294 191,294
Paid-in capital 32,258 35,179
Retained earnings 1,771,548 1,568,589
-----------------------------
1,995,100 1,795,062
Less cost of treasury stock, 18,855,458 and 10,880,919 shares 594,628 320,384
-----------------------------
Total shareholders' equity 1,400,472 1,474,678
-----------------------------
Total liabilities and shareholders' equity $ 3,436,611 $ 3,325,405
=============================
</TABLE>
See Summary of Accounting Policies and Additional Financial Information.
18
<PAGE> 20
CONSOLIDATED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Year Ended
- ---------------------------------------------------------------------------------------------------------------------------
(In thousands except for share data) JUNE 28, 1997 June 29, 1996 July 1, 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $14,454,589 $13,395,130 $12,118,047
Costs and expenses
Cost of sales 11,835,959 10,983,796 9,927,448
Operating expenses 2,076,335 1,917,376 1,736,625
Interest expense 46,502 41,019 38,579
Other income, net (162) (1,004) (2,223)
-------------------------------------------------
Total costs and expenses 13,958,634 12,941,187 11,700,429
-------------------------------------------------
Earnings before income taxes 495,955 453,943 417,618
Income taxes 193,422 177,038 165,794
-------------------------------------------------
Net earnings $ 302,533 $ 276,905 $ 251,824
=================================================
Earnings per share $ 1.71 $ 1.52 $ 1.38
=================================================
</TABLE>
See Summary of Accounting Policies and Additional Financial Information.
19
<PAGE> 21
CONSOLIDATED SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Common Stock Treasury Stock
------------------------ Paid-in Retained ------------------------
(In thousands except for share data) Shares Amount Capital Earnings Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JULY 2, 1994 191,293,725 $191,294 $60,003 $1,200,735 8,224,505 $211,123
Net earnings
for year ended July 1, 1995 251,824
Cash dividends paid,
$.40 per share (73,154)
Treasury stock purchases 2,100,000 53,166
Stock issued upon conversion of
Liquid Yield Option Notes (1,812) (592,700) (15,170)
Stock options exercised (6,297) (437,654) (11,196)
Employees' Stock Purchase Plan (2,635) (623,071) (15,944)
Management Incentive Plan (585) (241,877) (6,209)
------------------------------------------------------------------------------
BALANCE AT JULY 1, 1995 191,293,725 $191,294 $48,674 $1,379,405 8,429,203 $215,770
Net earnings
for year ended June 29, 1996 276,905
Cash dividends paid,
$.48 per share (87,721)
Treasury stock purchases 7,314,100 232,070
Stock issued upon conversion of
Liquid Yield Option Notes (11,190) (3,816,525) (99,776)
Stock options exercised (2,642) (271,406) (7,123)
Employees' Stock Purchase Plan (610) (531,569) (14,339)
Management Incentive Plan 947 (242,884) (6,218)
------------------------------------------------------------------------------
BALANCE AT JUNE 29, 1996 191,293,725 $191,294 $35,179 $1,568,589 10,880,919 $320,384
Net earnings
for year ended June 28, 1997 302,533
Cash dividends paid,
$.56 per share (99,574)
Treasury stock purchases 9,016,400 305,301
Stock options exercised (3,069) (334,139) (9,838)
Employees' Stock Purchase Plan (789) (512,603) (15,474)
Management Incentive Plan 937 (195,119) (5,745)
------------------------------------------------------------------------------
BALANCE AT JUNE 28, 1997 191,293,725 $191,294 $32,258 $1,771,548 18,855,458 $594,628
==============================================================================
</TABLE>
See Summary of Accounting Policies and Additional Financial Information.
20
<PAGE> 22
CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Year Ended
- ---------------------------------------------------------------------------------------------------------------------------
(In thousands) JUNE 28, 1997 June 29, 1996 July 1, 1995
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net earnings $ 302,533 $ 276,905 $ 251,824
Add non-cash items:
Depreciation and amortization 160,292 144,709 130,796
Interest on Liquid Yield Option Notes -- 2,274 6,013
Deferred tax provision 11,081 16,079 35,504
Provision for losses on receivables 21,588 16,427 15,988
Additional investment in certain assets and liabilities, net of effect of
businesses acquired and sold:
(Increase) in receivables (40,247) (123,653) (92,073)
(Increase) in inventories (6,883) (56,076) (65,867)
(Increase) decrease in prepaid expenses (2,534) 242 (2,305)
Increase in accounts payable 43,145 70,744 76,007
Increase in accrued expenses 27,512 6,615 30,088
(Decrease) increase in income taxes (5,589) 12,955 (18,793)
(Increase) in other assets (12,790) (16,787) (30,279)
--------------------------------------------
Net cash provided by operating activities 498,108 350,434 336,903
--------------------------------------------
Cash flows from investing activities:
Additions to plant and equipment (210,868) (235,891) (201,577)
Proceeds from sales of plant and equipment 2,842 11,024 5,088
Acquisition of business, net of cash acquired (5,330) -- --
--------------------------------------------
Net cash used for investing activities (213,356) (224,867) (196,489)
--------------------------------------------
Cash flows from financing activities:
Bank and commercial paper borrowings 92,039 146,775 15,747
Other debt borrowings (repayments) 9,885 (4,053) (6,522)
Common stock reissued from treasury 28,136 25,375 23,832
Treasury stock purchases (305,301) (232,070) (53,166)
Dividends paid (99,574) (87,721) (73,154)
--------------------------------------------
Net cash used for financing activities (274,815) (151,694) (93,263)
--------------------------------------------
Net increase (decrease) in cash 9,937 (26,127) 47,151
Cash at beginning of year 107,759 133,886 86,735
--------------------------------------------
Cash at end of year $ 117,696 $ 107,759 $ 133,886
============================================
Supplemental disclosures of cash flow information: Cash paid during the year
for:
Interest $ 44,575 $ 38,527 $ 38,487
Income taxes 186,153 141,302 145,596
</TABLE>
See Summary of Accounting Policies and Additional Financial Information.
21
<PAGE> 23
SUMMARY OF ACCOUNTING POLICIES
BUSINESS AND CONSOLIDATION
SYSCO Corporation (SYSCO) is engaged in the marketing and distribution of a
wide range of approximately 200,000 food and related products to the
foodservice or "food-prepared-away-from-home" industry. These services are
performed from 69 distribution facilities for approximately 270,000 customers
located in the 37 states where facilities are situated, 11 adjacent states and
Alaska. The company also has one facility in Vancouver, British Columbia and
one in Peterborough, Ontario, which service customers in those areas.
The accompanying financial statements include the accounts of SYSCO and its
subsidiaries. All significant intercompany transactions and account balances
have been eliminated. Certain amounts in the prior years have been reclassified
to conform to the 1997 presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates that
affect the reported amounts of assets, liabilities, sales and expenses. Actual
results could differ from the estimates used.
Earnings of acquisitions recorded as purchases are included in SYSCO's
results of operations from the date of acquisition.
INVENTORIES
Inventories consist of food and related products held for resale and are valued
at the lower of cost (first-in, first-out method) or market.
PLANT AND EQUIPMENT
Capital additions, improvements and major renewals are classified as plant and
equipment and are carried at cost. Depreciation is recorded using the
straight-line method which reduces the book value of each asset in equal
amounts over its estimated useful life. Maintenance, repairs and minor renewals
are charged to earnings when they are incurred. Upon the disposition of an
asset, its accumulated depreciation is deducted from the original cost, and any
gain or loss is reflected in current earnings.
Applicable interest charges incurred during the construction of new
facilities are capitalized as one of the elements of cost and are amortized
over the assets' estimated useful lives. Interest capitalized during the past
three years was $2,215,000 in 1997, $2,783,000 in 1996 and $2,833,000 in 1995.
GOODWILL AND INTANGIBLES
Goodwill and intangibles represent the excess of cost over the fair value of
tangible net assets acquired and are amortized over 40 years using the
straight-line method. Accumulated amortization at June 28, 1997, June 29, 1996
and July 1, 1995 was $66,521,000, $58,668,000 and $50,935,000, respectively.
COMPUTER SYSTEMS DEVELOPMENT PROJECT
SYSCO has capitalized direct costs incurred in connection with an internal
computer systems development project. The capitalization of these costs began
once it was reasonably certain that the new system would be completed and would
fulfill its intended use. No costs were capitalized in fiscal 1997, while
$2,994,000 and $17,593,000 were capitalized during fiscal 1996 and 1995,
respectively. Amounts capitalized are being amortized as completed portions of
the project are put into use. Accumulated amortization at June 28, 1997, June
29, 1996 and July 1, 1995 was $1,624,000, $753,000 and $232,000, respectively.
INSURANCE PROGRAM
SYSCO maintains a self-insurance program covering portions of workers'
compensation and general and automobile liability costs. The amounts in excess
of the self-insured levels are fully insured. Self-insurance accruals are based
on claims filed and an estimate for significant claims incurred but not
reported.
22
<PAGE> 24
INCOME TAXES
SYSCO follows the liability method of accounting for income taxes as required
by the provisions of Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes."
CASH FLOW INFORMATION
For cash flow purposes, cash includes cash equivalents such as time deposits,
certificates of deposit and all highly liquid instruments with original
maturities of three months or less.
NEW ACCOUNTING STANDARDS
In fiscal 1997, SYSCO adopted SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The adoption
of this standard did not have an effect on SYSCO's net earnings or financial
condition in fiscal 1997.
In fiscal 1997, SYSCO adopted SFAS No. 123, "Accounting for Stock-Based
Compensation." SYSCO will continue to apply the existing accounting rules
contained in Accounting Principles Board Opinion (APB) No. 25 "Accounting for
Stock Issued to Employees" and related interpretations. Pro forma disclosures
of the effect on net earnings and earnings per share as if the fair value-based
method prescribed by SFAS No. 123 had been applied in measuring compensation
expense are provided.
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share," which is effective for fiscal years ending after
December 15, 1997. SYSCO will adopt SFAS No. 128 in the second quarter of
fiscal 1998. Restatement of all prior periods is required. SYSCO does not
expect that the adoption will have a material effect on the earnings per share
calculation. SYSCO is also required to adopt SFAS No. 130, "Reporting
Comprehensive Income" during its fiscal year ending June 27, 1998. Adoption of
SFAS No. 130 will not have a significant effect on SYSCO's consolidated
financial statements.
ADDITIONAL FINANCIAL INFORMATION
INCOME TAXES
The income tax provisions consist of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
------------------------------------------------
<S> <C> <C> <C>
Federal income taxes $176,754,000 $161,142,000 $144,574,000
State and local income taxes 16,668,000 15,896,000 21,220,000
------------------------------------------------
Total $193,422,000 $177,038,000 $165,794,000
================================================
</TABLE>
Included in the income taxes charged to earnings are net deferred tax
provisions of $11,081,000 in 1997, $16,079,000 in 1996 and $35,504,000 in 1995.
The provisions result from the effects of net changes during the year in
deferred tax assets and liabilities arising from temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes.
23
<PAGE> 25
Significant components of the company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
JUNE 28, 1997 June 29, 1996
-------------------------------
Deferred tax liabilities:
<S> <C> <C>
Excess tax depreciation and basis differences of assets $192,068,000 $191,058,000
Computer systems development project 22,855,000 23,411,000
Other 21,782,000 17,000,000
------------------------------
Total deferred tax liabilities 236,705,000 231,469,000
------------------------------
Deferred tax assets:
Accrued pension expenses 10,221,000 11,109,000
Accrued medical and casualty insurance expenses 5,254,000 7,602,000
Other 11,033,000 13,718,000
------------------------------
Total deferred tax assets 26,508,000 32,429,000
------------------------------
Net deferred tax liabilities $210,197,000 $199,040,000
==============================
</TABLE>
The company has enjoyed taxable earnings during each year of its
twenty-eight year existence and knows of no reason such profitability should
not continue. Consequently, the company believes that it is more likely than
not that the entire benefit of existing temporary differences will be realized
and therefore no valuation allowance has been established for deferred tax
assets.
Reconciliations of the statutory Federal income tax rate to the effective
income tax rates are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
-----------------------------------------
<S> <C> <C> <C>
Statutory Federal income tax rate 35% 35% 35%
State and local income taxes, net of Federal income tax benefit 4 4 5
----------------------------------------
39% 39% 40%
========================================
</TABLE>
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
The allowance for doubtful accounts receivable was $17,240,000 as of June 28,
1997, $16,380,000 as of June 29, 1996 and $16,001,000 as of July 1, 1995.
Customer accounts written off, net of recoveries, were $21,183,000 or 0.15% of
sales, $16,048,000 or 0.12% of sales and $15,986,000 or 0.13% of sales for
fiscal years 1997, 1996 and 1995, respectively.
SHAREHOLDERS' EQUITY
Earnings per share have been computed by dividing net earnings by 177,235,085
in 1997, 182,598,897 in 1996 and 182,779,806 in 1995, which represents the
weighted average number of shares of common stock outstanding during those
respective years.
In May 1986, the Board of Directors adopted a Warrant Dividend Plan designed
to protect against those unsolicited attempts to acquire control of SYSCO that
the Board believes are not in the best interest of the shareholders. In May
1996, the Board of Directors adopted an amended and restated Plan which, among
other things, extends the expiration of the Plan through May 2006. As amended,
the Plan provides for a dividend distribution of one Preferred Stock Purchase
Right (Right) for each outstanding share of SYSCO common stock. Each Right may
be exercised to purchase one two-thousandth of a share of Series A Junior
Participating Preferred Stock at an exercise price of $175, subject to
adjustment. The Rights will not be exercisable until a party either acquires
10% of the company's common stock or makes a tender offer for 10% or more of
its common stock. In the event of a merger or other business combination
transaction, each Right effectively entitles the holder to purchase $350 worth
of stock of the surviving company for a purchase price of $175.
The Rights expire on May 21, 2006, and may be redeemed before expiration by
the company at a price of $0.01 per Right until a party acquires 10% of the
company's common stock or thereafter under certain circumstances. As a result
of the Rights distribution, 450,000 of the 1,500,000 authorized preferred
shares have been reserved for issuance as Series A Junior Participating
Preferred Stock.
24
<PAGE> 26
PLANT AND EQUIPMENT
A summary of plant and equipment, including the related accumulated
depreciation, appears below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Estimated
June 28, 1997 June 29, 1996 Useful Lives
------------------------------------------------
Plant and equipment, at cost
<S> <C> <C>
Land $ 97,384,000 $ 82,247,000
Buildings and improvements 828,591,000 754,733,000 10-40 years
Equipment 1,006,211,000 917,164,000 3-20 years
----------------------------------
1,932,186,000 1,754,144,000
Accumulated depreciation (873,754,000) (763,502,000)
----------------------------------
Net plant and equipment $1,058,432,000 $ 990,642,000
==================================
</TABLE>
DEBT
At June 28, 1997 and June 29, 1996 SYSCO had $14,267,000 and $9,390,000,
respectively, of short-term bank borrowings. The level of such borrowings
fluctuates during the year based on working capital requirements.
SYSCO's long-term debt is comprised of the following:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
June 28, 1997 June 29, 1996
--------------------------------
<S> <C> <C>
Commercial paper, interest averaging 5.6% in 1997
and 5.4% in 1996 $ 18,997,000 $ 75,878,000
Senior notes, interest at 9.95%, maturing in 1999 91,500,000 91,500,000
Senior notes, interest at 6.5%, maturing in 2005 149,283,000 149,193,000
Senior notes, interest at 7.0%, maturing in 2006 200,000,000 200,000,000
Senior notes, interest at 7.25%, maturing in 2007 99,618,000 --
Debentures, interest at 7.16%, maturing in 2027 50,000,000 --
Industrial Revenue Bonds, mortgages and other debt,
interest averaging 6.1% in
1997 and 6.8% in 1996,
maturing at various dates to 2026 89,507,000 78,097,000
--------------------------------
Total long-term debt 698,905,000 594,668,000
Less current maturities (13,285,000) (12,934,000)
--------------------------------
Net long-term debt $ 685,620,000 $ 581,734,000
================================
</TABLE>
The principal payments required to be made on long-term debt during the next
five years are shown below:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Year Amount
--------------------------------------------------------------------------------
<S> <C>
1998 $ 13,285,000
1999 108,684,000
2000 10,230,000
2001 12,888,000
2002 5,789,000
</TABLE>
SYSCO has a $300,000,000 revolving loan agreement maturing in fiscal 2003
which currently supports the company's commercial paper program. The commercial
paper borrowings at June 28, 1997 were $18,997,000.
In June 1995, SYSCO issued 6.5% senior notes totaling $150,000,000 due
June 15, 2005, under a $500,000,000 shelf registration filed with the
Securities and Exchange Commission in June 1995. These notes, which were priced
at 99.4% of par, are unsecured, not redeemable prior to maturity and are not
subject to any sinking fund requirement. In May 1996, SYSCO issued 7.0% senior
notes totaling $200,000,000 due May 1, 2006, under this shelf registration.
These notes, which were priced at par, are unsecured, not redeemable prior to
maturity and are not subject to any sinking fund requirement. On April 22,
1997, in two separate offerings, SYSCO drew down the remaining $150,000,000 of
the $500,000,000 shelf registration. SYSCO issued 7.16% debentures totaling
25
<PAGE> 27
$50,000,000 due April 15, 2027. These debentures were priced at par, are
unsecured, are not subject to any sinking fund requirement and are redeemable at
the option of the holder on April 15, 2007, but otherwise are not redeemable
prior to maturity. At that time SYSCO also issued 7.25% senior notes totaling
$100,000,000 due April 15, 2007. These notes were priced at 99.611% of par and
are unsecured, not redeemable prior to maturity and not subject to any sinking
fund requirement.
The Industrial Revenue Bonds have varying structures. Final maturities range
from one to twenty-nine years and certain of the bonds provide SYSCO the right
to redeem (a call) at various dates. These call provisions generally provide
the bondholder a premium in the early call years, declining to par value as the
bonds approach maturity. Certain bonds have provisions whereby the holder may
require SYSCO to purchase or redeem the bonds (a put) under certain
circumstances. If certain of these bonds are purchased from bondholders, they
can be remarketed at the then prevailing interest rates.
Long-term debt at June 28, 1997 was $685,620,000, of which 94% is at fixed
rates averaging 7.28% with an average life of nine years, while the remainder
is financed at floating rates averaging 5.25%. Certain loan agreements contain
typical covenants to protect noteholders including provisions to maintain
tangible net worth and funded indebtedness at specified levels.
The fair value of SYSCO's long-term debt is estimated based on the quoted
market prices for the same or similar issues or on the current rates offered to
the company for debt of the same remaining maturities. The fair value of
long-term debt approximates $701,810,000 at June 28, 1997.
As part of normal business activities, SYSCO issues letters of credit
through major banking institutions as required by certain vendor and insurance
agreements. As of June 28, 1997 and June 29, 1996, letters of credit
outstanding were $14,407,000 and $33,164,000, respectively. As of June 28, 1997
SYSCO has not entered into any significant derivative or other
off-balance-sheet financing arrangements.
LEASES
Although SYSCO normally purchases assets, it has obligations under capital
and operating leases for certain distribution facilities, vehicles and
computers. Total rental expense under operating leases was $33,343,000,
$31,728,000 and $32,105,000 in fiscal 1997, 1996 and 1995, respectively.
Contingent rentals, subleases, assets and obligations under capital leases are
not significant.
Aggregate minimum lease payments under existing non-capitalized long-term
leases are as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Year Amount
--------------------------------------------------------------------------------
<S> <C>
1998 $ 14,328,000
1999 11,545,000
2000 7,659,000
2001 5,979,000
2002 4,549,000
Later years 9,989,000
</TABLE>
STOCK COMPENSATION PLANS
Employee Incentive Stock Option Plan
The Employee Incentive Stock Option Plan adopted in fiscal 1982 provided for
the issuance of options to purchase SYSCO common stock to officers and key
personnel of the company and its subsidiaries at the market price at date of
grant, as adjusted for stock splits. No further grants will be made under this
plan which expired in November 1991 and was replaced by the 1991 Stock Option
Plan.
26
<PAGE> 28
The following summary presents information with regard to incentive options
under this plan:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Options Exercisable Options Outstanding
----------------------------------------------------------------------
Maximum Weighted Shares Weighted
Shares Average Price Under Average Price
Exercisable Per Share Option Per Share
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at July 2, 1994 1,600,594 $16.49 1,804,747 $17.14
Granted -- --
Cancelled (153,024) 15.30
Exercised (558,506) 14.40
---------
Balance at July 1, 1995 1,093,217 18.80 1,093,217 18.80
Granted -- --
Cancelled (140,393) 16.46
Exercised (271,570) 17.83
---------
Balance at June 29, 1996 681,254 19.67 681,254 19.67
Granted -- --
Cancelled (74,771) 22.15
Exercised (195,224) 19.33
---------
BALANCE AT JUNE 28, 1997 411,259 $19.39 411,259 $19.39
=========
</TABLE>
The options outstanding at June 28, 1997 under this plan have exercise
prices ranging from $14.81 to $22.25 and have a weighted average remaining
contractual life of 3.6 years.
1991 Stock Option Plan
The 1991 Stock Option Plan was adopted in fiscal 1992 and originally
reserved 3,000,000 shares of SYSCO common stock for options to directors,
officers and key personnel of the company and its subsidiaries at the market
price at date of grant. This plan provides for the issuance of options which
are qualified as incentive stock options under the Internal Revenue Code of
1986, options which are not so qualified and stock appreciation rights. During
fiscal 1996, the shareholders approved an amendment to the plan for an
additional 8,000,000 shares to be made available for future grants of options.
To date, the company has issued stock options but no stock appreciation rights
under this plan.
The following summary presents information with regard to options issued
under the 1991 plan:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Options Exercisable Options Outstanding
----------------------------------------------------------------------
Maximum Weighted Shares Weighted
Shares Average Price Under Average Price
Exercisable Per Share Option Per Share
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at July 2, 1994 163,305 $25.25 1,114,415 $27.28
Granted 1,004,100 25.50
Cancelled (83,168) 26.83
Exercised (4,901) 25.25
---------
Balance at July 1, 1995 504,915 26.66 2,030,446 26.42
Granted 1,104,450 28.75
Cancelled (77,247) 27.18
Exercised (62,834) 25.88
---------
Balance at June 29, 1996 1,095,345 26.55 2,994,815 27.27
Granted 1,223,900 31.75
Cancelled (118,017) 28.33
Exercised (218,068) 26.65
---------
BALANCE AT JUNE 28, 1997 1,723,314 $27.05 3,882,630 $28.69
=========
</TABLE>
27
<PAGE> 29
The options outstanding at June 28, 1997 under this plan have exercise
prices ranging from $25.13 to $31.88 and have a weighted average remaining
contractual life of 7 years.
Non-Employee Directors Stock Option Plan
The Non-Employee Directors Stock Option Plan adopted in fiscal 1996 permits the
issuance of up to 200,000 shares of common stock to directors who are not
employees of SYSCO. Under this plan options to purchase 2,000 shares of common
stock at the fair market value on the date of the grant are granted to each
non-employee director annually, provided certain earnings goals are met. As of
June 28, 1997, options for 56,000 shares had been granted to ten non-employee
directors under this plan, none of which are currently exercisable.
Employees' Stock Purchase Plan
SYSCO has an Employees' Stock Purchase Plan which permits employees (other than
directors) who have been employed for at least one year to invest by means of
periodic payroll deductions in SYSCO common stock at 85% of the closing price
on the last business day of each calendar quarter. During 1997, 511,067 shares
of SYSCO common stock were purchased by the participants as compared to 522,965
purchased in 1996 and 584,526 purchased in 1995. The total number of shares
which may be sold pursuant to the plan may not exceed 17,000,000 shares, of
which 5,072,521 remained available at June 28, 1997.
Accounting Issues Relating to all Plans
SYSCO accounts for these plans under APB Opinion No. 25 and related
interpretations under which no compensation cost has been recognized. Had
compensation cost for these plans been determined using the fair value-based
method of SFAS No. 123, SYSCO's pro forma net earnings and earnings per share
would have been $298,895,000 and $1.69 in fiscal 1997 and $274,291,000 and
$1.50 in fiscal 1996. The disclosure requirements of SFAS No. 123 are
applicable to options granted after fiscal 1995. The pro forma effects for
fiscal 1997 and 1996 are not necessarily indicative of the pro forma effects in
future years.
The weighted average fair value of options granted was $11.19 and $9.98
during fiscal 1997 and 1996, respectively. The fair value was estimated on the
date of grant using the Black-Scholes option pricing model with the following
weighted average assumptions used for grants in fiscal 1997 and 1996,
respectively: dividend yield of 0.88% and 0.86%; expected volatility of 0.24%
and 0.26%; risk-free interest rates of 7% and 6.3%; and expected lives of 8
years.
The weighted average fair value of employee stock purchase rights issued was
$5.05 and $4.55 during fiscal 1997 and 1996, respectively. The fair value of
the stock purchase rights was calculated as the difference between the stock
price at date of issuance and the employee purchase price.
EMPLOYEE BENEFIT PLANS
SYSCO and each of its subsidiaries have defined benefit and defined
contribution retirement plans for their employees. Also, the company
contributes to various multi-employer plans under collective bargaining
agreements.
The defined benefit pension plans pay benefits to employees at
retirement using formulas based on a participant's years of service and
compensation. The defined contribution 401(k) plan provides that under certain
circumstances the company may make matching contributions of up to 50% of the
first 6% of a participant's compensation. SYSCO's contribution to this plan was
$4,975,000 in 1997, $4,629,000 in 1996 and $4,254,000 in 1995.
28
<PAGE> 30
The funded status of the defined benefit plans is as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
June 28, 1997 June 29, 1996
--------------------------------
<S> <C> <C>
Assets available for benefits $ 247,783,000 $ 191,220,000
Projected benefit obligation
Vested (182,005,000) (153,071,000)
Nonvested (12,696,000) (10,755,000)
-------------------------------
Total accumulated benefit obligation (194,701,000) (163,826,000)
Effect of projected future compensation increases (30,203,000) (24,679,000)
-------------------------------
Total actuarial projected benefit obligation (224,904,000) (188,505,000)
-------------------------------
Assets more than projected obligation $ 22,879,000 $ 2,715,000
===============================
Consisting of:
Amounts to be offset against (charged to) future pension costs
Remaining assets in excess of obligation existing at
adoption of SFAS 87 in 1986 $ 6,777,000 $ 7,956,000
Unrecognized actuarial gain (loss) due to differences in
assumptions and actual experience 8,974,000 (1,424,000)
Unrecognized prior service cost 7,199,000 8,136,000
Accrued pension costs (71,000) (11,953,000)
-------------------------------
$ 22,879,000 $ 2,715,000
===============================
</TABLE>
The projected unit credit method was used to determine the actuarial present
value of the accumulated benefit obligation and the projected benefit
obligation. The discount rate used was 8% in 1997, 7.75% in 1996 and 8% in 1995
and the rate of increase in future compensation levels used was 5.5% in each
year. The expected long-term rate of return on assets used was 9% in each year.
The plans invest primarily in marketable securities and time deposits.
Net pension costs were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
------------------------------------------------
<S> <C> <C> <C>
Defined benefit plans
Benefits earned during the year $ 20,599,000 $ 19,885,000 $ 17,622,000
Interest accrued on benefits earned in prior years 16,412,000 13,812,000 11,476,000
Actual return on plan assets (34,477,000) (31,865,000) (19,078,000)
Net amortization and deferral 14,744,000 16,999,000 7,125,000
------------------------------------------------
Net pension costs from defined benefit plans 17,278,000 18,831,000 17,145,000
Defined contribution plans 4,975,000 4,629,000 4,274,000
Multi-employer pension plans 18,427,000 16,560,000 13,550,000
------------------------------------------------
Net pension costs $ 40,680,000 $ 40,020,000 $ 34,969,000
================================================
</TABLE>
SYSCO also has a Management Incentive Plan that compensates key management
personnel for specific performance achievements. The awards under this plan
were $17,633,000 in 1997, $15,208,000 in 1996 and $16,545,000 in 1995 and were
paid in both cash and stock. In addition to receiving benefits upon retirement
under the company's defined benefit plan, participants in the Management
Incentive Plan will receive benefits under a Supplemental Executive Retirement
Plan. This plan is a nonqualified, unfunded supplementary retirement plan. In
order to meet its obligations under this
29
<PAGE> 31
plan, SYSCO maintains life insurance policies on the lives of the participants
with carrying values of $46,692,000 at June 28, 1997 and $43,354,000 at June
29, 1996. SYSCO is the sole owner and beneficiary of such policies. The
periodic pension costs of this plan were $4,681,000 in 1997 and $3,830,000 in
1996. The actuarially determined accumulated benefit obligation for this plan
included in accrued expenses was $28,923,000 at June 28, 1997 and $23,556,000
at June 29, 1996. After taking into consideration the effect of future
compensation increases, the projected benefit obligation of this plan was
$38,057,000 at June 28, 1997 and $33,472,000 at June 29, 1996.
In addition to providing pension benefits, SYSCO provides certain health
care benefits to eligible retirees and their dependents in the United States.
Net periodic postretirement benefit costs were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
1997 1996
----------------------------
<S> <C> <C>
Service cost - benefits earned during the period $ 140,000 $ 312,000
Interest cost 177,000 366,000
Amortization of transition obligation 153,000 153,000
Amortization of unrecognized (gain) (193,000) --
Amortization of prior service cost 83,000 83,000
----------------------------
Net periodic postretirement benefit cost $ 360,000 $ 914,000
============================
</TABLE>
The components of the postretirement benefit obligation, included in accrued
expenses at June 28, 1997 and June 29, 1996 were:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
June 28, 1997 June 29, 1996
-------------------------------
<S> <C> <C>
Retirees $ 199,000 $ 233,000
Fully eligible active participants 773,000 1,773,000
Other active employees 1,227,000 2,500,000
------------------------------
Accumulated postretirement benefit obligation 2,199,000 4,506,000
Unrecognized net gain and effects of changes in assumptions 3,250,000 969,000
Unrecognized prior service cost (732,000) (929,000)
Unrecognized transition obligation (2,454,000) (2,607,000)
------------------------------
Accrued postretirement benefit liability $ 2,263,000 $ 1,939,000
==============================
</TABLE>
The discount rate used to determine the accumulated postretirement benefit
obligation was 8% in 1997 and 7.75% in 1996. A health care cost trend rate is
not used in the calculations because SYSCO subsidizes the cost of
postretirement medical coverage by a fixed dollar amount with the retiree
responsible for the cost of coverage in excess of the subsidy, including all
future cost increases.
CONTINGENCIES
SYSCO is engaged in various legal proceedings which have arisen but have not
been fully adjudicated. These proceedings, in the opinion of management, will
not have a material adverse effect upon the consolidated financial position or
results of operations of the company when ultimately concluded.
30
<PAGE> 32
QUARTERLY RESULTS (UNAUDITED)
Financial information for each quarter in the years ended June 28, 1997 and
June 29, 1996:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1997 Quarter Ended
---------------------------------------------------------------
(In thousands except for share data) September 28 December 28 March 29 June 28 Fiscal Year
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $ 3,679,223 $ 3,610,348 $ 3,470,334 $ 3,694,684 $ 14,454,589
Cost of sales 3,028,478 2,954,481 2,844,881 3,008,119 11,835,959
Operating expenses 519,729 518,694 512,563 525,349 2,076,335
Interest expense 10,917 11,888 11,580 12,117 46,502
Other income, net (241) (18) 307 (210) (162)
-----------------------------------------------------------------------------------
Earnings before income taxes 120,340 125,303 101,003 149,309 495,955
Income taxes 46,933 48,868 39,391 58,230 193,422
-----------------------------------------------------------------------------------
Net earnings $ 73,407 $ 76,435 $ 61,612 $ 91,079 $ 302,533
===================================================================================
Per share:
Earnings $ .41 $ .43 $ .35 $ .52 $ 1.71
Cash dividends .13 .13 .15 .15 .56
Market price 35-27 36-32 36-29 38-33 38-27
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1996 Quarter Ended
---------------------------------------------------------------
(In thousands except for share data) September 30 December 30 March 30 June 29 Fiscal Year
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $ 3,291,910 $ 3,301,585 $ 3,257,110 $ 3,544,525 $ 13,395,130
Cost of sales 2,704,658 2,705,801 2,675,844 2,897,493 10,983,796
Operating expenses 469,847 469,894 479,109 498,526 1,917,376
Interest expense 9,372 10,332 10,271 11,044 41,019
Other income, net (444) (350) (411) 201 (1,004)
-----------------------------------------------------------------------------------
Earnings before income taxes 108,477 115,908 92,297 137,261 453,943
Income taxes 42,306 45,204 35,996 53,532 177,038
-----------------------------------------------------------------------------------
Net earnings $ 66,171 $ 70,704 $ 56,301 $ 83,729 $ 276,905
===================================================================================
Per share:
Earnings $ .36 $ .39 $ .31 $ .46 $ 1.52
Cash dividends .11 .11 .13 .13 .48
Market price 31-27 33-27 35-30 35-31 35-27
- ---------------------------------------------------------------------------------------------------------------------------
Percentage increases--1997 vs. 1996:
Sales 12% 9% 7% 4% 8%
Earnings before income taxes 11 8 9 9 9
Net earnings 11 8 9 9 9
Earnings per share 14 10 13 13 13
</TABLE>
31
<PAGE> 33
PART III
Except as otherwise indicated, the information required by Items 10, 11, 12 and
13 is included in the Company's definitive proxy statement which will be filed
pursuant to Regulation 14A under the Securities Exchange Act of 1934 no later
than 120 days after the close of the 1997 fiscal year, and said proxy statement
is hereby incorporated by reference thereto.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning Executive Officers is included in Part I (Item 4A) of
this Form 10-K (page 8).
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
32
<PAGE> 34
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) The following documents are filed, or incorporated by reference, as
part of this Form 10-K:
1. All financial statements. See index to Consolidated Financial
Statements on page 14 of this Form 10-K.
2. Financial Statement Schedule. See page 14 of this Form 10-K.
3. Exhibits.
3(a) RESTATED CERTIFICATE OF INCORPORATION.
3(b) Bylaws, as amended, incorporated by reference to
Form 10-K for the year ended July 2, 1994.
3(c) Amended Certificate of Designation, incorporated by
reference to Form 10-K for the year ended June 29,
1996.
4(a) SEVENTH AMENDMENT AND RESTATEMENT OF COMPETITIVE
ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT
DATED AS OF JUNE 27, 1997.
4(b) SYSCO CORPORATION NOTE AGREEMENT DATED AS OF JUNE 1,
1989.
4(c) Indenture, dated as of October 1, 1989, between
Sysco Corporation and Chemical Bank, Trustee,
incorporated by reference to Registration Statement
on Form S-3 (File No. 33-31227).
4(d) Indenture, dated as of June 15, 1995, between Sysco
Corporation and First Union National Bank of North
Carolina, Trustee, incorporated by reference to
Registration Statement on Form S-3 (File No.
33-60023).
4(e) First Supplemental Indenture, dated as of June 27,
1995, between Sysco Corporation and First Union Bank
of North Carolina, Trustee as amended, incorporated
by reference to Form 10-K for the year ended June
29, 1996.
4(f) Second Supplemental Indenture, dated as of May 1,
1996, between Sysco Corporation and First Union Bank
of North Carolina, Trustee as amended, incorporated
by reference to Form 10-K for the year ended June
29, 1996.
33
<PAGE> 35
4(g) THIRD SUPPLEMENTED INDENTURE, DATED AS OF APRIL 25,
1997, BETWEEN SYSCO CORPORATION AND FIRST UNION
NATIONAL BANK OF NORTH CAROLINA, TRUSTEE.
4(h) FOURTH SUPPLEMENTAL INDENTURE, DATED AS OF APRIL 25,
1997, BETWEEN SYSCO CORPORATION AND FIRST UNION
NATIONAL BANK OF NORTH CAROLINA, TRUSTEE.
10(a) Amended and Restated Sysco Corporation Executive
Deferred Compensation Plan incorporated by reference
to Form 10-K for the year ended July 1, 1995. *
10(b) FIFTH AMENDED AND RESTATED SYSCO CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. *
10(c) Sysco Corporation Employee Incentive Stock Option
Plan incorporated by reference to the Form S-8 filed
under the Securities Act of 1933, as amended, dated
April 1, 1987, as amended. *
10(d) Sysco Corporation 1995 Management Incentive Plan
incorporated by reference to Form 10-K for the year
ended July 1, 1995. *
10(e) Sysco Corporation 1991 Stock Option Plan
incorporated by reference to Form 10-K for the year
ended June 27, 1992. *
10(f) AMENDMENTS TO SYSCO CORPORATION 1991 STOCK OPTION
PLAN. *
10(g) SYSCO CORPORATION AMENDED AND RESTATED NON-EMPLOYEE
DIRECTORS STOCK OPTION PLAN. *
10(h) Amended and Restated Shareholder Rights Agreement,
incorporated by reference to registration statement
on Form 8-A/A, filed May 29, 1996.
11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
21 SUBSIDIARIES OF THE REGISTRANT
23 INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT
27 FINANCIAL DATA SCHEDULE
- -------------------------
* Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
None
34
<PAGE> 36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Sysco Corporation has duly caused this Form 10-K to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 5th day of
September, 1997.
SYSCO CORPORATION
By /s/ BILL M. LINDIG
-------------------------------------
Bill M. Lindig
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated and on the date indicated above.
PRINCIPAL EXECUTIVE, FINANCIAL & ACCOUNTING OFFICERS:
/s/ JOHN F. WOODHOUSE
- ---------------------------------
John F. Woodhouse Chairman of the Board
/s/ JOHN K. STUBBLEFIELD, JR. Senior Vice President and
- --------------------------------- Chief Financial Officer
John K. Stubblefield, Jr.
35
<PAGE> 37
DIRECTORS:
/s/ JOHN W. ANDERSON /s/ BILL M. LINDIG
- --------------------------------- -------------------------------
John W. Anderson Bill M. Lindig
/s/ JOHN F. BAUGH /s/ RICHARD G. MERRILL
- --------------------------------- -------------------------------
John F. Baugh Richard G. Merrill
/s/ COLIN G. CAMPBELL /s/ FRANK H. RICHARDSON
- --------------------------------- -------------------------------
Colin G. Campbell Frank H. Richardson
/s/ CHARLES H. COTROS /s/ RICHARD J. SCHNIEDERS
- --------------------------------- -------------------------------
Charles H. Cotros Richard J. Schnieders
/s/ JUDITH B. CRAVEN /s/ PHYLLIS S. SEWELL
- --------------------------------- -------------------------------
Judith B. Craven Phyllis S. Sewell
/s/ FRANK A. GODCHAUX III /s/ ARTHUR J. SWENKA
- --------------------------------- -------------------------------
Frank A. Godchaux III Arthur J. Swenka
/s/ JONATHAN GOLDEN /s/ THOMAS B. WALKER, JR.
- --------------------------------- -------------------------------
Jonathan Golden Thomas B. Walker, Jr.
