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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 2, 2001
Registration No. 333-54940
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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SYSCO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 5140 74-1648137
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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1390 ENCLAVE PARKWAY
HOUSTON, TEXAS 77077-2099
(281) 584-1390
(Address, including zip code, telephone number, including area code, of
registrant's principal executive offices)
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MICHAEL C. NICHOLS, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND ASSISTANT SECRETARY
1390 ENCLAVE PARKWAY
HOUSTON, TEXAS 77077-2099
(281) 584-1390
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
THOMAS M. HAYTHE, ESQ. B. JOSEPH ALLEY, JR., ESQ. BRADLEY P. COST, ESQ.
GENERAL COUNSEL, GUEST SUPPLY, ARNALL GOLDEN GREGORY LLP TORYS
INC. 2800 ONE ATLANTIC CENTER 237 PARK AVENUE
90 PARK AVENUE, 15TH FLOOR 1201 WEST PEACHTREE STREET NEW YORK, NEW YORK 10017
NEW YORK, NEW YORK 10016 ATLANTA, GEORGIA 30309-3450 (212) 880-6000
(212) 210-9583 (404) 873-8500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement and the
consummation of the transactions described in the enclosed prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION CONTAINED IN THIS PROSPECTUS MAY BE CHANGED. WE MAY NOT
COMPLETE THE EXCHANGE OFFER AND ISSUE THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
WE ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE
THE OFFER IS NOT PERMITTED.
[SYSCO CORPORATION LOGO]
SUBJECT TO COMPLETION, DATED MARCH 2, 2001
OFFER TO EXCHANGE EACH OUTSTANDING SHARE OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
GUEST SUPPLY, INC.
FOR SHARES OF COMMON STOCK OF
SYSCO CORPORATION
PURSUANT TO AN EXCHANGE RATIO, AS DESCRIBED BELOW.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 11:59 P.M.,
NEW YORK CITY TIME, ON MARCH 5, 2001 UNLESS EXTENDED.
On January 22, 2001, we entered into a merger agreement with Guest Supply.
The board of directors of Guest Supply has approved the merger agreement and
determined that the offer is fair to, and in the best interests of, Guest Supply
stockholders. The Guest Supply board of directors unanimously recommends that
Guest Supply stockholders accept the offer and tender their shares.
Through Sysco Food Services of New Jersey, Inc., our wholly owned
subsidiary, we are offering to exchange our common stock based on an exchange
ratio, as described below, for each outstanding share of Guest Supply common
stock that is validly tendered and not properly withdrawn. The exchange ratio
will be determined based upon the average of the closing prices per share of our
common stock on The New York Stock Exchange ("NYSE") for each of the 15
consecutive trading days ending on the trading day that is five trading days
prior to the expiration date of the offer, as it may be extended from time to
time, which we refer to as the SYSCO average trading price. If the SYSCO average
trading price is:
- at least $22.00 but less than or equal to $30.00, Guest Supply
stockholders shall receive for each Guest Supply share a number of SYSCO
shares equal to $26.00 divided by the SYSCO average trading price;
- less than $22.00, Guest Supply stockholders shall receive for each Guest
Supply share approximately 1.1818 SYSCO shares; or
- more than $30.00, Guest Supply stockholders shall receive for each Guest
Supply share approximately 0.8667 SYSCO shares.
The SYSCO average trading price cannot be determined with certainty at this
time.
If completed, the offer will be followed by a merger in which our common
stock will be issued at the same exchange ratio used in the offer. On February
28, 2001, the closing price for our shares was $27.26. If the offer expires on
March 5, 2001 and is not extended, the SYSCO average trading price will be
$27.187, and a Guest Supply stockholder would receive approximately 0.9564
shares of our common stock for each share of Guest Supply common stock. We urge
you to obtain a current quote for our shares. Our obligation to exchange our
common stock is subject to the conditions listed under "The Offer -- Conditions
of the Offer." Our common stock trades on the NYSE under the symbol "SYY." Guest
Supply common stock trades on the NYSE under the symbol "GSY."
SEE "RISK FACTORS" BEGINNING ON PAGE 18 FOR A DISCUSSION OF FACTORS THAT
YOU SHOULD CONSIDER IN CONNECTION WITH THE OFFER.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY. IF REQUIRED, ANY SOLICITATION OF PROXIES WILL BE MADE ONLY PURSUANT TO
SEPARATE PROXY SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION
14(a) OF THE SECURITIES EXCHANGE ACT OF 1934.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is March , 2001
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TABLE OF CONTENTS
PAGE
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QUESTIONS AND ANSWERS ABOUT THE PROPOSED COMBINATION........ 1
WHERE YOU CAN FIND MORE INFORMATION......................... 5
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE............. 6
SUMMARY..................................................... 7
The Proposed Combination.................................. 7
The Companies............................................. 7
Reasons for the Proposed Combination...................... 8
Support of Guest Supply Board of Directors................ 9
Summary of The Offer...................................... 9
Interests of Guest Supply's Officers and Directors in the
Merger................................................. 12
Pro Forma Financial Information........................... 12
Comparative Per Share Data................................ 12
Comparative Per Share Market Price Information............ 14
Historical Market Prices of SYSCO and Guest Supply........ 15
SYSCO Selected Consolidated Financial Information......... 16
Guest Supply Selected Consolidated Financial
Information............................................ 17
RISK FACTORS................................................ 18
RISKS RELATED TO THE PROPOSED OFFER AND MERGER.............. 18
RISKS RELATED TO OUR BUSINESS............................... 19
BACKGROUND OF THE OFFER..................................... 22
THE OFFER................................................... 24
Basic Terms............................................... 24
Timing of the Offer....................................... 26
Extension, Subsequent Offering Period, Termination and
Amendment.............................................. 26
Exchange of Guest Supply Shares; Delivery of Our Common
Stock.................................................. 27
Cash Instead of Fractional Shares of Our Common Stock..... 28
Withdrawal Rights......................................... 28
Procedure for Tendering................................... 29
Guaranteed Delivery....................................... 30
Purpose of the Offer; The Merger; No Appraisal Rights..... 31
Conditions of the Offer................................... 31
Regulatory Approvals...................................... 32
Effects of Offer.......................................... 33
Relationships With Guest Supply........................... 34
Accounting Treatment...................................... 34
Fees and Expenses......................................... 34
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PAGE
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THE MERGER AGREEMENT AND THE TENDER AGREEMENTS.............. 36
The Merger Agreement...................................... 36
The Offer................................................. 36
The Merger................................................ 36
Board of Directors and Management Following the Merger.... 37
Exchange Agent; Procedures for Exchange of Certificates... 37
Guest Supply Board of Directors........................... 37
Guest Supply Stock Options................................ 38
Conduct of Business Pending the Merger.................... 39
Guest Supply Stockholders Meeting......................... 40
Other Offers.............................................. 40
Directors and Officers Insurance and Indemnification...... 42
Conditions to the Completion of the Merger................ 42
Termination Events; Termination Fee; Expenses............. 42
Other Provisions.......................................... 44
The Tender Agreements..................................... 44
Parties................................................... 44
Agreements to Tender...................................... 44
Proxy..................................................... 45
INTERESTS OF CERTAIN PERSONS................................ 45
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.................... 47
COMPARISON OF RIGHTS OF HOLDERS OF SYSCO SHARES AND GUEST
SUPPLY SHARES............................................. 49
LEGAL MATTERS............................................... 56
EXPERTS..................................................... 57
LIST OF ANNEXES
Annex A -- Merger Agreement and Plan of Reorganization.... A-1
Annex B -- Form of Tender Agreement....................... B-1
This prospectus incorporates important business and financial information
about SYSCO and Guest Supply that is not included in or delivered with this
document. This information is available at the Internet Web site that the SEC
maintains at http://www.sec.gov, as well as from other sources. See "Where You
Can Find More Information" on page 5.
You may also request copies of these documents from us, without charge,
upon written or oral request to the information agent for the offer.
The information agent for the offer is:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, NY 10010
(212) 929-5500
or call toll free
(800) 322-2885
YOU MUST MAKE YOUR REQUEST FOR INFORMATION NO LATER THAN FIVE BUSINESS DAYS
PRIOR TO EXPIRATION OF THE OFFER.
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QUESTIONS AND ANSWERS ABOUT THE PROPOSED COMBINATION
Q: WHAT ARE SYSCO AND GUEST SUPPLY PROPOSING?
A: SYSCO proposes to acquire all the outstanding shares of Guest Supply
common stock including the associated preferred stock purchase rights. We
have entered into a merger agreement with Guest Supply pursuant to which
we are offering, through Sysco Food Services of New Jersey, to exchange
shares of our common stock for the outstanding shares of Guest Supply
common stock. After the offer is completed, subject to approval by the
stockholders of Guest Supply, if necessary, Sysco Food Services of New
Jersey will merge with and into Guest Supply. As a result of the offer and
the merger, Guest Supply will become a wholly owned subsidiary of SYSCO.
Q: WHAT WILL I RECEIVE IN EXCHANGE FOR MY GUEST SUPPLY SHARES?
A: If the SYSCO average trading price is:
- at least $22.00 but less than or equal to $30.00, Guest Supply
stockholders shall receive for each Guest Supply share a number of SYSCO
shares equal to $26.00 divided by the SYSCO average trading price;
- less than $22.00, Guest Supply stockholders shall receive for each Guest
Supply share approximately 1.1818 SYSCO shares; or
- more than $30.00, Guest Supply stockholders shall receive for each Guest
Supply share approximately 0.8667 SYSCO shares.
The offer will be followed by a merger in which our stock will be issued
at the same exchange ratio used in the exchange offer.
The SYSCO average trading prices used to calculate the exchange ratio will
be the average of the closing prices per share of our common stock on the
NYSE for each of the 15 consecutive trading days ending five trading days
prior to the expiration date of the offer, as it may be extended from time
to time, which we refer to as the expiration date of the offer.
Q: HOW CAN I FIND OUT THE FINAL EXCHANGE RATIO?
A: We will notify you by issuing a press release announcing the final
exchange ratio and filing that press release with the SEC. Guest Supply
stockholders can call our information agent, MacKenzie Partners, at any
time collect at (212) 929-5500 or toll free at (800) 322-2885 for the
SYSCO average trading price and the exchange ratio that would be in effect
based on that price. For a table illustrating examples of SYSCO average
trading prices, the resulting exchange ratios and illustrations of the
approximate value you will receive for your Guest Supply shares, please
see "The Offer -- Basic Terms -- Illustrative Table of Exchange Ratios and
Value of Offer/Merger Consideration" beginning on page 25.
Q: HOW LONG WILL IT TAKE TO COMPLETE THE OFFER AND THE MERGER?
A: The initial offering period expires at 11:59 p.m., New York City time on
March 5, 2001, subject to extension. We hope to complete the offer in
March 2001. We expect to complete the merger without a stockholder vote
shortly after we complete the offer if we acquire 90% of the Guest Supply
shares in the offer. If less than 90% of the shares are tendered in the
offer, then the merger will require Guest Supply stockholder approval at a
special meeting. If a special meeting is required, we do not expect the
merger to close until April 2001. We must also obtain regulatory
clearances prior to completion of the offer and the merger.
Q: WILL I HAVE TO PAY ANY FEES OR EXPENSES IF I TENDER MY GUEST SUPPLY
SHARES?
A: If you are the record owner of your shares and you tender your shares in
the offer, you will not have to pay brokerage fees or incur similar
expenses. If you own your shares through a broker or other nominee and
your broker tenders the shares on your behalf, your broker may charge you
a fee for doing so. You should consult your broker or nominee to determine
whether any fees will apply.
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Q: DOES GUEST SUPPLY SUPPORT THE OFFER AND THE MERGER?
A: Yes. The Guest Supply board of directors has determined that the offer is
fair to, and in the best interests of, Guest Supply stockholders and
unanimously recommends that Guest Supply stockholders accept the offer and
tender their shares in the offer. The Guest Supply board of directors has
also approved and declared advisable the merger agreement and the merger.
Information about the recommendation of the Guest Supply board of
directors is more fully set forth in Guest Supply's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being
mailed to Guest Supply stockholders together with this prospectus.
Q: HAS GUEST SUPPLY RECEIVED A FAIRNESS OPINION IN CONNECTION WITH THE OFFER
AND THE MERGER?
A: Yes. Guest Supply has received an opinion from U.S. Bancorp Piper Jaffray,
dated January 22, 2001, to the effect that, as of that date, and subject
to the assumptions, factors and limitations set forth in their opinion,
the exchange ratio to be established pursuant to the merger agreement is
fair to the Guest Supply stockholders from a financial point of view. This
opinion is included as an exhibit to Guest Supply's Schedule 14D-9 dated
February 5, 2001, which was mailed to Guest Supply stockholders together
with this prospectus, and Guest Supply stockholders are urged to read such
opinion in its entirety, including the assumptions, factors and
limitations contained therein.
Q: HAVE ANY GUEST SUPPLY STOCKHOLDERS AGREED TO TENDER THEIR SHARES?
A: Yes. Directors and executive officers, who collectively hold approximately
8.35% of the outstanding common stock of Guest Supply as of January 31,
2001 have agreed to tender shares owned by them at January 22, 2001, as
well as all additional shares acquired by them, including those acquired
upon exercise of options and warrants. They have reserved the right to
sell into the public market up to 15% of the total number of (i) shares
held of record, and (ii) shares deemed beneficially owned by such
stockholders pursuant to Rule 13d-3 under the Securities Exchange Act of
1934. Shares deemed beneficially owned include those subject to options
and warrants exercisable at January 22, 2001, and those exercisable within
60 days thereafter. In addition, they have agreed to tender all shares not
sold into the public market. As of February 26, 2001, they had sold 82,500
shares.
Q: WHAT PERCENTAGE OF OUR COMMON STOCK WILL GUEST SUPPLY STOCKHOLDERS OWN
AFTER THE OFFER AND THE MERGER?
A: Because we do not know the final exchange ratio at this time, we cannot
determine the exact percentage of our common stock that former
stockholders of Guest Supply will own after the offer and the merger.
Nonetheless, upon completion of the offer and merger, we believe that
former stockholders of Guest Supply will own less than 1.5% of the
outstanding shares of our common stock, based upon the number of shares of
our common stock and Guest Supply common stock outstanding on January 29,
2001.
Q: WHAT ARE THE CONDITIONS TO THE OFFER?
A: Completion of the offer is subject to the following conditions:
- a majority of the outstanding Guest Supply shares, on a fully-diluted
basis, shall have been tendered and not withdrawn, which we refer to as
the minimum tender condition;
- waiting periods under applicable antitrust laws shall have expired or
been terminated;
- Guest Supply shall have obtained required approvals under the New Jersey
Industrial Site Recovery Act;
- the registration statement of which this prospectus is a part must have
been declared effective by the SEC and not be subject to any stop order
or proceedings seeking a stop order;
- no federal or state statute, rule, regulation, injunction, order or
decree shall have been enacted, entered, promulgated or enforced by any
governmental authority making illegal or otherwise prohibiting the
completion of the offer or the merger in the United States, Canada or
England
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and no action or proceeding before any governmental authority in the
United States by any governmental authority in the United States that
seeks to restrain or prohibit the offer or the merger shall have been
instituted;
- the fairness opinion of U.S. Bancorp Piper Jaffray shall not have been
modified or withdrawn;
- Guest Supply shall not have breached any covenant, representation or
warranty of the merger agreement resulting in a material adverse change
in the Guest Supply business; and
- no material adverse change in the Guest Supply business shall exist.
These and other conditions to the offer are discussed in this prospectus
under "The Offer -- Conditions of the Offer" beginning on page 31.
Q: HOW DO I PARTICIPATE IN THE OFFER?
A: To tender your shares, you should do the following:
- If you hold your shares in your own name, complete and sign the enclosed
letter of transmittal and return it with your share certificates to
EquiServe Trust Company, N.A., the exchange agent for the offer, at:
EquiServe Trust Company, N.A.
150 Royall Street
Canton, Massachusetts 02021
(781) 575-3170
or call toll free
(800) 730-4001
- If you hold your shares in "street name" through a broker, ask your
broker to tender your shares.
For more information on the procedures for tendering your shares, please
refer to "The Offer -- Procedure for Tendering" beginning on page 29.
Q: WILL I BE TAXED ON SYSCO SHARES I RECEIVE?
A: We and Guest Supply have been advised by our respective counsel that it is
their opinion that, although the matter is not free from doubt, for U.S.
federal income tax purposes the offer and the merger should qualify as a
reorganization if:
- the merger is completed promptly after the offer; and
- the offer and the merger are completed under the current terms of the
merger agreement.
If the offer and the merger qualify as a reorganization, no gain or loss
will be recognized for U.S. federal income tax purposes, and no U.S.
federal income tax will be payable, by a Guest Supply stockholder upon
receipt of our stock in the offer or the merger, except for cash received
in lieu of any fraction of a SYSCO share. You are urged to carefully read
the section under "Material Federal Income Tax Consequences" beginning on
page 46 for a more detailed discussion of the anticipated U.S. federal
income tax consequences and to consult your tax advisor regarding the tax
consequences to you of your participation in the offer and the merger.
Q: HAS THE OFFER COMMENCED EVEN THOUGH THIS PROSPECTUS IS SUBJECT TO CHANGE
AND THE RELATED REGISTRATION STATEMENT HAS NOT YET BEEN DECLARED EFFECTIVE
BY THE SEC?
A: Yes. The offer has commenced. The effectiveness of the registration
statement is not necessary for you to tender your Guest Supply shares. The
SEC recently changed its rules to permit exchange offers to begin before
the related registration statement has become effective, and we are taking
advantage of this with the goal of combining SYSCO and Guest Supply faster
than similar combinations could previously be accomplished. We cannot,
however, accept for exchange any shares tendered in the offer until the
registration statement is declared effective by the SEC.
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Q: IS SYSCO'S FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER MY SHARES
IN THE OFFER?
A: Yes. Shares of Guest Supply accepted in the offer will be exchanged for
shares of our common stock, so you should consider our financial condition
before you decide to become one of our stockholders through the offer. In
considering our financial condition, you should review this prospectus and
the documents incorporated by reference in this prospectus because they
contain detailed business, financial and other information about us.
Q: WHERE CAN I FIND MORE INFORMATION ABOUT SYSCO AND GUEST SUPPLY?
A: You can find more information about SYSCO and Guest Supply as described
under "Where You Can Find More Information" on page 5.
Q: WHAT SHOULD I DO IF I HAVE QUESTIONS?
A: If you have any questions about the offer and the merger, please contact
our information agent, MacKenzie Partners at (212) 929-5500 or call them
toll free at (800)322-2885.
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WHERE YOU CAN FIND MORE INFORMATION
SYSCO and Guest Supply file annual, quarterly and current reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy this information at the SEC's public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information regarding the public reference room. In
addition, the SEC also maintains an Internet Worldwide Web site that contains
reports, proxy statements and other information about issuers like SYSCO and
Guest Supply who file electronically with the SEC. The address of that site is
http://www.sec.gov.
We filed a registration statement on Form S-4 to register with the SEC the
offer and exchange of the shares of our common stock to be issued pursuant to
the offer and the merger. This prospectus is a part of that registration
statement. As allowed by SEC rules, this prospectus does not contain all the
information you can find in the registration statement or the exhibits to the
registration statement. We also filed with the SEC a statement on Schedule TO
pursuant to Rule 14d-3 under the Securities Exchange Act of 1934 that furnishes
information about the offer. You may read and copy the Form S-4, the Schedule TO
and any amendments to them at the SEC's public reference room or website
referred to above.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information contained directly in this prospectus.
This prospectus incorporates by reference the documents set forth below that we
or Guest Supply have previously filed with the SEC. These documents contain
important information about SYSCO, Guest Supply and their respective financial
condition.
The following documents that we previously filed with the SEC are
incorporated by reference:
- SYSCO's Annual Report on Form 10-K for the fiscal year ended July 1,
2000;
- SYSCO's Quarterly Reports on Form 10-Q for the quarters ended September
30, 2000 and December 30, 2000;
- SYSCO's Current Report on Form 8-K filed on August 3, 2000;
- SYSCO's Current Report on Form 8-K filed on October 20, 2000;
- SYSCO's Current Report on Form 8-K filed on October 26, 2000;
- SYSCO's Current Report on Form 8-K filed on November 6, 2000;
- SYSCO's Current Report on Form 8-K filed on January 16, 2001;
- SYSCO's Current Reports on Form 8-K filed on January 22, 2001;
- SYSCO's Current Report on Form 8-K filed on January 23, 2001;
- SYSCO's Current Report on Form 8-K filed on February 5, 2001;
- SYSCO's Current Report on Form 8-K filed on March 1, 2001; and
- The description of SYSCO's common stock contained in SYSCO's registration
statement on Form 8-A filed under Section 12 of the Securities Exchange
Act of 1934, and any amendment or report filed for the purpose of
updating such description, as updated by the description of capital stock
contained in SYSCO's Current Report on Form 8-K filed on October 26,
2000.
The following documents that Guest Supply previously filed with the SEC are
incorporated by reference:
- Guest Supply's Annual Report on Form 10-K for the fiscal year ended
September 29, 2000;
- Guest Supply's Amended Annual Report on Form 10-K/A for the fiscal year
ended September 29, 2000;
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- Guest Supply's Quarterly Report on Form 10-Q, as amended, for the quarter
ended December 29, 2000;
- Guest Supply's Current Report on Form 8-K filed on December 19, 2000;
- Guest Supply's Current Report on Form 8-K filed on January 24, 2001;
- Guest Supply's Current Report on Form 8-K filed on January 31, 2001;
- Guest Supply's Current Report on Form 8-K filed on February 1, 2001; and
- The description of Guest Supply common stock contained in the
registration statement on Form 8-A filed under Section 12 of the
Securities Exchange Act of 1934, and any amendment or report filed for
the purpose of updating such description, as updated by the description
of capital stock contained in Guest Supply's Current Report on Form 8-K
filed on January 31, 2001.
All documents that we or Guest Supply file pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 from the date of this
prospectus to the date that the offer is terminated, and, if later, until the
earlier of the date on which a meeting of Guest Supply stockholders to approve
the merger is held or the date on which the merger is completed, shall also be
deemed to be incorporated in this prospectus by reference.
DOCUMENTS INCORPORATED BY REFERENCE ARE AVAILABLE, WITHOUT EXHIBITS,
WITHOUT CHARGE UPON REQUEST TO OUR INFORMATION AGENT, MACKENZIE PARTNERS, (212)
929-5500 OR CALL TOLL FREE AT (800) 322-2885. IN ORDER TO ENSURE TIMELY
DELIVERY, ANY REQUEST FOR DOCUMENTS SHOULD HAVE BEEN SUBMITTED NO LATER THAN
FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION OF THE OFFER. IF YOU REQUEST ANY
INCORPORATED DOCUMENTS FROM US, WE WILL MAIL THEM TO YOU BY FIRST CLASS MAIL, OR
ANOTHER EQUALLY PROMPT MEANS, WITHIN ONE BUSINESS DAY AFTER WE RECEIVE YOUR
REQUEST.
We have not authorized anyone to give any information or make any
representation about our offer that is different from, or in addition to, that
contained in this prospectus or in any of the materials that we have
incorporated by reference into this prospectus. Therefore, if anyone does give
you information of this sort, you should not rely on it. If you are in a
jurisdiction in which offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document are unlawful, or
if you are a person to whom it is unlawful to direct these types of activities,
then the offer presented in this document does not extend to you. The
information contained in this document speaks only as of the date of this
document unless the information specifically indicates that another date
applies.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
We have made forward-looking statements in this prospectus about SYSCO,
Guest Supply and the combined company that are subject to risks and
uncertainties. Any statements contained in this prospectus that are not
statements of historical or current fact may be deemed forward-looking
statements. Forward-looking statements may be identified by such words as
"could," "may," "might," "will," "would," "shall," "should," "pro forma,"
"potential," "pending," "plans," "anticipates," "believes," "estimates,"
"expects," "intends" or similar expressions, including the negative of any of
the foregoing.
In making these forward-looking statements, we believe that our
expectations are based on reasonable assumptions. These statements are not meant
to predict future events or circumstances and might not be realized if actual
results and events differ materially from our expectations. Several factors,
some of which are beyond SYSCO's and Guest Supply's control, which are discussed
elsewhere in this prospectus and in the documents that we have incorporated by
reference, could affect the future results of SYSCO and Guest Supply and of the
combined company after completion of the offer and the merger. These factors
could also cause the results or other outcomes to differ materially from those
expressed in our forward-looking statements.
Given these uncertainties, you are cautioned not to place undue reliance on
our forward-looking statements. We disclaim any obligation to announce publicly
the results of any revisions to any of the forward-looking statements contained
in this prospectus to reflect future events or developments.
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SUMMARY
This summary highlights selected information from this prospectus and may
not contain all the information that is important to you. To better understand
the offer and the merger, you should read this entire document carefully, as
well as those additional documents to which we refer you. See "Where You Can
Find More Information" on page 5.
THE PROPOSED COMBINATION
We are proposing a business combination of SYSCO and Guest Supply under
which SYSCO will acquire all the outstanding shares of Guest Supply common
stock, including the associated preferred stock purchase rights. We are offering
to exchange shares of SYSCO common stock for shares of Guest Supply common stock
validly tendered and not properly withdrawn on or prior to the expiration date
of the offer. The expiration date of the offer is currently March 5, 2001. We
have also elected to provide a subsequent offering period of five business days
beginning the day after the expiration of the offer. We may extend or may be
obligated to extend the expiration date of the offer and may extend the
subsequent offering period under the circumstances as described in "The
Offer -- Extension, Subsequent Offering Period, Termination and Amendment" on
page 26. We intend, promptly after completion of the offer, to merge Sysco Food
Services of New Jersey, our wholly owned subsidiary, with and into Guest Supply.
Each share of Guest Supply common stock which has not been exchanged or accepted
for exchange in the offer will be converted in the merger into SYSCO shares at
the same exchange ratio used in the offer.
THE COMPANIES
SYSCO CORPORATION
1390 ENCLAVE PARKWAY
HOUSTON, TEXAS 77077-2099
(281) 584-1390
Sysco Corporation, together with its subsidiaries and divisions, is the
largest North American distributor of food and related products to the
foodservice or "food-prepared-away-from-home" industry. SYSCO provides its
products and services to approximately 356,000 customers, including:
- restaurants;
- healthcare and educational facilities;
- lodging establishments; and
- other foodservice customers.
Since SYSCO's formation in 1969, annual sales have grown from approximately
$115 million to over $19 billion in fiscal 2000. SYSCO's innovations in food
technology, packaging and transportation provide customers with quality products
delivered on time, in excellent condition and at reasonable prices.
Products distributed by SYSCO include:
- a full line of frozen foods, such as meats, fully prepared entrees,
fruits, vegetables and desserts;
- a full line of canned and dry goods;
- fresh meats;
- imported specialties; and
- fresh produce.
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SYSCO 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 proprietary brands.
On December 7, 2000, SYSCO completed the acquisition of North Douglas
Distributors, Ltd., the largest independently owned broadline foodservice
distributor operating on Vancouver Island, British Columbia.
On December 13, 2000, SYSCO completed the acquisition of Albert M. Briggs
Company, a specialty meat supplier based in Washington, D.C.
On January 16, 2001, SYSCO completed the acquisition of certain operations
of The Freedman Companies, a specialty meat supplier based in Houston, Texas.
GUEST SUPPLY, INC.
4301 U.S. HIGHWAY ONE
MONMOUTH JUNCTION, NEW JERSEY 08852-0902
(609) 514-9696
Guest Supply operates principally as a distributor, packager and
manufacturer of personal care guest amenities, housekeeping supplies, room
accessories and textiles to the lodging industry. Guest Supply also manufactures
and packages personal care products for major consumer products and retail
companies. Personal care guest amenity items include shampoo, hair conditioner,
soap, bath gel, hand and body lotion, mouthwash, shoe care and sewing kits,
shower caps, soap dishes and decorative containers and trays. Guest Supply has
available more than 20 amenity items in a variety of brands in Guest
Supply-designed packaging options. Housekeeping supplies for the lodging
industry consist primarily of paper products, cleaning chemicals and cleaning
implements. Room accessories include such items as wastebaskets, glassware,
stationery, laundry bags, pens, shower curtains and signs. Textiles include
sheets, towels and bedding. In total, Guest Supply distributes more than 100
different product categories.
Guest Supply's lodging industry customers consist of hotel chains,
including supply divisions, individual members or franchisees of hotel chains,
independent hotel properties, management companies and cruise ship lines. Guest
Supply distributes its products to approximately 20,000 customers worldwide.
Guest Supply sells to each of the 10 largest lodging chains in the United
States.
REASONS FOR THE PROPOSED COMBINATION
We believe that the proposed combination of SYSCO and Guest Supply could
achieve the following benefits:
- Increased Sales to Existing Customers. The complementary nature of
SYSCO's and Guest Supply's products and sales forces will benefit
customers of both companies by providing them a broader choice of
products for use in both the foodservice and housekeeping functions.
- Access to New Product Areas and Diversification Into New Markets. The
combination of SYSCO and Guest Supply provides the combined entity with
the opportunity for diversification into new markets and access to new
products and customers.
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- Increased Market Presence and Opportunities. The combination of SYSCO and
Guest Supply provides the combined entity with increased market presence
and opportunities for growth that will allow it to be better able to
respond to the needs of customers, the increased competitiveness of the
marketplace and opportunities that changes in the market might bring.
- Operating Efficiencies. The combination of SYSCO and Guest Supply
provides the opportunity for potential economies of scale and cost
savings.
This is not a complete list of all of the factors that our board
considered. Each member of our board may have considered different factors and
our board did not quantify or assign relative weights to the factors it
considered. The reasons for the recommendation by the Guest Supply board of
directors are set forth in Guest Supply's Solicitation/Recommendation Statement
on Schedule 14D-9, which is being mailed to Guest Supply stockholders together
with this prospectus.
SUPPORT OF GUEST SUPPLY BOARD OF DIRECTORS
The Guest Supply board of directors has determined that the offer is fair
to, and in the best interests of, Guest Supply stockholders and unanimously
recommends that Guest Supply stockholders accept the offer and tender their
shares pursuant to the offer. Information about the recommendation of the Guest
Supply board of directors is more fully set forth in Guest Supply's
Solicitation/Recommendation Statement on Schedule 14D-9.
SUMMARY OF THE OFFER
We have attached the merger agreement governing the offer and the merger as
Annex A to this prospectus. We encourage you to read this agreement because it
is the legal document that governs the offer and the merger.
What Guest Supply Stockholders Will Receive. We are offering, upon the
terms and conditions set forth in this prospectus and the related letter of
transmittal, SYSCO common shares for Guest Supply common shares that are validly
tendered on or prior to the expiration date of the offer and not properly
withdrawn. The number of shares will be based on the exchange ratio described on
the cover page of this prospectus.
Each share of Guest Supply common stock which has not been exchanged or
accepted for exchange in the offer will be converted in the merger into SYSCO
common shares at the same exchange ratio used in the offer, if completed. SYSCO
will not issue any fractional common shares in connection with the offer and the
merger. Guest Supply stockholders will instead receive cash for any SYSCO
fractional common shares otherwise issuable to them.
The SYSCO common shares to be issued to Guest Supply stockholders in the
merger will be listed on the NYSE.
Timing Of The Offer. Our offer is currently scheduled to expire on March
5, 2001, but may, in some cases, be extended as described below. In addition, we
have elected to provide a subsequent offering period of five business days to
begin the day after the expiration of the offer. See "The Offer -- Extension,
Subsequent Offering Period, Termination and Amendment" on page 26.
Extension, Subsequent Offering Period, Termination And Amendment. The
offer is scheduled to expire on March 5, 2001. We are required to complete the
offer at the end of the then current offer period without further extension when
the minimum tender condition and all other conditions have been satisfied or, if
allowed, waived by us. We are also required to extend the expiration date of the
offer in increments of up to 10 business days until the earlier of April 30,
2001 or such time as all conditions, including the minimum tender condition,
have been satisfied or waived. Finally, we may extend the offer as required to
comply with SEC rules and regulations.
In addition, we have elected to provide a subsequent offering period as
described below.
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During any extension of the initial offering period (but excluding the
subsequent offering period), all Guest Supply shares previously tendered and not
properly withdrawn will remain tendered, subject to the right to withdraw them.
We will accept and pay for all shares tendered and not withdrawn promptly
following the expiration date of the offer, if the minimum tender condition and
all other conditions have been satisfied or waived.
Without the prior written consent of Guest Supply, we may not:
- amend or waive the minimum tender condition;
- decrease or change the form of consideration to be paid;
- decrease the number of shares sought in the offer;
- waive the condition that the fairness opinion given by U.S. Bancorp Piper
Jaffray shall not have been modified or withdrawn;
- impose conditions in addition to those set forth in the merger agreement
or that would in any other way adversely affect the Guest Supply
stockholders; or
- extend the expiration date of the offer except as discussed above.
Subject to the SEC's rules and regulations and the terms of the merger
agreement, we also reserve the right to terminate the offer and not accept or
exchange any Guest Supply shares not previously accepted or exchanged upon the
failure of any of the conditions of the offer to be satisfied.
If, on April 30, 2001, SYSCO has not completed the offer in accordance with
the terms of the merger agreement, SYSCO will terminate the offer without
accepting any shares previously tendered, and if less than 35% of the
outstanding shares of Guest Supply on a fully diluted basis have been tendered,
the merger agreement will automatically terminate. However, if at least 35% but
less than a majority of the outstanding shares on a fully diluted basis have
been validly tendered by April 30, 2001, we will terminate the offer and will
seek to complete the merger. Immediately following any extension, delay,
termination or amendment, we will make a public announcement of the same.
Subsequent Offering Period. We have elected to provide a subsequent
offering period of five business days after the acceptance of and payment for
Guest Supply shares in the initial offering period. We may elect to extend the
subsequent offering period for up to an additional 15 business days if the
requirements under Exchange Act Rule 14d-11 have been met. The exchange ratio
will be the same as in the initial offering period. You will not have the right
to withdraw Guest Supply shares that you tender in the subsequent offering
period, if any.
Exchange of Shares. You will receive our common stock for each share of
Guest Supply common stock you tender in the offer as described on the cover page
of this prospectus. Because the SYSCO average trading price is not yet known, we
do not know at this time the number of shares of our common stock you will
receive for each share of Guest Supply common stock you tender. We will
determine the SYSCO average trading price prior to the expiration date of the
offer. We will not deliver shares of our common stock to Guest Supply
stockholders who tender their shares in the offer until after the expiration
date of the offer. Once the SYSCO average trading price is set, the value of our
common stock that you receive will fluctuate with our market price. Therefore,
the market value of our common stock that you receive could go up or down
between the date the number of shares of our common stock you are to receive is
determined and the date your shares are actually delivered to you.
Conditions of the Offer. Our obligation to complete the offer is subject
to various conditions described below under "The Offer -- Conditions of the
Offer."
Withdrawal Rights. Guest Supply shares tendered pursuant to the offer may
be withdrawn at any time prior to the expiration date of the offer. During the
subsequent offering period, you will not have the right to withdraw Guest Supply
shares that you tender in the subsequent offering period.
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For your withdrawal to be effective, the exchange agent must receive from
you a written or facsimile transmission notice of withdrawal at its address set
forth on the back cover of this prospectus, and your notice must include your
name, address, social security number, the certificate number(s), the number of
Guest Supply shares to be withdrawn and the name of the registered holder, if
different from you.
No Dissenters Rights. Under New Jersey law, neither the offer nor the
merger entitles you to dissenters rights with respect to your Guest Supply
shares.
Procedure for Tendering Shares. For you to validly tender Guest Supply
shares pursuant to our offer, either:
- a properly completed and duly executed letter of transmittal, or manually
executed facsimile of that document, along with any required signature
guarantees, or an agent's message in connection with a book-entry
transfer, and any other required documents, must be transmitted to and
received by the exchange agent at its address set forth on the back cover
of this prospectus. In addition, certificates for tendered Guest Supply
shares must be received by the exchange agent at that address, or those
Guest Supply shares must be tendered pursuant to the procedures for
book-entry tender, in each case before the expiration date of the offer;
or
- you must comply with the guaranteed delivery procedures set forth in "The
Offer -- Guaranteed Delivery."
See the procedures for tendering shares under "The Offer -- Procedure for
Tendering" for more details.
Merger. We are making the offer to acquire the entire common equity
interest in Guest Supply. As soon as possible after completion of the offer, we
will cause Guest Supply and Sysco Food Services of New Jersey to complete the
merger. The merger requires the affirmative vote of at least a majority of the
shares present and entitled to vote at a duly called meeting to approve the
merger, unless we have acquired 90% or more of the outstanding shares in the
offer, in which case the merger can be accomplished without a meeting. If a
majority but less than 90% of the shares of Guest Supply common stock is
tendered to and purchased by us, approval of the merger by Guest Supply
stockholders will be assured, subject to the other conditions to the merger. At
the effective time of the merger, each share of Guest Supply common stock,
except for shares held by Guest Supply, us, or Sysco Food Services of New
Jersey, will be converted into the right to receive the number of shares of our
common stock for each share of Guest Supply common stock at the same exchange
ratio as in the offer.
Regulatory Approvals. We and Guest Supply have agreed pursuant to the
merger agreement to use all reasonable efforts to take whatever actions are
required to obtain necessary regulatory approvals with respect to the offer and
the merger. Other than clearance under the antitrust laws applicable to the
offer and the merger that are described below under "The Offer -- Conditions of
the Offer -- Antitrust Condition," the SEC declaring the effectiveness of the
registration statement of which this prospectus is a part, the filing of
certificates of merger under New Jersey and Delaware law with respect to the
merger, and obtaining required approvals from the New Jersey Department of
Environmental Protection, we do not believe that any additional material
governmental filings or approvals are required with respect to the offer and the
merger.
Material Federal Income Tax Consequences. We and Guest Supply have been
advised by our respective counsel that it is their opinion that, although the
matter is not free from doubt, for U.S. federal income tax purposes the offer
and the merger should qualify as a reorganization if:
- the merger is completed promptly after the offer; and
- the offer and the merger are completed under the current terms of the
merger agreement.
If the offer and the merger qualify as a reorganization, no gain or loss
will be recognized for U.S. federal income tax purposes, and no U.S. federal
income tax will be payable, by a Guest Supply
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stockholder upon receipt of our stock in the offer or the merger, except for
cash received in lieu of any fraction of a SYSCO share.
The above-described tax treatment of the offer and the merger to Guest
Supply stockholders depends on some facts that will not be known before the
completion of the merger. Guest Supply stockholders are urged to carefully read
the discussion under "Material Federal Income Tax Consequences" beginning on
page 46, and to consult their tax advisors on the consequences to them of their
participation in the offer or the merger.
Accounting Treatment. We will account for the merger using the purchase
method of accounting.
Termination of Merger Agreement. We and Guest Supply each have the right
to terminate the merger agreement by mutual agreement if the agreement is not
timely completed without fault of the terminating party or under the other
conditions described in more detail in "The Merger Agreement and the Tender
Agreements -- Termination Events; Termination Fee; Expenses," which begins on
page 42.
Termination Fee. If the merger agreement is terminated because Guest
Supply has entered into an alternative transaction or has received an
alternative offer within four months of January 22, 2001 and enters into an
alternative transaction with respect thereto within 12 months after January 22,
2001, or otherwise as set forth in the merger agreement, Guest Supply is
obligated to pay us a fee in the amount of $5.5 million, plus our reasonable
out-of-pocket fees and expenses.
Opinion of Guest Supply Financial Advisor. In deciding to approve the
merger, Guest Supply's board of directors considered the opinion of its
financial advisor, U.S. Bancorp Piper Jaffray, to the effect that, as of January
22, 2001, the date of the opinion, and subject to the assumptions, factors and
limitations set forth in their opinion, the exchange ratio to be established
pursuant to the merger agreement is fair to the Guest Supply stockholders, from
a financial point of view. A copy of the U.S. Bancorp Piper Jaffray fairness
opinion is attached as an exhibit to Guest Supply's Schedule 14D-9, which was
mailed to Guest Supply stockholders together with a preliminary version of this
prospectus, and Guest Supply stockholders are urged to read such opinion in its
entirety, including the assumptions, factors and limitations contained therein.
INTERESTS OF GUEST SUPPLY'S OFFICERS AND DIRECTORS IN THE MERGER
When you consider the Guest Supply board's recommendation that Guest Supply
stockholders tender their shares in the offer, you should be aware that some
Guest Supply directors and executive officers may have interests in the offer
and the merger that may be different from, or in addition to, yours. See
"Interests of Certain Persons" which begins on page 45.
PRO FORMA FINANCIAL INFORMATION
The purpose of pro forma financial information in a merger context is to
determine any effect the merger will have on our net income and earnings per
share. The differences between SYSCO's unaudited pro forma combined basic and
diluted earnings per share for the fiscal year ended July 1, 2000 and the 26
weeks ended December 30, 2000 after giving effect to the merger were de minimis
as compared to SYSCO's reported earnings per share for those periods. The
unaudited pro forma effect of the merger on SYSCO's net earnings for those
periods and on total assets as of December 30, 2000 was de minimis. The
unaudited pro forma combined financial information includes the estimated
allocation of the purchase price to the assets acquired and liabilities assumed
based on preliminary estimates of fair value and may be revised as additional
information concerning the valuation of the assets and liabilities becomes
available.
COMPARATIVE PER SHARE DATA
The comparative per share data shows how each share of Guest Supply common
stock that you hold would have participated in the income from continuing
operations, cash dividends and book value of SYSCO if the merger had been
effective as of the dates below, and should be taken into account in valuing the
SYSCO stock to be received in the offer and the merger. However, these amounts
do not
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necessarily reflect future per share levels of income from continuing
operations, cash dividends and book value of SYSCO.
SYSCO and Guest Supply have summarized below per share information for
SYSCO and Guest Supply on a historical and equivalent pro forma basis. Guest
Supply's earnings and cash dividends per share equivalents assume the merger had
occurred at July 3, 1999 (the beginning of Guest Supply's
52-week period ended June 30, 2000), and the book value per share equivalents
assume the merger had occurred as of December 29, 2000, and are calculated by
multiplying the SYSCO unaudited pro forma per share amounts by an exchange ratio
of 0.9564, which is based on an average SYSCO closing price calculated assuming
that the expiration date of the offer will be March 5, 2001.
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SYSCO CORPORATION -- HISTORICAL
AT AND FOR THE AT AND FOR THE
26 WEEKS FISCAL YEAR
ENDED ENDED
DECEMBER 30, 2000 JULY 1, 2000
------------------ --------------
Per Share Data(1):
Income from continuing operations per common share
Basic..................................................... $0.43 $0.69
Diluted................................................... $0.42 $0.68
Cash dividends per common share............................. $0.12 $0.22
Book value per common share................................. $2.77 $2.66
GUEST SUPPLY, INC. -- HISTORICAL
AT AND FOR THE AT AND FOR THE
26 WEEKS 52 WEEKS
ENDED ENDED
DECEMBER 29, 2000 JUNE 30, 2000
------------------ --------------
Per Share Data:
Income from continuing operations per common share
Basic(2).................................................. $ 1.04 $1.50
Diluted(2)................................................ $ 0.94 $1.35
Cash dividends per common share(2).......................... $ -- $ --
Book value per common share................................. $10.70 $9.70
GUEST SUPPLY, INC. -- PRO FORMA PER SHARE EQUIVALENTS
AT AND FOR THE AT AND FOR THE
26 WEEKS 52 WEEKS
ENDED ENDED
DECEMBER 29, 2000 JUNE 30, 2000
------------------ --------------
Per Share Data:
Income from continuing operations per common share
Basic(2).................................................. $ 0.41 $0.66
Diluted(2)................................................ $ 0.40 $0.65
Cash dividends per common share(2).......................... $ 0.11 $0.21
Book value per common share................................. $ 2.65 $2.54
---------------
(1) Per share information has been adjusted to reflect the 2-for-1 stock split
effected on December 15, 2000.
(2) Guest Supply's fiscal year ended September 29, 2000. To conform Guest
Supply's historical information to SYSCO's fiscal year end, the applicable
quarterly historical financial statements were combined to present the
information for the 52 weeks ended June 30, 2000 and the 26 weeks ended
December 29, 2000. SYSCO's fiscal year ends on the Saturday closest to June
30 of each year and Guest Supply's fiscal year ends on the Friday closest to
September 30 of each year.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
SYSCO common stock and Guest Supply common stock are listed on the NYSE
under the symbols "SYY" and "GSY," respectively. On January 22, 2001, the last
full trading day before the public announcement of the proposed merger, the last
sale price per SYSCO common share on the NYSE was $24.50 and the last sale price
per Guest Supply common share on the NYSE was $18.50. On February 28, 2001, the
most recent practicable date prior to the filing of this document, the last sale
price per SYSCO common share on the NYSE was $27.26 and the last sale price per
Guest Supply common share on the NYSE was $25.85.
