Exhibit B
STANDSTILL AGREEMENT
STANDSTILL AGREEMENT (the "Agreement"), dated as of May 17,
1996, by and between RYKOFF-SEXTON, INC., a Delaware corporation
("RSI"), on the one hand, and the other Persons set forth on the
signature pages hereto (collectively, the "ML Entities"), on the
other hand.
W I T N E S S E T H:
WHEREAS, RSI, USF Acquisition Corporation, a Delaware
corporation and wholly-owned subsidiary of RSI ("Merger Sub"),
and US Foodservice Inc., a Delaware corporation (the "Company"),
have entered into an Agreement and Plan of Merger dated February
2, 1996 (the "Merger Agreement"; capitalized terms used without
definition herein having the meanings ascribed thereto in the
Merger Agreement);
WHEREAS, as a result of the Merger, the ML Entities will
beneficially own approximately 36.4% of the issued and
outstanding RSI Common Shares, depending upon the Exchange Ratio;
and
WHEREAS, pursuant to the Agreement dated as of February 2,
1996 (the "ML Agreement") between RSI, on the one hand, and the
ML Entities, on the other hand, RSI and the ML Entities have
agreed that at the Effective Time they shall enter into a
Standstill Agreement in the form of this Agreement.
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements set forth
herein, RSI and the ML Entities hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the
following meanings:
(a) "Additional Percentage" shall mean (w) 2% of the Total
Voting Power, in the event that the ML Entities and their
Affiliates beneficially own Voting Securities representing in the
aggregate at least 30% of the Total Voting Power; (x) 3% of the
Total Voting Power, in the event that the ML Entities and their
Affiliates beneficially own Voting Securities representing in the
aggregate less than 30%, but at least 22%, of the Total Voting
Power; (y) 4% of the Total Voting Power, in the event that the ML
Entities and their Affiliates beneficially own Voting Securities
representing in the aggregate less than 22%, but at least 16%, of
the Total Voting Power; and (z) 5% of the Total Voting Power, in
the event that the ML Entities and their Affiliates beneficially
own Voting Securities representing in the aggregate less than
16%, but at least 10%, of the Total Voting Power.
(b) "Affiliate" shall have the meaning set forth in
Rule 12b-2 of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"); provided, however, that any corporation in
which an ML Entity or any of its Affiliates owns less than a
majority of the securities entitled generally to vote for the
election of directors shall not be considered an Affiliate of
such ML Entity or such Affiliate unless such ML Entity or such
Affiliate otherwise controls such corporation.
(c) "Beneficial ownership" and "beneficially own"
shall have the meanings set forth in Rule 13d-3 under the
Exchange Act.
(d) "Continuing Director" and "Continuing Director
Quorum" shall have the meanings set forth in Article Thirteenth
of the Restated Certificate of Incorporation of RSI, as amended
from time to time; provided, however, that no ML Director shall
constitute a Continuing Director or be counted in determining the
presence of a Continuing Director Quorum.
(e) "Control" shall mean, with respect to a Person or
a Group, (i) beneficial ownership by such Person or Group of
securities entitling it to exercise in the aggregate more than 50
percent of the votes in any election of directors or other
governing body of the entity in question; or (ii) possession by
such Person or Group of the power, directly or indirectly, (x) to
elect a majority of the board of directors (or equivalent
governing body) of the entity in question or (y) in case of a
non-corporate entity, to manage or govern the business,
operations or investments of any such non-corporate entity.
(f) "Group" shall have the meaning comprehended by
Section 13(d)(3) of the Exchange Act; provided that, solely for
purposes of Section 3.1(a)(iv) of this Agreement, the ML Entities
shall not by themselves constitute a "Group."
(g) "Person" shall have the meaning set forth in
Section 3(a)(9) of the Exchange Act.
(h) "ML Representative" means any natural person who
has been chosen in writing, with notice thereof to RSI, by the ML
Entities holding beneficial ownership of Voting Securities
representing in the aggregate a majority of the Total Voting
Power held by the ML Entities, Matthias B. Bowman being hereby
designated as the initial ML Representative.
(i) "Schedule 13D Filer" means any Person or Group
which, based on its direct or indirect beneficial ownership of
any Voting Securities, is, or after the acquisition of such
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beneficial ownership would be, required to file a statement on
Schedule 13D with the SEC in accordance with Rule 13d-1 under the
Exchange Act, but shall not include any Schedule 13G Filer.
(j) "Schedule 13G Filer" means any Person or Group
which, based on its direct or indirect beneficial ownership of
any Voting Securities, is, or after the acquisition of such
beneficial ownership would be, required to file a statement on
Schedule 13D with the SEC in accordance with Rule 13d-1 under the
Exchange Act, but which in lieu of such filing may instead file a
short-form statement on Schedule 13G in accordance with such
Rule.
(k) "Standstill Percentage" means 36.4% of the Total
Voting Power; provided that in the event that the percentage of
the Total Voting Power represented by the shares of Voting
Securities beneficially owned by the ML Entities and their
Affiliates from time to time is less than 36.4%, then the
Standstill Percentage shall be automatically reduced to the
percentage of Total Voting Power represented by shares of Voting
Securities beneficially owned by the ML Entities and their
Affiliates from time to time; provided further, that (x)
following any such reduction in the Standstill Percentage, the
Standstill Percentage shall not thereafter be subject to any
increase (other than as provided for in the following clause
(y)), and (y) if the percentage of Total Voting Power represented
by shares of Voting Securities beneficially owned by the ML
Entities and their Affiliates is increased as a result of any RSI
Action (as defined in Section 3.1(a)(i) of this Agreement), the
Standstill Percentage shall be automatically increased to reflect
such RSI Action.
(l) "Total Voting Power" means, at any time, the
aggregate number of votes which may be cast by holders of
outstanding Voting Securities.
(m) "Transfer" means sell, transfer, assign, pledge,
hypothecate, give away or in any manner dispose of any Voting
Securities.
(n) "Voting Securities" means the RSI Common Shares
and any other securities (including voting preferred stock)
issued by RSI which are entitled to vote generally for the
election of directors of RSI, whether currently outstanding or
hereafter issued (other than securities having such powers only
upon the occurrence of a contingency).
ARTICLE II
BOARD REPRESENTATION
2.1 Initial Board Representation. At the Effective Time,
RSI will (a) take such action as may be necessary to increase the
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size of the Board of Directors of RSI (the "Board of Directors")
to 12, and (b) use its best efforts to fill four of the vacancies
thereby created in the three classes of directors with directors
designated by the ML Representative (each, a "ML Director" and,
collectively, the "ML Directors") in accordance with Article
Thirteenth of RSI's Restated Certificate of Incorporation. Of
the four initial ML directors, one shall be appointed to Class A
(current term expiring in 1996), one shall be appointed to Class
B (current term expiring in 1998) and two shall be appointed to
Class C (current terms expiring in 1997). The ML Entities
acknowledge that any designees of ML Directors who are not
employees of either an ML Entity which is controlled by Merrill
Lynch & Co., Inc. or an Affiliate of an ML Entity which is
controlled by Merrill Lynch & Co., Inc. must be reasonably
acceptable to the Continuing Directors of RSI.