/s/ DONALD J. KELLER /s/ JOHN F. WOODHOUSE
- --------------------------------- -------------------------------
Donald J. Keller John F. Woodhouse
36
<PAGE> 38
SYSCO CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance at Charged to Charged to Balance at
Beginning Costs and Other Accounts Deductions End of
Description Of Period Expenses Describe (1) Describe (2) Period
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Allowance
For year ended for doubtful
July 1, 1995............. accounts $15,999,000 $15,988,000 $ -- $15,986,000 $16,001,000
Allowance
For year ended for doubtful
June 29, 1996............ accounts $16,001,000 $16,427,000 $ -- $16,048,000 $16,380,000
Allowance
For year ended for doubtful
June 28, 1997............ accounts $16,380,000 $21,588,000 $455,000 $21,183,000 $17,240,000
</TABLE>
(1) Allowance accounts resulting from acquisitions.
(2) Customer accounts written off, net of recoveries.
S-1
<PAGE> 39
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 28, 1997 Commission File No. 1-6544
SYSCO CORPORATION
(Exact Name of Registrant as Specified in its Charter)
EXHIBITS
<PAGE> 40
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<S> <C>
3(a) RESTATED CERTIFICATE OF INCORPORATION.
3(b) Bylaws, as amended, incorporated by reference to Form 10-K for the year ended July 2, 1994.
3(c) Amended Certificate of Designation, incorporated by reference to Form 10-K for the year ended June 29, 1996.
4(a) SEVENTH AMENDMENT AND RESTATEMENT OF COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT DATED AS OF
JUNE 27, 1997.
4(b) SYSCO CORPORATION NOTE AGREEMENT DATED AS OF JUNE 1, 1989.
4(c) Indenture, dated as of October 1, 1989, between Sysco Corporation and Chemical Bank, Trustee, incorporated by
reference to Registration Statement on Form S-3 (File No. 33-31227).
4(d) Indenture, dated as of June 15, 1995, between Sysco Corporation and First Union National Bank of North Carolina,
Trustee, incorporated by reference to Registration Statement on Form S-3 (File No. 33-60023).
4(e) First Supplemental Indenture, dated as of June 27, 1995, between Sysco Corporation and First Union Bank of North
Carolina, Trustee as amended, incorporated by reference to Form 10-K for the year ended June 29, 1996.
4(f) Second Supplemental Indenture, dated as of May 1, 1996, between Sysco Corporation and First Union Bank of North
Carolina, Trustee as amended, incorporated by reference to Form 10-K for the year ended June 29, 1996.
4(g) THIRD SUPPLEMENTED INDENTURE, DATED AS OF APRIL 25, 1997, BETWEEN SYSCO CORPORATION AND FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, TRUSTEE.
</TABLE>
<PAGE> 41
<TABLE>
<S> <C>
4(h) FOURTH SUPPLEMENTAL INDENTURE, DATED AS OF APRIL 25, 1997, BETWEEN SYSCO CORPORATION AND FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, TRUSTEE.
10(a) Amended and Restated Sysco Corporation Executive Deferred Compensation Plan incorporated by reference to Form 10-K
for the year ended July 1, 1995.
10(b) FIFTH AMENDED AND RESTATED SYSCO CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. *
10(c) Sysco Corporation Employee Incentive Stock Option Plan incorporated by reference to the Form S-8 filed under the
Securities Act of 1933, as amended, dated April 1, 1987, as amended. *
10(d) Sysco Corporation 1995 Management Incentive Plan incorporated by reference to Form 10-K for the year ended
July 1, 1995. *
10(e) Sysco Corporation 1991 Stock Option Plan incorporated by reference to Form 10-K for the year ended June 27, 1992. *
10(f) AMENDMENTS TO SYSCO CORPORATION 1991 STOCK OPTION PLAN. *
10(g) SYSCO CORPORATION AMENDED AND RESTATED NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN. *
10(h) Amended and Restated Shareholder Right Agreement, incorporated by reference to registration statement on Form 8-A/A,
filed May 29, 1996.
11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
21 SUBSIDIARIES OF THE REGISTRANT
23 INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT
27 FINANCIAL DATA SCHEDULE
</TABLE>
<PAGE> 1
EXHIBIT # 3(a)
<PAGE> 2
RESTATED CERTIFICATE OF INCORPORATION
OF
SYSCO CORPORATION
It is hereby certified that:
1. The present name of the corporation (hereinafter called the
"corporation") is Sysco Corporation which is the name under which the
corporation was originally incorporated; and the date of filing the original
certificate of incorporation of the corporation with the Secretary of State of
the State of Delaware is May 8, 1969.
2. The provisions of the certificate of incorporation of the corporation as
heretofore amended and/or supplemented are hereby restated and integrated into
the single instrument which is hereinafter set forth, and which is entitled
Restated Certificate of Incorporation of Sysco Corporation without any further
amendments and without any discrepancy between the provisions of the certificate
of incorporation as heretofore amended and supplemented and the provisions of
the said single instrument hereinafter set forth.
3. The restatement of the certificate of incorporation herein certified has
been duly adopted by the directors in accordance with the provisions of Section
245 of the General Corporation Law of the State of Delaware.
4. The restated certificate of incorporation herein certified shall be
effective upon filing.
5. The certificate of incorporation of the corporation, and restated
herein, shall at the effective time of this Restated Certificate of
Incorporation, read as follows:
"RESTATED CERTIFICATE OF INCORPORATION
OF
SYSCO CORPORATION
------------------
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the "corporation")
is
SYSCO CORPORATION
SECOND: The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 229 South State
Street, City of Dover, County of Kent; and the name of the registered agent of
the corporation in the State of Delaware at such address is The Prentice-Hall
Corporation System, Inc.
THIRD: The nature of the business and of the purposes to be conducted and
promoted by the corporation, which shall be in addition to the authority of the
corporation to conduct any lawful business, to promote any lawful purpose, and
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware, is as follows:
To buy, sell, import, export, produce and cause to be produced, prepare for
market, process, manufacture, freeze and quick-freeze, desiccate, dehydrate,
preserve, package, wrap, can, devise formulae and recipes for, and receive,
acquire, transfer and assign options, rights, franchises, and licenses in
respect thereof, store, distribute, and generally deal in and with, at wholesale
and retail, and as principal, agent, broker, commission merchant, or in any
other lawful capacity, unprocessed and processed foods and food products,
edibles, and beverages, and commodities of any and all kinds, and without
limiting the generality of the foregoing, fruits,
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<PAGE> 3
vegetables, nuts, and grains and the products thereof, meat and meat products,
fish, crustaceans, and other marine products, poultry, fowl, game, and eggs, and
the products thereof, milk, cream, butter, and cheese, and dairy products,
coffee, tea, cocoa, chocolate, and alcoholic and non-alcoholic beverages, and
the products thereof, juices, concentrates, syrups, sugar and sweeteners and the
products thereof, confections, desserts, refreshments, and bakery products,
condiments, spices, oils, essences, and seasonings, sauces, flavorings, and
natural, vegetable, animal, marine, chemical, biological, mineral, and synthetic
products and compounds of any and all kinds, together with the ingredients,
components and resultants thereof and the substitutes therefor; to purchase,
lease, or otherwise acquire, operate, manage, maintain, and generally deal in
and with buildings, factories and processing, canning, freezing, dehydrating,
and preserving plants, packing houses, bakeries, offices, sales rooms,
warehouses, laboratories, workshops, and manufacturing establishments; to
purchase, lease, or otherwise acquire implements, machinery, apparatus,
fixtures, equipment, and other conveniences of any and all kinds for producing,
manufacturing, packing, processing, handling, buying, selling, and trading in
the said materials, goods, wares, merchandise, and products of the corporation;
and to do any and all things necessary, useful, and convenient in furtherance of
the business of the corporation.
To carry on the general business of franchising, licensing and managing
food sales and service, including all businesses, tangible and intangible
personal property of every class and description; to engage in management
consultant and advisory work in connection with the foregoing, and to promote
and develop any of the businesses or properties in which it may have an interest
or investment.
To endorse, assume and/or guarantee, as accommodation endorser, guarantor
or otherwise, the performance and/or payment of any leases, contracts, notes,
debentures, mortgages or other evidences of indebtedness or obligations of any
person, partnership, corporation, firm or association or other parties, whether
or not the corporation has a direct or indirect interest in the subject matter
with respect to which such leases, contracts, notes, debentures or other
evidences of indebtedness are being executed or issued and/or in the obligors or
makers of such leases, contracts, notes, debentures or any other parties
thereto.
To purchase, receive, take by grant, gift, devise, bequest or otherwise,
lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal
in and with real or personal property, or any interest therein, wherever
situated, and to sell, convey, lease, exchange, transfer or otherwise dispose
of, or mortgage or pledge, all or any of its property and assets, or any
interest therein, wherever situated.
To engage generally in the real estate business as principal, agent,
broker, and in any lawful capacity, and generally to take, lease, purchase, or
otherwise acquire, and to own, use, hold, sell, convey, exchange, lease,
mortgage, work, clear, improve, develop, divide, and otherwise handle, manage,
operate, deal in and dispose of real estate, real property, lands,
multiple-dwelling structures, houses, buildings and other works and any interest
or right therein; to take, lease, purchase or otherwise acquire, and to own,
use, hold, sell, convey, exchange, hire, lease, pledge, mortgage, and otherwise
handle, and deal in and dispose of, as principal, agent, broker, and in any
lawful capacity, such personal property, chattels, chattels real, rights,
easements, privileges, choses in action, notes, bonds, mortgages, and securities
as may lawfully be acquired, held, or disposed of; and to acquire, purchase,
sell, assign, transfer, dispose of, and generally deal in and with, as
principal, agent, broker, and in any lawful capacity, mortgages and other
interests in real, personal, and mixed properties; to carry on a general
construction, contracting, building, and realty management business as
principal, agent, representative, contractor, subcontractor, and in any other
lawful capacity.
To carry on a general mercantile, industrial, investing, and trading
business in all its branches; to devise, invent, manufacture, fabricate,
assemble, install, service, maintain, alter, buy, sell, import, export, license
as licensor or licensee, lease as lessor or lessee, distribute, job, enter into,
negotiate, execute, acquire, and assign contracts in respect of, acquire,
receive, grant, and assign licensing arrangements, options, franchises, and
other rights in respect of, and generally deal in and with, at wholesale and
retail, as principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber, advisor, and in
any other lawful capacity, goods, wares, merchandise, commodities, and
unimproved, improved, finished, processed, and other real, personal, and mixed
property of any and all kinds, together with the components, resultants, and
by-products thereof.
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<PAGE> 4
To apply for, register, obtain, purchase, lease, cake licenses in respect
of or otherwise acquire, and to hold, own, use, operate, develop, enjoy, turn to
account, grant licenses and immunities in respect of, manufacture under and to
introduce, sell, assign, mortgage, pledge or otherwise dispose of, and, in any
manner deal with and contract with reference to:
(a) inventions, devices, formulae, processes and any improvements and
modifications thereof;
(b) letters patent, patent rights, patented processes, copyrights,
designs, and similar rights, trade-marks, trade names, trade symbols and
other indications of origin and ownership granted by or recognized under
the laws of the United States of America, the District of Columbia, any
state or subdivision thereof, and any commonwealth, territory, possession,
dependency, colony, possession, agency or instrumentality of the United
States of America and of any foreign country, and all rights connected
therewith or appertaining thereunto;
(c) franchises, licenses, grants and concessions.
To guarantee, purchase, take, receive, subscribe for, and otherwise
acquire, own, hold, use and otherwise employ, sell, lease, exchange, transfer,
and otherwise dispose of, mortgage, lend, pledge, and otherwise deal in and
with, securities (which term, for the purpose of this Article THIRD, includes,
without limitation of the generality thereof, any shares of stock, bonds,
debentures, notes, mortgages, other obligations, and any certificates, receipts
or other instruments representing rights to receive, purchase or subscribe for
the same, or representing any other rights or interests therein or in any
property or assets) of any persons, domestic and foreign firms, associations,
and corporations, and by any government or agency or instrumentality thereof; to
make payment therefor in any lawful manner; and, while owner of any such
securities, to exercise any and all rights, powers and privileges in respect
thereof, including the right to vote.
To make, enter into, perform and carry out contracts of every kind and
description, partnership agreements or joint ventures with any person,
partnership, firm, association, corporation or government or subdivision
thereof.
To acquire by purchase, exchange or otherwise, all, or any part of, or any
interest in, the properties, assets, business and good will of any one or more
persons, firms, associations or corporations heretofore or hereafter engaged in
any business for which a corporation may now or hereafter be organized under the
laws of the State of Delaware; to pay for the same in cash, property or its own
or other securities; to hold, operate, reorganize, liquidate, sell or in any
manner dispose of the whole or any part thereof; and in connection therewith, to
assume or guarantee performance of any liabilities, obligations or contracts of
such persons, firms, associations or corporations, and to conduct the whole or
any part of any business thus acquired.
To lend money in furtherance of its corporate purposes and to invest and
reinvest its funds from time to time to such extent, to such persons, firms,
associations, corporations, governments or agencies or instrumentalities
thereof, and on such terms and on such security, if any, as the Board of
Directors of the corporation may determine.
To make contracts of guaranty and suretyship of all kinds and endorse or
guarantee the payment of principal, interest or dividends upon, and to guarantee
the performance of sinking fund or other obligations of, any securities, and to
guarantee in any way permitted by law the performance of any of the contracts or
undertakings in which the corporation may otherwise be or become interested, of
any persons, firm, association, corporation, government or agency or
instrumentality thereof, or of any other combination, organization or entity
whatsoever.
To borrow money without limit as to amount and at such rates of interest as
it may determine; from time to time to issue and sell its own securities,
including its shares of stock, notes, bonds, debentures, and other obligations,
in such amounts, on such terms and conditions, now or hereafter permitted by the
laws of the State of Delaware and by this certificate of incorporation, as the
Board of Directors of the corporation may determine; and to secure any of its
obligations by mortgage, pledge or other encumbrances of all or any of its
property, franchises and income.
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<PAGE> 5
To be a promoter or manager of other corporations of any type or kind; and
to participate with others in any corporation, partnership, limited partnership,
joint venture, or other association of any kind, or in any transaction,
undertaking or arrangement which the corporation would have power to conduct by
itself, whether or not such participation involves sharing or delegation of
control with or to others.
To draw, make, accept, endorse, discount, execute, and issue promissory
notes, drafts, bills of exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments and evidences of indebtedness whether
secured by mortgage or otherwise, as well as to secure the same by mortgage or
otherwise, so far as may be permitted by the laws of the State of Delaware.
To purchase, receive, take, reacquire or otherwise acquire, own and hold,
sell, lend, exchange, reissue, transfer or otherwise dispose of, pledge, use,
cancel, and otherwise deal in and with its own shares and its other securities
from time to time to such an extent and in such manner and upon such terms as
the Board of Directors of the corporation shall determine; provided that the
corporation shall not use its funds or property for the purchase of its own
shares of capital stock when its capital is impaired or when such use would
cause any impairment of its capital, except to the extent permitted by law.
To organize, as an incorporator, or cause to be organized under the laws of
the State of Delaware, or any other State of the United States of America, or of
the District of Columbia, or of any commonwealth, territory, dependency, colony,
possession, agency, or instrumentality of the United States of America, or of
any foreign country, a corporation or corporations for the purpose of conducting
and promoting any business or purpose for which corporations may be organized,
and to dissolve, wind up, liquidate, merge or consolidate any such corporation
or corporations or to cause the same to be dissolved, wound up, liquidated,
merged or consolidated.
To conduct its business, promote its purposes, and carry on its operations
in any and all of its branches and maintain offices both within and without the
State of Delaware, in any and all States of the United States of America, in the
District of Columbia, and in any or all commonwealths, territories,
dependencies, colonies, possessions, agencies, or instrumentalities of the
United States of America and of foreign governments.
To promote and exercise all or any part of the foregoing purposes and
powers in any and all parts of the world, and to conduct its business in all or
any of its branches as principal, agent, broker, factor, contractor, and in any
other lawful capacity, either alone or through or in conjunction with any
corporations, associations, partnership, firms, trustees, syndicates,
individuals, organizations, and other entities in any part of the world, and, in
conducting its business and promoting any of its purposes, to maintain offices,
branches and agencies in any part of the world, to make and perform any
contracts and to do any acts and things, and to carry on any business, and to
exercise any powers and privileges suitable, convenient, or proper for the
conduct, promotion, and attainment of any of the business and purposes herein
specified or which at any time may be incidental thereto or may appear conducive
to or expedient for the accomplishment of any of such business and purposes and
which might be engaged in or carried on by a corporation incorporated or
organized under the General Corporation Law of the State of Delaware, and to
have and exercise all of the powers conferred by the laws of the State of
Delaware upon corporations incorporated or organized under the General
Corporation Law of the State of Delaware.
The foregoing provisions of this Article THIRD shall be construed both as
purposes and powers and each as an independent purpose and power. The foregoing
enumeration of specific purposes and powers shall not be held to limit or
restrict in any manner the purposes and powers of the corporation, and the
purposes and powers herein specified shall, except when otherwise provided in
this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of this
Certificate of Incorporation; provided, that the corporation shall not conduct
any business, promote any purpose, or exercise any power or privilege within or
without the State of Delaware which, under the laws thereof, the corporation may
not lawfully conduct, promote, or exercise.
FOURTH: A. The total number of shares of stock which the corporation shall
have authority to issue is Fifty One Million Five Hundred Thousand (51,500,000)
shares, consisting of One Million Five Hundred Thousand (1,500,000) shares of
Preferred Stock with a par value of One ($1.00) Dollar each, and Fifty
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<PAGE> 6
Million (50,000,000) shares of Common Stock with a par value of One ($1.00)
Dollar each. The corporation may issue fractional shares of stock, which shall
be entitled to proportionate dividends, voting and liquidation rights.
B. Preferred Stock may be issued from time to time in one or more series
with such voting powers, full or limited, or no voting powers, and such
designations, powers and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof; and may be
subject to purchase or redemption at such time or times and at such price or
prices, and may provide for retirement or sinking fund for such purchase or
redemption, and may be entitled to receive dividends at such rates, on such
conditions and at such times, payable in preference to, or in such relation to,
dividends payable to any other class or classes and of any other series of
stock, and cumulative or non-cumulative, and may be entitled to such rights in
dissolution or liquidation, whether voluntary or involuntary, or upon any other
distribution of the assets of the corporation, and may be made convertible into
or exchangeable for, shares of any other class or classes of stock, or any other
series thereof, of the corporation, at such price or prices or at such rate or
rates of exchange, and with such adjustments, as shall be stated and expressed
in the resolution or resolutions providing for the issuance of such Preferred
Stock adopted by the Board of Directors from time to time pursuant to the
authority which is hereby expressly vested in said Board of Directors by the
provisions of this certificate of incorporation, a copy of which resolution or
resolutions shall have been set forth in a certificate made, executed,
acknowledged, filed and recorded in the manner required by the laws of the State
of Delaware in order to make the same effective.
Each series shall consist of such number of shares as shall be stated and
expressed in such resolution or resolutions providing for the issuance of the
stock of such series. All shares of any one series of Preferred Stock shall be
alike in every particular.
C. Dividends. Subject to such dividend rights as the holders of any
Preferred Stock or any series of Preferred Stock may have, holders of the Common
Stock shall be entitled to receive such dividends as may be declared thereon
from time to time by the Board of Directors, in its discretion, out of any
assets of the corporation at the time legally available for the payment of
dividends.
D. Liquidation or Dissolution. (a) In the event of any liquidation,
dissolution or winding up of the corporation, whether voluntary or involuntary,
or in the event of insolvency, then and in such event, subject to the preference
or other rights, if any, of the shares of Preferred Stock or any series of
Preferred Stock, if any, each share of Common Stock shall be entitled to share
equally in all of the assets of the corporation distributed in such
circumstances.
(b) Neither the consolidation, nor merger of the corporation into or with
another corporation or corporations, nor the merger or consolidation or another
corporation or corporations with or into the corporation, nor a reorganization
of the corporation, nor the purchase or redemption of all or part of the
outstanding shares of any class or classes of the stock of the corporation, nor
a sale or transfer of the property and business of the corporation as, or
substantially as, an entity, shall be deemed a liquidation, dissolution, or
winding up of the affairs of the corporation, within the meaning of any of the
provisions of this Article FOURTH.
E. Preemptive Rights. No holder of shares of stock of any class of the
corporation shall be entitled, as such, as of right to purchase or subscribe
for, or to have offered to him for purchase or subscription, any shares of the
same or any other class of stock of the corporation or any obligation of the
corporation convertible into or exchangeable for shares of stock of the
corporation of any class or any warrants, options, or rights to purchase or
subscribe for shares of stock of any class of the corporation or to purchase or
subscribe for any such convertible or exchangeable obligations, whether now or
hereafter authorized and whether unissued or issued and thereafter acquired by
the corporation. Any such stock or other securities may be issued and disposed
of pursuant to resolution of the Board of Directors, to such persons, firms,
corporations, or associations, at such prices, and otherwise upon such terms, as
may be deemed advisable by the Board of Directors in the exercise of its
discretion.
F. Except as otherwise required by law, or except as may be specifically
granted by any resolution or resolutions with respect to any class or series of
Preferred Stock that may subsequently be filed, the entire
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voting power shall be vested in the holders of the shares of Common Stock, and
the holders of the shares of Preferred Stock shall have no voting power and
shall not have the right to participate in any meeting of stockholders and shall
not be entitled to any notice of any such meeting and shall not be considered
stockholders for the purpose of any election, meeting, consent or waiver of
notice, under the provisions of any law now in force or which may hereafter be
enacted. Thirty-five per cent (35%) of the shares entitled to vote shall
constitute a quorum at all meetings except as may otherwise be required by law.
G. All of the foregoing rights and privileges of the corporation with
respect to the issuance of Common or Preferred Stock shall be cumulative and in
addition to any rights, powers and privileges which any similar corporation may
have under the present or any future laws of the State of Delaware with respect
to the issuance of such shares of stock.
H. The corporation may, from time to time, by action of its Board of
Directors, create and issue, rights, options and warrants entitling the holders
thereof to purchase from the corporation any shares of its capital stock of any
class or series, such rights, options or warrants to be evidenced by an
instrument in writing, the terms of which shall be set forth in detail in a
resolution adopted by the Board of Directors providing for the creation and
issue of such rights, options and warrants.
FIFTH: The name and the mailing address of the Incorporator are as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
R. G. Dickerson 229 South State Street
Dover, Delaware
</TABLE>
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and regulation
of the powers of the corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs
of the corporation, including the election of the Chairman of the
Board of Directors, if any, the President, the Treasurer, the
Secretary, and other principal officers of the corporation, shall be
vested in its Board of Directors. The number of directors which shall
constitute the whole Board of Directors shall be fixed by, or in the
manner provided in, the By-Laws. The phrase "whole Board" and the
phrase "total number of directors" shall be deemed to have the same
meaning, to wit, the total number of directors which the corporation
would have if there were no vacancies. No election of directors need
be by written ballot.
2. The original By-Laws of the corporation shall be adopted by
the incorporator unless the certificate of incorporation shall name
the initial Board of Directors therein. Thereafter, the power to
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<PAGE> 8
make, alter, or repeal the By-Laws, and to adopt any new By-Law, except a
By-Law classifying directors for election for staggered terms, shall be
vested in the Board of Directors.
3. Whenever the corporation shall be authorized to issue only
one class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the corporation shall be authorized to issue
more than one class of stock, no outstanding share of any class of
stock which is denied voting power under the provisions of the
certificate of incorporation shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders
except as the provisions of paragraph (d)(2) of section 242 of the
General Corporation Law and of sections 251, 252, and 253 of the
General Corporation Law shall otherwise require; provided, that no
share of any such class which is otherwise denied voting power shall
entitle the holder thereof to vote upon the increase or decrease in
the number of authorized shares of said class.
4. In lieu of taking any permissive or requisite action by vote
at a meeting of stockholders, any such vote and any such meeting may
be dispensed with if either all of the stockholders entitled to vote
upon the action at any such meeting shall consent in writing to any
such corporate action being taken or if less than all of the
stockholders entitled to vote upon the action at any such meeting
shall consent in writing to any such corporate action being taken;
provided, that any such action taken upon less than the unanimous
written consent of all stockholders entitled to vote upon any such
action shall be by the written consent of the stockholders holding at
least the minimum percentage of the votes required to be cast to
authorize any such action under the provisions of the General
Corporation Law or under the provisions of the certificate of
incorporation or the By-Laws as permitted by the provisions of the
General Corporation Law; and, provided, that prompt notice be given to
the stockholders entitled to vote on any such action or the taking of
such action without a meeting and by less than unanimous consent.
5. Subject to the applicable provisions of the By-Laws then in
effect, to determine, from time to time, whether and to what extent
and at what times and places and under what conditions and regulations
the accounts and books of the corporation, or any of them, shall be
open to the inspection of the stockholders, and no stockholder shall
have any right to inspect any account or book or document of the
corporation, except as conferred by the laws of the State of Delaware,
unless and until authorized so to do by resolution of the Board of
Directors or of the stockholders of the corporation.
6. To determine whether any, and, if any, what part, of the net
profits of the corporation or of its net assets in excess of its
capital shall be declared in dividends and paid to the stockholders,
and to direct and determine the use and disposition of any such net
profits or such net assets in excess of capital.
NINTH: No contract or transaction between the corporation and one of its
officers or directors, or between the corporation and another entity in which
one of its officers or directors is involved, either financially or as an
officer or director, will be void or voidable, even where that officer or
director participates in authorizing the transaction, in any one of the
following situations: (1) if the material facts as to both the director's or
officer's interest and the transaction itself are disclosed, and those directors
having no conflicting interest approve the transaction in good faith by a vote
which would be sufficient without counting the vote of any interested director;
or (2) if such material facts are disclosed to the stockholders entitled to vote
on the transaction and it is approved by those stockholders in good faith; or
(3) if the transaction is fair to the corporation at the time it is authorized.
Interested directors may be counted in determining the presence of a quorum
at a meeting of the Board of Directors or of a committee which authorizes the
contract or transaction.
TENTH: The corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of Delaware, indemnify any and all persons
whom it shall have power to indemnify under said section from and against any
and all of the expenses, liabilities or other matters referred to in or covered
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<PAGE> 9
by said section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as to action in
other capacities while holding such office, and shall continue as to a person
who has ceased to be a director, officer. employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
ELEVENTH: A. For purposes of this Article ELEVENTH, the following terms
shall have the following meanings:
1. "Affiliate" or "Associate" shall have the respective meanings ascribed
to such terms in Rule 12(b)-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect, on June 30, 1984.
2. "Announcement Date" shall mean the date of the first public announcement
of the proposal of the Business Combination.
3. "Business Combination" shall mean:
(a) any merger or consolidation of the corporation or any Subsidiary
with (a) any Interested Stockholder or any Affiliate of an Interested
Stockholder or (b) any other corporation (whether or not itself an
Interested Stockholder) which is, or after such merger or consolidation
would be, an Affiliate of an Interested Stockholder; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Stockholder of any Affiliate of any Interested Stockholder of
any assets of the corporation or any Subsidiary having an aggregate Fair
Market Value of $25,000,000 or more; or
(c) the issuance or transfer by the corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
corporation or any Subsidiary to any interested Stockholder or any
Affiliate of any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate Fair Market
Value of $25,000,000 or more; or
(d) The adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by or on behalf of any Interested
Stockholder or any Affiliate of any Interested Stockholder; or
(e) any reclassification of securities (including any reverse stock
split), or recapitalization of the corporation, or any merger or
consolidation of the corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise involving any
Interested Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any class
of equity or convertible securities of the corporation or any Subsidiary
which is directly or indirectly owned by any Interested Stockholder or any
Affiliate of any Interested Stockholder.
4. "Consummation Date" shall mean the date of the consummation of the
Business Combination.
5. "Continuing Director" means any member of the Board of Directors of the
corporation who is not an Affiliate of the Interested Stockholder and was a
member of the Board of Directors prior to the time that the Interested
Stockholder became an Interested Stockholder, and any successor of a Continuing
Director who is not an Affiliate of the Interested Stockholder and is
recommended to succeed a Continuing Director by a majority of the Continuing
Directors then on the Board.
6. "Determination Date" shall mean the date on which the Interested
Stockholder became an interested Stockholder.
7. "Fair Market Value" means: (i) in the case of stock, the highest closing
price during the 30-day period immediately preceding the date in question of a
share of such stock on the Composite Tape for New York Stock Exchange-Listed
Stocks, or, if such stock is not quoted on the Composite Tape, in the New York
Stock Exchange, or if such stock is not listed on such Exchange, on the
principal United States securities exchange registered under the Securities
Exchange Act of 1934 on which such stock is listed, or, if such stock
9
<PAGE> 10
is not listed on any such exchange, the highest closing bid quotation with
respect to a share of such stock during the 30-day period preceding the date in
question on the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or if no such quotations are
available, the Fair Market Value on the date in question of a share of such
stock as determined by the Board of the corporation in good faith; and (ii) in
the case of property other than cash or stock, the fair market value of such
property on the date in question as determined by the Board of Directors of the
corporation in good faith. In the event of any Business Combination in which the
corporation survives, the phrase "consideration other than cash to be received"
as used in paragraphs C(2) and C(3) of this Article ELEVENTH shall include the
shares of Common Stock and/or the shares of any other class of outstanding
Voting Stock retained by the holders of such shares.
8. "Interested Stockholder" shall mean any person who or which is the
beneficial owner, directly or indirectly, of more than ten percent (10%) of the
voting power of the outstanding Voting Stock. For the purposes of determining
whether a person is an "Interested Stockholder", the number of shares of Voting
Stock deemed to be outstanding shall include any other shares of Voting Stock
which may be issuable pursuant to any agreement, arrangement or understanding,
or upon exercise of conversion rights, exchange rights, warrants or options, or
otherwise which are beneficially owned by such person. A person shall be a
"beneficial" of any Voting Stock which:
(a) such person or any of its Affiliates or Associates beneficially
owns, directly or indirectly; or
(b) such person or any of its Affiliates or Associates has (a) the
right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote pursuant to any
agreement, arrangement or understanding; or
(c) is beneficially owned, directly or indirectly, by any other person
with which such person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock.
9. "Person" shall mean any individual, firm, corporation, or other entity.
10. "Preferred Stock Designation" shall mean any designation of the rights,
powers and preferences of any class or series of Preferred Stock made pursuant
to Article FOURTH of this Certificate of Incorporation.
11. "Prime Rate" shall be the prime rate of interest at First City National
Bank of Houston, Houston, Texas (or such other major bank headquartered in the
City of Houston, Texas as may be selected by the Continuing Directors) from time
to time in effect in the City of Houston, Texas.
12. "Subsidiary" means any corporation of which a majority of any class of
equity securities is owned, directly or indirectly, by the corporation.
13. "Voting Stock" shall mean the capital stock of the corporation entitled
to vote generally in the election of directors.
B. Except as otherwise provided in Section C of this Article ELEVENTH, no
Business Combination shall be effected unless it is approved by the affirmative
vote of the holders of at least eighty percent (80%) of all of the
then-outstanding shares of Voting Stock, voting together as a single class (it
being understood that, for purposes of this Article ELEVENTH, each share of
Preferred Stock shall have the number of votes granted to it pursuant to any
Preferred Stock Designation) at a meeting of the corporation's stockholders
called for that purpose.
C. A Business Combination that does not involve any cash or other
consideration being received by the stockholders of the corporation, solely in
their capacities as stockholders of the corporation, which meets the condition
specified in Section C(1) of this Article ELEVENTH shall be exempt from the
stockholder approval requirements of Section B of this Article ELEVENTH. Any
other Business Combination which
10
<PAGE> 11
meets the conditions specified in either Section C(1) or C(2) shall be exempt
from the stockholder approval requirements of Section B of this Article
ELEVENTH.
(1) The Business Combination is approved by a majority of the Continuing
Directors, it being understood that this condition shall not be capable of
satisfaction unless there is at least one Continuing Director.
(2) All of the following conditions are met:
(i) the consideration to be received by holders of shares of a
particular class of outstanding Voting Stock shall be in cash or in the
same form of consideration as the Interested Stockholder has paid for
shares of such class of Voting Stock within the two-year period ending on
and including the Determination Date. If within such two-year period the
Interested Stockholder has paid for shares of any class of Voting Stock
with varying forms of consideration, the form of consideration to be
received per share by holders of shares of such class of Voting Stock shall
be either cash or the form used to acquire the largest number of shares of
such class of Voting Stock acquired by the Interested Stockholder within
such two-year period.
(ii) the aggregate amount of the cash and the Fair Market Value, as of
the Consummation Date, of the consideration other than cash to be received
per share by holders of Common Stock in such Business Combination shall be
at least equal to the highest of the following, adjusted for the effect of
any stock split, reverse stock split or stock dividend (it being intended
that the requirements of this paragraph C(2)(ii) shall be required to be
met with respect to all shares of Common Stock outstanding whether or not
the Interested Stockholder has previously acquired any shares of Common
Stock):
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid
by the Interested Stockholder for any shares of Common Stock acquired by
it within the two-year period immediately prior to the Announcement Date
or the Determination Date, whichever is higher, plus interest compounded
annually from the Determination Date through the Consummation Date at
the Prime Rate less the aggregate amount of any cash dividends paid and
the Fair Market Value of any dividends paid in form other than cash on
each share of Common Stock from the Determination Date through the
Consummation Date in an amount up to but not exceeding the amount of
interest so payable per share of Common Stock; or
(b) the Fair Market Value per share of Common Stock on the
Announcement Date or on the Determination Date, whichever is higher; or
(c) (if applicable) the price per share equal to the Fair Market
Value per share of the Common Stock determined pursuant to Section
C(2)(ii)(b) above, multiplied by the ratio of (1) the highest per share
price (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder for any
shares of Common Stock acquired by it within the two-year period
immediately prior to the Announcement Date to (2) the Fair Market Value
per share of Common Stock on the first day in such two-year period upon
which the Interested Stockholder acquired any shares of Common Stock; or
(d) an amount per share determined by multiplying the earnings per
share of Common Stock for the four full consecutive fiscal quarters of
the corporation immediately preceding the Consummation Date of such
Business Combination by the then price/earnings multiple (if any) of
such Interested Stockholder as customarily computed and reported in the
financial community; provided, that for the purposes of this Section
C(2)(ii)(d), if more than one person constitutes the Interested
Stockholder involved in the Business Combination, the price/earnings
multiple (if any) of the persons having the highest price earnings
multiple shall be used for the computation in this Section C(2)(ii)(d).
(iii) the aggregate amount of the cash and the Fair Market Value, as
of the Consummation Date, of consideration other than cash to be received
per share by holders of shares of any other class of outstanding Voting
Stock shall be at least equal to the highest of the following, adjusted for
the effect of
11
<PAGE> 12
any stock split, reverse stock split or stock dividend (it being intended
that the requirements of this Section C(2)(iii) shall be required to be met
with respect to every class of outstanding Voting Stock other than Common
Stock whether or not the Interested Stockholder has previously acquired any
shares of a particular class of such Voting Stock):
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid
by the Interested Stockholder for any shares of such class of Voting
Stock acquired by it within the two-year period immediately prior to the
Announcement Date or the Determination Date, whichever is higher, plus
interest compounded annually from the Determination Date through the
Consummation Date at the Prime Rate less the aggregate amount of any
cash dividends paid and the Fair Market Value of any dividends paid in
form other than cash on each share of such Voting Stock from the
Determination Date through the Consummation Date in an amount up to but
not exceeding the amount of interest so payable per share of Voting
Stock; or
(b) (if applicable) the highest preferential amount per share to
which the holders of shares of such class of Voting Stock are entitled
in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the corporation; or
(c) the Fair Market Value per share of such class of Voting Stock
on the Announcement Date or on the Determination Date, whichever is
higher, or
(d) (if applicable) the price per share equal to the Fair Market
Value per share of such class of Voting Stock determined pursuant to
Section C(2)(iii)(c) above, multiplied by the ratio of (1) the highest
per share price (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder for any
shares of such class of Voting Stock acquired by it within the two-year
period immediately prior to the Announcement Date to (2) the Fair Market
Value per share of such class of Voting Stock on the first day in such
two-year period upon which the Interested Stockholder acquired any
shares of such class of Voting Stock.
(iv) after such Interested Stockholder has become an Interested
Stockholder and prior to the Consummation Date of such Business
Combination: (a) except as approved by a majority of the Continuing
Directors, there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or not
cumulative) on the outstanding Preferred Stock, if any, (b) there shall
have been (1) no reduction in the annual rate of dividends paid on the
Common Stock (except as necessary to reflect any subdivision of the Common
Stock), except as approved by a majority of the Continuing Directors, and
(2) there shall have been an increase in such annual rate of dividends as
necessary to reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar transaction which
has the effect of reducing the number of outstanding shares of Common
Stock, unless the failure so to increase such annual rate is approved by a
majority of the Continuing Directors, and (c) such Interested Stockholder
shall have not become the beneficial owner of any additional shares of
Voting Stock except as part of the transaction which results in such
Interested Stockholder becoming an Interested Stockholder.
(v) after such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the
benefit, directly or indirectly (except proportionately as a stockholder)
of any loans, advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantage provided by the corporation,
whether in anticipation of or in connection with such Business Combination
or otherwise.
(vi) a proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or regulations) shall be
mailed to public stockholders of the corporation at least thirty (30) days
prior to the consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed pursuant to such
Act or subsequent provisions).
12
<PAGE> 13
D. A majority of the total number of authorized directors shall have the
power to determine, on the basis of information known to them after reasonable
inquiry, all facts necessary to determine compliance with this Article ELEVENTH,
including, without limitation, (1) whether a person is an Interested
Stockholder, (2) the number of shares of Voting Stock beneficially owned by any
person, (3) whether a person is an Affiliate or an Associate of another, (4)
whether the applicable conditions set forth in paragraph C(2) have been met with
respect to any Business Combination, and (5) whether the assets which are the
subject of any Business Combination defined in Section A(3) have, or the
consideration to be received for the issuance or transfer of securities by the
corporation or any Subsidiary in any Business Combination referred to in Section
A(3) has, an aggregate Fair Market Value of $25,000,000 or more.
E. Nothing contained in this Article ELEVENTH shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law.
F. The affirmative vote requirement set forth in Section B shall be in
addition to any affirmative vote of the corporation's security holders otherwise
required by law, this Certificate of Incorporation, any Preferred Stock
Designation, or any agreement between this corporation and any national
securities exchange.
G. Notwithstanding any other provisions of this Certificate of
Incorporation, as amended, or any provision of law which might otherwise permit
a lesser vote or no vote, but in addition to any affirmative vote of the holders
of any particular class or series of the Voting Stock required by law, this
Certificate of Incorporation, or any Preferred Stock Designation, the
affirmative vote of the holders of at least eighty percent (80%) of the voting
power of all of the then-outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend, or repeal this Article
ELEVENTH.
TWELFTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article TWELFTH."
IN WITNESS WHEREOF said Sysco Corporation has caused this certificate to be
signed by John F. Woodhouse, its President, and attested by LaDee G. Riker, its
Secretary, this 29th day of April, 1985.