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HISTORICAL MARKET PRICES OF SYSCO AND GUEST SUPPLY
The tables below set forth for the periods presented the (1) high and low
sales prices per share for SYSCO common stock, as reported on The New York Stock
Exchange Composite Tape, and the cash dividends paid on SYSCO common stock,
adjusted for the 2-for-1 stock splits effected by a 100% stock dividend paid on
March 20, 1998 and December 15, 2000, and (2) high and low sales prices per
share for Guest Supply common stock, as reported on The New York Stock Exchange
Composite Tape. Guest Supply has never declared dividends on its common stock.
SYSCO
COMMON STOCK PRICES
-------------------- DIVIDENDS PAID
HIGH LOW PER SHARE
-------- --------- --------------
FISCAL YEAR ENDED JUNE 27, 1998
First Quarter........................................... $ 9.860 $ 8.547 $0.038
Second Quarter.......................................... 11.703 8.953 0.038
Third Quarter........................................... 13.375 10.813 0.043
Fourth Quarter.......................................... 13.375 10.938 0.045
FISCAL YEAR ENDED JULY 3, 1999
First Quarter........................................... $12.969 $ 9.969 $0.045
Second Quarter.......................................... 14.344 11.563 0.045
Third Quarter........................................... 14.938 12.469 0.050
Fourth Quarter.......................................... 15.938 12.500 0.050
FISCAL YEAR ENDED JULY 1, 2000
First Quarter........................................... $18.125 $ 15.032 $0.050
Second Quarter.......................................... 20.563 15.813 0.050
Third Quarter........................................... 20.282 13.063 0.060
Fourth Quarter.......................................... 21.688 17.188 0.060
FISCAL YEAR ENDING JUNE 30, 2001
First Quarter........................................... $23.625 $ 19.375 $0.060
Second Quarter.......................................... 30.438 21.750 0.060
GUEST SUPPLY
COMMON STOCK PRICES
-------------------
HIGH LOW
-------- --------
FISCAL YEAR ENDED SEPTEMBER 30, 1998
First Quarter............................................. $15.625 $11.500
Second Quarter............................................ 15.187 10.187
Third Quarter............................................. 17.375 13.625
Fourth Quarter............................................ 19.250 9.250
FISCAL YEAR ENDED OCTOBER 1, 1999
First Quarter............................................. $12.875 $ 8.125
Second Quarter............................................ 11.813 8.625
Third Quarter............................................. 13.063 8.625
Fourth Quarter............................................ 15.875 13.500
FISCAL YEAR ENDED SEPTEMBER 29, 2000
First Quarter............................................. $16.250 $13.125
Second Quarter............................................ 19.375 14.375
Third Quarter............................................. 19.250 16.375
Fourth Quarter............................................ 19.500 16.625
FISCAL YEAR ENDING SEPTEMBER 28, 2001
First Quarter............................................. $18.625 $15.250
As of January 29, 2001, there were 669,344,379 shares of SYSCO common stock
outstanding, which were owned by 15,186 holders of record. As of January 31,
2001, there were 6,848,575 shares of Guest Supply common stock outstanding,
which were owned by 437 holders of record.
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SYSCO SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected consolidated financial data of
SYSCO. The income statement data for fiscal years 1996 through 2000 and the
balance sheet data as of the end of each such fiscal year have been derived from
the audited financial statements of SYSCO incorporated by reference in this
prospectus. The selected consolidated financial data for the 26 weeks ended
December 30, 2000 and January 1, 2000 have been derived from SYSCO's unaudited
consolidated financial statements and includes, in the opinion of management of
SYSCO, all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the data for these periods. The financial data
included herein may not necessarily be indicative of the financial position or
results of operations of SYSCO in the future. The information is only a summary
and should be read in conjunction with SYSCO's historical financial statements
and related notes contained in the annual reports and other information of SYSCO
on file with the SEC and incorporated herein by reference. See "Where You Can
Find More Information" on page 5.
FISCAL YEAR ENDED
26-WEEKS ENDED (SATURDAY CLOSEST TO JUNE 30)
------------------------- -------------------------------------------------------------------
DECEMBER 30, JANUARY 1, 1999
2000 2000 2000 (53 WEEKS) 1998 1997 1996
------------ ---------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
(IN THOUSANDS EXCEPT FOR PER SHARE DATA AND PERCENTAGES)
INCOME STATEMENT DATA
Sales................... $10,650,704 $9,308,569 $19,303,268 $17,422,815 $15,327,536 $14,454,589 $13,395,130
Gross profit............ 2,076,933 1,743,371 3,653,717 3,214,955 2,827,900 2,618,630 2,411,334
Earnings before income
taxes................. 458,914 337,520 737,608 593,887 532,493 495,955 453,943
Income taxes............ 175,535 129,945 283,979 231,616 207,672 193,422 177,038
----------- ---------- ----------- ----------- ----------- ----------- -----------
Earnings before
cumulative effect of
accounting change..... 283,379 207,575 453,629 362,271 324,821 302,533 276,905
Cumulative effect of
accounting change..... -- (8,041) (8,041) -- (28,053) -- --
----------- ---------- ----------- ----------- ----------- ----------- -----------
Net earnings.... $ 283,379 $ 199,534 $ 445,588 $ 362,271 $ 296,768 $ 302,533 $ 276,905
=========== ========== =========== =========== =========== =========== ===========
Earnings before
accounting change:(1)
Basic earnings per
share............... $ 0.43 $ 0.32 $ 0.69 $ 0.54 $ 0.48 $ 0.43 $ 0.38
Diluted earnings per
share............... $ 0.42 $ 0.31 $ 0.68 $ 0.54 $ 0.47 $ 0.42 $ 0.38
Cumulative effect of
accounting change:(1)
Basic earnings per
share............... $ -- $ (0.01) $ (0.01) $ -- $ (0.04) $ -- $ --
Diluted earnings per
share............... $ -- $ (0.01) $ (0.01) $ -- $ (0.04) $ -- $ --
Net earnings(1)
Basic earnings per
share............... $ 0.43 $ 0.30 $ 0.68 $ 0.54 $ 0.44 $ 0.43 $ 0.38
Diluted earnings per
share............... $ 0.42 $ 0.30 $ 0.67 $ 0.54 $ 0.43 $ 0.42 $ 0.38
Cash dividends per
share(1).............. $ 0.12 $ 0.10 $ 0.22 $ 0.19 $ 0.17 $ 0.14 $ 0.12
DECEMBER 30, JANUARY 1, JULY 1, JULY 3, JUNE 27, JUNE 28, JUNE 29,
2000 2000 2000 1999 1998 1997 1996
------------ ---------- ----------- ----------- ----------- ----------- -----------
BALANCE SHEET AND OTHER
DATA
Current assets.......... $2,830,462 $2,576,098 $ 2,733,215 $ 2,408,767 $ 2,180,067 $ 1,961,629 $ 1,916,865
Noncurrent assets....... $2,157,856 $1,842,365 $ 2,080,740 $ 1,687,815 $ 1,600,122 $ 1,472,194 $ 1,403,078
Total assets............ $4,988,318 $4,418,463 $ 4,813,955 $ 4,096,582 $ 3,780,189 $ 3,433,823 $ 3,319,943
Capital expenditures.... $ 159,357 $ 126,319 $ 266,413 $ 286,687 $ 259,353 $ 210,868 $ 235,891
Current liabilities..... $1,835,887 $1,554,788 $ 1,782,935 $ 1,427,540 $ 1,324,190 $ 1,113,814 $ 1,037,524
Long term debt.......... $1,069,355 $1,132,976 $ 1,023,642 $ 997,717 $ 867,017 $ 685,620 $ 581,734
Noncurrent
liabilities........... $1,312,851 $1,362,223 $ 1,269,452 $ 1,241,846 $ 1,099,210 $ 919,537 $ 807,741
Shareholders' equity.... $1,839,580 $1,501,452 $ 1,761,568 $ 1,427,196 $ 1,356,789 $ 1,400,472 $ 1,474,678
Total capitalization.... $2,908,935 $2,634,428 $ 2,785,210 $ 2,424,913 $ 2,223,806 $ 2,086,092 $ 2,056,412
Ratio of long-term debt
to capitalization..... 36.8% 43% 36.8% 41.1% 39.0% 32.9% 28.3%
---------------
(1) Per share information has been adjusted to reflect the 2-for-1 stock splits
effected on December 15, 2000 and March 20, 1998.
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GUEST SUPPLY SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected historical consolidated financial data should be
read in conjunction with Guest Supply's consolidated financial statements
incorporated by reference in this prospectus. The income statement data for
fiscal years 1998 through 2000 and the balance sheet data as of the end of each
such fiscal year have been derived from Guest Supply's audited consolidated
financial statements. The income statement data for fiscal years 1996 and 1997
and the balance sheet data as of the end of each such fiscal year have been
derived from Guest Supply's audited consolidated financial statements as
adjusted for the reclassifications as indicated in footnote (1) below. The
selected consolidated financial data for the 13 weeks ended December 29, 2000
and December 31, 1999 have been derived from Guest Supply's unaudited
consolidated financial statements and include, in the opinion of management of
Guest Supply, all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the data for these periods. The consolidated
financial data included herein may not necessarily be indicative of the
financial position or results of operations of Guest Supply in the future.
13-WEEKS ENDED FISCAL YEAR ENDED
--------------------------- (FRIDAY CLOSEST TO SEPTEMBER 30)
DECEMBER 29, DECEMBER 31, ----------------------------------------------------
2000 1999 2000 1999 1998 1997 1996
------------ ------------ -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
INCOME STATEMENT DATA
Sales(1)......................... $ 90,314 $ 79,909 $365,928 $303,301 $235,042 $199,551 $177,659
Gross profit(1).................. 19,706 17,145 76,664 61,739 45,530 41,418 36,571
Selling, general and
administrative expenses(1)..... 14,848 13,199 55,994 46,183 37,481 32,636 29,492
Operating income................. 4,858 3,946 20,670 15,556 8,049 8,782 7,079
Net income....................... 2,968 1,822 10,448 7,708 3,633 3,816 3,151
BALANCE SHEET DATA
Working capital.................. 64,363 55,828 59,399 52,240 43,330 39,626 35,223
Current assets................... 114,809 105,944 116,885 103,462 78,456 73,056 67,416
Noncurrent assets................ 59,630 58,014 57,886 57,795 39,651 39,613 35,472
Total assets..................... 174,439 163,958 174,771 161,257 118,107 112,669 102,888
Current liabilities.............. 50,446 50,116 57,486 51,222 35,126 33,430 32,193
Total long-term liabilities...... 52,943 56,218 49,261 50,568 30,996 32,642 28,292
Total liabilities................ 103,389 106,334 106,747 101,790 66,122 66,072 60,485
Total shareholders' equity....... 71,050 57,624 68,024 59,467 51,985 46,597 42,403
COMMON SHARES DATA
Basic earnings per share......... $ 0.45 $ 0.28 $ 1.60 $ 1.19 $ 0.56 $ 0.62 $ 0.51
Diluted earnings per share....... $ 0.41 $ 0.26 $ 1.44 $ 1.10 $ 0.51 $ 0.55 $ 0.45
Book value per share............. $ 10.70 $ 9.14 $ 10.27 $ 9.04 $ 7.95 $ 7.53 $ 6.89
---------------
(1) In accordance with the Emerging Issues Task Force Issue No. 00-14,
"Accounting for Certain Sales Incentives," Guest Supply has reclassified
incentive rebates from Selling, General and Administrative (S,G&A) expenses
to Sales. In addition, certain other S,G&A costs were reclassified to Cost
of Sales. The reclassified amounts reduced S,G&A for the fiscal years ended
2000, 1999, 1998, 1997 and 1996 by $4,760, $3,328, $2,188, $1,407 and
$1,427, respectively, of which $4,316, $2,743, $1,701, $1,366 and $1,383,
respectively, were reclassified to Sales.
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RISK FACTORS
In deciding whether to tender your shares pursuant to the offer, you should
read carefully this prospectus, the accompanying Schedule 14D-9 of Guest Supply
and the documents to which we refer you. You should also carefully consider the
following factors:
RISKS RELATED TO THE PROPOSED OFFER AND MERGER
THE SYSCO COMMON SHARES TO BE RECEIVED BY GUEST SUPPLY STOCKHOLDERS IN THE OFFER
AND THE MERGER WILL FLUCTUATE IN VALUE
The SYSCO average trading price will be determined five trading days prior
to the expiration date of the offer and will be based on the average closing
prices during the preceding 15 trading days. Accordingly, it is possible that
the market price of our shares at the closings of the offer and the merger will
differ from the SYSCO average trading price and, if so, the market value of the
consideration to be received by you for each Guest Supply share you surrender,
as of the closing of the offer, will be more or less than $26.00 per share
depending on the direction of the price movement. For example, if the SYSCO
average trading price is less than $22.00, then the number of SYSCO shares that
you receive in the offer and the merger for each Guest Supply share you
surrender may have a market value of less than $26.00 per share, and such value
may be less than the market value of those shares at the completion of the offer
and the merger. The price of the SYSCO shares may vary significantly from the
market prices used in the calculation of the SYSCO average trading price.
Each stockholder is urged to obtain updated market information. See
"Comparative Per Share Market Price Information," and "The Offer -- Basic
Terms."
IF WE COMPLETE OUR PROPOSED ACQUISITION OF GUEST SUPPLY, WE MIGHT HAVE
DIFFICULTIES INTEGRATING GUEST SUPPLY'S BUSINESS INTO OUR EXISTING OPERATIONS,
AS WELL AS FACE NEW RISKS THAT WE HAVE NOT PREVIOUSLY FACED
If we complete the proposed combination, we must integrate the businesses
of two companies that have previously operated independently. We might not be
able to integrate Guest Supply's business, including its products, services,
technologies and personnel, into our existing operations without encountering
difficulties. The diversion of management's attention to the integration effort
and any difficulties encountered in combining operations could adversely affect
the companies' respective businesses following the completion of the merger.
OFFICERS AND DIRECTORS OF GUEST SUPPLY HAVE POTENTIAL CONFLICTS OF INTEREST IN
THE OFFER AND THE MERGER
Guest Supply stockholders should be aware of potential conflicts of
interest and the benefits available to Guest Supply directors when considering
Guest Supply's board of directors' recommendation to approve the transaction.
Some of Guest Supply's officers, directors and consultants will have employment
or consulting agreements with the surviving corporation that will provide them
with interests in the merger that are different from, or in addition to,
interests of Guest Supply stockholders. See "Interests of Certain Persons" on
page 45.
THE MARKET PRICE OF OUR COMMON STOCK MAY BE AFFECTED BY FACTORS DIFFERENT FROM
THOSE AFFECTING THE MARKET PRICE OF GUEST SUPPLY COMMON STOCK
Upon completion of the offer and the merger, holders of Guest Supply common
stock will become holders of our common stock. Our business differs from that of
Guest Supply, and our results of operations, as well as the market price of our
common stock, may be affected by factors different from those affecting Guest
Supply's results of operations and the market price of Guest Supply's common
stock. For a discussion of SYSCO's and Guest Supply's businesses and information
to consider in evaluating such businesses, you should review our Annual Report
on Form 10-K for the fiscal year ended July 1,
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2000, our subsequent quarterly and current reports, and Guest Supply's Annual
Report on Form 10-K for the fiscal year ended September 29, 2000, Amended Annual
Report on Form 10-K/A for the fiscal year ended September 29, 2000 and
subsequent quarterly and current reports, all of which are incorporated by
reference in this prospectus.
THE RECEIPT OF SYSCO SHARES MAY BE TAXABLE TO YOU, DEPENDING ON FACTS
SURROUNDING THE OFFER AND THE MERGER
We and Guest Supply have structured the offer and the merger in a manner
intended to qualify as a reorganization for U.S. federal income tax purposes and
have been advised by our respective counsel that in their opinion, although the
matter is not free from doubt, for U.S. federal income tax purposes the offer
and the merger should so qualify if:
- the merger is completed promptly after the offer; and
- the offer and the merger are completed under the current terms of the
merger agreement.
If the offer and the merger qualify as a reorganization, no gain or loss
will be recognized for U.S. federal income tax purposes, and no U.S. federal
income tax will be payable, by a Guest Supply stockholder upon receipt of our
stock in the offer or the merger, except for cash received in lieu of any
fractional SYSCO shares. The ability to satisfy the foregoing assumptions, and
therefore the U.S. federal income tax consequences of the offer and the merger,
depends in part on facts that will not be available before the completion of the
merger. There can be no assurance that the merger will be completed or that the
other assumptions will be satisfied.
If any of the assumptions are not correct, a Guest Supply stockholder's
receipt of our shares in the offer or the merger could be a taxable transaction.
Because satisfaction of the assumptions is dependent in part on facts that will
not be available before the completion of the merger, if and when you tender
Guest Supply shares in the offer you will not know whether the offer or the
merger, or both, will be tax free. You are urged to review carefully the section
below entitled "Material Federal Income Tax Consequences" beginning on page 47
for a more detailed discussion of the anticipated U.S. federal income tax
consequences and to consult your tax advisor regarding the tax consequences and
risks to you of your participation in the offer and the merger.
RISKS RELATED TO OUR BUSINESS
SYSCO IS IN A LOW MARGIN BUSINESS AND ITS PROFITABILITY MAY BE NEGATIVELY
IMPACTED BY FOOD PRICE DEFLATION AND OTHER FACTORS
The foodservice distribution industry is characterized by relatively high
inventory turnover with relatively low profit margins. SYSCO makes a significant
portion of its sales at prices that are based on the cost of products it sells
plus a percentage markup. As a result, SYSCO's profit levels may be negatively
impacted during periods of food price deflation, even though SYSCO's gross
profit percentage may remain relatively constant. The foodservice industry is
sensitive to national and economic conditions. SYSCO's operating results also
are sensitive to, and may be adversely affected by, other factors, including
difficulties with the collectability of accounts receivable, inventory control,
competitive price pressures, severe weather conditions and unexpected increases
in fuel or other transportation-related costs. Although such factors have not
had a material adverse impact on SYSCO's past operations, there can be no
assurance that one or more of these factors will not adversely affect future
operating results.
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SYSCO'S SIGNIFICANT INDEBTEDNESS COULD INCREASE ITS VULNERABILITY TO COMPETITIVE
PRESSURES, NEGATIVELY AFFECT ITS ABILITY TO EXPAND AND DECREASE THE MARKET VALUE
OF ITS COMMON STOCK
As of July 1, 2000, SYSCO had approximately $1.04 billion of long-term
indebtedness outstanding. Because historically a substantial part of SYSCO's
growth has been the result of acquisitions and capital expansion, SYSCO's
continued growth depends, in large part, on its ability to continue this
expansion. As a result, its inability to finance acquisitions and capital
expenditures through borrowed funds could restrict its ability to expand.
Moreover, any default under the documents governing the indebtedness of SYSCO
could have a significant adverse effect on the market value of SYSCO's common
stock. Further, SYSCO's leveraged position may also increase its vulnerability
to competitive pressures.
BECAUSE SYSCO SELLS FOOD PRODUCTS, IT FACES THE RISK OF EXPOSURE TO PRODUCT
LIABILITY CLAIMS
SYSCO, like any other seller of food, faces the risk of exposure to product
liability claims in the event that the use of products sold by it causes injury
or illness. With respect to product liability claims, SYSCO believes it has
sufficient primary and excess umbrella liability insurance. However, this
insurance may not continue to be available at a reasonable cost, or, if
available, may not be adequate to cover liabilities. SYSCO generally seeks
contractual indemnification and insurance coverage from parties supplying its
products, but this indemnification or insurance coverage is limited, as a
practical matter, to the creditworthiness of the indemnifying party and the
policy limits of any insurance provided by suppliers. If SYSCO does not have
adequate insurance or contractual indemnification available, product liability
claims relating to defective products could materially reduce SYSCO's net income
and earnings per share.
BECAUSE SYSCO HAS FEW LONG-TERM CONTRACTS WITH SUPPLIERS AND DOES NOT CONTROL
THE ACTUAL PRODUCTION OF THE PRODUCTS IT SELLS, SYSCO MAY BE UNABLE TO OBTAIN
ADEQUATE SUPPLIES OF ITS PRODUCTS
SYSCO obtains substantially all of its foodservice products from other
suppliers. For the most part, SYSCO does not have long-term contracts with its
suppliers committing them to provide products to SYSCO. Although SYSCO's
purchasing volume can provide leverage when dealing with suppliers, suppliers
may not provide the foodservice products and supplies needed by SYSCO in the
quantities requested. Because SYSCO does not control the actual production of
the products it sells, it is also subject to delays caused by interruption in
production based on conditions outside its control. These conditions include:
- job actions or strikes by employees of suppliers;
- weather;
- crop conditions;
- transportation interruptions; and
- natural disasters or other catastrophic events.
SYSCO's inability to obtain adequate supplies of its foodservice products
as a result of any of the foregoing factors, or otherwise, could mean that SYSCO
could not fulfill its obligations to customers, and customers may turn to other
distributors.
IF SYSCO CANNOT RENEGOTIATE ITS UNION CONTRACTS, ITS PROFITABILITY MAY DECREASE
BECAUSE OF WORK STOPPAGES
As of July 1, 2000, approximately 8,000 SYSCO employees at 34 operating
companies were members of 48 different local unions associated with the
International Brotherhood of Teamsters and other labor organizations. In fiscal
2001, 14 agreements covering approximately 2,500 employees will expire. Failure
to effectively renegotiate these contracts could result in work stoppages.
Although SYSCO has not experienced any significant labor disputes or work
stoppages to date, and believes it has satisfactory
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relationships with its unions, a work stoppage due to failure to renegotiate a
union contact, or otherwise, could have a material adverse effect on SYSCO.
IF SYSCO CANNOT INTEGRATE ACQUIRED COMPANIES WITH ITS BUSINESS, ITS
PROFITABILITY MAY DECREASE
If SYSCO is unable to integrate acquired businesses successfully and
realize anticipated economic, operational and other benefits in a timely manner,
its profitability may decrease. Integration of an acquired business may be more
difficult when SYSCO acquires a business in a market in which it has limited or
no expertise, or with a corporate culture different from SYSCO's. If SYSCO is
unable to integrate acquired businesses successfully, it may incur substantial
costs and delays in increasing its customer base. In addition, the failure to
integrate acquisitions successfully may divert management's attention from
SYSCO's existing business and may damage SYSCO's relationships with its key
customers and suppliers.
PROVISIONS IN SYSCO'S CHARTER AND STOCKHOLDER RIGHTS PLAN MAY INHIBIT A TAKEOVER
OF SYSCO
Under its Restated Certificate of Incorporation, SYSCO's Board of Directors
is authorized to issue up to 1.5 million shares of preferred stock without
stockholder approval. No shares of preferred stock are currently outstanding.
Issuance of these shares would make it more difficult for anyone to acquire
SYSCO without approval of the Board of Directors because more shares would have
to be acquired to gain control. If anyone attempts to acquire SYSCO without
approval of the Board of Directors of SYSCO, the stockholders of SYSCO have the
right to purchase preferred stock of SYSCO, which also means more shares would
have to be acquired to gain control. Both of these devices may deter hostile
takeover attempts that might result in an acquisition of SYSCO that would have
been financially beneficial to SYSCO's stockholders.
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BACKGROUND OF THE OFFER
In early 2000, Guest Supply's management concluded that a combination of
Guest Supply with another large company in a complementary industry was likely
to result in the greatest value for Guest Supply shareholders as compared to
leaving Guest Supply as a stand-alone company. Guest Supply's management reached
this conclusion based on a number of factors including that Guest Supply, as a
stand-alone microcap company, had no meaningful research coverage by securities
analysts, provided limited liquidity to its shareholders due to the lack of
trading volume in Guest Supply common stock and, like many microcap companies,
was experiencing, over time, a decline in the earnings multiple at which the
Guest Supply common stock traded despite improved earnings performance for Guest
Supply. The prospect of a combination with a larger company in a complementary
industry appeared to offer the prospect of maximizing value and liquidity for
Guest Supply's shareholders. While Guest Supply's management considered other
options such as combining with a company of comparable size, commencing a
broad-based share repurchase plan, effecting a divestiture of assets, pursuing
acquisitions with a view to creating greater size and scale for Guest Supply, or
undertaking a management-led leveraged buy-out with a financial partner, Guest
Supply's management and board of directors concluded that combining with a
larger company in a complementary industry would create the greatest value and
liquidity for shareholders.
Following preliminary discussions with prospective financial advisors, on
June 19, 2000, Guest Supply engaged an investment banking firm, U.S. Bancorp
Piper Jaffray, to act as Guest Supply's financial advisor in connection with a
possible sale of Guest Supply or its assets. As part of their services to Guest
Supply, U.S. Bancorp Piper Jaffray reviewed with Guest Supply's management the
alternatives considered by management in early 2000.
Guest Supply's management and U.S. Bancorp Piper Jaffray then identified a
number of third parties who might have an interest in combining with Guest
Supply.
Commencing in July 2000, representatives of U.S. Bancorp Piper Jaffray
contacted 24 potential strategic acquirors and three potential financial
acquirors in an effort to ascertain, on a preliminary basis, their level of
interest in combining with Guest Supply. U.S. Bancorp Piper Jaffray then sent
public investor packages to 11 potential acquirors who initially expressed
interest in a combination with Guest Supply.
Representatives of U.S. Bancorp Piper Jaffray arranged introductory
meetings between representatives of Guest Supply and five potential acquirors,
including SYSCO.
On July 6 and July 21, 2000, Daniel Donoghue, a managing director of U.S.
Bancorp Piper Jaffray, telephoned John Stubblefield, Executive Vice President,
Finance and Administration, of SYSCO soliciting SYSCO's interest in pursuing a
potential transaction with Guest Supply.
On July 27, 2000, Messrs. Stubblefield and Donoghue discussed the merits of
a combination of SYSCO and Guest Supply. Mr. Donoghue also answered preliminary
questions posed by Mr. Stubblefield concerning Guest Supply's operations and
business prospects. Mr. Donoghue then provided Mr. Stubblefield with Guest
Supply's public investor package. Messrs. Stubblefield and Donoghue engaged in
occasional preliminary discussions about a possible combination between July
2000 and September 2000.
On September 19, 2000, SYSCO executed a confidentiality agreement with
Guest Supply in preparation for a meeting with Guest Supply's senior management
team.
On September 21, 2000, U.S. Bancorp Piper Jaffray hosted an introductory
meeting in Chicago between Guest Supply and SYSCO. Senior representatives from
both companies attended this meeting, including Richard Schnieders, President
and Chief Operating Officer, and Mr. Stubblefield of SYSCO, as well as Clifford
W. Stanley, President and Chief Executive Officer, and Paul T. Xenis, Chief
Financial Officer of Guest Supply. Messrs. Stanley and Xenis made a slide
presentation discussing Guest Supply's business, customers, industry and
historical financial performance. After this presentation, Messrs. Stanley and
Xenis answered questions and provided a broad overview as to how a potential
combination might improve both Guest Supply's and SYSCO's future prospects.
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From June until September 2000, Guest Supply, with the assistance of U.S.
Bancorp Piper Jaffray, had extensive discussions with BFMA Holding Corporation
("BFMA") based upon BFMA's then-stated intention to offer $24.00 per share for
Guest Supply's common stock. After over three months of discussions, Guest
Supply terminated negotiations based in part on concerns over BFMA's ability to
finance the transaction. In November 2000, BFMA commenced a solicitation of
proxies for the election at the 2001 Annual Meeting of Stockholders of Guest
Supply of two Class C Directors nominated by BFMA. BFMA also announced that it
was prepared to offer $21.00 per share for Guest Supply's common stock. On
January 23, 2001, following announcement of the execution of the merger
agreement, BFMA announced that it intended to withdraw its proxy solicitation.
On October 19, 2000, Mr. Stubblefield and Robert G. Culak, Vice President,
Financial Reporting & Compliance of SYSCO participated in a conference call with
Messrs. Stanley and Xenis of Guest Supply to answer due diligence questions.
SYSCO and Guest Supply also discussed the strategic and financial rationale for
a possible transaction. In response to this call, Guest Supply sent a package of
due diligence materials to SYSCO answering several questions raised on the
conference call.
On October 27, 2000, Messrs. Stubblefield and Culak of SYSCO participated
in an additional conference call with Messrs. Stanley and Xenis of Guest Supply
to discuss the due diligence package previously sent as well as to answer
additional questions. Beginning on this date, and continuing until the merger
agreement was signed, representatives of SYSCO continued their due diligence
investigation of Guest Supply, including the exchange of information regarding
the business and operations of Guest Supply.
On November 20, 2000, Mr. Donoghue and Jonathan Leiman, also of U.S.
Bancorp Piper Jaffray, telephoned Mr. Stubblefield to advise him of the BFMA
proxy solicitation. Later that day, Mr. Stubblefield telephoned Mr. Donoghue to
inform him that SYSCO intended to make an offer to acquire Guest Supply on
November 27, 2000.
On November 21, 2000, Mr. Donoghue telephoned Mr. Stubblefield to inquire
as to whether he had any additional information requests and Mr. Stubblefield
advised Mr. Donoghue that SYSCO would make an offer for Guest Supply on November
29, 2000. On November 29, 2000, SYSCO sent a draft proposal to Guest Supply
indicating a willingness to acquire Guest Supply for $25.00 per share.
On December 1, 2000, Mr. Donoghue telephoned Mr. Stubblefield to review the
value, timing and the structure of the transaction.
On December 5, 2000, U.S. Bancorp Piper Jaffray participated in a
conference call with the Guest Supply board of directors to discuss the proposed
offer.
On December 7, 2000, SYSCO provided Guest Supply a written letter of intent
indicating its willingness to acquire Guest Supply for $25.00 per share. Guest
Supply did not execute this letter.
On December 15, 2000, the Guest Supply board of directors authorized
management to enter into an exclusivity and termination fee agreement with
SYSCO. This agreement provided for an exclusive negotiating period through
January 20, 2001 whereby Guest Supply agreed not to solicit, initiate or
encourage any alternative proposals. The agreement further provided that if
Guest Supply violated this provision, accepted an alternative proposal, and
subsequently consummated an alternative transaction, Guest Supply would be
required to pay SYSCO a termination fee of $5.5 million.
On December 18 and 19, 2000, representatives of SYSCO and SYSCO's counsel,
Arnall Golden Gregory LLP, conducted legal due diligence at the offices of
Torys, legal counsel to Guest Supply. Legal due diligence activities continued
through the execution of the merger agreement.
On December 26, 2000, Charles H. Cotros, Chairman of the Board and Chief
Executive Officer of SYSCO, visited Guest Supply's Orlando, Florida distribution
center and met briefly with Mr. Xenis.
On January 2, 2001, Messrs. Cotros, Schnieders and Stubblefield,
accompanied by Michael C. Nichols, Vice President and General Counsel of SYSCO,
visited Guest Supply's headquarters, distribution and manufacturing facilities
in New Jersey. On January 3, 2001, Messrs. Schnieders, Stubblefield and Nichols
visited Guest Supply's facilities in Cleveland, Ohio.
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On January 2, 2001, Thomas E. Lankford, Executive Vice President, Food
Service Operations and a Director of SYSCO, and Larry J. Accardi, Executive Vice
President, Merchandising Services & Multi-Unit Sales, visited Guest Supply's
facilities in Dallas, Texas. On January 3, 2001, they visited Guest Supply's
facilities in Los Angeles, California.
From January 2, 2001 through January 5, 2001, Mr. Culak and representatives
of Arthur Andersen conducted a review of Guest Supply's financial records at
Guest Supply's headquarters in New Jersey.
On January 15, 2001, members of senior management of SYSCO, members of
senior management of Guest Supply, including Mr. Stanley, Mr. Xenis and Thomas
M. Haythe, Guest Supply's General Counsel, and representatives of U.S. Bancorp
Piper Jaffray participated in a telephone conference during which the SYSCO
representatives made a presentation about SYSCO's business, customers, industry,
and historical financial performance. After this presentation, the SYSCO
representatives responded to questions from the Guest Supply representatives.
On January 16, 2001, SYSCO's board of directors met by telephone conference
call to review the terms and conditions of the proposed transaction with Guest
Supply. Eleven of the twelve members of SYSCO's board of directors were present
at the meeting. By unanimous vote of the directors present, the officers of
SYSCO were authorized to proceed with the offer and the merger.
On January 18, 2001, Messrs. Donoghue and Stubblefield had a final
telephonic negotiation of the price and terms of the proposed offer during which
Mr. Stubblefield agreed to increase the price offered for the Guest Supply
common stock from $25.00 to $26.00 per share in SYSCO common stock.
On January 19, 2001, Guest Supply's board of directors met to consider the
proposed transaction and merger agreement and related agreements. The meeting
was attended by all of the Guest Supply directors. At the meeting, Mr. Stanley,
representatives of U.S. Bancorp Piper Jaffray, and Mr. Haythe addressed the
board of directors about the business, financial and legal implications,
respectively, of a merger between SYSCO and Guest Supply and the terms of the
proposed agreements. During that meeting, representatives of U.S. Bancorp Piper
Jaffray informed the board that in the opinion of U.S. Bancorp Piper Jaffray, as
of January 19, 2001 (subsequently updated on the date of the merger agreement),
the exchange ratio under the proposed agreement, the offer and merger was fair,
from a financial point of view, to Guest Supply stockholders. After discussion,
Guest Supply's board of directors unanimously voted to approve the agreement and
the merger and unanimously resolved to recommend that Guest Supply stockholders
accept the offer and tender their shares of Guest Supply's common stock in the
offer. At the meeting, Guest Supply's board of directors approved an amendment
to its preferred stock rights plan in order to exempt the offer and merger from
the provisions of the rights plan.
On January 20, 2001, SYSCO and Guest Supply executed an extension of the
exclusivity agreement, extending the arrangement through January 22, 2001.
On January 22, 2001, SYSCO's executive committee held a telephonic board
meeting with its legal advisors and management, and discussed the final terms
and conditions of the offer and the merger as set forth in the merger agreement
and related agreements. Six of the seven members of the committee were present
at the meeting. SYSCO's executive committee approved the merger agreement and
the related transactions, including the offer and the merger, by the unanimous
vote of the members of the committee present at the meeting.
On January 22, 2001, the parties executed the merger agreement and related
documents. Immediately thereafter, SYSCO and Guest Supply issued a press release
announcing the proposed offer and merger.
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THE OFFER
BASIC TERMS
Exchange Of Shares; Exchange Ratio. We are offering to exchange shares of
our common stock based on an exchange ratio, as described below, for the
outstanding shares of Guest Supply common stock that are validly tendered and
not properly withdrawn. If the average of the closing prices per share of our
common stock on the NYSE for each of the 15 consecutive trading days ending on
the trading day that is five trading days prior to the expiration date of the
offer, as it may be extended from time to time, which we refer to as the SYSCO
average trading price, is:
- at least $22.00 but less than or equal to $30.00, Guest Supply
stockholders shall receive for each Guest Supply share a number of SYSCO
shares equal to $26.00 divided by the SYSCO average trading price;
- less than $22.00, Guest Supply stockholders shall receive for each Guest
Supply share approximately 1.1818 SYSCO shares; or
- more than $30.00, Guest Supply stockholders shall receive for each Guest
Supply share approximately 0.8667 SYSCO shares.
The SYSCO average trading price cannot be determined with certainty at this
time.
ILLUSTRATIVE TABLE OF EXCHANGE RATIOS AND VALUE OF OFFER/MERGER CONSIDERATION
The following table shows:
- illustrative values of the exchange ratios that will result if the SYSCO
average trading price is within a range of $19.00 to $33.00 per share,
representing the number of shares of our common stock that will be issued
for one share of Guest Supply common stock at each of the SYSCO average
trading prices presented in the table; and
- illustrative values of the approximate consideration that would be issued
in connection with the offer and the merger for one Guest Supply common
share, which illustrative values are determined by multiplying each of
the SYSCO average trading prices presented in the table by the
corresponding exchange ratio.
APPROXIMATE
CONSIDERATION
APPROXIMATE VALUE PER
SYSCO AVERAGE EXCHANGE GUEST SUPPLY
TRADING PRICE RATIO SHARE*
------------- ----------- -------------
$19.00.................................... 1.1818 $22.45
20.00.................................... 1.1818 23.64
21.00.................................... 1.1818 24.82
22.00.................................... 1.1818 26.00
23.00.................................... 1.1304 26.00
24.00.................................... 1.0833 26.00
25.00.................................... 1.0400 26.00
26.00.................................... 1.0000 26.00
27.00.................................... 0.9629 26.00
28.00.................................... 0.9285 26.00
29.00.................................... 0.8965 26.00
30.00.................................... 0.8667 26.00
31.00.................................... 0.8667 26.87
32.00.................................... 0.8667 27.73
33.00.................................... 0.8667 28.60
---------------
* See "Fluctuations in Market Price" below.
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The values of our common shares in the table above are illustrative only
and do not represent the actual amounts per Guest Supply common share that might
be realized by any Guest Supply stockholder on or after completion of the offer
or the merger. The amount any Guest Supply stockholder might realize upon sale
in the market of our common shares received in the offer or the merger will
depend upon the market price per share of our common shares at the time of sale,
which will fluctuate depending upon any number of reasons, including those
specific to us and those that influence the trading prices of equity securities
generally.
Fluctuations In Market Price. Because the SYSCO average trading price is
an average of closing prices, it might be different from the actual market value
of a share of our common stock on the date we issue shares to the Guest Supply
stockholders. The market value of shares of SYSCO common stock issued in
exchange for each share of Guest Supply might actually be less than $26.00 on
the date we issue those shares. In addition, prior to the completion of the
offer, the number of shares of our common stock to be issued for each share of
Guest Supply common stock will change if the trading price of our common stock
changes but does not go below $22.00 or exceed $30.00.
More Information About The Exchange Ratio. We will notify Guest Supply
stockholders by issuing a press release announcing the exchange ratio and filing
that press release with the SEC. Guest Supply stockholders can call our
information agent, MacKenzie Partners, at any time collect at (212) 929-5500 or
toll free at (800) 322-2885 to request information about the SYSCO average
trading price, including the exchange ratio for the offer, once determined.
Transfer Charges. Stockholders tendering shares will not be obligated to
pay any charges or expenses of the exchange agent. Stockholders owning shares
through a broker or other nominee may be charged a fee. Guest Supply
stockholders should consult their broker or nominee to determine whether any
charges will apply.
Merger. We are making this offer in order to acquire the entire equity
interest in Guest Supply. As soon as possible after completion of the offer, we
will cause Guest Supply and Sysco Food Services of New Jersey to complete the
merger. At the effective time of the merger, each share of Guest Supply common
stock, except for shares held by Guest Supply, us or Sysco Food Services of New
Jersey, will be converted into the right to receive the same number of our
shares for each Guest Supply share at the same exchange ratio as in the offer.
If we obtain all of the shares of Guest Supply pursuant to the offer and the
merger, former stockholders of Guest Supply will own less than 1.5% of the
outstanding shares of our common stock, based upon the respective number of
shares of SYSCO and Guest Supply outstanding on January 29, 2001. The exact
percentage of our shares outstanding that former Guest Supply stockholders will
hold is dependent on the exchange ratio, which cannot be determined at this
time.
Stockholders List. We have relied on Guest Supply's stockholders list and
security position listings to communicate with you and to distribute the offer
to you. We are sending this prospectus, related letter of transmittal and other
relevant materials to you and to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on Guest Supply's stockholders list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
TIMING OF THE OFFER
The offer is currently scheduled to expire at 11:59 p.m., New York City
time, on March 5, 2001.
EXTENSION, SUBSEQUENT OFFERING PERIOD, TERMINATION AND AMENDMENT
The offer is scheduled to expire on March 5, 2001. We are required to
complete the offer at the end of the then current offer period, without further
extension, when the minimum tender condition and all other conditions have been
satisfied or, if allowed, waived by us. We are also required to extend the
expiration date of the offer in increments of up to 10 business days until the
earlier of April 30, 2001 or such time as all conditions, including the minimum
tender condition, have been satisfied or waived. Finally, we may extend the
offer as required to comply with SEC rules and regulations.
We have elected to provide a subsequent offering period as described below.
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During any extension of the initial offering period (but excluding the
subsequent offering period), all Guest Supply shares previously tendered and not
properly withdrawn will remain tendered, subject to the right to withdraw them.
We will accept and pay for all shares tendered and not withdrawn promptly
following the expiration date of the offer, if the minimum tender condition and
all other conditions have been satisfied or waived.
Without the prior written consent of Guest Supply, we may not:
- amend or waive the minimum tender condition;
- decrease or change the form of consideration to be paid;
- decrease the number of shares sought in the offer;
- waive the condition that the fairness opinion given by U.S. Bancorp Piper
Jaffray shall not have been modified or withdrawn;
- impose conditions in addition to those set forth in the merger agreement
or that would in any other way adversely affect the Guest Supply
stockholders; or
- extend the expiration date of the offer except as discussed above.
Subject to the SEC's rules and regulations and the terms of the merger
agreement, we also reserve the right to terminate the offer and not accept or
exchange any Guest Supply shares not previously accepted or exchanged upon the
failure of any of the conditions of the offer to be satisfied.
If, on April 30, 2001, SYSCO has not completed the offer in accordance with
the terms of the merger agreement, SYSCO will terminate the offer without
accepting any shares previously tendered, and if less than 35% of the
outstanding shares of Guest Supply on a fully diluted basis have been tendered,
the merger agreement will automatically terminate. However, if at least 35% but
less than a majority of the outstanding shares on a fully diluted basis have
been validly tendered by April 30, 2001, we will terminate the offer and will
seek to consummate the merger. Immediately following any extension, delay,
termination or amendment, we will make a public announcement of the same.
We have elected to provide a subsequent offering period of five business
days after the acceptance of and payment for Guest Supply shares in the initial
offering period. We may extend the subsequent offering period for up to an
additional fifteen business days if the requirements under Exchange Act Rule
14d-11 have been met. The exchange ratio will be the same as in the initial
offering period. You will not have the right to withdraw Guest Supply shares
that you tender in the subsequent offering period, if any.
EXCHANGE OF GUEST SUPPLY SHARES; DELIVERY OF OUR COMMON STOCK
Upon the terms and subject to the conditions of the offer, and any
extension or amendment, we will exchange Guest Supply shares validly tendered
and not withdrawn promptly after the expiration date of the offer and promptly
after they are tendered during the subsequent offering period. In addition,
subject to applicable SEC rules and the merger agreement terms, we reserve the
right to delay acceptance or exchange of Guest Supply shares in order to comply
with any applicable law. In all cases, exchange of Guest Supply shares tendered
and accepted for exchange pursuant to the offer will be made only after timely
receipt by the exchange agent of:
- certificates for those Guest Supply shares or a confirmation of a
book-entry transfer of those Guest Supply shares in the exchange agent's
account at The Depository Trust Company, which we refer to as DTC;
- a properly completed and duly executed letter of transmittal (or a
facsimile of that document) or agent's message if applicable; and
- any other required documents.
You should read the information under the caption "The Offer -- Procedure
for Tendering" for more details on tendering your shares.
For purposes of the offer, we will be deemed to have accepted for exchange
Guest Supply shares validly tendered and not withdrawn when we notify the
exchange agent of our acceptance of such shares.
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The exchange agent will deliver our common stock in exchange for Guest Supply
shares tendered pursuant to the offer promptly after receipt of such notice. The
exchange agent will act as agent for tendering stockholders for the purpose of
receiving our common stock from us and transmitting such stock to you.
If we do not accept any tendered Guest Supply shares pursuant to the terms
and conditions of the offer for any reason, or if certificates are submitted for
more Guest Supply shares than are tendered, we will return certificates for such
tendered Guest Supply shares or untendered Guest Supply shares, as the case may
be, without expense to the tendering stockholder. In the case that Guest Supply
shares tendered by book-entry transfer into the exchange agent's account at DTC
pursuant to the procedures set forth below under the discussion entitled
"-- Procedure for Tendering" are not accepted for transfer, those Guest Supply
shares will be credited to an account maintained within DTC promptly following
expiration or termination of the offer.