2.2 Continuing Board Representation. Until such time as
the ML Entities no longer beneficially own Voting Securities
representing in the aggregate at least 10% of the Total Voting
Power, RSI covenants and agrees as follows:
(a) except as contemplated by this Agreement or as
otherwise agreed to by a majority of the ML Directors, RSI will
not take or recommend to its stockholders any action which would
(i) cause the Board of Directors to consist of any number of
directors other than twelve directors divided into three classes
of four directors each or (ii) result in any amendment to the By-
Laws of RSI or the By-Laws or Regulations of any Subsidiary (as
defined in Section 2.3(b) hereof) in effect on the date hereof
that would impose any qualifications to the eligibility of
directors of RSI or any Subsidiary to serve on any committee of
the Board of Directors, any Subsidiary Board or any committee of
any Subsidiary Board, except as may be required by applicable
law;
(b) so long as the ML Entities beneficially own Voting
Securities representing in the aggregate at least 34% of the
Total Voting Power, RSI will use its best efforts to cause the
Nominating Committee of the Board of Directors (the "Nominating
Committee") (or if the Nominating Committee makes no such
recommendation, the Board of Directors) to recommend for election
in the applicable year in which the respective class term
expires, one ML Director in Class A, one ML Director in Class B
and two ML Directors in Class C, in each case as designated by
the ML Representative; provided, that if despite such best
efforts, any such ML Director is not elected by the stockholders
of RSI, RSI shall have no further obligations under this Section
2.2(b) for the applicable year;
(c) in the event that the ML Entities beneficially own
Voting Securities representing in the aggregate less than 34%,
but at least 27%, of the Total Voting Power, RSI will use its
best efforts to cause the Nominating Committee (or if the
Nominating Committee makes no such recommendation, the Board of
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Directors) to recommend for election in the applicable year in
which the respective class term expires, one ML Director in Class
A, one ML Director in Class B and one ML Director in Class C, in
each case as designated by the ML Representative; provided, that
if despite such best efforts, any such ML Director is not elected
by the stockholders of RSI, RSI shall have no further obligations
under this Section 2.2(c) for the applicable year;
(d) in the event that the ML Entities beneficially own
Voting Securities representing in the aggregate less than 27%,
but at least 16%, of the Total Voting Power, RSI will use its
best efforts to cause the Nominating Committee (or if the
Nominating Committee makes no such recommendation, the Board of
Directors) to recommend for election in the applicable year in
which the respective class term expires, one ML Director in Class
A and one ML Director in Class B or Class C, in each case as
designated by the ML Representative; provided, that if despite
such best efforts, any such ML Director is not elected by the
stockholders of RSI, RSI shall have no further obligations under
this Section 2.2(d) for the applicable year; and
(e) in the event that the ML Entities beneficially own
Voting Securities representing in the aggregate less than 16%,
but at least 10%, of the Total Voting Power, RSI will use its
best efforts to cause the Nominating Committee (or if the
Nominating Committee makes no such recommendation, the Board of
Directors) to recommend for election in the applicable year in
which the respective class term expires, one ML Director in Class
A; provided, that if despite such best efforts, such ML Director
is not elected by the stockholders of RSI, RSI shall have no
further obligations under this Section 2.2(e) for the applicable
year.
2.3 Committee Representation; Subsidiary Board
Representation. (a) Until such time as the ML Entities no
longer beneficially own Voting Securities representing in the
aggregate at least 16% of the Total Voting Power, to the extent
that, and for so long as, any of the ML Directors is qualified
under the then-current rules and regulations of the New York
Stock Exchange ("NYSE Rules"), the rules and regulations under
the Internal Revenue Code of 1986, as amended, relating to the
qualification of employee stock benefit plans, the rules and
regulations under Section 16(b) of the Exchange Act, including
Rule 16b-3 thereunder or any successor rule, and RSI's By-laws,
RSI shall use its best efforts to cause the Board of Directors to
designate one of the ML Directors to serve on each of the
committees of the Board of Directors to the same extent, and on
the same basis, as the other members of the Board of Directors;
provided, however, that subject to the foregoing director
qualification requirements, in the event that, and for so long
as, the ML Entities own Voting Securities representing in the
aggregate at least 10% of the Total Voting Power, RSI shall use
its best efforts to cause the Board of Directors to designate one
of the ML Directors to serve on the Nominating Committee and the
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Management Development Compensation and Stock Option Committee of
the Board of Directors to the same extent, and on the same basis,
as the other members of the Board of Directors.
(b) Until such time as the ML Entities no longer
beneficially own Voting Securities representing in the aggregate
at least 10% of the Total Voting Power, to the extent that (I)
any Continuing Director who is not an officer or employee of RSI
("Outside Director") is also a director of any wholly-owned
subsidiary of RSI ("Subsidiary"), and (II) the ML Directors are
qualified under the By-laws or Regulations of the relevant
Subsidiary, RSI shall cause to be included (i) on the board of
directors of such Subsidiary a number of ML Directors equal to
the product of (x) the number of Continuing Directors on the
board of directors of such Subsidiary (a "Subsidiary Board"),
multiplied by (y) a quotient, the numerator of which shall be the
total number of ML Directors which RSI is required to use its
best efforts to cause the Nominating Committee to recommend for
election pursuant to Section 2.2(b), 2.2(c), 2.2(d) or 2.2(e), as
the case may be, and the denominator of which shall be twelve,
provided that if the product calculated above is less than 1,
then to the extent that any Outside Director is also a director
of any such Subsidiary, one ML Director designated by the ML
Representative shall be entitled to sit on such Subsidiary Board
so long as the ML Entities beneficially own Voting Securities
representing at least 10% of the Total Voting Power; and (ii) on
each committee of each Subsidiary Board, if an ML Director is
entitled to sit on any Subsidiary Board, one ML Director
designated by the ML Representative, subject to the rules and
regulations described in Section 2.3(a) and qualification under
the By-laws or Regulations of the relevant Subsidiary.
2.4 Removal of Directors; Vacancies. The ML Representative
shall have the right, with cause, to request the removal from the
Board of Directors of any ML Director. Any such removal shall be
subject to the applicable provisions of the Restated Certificate
of Incorporation and By-Laws of RSI (including, without
limitation, any stockholder vote requirement), as well as
applicable statutory provisions; provided that RSI will use its
best efforts to cause the Continuing Directors to vote, subject
to Section 2.6, in favor of such requested removal. In the event
that any ML Director for any reason ceases to serve as a member
of the Board of Directors during his or her term of office and at
such time the ML Representative would have the right to a
designation hereunder if an election for the resulting vacancy
were to be held, (a) the director to fill such vacancy ("ML
Director Vacancy") shall be designated by the ML Representative
and, if not an employee of an ML Entity which is controlled by
Merrill Lynch & Co., Inc. or an Affiliate of an ML Entity which
is controlled by Merrill Lynch & Co, Inc., shall be reasonably
acceptable to the Continuing Directors of RSI, and (b) such ML
Director Vacancy shall be filled in accordance with Article
Thirteenth of RSI's Restated Certificate of Incorporation. In
the event that, and for so long as, any ML Director is a member
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of the Nominating Committee of the Board of Directors, the ML
Entities shall cause the ML Directors to take such action as may
be necessary and to vote in accordance with the recommendation of
the Continuing Directors to fill any vacancies in the Board of
Directors (other than an ML Director Vacancy).
2.5 Resignation. In the event that the percentage of Total
Voting Power represented by the Voting Securities beneficially
owned in the aggregate by the ML Entities at any time decreases
below the minimum percentage thresholds specified in Sections
2.2(b), (c), (d) or (e) or Sections 2.3(a) or (b), the ML
Entities shall cause such number of ML Directors to resign as is
necessary to adjust the number of remaining ML Directors to the
number (if any) to which the ML Entities would have been entitled
under such Sections if the nominations to the Board of Directors
or Subsidiary Board or the selections for committees of the Board
of Directors or Subsidiary Board were made at such time; provided
that in the event of any such decrease below any such minimum
percentage threshold, any subsequent increase in the percentage
of the Total Voting Power represented in the aggregate by the
Voting Securities beneficially owned by the ML Entities above
such minimum percentage threshold shall not entitle the ML
Entities to have any additional ML Directors named or elected to
the Board of Directors or any committee thereof or any Subsidiary
Board or any committee thereof.
2.6 Charter and By-laws; Fiduciary Duties. The obligations
of RSI set forth in this Article II are subject to compliance
with the provisions of Article Thirteenth of RSI's Restated
Certificate of Incorporation and RSI's By-laws, and the fiduciary
duties of the Board of Directors and the Nominating Committee to
RSI's stockholders. Nothing contained in this Article II shall
require RSI to violate any such provisions or to require any
director of RSI to breach any such fiduciary duty.
2.7 No Voting Trust. This Agreement does not create or
constitute, and shall not be construed as creating or
constituting, a voting trust agreement under the Delaware General
Corporation Law or any other applicable corporation law.
2.8 Notification of Nominations. The rights of the ML
Entities, ML Directors and ML Representative and the obligations
of RSI under this Article II shall be subject to compliance with
Article III, Section 3a of RSI's By-laws.
2.9 No Duty to Designate; Reduction of Board
Representation. Nothing contained in this Article II shall be
construed as requiring the ML Entities to designate any ML
Directors or, once designated and elected, to require any ML
Director to continue to serve in office if such ML Director
elects to resign. Until such time as the ML Entities no longer
beneficially own Voting Securities representing in the aggregate
at least 10% of the Total Voting Power, in the event of any
vacancy created by the resignation or removal of an ML Director
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or the failure of the ML Representative to designate an ML
Director, other than a vacancy created by the resignation or
removal of an ML Director pursuant to Section 2.5 hereof, upon
the written request of the ML Representative, RSI shall take such
action as may be necessary to reduce the size of the Board of
Directors to a number equal to (x) 12 (or such lesser number as
exists following one or more previous reductions of the size of
the Board pursuant to this Section 2.9) minus (y) the number of
such vacancies, and thereafter, notwithstanding any other
provisions of this Article II, the ML Entities shall have no
right to designate any ML Directors to the extent of such
reduction.