ATTEST:
<TABLE>
<S> <C>
By: /s/ LADEE G. RIKER By: /s/ JOHN F. WOODHOUSE
------------------------------------------------- -------------------------------------------------
LaDee G. Riker John F. Woodhouse
Secretary President
</TABLE>
13
<PAGE> 14
<TABLE>
<S> <C>
STATE OF TEXAS
COUNTY OF HARRIS
</TABLE>
SS.:
BE IT REMEMBERED that, on April 29, 1985, before me, a Notary Public duly
authorized by law to take acknowledgement of deeds, personally came JOHN F.
WOODHOUSE, President of SYSCO CORPORATION, who duly signed the foregoing
instrument before me and acknowledged that such signing is his act and deed,
that such instrument as executed is the act and deed of said corporation, and
that the facts stated therein are true.
Give under my hand on April 29,
1985.
[SEAL]
/s/ JOAN L. GALLAGHER
------------------------------------
Notary Public
Joan L. Gallagher
Affix Seal Here
My Commission expires March 26, 1988.
14
<PAGE> 15
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SYSCO CORPORATION
IT IS HEREBY CERTIFIED THAT:
1. The name of the corporation (hereinafter called the "Corporation") is
Sysco Corporation.
2. The certificate of incorporation of the Corporation is hereby amended
by striking out Article FOURTH, Section A, thereof and substituting therefor the
following new Article FOURTH, Section A, and by adding the following new Article
THIRTEENTH:
"FOURTH: A. The total number of shares of stock which the
corporation shall have authority to issue is Two Hundred One Million
Five Hundred Thousand (201,500,000) shares, consisting of One Million
Five Hundred Thousand (1,500,000) shares of Preferred Stock with a par
value of One ($1.00) Dollar each, and Two Hundred Million
(200,000,000) shares of Common Stock with a par value of One ($1.00)
Dollar each. The corporation may issue fractional shares of stock,
which shall be entitled to proportionate dividends, voting and
liquidation rights."
"THIRTEENTH: A director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, as the same exists or hereafter may be amended, or
(iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law hereafter is
amended to authorize the further elimination or limitation of the
liability of directors, then the liability of a director of the
corporation, in addition to the limitation on personal liability
provided herein, shall be limited to the fullest extent permitted by
the amended Delaware General Corporation Law. Any repeal or
modification of this paragraph by the stockholders of the corporation
shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the corporation
existing at the time of such repeal or modification."
3. The amendments of the certificate of incorporation herein certified have
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
Signed and attested on November 18, 1986.
SYSCO CORPORATION
By: /s/ BILL M. LINDIG
----------------------------------
Bill M. Lindig
President
ATTEST:
By: /s/ LADEE G. RIKER
--------------------------------
LaDee G. Riker
Secretary
15
<PAGE> 16
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SYSCO CORPORATION
IT IS HEREBY CERTIFIED THAT:
1. The name of the corporation (hereinafter called the "Corporation") is
Sysco Corporation.
2. The certificate of incorporation of the Corporation is hereby amended by
striking out Article FOURTH, Section A, thereof and substituting therefor the
following new Article FOURTH, Section A:
FOURTH: A. The total number of shares of stock which the
corporation shall have authority to issue is Five Hundred One Million
Five Hundred Thousand, (501,500,000) shares, consisting of One Million
Five Hundred Thousand (1,500,000) shares of Preferred Stock with a par
value of One Dollar ($1.00) each, and Five Hundred Million
(500,000,000) shares of Common Stock with a par value of One Dollar
($1.00) each. The corporation may issue fractional shares of stock,
which shall be entitled to proportionate dividends, voting and
liquidation rights."
3. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
Sign and attested on November 9th, 1990.
SYSCO CORPORATION
By: /s/ BILL M. LINDIG
----------------------------------
Bill M. Lindig
President
ATTEST:
By: /s/ LADEE G. RIKER
--------------------------------
LaDee G. Riker
Secretary
[SEAL]
16
<PAGE> 1
EXHIBIT # 4(a)
<PAGE> 2
AGREEMENT AND SEVENTH AMENDMENT
TO
COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
THIS AGREEMENT AND SEVENTH AMENDMENT TO COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT (this "Amendment") dated as of June 27,
1997 is among SYSCO CORPORATION, a Delaware corporation (the "Company"), the
banks listed on the signature pages hereof (the "Banks"), TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, a national banking association, as agent for the Banks
(in such capacity, the "Agent"), and THE CHASE MANHATTAN BANK, a New York
banking corporation (successor to Chemical Bank), as auction administration
agent (in such capacity, the "Auction Administration Agent").
PRELIMINARY STATEMENT
The Company, the Banks, certain other banks, the Agent and the
Auction Administration Agent have entered into a Competitive Advance and
Revolving Credit Facility Agreement dated as of July 27, 1988 as modified by an
Agreement and First Amendment to Competitive Advance and Revolving Credit
Facility Agreement dated as of February 14, 1989, by an Agreement and Second
Amendment to Competitive Advance and Revolving Credit Facility Agreement and
Modification of Notes dated as of May 1, 1989, by an Agreement and Third
Amendment to Competitive Advance and Revolving Credit Facility Agreement and
Modification of Notes dated as of January 2, 1990, by an Agreement and Fourth
Amendment to Competitive Advance and Revolving Credit Facility Agreement dated
as of January 31, 1994, and by an Agreement and Fifth Amendment to Competitive
Advance and Revolving Credit Facility Agreement
<PAGE> 3
dated as of November 15, 1994, and as amended and restated by a Sixth Amendment
and Restatement of Competitive Advance and Revolving Credit Facility Agreement
dated as of May 31, 1996 (said Competitive Advance and Revolving Credit
Facility Agreement as so modified, amended and restated being the "Credit
Agreement"). All capitalized terms defined in the Credit Agreement and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement. The Company, the Banks, the Agent and the Auction Administration
Agent have agreed, upon the terms and conditions specified herein, to amend the
Credit Agreement as hereinafter set forth:
NOW THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the Company, the Banks, the Agent and the
Auction Administration Agent hereby agree as follows:
SECTION 1. Amendments to Section 1.01 of the Credit Agreement.
The definition of the term "Original Termination Date" contained in Section
1.01 of the Credit Agreement is hereby amended in its entirety to read as
follows:
"'Original Termination Date' means July 7, 2002.".
SECTION 2. Amendment to Section 2.20(b) of the Credit Agreement.
Section 2.20(b) of the Credit Agreement is hereby amended in its entirety to
read as follows:
"(b) Each Notice of Extension shall (i) except as
provided in Section 2.20(f), be irrevocable and (ii) constitute a
representation by the Company that (A) neither any Event of Default nor
any Default has occurred and is continuing and (B) the representations
and warranties contained in Article IV are correct on and as of the
Relevant Anniversary Date, as though made on and as of such date;
provided, however, that for purposes of this clause (B), Schedule II, as
used in Section 4.02, shall be deemed to include
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<PAGE> 4
any supplements to such Schedule delivered to the Agent and the Banks by
the Company prior to such Relevant Anniversary Date.".
SECTION 3. Amendment to Section 3.03(a)(i) of the Credit
Agreement. Section 3.03(a)(i) of the Credit Agreement is hereby amended in its
entirety to read as follows:
(i) The representations and warranties contained in Article IV
are correct on and as of the date of such Committed Borrowing, before
and after giving effect to such Committed Borrowing and to the
application of the proceeds therefrom, as though made on and as of such
date; provided, however, that the representations and warranties set
forth in the last sentence of Section 4.04(b) and in Section 4.09 need
not be correct on and as of the date of such Committed Borrowing if,
after giving effect to such Committed Borrowing, the aggregate
outstanding principal amount of the Committed Loans of each Bank would
be equal to or less than the aggregate outstanding principal amount of
the Committed Loans of such Bank immediately prior to such Committed
Borrowing and, provided further, that for purposes of this clause (i)
Schedule II, as used in Section 4.02, shall be deemed to include any
supplement to such Schedule delivered to the Agent and the Banks by the
Company prior to the date of such Committed Borrowing;".
SECTION 4. Amendment to Section 3.04(b)(i)(1) of the Credit
Agreement. Section 3.04(b)(i)(1) of the Credit Agreement is hereby amended in
its entirety to read as follows:
"(1) The representations and warranties contained in Article IV
are correct on and as of the date of such Competitive Borrowing, before
and after giving effect to such Competitive Borrowing and to the
application of the proceeds therefrom, as though made on and as of such
date; provided, however, that for purposes of this clause (1) Schedule
II, as
-3-
<PAGE> 5
used in Section 4.02, shall be deemed to include any supplement to such
Schedule delivered to the Agent and the Banks by the Company prior to
the date of such Competitive Borrowing;".
SECTION 5. Amendments to Section 4.05 of the Credit Agreement.
Section 4.05 of the Credit Agreement is hereby amended in its entirety to read
as follows:
"(a) Neither the Company nor any Subsidiary has any contingent
liability which either individually or collectively with all such other
contingent liabilities would have a material adverse effect upon the
Company and the Consolidated Subsidiaries taken as a whole or upon the
ability of the Company to perform its obligations under this Agreement
and the Notes.".
SECTION 6. Conditions of Effectiveness. This Amendment shall
become effective when, and only when the following conditions shall have been
fulfilled:
(a) the Company, the Agent, the Auction Administration Agent
and each Bank shall have executed a counterpart hereof and delivered the same
to the Agent or, in the case of any Bank as to which an executed counterpart
hereof shall not have been so delivered, the Agent shall have received written
confirmation by telecopy or other similar writing from such Bank of execution
of a counterpart hereof by such Bank; and
(b) the Agent shall have received from the Company a
certificate of the Secretary or Assistant Secretary of the Company certifying
that attached thereto is (i) a true and complete copy of the general borrowing
resolutions of the Board of Directors of the Company authorizing the execution,
delivery and performance of the Credit Agreement, as amended hereby, and (ii)
the incumbency and specimen signature of each officer of the Company executing
this Amendment.
-4-
<PAGE> 6
SECTION 7. Representations and Warranties True; No Default or
Event of Default. The Company hereby represents and warrants to the Agent, the
Auction Administration Agent and the Banks that after giving effect to the
execution and delivery of this Amendment (a) the representations and warranties
set forth in the Credit Agreement are true and correct on the date hereof as
though made on and as of such date; provided, however, that for purposes of
this clause (a), Schedule II as used in Section 4.02 of the Credit Agreement
shall be deemed to include any supplements to such Schedule delivered to the
Agent and the Banks by the Company prior to the date of this Amendment and (b)
neither any Default nor Event of Default has occurred and is continuing as of
the date hereof.
SECTION 8. Reference to the Credit Agreement and Effect on the
Notes and Other Documents Executed Pursuant to the Credit Agreement.
(a) Upon the effectiveness of this Amendment, each reference
in the Credit Agreement to "this Agreement," "hereunder," "herein," "hereof" or
words of like import shall mean and be a reference to the Credit Agreement, as
amended hereby.
(b) Upon the effectiveness of this Amendment, each reference
in the Notes and the other documents and agreements delivered or to be
delivered pursuant to the Credit Agreement shall mean and be a reference to the
Credit Agreement, as amended hereby.
(c) The Credit Agreement and the Notes and other documents and
agreements delivered pursuant to the Credit Agreement, and modified by the
amendments referred to above, shall remain in full force and effect and are
hereby ratified and confirmed.
SECTION 9. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when
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<PAGE> 7
so executed and delivered shall be deemed to be an original and all of which
taken together shall constitute but one and the same instrument.
SECTION 10. GOVERNING LAW; BINDING EFFECT. THIS AMENDMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND APPLICABLE FEDERAL LAW AND SHALL BE BINDING UPON THE COMPANY, THE
AGENT, THE AUCTION ADMINISTRATION AGENT AND THE BANKS AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS.
SECTION 11. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.
SECTION 12. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS
AMENDED HEREBY, THE NOTES AND THE LETTER AGREEMENTS REFERRED TO IN SECTIONS
2.05(b) AND 2.05(c) OF THE CREDIT AGREEMENT CONSTITUTE A "LOAN AGREEMENT" AS
DEFINED IN SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF
AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
-6-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed effective as of the date first stated herein, by their
respective officers thereunto duly authorized.
SYSCO CORPORATION
By: /s/ DIANE S. DAY
------------------------------
Name: Diane S. Day
Title: Vice-President/Treasurer
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
INDIVIDUALLY AND AS AGENT
By:
------------------------------
Susan Garner
Vice President
-7-
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed effective as of the date first stated herein, by their
respective officers thereunto duly authorized.
SYSCO CORPORATION
By:
------------------------------
Name:
Title:
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
INDIVIDUALLY AND AS AGENT
By: /s/ JAN DANVERS
------------------------------
Jan Danvers
Senior Vice President
-7-
<PAGE> 10
THE CHASE MANHATTAN BANK
(SUCCESSOR TO CHEMICAL BANK), AS
AUCTION ADMINISTRATION AGENT
By: /s/ PETER M. LING
------------------------------
Name: Peter M. Ling
Title: Vice President
-8-
<PAGE> 11
BANK OF AMERICA ILLINOIS
(f/k/a CONTINENTAL BANK N.A.)
By: /s/ CLAIRE LIU
------------------------------
Name: Claire Liu
Title: Vice President
-9-
<PAGE> 12
NATIONSBANK OF TEXAS, N.A.
By: /s/ BILLY B. GREER
------------------------------
Name: Billy B. Greer
Title: Vice President
-10-
<PAGE> 13
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ JANE W. WORKMAN
------------------------------
Name: Jane W. Workman
Title: Senior Vice President
-11-
<PAGE> 14
THE FUJI BANK, LIMITED,
HOUSTON AGENCY
By: /s/ DAVID KELLEY
------------------------------
Name: David Kelley
Title: Sr. Vice President
-12-
<PAGE> 15
THE TORONTO-DOMINION BANK
By: /s/ DAVID G. PARKER
------------------------------
Name: David G. Parker
Title: MGR. CR. ADMIN.
-13-
<PAGE> 16
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
By: /s/ SAMUEL AZIZO
------------------------------
Name: Samuel Azizo
Title: Vice President
By: /s/ DIETER HOEPPLI
------------------------------
Name: Dieter Hoeppli
Title: Vice President
-14-
<PAGE> 17
WACHOVIA BANK OF GEORGIA,
NATIONAL ASSOCIATION
By: /s/ CARL E. PEOPLES
------------------------------
Name: Carl E. Peoples
Title: Vice President
-15-
<PAGE> 1
EXHIBIT # 4(b)
<PAGE> 2
CONFORMED COPY
================================================================================
SYSCO CORPORATION
NOTE AGREEMENT
DATED AS OF JUNE 1, 1989
$91,500,000 PRINCIPAL AMOUNT
9.95% SENIOR NOTES
DUE JUNE 15, 1999
================================================================================
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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<C> <C> <S> <C>
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT
1.1 Description of Notes........................................ 1
1.2 Commitment; Closing Date.................................... 1
SECTION 2. PAYMENTS ON THE NOTES
2.1 Repayments.................................................. 1
2.2 Prepayment at Noteholder's Option Upon Change of Control.... 1
2.3 Surrender of Notes on Payment or Exchange................... 2
2.4 Direct Payment.............................................. 2
2.5 Payments Due on Saturdays, Sundays and Holidays............. 2
SECTION 3. REPRESENTATIONS
3.1 Representations of the Company.............................. 3
3.2 Representations of the Purchasers........................... 7
SECTION 4. CLOSING CONDITIONS
4.1 Representations and Warranties.............................. 7
4.2 Legal Opinions.............................................. 7
4.3 Events of Default........................................... 8
4.4 Legality of Investment...................................... 8
4.5 Sale of All Notes........................................... 8
4.6 Proceedings and Documents................................... 8
SECTION 5. INTERPRETATION OF AGREEMENT
5.1 Certain Terms Defined....................................... 8
5.2 Accounting Principles....................................... 11
5.3 Valuation Principles........................................ 11
5.4 Direct or Indirect Actions.................................. 11
SECTION 6. AFFIRMATIVE COVENANTS
6.1 Corporate Existence......................................... 11
6.2 Insurance................................................... 11
6.3 Taxes, Claims for Labor and Materials....................... 12
6.4 Maintenance of Properties................................... 12
6.5 Maintenance of Records...................................... 12
6.6 Financial Information and Reports........................... 12
6.7 Inspection of Properties and Records........................ 13
6.8 ERISA....................................................... 14
6.9 Compliance with Laws........................................ 14
6.10 Acquisition of Notes........................................ 14
6.11 Notification of Change in Control........................... 14
6.12 Private Placement Number.................................... 14
6.13 Disposition of Notes........................................ 14
i
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
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<C> <C> <S> <C>
SECTION 7. NEGATIVE COVENANTS
7.1 Funded Debt................................................. 15
7.2 Liens....................................................... 15
7.3 Sales and Lease-Back Transaction............................ 16
7.4 Merger or Sale of Substantially All Assets.................. 16
7.5 Dealings with Affiliates.................................... 17
7.6 Consolidated Tax Returns.................................... 17
7.7 Purchase of Notes........................................... 17
SECTION 8. EVENTS OF DEFAULT AND REMEDIES THEREFOR
8.1 Nature of Events............................................ 17
8.2 Remedies on Default......................................... 18
8.3 Annulment of Acceleration of Notes.......................... 18
8.4 Other Remedies.............................................. 19
8.5 Conduct No Waiver; Collection Expenses...................... 19
8.6 Remedies Cumulative......................................... 19
8.7 Notice of Default........................................... 19
SECTION 9. AMENDMENTS, WAIVERS AND CONSENTS
9.1 Matters Subject to Modification............................. 19
9.2 Solicitation of Holders of Notes............................ 20
9.3 Binding Effect.............................................. 20
SECTION 10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT
10.1 Form of Notes............................................... 20
10.2 Note Register............................................... 20
10.3 Issuance of New Notes upon Exchange or Transfer............. 20
10.4 Replacement of Notes........................................ 21
SECTION 11. MISCELLANEOUS
11.1 Expenses.................................................... 21
11.2 Notices..................................................... 21
11.3 Reproduction of Documents................................... 21
11.4 Successors and Assigns...................................... 21
11.5 Law Governing............................................... 21
11.6 Headings.................................................... 22
11.7 Counterparts................................................ 22
11.8 Reliance on and Survival of Provisions...................... 22
11.9 Integration and Severability................................ 22
SCHEDULE I: Purchasers and Notes to be Purchased
ANNEX I: List of Subsidiaries
ANNEX II: List of Multi-Employer Plans
ANNEX III: Description of Outstanding Liens
ANNEX IV: Description of Open Tax Years
EXHIBIT A: 9.95% Senior Note, Due June 15, 1999
EXHIBIT B: Legal Opinions
</TABLE>
ii
<PAGE> 5
SYSCO CORPORATION
NOTE AGREEMENT
Dated as of June 1, 1989
To Each of the Purchasers
Named in Schedule I
Attached Hereto
Ladies and Gentlemen:
SYSCO CORPORATION, a Delaware corporation (the "Company"), agrees with each
of you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT
1.1 Description of Notes. The Company has authorized the issuance of
$91,500,000 aggregate principal amount of its Senior Notes (the "Notes"), to
mature June 15, 1999, to be dated the date of issuance, to bear interest from
the date thereof at the rate of 9.95% per annum prior to maturity, such interest
being payable semi-annually on June 15 and December 15 of each year, commencing
December 15, 1989. The Notes will be substantially in the form attached hereto
as Exhibit A and shall have the other terms and provisions hereinafter set
forth. The term "Notes" as used herein shall include each Note delivered
pursuant to this Note Agreement (the "Agreement") and each Note delivered in
substitution or exchange therefor and, where applicable, shall include the
singular number as well as the plural. Any reference to you in this Agreement
shall in all instances be deemed to include any nominee of yours or any separate
account or other person on whose behalf you are purchasing Notes. You are
sometimes referred to herein as a "Purchaser" and, together with the other
purchasers, as the "Purchasers."
1.2 Commitment; Closing Dates. Subject to the terms and conditions hereof
and on the basis of the representations and warranties hereinafter set forth,
the Company agrees to issue and sell to each of you, and each of you agrees to
purchase from the Company, Notes in the aggregate principal amount set forth
opposite your name in Schedule I attached hereto at a price of 100% of the
principal amount thereof on the Closing Date (as hereinafter defined).
Delivery of and payment for the Notes shall be made on June 15, 1989, or on
such later date as may be mutually agreed upon by the Company and the Purchasers
at the offices of Gardner, Carton & Douglas, 321 North Clark Street, Chicago,
Illinois 60610, at 9:00 a.m. Chicago Time (the "Closing Date"). The Notes will
be delivered to each of you in the form of one or more Notes in fully registered
form, issued in your name or in the name of your nominee. Delivery of the Notes
to each of you shall be against payment of the purchase price thereof in Federal
Funds or other immediately available funds in U.S. dollars transmitted to First
City, Texas -- Houston, P.O. Box 2557, Houston, Texas 77001, ABA #113000010 for
deposit in the Company's Account No. 001-00-9549-4. If on the Closing Date the
Company shall fail to tender the Notes it is obligated to provide to you, you
shall be relieved of all remaining obligations under this Agreement. Nothing in
the preceding sentence shall relieve the Company of any liability occasioned by
such failure to deliver the Notes.
SECTION 2. PAYMENTS ON THE NOTES
2.1 Prepayments. Except as provided in Section 2.2, the Notes shall not be
prepayable in whole or in part.
2.2 Prepayment at Noteholder's Option Upon Change of Control.
(a) In the event that (i) a Change in Control shall occur and (ii) on
the date that such Change in Control shall occur or at any time during the
12-month period thereafter, the ratio of (A) Consolidated Short-Term Debt
plus Consolidated Funded Debt to (B) Consolidated Capitalization plus
Short-Term Debt exceeds 80%, (the occurrence of (i) and (ii) being referred
to hereinafter as a "Designated
<PAGE> 6
Event"), the Company shall, within ten days after the date of such
Designated Event, give written notice to you and each other holder of a
Note of such Designated Event, accompanied by a certificate of an
authorized officer of the Company certifying that the conditions of this
Section 2.2 have been fulfilled and specifying the nature of the Change of
Control, which notice (x) shall contain a written, irrevocable offer by the
Company to prepay, on a date specified in such notice by the Company which
shall be 90 days after the date of such notice, the Notes held by you and
each other holder in full (and not in part) at the price set forth in
paragraph (b) of this Section 2.2, and (y) shall advise you and each other
holder of Notes that notice of such holder's acceptance of the Company's
offer to prepay under this Section 2.2 must be delivered to the Company
within 60 days after its receipt of the notice of the Company delivered
pursuant to this Section 2.2.
(b) Notes to be prepaid pursuant to this Section 2.2 shall be prepaid
at a price of either (i) 100% of the principal amount to be prepaid, plus
interest accrued thereon to the date of prepayment, in the event that the
Reinvestment Yield shall, on the applicable Determination Date, equal or
exceed the interest rate payable on or in respect of the Notes, or (ii)
100% of the principal amount to be prepaid, plus interest accrued thereon
to the date of prepayment, plus a premium, in the event that the
Reinvestment Yield shall, on such Determination Date, be less than the
interest rate payable on or in respect of the Notes. The premium, if any,
shall equal the present value of each remaining scheduled payment of
principal and interest which would be required by Section 1.1 absent such
prepayment, determined by discounting (on the basis of a 360-day year
composed of twelve 30-day months) each such amount utilizing an interest
factor equal to the Reinvestment Yield, less the principal amount to be
prepaid.
2.3 Surrender of Notes on Payment or Exchange. Subject to Section 2.4, upon
any exchange of a Note pursuant to Section 10.3, such Note may, at the option of
the holder thereof, (i) be surrendered to the Company pursuant to Section 10.3
in exchange for a new Note equal to the principal amount remaining unpaid on the
surrendered Note, or (ii) be made available to the Company for notation thereon
of the portion of the principal so exchanged. In case the entire principal
amount of any Note is paid at maturity, such Note shall be surrendered to the
Company for cancellation and shall not be reissued, and no Note shall be issued
in lieu of such Note.
2.4 Direct Payment. Notwithstanding any other provision contained in the
Notes or this Agreement, the Company will pay all sums becoming due on each Note
held by you, at your election by wire transfer of Federal Funds to such account
in your name as you have designated in Schedule I hereto or as you may otherwise
designate to the Company in writing, without presentment and without notations
being made thereon, except that any such Note so paid in full shall be
surrendered to the Company for cancellation. Any wire transfer shall identify
such payment as "Sysco Corporation, 9.95% Senior Notes due June 15, 1999" and
shall identify the payment as principal, premium or interest. Before selling or
otherwise transferring any such Note, you agree that you will make a notation
thereon of the date to which interest has been paid. If the transferee of any
Note held by you is an Institutional Holder or its nominee and shall request the
Company to make all payments on account of such Note that are payable in cash by
wire transfer of immediately available funds at an address specified in such
request, the Company will make such payments in compliance with such request,
provided that such Institutional Holder undertakes in said request the same
obligations in respect of such Note as those undertaken by you in the
immediately preceding sentence.
2.5 Payments Due on Saturdays, Sundays and Holidays. In any case where any
interest payment date on the Notes or the date fixed for any other payment of
any Note or exchange of any Note shall be on a Saturday, Sunday or a legal
holiday or a day on which banking institutions are authorized by law to close in
New York, New York or Houston, Texas, then such payment or exchange need not be
made on such date but may be made on the next succeeding business day not a
Saturday, Sunday or a legal holiday or a day upon which banking institutions are
authorized by law to close in New York, New York or Houston, Texas, with the
same force and effect as if made on the due date.
2
<PAGE> 7
SECTION 3. REPRESENTATIONS
3.1 Representations of the Company. As an inducement to, and as part of
the consideration for, your purchase of the Notes pursuant to this Agreement,
the Company represents and warrants to you as follows:
(a) Corporate Organization and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, has full corporate power and authority to carry on its
business as now conducted, to enter into the Agreement and to issue and
sell the Notes as contemplated in the Agreement.
(b) Qualification to Do Business. The Company is duly licensed or
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction where the nature of its business or the
character of its properties makes such qualification or licensing
necessary, except where such failure to be so qualified or licensed would
not have a material adverse effect on the operations or financial condition
of the Company and its Subsidiaries on a consolidated basis. The Company
represents that, in states in which qualification to do business is
required and the Company is not so qualified, it has filed such documents
and paid such fees as are necessary to obtain such qualification.
(c) Subsidiaries. As of June 1, 1989, the Company has no Subsidiaries,
as defined in Section 5.1, except those which are Wholly-Owned Consolidated
Subsidiaries and which are listed in Annex I hereto. Except as set forth in
Annex I hereto, each Subsidiary has been duly organized and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization and is qualified in each other jurisdiction
where the nature of its business or the character of its properties makes
such qualification necessary, except in those jurisdictions where the
failure to so qualify, either individually or in the aggregate, would not
have a material adverse affect on the condition, financial or otherwise, of
the Company and its Subsidiaries on a consolidated basis. Each Subsidiary
has full corporate power and authority to own its properties and to carry
on its business as now conducted. The Company and/or one or more
Subsidiaries have good and marketable title to all of the shares it
purports to own of the capital stock of each Subsidiary, free and clear in
each case of any lien or encumbrance, and all such shares have been validly
issued and are fully paid and nonassessable.
(d) Financial Statements. The audited consolidated balance sheets of
the Company and its Subsidiaries as of July 2, 1988 and June 27, 1987, and
the related audited consolidated statements of income, changes in financial
position and shareholders' equity for the fiscal years ended on such dates,
copies of which have heretofore been delivered to you, were prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved (except as otherwise noted therein)
and present fairly the financial position and results of operations of the
Company and its Subsidiaries for and as of the end of each of such fiscal
years. The unaudited consolidated balance sheets of the Company and its
Subsidiaries as of October 1, 1988 and September 26, 1987, as of December
31, 1988 and December 26, 1987 and as of April 1, 1989 and March 26, 1988
and the unaudited statements of consolidated income and consolidated
changes in financial position for the three, six and nine month periods
ended on those dates, copies of which have heretobefore been delivered to
you were prepared in accordance with generally accepted accounting
principles and present fairly the financial condition of the Company and
its Subsidiaries as of said dates and the results of their operations for
the fiscal periods then ended, subject to customary year-end audit
adjustments.
(e) No Contingent Liabilities or Adverse Changes. Except for
contingent liabilities previously disclosed to the Purchasers (reflected in
the Form 10-Q's of the Company provided to the Purchasers) as of the date
hereof, neither the Company nor any of its Subsidiaries has any contingent
liabilities which, individually or in the aggregate, are material to the
Company and its Subsidiaries on a consolidated basis and since July 2,
1988, there have been no material adverse changes in the condition,
financial or otherwise, of the Company and its Subsidiaries on a
consolidated basis nor any material and adverse changes to the Company and
its Subsidiaries on a consolidated basis except those occurring in the
ordinary course of business.
3
<PAGE> 8
(f) No Pending Litigation or Proceedings. There are no actions, suits
or proceedings pending and served upon the Company or any of its
Subsidiaries or, to the knowledge of the Company or any Subsidiary,
threatened and not served upon the Company or any Subsidiary, against or
affecting the Company or any of its Subsidiaries, at law or in equity or
before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic
or foreign, which if determined adversely to the Company or any Subsidiary,
either individually or collectively, would result in any material adverse
change in the business, properties, operations or condition, financial or
otherwise, of the Company and its Subsidiaries on a consolidated basis.
(g) Compliance with Law. (i) Neither the Company nor any of its
Subsidiaries is: (x) in default with respect to any order, writ, injunction
or decree of any court to which it is a named party; or (y) in default
under any law, rule, regulation, ordinance or order relating to its or
their respective businesses, the sanctions and penalties resulting from
which defaults described in clauses (x) and (y) would have a material
adverse effect, individually or in the aggregate, on the business,
properties, operations, assets or condition, financial or otherwise, of the
Company and its Subsidiaries on a consolidated basis.
(ii) Neither the Company nor any Subsidiary is a "national" of a
"designated foreign country", a Person defined as a "designated foreign
country", an entity defined as "Iran" or an "Iranian Entity," an entity
defined as "Nicaragua" or a "Nicaraguan," an "Entity controlled by the
South African Government," or an entity defined as the "Government of
Libya" or a "Libyan Person" within the definitions in the Foreign Assets
Control, Cuban Assets Control, Iranian Assets Control, Nicaraguan Control,
South African Transactions or Libyan Sanctions Regulations of the United
States Treasury Department, 31 C.F.R., Chapter V, as amended, or any
regulation or ruling issued thereunder.
(h) Pension Reform Act of 1974. Based upon your representations in
Section 3.2 of this Agreement, neither the purchase of the Notes by you nor
the consummation of any of the other transactions contemplated by this
Agreement is or will constitute a "prohibited transaction" within the
meaning of Section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), or Section 406 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). The Internal Revenue Service has issued a
determination that each "employee pension benefit plan," as defined in
Section 3 of ERISA (a "Plan"), established, maintained or contributed to by
the Company or any Subsidiary (except for any Plan which is unfunded and
maintained primarily for the purpose of providing deferred compensation for
a select group of management or highly compensated employees) is qualified
under Section 401(a) and related provisions of the Code, as amended by
ERISA, and that each related trust or custodial account is exempt from
taxation under Section 501(a) of the Code. All Plans of the Company or any
Subsidiary comply in all material respects with ERISA and the Code. Except
as set forth in Annex II, there exist with respect to the Company or any
Subsidiary no "multi-employer plans," as defined in the Multiemployer
Pension Plan Amendments Act of 1980, for which a material withdrawal or
termination liability may be incurred. The Company has no knowledge of any
material liability existing with respect to any "multi-employer plans" in
which it participates, including but not limited to, withdrawal or
termination liability. There exist with respect to all Plans or trusts
established or maintained by the Company or any Subsidiary: (i) no
accumulated funding deficiency within the meaning of ERISA material to the
Company and its Subsidiaries on a consolidated basis; (ii) no termination
of any Plan or trust which would result in any liability to the Pension
Benefit Guaranty Corporation ("PBGC") material to the Company and its
Subsidiaries on a consolidated basis or any "reportable event," as that
term is defined in ERISA, which is likely to constitute grounds for
termination of any Plan or trust by the PBGC; and (iii) no "prohibited
transaction," as that term is defined in ERISA, which is likely to subject
any Plan, trust or party dealing with any such Plan or trust to any tax or
penalty material to the Company and its Subsidiaries on a consolidated
basis on prohibited transactions imposed by Section 4975 of the Code.
(i) Title to Properties. Except as disclosed on the consolidated
balance sheet as of June 2, 1988 delivered pursuant to Paragraph (d) of
this Section 3.1, the Company and its Subsidiaries have (i) good title in
fee simple or its equivalent under applicable law to all the real property
owned by it and (ii) good title to all the other property reflected in said
balance sheet or subsequently acquired by the Company or any Subsidiary
4
<PAGE> 9
(except as sold or otherwise disposed of in the ordinary course of
business), in each case free from all liens, charges, and encumbrances of
any kind, except (w) those securing Indebtedness of the Company or a
Subsidiary, which are listed in Annex III hereto; (x) liens for taxes which
are not now delinquent; (y) any mechanic's, laborer's or supplier's liens
if payment is not yet due under the contract in question or if payment is
being contested in good faith by the Company or any Subsidiary and with
respect to which adequate reserves are maintained by the Company; and (z)
other liens, charges and encumbrances that, in the aggregate, do not
materially detract from the value of said properties or materially impair
their use in the operation of the business of the Company and its
Subsidiaries on a consolidated basis.
(j) Leases The Company and each Subsidiary enjoy peaceful and
undisturbed possession under all material leases under which the Company or
such Subsidiary is a lessee or is operating. None of such leases contains
any provision which is reasonably likely to materially and adversely affect
the operation or the financial condition of the Company and its
Subsidiaries on a consolidated basis. All of such leases are valid and
subsisting and there are no defaults in such leases which would result in a
material adverse effect on the Company and it Subsidiaries on a
consolidated basis.
(k) Franchises, Patents, Trademarks and Other Rights The Company and
each Subsidiary have all franchises, permits, licenses and other authority
as are necessary to enable them to carry on their respective businesses as
now being conducted and as proposed to be conducted, and none of them is in
default under any of such franchises, permits, licenses or other authority
which are material to the business, properties, operations or condition,
financial or otherwise, of the Company and its Subsidiaries on a
consolidated basis. The Company and each Subsidiary own or possess all
patents, trademarks, service marks, trade names, copyrights, licenses and
rights with respect to the foregoing necessary for the present conduct of
their businesses, without any known conflict with the rights of others
which might result in any material adverse change in the business,
properties, operations or condition, financial or otherwise, of the Company
and its Subsidiaries on a consolidated basis.
(l) Status of Notes and Sale of Notes The Notes and this Agreement
have been duly authorized on the part of the Company and constitute the
legal, valid and binding obligations of the Company, enforceable in
accordance with their terms, except to the extent that enforcement of the
Notes and this Agreement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general
application relating to or affecting the enforcement of the rights of
creditors or secured parties or by equitable principles if equitable
remedies are sought. The sale of the Notes and compliance by the Company
with all of the provisions of this Agreement and of the Notes (i) are
within the corporate powers of the Company, (ii) have been duly authorized
by proper corporate action and (iii) are legal and will not result in any
breach of any of the provisions of, or constitute a default under, or
result in the creation of any lien or encumbrance upon any property of the
Company or any Subsidiary under the provisions of, any charter instrument,
by-law, loan agreement or other agreement or instrument to which the
Company or any Subsidiary is a party or by which any of them is bound.
(m) No Defaults No event has occurred and no condition exists which,
upon the issuance of the Notes, would constitute an Event of Default, or
with the lapse of time or the giving of notice or both would become an
Event of Default, under this Agreement. Neither the Company nor any
Subsidiary is in default (which default has not been waived by all
necessary parties) under any charter instrument, by-law, or any loan
agreement or other agreement or instrument to which it is a party or by
which it is bound which default would result in a material adverse effect
on the Company and its Subsidiaries on a consolidated basis.
(n) Governmental Consent Neither the nature of the Company or any of
its Subsidiaries, their respective businesses or properties, nor any
relationship between the Company or any of its Subsidiaries and any other
Person, nor any circumstances in connection with the offer, issue, sale or
delivery of the Notes is such as to require a consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority on the part of the Company in connection with the
execution and delivery of this Agreement or the offer, issue, sale or
delivery of the Notes.
5
<PAGE> 10
(o) Taxes. (i) All tax returns required to be filed by the Company or
any Subsidiary in any jurisdiction have in fact been filed. All taxes,
assessments, fees and other governmental charges upon the Company or any
Subsidiary, or upon any of their respective properties, income or
franchises, which are due and payable, and which the failure to pay would
have a material adverse effect on the Company and its Subsidiaries on a
consolidated basis, have been paid timely or within appropriate extension
periods or contested in good faith by appropriate proceedings. Neither the
Company nor any Subsidiary knows of any proposed additional tax assessment
against it nor of any basis for one which would have a materially adverse
effect on the Company and its Subsidiaries on a consolidated basis.
(ii) The respective Federal income tax liabilities of the Company and
its Subsidiaries have been finally determined by the Internal Revenue
Service and satisfied for all taxable years other than the taxable years
ended on the dates set forth in Annex IV hereto. The provisions for taxes
on the books of the Company and its Subsidiaries on a consolidated basis
are adequate for all open years and for the current fiscal period.
(p) Status under Certain Statutes. Neither the Company nor any
Subsidiary is: (i) a "public utility company" or a "holding company," or an
"affiliate" or a "subsidiary company" of a "holding company," or an
"affiliate" of such a "subsidiary company," as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended, or (ii) a
"public utility" as defined in the Federal Power Act, as amended, or (iii)
an "investment company" or an "affiliated person" thereof or an "affiliated
person" of any such "affiliated person," as such terms are defined in the
Investment Company Act of 1940, as amended.
(q) Private Offering. Neither the Company nor Goldman, Sachs & Co.
(the only Person authorized or employed by the Company as agent, broker,
dealer or otherwise in connection with the offering of the Notes or any
similar security of the Company) has offered any of the Notes or any
similar security of the Company for sale to, or solicited offers to buy any
thereof from, or otherwise approached or negotiated with respect thereto
with, any prospective purchaser, other than not more than 54 institutional
investors, including the Purchasers, referred to in a letter from Goldman,
Sachs & Co. to the Company, dated June 2, 1989, a copy of which has been
delivered to your special counsel, each of whom was offered all or a
portion of the Notes at private sale for investment. With respect to the
actions of Goldman, Sachs & Co. described in this paragraph, the Company
has relied solely on the representations of Goldman, Sachs & Co. set forth
in the aforementioned letter. The Company agrees that neither the Company
nor anyone acting on its authorization will offer the Notes or any part
thereof or any similar securities for issue or sale to, or solicit any
offer to acquire any of the same from, anyone so as to bring the issuance
and sale of the Notes within the provisions of Section 5 of the Securities
Act of 1933, as amended.
(r) Effect of Other Instruments. Neither the Company nor any
Subsidiary is bound by any agreement or instrument or subject to any
charter or other corporate restriction which materially and adversely
affects the business, properties, operations, or condition, financial or
otherwise, of the Company and its Subsidiaries on a consolidated basis.