If we increase the consideration offered to Guest Supply stockholders in
the offer prior to the expiration date of the offer, such increased
consideration will be given to all stockholders whose Guest Supply shares are
tendered pursuant to the offer, whether or not such Guest Supply shares were
tendered or accepted for exchange prior to the increase in consideration. We
currently have no intention of increasing the consideration offered.
CASH INSTEAD OF FRACTIONAL SHARES OF OUR COMMON STOCK
We will not issue certificates representing fractional shares of our common
stock pursuant to the offer or the merger. Instead, each Guest Supply
stockholder will receive an amount of cash in lieu of fractional shares, if any,
equal to such fraction multiplied by the SYSCO average trading price or, if
applicable, the SYSCO average trading merger price, used in the offer or the
merger. Guest Supply stockholders will not receive any interest on the cash to
be received for fractional shares, even if there is a delay in making the
exchange and payment.
WITHDRAWAL RIGHTS
Guest Supply shares tendered pursuant to the offer may be withdrawn at any
time prior to the expiration date of the offer. During the subsequent offering
period, you will not have the right to withdraw Guest Supply shares that you
tender in the subsequent offering period.
For your withdrawal to be effective, the exchange agent must receive from
you a written or facsimile transmission notice of withdrawal at its address set
forth on the back cover of this prospectus, and your notice must include your
name, address, social security number, the certificate number(s), the number of
Guest Supply shares to be withdrawn and the name of the registered holder, if
different from you.
A financial institution must guarantee all signatures on the notice of
withdrawal. Most banks, savings and loan associations and brokerage houses are
able to effect these signature guarantees for you. The financial institution
must be a participant in the Securities Transfer Agents Medallion Program, the
New York Stock Exchange, Inc. Medallion Signature Program or the Stock Exchange
Medallion Program, any of which are an "eligible institution," unless those
Guest Supply shares have been tendered for the account of any eligible
institution. If Guest Supply shares have been tendered pursuant to the
procedures for book-entry exchange discussed under the caption entitled
"-- Procedure for Tendering," any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn Guest Supply
shares and must otherwise comply with DTC's procedures. If certificates have
been delivered or otherwise identified to the exchange agent, the name of the
registered holder and the serial numbers of the particular certificates
evidencing the Guest Supply shares withdrawn must also be furnished to the
exchange agent, as stated above, prior to the physical release of such
certificates. We, working in conjunction with the exchange agent, will decide
all questions as to the form and validity (including time of receipt) of any
notice of withdrawal, in our sole discretion, and our decision shall be final
and binding. Neither we, the exchange agent, the information agent nor any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or will incur any liability for
failure to give any such notification. Any Guest Supply shares properly
withdrawn will be deemed not to have been validly tendered for purposes of the
offer. However, you may retender withdrawn
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Guest Supply shares by following one of the procedures discussed under the
captions entitled "-- Procedure for Tendering" or "-- Guaranteed Delivery" at
any time prior to the expiration date of the offer.
PROCEDURE FOR TENDERING
For you to validly tender Guest Supply shares pursuant to the offer:
- the enclosed letter of transmittal, properly completed and duly executed
(or a manually executed facsimile of that document), along with any
required signature guarantees, or an agent's message in connection with a
book-entry transfer, and any other required documents, must be
transmitted to and received by the exchange agent at its address set
forth on the back cover of this prospectus, and certificates for Guest
Supply shares tendered must be received by the exchange agent at such
address or those Guest Supply shares must be tendered pursuant to the
procedures for book-entry exchange set forth below and a confirmation of
receipt of such tender received, which confirmation we refer to below as
a "book-entry confirmation," in each case before the expiration date of
the offer; or
- you must comply with the guaranteed delivery procedures set forth below.
The term "agent's message" means a message, transmitted by DTC to, and
received by, the exchange agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC exchanging the Guest Supply shares which are the subject of
such book-entry confirmation, that such participant has received and agrees to
be bound by the terms of the letter of transmittal and that we may enforce that
agreement against such participant.
The exchange agent will establish accounts with respect to the Guest Supply
shares at DTC for purposes of the offer and any financial institution that is a
participant in DTC may make book-entry delivery of the Guest Supply shares by
causing DTC to transfer such Guest Supply shares into the exchange agent's
account in accordance with DTC's procedure for such transfer. However, although
delivery of Guest Supply shares may be effected through book-entry at DTC, the
letter of transmittal (or facsimile thereof), with any required signature
guarantees, or an agent's message in connection with a book-entry transfer, and
any other required documents, must, in any case, be transmitted to and received
by the exchange agent at its address set forth on the back cover of this
prospectus prior to the expiration date of the offer, or you must comply with
the guaranteed delivery procedures described below.
Signatures on all letters of transmittal must be guaranteed by an eligible
institution, except in cases in which Guest Supply shares are tendered either by
a registered holder of Guest Supply shares who has not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on the letter of transmittal or for the account of an eligible
institution.
If the certificates for Guest Supply shares are registered in the name of a
person other than the person who signs the letter of transmittal, or if
certificates for untendered Guest Supply shares are to be issued to a person
other than the registered holder(s), the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates, with
the signature(s) on the certificates or stock powers guaranteed in the manner we
have described above.
The method of delivery of Guest Supply share certificates and all other
required documents, including delivery through DTC, is at your option and risk,
and the delivery will be deemed made only when actually received by the exchange
agent. If delivery is by mail, we recommend that stockholders use an overnight
or hand delivery service. In all cases, you should allow sufficient time to
ensure timely delivery.
To prevent backup federal income tax withholding with respect to cash, if
any, received pursuant to the offer, you must provide the exchange agent with
your correct taxpayer identification number and certify whether you are subject
to backup withholding of federal income tax by completing the substitute Form
W-9 included in the letter of transmittal. Some stockholders (including, among
others, all
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corporations and some foreign individuals) are not subject to these backup
withholding and reporting requirements. In order for a foreign individual to
qualify as an exempt recipient, the stockholder must submit a Form W-8 or Form
W-8BEN, signed under penalties of perjury, attesting to that individual's exempt
status.
Each Guest Supply stockholder that receives our common shares in the offer
and/or the merger should file a statement with his, her or its federal income
tax return setting forth the stockholder's basis in the Guest Supply shares
surrendered and the fair market value of our common shares and the proceeds from
the sale of fractional shares received in the offer and the merger, and should
retain permanent records of these facts relating to the offer and the merger.
GUARANTEED DELIVERY
If you wish to tender Guest Supply shares pursuant to the offer and your
certificates are not immediately available or you cannot deliver the
certificates and all other required documents to the exchange agent prior to the
expiration date of the offer or cannot complete the procedure for book-entry
transfer on a timely basis, your Guest Supply shares may nevertheless be
tendered, so long as all of the following conditions are satisfied:
- you make your tender by or through an eligible institution;
- the enclosed notice of guaranteed delivery, properly completed and duly
executed, substantially in the form enclosed with this prospectus, or an
agent's message with respect to a guaranteed delivery that is accepted by
SYSCO, is received by the exchange agent as provided below on or prior to
the expiration date of the offer; and
- the certificates for all Guest Supply shares to be tendered (or a
confirmation of a book-entry transfer of such securities into the
exchange agent's account at DTC as described above), in proper form for
transfer, together with a properly completed and duly executed letter of
transmittal (or facsimile thereof), with any required signature
guarantees (or, in the case of a book-entry transfer, an agent's message)
and all other documents required by the letter of transmittal, or a
properly transmitted agent's message, are received by the exchange agent
within three NYSE trading days after the date of execution of such notice
of guaranteed delivery.
You may deliver the notice of guaranteed delivery by hand or transmit it by
facsimile transmission or mail it to the exchange agent and you must include a
signature guarantee by an eligible institution in the form set forth in that
notice.
By executing a letter of transmittal as set forth above, you irrevocably
appoint our designees as your attorneys-in-fact and proxies, each with full
power of substitution, to the full extent of your rights with respect to your
Guest Supply shares tendered and accepted for exchange by us and with respect to
any and all other Guest Supply shares and other securities issued or issuable in
respect of the Guest Supply shares on or after February 5, 2001. That
appointment is effective, and voting rights will be affected, when and only to
the extent that we deposit with the exchange agent the shares of our common
stock for Guest Supply shares that you have tendered. All such proxies shall be
considered coupled with an interest in the tendered Guest Supply shares and
therefore shall not be revocable. Upon the effectiveness of such appointment,
all prior proxies that you have given will be revoked, and you may not give any
subsequent proxies and, if given, they will not be deemed effective. Our
designees will, with respect to the Guest Supply shares for which the
appointment is effective, be empowered to exercise all of your voting and other
rights as they, in their sole discretion, deem proper at any annual, special or
adjourned meeting of Guest Supply stockholders or otherwise. We reserve the
right to require that, in order for Guest Supply shares to be deemed validly
tendered, immediately upon our acceptance for exchange of those Guest Supply
shares, we must be able to exercise full voting rights with respect to such
Guest Supply shares.
We will determine questions as to the validity, form, eligibility, time of
receipt and acceptance for exchange of any tender of Guest Supply shares, in our
sole discretion, and our determination shall be final
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and binding. We reserve the absolute right to reject any and all tenders of
Guest Supply shares that we determine are not in proper form or the acceptance
for exchange of or exchange for which may, in the opinion of our counsel, be
unlawful. To the extent not otherwise prohibited by applicable law, we may waive
any of the conditions of the offer, other than the minimum tender condition, the
requirement that the merger agreement not have been terminated, and the
requirement that the fairness opinion not have been modified or withdrawn, or
any defect or irregularity in the tender of any Guest Supply shares. No tender
of Guest Supply shares will be deemed to have been validly made until all
defects and irregularities in tenders of Guest Supply shares have been cured or
waived. Neither we, the exchange agent, the information agent nor any other
person will be under any duty to give notification of any defects or
irregularities in the tender of any Guest Supply shares or will incur any
liability for failure to give any such notification. Our interpretation of the
terms and conditions of the offer, including the letter of transmittal and
instructions thereto, will be final and binding.
The tender of Guest Supply shares pursuant to any of the procedures
described above will constitute a binding agreement between us and the tendering
stockholders upon the terms and subject to the conditions of the offer.
PURPOSE OF THE OFFER; THE MERGER; NO DISSENTERS RIGHTS
Purpose. We are making the offer to acquire the entire equity interest in
Guest Supply. The offer is the first step in our acquisition of Guest Supply and
is intended to facilitate the acquisition of all Guest Supply shares. As soon as
possible after completion of the offer, we will cause Guest Supply and Sysco
Food Services of New Jersey to complete the merger. The purpose of the merger is
to acquire all Guest Supply shares not tendered and exchanged pursuant to the
offer. At the effective time of the merger, each share of Guest Supply common
stock, except for shares held by Guest Supply, us, or Sysco Food Services of New
Jersey, will be converted into the right to receive the number of shares of our
common stock at the same exchange ratio as in the offer. Assuming satisfaction
or waiver of the conditions to the merger, we are obligated to complete the
merger as promptly as practicable.
Approval of the Merger. Under Guest Supply's certificate of incorporation,
the approval of the board of directors and the affirmative vote of the holders
of a majority of its outstanding shares present and entitled to vote at a
meeting called for such purpose are required in order to approve the merger. The
Guest Supply board of directors has approved the merger. Therefore, unless the
merger is completed in accordance with the short form merger provisions under
New Jersey law described below, the only remaining corporate action of Guest
Supply is the approval of the merger agreement by the Guest Supply stockholders.
If we complete the offer, we will own a majority of the outstanding shares of
Guest Supply common stock and therefore we will be able to approve the merger
without the affirmative vote of any other Guest Supply stockholder.
Possible Short Form Merger. Section 14A:10-5.1 of the New Jersey Business
Corporation Act permits the merger to occur without a vote of Guest Supply
stockholders (a "short form merger") if we acquire at least 90% of the
outstanding Guest Supply shares in the initial offering period, any subsequent
offering period or otherwise. If, however, we do not acquire at least 90% of the
then outstanding Guest Supply shares, and a vote of Guest Supply stockholders is
required under New Jersey law, a longer period of time will be required to
effect the merger.
No Dissenters Rights. Guest Supply stockholders do not have dissenters
rights in connection with the offer or the merger.
CONDITIONS OF THE OFFER
The offer is subject to a number of conditions, including those described
below:
Minimum Tender Condition. There must be validly tendered, and not
withdrawn prior to the expiration date of the offer, a number of Guest
Supply shares that constitutes at least a majority of the fully diluted
Guest Supply shares. Based on information supplied by Guest Supply, the
number of
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shares needed to satisfy the minimum tender condition would have been
3,973,037 as of January 31, 2001.
Antitrust Condition. The waiting period, and any extension thereof,
applicable to the offer and the merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, which we refer to as the
"HSR Act," and any other applicable antitrust law must have expired or been
terminated. We call this the "antitrust condition." See "-- Regulatory
Approvals" below.
Registration Statement Effectiveness Condition. The registration
statement on Form S-4 of which this prospectus is a part must have been
declared effective by the SEC and not be subject to any stop order or
proceedings seeking a stop order. We call this the "registration statement
effectiveness condition."
Other Conditions of the Offer. The offer, at the time of acceptance
for exchange of Guest Supply shares is also subject to the following
conditions:
- no action or proceeding shall be pending before any governmental
authority in the United States by any governmental authority in the
United States that seeks to restrain or prohibit the transactions
contemplated by the merger agreement;
- no federal or state statute, rule, regulation, injunction, order or
decree shall have been enacted, entered, promulgated or enforced by
any governmental authority or court in the United States, Canada or
England which prohibits the consummation of the transactions
contemplated by the merger agreement;
- Guest Supply shall not have breached its covenants, representations or
warranties set forth in the merger agreement, resulting in a material
adverse change in the Guest Supply business;
- the merger agreement shall not have been terminated;
- no material adverse change in the Guest Supply business shall exist;
- Guest Supply shall have obtained required approvals under the New
Jersey Industrial Site Recovery Act;
- the fairness opinion of U.S. Bancorp Piper Jaffray shall not have been
modified or withdrawn;
- Guest Supply shall have delivered to SYSCO a comfort letter from KPMG
LLP in form and substance reasonably satisfactory to SYSCO;
- Guest Supply shall have caused an opinion of its counsel to be
delivered to SYSCO; and
- Guest Supply shall have delivered to SYSCO a certificate signed by an
authorized officer of Guest Supply certifying as to the satisfaction
of certain of the conditions set forth above.
The conditions of the offer described above are solely for our and Sysco
Food Services of New Jersey's benefit and we may assert them regardless of the
circumstances giving rise to any such conditions, including any action or
omission by us, other than a material and willful breach of the merger agreement
by us. To the extent not otherwise prohibited by applicable law, we may waive
these conditions in whole or in part, other than the minimum tender condition,
the requirement that the merger agreement not have been terminated and the
requirement that the fairness opinion of U.S. Bancorp Piper Jaffray not have
been modified or withdrawn. The failure by us at any time prior to expiration of
the offer to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time prior to the expiration of the
offer. Accordingly, all conditions of the offer must be satisfied or waived
prior to expiration of the offer. The waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances. Notwithstanding the fact that we reserve the
right to assert the failure of a condition in order to delay exchange or cancel
our obligation to exchange properly tendered Guest Supply shares, we will either
promptly exchange or return such Guest Supply shares.
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REGULATORY APPROVALS
We and Guest Supply have agreed in the merger agreement to use all
reasonable efforts to take whatever actions are required to obtain necessary
regulatory approvals with respect to the offer and the merger. Other than
clearance under the antitrust laws applicable to the offer and the merger which
are described above under "-- Conditions of the Offer -- Antitrust Condition,"
the SEC's declaring the effectiveness of the registration statement of which
this prospectus is a part, the filing of certificates of merger under New Jersey
corporate law and Delaware corporate law with respect to the merger, and certain
approvals from the New Jersey Department of Environmental Protection, we do not
believe that any additional material governmental filings or approvals are
required with respect to the offer and the merger.
Under the HSR Act and the related rules, neither the offer nor the merger
may be completed until we and Guest Supply notify and furnish information to the
Federal Trade Commission, or FTC, and the Antitrust Division of the United
States Department of Justice and specified waiting period requirements have been
satisfied. In connection with the offer and the merger, on January 26, 2001, we
filed with the FTC and the Antitrust Division the required notification and
report forms under the HSR Act. Guest Supply shall file its required
notification and report forms under the HSR Act as promptly as possible, but not
later than February 2, 2001. The applicable waiting period under the HSR Act
relating to the offer and the merger is scheduled to expire at midnight on
February 25, 2001 unless it is earlier terminated or extended by a request for
additional information.
At any time before or after the completion of the offer or the merger,
either the Antitrust Division or the FTC could take any action under U.S.
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the completion of the offer or the merger or seeking
the divestiture of substantial assets owned by us or Guest Supply. Private
parties and state attorneys general may also bring actions under U.S. antitrust
laws depending on the circumstances. Although we believe that the offer and
merger do not raise significant concerns under U.S. antitrust laws, we can give
no assurance that a challenge to the offer or the merger on antitrust grounds
will not be made or, if this challenge is made, that it would not be successful.
The completion of the transactions contemplated in the merger agreement
requires compliance with the New Jersey Industrial Site Recovery Act. In order
to comply with such act, Guest Supply has agreed to obtain from the New Jersey
Department of Environmental Protection with respect to each property owned or
leased by it in New Jersey a letter of non-applicability, a remediation
agreement or a regulated underground storage tank waiver. Guest Supply has
applied for a remediation agreement.
EFFECTS OF OFFER
Reduced Liquidity; Possible Delisting. According to Guest Supply, there
were, as of January 31, 2001, 6,848,575 Guest Supply common shares outstanding.
The tender of Guest Supply shares pursuant to the offer will reduce the number
of Guest Supply stockholders and the number of Guest Supply shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Guest Supply shares held by the public. Guest Supply
shares are listed and traded on the NYSE. Depending on the number of Guest
Supply shares acquired pursuant to the offer, following completion of the offer,
Guest Supply shares may no longer meet the requirements of the NYSE for
continued listing and the shares may be suspended or delisted.
The NYSE will normally give consideration to delisting a security when:
- the number of total stockholders is less than 400;
- the number of total stockholders is less than 1,200 and average monthly
trading volume is less than 100,000 shares for the most recent 12 months;
or
- the number of publicly-held shares is less than 600,000.
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Shares held directly or indirectly by directors, officers or beneficial
owners of more than 10% of the shares are not considered as being publicly held
for this purpose. If, following the closing of the offer, the shares of Guest
Supply no longer meet the requirements of the NYSE, the market for the shares
could be adversely affected.
If the NYSE were to delist the Guest Supply shares, including after the
exchange of shares in the offer but prior to the merger, the market for them
could be adversely affected. It is possible that Guest Supply shares would be
traded on other securities exchanges or in the over-the-counter market, and that
price quotations would be reported by such exchanges or by other sources. The
extent of the public market for the Guest Supply shares and the availability of
such quotations would, however, depend upon the number of holders and/or the
aggregate market value of the Guest Supply shares remaining at such time, the
interest in maintaining a market in the Guest Supply shares on the part of
securities firms, the possible termination of registration of Guest Supply
shares under the Exchange Act, as described below under "-- Registration under
the Exchange Act," and other factors.
We intend to complete the merger as soon as possible following completion
of the offer. No shares of Guest Supply will remain publicly traded upon
completion of the merger.
Status as "Margin Securities." The Guest Supply shares are presently
"margin securities" under the regulations of the Federal Reserve Board, which
has the effect of allowing brokers to extend credit on the collateral of Guest
Supply shares. Depending on the factors similar to those described above with
respect to listing and market quotations, following the completion of the offer,
the Guest Supply shares may no longer constitute "margin securities" for the
purposes of the Federal Reserve Board's margin regulations, in which event the
Guest Supply shares would be ineligible as collateral for margin loans made by
brokers.
Registration under the Exchange Act. Guest Supply shares are currently
registered under the Exchange Act. Guest Supply can terminate that registration
upon application to the SEC if the outstanding shares are not listed on a
national securities exchange or market and if there are fewer than 300 holders
of record of Guest Supply shares. Termination of registration of the Guest
Supply shares under the Exchange Act would reduce the information that Guest
Supply must furnish to its stockholders and to the SEC and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b) and the requirement of furnishing a proxy statement
in connection with stockholders meetings pursuant to Section 14(a) and the
related requirement of furnishing an annual report to stockholders, no longer
applicable with respect to Guest Supply shares. Furthermore, the ability of
"affiliates" of Guest Supply and persons holding "restricted securities" of
Guest Supply to dispose of such securities pursuant to Rule 144 under the
Securities Act may be impaired or eliminated. If registration of the shares
under the Exchange Act were terminated, they would no longer be eligible for
NYSE listing or for continued inclusion on the Federal Reserve Board's list of
"margin securities."
RELATIONSHIPS WITH GUEST SUPPLY
Except as set forth in this prospectus, neither we nor, to the best of our
knowledge, any of our directors, executive officers or other affiliates has any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of Guest Supply, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as described in this prospectus, there have been
no contacts, negotiations or transactions within the last two years between us
or, to the best of our knowledge, any of our directors, executive officers or
other affiliates on the one hand, and Guest Supply or its affiliates, on the
other hand, concerning a merger, consolidation or acquisition, a tender offer or
other acquisition of securities, an election of directors, or a sale or other
transfer of a material amount of assets.
ACCOUNTING TREATMENT
Our acquisition of Guest Supply will be accounted for under the purchase
method of accounting under U.S. generally accepted accounting principles, which
means that Guest Supply's results of operations
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will be included with ours from the closing date and its consolidated assets and
liabilities will be recorded at their fair values at the same date.
FEES AND EXPENSES
We have retained MacKenzie Partners to act as the information agent in
connection with the offer. The information agent may contact holders of Guest
Supply shares by mail, telephone or other means, and may request brokers,
dealers and other nominee stockholders to forward the offer materials to
beneficial owners of Guest Supply shares. The information agent will be paid a
customary fee for such services, plus reimbursement of out-of-pocket expenses,
and we will indemnify the information agent against certain liabilities and
expenses in connection with the offer, including liabilities under federal
securities laws.
In addition, we have retained EquiServe Trust Company, N.A. as the exchange
agent. We will pay the exchange agent customary compensation for its services in
connection with the offer, will reimburse the exchange agent for its reasonable
out-of-pocket expenses and will indemnify the exchange agent against certain
liabilities and expenses, including liabilities under the federal securities
laws.
We will not pay any fees or commissions to any broker, dealer or other
persons (other than the information agent) for soliciting tenders of Guest
Supply shares pursuant to the offer.
Guest Supply received an opinion from U.S. Bancorp Piper Jaffray dated
January 22, 2001 to the effect that, as of that date, and subject to the
assumptions, factors and limitations set forth in their opinion, the exchange
ratio to be established pursuant to the merger agreement is fair to the Guest
Supply stockholders, from a financial point of view. The opinion is attached as
an exhibit to Guest Supply's Schedule 14D-9, which was mailed to the Guest
Supply stockholders with a preliminary version of this prospectus, and Guest
Supply stockholders are urged to read such opinion in its entirety, including
the assumptions, factors and limitations contained therein.
U.S. Bancorp Piper Jaffray also provided certain financial advisory
services to Guest Supply in connection with the offer and the merger. Under the
terms of the engagement letter dated June 19, 2000, Guest Supply has agreed to
pay U.S. Bancorp Piper Jaffray a fee equal to 1.25% of the total sale price of
Guest Supply in connection with this transaction for U.S. Bancorp Piper
Jaffray's financial advisory services, a retainer fee of $100,000, $350,000 for
rendering the opinion described above, which fee will be credited against
payment of the fee for financial advisory services and reasonable out-of-pocket
expenses of U.S. Bancorp Piper Jaffray, and to indemnify U.S. Bancorp Piper
Jaffray against liabilities incurred. Details concerning the arrangements
between Guest Supply and U.S. Bancorp Piper Jaffray are disclosed in Guest
Supply's Solicitation/Recommendation Statement on Schedule 14D-9, which was
mailed to the Guest Supply stockholders with a preliminary version of this
prospectus.
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THE MERGER AGREEMENT AND THE TENDER AGREEMENTS
The merger agreement and the form of the tender agreements are attached as
Annex A and Annex B, respectively, to this prospectus. We believe the following
summary describes the material terms of the merger agreement and the tender
agreements. This summary, however, does not purport to describe all the terms of
the agreements. We recommend that you read carefully the complete agreements for
their precise terms and other information that may be important to you.
THE MERGER AGREEMENT
THE OFFER
Conditions. Our obligation to complete the offer is subject to the
conditions described beginning on page 31 of this prospectus and include the
minimum tender condition, the antitrust condition and the registration statement
effectiveness condition. See "The Offer -- Conditions of the Offer."
THE MERGER
Completion of the Merger. If the conditions to the merger are satisfied or
waived in accordance with the merger agreement and in accordance with the New
Jersey Business Corporation Act and the Delaware General Corporation Law, at the
effective time of the merger, Sysco Food Services of New Jersey will merge with
and into Guest Supply. Guest Supply will survive the merger as our wholly owned
subsidiary.
Effective Time of the Merger. The merger will become effective upon the
filing of certificates of merger with the New Jersey Secretary of State and the
Delaware Secretary of State or at such subsequent date or time as Guest Supply
and we may specify. The filing of the certificates of merger will take place as
soon as practicable after satisfaction or waiver of the conditions described
below under "-- Conditions to the Completion of the Merger" on page 42.
Additional Effects of the Merger. Upon completion of the merger:
- each outstanding share of capital stock of Sysco Food Services of New
Jersey shall be converted into and become one share of common stock of
Guest Supply, as the corporation surviving the merger;
- if the exchange offer is completed, each outstanding share of Guest
Supply common stock shall be converted into the right to receive a number
of shares of our common stock at the same exchange ratio used in the
offer, but if the offer is terminated and the merger is completed, each
outstanding share of Guest Supply common stock shall be converted into
the right to receive a number of shares of our common stock based on the
merger ratio, as described below;
- each share of Guest Supply common stock held in the Guest Supply treasury
shall automatically be canceled and retired and shall cease to exist;
- the directors and officers of Sysco Food Services of New Jersey at the
effective time of the merger shall become the directors and officers of
Guest Supply, as the corporation surviving the merger;
- the certificate of incorporation of Guest Supply at the effective time of
the merger shall remain the certificate of incorporation of Guest Supply,
as the corporation surviving the merger, except as amended by the
certificates of merger; and
- the bylaws of Guest Supply at the effective time of the merger shall
become the bylaws of Guest Supply, as the corporation surviving the
merger, until amended.
The Merger Ratio. If the offer is terminated and the merger is completed,
the outstanding Guest Supply common stock shall be converted into the right to
receive shares of our common stock based on a merger ratio, as described below.
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If the average of the closing prices per share of our common stock on the
NYSE for each of the 15 consecutive trading days ending on the trading date that
is five trading days prior to the date of the Guest Supply stockholders' meeting
at which approval of the merger is being considered, which we refer to as the
SYSCO average trading merger price, is:
- at least $22.00 but less than or equal to $30.00, Guest Supply
stockholders shall receive for each Guest Supply share a number of
SYSCO shares equal to $26.00 divided by the SYSCO average trading
merger price;
- less than $22.00, Guest Supply stockholders shall receive for each
Guest Supply share approximately 1.1818 SYSCO shares; or
- more than $30.00, Guest Supply stockholders shall receive for each
Guest Supply share approximately 0.8667 SYSCO shares.
The SYSCO average trading merger price cannot be determined with certainty
at this time.
BOARD OF DIRECTORS AND MANAGEMENT FOLLOWING THE MERGER
After the merger, SYSCO will continue to be managed by the same Board of
Directors and officers of SYSCO as before the merger. Information relating to
the management, executive compensation, voting securities, certain relationships
and related transactions and other related matters pertaining to SYSCO is
contained in or incorporated by reference in its Annual Report on Form 10-K for
the fiscal year ended July 1, 2000. Such Annual Report is incorporated by
reference into this prospectus. See "Where You Can Find More Information" on
page 5.
EXCHANGE AGENT; PROCEDURES FOR EXCHANGE OF CERTIFICATES
Exchange Agent. At the time the merger becomes effective, we will deposit
with the exchange agent certificates representing the number of whole shares of
our common stock issuable pursuant to the merger agreement in exchange for the
outstanding shares of Guest Supply common stock. We will also deposit with the
exchange agent a certificate representing the aggregated fractional shares which
would otherwise be issued in exchange for the surrendered Guest Supply shares
pursuant to the merger agreement. Soon after the completion of the merger, the
exchange agent will send a letter to each person who was a Guest Supply
stockholder at the time the merger became effective. The letter will contain
instructions on how to surrender Guest Supply stock certificates to the exchange
agent and receive shares of our common stock. See "The Offer -- Procedure for
Tendering."
Dividends. Holders of Guest Supply shares will not be entitled to receive
any dividends declared by us or other distributions with respect to our shares
until after the effective time of the merger and they have surrendered their
Guest Supply stock certificates to the exchange agent. Any dividends declared by
us with a record date after the effective time of the merger will be accrued for
the benefit of those Guest Supply stockholders who have not yet surrendered
their certificates, and paid upon surrender.
Fractional Shares. No fractional shares of our common stock will be issued
upon the surrender of certificates representing Guest Supply shares. Guest
Supply stockholders will not have any dividend, voting or other rights of a
SYSCO shareholder with respect to such fractional shares. Instead, each Guest
Supply stockholder will receive an amount of cash in lieu of fractional shares,
if any, equal to such fraction multiplied by the SYSCO average trading price or,
if applicable, the SYSCO average trading merger price, used in the offer or the
merger. Guest Supply stockholders will not receive any interest on the cash to
be received for fractional shares, even if there is a delay in making the
exchange and payment.
GUEST SUPPLY BOARD OF DIRECTORS
Upon acceptance for exchange of Guest Supply shares in the offer, Guest
Supply will, subject to applicable law, cause to be placed on the Guest Supply
board of directors a number of directors designated by SYSCO. We will be
entitled to designate that number of Guest Supply directors, rounded up to the
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next whole number, such that the percentage of the total number of Guest Supply
directors designated by us will be equal to the percentage of total outstanding
Guest Supply shares then held by us. However, following such designation and
until the merger has been completed, we and Guest Supply shall use best efforts
to ensure that the Guest Supply board of directors shall always have at least
two members who were directors of Guest Supply prior to the completion of the
offer. The merger agreement provides that, prior to the effective time of the
merger, if our designees are elected to the Guest Supply board, the affirmative
vote of a majority of the continuing Guest Supply directors will be required to:
- amend or terminate the merger agreement;
- exercise or waive any of Guest Supply's rights, benefits, or remedies
under the merger agreement if such exercise or waiver materially and
adversely affects Guest Supply stockholders other than us or Sysco Food
Services of New Jersey;
- take action with respect to the retention of counsel and other advisors
in connection with the transactions contemplated by the merger agreement;
or
- approve any other action under or in connection with the merger agreement
which materially and adversely affects the interests of Guest Supply
stockholders, other than us or Sysco Food Services of New Jersey.
GUEST SUPPLY STOCK OPTIONS
Stock Options. At the effective time of the merger, each outstanding Guest
Supply option shall be assumed by SYSCO and thereafter deemed to constitute an
option to acquire, on the same terms and conditions as were applicable under the
Guest Supply stock option, the same number of shares of SYSCO common stock as
the holder of the Guest Supply option would have been entitled to receive
pursuant to the merger agreement had the holder exercised the Guest Supply
option in full immediately prior to the effective time of the merger, rounded
down to the nearest whole number. The price per share shall equal the per share
exercise price at which the Guest Supply option was exercisable immediately
prior to the effective time, divided by the exchange ratio. All such options
shall automatically vest and become immediately exercisable upon the first to
occur of the commencement of the offer or 15 days prior to consummation of the
merger.
SYSCO has agreed to take all action necessary to implement the above,
including the reservation, issuance and listing of a sufficient number of shares
of SYSCO common stock for delivery upon exercise of these assumed options. SYSCO
shall prepare and file a registration statement on an appropriate form, or a
post-effective amendment to a previously filed registration statement, with
respect to the shares of SYSCO common stock subject to the above options and,
where applicable, shall use its reasonable efforts to have the registration
statement declared effective as soon as is reasonably practicable after the
effective time of the merger, to maintain its effectiveness and to maintain the
current status of the prospectus contained in it for so long as the options
remain outstanding.
Guest Supply has agreed to use commercially reasonable efforts to cause all
individuals holding options under its 1993 Stock Option Plan to waive all of
their respective rights under Section 5(k) of such plan, which provides for the
issuance of reload options, effective from and after the date that our designees
constitute a majority of the members of the Guest Supply board of directors,
pursuant to a waiver agreement in form and substance reasonably satisfactory to
us. As of January 31, 2001, holders of all options outstanding under this plan
have executed the waivers.
For more information on the treatment of Guest Supply stock options in
connection with the offer and the merger, please refer to Item 3 of Guest
Supply's Solicitation/Recommendation Statement on Schedule 14D-9, which was
mailed to Guest Supply stockholders together with a preliminary version of this
prospectus.
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CONDUCT OF BUSINESS PENDING THE MERGER
Guest Supply has agreed that, except as expressly contemplated by the
merger agreement and unless we consent in advance in writing, during the period
from the execution and delivery of the merger agreement to the date that our
designees constitute a majority of the members of the Guest Supply board of
directors, Guest Supply and its subsidiaries will carry on their respective
businesses in substantially the same manner as conducted before the date of the
merger agreement.
In addition, Guest Supply will not, directly or indirectly, do any of the
following:
- engage in transactions in shares of its capital stock or acquire any
shares of its capital stock, except Guest Supply shall have the right to
issue common stock pursuant to its employee stock purchase plan, stock
option plans and warrants or other convertible securities which were
issued and outstanding prior to the date of the merger agreement;
- amend or propose to amend its certificate of incorporation or bylaws;
- split, combine or reclassify any outstanding shares of its capital stock,
or declare, set aside or pay any dividend;
- acquire any interest in any entity or person;
- except in the ordinary course of business and consistent with past
practice, sell or encumber or authorize or propose the sale or
encumbrance of any of Guest Supply's business assets;
- enter into any material contract or agreement, except in the ordinary
course of business and consistent with past practice;
- authorize a single capital expenditure in excess of $50,000 or aggregate
capital expenditures in excess of $200,000;
- take any action, other than in the ordinary course of business and
consistent with past practice, to increase compensation (including
bonuses) or other remuneration of its directors, officers or employees or
grant any severance or termination pay unless disclosed to SYSCO prior
thereto;
- make payments or grants, except in the ordinary course of business and
consistent with past practice, under any employee benefit plan,
employment or consulting agreement, or adopt or otherwise amend any of
the foregoing, except as required or contemplated by the merger
agreement;
- take any action, except in the ordinary course of business and consistent
with past practice, with respect to its methods of management,
purchasing, distribution, marketing, or operating or make any change in
its method of accounting;
- take any action to incur or increase any indebtedness for borrowed money
from banks, other than borrowings under existing credit facilities and
trade payables incurred in the ordinary course of business and consistent
with its past practice, or cancel without payment in full, any notes,
loans or other receivables, except in the ordinary course of business and
consistent with its past practice;
- loan or advance monies except reasonable expense advances to its
employees not to exceed $1,000 per employee;
- change any of its existing bank accounts or lock box arrangements except
for deposits, withdrawals or changes in signatories in the ordinary
course of business and consistent with past practice;
- waive any of its material rights or settle any single claim involving
more than $50,000 or in the aggregate involving more than $200,000; or
- do any act or omit to do any act which would cause a material breach of
any of its material contracts, commitments or obligations.
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GUEST SUPPLY STOCKHOLDERS MEETING
If required by applicable law to effectuate the merger, the merger
agreement requires Guest Supply to call a meeting of its stockholders as soon as
practicable after the expiration or termination of the offer. Guest Supply has
agreed that, through its board of directors and subject to the board's fiduciary
duties, it will recommend that its stockholders vote in favor of approving the
merger agreement. At any such Guest Supply stockholder meeting, we have agreed
to vote all Guest Supply shares beneficially owned by us or any of our
subsidiaries in favor of approving the merger agreement. If we or any of our
subsidiaries in the aggregate obtain at least 90% of the outstanding Guest
Supply shares, we have agreed to effect the merger as soon as practicable after
the expiration of the offer without a Guest Supply stockholders meeting pursuant
to Section 14A:10-5.1 of the New Jersey Business Corporation Act.
OTHER OFFERS
The merger agreement provides that, from the date of the merger agreement
until the effective time of the merger or, if earlier, the termination of the
merger agreement, Guest Supply will not, directly or indirectly:
- solicit, initiate, entertain, encourage or respond, except that it may
respond to the contested proxy solicitation initiated by BFMA (which has
publicly announced that it intends to withdraw its proxy solicitation)
for Guest Supply's 2001 Annual Meeting of stockholders, to any inquiries
or proposals that constitute or could reasonably be expected to lead to
an alternative transaction, which means:
- the acquisition of Guest Supply by merger or otherwise by any third
party;
- the acquisition by a third party of 20% or more of the assets of
Guest Supply and its subsidiaries taken as a whole;
- the acquisition by a third party of 20% or more of the outstanding
Guest Supply common stock or the issuance by Guest Supply of capital
stock containing terms which are inconsistent with the consummation
of the transactions contemplated by the merger agreement;
- the adoption by Guest Supply of a plan of liquidation or the
declaration or payment by Guest Supply of an extraordinary dividend
representing 20% or more of the value of Guest Supply and its
subsidiaries taken as a whole; or
- the repurchase by Guest Supply or any of its subsidiaries of more
than 20% of its outstanding common stock;
- negotiate, discuss or provide any non-public information to any third
party in connection with an alternative transaction, or;
- permit any subsidiary to, and will not authorize any officer, director,
employee, any investment bank or other advisor or representative of it or
a subsidiary to, and will instruct such persons not to, solicit, initiate
or encourage the submission of a proposal for any alternative transaction
or participate in any discussions or negotiations regarding, or furnish
information with respect to, or take action to facilitate, any
alternative transaction or any inquiries or the making of any proposal
that constitutes, or leads to, any alternative transaction; however, the
Guest Supply board of directors may furnish information or enter into
negotiations with, a third party that makes an unsolicited bona fide
written proposal of an alternative transaction if, and only to the extent
that:
- the Guest Supply board of directors, after consultation with legal
counsel, determines in good faith that such action is necessary for
it to comply with its fiduciary duties,
- the Guest Supply board of directors determines in good faith, after
consultation with a financial advisor of nationally recognized
reputation, that such alternative transaction would, if consummated,
constitute or be reasonably likely to constitute a superior
proposal, which means any bona fide written unsolicited proposal of
an alternative transaction, except that, for purposes of a superior
proposal, 50% shall be substituted for 20%, that the Guest Supply
board
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of directors determines in its good faith judgment, after consultation with a
financial advisor of nationally recognized reputation and consultation with
legal counsel, (i) would result in a transaction that would, if completed, be
superior to the Guest Supply stockholders from a financial point of view
as compared to the transactions contemplated by the merger agreement and
any alternative proposed by us in accordance with the merger agreement and
(ii) to be reasonably capable of being consummated in accordance with its
terms, including that any financing required to consummate the transaction
contemplated by such proposal is capable of being, and is reasonably
likely to be, obtained, in each case taking into account all factors the
Guest Supply board of directors considers relevant, including all legal,
financial, regulatory and other aspects of the proposal by the third
party, and
- prior to taking such action, Guest Supply provides notice to us to
the effect that it is taking such action, including, without
limitation, the material terms and conditions thereof and the
identity of the person making it, and as promptly as practicable,
but in no case later than 24 hours, after taking such action,
provides us with a copy of any alternative transaction or amendments
or supplements thereto and receives from such third party an
executed confidentiality agreement in reasonably customary form and
in any event containing terms at least as stringent as those between
us and Guest Supply.
Subsequent to furnishing information to, or entering into discussions or
negotiations with, any third party, Guest Supply shall inform us on a prompt
basis of the status of any discussions or negotiations with such third party,
and any material changes to the terms and conditions of such alternative
transaction. Promptly after the execution and delivery of the merger agreement,
Guest Supply will, and will cause its subsidiaries to, and will instruct their
respective officers, directors, employees, investment bankers, attorneys,
accountants and other agents to, cease and terminate any existing activities,
discussions or negotiations with any parties with respect to any possible
alternative transaction and shall notify each party with which it, or any
officer, director, investment advisor, financial advisor, attorney or other
representative retained by it, has had discussions during the 60 days prior to
the merger agreement, that the Guest Supply board of directors no longer seeks
to engage in any alternative transactions.
Under the merger agreement, Guest Supply has agreed that its board of
directors will not withdraw or modify or propose to withdraw or modify its
approval or recommendation of the merger agreement unless the board of directors
determines, after consultation with counsel, that it is required by its
fiduciary duties to do so. Guest Supply has also agreed not to approve or
recommend an alternative transaction unless the following requirements are met:
- the alternative transaction must be a superior proposal;
- Guest Supply's board of directors must first consult with legal counsel
and determine that such action is necessary for it to comply with its
fiduciary duties to the Guest Supply stockholders;
- Guest Supply must provide us with written notice advising us that Guest
Supply has received a superior proposal, specifying the material terms
and conditions of the superior proposal and identifying the person or
entity making the superior proposal; and
- Guest Supply's board of directors must allow two business days to elapse
after we receive notice of the superior proposal without receiving from
us an offer that would cause the Guest Supply board of directors to
determine, after consulting with both a financial advisor of nationally
recognized reputation and legal counsel, in its good faith judgment, that
the alternative transaction is not a superior proposal to the
transactions contemplated by the merger agreement.
Guest Supply can terminate the merger agreement to pursue an alternative
transaction only after the second business day following our receipt of written
notice from Guest Supply advising us that its board of directors is prepared to
accept the superior proposal, and Guest Supply must pay us a termination fee.
See "-- Termination Events; Termination Fee; Expenses."
No provision of the merger agreement prohibits Guest Supply from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from
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making any disclosure to its stockholders which, in the good faith reasonable
judgment of the Guest Supply board of directors, based on the advice of legal
counsel, is required under applicable law.
DIRECTORS AND OFFICERS INSURANCE AND INDEMNIFICATION
The merger agreement provides that, after the date of the merger agreement,
the certificate of incorporation and bylaws of the corporation surviving the
merger will contain provisions that indemnify present or former directors,
officers, employees or agents of Guest Supply to at least the same extent as
they were indemnified prior to the date of the merger agreement.
We have agreed to maintain Guest Supply's current directors and officers
liability insurance and indemnification policies to the extent that they provide
coverage for events occurring prior to the effective time of the merger and to
provide similar coverage for a period of not less than six years from the
effective time of the merger for all persons who are directors and officers of
Guest Supply on the date of the merger agreement, provided that we will not be
obligated to pay an annual premium for any such coverage in excess of 150% of
the premium paid by Guest Supply for its most recent fiscal year, and our
aggregate indemnification liability may not exceed the net worth of Guest Supply
at December 29, 2000.
CONDITIONS TO THE COMPLETION OF THE MERGER
Each party's obligation to effect the merger is subject to the satisfaction
or waiver, prior to the time the merger becomes effective, of the following
conditions:
- if required by applicable law, the merger agreement shall have been duly
approved by the Guest Supply stockholders, in accordance with applicable
law and the certificate of incorporation and bylaws of Guest Supply;
- no federal or state statute, rule, regulation or injunction shall have
been enacted, entered, promulgated or enforced by any court or
governmental authority which makes the merger illegal or otherwise
prohibits completion of the merger;
- Sysco Food Services of New Jersey shall have accepted for exchange all of
the shares of Guest Supply common stock tendered pursuant to the offer,
unless the failure to complete the offer is the result of a willful and
material breach of the merger agreement by the party asserting such
condition;
- this registration statement shall have become effective in accordance
with the provisions of the Securities Act, and no stop order shall have
been issued, and no proceeding for that purpose shall have been initiated
or be threatened, by the SEC with respect thereto;
- no action or proceeding shall be pending before any governmental
authority by any governmental authority in which it is sought to restrain
or prohibit the merger;
- if required, the approval for listing on the NYSE of the shares of SYSCO
common stock to be issued in the offer and the merger; and
- the receipt by the Guest Supply board of directors of a fairness opinion
by U.S. Bancorp Piper Jaffray which shall not have been modified or
withdrawn prior to the payment for the shares in the offer.