2.10 Effect of Change in Control. Notwithstanding anything
to the contrary contained in this Agreement, the rights under
this Article II are for the benefit of, and shall only extend to,
those ML Entities which are controlled by Merrill Lynch & Co.,
Inc. In the event of any transaction, including any Transfer of
any securities or partnership interests, resulting in Merrill
Lynch & Co., Inc. no longer controlling such ML Entity, such ML
Entity shall no longer have any rights under this Article II and
shall not be deemed to be an ML Entity for purposes of this
Article II, but shall remain bound by the other provisions of
this Agreement.
ARTICLE III
STANDSTILL RESTRICTIONS; VOTING MATTERS
3.1 Standstill Restrictions. (a) During the term of this
Agreement, each of the ML Entities covenants and agrees that
without the prior affirmative vote of a majority of the
Continuing Directors at a meeting at which a Continuing Director
Quorum is present, the ML Entities shall not, and shall not
permit any of their respective Affiliates to, directly or
indirectly:
(i) acquire, propose to acquire (or publicly
announce or otherwise disclose an intention to propose to
acquire) or offer to acquire, by purchase or otherwise, any
Voting Securities, if the effect of such acquisition would
be to increase the outstanding number of shares of Voting
Securities then beneficially owned by the ML Entities and
their Affiliates, in the aggregate, to an amount
representing Total Voting Power in excess of the Standstill
Percentage; provided that this Section 3.1(a)(i) shall not
be applicable, and no ML Entity shall be obligated to
dispose of Voting Securities, if the aggregate percentage of
the Total Voting Power represented by Voting Securities
beneficially owned by the ML Entities is increased as a
result of corporate action taken solely by RSI and not
caused by any action taken by any ML Entity or any Affiliate
of any ML Entity ("RSI Action");
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(ii) propose (or publicly announce or otherwise
disclose an intention to propose), solicit, offer, seek to
effect, negotiate with or provide any confidential
information relating to RSI or its business to any other
Person with respect to, any tender or exchange offer,
merger, consolidation, share exchange, business combination,
restructuring, recapitalization or similar transaction
involving RSI; provided, that nothing set forth in this
Section 3.1(a)(ii) shall prohibit ML Entities from
soliciting, offering, seeking to effect and negotiating with
any Person with respect to Transfers of Voting Securities
otherwise permitted by Article IV of this Agreement;
provided further, that in so doing the ML Entities shall not
(x) issue any press release or otherwise make any public
statements (other than statements made in response to any
request by any Person for confirmation by any ML Entity or
any Affiliate of an ML Entity of information contained in
any statement on Schedule 13D under the Exchange Act) with
respect to such action other than in accordance with Section
9.14 hereof (provided that the ML Entities may, and may
permit their Affiliates to, make any statement required by
applicable law, including without limitation, the amendment
of any statement on Schedule 13D under the Exchange Act), or
(y) provide any confidential information relating to RSI or
its business to any such Person.
(iii) make, or in any way participate in, any
"solicitation" of "proxies" to vote (as such terms are
defined in Rule 14a-1 under the Exchange Act), solicit any
consent with respect to the voting of any Voting Securities
or become a "participant" in any "election contest" (as such
terms are defined or used in Rule 14a-11 under the Exchange
Act) with respect to RSI;
(iv) except to the extent contemplated by the
Registration Rights Agreement, form, participate in or join
any Person or Group with respect to any Voting Securities
(except an arrangement solely among any or all of the ML
Entities), or otherwise act in concert with any third Person
(other than an ML Entity) for the purpose of (x) acquiring
any Voting Securities or (y) holding or disposing of Voting
Securities for any purpose otherwise prohibited by this
Section 3.1(a);
(v) deposit any Voting Securities into a voting
trust or subject any Voting Securities to any arrangement or
agreement with respect to the voting thereof (except for
this Agreement and except for any such arrangement solely
among any or all of the ML Entities);
(vi) initiate, propose or otherwise solicit
stockholders for the approval of one or more stockholder
proposals with respect to RSI as described in Rule 14a-8
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under the Exchange Act, or induce or attempt to induce any
other Person to initiate any stockholder proposal;
(vii) except as specifically provided for in
Article II hereof or as contemplated by Section 3.1(e), seek
election to or seek to place a representative on the Board
of Directors, or seek the removal of any member of the Board
of Directors (other than an ML Director);
(viii) call or seek to have called any meeting of
the stockholders of RSI for any purpose otherwise prohibited
by this Section 3.1(a);
(ix) take any other action to seek to control RSI;
(x) demand, request or propose to amend, waive or
terminate the provisions of this Section 3.1(a); or
(xi) agree to do any of the foregoing, or advise,
assist, encourage or persuade any third party to take any
action with respect to any of the foregoing.
(b) Each of the ML Entities agrees that it will notify
RSI promptly if any inquiries or proposals are received by, any
information is exchanged with respect to, or any negotiations or
discussions are initiated or continued with, any ML Entity or, to
the knowledge of any officer of Merrill Lynch Capital Partners,
Inc. or ML IBK Positions, Inc., any of their respective
Affiliates, regarding any matter described in Section 3.1(a)
hereof; provided, however, that the foregoing obligation is
subject to any confidentiality policies of any such Affiliate of
any ML Entity. The ML Entities and RSI shall mutually agree upon
an appropriate response to be made to any such proposals received
by any ML Entity, or, to the knowledge of any such officer, any
Affiliate of such ML Entity or any such officer.
(c) Notwithstanding the provisions of Section 3.1(a),
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") and its Affiliates (other than the ML Entities) may
effect or recommend transactions, either as principal or as agent
on behalf of third parties, in the ordinary course of Merrill
Lynch's business or the business of such Affiliates, in, relating
to or involving Voting Securities, including, without limitation,
transactions in which Merrill Lynch or such Affiliates are acting
as an investment banking organization providing advisory
services, an investment advisor, an investment company, a broker
or dealer in securities, as an underwriter or placement agent of
securities, a market maker, a specialist, an arbitrageur or a
block positioner; provided, however, that (i) in no event shall
Merrill Lynch and its Affiliates (other than the ML Entities)
acquire beneficial ownership of Voting Securities representing
Total Voting Power in excess of the Additional Percentage; and
(ii) for purposes of this Section 3.1(c), transactions in the
ordinary course of Merrill Lynch's or its Affiliates' business
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shall in no event be deemed to include any activities or
transactions which have the purpose or effect of seeking to
control or influence the management, policies or affairs of RSI,
including, without limitation, through advising any Person with
respect to any unsolicited bid for control of, or any other offer
for securities of or any business combination involving, RSI;
provided, however, that this Section 3.1(c)(ii) shall not
prohibit or restrict Merrill Lynch from performing such
obligations as may be required by law or the rules or other
requirements of any regulatory authority.
(d) The ML Entities shall not be deemed to have
breached Section 3.1(a)(i) of this Agreement if (i) the ML
Entities or their Affiliates inadvertently and in good faith
acquire Voting Securities so as to cause the Total Voting Power
represented by the Voting Securities beneficially owned by the ML
Entities and their Affiliates to exceed the Standstill
Percentage, and (ii) the ML Entities as soon as practicable
divest a sufficient number of shares of Voting Securities
beneficially owned by the ML Entities and their Affiliates so as
to result in the Total Voting Power represented by the Voting
Securities beneficially owned by the ML Entities and their
Affiliates to be equal to or less than the Standstill Percentage.
(e) Nothing contained in this Article III shall be
deemed to restrict the manner in which the ML Directors may
participate in deliberations or discussions of the Board of
Directors or individual consultations with the Chairman of the
Board or any other members of the Board of Directors, so long as
such actions do not otherwise violate any provision of Section
3.1(a).