(s) Use of Proceeds. The Company will apply the proceeds from the sale
of the Notes to reduce outstanding Indebtedness resulting from the
Company's acquisition of the food service business of Staley Continental,
Inc. None of the transactions contemplated in this Agreement (including,
without limitation thereof, the use of the proceeds from the sale of the
Notes) will violate or result in a violation of Section 7 of the Securities
Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations G, T and X of the Board
of Governors of the Federal Reserve System (12 C.F.R., Chapter II). Neither
the Company nor any Subsidiary owns or intends to carry or purchase any
"margin stock" within the meaning of Regulation G, and none of the proceeds
from the sale of the Notes will be used to purchase or carry or refinance
any borrowing the proceeds of which were used to purchase or carry any
"margin stock" or "margin security" in violation of Regulations G, T and X.
(t) Condition of Property. All of the facilities of the Company and
each of its Subsidiaries material to the operation or financial condition
of the Company and its Subsidiaries on a consolidated basis are in sound
operating condition and repair except for facilities being repaired in the
ordinary course of business.
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(u) Books and Records. The Company and each of its Subsidiaries (i)
maintain books, records and accounts which, in reasonable detail,
accurately and fairly reflect their respective transactions and business
affairs, and (ii) maintain a system of internal accounting controls
sufficient to provide reasonable assurances that transactions are executed
in accordance with management's general or specific authorization and to
permit preparation of financial statements in accordance with generally
accepted accounting principles.
(v) Change in Business. The Company and its Subsidiaries have no
present intention, directly or indirectly or through any Subsidiary, to
enter into any business which is substantially different from that being
conducted by them and that does not relate to products or services supplied
by or product markets served by the Company and its Subsidiaries.
(w) Full Disclosure. Neither the financial statements referred to in
Paragraph (d) of this Section 3.1, nor this Agreement, nor the Company's
Annual Report for the year ended July 2, 1988, nor its Annual Report on
Form 10-K for the years ended July 2, 1988, nor the Company's Quarterly
Reports on Form 10-Q for the quarters ended October 1, 1988, December 31,
1988, and April 1, 1989 furnished to you in connection with the placement
of the Notes, nor any other written statement or document furnished by the
Company to you in connection with the negotiation of the sale of the Notes,
taken together, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein
not misleading in light of the circumstances under which they were made.
There is no fact known, or which, after inquiry would be known, by the
Company which the Company has not disclosed to you in writing which has a
material adverse effect on or, so far as the Company can now reasonably
foresee, will have a material adverse effect on the business, property,
operations or condition, financial or otherwise, of the Company and its
Subsidiaries on a consolidated basis or the ability of the Company to
perform its undertakings under and in respect of this Agreement and the
Notes.
3.2 Representations of the Purchasers. As an inducement to, and as part of
the consideration for, the issuance by the Company of the Notes pursuant to this
Agreement, each of you represents and warrants to the Company that you are
acquiring the Notes being purchased by you for the purpose of investment and not
with a view to the resale or distribution thereof, and that you have no present
intention of selling, negotiating or otherwise disposing of the Notes; provided
that the disposition of your property shall at all times be and remain within
your control, subject, however, to compliance with federal and other applicable
laws. Each of you acknowledges that the Notes have not been registered under the
Securities Act of 1933, as amended, or any other applicable laws, and each of
you understands that the Notes must be held indefinitely unless (i) they are
subsequently registered under said Securities Act and any other applicable laws,
(ii) an exemption from such registration is available, or (iii) said Securities
Act and any other applicable laws do not apply to their disposition. Each of you
has been advised that the Company does not contemplate registering, and is not
legally required to register, the Notes under said Securities Act or any other
applicable laws.
SECTION 4. CLOSING CONDITIONS
Your obligation to purchase the Notes as herein provided on the Closing
Date shall be subject to the performance by the Company of its agreements
hereunder, which by the terms hereof are to be performed at or prior to the time
of delivery of the Notes, and to the following conditions to be satisfied on or
before such Closing Date:
4.1 Representations and Warranties. The representations and warranties of
the Company contained in this Agreement or otherwise made in writing in
connection herewith shall be true and correct on and as of the Closing Date and
you shall receive from the Company a Closing Certificate dated such Closing
Date, and executed by the Chairman, President, Vice President, Treasurer or
Assistant Treasurer of the Company to such effect.
4.2 Legal Opinions. You shall receive from Gardner, Carton & Douglas, who
are acting as your special counsel in this transaction, from Thomas Kurz,
General Counsel to the Company, and from Arnall Golden & Gregory, counsel for
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the Company, their respective opinions, dated the Closing Date, in form and
substance satisfactory to you and covering substantially the matters set forth
or provided in Exhibit B hereto.
4.3 Events of Default. No event shall have occurred and be continuing on
the Closing Date which would constitute an Event of Default, as defined in
Section 8.1 hereof, or with notice or lapse of time or both would become such an
Event of Default, and the Company shall have delivered to you on the Closing
Date a certificate signed by the Chairman, President, Vice President or
Treasurer or Assistant Treasurer of the Company to such effect.
4.4 Legality of Investment. Your acquisition of the Notes shall constitute
a legal investment as of the Closing Date under the laws and regulations of each
jurisdiction to which you may be subject (without resort to any "basket" or
"leeway" provision which permits the making of an investment without restriction
as to the character of the particular investment being made), and such
acquisition shall not subject you to any penalty or other onerous condition in
or pursuant to any such law or regulation; and you shall have received such
certificates or other evidence as to factual matters as you may reasonably
request from the Company to establish compliance with this condition.
4.5 Sale of All Notes. Contemporaneously with the sale of Notes to you,
the Company shall complete and close the sale of Notes being purchased by each
of the other Purchasers scheduled to purchase Notes on such Closing Date.
4.6 Proceedings and Documents. All proceedings taken in connection with
the transactions contemplated by this Agreement, and all documents necessary to
the consummation thereof shall be reasonably satisfactory in form and substance
to you and your special counsel, and you and your special counsel shall have
received copies (executed or certified as may be appropriate) of all legal
documents or proceedings which you and they may reasonably request in connection
with the consummation of said transactions.
SECTION 5. INTERPRETATION OF AGREEMENT
5.1 Certain Terms Defined. The terms hereinafter set forth when used
herein shall have the following meanings:
Affiliate -- Any Person (other than a Subsidiary) which directly or
indirectly through one or more intermediaries controls, or is controlled
by, or is under common control with, the Company. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Attributable Debt -- In connection with a Sale and Lease-Back
Transaction, the lesser of (i) the fair value of the assets subject thereto
or (ii) the total net amount of rent required to be paid under such lease
during the remaining term thereof (after giving effect to any extensions at
the option of the lessee), discounted annually from the respective due
dates thereof to such date at the rate of 11% per annum, compounded
semi-annually. The net amount of rent required to be paid under any such
lease for any such period shall be the amount of the rent payable by the
lessee with respect to such period, after excluding amounts required to be
paid on account of maintenance and repairs, insurance, taxes, assessments,
water rates and similar charges. In the case of any lease which is
terminable by the lessee, such net amount shall also include the amount of
any penalty payable by the lessee upon such termination, but no rent shall
be considered as required to be paid under such lease subsequent to the
first date upon which it may be so terminated.
Capitalized Lease -- Any lease of property, real or personal, which in
accordance with generally accepted accounting principles would be required
to be capitalized on a balance sheet of the lessee.
Change in Control -- The occurrence of any one or more of the
following:
(a) any Person shall purchase or otherwise acquire, directly or
indirectly, in one or more transactions, beneficial ownership of
securities representing 50% of the combined voting power of the
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Company's Voting Stock, determined on the date prior to the date of such
purchase or acquisition (or, if there be more than one, the date of the
last such purchase or acquisition);
(b) there shall occur, in any consecutive twenty-four month period,
a replacement of or change in a majority of the members of the Board of
Directors of the Company;
(c) (i) the Company shall merge into any other corporation (and the
Company shall not be the surviving corporation) or convey, transfer or
lease all or substantially all of its assets to any Person (other than a
Wholly-Owned Subsidiary of the Company), or (ii) any corporation or
corporations (other than a Wholly-Owned Subsidiary) shall consolidate
with or merge into the Company, pursuant to one or more transactions in
which Voting Stock of the Company representing 30% or more, in the
aggregate, of the combined voting power of the Company's Voting Stock,
determined on the date prior to the date, of such transaction (or if
there is more than one date, the date prior to the date of such last
transaction) is exchanged for cash, securities or other property.
(d) the Company or any Subsidiary shall purchase or otherwise
acquire, directly or indirectly, beneficial ownership of Voting Stock of
the Company, if, after giving effect to such purchase or acquisition,
the Company (together with all Subsidiaries) shall have acquired, during
any period of twelve consecutive months, beneficial ownership of an
aggregate of 30% or more of the Voting Stock of the Company outstanding
on the date immediately prior to the last such purchase or acquisition
during such period; or
(e) the Company shall make a distribution of cash, securities or
other properties (other than regular periodic cash dividends at a rate
which is substantially consistent with past practice, including with
respect to increases in dividends, and other than Common Stock or rights
to acquire Common Stock) to holders of capital stock (including by means
of dividend, reclassification, recapitalization or otherwise) which,
together with all other such distributions during the 365-day period
preceding the date of such distribution, has an aggregate fair market
value in excess of an amount equal to 30% of the fair market value of
the Voting Stock of the Company outstanding on the date immediately
prior to such distribution.
Consolidated Capitalization -- The sum of Consolidated Funded Debt and
Shareholder's Equity.
Consolidated Funded Debt -- Funded Debt of the Company and its
Consolidated Subsidiaries, determined on a consolidated basis in accordance
with generally accepted accounting principles.
Consolidated Net Tangible Assets -- The total of all assets (net of
depreciation and amortization) appearing on a consolidated balance sheet of
the Company and its Consolidated Subsidiaries prepared in conformity with
generally accepted accounting principles, after deducting therefrom
(without duplication of deductions) (i) all amounts shown on such
consolidated balance sheet in respect of good will, organizational
expenses, trademarks, tradenames, copyrights, patents, patent applications,
licenses and rights in any thereof, prepaid advertising, deferred costs and
charges and such other assets as are properly classified as "intangible
assets" in accordance with generally accepted accounting principles, (ii)
any unamortized debt discount and expense, (iii) any write-up in the book
value of any fixed asset after June 1, 1989 and (iv) all amounts appearing
as liabilities on such balance sheet other than (A) minority interests in
other Persons, (B) deferred taxes which are properly classified as
long-term liabilities and (C) Consolidated Funded Debt.
Consolidated Short-Term Debt -- Short-Term Debt of the Company and its
Consolidated Subsidiaries determined on a consolidated basis in accordance
with generally accepted accounting principles.
Consolidated Subsidiary -- Any Subsidiary, the financial statements of
which are consolidated with those of the Company in accordance with
generally accepted accounting principles.
Determination Date -- The day 10 days before the date fixed for
prepayment pursuant to a notice required by Section 2.2 or the day 10 days
before the date of declaration pursuant to Section 8.2.
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Exempted Debt -- The sum, as of the date of determination thereof, of
(without duplication) (i) Consolidated Funded Debt incurred after June 1,
1989 and secured by Liens not otherwise permitted by Section 7.2(a) through
(m), (ii) Attributable Debt of the Company and its Consolidated
Subsidiaries incurred subsequent to June 1, 1989 permitted by Section 7.3
and (iii) Funded Debt of Consolidated Subsidiaries incurred subsequent to
June 1, 1989.
Funded Debt -- Indebtedness for borrowed money which by its terms
matures more than one year from the date of determination thereof, or which
is extendible or renewable at the option of the obligor to a time more than
one year from the date of determination thereof, including any liability
with respect to Capitalized Leases, but without including any portion of
such indebtedness payable by its terms within one year from the date of
determination.
Indebtedness -- (i) All items of borrowings, including Capitalized
Leases, which, in accordance with generally accepted accounting principles,
would be included in determining total liabilities as shown on the
liability side of a balance sheet as of the date at which Indebtedness is
to be determined, and, without duplication, (ii) all guarantees, letters of
credit (other than letters of credit supporting the purchase of goods in
the ordinary course of business and letters of credit not in excess of $50
million in the aggregate at any time outstanding used for the purpose of
obtaining insurance in the ordinary course of business), support
agreements, maintenance agreements, and endorsements (other than of notes,
bills and checks presented to banks for collection or deposit in the
ordinary course of business), in each case to support Indebtedness of other
Persons.
Institutional Holder -- Any bank, trust company, insurance company,
pension fund, mutual fund or other similar financial institution which is
or becomes a holder of any Note.
Lien -- Any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, any Leases
pursuant to which security interests are granted, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code
of any jurisdiction in connection with any of the foregoing.
Person -- Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Reinvestment Yield -- With respect to Notes to be prepaid pursuant to
Section 2.2 or Notes the payment of which has been accelerated pursuant to
Section 8.2, the arithmetic mean of the rates, published for the 5 business
days preceding the applicable Determination Date, in the weekly statistical
release designated H.15(519) (or any successor publication) of the Board of
Governors of the Federal Reserve System under the caption "U.S. Government
Securities -- Treasury Constant Maturities" opposite the maturity
corresponding to the remaining maturity of the principal amount of the
Notes to be prepaid, plus .50%. If no maturity exactly corresponding to
such maturity shall appear therein, yields for the two most closely
corresponding published maturities shall be calculated pursuant to the
foregoing sentence and the Reinvestment Yield (including the .50% amount
referenced above) shall be interpolated from such yields on a straight-line
basis.
Sale and Lease-Back Transaction -- Any arrangement, directly or
indirectly, with any Person whereby a seller or a transferor shall sell or
otherwise transfer any real or personal property and then or thereafter
lease (whether or not a Capitalized Lease), or repurchase under an extended
purchase contract, the same or similar property from the purchaser or the
transferee of such property.
Shareholders' Equity -- The sum of all capital stock, capital in
excess of par value and retained earnings of the Company and its
Subsidiaries, determined on a consolidated basis in accordance with
generally accepted accounting principles.
Short-Term Debt -- Indebtedness which matures within one year from the
date of determination.
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Subsidiary -- Any corporation or other entity the majority of
outstanding Voting Stock of which is at the time owned (either alone or
through Subsidiaries or together with Subsidiaries) by the Company or
another Subsidiary.
Voting Stock -- Capital stock of any class or classes of a corporation
having power under ordinary circumstances to vote for the election of the
members of the Board of Directors of such corporation.
Wholly-Owned Consolidated Subsidiary -- A Consolidated Subsidiary, all
of the outstanding capital stock of which, other than directors' qualifying
shares, is at the time owned by the Company, another Wholly-Owned
Consolidated Subsidiary, or the Company and a Wholly-Owned Consolidated
Subsidiary.
Terms which are defined in other Sections of this Agreement shall have the
meanings specified therein.
5.2 Accounting Principles. Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with generally
accepted accounting principles in force at the time of such determination,
consolidation or computation to the extent applicable, except where such
principles are inconsistent with the requirements of this Agreement, in which
case the requirements of this Agreement shall govern.
5.3 Valuation Principles. Except when indicated expressly to the contrary
by the use of terms such as "fair value," "fair market value" or "market value,"
each asset, each liability and each capital item of any Person, and any quantity
derivable by a computation involving any of such assets, liabilities or capital
items, shall be taken at the net book value thereof for all purposes of this
Agreement. "Net book value" with respect to any asset, liability or capital item
of any Person shall mean the amount at which the same is recorded or, in
accordance with generally accepted accounting principles, should have been
recorded in the books of account of such Person, as reduced by any reserves
which have been or, in accordance with generally accepted accounting principles,
should have been set aside with respect thereto, but in every case (whether or
not permitted in accordance with generally accepted accounting principles)
without giving effect to any write-up, write-down or write-off relating thereto
which was made after the date of this Agreement.
5.4 Direct or Indirect Actions. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person.
SECTION 6. AFFIRMATIVE COVENANTS
The Company agrees that, so long as any amount remains unpaid on any Note:
6.1 Corporate Existence. The Company will maintain and preserve, and will
cause each Subsidiary to maintain and preserve, its corporate existence and
right to carry on its business and duly procure all necessary renewals and
extensions thereof and use, and cause each Subsidiary to use, its best efforts
to maintain, preserve and renew all of its rights, powers, privileges and
franchises which in the reasonable opinion of the Board of Directors or senior
management of the Company continue to be advantageous to the Company and its
Subsidiaries; provided, however, that the corporate existence of the Company or
of any Subsidiary may be discontinued as a result of liquidation or sale of
assets or merger in accordance with the provisions of Section 7.4 hereof.
6.2 Insurance. The Company will insure and keep insured, and will cause
each Subsidiary to insure and keep insured, at all times all of its properties
which are of an insurable nature and of the character usually insured by
companies operating properties similar to the properties of the Company or each
such Subsidiary, against loss or damage by fire and from other causes
customarily insured against by companies engaged in businesses similar to those
of the Company in such amounts as are usually insured against by such companies.
The Company will also maintain, and will also cause each Subsidiary to maintain,
at all times adequate insurance against loss or damage from such hazards and
risks to the person and property of others as are usually insured against by
companies operating properties similar to the properties of the Company or each
such Subsidiary. All such insurance shall be carried with financially sound and
reputable insurers. The Company shall furnish to you on or prior to the Closing
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Date a summary of insurance presently in force with respect to itself and its
Subsidiaries.
6.3 Taxes, Claims for Labor and Materials. The Company will pay and
discharge when due, and will cause each Subsidiary to pay and discharge when
due, all taxes, assessments and governmental charges or levies imposed upon it
or its property or assets, or upon properties leased by it (but only to the
extent required to do so by the applicable lease), prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might become a
Lien upon its property or assets, provided that neither the Company nor any
Subsidiary shall be required to pay any such tax, assessment, charge, levy or
claim, the payment of which is being contested in good faith and by proper
proceedings that will stay the forfeiture or sale of any property and with
respect to which adequate reserves are maintained in accordance with generally
accepted accounting principles.
6.4 Maintenance of Properties. The Company will maintain, preserve and
keep, and will cause each Subsidiary to maintain, preserve and keep, its
material properties (whether owned in fee or a leasehold interest) in good
repair and working order, ordinary wear and tear excepted, and from time to time
will make all necessary repairs, replacements, renewals and additions required
to maintain the business of the Company and each Subsidiary.
6.5 Maintenance of Records. The Company will keep, and will cause each
Subsidiary to keep, at all times proper books of record and account in which
full, true and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of the Company or such Subsidiary, in
accordance with generally accepted accounting principles consistently applied
throughout the period involved (except for such changes as are disclosed in the
financial statements of the Company and its Subsidiaries or in the notes thereto
and concurred in by the independent certified public accountants), and the
Company will, and will cause each Subsidiary to, provide reasonable protection
against loss or damage to such books of record and account.
6.6 Financial Information and Reports. The Company will furnish to you and
to any other Institutional Holder (in duplicate if you or such other holder so
request), the following:
(a) As soon as available and in any event within 60 days after the end
of each of the first three quarterly accounting periods of each fiscal year
of the Company, consolidated balance sheets of the Company and its
Consolidated Subsidiaries as of the end of such period and consolidated
statements of income and changes in financial position of the Company and
its Consolidated Subsidiaries (and, if prepared and provided to third
parties at any time by the Company and its Subsidiaries, consolidating
balance sheets and consolidating statements of income and changes in
financial position) for the periods beginning on the first day of such
fiscal year and the first day of such period and ending on the date of such
balance sheet, setting forth in comparative form the corresponding
consolidated figures for the corresponding periods of the preceding fiscal
year, all in reasonable detail prepared in accordance with generally
accepted accounting principles consistently applied throughout the period
involved (except for such changes as are disclosed in such financial
statements or in the notes thereto and concurred in by independent
certified public accountants);
(b) As soon as available and in any event within 120 days after the
last day of each fiscal year consolidated balance sheets of the Company and
its Consolidated Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income, stockholders' equity and changes
in financial position of the Company and its Subsidiaries (and, if prepared
and provided to third parties at any time by the Company and its
Subsidiaries, consolidating balance sheets and consolidating statements of
income and changes in financial position) for such fiscal year, in each
case setting forth in comparative form figures for the preceding fiscal
year, all in reasonable detail, prepared in accordance with generally
accepted accounting principles consistently applied throughout the period
involved (except for changes as are disclosed in such financial statements
or in the notes thereto and concurred in by independent certified public
accountants) and accompanied by a report of a firm of independent certified
public accountants of recognized national standing selected by the Company;
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(c) Together with the financial reports delivered pursuant to
Paragraphs (a) and (b) of this Section 6.6, a certificate of the chief
financial officer or any vice president, treasurer or assistant treasurer
responsible for financial or accounting matters, (i) to the effect that the
signer thereof has re-examined the terms and provisions of this Agreement
and that, to the best of his knowledge after due inquiry, at the date of
such certificate, during the periods covered by such financial reports and
as of the end of such periods, no Event of Default, or event which, with
the lapse of time or the giving of notice, or both, would become an Event
of Default hereunder, is occurring or has occurred as of the date of such
certificate, during such periods and as of the end of such periods, or if
the signer is aware of any such event or Event of Default, he shall
disclose in such statement the nature thereof, its period of existence and
what action, if any, the Company has taken, is taking or proposes to take
with respect thereto, and (ii) stating whether the Company is in compliance
with Sections 7.1 through 7.7 and setting forth, in sufficient detail, the
information and computations required to establish whether or not the
Company was in compliance with the requirements of Sections 7.1, 7.2, 7.3
and 7.4 during the periods covered by the financial reports then being
furnished and as of the end of such periods;
(d) Together with the financial reports delivered pursuant to
Paragraph (b) of this Section 6.6, a report of the Company's independent
certified public accountants stating that in making the examination
necessary for expressing an opinion on such financial statements, nothing
came to their attention that caused them to believe that there is in
existence or has occurred any Event of Default hereunder, or any event (the
occurrence of which is ascertainable by accountants in the course of normal
audit procedures) which, with the lapse of time or the giving of notice, or
both, would become an Event of Default hereunder or, if such accountants
shall have obtained knowledge of any such event or Event of Default, they
shall disclose in such report the nature thereof and the length of time it
has existed or did exist;
(e) Within 10 business days after the Company obtains knowledge
thereof, notice of any litigation or governmental proceeding pending
against the Company or any Subsidiary in which the damages sought exceed
$5,000,000, after deducting the amount with respect to which the Company or
such Subsidiary is insured and with respect to which the insurer has
assumed responsibility in writing, or which, individually or in the
aggregate, might otherwise materially adversely affect the business,
operations or condition, financial or otherwise, of the Company and its
Subsidiaries on a consolidated basis;
(f) As soon as available, copies of such financial statements,
notices, reports and proxy statements as the Company shall furnish to its
stockholders; copies of all registration statements (other than
registration statements covering employee benefit, stock option or similar
plans) and periodic reports which the Company may file with the Securities
and Exchange Commission, and any other similar or successor agency of the
Federal government administering the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, or the Trust Indenture Act
of 1939, as amended; and copies of all reports relating to the Company or
its securities which the Company may file with any securities exchange on
which any of the Company's securities may be registered;
(g) As soon as reasonably possible after it is available, a copy of
each other report submitted to the Company by any Person and prepared by
independent accountants retained by the Company or any Subsidiary in
connection with any interim or special audit made by them of the books of
the Company or any Subsidiary;
(h) Such additional information as you or such other Institutional
Holder of the Notes may reasonably request concerning the Company and its
Subsidiaries; and
(i) For purposes of satisfying the requirements for delivery of
financial statements pursuant to (a) and (b) of this Section 6.6, such
requirements will be satisfied by the delivery to the Purchasers of the
Company's quarterly reports on Form 10-Q and annual reports on Form 10-K in
the form filed with the Securities and Exchange Commission.
6.7 Inspection of Properties and Records. The Company will allow, and will
cause each Subsidiary to allow, any representative of you or any other
Institutional Holder, so long as you or such other Institutional
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Holder shall hold any Note, to visit and inspect, upon five days notice, any of
its properties, to examine its books of record and account and to discuss its
affairs, finances and accounts with its officers and its public accountants (and
by this provision the Company and each Subsidiary hereby authorize such
accountants to discuss with you or such Institutional Holder its affairs,
finances and accounts), all at such reasonable times and as often as you or such
Institutional Holder may reasonably request.
6.8 ERISA. (a) The Company agrees that all assumptions and methods used to
determine the actuarial valuation of employee benefits, both vested and
unvested, under any Plan of the Company or any Subsidiary, and each such Plan,
will comply in all material respects with ERISA and other applicable laws.
(b) The Company will not at any time cause any Plan established, maintained
or contributed to by it or any Subsidiary or "affiliate" (as defined in Section
407(d)(7) of ERISA) to:
(i) engage in any "prohibited transaction" as such term is defined in
Section 4975 of the Code or in Section 406 of ERISA;
(ii) incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA, whether or not waived; or
(iii) be terminated under circumstances which are likely to result in
the imposition of a lien on the property of the Company or any Subsidiary
pursuant to Section 4068 of ERISA, if and to the extent such termination is
within the control of the Company;
if the event or condition described in (i), (ii) or (iii) above is likely to
subject the Company or any Subsidiary or "affiliate" to a liability which, in
the aggregate, is material in relation to the business, operations, property or
condition, financial or otherwise, of the Company and its Subsidiaries on a
consolidated basis.
(c) Upon the request of you or any other Institutional Holder, the Company
will furnish a copy of the annual report of each Plan (Form 5500) required to be
filed with the Internal Revenue Service. Copies of annual reports shall be
delivered no later than 30 days after the later of the date such report has been
filed with the Internal Revenue Service or the date the copy is requested.
6.9 Compliance with Laws. The Company will comply, and will cause each of
its Subsidiaries to comply, with all laws, rules and regulations relating to its
or their respective businesses, other than laws, rules and regulations the
failure to comply with which and the sanctions and penalties resulting
therefrom, when taken together with the failure to comply with all other laws,
rules and regulations and the sanctions and penalties resulting therefrom, would
not have a material adverse effect on the operations, business, property, assets
or condition, financial or otherwise, of the Company and its Subsidiaries on a
consolidated basis, and would not result in the creation of a Lien which, if
incurred in the ordinary course of business, would not be permitted by Section
7.2 on any of the property of the Company or any Subsidiary; provided, however,
that the Company and its Subsidiaries shall not be required to comply with laws,
rules and regulations the validity or applicability of which are being contested
in good faith and by appropriate proceedings and with respect to which adequate
reserves are maintained in accordance with generally accepted accounting
principles.
6.10 Acquisition of Notes. The Company will forthwith cancel any Notes in
any manner or at any time acquired by the Company or any Subsidiary or Affiliate
and such Notes shall not be deemed to be outstanding for any of the purposes of
this Agreement or the Notes.
6.11 Notification of Change in Control. The Company shall, within ten days
following the occurrence of an event constituting a Change of Control, notify
each holder of a Note in writing of such Change in Control.
6.12 Private Placement Number. The Company agrees, in connection with the
obtaining of a "private placement number" from Standard & Poor's Corporation, to
permit the Purchasers to file this Agreement with Standard & Poor's.
6.13 Disposition of Notes. The Company will cooperate in good faith with
the holders of the Notes to provide to each holder of a Note, promptly upon
request, information concerning the Company sufficient to
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enable such holder to make dispositions of any Note in compliance with and as
required pursuant to statutes or rules adopted by the Securities and Exchange
Commission.
SECTION 7. NEGATIVE COVENANTS
The Company agrees that, for so long as any amount remains unpaid on any
Note:
7.1 Funded Debt.
(a) The Company will not, and will not permit any Consolidated
Subsidiary to, create, assume, incur, guarantee or otherwise become liable,
directly or indirectly, in respect of any Funded Debt unless, after giving
effect thereto, Consolidated Funded Debt shall not exceed 65% of
Consolidated Capitalization.
(b) The Company will not permit any Consolidated Subsidiary to create,
assume, incur, guarantee or otherwise become liable, directly or
indirectly, in respect of any Funded Debt unless, after giving effect
thereto, Exempted Debt then outstanding does not exceed 15% of Consolidated
Net Tangible Assets.
Notwithstanding the foregoing, the Company and its Consolidated
Subsidiaries may, without limit, incur or become liable in respect of
Funded Debt incurred solely for the purpose of refunding, extending or
renewing outstanding Funded Debt, provided that, after giving effect
thereto and to the application of the proceeds therefrom, there shall be no
increase in total Funded Debt outstanding.
7.2 Liens. The Company will not, and will not permit any Consolidated
Subsidiary to, create, assume, incur or permit to exist, directly or indirectly,
any Lien on its properties or assets, whether now owned or hereafter acquired
without equally and ratably securing the Notes, except:
(a) Liens, in addition to those otherwise permitted pursuant to this
Section 7.2, that exist on property of the Company or any Consolidated
Subsidiary as of the date of this Agreement and that either (i) are
described on Annex III hereto or (ii) that secure Indebtedness in a
principal amount less than $125,000;
(b) Liens existing on property of a corporation at the time it becomes
a Consolidated Subsidiary;
(c) Liens on property or shares of stock existing at the time of
acquisition thereof (including acquisition through merger or consolidation)
or Liens on property or shares of stock hereafter acquired (or, in the case
of real property, constructed), which are created prior to, at the time of,
or within 180 days after such acquisition (or, in the case of property, the
completion of such construction and commencement of full operation of such
property, whichever is later) to secure or provide for the payment of all
or any part of the purchase price (or, in the case of real property, the
construction cost) thereof (provided, however, that in each case the
Indebtedness secured by such Lien shall not exceed the fair market value of
the property or shares of stock to which such Lien relates and such
Indebtedness shall not be secured by any additional assets of the Company
or any Subsidiary other than the property being acquired and, if
applicable, fixed improvements then or thereafter erected thereon);
(d) Liens on property of a Consolidated Subsidiary to secure only
Indebtedness owing to the Company or to one or more other Wholly-Owned
Consolidated Subsidiaries;
(e) Liens existing on property of a corporation at the time such
corporation is merged into or consolidated with the Company or a
Consolidated Subsidiary or at the time of purchase, lease or other
acquisition of all or substantially all of the assets of such corporation
by the Company or a Consolidated Subsidiary; provided that such Liens shall
not extend to any additional assets of the Company or any Subsidiary other
than the property being acquired and, if applicable, fixed improvements
then or thereafter erected thereon;
(f) A lien on the Company's headquarters building located at 1390
Enclave Parkway, Houston, Texas to secure Indebtedness in an aggregate
principal amount not to exceed $25,000,000;
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(g) Liens on property of the Company or a Consolidated Subsidiary in
favor of the United States of America or any political subdivision thereof
or in favor of any other country or political subdivision thereof to secure
certain payments pursuant to any contract or statute or to secure any
Indebtedness incurred or guaranteed for the purpose of financing all or any
part of the purchase price (or, in the case of real property, the cost of
construction) of the assets subject to such liens, including, but not
limited to, liens incurred in connection with pollution control, industrial
revenue or similar bond financing;
(h) Extensions, renewals, or replacements (or any successive
extensions, renewals or replacements) in whole or in part of the Liens (or
Indebtedness secured thereby) referred to in clauses (a) through (g),
provided there is no increase in the principal amount of Indebtedness
secured thereby and any new Lien attaches only to the same property subject
to such earlier Lien;
(i) Pledges, deposits or liens to secure obligations under workmen's
compensation laws or similar legislation thereunder which are not currently
dischargeable and pledges, deposits, performance bonds or similar security
interests in connection with bids, tenders, contracts and leases to which
the Company or any Consolidated Subsidiary is a party;
(j) Attachments, judgments and other similar Liens arising in
connection with court proceedings, provided the claims secured thereby are
being actively contested in good faith and by appropriate proceedings and
such liens have not remained in effect for more than 60 days without having
been effectively stayed, vacated or bonded;
(k) Liens for taxes, assessments or governmental charges not then due
and delinquent or the validity of which is being contested in good faith
and with respect to which adequate reserves are maintained in accordance
with generally accepted accounting principles;
(l) Liens arising in the ordinary course of business (including
landlord's liens, easements and similar encumbrances) that are not incurred
in connection with the borrowing of money, provided that such Liens do not,
in the judgment of management of the Company, materially impair the use or
value of the assets of the Company, subject to such Liens or materially
interfere with the conduct of the business of the Company and its
Consolidated Subsidiaries, taken as a whole;
(m) Mechanics and materialmen's Liens or Statutory Liens or similar
Liens, each arising in the ordinary course of business of the Company or a
Consolidated Subsidiary or Liens arising out of government contracts; and
(n) Liens incurred in connection with the borrowing of money not
permitted by clauses (a) through (h) above, provided that, after giving
effect thereto, Exempted Debt outstanding does not exceed 15% of
Consolidated Net Tangible Assets.
7.3 Sale and Lease-Back Transaction. The Company will not, and will not
permit any Consolidated Subsidiary to, effect any Sale and Lease-Back
Transaction other than a Sale and Lease-Back Transaction involving a lease,
including renewals, not in excess of three years, unless (a) the Company or such
Consolidated Subsidiary could incur, pursuant to Section 7.2(a) through (n),
Indebtedness secured by a Lien on the assets to be sold at least equal in
principal amount to the Attributable Debt arising from such transaction without
equally and ratably securing the Notes, or (b) the proceeds of such Sale and
Lease-Back Transaction are at least equal to the fair market value of the assets
sold and are applied either (w) to the retirement of Indebtedness other than the
Notes, except as permitted pursuant to Section 2.2 hereof, or (x) to the
purchase (or construction) of other property having a fair market value at least
equal to the amount of the proceeds of such Sale and Lease-Back, provided that
the property purchased or constructed with such proceeds is not encumbered by
any Liens, except that Liens may attach to such property if the Indebtedness
secured by such Liens does not exceed 50% of the fair market value of the
property so purchased, or (y) to any combination of the foregoing.
7.4 Merger or Sale of Substantially All Assets. The Company will not merge
or consolidate with, or sell, lease or convey all or substantially all of its
assets to, any other Person, except that the Company may
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consolidate with, merge into or sell, lease or convey all or substantially all
of its assets to any Person, or permit any other Person to merge into it,
provided that immediately after giving effect thereto,
(a) The Company shall be the successor corporation, or if the Company
is not the successor corporation, such successor corporation shall be a
corporation organized under the laws of a state of the United States having
substantially all of its assets in the United States.
(b) The Company shall be in compliance with all provisions of this
Agreement, or if the Company is not the successor corporation, the
obligations of the Company with respect to the Notes shall be expressly
assumed in writing by such successor corporation, and such successor
corporation shall be in compliance with all provisions of this Agreement;
and
(c) The Company or the successor corporation shall be able to incur at
least $1.00 of additional Funded Debt pursuant to Section 7.1.
7.5 Dealings with Affiliates. The Company will not, and will not permit
any Subsidiary to, enter into any transaction (including the furnishing of goods
or services) with an Affiliate except in the ordinary course of business as
presently conducted and on terms and conditions no less favorable to the Company
or such Subsidiary than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate.
7.6 Consolidated Tax Returns. The Company will not file, or consent to the
filing of, any consolidated federal income tax return with any Person other than
a Subsidiary (or a corporation that was a Subsidiary during the period with
respect to which such tax return is filed).
7.7 Purchase of Notes. The Company will not, and will not permit any
Subsidiary to purchase or offer to purchase any of the Notes, except pursuant to
a written offer made to all holders or pursuant to the terms of this Agreement.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES THEREFOR
8.1 Nature of Events. An "Event of Default" shall exist in case any one or
more of the following occurs and is continuing:
(a) Default in the payment of interest on any of the Notes when the
same shall have become due, and such default shall continue for 5 business
days;
(b) Default in the payment of the principal of, or premium, if any, on
any of the Notes when due, at maturity or upon acceleration of maturity or
otherwise;
(c) Default shall occur (i) in the payment of the principal of or
interest on any other Indebtedness in excess of $5,000,000, individually or
in the aggregate, as and when the same shall become due and payable, of the
Company or any Subsidiary for borrowed money, (ii) under any mortgage,
agreement or other instrument under or pursuant to which such Indebtedness
for borrowed money in excess of $5,000,000, individually or in the
aggregate, is issued, or (iii) under any Capitalized Lease, or any
operating lease with aggregate payments or rentals in excess of $5,000,000,
individually or in the aggregate, regardless of whether such default would
be an Event of Default hereunder, and such default under (i), (ii) or (iii)
above shall continue, unless waived, beyond the period of grace, if any,
allowed with respect thereto and, in the case of any default not involving
the payment of money, the sums due thereunder shall have been accelerated
and such acceleration shall not have been annulled within 10 days after
written notice of such acceleration;
(d) Default shall occur in any material respect under any other
covenant or provision of this Agreement which is not remedied within 30
days after management of the Company knows of such default;
(e) Any representation or warranty made by the Company herein, or made
by the Company in any written statement or certificate furnished by the
Company in connection with the issuance and sale of the Notes or furnished
by the Company pursuant hereto, proves incorrect in any material respect as
of the date of the issuance or making thereof;
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(f) Any judgment, writ or warrant of attachment or any similar process
in an aggregate amount in excess of $500,000 shall be entered or filed
against the Company or any Subsidiary or against any property or assets of
either and remain unpaid, unvacated, unbonded or unstayed (through appeal
or otherwise) for a period of 60 days after the Company receives notice
thereof;
(g) The Company shall incur a "Distress Termination" (as defined in
Title IV of ERISA) of any Plan or any trust created thereunder which
results in material liability to the PBGC, the PBGC shall institute
proceedings to terminate any Plan or any trust created thereunder, or a
trustee shall be appointed by a United States District Court pursuant to
Section 4042(b) of ERISA to administer any Plan or any trust created
thereunder; or
(h) The Company or any Subsidiary the assets of which are equal to at
least 10% of the assets of the Company and its Subsidiaries on a
consolidated basis shall be in financial difficulties as evidenced by
(i) its generally not paying its debts as they become due or its
admitting in writing its inability to pay its debts generally as they
become due;
(ii) its filing a petition in bankruptcy or for reorganization or
for the adoption of an arrangement under the Federal Bankruptcy Code, or
any similar applicable Federal or State bankruptcy or insolvency law, as
now or in the future amended (herein collectively called "Bankruptcy
Laws"), or an answer or other pleading admitting or failing to deny the
material allegations of such a petition or seeking, consenting to or
acquiescing in relief provided for under the Bankruptcy Laws;
(iii) its making an assignment of all or a substantial part of its
property for the benefit of its creditors;
(iv) its seeking or consenting to or acquiescing in the appointment
of a receiver, liquidator, custodian or trustee of it or for all or a
substantial part of its property;
(v) its being finally adjudicated a bankrupt or insolvent;
(vi) the entry of a court order, which shall not be vacated, set
aside or stayed within 60 days from the date of entry, appointing a
receiver, liquidator, custodian or trustee of it or for all or a
substantial part of its property, or approving a petition filed against
it for, or effecting an arrangement in, bankruptcy or for a
reorganization pursuant to the Bankruptcy Laws or for any other judicial
modification or alteration of the rights of creditors; or
(vii) the assumption of custody or sequestration by a court of
competent jurisdiction of all or a substantial part of its property,
which custody or sequestration shall not be suspended or terminated
within 60 days from its inception.