TERMINATION EVENTS; TERMINATION FEE; EXPENSES
Termination Events. The merger agreement may be terminated at any time
prior to the closing date of the merger, notwithstanding any approval of the
merger agreement by the stockholders of Guest Supply:
- by mutual written consent of us and Guest Supply;
- by us if, prior to the acceptance for payment of Guest Supply common
stock under the offer, there occurs in respect of Guest Supply or its
business, a material adverse effect or a breach by Guest
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Supply of any representation, warranty, covenant or agreement contained in the
merger agreement that is not curable and would give rise to a material adverse
effect; unless we are then in breach in any material respect of any of our
obligations under the merger agreement;
- by Guest Supply if, prior to the acceptance for payment of Guest Supply
common stock under the offer, we materially breach any representation,
warranty, covenant or agreement contained in the merger agreement, unless
Guest Supply is then in breach in any material respect of any of its
obligations under the merger agreement;
- by Guest Supply or us, only if no shares of Guest Supply common stock
were purchased by Sysco Food Services of New Jersey pursuant to the
offer, and the merger has not been completed by August 31, 2001, provided
that the party seeking to exercise such right is not then in breach in
any material respect of any of its obligations under the merger
agreement;
- by either us or Guest Supply if a meeting of Guest Supply stockholders is
required under the New Jersey Business Corporation Act and the merger
fails to receive the requisite vote for approval;
- by Guest Supply, prior to acceptance for payment of Guest Supply common
stock under the offer, in order to enter into a definitive written
agreement with respect to an alternative transaction with a third party,
provided that, prior to entering into such definitive agreement, Guest
Supply shall have given us notice of such alternative transaction as
required by the merger agreement and is otherwise not prohibited by the
merger agreement from entering into such agreement;
- the merger agreement shall automatically terminate if less than thirty
five percent (35%) of the outstanding shares of common stock of Guest
Supply, on a fully diluted basis, are validly tendered by April 30, 2001;
or
- by us if a triggering event shall have occurred, which means:
- the approval or recommendation by the Guest Supply board of directors
or any committee thereof to the Guest Supply stockholders of any
alternative transaction;
- the withdrawal, amendment or modification by the Guest Supply board of
directors or any committee thereof in a manner adverse to us of the
recommendations it is required to make under the merger agreement;
- failure by the Guest Supply board of directors to include the
recommendations it is required to make under the merger agreement in
the offer documents, the Schedule 14D-9 or any post-effective
amendment to the registration statement of which this prospectus forms
a part; or
- commencement by a person unaffiliated with Guest Supply of a tender or
exchange offer relating to 40% or more of the shares of common stock
of Guest Supply, and failure by Guest Supply to send to its
stockholders pursuant to Rule 14e-2 promulgated under the Securities
Exchange Act of 1934, within 10 business days after such tender or
exchange offer is first published, sent or given, a statement
disclosing that Guest Supply recommends rejection of such tender or
exchange offer.
We do not have the right to terminate the merger agreement as a result of
any action taken by Guest Supply or its agents in connection with the contested
proxy solicitation involving Guest Supply's 2001 Annual Meeting of stockholders
that is not in breach of any provision of the merger agreement. However, on
January 23, 2001, following announcement of the execution of the merger
agreement, the party soliciting proxies in opposition to the nominees of Guest
Supply announced that it intends to withdraw its proxy solicitation.
Termination Fee; Expenses. Guest Supply has agreed to pay us a termination
fee of $5.5 million plus all reasonable out-of-pocket fees and expenses incurred
by us in connection with the merger agreement, including without limitation, all
filing fees with all governmental authorities, reasonable out-of-
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pocket legal fees and expenses incurred by us for accounting advice and
environmental due diligence upon the occurrence of any of the following events:
- if within four months after the date of the merger agreement, Guest
Supply receives a proposal for an alternative transaction, including the
commencement of a tender offer made directly to the Guest Supply
stockholders, from any person or entity other than us or our affiliates
and such alternative transaction is completed within twelve months after
the date of the merger agreement;
- if Guest Supply, prior to acceptance for payment of any shares of common
stock of Guest Supply under the offer, terminates the merger agreement in
order to enter into a written agreement with respect to an alternative
transaction with a third party in accordance with the merger agreement;
or
- if a triggering event shall have occurred.
The termination fee is due to us within ten days of the first to occur of
any of the above events.
Except as set forth above, , all expenses incurred by us in connection with
the merger agreement and related agreements, including all fees and expenses of
agents, representatives, brokers, counsel and accountants for us, shall be paid
by us. All expenses incurred by Guest Supply in connection with the merger
agreement and the related agreements, including without limitation, all fees and
expenses of agents, representatives, brokers, counsel and accountants for Guest
Supply shall be paid by Guest Supply. Guest Supply shall also pay the fees owed
to U.S. Bancorp Piper Jaffray in connection with this transaction, as well as
sales, use and transfer taxes, if any, incurred in connection with the
transactions described in the merger agreement.
OTHER PROVISIONS
Representations and Warranties. The merger agreement contains customary
representations and warranties relating to each of the parties and their ability
to complete the offer and the merger. All representations and warranties of
SYSCO and Guest Supply survive for three years after the completion of the
merger.
Access To Information. Guest Supply has agreed to afford, and to cause its
respective officers, employees, representatives and agents to afford us, from
the date of the merger agreement to the effective time, reasonable access to its
officers, employees, agents, properties, books, records, files and other
documents as we may reasonably request that relate to the Guest Supply business.
Except as required by law, each party shall hold any confidential information in
accordance with the confidentiality agreement between SYSCO and Guest Supply.
Further Assurances. Each of the parties to the merger agreement has agreed
to execute and deliver any additional information, documents or agreements
contemplated by the merger agreement or necessary to complete the offer and the
merger.
THE TENDER AGREEMENTS
PARTIES
Certain directors and executive officers of Guest Supply who, on January
31, 2001, directly or indirectly, collectively held an aggregate of
approximately 8.35% of the outstanding shares of Guest Supply common stock and
collectively have the right to acquire an additional 472,500 shares upon the
exercise of outstanding Guest Supply stock options, have entered into tender
agreements with us.
AGREEMENTS TO TENDER
Each Guest Supply stockholder who signed a tender agreement agreed to
tender in the offer and not withdraw all Guest Supply shares owned by him along
with any additional Guest Supply shares acquired by him after the date of the
tender agreement, including those acquired upon the exercise of options and
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warrants. Such stockholders have reserved the right to sell into the public
market up to 15% of the total number of (i) shares held of record, and (ii)
shares deemed beneficially owned by them pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934. Shares deemed beneficially owned include those
subject to options and warrants exercisable at January 22, 2001, and those
exercisable within 60 days thereafter. They have also agreed that, if they do
not sell the remaining shares at least five days prior to the expiration date of
the offer, they will tender them in the offer. As of February 26, 2001, they had
sold 82,500 shares.
PROXY
Each Guest Supply stockholder who signed a tender agreement granted us, or
any of our nominees, a proxy to vote or execute a consent voting all of such
stockholder's Guest Supply shares:
- in favor of the approval of the merger agreement and the transactions
contemplated by the merger agreement;
- against any proposal for any recapitalization, merger, sale of assets or
other business combination between Guest Supply and any person or entity,
other than the transactions contemplated by the merger agreement; and
- against any action or agreement that would result in a breach of any
covenant, representation or warranty or would result in any other
obligation or agreement of Guest Supply under the merger agreement not
being fulfilled or would result in payment by Guest Supply of the
termination fee set forth under "-- Termination Events; Termination Fee;
Expenses"
NO SOLICITATION
Each Guest Supply stockholder who signed a tender agreement further agreed
not to, directly or indirectly, solicit, initiate, entertain, encourage or
respond to any inquiries or proposals that constitute or could reasonably be
expected to lead to an alternative transaction to the offer or the merger with
another person or entity, or to negotiate, discuss or provide any non-public
information to any third party in connection with such an alternative
transaction.
TERMINATION
Each tender agreement provides that it and the proxies granted under the
tender agreements will terminate upon the earliest to occur of:
- termination of the merger agreement in accordance with its terms;
- the effective time of the merger;
- the date on which all of the stockholder's Guest Supply shares are
purchased pursuant to the offer; or
- the termination of the offer without the purchase of any Guest Supply
shares.
INTERESTS OF CERTAIN PERSONS
The information contained in Item 3 of the Schedule 14D-9 of Guest Supply
dated February 5, 2001 is incorporated herein by reference. To our knowledge,
each material agreement, arrangement or understanding and any actual or
potential conflict of interest between Guest Supply and Guest Supply's executive
officers, directors or affiliates, or between Guest Supply and Sysco Food
Services of New Jersey, SYSCO and their respective executive officers, directors
or affiliates, is either incorporated herein by reference as a result of the
previous sentence or is set forth below.
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EMPLOYMENT AND SEVERANCE AGREEMENTS
In connection with the negotiation of the merger agreement, we required
that the employment agreements of Clifford W. Stanley, Paul T. Xenis and R.
Eugene Biber be replaced with new employment agreements in order to help retain
these officers following the earlier to occur of the completion of the offer or
the merger. These new agreements have terms that last until 90 days following
the end of our 2006 fiscal year and will become effective only upon the earlier
of completion of the offer or the merger, which we refer to as the effective
date of the agreement. The agreements provide for initial base salaries of
$284,000 for Mr. Stanley, $210,000 for Mr. Xenis and $199,000 for Mr. Biber,
subject to annual review for merit increases. On the effective date of the
agreement, Mr. Stanley will be granted stock options pursuant to our 2000 Stock
Incentive Plan to purchase 100,000 shares of our common stock which vest in
33 1/3% increments over three years on each anniversary date of the grant. The
options may remain outstanding for 10 years from the date of grant so long as
during the first three years, following the effective date, his employment is
not terminated with cause and he does not resign (except for good reason). The
term may be shortened based on the circumstances surrounding the termination of
his employment. Messrs. Xenis and Biber will be granted stock options pursuant
to our 2000 Stock Incentive Plan to purchase 30,000 and 20,000 shares,
respectively, of our common stock which vest in 20% increments over five years
based upon achievement of targeted increases in pre-tax earnings of Guest Supply
compared to prior years, but if any such options do not vest because the targets
are not met, the options vest nine and one half years after the date of grant
provided that Mr. Xenis or Mr. Biber, as the case may be, is still employed by
Guest Supply. Each of the options granted have special vesting provisions in the
event of and depending upon the reason why the employment agreements are
terminated. Each of the agreements also provides for certain restrictive
covenants in favor of SYSCO, including noncompetition, nonsolicitation, and
nondisclosure of confidential information provisions.
This summary of the terms of the new employment agreements is qualified in
its entirety by reference to the text of the employment agreements, which are
filed as exhibits to the registration statement of which this prospectus is a
part.
Pursuant to an agreement dated August 6, 1997, as amended, between Guest
Supply and Thomas M. Haythe, Mr. Haythe acts as general counsel for Guest
Supply. The agreement provides for the payment of a monthly retainer of $7,500,
credited on a current basis against his fees for services rendered to Guest
Supply, and the payment of up to three years of such retainer upon the
termination of the agreement in the case of certain change-of-control events
involving Guest Supply. The term of the agreement is for a three-year period
with automatic yearly extensions. In connection with execution of the merger
agreement, Mr. Haythe entered into an amendment to the agreement with Guest
Supply which will take effect upon the closing of the offer or the merger.
Pursuant to the amendment, Mr. Haythe will continue to receive his monthly
retainer through July 2004.
STOCK OPTIONS
As of January 31, 2001, options issued to executive officers and directors
of Guest Supply to purchase a total of 472,500 shares of Guest Supply common
stock, with a weighted average exercise price of approximately $8.54 per share,
were outstanding.
DIRECTORS' AND OFFICERS' INSURANCE; INDEMNIFICATION
The merger agreement provides that for a period of six years from the
effective time of the merger, the corporation surviving the merger will maintain
in effect directors' and officers' liability insurance covering those persons
who were covered under Guest Supply directors' and officers' liability insurance
on January 22, 2001. Such insurance shall be no less favorable than Guest Supply
existing policies and shall cover events occurring prior to the effective time
of the merger. We are not required to expend an amount in excess of 150% of the
annual premiums currently paid by Guest Supply for such insurance.
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The surviving corporation of the merger will also indemnify each such
officer and director for a period of six years to the fullest extent that those
individuals are currently entitled to indemnification under New Jersey law and
under the Guest Supply certificate of incorporation and bylaws.
THE TENDER AGREEMENTS
Immediately prior to the signing of the merger agreement, directors and
executive officers of Guest Supply, who then collectively held approximately
9.3% of the outstanding Guest Supply common stock, entered into tender
agreements with us. Each Guest Supply stockholder who signed a tender agreement
all Guest Supply shares owned by them at January 22, 2001, as well as all
additional shares acquired by them, including those acquired upon exercise of
options and warrants. However, each of those stockholders also reserved the
right to sell into the public market up to 15% of the total number of (i) shares
held of record, and (ii) shares deemed beneficially owned by such stockholders
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934. Shares deemed
beneficially owned include those subject to options and warrants exercisable at
January 22, 2001, and those exercisable within 60 days thereafter. Shares sold
pursuant to this provision on or before five days prior to the expiration date
of the offer will not be tendered. As of February 1, 2001, approximately 8.35%
of the outstanding Guest Supply common stock was subject to the tender
agreements.
See "The Merger Agreement and the Tender Agreements -- The Tender
Agreements."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the anticipated material U.S. federal
income tax consequences of the offer and the merger to Guest Supply stockholders
who exchange their Guest Supply shares for our common shares pursuant to the
offer or the merger. This discussion does not purport to be a complete analysis
or discussion of all potential tax effects relevant to the offer and the merger.
Further, this tax discussion does not address all of the U.S. federal income tax
consequences that may be relevant to Guest Supply stockholders in light of their
particular circumstances; nor does the discussion address the U.S. federal
income tax consequences that may be applicable to Guest Supply stockholders
subject to special tax treatment under the Internal Revenue Code of 1986, as
amended (which we refer to as the Code), such as stockholders:
- who are dealers in securities, traders that mark to market, foreign
individuals (i.e., individuals who are not citizens or residents of the
United States), foreign corporations, foreign partnerships or other
foreign entities, mutual funds, financial institutions, insurance
companies or tax-exempt entities;
- who acquired their shares through the exercise of stock options, through
stock purchase plans, in other compensatory transactions, or through a
tax-qualified retirement plan;
- whose shares are qualified small business stock for purposes of Section
1202 of the Code;
- who hold their shares as part of an integrated investment such as a
hedge, straddle, constructive sale or other risk reduction strategy or as
part of a conversion transaction;
- who do not hold their shares as capital assets;
- whose functional currency is not the U.S. dollar; or
- who are subject to the alternative minimum tax.
In addition, the following tax discussion does not address the tax
consequences, if any, of the offer or the merger under state, local, foreign,
and other tax laws. The tax opinions described below and this tax discussion are
based upon the provisions of the Code, applicable Treasury regulations, judicial
decisions and Internal Revenue Service (which we refer to as the IRS) rulings,
in each case, as in effect as of the date of this document. There can be no
assurance that future legislative, judicial or administrative changes
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or interpretations, which changes or interpretations could apply retroactively,
will not affect the accuracy of the statements or conclusions set forth in the
tax opinions summarized below or in this tax discussion. No rulings have been or
will be sought from the IRS concerning the tax consequences of the offer and the
merger and neither this tax discussion nor the tax opinions described below will
be binding on the IRS or any court. The IRS could adopt a contrary position, and
such contrary position could be sustained by a court.
SYSCO and Guest Supply expect to be advised by Arnall Golden Gregory LLP
and Torys, respectively, that in their respective opinions, although the matter
is not free from doubt, for U.S. federal income tax purposes the offer and the
merger should constitute a reorganization within the meaning of Section 368(a)
of the Code. These tax opinions, when given, will be attached as Exhibits 8.1
and 8.2, respectively, to the registration statement on Form S-4 filed with the
SEC, of which this prospectus is a part. The tax opinions described above and
the consequences summarized below under "Federal Income Tax Consequences If The
Offer And The Merger Qualify As A Reorganization" will be conditioned upon,
among other things, all of the following factual assumptions (which we refer to
as the supporting conditions):
- the merger is completed promptly after the offer; and
- the offer and the merger are completed under the current terms of the
merger agreement.
In addition to these primary supporting conditions, the opinions of Arnall
Golden Gregory LLP and Torys will rely upon, and the consequences summarized
below under "Federal Income Tax Consequences If The Offer And The Merger Qualify
As A Reorganization" are based upon, representations and covenants made by Guest
Supply and SYSCO, including those contained in tax representation letters of
Guest Supply, SYSCO and Sysco Food Services of New Jersey, and certain other
assumptions including the absence of changes in facts or in law between the date
of this prospectus and the effective time of the merger. If any of those
representations, covenants or assumptions are inaccurate or if the supporting
conditions are not satisfied, the tax opinions of Arnall Golden Gregory LLP and
Torys described above cannot be relied upon. In addition, the ability to satisfy
the supporting conditions, and therefore the federal income tax consequences of
the offer and the merger, depend in part on facts that will not be available
before the completion of the merger. There can be no assurance that the merger
will be completed, or that the supporting conditions will be satisfied. Also, as
noted above, it is possible that a court might reach a conclusion contrary to
the conclusion reached in the tax opinions. Accordingly, it is possible that the
offer and/or the merger may not qualify as a reorganization, and the tax
consequences of the offer and/or the merger could differ materially from those
summarized below under "Federal Income Tax Consequences If The Offer And The
Merger Qualify As A Reorganization." See "Federal Income Tax Consequences If The
Offer And/Or The Merger Does Not Qualify As A Reorganization."
FEDERAL INCOME TAX CONSEQUENCES IF THE OFFER AND THE MERGER QUALIFY AS A
REORGANIZATION
Assuming that the offer and the merger qualify as a reorganization, and
subject to the assumptions, limitations and qualifications described above, for
federal income tax purposes:
- A holder of Guest Supply shares will not recognize any gain or loss upon
exchange of the holder's Guest Supply shares for SYSCO shares in the
offer or the merger, except for cash received instead of a fractional
share of SYSCO common stock.
- A holder of Guest Supply shares will have an aggregate tax basis in the
SYSCO shares received in the offer or the merger equal to (1) the
aggregate tax basis in the Guest Supply shares surrendered by that holder
in the offer or merger, reduced by (2) any tax basis in such Guest Supply
shares that is allocable to a fraction of a SYSCO common share for which
cash is received.
- The holding period for SYSCO shares received in exchange for Guest Supply
shares in the offer or the merger will include the holding period for
Guest Supply shares surrendered for them in the offer or the merger.
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FEDERAL INCOME TAX CONSEQUENCES IF THE OFFER AND/OR THE MERGER DOES NOT QUALIFY
AS A REORGANIZATION
If the offer and/or the merger does not qualify as a reorganization, each
Guest Supply stockholder realizing gain on the exchange of Guest Supply shares
for SYSCO shares in the offer and/or the merger, as applicable, generally will
recognize capital gain or loss, measured by the difference between the fair
market value of the SYSCO shares received by such stockholder (together with any
cash received by such stockholder instead of a fraction of a SYSCO share) and
such stockholder's tax basis in the Guest Supply shares surrendered. This
capital gain or loss will be long-term capital gain or loss if such stockholder
held such Guest Supply shares for more than one year at the time such Guest
Supply shares are exchanged in the offer or at the effective time of the merger,
as applicable.
Guest Supply stockholders are urged to consult their own tax advisor
regarding the recognition of gain or loss, and their basis and holding period in
the SYSCO shares if the offer and/or the merger does not qualify as a
reorganization.
FEDERAL INCOME TAX CONSEQUENCES IF THE MERGER IS NOT CONSUMMATED
In addition to the limitations, assumptions and qualifications described
above, this tax discussion does not address, and no opinion has been given
concerning, any tax consequences of the offer if the merger is not completed. If
the merger is not completed, the federal income tax consequences of the exchange
of Guest Supply shares for SYSCO shares in the offer will depend on facts and
circumstances that are not yet known. Such facts and circumstances include the
percentage of Guest Supply shares tendered in the offer. You are urged to
consult your tax advisor regarding the tax consequences to you of your
participation in the offer if the merger is not completed.
The summary of anticipated material U.S. federal income tax consequences
set forth above is intended to provide only a general summary and is not
intended to be a complete analysis or description of all potential U.S. federal
income tax consequences of the offer and the merger. In addition, the summary
does not address tax consequences that may vary with, or are contingent on,
individual circumstances. Moreover, the summary does not address any non-income
tax or any foreign, state, local or other tax consequences of the offer or the
merger. The summary does not address the tax consequences of any transaction
other than the offer and the merger. Accordingly, each Guest Supply stockholder
is strongly urged to consult with a tax advisor to determine the particular
federal, state, local or foreign income, reporting or other tax consequences of
the offer and the merger to such stockholder.
COMPARISON OF RIGHTS OF HOLDERS OF SYSCO
SHARES AND GUEST SUPPLY SHARES
The rights of our stockholders are governed by the Delaware General
Corporation Law, our certificate of incorporation and our bylaws. The rights of
Guest Supply stockholders are governed by the New Jersey Business Corporation
Act and Guest Supply's certificate of incorporation and bylaws. Our certificate
of incorporation and bylaws differ from the Guest Supply certificate of
incorporation and bylaws in several respects. Upon completion of the merger,
Guest Supply stockholders will become SYSCO stockholders and their rights will
become subject to the provisions of Delaware law and the SYSCO certificate of
incorporation and bylaws. The material differences between the rights of Guest
Supply stockholders and SYSCO stockholders are summarized below.
The following discussion is not intended to be complete. You should also
refer to Delaware corporate law, our certificate of incorporation and our
bylaws. Copies of our certificate of incorporation, our bylaws,
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the Guest Supply certificate of incorporation and the Guest Supply bylaws will
be sent to the stockholders of Guest Supply upon request. See "Where You Can
Find More Information" on page 5.
AUTHORIZED CAPITAL STOCK:
SYSCO GUEST SUPPLY
----- ------------
- 1.5 million shares of preferred stock. - 1 million shares of preferred stock.
- 1 billion shares of common stock. - 20 million shares of common stock.
NUMBER AND TERM OF DIRECTORS:
SYSCO GUEST SUPPLY
----- ------------
- Not less than 3 nor more than 15, elected - Not less than 3 nor more than 9, elected
in 3 classes with staggered 3-year terms, in 3 classes with staggered 3-year terms,
with exact numbers to be determined from with exact numbers to be determined from
time to time by the Board, currently 12 time to time by the Board, currently 6
directors. directors.
REMOVAL OF DIRECTORS:
SYSCO GUEST SUPPLY
----- ------------
- Can be removed with cause by the - Can be removed by the stockholders only
stockholders. for cause and only by the affirmative vote
- Can be removed for cause by action of the of a majority of the combined voting power
Board. of the then outstanding shares of voting
stock, voting together as a single class.
SPECIAL MEETING OF STOCKHOLDERS:
SYSCO GUEST SUPPLY
----- ------------
- Can be called at any time by the Chairman - Can be called by resolution of the Board
of the Board, the Directors or any officer of Directors, by the Chairman of the Board
instructed by the Directors. of Directors, by the President, or by the
holders of a majority of the outstanding
shares of capital stock entitled to vote.
Special meetings may not be called by
stockholders without the approval of the
Board of Directors, except as may be
required by New Jersey law.
QUORUM:
SYSCO GUEST SUPPLY
----- ------------
- Requires 35% of the outstanding shares - Requires a majority of the outstanding
entitled to vote. shares entitled to vote.
NOTICE FOR MEETING:
SYSCO GUEST SUPPLY
----- ------------
- Notice to stockholders of any meeting - Notice to stockholders of any meeting
requires written notice delivered not less requires written notice delivered not less
than ten days nor more 50 days before the than ten days nor more than 60 days before
date of the meeting to each stockholder the date of the meeting to each
entitled to vote at such meeting. stockholder entitled to vote at such
meeting.
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CHARTER AMENDMENTS:
SYSCO GUEST SUPPLY
----- ------------
- Requires board approval and the - Amendment of some articles requires the
affirmative vote of the holders of a affirmative vote of the holders of 80% of
majority of the outstanding shares the outstanding shares entitled to vote.
entitled to vote.
AMENDMENT TO BYLAWS:
SYSCO GUEST SUPPLY
----- ------------
- Board has full power to amend, alter and - Bylaws may be altered, amended or repealed
repeal the bylaws, and to adopt new or new bylaws may be adopted by the Board or
bylaws, provided that the Board may the stockholders; provided that
delegate such power, in whole or in part, alteration, amendment, repeal or adoption
to the stockholders, which power has not by the stockholders requires the
been delegated; and provided, further, affirmative vote of the holders of not
that any bylaw which provides for the less than 80% of the outstanding shares
election of directors by classes for entitled to vote.
staggered terms may only be amended by the
stockholders.
ADVANCE NOTICE BYLAW PROVISIONS FOR ELECTION OF DIRECTORS:
SYSCO GUEST SUPPLY
----- ------------
- Only persons who are nominated by or at - Only persons who are nominated by or at
the direction of: the direction of:
- the Board of Directors, or any duly - the Board of Directors, or any duly
authorized committee thereof; authorized committee thereof;
- a stockholder of SYSCO (1) who is a - a stockholder of Guest Supply (1) who is a
stockholder of record on the date the stockholder of record on the date the
notice to stockholders is mailed and on notice to stockholders is mailed and on
the record date for stockholders entitled the record date for stockholders entitled
to notice of and to vote at such meeting to notice of and to vote at such meeting
and (2) who complies with the notice and and (2) who complies with the notice and
disclosure procedures contained in the disclosure procedures contained in the
bylaw, are eligible for election as bylaw, are eligible for election as
directors of SYSCO. directors of Guest Supply.
- To be timely, a stockholder's notice must - To be timely, a stockholder's notice must
be delivered to SYSCO, in the case of an be delivered to Guest Supply, in the case of
annual meeting, not less than 90 days nor an annual meeting, not less than 60 days
more than 130 days prior to the date of nor more than 90 days prior to the date of
the anniversary of the previous year's the anniversary of the previous year's
annual meeting or in the case of a special annual meeting or in the case of a special
meeting of stockholders called for the meeting of stockholders called for the
purpose of electing directors, not later purpose of electing directors, not later
than the close of business on the 10th day than the close of business on the 10th day
following the day on which notice of the following the day on which notice of the
date of the special meeting was mailed or date of the special meeting was mailed or
public disclosure of the date of the public disclosure of the date of the
special meeting was made, whichever first special meeting was made, whichever first
occurs. occurs.
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STOCKHOLDER PROPOSALS:
SYSCO GUEST SUPPLY
----- ------------
No business may be transacted at an annual No business may be transacted at an annual
meeting of SYSCO stockholders, other than meeting of Guest Supply stockholders, other
business that is either specified in the notice of than business that is either specified in the
meeting given by or at the direction of the notice of meeting given by or at the direction of
Board of Directors, otherwise properly brought the Board of Directors, otherwise properly
before the annual meeting by or at the direction brought before the annual meeting by or at the
of the Board of Directors, or any duly direction of the Board of Directors, or any duly
authorized committee thereof, or otherwise authorized committee thereof, or otherwise
properly brought before the annual meeting by a properly brought before the annual meeting by a
stockholder of SYSCO (1) who is a stockholder of Guest Supply (1) who is a
stockholder of record on the date of the notice stockholder of record on the date of the notice
and on the record date for stockholders entitled and on the record date for stockholders entitled
to notice of and to vote at such annual meeting to notice of and to vote at such annual meeting
and (2) who complies with the notice and and (2) who complies with the notice and
disclosure procedures contained in the bylaws. disclosure procedures contained in the bylaws.
- To be timely, a stockholder's notice must be - To be timely, a stockholder's notice must be
received by SYSCO not less than 90 days nor more received by Guest Supply not less than 60 days
than 130 days prior to the date of the nor more than 90 days prior to the date of the
anniversary of the previous year's annual anniversary of the previous year's annual
meeting. meeting.
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STATE TAKEOVER LAWS APPLICABLE TO THE COMPANIES:
SYSCO GUEST SUPPLY
----- ------------
- Section 203 of the Delaware General - New Jersey law restricts the ability of
Corporation Law restricts a corporation's certain persons to acquire control of a New
right to engage in a business combination Jersey corporation. In general, a New
with any interested stockholder within a Jersey corporation may not engage in a
period of three years from the date that business combination with an interested
such stockholder became an interested stockholder for a period of five years
stockholder. In general, an interested following the interested stockholder's
stockholder is a stockholder who holds 15% becoming such. An interested stockholder
or more of the outstanding voting stock of is generally a stockholder owning at least
a Delaware corporation; provided, however, 10% of the voting power of a corporation's
if such stockholder holds 85% of the outstanding shares. A New Jersey
outstanding stock, the board approves corporation may opt out of the New Jersey
either the transaction in question or the anti-takeover provisions and make the
acquisition of shares by the stockholder, anti-takeover provisions of New Jersey law
or the transaction is approved by inapplicable to the business combination
two-thirds of the company's stockholders and related transactions. The Guest Supply
other than the stockholder in question, certificate of incorporation provides that
then the prohibition against a business certain transactions, including a merger,
combination does not apply. significant asset sales and certain
issuances or transfers of securities of
Guest Supply require the affirmative vote
of the holders of 80% of the outstanding
shares of voting stock, unless the Board
of Directors of Guest Supply expressly
approved in advance the acquisition of
outstanding shares of voting stock of
Guest Supply that resulted in any related
person (as defined) becoming a related
person or expressly approved the business
combination prior to the related person
involved in the business combination
having become a related person.
- The Guest Supply certificate of
incorporation also provides that certain
affiliated transactions with a related
person of Guest Supply require, in
addition to any vote required by law or in
Guest Supply's certificate of
incorporation or by-laws, approval by a
majority of continuing directors.
- The Guest Supply Board of Directors has
taken the necessary action to make the
foregoing provisions of the New Jersey
anti-takeover laws and Guest Supply's
certificate of incorporation inapplicable
to the offer and the merger and the
related transactions.
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INSPECTION OF BOOKS AND RECORDS:
SYSCO GUEST SUPPLY
----- ------------
- Any stockholder has the right to inspect - Any stockholder has the right to inspect
and copy SYSCO's stock ledger, its list of and copy Guest Supply's list of stockholders
stockholders and other corporate books and and other corporate records during the
records during the usual hours of business usual hours of business upon at least 5
upon written demand stating a purpose days written demand stating a proper
reasonably related to such person's purpose; provided that, the stockholder
interest as a stockholder. has been a stockholder for at least six
months or holds at least 5% of the
outstanding shares of voting stock.
VOTE REQUIRED FOR MERGERS AND SIMILAR FUNDAMENTAL CORPORATE TRANSACTIONS:
SYSCO GUEST SUPPLY
----- ------------
- Requires Board approval and the - Requires the affirmative vote of not less
affirmative vote of the holders of a than 80% of the outstanding shares of voting
majority of the outstanding stock entitled stock, unless the Board of Directors has,
to vote. in advance, expressly approved the
transaction. Since the Board of Directors
has approved the offer and merger, the
merger requires the affirmative vote of a
majority of the votes cast.
VOTE REQUIRED FOR SALES OF ALL OR SUBSTANTIALLY ALL OF THE CORPORATE ASSETS:
SYSCO GUEST SUPPLY
----- ------------
- Requires Board approval and the - Requires the affirmative vote of not less
affirmative vote of the holders of a than 80% of the outstanding shares of voting
majority of the outstanding stock entitled stock, unless the Board of Directors has,
to vote. in advance, expressly approved the
transaction.
DIVIDENDS:
SYSCO GUEST SUPPLY
----- ------------
- Under Delaware corporate law, a - Under New Jersey corporate law, a
corporation's Board of Directors may corporation's Board of Directors may
declare and pay dividends either: declare and pay dividends in cash, in
- out of surplus, the amount of net assets property, or in shares of capital stock;
of the corporation in excess of all provided however, that a corporation may
liabilities, or not make a distribution if either:
- if there is no surplus, out of net - the corporation is unable to pay its debts
profits generated in the fiscal year in as they become due in the usual course of
which the dividend is declared and/or business; or
the preceding fiscal year. - the corporation's total assets would be
less than its total liabilities.
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DISSENTERS' APPRAISAL RIGHTS:
SYSCO GUEST SUPPLY
----- ------------
- No appraisal rights are available for - No dissenters' rights are available for
shares of any class or series of stock, shares of any class or series of stock,
which stock, at the record date fixed to which stock, at the record date fixed to
determine the shareholders entitled to determine the shareholders entitled to
receive notice of and to vote at the notice of and to vote at a meeting to act
meeting of shareholders to act upon a upon a merger, share exchange or
merger, is listed on a national securities disposition of all or substantially all of
exchange, as is SYSCO's, or designated a a corporation's assets is listed on a
national market system security on an national securities exchange, as is Guest
interdealer quotation system by the Supply's. Thus, Guest Supply's
National Association of Securities shareholders do not have any appraisal or
Dealers, Inc. dissenters' rights with respect to the
offer or the merger.
SYSCO RIGHTS PLAN
Under SYSCO's Amended and Restated Rights Agreement, as amended in May
1999, each share of SYSCO common stock has attached to it one-half of one
preferred stock purchase right. Each right entitles the holder to purchase from
SYSCO one two-thousandth of a share of SYSCO's Series A Junior Participating
Preferred Stock at a price of $175 per one two-thousandth of a share.
The rights are not exercisable until the earlier to occur of:
- a public announcement that, without the prior consent of the board of
directors of SYSCO, a person or group has acquired or obtained the right
to acquire beneficial ownership of 10% or more of the outstanding shares
of SYSCO common stock; or
- ten business days, or such later date as the board may determine,
following the commencement or announcement of an intention, which is not
subsequently withdrawn, to make a tender offer or exchange offer which
would result in any person or group having beneficial ownership of 10% or
more of the outstanding shares of SYSCO common stock without the prior
consent of the board of directors.
Upon the occurrence of either of the events described above, each holder of
a right will have a 60-day period (or a longer period set by the board of
directors) to exercise a right to receive securities. The 60-day (or longer)
period will begin on the later of:
- the date of this occurrence; or
- the effective date of any required registration statement.
Upon exercise of this right, each holder will receive that number of units
of one two-thousandths of a share of preferred stock, or, in some cases, common
stock or other securities, having an average market value during a specified
time period of two times the exercise price of the right.
In addition, if SYSCO is acquired in a merger or other business combination
transaction or 50% or more of SYSCO's assets or earning power is sold, each
right will entitle the holder to receive, upon the exercise of the right, that
number of shares of common stock of the acquiring company having a market value
of two times the exercise price of the right.
Prior to there being an occurrence described above, SYSCO may redeem the
rights at a price of $0.01 per right. The rights will expire on May 31, 2006,
unless earlier redeemed by SYSCO.
The rights have certain anti-takeover effects. Because an acquiring person
or group is not entitled to exercise purchase rights that relate to its shares,
the acquiring person's or group's ownership of SYSCO would be severely diluted
if the other stockholders exercise their rights to purchase the preferred stock,
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which has preferential dividends, liquidation, voting and other rights.
Therefore, the effect of the rights agreement is to encourage any person or
group who wants to acquire SYSCO to negotiate with the SYSCO board to agree on
the terms of the transaction. However, the rights generally should not interfere
with any merger or other business combination approved by the board of
directors.
GUEST SUPPLY RIGHTS PLAN
On July 14, 1988, as amended on August 6, 1997, the Board of Directors of
Guest Supply declared a dividend of one preferred share purchase right for each
outstanding share of common stock of Guest Supply and for each share of common
stock issued from that date. The dividend was payable on July 26, 1988 to the
stockholders of record on that date. Each right entitles the registered holder
to purchase from Guest Supply one one-hundredth of a preferred share at a price
of $30.00, subject to adjustment.
The rights agreement provides that, until the earlier to occur of (i) 10
days following a public announcement that a person or group of affiliated or
associated persons have acquired beneficial ownership of 20% or more of the
outstanding common stock, or (ii) 10 days following the commencement or
announcement of an intention to make a tender offer or exchange offer, the
completion of which would result in the beneficial ownership by a person or
group of 20% or more of such outstanding common stock, the rights will be
transferred with and only with the common stock.
Each holder of a right will in such event have the right to receive shares
of Guest Supply's common stock having a market value of two times the exercise
price of the right, which has been set at $30.00; and in the event that Guest
Supply is acquired in a merger or other business combination, or if more than
50% of its assets or earning power is sold, each holder of a right would have
the right to receive common stock of the acquiring company with a market value
of two times the exercise price of the right. Following the occurrence of any of
these events, any rights that are beneficially owned by any acquiring person
will immediately become null and void.
The rights are not exercisable until the earlier of such date as described
above and will expire on July 15, 2008, unless the final expiration date is
extended or the rights are earlier redeemed by Guest Supply at $.01 per right.
Guest Supply's Board of Directors has taken sufficient action to exempt the
offer, the merger and the transactions contemplated by the merger agreement from
the provisions of the rights plan.
LEGAL MATTERS
The legality of the shares of SYSCO common stock to be issued in the merger
will be passed upon for SYSCO by Arnall Golden Gregory LLP. Jonathan Golden, a
partner of Arnall Golden Gregory LLP, is a director of SYSCO. As of January 31,
2001, attorneys with Arnall Golden Gregory LLP beneficially owned an aggregate
of approximately 160,000 shares of SYSCO common stock. Arnall Golden Gregory LLP
and Torys will deliver their opinions to SYSCO and Guest Supply, respectively,
as to certain federal income tax consequences of the merger. See "Material
Federal Income Tax Consequences."
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EXPERTS
The consolidated balance sheets of SYSCO Corporation and subsidiaries as of
July 1, 2000 and July 3, 1999, and the related statements of consolidated
results of operations, shareholders' equity and cash flows and financial
statement schedule for each of the three years in the period ended July 1, 2000,
incorporated by reference in this prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
giving said report.
With respect to the unaudited interim financial information of SYSCO
Corporation and subsidiaries for the quarters ended December 30, 2000 and
January 1, 2000 incorporated herein by reference, Arthur Andersen LLP has
applied limited procedures in accordance with professional standards for a
review of that information. However, their separate report thereon states that
they did not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their report on that
information should be restricted in light of the limited nature of the review
procedures applied. In addition, the accountants are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
reports on the unaudited interim information because that report is not a
"report" or a "part" of the registration statement prepared or certified by the
accountants within the meaning of Sections 7 and 11 of the Act.
The consolidated financial statements and the related financial statement
schedule of Guest Supply, Inc. and subsidiaries as of September 29, 2000 and
October 1, 1999, and for each of the fiscal years in the three-year period ended
September 29, 2000, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
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ANNEX A
MERGER AGREEMENT AND PLAN OF REORGANIZATION
UNDER SECTION 368(a) OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION UNDER SECTION 368(a) OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (the "Agreement"), dated January
22, 2001, by and among GUEST SUPPLY, INC., a New Jersey corporation (the
"Company"; the Company together with all of its Subsidiaries set forth on
Schedule 4.1(b)(i) are hereinafter collectively referred to as "Guest Supply"),
SYSCO CORPORATION, a Delaware corporation ("Sysco"); and SYSCO FOOD SERVICES OF
NEW JERSEY, INC., a Delaware corporation and a wholly-owned subsidiary of Sysco
("Merger Sub") (Sysco and Merger Sub are hereinafter collectively referred to as
the "Sysco Companies").
RECITALS
A. Guest Supply is in the following business ("Business"):
(i) manufacturing, packaging and distributing to the lodging industry,
nursing homes, cruise ships and others personal care guest amenities (which
include, among other items, shampoo, hair conditioners, soap, bath gel, and
mouthwash), housekeeping supplies, furnishings, room accessories and
textiles; and
(ii) manufacturing and packaging personal care products for consumer
products and retail companies.
B. The respective Boards of Directors of Sysco, Merger Sub and the Company
have each approved the acquisition of the Company by Sysco upon the terms and
the conditions set forth in this Agreement.
C. In furtherance of such acquisition, it is proposed that Merger Sub shall
make an exchange offer (the "Offer") to exchange shares of common stock, $1.00
par value ("Sysco Common Stock"), of Sysco for all of the issued and outstanding
shares of common stock, no par value ("Common Stock"), of the Company, including
the associated Company Rights (as defined in Section 4.5) (each share of the
Common Stock together with its associated Company Right, is hereinafter referred
to as a "Share" and collectively, as the "Shares") upon the terms and subject to
the conditions set forth in this Agreement.
D. Also in furtherance of such acquisition, the respective Boards of
Directors of Sysco, Merger Sub and the Company have each approved the merger of
Merger Sub with the Company ("Merger") upon the terms and subject to the
conditions set forth in this Agreement.
E. The respective Boards of Directors of Sysco, Merger Sub and the Company
have each determined that the Offer and the Merger and the other transactions
contemplated hereby are consistent with, and in furtherance of, their respective
business strategies and goals and are in the best interests of their respective
stockholders.
F. For federal income tax purposes, it is intended that the Offer and
Merger qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended ("Code"), and that this Agreement
constitutes a plan of reorganization.
G. Sysco, Merger Sub and the Company desire to make certain
representations, warranties, covenants, each to the other, and agreements in
connection with the Offer and the Merger and also to prescribe various
conditions to the Offer and the Merger and the other transactions contemplated
by this Agreement.
H. The agreements, certificates and other documents listed on Schedule I
hereto have been executed and delivered prior to, or simultaneously with, this
Agreement.
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NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE 1
THE OFFER AND MERGER
1.1 The Offer; Merger Election. (a) Provided that this Agreement shall
not have been terminated in accordance with Section 7.1 and none of the events
set forth in Annex A hereto shall be existing (other than paragraphs (g), (i)
and (k) therein), Merger Sub shall, as promptly as practicable after the date
hereof, but in no event later than ten (10) business days after the date hereof,
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) the Offer. Each Share accepted by Merger
Sub in accordance with the Offer shall be exchanged for the right to receive
from Merger Sub the consideration determined in accordance with Section 1.2(A)
below (collectively, the "Offer Consideration"). The Offer shall be subject to
the condition that there be validly tendered and not withdrawn prior to the
expiration of the Offer such number of Shares which, when added to the Shares,
if any, beneficially owned by Sysco or Merger Sub, would constitute a majority
of the Shares outstanding on a fully diluted basis (the "Minimum Condition") and
to the other conditions set forth in Annex A hereto (any of which may be waived
in whole or in part by Merger Sub in its sole discretion except as otherwise
provided herein). Sysco and Merger Sub shall comply with the obligations
respecting prompt payment and announcement under the Exchange Act, and, without
limiting the generality of the foregoing, subject to the terms and conditions of
this Agreement, including but not limited to the conditions of the Offer, Merger
Sub shall, and Sysco shall cause Merger Sub to, accept for payment and pay for
Shares tendered pursuant to the Offer as soon as practicable after expiration
thereof. The obligations of Merger Sub to consummate the Offer and to accept for
payment and to pay for any Shares validly tendered on or prior to the expiration
of the Offer and not withdrawn shall be subject only to the conditions set forth
in Annex A hereto. Each of Sysco and Merger Sub expressly reserves the right to
waive the conditions of the Offer and to amend any of the terms and conditions
of the Offer; provided, that Merger Sub shall not without the prior written
consent of the Company (such consent to be authorized by the Board of Directors
of the Company (the "Company Board") or a duly authorized committee thereof) (i)
decrease the Offer Consideration, (ii) decrease the number of Shares sought,
(iii) change the form of consideration to be paid pursuant to the Offer as set
forth in Section 1.2 below, (iv) impose conditions to the Offer in addition to
those set forth in Annex A hereto, (v) amend any other term or condition of the
Offer in any manner adverse to the holders of the Shares, (vi) extend the
expiration date of the Offer, or (vii) waive the Minimum Condition or the
conditions set forth in subsection (f) or (h) of Annex A. Notwithstanding the
foregoing, Merger Sub may, without the consent of the Company, (A) extend the
Offer, if at the initial scheduled or any extended expiration date of the Offer
any of the conditions of the Offer shall not be satisfied or waived, until such
time as such conditions are satisfied or waived, (B) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
United States Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer, (C) extend the Offer for up to twenty (20)
business days if there have not been validly tendered and not withdrawn prior to
the expiration of the Offer such number of Shares that, together with Shares, if
any, beneficially owned by Sysco or Merger Sub, would constitute at least 90% of
the fully diluted Shares as of the date of determination, provided that all
other conditions to the Offer are satisfied or waived and (D) extend the Offer
for any reason for up to five (5) business days; provided, that no more than
three extensions in the aggregate shall be permitted under clauses (C) and (D)
of this sentence; provided, however, that notwithstanding the foregoing, unless
this Agreement has been terminated pursuant to Section 7.1 and, subject to
Section 1.1(c), Merger Sub shall extend the Offer from time to time in the event
that, at a then-scheduled expiration date, all of the conditions to the Offer
have not been satisfied or waived as permitted pursuant to this Agreement, each
such extension not to exceed the lesser of ten (10) additional business days or
such fewer number of days that Merger Sub reasonably believes is necessary to
permit the conditions to the Offer to be satisfied. In addition, the Offer
Consideration may be increased and the Offer may be extended to the extent
required by law, in each case
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without the consent of the Company. Notwithstanding the foregoing or any other
provision herein to the contrary, in the event that the Minimum Condition has
been satisfied and all other conditions set forth in Annex A have been satisfied
or waived, then Merger Sub shall, and Sysco shall cause Merger Sub to, accept
for payment and pay for all Shares tendered pursuant to the Offer and not
withdrawn as soon as practicable after the date that all such conditions have
been satisfied or waived, and nothing herein shall prohibit Merger Sub from
making a subsequent offer for Shares not so purchased upon the consummation of
the Offer subject to and in compliance with Rule 14d-11 of the Exchange Act (a
"Subsequent Offer").