3.2 Voting. Until such time as the ML Entities no longer
beneficially own Voting Securities representing in the aggregate
at least 10% of the Total Voting Power, the ML Entities will take
all such action as may be required so that all Voting Securities
owned by the ML Entities and their Affiliates, as a group, are
(i) voted (in person or by proxy) for RSI's nominees to the Board
of Directors, in accordance with the recommendation of the
Nominating Committee (or, if the Nominating Committee makes no
such recommendation, the Board of Directors), provided that if
the ML Representative has requested representation on the
Nominating Committee, RSI shall have performed its obligations
described in the proviso to Section 2.3(a) hereof, provided
further that if the ML Entities have a reasonable, good faith
objection to any one (and only one) such nominee for election to
the Board of Directors at any annual meeting of RSI stockholders
(other than any nominee who was a member of the Board of
Directors as of the date of the Merger Agreement), based on such
nominee's personal qualifications to serve as a member of the
Board of Directors ("Objectionable Nominee"), the ML Entities may
abstain from, or vote against, the election of such Objectionable
Nominee at such meeting, but only if (x) the board of directors
of the general partner of such ML Entity determines in good faith
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that such action is required to fulfill its fiduciary duties to
the limited partners of such ML Entity under applicable law based
upon the advice of outside counsel (who may be such general
partner's regularly engaged outside counsel) and (y) at least two
Business Days in advance of the date of mailing of the proxy
statement for such annual meeting of RSI stockholders, one or
more ML Directors objects to the proposed nomination of the
Objectionable Nominee in writing to RSI or orally during a
meeting of the Board of Directors or the Nominating Committee,
and (ii) on all other matters to be voted on by holders of Voting
Securities, actually voted (in person or by proxy) by the ML
Entities. Each of the ML Entities shall be present, in person or
by proxy, at all duly held meetings of stockholders of RSI so
that all Voting Securities held by the ML Entities may be counted
for the purposes of determining the presence of a quorum at such
meetings.
ARTICLE IV
TRANSFERS; RIGHT OF FIRST REFUSAL
4.1 Transfers of Voting Securities. None of the ML
Entities shall, directly or indirectly, Transfer any Voting
Securities except:
(a) to RSI;
(b) pursuant to a merger or consolidation of RSI or
pursuant to a plan of liquidation of RSI, which has been approved
by the affirmative vote of a majority of the members of the Board
of Directors then in office; provided that at the time of such
approval the number of ML Directors then serving on the Board of
Directors shall not exceed the number contemplated by Article II
hereof;
(c) provided that the rights of the ML Entities under
this Agreement shall not transfer to the transferee of such
securities, pursuant to a bona fide public offering registered
under the Securities Act of 1933, as amended (the "Securities
Act"), in which the ML Entities shall use commercially reasonable
efforts to (i) effect as wide a distribution of such Voting
Securities as is reasonably practicable, and (ii) prevent any
Person or Group from acquiring pursuant to such offering
beneficial ownership of Voting Securities or securities
convertible into Voting Securities representing in the aggregate
5% or more of the Total Voting Power;
(d) provided that the rights of the ML Entities under
this Agreement shall not transfer to the transferee of such
securities, pursuant to Rule 144 under the Securities Act;
(e) provided that the rights of the ML Entities under
this Agreement shall not transfer to the transferee of such
12
securities, pursuant to a pro rata distribution (including any
such distribution pursuant to any liquidation or dissolution of
any ML Entity) by any ML Entity to its partners or stockholders
if no successor or distributee, as the case may be, and no Person
that controls such successor or distributee, acquires from any ML
Entity beneficial ownership of Voting Securities representing
more than 3% of the Total Voting Power in such distribution (in
each case other than any distributee which is an Affiliate of an
ML Entity provided that such Affiliate shall thereafter promptly
distribute all such Voting Securities to its own partners or
stockholders and such partners or stockholders do not thereby
acquire from such Affiliate beneficial ownership of Voting
Securities representing more than 3% of the Total Voting Power in
such distribution).
(f) provided that the rights of the ML Entities under
this Agreement shall not transfer to the transferee of such
securities, (i) Transfers of Voting Securities to any Person or
Group which is a Schedule 13D Filer and which, after giving
effect to such Transfer, would beneficially own Voting Securities
representing in the aggregate less than 5% of the Total Voting
Power, and (ii) Transfers to any Person or Group which is a
Schedule 13G Filer of Voting Securities representing in the
aggregate less than 10% of the Total Voting Power;
(g) provided that (i) the rights of the ML Entities
under this Agreement shall not transfer to the transferee of such
securities, and (ii) the Transfer is made on or after January 1,
2000 in connection with the required dissolution of any ML
Entity, Transfers of Voting Securities to any Person or Group (A)
which, after giving effect to such Transfer would beneficially
own Voting Securities representing in the aggregate less than the
greater of (x) 15% of the Total Voting Power or (y) such other
percentage of the Total Voting Power as would make such Person or
Group an "Acquiring Person" under RSI's shareholders' rights plan
or (B) approved by the prior affirmative vote of a majority of
the Continuing Directors at a meeting at which a Continuing
Director Quorum is present;
(h) pursuant to a tender offer or exchange offer that
the Board of Directors, by action taken by the affirmative vote
of a majority of the members of the Board of Directors then in
office, has determined not to oppose; or
(i) in accordance with the provisions of Section 4.2.
4.2 Right of First Refusal. Except as otherwise permitted
by Section 4.1, if any ML Entity or ML Entities (each a "Selling
ML Entity" and, collectively, the "Selling ML Entities") shall
receive an offer from, or have entered into any agreement or
understanding with, a third party or parties to purchase or
otherwise acquire Voting Securities from such Selling ML Entity,
such Selling ML Entity shall have the right, provided that the
rights of such Selling ML Entity under this Agreement shall not
13
transfer to such third party or parties, to Transfer the amount
of Voting Securities which are the subject of such offer by, or
agreement or understanding with, such third party or parties if,
prior to such Transfer, RSI shall have been given the
opportunity, in the following manner, to purchase such Voting
Securities:
(a) The Selling ML Entities shall give notice (the
"Transfer Notice") to RSI in writing of such proposed Transfer
specifying the amount of Voting Securities proposed to be sold or
transferred, the proposed price therefor (the "Transfer
Consideration"), the identity of the offeror and the other
material terms upon which such Transfer is proposed to be made.
(b) RSI shall have the right, exercisable by written
notice given by RSI to the Selling ML Entities within 15 Business
Days after receipt of the Transfer Notice, to purchase from such
Selling ML Entities all, but not less than all, the Voting
Securities specified in such Transfer Notice for cash in an
amount equivalent to the Transfer Consideration.
(c) If the Transfer Consideration specified in the
Transfer Notice includes any property other than cash, such
Transfer Consideration shall be deemed to be the amount of any
cash included in the Transfer Consideration plus the value (as
jointly determined by a nationally recognized investment banking
firm selected by each party) of such other property included in
such Transfer Consideration. For this purpose, the parties shall
use their reasonable best efforts to cause any determination of
the value of any such other property included in the Transfer
Consideration to be made within ten Business Days after the date
of delivery of the Transfer Notice. If the firms selected by RSI
and the Selling ML Entities are unable to agree upon the value of
any such other property within such ten Business Day period, such
firms shall promptly select a third nationally recognized
investment banking firm whose determination shall be conclusive.
(d) If RSI exercises its right of first refusal
hereunder, the closing of the purchase of the Voting Securities
with respect to which such right has been exercised shall take
place within 60 days after RSI gives notice of such exercise,
which period of time shall be extended as necessary (but in no
event for a period of time longer than 60 days after the end of
such 60 day period) in order to comply with applicable securities
and other laws and regulations or any listing agreement to which
RSI is a party. Upon exercise of its right of first refusal, RSI
shall be legally obligated to consummate the purchase
contemplated thereby, shall use its reasonable best efforts to
secure all approvals required in connection therewith, and shall
be liable in damages to the Selling ML Entities if for any
reason, including the failure to obtain any requisite approvals,
the purchase is not consummated; provided, however, that if RSI
does not obtain any required approval of its stockholders with
respect to such purchase, (i) RSI shall have no liability to the
14
Selling ML Entities with respect to the failure of such purchase
to be consummated and (ii) the Voting Securities with respect to
which such right was exercised shall not thereafter be subject to
the right of first refusal under this Section 4.2 unless to the
extent that RSI specifies a designee to purchase Voting
Securities pursuant to Section 4.2(f) hereof and such designee
consummates its purchase of Voting Securities within the time
remaining in the time period during which RSI was to have
consummated its purchase of such Voting Securities.