8.2 Remedies on Default. When (i) any Event of Default described in
Section 8.1 hereof, except paragraphs (a) and (b) thereof, has happened and is
continuing, the holder or holders of at least 25% in principal amount of the
Notes then outstanding may, and when (ii) any Event of Default described in
paragraphs (a) or (b) of Section 8.1 hereof has happened and is continuing, any
holder may (in addition to any other right, power or remedy permitted to such
holder or holders by law) declare the entire principal, together with the
premium, if any, set forth below, and all interest accrued on all the Notes then
outstanding to be, and, in either of such events or when any Event of Default
described in paragraph (h) of Section 8.1 hereof has happened and is continuing,
all of such Notes and, the premium, if any, and all interest accrued thereon
shall thereupon become, forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived. The Company will forthwith pay to the holder or holders of all the Notes
then outstanding the entire principal of and interest accrued (including, but
not limited to, any interest due with respect to overdue installments of
interest) on such Notes, plus the premium, if any, payable as calculated
pursuant to Section 2.2(b).
8.3 Annulment of Acceleration of Notes. The provisions of the foregoing
Section 8.2 are subject to the condition that if the principal of and accrued
interest on the Notes have been declared immediately due and payable by reason
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reason of the occurrence of any Event of Default, the holder or holders of
66- 2/3% in aggregate principal amount of the Notes then outstanding may, by
written instrument filed with the Company, rescind and annul such declaration
and the consequences thereof, provided that (i) at the time such declaration is
annulled and rescinded no judgment or decree has been entered for the payment of
any monies due pursuant to the Notes or this Agreement, (ii) all arrears of
interest upon all the Notes and all other sums payable under the Notes and under
this Agreement (except any principal, interest or premium on the Notes which has
become due and payable solely by reason of such declaration under Section 8.2)
shall have been duly paid and (iii) each and every other Event of Default shall
have been cured or waived; and provided further, that no such rescission and
annulment shall extend to or affect any subsequent default or Event of Default
or impair any right consequent thereto.
8.4 Other Remedies. If any Event of Default shall be continuing, any
holder of Notes may enforce its rights by suit in equity, by action at law, or
by any other appropriate proceedings, whether for the specific performance (to
the extent permitted by law) of any covenant or agreement contained in this
Agreement or in the Notes or in aid of the exercise of any power granted in this
Agreement, and may enforce the payment of any Note held by such holder and any
of its other legal or equitable rights.
8.5 Conduct No Waiver; Collection Expenses. No course of dealing on the
part of any holder of Notes, nor any delay or failure on the part of any holder
of Notes to exercise any of its rights, shall operate as a waiver of such rights
or otherwise prejudice such holder's rights, powers and remedies. If the Company
fails to pay, when due, the principal of, or the interest on, any Note, or fails
to comply with any other provision of this Agreement, the Company will pay to
each holder, to the extent permitted by law, on demand, such further amounts as
shall be sufficient to cover the cost and expenses, including but not limited to
reasonable attorneys' fees, incurred by such holders of the Notes in collecting
any sums due on the Notes or in otherwise enforcing any of their rights.
8.6 Remedies Cumulative. No right or remedy conferred upon or reserved to
any holder of Notes under this Agreement is intended to be exclusive of any
other right or remedy, and every right and remedy shall be cumulative and in
addition to every other right or remedy given hereunder or now or hereafter
existing under any applicable law. Every right and remedy given by this
Agreement or by applicable law to any holder of Notes may be exercised from time
to time and as often as may be deemed expedient by such holder, as the case may
be.
8.7 Notice of Default. With respect to Events of Default or claimed
defaults, the Company will give the following notices:
(a) The Company will promptly, but in any event in no more than five
business days, furnish to each holder of a Note notice in writing by
registered mail, return receipt requested, of the occurrence of an Event of
Default or an event which, with the lapse of time or the giving of notice,
or both, would become an Event of Default. Such notice shall specify the
nature of such default, the period of existence thereof and what action the
Company has taken or is taking or proposes to take with respect thereto.
(b) If the holder of any Note or of any other evidence of indebtedness
of the Company or any Subsidiary gives any notice or takes any other action
of which the Company has notice with respect to a claimed default, the
Company will forthwith give written notice thereof to each holder of the
then outstanding Notes, describing the notice or action and the nature of
the claimed default.
SECTION 9. AMENDMENTS, WAIVERS AND CONSENTS
9.1 Matters Subject to Modification. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended, or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the holder or holders of at least 66- 2/3% in
aggregate principal amount of outstanding Notes; provided, however, that without
the written consent of the holder or holders of all of the Notes then
outstanding, no such waiver, modification, alteration or amendment shall be
effective which will (i) change the time or amount of payment (including any
required prepayment or optional prepayment) of the principal of, or the
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premium or interest on, any Note, (ii) reduce the principal amount thereof or
the premium, if any, or reduce the rate of interest thereon, (iii) change any
provision of any instrument affecting the preferences between holders of the
Notes or between holders of the Notes and other creditors of the Company, or
(iv) change any of the provisions of Section 8.1, Section 8.2, Section 8.3 or
this Section 9.
For the purpose of determining whether holders of the requisite principal
amount of Notes have made or concurred in any waiver, consent, approval, notice
or other communication under this Agreement, Notes held in the name of, or owned
beneficially by, the Company, any Subsidiary or any Affiliate of any thereof,
shall not be deemed outstanding.
9.2 Solicitation of Holders of Notes. The Company will not solicit,
request or negotiate for or with respect to any proposed waiver or amendment of
any of the provisions of this Agreement or the Notes unless each holder of the
Notes (irrespective of the amount of Notes then owned by it) shall concurrently
be informed thereof by the Company and shall be afforded the opportunity of
considering the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any waiver or consent effected pursuant
to the provisions of this Article 9 shall be delivered by the Company to each
holder of outstanding Notes forthwith following the date on which the same shall
have been executed and delivered by the holder or holders of the requisite
percentage of outstanding Notes. The Company will not, directly or indirectly,
pay or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any holder of the Notes as
consideration for or as an inducement to the entering into by any holder of the
Notes of any waiver or amendment of any of the terms and provisions of this
Agreement unless such remuneration is concurrently paid, on the same terms,
ratably to each holder of the then outstanding Notes.
9.3 Binding Effect. Any such amendment or waiver shall apply equally to
all the holders of the Notes and shall be binding upon them, upon each future
holder of any Note and upon the Company whether or not such Note shall have been
marked to indicate such amendment or waiver. No such amendment or waiver shall
extend to or affect any obligation not expressly amended or waived or impair any
right related thereto.
SECTION 10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND
REPLACEMENT
10.1 Form of Notes. The Notes initially delivered under this Agreement
will be in the form attached hereto as Exhibit A. The Notes are issuable only in
fully registered form and in denominations of at least $100,000 (or the
remaining outstanding balance thereof, if less than $100,000).
10.2 Note Register. The Company shall cause to be kept at its principal
office a register (the "Note Register") for the registration and transfer of the
Notes. The names and addresses of the holders of Notes, the transfer thereof and
the names and addresses of the transferees of the Notes shall be registered in
the Note Register. The Company may deem and treat the person in whose name a
Note is so registered as the holder and owner thereof for all purposes and shall
not be affected by any notice to the contrary, until due presentment of such
Note for registration of transfer as provided in this Section 10.
10.3 Issuance of New Notes upon Exchange or Transfer. Upon surrender for
exchange or registration of transfer of any Note at the office of the Company
designated for notices in accordance with Section 11.2, the Company shall
execute and deliver, at its expense, one or more new Notes of any authorized
denominations requested by the holder of the surrendered Note, each dated the
date to which interest has been paid on the Notes so surrendered (or, if no
interest has been paid, the date of such surrendered Note), but in the same
aggregate unpaid principal amount as such surrendered Note, and registered in
the name of such person or persons as shall be designated in writing by such
holder. Every Note surrendered for registration of transfer shall be duly
endorsed, or be accompanied by a written instrument transfer duly executed, by
the holder of such Note or by his attorney duly authorized in writing. The
Company may condition its issuance of any new Note in connection with a transfer
by any Person on compliance by both transferee and transferor with Section 3.2,
by Institutional Holders on compliance with Section 2.4 and on the payment to it
of a sum sufficient to cover any stamp tax or other governmental charge imposed
in respect of such transfer.
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10.4 Replacement of Notes. Upon receipt of evidence satisfactory to the
Company of the loss, theft, mutilation or destruction of any Note, and in the
case of any such loss, theft or destruction upon delivery of a bond of indemnity
in such form and amount as shall be reasonably satisfactory to the Company or in
the event of such mutilation upon surrender and cancellation of the Note, the
Company, without charge to the holder thereof, will make and deliver a new Note,
of like tenor in lieu of such lost, stolen, destroyed or mutilated Note. If any
such lost, stolen or destroyed Note is owned by you or any other Institutional
Holder, then the affidavit of an authorized officer of such owner setting forth
the fact of loss, theft or destruction and of its ownership of the Note at the
time of such loss, theft or destruction shall be accepted as satisfactory
evidence thereof, and no further indemnity shall be required as a condition to
the execution and delivery of a new Note, other than a written agreement of such
owner (in form reasonably satisfactory to the Company) to indemnify the Company.
SECTION 11. MISCELLANEOUS
11.1 Expenses. Whether or not the purchase of Notes herein contemplated
shall be consummated, the Company agrees to pay directly all reasonable expenses
in connection with the preparation, execution and delivery of this Agreement and
the transactions contemplated hereby, including, but not limited to, out-of-
pocket expenses, filing fees related to the obtaining of a "private placement
number" from Standard & Poor's Corporation, charges and disbursements of special
counsel, photocopying and printing costs and charges for shipping the Notes,
adequately insured, to you at your home office or at such other address as you
may designate, and all similar expenses relating to any amendment, waivers or
consents in connection with this Agreement or the Notes. The Company also agrees
that it will pay and save you harmless against any and all liability with
respect to stamp and other documentary taxes, if any, which may be payable, or
which may be determined to be payable in connection with the execution and
delivery of this Agreement or the Notes (but not in connection with a transfer
of any Notes), whether or not any Notes are then outstanding. The obligations of
the Company under this Section 11.1 shall survive the retirement of the Notes.
11.2 Notices. Except as otherwise expressly provided herein, all
communications provided for hereunder shall be in writing and delivered or sent
by registered or certified mail, return receipt requested, or by overnight
courier (i) if to you, to the address set forth in Schedule I hereto or to such
other address as you may in writing designate, (ii) if to any other holder of
the Notes, to such address as the holder may designate in writing to the
Company, and (iii) if to the Company, to Sysco Corporation, 1390 Enclave
Parkway, Houston, Texas 77077, Attention: General Counsel, or to such other
address as the Company may in writing designate.
11.3 Reproduction of Documents. This Agreement and all documents relating
hereto, including, without limitation (a) consents, waivers and modifications
which may hereafter be executed, (b) documents received by you at the closing of
the purchase of the Notes (except the Notes themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to you, may be reproduced by you by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process, and you may destroy
any original document so reproduced. The Company agrees and stipulates that any
such reproduction which is legible shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you in
the regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence;
provided that nothing herein contained shall preclude the Company from objecting
to the admission of any reproduction on the basis that such reproduction is not
accurate, has been altered, is otherwise incomplete or is otherwise
inadmissible.
11.4 Successors and Assigns. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns.
11.5 Law Governing. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS. No provision of this
Agreement may be waived, changed or modified, or the discharge thereof
acknowledged, orally, except only by
21
<PAGE> 26
an agreement in writing signed by the party against whom the enforcement of any
waiver, change, modification or discharge is sought.
11.6 Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
11.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument, and it shall
not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart or reproduction thereof permitted by Section
11.3.
11.8 Reliance on and Survival of Provisions. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with a
closing, (i) shall be deemed to have been relied upon by you, notwithstanding
any investigation heretofore or hereafter made by you or on your behalf and (ii)
shall survive the delivery of this Agreement and the Notes. Except as provided
in Section 11.1 or otherwise in this Agreement, such representations and
warranties shall not survive the payment in full of all principal of, premium,
if any, on and interest on the Notes.
11.9 Integration and Severability. This Agreement embodies the entire
agreement and understanding between you and the Company, and supersedes all
prior agreements and understandings relating to the subject matter hereof. In
case any one or more of the provisions contained in this Agreement or in any
Note, or application thereof, shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein, and any other application thereof, shall not in
any way be affected or impaired thereby.
22
<PAGE> 27
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Agreement to be executed and delivered by their respective officer or officers
thereunto duly authorized.
SYSCO CORPORATION
By: /s/ William J. DeLaney
------------------------------------
Title: Assistant Treasurer
AID ASSOCIATION FOR LUTHERANS
By: /s/ James Abitz
------------------------------------
Title: Vice President -- Securities
UNUM LIFE INSURANCE COMPANY
By: /s/ John N. Hastings
------------------------------------
Title: Vice President
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Dorothy E. Even
------------------------------------
Title:
By: /s/ Peter D. Wells
------------------------------------
Title:
THE GREAT-WEST LIFE ASSURANCE
COMPANY
By: /s/ J.R. Abbott
------------------------------------
Title: Director, Private Placement
Investments (U.S.)
By: /s/ E.A. Marr
------------------------------------
Title: Manager, Private Placement
Investments (U.S.)
NATIONWIDE LIFE INSURANCE
COMPANY
By: /s/ Jeffrey G. Milburn
------------------------------------
Title: Vice President Corporate
Fixed-Income Securities
23
<PAGE> 28
UNUM LIFE INSURANCE COMPANY OF
AMERICA
By: /s/ John N. Hastings
------------------------------------
Title: Vice President
KNIGHTS OF COLUMBUS
By: /s/ George R. Humphrey
------------------------------------
Title: Assistant Supreme Secretary
ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK
By: /s/ Peter D. Wells
------------------------------------
Title:
By: /s/ Theodore A. Schnell
------------------------------------
Title:
THE HANOVER INSURANCE COMPANY
By: /s/ Dennis P. Howard
------------------------------------
Title: Assistant Treasurer
MODERN WOODMEN OF AMERICA
By: /s/ W.B. Foster
------------------------------------
Title: President
EMPLOYERS LIFE INSURANCE COMPANY
OF WAUSAU
By: /s/ John G. Powles
------------------------------------
Title: Vice President
CITIZENS INSURANCE COMPANY OF
AMERICA
By: /s/ Diane E. Wood
------------------------------------
Title: Assistant Treasurer
24
<PAGE> 29
UNITY MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Elizabeth O'Riordan
------------------------------------
Title: Investment Operations Manager
Congress Asset Management
Company on behalf of Unity
Mutual Life Ins. Co.
PROVIDENT MUTUAL LIFE INSURANCE
COMPANY OF PHILADELPHIA
By: /s/ Rosanne Gatta
------------------------------------
Title: Treasurer
WOODMEN ACCIDENT AND LIFE
COMPANY
By: /s/ H.A. Wievers
------------------------------------
Title: Senior Vice President and
Treasurer
25
<PAGE> 30
SCHEDULE I
----------------
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
Aid Association for Lutherans $20,000,000
4321 North Ballard Road
Appleton, Wisconsin 54919
Attention: Investment Department
Address for all communications is as above, except that
notices of payment and written confirmations of wire or
interbank transfers, are to be sent as below. All payments
are to be by wire transfer of immediately available funds
to:
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690
ABA # 071 000 288
For deposit in the account of Aid Association for
Lutherans Account No. 164-096-0
Each wire transfer shall show the name of the Company, the
due date of the payment and the nature thereof.
All notices and communications, to be addressed as first
provided above, except notices with respect to payments,
and written confirmation of each such payment, shall be
provided by telephone and in writing to:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attention: Investment Accounting
Telephone #:
</TABLE>
26
<PAGE> 31
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
UNUM Life Insurance Company $15,000,000
Corporate Securities Department
2211 Congress Street
Portland, Maine 04122
Attention: Bond Investment Division
(Fax # (207) 770-3000)
Address for all communications is as above, except that
notices of payment and written communications of wire or
inter-bank transfers are to be sent to the address
specified below. All payments are to be by wire transfer
of immediately available funds to:
Maine National Bank
ABA #011200051
400 Congress Street
Portland, Maine 04101
For deposit in the account of UNUM Life Insurance Company
Account No. 000-0062-0
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
Address for all notices of payment and written
confirmations:
UNUM Life Insurance Company
2211 Congress Street
Portland, Maine 04122
Attention: Investment Accounting
(Fax # (707) 770-3000)
</TABLE>
27
<PAGE> 32
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
The Great-West Life Assurance Company $10,000,000
100 Osborne Street, North
Winnipeg, Manitoba R3C 3A5 Canada
Attention: Private Placement Investments -- U.S.
(Portage Place, Fourth Floor 393 Portage)
(Fax # (204) 946-8951)
Address for all communications is as above, except that
notices of payment and written confirmations of wire or
interbank transfers, are to be sent as below. All payments
are to be by wire transfer of immediately available funds
to:
NORWEST BANK MINNEAPOLIS, N.A.
ABA # 091000019
8th Street and Marquette Avenue
Minneapolis, Minnesota 55479-0065
For deposit to Trust Clearing Account #08-40-245 for the
Account of Great-West Life Assurance Company Account No.
7-06277-00-1
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
Address for all notices of payment and written
confirmations:
NORWEST BANK MINNEAPOLIS, N.A.
Capital Management and Trust Group
Eighth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0065
Attn: Dan Mroz
Fax #: (612) 372-0551
</TABLE>
28
<PAGE> 33
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
Allstate Life Insurance Company $ 7,000,000
Allstate Plaza North E-2
Northbrook, Illinois 60062
Attention: Private Placement Taxable
Fixed Income Division E2
Address for all communications is as above, including
notices of payment and confirmations of wire or inter-bank
transfers. All payments are to be by wire transfer of
immediately available funds to:
Continental Illinois National Bank and Trust Company
(ABA # 071000039)
30 North LaSalle Street
Chicago, Illinois 60693
Attention: Trade Trust Teller
For deposit in the Account of Allstate Life Insurance
Company Account No. 17-00011-8
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
</TABLE>
29
<PAGE> 34
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
Nationwide Life Insurance Company $ 7,000,000
One Nationwide Plaza
Columbus, Ohio 43216
Attention: Fixed Income Securities
Address for all communications is as above, except that
notices of payment and written confirmations of wire or
inter-bank transfers, are to be sent as below. All
payments are to be by bank wire transfer of immediately
available funds to:
AMERITRUST
Trust # 30352900
ABA # 041000687
FAO Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43216
Attention: Cash Division, Money and Banking
Each wire transfer shall show the name of the Company, the
due date of the payment and the nature thereof.
Address for all notices of payment and written
confirmations:
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43216
Attention: Cash Division, Money and Banking
</TABLE>
30
<PAGE> 35
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
The Hanover Insurance Company $ 5,000,000
100 N. Parkway
Worcester, Massachusetts 01605
Attention: Investment Administration
Address for all notices of payment, written confirmations
and other communications shall be as above. All payments
are to be by wire transfer of immediately available funds
to:
The Chase Manhattan Bank, N.A.
ABA # 02100002
One Chase Manhattan Plaza
New York, New York 10081
Attn: Worldwide Insurance Division
For deposit in the Account of The Hanover Insurance
Company Demand Deposit Account No. 9101392943
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
</TABLE>
31
<PAGE> 36
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
UNUM Life Insurance Company of America $ 5,000,000
Corporate Securities Department
2211 Congress Street
Portland, Maine 04122
Attention: Bond Investment Division
(Fax # (207) 770-3000)
Address for all communications is as above, except that
notices of payment and written communications of wire or
inter-bank transfers are to be sent to the address
specified below. All payments are to be by wire transfer
of immediately available funds to:
Casco Northern Bank
ABA # 011200022
One Monument Square
Portland, Maine
For deposit in the Account of UNUM Life Insurance Company
of America No. 00-039-976
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
Address for all notices of payment and written
confirmations:
UNUM Life Insurance Company of America
2211 Congress Street
Portland, Maine 04122
Attention: Investment Accounting
</TABLE>
32
<PAGE> 37
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
Knights of Columbus $ 5,000,000
Supreme Office
One Columbus Plaza
New Haven, Connecticut 06507
Attention: Investment Department
Address for all communications is as above, except that
notices of payment and written confirmations of wire or
inter-bank transfers are to be sent to the address
specified below. All payments are to be by wire transfer
of immediately available funds to:
Connecticut National Bank and Trust Company
ABA # -----------------------------
One Constitution Plaza
Hartford, Connecticut 06115
For deposit in the Account of Knights of Columbus Account
No. 081-666-3
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
Address for all notices of payment, written confirmations
and other communications:
Knights of Columbus
One Columbus Plaza
New Haven, Connecticut 06507
Attn: Accounting Department
</TABLE>
33
<PAGE> 38
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
Allstate Life Insurance Company of New York $ 3,000,000
Allstate Plaza North
Northbrook, Illinois 60062
Attention: Investment Department -- Private Placement
Taxable Fixed Income Division E2
Address for all notices of payment, written confirmations
and other communications is as above. All payments are to
be by wire transfer of immediately available funds to:
Marine Midland Bank, N.A.
ABA # 0210-0108-8
140 Broadway
New York, New York 10015
Attention: Trust Teller
For deposit in the Account of Allstate Life Insurance
Company Account No. 007-3761-0
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
</TABLE>
34
<PAGE> 39
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
Modern Woodmen of America $ 3,000,000
Mississippi River at 17th Street
Rock Island, Illinois 61201
Attention: Investment Department
Address for all communications is as above, except that
notices of payment and written confirmations of wire or
inter-bank transfers are to be sent to the address
specified below. All payments are to be by wire transfer
of immediately available funds to:
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690
ABA # 071-000288
For deposit in the account of Modern Woodmen of America
Account No. 34-79045
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
Address for all notices of payment, written confirmations
and other communications:
Modern Woodmen of America
Mississippi River at 17th Street
Rock Island, Illinois 61201
Attention: General Accounting Department
</TABLE>
35
<PAGE> 40
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
Employers Life Insurance Company of Wausau $ 3,000,000
2000 Westwood Avenue
Wausau, Wisconsin 54401
Attention:
All payments are to be by wire transfer of immediately
available
funds to:
First Wisconsin National Bank
Milwaukee, Wisconsin
for credit to: First Wisconsin
Trust Company Account No. 112-950-027
for further credit to: Employers
Life Insurance Company of Wausau
Account No. 600557511
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
Address for all notices of payment, written confirmations
and other communications:
Employers Life Insurance Company of Wausau
One Nationwide Plaza -- 33T
Columbus, OH 43216
Attn: Corporate Fixed-Income Securities
[Registered in the name of Empl & Co.]
</TABLE>
36
<PAGE> 41
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
Citizens Insurance Company of America $ 3,000,000
645 West Grand River
Howell, Michigan 48843
Attention: Investment Administration
Address for all notices of payment, written confirmations
and other communications is as above. All payments are to
be by wire transfer of immediately available funds to:
The Chase Manhattan Bank, N.A.
ABA # 021000021
One Chase Manhattan Plaza
New York, New York 10081
Attn: Insurance Division
For deposit in Custodial Demand Deposit Account #
9009000168 for the Account of Citizens Insurance Company
of America Account No. G01039.
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
</TABLE>
37
<PAGE> 42
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
Unity Mutual Life Insurance Company $ 2,500,000
c/o Congress Asset Management
105 Chauncy Street
Boston, Massachusetts 02111
Attention:
Address for all communications is as above, except that
notices of payment and written confirmations by wire or
inter-bank transfers are to the address specified below.
All payments are to be by wire transfer of immediately
available funds to:
Lincoln/ROCH/Trust ABA # 022300173
For deposit to the Account of Unity Mutual Life Insurance
Company Account # 611002310
Attention: Carol Eckton, Ext. 6973
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
Address for all notices of payment and written
confirmations:
Original Confirmation:
Chase Lincoln First Bank, N.A.
IAMG/Unity Mutual Life Insurance Company
P.O. Box 1412
Rochester, New York 14603
Duplicate confirmation:
Unity Mutual Life Insurance Company
One Unity Plaza
Syracuse, New York 13215-0068
Attn: Toni McFadden
Triplicate confirmation:
Betsy O'Riordan
Congress Asset Management Company
105 Chauncy Street
7th Floor
Boston, Massachusetts 02111
Nominee Name: PENLIN
</TABLE>
38
<PAGE> 43
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
Provident Mutual Life Insurance Company of Philadelphia $ 2,000,000
1600 Market Street, 4th Floor
P.O. Box 7378
Philadelphia, Pennsylvania 19103
All payments are to be by wire transfer of immediately
available funds to:
Provident National Bank of Philadelphia
ABA # 031000053
For deposit in the General Account of Provident Mutual
Life Insurance Company No. 200-049-0
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
Address for all notices of payment, written confirmations
and other communications:
Provident Mutual Life Insurance Company of Philadelphia
1600 Market Street, 4th Floor
P.O. Box 7378
Philadelphia, Pennsylvania 19101
Attn: Treasurer
</TABLE>
39
<PAGE> 44
SCHEDULE I
----------------
(CONTINUED)
PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME AND ADDRESS OF PURCHASER OF NOTES
----------------------------- ----------------
<S> <C>
Woodmen Accident and Life Company $ 1,000,000
1526 K Street
Lincoln, Nebraska 68501
Attention:
All payments are to be by wire transfer of immediately
available funds to:
FirsTier Bank Lincoln, N.A.
ABA # 104000032
13 and M Streets
Lincoln, Nebraska 68501
For deposit in the account of the Woodmen Accident and
Life Insurance Company General Fund Account No. 092-909
Each wire transfer shall show the name of the company, the
due date of the payment and the nature thereof.
Address for all notices of payment, written confirmations
and other communications:
Woodmen Accident and Life Company
P.O. Box 82288
1526 K Street
Lincoln, Nebraska 68501
Attn: Securities Division
Telecopy No.: 402-437-4392
</TABLE>
40
<PAGE> 45
ANNEX I
SUBSIDIARIES OF THE COMPANY
I. SUBSIDIARIES OF SYSCO CORPORATION
<TABLE>
<CAPTION>
COMPANY JURISDICTION OF INCORPORATION
------- -----------------------------
<S> <C>
AOD, Inc. (Inactive)........................................ Illinois
Allied-Sysco Food Services, Inc............................. California
Arrow-Sysco Food Services, Inc.............................. Delaware
Baraboo-Sysco Food Services, Inc............................ Wisconsin
Bell-Sysco Food Services, Inc............................... North Carolina
CFS Bakeries, Inc. (Inactive)............................... California
CFS Continental Transportation Company (Inactive)*.......... Illinois
CFS Interstate Foods, Inc. (Inactive)....................... New Jersey
Continental-Keil, Inc....................................... Montana
Continental of Miami, Inc................................... Delaware
Continental of Orlando, Inc................................. Delaware
Deaktor/Sysco Food Services Co.............................. Pennsylvania
DiPaolo/Sysco Food Services, Inc............................ Ohio
FSB, Inc. (Inactive)........................................ Delaware
Favorite Chef, Inc. (Inactive).............................. Illinois
Foodservice Specialists, Inc................................ Delaware
Galaxy Transportation Services, Inc......................... Delaware
Glencoe-Sysco Food Services Co.............................. California
Global Frozen Foods, Inc. (Alfmark, a division)............. Delaware
Grants-Sysco Food Services, Inc............................. Michigan
Gregg Foods, Inc. (Inactive)................................ Delaware
HFP-Sysco Food Services, Inc................................ Virginia
Hardin's-Sysco Food Services, Inc........................... Tennessee
IFC, Inc. (Inactive)........................................ Illinois
K. W. Food Distributors Ltd.*............................... British Columbia, Canada
Koon-Sysco Food Services, Inc............................... Kentucky
Lankford-Sysco Food Services, Inc........................... Maryland
Maine/Sysco, Inc............................................ Maine
Major-Sysco, Inc............................................ California
Mid-Central/Sysco Food Services, Inc........................ Missouri
Miesel/Sysco Food Service Co................................ Michigan
New York Tea-Sysco Food Service Co.......................... Minnesota
Nobel/Sysco Food Services Co................................ Colorado
</TABLE>
41
<PAGE> 46
ANNEX I
SUBSIDIARIES OF THE COMPANY -- (CONTINUED)
<TABLE>
<CAPTION>
COMPANY JURISDICTION OF INCORPORATION
------- -----------------------------
<S> <C>
Pegler-Sysco Food Services Co............................... Nebraska
Pegler-Sysco Transportation Co.............................. Nebraska
The Perseco Company (Name Saver)*........................... Illinois
Puramco, Ltd. (Name Saver).................................. Delaware
Puramco U.S.A., Inc. (Name Saver)*.......................... Illinois
Robert Orr-Sysco Food Services Co. ......................... Tennessee
Select-Sysco Foods, Inc..................................... California
Smelkinson Brothers Corporation (Name Saver)*............... Maryland
Sugar Foods, Inc............................................ Delaware
The Sygma Network, Inc...................................... Delaware
Sysco/Avard Continental Food Services, Inc.................. Delaware
Sysco/Continental Food Services of Atlanta, Inc............. Delaware
Sysco/Continental Food Services of Chicago, Inc............. Delaware
Sysco/Continental Food Services of Indianapolis, Inc........ Delaware
Sysco/Continental Food Services of Iowa, Inc................ Delaware
Sysco/Continental Food Services of Los Angeles, Inc......... Delaware
Sysco/Continental Food Services of Minnesota, Inc........... Delaware
Sysco/Continental Food Services of Phoenix, Inc............. Delaware
Sysco/Continental Food Services of Pittsburgh, Inc.......... Delaware
Sysco/Continental Food Services of Portland, Inc............ Delaware
Sysco/Continental Food Services of Seattle, Inc............. Delaware
Sysco/Continental Institutional Food Services of Macon,
Inc....................................................... Delaware
Sysco/Continental Keil Food Services, Inc................... Delaware
Sysco/Continental Mulberry Food Services, Inc............... Delaware
Sysco/Continental Smelkinson Food Services, Inc............. Delaware
Sysco Equipment & Furnishings Co............................ Delaware
Sysco Food Services, Inc.................................... Texas
Sysco Food Services of Beaumont, Inc........................ Texas
Sysco Food Services Southeast, Inc.......................... Georgia
Sysco Food Systems, Inc..................................... Texas
Sysco Frosted Foods, Inc.................................... New York
Sysco/Frost-Pack Food Services, Inc......................... Michigan
Sysco/General Food Services, Inc............................ Idaho
Sysco/Louisville Food Services Co........................... Kentucky
Sysco-Rome Food Services, Inc............................... Georgia
Testing Consultants, Inc. (Inactive)........................ Illinois
Vernon, Inc. (Inactive)..................................... California
Vogel/Sysco Food Service, Inc............................... Arkansas
</TABLE>
- ---------------
* This subsidiary is not in good standing under the laws of its jurisdiction of
incorporation.
42
<PAGE> 47
ANNEX II
LIST OF MULTI-EMPLOYER PLANS
--------------------------------
<TABLE>
<CAPTION>
COMPANY LOCAL PLAN
------- ----------- ----
<S> <C> <C> <C>
Allied IBT #150 Western Conference of Teamsters Pension Trust Fund
IBT #431 Western Conference of Teamsters Pension Trust Fund
IBT #588 Western Conference of Teamsters Pension Trust Fund
Deaktor UFW # 23 United Food & Commercial Workers International
Union -- Industry Pension Fund
Glencoe IBT #572 Western Conference of Teamsters Pension Trust Fund
IBT #683 Western Conference of Teamsters Pension Trust Fund
IBT #381 Western Conference of Teamsters Pension Trust Fund
Global IBT #805 Local 805 Pension and Retirement Fund
Grants IBT #486 Central States, Southeast & Southwest Areas Pension Fund
(American National Bank, P. O. Box 1431, Chicago,
Illinois 60690; Account No. 7000)
Mid-Central IBT #955 Central States, Southeast and Southwest Areas, Pension
Fund
Miesel/Detroit IBT #337 Michigan Conference of Teamsters Welfare Fund SOA Plan
Michigan Conference of Teamsters Welfare Fund SUE Plan
(Account at National Bank of Detroit)
Central States, Southeast and Southwest Areas Pension
Fund
(American National Bank, P. O. Box 1431, Chicago,
Illinois 60690; Account No. 7000)
Miesel/Cleveland IBT #507 Teamsters Local #507 Pension Fund
Nobel/Albuquerque IBT #492 Western Conference of Teamsters Pension Trust Fund
Nobel/Denver IBT #435 Western Conference of Teamsters Pension Trust Fund
Select-Sysco IBT #588 Western Conference of Teamsters Pension Trust Fund
IBT #137 Western Conference of Teamsters Pension Trust Fund
IBT #190 Automotive Industries Pension Trust Fund
Sysco Food Services IBT #657 Central States, Southeast Area, Pension Fund
of Austin
(decertified 6/11/89)
Sysco Food Services CTDU Chicago Truck Drivers, Helpers and Warehouse Workers
Chicago Union (Independent) Pension fund
IBT #738 Chicago Pension Fund
Sysco Frosted Foods, IBT #294 Pension Fund of the Albany Area Trucking and Allied
Inc. (Albany) Industries
Avard IBT #588 Western Conference of Teamsters Pension Plan
Chicago UFCW #546 UFCW Local #546
Indianapolis IBT #135 Central States, Southeast and Southwest Areas Pension
Plan
S & E Warehouse IBT #135 Central States, Southeast and Southwest Areas Pension
Plan
Iowa IBT #147 Central States, Southeast and Southwest Areas Pension
Plan
</TABLE>
43
<PAGE> 48
ANNEX II
(CONTINUED)
LIST OF MULTI-EMPLOYER PLANS
-------------------------------
<TABLE>
<CAPTION>
COMPANY LOCAL PLAN
------- ----------- ----
<S> <C> <C> <C>
Keil IBT #190 Western Conference of Teamsters Pension Plan
Los Angeles IBT #542 Western Conference of Teamsters Pension Plan
IBT #848 Western Conference of Teamsters Pension Plan
IBT #630 Western Conference of Teamsters Pension Plan
IBT #683 Western Conference of Teamsters Pension Plan
Miami IBT #769 Central States, Southeast and Southwest Areas Pension
Plan
Minnesota IBT #544 Central States, Southeast and Southwest Areas Pension
Plan -- Minneapolis Food Distribution Industry
Phoenix IBT #104 Western Conference of Teamsters Pension Plan
Portland IBT #162 Western Conference of Teamsters Pension Plan
Seattle IBT #117 Western Conference of Teamsters Pension Plan
Smelkinson IBT #355 IBT Local #355
</TABLE>
44
<PAGE> 49
ANNEX III
DESCRIPTION OF OUTSTANDING LIENS
<TABLE>
<CAPTION>
DEBTOR COLLATERAL LIENHOLDER BALANCE(1) MATURITY
------ ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Baraboo-Sysco Food Services, Inc. Facility Baraboo Industrial $ 65,103 01/01/95
Expansion Corp. 92,762 12/01/94
108,010 06/01/93
Bell-Sysco Food Services, Inc. Facility Thomas & Howard 148,000 11/28/91
Cochran-Sysco Services Facility Deposit Guaranty 940,000 12/01/94
National Bank
Global/Sysco Facility European American 1,072,500 11/01/93
Banking Corp.
Global/Sysco Real Estate, Trucks Waldbaum, Inc., Metro 3,025,116 01/01/04
Trucking and
11/01/08
Hallsmith-Sysco Facility First National Bank of 2,645,000 05/01/04
Boston
Koon-Sysco Food Services, Inc. Facility J.M. Classic Chicken 16,000 11/01/90
Maine/Sysco, Inc. Facility SBA 69,775 08/01/98
Facility SBA 205,670 11/01/02
Mid-Central/Sysco Food Services, Inc. Facility First City National Bank 7,490,000 08/08/12
of Houston
Miesel/Sysco Food Service Co. Warehouse Robert M. Levin 8,503 03/31/89
(Cleveland) Cleveland Trust Co.
Nobel/Sysco Food Services Co. Building Central Bank Intrawest $ 87,525 12/01/92
(Denver) Building Mortgage 2,835,615 02/01/01
Nobel/Sysco Food Services Co. Facility Pacific Mutual 4,962,000 09/01/04
(Albuquerque)
Robert Orr -- Sysco Food Services Co. Facility First National Bank of 815,000 03/01/90
Nashville
Pegler-Sysco Food Services Co. Facility First National Bank & 205,000 10/01/90
Trust of Lincoln 1,130,000 10/01/95
Facility First City National Bank 3,400,000 11/01/94
of Houston
Sysco Food Services, Inc. Facility State Farm 1,684,653 02/2000
Sysco Frosted Foods, Inc. (Syracuse) Facility First City National Bank 5,200,000
Bank of Houston of which
3,000,000 04/01/03
2,200,000 04/01/08
Sysco Frosted Foods, Inc. (Albany) Facility Manufacturers & Traders 3,100,000 11/01/98
Trust Co.
Sysco Frosted Foods, Inc. (Elmira) Facility Elmira Savings Bank 247,383 10/01/93
Sysco Intermountain Food Services Facility First Security Bank of 885,000 12/01/89
(Shire Warehouse) Utah
Sysco Food Services, Chicago Warehouse Bankers Life Nebraska $ 911,000 02/01/90
</TABLE>
45
<PAGE> 50
ANNEX III
(CONTINUED)
DESCRIPTION OF OUTSTANDING LIENS
<TABLE>
<CAPTION>
DEBTOR COLLATERAL LIENHOLDER BALANCE(1) MATURITY
------ ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Continental of Orlando, Inc. Facility Continental Illinois 800,000
National Bank & Trust of which
Company 300,000 05/01/94
300,000 05/01/99
200,000 05/01/95
-98
Sysco/Continental Food Services of Facility First National Bank of 1,020,000 06/01/97
Iowa, Inc. Minneapolis
Sugar Foods, Inc. Facility First Trust Company of 1,260,000 02/01/99
Ohio, N.A.
Sysco/Continental Mulberry Food Facility Bank of the South, N.A. 816,660 10/31/90
Services, Inc.
Sysco/Continental Food Services of Facility Bank of the South, N.A. 758,330 10/31/90
Indianapolis, Inc.
Sugar Foods, Inc. Facility Bank One Trust Company, 533,333 01/01/97
N.A.
Continental of Orlando, Inc. Facility Atlantic National Bank 954,000 11/01/97
of Florida
Sysco/Continental Food Services of Equipment Bank of the South, N.A. 1,150,000 09/01/93
Atlanta, Inc.