(b) As soon as practicable after the date of this Agreement, Sysco shall
prepare and file with the SEC a registration statement on Form S-4 under the
Securities Act of 1933, as amended (the "Securities Act"), to register the offer
and sale of Sysco Common Stock pursuant to the Offer and any Subsequent Offer
(the "Form S-4"). The Form S-4 will include a preliminary prospectus containing
the information required under Rule 14d-4(b) promulgated under the Exchange Act
(the "Preliminary Prospectus"). As soon as practicable on the date of
commencement of the Offer, Sysco and Merger Sub shall (i) file with the SEC a
Tender Offer Statement on Schedule TO with respect to the Offer and any
Subsequent Offer (the "Schedule TO") which will contain or incorporate by
reference all or part of the Preliminary Prospectus and form of the related
letter of transmittal (together with any supplements or amendments thereto,
collectively the "Offer Documents") and (ii) subject to the Company's compliance
with Section 1.3(c), cause the Offer Documents to be disseminated to holders of
Shares. Sysco, Merger Sub and the Company each agree promptly to correct any
information provided by it for use in the Form S-4 or the Offer Documents if and
to the extent that it shall have become false or misleading in any material
respect. Sysco and Merger Sub agree to take all steps necessary to cause the
Offer Documents as so corrected, and any other filings or documents, to be filed
with the SEC and to be disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws. Sysco further agrees
that it shall cause the Offer Documents, Form S-4, and any other documents filed
with the SEC, to comply in all material respects with the Exchange Act, and the
rules and regulations thereunder, and other applicable laws. The Company and its
counsel shall be given a reasonable opportunity to review and comment on the
Schedule TO, the Form S-4 and the Offer Documents prior to its being filed with
the SEC. In addition, Sysco agrees to provide the Company and its counsel in
writing with any comments, whether written or oral, that Sysco or its counsel
may receive from time to time from the SEC or its staff with respect to the
Schedule TO, the Form S-4 and the Offer Documents promptly after the receipt of
such comments or other communications.
(c) If, on April 30, 2001 (the "Final Expiration Date"), Merger Sub has not
consummated the Offer in accordance with its terms, Merger Sub shall thereupon
terminate the Offer (in accordance with all applicable laws) without the
acceptance of any Shares previously tendered. If, at the Final Expiration Date,
the Minimum Condition has not been satisfied, Merger Sub shall, unless Sysco and
the Company otherwise agree, terminate the Offer, and the parties shall, subject
to the terms and conditions hereof in accordance with all applicable laws, use
all commercially reasonable efforts to consummate the Merger unless the
Agreement has been terminated pursuant to Section 7.1(h).
(d) In the event that this Agreement has been terminated pursuant to
Section 7.1, Merger Sub shall, and Sysco shall cause Merger Sub to, promptly
terminate the Offer (in accordance with all applicable laws) without accepting
any Shares for payment or exchange.
1.2(A) Offer Consideration. The consideration per Share due to each holder
of Common Stock (a "Stockholder") in connection with the Offer (and any
Subsequent Offer) is the "Offer Consideration" and shall be payable by Sysco in
the form of shares of Sysco Common Stock as provided in subsection (a) below.
(a) In connection with the Offer (and any Subsequent Offer), the
number of shares of Sysco Common Stock which each Stockholder is entitled
to receive, and which Sysco shall issue, for each Share owned by a
Stockholder shall be determined by dividing $26.00 by the Average Sysco
Offer Price (as defined in Section 1.2(A)(b) below).
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(b) The "Average Sysco Offer Price" means the average of the closing
prices of the Sysco Common Stock as reported on the NYSE Composite
Reporting Tape (as reported in The Wall Street Journal, or, if not reported
therein, any other authoritative source) on the fifteen (15) trading days
ending on the date (the "Offer Determination Date") which is five (5)
trading days immediately preceding the expiration date of the Offer as it
may from time to time be extended in accordance with this Agreement;
provided, however, notwithstanding the foregoing, in the event that (x)
such average is less than $22.00, then the Average Sysco Offer Price shall
be $22.00 and (y) such average is more than $30.00, then the Average Sysco
Offer Price shall be $30.00.
(B) Merger Consideration Upon Termination of Offer. In the event that the
Offer has been terminated pursuant to Section 1.1(c) and the Agreement has not
been terminated pursuant to Section 7.1, the parties shall use all commercially
reasonable efforts to consummate the Merger in accordance with the terms of this
Agreement. The consideration per Share due to each Stockholder in connection
with the Merger is the "Merger Consideration" and shall be payable as set forth
in subsection (a) below. The Merger Consideration payable to the Stockholders in
connection with the Merger upon such termination of the Offer shall be payable
by Sysco in the form of shares of Sysco Common Stock.
(a) In the event that the Offer has been terminated pursuant to
Section 1.1(c), in connection with the Merger the number of shares of Sysco
Common Stock which each Stockholder is entitled to receive, and which Sysco
shall issue, for each Share owned by a Stockholder shall be determined by
dividing $26.00 by the Average Sysco Merger Price (as defined in Section
1.2(B)(b) below).
(b) The "Average Sysco Merger Price" means the average of the closing
prices of the Sysco Common Stock as reported on the NYSE Composite
Reporting Tape (as reported in The Wall Street Journal, or, if not reported
therein, any other authoritative source) on the fifteen (15) trading days
ending on the date (the "Merger Determination Date") which is five (5)
trading days immediately preceding the date of the Stockholders Meeting (as
defined in Section 1.12) for the Merger following a termination of the
Offer pursuant to Section 1.1(c); provided, however, notwithstanding the
foregoing, in the event that (x) such average is less than $22.00, then the
Average Sysco Merger Price shall be $22.00 and (y) such average is more
than $30.00, then the Average Sysco Merger Price shall be $30.00. The
Average Sysco Merger Price shall be used in determining Merger
Consideration payable in connection with the Merger following the
termination of the Offer pursuant to Section 1.1(c) and for no other
purpose.
(C) Merger Consideration Upon Consummation of Offer. In the event that
Merger Sub accepts for payment any Shares in the Offer, the parties shall
consummate the Merger in accordance with the terms of this Agreement and the
Merger Consideration payable to the Stockholders in connection with the Merger
shall be payable by Sysco in the same form and same amount as the Offer
Consideration and there shall be no calculation of the Average Sysco Merger
Price.
1.3 Company Actions.
(a) The Company hereby consents to the Offer and represents that the
Company Board, at a meeting duly called and held, has unanimously (i) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, are advisable and are fair to and in the best interest of
the Stockholders, (ii) approved this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, (iii) taken all steps, or will take
all steps, at the proper time in connection with this Agreement, the
transactions contemplated hereby, the Offer and the Merger, necessary to comply
with any applicable state takeover law, including to ensure that the Offer and
the Merger, and the transactions contemplated hereby, do not constitute a
"takeover bid" under the New Jersey Shareholders Protection Act (NJSA 14A:10A-1
et seq.) and the New Jersey Corporation Takeover Bid Disclosure Law (NJSA 49:5-1
et seq.) (collectively, the "New Jersey Takeover Acts"), including, without
limitation, taking the steps contemplated by the proviso in Section 4.28 hereof,
(iv) taken all steps necessary to exempt the Offer (and any Subsequent Offer),
the Merger and this Agreement from the Rights Agreement (as defined in Section
4.5), and (v) resolved to recommend acceptance of the Offer
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(and any Subsequent Offer) and approval and adoption of this Agreement and the
Merger by the Stockholders (the recommendations referred to in this clause (iv)
are collectively referred to in this Agreement as the "Company
Recommendations").
(b) As soon as practicable on the date the Offer Documents are filed with
the SEC, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto and including the exhibits thereto, the "Schedule 14D-9") containing the
Company Recommendations, subject to the provisions of Section 7.1. At the time
the Offer Documents are first mailed to the Stockholders, the Company shall mail
or cause to be mailed to the Stockholders such Schedule 14D-9 together with such
Offer Documents. The Company further agrees that it shall cause the Schedule
14D-9 to comply in all material respects with the Exchange Act, and the rules
and regulations thereunder, and other applicable laws. The Company further
agrees to take all steps reasonably necessary to cause the Schedule 14D-9 to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Each of the Company, on the one hand, and
Sysco and Merger Sub, on the other hand, agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false and misleading in any material respect and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. Sysco and its counsel shall be given a reasonable opportunity
to review the Schedule 14D-9 before it is filed with the SEC. In addition, the
Company agrees to provide Sysco, Merger Sub and their counsel in writing with
any comments, whether written or oral, that the Company or its counsel may
receive from time to time from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments or other communications.
(c) In connection with the Offer (and any Subsequent Offer) and the Merger,
the Company shall promptly furnish or cause to be furnished to Merger Sub
mailing labels, security position listings and any available listing or computer
file containing the names and addresses of the record holders of the Shares as
of a recent date, and shall furnish Merger Sub with such information and
assistance as Merger Sub or its agents may reasonably request in communicating
the Offer (and any Subsequent Offer) to the Stockholders. Except for such steps
as are necessary to disseminate the Offer Documents, Sysco and Merger Sub shall
hold in confidence the information contained in any of such labels and lists and
the additional information referred to in the preceding sentence, will use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, will upon request of the Company deliver or cause to be
delivered to the Company all copies of such information then in its possession
or the possession of its agents or representatives.
1.4 Directors.
(a) Subject to compliance with the New Jersey Business Corporation Act (the
"NJBCA"), the Company's Certificate of Incorporation and applicable law,
promptly upon the payment for Shares by Merger Sub which represent at least a
majority of the then outstanding shares of Common Stock pursuant to the Offer,
the Company shall, at the request of Sysco, promptly use its commercially
reasonable efforts to take all actions necessary to cause the Company Board to
include such number of directors designated by Sysco, rounded up to the next
whole number, as is equal to the product of the total number of directors on the
Company Board (giving effect to the directors designated by Sysco pursuant to
this sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Merger Sub, Sysco and any of their affiliates (including
Shares so accepted for payment) bears to the total number of shares of Common
Stock then outstanding, including by accepting the resignations of such number
of its incumbent directors as is necessary to enable Sysco's designees to be
elected or appointed. At such times, the Company will cause individuals
designated by Sysco to constitute the same percentage (rounded up to the nearest
whole number) as such individuals represent on the Company Board of (A) each
committee of the Company Board and (B) each board of directors (and committee
thereof) of each Company Subsidiary in each case to the extent permitted by
applicable law or the rules or applicable listing agreement of any stock
exchange or over-the-counter market on which the Common Stock is listed or
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traded. Notwithstanding the foregoing, until the Effective Time (as defined in
Section 1.7 hereof), the Company shall use its commercially reasonable efforts
to retain as members of the Company Board at least two directors that are
directors of the Company on the date hereof (the "Independent Directors"). The
Company's obligations under this Section 1.4(a) shall be subject to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company
shall promptly take all actions, and shall include in the Schedule 14D-9 all
information with respect to the Company and its officers and directors, required
pursuant to such Section 14(f) and Rule l4f-1 in order to fulfill its
obligations under this Section 1.4(a), including mailing to Stockholders the
information required by such Section 14(f) and Rule 14f-1 as is necessary to
enable Sysco's designees to be elected or appointed to the Company Board. Sysco
or Merger Sub shall supply the Company any information with respect to either of
them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1. The provisions of this Section 1.4 are in addition
to and shall not limit any rights which Merger Sub, Sysco or any of their
Affiliates may have as a holder or beneficial owner of Shares as a matter of law
with respect to the election of directors or otherwise.
(b) In the event that Sysco's designees are elected or appointed to the
Company Board as aforesaid, until the Effective Time, the Company shall use its
commercially reasonable efforts to maintain as members of the Company Board at
least two directors who are Independent Directors, provided that, in such event,
if the number of Independent Directors shall be reduced below two for any reason
whatsoever, the remaining Independent Director, if any, shall be entitled to
designate a person to fill such vacancy who shall be deemed to be an Independent
Director for purposes of this Agreement or, if no Independent Director then
remains, the other directors shall designate two persons to fill such vacancies
who shall not be stockholders, Affiliates or associates of Sysco or Merger Sub,
and each such person shall be deemed to be an Independent Director, for purposes
of this Agreement. Notwithstanding anything in this Agreement to the contrary,
in the event that Sysco's designees constitute a majority of the directors on
the Company Board (the effective date on which Sysco's designees constitute such
a majority shall be hereinafter referred to as the "Control Date"), the
affirmative vote of a majority of the Independent Directors shall be required
after the acceptance for payment of Shares pursuant to the Offer and prior to
the Effective Time, to (a) amend or terminate this Agreement by the Company, (b)
exercise or waive any of the Company's rights, benefits or remedies hereunder if
such exercise or waiver materially and adversely affects holders of Shares other
than Sysco or Merger Sub, (c) take action with respect to the retention of
counsel and other advisors in connection with the transactions contemplated
hereby or (d) take any other action under or in connection with this Agreement
if such action materially and adversely affects holders of Shares other than
Sysco or Merger Sub; provided, that if there shall be no such directors, such
actions may be effected by unanimous vote of the entire Company Board. The
Independent Directors shall have the right to retain, at the expense of the
Company, one separate firm of counsel and one investment banking firm to
represent them in connection with the transactions contemplated hereby.
1.5 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the relevant provisions of the Delaware
General Corporation Law ("DGCL") and the relevant provisions of the NJBCA,
Merger Sub shall be merged with and into the Company at the Effective Time (as
defined in Section 1.7). Following the Effective Time, the separate corporate
existence of Merger Sub shall cease and the Company shall be the surviving
corporation of the Merger ("Surviving Corporation") and shall succeed to and
assume all of the rights and obligations of Merger Sub and the Company in
accordance with the NJBCA.
1.6 Closing. The closing of the Merger ("Closing") will take place at
10:00 a.m., Eastern time, on a date to be specified by the parties ("Closing
Date"), which shall be no later than the tenth business day after satisfaction
or waiver of the conditions set forth in Article VI, unless another time or date
is agreed to by the parties hereto. The Closing will be held at the offices of
Torys, 237 Park Avenue, New York, NY, or such other location as may be agreed to
by the parties hereto.
1.7 Effective Time. Subject to the provisions of this Agreement, as soon
as practicable on the Closing Date, the parties shall cause the Merger to be
consummated by filing certificates of merger or
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other appropriate documents (in any such case, the "Certificates of Merger")
executed in accordance with the relevant provisions of the DGCL and the relevant
provisions of the NJBCA and shall make all other filings or recordings required
under the DGCL and the NJBCA. The Merger shall become effective at such time as
the Certificates of Merger are duly filed with, and declared effective by the
Secretary of State of Delaware and the Secretary of State of New Jersey, or at
such subsequent date or time as Sysco and the Company shall agree and specify in
the Certificates of Merger (the time the Merger becomes effective being
hereinafter referred to as the "Effective Time").
1.8 Statutory Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL and Section 14A:10-6 of the NJBCA. The laws
which are to govern the Surviving Corporation are the laws of the State of New
Jersey.
1.9 Certificate of Incorporation and Bylaws. The Certificate of
Incorporation (as amended by the amendments, if any, set forth in the
Certificates of Merger) and Bylaws of the Company at the Effective Time shall be
the Certificate of Incorporation and Bylaws of the Surviving Corporation.
1.10 Directors and Officers. The directors and officers of Merger Sub
immediately prior to the Effective Time shall be the initial directors and
officers of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and the Bylaws of the Surviving Corporation.
1.11 Subsequent Actions. If at any time after the Effective Time, the
Surviving Corporation will consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Merger Sub acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or Merger Sub, all such deeds, bills of
sale, instruments of conveyance, assignments and assurances and to take and do,
in the name and on behalf of each of such corporations or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
1.12 Stockholders Meeting.
(a) If (x) required by applicable law in order to consummate the Merger
following the payment for the Shares pursuant to the Offer, or (y) the Offer has
been terminated pursuant to Section 1.1(c), the Company, acting through the
Company Board, shall, in accordance with all applicable laws:
(i) duly call, give notice of, convene and hold a special meeting of
its Stockholders (the "Stockholders Meeting") as soon as practicable
following the acceptance for payment and purchase of Shares by Merger Sub
pursuant to the Offer for the purpose of considering and taking action upon
the approval of the Merger and the adoption of this Agreement;
(ii) (a) the Company shall prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this Agreement
and shall obtain and furnish the information required to be included by the
SEC in the Proxy Statement (as hereinafter defined) and, after consultation
with Sysco, to respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement, including any amendment or
supplement thereto (the "Proxy Statement"), to be mailed to its
Stockholders, provided that no amendment or supplement to the Proxy
Statement will be made by the Company without consultation with Sysco and
its counsel and (b) Sysco shall prepare and file with the SEC any
amendments required to be filed, including a post-effective amendment, to
the S-4 (the "Post-Effective Amendment"). The Company will advise Sysco,
promptly after it receives notice thereof, of any request by the SEC for
the amendment of the Proxy Statement or comments thereon and responses
thereto or requests by the SEC for additional information. If at any time
prior to the Effective Time any information relating to the Company or
Sysco, or any of their respective affiliates,
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officers or directors, should be discovered by the Company or Sysco which
should be set forth in an amendment or supplement to either of the
Post-Effective Amendment or the Proxy Statement, so that any of such
documents would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other parties
hereto and an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the Stockholders.
(iii) include in the Proxy Statement the recommendation of the Company
Board that Stockholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement; and
(iv) use its commercially reasonable efforts to solicit from holders
of Shares proxies in favor of the Merger and shall take all other action
necessary or, in the reasonable opinion of Sysco, advisable to secure any
vote or consent of Stockholders required by the NJBCA to effect the Merger.
(b) Sysco agrees that it will provide the Company with the information
concerning Sysco and Merger Sub required to be included in the Proxy Statement
wand will vote, or cause to be voted, all of the Shares then owned by it, Merger
Sub or any of its other Merger Subsidiaries and Affiliates in favor of the
approval of the Merger and the adoption of this Agreement.
1.13 Merger Without Meeting of Stockholders. Notwithstanding Section 1.12
hereof, in the event that Sysco, Merger Sub or any other subsidiary of Sysco
shall acquire in the aggregate a number of the outstanding Shares, pursuant to
the Offer or otherwise, sufficient to enable Merger Sub or the Company to cause
the Merger to become effective under applicable law without a meeting of
Stockholders, the parties hereto shall, at the request of Sysco and subject to
Article VI hereof, take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after such acquisition, without a
meeting of Stockholders, in accordance with the NJBCA.
1.14 Terminated Offer. In the event the Offer is terminated pursuant to
Section 1.1(c), the parties hereto shall complete the Merger consistent with the
terms and conditions of this Agreement as amended by the terms and conditions
contained in Annex B in lieu of Article VI contained herein, and in such event,
upon such termination, this Agreement shall be deemed to be amended to
incorporate the terms and conditions contained therein without any further
action by Sysco, Merger Sub or the Company.
ARTICLE 2
OPTIONS; EXCHANGE OF CERTIFICATES
2.1 Stock Options. (a) At the Effective Time, each outstanding option to
purchase shares of Common Stock (a "Company Stock Option") issued pursuant to
any of the Company Stock Plans, whether vested or unvested, shall be assumed by
Sysco. Each Company Stock Option shall be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable under such Company
Stock Option, (i) the same number of whole shares of Sysco Common Stock as the
holder of such Company Stock Option would have been entitled to receive pursuant
to the Merger had such holder exercised such option in full immediately prior to
the Effective Time, (ii) at a price per share (rounded up to the nearest whole
cent) equal to (A) the aggregate exercise price for the shares of Common Stock
otherwise purchasable pursuant to such Company Stock Option divided by (B) the
number of whole shares of Sysco Common Stock deemed purchasable pursuant to such
Company Stock Option; provided, however, that in the case of any Company Stock
Option to which Section 421 of the Code applies by reason of its qualification
under Section 422 of the Code ("incentive stock options"), the option price, the
number of shares purchasable pursuant to such Company Stock Option and the terms
and conditions of exercise of such Company Stock Option shall be determined in
order to comply with Section 424(a) of the Code. As used herein, the term,
"Company Stock Plan," shall mean and refer to (as the context requires) any of
the Company's: (i) 1983 Stock Option Plan, (ii) 1993 Stock Option Plan and (iii)
1996
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Long Term Incentive Plan, and the term "Company Stock Plans," shall mean and
refer to all of such Plans collectively.
(b) As soon as practicable after the Effective Time, Sysco shall deliver to
the holders of Company Stock Options appropriate notices setting forth such
holders' rights with respect to such Company Stock Options pursuant to the
applicable Company Stock Plan and the certificates evidencing the grants of such
Company Stock Options shall continue in effect on the same terms and conditions
(subject to the adjustments required by Section 2.1(a) after giving effect to
the Merger and the assumption by Sysco as set forth above). Sysco shall comply
with the terms of the applicable Company Stock Plan and shall use its
commercially reasonable efforts to ensure, to the extent required by, and
subject to the provisions of, such Plan, that Company Stock Options which
qualified as incentive stock options prior to the Effective Time continue to
qualify as incentive stock options of Sysco after the Effective Time.
(c) Sysco shall take all corporate action necessary to reserve for issuance
a sufficient number of shares of Sysco Common Stock for delivery upon exercise
of Company Stock Options assumed by it in accordance with Section 2.1(a). As
soon as practicable, but in no event more than 20 days, after the Effective
Time, Sysco shall file a registration statement on Form S-8 (or any successor or
other appropriate form) with respect to the shares of Sysco Common Stock subject
to such Company Stock Options assumed by Sysco as aforesaid, and shall use its
commercially reasonable efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses referred to therein) for so long as
such Company Stock Options remain outstanding.
(d) The Company shall use its commercially reasonable efforts to cause all
individuals holding options under the Company's 1993 Stock Option Plan to waive
all of their respective rights under Section 5(k) of such plan effective from
and after the Control Date pursuant to a waiver agreement in form and substance
reasonably satisfactory to Sysco.
2.2 Fractional Shares. No fractional shares of Sysco Common Stock shall
be issued in the Merger or the Offer. If a fractional share results from the
calculations set forth in Section 1.2, a Stockholder shall receive an amount in
cash in lieu of such fractional share, equal to such fraction multiplied by the
Average Sysco Offer Price or, if the Offer has been terminated in accordance
with the terms and conditions of this Agreement, the Average Sysco Merger Price.
2.3 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of Sysco, Merger Sub, Guest Supply or
the Stockholders:
(a) Conversion of Common Stock. Each issued and outstanding share of
Common Stock shall be converted into solely the right to receive the Merger
Consideration paid in connection with the consummation of the Merger and,
each share of Common Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
Stockholder shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration.
(b) Cancellation of Treasury Stock. Each share of Common Stock held
in the treasury of the Company shall automatically be cancelled and
extinguished and no Merger Consideration shall be paid with respect
thereto.
(c) Merger Sub Common Stock. Each share of common stock, par value
$.001 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one share of newly issued Common
Stock and shall remain outstanding as a validly issued, fully paid and
non-assessable share of common stock of the Surviving Corporation.
(d) Sysco Common Stock. At and after the Effective Time, each share
of Sysco Common Stock issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding and shall not be
affected by the Merger.
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2.4 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Sysco shall enter into an
agreement with Sysco's transfer agent or such other bank or trust company as may
be designated by Sysco and reasonably satisfactory to the Company (the "Exchange
Agent") which shall provide that Sysco shall deposit with the Exchange Agent as
of the Effective Time, for the benefit of the Stockholders, for exchange in
accordance with this Section 2.4 through the Exchange Agent, certificates
representing the shares of Sysco Common Stock to be issued as the Merger
Consideration (such shares of Sysco Common Stock, together with any dividends or
distributions with respect thereto with a record date after the Effective Time
or cash payable in lieu of any fractional shares of Sysco Common Stock are
collectively the "Exchange Fund").
(b) Exchange Procedures.
(i) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each Stockholder (A) a letter of transmittal
("Letter of Transmittal") (which shall specify that delivery shall be
effected, and risk of loss of the Common Stock shall pass, only upon
delivery to the Exchange Agent of the certificates representing same
(collectively, the "Certificates"), and shall be in such form and have such
other provisions as Sysco and the Company may reasonably specify) and (B)
instructions for use in surrendering the Certificates in exchange for the
Merger Consideration.
(ii) Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with the Letter of Transmittal, duly executed, and such
other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of Sysco
Common Stock which such holder has the right to receive pursuant to the
provisions of Section 1.2 and cash in lieu of any fractional share of Sysco
Common Stock in accordance with Section 2.2 and the Certificates so
surrendered shall forthwith be cancelled.
(iii) If a surrendered Certificate is not registered in the transfer
records of the Company under the name of the person surrendering such
Certificate, the Merger Consideration may be delivered to the surrendering
person only if such Certificate has been properly endorsed for transfer and
the surrendering person pays any applicable transfer or other Taxes.
(iv) Until surrendered as contemplated by this Section 2.4(b), each
Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration.
(c) Distributions with Respect to Unexchanged Shares. With respect to any
unsurrendered Certificate, any interest, dividends or other distributions
otherwise payable to the holder therefor shall be included in the Exchange Fund,
in each case until the surrender of such Certificate in accordance with this
Section 2.4. Subject to the effect of applicable escheat or similar laws,
following surrender of any such Certificate there shall be paid to the holder of
the Certificate: (i) a certificate representing whole shares of Sysco Common
Stock issued in exchange therefor, (ii) the amount of dividends or other
distributions without interest, with a record date after the Effective Time
theretofore paid with respect to such whole shares of Sysco Common Stock, and
(iii) the amount of any cash payable in lieu of a fractional share of Sysco
Common Stock to which such holder is entitled.
(d) Further Ownership Rights in Common Stock. All shares of Sysco Common
Stock issued and cash paid upon the surrender for exchange of Certificates in
accordance with the terms of this Section 2.4 shall be deemed in full
satisfaction of all rights of the Stockholders pertaining to the shares of
Common Stock theretofore represented by such Certificates, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of any shares of Common Stock other than pursuant to Section 2.2(d).
If, after the Effective Time, Certificates are presented to Sysco, the Surviving
Corporation or the Exchange Agent for any reason, they shall be cancelled and
exchanged as provided in this Section 2.4, except as otherwise provided by law.
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(e) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of the Certificates for six months after
the Effective Time shall be delivered to Sysco, upon demand, and any holders of
the Certificates who have not theretofore complied with this Section 2.4 shall
thereafter look only to Sysco for payment of their claim for Merger
Consideration.
(f) No Liability; Escheat. None of the Company, Sysco, the Surviving
Corporation or the Exchange Agent shall be liable to any person in respect of
any shares of Sysco Common Stock, any dividends or distributions with respect
thereto, any cash in lieu of fractional shares of Sysco Common Stock or any
other cash from the Exchange Fund, in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(g) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Sysco, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Sysco.
(h) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
shall issue and pay to such person in exchange for such lost, stolen or
destroyed Certificate the applicable Merger Consideration.
2.5 Adjustment. If, between the date of this Agreement and the Effective
Time, as the case may be, (i) the outstanding shares of Common Stock or Sysco
Common Stock shall have been changed into a different number of shares or a
different class by reason of any classification, recapitalization, split-up,
combination, exchange of shares, or readjustment or a stock dividend thereon
shall be declared with a record date within such period, or (ii) the Company
shall have issued additional shares of Common Stock (other than upon the
exercise or conversion of stock options, warrants or other convertible
securities issued or granted prior to the date hereof) or Options or warrants to
purchase the same, or securities convertible into the same, the number of shares
of Sysco Common Stock issued as Offer Consideration or Merger Consideration, as
the case may be, shall be adjusted to accurately reflect such change (it being
acknowledged that the Company elsewhere herein covenants not to take any of the
actions described in (i) or (ii) above).
2.6 Shares of Sysco Common Stock. The shares of Sysco Common Stock
delivered as the Offer Consideration or Merger Consideration, as the case may
be, are hereinafter collectively referred to as the "Sysco Shares." The Sysco
Shares when issued to Stockholders shall be registered under the Securities Act
and shall contain no restrictions by Sysco or Merger Sub other than, as to
certain Affiliates, pursuant to Rules 144 and 145 of the Securities Act.
ARTICLE 3
OTHER COVENANTS AND AGREEMENTS
3.1 Employee Matters.
(a) Conditions of Employment. From and after the Control Date, the Company
will continue employment of the persons who are current employees of Guest
Supply immediately prior to the Control Date (the "Current Employees") on
substantially the same terms and conditions as such Current Employees are
employed by the Guest Supply (other than with respect to employee benefit
coverages) subject to the following conditions: (i) Sysco and Surviving
Corporation shall not, and shall not be obligated to, continue the employment of
those Current Employees who do not meet Sysco's then-current employment
standards; (ii) nothing contained herein shall preclude Sysco or Surviving
Corporation from revising conditions of employment after the Control Date or
effecting the termination of any Current Employees after the Control Date.
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(b) Employee Benefits. With respect to employee benefits, nothing contained
in this Agreement shall prohibit Sysco from changing or eliminating the benefits
of Current Employees or employees of the Surviving Corporation or eliminating or
modifying benefits currently being made available by Guest Supply to its Current
Employees.
3.2 Consents. Promptly after execution of this Agreement, Guest Supply
will apply for or otherwise seek, and use its commercially reasonable efforts to
obtain, all consents and approvals required with respect to the Company for
consummation by the Company of the transactions contemplated hereby, including
without limitation, those consents listed in Schedule 4.4. Any charges imposed
by any parties for such consents and estoppels shall be paid solely by Guest
Supply prior to the Closing.
3.3 Business Information.
(a) Access to Books, Records, and Employees. Upon reasonable prior notice,
Guest Supply, its employees, agents and representatives shall provide Sysco, its
employees, agents, counsel, accountants and financial consultants full access
during normal business hours, and, with Guest Supply's prior approval, after
normal business hours, to the offices, properties, books, records, files and
other documents and information of or relating to the Business as Sysco, its
employees, agents, counsel, accountants or financial consultants may request,
provided that such shall not unduly interfere with Guest Supply's business
operations. Guest Supply shall allow Sysco, its employees, agents, counsel,
accountants and financial consultants, access to a work area within such
business office and shall allow the copying, at Sysco's expense, of any such
records as requested by such party.
(b) Inspection of the Real Property. Subject to the requirements of Guest
Supply's leases and other contracts, including without limitation prior notice
to or permission from such contracting parties, Sysco, its agents and
representatives shall have full and complete access to all real property
currently owned or leased by Guest Supply ("Real Property") in which to make
such studies, tests, inspections, measurements of all kinds and/or inspections
as Sysco deems reasonably necessary, including, without limitation, engineering,
environmental, hydrologic, compaction, soils, surveys, and tests, observations
and/or studies including, without limitation, the taking of soil and ground
water samples. Sysco hereby agrees to indemnify Guest Supply and its contracting
parties and hold it and them harmless from any loss, cost or damage to the
physical condition of the Real Property actually incurred by Guest Supply or
such contracting parties and proximately caused by Sysco's or its agent's
inspection of and access to the Real Property.
(c) Interim Financials. The Company shall have delivered to Sysco within
three (3) business days from the date of this Agreement unaudited, consolidated
monthly balance sheets for Guest Supply as of December 29, 2000 and an
unaudited, consolidated income statement for Guest Supply for the two (2) months
then ended, prepared in accordance with generally accepted accounting principles
("GAAP"), which fairly present in all material respects the financial condition
of Guest Supply at the date thereof and the results of the operations for the
two (2) months then ended (subject to normal year-end audit adjustments,
collectively, together with those additional financial statements to be
delivered after the date hereof pursuant to this Section 3.3(c), collectively,
the "Interim Financials"). Within fifteen (15) days after the end of each month
commencing with the month of January 2001 and continuing for each month prior to
the month in which the Control Date occurs, the Company shall prepare and
deliver Interim Financials to Sysco which will be as of the end of the preceding
month. The Interim Financials shall fairly present in all material respects the
financial condition of Guest Supply at, and as of, the dates thereof and the
results of the operations for the periods then ended (subject to normal year-end
adjustments).
(d) No Waiver. Sysco's due diligence review and any inspections pursuant
hereto shall not waive or release Guest Supply from any of its representations,
warranties or covenants under this Agreement.
3.4 Conduct of Business by the Company. The Company covenants and agrees
that, unless Sysco shall otherwise consent in writing, between the date hereof
and the Control Date, the Business shall be conducted in, and Guest Supply shall
not take any action except in, the ordinary course of Business and in
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a manner consistent with its past practice; and Guest Supply will use its
commercially reasonable efforts consistent with past practices, but recognizing
the effects that the transaction contemplated hereby may have, to preserve
substantially intact the business organization of the Business, to keep
available the services of the present officers, employees and consultants of
Guest Supply and to preserve the present relationships of Guest Supply with
customers, suppliers and other persons with which Guest Supply has significant
business relations.
(a) By way of amplification and not limitation, except as expressly
provided for in this Agreement, the Company shall not, between the date
hereof and the Control Date, directly or indirectly, do any of the
following in respect of the Business without the prior written consent of
Sysco:
(i)(A) issue, sell, pledge, dispose of, encumber, authorize, or
propose the issuance, sale, pledge, disposition, encumbrance or
authorization of any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock of, or any other ownership interest
in, Guest Supply; provided, however, the Company shall have the right to
issue Common Stock pursuant to the Company's Employee Stock Purchase
Plan and to issue Common Stock to those persons and entities who
properly exercise or convert a Company Stock Option, warrant or other
convertible security to acquire Common Stock which Company Stock
Options, warrants and convertible securities were issued and outstanding
prior to the date of this Agreement; (B) amend or propose to amend the
Certificates of Incorporation, bylaws (or other comparable
organizational document) of Guest Supply; (C) split, combine or
reclassify any outstanding share of the Company's capital stock, or
declare, set aside or pay any dividend or distribution payable in cash,
stock, property or otherwise with respect to the Company's capital
stock; (D) redeem, purchase or otherwise acquire or offer to redeem,
purchase or otherwise acquire any shares of the Company's capital stock;
or (E) enter into any contract, agreement, commitment or arrangement
with respect to any of the matters set forth in this Section 3.4(a)(i);
(ii)(A) directly or indirectly acquire (by merger, consolidation,
or acquisition of stock or assets) any interest in any entity or person;
(B) except in the ordinary course of Business and in a manner consistent
with its past practices, sell, pledge, dispose of, or encumber or
authorize or propose the sale, pledge, disposition or encumbrance of any
assets of Guest Supply used or held for use by the Business; (C) enter
into any material contract or agreement, except in the ordinary course
of Business and in a manner consistent with its past practice; (D)
authorize any single capital expenditure in excess of $50,000 or capital
expenditures in the aggregate in excess of $200,000; or (E) enter into
or amend any contract, agreement, commitment or arrangement with respect
to any of the matters set forth in this Section 3.4(a)(ii);
(iii) take any action other than in the ordinary course of Business
and in a manner consistent with its past practice with respect to
increasing compensation (including bonuses), or other remuneration of
any director, officer or employee of Guest Supply or with respect to the
grant of any severance or termination pay (otherwise than as fully
disclosed to Sysco in writing prior thereto) or with respect to any
increase of benefits payable under its severance or termination pay
policies in effect on the date hereof;
(iv) make any payments except in the ordinary course of Business
and in amounts and in a manner consistent with its past practice (none
of which payments shall be unreasonable or unusual), under any Employee
Benefit Plan (defined in Section 4.18), or otherwise to any employee of
Guest Supply, enter into any Employee Benefit Plan, any employment or
consulting agreement, grant or establish any new awards under any such
existing Employee Benefit Plan or agreement, or adopt or otherwise amend
(except as required or contemplated hereby) any of the foregoing;
(v) take any action, except in the ordinary course of Business and
in a manner consistent with past practice, with respect to, or make any
change in, its methods of management,
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purchasing, distribution, marketing, or operating (or practices relating
to payment of trade accounts or to other payments or relating to writing
down or failing to write down or writing up the value of any inventory
or other assets of Guest Supply) or make any change in the method of
accounting of Guest Supply;
(vi) take any action to incur or increase prior to the Control Date
any indebtedness for borrowed money from banks, financial institutions,
or any other persons or entities (other than trade payables incurred in
the ordinary course of Business and in a manner consistent with its past
practices and other than borrowings under existing credit facilities) or
cancel without payment in full, any notes, loans or, except in the
ordinary course of Business and in a manner consistent with its past
practices, other receivables;
(vii) loan or advance monies to any person under any circumstance
whatsoever, except travel advances, advances in connection with
vacations, or other reasonable expense advances to employees of Guest
Supply but in no event shall any advance exceed $1,000 per person;
(viii) change any existing bank accounts or lock box arrangements
of Guest Supply except for deposits, withdrawals or changes in
signatories in the ordinary course of Business and in a manner
consistent with its past practices;
(ix) waive any material rights of Guest Supply or settle any single
claim involving more than $50,000 or in the aggregate involving more
than $200,000; or
(x) do any act or omit to do any act which would cause a material
breach of any material contract, commitment or obligation of Guest
Supply.
3.5 No Negotiations. The Company hereby agrees that neither Guest Supply
nor any of its officers, directors, employees, investment bankers,
representatives or agents shall, directly or indirectly:
(i) solicit, initiate, entertain, encourage or respond to any
inquiries or proposals that constitute or could reasonably be expected to
lead to an Alternative Transaction, as defined below; provided, however,
the Company shall not be in breach of this Section 3.5 for responses (but
not to an Alternative Transaction) relating to the contested proxy
solicitation initiated by BFMA Holding Corporation for the Company's 2001
Annual Meeting of Stockholders, so long as the Company does not breach the
covenants of the fourth sentence of Section 3.8; or
(ii) negotiate, discuss or provide any non-public information to any
third party in connection with an Alternative Transaction; or
(iii) from and after the date hereof until the termination of this
Agreement and except as expressly permitted by the following provisions of
this Section 3.5, permit any of its Subsidiaries to, and will not authorize
any officer, director or employee of or any investment banker, attorney,
accountant or other advisor or representative of, the Company or any of its
Subsidiaries to (and will instruct such persons not to), directly or
indirectly, (i) solicit, initiate or encourage the submission of a proposal
for any Alternative Transaction (as hereinafter defined) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person (which includes a "person" as such term is defined in Section
13(d)(3) of the Exchange Act) (a "Third Party") other than Sysco, Merger
Sub or any affiliate thereof any information with respect to, or take any
other action knowingly to facilitate, any Alternative Transaction or any
inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Alternative Transaction; provided, however,
that nothing contained in this Section 3.5(iii) or in Sections 3.5(i) or
3.5(ii) shall prohibit the Company Board from furnishing information to, or
entering into discussions or negotiations with, any Third Party that makes
an unsolicited bona fide written proposal of an Alternative Transaction if,
and only to the extent that (A) the Company Board, after consultation with
legal counsel, determines in good faith that such action is necessary for
the Company Board to comply with its fiduciary duties to the Stockholders
under applicable law, (B) the Company Board determines in good faith, after
consultation with a financial advisor of nationally recognized reputation,
that such Alternative
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Transaction would, if consummated, constitute or be reasonably likely to
constitute a Superior Proposal (as hereinafter defined) and (C) prior to
taking such action, the Company (x) provides notice to Sysco to the effect
that it is taking such action (including, without limitation, the material
terms and conditions thereof and the identity of the person making it) as
promptly as practicable (but in no case later than 24 hours) after taking
such action, (y) provides Sysco with a copy of any Alternative Transaction
or amendments or supplements thereto and (z) receives from such Third Party
an executed confidentiality agreement in reasonably customary form and in
any event containing terms at least as stringent as those between Sysco and
the Company. Subsequent to furnishing information to, or entering into
discussions or negotiations with, any Third Party in accordance with this
Section 3.5, the Company shall inform Sysco on a prompt basis of the status
of any discussions or negotiations with such Third Party, and any material
changes to the terms and conditions of such Alternative Transaction.
Promptly after the execution and delivery of this Agreement, the Company
will, and will cause its Subsidiaries to, and will instruct their
respective officers, directors, employees, investment bankers, attorneys,
accountants and other agents to, cease and terminate any existing
activities, discussions or negotiations with any parties conducted
heretofore with respect to any possible Alternative Transaction and shall
notify each party that it, or any officer, director, investment advisor,
financial advisor, attorney or other representative retained by it, has had
discussions with during the 60 days prior to the date of this Agreement
that the Company Board no longer seeks the making of any Alternative
Transaction.
(iv) (x) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Sysco, the Company Recommendations or (y) approve or
recommend an Alternative Transaction unless the Company Board, after
consultation with legal counsel, determines in good faith that such action
is necessary for the Company Board to comply with its fiduciary duties to
the Stockholders under applicable Law; provided, however, the Company Board
may not approve or recommend (and in connection therewith, withdraw or
modify the Company Recommendations) an Alternative Transaction unless (i)
such Alternative Transaction is a Superior Proposal, (ii) the Company Board
shall have first consulted with legal counsel and have determined that such
action is necessary for the Company Board to comply with its fiduciary
duties to the Stockholders, (iii) the Company Board has provided written
notice to Sysco (a "Notice of Superior Proposal") advising Sysco that the
Company Board has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal and identifying the person
making such Superior Proposal, and (iv) two business days have elapsed
after Sysco's receipt of the Notice of Superior Proposal and Sysco has not
made an offer such that the Company Board determines in its good faith
judgment (after consultation with a financial adviser of nationally
recognized reputation and consultation with legal counsel) that the
Alternative Transaction is not a Superior Proposal. If Sysco makes an offer
as contemplated by clause (iv) of the preceding sentence, upon the
Company's request Sysco shall execute an amendment to this Agreement to
implement the terms contemplated by such offer.
Nothing contained in this Section 3.5 shall prohibit the Company from
taking and disclosing to the Stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure
to the Stockholders which, in the good faith reasonable judgment of the
Company Board, after consultation with legal counsel, is required under
applicable law; provided, that except as otherwise permitted in this
Section 3.5, the Company shall not withdraw or modify, or propose to
withdraw or modify, the Company Recommendations or approve or recommend, or
propose to approve or recommend, an Alternative Transaction.
Notwithstanding anything contained in this Agreement to the contrary, any
action by the Company Board permitted by, and taken in accordance with,
this Section 3.5 shall not constitute a breach of this Agreement by the
Company. Notwithstanding anything in this Agreement to the contrary but
subject to the proviso contained in the first sentence of Section 3.5(iii)
hereof, nothing in this Agreement shall (x) limit the Company Board's
ability to make any disclosure to the Stockholders that the Company Board
determines in good faith (after consultation with legal counsel) is
required to be made to satisfy its fiduciary duties under applicable law or
(y) limit the Company's ability to make any disclosure required by
applicable law, and such actions shall not be considered a breach of this
Agreement.
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(v) For all purposes of this Agreement, "Alternative Transaction"
means the occurrence of any of the following events: (i) the acquisition of
the Company by merger or otherwise by any Third Party, (ii) the acquisition
by a Third Party of 20% or more of the assets of the Company and its
Subsidiaries taken as a whole, (iii) the acquisition by a Third Party of
20% or more of the outstanding Shares or the issuance by the Company of
capital stock containing terms which are inconsistent with the consummation
of the transactions contemplated by this Agreement, (iv) the adoption by
the Company of a plan of liquidation or the declaration or payment by the
Company of an extraordinary dividend representing 20% or more of the value
of the Company and its Subsidiaries taken as a whole or (v) the repurchase
by the Company or any of its Subsidiaries of more than 20% of the
outstanding Shares.