(e) If RSI does not exercise its right of first
refusal hereunder within the time specified for such exercise,
the Selling ML Entities shall be free, during the period of 60
days following the expiration of such time for exercise (which
period of time may be extended as necessary (but in no event for
a period of time longer than 60 days after the end of such 60 day
period) in order to comply with applicable securities and other
laws and regulations), to Transfer the Voting Securities
specified in the Transfer Notice to the offeror specified in the
Transfer Notice on the terms described in the Transfer Notice and
at a price not less than the Transfer Consideration. If the
Selling ML Entities fail to Transfer the Voting Securities
specified in the Transfer Notice in such manner within such
period, the Voting Securities specified in the Transfer Notice
shall again be subject to the terms of Sections 4.1 and 4.2
hereof.
(f) If RSI elects to exercise any of its rights under
this Section 4.2, RSI may specify, prior to closing such
purchase, another Person as its designee to purchase the Voting
Securities to which such notice of intention to exercise such
rights relates. If RSI designates another Person as the
purchaser pursuant to this Section 4.2, RSI shall be legally
obligated, in accordance with Section 4.2(d) above, to complete
such purchase if its designee fails to do so.
ARTICLE V
Legends and Stop Transfer Orders
5.1 Legend. All certificates evidencing Voting Securities
beneficially owned by any of the ML Entities shall bear the
following legend:
"The securities represented by this certificate are
subject to the restrictions on disposition and to the other
provisions of a Standstill Agreement dated as of May __,
1996 among Rykoff-Sexton, Inc., Merrill Lynch Capital
Partners, Inc., Merrill Lynch Capital Appreciation
Partnership No. B-XVIII, L.P., Merrill Lynch KECALP L.P.
1994, ML Offshore LBO Partnership No. B-XVIII, ML IBK
Positions, Inc., MLCP Associates L.P. No. II, MLCP
Associates L.P. No. IV, Merrill Lynch KECALP L.P. 1991,
15
Merrill Lynch Capital Appreciation Partnership No. XIII,
L.P., ML Offshore LBO Partnership No. XIII, ML Employees LBO
Partnership No. I, L.P., Merrill Lynch KECALP L.P. 1987,
Merchant Banking L.P. No. II. Copies of such Agreement are
on file at the respective offices of such parties."
5.2 Stop Transfer Orders. The ML Entities each hereby
consent to the entry of stop transfer orders with the transfer
agents of any such Voting Securities against the transfer of such
legended certificates representing such Voting Securities except
in compliance with this Agreement.
5.3 Removal or Modification of Legend. RSI agrees that
upon any Transfer of the securities represented by such
certificates made in compliance with the provisions of this
Agreement, it will, upon the presentation to its transfer agent
of the certificates containing such legend, remove such legend
from the certificates being sold or registered.
ARTICLE VI
Representations and Warranties
6.1 Representations and Warranties of the ML Entities. Each
of the ML Entities severally and not jointly represent and
warrant to RSI as follows:
(a) Merrill Lynch Capital Partners, Inc. and ML IBK
Positions, Inc. are each corporations duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Merrill Lynch Capital Appreciation Partnership No. B-
XVIII, L.P., MLCP Associates L.P. No. II, MLCP Associates L.P.
No. IV, Merrill Lynch KECALP L.P. 1991, Merrill Lynch KECALP L.P.
1994, Merrill Lynch Capital Appreciation Partnership No. XIII,
L.P., ML Employees LBO Partnership No. I, L.P., Merrill Lynch
KECALP L.P. 1987 and Merchant Banking L.P. No. II are each
limited partnerships, duly organized, validly existing and in
good standing under the laws of the State of Delaware. ML
Offshore LBO Partnership No. B-XVIII and ML Offshore LBO
Partnership No. XIII are each limited partnerships, duly
organized, validly existing and in good standing under the laws
of the Cayman Islands.
(b) Assuming that (i) the ML Entities Shares (as
defined below) are duly authorized, validly issued, fully paid
and nonassessable, and, immediately prior to their receipt by the
ML Entities, are free and clear of all security interests, liens,
claims, proxies, charges, encumbrances and options of any nature
whatsoever created by any Person other than an ML Entity (other
than those created by this Agreement, the Registration Rights
Agreement and the Tax Agreement), and (ii) the issuance of the ML
Entities Shares to the ML Entities is properly recorded in the
stock ledger of RSI, then, upon the issuance of the ML Entities
16
Shares to the ML Entities pursuant to Sections 4.1 and 4.2 of the
Merger Agreement, each of the ML Entities will be the beneficial
and record owner of RSI Common Shares in the respective amounts
set forth in Schedule I attached hereto (the "ML Entities
Shares"), free and clear of all security interests, liens,
claims, proxies, charges, encumbrances and options of any nature
whatsoever, and there will be no outstanding options, warrants or
rights to purchase or acquire, or agreements relating to, any of
the ML Entities Shares (other than those created by this
Agreement, the Registration Rights Agreement and the Tax
Agreement).
(c) Except for the ML Entities Shares and 2,100 shares
of Voting Securities owned by Merrill Lynch, neither any of the
ML Entities, nor any of their Affiliates, owns beneficially or of
record, directly or indirectly, any Voting Securities or any
options, warrants or rights of any nature (including conversion
and exchange rights) to acquire beneficial ownership of any
Voting Securities.
(d) Each of the ML Entities has full legal right,
power and authority to enter into and perform this Agreement.
This Agreement has been duly authorized, executed and delivered
by each of the ML Entities. This Agreement constitutes a legally
valid and binding agreement of each of the ML Entities,
enforceable in accordance with its terms, except that such
enforceability may be subject to bankruptcy, insolvency,
receivership, reorganization, moratorium or other similar laws
relating to creditors' rights now or hereafter in effect and by
general equitable principles.
(e) The execution and delivery of this Agreement by
the ML Entities does not conflict with or constitute a violation
of or default under the respective certificates of incorporation,
partnership agreements or certificates of partnership (or
comparable documents) of any of the ML Entities or any statute,
law, regulation, order or decree applicable to any of the ML
Entities, or any contract, commitments, agreement, arrangement or
restriction of any kind to which any of the ML Entities are a
party or by which any of the ML Entities are bound, other than
such violations as would not prevent or materially delay the
performance by such ML Entity of its obligations hereunder or
otherwise subject RSI to any claim or liability.
(f) Schedule II hereto sets forth a true, accurate and
complete list of the percentage ownership interests of each
partner or securityholder (without naming them) in each ML Entity
listed thereon. Schedule III hereto sets forth, with respect to
each ML Entity listed thereon, the latest dissolution date for
such ML Entity under the terms of its partnership agreement.
6.2 Representations and Warranties of RSI. RSI hereby
represents and warrants to the ML Entities as follows:
17
(a) RSI is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware.
(b) RSI has full legal right, power and authority to
enter into and perform this Agreement and the execution and
delivery of this Agreement by RSI have been duly authorized by
all necessary corporate action on behalf of RSI. This Agreement
constitutes a legally valid and binding agreement of RSI,
enforceable in accordance with its terms, except that such
enforceability may be subject to bankruptcy, insolvency,
receivership, reorganization, moratorium or other similar laws
relating to creditors' rights now or hereafter in effect, and by
general equitable principles.
(c) Neither the execution and delivery of this
Agreement nor the consummation by RSI of the transactions
contemplated hereby conflicts with or constitutes a violation of
or default under the Restated Certificate of Incorporation or By-
laws of RSI, any statute, law, regulation, order or decree
applicable to RSI, or any contract, commitment, agreement,
arrangement or restriction of any kind to which RSI is a party or
by which RSI is bound, other than such violations as would not
prevent or materially delay the performance by RSI of its
obligations hereunder or otherwise subject any ML Entity to any
claim or liability.
ARTICLE VII
Further Assurances
Each party shall execute and deliver such additional
instruments and other documents and shall take such further
actions as may be necessary or appropriate to effectuate, carry
out and comply with all of their obligations under this
Agreement. If reasonably requested by RSI, each ML Entity agrees
to execute a letter to RSI confirming that the beneficial
ownership of Voting Securities by the ML Entities and their
Affiliates does not represent in the aggregate Total Voting Power
in excess of the Standstill Percentage as of the date of such
letter.