Food Service Specialists, Inc. Equipment Harris Trust and Savings 900,000 10/15/94
Bank
Sysco/Continental Food Services of Facility City of Mounds View, 1,780,000 03/20/90
Minnesota, Inc. Minnesota
Sysco Corporation Facility Utica National Bank and 485,111 01/31/2004
Trust Company
Sysco Corporation Atlanta Warehouse John Hancock Mutual Life 7,551,800 01/01/97
Ins. Company
Hallsmith Capital Lease Town of Norton 750,000 05/01/94
Olewines Warehouse Dauphin Deposit Bank and 772,449 09/01/96
Trust
Olewines Warehouse Dauphin Deposit Bank and 947,287 06/01/96
Trust
Baraboo-Sysco Food Services, Inc. Land City of Baraboo 14,000 08/01/93
Sysco/Continental Smelkinson Food Capital Lease Robert N. Smelkinson and 629,640(2) 05/31/96
Services, Inc. Sheldon R. Roth
Sysco/Continental Smelkinson Food Capital Lease Robert N. Smelkinson and 738,003(2) 05/31/96
Services, Inc. Sheldon R. Roth
Sysco/Continental Smelkinson Food Capital Lease Robert N. Smelkinson and 3,385,675(2) 05/31/96
Services, Inc. Sheldon R. Roth
Sysco Frosted Foods, Inc. (Elmira) Capital Lease SBA-Horseheads 15,000 07/01/94
K.W. Food Distributors, Ltd. Cooler and Freezer Bank of British Columbia 257,330 06/19/91
Equipment
K.W. Food Distributors, Ltd. Inventory and Assets Bank of British Columbia 3,450,000 demand
(Canadian)
</TABLE>
- ---------------
(1) All balances are as of April 1, 1989
(2) This represents the total rent payments of Sysco/Continental Smelkinson Food
Services, Inc. from May 1, 1989, to May 31, 1996, the maturity date of the
Lease.
46
<PAGE> 51
ANNEX IV
DESCRIPTION OF OPEN TAX YEARS
Federal Income Tax Liability has been determined and satisfied for the
Company and its subsidiaries through the fiscal year ending June 29, 1985 except
for:
<TABLE>
<CAPTION>
COMPANY FISCAL YEAR
------- -----------
<S> <C>
1985 (The tax liability is currently on appeal; the issue is
the I.T.C. on a freezer addition which has been tentatively
Hallsmith-Sysco Food settled, subject to the appeal process, for approximately
Services, Inc. $40,000)
</TABLE>
47
<PAGE> 52
EXHIBIT A
SYSCO CORPORATION
9.95% SENIOR NOTES
DUE JUNE 15, 1999
Registered Note No. R-1 June 15, 1999
$ PPN #: 871829B*7
SYSCO CORPORATION, a Delaware corporation (the "Company"), for value
received, hereby promises to pay to or registered assigns,
on the fifteenth day of June 1999, the principal amount of
Dollars ($ ) and to pay interest (computed on the basis of a 360-day
year of twelve 30-day months) on the principal amount from time to time
remaining unpaid hereon at the rate of nine and ninety-five hundredths percent
(9.95%) per annum from the date hereof until maturity, payable on June 15 and
December 15 in each year, commencing December 15, 1989, and at maturity, and to
pay interest on overdue principal and (to the extent legally enforceable) on any
overdue installment of interest at the rate of ten and ninety-five hundredths
percent (10.95%) per annum after maturity or the due date thereof, whether by
acceleration or otherwise, until paid. Payments of the principal of, the
premium, if any, and interest on this Note shall be made in lawful money of the
United States of America in the manner and at the place provided in Section 2.4
of the Note Agreement hereinafter defined.
This Note is issued under and pursuant to the terms and provisions of a
Note Agreement, dated as of June 1, 1989, entered into by the Company with those
Purchasers set forth in Schedule I thereto (the "Note Agreement"), and this Note
and any holder hereof are entitled to all of the benefits provided for by such
Note Agreement or referred to therein. The provisions of the Note Agreement are
hereby incorporated in this Note to the same extent as if set forth at length
herein.
As provided in the Note Agreement, upon surrender of this Note for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder hereof or his attorney duly
authorized in writing, a new Note for a like unpaid principal amount will be
issued to, and registered in the name of, the transferee upon the payment of the
taxes or other governmental charges, if any, that may be imposed in connection
therewith. The Company may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
This Note may be declared due prior to its expressed maturity date, and
certain prepayments at the option of holders of the Notes are required to be
made hereon in the events, on the terms and the manner as provided in the Note
Agreement.
Should the indebtedness represented by this Note or any part thereof be
collected in any proceeding provided for in the Note Agreement or be placed in
the hands of attorneys for collection, the Company agrees to pay, in addition to
the principal, premium, if any, and interest due and payable hereon, all costs
of collecting this Note, including reasonable and actual attorneys' fees and
expenses.
This Note and said Note Agreement are governed by and construed in
accordance with the laws of the State of Illinois.
SYSCO CORPORATION
By:
------------------------------------
Its:
------------------------------------
48
<PAGE> 53
EXHIBIT B
LEGAL OPINIONS
A. The opinion of Gardner, Carton & Douglas, special counsel for the
Purchasers, shall be to the effect that:
1. The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware, with all requisite
corporate power and authority to carry on the business now being conducted
by it, to enter into the Agreement and to issue and sell the Notes.
2. The Agreement has been duly authorized by proper corporate action
on the part of the Company, has been duly executed and delivered by an
authorized officer of the Company and constitutes the legal, valid and
binding agreement of the Company, enforceable in accordance with its terms,
except to the extent that enforcement of the Agreement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application relating to or affecting the enforcement of the
rights of creditors or secured parties or by equitable principles if
equitable remedies are sought.
3. The Notes have been duly authorized by proper corporate action on
the part of the Company, have been duly executed and delivered by an
authorized officer of the Company, and constitute the legal, valid and
binding obligations of the Company, enforceable in accordance with their
terms, except to the extent that enforcement of the Notes may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application relating to or affecting the enforcement of the
rights of creditors or secured parties or by equitable principles if
equitable remedies are sought.
4. Based upon the representations set forth in the Agreement, the
offering, sale and delivery of the Notes do not require the registration of
the Notes under the Securities Act of 1933, as amended, nor the
qualification of an indenture under the Trust Indenture Act of 1939, as
amended.
5. The issuance and sale of the Notes and compliance with the terms
and provisions of the Notes and the Agreement will not conflict with or
result in any breach of any of the provisions of the Articles of
Incorporation or By-Laws of the Company.
6. Assuming the truth and accuracy of the Company's representations
and warranties contained in Section 3.1 of the Agreement, the issuance of
the Notes and the use of the proceeds of the sale of the Notes do not
violate or conflict with Regulation G, T or X of the Board of Governors of
the Federal Reserve System (12 C.F.R., Chapter II).
7. The legal opinion of Arnall Golden & Gregory, counsel for the
Company, delivered to you pursuant to the Agreement, is satisfactory in
form and substance to us, and, in our opinion, you and we are justified in
relying thereon.
8. In giving its opinion, Gardner, Carton & Douglas may rely, as to
matters involving Texas law, upon the opinion of Arnall Golden & Gregory.
B. The opinion of Arnall Golden & Gregory, counsel for the Company, shall
cover all matters specified in clauses 1 through 4 and 6 set forth above and
shall also be to the effect that:
1. Each of the Subsidiaries of the Company listed as such in Annex I
to the Agreement is a corporation duly organized and validly existing in
good standing under the laws of its jurisdiction of incorporation, and each
has all requisite corporate power and authority to carry on the business
now being conducted by it and to own its property.
2. The Company and its Subsidiaries are duly qualified and in good
standing as foreign corporations in the jurisdictions in which they carry
on business and such jurisdictions are all of the jurisdictions where the
nature of its or their business or the character of its or their properties
makes such qualification or licensing necessary.
49
<PAGE> 54
3. No authorization, approval or consent of any governmental or
regulatory body is necessary or required in connection with the lawful
execution and delivery by the Company of the Agreement or the lawful
offering, issuance and sale of the Notes, and no designation, filing,
declaration, registration and/or qualification with any governmental
authority is required by the Company in connection with such offer,
issuance and sale.
4. The issuance and sale of the Notes and compliance with the terms
and provisions of the Notes and the Agreement will not conflict with, or
result in any breach of any of the provisions of, or constitute a default
under, or result in the creation or imposition of any lien or encumbrance
upon any of the property of the Company pursuant to the provisions of the
Certificate of Incorporation or by-laws of the Company or any Subsidiary or
result in any breach of any laws, rules, regulations, judgements or orders
or result in any material breach in the provisions of or any material
default under any loan agreement under which the Company or any Subsidiary
is bound, or other agreement or instrument known to such counsel (after due
inquiry) under which the Company or any Subsidiary is bound.
5. There are no actions, suits or proceedings pending or, to the best
of such counsel's knowledge after due inquiry, threatened against, or
affecting the Company or its Subsidiaries, at law or in equity or before or
by any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which are likely to result, either individually or collectively, in any
material adverse change in the business, properties, operations or
condition, financial or otherwise, of the Company or any Subsidiary.
6. All of the issued and outstanding shares of capital stock of each
Subsidiary have been duly and validly issued, are fully paid and
nonassessable and, to the knowledge of such counsel, are owned by the
Company free and clear of any lien or encumbrance.
7. The Company and each Subsidiary have all franchises, permits,
licenses and other authority as are necessary to enable them to carry on
their respective businesses as now being conducted and as proposed to be
conducted, and none of them is in default under any of such franchises,
permits, licenses or other authority.
Such opinion shall also cover such other matters incident to the
transactions contemplated hereby as you or your special counsel may reasonably
request. In giving its opinion, counsel for the Company may rely, as to matters
of law, upon the opinion of other counsel delivered to you at the closing
(provided that in each such case such counsel shall state that such opinion is
satisfactory in form and substance to it, and that, in its opinion, it and you
are justified in so relying thereon); as to matters of fact, upon a certificate
or certificates of an officer or officers of the Company; and, as to the good
standing of the Company or any Subsidiary, upon certificates of good standing or
similar certificates issued by appropriate governmental authorities. In each
case, such opinions and certificates shall be satisfactory to your special
counsel.
50
<PAGE> 1
EXHIBIT # 4(g)
<PAGE> 2
================================================================================
SYSCO CORPORATION
AND
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
Trustee
______________________
THIRD SUPPLEMENTAL INDENTURE
Dated as of April 25, 1997
______________________
Supplementing the Indenture
dated as of June 15, 1995
================================================================================
<PAGE> 3
THIRD SUPPLEMENTAL INDENTURE, dated as of the 25th day of
April, 1997, between SYSCO CORPORATION, a corporation organized and existing
under the laws of the State of Delaware (the "Company"), and FIRST UNION
NATIONAL BANK OF NORTH CAROLINA, a national banking association, as trustee
(the "Trustee");
WHEREAS, the Company has heretofore executed and delivered to
the Trustee an Indenture dated as of June 15, 1995 (the "Original Indenture")
providing for the issuance by the Company from time to time of its unsecured
debentures, notes or other evidences of indebtedness to be issued in one or
more series (in the Original Indenture and herein called the "Securities"); and
WHEREAS, the Company has heretofore executed and delivered to
the Trustee (i) a First Supplemental Indenture dated as of June 27, 1995
providing for the issuance by the Company of $150,000,000 6 1/2% Senior Notes
due June 15, 2005, and (ii) a Second Supplemental Indenture dated as of May 1,
1996 providing for the issuance by the Company of $200,000,000 7% Senior Notes
due May 1, 2006; and
WHEREAS, the Company, in the exercise of the power and
authority conferred upon and reserved to it under the provisions of the
Original Indenture, including Section 2.3 thereof, and pursuant to appropriate
resolutions of the Board of Directors, has duly determined to make, execute and
deliver to the Trustee this Third Supplemental Indenture to the Original
Indenture as permitted by Sections 2.1, 2.3 and 8.1 of the Original Indenture
in order to establish the form or terms of, and to provide for the creation and
issue of, a series of Securities under the Original Indenture in the aggregate
principal amount of up to $50,000,000; and
WHEREAS, all things necessary to make the Securities, when
executed by the Company and authenticated and delivered by the Trustee or any
Authenticating Agent and issued upon the terms and subject to the conditions
hereinafter and in the Original Indenture set forth against payment therefor,
the valid, binding and legal obligations of the Company and to make this Third
Supplemental Indenture a valid, binding and legal agreement of the Company,
have been done;
NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH
that, in order to establish the terms of a series of Securities, and for and in
consideration of the premises and of the covenants contained in the Original
Indenture and in this Third Supplemental Indenture and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, it is mutually covenanted and agreed as follows:
-1-
<PAGE> 4
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
1.1 Definitions. Each capitalized term that is used herein
and is defined in the Original Indenture shall have the meaning specified in
the Original Indenture unless such term is otherwise defined herein.
"Stated Maturity" means April 15, 2027.
1.2 Section References. Each reference to a particular
section set forth in this Third Supplemental Indenture shall, unless the
context otherwise requires, refer to this Third Supplemental Indenture.
ARTICLE II
TITLE AND TERMS OF SECURITIES
2.1 Title of the Securities. This Third Supplemental
Indenture hereby establishes a series of Securities designated as the "7.16%
Debentures due April 15, 2027" of the Company (collectively referred to herein
as the "Debentures"). For purposes of the Original Indenture, the Debentures
shall constitute a single series of Securities.
2.2 Term of the Debentures. The Debentures shall mature on
April 15, 2027. In the event that the Stated Maturity of any Debenture is not
a Business Day, principal and interest payable at maturity shall be paid on the
next succeeding Business Day with the same effect as if such Business Day were
such Stated Maturity and no interest shall accrue or be payable for the period
from and after such Stated Maturity to such next succeeding Business Day.
2.3 Amount and Denominations; Currency of Payment. The
aggregate principal amount in which the Debentures may be issued under this
Third Supplemental Indenture is limited to $50,000,000.
The Debentures shall be issued in the form of one or more
Registered Global Securities in the name of Cede & Co., as registered owner and
nominee for The Depositary Trust Company, New York, New York ("DTC"). DTC
shall initially act as Depositary for the Debentures.
The Debentures shall be denominated in United States dollars
in denominations of $1,000 and integral multiples of $1,000 in excess thereof.
2.4 Interest and Interest Rates. Each Debenture shall bear
interest at the rate of 7.16% per annum from the date of issue or from the most
recent Interest Payment Date (as defined
-2-
<PAGE> 5
below) to which interest on such Debenture has been paid or duly provided for,
commencing with the Interest Payment Date next succeeding the date of issue,
until the principal thereof is paid or made available for payment. Interest
shall be payable to the Person in whose name a Debenture is registered at the
close of business on the Regular Record Date (as defined below) next preceding
an Interest Payment Date. Notwithstanding the foregoing, if a Debenture is
originally issued after the Regular Record Date and before the corresponding
Interest Payment Date, the first payment of interest on such Debenture shall be
made on the next succeeding Interest Payment Date to the Person in whose name
such Debenture was registered on the Regular Record Date with respect to such
next succeeding Interest Payment Date. Interest on each Debenture shall be
computed on the basis of a 360-day year comprising twelve 30-day months.
2.5 Interest Payments
The Interest Payment Dates for each Debenture shall be April
15 and October 15 in each year, beginning October 15, 1997 and the Regular
Record Dates shall be the March 31 and September 30 preceding such April 15 and
October 15 Interest Payment Dates. Interest shall also be payable at maturity
of any Debenture.
If an Interest Payment Date with respect to the Debentures
would otherwise fall on a day that is not a Business Day, such Interest Payment
Date shall be postponed to the next succeeding Business Day with respect to the
Debentures and no interest shall accrue or be payable on such next succeeding
Business Day for the period from and after such original Interest Payment Date
to such next succeeding Business Day.
Except as provided in the preceding paragraph, interest
payments shall be in the amount of interest accrued to, but excluding, the
Interest Payment Date.
2.6 Place of Payment, Transfer and Exchange. The Company
authorizes and appoints the Trustee as the sole Paying Agent with respect to
any Debentures represented by Registered Global Securities without prejudice to
the Company's authority to appoint additional Paying Agents from time to time
pursuant to Section 3.4 of the Original Indenture. Payments of principal on
each Debenture and interest thereon payable at maturity shall be made in
immediately available funds, at the request of the Holder, at the office or
agency of the Paying Agent in New York, New York or any other duly appointed
Paying Agent; provided that such Debenture is presented to the Paying Agent in
time for the Paying Agent to make such payments in such funds in accordance
with its normal procedures. In addition, the Company may maintain a drop
agent, in such location or locations as the Company may select, to provide the
Holders with an office at which they may present the Debentures for payment.
The Company hereby acknowledges that any such drop agent will accept Debentures
for presentment, take payment instructions from the Holder and forward such
Debentures and any related payment instructions to the Paying Agent by
overnight courier, for next day delivery. Such Debentures shall be deemed to
be presented to the Paying Agent on the Business Day next succeeding the day
the Debentures are delivered to any such drop agent.
-3-
<PAGE> 6
So long as the Debentures are represented by a Registered
Global Security, interest (other than interest payable at maturity) shall be
paid in immediately available funds by wire transfer to the Depositary for such
Debentures, upon the written order of the Depositary. With respect to
Debentures not represented by a Registered Global Security, interest (other
than interest payable at maturity) shall be paid by check mailed to the address
of the Person entitled thereto as it appears in the Security register.
The Company appoints the Trustee as the sole Security
registrar with respect to the Debentures, without prejudice to the Company's
authority to appoint additional Security registrars from time to time pursuant
to Section 2.8 of the Original Indenture. The Debentures may be presented by
the Holders thereof for registration of transfer or exchange at the office or
agency of the Security registrar or any successor or co-registrar in New York,
New York. In addition, the Company may maintain a drop agent, in such location
or locations as the Company may select, to provide the Holders with an office
at which they may present the Debentures for registration of transfer or
exchange. The Company hereby acknowledges that any such drop agent will accept
Debentures for registration of transfer or exchange and forward such Debentures
to the Security registrar by overnight courier, for next day delivery. Such
Debentures shall be deemed to be presented to the Security registrar on the
Business Day next succeeding the day that Debentures are delivered to any such
drop agent.
2.7 No Sinking Fund. The Debentures shall not be subject to
any sinking fund.
2.8 Redemption.
(a) At Option of Company. The Debentures shall not be
redeemable, at the option of the Company, prior to Stated Maturity.
(b) At Option of Holders. The Company shall be obligated
to redeem the Debentures, at the option of the Holders, on April 15, 2007 (the
"Redemption Date") at a redemption price equal to 100% of the principal amount
of the Debentures to be redeemed, plus interest accrued to the Redemption Date
(the "Redemption Price"). To exercise this option, the Holder shall deliver or
cause to be delivered and received at the office or agency of the Security
registrar in Charlotte, North Carolina or New York, New York, respectively, or
any successor or co-registrar during the period beginning March 1, 2007 and
ending at 5:00 p.m. (New York City time) on March 15, 2007 (or if March 15,
2007 is not a Business Day, the next succeeding Business Day), the Debentures
the Holder desires to have redeemed with the attached form entitled "Option to
Elect Redemption on April 15, 2007" duly completed. In addition, the Company
may maintain a drop agent, in such location or locations as the Company may
select, to provide the Holders with an office at which they may present the
Debentures for redemption. The Company hereby acknowledges that any such drop
agent will accept Debentures for redemption and forward such Debentures to the
Security registrar by overnight courier, for next day delivery. Such
Debentures shall be deemed to be presented to the Security registrar on the
Business Day next succeeding the day that those Debentures are delivered to any
such drop agent. Holders of Debentures may redeem all or any portion of the
principal of the Debentures held by such Holder that is an integral multiple
-4-
<PAGE> 7
of $1,000. Exercise of the redemption option by a Holder as aforesaid shall be
irrevocable. The Paying Agent shall pay the applicable Redemption Price on the
Redemption Date to each of the Holders that duly exercised their redemption
options in accordance with the procedures set forth above, in immediately
available funds, at the request of the Holder, at the office or agency of the
Paying Agent in Charlotte, North Carolina or New York, New York, respectively,
or any other duly appointed Paying Agent. All questions as to the validity,
form, eligibility (including time of receipt) and acceptance of the Debentures
for redemption shall be determined by the Trustee, whose determination shall be
final and binding.
2.9. Form and Other Terms of the Debentures. Attached hereto
as Exhibit A is a form of a Debenture denominated in United States dollars,
which form is hereby established as a form in which Debentures may be issued.
In addition, any Debenture may be issued in such other form as may be provided
by, or not inconsistent with, the terms of the Original Indenture and this
Third Supplemental Indenture.
ARTICLE III
MISCELLANEOUS PROVISIONS
The Trustee makes no undertaking or representations in respect
of, and shall not be responsible in any manner whatsoever for and in respect
of, the validity or sufficiency of this Third Supplemental Indenture or the
proper authorization or the due execution hereof by the Company or for or in
respect of the recitals and statements contained herein, all of which recitals
and statements are made solely by the Company.
Except as expressly amended hereby, the Original Indenture, as
heretofore amended and supplemented, shall continue in full force and effect in
accordance with the provisions thereof and the Original Indenture is in all
respects hereby ratified and confirmed. This Third Supplemental Indenture and
all its provisions shall be deemed a part of the Original Indenture in the
manner and to the extent herein and therein provided.
This Third Supplemental Indenture shall be governed by, and
construed in accordance with, the laws of the State of New York.
This Third Supplemental Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
-5-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
SYSCO CORPORATION
By:
------------------------------------
John K. Stubblefield, Jr.
Senior Vice President and
Chief Financial Officer
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, as Trustee
By:
------------------------------------
Name:
Title:
-6-
<PAGE> 9
Exhibit A to Third Supplemental Indenture
[IF ISSUED AS REGISTERED GLOBAL SECURITIES, THE FOLLOWING LEGEND MUST
BE USED:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO THE 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.]
REGISTERED
REGISTERED
SYSCO CORPORATION
7.16% Debenture due April 15, 2027
No. _______ CUSIP NO._______
PRINCIPAL AMOUNT AUTHENTICATION DATE: April 25, 1997
$ 50,000,000
ORIGINAL ISSUE DATE: STATED MATURITY: April 15, 2027
April 25, 1997
INTEREST RATE: SUBJECT TO DEFEASANCE PURSUANT
TO SECTION 10.1 OF THE INDENTURE
7.16% per annum
ISSUE PRICE (%):
100%
SYSCO CORPORATION, a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which
term includes any successor Person under the Indenture referred to on the
reverse hereof), for value received, hereby promises to pay to CEDE & Co. or
registered assigns, the principal sum of FIFTY MILLION DOLLARS at the Stated
Maturity specified above and to pay interest thereon, computed on the basis of
a 360-day year comprising twelve 30-day months, from the Original Issue Date
specified above or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semi-annually in arrears on April 15 and
October 15 beginning October 15, 1997, in each year and at the Stated Maturity,
commencing with, except as provided in the next succeeding sentence, the
Interest Payment Date next succeeding the Original Issue Date set forth above,
at the Interest Rate per annum set forth above, until the principal hereof is
paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security is registered
at the close of business on the Regular Record Date for such interest, which
shall be March 31 or September 30 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date; provided, however, that if
the Original Issue Date of this Security is after a Regular Record Date and
before the corresponding Interest Payment Date, the first payment of interest
on this Security shall be made on the next succeeding Interest Payment Date to
the Person in whose name this Security is registered on the Regular Record Date
with respect to such next succeeding Interest Payment Date. Except as
otherwise provided in the Indenture, any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and shall be paid to the Person in whose name this Security
is registered at the close of business on a
-1-
<PAGE> 10
subsequent record date for the payment of such defaulted interest, notice
thereof to be given to Holders of Securities of this series not less than five
Business Days prior to such subsequent record date.
The Company shall be obligated to redeem this Security, or any
portion of the principal hereof that is an integral multiple of $1,000, at the
option of the Holder, on April 15, 2007 (the "Redemption Date") at a redemption
price equal to 100% of the principal amount hereof to be redeemed, plus
interest accrued to the Redemption Date. To exercise this option, the Holder
shall deliver or cause to be delivered and received at the office or agency of
the Trustee, First Union National Bank of North Carolina, 230 North Tryon
Street, Eighth Floor, Charlotte, North Carolina 28288 and c/o IBJ Shroeder Bank
& Trust, Stock Transfer Department, SC 1, One State Street, New York, New York
10004, respectively, during the period beginning March 1, 2007 and ending at
5:00 p.m. (New York City time) on March 15, 2007 (or if March 15, 2007 is not a
Business Day, the next succeeding Business Day), this Security with the
attached form entitled "Option to Elect Redemption on April 15, 2007" duly
completed. Any such exercise of this redemption option shall be irrevocable.
All questions as to the validity, form, eligibility (including time of receipt)
and acceptance of this Security for redemption shall be determined by the
Trustee, whose determination shall be final and binding.
Payment of the principal on this Security, and interest
payable at Stated Maturity will be made in immediately available funds, at the
request of the Holder upon presentation and surrender of this Security, at the
office or agency of the Company maintained for that purpose in New York, New
York or such other office or agency of the Company as may be designated by it
for such purpose, in such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public and
private debts. Payment of interest (other than interest payable at the Stated
Maturity) will, subject to certain exceptions provided in the Indenture, be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security register.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
SECURITY SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS
SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS
PLACE.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof, directly or through
an Authenticating Agent, by manual signature of an authorized signatory, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, SYSCO CORPORATION has caused this
instrument to be duly executed under its corporate seal.
SYSCO CORPORATION
[Seal]
By
-------------------------------------
Senior Vice President
Attest
---------------------------------
Assistant Secretary
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<PAGE> 11
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein, referred to in
the within-mentioned Indenture.
- ---------------------------------------------------
First Union National Bank
of North Carolina, as Trustee
By
-------------------------------------------------
As Authenticating Agent
By
-------------------------------------------------
Authorized Signatory
-3-
<PAGE> 12
SYSCO CORPORATION
7.16% Debenture due April 15, 2027
-----------------
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated as of June 15, 1995, as supplemented
by a Third Supplemental Indenture dated as of April 25, 1997 (as so
supplemented, herein called the "Indenture"), between the Company and First
Union National Bank of North Carolina, as trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. The acceptance of this Security shall be deemed
to constitute the consent and agreement of the Holder hereof to all of the
terms and conditions of the Indenture. This Security is one of the series
designated on the face hereof.
In any case where any Interest Payment Date or the Stated
Maturity shall not be a Business Day, payment of the amounts due on this
Security on such date may be made on the next succeeding Business Day; and no
interest shall accrue or be payable on such amounts as a result of the making
of such payment after such Interest Payment Date or Stated Maturity, as the
case may be, provided such payment is made in full on such next succeeding
Business Day.
The Securities are not subject to redemption by the Company
prior to the Stated Maturity.
If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of not less than a majority in
principal amount of the Securities then Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Securities of each series at the
time Outstanding, on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security issued
upon the registration of transfer hereof or in exchange for or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As set forth in, and subject to the provisions of, the
Indenture, no Holder of any Security of this series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless (i) such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default with respect to this series,
(ii) the Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities of this series shall have made written request, and
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, (iii) the Trustee shall not have received from the Holders of a
majority in aggregate principal amount of the Outstanding Securities of this
series a direction inconsistent with such request and (iv) the Trustee shall
have failed to institute such proceeding within 60 days; provided, however,
that such limitations do not apply to a suit instituted by the Holder hereof
for the enforcement of payment of the principal or any interest on this
Security on or after the respective due dates expressed herein.
No reference to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal and any
interest including additional amounts, as described on the face hereof on this
Security at the times, places and rate, and in the coin or currency, herein
prescribed.
-4-
<PAGE> 13
The Securities of this series are issuable only in fully
registered form and are represented either by a global certificate registered
in the name of a depositary or in the name of its nominee or by a certificate
registered in the name of the beneficial owner of such Securities or its
nominee. The Securities are issuable in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of this series
and of like tenor of any authorized denomination, as requested by the Holder
surrendering the same.
As provided in the Indenture and subject to certain
limitations therein or herein set forth, the transfer of this Security is
registrable in the Security register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any place
where the principal and any interest on this Security are payable or at such
other offices or agencies as the Company may designate, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to, the
Company and the Security registrar or any transfer agent, duly executed by the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees.
No service charge shall be made for any registration of
transfer or exchange of Securities, but, subject to certain limitations set
forth in the Indenture, the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Subject to the terms of the Indenture, prior to due
presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Security is registered as the owner hereof for all purposes,
whether or not this Security is overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.
The Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
As provided in the Indenture, no recourse may be taken,
directly or indirectly, against any incorporator, subscriber to the stock,
stockholder, officer, director or employee of the Company or the Trustee or of
any predecessor or successor of the Company or the Trustee with respect to the
Company's obligations on the Securities or the obligations of the Company or
the Trustee under the Indenture or any certificate or other writing delivered
in connection herewith or therewith except as otherwise expressly provided in
any such certificate or other writing.
------------------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - _____Custodian____
(Cust) (Minor)
under Uniform Gifts
TEN ENT - as tenants by the entireties to Minors Act
JT TEN - as joint tenants with right ------------------
of survivorship and not as (State)
tenants in common
-5-
<PAGE> 14
Additional abbreviations may also be used though not in the above
list.
______________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
Please insert Social Security
or taxpayer identification number
of Assignee
__________________________
__________________________ _____________________________________________________
________________________________________________________________________________
Please print or typewrite name and address including
postal zip code of assignee
________________________________________________________________________________
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing ______________________, attorney to transfer said Security on the
books of the Company, with full power of substitution in the premises.
Dated: _________________________ ____________________________________
____________________________________
The signature(s) to this assignment
must correspond with the name as
written upon the face of this
Security in every particular,
without alteration, enlargement or
any change whatsoever.
________________________________
Signature Guarantee
Note: Signature(s) must be guaranteed by an eligible guarantor institution
meeting the requirements of the Trustee, which requirements will
include membership or participation in STAMP or such other "signature
guarantee program" as may be determined by the Trustee in addition to,
or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
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<PAGE> 15
------------------------------
OPTION TO ELECT REDEMPTION ON APRIL 15, 2007
The undersigned hereby irrevocably exercises the option to require
the Company to redeem ( ) all ( ) $________________ ($1,000 or an integral
multiple thereof) of the principal amount of this Security on April 15, 2007,
and directs the Company to make payment of the Redemption Price, and to issue
and deliver a new Security or Securities of this series equal in aggregate
principal amount to the unredeemed principal amount hereof, if any, to the
undersigned at the undersigned's address as it appears in the register for the
Securities of this series, unless a different name and/or address has been
specified below.
<TABLE>
<S> <C>
Dated:
---------------------------------------------------- --------------------------------------------------
Signature
Payment of the Redemption Price and delivery of new Issue new Securities of this series in the
Securities of this series, if any (if other than to the principal amounts (each $1,000 or an integral
registered Holder at the address appearing in the multiple thereof) specified below. (If no
register for Securities of this series), are to be made contrary specification is made, a single new
as follows: Security of this series equal in principal amount
to the unredeemed portion of this Security will
be issued).
----------------------------------------------------------
Name
Address: Number: Principal Amount:
------------ -------------------------
---------------------------------------------------------- ------------ -------------------------
---------------------------------------------------------- ------------ -------------------------
---------------------------------------------------------- ------------ -------------------------
---------------------------------------------------------- ------------ -------------------------
Social Security or other identifying number of owner of
new security ------------ -------------------------
------------ -------------------------
</TABLE>
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<PAGE> 1
EXHIBIT # 4(h)
<PAGE> 2
--------------------------------------------------
--------------------------------------------------
SYSCO CORPORATION
AND
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
Trustee
----------------------
FOURTH SUPPLEMENTAL INDENTURE
Dated as of April 25, 1997
----------------------
Supplementing the Indenture
dated as of June 15, 1995
--------------------------------------------------
--------------------------------------------------
<PAGE> 3
FOURTH SUPPLEMENTAL INDENTURE, dated as of the 25th day of April,
1997, between SYSCO CORPORATION, a corporation organized and existing under the
laws of the State of Delaware (the "Company"), and FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, a national banking association, as trustee (the "Trustee");
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an Indenture dated as of June 15, 1995 (the "Original Indenture")
providing for the issuance by the Company from time to time of its unsecured
debentures, notes or other evidences of indebtedness to be issued in one or
more series (in the Original Indenture and herein called the "Securities"); and
WHEREAS, the Company has heretofore executed and delivered to the
Trustee (i) a First Supplemental Indenture dated as of June 27, 1995 providing
for the issuance by the Company of $150,000,000 6 1/2 % Senior Notes due June
15, 2005, (ii) a Second Supplemental Indenture dated as of May 1, 1996
providing for the issuance by the Company of $200,000,000 7% Senior Notes due
May 1, 2006, and (iii) a Third Supplemental Indenture dated as of April 25,
1997 providing for the issuance by the Company of $50,000,000 7.16% Debentures
due April 15, 2027; and
WHEREAS, the Company, in the exercise of the power and authority
conferred upon and reserved to it under the provisions of the Original
Indenture, including Section 2.3 thereof, and pursuant to appropriate
resolutions of the Board of Directors, has duly determined to make, execute and
deliver to the Trustee this Fourth Supplemental Indenture to the Original
Indenture as permitted by Sections 2.1, 2.3 and 8.1 of the Original Indenture
in order to establish the form or terms of, and to provide for the creation and
issue of, a series of Securities under the Original Indenture in the aggregate
principal amount of up to $100,000,000; and
WHEREAS, all things necessary to make the Securities, when
executed by the Company and authenticated and delivered by the Trustee or any
Authenticating Agent and issued upon the terms and subject to the conditions
hereinafter and in the Original Indenture set forth against payment therefor,
the valid, binding and legal obligations of the Company and to make this Fourth
Supplemental Indenture a valid, binding and legal agreement of the Company,
have been done;
NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITNESSETH
that, in order to establish the terms of a series of Securities, and for and in
consideration of the premises and of the covenants contained in the Original
Indenture and in this Fourth Supplemental Indenture and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, it is mutually covenanted and agreed as follows:
-1-
<PAGE> 4
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
1.1 Definitions. Each capitalized term that is used herein and
is defined in the Original Indenture shall have the meaning specified in the
Original Indenture unless such term is otherwise defined herein.
"Stated Maturity" means April 15, 2007.
1.2 Section References. Each reference to a particular section
set forth in this Fourth Supplemental Indenture shall, unless the context
otherwise requires, refer to this Fourth Supplemental Indenture.
ARTICLE II
TITLE AND TERMS OF SECURITIES
2.1 Title of the Securities. This Fourth Supplemental Indenture
hereby establishes a series of Securities designated as the "7.25% Senior Notes
due April 15, 2007" of the Company (collectively referred to herein as the
"Senior Notes"). For purposes of the Original Indenture, the Senior Notes
shall constitute a single series of Securities.
2.2 Term of the Senior Notes. The Senior Notes shall mature on
April 15, 2007. In the event that the Stated Maturity of any Senior Note is
not a Business Day, principal and interest payable at maturity shall be paid on
the next succeeding Business Day with the same effect as if such Business Day
were such Stated Maturity and no interest shall accrue or be payable for the
period from and after such Stated Maturity to such next succeeding Business
Day.
2.3 Amount and Denominations; Currency of Payment. The
aggregate principal amount in which the Senior Notes may be issued under this
Fourth Supplemental Indenture is limited to $100,000,000.
The Senior Notes shall be issued in the form of one or more
Registered Global Securities in the name of Cede & Co., as registered owner and
nominee for The Depositary Trust Company, New York, New York ("DTC"). DTC
shall initially act as Depositary for the Senior Notes.
The Senior Notes shall be denominated in United States dollars
in denominations of $1,000 and integral multiples of $1,000 in excess thereof.
-2-
<PAGE> 5
2.4 Interest and Interest Rates. Each Senior Note shall bear
interest at the rate of 7.25% per annum from the date of issue or from the most
recent Interest Payment Date (as defined below) to which interest on such
Senior Note has been paid or duly provided for, commencing with the Interest
Payment Date next succeeding the date of issue, until the principal thereof is
paid or made available for payment. Interest shall be payable to the Person in
whose name a Senior Note is registered at the close of business on the Regular
Record Date (as defined below) next preceding an Interest Payment Date.
Notwithstanding the foregoing, if a Senior Note is originally issued after the
Regular Record Date and before the corresponding Interest Payment Date, the
first payment of interest on such Senior Note shall be made on the next
succeeding Interest Payment Date to the Person in whose name such Senior Note
was registered on the Regular Record Date with respect to such next succeeding
Interest Payment Date. Interest on each Senior Note shall be computed on the
basis of a 360-day year comprising twelve 30-day months.
2.5 Interest Payments
The Interest Payment Dates for each Senior Note shall be April 15
and October 15 in each year, beginning October 15, 1997 and the Regular Record
Dates shall be the March 31 and September 30 preceding such April 15 and
October 15 Interest Payment Dates. Interest shall also be payable at maturity
of any Senior Note.
If an Interest Payment Date with respect to any Senior Note would
otherwise fall on a day that is not a Business Day, such Interest Payment Date
shall be postponed to the next succeeding Business Day with respect to such
Senior Note and no interest shall accrue or be payable on such next succeeding
Business Day for the period from and after such original Interest Payment Date
to such next succeeding Business Day.
Except as provided in the preceding paragraph, interest payments
shall be in the amount of interest accrued to, but excluding, the Interest
Payment Date.
2.6 Place of Payment, Transfer and Exchange. The Company authorizes
and appoints the Trustee as the sole Paying Agent with respect to any Senior
Notes represented by Registered Global Securities without prejudice to the
Company's authority to appoint additional Paying Agents from time to time
pursuant to Section 3.4 of the Original Indenture. Payments of principal on
each Senior Note and interest thereon payable at maturity shall be made in
immediately available funds, at the request of the Holder, at the office or
agency of the Paying Agent in New York, New York or any other duly appointed
Paying Agent; provided that such Senior Note is presented to the Paying Agent
in time for the Paying Agent to make such payments in such funds in accordance
with its normal procedures. In addition, the Company may maintain a drop
agent, in such location or locations as the Company may select, to provide the
Holders with an office at which they may present the Senior Notes for payment.
The Company hereby acknowledges that any such drop agent will accept Senior
Notes for presentment, take payment instructions from the Holder and forward
such Senior Notes and any related payment instructions to the Paying Agent by
overnight courier, for next day delivery. Such Senior Notes shall be deemed to
be presented to the Paying Agent on the Business Day next succeeding the day
the Senior Notes are delivered to any such drop agent.
-3-
<PAGE> 6
So long as the Senior Notes are represented by a Registered
Global Security, interest (other than interest payable at maturity) shall be
paid in immediately available funds by wire transfer to the Depositary for such
Senior Notes, upon the written order of the Depositary. With respect to Senior
Notes not represented by a Registered Global Security, interest (other than
interest payable at maturity) shall be paid by check mailed to the address of
the Person entitled thereto as it appears in the Security register.
The Company appoints the Trustee as the sole Security registrar
with respect to the Senior Notes, without prejudice to the Company's authority
to appoint additional Security registrars from time to time pursuant to Section
2.8 of the Original Indenture. The Senior Notes may be presented by the
Holders thereof for registration of transfer or exchange at the office or
agency of the Security registrar or any successor or co-registrar in New York,
New York. In addition, the Company may maintain a drop agent, in such location
or locations as the Company may select, to provide the Holders with an office
at which they may present the Senior Notes for registration of transfer or
exchange. The Company hereby acknowledges that any such drop agent will accept
Senior Notes for registration of transfer or exchange and forward such Senior
Notes to the Security registrar by overnight courier, for next day delivery.