For all purposes of this Agreement, a "Superior Proposal" means any
bona fide written unsolicited proposal of an Alternative Transaction
(except that, for purposes of the definition of Superior Proposal, 50%
shall be substituted for 20% wherever it appears in the definition of
Alternative Transaction) that the Company Board determines in its good
faith judgment (after consultation with a financial advisor of nationally
recognized reputation and consultation with legal counsel) (i) would result
in a transaction, if consummated, that would be superior to the
Stockholders from a financial point of view as compared to the transactions
contemplated hereby and any alternative proposed by Sysco or Merger Sub in
accordance with Section 3.5(iv) and (ii) to be reasonably capable of being
consummated in accordance with its terms (including that any financing
required to consummate the transaction contemplated by such proposal is
capable of being, and is reasonably likely to be, obtained), in each case
taking into account all factors the Company Board considers relevant,
including all legal, financial, regulatory and other aspects of the
proposal by the Third Party. Any change in the terms of an Alternative
Transaction shall be deemed to constitute a new Alternative Transaction
hereunder, subject to all of the applicable provisions of this Section 3.5.
The Company shall notify Sysco promptly if it or, to its knowledge,
any of its officers, directors, employees, investment bankers,
Stockholders, representatives, agents, or Affiliates receives any
indications of interest, requests for non-public information or offers in
respect of an Alternative Transaction, and will communicate to Sysco in
reasonable detail the terms of any such indication, request or proposal,
and will provide Sysco with copies of all written communications relating
to any such indication, request or proposal. The Company represents that it
is not party to or bound by any agreement with respect to an Alternative
Transaction other than this Agreement.
3.6 Expenses.
(a) Except as otherwise specifically provided herein, all of the expenses
incurred by Sysco and Merger Sub in connection with the authorization,
negotiation, preparation, execution and performance of this Agreement and other
agreements referred to herein, including, without limitation, all fees and
expenses of agents, representatives, brokers, counsel and accountants for Sysco,
and Merger Sub, shall be paid by Sysco.
(b) Except as otherwise specifically provided herein, all expenses incurred
by Guest Supply in connection with the authorization, negotiation, preparation,
execution and performance of this Agreement and the other agreements referred to
herein, including without limitation, all fees and expenses of agents,
representatives, brokers, counsel and accountants for Guest Supply shall be paid
by Guest Supply. Guest Supply shall be solely responsible for paying the fees
owed to U.S. Bancorp Piper Jaffray ("Piper Jaffray") incurred in connection with
this transaction. Guest Supply shall be solely responsible for paying any and
all sales, use and transfer taxes incurred in connection with the transactions
described herein.
3.7 Notification of Certain Matters. The Company shall give prompt notice
to Sysco of the following:
(a) The occurrence or nonoccurrence of any event of which it obtains
knowledge whose occurrence or nonoccurrence would be reasonably likely to
cause either (A) a material breach of any representation or warranty of the
Company contained in this Agreement at any time from the date
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hereof to the Control Date, or (B) directly or indirectly, any Material
Adverse Effect. The term "Material Adverse Effect" means any change in or
effect that is or may reasonably be expected to be materially adverse to
the operations, condition (financial or otherwise) or assets of Guest
Supply, or the Business, in either case, taken as a whole, provided,
however, that the term "Material Adverse Effect" shall not include any
change or effect to the extent attributable to the matters set forth on
Schedule 3.7. Sysco's knowledge of any facts obtained by Sysco prior to the
date hereof or disclosed herein that may give rise after the date hereof to
a Material Adverse Effect shall not affect whether or not a Material
Adverse Effect shall have occurred.
(b) Any material failure by the Company to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
Notwithstanding the foregoing, the delivery of any notice pursuant to this
Section 3.7 shall not limit or otherwise affect the remedies available hereunder
to Sysco upon receiving such notice.
3.8 Confidentiality and Public Announcements. Until the disclosure
contemplated by the next following sentence is made, the parties hereto each
agree to, and to direct their respective directors, officers, employees,
representatives and agents with a need to know such information to, maintain the
confidentiality of the transactions contemplated by this Agreement, unless
disclosure is required by applicable federal or state laws or regulations or
common law. Further, the parties hereto agree to announce the consummation of
the transactions contemplated by this Agreement simultaneously at a mutually
agreeable time as promptly as practicable after the execution and delivery of
this Agreement (except as required by applicable law). The content of all
announcements and publicity relating to this Agreement will be subject to the
mutual approval of the Company and Sysco (except as otherwise required by law),
which approval shall not be unreasonably withheld or delayed. Guest Supply
shall, and shall cause its representatives to, maintain the confidentiality of
all non-public information concerning Sysco (other than such information which
becomes generally available to the public other than as a result of disclosure
by Guest Supply) which becomes known by Guest Supply or such representatives
solely as a result of the negotiation or consummation of the transactions
contemplated by this Agreement, and shall promptly return and cause its agents
and representatives to return to Sysco all written materials containing such
information in the event that the Closing does not occur within the time limit
herein provided for. Without limiting the terms and conditions of the
Confidentiality Agreement dated September 19, 2000 between Sysco and the
Company, Sysco shall, and shall cause its representatives to, maintain the
confidentiality of all non-public information concerning Guest Supply (other
than such information which becomes generally available to the public other than
as a result of disclosure by Sysco) which becomes known by Sysco or such
representatives solely as a result of its due diligence investigations or
efforts conducted prior to or after the date hereof or the negotiation or
consummation of the transactions contemplated by this Agreement, and shall
promptly return, and cause its agents and representatives to return, to Guest
Supply all written materials containing such information in the event that the
Closing does not occur within the time limit herein provided for. Nothing
contained herein shall limit the right of any such persons to disclose any such
information to its subsidiaries, employees, agents, representatives, counsel,
accountants, financial advisors, underwriters and sources of financing (and
their counsel and accountants) for the purpose of facilitating the consummation
of the transactions contemplated hereby.
3.9 Tax Matters.
(a) Defined Terms. As used in this Agreement, the following terms have the
specified meanings:
(i) "Tax Authority" shall mean any United States federal, foreign,
national, state, county or municipal or other local government, any
subdivision, agency, commission or authority thereof, or any
quasi-governmental body exercising any taxing authority or any other
authority exercising tax regulatory authority.
(ii) "Tax Return" shall mean any return, amended return, estimated
return, information return or statement (including any related or
supporting information) filed or to be filed with any Tax
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Authority in connection with the determination, assessment, collection or
administration of any Tax or filed by or including Guest Supply in respect
of the Business.
(iii) "Tax" or "Taxes" shall mean all taxes, charges, fees, interest,
fines, penalties, additions to tax or other assessments, including without
limitation, income, excise, environmental, property, sales, gross receipts,
gains, transfer, occupation, privilege, employment (including social
security and unemployment), withholding, use, value added, capital stock or
surplus, franchise taxes, advance corporate tax and customs duties imposed
by any Tax Authority, payable by Guest Supply or relating to or chargeable
against Guest Supply's assets, revenues or income.
(b) Tax Returns. After the Closing, Sysco will cause to be prepared and
filed all Tax Returns for Guest Supply for any period ending on or before the
Closing Date and for any period which includes the Closing Date and ends after
the Closing Date.
3.10 Regulatory Authorization. Sysco and the Company shall, within five
business days of the execution hereof, file with the United States Federal Trade
Commission ("FTC") and the United States Department of Justice ("DOJ") their
respective notification and report forms required for the transactions
contemplated hereby in connection therewith pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("HSR Act") and each agrees to
file as promptly as practicable any supplemental information requested by the
FTC or DOJ. Any such notification and report forms and supplemental information
will be in substantial compliance with the requirements of the HSR Act. Sysco
shall be solely responsible for all filing fees required in connection with such
filings. Each party shall cooperate in all reasonable respects with each other
and the FTC and the DOJ.
3.11 Letters of Guest Supply's Accountants. The Company shall use
commercially reasonable efforts to cause to be delivered to Sysco two letters
from the Company's independent accountants, one dated a date within two business
days before the date on which the Form S-4 shall become effective (the "Guest
Supply S-4 Comfort Letter") and one dated a date within two business days before
the Closing Date (the "Guest Supply Merger Comfort Letter"), each addressed to
Sysco, in form and substance reasonably satisfactory to Sysco and customary in
scope and substance for comfort letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4.
3.12 Letters of Sysco's Accountants. Sysco shall use commercially
reasonable efforts to cause to be delivered to the Company two letters from
Sysco's independent accountants, one dated a date within two business days
before the date on which the Form S-4 shall become effective (the "Sysco S-4
Comfort Letter") and one dated a date within two business days before the
Closing Date (the "Sysco Merger Comfort Letter"), each addressed to the Company,
in form and substance reasonably satisfactory to the Company and customary in
scope and substance for comfort letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4.
3.13 Affiliates. As soon as practicable after the date hereof, the
Company shall deliver to Sysco a list of all persons or entities who, to its
knowledge, may be deemed to be, at the time this Agreement is submitted for
adoption to the Stockholders, "Affiliates" of the Company for purposes of Rule
145 under the Securities Act. Such list shall be updated, from time to time,
upon receipt of knowledge thereof, as necessary to reflect changes from the date
hereof. The Company shall use commercially reasonable efforts to cause each
person identified on such list to deliver to Sysco not less than 10 days prior
to the Effective Time, a written agreement containing customary terms and
otherwise reasonably satisfactory to Sysco.
3.14 ISRA. The Sysco Companies and Guest Supply acknowledge that the sale
of the Business is subject to compliance with the Industrial Site Recovery Act,
N.J.S.A. 13:1K-6 ("ISRA"). Prior to the Closing Date, Guest Supply agrees to
apply to and obtain from the New Jersey Department of Environmental Protection
("NJDEP") one of the following with respect to the entirety of each property
owned or leased by Guest Supply in New Jersey (the "NJ Properties"): (i) a
letter of Non-Applicability ("LNA") pursuant to N.J.S.A. 7:26B-2.22; (ii) a
Remediation Agreement ("RA") pursuant to N.J.S.A. 7:26b-4.1; or (iii) a
regulated underground storage tank waiver pursuant to N.J.A.C. 7:26B-5.3 ("UST
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Waiver")(collectively, the "ISRA Approvals"). Guest Supply further agrees that,
if it chooses to obtain an RA or UST Waiver, Guest Supply will use commercially
reasonable efforts to obtain Shore Point Distributor's signature on the RA or on
documents pertaining to the UST Waiver, and an agreement to fund the
implementation of the RA or work resulting from U.S.T Waiver in compliance with
Shore Point Distributors' obligations pursuant to the Rider to Lease Between
Shore Point Distributors and Guest Supply. In the event that Shore Point
Distributors has not executed the documents necessary to obtain the ISRA
Approvals for the property owned by Shore Point Distributors within seven (7)
days after the date hereof, Guest Supply shall file the documents necessary to
obtain such ISRA Approvals in its own name and without the signature of Shore
Point Distributors.
If any investigation or remediation is performed in connection with Guest
Supply's ISRA compliance or underground storage tank remediation, Case
#96-10-25-1305-57/UST #0042400, in advance of the Closing Date, then Guest
Supply shall provide to Sysco, at the same time it provides to NJDEP, a copy of
any analytical data report or other report prepared by or on behalf of Guest
Supply in connection therewith.
3.15 Director and Officer Liability. (a) Sysco agrees that the
certificate of incorporation and the bylaws of the Surviving Corporation shall
contain at least the provisions with respect to exculpation from liability and
indemnification set forth in the certificate of incorporation and bylaws of the
Company as of the date hereof, which provisions (along with all provisions
regarding indemnification or exculpation from liability contained in the
governing documents of any of the Company's subsidiaries or in any agreements or
commitments of the Company or any of its subsidiaries) shall not be amended,
repealed, or otherwise modified in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were present or
former directors, officers, employees, or agents of the Company, unless such
modification is required by applicable law.
(b) From and after the earlier to occur of the Effective Time or the
acceptance for payment of the Shares in the Offer, Sysco and the Surviving
Corporation will, jointly and severally, indemnify, defend, and hold harmless
the present and former directors and officers of the Company and each of its
subsidiaries against all losses, claims, damages, and liabilities and amounts
paid in settlement in connection with any claim, action, suit, proceeding, or
investigation, whether civil, criminal, administrative, or investigative, to
which any of them was or is a party or is threatened to be made a party by
reason of the fact that he or she was or is a director or officer of the Company
or any of its subsidiaries in respect of acts or omissions occurring at or prior
to the Effective Time to the fullest extent that the Company or such subsidiary
would have been permitted to indemnify such Person under applicable law and the
certificate of incorporation and bylaws of the Company or such subsidiary in
effect on the date hereof, provided, however; that the aggregate indemnification
liability of Sysco pursuant to this Section 3.15 shall not exceed the
consolidated net worth (determined in accordance with GAAP) of the Company at
December 29, 2000. Sysco shall, without any lapse in coverage, either (i) for at
least six (6) years after the Effective Time, provide officers' and directors'
liability insurance ("D&O Insurance") in respect of acts or omissions occurring
at or prior to the Effective Time covering each person currently covered by the
Company's D&O Insurance policy on terms with respect to coverage and amount no
less favorable than those contained in such policy as in effect on the date
hereof; (ii) purchase tail insurance in respect of the Company's existing D&O
Insurance for six (6) years for a premium not to exceed the amount of the
customary premium for such tail insurance, or (iii) if such D&O Insurance or
tail insurance is only available at premiums in excess of the premiums currently
paid by the Company for its existing D&O Insurance, then purchase the highest
level of D&O Insurance or tail insurance available for an amount equal to 150%
of such annual premium.
(c) Any person who is entitled to indemnification under this Section 3.15
(an "Indemnified Party") wishing to claim such indemnification, upon learning of
any such claim, action, suit, proceeding, or investigation, shall promptly
notify Sysco thereof, but failure to so notify will not relieve Sysco of
liability except to the extent Sysco is materially adversely affected thereby.
In the event of any such claim, action, suit, proceeding, or investigation
(whether arising before or after the Effective Time), (i) Sysco or the Surviving
Corporation shall have the right to assume the defense thereof, and Sysco shall
not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently
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incurred by such Indemnified Parties in connection with the defense thereof,
except that if Sysco or the Surviving Corporation elects not to assume such
defense or counsel for the Indemnified Parties advises that, in such counsel's
reasonable judgment, there are issues that constitute conflicts of interest
between Sysco or the Surviving Corporation and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and Sysco and the
Surviving Corporation shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefor are received;
provided that, Sysco shall be obligated pursuant to this subsection (c) to pay
for only one firm of counsel for all Indemnified Parties in any jurisdiction,
(ii) the Indemnified Parties will cooperate in the defense of any such matter,
and (iii) Sysco shall not be liable for any settlement effected without its
prior written consent; and provided further that, Sysco shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and nonappealable, that the indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by applicable law. The
rights of the Indemnified Parties under this Section 3.15 are in addition to any
rights they may have under the certificate of incorporation and bylaws of the
Surviving Corporation or any subsidiary of the Surviving Corporation or under
any indemnification agreement with the Company or any subsidiary of the Company.
(d) Sysco agrees that if the Surviving Corporation or any of its successors
or assigns (i) shall consolidate with or merge into any other person or entity
and shall not be the continuing or surviving person of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any person or entity, then and in each such case, proper provisions
shall be made so that the successors and assigns of the Surviving Corporation
shall assume all of the obligations set forth in this Section 3.15.
(e) The provisions of this Section 3.15 are intended to be for the benefit
of, and shall be enforceable by, each of the present and former directors,
officers, employees, and agents, their representatives.
3.16 Agreement to Vote All Shares. Sysco and Merger Sub agree to vote all
Shares acquired in the Offer or otherwise beneficially owned by them or any of
their subsidiaries in favor of approval and adoption of this Agreement and the
Merger at the Stockholders Meeting and to take such other actions to effectuate
as promptly as practicable the Merger pursuant to Section 14A:10-3 of the NJBCA,
on the terms and subject to the conditions set forth in this Agreement.
3.17 Form 8-K. The Company shall, within five business days of the
execution hereof, prepare and file with the SEC a current report on Form 8-K
containing a description of the Company's capital stock in compliance with Item
202 of the SEC's Regulation S-K.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
In order to induce Sysco and Merger Sub to enter into this Agreement and
consummate the transactions contemplated hereby, the Company hereby makes the
following representations and warranties to Sysco and Merger Sub, each of which
is relied upon by Sysco and Merger Sub:
4.1 Organization and Authority.
(a) The Company. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey. The
Company is duly qualified as a foreign corporation in all jurisdictions in which
the conduct of its business or the ownership of its properties requires such
qualification where the failure to have so qualified would cause a Material
Adverse Effect and Schedule 4.1(a)is a true, correct and complete list of all of
the states and foreign jurisdictions where the Company is so qualified.
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(b) Subsidiaries. Schedule 4.1(b)(i) lists all corporations,
partnerships, joint ventures and other business entities in which the Company
owns, of record or beneficially, a majority of the direct or indirect equity
interest or any right (contingent or otherwise) to acquire a majority of the
equity interest of any entity (collectively, the "Subsidiaries"). The Company
and/or a Subsidiary owns all of the issued and outstanding capital stock or
equitable interest of each Subsidiary free and clear of any security interest,
pledge, lien, charge, or restriction on ownership, voting or transfer
restriction, or encumbrance of any kind. Each Subsidiary is duly organized,
validly existing and in good standing under the laws of its state of
incorporation or organization, as applicable, all of which are listed on
Schedule 4.1(b)(i). Except as set forth on Schedule 4.1(b)(ii), each Subsidiary
is duly qualified as a foreign corporation (or foreign entity, as applicable) in
all jurisdictions where the failure to have so qualified would cause a Material
Adverse Effect and, Schedule 4.1(b)(ii) is a true, correct and complete list all
of the states and foreign jurisdictions where each Subsidiary is so qualified.
Since November 15, 2000, Guest Supply has had no material operations or business
in New Zealand other than in connection with the liquidation and closure of
Guest Supply's operations and business conducted in New Zealand.
(c) Power and Authority. Guest Supply has all necessary corporate power
and authority to own, lease and operate its properties and conduct the Business
as it is currently being conducted.
4.2 Corporate Power and Authority; Due Authorization. The Company has
full corporate power and authority to execute and deliver this Agreement and
each of the Transaction Documents to which the Company is or will be a party and
subject to the Stockholders' approval, to consummate the transactions
contemplated hereby and thereby. "Transaction Documents" means each of the
agreements, documents and instruments referenced in this Agreement to be
executed and delivered by the Company. The Company Board has, in accordance with
Section 1.3(a), duly approved and authorized the execution and delivery of this
Agreement and each of the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, and no other corporate proceedings
are necessary, other than the Stockholders' approval. Assuming that this
Agreement and each of the Transaction Documents which are also Sysco Companies'
Transaction Documents (defined in Section 5.2) constitutes a valid and binding
agreement of the Sysco and Merger Sub, this Agreement and each of the
Transaction Documents constitutes, or will constitute when executed and
delivered, a valid and binding agreement of the Company enforceable by Sysco and
Merger Sub in accordance with its terms, subject to laws of general application
in effect affecting creditors' rights and subject to the exercise of judicial
discretion in accordance with general equitable principles. The duly elected
officers and directors of Guest Supply are set forth on Schedule 4.2. True,
correct and complete copies of the Articles of Incorporation, the Bylaws and
comparable organizational documents and all minutes of Guest Supply are
contained in the minute books of Guest Supply. True, correct and complete copies
of the minute books of Guest Supply have been delivered to Sysco.
4.3 Title to Assets. Other than as set forth on Schedule 4.3, Guest
Supply has good and valid title to all of the assets reflected on Guest Supply's
consolidated, audited September 29, 2000 balance sheet (and a valid and
enforceable leasehold interest in the real and personal property which is
leased) and the Interim Financials except for assets disposed of since the date
of such financial statements in the ordinary course of Business and in a manner
consistent with past practices (collectively, the "Assets"), free and clear of
any liens, pledges, encumbrances, claims or similar rights of third parties. All
of the Assets are in satisfactory operating condition, normal wear and tear
excepted.
4.4 No Conflict; Required Consents. Other than the consents, approvals,
authorizations and other actions listed on Schedule 4.4, the execution and
delivery by the Company of this Agreement and the Transaction Documents and the
consummation by the Company of the transactions contemplated hereby and thereby
do not and will not (a) require the consent, approval or action of, or any
filing or notice to, any corporation, firm, person or other entity or any
foreign, federal, state, or local government, court, administrative, regulatory
or other governmental agency, commission or authority, or any non-governmental
self-regulatory agency, commission or authority (collectively, "Governmental
Authority"); (b) violate the terms of any instrument, document or agreement to
which Guest Supply is a party, or by which the
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Business or any Assets are bound, or be in conflict with, result in a breach of
or constitute (upon the giving of notice or lapse of time or both) a default
under any such instrument, document or agreement, or result in the creation of
any lien upon the Business or any of the Assets; (c) violate any applicable
order, writ, injunction, decree, judgment, restriction, ruling, law, or
regulation (collectively, "Laws") of any Governmental Authority; or (d) violate
the Certificate of Incorporation, Bylaws, or comparable organizational document
of Guest Supply. Except as set forth on Schedule 4.4, Guest Supply is not
subject to, or a party to, any mortgage, lien, lease, agreement, contract
instrument, order, judgment or decree or other restriction of any kind or
character which would prevent or hinder the continued operation of the Business
immediately after the Closing on substantially the same basis as theretofore
operated.
4.5 Capital Stock.
(a) The Company. The Company has 20,000,000 shares of Common Stock
authorized of which 6,839,837 shares are issued and outstanding and no shares
are held in the treasury of the Company as of the date hereof. As of the date
hereof, the Company has authorized 1,000,000 shares of preferred stock, no par
value, of the Company ("Preferred Stock"), of which no shares of Preferred Stock
are issued and outstanding on the date hereof. 40,000 shares of Preferred Stock
were reserved for issuance upon exercise of the rights (the "Company Rights" or,
individually, a "Company Right") distributed in connection with that certain
Rights Agreement dated July 15, 1988, as amended by Amendment No. 1 dated August
15, 1997 (the "Rights Agreement"). Schedule 4.5(a)(i) is a true, correct and
complete list as of the date hereof of: (x) the number of options which the
Company has been authorized to issue, and (y) the number of Company Stock
Options which are issued and outstanding together with the applicable exercise
price(s), vesting dates, and expiration dates. Schedule 4.5(a)(ii) is a true,
correct and complete copy of all of the option plans, forms of agreements
pursuant to which the Company Stock Options were granted, and a list of
convertible promissory notes. All outstanding shares of Common Stock, and all
outstanding Company Stock Options, and convertible promissory notes have been
duly authorized, and are validly issued, and all outstanding shares of Common
Stock are fully paid and nonassessable and free of preemptive rights. Except as
set forth on Schedule 4.5(a)(i)-(ii), as of the date hereof there are
outstanding (i) no shares of capital stock or other voting securities of the
Company, (ii) no securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company, (iii) no options
(including employee stock options), warrants or rights of conversion or other
rights, agreements, arrangements or commitments obligating, or which may
obligate, the Company to sell or issue any additional shares of the Company's
capital stock, (iv) no obligation of the Company to issue any voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of the Company and (v) no equity equivalents, interests in the
ownership or earnings, or other similar rights of or with respect to the Company
(the items in clauses (i), (ii), (iii), (iv) and (v) being referred to
collectively as the "Company Securities"). There are no outstanding obligations
of the Company to repurchase, redeem or otherwise acquire any of the Company
Securities.
(b) Subsidiaries. Schedule 4.5(b) is a true correct and complete list of:
(x) the authorized, issued and outstanding capital stock (or other ownership
interest, as applicable) of each Subsidiary, and (y) the number of shares of
capital stock (or other ownership interest, as applicable) held by the Company.
Except as set forth on Schedule 4.5(b), all outstanding shares of capital stock
(or other ownership interest, as applicable) of the Subsidiaries have been duly
authorized, and are validly issued, fully paid and nonassessable are solely
owned (of record and beneficially) by the Company. Except as set forth on
Schedule 4.5(b), there are outstanding (i) no shares of capital stock or other
voting securities of the Subsidiaries, (ii) no securities of the Subsidiaries
convertible into or exchangeable for shares of capital stock or voting
securities of any Subsidiary, (iii) no options (including employee stock
options), warrants or rights of conversion or other rights, agreements,
arrangements or commitments obligating, or which may obligate, any Subsidiary to
sell or issue any additional shares of any Subsidiary's capital stock, (iv) no
obligation of any Subsidiary to issue any voting securities or securities
convertible into or exchangeable for capital stock or voting securities of any
Subsidiary and (v) no equity equivalents, interests in the ownership or
earnings, or other similar rights of or with respect to any Subsidiary (the
items in clauses (i), (ii), (iii), (iv) and (v) being referred to collectively
as the "Subsidiary Securities"). There
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are no outstanding obligations of Guest Supply to repurchase, redeem or
otherwise acquire any Subsidiary Securities.
4.6 Compliance with Laws. Except as set forth on Schedule 4.6, the
Assets, the Business, Guest Supply, and its directors, officers and employees in
the conduct of their duties on behalf of Guest Supply are in, and have been in,
compliance with all applicable Laws of all applicable Governmental Authorities.
Other than as set forth on Schedule 4.6, since December 31, 1999, Guest Supply
has received no written notice of any noncompliance with the foregoing which has
not been cured in all material respects.
4.7 Licenses and Permits. Except as set forth on Schedule 4.7, Guest
Supply holds and is in compliance with all material licenses, permits,
concessions, grants, franchises, approvals and authorizations listed on Schedule
4.7 ("Licenses and Permits"), and such list constitutes all of the material
licenses, permits, concessions, grants, franchises, approvals and authorizations
necessary or required for the use or ownership of Guest Supply's Assets and the
operation of the Business. Except as set forth on Schedule 4.7, Guest Supply has
not received within the preceding thirty-six (36) months written notice of any
material violations in respect of any such Licenses and Permits. Except as set
forth on Schedule 4.7, no proceeding is pending or, to the best knowledge of
Guest Supply (defined in Section 8.16(a)), threatened, which seeks revocation or
limitation of any such Licenses and Permits.
4.8 Financial Information.
(a) Prior to the date hereof, Guest Supply has delivered to Sysco copies of
the audited consolidated balance sheets of Guest Supply as of October 1, 1999
and September 29, 2000 and audited consolidated income statements for the fiscal
years then ended (collectively, the "Historical Financials"). All such
Historical Financials (including any related notes and schedules) have been
prepared in accordance with GAAP and fairly present in all material aspects the
financial condition of Guest Supply at the respective dates thereof and the
results of its operations for the periods then ended.
(b) On the date hereof, there are no liabilities or obligations of Guest
Supply or the Business of any nature, whether liquidated, unliquidated, accrued,
absolute, contingent or otherwise which are required by GAAP to be reflected or
reserved against on a balance sheet or in the notes thereto, except for (i)
those that are specifically reflected or reserved against as to amount in the
September 29, 2000 audited consolidated balance sheet or in the notes thereto;
(ii) that are specifically set forth on Schedule 4.8; (iii) those that are
specifically reflected or reserved against in the balance sheets contained in
the Interim Financials (subject to normal recurring year-end adjustments, the
effect of which will not have a Material Adverse Effect) and/or (iv) current
liabilities incurred in the ordinary course of Business and in a manner
consistent with its past practices since the date of the Interim Financials.
(c) Guest Supply has not been during the preceding twenty-four (24) months
immediately preceding the execution of this Agreement insolvent within the
meaning of 11 U.S.C. sec.101(31). Guest Supply has paid and is paying its debts
as they become due.
4.9 Sufficiency of Assets. The Assets constitute all the material assets
of any nature with which Guest Supply has conducted the Business for the
preceding twelve (12) month period, subject only to additions and deletions of
inventory and other assets in the ordinary course of Business and in a manner
consistent with its past practices and no other material assets are necessary to
operate the Business in its ordinary course and in a manner consistent with its
past practices. Title to all of the Assets is held solely by Guest Supply, and
except as set forth on Schedule 4.9, all agreements, obligations, expenses and
transactions related to the Business have been entered into, incurred and
conducted on behalf of Guest Supply only by Guest Supply, and no Affiliate of
Guest Supply or any other person or entity owns or has any rights in or to any
of the Assets.
4.10 Deposits. Attached hereto as Schedule 4.10 is a true, correct and
complete list of all security and other deposits, prepayments and prepaid
expenses of Guest Supply as of September 29, 2000 not reflected on the
Historical Financials (collectively, the "Deposits" and individually, a
"Deposit"), setting forth the amount of each Deposit.
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4.11 Accounts Receivable; Obligations.
(a) Schedule 4.11(a)(i) is a true, correct and complete list of all
accounts receivable, notes receivable, and other rights to receive payments
("Accounts Receivable") of Guest Supply as of December 31, 2000 showing the
terms and time period for collection thereof, and all such Accounts Receivable
listed thereon are bona fide, arose in the ordinary course of Business and in a
manner consistent with its past practices.
(b) Schedule 4.11(b) is a true, correct and complete list of all
obligations for all indebtedness for borrowed money on the date hereof owed by
Guest Supply and all obligations of Guest Supply in respect of the Business
incurred other than in the ordinary course of Business and in a manner
consistent with its past practices. None of the items set forth on Schedule
4.11(b) is overdue.
4.12 Tax Returns and Payments.
(a) Payment of Taxes and Other Matters. Except as otherwise disclosed in
Schedule 4.12: (i) all Tax Returns, including estimated Tax returns and reports
of every kind with respect to Taxes which are due to have been filed by Guest
Supply on or before the Closing Date in accordance with any applicable law in
all jurisdictions where Guest Supply is subject to Taxes, have been duly filed
and are true, correct and complete in all material respects; (ii) all Taxes,
including estimated tax payments, required to be paid (whether or not shown on a
Tax Return) by Guest Supply on or prior to the Closing Date have been paid in
full; (iii) the unpaid Taxes of Guest Supply attributable to periods ending on
or prior to the Closing Date or the pre-Closing portion of any Tax period ending
after the Closing Date, will not exceed the reserve for such Tax liability
accrued on the Interim Financials; (iv) there are not now any extensions of time
in effect with respect to the dates on which any Tax Returns or reports of Taxes
were or are due to be filed; (v) all deficiencies asserted as a result of any
examination of any Tax Return or report of Taxes by Guest Supply have been paid
in full, accrued or reserved as a Tax liability on the Interim Financials or
finally settled or are the subject of on-going good faith negotiations or
litigation, and no audit or investigation of any Tax Return or report of Taxes
is currently underway, pending, or to the Company's knowledge, threatened; (vii)
there are no outstanding waivers or agreements by Guest Supply for the extension
of time for the assessment of any Taxes or deficiency thereof, nor are there any
notices of proposed reassessment of any property owned or leased by Guest
Supply; (viii) there are no liens for Taxes upon any property or assets of Guest
Supply except liens for current Taxes not yet delinquent; (ix) Guest Supply does
not have any liability for the Taxes of any Person under Treas. Reg.
sec. 1.1502-6 (or any similar provision of state, local or foreign law), as
transferee or successor, by contract or otherwise; (x) Guest Supply is not a
party to or bound by any tax allocation or tax sharing agreement and has no
contractual obligation to indemnify any other person with respect to Taxes; (xi)
no property of Guest Supply is property that is "tax-exempt use property" within
the meaning of Section 168(h) of the Code; and (xii) Guest Supply is not
required to include in income any adjustment pursuant to Section 481(a) of the
Code by reason of a voluntary change in accounting method initiated by it, nor
has the IRS proposed any adjustment or change in accounting methods for Guest
Supply.
(b) Submission of Tax Returns. Guest Supply has made available to Sysco
copies of all Tax Returns relating to the operations of Guest Supply for the
periods set forth on Schedule 4.12(b).
4.13 Intellectual Property. Schedule 4.13 lists all registered
trademarks, service marks, trade names, service names, copyrights, patents,
applications therefor and licenses and other rights in respect thereof of Guest
Supply that is material to the conduct of the Business (collectively,
"Intellectual Property") used by Guest Supply in the operation of its Business.
Guest Supply owns and/or has a binding and enforceable right to use all of the
Intellectual Property. Upon the consummation of the transactions contemplated
hereby Guest Supply will continue to have the binding and enforceable right to
own and use the Intellectual Property. No claims have been asserted and no
claims are pending or, to the best knowledge of Guest Supply, threatened by any
person or entity, as to the use by Guest Supply of any such Intellectual
Property or challenging or questioning the validity or effectiveness of any
state or federal registration of the Intellectual Property, and Guest Supply
does not know of any valid basis for such claim.
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Guest Supply's use of the Intellectual Property and trade secrets and, to the
best knowledge of Guest Supply, Guest Supply's continued use of the same
following the Closing in the same manner as used by Guest Supply prior to
Closing, does not, and will not, infringe on the rights of any person or entity.
4.14 Contracts. Schedule 4.14 sets forth a true, correct and complete
list of all written and oral contracts, agreements, leases and other instruments
to which Guest Supply is a party which involve any of the following
(collectively, the "Contracts"):
(i) projected revenue or expense to Guest Supply in excess of $50,000
annually;
(ii) limitations in any respect on the locations in which Guest Supply
can conduct its Business or restrictions on the lines of business in which
Guest Supply can engage;
(iii) loans to or from (in excess of $1,000 per person) Guest Supply,
including without limitation, any loan agreements, promissory notes,
indentures;
(iv) the payment of cash or other benefit upon the change in control
of the Company;
(v) any joint venture, partnership or other arrangement which involves
the sharing or profits, losses, costs or liabilities;
(vi) calculating the price of an item for one party to the agreement
based on cost of such item to the other party to the agreement;
(vii) any leases for real property of which Guest Supply is a party;
and
(viii) any written employment agreement between any employee of Guest
Supply and Guest Supply.
Prior to execution of this Agreement, Guest Supply has provided or made
available to Sysco true, correct and complete copies of the written Contracts
and accurate descriptions of the terms of oral Contracts. The Contracts are
valid, legally binding and enforceable against Guest Supply, and, to Guest
Supply's knowledge, the other parties thereto, subject to laws of general
application in effect affecting creditors' rights and subject to the exercise of
judicial discretion in accordance with general equitable principles. Neither
Guest Supply nor, to the best knowledge of Guest Supply, any other party to any
of the Contracts is in breach of, or in default under, any of the Contracts and,
no event has occurred which, with the notice or lapse of time, or both, would
constitute a breach or default by Guest Supply or, to the best knowledge of
Guest Supply, any other party to any of the Contracts.
4.15 Litigation; Judgments.
(a) On the date hereof, except as set forth on Schedule 4.15, there is no
action, proceeding or investigation pending by or before any Governmental
Authority (or, to the best knowledge of Guest Supply, threatened) (i) against
Guest Supply, (ii) against the Company's executive officers or directors in
their capacity as such, nor (iii) seeking to restrain or prohibit or to obtain
damages or other relief in connection with the consummation of the Merger, or
Guest Supply's or Stockholders' ability to consummate the transactions
contemplated by this Agreement and the Transaction Documents. Except as set
forth on Schedule 4.15, neither Guest Supply nor, to its knowledge, the
Stockholders are subject to any judgment, order or decree entered in any lawsuit
or proceeding relating to the Assets or the operation of the Business.
(b) There does not exist under any customer contract of Guest Supply any
basis, regardless of the giving of notice or the lapse of time or both, for a
claim by the customer with respect to how the cost of products is calculated
thereunder or with respect to the method for pricing of products sold to such
customer thereunder ("Cost Plus Contract Claims").
4.16 Insurance. Guest Supply maintains property, fire, casualty, workers
compensation, general liability insurance and other forms of insurance relating
to the operation of the Business against risks of the kind customarily insured
against and in amounts customarily insured. Guest Supply will maintain its
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insurance policies in full force and effect through the Closing Date. Schedule
4.16 lists all of the insurance policies maintained by Guest Supply, which
schedule includes the name of the insurance company, the policy number, a
description of the type of insurance covered by such policy, the dollar limit of
the policy, and the annual premiums for such policy. All premiums thereon due
and payable have been paid, and Guest Supply has received no notice of
cancellation with respect thereto. There are no pending or, to the best
knowledge of Guest Supply, threatened, terminations of, or premium increases
with respect to, any of such policies and bonds, and Guest Supply is in
compliance, in all material respects, with all conditions contained therein.
Guest Supply has delivered or made available to Sysco true, complete and correct
copies of all of the above-described insurance policies.
4.17 Employees; Union; Labor. Except as otherwise designated on Schedule
4.17(i), Guest Supply does not use the services of independent contractors as
sales agents or consultants in connection with the Business. Guest Supply is not
a party to any collective bargaining agreement or any other contract, written or
oral, with any trade or labor union, employees' association or similar
organization. There are no strikes or labor disputes with its employees
generally pending or, to the best knowledge of Guest Supply, threatened, or to
the best knowledge of Guest Supply, any attempts at union organization of the
employees of Guest Supply. All salaries and wages paid and withheld by Guest
Supply are and have been in compliance with all applicable foreign, federal,
state and local laws. Schedule 4.17(ii) lists each current employee of Guest
Supply whose aggregate annualized compensation exceeded $50,000 or whose
employment by Guest Supply has ceased for any reasons since January 1, 2000.
4.18 Benefit Plans and ERISA (a) Set forth on Schedule 4.18(a) hereto is
a correct and complete list of each "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and any other bonus, profit sharing, pension, compensation,
deferred compensation, stock option, stock purchase, fringe benefit, severance,
post-retirement, scholarship, disability, sick leave, vacation, individual
employment, commission, bonus, payroll practice, retention or other plan,
agreement, policy, trust fund, arrangement, or understanding (regardless of
whether legally enforceable) (each such plan, agreement, policy, trust fund,
arrangement or understanding is referred to herein as a "Benefit Plan," and
collectively, the "Benefit Plans") that is currently in effect or followed, was
maintained since December 31, 1996, or which has been approved before the date
hereof but is not yet effective, for the benefit of (X) directors or employees
of Guest Supply or any other persons performing services for Guest Supply, (Y)
former directors or former employees of Guest Supply or any other persons
formerly performing services for Guest Supply, and/or (Z) beneficiaries of
anyone described in (X) or (Y) (collectively, "Business Employees") or with
respect to which Guest Supply or any "ERISA Affiliate" (hereby defined to
include any trade or business, whether or not incorporated, other than the
Company, which has employees who are or have been at any date of determination
occurring within the preceding six years treated pursuant to Section 4001(a)(14)
of ERISA and/or Section 414 of the Code as employees of a single employer which
includes the Company) has or has had any obligation on behalf of any Business
Employee. Guest Supply has delivered or made available to Sysco copies of all
Benefit Plans and all financial statements, actuarial reports and annual reports
and returns filed with the Internal Revenue Service ("IRS") or Department of
Labor ("DOL") with respect to such Benefit Plans for a period of three years
prior to the date hereof and, except as disclosed on Schedule 4.18(a) attached
hereto, there are no other benefits to which any Business Employee is entitled
or for which Guest Supply or any ERISA Affiliate has any obligation. In
addition, except as set forth on Schedule 4.18(a):
(i) Each Benefit Plan has been operated and administered in material
compliance with its terms;
(ii) Each Benefit Plan complies in all material respects with all
requirements of ERISA and the Code and with all other applicable law;
(iii) Each Benefit Plan intended to qualify under Section 401(a) of
the Code has received a favorable determination letter from the Internal
Revenue Service as to its qualification under Section 401(a) of the Code,
which determination letter has not been modified, revoked or limited, and
nothing has occurred or is expected to occur that caused or could cause the
loss of its
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qualification under Section 401(a) of the Code or the imposition of any
liability, penalty or Tax with respect to such Benefit Plan. Guest Supply
has delivered to Sysco copies of the most recent determination letter it
has received with respect to each Benefit Plan intended to qualify under
Section 401(a) of the Code;
(iv) Neither Guest Supply nor any ERISA Affiliate maintains, sponsors
or contributes to, or has maintained, sponsored or contributed in the past
six years to, any "defined benefit plan" (within the meaning of Section
3(35) of ERISA), any multiemployer plan (within the meaning of Section
3(37) of ERISA) or any voluntary employee beneficiary association intended
to be tax-exempt under Section 501(c)(9) of the Code;
(v) No non-exempt "prohibited transaction" (within the meaning of
Section 4975 of the Code and Section 406 of ERISA) has occurred or is
expected to occur with respect to the Benefit Plans (and the transactions
contemplated by this Agreement will not constitute or directly or
indirectly result in such a "prohibited transaction") which has subjected
or could subject Guest Supply, any ERISA Affiliate or Sysco , or any
officer, director or employee of Guest Supply, any ERISA Affiliate or
Sysco, or the Benefit Plans' trustees, administrators or other fiduciaries,
to a tax or penalty on prohibited transactions imposed by either Section
502 of ERISA or Section 4975 of the Code or any other liability with
respect thereto;
(vi) No provision of any Benefit Plan limits the right of Guest Supply
to amend or terminate any Benefit Plan on no more than 90 days' notice,
subject to the requirements of applicable law;
(vii) All contributions, insurance premiums, Taxes, or other
liabilities or charges with respect to any Benefit Plan required to be paid
on or prior to the Closing Date have been or will be paid in full on or
prior to the Closing Date. All unpaid contributions, insurance premiums,
Taxes, or other liabilities or charges with respect to any Benefit Plan
attributable to periods prior to the Closing Date, including the
pre-Closing portion of any period ending after the Closing Date, have been
accrued and properly reflected as liabilities on Guest Supply's historical
financial statements and Interim Financials. Contributions for purposes of
this Section 4.18(a)(vii) shall include, without limitation, any matching
or employer profit sharing contributions required or customarily made under
a "defined contribution plan" (within the meaning of Section 3(34) of
ERISA) sponsored by Guest Supply;
(viii) Other than claims in the ordinary course for benefits with
respect to the Benefit Plans, there are no actions, suits or claims pending
with respect to any Benefit Plan, or, to Guest Supply's Knowledge, any
circumstances which might give rise to any such action, suit or claim;
(ix) All reports, returns and similar documents with respect to the
Benefit Plans required to be filed with any governmental agency have been
so filed;
(x) Guest Supply has no obligation to provide health or other welfare
benefits to former, retired or terminated employees, except as specifically
required under Section 4980B of the Code or Section 601 of ERISA. Guest
Supply has complied in all material respects with the notice and
continuation requirements of Section 4980B of the Code and Section 601 of
ERISA and the regulations thereunder;
(xi) Each Benefit Plan that purports to provide benefits that qualify
for tax-favored treatment under Sections 79, 105, 106, 117, 125, 127, 129,
or 132 of the Code complies with the requirements of such Section and the
regulations promulgated thereunder;
(xii) All amendments required to bring the Benefit Plans into
conformity with applicable law, including, without limitation, ERISA and
the Code, have been timely adopted;
(xiii) No Benefit Plan is under audit or investigation by the IRS or
the DOL or any other governmental authority, and no such completed audit,
if any, has resulted in the imposition of any Tax, interest or penalty that
remains unpaid as of the Closing Date;
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(xiv) Guest Supply is not subject to any liens, and excise or other
Taxes, under ERISA, the Code or other applicable law relating or with
respect to any Benefit Plan; and
(xv) The Sysco Companies, and from and after the Closing Date, Guest
Supply, shall have no liability for, under, with respect to or otherwise in
connection with any Benefit Plan (assuming a like definition of "Benefit
Plan" were applicable to ERISA Affiliates as to those same types of plans,
agreements, policies, trusts, funds, and arrangements sponsored, maintained
or contributed to by them) sponsored or maintained for the benefit of
employees (and beneficiaries and covered dependents thereof) of any ERISA
Affiliate, excluding Guest Supply, at any relevant time prior to the
Closing Date (other than a liability for providing benefits arising in the
ordinary course of business when ordinarily due under such Benefit Plan),
which liability arises under ERISA or the Code, by virtue of Guest Supply
being aggregated in a controlled group or affiliated service group with any
ERISA Affiliate for purposes of ERISA or the Code at any relevant time
prior to the Closing Date.
(b) Parachute Payments. Set forth on Schedule 4.18(b) is a true, correct
and complete list of each Business Employee, who, as a result of the
consummation of the transactions contemplated by this Agreement, would be
entitled, under any agreement or plan binding on Guest Supply prior to the
Control Date, to: (i) any severance compensation, bonus, increase in
compensation or like benefit, or (ii) any acceleration or vesting of any
benefits or payments (other than the acceleration or vesting of Company Stock
Options) including, without limitation, any Employee Benefits (collectively
"Parachute Benefits"), other than as may be required by law. All of the Business
Employees listed on Schedule 4.18(b) have waived in writing their Parachute
Benefits, effective as of the execution and delivery of this Agreement.