ARTICLE VIII
Termination
Unless earlier terminated by written agreement of the
parties hereto, this Agreement shall terminate on the earlier of
(i) the tenth anniversary of the Effective Date and (ii) the date
on which the ML Entities and their Affiliates beneficially own
Voting Securities representing in the aggregate less than 10% of
the Total Voting Power; provided, that if, prior to the tenth
18
anniversary of the Effective Date, (x) the ML Entities shall
beneficially own Voting Securities representing in the aggregate
10% or more of the Total Voting Power, or (y) the ML Entities and
their Affiliates shall beneficially own Voting Securities
representing in the aggregate 5% or more of the Total Voting
Power which causes them to be a Schedule 13D Filer, this
Agreement shall automatically be reinstated. Any termination of
this Agreement as provided herein shall be without prejudice to
the rights of any party arising out of the breach by any other
party of any provisions of this Agreement which occurred prior to
the termination.
ARTICLE IX
Miscellaneous
9.1 Notices, Etc. All notices, requests, demands or other
communications required by or otherwise with respect to this
Agreement shall be in writing and shall be deemed to have been
duly given to any party when delivered personally (by courier
service or otherwise), when delivered by telecopy and confirmed
by return telecopy, or seven days after being mailed by
first-class mail, postage prepaid in each case to the applicable
addresses set forth below:
If to RSI:
Rykoff-Sexton, Inc.
1050 Warrenville Road
Lisle, Illinois 60532-5201
Attn: Mark Van Stekelenburg, Chairman,
President and Chief Executive
Officer
Telecopy: (708) 971-6588
with a copy to:
Elizabeth C. Kitslaar, Esq.
Jones, Day, Reavis & Pogue
77 West Wacker
Chicago, Illinois 60601-1692
Telecopy: (312) 782-8585
If to the ML Entities:
Merrill Lynch Capital Partners, Inc.
225 Liberty Street
New York, New York 10080-6123
Attn: James V. Caruso
Telecopy: (212) 236-7364
with a copy to:
19
Marcia L. Tu, Esq.
Merrill Lynch & Co.
World Financial Center
North Tower
250 Vesey Street
New York, New York 10281-1323
Telecopy: (212) 449-3207
with a copy to:
Bonnie Greaves, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopy: (212) 848-7179
or to such other address as such party shall have designated by
notice so given to each other party.
9.2 Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or
terminated except by an instrument in writing signed by the
holders of a majority in number of the ML Entities Shares and by
RSI following approval thereof by a majority of the Continuing
Directors.
9.3 Successors and Assigns. Except as otherwise provided
herein, including, without limitation, Section 2.10, this
Agreement shall be binding upon and shall inure to the benefit of
and be enforceable by the parties and their respective Affiliates
and their respective successors and assigns, including without
limitation in the case of any corporate party hereto any
corporate successor by merger or otherwise. Except as otherwise
provided herein, this Agreement shall not be assignable.
9.4 Entire Agreement. This Agreement embodies the entire
agreement and understanding among the parties relating to the
subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter. There are no
representations, warranties or covenants by the parties hereto
relating to such subject matter other than those expressly set
forth in this Agreement, the Merger Agreement and the ML
Agreement.
9.5 Specific Performance. The parties acknowledge that
money damages are not an adequate remedy for violations of this
Agreement and that any party may, in its sole discretion, apply
to a court of competent jurisdiction for specific performance or
injunctive or such other relief as such court may deem just and
proper in order to enforce this Agreement or prevent any
violation hereof and, to the extent permitted by applicable law,
each party waives any objection to the imposition of such relief.
20
9.6 Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect
hereof at law or in equity shall be cumulative and not
alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
9.7 No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or
otherwise available in respect hereof at law or in equity, or to
insist upon compliance by any other party hereto with its
obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver
by such party of its right to exercise any such or other right,
power or remedy or to demand such compliance.
9.8 No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of and shall not be enforceable by
any Person who or which is not a party hereto.
9.9 Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the Court of Chancery in the State
of Delaware in any action, suit or proceeding arising in
connection with this Agreement, and agrees that any such action,
suit or proceeding shall be brought only in such court (and
waives any objection based on forum non conveniens or any other
objection to venue therein); provided, however, that such consent
to jurisdiction is solely for the purpose referred to in this
Section 9.9 and shall not be deemed to be a general submission to
the jurisdiction of said court or in the State of Delaware other
than for such purposes. Each party hereto hereby waives any
right to a trial by jury in connection with any such action, suit
or proceeding.
9.10 Governing Law. This Agreement and all disputes
hereunder shall be governed by and construed and enforced in
accordance with the law of the State of Delaware.
9.11 Name, Captions. The name assigned to this Agreement
and the section captions used herein are for convenience of
reference only and shall not affect the interpretation or
construction hereof.
9.12 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies
each signed by less than all, but together signed by all, the
parties hereto.
9.13 Expenses. Each of the parties hereto shall bear their
own expenses incurred in connection with this Agreement and the
transactions contemplated hereby, except that in the event of a
dispute concerning the terms or enforcement of this Agreement,
21
the prevailing party in any such dispute shall be entitled to
reimbursement of reasonable legal fees and disbursements from the
other party or parties to such dispute.
9.14 Press Releases. The initial press release relating to
this Agreement shall be a joint press release and, thereafter,
RSI and the ML Representative shall consult with each other
before issuing any press release or otherwise making any public
statements with respect to this Agreement, and neither RSI nor
any ML Entity shall issue any such press release or make any such
public statement without the consent (which shall not be
unreasonably withheld) of the other (the ML Representative acting
on behalf of the ML Entities for such purpose), except to the
extent required by applicable law or the rules and requirements
of the New York Stock Exchange, in which case the issuing party
shall use its reasonably best efforts to consult with the other
party (the ML Representative in case of the ML Entities) before
issuing any such release or making any such public statement.
22
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
RYKOFF-SEXTON, INC.
By: /s/ Mark Van Stekelenburg
---------------------------------
Name: Mark Van Stekelenburg
Title: Chairman, President and
Chief Executive Officer
MERRILL LYNCH CAPITAL PARTNERS,
INC.
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
MERRILL LYNCH CAPITAL APPRECIATION
PARTNERSHIP NO. B-XVIII, L.P.
By: Merrill Lynch LBO Partners
No. B-IV, L.P., as General
Partner
By: Merrill Lynch Capital
Partners,
Inc., as General Partner
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
MERRILL LYNCH KECALP L.P. 1994
BY: KECALP Inc., as General Partner
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
23
ML OFFSHORE LBO PARTNERSHIP
NO. B-XVIII
By: Merrill Lynch LBO Partners
No. B-IV, L.P., as Investment
General Partner
By: Merrill Lynch Capital
Partners, Inc., as General
Partner
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
ML IBK POSITIONS, INC.
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
MLCP ASSOCIATES L.P. NO. II
By: Merrill Lynch Capital
Partners, Inc., as
General Partner
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
MLCP ASSOCIATES L.P. NO. IV
By: Merrill Lynch Capital
Partners, Inc., as
General Partner
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
MERRILL LYNCH KECALP L.P. 1991
By: KECALP Inc., as General
Partner
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
24
MERRILL LYNCH CAPITAL APPRECIATION
PARTNERSHIP NO. XIII, L.P.
By: Merrill Lynch LBO Partners
No. IV, L.P., as General
Partner
By: Merrill Lynch Capital
Partners, Inc., as General
Partner
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
ML OFFSHORE LBO PARTNERSHIP NO.
XIII
By: Merrill Lynch LBO Partners
No. IV, L.P., as Investment
General Partner
By: Merrill Lynch Capital
Partners, Inc., as General
Partner
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
ML EMPLOYEES LBO PARTNERSHIP NO. I,
L.P.
By: ML Employees LBO Managers,
Inc., as General Partner
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
MERRILL LYNCH KECALP L.P. 1987
By: KECALP Inc., as General
Partner
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
25
MERCHANT BANKING L.P. NO. II
By: Merrill Lynch MBP Inc., as
General Partner
By: /s/ James V. Caruso
---------------------------------
Name: James V. Caruso
Title: Vice President
26
SCHEDULE I
SHARE OWNERSHIP
Name of Stockholder RSI Common Shares
MERRILL LYNCH CAPITAL 4,357,505
APPRECIATION PARTNERSHIP NO.
B-XVIII, L.P.
MERRILL LYNCH KECALP L.P. 67,879
1994
ML OFFSHORE LBO PARTNERSHIP 2,192,382
NO. B-XVIII
ML IBK POSITIONS, INC. 1,440,181
MLCP ASSOCIATES L.P. NO. II 52,257
MLCP ASSOCIATES L.P. NO. IV 13,575
MERRILL LYNCH KECALP L.P. 189,793
1991
MERRILL LYNCH CAPITAL 1,620,103
APPRECIATION PARTNERSHIP NO.