Such Senior Notes shall be deemed to be presented to the Security registrar on
the Business Day next succeeding the day that Senior Notes are delivered to any
such drop agent.
2.7 Redemption; No Sinking Fund. The Senior Notes shall not be
redeemable prior to Stated Maturity. The Senior Notes shall not be subject to
any sinking fund.
2.8. Form and Other Terms of the Senior Notes. Attached hereto
as Exhibit A is a form of a Senior Note denominated in United States dollars,
which form is hereby established as a form in which Senior Notes may be issued.
In addition, any Senior Note may be issued in such other form as may be
provided by, or not inconsistent with, the terms of the Original Indenture and
this Fourth Supplemental Indenture.
ARTICLE III
MISCELLANEOUS PROVISIONS
The Trustee makes no undertaking or representations in respect
of, and shall not be responsible in any manner whatsoever for and in respect
of, the validity or sufficiency of this Fourth Supplemental Indenture or the
proper authorization or the due execution hereof by the Company or for or in
respect of the recitals and statements contained herein, all of which recitals
and statements are made solely by the Company.
Except as expressly amended hereby, the Original Indenture, as
heretofore amended and supplemented, shall continue in full force and effect in
accordance with the provisions thereof and the Original Indenture is in all
respects hereby ratified and confirmed. This Fourth Supplemental Indenture and
all its provisions shall be deemed a part of the Original Indenture in the
manner and to the extent herein and therein provided.
-4-
<PAGE> 7
This Fourth Supplemental Indenture shall be governed by, and
construed in accordance with, the laws of the State of New York.
This Fourth Supplemental Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
-5-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
SYSCO CORPORATION
By:
----------------------------
John K. Stubblefield, Jr.
Senior Vice President and
Chief Financial Officer
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, as Trustee
By:
----------------------------
Name:
Title:
-6-
<PAGE> 9
Exhibit A to Fourth Supplemental Indenture
[IF ISSUED AS REGISTERED GLOBAL SECURITIES, THE FOLLOWING LEGEND MUST BE
USED:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITARY TO THE 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.]
REGISTERED REGISTERED
SYSCO CORPORATION
7.25% Senior Note due April 15, 2007
No. _______ CUSIP NO._______
PRINCIPAL AMOUNT AUTHENTICATION DATE: April 25, 1997
$ 100,000,000
ORIGINAL ISSUE DATE: STATED MATURITY: April 15, 2007
April 25, 1997
INTEREST RATE: SUBJECT TO DEFEASANCE PURSUANT
TO SECTION 10.1 OF THE INDENTURE
7.25% per annum
ISSUE PRICE (%):
99.611%
SYSCO CORPORATION, a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which
term includes any successor Person under the Indenture referred to on the
reverse hereof), for value received, hereby promises to pay to CEDE & Co., or
registered assigns, the principal sum of ONE HUNDRED MILLION DOLLARS at the
Stated Maturity specified above and to pay interest thereon, computed on the
basis of a 360-day year comprising twelve 30-day months, from the Original
Issue Date specified above or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually in arrears on
April 15 and October 15 beginning October 15, 1997, in each year and at the
Stated Maturity, commencing with, except as provided in the next succeeding
sentence, the Interest Payment Date next succeeding the Original Issue Date set
forth above, at the Interest Rate per annum set forth above, until the
principal hereof is paid or made available for payment. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in such Indenture, be paid to the Person in whose name this
Security is registered at the close of business on the Regular Record Date for
such interest, which shall be March 31 or September 30 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date;
provided, however, that if the Original Issue Date of this Security is after a
Regular Record Date and before the corresponding Interest Payment Date, the
first payment of interest on this Security shall be made on the next succeeding
Interest Payment Date to the Person in whose name this Security is registered
on the Regular Record Date with respect to such next succeeding Interest
Payment Date. Except as otherwise provided in the Indenture, any such interest
not so punctually paid or duly provided for will forthwith cease to be payable
to the Holder on such Regular Record Date and shall be paid to the Person in
whose name this Security is registered at the close of business on
-1-
<PAGE> 10
a subsequent record date for the payment of such defaulted interest, notice
thereof to be given to Holders of Securities of this series not less than five
Business Days prior to such subsequent record date.
Payment of the principal on this Security, and interest payable
at Stated Maturity will be made in immediately available funds, at the request
of the Holder upon presentation and surrender of this Security, at the office
or agency of the Company maintained for that purpose in New York, New York or
such other office or agency of the Company as may be designated by it for such
purpose, in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts. Payment of interest (other than interest payable at the Stated
Maturity) will, subject to certain exceptions provided in the Indenture, be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security register.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
SECURITY SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS
SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS
PLACE.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof, directly or through an
Authenticating Agent, by manual signature of an authorized signatory, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, SYSCO CORPORATION has caused this instrument
to be duly executed under its corporate seal.
SYSCO CORPORATION
[Seal]
By
-------------------------
Senior Vice President
Attest
----------------------
Assistant Secretary
-2-
<PAGE> 11
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein, referred to in
the within-mentioned Indenture.
First Union National Bank
of North Carolina, as Trustee
By
-------------------------------
As Authenticating Agent
By
-------------------------------
Authorized Signatory
-3-
<PAGE> 12
SYSCO CORPORATION
7.25% Senior Note due April 15, 2007
------------------
This Security is one of a duly authorized issue of securities of
the Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of June 15, 1995, as supplemented by a
Fourth Supplemental Indenture dated as of April 25, 1997 (as so supplemented,
herein called the "Indenture"), between the Company and First Union National
Bank of North Carolina, as trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered. The
acceptance of this Security shall be deemed to constitute the consent and
agreement of the Holder hereof to all of the terms and conditions of the
Indenture. This Security is one of the series designated on the face hereof.
In any case where any Interest Payment Date or the Stated
Maturity shall not be a Business Day, payment of the amounts due on this
Security on such date may be made on the next succeeding Business Day; and no
interest shall accrue or be payable on such amounts as a result of the making
of such payment after such Interest Payment Date or Stated Maturity, as the
case may be, provided such payment is made in full on such next succeeding
Business Day.
The Securities are not subject to redemption by the Company prior
to the Stated Maturity.
If an Event of Default with respect to Securities of this series
shall occur and be continuing, the principal of the Securities of this series
may be declared due and payable in the manner and with the effect provided in
the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of not less than a majority in
principal amount of the Securities then Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Securities of each series at the
time Outstanding, on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security issued
upon the registration of transfer hereof or in exchange for or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As set forth in, and subject to the provisions of, the Indenture,
no Holder of any Security of this series will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
(i) such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to this series, (ii) the Holders of
not less than 25% in aggregate principal amount of the Outstanding Securities
of this series shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee, (iii) the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the Outstanding Securities of this series a direction
inconsistent with such request and (iv) the Trustee shall have failed to
institute such proceeding within 60 days; provided, however, that such
limitations do not apply to a suit instituted by the Holder hereof for the
enforcement of payment of the principal or any interest on this Security on or
after the respective due dates expressed herein.
No reference to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal and any interest including
additional amounts, as described on the face hereof on this Security at the
times, places and rate, and in the coin or currency, herein prescribed.
-4-
<PAGE> 13
The Securities of this series are issuable only in fully
registered form and are represented either by a global certificate registered
in the name of a depositary or in the name of its nominee or by a certificate
registered in the name of the beneficial owner of such Securities or its
nominee. The Securities are issuable in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of this series
and of like tenor of any authorized denomination, as requested by the Holder
surrendering the same.
As provided in the Indenture and subject to certain limitations
therein or herein set forth, the transfer of this Security is registrable in
the Security register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the
principal and any interest on this Security are payable or at such other
offices or agencies as the Company may designate, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to, the
Company and the Security registrar or any transfer agent, duly executed by the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees.
No service charge shall be made for any registration of transfer
or exchange of Securities, but, subject to certain limitations set forth in the
Indenture, the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
Subject to the terms of the Indenture, prior to due presentment
of this Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not
this Security is overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
The Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
As provided in the Indenture, no recourse may be taken, directly
or indirectly, against any incorporator, subscriber to the stock, stockholder,
officer, director or employee of the Company or the Trustee or of any
predecessor or successor of the Company or the Trustee with respect to the
Company's obligations on the Securities or the obligations of the Company or
the Trustee under the Indenture or any certificate or other writing delivered
in connection herewith or therewith except as otherwise expressly provided in
any such certificate or other writing.
--------------------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - _____Custodian____
(Cust) (Minor)
under Uniform Gifts
TEN ENT - as tenants by the entireties to Minors Act
JT TEN - as joint tenants with right --------------------
of survivorship and not as (State)
tenants in common
</TABLE>
Additional abbreviations may also be used though not in the above list.
-5-
<PAGE> 14
----------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
Please insert Social Security
or taxpayer identification number
of Assignee
- ------------------------
- ------------------------ ------------------------------------------------------
- -------------------------------------------------------------------------------
Please print or typewrite name and address including
postal zip code of assignee
- -------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing ______________________, attorney to transfer said Security on
the books of the Company, with full power of substitution in the premises.
Dated: _________________________ ________________________________
________________________________
The signature(s) to this assignment
must correspond with the name as
written upon the face of this
Security in every particular,
without alteration, enlargement or
any change whatsoever.
- --------------------------------
Signature Guarantee
Note: Signature(s) must be guaranteed by an eligible guarantor institution
meeting the requirements of the Trustee, which requirements will include
membership or participation in STAMP or such other "signature guarantee
program" as may be determined by the Trustee in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
-6-
<PAGE> 1
EXHIBIT # 10(b)
<PAGE> 2
FIFTH AMENDED AND RESTATED
SYSCO CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
7/7/97
<PAGE> 3
FIFTH AMENDED AND RESTATED
SYSCO CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section
<S> <C>
ARTICLE I -- DEFINITIONS
Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Actuarial Equivalent or Actuarially Equivalent Basis . . . . . . . . . . . . . . . . . . . . . . 1.2
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Credited Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9
Eligible Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10
Final Average Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.13
Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.14
Primary Social Security Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.15
Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.16
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.17
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.18
Sysco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.19
Sysco Retirement Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.20
Total Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.21
Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.22
ARTICLE II - ELIGIBILITY
Initial and Continued Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Frozen Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Frozen Participation Deemed Active Participation . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Renewed Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
ARTICLE III - VESTING
</TABLE>
-i-
<PAGE> 4
TABLE OF CONTENTS (CONTINUED)
<TABLE>
<CAPTION>
Section
<S> <C>
ARTICLE IV - RETIREMENT BENEFIT
Calculation of Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1
Form and Time of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Temporary Social Security Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
Beneficiary for the Five Year Certain Payment . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
ARTICLE V - DEATH BENEFIT
Death Prior to Participant's Age 60 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
Death at or After Age 60 While Still Employed
or After a Change of Control Which Occurs
While He is Employed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2
Death After Vested Termination But Prior to
Commencement of Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
Death After Commencement of Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . 5.4
Death While Participation is Frozen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5
Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6
ARTICLE VI - PROVISIONS RELATING TO ALL BENEFITS
Effect of this Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
Limitation on Benefits Applicable to Each
Participant Whose Participation is Frozen . . . . . . . . . . . . . . . . . . . . . . . 6.3
No Duplication of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
Forfeiture For Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
Forfeiture For Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6
Expenses Incurred in Enforcing the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
Restrictions on any Portion of Total Payments
Determined to be Excess Parachute Payments . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
Benefits Upon Re-employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
ARTICLE VII - ADMINISTRATION
Committee Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
Committee Organization and Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
Powers of the Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3
</TABLE>
-ii-
<PAGE> 5
TABLE OF CONTENTS (CONTINUED)
<TABLE>
<CAPTION>
Section
<S> <C>
Committee Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5
ARTICLE VIII - ADOPTION BY SUBSIDIARIES
Procedure for and Status After Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1
Termination of Participation By Adopting Subsidiary . . . . . . . . . . . . . . . . . . . . . . 8.2
ARTICLE IX - AMENDMENT AND/OR TERMINATION
Amendment or Termination of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1
No Retroactive Effect on Awarded Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2
Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3
ARTICLE X - FUNDING
Payments Under This Plan are the Obligation
of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1
Plan May Be Funded Through Life Insurance
Owned by the Company or a Rabbi Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2
Reversion of Excess Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
Participants Must Reply Only on General
Credit of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4
Funding of Benefits for Participants Subject to
Canadian Income Tax Laws is Prohibited . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5
ARTICLE XI - MISCELLANEOUS
Responsibility for Distributions and
Withholding of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
Limitation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2
Distributions to Incompetents of Minors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
Nonalienation of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4
Reliance Upon Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5
Amendment Applicable to Active Participants Only
Unless it Provides Otherwise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6
Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7
</TABLE>
-iii-
<PAGE> 6
TABLE OF CONTENTS (CONTINUED)
<TABLE>
<CAPTION>
Section
<S> <C>
Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.8
Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.9
Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.10
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.11
</TABLE>
-iv-
<PAGE> 7
FIFTH AMENDED AND RESTATED
SYSCO CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, Sysco Corporation and its subsidiaries have
established the Sysco Corporation Supplemental Executive Retirement Plan
effective July 3, 1988 which provides for certain highly compensated management
personnel a supplement to their retirement pay so as to retain their loyalty
and to offer a further incentive to them to maintain and increase their
standard of performance;
WHEREAS, Sysco Corporation retained the right of the Board of
Directors to amend the Plan at any time by an instrument in writing; and
WHEREAS, the Plan, as amended and restated on February 15,
1996, has been amended by the First Amendment to the Plan, which amendment was
executed on this date, July 7, 1997, to be effective October 1, 1996, and;
WHEREAS, it has been determined that the Plan should again be
restated to incorporate the First Amendment so that the Plan, as amended, is
set forth in one document;
NOW, THEREFORE, Sysco Corporation amends and restates the
Sysco Corporation Supplemental Executive Retirement Plan as follows:
<PAGE> 8
ARTICLE I
DEFINITIONS
1.1 Accrued Benefit. "Accrued Benefit" means, for all
purposes other than determining the frozen Accrued Benefit, as of any given
time the retirement benefit calculated under Section 4.1 with Final Average
Compensation, the offsets for benefits provided by other qualified or
registered defined contribution and qualified or registered defined benefit
plans and Credited Service determined as of that date but with the offset for
the Primary Social Security Benefit and the Canadian Pension Plan benefit being
projected to be the benefit payable at age 65 if he is less than age 65 at the
given time and his age at the given time if he is age 65 or more at the given
time. "Accrued Benefit" means for purposes of determining a Participant's
frozen Accrued Benefit as of any given time the retirement benefit calculated
under Section 4.1 with Final Average Compensation determined under Section 1.11
and Credited Service determined under Section 1.9 as of the date the
Participant's participation in this Plan is frozen but with the offsets for
benefits provided by other qualified or registered defined contribution and
qualified or registered defined benefit plans determined as of the date of his
Retirement or his earlier termination of employment with all Companies and the
offset for the Primary Social Security Benefit and the Canadian Pension Plan
benefit being projected to be the benefit payable at age 65 if he is less than
age 65 at the time of his Retirement or his earlier termination from employment
with all Companies and his age at Retirement if he is age 65 or more at that
time.
1.2 Actuarial Equivalent or Actuarially Equivalent Basis.
"Actuarial Equivalent" or "Actuarially Equivalent Basis" means an equality in
value of the aggregate amounts expected to be received under different forms of
payment based on the same mortality and interest assumptions. For this
purpose, the mortality and interest rate assumptions used in
-2-
<PAGE> 9
computing benefits under the Sysco Retirement Plan will be used. If there is
no Sysco Retirement Plan or successor qualified defined benefit plan, then the
actuarial assumptions to be used will be those actuarial assumptions as are
selected by the actuarial firm, which last serviced the Sysco Retirement Plan
prior to its termination or merger, as being then appropriate had the Sysco
Retirement Plan remained in existence with its last participant census.
1.3 Beneficiary. "Beneficiary" means a person or entity
designated by the Participant under the terms of this Plan to receive any
amounts distributed under the Plan upon the death of the Participant.
1.4 Board of Directors. "Board of Directors" means the
Board of Directors of Sysco.
1.5 Change of Control. "Change of Control" means the
occurrence of one or more of the following events:
(a) Any "person", including a "syndication" or "group" as
those terms are used in Section 13(d)(3) of the Securities Act, is or
becomes the beneficial owner, directly or indirectly, of securities of
Sysco representing 20% or more of the combined voting power of Sysco's
then outstanding Voting Securities;
(b) Sysco is merged or consolidated with another
corporation and immediately after giving effect to the merger or
consolidation either (i) less than 80% of the outstanding Voting
Securities of the surviving or resulting entity are then beneficially
owned in the aggregate by (x) the stockholders of Sysco immediately
prior to the merger or consolidation, or (y) if a record date has been
set to determine the stockholders of Sysco entitled to vote on the
merger or consolidation, the stockholders of Sysco as of that record
date, or (ii) the Board of Directors, or similar governing body, of
the surviving or resulting entity does not have as a majority of its
members the persons specified in clause (c)(i) and (ii) below;
(c) If at any time the following do not constitute a
majority of the Board of Directors of Sysco (or any successor entity
referred to in clause (b) above):
(i) persons who are directors of Sysco on July
12, 1991; and
-3-
<PAGE> 10
(ii) persons who, prior to their election as a
director of Sysco (or successor entity if applicable) were
nominated, recommended or endorsed by a formal resolution of
the Board of Directors of Sysco;
(d) If at any time during a calendar year a majority of
the directors of Sysco are not persons who were directors at the
beginning of the calendar year; and
(e) Sysco transfers substantially all of its assets to
another corporation which is a less than 80% owned subsidiary of
Sysco.
1.6 Code. "Code" means the Internal Revenue Code of
1986, as amended from time to time.
1.7 Company. "Company" means Sysco and any Subsidiary
adopting the Plan.
1.8 Committee. "Committee" means the persons who are
from time to time serving as members of the committee administering this Plan.
1.9 Credited Service. "Credited Service" means service
with Sysco and its Subsidiaries for which the Participant is awarded credited
service under the Sysco Retirement Plan for vesting purposes or would have been
awarded Credited Service under the Sysco Retirement Plan for vesting purposes
if the Sysco Retirement Plan covered employees working outside of the United
States except under the circumstances described below in which event the rules
set forth for each circumstance would be applicable to that circumstance only:
(a) If a Participant is terminated for total disability
on or after age 60 under circumstances which will qualify the
Participant for a total disability benefit under the Sysco Retirement
Plan and his participation is not then frozen, the Participant will be
awarded Credited Service for vesting purposes under Article III until
the Participant attains 65 if the disability continues but will not be
awarded Credited Service for benefit accrual purposes under Section
4.1.
(b) If a Participant is terminated for total disability
at any time before age 60 or on or after age 60 when his participation
is frozen under Section 2.2, the Participant will not be awarded
Credited Service for any purpose under this Plan.
(c) If a Participant's participation in this Plan is
frozen, the Participant will be awarded Credited Service for vesting
purposes under Article III during the
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<PAGE> 11
period the Participant is still employed by an adopting Company but
during which his participation is frozen, but will not be awarded
Credited Service for benefit accrual purposes under Section 4.1.
(d) If a Participant's participation in this Plan is
frozen but he remains employed by an adopting Company and then later
again becomes eligible to participate, the Participant will be awarded
Credited Service for the intervening period for all purposes.
However, notwithstanding the above provisions or anything else
that may be to the contrary in this Plan, the Compensation Committee of the
Board of Directors may, in its sole discretion, award additional Credited
Service for purposes of vesting, benefit accrual or both when it determines a
situation warrants it.
1.10 Eligible Earnings. "Eligible Earnings" means the
Participant's salary for a given Plan Year plus the amount, if any, awarded the
Participant with respect to the Plan Year under the Sysco Corporation
Management Incentive Plan and then paid to him, plus the amount, if any,
deferred by the Participant under the Sysco Corporation Executive Deferred
Compensation Plan.
1.11 Final Average Compensation. "Final Average
Compensation" means a Participant's average monthly Eligible Earnings from the
Company for the five successive Plan Years that give the highest average
monthly rate of Eligible Earnings for the Participant out of the ten Plan Years
next preceding the earliest of: (a) a Participant's participation in this Plan
being frozen, (b) a Change of Control unless the employee remains an employee
of the Company and a Participant for the Plan Year in which a Change of Control
occurs and the next succeeding three Plan Years, or (c) the latest of (i) his
attainment of age 60, (ii) termination for total disability after age (60) or
(iii) his Retirement. For this purpose, a Participant's Eligible Earnings will
only be used for the period of time that the Company has been a Subsidiary and
for the period of time that the Participant has been employed by Sysco or a
Subsidiary.
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<PAGE> 12
1.12 Participant. "Participant" means an employee of a
Company who is eligible for and is participating in the Plan.
1.13 Plan. "Plan" means the Sysco Corporation
Supplemental Executive Retirement Plan set forth in this document, as amended
from time to time.
1.14 Plan Year. "Plan Year" means a one year period which
coincides with the fiscal year of Sysco. Sysco has a 52/53 week fiscal year
beginning on the Sunday next following the Saturday closest to June 30th of
each calendar year.
1.15 Primary Social Security Benefit. "Primary Social
Security Benefit" means the amount commencing at the date of benefit
commencement under the Plan, or the date a Social Security retirement benefit
is first payable to the Participant if later, for those Participants who retire
or whose employment with all Companies is otherwise terminated at a time when
they have a vested interest on or before age 65, or at the time of Retirement
for all others, as a monthly old age benefit for the Participant under the
Federal Social Security Act or any similar federal act or acts in effect at
termination of employment, whether or not payment of the amount is delayed,
superseded or forfeited because of failure to apply or for any other reason.
The amount of the monthly old age benefit will be determined based upon the pay
and employment data which may be furnished by the Company and/or the
Participant concerned. If a Participant terminates before age 65, it will be
assumed that he had no compensation after termination. Any pay for periods
prior to the earliest data furnished will be estimated by applying a salary
scale factor projected backward and the salary scale applied for this purpose
is the actual change in average wages from year to year as determined by the
Federal Social Security Administration.
1.16 Retirement. "Retirement" means the retirement of a
Participant from any Company on or after age 60 under Company policy.
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1.17 Securities Act. "Securities Act" means the
Securities Exchange Act of 1934, as amended from time to time.
1.18 Subsidiary. "Subsidiary" means any wholly owned
subsidiary of Sysco.
1.19 Sysco. "Sysco" means the Sysco Corporation, the
sponsor of this Plan.
1.20 Sysco Retirement Plan. "Sysco Retirement Plan" means
the Sysco Corporation Retirement Plan, a defined benefit plan qualified under
Section 401(a) of the Code.
1.21 Total Payments. "Total Payments" means all payments
or benefits received or to be received by a Participant in connection with a
Change of Control of Sysco and the termination of his employment under the
terms of this Agreement or the Sysco Corporation Executive Deferred
Compensation Plan, and in connection with a Change of Control of Sysco under
the terms of any stock option plan or any other plan, arrangement or agreement
with the Company, its successors, any person whose actions result in a Change
of Control or any person affiliated with the Company or who as a result of the
completion of transactions causing a Change of Control become affiliated with
the Company within the meaning of Section 1504 of the Code, taken collectively.
1.22 Voting Securities. "Voting Securities" means any
security which ordinarily possesses the power to vote in the election of the
Board of Directors without the happening of any precondition or contingency.
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<PAGE> 14
ARTICLE II
ELIGIBILITY
2.1 Initial and Continued Eligibility. Each employee of
a Company who is a participant in the Sysco Corporation Management Incentive
Plan is eligible to participate in this Plan. Once an employee has qualified
to participate in this Plan the employee shall continue his participation as
long as he remains a participant in the Sysco Corporation Management Incentive
Plan or the Committee determines that his failure to participate in the Sysco
Corporation Management Incentive Plan will not affect his eligibility to
continue his participation in this Plan. But, if a Participant is no longer a
participant in the Sysco Corporation Management Incentive Plan and the
Committee does not make that determination, the Participant immediately becomes
ineligible to participate in this Plan.
2.2 Frozen Participation. If an employee who is a
Participant later becomes ineligible to continue to participate but still is
employed by an adopting Company, his Accrued Benefit will be frozen as of the
last day of the Plan Year prior to the Plan Year during which he initially
became ineligible to participate. He will later be entitled to that frozen
Accrued Benefit, upon Retirement, should he fulfill the requirements of
Articles III and IV. The frozen Accrued Benefit will be payable at the time
and in the form set out in Article IV. However, if any of the events described
in Article VI should occur, the Participant whose participation is frozen shall
then have his frozen Accrued Benefit either restricted in amount or forfeited.
2.3 Frozen Participation Deemed Active Participation. If
a Participant's participation in this Plan is frozen after a Change of Control
and the Participant dies or is terminated from the employ of all Companies by
the then management within four years after
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<PAGE> 15
that Change of Control the freeze will be ineffective as to that Participant
and he will be treated for all purposes as if his participation were never
frozen.
2.4 Renewed Eligibility. If an employee who is a
Participant becomes ineligible to continue to participate but remains employed
by an adopting Company and then later again becomes eligible to participate,
the Participant will have his Final Average Compensation computed as though the
freeze had never occurred, and will be treated for all purposes as though he
had not had his participation interrupted. Thereafter he will become entitled
to benefits as before should he fulfill the requirements of Article III and IV
or V.
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ARTICLE III
VESTING
A Participant must have 10 years or more of Credited Service,
excluding any Credited Service before the later of the first date of hire by
the Company or the date of acquisition by Sysco of the Company for which the
Participant then worked, in order to vest in his Accrued Benefit using the
following vesting schedule unless a Change of Control occurs. If a Change of
Control occurs, each Participant will immediately vest 100% in his Accrued
Benefit, without regard to the required 10 years or more of Credited Service to
begin vesting or the vesting schedule. In addition, the Compensation Committee
of the Board of Directors within its sole discretion may accelerate vesting and
may award Credited Service for vesting purposes as provided in Section 1.9 when
it determines that specific situations warrant such action.
<TABLE>
<CAPTION>
Participant's Attained
Age Upon Termination
of Credited Service Vested Percentage
--------------------- -----------------
<S> <C>
Less than 60 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
60 but less than 61 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50%
61 but less than 62 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60%
62 but less than 63 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70%
63 but less than 64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80%
64 but less than 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90%
65 or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
</TABLE>
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<PAGE> 17
ARTICLE IV
RETIREMENT BENEFIT
4.1 Calculation of Retirement Benefit. If a Participant
retires for age or disability from the Company on or after age 65 or if the
Participant's employment with all Companies is terminated prior to age 65 and
he has a vested interest, he will be entitled to be paid in accordance with
Section 4.2, the vested portion of a monthly benefit equal to 50% of the
Participant's Final Average Compensation offset by the sum of (a), (b), and (c)
below which net amount is then reduced by 5% for each full year of Credited
Service less than 20 years:
(a) the monthly benefit for the life of the Participant
with five years certain which can be provided on an Actuarially
Equivalent Basis with the vested benefit of the Participant in the
Sysco Corporation Employees' 401(k) Plan and any other qualified
defined contribution plan in the United States and/or registered
deferred profit sharing plan in Canada sponsored and funded by the
Company or any other company for which a Participant may have worked
in the past or will work in the future,
(b) the monthly benefit for the life of the Participant
with five years certain which can be provided on an Actuarially
Equivalent Basis with the vested accrued benefit of the Participant
from the Sysco Retirement Plan and any other qualified defined benefit
plan in the United States and/or registered pension plan in Canada
sponsored and funded by the Company or any other company for which a
Participant may have worked in the past or will work in the future,
and
(c) the Primary Social Security Benefit available to the
Participant and/or the benefit available to the Participant under the
Canadian Pension Plan (the government sponsored plan comparable to the
federal Social Security System) using the same or similar assumptions
used to determine the Primary Social Security Benefit.
In determining the amount of the offset resulting from a
Participant's vested benefit and/or vested accrued benefit, only the benefit
derived from the Company's or any other employer contributions, exclusive of
any salary deferral contributions, is to be used and any prior distribution
from a Participant's vested benefit and/or vested accrued benefit, including
but not limited to an in service withdrawal or a qualified domestic relations
order distribution, will
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<PAGE> 18
be added back. The vested benefit and/or vested accrued benefit is to be
computed as if the benefits will begin being paid as of the later of the date
of benefit commencement under the Plan or the date a retirement benefit is
first payable to the Participant under the applicable plans without regard to
the actual election made by the Participant under any given plan.
4.2 Form and Time of Payment.
(a) Except as provided in (b) below, the monthly
retirement benefit will begin on the first day of the month coincident
with or next following the Participant's sixty-fifth (65th) birthday
or actual Retirement, whichever is later, if he survives to the
applicable date.
(b) The monthly retirement benefit will begin on the
first day of the month next following the Participant's actual
Retirement if he survives to the applicable date, for a Participant
(i) who retires for reasons other than disability on or after his
sixtieth (60th) birthday but prior to his sixty-fifth (65th) birthday,
(ii) who has been a Participant for ten (10) years or since the
inception of the Plan, whichever is shorter, and (iii) who has had at
least twenty (20) years of Credited Service prior to his actual
Retirement, excluding any Credited Service before the later of his
first date of hire by the Company or the date of acquisition by Sysco
of the Company for which the Participant then worked.
(c) The form of benefit payment, in the case of a
Participant who is not married at benefit commencement will be a life
only monthly annuity with a period of five years guaranteed in the
amount calculated in accordance with Section 4.1. The form of benefit
payment, in the case of a Participant who is married at benefit
commencement will be a joint and two-thirds survivor monthly annuity
which is Actuarially Equivalent to the amount calculated in accordance
with Section 4.1 where a reduced monthly amount is payable for the
joint lives of the Participant and his spouse, and upon the death of
either, a monthly amount will continue for the life of the survivor
equal to two-thirds of the monthly amount provided during their joint
lives.
4.3 Temporary Social Security Supplement.
Notwithstanding anything in the Plan to the contrary, the monthly retirement
benefit of a Participant who retires on or after his 60th birthday but before
attainment of age 62 and who has met the early payment criteria of Section
4.2(b) shall be calculated in accordance with Section 4.1 including the offset
of the age 62 Primary Social Security Benefit pursuant to Section 4.1(c). The
payment shall be modified,
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<PAGE> 19
however, by the Company paying to the Participant each month, in addition to
the benefit calculated pursuant to Section 4.1, an amount equal to such
Participant's projected monthly age 62 Primary Social Security Benefit through
and including the month in which the Participant's 62nd birthday occurs, but
not thereafter.
4.4 Beneficiary for the Five Year Certain Payment. If a
Participant who receives a life annuity, with five years certain, dies prior to
completing the five years certain period, the Beneficiary named by him, under
Article V, for any death benefit that may be payable under that Article, will
receive the remaining payments to be made under that annuity form after the
Participant's death. Even though a Participant with a frozen Accrued Benefit
cannot receive a death benefit under Article V, a Beneficiary designation
completed in accordance with Section 5.4, before or after a Participant's
participation is frozen, will be effective for the purpose of awarding the
remaining payments under the five years certain.
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<PAGE> 20
ARTICLE V
DEATH BENEFIT
5.1 Death Prior to Participant's Age 60. If a
Participant's participation in this Plan is not then frozen and he dies prior
to age 60 either (a) while in the employ of the Company or (b) within four
years after a Change of Control whether he is still employed by the Company or
not, the Participant's designated Beneficiary will be entitled to receive
annually, for a period of 10 years, an amount which is equal to 25% of the
average annual Eligible Earnings of the Participant for the last three full
Plan Years prior to his death or termination, whichever is earlier. This
benefit will begin being paid 90 days after the date of the Participant's
death.
5.2 Death at or After Age 60 While Still Employed or After a
Change of Control Which Occurs While He Is Employed.
(a) If a Participant's participation in this Plan is not
then frozen and he dies at or after age 60 either (x) while in the
employ of the Company or (y) within four years after a Change of
Control which occurs while he is employed, whether or not he is still
employed by the Company at the date of death:
(1) if the Participant is married at the time of
death the Participant's designated Beneficiary will be
entitled to receive a monthly annuity for life with a period
of 10 years certain that can be provided on an Actuarially
Equivalent Basis by the greater of (A) the commuted lump sum
value of the benefit which would be payable to the Participant
if he had retired and could have begun receiving his
retirement benefit under Article IV, using the vested
percentage as of his date of death but, except as provided in
(b) below, reducing the benefit by five-ninths of 1% for each
full calendar month by which the first payment precedes the
month in which the Participant would have attained age 65 so
as to discount it for its earlier payment, or (B) the commuted
lump sum value of the benefit the Participant's designated
Beneficiary would have received under Section 5.1 assuming the
Participant qualified for it without regard to his age; or
(2) if the Participant is single at the time of
death, the Participant's designated Beneficiary will be
entitled to receive a lump sum payment which is the Actuarial
Equivalent of the greater of (A) the
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<PAGE> 21
commuted lump sum value of the benefit which would be payable
to the Participant if he had retired and could have begun
receiving his retirement benefit under Article IV, using the
vested percentage as of his date of death but, except as
provided in (b) below, reducing the benefit by five-ninths of
1% for each full calendar month by which the lump sum payment
precedes the month in which the Participant would have
attained age 65 so as to discount it for its earlier payment,
or (B) the commuted lump sum value of the benefit the
Participant's designated Beneficiary would have received under
Section 5.1 assuming the Participant qualified for it without
regard to his age.
This benefit will be paid or begin being paid, as applicable, 90 days after the
date of the Participant's death.
(b) Notwithstanding (a)(1) and (2) above if on the date
of the Participant's death, the Participant would have met the
conditions of Section 4.2(b) hereof which would entitle him to receive
a monthly retirement benefit prior to his attaining age 65 had he
retired on the date of his death, the benefit such Participant's
designated Beneficiary would be entitled to under (a)(1)(A) or
(a)(2)(A) above shall not be reduced by five-ninths of 1% for each
full calendar month by which the payment(s) precede the month in which
the Participant would have attained age 65.
5.3. Death After Vested Termination But Prior to
Commencement of Retirement Benefits. If a Participant's participation in the
Plan is not then frozen, (i) he dies after retiring on or after age 60 for age
or disability, (ii) death occurs prior to benefit commencement and (iii) no
Change of Control occurs while he is still employed within a four-year period
ending on the date of his death:
(a) if the Participant is married at the time of death,
the Participant's designated Beneficiary will be entitled to receive,
monthly, an annuity for life with a period of 10 years certain which
is the actuarial equivalent of the commuted lump sum of the two-thirds
survivor annuity his spouse would have received if the Participant
could have begun receiving his retirement benefit under Article IV,
using the vested percentage as of his date of retirement, and then
died, all as of his date of death, reduced by five-ninths of 1% for
each full calendar month by which the first payment precedes the month
in which the Participant would have attained age 65; or
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<PAGE> 22
(b) if the Participant is single at the time of death,
the Participant's designated Beneficiary will be entitled to receive a
lump sum payment which is the actuarial equivalent of the commuted
lump sum of the period of five years of monthly payments his
designated Beneficiary would have received if the Participant could
have begun receiving his retirement benefit under Article IV, using
the vested percentage as of his date of retirement, and then died, all
as of his date of death, reduced by five-ninths of 1% for each full
calendar month by which the lump sum payment precedes the month in
which the Participant would have attained age 65.
This benefit will be paid or begin being paid, as applicable, 90 days after the
date of the Participant's death.
5.4 Death After Commencement of Retirement Benefits.
Upon the death of a Participant after benefit commencement there is no death
benefit. However, if the Participant is married at benefit commencement his
spouse, if she is then living, will receive the two-thirds survivor benefit
provided for in Article IV; and if the Participant is not married at benefit
commencement his designated Beneficiary will receive the remaining payments, if
any, due because of the five year certain period.
5.5 Death While Participation is Frozen. The death of a
frozen Participant has the following consequences under the Plan:
(a) If a frozen Participant dies after age 60 but prior
to age 65 and also prior to having met the early retirement criteria
of Section 4.2(b) there shall be no death benefit.
(b) If a frozen Participant dies after Retirement but
before commencement of benefits, there shall be no death benefit.
(c) If a frozen Participant dies either (i) after
commencement of benefits, (ii) after age 65 or (iii) after having met
the early retirement criteria of Section 4.2(b), the following death
benefits shall be applicable. If he was married at the date of
benefit commencement or, if benefits have not commenced, if he was
married, at the earlier of age 65 or the date of death, his spouse, if
she is then living, will receive the two thirds survivor's benefit
provided in Article IV. If he was not married at the date of benefit
commencement or, if benefits have not commenced, if he was not married
at the earlier of age 65 or the date
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<PAGE> 23
of death, his designated Beneficiary will receive the payments, if
any, due because of the five year certain period.
5.6 Beneficiary Designation. Each Participant upon
entering the Plan shall file with the Committee a designation of one or more
Beneficiaries to whom the death benefit provided by this Article V or the
remaining unpaid period certain payments under Article IV will be payable in
the event of the Participant's death prior to his Retirement. The designation
will be effective upon receipt by the Committee of a properly executed form
which the Committee has approved for that purpose. The Participant may from
time to time revoke or change any designation of Beneficiary by filing another
approved Beneficiary designation form with the Committee. If there is no valid
designation of Beneficiary on file with the Committee at the time of the
Participant's death or if all of the Beneficiaries designated in the last
Beneficiary designation have predeceased the Participant or otherwise cease to
exist, the Beneficiary will be the Participant's spouse, if the spouse survives
the Participant, or otherwise the Participant's estate. A Beneficiary must
survive the Participant by 60 days in order to be considered to be living on
the date of the Participant's death. If any Beneficiary survives the
Participant but dies or otherwise ceases to exist before receiving all payments
due under Article IV or this Article V, the balance of the payments, which
would have been paid to that Beneficiary will, unless the Participant's
designation provides otherwise, be distributed to the deceased individual
Beneficiary's estate or to the Participant's estate in the case of a
Beneficiary which is not an individual. Any Beneficiary designation which
designates any person or entity other than the Participant's spouse must be
consented to by the spouse in writing in a form acceptable to the Committee in
order to be effective.
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<PAGE> 24
ARTICLE VI
PROVISIONS RELATING TO ALL BENEFITS
6.1 Effect of This Article. The provisions of this
Article will control over all other provisions of this Plan.
6.2 Termination of Employment. Termination of employment
for any reason prior to the Participant's vesting under Article III or Article
V, if applicable, will cause the Participant and all Beneficiaries holding
under the Participant to forfeit all interest in and under this Plan.
6.3 Limitation on Benefits Applicable to Each Participant
Whose Participation is Frozen. The benefit provided under Article IV of this
Plan is limited in amount, in the case of each Participant whose participation
in this Plan is frozen at the time he becomes entitled to the benefit, so that
the benefit will not exceed the Participant's frozen Accrued Benefit if the
frozen Accrued Benefit is less than the benefit which could otherwise be
provided without this limitation.
6.4 No Duplication of Benefits. It is not intended that
there be any duplication of benefits. Therefore, if a Participant has met the
requirements of Article IV and has survived to age 65 or actual Retirement, if
later, then the Participant, his spouse and/or his Beneficiary shall only
receive a benefit under that Article. If a Participant dies before attaining
age 65 or actual Retirement, if later, the Participant's Beneficiary shall only
receive a benefit, if the Beneficiary qualifies for one, under Article V. But,
in no event will a Participant, Participant's spouse and/or Beneficiary qualify
for a benefit under both Articles.