4.19 Brokers Fees and Expenses. Guest Supply has not retained or utilized
the services of any broker, finder or intermediary, other than Piper Jaffray, or
paid or agreed to pay any fee or commission to any person or entity for or on
account of the transactions contemplated hereby, or had any communications with
any person or entity with respect thereto which would obligate Sysco to pay any
such fees or commissions.
4.20 Absence of Material Changes. Except as set forth on Schedule 4.20,
from September 29, 2000 to the date of this Agreement:
(a) there has not been any Material Adverse Effect;
(b) there has been no Material Adverse Effect resulting from Guest
Supply's relations with, nor has Guest Supply lost (or received written
notice that it may lose), any distributors or suppliers with which Guest
Supply has significant business relations;
(c) Guest Supply has operated the Business in the ordinary course and
has not sold, assigned, or transferred any of its Assets, except in the
ordinary course of its Business consistent with past practice;
(d) Guest Supply has not mortgaged, pledged or subjected to any lien,
pledge, mortgage, security interest, conditional sales contract, or other
encumbrance of any nature whatsoever, any of its Assets;
(e) there has been no amendment, termination, or waiver of any
material right of Guest Supply under any Contract, License or Permit that
reasonably may be anticipated to have a Material Adverse Effect on the
Assets, or the Business;
(f) Guest Supply has not:
(i) paid any judgment resulting from any suit, proceeding,
arbitration, claim or counterclaim filed before any Governmental
Authority or arbitration panel in respect of its Assets or the Business
in excess of $25,000 (provided that all such excluded payments do not
aggregate to more than $100,000);
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(ii) made any such payment to any party in settlement of any such
suit, proceeding, arbitration, claim or counterclaim in excess of
$25,000 (provided that all such excluded payments do not aggregate to
more than $100,000);
(iii) written down or failed to write down (in accordance with
generally accepted accounting principles), or written up the value of
any inventory or Assets;
(iv) made any material changes in the customary methods of
operation of the Business, including practices and policies relating to
purchasing, marketing, selling or payment of trade creditors or made any
change in its method of accounting;
(v) incurred any indebtedness or guaranteed any indebtedness
(except in respect of ordinary trade payables), except for borrowings
under existing loans or lines of credit in the ordinary course of
Business and in a manner consistent with its past practices;
(vi) issued or sold any of its stock, notes, bonds or other
securities, or any option, warrant or other rights to purchase the same
except stock issuances upon exercise of outstanding Company Stock
Options, warrants and convertible securities;
(vii) taken any action other than in the ordinary course of
Business and in a manner consistent with its past practices with respect
to increasing the compensation of any employee of Guest Supply in the
Business or with respect to the grant or increase of any severance or
termination pay to any such person (otherwise than as disclosed to Sysco
in writing prior to the date hereof);
(viii) declared, set aside or paid any dividend or distribution
payable in cash, stock, property or otherwise with respect to the
Company's capital stock; or
(ix) agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 4.20.
4.21 Bank Accounts; Powers of Attorney. Schedule 4.21(i) is a true,
complete and correct list showing the name and location of each bank or other
institution in which Guest Supply has any account or safe deposit box, together
with a listing of account numbers and the persons authorized to draw thereon or
have access thereto. Schedule 4.21(ii) is a true, complete and correct list of
the persons holding effective general or special powers of attorney from Guest
Supply and description of such power.
4.22 Certain Arrangements. Schedule 4.22 is a true, correct and complete
list of any transaction (other than in respect of employee salary, bonus, or
travel or expense account reimbursement in the ordinary course of Business
consistent with its past practice) that any director, officer, employee,
Stockholder or other Affiliate, or any relative of any director or officer, is a
party to:
(i) any contract, agreement, understanding, commitment or other
arrangement providing for the furnishing of services, or the rental of real
or personal property from or otherwise requiring payments to any such
person (outside of his or her capacity as such director or officer) or to
any such relative of such person; and
(ii) any loans or advances to or from Guest Supply (exclusive of
travel advances, expense advances, and normal salary advances in connection
with vacation periods, or compensation, or travel or expense account
reimbursement, all in the ordinary course of Business and in a manner
consistent with its past practices), giving for each the principal amount
outstanding, interest rate, maturity date and security therefore.
4.23 Environmental Matters. For purposes of this Agreement: (i)
"Environmental Laws" means the New Jersey Spill Compensation and Control Act,
N.J.S.A. 58:10.23.11, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., and all laws,
ordinances, rules, regulations and requirements issued by any Governmental
Authority, as well as any common law doctrines
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pertaining to environmental, health, safety or ecological conditions, along with
any regulations promulgated thereunder; and (ii) "Hazardous Material" means (A)
any "hazardous substance," "hazardous waste" or "hazardous material" defined as
such in (or for purposes of) any Environmental Law; (B) any petroleum product,
asbestos-containing material, urea formaldehyde or PCBs; and (C) any other
substance, regardless of physical form, that is subject to any Environmental Law
regulating, or imposing obligations, liability, or standards of conduct
concerning the protection of human health, plant life, animal life or natural
resources. Except as set forth in the Environmental Reports (as defined below)
or on Schedule 4.23:
(i) Neither Guest Supply, nor to the best knowledge of Guest Supply,
any prior owner, user or occupant of the Real Property or any property
formerly owned, leased, or occupied by Guest Supply (collectively, the
"Properties") has conducted or authorized the storage, treatment, or
disposal of any Hazardous Material on the Properties, which, if discovered
or reported, is reasonably likely to give rise to a liability or obligation
on the part of Guest Supply or the Sysco Companies;
(ii) There has been no spill, discharge, release, emission of, or
contamination resulting from any Hazardous Material on, at, under or
migrating to or from any of the Properties, and No Hazardous Material
currently exists on, at, in, under or about any of the Properties, which,
if disclosed or discovered, is reasonably likely to require remediation or
give rise to a claim or liability against Guest Supply or the Sysco
Companies;
(iii) Guest Supply has not received any written or actual notice of
any violation, directive, complaint, suit, order or other notice with
respect to any Environmental Law, the disposal or release of Hazardous
Material from the Properties onto any other property, or that Guest Supply
or the Properties have incurred any liability under any Environmental Law,
and Guest Supply has no knowledge that any such notice is pending,
threatened or otherwise anticipated from any person, including but not
limited to a Governmental Authority;
(iv) There is no pending litigation, investigation or proceeding by
any person, including but not limited to any Governmental Authority, in
which it is alleged that there has been a discharge, spill, disposal or
release of any Hazardous Material or any violation of Environmental Law
with respect to the Properties, nor is Guest Supply aware of any facts or
circumstances that would reasonably lead it to believe that any person or
Governmental Authority would allege any of the foregoing;
(v) There are no written agreements, including but not limited to
Consent Orders or Memoranda of Agreement, between Guest Supply and any
Governmental Authority relating in any way to the presence, spill,
discharge, release, threat of release, storage, treatment or disposal of
any Hazardous Material;
(vi) Other than as provided in Section 3.14 with respect to ISRA,
there are no Environmental Laws applicable to the Properties that would
require Guest Supply to obtain the approval of or provide notice to any
Governmental Authority (which has not been obtained or provided) as a
condition to the consummation of the Merger;
(vii) Guest Supply has owned, leased and operated the Properties in
compliance with all applicable Environmental Laws;
(viii) Guest Supply and the Business have in full force and effect,
and are in compliance with, all Licenses and Permits required under the
Environmental Laws that are necessary for the operation of the Business;
(ix) Neither Guest Supply nor the Properties has incurred any
liability or obligation, contingent or non-contingent, under the
Environmental Laws or otherwise pertaining to Hazardous Materials that
remains unresolved or has not been complied with so as to bring Guest
Supply or the Properties into compliance with Environmental Law;
(x) Guest Supply has delivered or made available to Sysco true,
correct and complete copies of all reports or tests with respect to the
compliance of the Properties and the Assets with the
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Environmental Laws and/or the presence of any Hazardous Material on the
Properties that were (A) prepared for Guest Supply; or (B) prepared for
other parties and are in the possession of Guest Supply (collectively, the
"Environmental Reports") and, to the knowledge of Guest Supply, all such
reports and tests contain no material misstatements or omissions;
(xi) There are no leaking or non-compliant underground storage tanks
owned or operated by Guest Supply on the Properties, nor to Guest Supply's
knowledge, were there any such leaking or non-compliant tank systems owned
or operated by Guest Supply on any of the Properties;
(xii) Neither Guest Supply nor, to the knowledge of Guest Supply, any
prior owner, user or occupant of the Properties, have filed or otherwise
provided notice to any Governmental Authority under any Environmental Law
of any past or present release or discharge of a Hazardous Material into
the Environment;
(xiii) No risk to human health or the environment exists as a result
of any Hazardous Material previously or currently located on, at, in, under
or about the Properties that is reasonably likely to give rise to a
liability against Guest Supply or the Sysco Companies;
(xiv) Guest Supply has not received any notice, demand, or information
request regarding its alleged disposal of, or arrangement for disposal of,
any Hazardous Materials on any real property not owned by Guest Supply that
is on the USEPA's National Priorities List or the CERCLIS list or any
similar state list, or, to the knowledge of Guest Supply, which is or
reasonably could be the subject of any remedial action by a federal or
state agency or by a third party seeking reimbursement of cleanup expenses
from Guest Supply under federal or state law;
(xv) During Guest Supply's ownership, leasing and/or occupancy of the
Properties, no construction debris or other debris was buried on any of the
Properties, which, if disclosed or discovered, is reasonably likely to
require remediation; and
(xvi) No lien, nor any deed notice or use restriction that precludes
the Real Property from being used for their current commercial purposes,
has been issued, filed, or recorded pursuant to any Environmental Law with
respect to the Real Property.
4.24 Unlawful Payments. Neither Guest Supply nor any of its directors,
officers, agents, employees, or other persons associated with or acting on
behalf of Guest Supply has, directly or indirectly:
(i) used any funds of Guest Supply for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political activity;
(ii) made any unlawful payment to domestic or foreign government
officials or employees, or to domestic or foreign political parties or
campaigns, from corporate funds;
(iii) violated any provision of the Foreign Corrupt Practices Act of
1977, as amended;
(iv) established or maintained any unlawful or unrecorded fund of
Guest Supply monies or other assets;
(v) made any false or fictitious entry on the books or records of
Guest Supply;
(vi) made any bribe, unlawful rebate, payoff, influence payment,
kickback, or other unlawful payment;
(vii) given any favor or gift which is not deductible for federal
income tax purposes; or
(viii) made any bribe, kickback or other payment of a similar or
comparable nature, whether lawful or not, to any person or entity, private
or public, regardless of form, whether in money, property, or services, to
obtain favorable treatment in securing business or to obtain special
concessions, or to pay for favorable treatment for business secured or for
special concessions already obtained.
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4.25 Internet Presence. Schedule 4.25 describes Guest Supply's public,
private or reserved presence on the world wide web, multi-party extranet,
virtual private network, or similar internet based, linked system ("Internet
Presence"). Guest Supply's domain name(s), if any, are currently registered with
the currently authorized Internet Domain Name Registrar and are in good
standing.
4.26 Information Supplied. Neither the Schedule 14D-9, nor any of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Form S-4, the Post-Effective Amendment or the
Offer Documents will, at the respective times any such documents or any
amendments or supplements thereto are filed with the SEC, are first published,
sent or given to Stockholders or become effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Proxy Statement will not, at the time the Proxy Statement is
first mailed to the Stockholders or, at the time of the Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9 and the Proxy Statement will comply as to form in
all material respects with the requirements of all applicable laws, including
the Exchange Act and the rules and regulations thereunder. No representation or
warranty is made by the Company with respect to statements made or incorporated
by reference therein based on information supplied by Sysco or Merger Sub
specifically for inclusion or incorporation by reference therein.
4.27 Books and Records; Deliveries.
(a) Guest Supply has maintained all books and records in the ordinary
course of its Business, in accordance with good business practice, and such
books and records are complete and accurate in all material respects.
(b) The Company has delivered or made available to Sysco , true, correct
and complete copies of all documents listed on or referred to in the Schedules
(other than Schedule 4.15).
4.28 State Takeover Laws. The Offer will not require any filing under the
New Jersey Corporation Takeover Bid Disclosure Law (NJSA 49:5-1 et seq.) in
connection with this Agreement, the Offer or the Merger; provided that the
Company properly discloses the terms of the Offer to the Stockholders, including
the disclosure of all special incentives, inducements and consideration made
available to the officers and directors of the Company that were not made
available to the Stockholders generally. Assuming the representation set forth
in Section 5.12 is true and correct, neither this Agreement, the Offer (any
Subsequent Offer) nor the Merger is prohibited by the New Jersey Shareholders
Protection Act (NJSA 14A:10A-1 et seq.).
4.29 Representations as to Real Property.
(a) Real Property. Schedule 4.29(a)(i) is a true, correct and complete
list of all of the Real Property, to which Guest Supply has fee simple title and
the Real Property which Guest Supply occupies pursuant to a lease.
(b) No Condemnation Proceedings. No condemnation or eminent domain
proceedings are pending or, to the best of Guest Supply's knowledge, threatened
or contemplated against the Real Property, or any part thereof, and Guest Supply
has received no notice, oral or written, of the desire of any public authority
or other entity to take or use the Real Property, or any part thereof. Guest
Supply will give Sysco prompt written notice of any actual or, if known to Guest
Supply, any threatened or contemplated condemnation of any part of the Real
Property.
(c) Zoning and Use. Except as set forth on Schedule 4.29(c) or Schedule
4.23, there are no outstanding notices or orders of any Governmental Authority
requiring, as of the date hereof or as of a specified or unspecified date in the
future, any repairs or alterations or additions or improvements thereto.
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(d) Encroachment. No improvements located on the Real Property owned by
Guest Supply violate any setback requirements or encroach on any adjacent
property and no buildings or other improvements of any kind encroach on the Real
Property owned by Guest Supply.
4.30 Shareholder Rights Plan. The Company Board has taken all actions
necessary to cause the Rights Agreement, to be ineffective as to the Offer, the
Merger and the other transactions described in this Agreement.
4.31 SEC Filings.
(a) The Company has filed all forms, reports and documents required to be
filed by the Company with the SEC since January 1, 1998, and has made available
to Sysco such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that the Company may
file subsequent to the date hereof) are referred to herein as the "Company SEC
Reports." As of their respective dates, the Company SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act, or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Reports and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to the extent
corrected prior to the date of this Agreement by a subsequently filed Company
SEC Report. None of the Company's Subsidiaries is required to file any forms,
reports or other documents with the SEC.
4.32 Full Disclosure. The representations and warranties made by the
Company in this Agreement and in the Schedules and Exhibits referenced herein do
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances under which they were made, not misleading. Prior to the
Closing, the Company shall promptly notify Sysco and Merger Sub at such time(s)
it becomes aware that any representation or warranty is untrue or misleading in
any material respect.
4.33 Fairness Opinion. The Company has received from Piper Jaffray a
written opinion (the "Fairness Opinion") addressed to the Company Board dated
January 22, 2001, to the effect that, as of the date of such opinion, the
Exchange Ratio (as hereinafter defined) to be received by the Stockholders,
pursuant to this Agreement, is fair to the Stockholders from a financial point
of view, and such opinion has not been modified or withdrawn as of the date
hereof. For purposes of the Fairness Opinion, (a) the "Exchange Ratio" is
defined as the Offer Exchange Ratio and the Merger Exchange Ratio, (b) the
"Offer Exchange Ratio" is defined as (i) if the Average Sysco Offer Price is
greater than or equal to $22.00 per share and less than or equal to $30.00 per
share, a number of Sysco Shares per share of Common Stock equal to $26.00
divided by the Average Sysco Offer Price, (ii) if the Average Sysco Offer Price
is less than $22.00, 1.1818 Sysco Shares per share of Common Stock and (iii) if
the Average Sysco Offer Price is greater than $30.00, 0.8667 Sysco Shares per
share of Common Stock and (c) the "Merger Exchange Ratio" is defined as (i) if
the Average Sysco Merger Price is greater than or equal to $22.00 per share and
less than or equal to $30.00 per share, a number of Sysco Shares per share of
Common Stock equal to $26.00 divided by the Average Sysco Merger Price, (ii) if
the Average Sysco Merger Price is less than $22.00, 1.1818 Sysco Shares per
share of Common Stock and (iii) if the Average Sysco Merger Price is greater
than $30.00, 0.8667 Sysco Shares per share of Common Stock.
4.34 Inventory. Guest Supply's inventory, net of reasonable (in
accordance with GAAP) reserves, consists of Salable (defined below) inventory of
a quality and quantity generally maintained and sold in the ordinary course of
Business and in a manner consistent with its past practices. For purposes
hereof, inventory is "Salable" only if it (including its packaging) is in the
physical condition to be sold to customers in the ordinary course of Business
and in a manner consistent with its past practices and in
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accordance with industry standards and applicable government regulations;
provided, however, that "Salable" inventory does not include:
(a) any item whose supplier notifies any of the parties hereto prior
to the Closing that such item may not be distributed following Closing;
(b) any items which are private label products for customers who
immediately prior to the Closing are no longer customers of Guest Supply to
the extent such products are not otherwise salable (after appropriate but
non-material modifications) to other customers at prices comparable to the
pricing for the products as generally prepared;
(c) items which are, pursuant to industry or Governmental Authority
standards, out of date (or perishable product in excess, in days supply, of
the normal shelf life of such product); or
(d) items of obsolete inventory.
4.35 Immigration Matters.
(a) With respect to all current employees (as defined in Section 274a.1(g)
of Title 8, Code of Federal Regulations) of Guest Supply, true and complete
copies of all Forms I-9 (Employment Eligibility Verification Forms) completed
pursuant to the Immigration Reform and Control Act of 1986, as amended, and all
regulations promulgated thereunder ("IRCA"), and any and all copies of
documentation, records or other papers retained with Forms I-9 (Employment
Eligibility Verification Forms), have been made available to Sysco. Guest Supply
has complied with IRCA with respect to the completion of Forms I-9 for all
employees and the reverification of the employment status of any and all
employees whose employment authorization documents indicated a limited period of
employment authorization.
(b) With respect to all former employees who left Guest Supply's employment
within three (3) years prior to Closing, Guest Supply has complied with IRCA
with respect to the maintenance of Forms I-9 for at least three (3) years or for
one (1) year beyond the date of termination, whichever is later.
(c) The Company has made available true and correct information with
respect to all employees of Guest Supply working under INS authorization in E,
F, H, J, L, M, O, P, or TN Visa Status. The Company maintains current files
containing all Labor Condition Application (LCA) related public and non-public
access documentation which it must present upon request by the DOL or the
general public, including but not limited to all documentation noted in 20 CFR
sec.655.760.
(d) Guest Supply has not had immigration violations, nor has it employed
individuals not authorized to work in the United States. Guest Supply has never
been the subject of any inspection or investigation relating to its compliance
with or violation of the Immigration and Nationality Act, 8 U.S.C. 1101 ("INA")
or IRCA, nor has it been warned, fined or otherwise penalized by reason of any
failure to comply with INA or IRCA, nor is such proceeding pending or
threatened.
(e) The consummation of the transactions contemplated by this Agreement
will not give rise to any liability for the failure to properly complete,
maintain and update Forms I-9, or give rise to any liability for the employment
of individuals not authorized to work in the United States, or cause any current
employee to become unauthorized to work in the United States.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SYSCO
In order to induce the Company to enter into this Agreement and consummate
the transactions contemplated hereby, Sysco and Merger Sub hereby make the
following representations and warranties to the Company, each of which
representations and warranties is relied upon by the Company:
5.1 Organization of Sysco and Merger Sub. Sysco and Merger Sub are
corporations duly organized and validly existing under the laws of the State of
Delaware and each has the corporate power and
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authority to own its respective properties and to carry on its respective
businesses as now being conducted by it.
5.2 Power and Authority; Due Authorization. Sysco and Merger Sub have
full power and authority to execute and deliver this Agreement and each of the
agreements, documents and instruments referenced in this Agreement to which
Sysco or Merger Sub is or will be a party ("Sysco Companies' Transaction
Documents") and to consummate the transactions contemplated hereby and thereby.
The Boards of Directors of Sysco and Merger Sub have duly approved and
authorized the execution and delivery of this Agreement and each of the Sysco
Companies' Transaction Documents and the consummation of the transactions
contemplated hereby and thereby, and no other corporate proceedings or approvals
on the part of Sysco and Merger Sub are necessary to approve and authorize the
execution and delivery of this Agreement and the Sysco Companies' Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby. Assuming that this Agreement and each of the Sysco Companies'
Transaction Documents constitutes a valid and binding agreement of the Company,
this Agreement and each of the Sysco Companies' Transaction Documents
constitutes, or will constitute when executed and delivered, a valid and binding
agreement of Sysco and Merger Sub, in each case enforceable against Sysco and
Merger Sub in accordance with its terms, subject to laws of general application
in effect affecting creditors' rights and subject to the exercise of judicial
discretion in accordance with general equitable principles.
5.3 No Conflict. Assuming all consents, approvals, authorizations, and
other actions listed on Schedule 5.3 have been obtained or taken prior to the
date hereof or Closing as indicated thereon, the execution and delivery by Sysco
and Merger Sub of this Agreement, the Sysco Companies' Transaction Documents and
the consummation by Sysco and Merger Sub of the transactions contemplated hereby
and thereby do not and will not (a) require the consent, approval or action of,
or any filing or notice to, any corporation, firm, person or other entity or any
public, governmental or judicial authority; (b) violate the terms of any
instrument, document or agreement to which Sysco or Merger Sub is a party, or by
which Sysco or Merger Sub or the properties of Sysco or Merger Sub is bound, or
be in conflict with, result in a breach of or constitute (upon the giving of
notice or lapse of time, or both) a default under any such instrument, document
or agreement; (c) violate Sysco's or Merger Sub's Certificate of Incorporation
or Bylaws; or (d) violate any order, writ, injunction, decree, judgment, ruling,
law or regulation of any Governmental Authority applicable to Sysco or Merger
Sub, or the business or assets of Sysco or Merger Sub.
5.4 Brokers Fees and Expenses. Neither Sysco nor Merger Sub has retained
or utilized the services of any broker, finder, or intermediary, or paid or
agreed to pay any fee or commission to any person or entity for or on account of
the transactions contemplated hereby, or had any communications with any person
or entity which would obligate Guest Supply to pay any such fees or commissions.
5.5 Offer Consideration and Merger Consideration. The Sysco Shares, when
issued and delivered to the Stockholders pursuant to the Offer or the Merger, as
the case may be, in accordance with this Agreement, will be duly authorized,
validly issued, fully paid and non-assessable shares of Sysco Common Stock. Upon
delivery of the Sysco Shares, Stockholders will receive good and unencumbered
title to the Sysco Shares, free and clear of all liens, restrictions, charges,
encumbrances and other security interests of any kind or nature whatsoever,
except for restrictions existing under applicable securities laws regarding
transferability of the Sysco Shares and the restrictions imposed in this
Agreement. Sysco shall use commercially reasonable efforts to cause the Sysco
Shares to be approved for listing on the New York Stock Exchange ("NYSE"),
subject to official notice of issuance prior to the delivery of the Shares to
the Stockholders.
5.6 Information Supplied. Neither the Offer Documents, the Form S-4 or
the Post-Effective Amendment, nor any of the information supplied or to be
supplied by Sysco or its representatives for inclusion or incorporation by
reference in the Schedule 14D-9 or the Proxy Statement will, at the respective
times any such documents or any amendments or supplements thereto are filed with
the SEC, are first published, sent or given to the Stockholders or become
effective under the Securities Act or, in
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the case of the Proxy Statement, at the time of the Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Offer Documents the Form S-4 and the Post-Effective
Amendment will comply as to form in all material respects with the requirements
of all applicable laws, including the Securities Act and the Exchange Act, as
applicable, and the rules and regulations thereunder. No representation or
warranty is made by Sysco or Merger Sub with respect to statements made or
incorporated by reference therein based on information supplied by the Company
for inclusion or incorporation by reference therein.
5.7 SEC Filings. (a) Sysco has filed all forms, reports and documents
required to be filed by Sysco with the SEC since January 1, 1998, and has made
available to the Company such forms, reports and documents in the form filed
with the SEC. All such required forms, reports and documents (including those
that Sysco may file subsequent to the date hereof) are referred to herein as the
"Sysco SEC Reports." As of their respective dates, the Sysco SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act, or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Sysco SEC Reports and (ii) did not at the time
they were filed (or if amended of superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement or
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to the extent
corrected prior to the date of this Agreement by a subsequently filed Sysco SEC
Report.
5.8 Absence of Certain Changes or Events. Except as disclosed in the
Sysco SEC filed and publicly available prior to the date of this Agreement,
there has not been any event, occurrence or development of a state of
circumstances that has had or could reasonably be expected to have a material
adverse effect on Sysco and its subsidiaries taken as a whole.
5.9 Financial Information. Prior to the date hereof, Sysco has delivered
to the Company copies of the unaudited consolidated statement of earnings of
Sysco dated as of December 30, 2000 for the thirteen (13) week and twenty-six
(26) week periods then ended (collectively, the "Sysco Historical Financials").
The Sysco Historical Financials have been prepared in accordance with GAAP
(except for the absence of footnotes required by GAAP) and fairly present in all
material respects the consolidated statement of earnings of Sysco for the
periods then ended.
5.10 Brokers' Fees and Expenses. Neither Sysco nor Merger Sub has
retained or utilized in the services of any broker, finder or intermediary, or
paid or agreed to pay any fee or commission to any person or entity for or on
account of the transactions contemplated hereby, or had any communications with
any person or entity with respect thereto, which, in any case, obligate Guest
Supply to pay any such fees or commissions.
5.11 Full Disclosure. Except as disclosed in the Sysco SEC Reports filed
and publicly available prior to the date of this Agreement, since September 30,
2000, there has not been any event, occurrence or development or a state of
circumstances that has had or could reasonably be expected to have a material
adverse effect on the financial condition or results of operations of Sysco.
Copies of all documents with respect to Sysco or its ongoing business or
financial condition which have been delivered or made available to the Company
are true, correct and complete copies thereof.
5.12 No Ownership of Company Capital Stock. As of the date hereof,
neither Sysco nor Merger Sub owns any shares of Common Stock or has the right to
acquire any equity interest in the Company other than pursuant to this
Agreement.
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ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of each party under this Agreement to effect the
Merger shall be subject to the fulfillment, on or prior to the Closing, of each
of the following conditions, unless and to the extent any such condition is
expressly waived in writing by Sysco, Merger Sub or the Company, as the case may
be:
6.1 Shareholder Approval. If required by the NJBCA, this Agreement and
the Merger shall have been approved and adopted by the requisite votes of the
Stockholders.
6.2 Purchase of Shares in the Offer. Merger Sub shall have accepted for
exchange all of the Shares tendered pursuant to the Offer unless the failure to
consummate the Offer is the result of a willful and material breach of this
Agreement by the party asserting such condition.
6.3 No Government Action. There shall not be pending any action or
proceeding before any Governmental Authority by any Government Authority in
which it is sought to restrain or prohibit the transactions contemplated by this
Agreement.
6.4 No Illegality. No federal or state statute, rule, regulation or
injunction shall have been enacted, entered, promulgated or enforced by any
court or governmental authority which is in effect and has the effect of making
the transactions contemplated hereby illegal or otherwise prohibiting the
consummation of the transactions contemplated hereby.
6.5 Form S-4. Form S-4 or the Post-Effective Amendment, as the case may
be, shall have become effective under the Securities Act and shall not be the
subject of any stop order or proceeding seeking a stop order, if any.
6.6 NYSE Listing. The shares of Sysco Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, subject to official
notice of issuance.
6.7 Fairness Opinion. Piper Jaffray shall have delivered the Fairness
Opinion to the Company Board and such Fairness Opinion shall not have been
modified or withdrawn prior to the payment for the Shares in the Offer.
ARTICLE 7
TERMINATION; TERMINATION FEES
7.1 Termination. This Agreement may be terminated (and, in the case of
subsection (h) below, shall be terminated) at any time before the Closing Date
(notwithstanding any approval of the Merger and adoption of this Agreement by
the Stockholders):
(a) by mutual written consent of Sysco and the Company; or
(b) by Sysco if, prior to the acceptance for payment of any Shares
under the Offer, (i) there occurs in respect of the Company or the
Business, a Material Adverse Effect or (ii) there has been a breach by the
Company of any representation, warranty, covenant or agreement contained in
this Agreement that is not curable and such breach would give rise to a
failure of the condition set forth in (a) or (b) of Annex A hereof; in
either case provided that Sysco is not then in breach in any material
respect of any of its obligations under this Agreement; or
(c) by the Company if, prior to the acceptance for payment of any
Shares under the Offer, (i) there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement
on the part of Sysco, provided that the Company is not then in breach in
any material respect of any of its obligations under this Agreement; or
(d) by the Company or Sysco (only if no Shares were purchased by
Merger Sub pursuant to the Offer) if the Merger has not been consummated by
August 31, 2001, provided that the party seeking
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to exercise such right is not then in breach in any material respect of any
of its obligations under this Agreement; or
(e) by either Sysco or the Company if a Stockholders Meeting is
required under the NJBCA and the Merger shall fail to receive the requisite
vote for approval at the Stockholders Meeting; or
(f) by the Company, prior to acceptance for payment of any Shares
under the Offer, in order to enter into a definitive written agreement with
respect to an Alternative Transaction with a Third Party, provided that,
prior to entering into such definitive agreement, the Company shall have
given Sysco notice of such Alternative Transaction as required by Section
3.5 and is otherwise not prohibited by Section 3.5 from entering into such
agreement; or
(g) by Sysco if a Triggering Event shall have occurred.
For purposes of this Agreement, a "Triggering Event" shall be deemed
to have occurred if, (i) the Company Board or any committee thereof shall
have approved or recommended to the Stockholders any Alternative
Transaction, (ii) the Company Board or any committee thereof shall for any
reason have withdrawn or shall have amended or modified in a manner adverse
to Sysco the Company Recommendations; (iii) the Company shall have failed
to include in the Offer Documents, the Schedule 14D-9 or the Post-Effective
Amendment the Company Recommendations; or (iv) a tender or exchange offer
relating to 40% or more of the Shares shall have been commenced by a person
unaffiliated with Sysco, and Company shall not have sent to its
Stockholders pursuant to Rule 14e-2 promulgated under the Securities Act,
within 10 business days after such tender or exchange offer is first
published sent or given, a statement disclosing that the Company recommends
rejection of such tender or exchange offer.
(h) This Agreement shall automatically terminate, without any action
on the part of Sysco, Merger Sub or the Company, if there shall be validly
tendered at the Final Expiration Date such number of Shares which, when
added to the Shares, if any, owned by Sysco or Merger Sub, would constitute
less than thirty five percent (35%) of the Shares outstanding on a fully
diluted basis.
Sysco shall not have the right to terminate this Agreement as a result
of or arising out of any action taken by the Company or its officers,
directors, employees, investment bankers, representatives or agents in
connection with the contested proxy solicitation involving the Company's
2001 Annual Meeting of Stockholders that is not in breach of any provision
hereof.
7.2 Effect of Termination.
(a) Termination Fee. The Company shall pay to Sysco in cash the sum of
$5,500,000 ("Termination Fee") plus all reasonable out-of-pocket fees and
expenses incurred by Sysco in connection with this Agreement, including, without
limitation, all filing fees with all Governmental Authorities, reasonable
out-of-pocket legal fees and expenses incurred by Sysco for accounting advice
and environmental due diligence if:
(i) within four (4) months after the date of this Agreement, the
Company receives a proposal for an Alternative Transaction (including the
commencement of a tender offer made directly to the Stockholders) from any
person or entity (other than Sysco or its Affiliates) and such Alternative
Transaction (including such tender offer) is consummated within twelve (12)
months after the date of this Agreement (a "Covered Alternative
Transaction"); or
(ii) (A) this Agreement is terminated by the Company pursuant to
Section 7.1(f), or (B) this Agreement is terminated by Sysco pursuant to
Section 7.1(g).
(b) Timing of Payment of Termination Fee. The Termination Fee shall be due
and payable to Sysco within ten (10) days of the first to occur of (i) the
consummation of a Covered Alternative Transaction and (ii) the events set forth
in Section 7.2(a)(ii).
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(c) Effect of Termination. Termination of this Agreement pursuant to
Section 7.1 shall terminate all obligations and liabilities of the parties to
each other hereunder, except for the obligations under Sections 3.6, 3.8,
7.2(a), 7.2(b) and 8.14 hereof.
(d) Sole and Exclusive Remedy. Each party hereto acknowledges and agrees
that such party's sole and exclusive remedy with respect to any losses,
liabilities, costs, expenses or damages of any kind and all claims for any
breach or liability under this Agreement or otherwise relating to the subject
matter hereof and the transactions contemplated hereby shall be solely in
accordance with, and limited by, Section 7.1, subsections (a), (b) and (c) of
Section 7.2 and Section 8.17 hereof, provided, however, if all conditions to the
obligations to the applicable party hereto at Closing contained in Article 6,
Annex A or Annex B, as applicable, have been satisfied (or waived by the party
entitled to waive such conditions) and such party does not proceed with the
Closing, all remedies available to the other party, at law or in equity, on
account of such failure to close, shall be preserved including, without
limitation, specific performance. Without limiting the generality of the
foregoing, the parties hereto agree that the payment provided for in Section
7.2(a) shall be the sole and exclusive remedy of Sysco and the Merger Sub upon
termination of this Agreement under the circumstances set forth in Section
7.2(a) and such remedies shall be limited to the sum stipulated in Section
7.2(a) regardless of the circumstances (including willful or deliberate conduct)
giving rise to such termination. The provisions of this Section 7.2 shall
survive any termination of this Agreement.
ARTICLE 8
MISCELLANEOUS PROVISIONS
8.1 Risk of Loss. The risk of loss occurring with respect to Guest Supply
prior to the Closing shall remain the liability of Guest Supply.
8.2 Severability. If any provision of this Agreement is prohibited by the
laws of any jurisdiction as those laws apply to this Agreement, that provision
shall be ineffective to the extent of such prohibition and/or shall be modified
to conform with such laws, without invalidating the remaining provisions hereto.
8.3 Modification and Waiver. This Agreement may not be changed or
modified except in writing specifically referring to this Agreement and signed
by the Sysco, Merger Sub, and Guest Supply. No change, amendment or attempted
waiver of any provision hereof shall be binding on the other parties unless
reduced to writing and signed by Sysco, Merger Sub, and Guest Supply. Unless
specifically provided otherwise herein or agreed to by Sysco, Merger Sub, and
Guest Supply in writing, no modification, waiver, termination, rescission,
discharge or cancellation of this Agreement shall affect the right of the
parties hereto to enforce any claim, whether or not liquidated, which accrued
prior to the date of such modification, waiver, termination, rescission,
discharge, or cancellation of this Agreement, and no waiver of any provision or
of any default under this Agreement shall affect the right of any party to
enforce such provision or to exercise any right or remedy in the event of any
other default, whether or not similar.
8.4 Assignment, Survival and Binding Agreement. This Agreement, the
Transaction Documents and the Sysco Companies' Transaction Documents may not be
assigned by any party hereto without the prior written consent of the other
parties, provided that Sysco may assign this Agreement in whole or in part to
one or more wholly-owned subsidiaries without the consent of Guest Supply (but
no such assignment shall relieve Sysco of its obligations hereunder). The terms
and conditions hereof shall survive the Closing and shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, personal
representatives, successors and assigns.
8.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, with the same effect as
if the signatures thereto were in the same instrument. This Agreement shall be
effective and binding on all parties when all parties have executed and
delivered a counterpart of this Agreement.
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8.6 Notices. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, or sent by a recognized overnight
delivery service which guarantees next day delivery ("Overnight Delivery") or
mailed registered or certified mail, return receipt requested, postage prepaid,
transmitted or addressed to the intended recipient as set forth below:
If to the Company: Guest Supply, Inc.
4301 U.S. Highway One
Monmouth Junction, New Jersey 08852
Attention: Clifford W. Stanley
Telefax: (609) 514-7377
with copies to: (1) Thomas M. Haythe, Esq.
General Counsel
90 Park Avenue
15th Floor
New York, New York 10016
Telefax: (212) 210-9444
and
(2) Bradley P. Cost, Esq
Torys
237 Park Avenue
New York, New York 10017
Telefax: (212) 682-0200
If to the Sysco or Merger Sub: Sysco Corporation
1390 Enclave Parkway
Houston, Texas 77077-2099
Attention: Michael C. Nichols, Esq.
Telefax: (281) 584-2524
with a copy to: Jonathan Golden, Esq.
Arnall Golden Gregory LLP
1201 West Peachtree Street
2800 One Atlantic Center
Atlanta, Georgia 30309-3450
Telefax: (404) 873-8701
or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first business day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by U.S.
mail, will be deemed received three (3) business days immediately following the
date sent.
8.7 Entire Agreement; No Third Party Beneficiaries. This Agreement,
together with the Exhibits, and Schedules referenced herein, constitutes the
entire agreement and supersedes any and all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and, except as otherwise expressly provided
herein, is not intended to confer upon any person other than Sysco, Guest Supply
and, after the Closing Date, the Stockholders, any rights or remedies hereunder.
8.8 Further Assurances. The parties to this Agreement agree to execute
and/or deliver, both before and after Closing, any additional information,
documents or agreements contemplated hereby and/or necessary or appropriate to
effect and consummate the transactions contemplated hereby. Subject to
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Section 3.8 hereof, Guest Supply agrees to provide to Sysco before the Closing
such information as Sysco may reasonably request in order to consummate the
transactions contemplated hereby and to effect an orderly transition of the
Business following Closing.
8.9 Construction. Within this Agreement the singular shall include the
plural and the plural shall include the singular and any gender shall include
all other genders, all as the meaning and context of this Agreement shall
require. In connection with any action or event which by the terms hereof
requires consent of a party hereto, such consent shall not be unreasonably
withheld or delayed.
8.10 Choice of Law. This Agreement and all documents executed in
connection therewith shall be governed by, and construed in accordance with, the
laws of the State of New Jersey, regardless of the laws that might otherwise
govern under applicable principles of conflict of laws thereof.
8.11 Consent to Jurisdiction. Each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any federal court located in the
State of New Jersey or any New Jersey state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (c)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of New Jersey or a New Jersey state court.
8.12 Schedules and Exhibits; Sections and Articles. All Schedules and
Exhibits referenced in this Agreement, whether or not attached hereto, shall be
deemed to be a part of this Agreement, and this Agreement shall be construed in
accordance therewith.
8.13 Definition of Days. For purposes of this Agreement, a "business day"
is a day on which banks in the New York, New York are open for business but
shall not include a Saturday or Sunday or federal holiday. Notwithstanding
anything to the contrary in this Agreement, no action shall be required of the
parties hereto except on a business day and in the event an action is required
on a day which is not a business day, such action shall be required to be
performed on the next succeeding day which is a business day. All references to
"day" or "days" shall mean calendar days unless specified as a "business day."
8.14 Expenses. Except as otherwise set forth in Section 7.2(a), each
party will pay its own legal, accounting and other expenses incurred by such
party or on its behalf in connection with this Agreement and the transactions
contemplated herein.
8.15 Defined Terms.
(a) The best knowledge. As used herein, the terms "the best knowledge of
Guest Supply" or "the best knowledge of the Company" or "the knowledge of Guest
Supply" or "the knowledge of the Company" or words of similar import shall mean
the actual knowledge of either of the CEO/President or the Vice President of
Finance on the date of this Agreement or on the Closing Date.
(b) Affiliate. As used herein, the term "Affiliate" shall have the meaning
set forth in Rule 144 promulgated under the Securities Act.
8.16 Survival. The representations and warranties of Sysco, Merger Sub
and the Company contained in this Agreement shall survive until the earlier to
occur of (i) the termination of this Agreement, or (ii) the third anniversary of
the date hereof.
8.17 Injunctive Relief. In the event of a breach or threatened breach by
any party hereto of any of its covenants or other obligations hereunder,
including, without limitation, the parties' respective obligations to close the
transactions contemplated hereby, each of the parties hereby consents and agrees
that the non-breaching party shall be entitled to an injunction or similar
equitable relief restraining the breaching party(s) from committing or
continuing any such breach or threatened breach or granting specific performance
of any act required to be performed by the breaching party(s) under any such
provision, without the necessity of showing any actual damage or that money
damages would not afford an adequate remedy and without the necessity of posting
any bond or other security.
* * *
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IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement under seal as of the date first written above.
GUEST SUPPLY:
GUEST SUPPLY, INC.
By: /s/ CLIFFORD W. STANLEY
------------------------------------
Print Name: Clifford W. Stanley
------------------------------------
Title: President
------------------------------------
SYSCO:
SYSCO CORPORATION
By: /s/ MICHAEL C. NICHOLS
------------------------------------
Print Name: Michael C. Nichols
------------------------------------
Title: Vice President
------------------------------------
MERGER SUB:
SYSCO FOOD SERVICES OF NEW
JERSEY, INC.
By: /s/ MICHAEL C. NICHOLS
------------------------------------
Print Name: Michael C. Nichols
------------------------------------
Title: President
------------------------------------
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SCHEDULE I
DOCUMENTS EXECUTED PRIOR TO OR SIMULTANEOUS WITH SIGNING OF MERGER AGREEMENT
1. Employment Agreements (including termination of prior Employment
Agreements)
- Clifford W. Stanley
- Paul T. Xenis
- R. Eugene Biber
2. Severance Payment Waivers
- Clifford W. Stanley
- Paul T. Xenis
- R. Eugene Biber
3. Employment Amendment and Waiver of Severance Payment
- Teri E. Unsworth
4. Non Compete of Clifford Stanley
5. Non Compete of Paul T. Xenis
6. Torys Opinion
7. Arnall Golden Gregory LLP Opinion
8. Opinion of Pepper Hamilton, LLP
9. Fairness Opinion
10. Secretary's Certificates re: Charter, Bylaws, Incumbency and Certified
Resolutions
11. Amendment No. 2 to Rights Agreement
12. Waiver of Reload Provision of Options under 1993 Option Plan
- Edward J. Walsh
- George S. Zabrycki
- R. Eugene Biber
- Thomas M. Haythe
- Clifford W. Stanley
- Paul T. Xenis
- Teri E. Unsworth
13. Tender Agreement
- Clifford W. Stanley
- Paul T. Xenis
- R. Eugene Biber
- Edward J. Walsh
- George S. Zabrycki
- Thomas M. Haythe
- Teri E. Unsworth
14. Amendment to General Counsel Agreement
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APPENDIX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, subject to the terms of
this Agreement, Merger Sub shall not be required to accept for exchange or
exchange or deliver any shares of Sysco Common Stock (or in the case of
fractional shares, cash) for (subject to any applicable rules and regulations of
the SEC, including Rule 14e-1(c) under the Exchange Act (relating to Merger
Sub's obligation to pay for or return tendered Shares after the termination or
withdrawal of the Offer)) any Shares tendered, if by the expiration of the Offer
(as it may be extended in accordance with the requirements of Section 1.1), (1)
the Minimum Condition shall not have been satisfied, (2) the applicable waiting
period under the HSR Act and any other applicable antitrust laws shall not have
expired or been terminated, (3) the Form S-4 shall not have become effective
under the Securities Act or shall be the subject of any stop order or
proceedings seeking a stop order, (4) the shares of Sysco Common Stock to be
issued in the Offer and the Merger shall not have been approved for listing on
the NYSE, subject to official notice of issuance, or (5) any of the following
conditions exist:
(a) The representations and warranties of the Company set forth in
this Agreement that are qualified as to "materiality," "in all material
respects," "Material Adverse Effect" or similar qualifier or threshold
shall not be true and correct as of the date of this Agreement and as of
the expiration of the Offer (including any extension thereof) (except to
the extent expressly made as of an earlier date, in which case as of such
date), or any of the representations and warranties set forth in this
Agreement that are not so qualified shall not be true and correct in all
material respects as of the date of this Agreement and as of the expiration
of the Offer (except to the extent expressly made as of an earlier date, in
which case as of such date); provided that this condition shall not be
deemed to have been satisfied unless any such breaches of representation
and warranty (without regard to any "materiality," "in all material
respects," "Material Adverse Effect" or similar qualifier or threshold),
individually or in the aggregate, have had a Material Adverse Effect.
(b) The Company shall have failed to perform and comply with all
agreements, conditions and obligations required by this Agreement to be
performed or complied with by it prior to or at the expiration of the Offer
and such failure has had a Material Adverse Effect.