XIII, L.P.
ML OFFSHORE LBO PARTNERSHIP 41,188
NO. XIII
ML EMPLOYEES LBO PARTNERSHIP 40,273
NO. I, L.P.
MERRILL LYNCH KECALP L.P. 30,434
1987
MERCHANT BANKING L.P. NO. II 30,434
SCHEDULE II
PERCENTAGE OWNERSHIPS
DISTRIBUTION TO ML OFFSHORE LBO PARTNERSHIP NO. B-XVIII
DISTRIBUTION OF 100% OF US FOODSERVICE COMMON SHARES
JANUARY 1996
EXCHANGE
US FOODSERVICE
% OF SHARES FOR
US FOODSERVICE US FOODSERVICE 1.457 SHARES OF
CAPITAL ORIGINAL DISTRIBUTION SHARES REVERSE STOCK RYKOFF-SEXTON
PARTNERS CONTRIBUTION PERCENTAGE OF SHARES OUTSTANDING SPLIT OF .396 COMMON STOCK
- --------------------------------------- ------------ ---------- ------------ -------------- -------------- ---------------
MERRILL LYNCH CAPITAL $17,120,179 71.82% 2,728,888 12.22% 1,080,640 1,574,492
APRECIATION COMPANY LIMITED II
MERRILL LYNCH CAPITAL APPRECIATION 6,480,221 27.18% 1,032,921 4.63% 409,037 595,967
LIMITED PARTNERSHIP II (SPECIAL LP)
MERRILL LYNCH CAPITAL PARTNERS, INC 0 0.00% 0 0.00% 0 0
INVESTMENT GENERAL PARTNER 238,290 1.00% 37,983 0.17% 15,041 21,915
ADMINISTRATIVE GENERAL PARTNER 100 0.00% 16 0.00% 6 9
----------- ------ --------- ----- --------- ---------
TOTAL $23,838,790 100.00% 3,799,808 17.02% 1,504,724 2,192,383
=========== ====== ========= ===== ========= =========
SECOND TIER DISTRIBUTION TO SHAREHOLDERS OF MERRILL LYNCH
CAPITAL APPRECIATION COMPANY LIMITED II FROM ML OFFSHORE
LBO PARTNERSHIP NO. B-XVIII AS A RESULT OF THE DISTRIBUTION
OF 100% OF US FOODSERVICE COMMON SHARES
JANUARY 1996
EXCHANGE
US FOODSERVICE
% OF SHARES FOR
% DISTRIBUTION US FOODSERVICE US FOOSERVICE 1.457 SHARES OF
OF TOTAL OF SHARES REVERSE STOCK RYKOFF-SEXTON
# SHARES SHARES SHARES OUTSTANDING SPLIT OF .396 COMMON STOCK
- --- -------- -------- ------------ -------------- ------------- ---------------
1 7,513 43.85% 1,196,645* 5.36% 473,872 690,432
2 5,009 29.24% 797,817* 3.57% 315,936 460,319
3 1,373 8.01% 218,687 0.98% 86,600 126,176
4 501 2.92% 79,798 0.36% 31,600 46,041
5 1,036 6.05% 165,011 0.74% 65,344 95,206
6 440 2.57% 70,082 0.31% 27,752 40,435
7 402 2.35% 64,029 0.29% 25,355 36,942
8 176 1.03% 28,033 0.13% 11,101 16,174
9 201 1.17% 32,015 0.14% 12,678 18,472
10 240 1.40% 38,226 0.17% 15,138 22,056
11 198 1.16% 31,537 0.14% 12,489 18,196
12 44 0.26% 7,008 0.03% 2,775 4,043
------ ------- --------- ----------------------------------------------
17,133 100.00% 2,728,888 12.22% 1,080,640 1,574,492
====== ======= ========= ==============================================
* REPRESENTS OVER 1% OF O/S STOCK. (2 INVESTORS)
SECOND TIER DISTRIBUTION TO PARTNERS OF MERRILL LYNCH
CAPITAL APPRECIATION LIMITED PARTNERSHIP II (SPECIAL LP)
FROM ML OFFSHORE LBO PARTNERSHIP NO. B-XVIII AS A RESULT OF
THE DISTRIBUTION OF 100% OF US FOODSERVICE COMMON SHARES
JANUARY 1996
EXCHANGE
CAPITAL US FOODSERVICE
ACCOUNT FOR PERCENT % OF SHARES FOR
B-XVIII OF TOTAL DISTRIBUTION US FOODSERVICE US FOOSERVICE 1.457 SHARES OF
INVESTMENT CAPITAL OF SHARES REVERSE STOCK RYKOFF-SEXTON
# @ 1/1/95 ACCOUNT SHARES OUTSTANDING SPLIT OF .396 COMMON STOCK
- --- --------------- ---------------------- -------------- ------------- ---------------
1 $2,039,980.00 31.43% 324,678* 1.45% 128,571 187,328
2 917,990.00 14.14% 146,105 0.65% 57,858 84,299
3 506,995.00 7.81% 80,692 0.36% 31,954 46,557
4 917,990.00 14.14% 146,105 0.65% 57,858 84,299
5 463,995.00 7.15% 73,848 0.33% 29,244 42,609
6 407,996.00 6.29% 64,936 0.29% 25,715 37,467
7 1,003,990.00 15.47% 159,792 0.72% 63,278 92,196
8 0.00 0.00% 0 0.00% 0 0
9 230,998.00 3.56% 36,765 0.16% 14,559 21,212
------------- -------------------- ----------------------------------------------
$6,489,934.00 100.00% 1,032,921 4.63% 409,037 595,967
============= ==================== ==============================================
* REPRESENTS OVER 1% OF O/S STOCK. (1 INVESTOR)
MERRILL LYNCH CAPITAL APPRECIATION FUND I & II
& OTHER MERRILL LYNCH ENTITIES
PORTFOLIO INVESTMENT POSITION IN COMMON STOCK OF
US FOODSERVICE, INC.
DECEMBER 31, 1995
Ownership of
# Partnership/Corporation Common Shares
- --- ---------------------------------------------------------------- -------------
1. Merrill Lynch Capital Appreciation Partnership No. XIII, L.P. 2,807,941.6552
2. ML Offshore LBO Partnership No. XIII 71,387.8790
3. Merrill Lynch Capital Appreciation Partnership No. B-XVIII, L.P. 7,552,369.5000
4. ML Offshore LBO Partnership No. B-XVIII 3,799,808.0000
5. ML IBK Positions, Inc.* 2,496,102.7370
6. ML Employees LBO Partnership No. I, L.P. 69,802.2183
7. MLCP Associates L.P. No II 90,572.5000
8. MLCP Associates L.P. No IV 23,529.0000
9. Merrill Lynch KECALP L.P. 1987 52,748.5393
10. Merrill Lynch KECALP L.P. 1991 328,947.0000
11. Merrill Lynch KECALP L.P. 1994 117,647.0000
12. Merchant Banking L.P. No II 52,748.5393
---------------
Total 17,463,604.5681
===============
* - Merrill Lynch itself.
MERRILL LYNCH CAPITAL APPRECIATION PARTNERSHIP NO. XIII, L.P.