6.5 Forfeiture For Cause. If the Committee finds, after
full consideration of the facts presented on behalf of both the Company and a
former Participant, that the Participant
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<PAGE> 25
was discharged by the Company for fraud, embezzlement, theft, commission of a
felony, proven dishonesty in the course of his employment by the Company which
damaged the Company, or for disclosing trade secrets of the Company, the entire
benefit accrued for the benefit of the Participant and/or his Beneficiaries
will be forfeited even though it may have been previously vested under Article
III or V. The decision of the Committee as to the cause of a former
Participant's discharge and the damage done to the Company will be final. No
decision of the Committee will affect the finality of the discharge of the
Participant by the Company in any manner. Notwithstanding the foregoing, the
forfeiture created by this Section will not apply to a Participant or former
Participant discharged during the Plan Year in which a Change of Control
occurs, or during the next three succeeding Plan Years following the Plan Year
in which a Change of Controls occurs unless an arbitrator selected to review
the Committee's findings agrees with the Committee's determination to apply the
forfeiture. The arbitrator will be selected by permitting each the Company and
the Participant to strike one name each from a panel of three names obtained
from the American Arbitration Association. The person whose name is remaining
will be the arbitrator.
6.6 Forfeiture for Competition. If at the time a
distribution is being made or is to be made to a Participant or former
Participant, the Committee finds after full consideration of the facts
presented on behalf of the Company and the Participant or former Participant,
that the Participant or former Participant at any time within (i) two years
from his termination of employment from all Companies which adopted this Plan
or, (ii) if such termination occurs prior to such Participant's or former
Participant's attaining age 65, the date such Participant or former Participant
attains age 67, and without written consent of the Company, directly or
indirectly owns, operates, manages, controls or participates in the ownership,
management, operation or control of or is employed by, or is paid as a
consultant or other independent contractor by a
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<PAGE> 26
business which competes or at any time did compete with the Company by which he
was formerly employed in a trade area served by the Company at the time
distributions are being made or to be made and in which the Participant or
former Participant had represented the Company while employed by it; and if the
Participant or former Participant continues to be so engaged 60 days after
written notice has been given to him, the Committee will forfeit all amounts
otherwise due the Participant or former Participant even though it may have
been previously vested under Article III or V. Notwithstanding the foregoing,
the forfeiture created by this Section will not apply to any Participant or
former Participant whose termination of employment from all Companies which
adopted this Plan occurs during the Plan Year in which a Change of Control
occurs or during the next three succeeding Plan Years following the Plan Year
in which a Change of Control occurs.
6.7 Expenses Incurred in Enforcing the Plan. The Company
will, in addition, pay a Participant for all legal fees and expenses incurred
by him in contesting or disputing his termination or in seeking to obtain or
enforce any benefit provided by this Plan if the termination occurs in the Plan
Year in which a Change of Control occurs or during the next three succeeding
Plan Years following the Plan Year in which a Change of Control occurs except
to the extent that the payment of those fees or expenses are restricted under
Section 6.8.
6.8 Restrictions on any Portion of Total Payments
Determined to be Excess Parachute Payments. In the event that any payment or
benefit received or to be received by a Participant in connection with a Change
of Control of Sysco, or the termination of his employment by the Company would
not be deductible, whether in whole or in part, by the Company or any
affiliated company, as a result of Section 280G of the Code, the benefits
payable under this Plan shall first be reduced until no portion of the Total
Payments is not deductible as a result of Section 280G of the Code, or the
benefits payable under this Plan have
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<PAGE> 27
been reduced to zero. If any further reduction is necessary the benefits
payable under the Sysco Corporation Executive Deferred Compensation Plan will
then be reduced under the terms of that Plan. In determining this limitation:
(a) no portion of the Total Payments which the Participant has waived in
writing prior to the date of the payment of benefits under this Plan will be
taken into account, (b) no portion of the Total Payments which tax counsel,
selected by the Company's independent auditors and acceptable to the
Participant, determines not to constitute a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code will be taken into account, (c) no
portion of the Total Payments which tax counsel, selected by the Company's
independent auditors and acceptable to the Participant, determines to be
reasonable compensation for services rendered within the meaning of Section
280G(b)(4) of the Code will be taken into account, and (d) the value of any
non-cash benefit or any deferred payment or benefit included in the Total
Payments will be determined by the Company's independent auditors in accordance
with Sections 280G(d)(3) and (4) of the Code.
6.9 Benefits Upon Re-employment. If a former Participant
who is receiving benefit payments under this Plan is re-employed by the
Company, the payment of the benefit will continue during his period of
re-employment. The re-employed former Participant's benefit will not be
changed as a result of his re-employment.
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<PAGE> 28
ARTICLE VII
ADMINISTRATION
7.1 Committee Appointment. The Committee will be
appointed by the Board of Directors. The initial Committee members will be
Messrs. Woodhouse, Lindig and Lowrey and Mrs. Riker. Each Committee member
will serve until his or her resignation or removal. The Board of Directors
will have the sole discretion to remove any one or more Committee members and
appoint one or more replacement or additional Committee members from time to
time.
7.2 Committee Organization and Voting. The Committee
will select from among its members a chairman who will preside at all of its
meetings and will elect a secretary without regard to whether that person is a
member of the Committee. The secretary will keep all records, documents and
data pertaining to the Committee's supervision and administration of this Plan.
A majority of the members of the Committee will constitute a quorum for the
transaction of business and the vote of a majority of the members present at
any meeting will decide any question brought before the meeting. In addition,
the Committee may decide any question by vote, taken without a meeting, of a
majority of its members. A member of the Committee who is also a Participant
will not vote or act on any matter relating solely to himself.
7.3 Powers of the Committee. The Committee will have the
exclusive responsibility for the general administration of this Plan according
to the terms and provisions of this Plan and will have all powers necessary to
accomplish those purposes, including but not by way of limitation the right,
power and authority:
(a) to make rules and regulations for the administration
of this Plan;
(b) to construe all terms, provisions, conditions and
limitations of this Plan;
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<PAGE> 29
(c) to correct any defect, supply any omission or
reconcile any inconsistency that may appear in this Plan in the manner
and to the extent it deems expedient to carry this Plan into effect
for the greatest benefit of all parties at interest;
(d) subject to Section 6.5, to determine all
controversies relating to the administration of this Plan, including
but not limited to:
(1) differences of opinion arising between the
Company and a Participant except when the difference of
opinion relates to the entitlement to, the amount of or the
method or timing of payment of a benefit affected by a Change
of Control, in which event it shall be decided by judicial
action; and
(2) any question it deems advisable to determine
in order to promote the uniform administration of this Plan
for the benefit of all parties at interest; and
(e) to delegate by written notice those clerical and
recordation duties of the Committee, as it deems necessary or
advisable for the proper and efficient administration of this Plan.
7.4 Committee Discretion. The Committee in exercising
any power or authority granted under this Plan or in making any determination
under this Plan shall perform or refrain from performing those acts using its
sole discretion and judgment. Any decision made by the Committee or any
refraining to act or any act taken by the Committee in good faith shall be
final and binding on all parties. The Committee's decision shall never be
subject to de novo review. Notwithstanding the foregoing, the Committee's
decisions, refraining to act or acting is to be subject to judicial review for
those incidents occurring during the Plan Year in which a Change of Control
occurs and during the next three succeeding Plan Years.
7.5 Reimbursement of Expenses. The Committee will serve
without compensation for their services but will be reimbursed by Sysco for all
expenses properly and actually incurred in the performance of their duties
under this Plan.
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<PAGE> 30
ARTICLE VIII
ADOPTION BY SUBSIDIARIES
8.1 Procedure for and Status After Adoption. Any
Subsidiary may, with the approval of the Committee, adopt this Plan by
appropriate action of its board of directors. The terms of this Plan will
apply separately to each Subsidiary adopting this Plan and its Participants in
the same manner as is expressly provided for Sysco and its Participants except
that the powers of the Board of Directors and the Committee under this Plan
will be exercised by the Board of Directors of Sysco alone. Sysco and each
Subsidiary adopting this Plan will bear the cost of providing plan benefits for
its own Participants. Sysco will initially pay the costs of the Plan each Plan
Year. However, each adopting Subsidiary will then be billed back for the
actuarially determined costs pertaining to it in accordance with the
appropriate Financial Accounting Standards Board pronouncements. It is
intended that the obligation of Sysco and each Subsidiary with respect to its
Participants will be the sole obligation of the Company that is employing the
Participant and will not bind any other Company.
8.2 Termination of Participation By Adopting Subsidiary.
Any Subsidiary adopting this Plan may, by appropriate action of its board of
directors, terminate its participation in this Plan. The Committee may, in its
discretion, also terminate a Subsidiary's participation in this Plan at any
time. The termination of the participation in this Plan by a Subsidiary will
not, however, affect the rights of any Participant who is working or has worked
for the Subsidiary as to benefits previously accrued by the Participant under
this Plan without his consent.
-24-
<PAGE> 31
ARTICLE IX
AMENDMENT AND/OR TERMINATION
9.1 Amendment or Termination of the Plan. The Board of
Directors may amend or terminate this Plan at any time by an instrument in
writing without the consent of any adopting Company.
9.2 No Retroactive Effect on Awarded Benefits. No
amendment will affect the rights of any Participant to the retirement benefit
provided in Article IV previously accrued by the Participant or will change a
Participant's rights under any provision relating to a Change of Control after
a Change of Control has occurred without his consent. However, the Board of
Directors retains the right at any time to change in any manner or to
discontinue the death benefit provided in Article V and/or the additional
awarding of Credited Service for vesting purposes after termination for total
disability except for a period of four years after a Change of Control for
those persons who at that time were covered by the death benefit and those
persons who at that time were covered by the additional Credited Service for
vesting for disability, and to change in any manner the retirement benefit
provided in Article IV but only as to accruals after the date of the amendment.
9.3 Effect of Termination. If this Plan is terminated,
no new death benefit will be provided and no further retirement benefit will
accrue. The retirement benefit accrued to the date of termination will be
payable under the conditions, at the time and in the form then provided in this
Plan.
-25-
<PAGE> 32
ARTICLE X
FUNDING
10.1 Payments Under This Plan are the Obligation of the
Company. The Company will pay the benefits due the Participants under this
Plan; however should it fail to do so when a benefit is due, the benefit will
be paid by the trustee of that certain trust agreement, entered into
contemporaneously with this agreement, by and between the Company and Texas
Commerce Bank National Association. In any event, if the trust fails to pay
for any reason, the Company still remains liable for the payment of all
benefits provided by this Plan.
10.2 Plan May Be Funded Through Life Insurance Owned by
the Company or a Rabbi Trust. It is specifically recognized by both the
Company and the Participants that the Company may, but is not required to,
purchase life insurance so as to accumulate assets sufficient to fund the
obligations of the Company under this Plan and that the Company may, but is not
required to contribute any policy or policies it may purchase and any amount it
finds desirable to a trust established to accumulate assets sufficient to fund
the obligations of all of the Companies signatory to this Plan. However, under
all circumstances, the Participants will have no rights to any of those
policies; and, likewise, under all circumstances, the rights of the
Participants to the assets held in the trust will be no greater than the rights
expressed in this agreement. Nothing contained in the trust agreement which
creates the funding trust will constitute a guarantee by any Company that
assets of the Company transferred to the trust will be sufficient to pay any
benefits under this Plan or would place the Participant in a secured position
ahead of general creditors should the Company become insolvent or bankrupt.
Any trust agreement prepared to fund the Company's obligations under this Plan
must specifically
-26-
<PAGE> 33
set out these principles so it is clear in that trust agreement that the
Participants in this Plan are only unsecured general creditors of the Company
in relation to their benefits under this Plan.
10.3 Reversion of Excess Assets. Any adopting Company
may, at any time, request the actuary, who last performed the annual actuarial
valuation of the Sysco Retirement Plan, to determine the present value of the
Accrued Benefit assuming the Accrued Benefit to be fully vested (whether it is
or not), as of the end of the Plan Year coincident with or last preceding the
request, of all Participants and Beneficiaries of deceased Participants for
which all Companies are or will be obligated to make payments under this Plan.
If the fair market value of the assets held in the trust, as determined by the
Trustee as of that same date, exceeds the total of the Accrued Benefits of all
Participants and Beneficiaries by 25%, any Company may direct the trustee to
return to each Company its proportionate part of the assets which are in excess
of 125% of the Accrued Benefits. Each Company's share of the excess assets
will be the Participants' present value of the Accrued Benefit earned while in
the employ of that Company as compared to the total of the present value of the
Accrued Benefits earned by all Participants under the Plan times the excess
assets. For this purpose the present value of the Accrued Benefit will be
calculated using the data for the preceding Plan Year brought forward using the
assumptions used to determine the actuarially determined costs according to the
appropriate Financial Accounting Standards Board pronouncements. If there has
been a Change of Control, to determine excess assets, all contributions made
prior to the Change of Control will be subtracted from the fair market value of
the assets held in the trust as of the determination date but before the
determination is made.
10.4 Participants Must Rely Only on General Credit of the
Company. It is also specifically recognized by both the Company and the
Participants that this Plan is only a general corporate commitment and that
each Participant must rely upon the general credit of the
-27-
<PAGE> 34
Company for the fulfillment of its obligations under this Plan. Under all
circumstances the rights of Participants to any asset held by the Company will
be no greater than the rights expressed in this Plan. Nothing contained in
this Plan will constitute a guarantee by the Company that the assets of the
Company will be sufficient to pay any benefits under this Plan or would place
the Participant in a secured position ahead of general creditors of the
Company. Though the Company may establish or become a signatory to a Rabbi
Trust, as indicated in Section 10.1, to accumulate assets to fulfill of its
obligations, the Plan and any such trust will not create any lien, claim,
encumbrance, right, title or other interest of any kind in any Participant in
any asset held by the Company, contributed to any such trust or otherwise
designated to be used for payment of any of its obligations created in this
Plan. No policy or other specific asset of the Company has been or will be set
aside, or will in any way be transferred to the trust or will be pledged in any
way for the performance of the Company's obligations under this Plan which
would remove the policy or asset from being subject to the general creditors of
the Company.
10.5 Funding of Benefits for Participants Subject to
Canadian Income Tax Laws is Prohibited. No Company employing a Participant
whose income is subject to the Canadian tax laws shall be permitted to fund its
obligation to that person through any Rabbi Trust, fund, sinking fund or other
financial vehicle even though under applicable law the assets held to fund the
obligation are still subject to the general creditors of the Company.
-28-
<PAGE> 35
ARTICLE XI
MISCELLANEOUS
11.1 Responsibility for Distributions and Withholding of
Taxes. The Committee will furnish information, to the Company last employing
the Participant, concerning the amount and form of distribution to any
Participant entitled to a distribution so that the Company may make or cause
the Rabbi Trust to make the distribution required. It will also calculate the
deductions from the amount of the benefit paid under this Plan for any taxes
required to be withheld by federal, state or local government and will cause
them to be withheld. If a Participant has accrued a benefit under this Plan
while in the service of more than one Company, each Company for which the
Participant was working will reimburse the disbursing agent for the amount
attributable to the benefit earned while the Participant was in the Credited
Service of that Company if it has not already provided that funding to the
disbursing agent.
11.2 Limitation of Rights. Nothing in this Plan will be
construed:
(a) to give a Participant any right with respect to any
benefit except in accordance with the terms of this Plan;
(b) to limit in any way the right of the Company to
terminate a Participant's employment with the Company at any time;
(c) to evidence any agreement or understanding, expressed
or implied, that the Company will employ a Participant in any
particular position or for any particular remuneration; or
(d) to give a Participant or any other person claiming
through him any interest or right under this Plan other than that of
any unsecured general creditor of the Company.
11.3 Distributions to Incompetents or Minors. Should a
Participant become incompetent or should a Participant designate a Beneficiary
who is a minor or incompetent, the Committee is authorized to pay the funds due
to the parent of the minor or to the guardian of
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<PAGE> 36
the minor or incompetent or directly to the minor or to apply those funds for
the benefit of the minor or incompetent in any manner the Committee determines
in its sole discretion.
11.4 Nonalienation of Benefits. No right or benefit
provided in this Plan will be transferable by the Participant except, upon his
death, to a named Beneficiary as provided in this Plan. No right or benefit
under this Plan will be subject to anticipation, alienation, sale, assignment,
pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell,
assign, pledge, encumber, or charge the same will be void. No right or benefit
under this Plan will in any manner be liable for or subject to any debts,
contracts, liabilities or torts of the person entitled to such benefits. If
any Participant or any Beneficiary becomes bankrupt or attempts to anticipate,
alienate, sell, assign, pledge, encumber or charge any right or benefit under
this Plan, that right or benefit will, in the discretion of the Committee,
cease. In that event, the Committee may have the Company hold or apply the
right or benefit or any part of it to the benefit of the Participant or
Beneficiary, his or her spouse, children or other dependents or any of them in
any manner and in any proportion the Committee believes to be proper in its
sole and absolute discretion, but is not required to do so.
11.5 Reliance Upon Information. The Committee will not be
liable for any decision or action taken in good faith in connection with the
administration of this Plan. Without limiting the generality of the foregoing,
any decision or action taken by the Committee when it relies upon information
supplied it by any officer of the Company, the Company's legal counsel, the
Company's actuary, the Company's independent accountants or other advisors in
connection with the administration of this Plan will be deemed to have been
taken in good faith.
11.6 Amendment Applicable to Active Participants Only
Unless it Provides Otherwise. No benefit which has accrued to any Participant
who has died, retired, become disabled or separated or whose participation has
become frozen prior to the execution of an
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<PAGE> 37
amendment shall be changed in amount or subject to any adjustment provided in
that amendment unless the amendment specifically provides that it will apply to
those persons and it does not have the effect of reducing those persons Accrued
Benefit as then fixed without their consent.
11.7 Severability. If any term, provision, covenant or
condition of this Plan is held to be invalid, void or otherwise unenforceable,
the rest of this Plan will remain in full force and effect and will in no way
be affected, impaired or invalidated.
11.8 Notice. Any notice or filing required or permitted
to be given to the Committee or a Participant will be sufficient if in writing
and hand delivered or sent by U.S. mail to the principal office of the Company
or to the residential mailing address of the Participant. Notice will be
deemed to be given as of the date of hand delivery or if delivery is by mail,
as of the date shown on the postmark.
11.9 Gender and Number. If the context requires it, words
of one gender when used in this Plan will include the other genders, and words
used in the singular or plural will include the other.
11.10 Governing Law. The Plan will be construed,
administered and governed in all respects by the laws of the State of Texas.
11.11 Effective Date. This Plan will be operative and
effective on July 3, 1988.
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<PAGE> 38
IN WITNESS WHEREOF, the Company has executed this document on
this 7th day of July, 1997, amending and restating the Plan to incorporate the
First Amendment, which was previously executed but made effective October 1,
1996, into the last previously amended and restated Plan which was executed on
February 15, 1996.
SYSCO CORPORATION
By /s/ Diane S. Day
-------------------------------------
Name: Diane S. Day
----------------------------------
Title: Vice President and Treasurer
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<PAGE> 1
EXHIBIT 10(f)
<PAGE> 2
AMENDMENTS TO THE
SYSCO CORPORATION
1991 STOCK OPTION PLAN
The Sysco Corporation 1991 Stock Option Plan (the "Plan"), which was
approved by the shareholders on November 8, 1991, was amended by the Board of
Directors effective September 4, 1997, pursuant to Section 12 of the Plan which
empowers the Board to amend the Plan from time to time. These changes are as
set forth below.
1. The first sentence of paragraph (f)(ii) of Section 6 of the Plan
is hereby amended in its entirety to read as follows:
"In order to exercise an option granted hereunder, in whole or in part,
the Optionee must meet any additional specific conditions imposed by the
Committee at or after the time of the granting of the option."
2. The following sentence is hereby added to the end of paragraph
(f)(ii) of Section 6 of the Plan:
"Any such goals or conditions may be waived by the Committee at any time
with respect to any employee or group of employees."
3. Except as amended in the manner described above, the Plan shall
be and remain in full force and effect.
<PAGE> 1
EXHIBIT 10(g)
<PAGE> 2
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
Amended and Restated September 4, 1997
This Non-Employee Directors Stock Option Plan (the "Plan") is
established to attract, retain and compensate for service as members of the
Board of Directors highly qualified individuals who are not current employees
of Sysco Corporation (the "Corporation") and to enable them to increase their
ownership in the Corporation's common stock. This Plan will be beneficial to
the Corporation and its stockholders since it will allow these directors to
have a greater personal financial stake in the Corporation through the
ownership of Corporation common stock, in addition to underscoring their common
interest with stockholders in increasing the value of the Corporation over the
longer term.
1. ELIGIBILITY. All members of the Corporation's Board of Directors
who are not current employees of the Corporation or any of its subsidiaries
("Non-Employee Directors") are eligible to participate in this Plan.
2. OPTIONS. No stock options granted pursuant to this Plan
("Options") may be "Incentive Stock Options" under Section 422 of the Internal
Revenue Code of 1986, as amended.
3. SHARES AVAILABLE.
(a) Number of Shares Available: There are hereby reserved for
issuance under this Plan 200,000 shares of the Corporation's Common Stock,
$1.00 par value per share ("Common Stock"), which may be authorized but
unissued shares, treasury shares, or shares purchased on the open market.
(b) Recapitalization Adjustment: In the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of the Corporation, adjustments in the number and
kind of shares authorized by this Plan, in the number and kind of shares to be
issued under Section 4 below, in the number and kind of shares covered by
outstanding Options under this Plan, and in the option price thereof, shall be
made if, and in the same manner as, such adjustments are made to options issued
under the Corporation's plan pursuant to which Incentive Stock Options may be
granted which is then in effect.
4. ANNUAL GRANT OF STOCK OPTIONS. If the Corporation achieves for
any fiscal year an increase in after-tax earnings per share of 10% or more over
after-tax earnings per share for the prior fiscal year, determined consistently
with determinations made in connection with the measurement of the
Corporation's performance under incentive compensation plans for management of
the Corporation, or in the event such increase is not achieved, if the Board of
Directors shall waive this requirement, each individual elected, re-elected or
continuing as a Non-Employee Director shall automatically receive an Option for
2,000 shares of Common Stock on the first business day (the "Award Date") after
the Corporation's Annual Meeting of Stockholders which follows the close of
such fiscal year. Notwithstanding the foregoing, if, on the Award Date, the
General Counsel of the Corporation determines, in his/her sole discretion, that
the Corporation is in possession of material, undisclosed information about the
Corporation, then the annual grant of Options to Non-Employee Directors shall
be suspended until the second day after public dissemination of such
information, and the price, exercisability dates and option period shall then
be determined by reference to such later date. If Common Stock is not traded
on the New York Stock Exchange ("NYSE") on any date a grant would otherwise be
awarded, then the grant shall be made the next day thereafter on which Common
Stock is so traded. The foregoing notwithstanding, the first Option grant
pursuant to this Plan shall be made effective as of December 12, 1994. All
Option grants pursuant to this Plan shall be evidenced by a written instrument
consistent with the provisions hereof.
5. OPTION PRICE. The price of the Option shall be the last closing
price of the Corporation Common Stock on the NYSE prior to the grant of the
Option.
6. OPTION PERIOD. An Option granted under the Plan shall become
exercisable and shall expire in accordance with the vesting and other
conditions contained on Exhibit A hereto, or in accordance with such other
vesting requirements as the Board of Directors shall substitute at or after the
date of grant with respect to any
<PAGE> 3
individual or group of individuals; provided, however, that no Option may be
exercised later than ten years after the date of grant thereof.
7. PAYMENT. The Option exercise price shall be paid in cash in U.S.
dollars at the time the Option is exercised or in shares of Corporation Common
Stock having an aggregate value equal to the Option exercise price (determined
as of the first business day prior to the date of exercise, pursuant to the
formula set forth in paragraph 5 above) or by a combination of cash and Common
Stock.
8. CESSATION OF SERVICE. Upon cessation of service as a Non-
Employee Director (for reasons other than death), all Options, whether or not
exercisable at the date of cessation of service, shall be forfeited by the
grantee; provided, however, that, subject to Paragraph 3 of Exhibit A, if a
grantee leaves the Board of Directors in "good standing" (for reasons other
than death), such grantee's Options shall remain in effect, vest, become
exercisable and expire as if the grantee had remained a Non-Employee Director
of the Corporation. Whether or not a Non-Employee Director has left the Board
in "good standing" shall be determined by the Corporation's Board of Directors,
in its sole discretion; provided, however, that any Non-Employee Director who
serves out his/her term but does not stand for re-election at the end thereof
shall be deemed to have left the Board of Directors in "good standing."
9. DEATH. Upon the death of a Non-Employee Director, only those
Options which were exercisable on the date of death shall be exercisable by
his/her legal representatives or heirs. Such Options must be exercised within
one year from date of death or they shall be automatically forfeited (but in no
event may the Options be exercised beyond the last date on which they could
have been exercised had the Non-Employee Director not died).
10. ADMINISTRATION AND AMENDMENT OF THE PLAN. This Plan shall be
administered by the Board of Directors of the Corporation. This Plan may be
terminated or amended by the Board of Directors as it deems advisable.
However, amendments to this Plan shall not be made more frequently than every
six months unless necessary to comply with the Internal Revenue Code of 1986,
as amended, or with the Employee Retirement Income Security Act of 1974, as
amended, or any successors thereto, or the regulations promulgated thereunder.
No amendment may revoke or alter in a manner unfavorable to the grantees any
Options then outstanding, nor may the Board amend this Plan without stockholder
approval where the absence of such approval would cause the Plan to fail to
comply with Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Act"), or any other requirement of applicable law or regulation. An
Option may not be granted under this Plan after that date which is ten years
from the date of stockholder approval of this Plan, but Options granted prior
to that date shall continue to become exercisable and may be exercised
according to their terms.
11. NONTRANSFERABILITY. No Option granted under this Plan is
transferable other than by will or the laws of descent and distribution.
During the grantee's lifetime, an Option may be exercised only by the grantee
or the grantee's guardian or legal representative.
12. COMPLIANCE WITH SEC REGULATIONS. It is the Corporation's intent
that this Plan comply in all respects with Rule 16b-3 under the Act and any
regulations promulgated thereunder. If any provision of this Plan is at any
time found not to be in compliance with the Rule, the provision shall be deemed
null and void. All grants and exercises of Options under this Plan shall be
executed in accordance with the requirements of Section 16 of the Act, as
amended, and any regulations promulgated thereunder.
13. MISCELLANEOUS. Except as provided in this Plan, no Non-Employee
Director shall have any claim or right to be granted an Option under this Plan.
Neither this Plan nor any actions hereunder shall be construed as giving any
director any right to be retained in the service of the Corporation.
14. EFFECTIVE DATE. This Plan shall be effective on December 1,
1994, subject to stockholder approval hereof being obtained at the
Corporation's 1995 Annual Meeting of Stockholders; provided, however, that all
Option grants made hereunder prior to this Plan having been approved by the
Corporation's stockholders are hereby expressly made contingent upon obtaining
such approval.
2
<PAGE> 4
EXHIBIT A TO SYSCO CORPORATION
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
In addition to the conditions set out in the Plan, the exercise of an
Option is contingent upon satisfying the below requirements:
1. The fiscal year immediately prior to the fiscal year in which the
Option is granted is the "Base Year" for determining if vesting requirements
have been met. One-third of the total number of shares covered by an Option
shall vest at the conclusion of each of the next three fiscal years of the
Corporation following the Base Year, provided that the earnings per share of
the Corporation increased at least 20% in such fiscal year over the
Corporation's earnings per share for the prior fiscal year. If earnings per
share of the Corporation should increase less than 20% in any one fiscal year
over the prior fiscal year, the Option can be vested at the conclusion of any
fiscal year ending within the five-year period following the date of grant of
the Option (the "Vesting Period") in which earnings per share of the
Corporation for the fiscal years after the Base Year have grown at a minimum
rate of 15%, compounded annually, with one-third of the total number of shares
covered by the Option to vest for each fiscal year after the Base Year included
in the calculation of the 15% compounded minimum growth rate.
2. If neither of the vesting requirements set out in the paragraph
immediately above are met, an Option may still vest, in part or in whole,
subject to the following criteria:
(a) For any fiscal year within the Vesting Period in which the
Corporation's annual return on shareholders' equity (computed in a
manner consistent with the computation of the Corporation's annual
return on shareholders' equity under the Corporation's incentive
compensation plans for management of the Corporation) equals or exceeds
17.5% and the increase in earnings per share of the Corporation over the
prior fiscal year equals or exceeds 15%, one-third of the Option will
vest.
(b) If the Corporation's average annual return on
shareholders' equity (computed in a manner consistent with the
computation of the Corporation's annual return on shareholders' equity
under the Corporation's incentive compensation plans for management of
the Corporation) for the five fiscal years ending within the Vesting
Period equals or exceeds 17.5% and the increase in earnings per share of
the Corporation over such five fiscal years equals or exceeds 10%,
compounded annually, the Option will fully vest.
3. If none of the vesting requirements set out above are met within
the Vesting Period as to any portion of an Option, such Option (or portion
thereof) will nonetheless vest and become exercisable six months prior to the
expiration thereof (the "Supplemental Vesting Date") provided that the grantee
of the Option (the "Grantee") continues to serve on the Corporation's Board of
Directors as a Non-Employee Director on the Supplemental Vesting Date.
Notwithstanding anything in Section 8 of the Plan to the contrary, if any
Option (or portion thereof) has not vested by the end of the Vesting Period,
said Option (or portion thereof) shall be automatically forfeited when the
Grantee ceases to serve as a Non-Employee Director (for reasons other than
death) if such cessation occurs prior to the Supplemental Vesting Date.
4. Subject to the limitations set forth in the Plan, the vested
portion of an Option may be exercised at any time following the conclusion of
the fiscal year in which it vests, provided that at the time of exercise all of
the conditions set forth in the Plan have been met. No portion of any Option
may be exercised prior to one calendar year following the date of grant
thereof.
3
<PAGE> 1
EXHIBIT # 11
<PAGE> 2
SYSCO CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
EXHIBIT 11
<TABLE>
<CAPTION>
July 1, 1995 June 29, 1996 June 28, 1997
------------ ------------- -------------
<S> <C> <C> <C>
Calculation of Primary Earnings Per Share:
- -----------------------------------------
Net earnings applicable to common stock $251,824,000 $276,905,000 $302,533,000
============ ============ ============
Average number of common shares and common stock
equivalents outstanding 182,779,806 182,598,897 177,235,085
Dilutive effect of stock options (1) -- -- --
------------ ------------ ------------
182,779,806 182,598,897 177,235,085
============ ============ ============
Primary earnings per share $ 1.38 $ 1.52 $ 1.71
============ ============ ============
Calculation of Fully Diluted Earnings Per Share:
- -----------------------------------------------
Net earnings applicable to common stock $251,824,000 $276,905,000 $302,533,000
============ ============ ============
Average number of shares outstanding on a fully
diluted basis -- same as for calculation of primary
earnings per share 182,779,806 182,598,897 177,235,085
Dilutive effect of stock options and
Liquid Yield Option Notes (2) -- -- --
------------ ------------ ------------
182,779,806 182,598,897 177,235,085
============ ============ ============
Fully diluted earnings per share $ 1.38 $ 1.52 $ 1.71
============ ============ ============
</TABLE>
(1) Maximum possible dilutive effect of outstanding options in each year is
less than 3%.
(2) Maximum possible dilutive effect of outstanding options and Liquid Yield
Option Notes during each year is less than 3%.
<PAGE> 1
EXHIBIT # 21
<PAGE> 2
SYSCO CORPORATION AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
EXHIBIT 21
Registrant: Sysco Corporation
The following is a list of wholly-owned subsidiaries of the Registrant.
<TABLE>
<CAPTION>
State or Jurisdiction
Name of Subsidiary of Incorporation
------------------ -------------------------
<S> <C>
Deaktor/Sysco Food Services Company ............................... Pennsylvania
K.W. Food Distributors Ltd. ....................................... B.C. Canada
Maine/Sysco, Inc. ................................................. Maine
Major-Sysco Food Services, Inc..................................... California
Mid-Central/Sysco Food Services, Inc. ............................. Missouri
Miesel/Sysco Food Service Company ................................. Delaware
Nobel/Sysco Food Services Company ................................. Colorado
* Sysco Equipment & Furnishings Company ...................... Delaware
Pegler-Sysco Food Services Company ................................ Nebraska
* Pegler-Sysco Transportation Co. ............................ Nebraska
Ritter Sysco Food Services, Inc. .................................. New Jersey
* Dowd Food Discount Corp. ................................... New Jersey
Sysco Administrative Services, Inc................................. Delaware
Sysco Avard Food Services, Inc. ................................... Delaware
Sysco Financial Services, Inc. .................................... Delaware
* Arrow-Sysco Food Services, Inc. ............................ Delaware
* Hardin's-Sysco Food Services, Inc. ......................... Tennessee
* Lankford-Sysco Food Services, Inc. ......................... Maryland
* Robert Orr-Sysco Food Services Co. ......................... Tennessee
* Sysco Food Services of Dallas, Inc. ........................ Delaware
* Sysco Food Services of Houston, Inc. ....................... Delaware
Sysco Food Services-Chicago, Inc. ................................. Delaware
Sysco Food Services-Jacksonville, Inc. ............................ Delaware
Sysco Food Services-West Coast Florida, Inc. ...................... Delaware
Sysco Food Services of Arizona, Inc. .............................. Delaware
* Sysco Arizona Leasing, Inc. ................................ Delaware
Sysco Food Services of Arkansas, Inc. ............................. Arkansas
Sysco Food Services of Atlanta, Inc. .............................. Delaware
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
State or Jurisdiction
Name of Subsidiary of Incorporation
------------------ -------------------------
<S> <C>
Sysco Food Services of Austin, Inc. ............................... Delaware
Sysco Food Services of Beaumont, Inc. ............................. Texas
Sysco Food Services of Central Alabama, Inc........................ Delaware
Sysco Food Services of Central Florida, Inc. ...................... Delaware
Sysco Food Services of Central Pennsylvania, Inc. ................. Pennsylvania
Sysco Food Services of Charlotte, Inc.............................. North Carolina
Sysco Food Services of Cleveland, Inc. ............................ Delaware
Sysco Food Services of Grand Rapids, Inc. ......................... Michigan
Sysco Food Services of Idaho, Inc. ................................ Idaho
Sysco Food Services of Indianapolis, Inc. ......................... Delaware
Sysco Food Services of Iowa, Inc. ................................. Delaware
Sysco Food Services of Los Angeles, Inc. .......................... Delaware
Sysco Food Services of Minnesota, Inc. ............................ Delaware
Sysco Food Services of Montana, Inc. .............................. Delaware
Sysco Food Services of Oklahoma, Inc. ............................. Delaware
Sysco Food Services of Philadelphia, Inc. ......................... Pennsylvania
* Garden Cash & Carry, Inc. .................................. Delaware
Sysco Food Services of Portland, Inc. ............................. Delaware
Sysco Food Services of San Antonio, Inc. .......................... Delaware
Sysco Food Services of San Diego, Inc.............................. Delaware
Sysco Food Services of San Francisco, Inc.......................... California
Sysco Food Services of Seattle, Inc. .............................. Delaware
Sysco Food Services of South Florida, Inc. ........................ Delaware
Sysco Food Services of Southeast Florida, Inc...................... Delaware
Sysco Food Services of St. Louis, Inc. ............................ Delaware
Sysco Food Services of Virginia, Inc. ............................. Virginia
Sysco Holdings Limited ............................................ New Brunswick, Canada
* Strano Sysco Foodservice Limited ........................... Ontario, Canada
Sysco Intermountain Food Services, Inc. ........................... Delaware
Sysco/Louisville Food Services Co. ................................ Delaware
Sysco Services LP.................................................. Texas
The SYGMA Network, Inc. ........................................... Delaware
The SYGMA Network of Ohio, Inc. ................................... Delaware
INACTIVE
DiPaolo/Sysco Food Services, Inc. ................................. Ohio
Grants - Sysco Food Services, Inc. ................................ Michigan
Olewine's Sysco Food Services Company.............................. Delaware
Sysco Med, Inc..................................................... Delaware
</TABLE>
* 2nd Tier Subsidiary
<PAGE> 1
EXHIBIT # 23
<PAGE> 2
SYSCO CORPORATION AND SUBSIDIARIES
INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT
EXHIBIT 23
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K for the year ended June 28, 1997, into
the Company's previously filed (i) Post-Effective Amendment No. 1 of the
Registration Statement and Prospectus of Sysco Corporation relating to the
offering of Sysco Common Stock under the Sysco Corporation Management Incentive
Plan (Registration No. 2-73392), (ii) Registration Statement and Prospectus of
Sysco Corporation relating to the Sysco Corporation 1974 Employee's Stock
Purchase Plan (Registration No. 33-10906), (iii) Post-Effective Amendment No. 1
of the Registration Statement and Prospectus relating to the offering of Sysco
Common Stock under the Sysco Corporation Employee Incentive Stock Option Plan
(Registration No. 2-76096), (iv) Registration Statement and Prospectus of Sysco
Corporation relating to the offering of additional shares of Sysco Common Stock
under the Sysco Corporation 1995 Management Incentive Plan (Registration No.
33-45804), (v) Registration Statement and Prospectus of Sysco Corporation
relating to the offering of Sysco Common Stock under the Sysco Corporation 1991
Stock Option Plan (Registration No. 33-45820), (vi) Registration Statement of
Sysco Corporation relating to the offering of Sysco Common Stock under the
Sysco Corporation Non-Employee Directors Stock Option Plan (Registration No.
333-1259), (vii) Registration Statement of Sysco Corporation relating to the
offering of additional shares of Sysco Common Stock under the Sysco Corporation
1991 Stock Option Plan (Registration No. 333-1255), and (viii) Registration
Statement of Sysco Corporation relating to the offering of additional shares of
Sysco Common Stock under the Sysco Corporation 1995 Management Incentive Plan
(Registration No. 333-1257).
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Houston, Texas
September 24, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ITEM 8.,
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-END> JUN-28-1997
<CASH> 117,696
<SECURITIES> 0
<RECEIVABLES> 1,082,242
<ALLOWANCES> (17,240)
<INVENTORY> 733,782
<CURRENT-ASSETS> 1,964,417
<PP&E> 1,932,186
<DEPRECIATION> (873,754)
<TOTAL-ASSETS> 3,436,611
<CURRENT-LIABILITIES> 1,113,814
<BONDS> 685,620
0
0
<COMMON> 191,294
<OTHER-SE> 1,209,178
<TOTAL-LIABILITY-AND-EQUITY> 3,436,611
<SALES> 14,454,589
<TOTAL-REVENUES> 14,454,589
<CGS> 11,835,959
<TOTAL-COSTS> 13,958,634
<OTHER-EXPENSES> (162)
<LOSS-PROVISION> 21,588
<INTEREST-EXPENSE> 46,502
<INCOME-PRETAX> 495,955
<INCOME-TAX> 193,422
<INCOME-CONTINUING> 302,533
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 302,533
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 1.71
</TABLE>