(c) There shall be pending any action or proceeding before any
Governmental Authority in the United States by any Governmental Authority
in the United States in which it is sought to restrain or prohibit the
transactions contemplated by this Agreement.
(d) There shall exist any Material Adverse Effect.
(e) Any federal or state statute, rule, regulation, injunction, order
or decree shall have been enacted, entered, promulgated or enforced by any
Governmental Authority in the United States, Canada or England which is in
effect and has the effect of making the transactions contemplated hereby
illegal or otherwise prohibiting the consummation of the transactions
contemplated hereby.
(f) This Agreement has been terminated in accordance with Section 7.1
hereof.
(g) The Company shall not have obtained the ISRA Approvals.
(h) The Fairness Opinion shall have been modified or withdrawn.
(i) The Company shall not have delivered the Guest Supply S-4 Comfort
Letter to Sysco.
(j) The Company shall not have caused an opinion of counsel to the
Company to be delivered to Sysco substantially in the form of Schedule
A(j).
(k) The Company shall not have delivered to Sysco a certificate signed
by an authorized officer on behalf of the Company certifying that the
conditions set forth in subsections (a) and (b) of this Annex A do not
exist on the date of the acceptance for payment of the Shares in the Offer.
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The foregoing conditions are for the sole benefit of Sysco and Merger Sub
and may be asserted by Sysco regardless of the circumstances (including any
action or omission by Sysco or Merger Sub, other than a material and willful
breach by Sysco or Merger Sub of this Agreement) giving rise to any such
condition or (other than the Minimum Condition and subsections (f) and (h)
above) may, subject to the terms of this Agreement, be waived by Sysco and
Merger Sub in their sole discretion in whole at any time or in part from time to
time. The failure by Sysco or Merger Sub at any time to exercise its rights
under any of the foregoing conditions shall not be deemed a waiver of any such
right; the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right which may be
asserted at any time or from time to time.
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APPENDIX B
TERMINATION OF OFFER
In accordance with Section 1.14 of this Agreement, in the event the Offer
is terminated pursuant to Section 1.1(c), this Agreement shall be deemed amended
to incorporate the following terms and conditions without any further action by
Sysco, Merger Sub or the Company:
Section 1. Article 6 shall be amended and restated in its entirety as
follows:
"ARTICLE 6
CONSUMMATION OF THE MERGER
The obligation of Sysco and Merger Sub under this Agreement to effect the
Merger shall be subject to the fulfillment, on or prior to the Closing, of each
of the following conditions, unless and to the extent any such condition is
expressly waived in writing by Sysco:
6.1 Representations and Warranties True at Closing. The representations
and warranties of the Company set forth in this Agreement that are qualified as
to "materiality," "in all material respects," "Material Adverse Effect" or
similar qualifier or threshold shall be true and correct as of the date of this
Agreement and as of the Closing Date (except to the extent expressly made as of
an earlier date, in which case as of such date), and the representations and
warranties set forth in this Agreement that are not so qualified shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date (except to the extent expressly made as of an earlier date, in
which case as of such date); provided that this condition shall be deemed to
have been satisfied unless any such breaches of representation and warranty
(without regard to any "materiality," "in all material respects," "Material
Adverse Effect" or similar qualifier or threshold), individually or in the
aggregate, have had a Material Adverse Effect.
6.2 Obligations Performed. The Company shall have performed and complied
with all agreements, conditions and obligations required by this Agreement to be
performed or complied with by it prior to or at the Closing except for any
failures which would not have a Material Adverse Effect.
6.3 Consents. The Company shall have obtained and delivered to Sysco
written consents of all persons or entities listed on Schedule 4.4 and
designated by an asterisk and all of such consents shall remain in full force
and effect at and as of the Closing.
6.4 Closing Deliveries. The Company shall have executed (where
applicable) and delivered to Sysco the following:
(i) a certified copy of the corporate resolutions of the Company Board
and Stockholders authorizing and approving the Merger and the execution,
delivery and performance by the Company of this Agreement and all other
documents, instruments and agreements contemplated by this Agreement to be
executed, delivered or performed by the Company, together with an
incumbency certificate with respect to officers of the Company executing
documents or instruments on behalf of the Company;
(ii) a certificate of the President of the Company certifying as to
the matters set forth in Sections 6.1, 6.2 and 6.3 hereof and as to the
satisfaction in all material respects of all other covenants of the Company
set forth in this Agreement;
(iii) an opinion of counsel to the Company substantially in the form
of Schedule B-6.4(iii);
(iv) the Certificates of Merger duly executed by the Company;
(v) Good Standing Certificates issued by the Secretary of State for
the states in which the Company is either organized or qualified as a
foreign corporation certifying that the Company is in
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good standing as a corporation (or applicable entity) under the laws of
said states, such certificates to be in form and substance acceptable to
Sysco and Merger Sub; and
(vi) evidence reasonably satisfactory to Sysco that the Company has
obtained the ISRA Approvals.
6.5 No Challenge. There shall not be pending any action or proceeding
before any Governmental Authority in the United States by any Governmental
Authority in the United States in which it is sought to restrain or prohibit the
transactions contemplated by this Agreement.
6.6 No Material Adverse Effect. There shall not exist any Material
Adverse Effect.
6.7 Legality. No federal or state statute, rule, regulation, injunction,
order or decree shall have been enacted, entered, promulgated or enforced by any
Governmental Authority in the United States, Canada or England which is in
effect and has the effect of making the transactions contemplated hereby illegal
or otherwise prohibiting the consummation of the transactions contemplated
hereby.
6.8 Regulatory Matters. The waiting period shall have expired or been
terminated under the HSR Act.
6.9 Issuance of Securities. The Merger shall have been approved at the
Stockholders Meeting and the Form S-4 shall have become effective under the
Securities Act prior to the mailing of the Proxy Statement by the Company to its
Stockholders and no stop order or proceedings seeking a stop order shall be
threatened by the SEC or shall have been initiated by the SEC.
The obligation of the Company under this Agreement to effect the Merger
shall be subject to the fulfillment, on or prior to the Closing, of each of the
following conditions, unless and to the extent any such condition is
specifically waived in writing by the Company:
6.10 Comfort Letters. The Company shall have caused to be delivered to
Sysco the Guest Supply S-4 Comfort Letter and the Guest Supply Merger Comfort
Letter.
6.11 Representations and Warranties True at Closing. The representations
and warranties made by Sysco and Merger Sub in to this Agreement shall be true
and correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made or given on
and as of the Closing Date.
6.12 Obligations Performed. Sysco and Merger Sub shall have performed and
complied in all material respects with all of their respective agreements,
conditions and obligations required by this Agreement which are to be performed
or complied with by them prior to or at the Closing.
6.13 Consents. Sysco and Merger Sub shall have obtained and delivered to
the Company written consents of all persons or entities listed on Schedule 5.3,
and all of such consents shall remain in full force and effect at and as of the
Closing.
6.14 Closing Deliveries. Sysco and Merger Sub shall have delivered to the
Company all of the following:
(i) written confirmation from Sysco's transfer agent that stock
certificates evidencing the shares of Sysco Common Stock, to be issued as
the Merger Consideration and the cash in lieu of fractional shares, have
been reserved for issuance upon the exchange provided for in Section 2.4;
(ii) certified copies of the corporate resolutions of the Board of
Directors of Sysco and of the Board of Directors and sole stockholder of
Merger Sub authorizing and approving the Merger and the execution, delivery
and performance by Sysco and Merger Sub of this Agreement and all other
documents, instruments and agreements contemplated by this Agreement,
together with incumbency certificates with respect to the respective
officers of Sysco and Merger Sub executing documents or instruments on
behalf of Sysco and Merger Sub;
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(iii) a certificate of an authorized officer of Sysco and Merger Sub
certifying as to the matters set forth in Sections 6.11, 6.12 and 6.13
hereof and as to the satisfaction in all material respects of all other
covenants of Sysco and Merger Sub, respectively, set forth herein;
(iv) the Certificates of Merger executed by Merger Sub;
(v) an Opinion of counsel to Sysco substantially in the form of
Schedule B-6.14(v)
(vi) Good Standing Certificates issued by the Secretary of State for
the State of Delaware certifying that Sysco and Merger Sub are in good
standing under the DGCL, such certificates to be in form and substance
reasonably satisfactory to the Company.
6.15 No Challenge. There shall not be pending any action or proceeding
before any Governmental Authority in the United States by any Governmental
Authority in the United States in which it is sought to restrain or prohibit
transactions contemplated by this Agreement.
6.16 Legality. No federal or state statute, rule, regulation, injunction,
order or decree shall have been enacted, entered, promulgated or enforced by any
Governmental Authority in the United States, Canada or England which is in
effect and has the effect of making the transactions contemplated herein illegal
or otherwise prohibiting the consummation of the transactions contemplated
herein.
6.17 Regulatory Matters. The Waiting Period shall have expired or been
terminated under the HSR Act.
6.18 Issuance of Securities. The Merger shall have been approved at the
Stockholders Meeting and the Form S-4 shall have become effective under the
Securities Act prior to the mailing of the Proxy Statement by the Company to its
Stockholders and no stop order or proceedings seeking a stop order shall be
threatened by the SEC or shall have been initiated by the SEC and the Sysco
Common Stock to be issued as Merger Consideration shall have been listed and
approved for trading on the NYSE (subject to notice of issuance)."
6.19 Fairness Opinion. The Fairness Opinion shall not have been modified
or withdrawn.
6.20 Comfort Letters. Sysco shall cause to be delivered to the Company
the Sysco S-4 Comfort Letter and the Sysco Merger Comfort Letter.
110
DISCLOSURE SCHEDULES
Schedule 3.7 Certain Definitions
Schedule 4.1(a) Jurisdictions and Qualifications of the Company
Schedule 4.1(b)(i) Subsidiaries
Schedule 4.1(b)(ii) Foreign Qualifications of the Subsidiaries
Schedule 4.2 Officers and Directors
Schedule 4.3 Liens
Schedule 4.4 Consents and Approvals
Schedule 4.5(a)(i) Issued and Outstanding Options
Schedule 4.5(a)(ii) Option Plans
Schedule 4.5(b) Ownership of Subsidiaries
Schedule 4.6 Compliance with Laws
Schedule 4.7 Licenses and Permits
Schedule 4.8 Liabilities
Schedule 4.9 Sufficiency of Assets
Schedule 4.10 Deposits
Schedule 4.11(a)(i) Accounts Receivable
Schedule 4.11(b) Indebtedness
Schedule 4.12 Tax Returns
Schedule 4.12(b) Submission of Tax Returns
Schedule 4.13 Intellectual Property
Schedule 4.14 Certain Material Contract Matters
Schedule 4.15 Litigation; Judgments
Schedule 4.16 List of Insurance Policies
Schedule 4.17(i) Independent Contractors
Schedule 4.17(ii) Employee Matters
Schedule 4.18(a) Employee Benefit Plans
Schedule 4.18(b) Parachute Payments
Schedule 4.20 Absence of Material Changes
Schedule 4.21(i) Bank Accounts
Schedule 4.21(ii) Powers of Attorney
Schedule 4.22 Certain Arrangements
Schedule 4.23 Environmental Matters
Schedule 4.25 Internet Presence
Schedule 4.29(a)(i) Real Property
Schedule 4.29(c) Zoning and Use
Schedule 5.3 No Conflict
111
ANNEX B
TENDER AGREEMENT
This Tender Agreement ("Agreement") is entered into as of January 22, 2001,
by and between SYSCO Corporation, a Delaware corporation ("Parent"), and
("Stockholder").
RECITALS
A. Parent, Sysco Food Services of New Jersey, Inc., a Delaware corporation
and a wholly owned subsidiary of Parent ("Merger Sub"), and Guest Supply, Inc.,
a New Jersey corporation (the "Company"), are entering into an Merger Agreement
and Plan of Reorganization of even date herewith (the "Merger Agreement") which
provides (subject to the conditions set forth therein) for the acquisition of
shares of Common Stock of the Company by Parent pursuant to a tender offer
followed by the merger of Merger Sub and the Company (the "Merger").
B. In order to induce Parent and Merger Sub to enter into the Merger
Agreement, Stockholder is entering into this Agreement.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1
CERTAIN DEFINITIONS
For purposes of this Agreement:
(a) "Company Common Stock" shall mean the common stock, no par value
per share, of the Company.
(b) "Expiration Date" shall mean the earliest of (i) the date upon
which the Merger Agreement is terminated; (ii) the date upon which the
Merger is effected; (iii) the date upon which all of the Stockholder's now
owned or hereafter acquired shares of Company Common Stock are purchased by
Parent or Merger Sub pursuant to the Offer (as defined in the Merger
Agreement) and (iv) the date on which the Offer terminates without the
purchase of Company Common Stock thereunder.
(c) Stockholder shall be deemed to "Own" or to have acquired
"Ownership" of a security if Stockholder: (i) is the record owner of such
security; or (ii) is the "beneficial owner" (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934) of such security.
(d) "Person" shall mean any (i) individual, (ii) corporation, limited
liability company, partnership or other entity, or (iii) governmental
authority.
(e) "Subject Securities" shall mean: (i) all securities of the Company
(including all shares of Company Common Stock and all options, warrants and
other rights to acquire shares of Company Common Stock) Owned by
Stockholder as of the date of this Agreement as set forth on the Schedule
attached hereto; and (ii) all additional securities of the Company
(including all additional shares of Company Common Stock and all additional
options, warrants and other rights to acquire shares of Company Common
Stock) of which Stockholder acquires Ownership during the period from the
date of this Agreement through the Expiration Date.
(f) A Person shall be deemed to have effected a "Transfer" of a
security if such Person directly or indirectly: (i) sells, pledges,
encumbers, grants an option with respect to, transfers or disposes of such
security or any interest in such security; or (ii) enters into an agreement
or commitment
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contemplating the possible sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein.
SECTION 2.
TENDER OF SHARES
2.1 Tender Agreement. Stockholder agrees, pursuant to the terms and
subject to the conditions set forth herein:
(a) to tender for exchange in the Offer all shares of Company Common
Stock currently held by Stockholder as set forth on the signature page
hereto and any additional shares of Company Common Stock acquired by
Stockholder (whether by purchase, upon conversion of options or convertible
securities, or otherwise) after the date of this Agreement (collectively,
the "Stockholder's Shares");
(b) as promptly as practicable (but no later than ten (10) business
days) after commencement of the Offer (or, in the case of shares of Company
Common Stock acquired by Stockholder after commencement of the Offer, as
promptly as practicable after such acquisition) Stockholder shall, as
appropriate, (x) deliver to the Exchange Agent (the "Exchange Agent")
designated in the Offer (i) a letter of transmittal with respect to the
Stockholder's Shares (other than the Tender Exception Shares as defined in
Section 2.3 below) complying with the terms of the Offer together with
instructions directing the Exchange Agent to make payment for the
Stockholder's Shares directly to Stockholder, (ii) a certificate or
certificates representing the Stockholder's Shares and (iii) all other
documents or instruments required to be delivered pursuant to the terms of
the Offer (collectively, the "Tender Documents"), and/or (y) instruct its
broker or such other Person who is the holder of record of any shares of
Common Stock Owned by Stockholder to tender such shares for exchange in the
Offer pursuant to the terms and conditions of the Offer; and
(c) Stockholder shall not withdraw any tender effected in accordance
with this Section 2.1; provided, however, that Stockholder shall have the
right to withdraw any tender effected in accordance with this Section 2.1
if the Merger Agreement is terminated.
2.2 Proxy. Stockholder hereby irrevocably (to the fullest extent
permitted by law) appoints and constitutes each of Merger Sub and Parent the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
the Subject Securities. Upon the execution hereof, all prior proxies given by
the Stockholder with respect to any of the Shares are hereby revoked, and the
Stockholder agrees that no subsequent proxies will be given with respect to any
of the Subject Securities.
This proxy is irrevocable, is coupled with an interest between Parent and
the Stockholder and is granted in consideration of Parent entering into the
Merger Agreement.
The attorneys and proxies named above will be empowered, and may exercise
this proxy, to vote the Shares at any time until the Expiration Date at any
meeting of the stockholders of the Company, however called, or in connection
with any solicitation of written consents from stockholders of the Company, (i)
in favor of the approval and adoption of the Merger Agreement and the approval
of the Merger, and in favor of each of the other actions contemplated by the
Merger Agreement, (ii) against any proposal for any recapitalization, merger,
sale of assets or other business combination between the Company and any person
or entity (other than the Merger) and (iii) against any action or agreement that
would result in a breach of any covenant, representation or warranty contained
in the Merger Agreement or would result in any obligation or agreement of the
Company under the Merger Agreement not being fulfilled or would result in the
Company being required to pay to Parent or Merger Sub the fee contemplated in
Section 7.2 of the Merger Agreement.
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The Stockholder may vote the Subject Securities on all other matters. This
proxy shall be binding upon the heirs, estate, executors, personal
representatives, successors and assigns of the Stockholder (including any
transferee of any of the Subject Securities).
This proxy shall terminate upon the Expiration Date.
2.3 Limited Sales of Subject Securities. Notwithstanding the provisions
of Section 2.1 or 2.2 above, Parent and Merger Sub hereby agree that Stockholder
shall be entitled to sell, transfer and dispose of through sales in the public
markets, at any time up to five (5) days prior to the expiration of the Offer
(the "Tender Deadline"), a number of Stockholder's Shares that shall not exceed
fifteen percent (15%) of the aggregate numbers of shares of Company Common Stock
included in, or acquirable by Stockholder pursuant to, the Subject Securities
referred to in clause (i) of Section 1(e) (the "Tender Exception Shares"). Any
Tender Exception Shares not disposed of by the Stockholder by the Tender
Deadline shall be subject to the provisions of Sections 2.1 and 2.2 above.
SECTION 3.
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
Stockholder hereby represents and warrants to Parent as follows:
3.1 Authorization, etc. Stockholder has the absolute and unrestricted
right, power, authority and capacity to execute and deliver this Agreement and
to perform his obligations hereunder and thereunder. This Agreement has been
duly executed and delivered by Stockholder and constitutes legal, valid and
binding obligations of Stockholder, enforceable against Stockholder in
accordance with their terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
3.2 No Conflicts or Consents.
(a) The execution and delivery of this Agreement by Stockholder do
not, and, to the Stockholder's knowledge as of the date of this Agreement,
the performance of this Agreement by Stockholder in accordance with its
terms will not: (i) conflict with or violate any law, rule, regulation,
order, decree or judgment applicable to Stockholder or by which he or any
of his properties is or may be bound or affected; or (ii) result in or
constitute (with or without notice or lapse of time) any breach of or
default under, or give to any other Person (with or without notice or lapse
of time) any right of termination, amendment, acceleration or cancellation
of, or result (with or without notice or lapse of time) in the creation of
any encumbrance or restriction on any of the Subject Securities pursuant
to, any contract to which Stockholder is a party or by which Stockholder or
any of his affiliates or properties is or may be bound or affected.
(b) The execution and delivery of this Agreement by Stockholder do
not, and the performance of this Agreement by Stockholder will not, require
any consent or approval of any Person.
3.3 Title to Securities. As of the date of this Agreement: (a)
Stockholder holds of record (free and clear of any encumbrances or restrictions)
the number of outstanding shares of Company Common Stock set forth under the
heading "Shares Held of Record" on the Schedule attached hereto; (b) Stockholder
holds (free and clear of any encumbrances or restrictions) the options, warrants
and other rights to acquire shares of Company Common Stock set forth under the
heading "Options and Other Rights" on the Schedule attached hereto; (c)
Stockholder Owns the additional securities of the Company set forth under the
heading "Additional Securities Beneficially Owned" on the Schedule attached
hereto; and (d) Stockholder does not directly or indirectly Own any shares of
capital stock or other securities of the Company, or any option, warrant or
other right to acquire (by purchase, conversion or otherwise) any shares of
capital stock or other securities of the Company, other than the shares and
options, warrants and other rights set forth on the on the Schedule attached
hereto.
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3.4 Accuracy of Representations. The representations and warranties
contained in this Agreement are accurate in all respects as of the date of this
Agreement, will be accurate in all respects at all times through the Expiration
Date and will be accurate in all respects as of the date of the consummation of
the Merger as if made on that date.
3.5 Finder's Fees. No investment banker, broker, finder or other Person
is entitled to a commission or fee from Parent or Merger Sub in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of
Stockholder other than any arrangement or agreement made by or on behalf of the
Company.
SECTION 4.
ADDITIONAL COVENANTS OF STOCKHOLDER
4.1 Further Assurances. Stockholder agrees that, subject to the fiduciary
duty under applicable law of Stockholder as a director of the Company (if
Stockholder is such a director) as further provided in the Merger Agreement, it
shall not take any action which in any manner delays, deters or impedes the
successful completion of the Offer and the Merger in an expeditious manner. In
addition, from time to time and without additional consideration, Stockholder
shall execute and deliver, or cause to be executed and delivered, such
additional transfers, assignments, endorsements, proxies, consents and other
instruments, and shall take such further actions, as Parent may reasonably
request for the purpose of carrying out and furthering the intent of this
Agreement.
4.2 No Proxies for or Encumbrances on Subject Securities. Except pursuant
to the terms of this Agreement or the Tender Documents, Stockholder shall not,
without the prior written consent of Parent, directly or indirectly, (i) grant
any proxies or enter into any voting trust or other agreement or arrangement
with respect to the voting of any Subject Securities or (ii) sell, assign,
transfer, encumber or otherwise dispose of, or enter into any contract, option
or other arrangement or understanding with respect to the direct or indirect
sale, assignment, transfer, encumbrance or other disposition of, any Subject
Securities during the term of this Agreement.
4.3 No Shopping. Stockholder, in the capacity as a stockholder, shall not
directly or indirectly, subject to the fiduciary duty under applicable law of
Stockholder as a director of the Company (if Stockholder is such a director),
take any action prohibited by Section 3.5 of the Merger Agreement.
4.4 Conduct of Stockholder. Stockholder will not (i) take, agree or
commit to take any action that would make any representation and warranty of
Stockholder hereunder inaccurate in any respect as of any time prior to the
termination of this Agreement or (ii) omit, or agree or commit to omit, to take
any reasonable action necessary to prevent any such representation or warranty
from being inaccurate in any respect at any such time.
4.5 Disclosure. Stockholder hereby permits Parent to publish and disclose
in the offer documents and, if approval of the Company's stockholders is
required under applicable law, a proxy statement (including all documents and
schedules to be filed in connection therewith with the SEC) such Stockholder's
identity and details regarding his ownership of shares of Company Common Stock
and the nature of his commitments, arrangements and understandings under this
Agreement.
4.6 Action by the Board of Directors of the Company. Stockholder agrees
that, subject to the fiduciary duty under applicable law of Stockholder as a
director of the Company (if Stockholder is such a director), he shall take such
actions at the first meeting of the Board of Directors of the Company following
the Effective Time (as defined in the Merger Agreement) as shall be necessary to
permit the Company to comply with its obligations under Section 1.4 of the
Merger Agreement including, without limitation, voting to increase the size of
the Board of Directors of the Company, voting to elect as directors of the
Company those individuals designated by Sysco and/or resigning as a director of
the Company.
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SECTION 5.
MISCELLANEOUS
5.1 Expenses. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such costs and expenses.
5.2 Notices. Any notice or other communication required or permitted to
be delivered to either party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other party): if to
Stockholder: at the address set forth below Stockholder's signature on the
signature page hereof if to Parent: SYSCO Corporation, 1390 Enclave Parkway,
Houston, TX 77077-2099, Attn: General Counsel
5.3 Severability. If any provision of this Agreement or any part of any
such provision is held under any circumstances to be invalid or unenforceable in
any jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement. Each provision of this
Agreement is separable from every other provision of this Agreement, and each
part of each provision of this Agreement is separable from every other part of
such provision.
5.4 Entire Agreement. This Agreement, the Proxy and any other documents
delivered by the parties in connection herewith constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings between the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon either party unless made in writing and signed
by both parties.
5.5 Assignment; Binding Effect. Except as provided herein, neither this
Agreement nor any of the interests or obligations hereunder may be assigned or
delegated by Stockholder, and any attempted or purported assignment or
delegation of any of such interests or obligations shall be void. Subject to the
preceding sentence, this Agreement shall be binding upon Stockholder and his
heirs, estate, executors, personal representatives, successors and assigns, and
shall inure to the benefit of Parent and its successors and assigns. Without
limiting any of the restrictions set forth in this Agreement, this Agreement
shall be binding upon any Person to whom any Subject Securities are transferred
other than with respect to Subject Securities transferred pursuant to Section
2.3. Nothing in this Agreement is intended to confer on any Person (other than
Parent and its successors and assigns) any rights or remedies of any nature.
5.6 Specific Performance. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the Proxy was
not performed in accordance with its specific terms or was otherwise breached.
Stockholder agrees that, in the event of any breach or threatened breach by
Stockholder of any covenant or obligation contained in this Agreement or in the
Proxy, Parent shall be entitled (in addition to any other remedy that may be
available to it, including monetary damages) to seek and obtain (a) a decree or
order of specific performance to enforce the observance and performance of such
covenant or obligation, and (b) an injunction restraining such breach or
threatened breach. Stockholder further agrees that neither Parent nor any other
Person shall be required to obtain, furnish or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy referred
to in this Section 5.6, and Stockholder irrevocably waives any right he may have
to require the obtaining, furnishing or posting of any such bond or similar
instrument.
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5.7 Non-Exclusivity. The rights and remedies of Parent under this
Agreement are not exclusive of or limited by any other rights or remedies which
it may have, whether at law, in equity, by contract or otherwise, all of which
shall be cumulative (and not alternative). Without limiting the generality of
the foregoing, the rights and remedies of Parent under this Agreement, and the
obligations and liabilities of Stockholder under this Agreement, are in addition
to their respective rights, remedies, obligations and liabilities under common
law requirements and under all applicable statutes, rules and regulations.
Nothing in this Agreement shall limit any of Stockholder's obligations, or the
rights or remedies of Parent, under any Affiliate Agreement between Parent and
Stockholder; and nothing in any such Affiliate Agreement shall limit any of
Stockholder's obligations, or any of the rights or remedies of Parent, under
this Agreement.
5.8 Governing Law; Venue.
(a) This Agreement shall be construed in accordance with, and governed
in all respects by, the laws of the State of Delaware (without giving
effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to this
Agreement or the Proxy or the enforcement of any provision of this
Agreement or the Proxy shall be brought or otherwise commenced in any state
or federal court located in the State of Delaware. Each of Stockholder and
Parent:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the State of
Delaware in connection with any such legal proceeding;
(ii) agrees that service of any process, summons, notice or
document by U.S. mail addressed to him at the address set forth below
shall constitute effective service of such process, summons, notice or
document for purposes of any such legal proceeding;
(iii) agrees that each state and federal court located in the State
of Delaware shall be deemed to be a convenient forum; and
(iv) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or
federal court located in the State of Delaware, any claim that
Stockholder is not subject personally to the jurisdiction of such court,
that such legal proceeding has been brought in an inconvenient forum,
that the venue of such proceeding is improper or that this Agreement or
the subject matter of this Agreement may not be enforced in or by such
court.
(c) EACH OF STOCKHOLDER AND PARENT IRREVOCABLY WAIVES THE RIGHT TO A
JURY TRIAL IN CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS
AGREEMENT OR THE PROXY OR THE ENFORCEMENT OF ANY PROVISION OF THIS
AGREEMENT OR THE PROXY.
5.9 Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
5.10 Captions. The captions contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
5.11 Attorneys' Fees. If any legal action or other legal proceeding
relating to this Agreement or the enforcement of any provision of this Agreement
is brought against Stockholder, the prevailing party shall be entitled to
recover reasonable attorneys' fees, costs and disbursements (in addition to any
other relief to which the prevailing party may be entitled).
5.12 Waiver. No failure on the part of Parent to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of
Parent in exercising any power, right, privilege or
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remedy under this Agreement, shall operate as a waiver of such power, right,
privilege or remedy; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or of
any other power, right, privilege or remedy. Parent shall not be deemed to have
waived any claim available to Parent arising out of this Agreement, or any
power, right, privilege or remedy of Parent under this Agreement, unless the
waiver of such claim, power, right, privilege or remedy is expressly set forth
in a written instrument duly executed and delivered on behalf of Parent; and any
such waiver shall not be applicable or have any effect except in the specific
instance in which it is given.
5.13 Termination. This Agreement will terminate immediately upon the
Expiration Date.
5.14 Construction.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender
shall include the masculine and neuter genders; and the neuter gender shall
include masculine and feminine genders.
(b) The parties agree that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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In Witness Whereof, Parent and Stockholder have caused this Tender
Agreement to be executed as of the date first written above.
SYSCO CORPORATION
By:
----------------------------------
Stockholder
By:
----------------------------------
Address:
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SCHEDULE
GUEST SUPPLY STOCKHOLDERS SUBJECT TO TENDER AGREEMENTS
NUMBER OF SHARES OF GUEST NUMBER OF SHARES OF
SUPPLY COMMON STOCK GUEST SUPPLY
BENEFICIALLY OWNED COMMON STOCK
BUT NOT HELD OF RECORD HELD OF RECORD
------------------------- -------------------
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The letter of transmittal, certificates for Guest Supply shares and any
other required documents should be sent or delivered by each Guest Supply
stockholder or his or her broker, dealer, commercial bank, trust company or
other nominee to the exchange agent at its address set forth below.
THE EXCHANGE AGENT FOR THE OFFER IS:
EquiServe Trust Company, N.A.
150 Royall Street
Canton, Massachusetts 02021
(781) 575-3170
or call toll free
(800) 730-4001
Any questions or requests for assistance or additional copies of the
prospectus, the letter of transmittal and the notice of guaranteed delivery and
related exchange offer materials may be directed to the information agent at its
telephone number and location listed below. You may also contact your local
broker, commercial bank, trust company or nominee for assistance concerning the
offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500
or call toll free
(800) 322-2885
121
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law and the Restated
Certificate of Incorporation, as amended, and the Amended and Restated Bylaws of
SYSCO contain provisions covering indemnification of corporate directors and
officers against certain liabilities and expenses incurred as a result of
proceedings involving such persons in their capacities as directors and
officers, including proceedings under the Securities Act and the Exchange Act.
SYSCO has entered into indemnity contracts and provides indemnity insurance
pursuant to which officers and directors are indemnified and insured against
liability or loss under certain circumstances which may include liability or
related loss under the Securities Act and the Exchange Act.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2.1+ -- Merger Agreement and Plan of Reorganization, dated as of
January 22, 2001, among SYSCO, Sysco Food Services of New
Jersey and Guest Supply (Incorporated by reference to
Annex A to the Prospectus contained in this Registration
Statement).
3.1 -- Restated Certificate of Incorporation (Incorporated by
reference to Exhibit 3(a) to Form 10-K for the year ended
June 28, 1997).
3.2 -- Certificate of Amendment of Certificate of Incorporation
increasing authorized shares (Incorporated by reference
to Exhibit 3(d) to Form 10-Q for the quarter ended
January 1, 2000).
3.3 -- Amended and Restated Bylaws of Sysco Corporation, as
amended May 12, 1999 (Incorporated by reference to
Exhibit 3(b) to Form 10-K for the year ended July 3,
1999).
3.4 -- Form of Amended Certificate of Designation, Preferences
and Rights of Series A Junior Participating Preferred
Stock (Incorporated by reference to Exhibit 3(c) to 10-K
for the year ended June 29, 1996).
4.1 -- Senior Debt Indenture, dated as of June 15, 1995, between
Sysco Corporation and First Union National Bank, as
Trustee (Incorporated by reference to Exhibit 4(a) to the
Registrant's Registration Statement on Form S-3 (No.
333-52897)).
4.2 -- First Supplemental Indenture, dated as of June 27, 1995,
between Sysco Corporation and First Union National Bank,
Trustee, as amended (Incorporated by reference to Exhibit
4(e) to the Registrant's Annual Report on Form 10-K for
the fiscal year ended June 29, 1996).
4.3 -- Second Supplemental Indenture, dated as of May 1, 1996,
between Sysco Corporation and First Union National Bank,
Trustee, as amended (Incorporated by reference to Exhibit
4(f) to the Registrant's Annual Report on Form 10-K for
the fiscal year ended June 29, 1996).
4.4 -- Third Supplemental Indenture, dated as of April 25, 1997,
between Sysco Corporation and First Union National Bank,
Trustee (Incorporated by reference to Exhibit 4(g) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 28, 1997).
II-1
122
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.5 -- Fourth Supplemental Indenture, dated as of April 25,
1997, between Sysco Corporation and First Union National
Bank, Trustee (Incorporated by reference to Exhibit 4(h)
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended June 28, 1997).
4.6 -- Fifth Supplemental Indenture, dated as of July 27, 1998,
between Sysco Corporation and First Union National Bank,
Trustee (Incorporated by reference to Exhibit 4(h) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 27, 1998).
4.7 -- Sixth Amendment and Restatement of Competitive Advance
and Revolving Credit Facility Agreement dated May 31,
1996 (Incorporated by reference to Exhibit 4(a) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 27, 1996).
4.8 -- Agreement and Seventh Amendment to Competitive Advance
and Revolving Credit Facility Agreement dated as of June
27, 1997 (Incorporated by reference to Exhibit 4(a) to
the Registrant's Annual Report on Form 10-K for the
fiscal year ended June 28, 1997).
4.9 -- Agreement and Eighth Amendment to Competitive Advance and
Revolving Credit Facility Agreement dated as of June 22,
1998 (Incorporated by reference to Exhibit 4(c) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended July 3, 1999).
4.10 -- Agreement and Ninth Amendment to Competitive Advance and
Revolving Credit Facility Agreement dated as of December
1, 1999 (Incorporated by reference to Exhibit 4(j) to the
Registrant's Quarterly Report on Form 10-Q for the
quarter year ended January 1, 2000).
5.1 -- Opinion of Arnall Golden Gregory LLP with respect to
legality of the securities to be registered
8.1 -- Opinion of Arnall Golden Gregory LLP regarding material
federal income tax consequences of the offer and the
merger.
8.2 -- Opinion of Torys regarding material federal income tax
consequences of the offer and the merger.
15.1 -- Letter from Arthur Andersen LLP re unaudited financial
statements.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of KPMG LLP.
23.3 -- Consent of Arnall Golden Gregory LLP (included in the
opinions filed as Exhibits 5.1 and 8.1 to this
Registration Statement).
23.4 -- Consent of Torys (included in the opinion filed as
Exhibit 8.2 to this Registration Statement).
23.5 -- Consent of U.S. Bancorp Piper Jaffray.
24.1* -- Powers of Attorney (included on the signature page of
this Registration Statement).
99.1* -- Form of Letter of Transmittal.
99.2* -- Form of Notice of Guaranteed Delivery.
II-2
123
EXHIBIT
NUMBER DESCRIPTION
------- -----------
99.3* -- Form of Letter to Brokers, Dealers, etc.
99.4* -- Form of Letter to Clients.
99.5* -- Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
99.6* -- Employment Agreement by and among Clifford W. Stanley,
Guest Supply, Inc., and Sysco Corporation dated January
22, 2001, and related Waiver Agreement and Noncompetition
Agreement.
99.7* -- Employment Agreement by and among Paul T. Xenis, Guest
Supply, Inc. and Sysco Corporation dated January 22,
2001, and related Waiver Agreement and Noncompetition
Agreement.
99.8* -- Employment Agreement by and among R. Eugene Biber, Guest
Supply, Inc., and Sysco Corporation dated January 22,
2001, and related Waiver Agreement.
99.9* -- Employment Agreement Amendment and Acknowledgement by and
among Teri E. Unsworth, Guest Supply, Inc. and Sysco
Corporation.
99.10 -- Form of Tender Agreement dated January 22, 2001, a
substantially similar version of which has been executed
by Clifford W. Stanley, Paul T. Xenis, R. Eugene Biber,
Edward J. Walsh, George S. Zabrycki, Thomas M. Haythe and
Teri E. Unsworth (Incorporated by reference to Annex B to
the Prospectus contained in this Registration Statement).
99.11* -- Amendment No. 2 dated January 22, 2001 to General Counsel
Agreement between Guest Supply and Thomas M. Haythe.
---------------
* Previously filed.
+ In accordance with Item 601(b)(2) of Regulation S-K, the schedules have been
omitted and a list briefly describing the schedules is at the end of Annex A.
SYSCO will furnish supplementally a copy of any omitted schedule to the
Commission upon request.
(b) Not applicable.
(c) The fairness opinion of U.S. Bancorp Piper Jaffray is attached as an
exhibit to Guest Supply's Schedule 14D-9 which was mailed to Guest Supply's
stockholders together with the prospectus and other offering materials included
in or attached as exhibits to the Registration Statement on Form S-4.
ITEM 22. UNDERTAKINGS.
1. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
2. That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
II-3
124
1934 that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
3. The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day
of receipt of such request, and to send the incorporated documents by
first-class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
4. The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject of
and included in the registration statement when it became effective.
II-4
125
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston and State of
Texas, on the 2nd day of March, 2001.
SYSCO CORPORATION
By: /s/ CHARLES H. COTROS
------------------------------------
Charles H. Cotros
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ CHARLES H. COTROS Chairman, Chief Executive Officer and March 2, 2001
--------------------------------------------------- Director (principal executive
Charles H. Cotros officer)
/s/ JOHN K. STUBBLEFIELD, JR. Executive Vice President, Finance and March 2, 2001
--------------------------------------------------- Administration (principal financial
John K. Stubblefield, Jr. and accounting officer)
* Director March 2, 2001
---------------------------------------------------
John W. Anderson
* Director March 2, 2001
---------------------------------------------------
Colin G. Campbell
* Director March 2, 2001
---------------------------------------------------
Judith B. Craven
* Director March 2, 2001
------------------------------------------------
Frank A. Godchaux III
* Director March 2, 2001
---------------------------------------------------
Jonathan Golden
* Director March 2, 2001
---------------------------------------------------
Thomas E. Lankford
* Director March 2, 2001
---------------------------------------------------
Richard G. Merrill
II-5
126
SIGNATURE TITLE DATE
--------- ----- ----
* Director March , 2001
---------------------------------------------------
Frank H. Richardson
* Director March , 2001
---------------------------------------------------
Richard J. Schnieders
* Director March , 2001
---------------------------------------------------
Phyllis S. Sewell
* Director March , 2001
---------------------------------------------------
John F. Woodhouse
By: /s/ CHARLES H. COTROS
----------------------------------------------
Charles H. Cotros
Attorney-in-Fact
II-6
127
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2.1+ -- Merger Agreement and Plan of Reorganization, dated as of
January 22, 2001, among SYSCO, Sysco Food Services of New
Jersey and Guest Supply (Incorporated by reference to
Annex A to the Prospectus contained in this Registration
Statement).
3.1 -- Restated Certificate of Incorporation (Incorporated by
reference to Exhibit 3(a) to Form 10-K for the year ended
June 28, 1997).
3.2 -- Certificate of Amendment of Certificate of Incorporation
increasing authorized shares (Incorporated by reference
to Exhibit 3(d) to Form 10-Q for the quarter ended
January 1, 2000).
3.3 -- Amended and Restated Bylaws of Sysco Corporation, as
amended May 12, 1999 (Incorporated by reference to
Exhibit 3(b) to Form 10-K for the year ended July 3,
1999).
3.4 -- Form of Amended Certificate of Designation, Preferences
and Rights of Series A Junior Participating Preferred
Stock (Incorporated by reference to Exhibit 3(c) to 10-K
for the year ended June 29, 1996).
4.1 -- Senior Debt Indenture, dated as of June 15, 1995, between
Sysco Corporation and First Union National Bank, as
Trustee (Incorporated by reference to Exhibit 4(a) to the
Registrant's Registration Statement on Form S-3 (No.
333-52897)).
4.2 -- First Supplemental Indenture, dated as of June 27, 1995,
between Sysco Corporation and First Union National Bank,
Trustee, as amended (Incorporated by reference to Exhibit
4(e) to the Registrant's Annual Report on Form 10-K for
the fiscal year ended June 29, 1996).
4.3 -- Second Supplemental Indenture, dated as of May 1, 1996,
between Sysco Corporation and First Union National Bank,
Trustee, as amended (Incorporated by reference to Exhibit
4(f) to the Registrant's Annual Report on Form 10-K for
the fiscal year ended June 29, 1996).
4.4 -- Third Supplemental Indenture, dated as of April 25, 1997,
between Sysco Corporation and First Union National Bank,
Trustee (Incorporated by reference to Exhibit 4(g) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 28, 1997).
4.5 -- Fourth Supplemental Indenture, dated as of April 25,
1997, between Sysco Corporation and First Union National
Bank, Trustee (Incorporated by reference to Exhibit 4(h)
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended June 28, 1997).
4.6 -- Fifth Supplemental Indenture, dated as of July 27, 1998,
between Sysco Corporation and First Union National Bank,
Trustee (Incorporated by reference to Exhibit 4(h) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 27, 1998).
4.7 -- Sixth Amendment and Restatement of Competitive Advance
and Revolving Credit Facility Agreement dated May 31,
1996 (Incorporated by reference to Exhibit 4(a) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 27, 1996).
128
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.8 -- Agreement and Seventh Amendment to Competitive Advance
and Revolving Credit Facility Agreement dated as of June
27, 1997 (Incorporated by reference to Exhibit 4(a) to
the Registrant's Annual Report on Form 10-K for the
fiscal year ended June 28, 1997).
4.9 -- Agreement and Eighth Amendment to Competitive Advance and
Revolving Credit Facility Agreement dated as of June 22,
1998 (Incorporated by reference to Exhibit 4(c) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended July 3, 1999).
4.10 -- Agreement and Ninth Amendment to Competitive Advance and
Revolving Credit Facility Agreement dated as of December
1, 1999 (Incorporated by reference to Exhibit 4(j) to the
Registrant's Quarterly Report on Form 10-Q for the
quarter year ended January 1, 2000).
5.1 -- Opinion of Arnall Golden Gregory LLP with respect to
legality of the securities to be registered
8.1 -- Opinion of Arnall Golden Gregory LLP regarding material
federal income tax consequences of the offer and the
merger.
8.2 -- Opinion of Torys regarding material federal income tax
consequences of the offer and the merger.
15.1 -- Letter from Arthur Andersen LLP re unaudited financial
statements.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of KPMG LLP.
23.3 -- Consent of Arnall Golden Gregory LLP (included in the
opinions filed as Exhibits 5.1 and 8.1 to this
Registration Statement).
23.4 -- Consent of Torys (included in the opinion filed as
Exhibit 8.2 to this Registration Statement).
23.5 -- Consent of U.S. Bancorp Piper Jaffray.
24.1* -- Powers of Attorney (included on the signature page of
this Registration Statement).
99.1* -- Form of Letter of Transmittal.
99.2* -- Form of Notice of Guaranteed Delivery.
99.3* -- Form of Letter to Brokers, Dealers, etc.
99.4* -- Form of Letter to Clients.
99.5* -- Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
99.6* -- Employment Agreement by and among Clifford W. Stanley,
Guest Supply, Inc., and Sysco Corporation dated January
22, 2001, and related Waiver Agreement and Noncompetition
Agreement.
99.7* -- Employment Agreement by and among Paul T. Xenis, Guest
Supply, Inc. and Sysco Corporation dated January 22,
2001, and related Waiver Agreement and Noncompetition
Agreement.
99.8* -- Employment Agreement by and among R. Eugene Biber, Guest
Supply, Inc., and Sysco Corporation dated January 22,
2001, and related Waiver Agreement.
99.9* -- Employment Agreement Amendment and Acknowledgement by and
among Teri E. Unsworth, Guest Supply, Inc. and Sysco
Corporation.
129
EXHIBIT
NUMBER DESCRIPTION
------- -----------
99.10 -- Form of Tender Agreement dated January 22, 2001, a
substantially similar version of which has been executed
by Clifford W. Stanley, Paul T. Xenis, R. Eugene Biber,
Edward J. Walsh, George S. Zabrycki, Thomas M. Haythe and
Teri E. Unsworth (Incorporated by reference to Annex B to
the Prospectus contained in this Registration Statement).
99.11* -- Amendment No. 2 dated January 22, 2001 to General Counsel
Agreement between Guest Supply and Thomas M. Haythe.
---------------
* Previously filed.
+ In accordance with Item 601(b)(2) of Regulation S-K, the schedules have been
omitted and a list briefly describing the schedules is at the end of Annex A.
SYSCO will furnish supplementally a copy of any omitted schedule to the
Commission upon request.