DISTRIBUTION OF 100% OF US FOODSERVICE COMMON SHARES
JANUARY 1996
US FOODSERVICE
% OF SHARES FOR
TOTAL % DISTRIBUTION US FOODSERVICE US FOODSERVICE 1,457 SHARES OF
CAPITAL OF OF SHARES REVERSE STOCK RYKOFF-SEXTON
# COMMITMENT OWNERSHIP SHARES OUTSTANDING SPLIT OF .396 COMMON STOCK
- --- ------------- ------------ ------------ --------------- -------------- ---------------
1 $ 90,000,000 25.42% 706,745* 3.16% 279,869 407,769
2 30,000,000 8.47% 235,582* 1.05% 93,290 135,924
3 29,500,000 8.33% 231,655* 1.04% 91,735 133,658
4 25,000,000 7.06% 196,318 0.88% 77,742 113,270
5 25,000,000 7.06% 196,318 0.88% 77,742 113,270
6 19,000,000 5.37% 149,202 0.67% 59,084 86,085
7 15,000,000 4.24% 117,791 0.53% 46,645 67,962
8 10,000,000 2.82% 78,527 0.35% 31,097 45,308
9 10,000,000 2.82% 78,527 0.35% 31,097 45,308
10 10,000,000 2.82% 78,527 0.35% 31,097 45,308
11 10,000,000 2.82% 78,527 0.35% 31,097 45,308
12 6,000,000 1.69% 47,116 0.21% 18,658 27,185
13 5,000,000 1.41% 39,264 0.18% 15,549 22,655
14 5,000,000 1.41% 39,264 0.18% 15,549 22,655
15 5,000,000 1.41% 39,264 0.18% 15,549 22,655
16 5,000,000 1.41% 39,264 0.18% 15,549 22,655
17 5,000,000 1.41% 39,264 0.18% 15,549 22,655
18 5,000,000 1.41% 39,264 0.18% 15,549 22,655
19 4,000,000 1.13% 31,411 0.14% 12,439 18,124
20 4,000,000 1.13% 31,411 0.14% 12,439 18,124
21 4,000,000 1.13% 31,411 0.14% 12,439 18,124
22 3,000,000 0.85% 23,558 0.11% 9,329 13,592
23 3,000,000 0.85% 23,558 0.11% 9,329 13,592
24 3,000,000 0.85% 23,558 0.11% 9,329 13,592
25 3,000,000 0.85% 23,558 0.11% 9,329 13,592
26 3,000,000 0.85% 23,558 0.11% 9,329 13,592
27 2,500,000 0.71% 19,632 0.09% 7,774 11,327
28 2,500,000 0.71% 19,632 0.09% 7,774 11,327
29 2,500,000 0.71% 19,632 0.09% 7,774 11,327
30 2,000,000 0.56% 15,705 0.07% 6,219 9,061
31 2,000,000 0.56% 15,705 0.07% 6,219 9,061
32 2,000,000 0.56% 15,705 0.07% 6,219 9,061
33 2,000,000 0.56% 15,705 0.07% 6,219 9,061
34 2,000,000 0.56% 15,705 0.07% 6,219 9,061
------------ ------- --------- ------ ---------- ----------
$354,000,000 100.00% 2,779,863 12.45% $1,100,826 $1,603,903
------------ ======= --------- ------ ---------- ----------
3,575,758 28,079 0.13% 11,119 16,201
------------ --------- ------ ---------- ----------
$357,575,758 2,807,942 12.57% 1,111,945 1,620,104
============ ========= ====== ========== ==========
* REPRESENTS OVER 1% OF O/S STOCK. (3 INVESTORS)
MERRILL LYNCH CAPITAL APPRECIATION PARTNERSHIP NO. B-XVIII, L.P.
DISTRIBUTION OF 100% OF US FOODSERVICE COMMON SHARES
JANUARY 1996
EXCHANGE
US FOODSERVICE
% OF SHARES FOR
CAPITAL ACCOUNT % DISTRIBUTION US FOODSERVICE US FOODSERVICE 1,457 SHARES OF
BALANCE AT OF OF SHARES REVERSE STOCK RYKOFF-SEXTON
# JANUARY 1, 1995 OWNERSHIP SHARES OUTSTANDING SPLIT OF .396 COMMON STOCK
- --- --------------- ----------- ------------- -------------- -------------- ---------------
1. $2,267,896 4.50% 336,522* 1.51% 133,262 194,163
2. 3,469,299 6.89% 514,792* 2.31% 203,856 297,016
3. 1,120,249 2.22% 166,228 0.74% 65,826 95,908
4. 2,655,143 5.27% 393,983* 1.76% 156,017 227,317
5. 2,601,973 5.16% 386,093* 1.73% 152,893 222,765
6. 2,857,970 5.67% 424,079* 1.90% 167,935 244,681
7. 2,601,974 5.16% 386,094* 1.73% 152,893 222,765
8. 2,036,418 4.04% 302,174* 1.35% 119,661 174,346
9. 1,642,568 3.26% 243,732* 1.09% 96,518 140,627
10. 3,917,840 7.78% 581,348* 2.60% 230,214 335,422
11. 2,381,643 4.73% 353,400* 1.58% 139,946 203,901
12. 1,896,530 3.76% 281,416* 1.26% 111,441 162,370
13. 2,168,310 4.30% 321,744* 1.44% 127,411 185,638
14. 1,295,989 2.57% 192,305 0.86% 76,153 110,955
15. 2,083,124 4.13% 309,104* 1.38% 122,405 178,344
16. 1,036,791 2.06% 153,844 0.69% 60,922 88,763
17. 619,206 1.23% 91,881 0.41% 36,385 53,013
18. 518,396 1.03% 76,922 0.34% 30,461 44,382
19. 952,658 1.89% 141,360 0.63% 55,979 81,561
20. 412,805 0.82% 61,254 0.27% 24,257 35,342
21. 758,611 1.51% 112,566 0.50% 44,576 64,947
22. 471,962 0.94% 70,032 0.31% 27,733 40,407
23. 758,611 1.51% 112,566 0.50% 44,576 64,947
24. 952,658 1.89% 141,360 0.63% 55,979 81,561
25. 518,396 1.03% 76,922 0.34% 30,461 44,382
26. 867,325 1.72% 128,698 0.58% 50,964 74,255
27. 758,611 1.51% 112,566 0.50% 44,576 64,947
28. 412,805 0.82% 61,254 0.27% 24,257 35,342
29. 518,396 1.03% 76,922 0.34% 30,461 44,382
30. 518,396 1.03% 76,922 0.34% 30,461 44,382
31. 518,396 1.03% 76,922 0.34% 30,461 44,382
32. 833,248 1.65% 123,641 0.55% 48,962 71,338
33. 606,890 1.20% 90,053 0.40% 35,661 51,958
34. 311,037 0.62% 46,153 0.21% 18,277 26,630
35. 259,197 0.51% 38,461 0.17% 15,231 22,192
36. 226,789 0.45% 33,652 0.15% 13,326 19,416
37. 259,197 0.51% 38,461 0.17% 15,231 22,192
38. 259,197 0.51% 38,461 0.17% 15,231 22,192
39. 433,660 0.86% 64,349 0.29% 25,482 37,127
40. 259,197 0.51% 38,461 0.17% 15,231 22,192
41. 207,358 0.41% 30,769 0.14% 12,185 17,754
42. 207,358 0.41% 30,769 0.14% 12,185 17,754
43. 207,358 0.41% 30,769 0.14% 12,185 17,754
44. 124,471 0.25% 18,470 0.08% 7,314 10,656
45. 239,418 0.48% 35,526 0.16% 14,068 20,497
46. 155,518 0.31% 23,077 0.10% 9,138 13,314
47. 129,599 0.26% 19,231 0.09% 7,615 11,095
48. 77,760 0.15% 11,538 0.05% 4,569 6,657
----------- ------- --------- ------ --------- ---------
50,388,201 100.00% 7,476,846 33.48% 2,960,831 4,313,931
----------- ======= --------- ====== --------- ---------
508,971 75,524 0.34% 29,908 43,576
----------- --------- ------ --------- ---------
$50,897,172 7,552,370 33.82% 2,990,739 4,357,507
=========== ========= ====== ========= =========
* REPRESENTS OVER 1% OF O/S STOCK. (13 INVESTORS)
SCHEDULE III
DISSOLUTION DATES
Latest
------
Name of Stockholder Dissolution Date
------------------- ----------------
MERRILL LYNCH CAPITAL APPRECIATION December 31, 2003
PARTNERSHIP NO. B-XVIII, L.P.
MERRILL LYNCH KECALP L.P. 1994 December 31, 2034
ML OFFSHORE LBO PARTNERSHIP NO. B-XVIII December 31, 2003
ML IBK POSITIONS, INC. None.
MLCP ASSOCIATES L.P. NO. II December 31, 2002
MLCP ASSOCIATES L.P. NO. IV December 31, 2006
MERRILL LYNCH KECALP L.P. 1991 December 31, 2033
MERRILL LYNCH CAPITAL APPRECIATION December 31, 2000
PARTNERSHIP NO. XIII, L.P.
ML OFFSHORE LBO PARTNERSHIP NO. XIII December 31, 2000
ML EMPLOYEES LBO PARTNERSHIP NO. I, L.P. December 31, 2004
MERRILL LYNCH KECALP L.P. 1987 December 31, 2029
MERCHANT BANKING L.P. NO. II December 31, 2000