FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
- ----------
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
- --------------------------------------------------------------------------------
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission file number 1-3122
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Ogden Corporation
-----------------
(Exact name of registrant as specified in its charter)
Delaware 13-5549268
- ------------------------------- ------------------------------
(State or other jurisdiction of I.R.S. Employer Identification
incorporation or organization) Number)
Two Pennsylvania Plaza, New York, New York 10121
------------------------------------------------
(Address or principal executive office) (Zip Code)
(212)-868-6100
------------------------------------------------
(Registrant's telephone number including
area code)
Not Applicable
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(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each of the issuer's classes of common
stock, as of June 30, 1999; 49,218,532 shares of Common Stock, $.50 par value
per share.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGDEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE THREE MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
(In Thousands of Dollars, Except per Share Data)
<S> <C> <C> <C> <C>
Service revenues $ 557,058 $ 544,440 $ 292,483 $ 284,231
Net sales 214,005 259,720 131,066 143,898
Construction revenues 67,870 7,948 33,769 4,616
Net gain on disposition of businesses 18,431 45,222 3,500 39,710
--------- --------- --------- ---------
Total revenues 857,364 857,330 460,818 472,455
--------- --------- --------- ---------
Operating costs and expenses 425,937 426,924 206,682 231,132
Costs of goods sold 194,390 243,583 122,573 134,844
Construction costs 65,209 7,314 32,934 4,381
Selling, administrative and
general expenses 60,192 59,449 32,356 30,428
Debt service charges 46,699 50,441 23,936 25,320
--------- --------- --------- ---------
Total costs and expenses 792,427 787,711 418,481 426,105
--------- --------- --------- ---------
Consolidated operating income 64,937 69,619 42,337 46,350
Equity in net income of
investees and joint ventures 6,231 4,047 2,453 3,194
Interest income 4,980 7,046 1,813 3,506
Interest expense (19,690) (16,895) (10,106) (8,299)
Other income (deductions)-net 5,267 172 5,108 (117)
--------- --------- --------- ---------
Income before income taxes,
minority interests and the
cumulative effect of change
in accounting principle 61,725 63,989 41,605 44,634
Less: income taxes 23,457 24,316 15,811 17,151
minority interests 2,755 913 802 423
--------- --------- --------- ---------
Income before cumulative effect of
change in accounting principle 35,513 38,760 24,992 27,060
Cumulative effect of change in
accounting principle (net of
income taxes $1,313) (3,820)
--------- --------- --------- ---------
Net Income 31,693 38,760 24,992 27,060
--------- --------- --------- ---------
Other comprehensive income,
Net Of Tax:
Foreign currency translation adjustments (7,357) (1,375) (1,152) (1,114)
Unrealized holding gains(losses) arising
during period (549) 103 (429) 48
--------- --------- --------- ---------
Other comprehensive income (7,906) (1,272) (1,581) (1,066)
--------- --------- --------- ---------
Comprehensive income $ 23,787 $ 37,488 $ 23,411 $ 25,994
========= ========= ========= =========
BASIC EARNINGS PER SHARE
Income before cumulative
effect of change in
accounting principle $ .72 $ .77 $ .51 $ .54
Cumulative effect of change
in accounting principle (.07)
--------- --------- --------- ---------
Net Income $ .65 $ .77 $ .51 .54
========= ========= ========= =========
DILUTED EARNINGS PER SHARE
Income before cumulative effect
of change in accounting principle $ .71 $ .75 $ .49 $ .52
Cumulative effect of change in
accounting principle (.07)
--------- --------- --------- ---------
Net Income $ .64 $ .75 $ .49 $ .52
========= ========= ========= =========
</TABLE>
<PAGE>
OGDEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
1999 1998
----------- -----------
(In Thousands of Dollars)
ASSETS
Current Assets:
Cash and cash equivalents $ 100,196 $ 261,119
Marketable securities available for sale 44,685
Restricted funds held in trust 143,834 110,553
Receivables (less allowances: 1999,
$21,889 and 1998, $30,595) 405,699 394,923
Inventories 30,985 31,100
Deferred income taxes 49,690 49,327
Other 79,560 62,742
----------- -----------
Total current assets 809,964 954,449
Property, plant and equipment-net 2,156,811 1,987,643
Restricted funds held in trust 175,310 180,922
Unbilled service and other receivables 189,686 173,630
Unamortized contract acquisition costs 195,398 132,818
Goodwill and other intangible assets 164,626 130,031
Investments in and advances to investees and
joint ventures 239,663 205,702
Other assets 159,035 157,648
----------- -----------
Total Assets $ 4,090,493 $ 3,922,843
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Current Liabilities:
Notes payable $ 25,641 $ 45,600
Current portion of long-term debt 43,513 30,232
Current portion of project debt 61,849 63,201
Dividends payable 15,415 15,403
Accounts payable 119,730 94,629
Federal and foreign income taxes payable 9,300 21,776
Accrued expenses, etc. 295,510 305,942
Deferred income 50,890 47,991
----------- -----------
Total current liabilities 621,848 624,774
Long-term debt 497,710 391,287
Project debt 1,437,492 1,367,528
Deferred income taxes 399,968 396,648
Deferred income 196,168 201,563
Other liabilities 210,141 215,119
Minority interests 30,501 28,174
Convertible subordinated debentures 148,650 148,650
----------- -----------
Total Liabilities 3,542,478 3,373,743
----------- -----------
Shareholders' Equity:
Serial cumulative convertible preferred
stock, par value $1.00 per share; authorized
4,000,000 shares; shares outstanding: 41,316
in 1999 and 42,218 in 1998; net of treasury
shares of 29,820 in 1999 and 1998,respectively 41 43
Common stock, par value $.50 per share;
authorized, 80,000,000 shares; shares
outstanding: 49,218,532 in 1999 and
48,945,989 in 1998, net of treasury
shares of 4,486,603 and 4,561,963 in
1999 and 1998, respectively 24,609 24,473
Capital surplus 179,181 173,413
Earned surplus 368,903 367,984
Accumulated other comprehensive income (24,719) (16,813)
----------- -----------
Total Shareholders' Equity 548,015 549,100
----------- -----------
Total Liabilities and Shareholders' Equity $ 4,090,493 $ 3,922,843
=========== ===========
<PAGE>
OGDEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31, 1998
Shares Amounts Shares Amounts
---------------------- ----------------------
(In Thousands of Dollars, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Serial Cumulative Convertible Preferred
Stock, Par Value $1.00 Per Share;
Authorized 4,000,000 Shares:
Balance at beginning of period 72,038 $ 73 74,166 $ 75
Shares converted into common stock (902) (2) (2,128) (2)
---------------------- ----------------------
Total 71,136 71 72,038 73
Treasury shares (29,820) (30) (29,820) (30)
---------------------- ----------------------
Balance at end of period (aggregate
involuntary liquidation value - 1999
$833) 41,316 41 42,218 43
---------------------- ----------------------
Common Stock, Par Value $.50 Per Share;
Authorized, 80,000,000 Shares:
Balance at beginning of year 53,507,952 26,754 53,430,246 26,715
Exercise of stock options 65,000 33
Shares issued for acquisition 191,800 96
Conversion of preferred shares 5,383 2 12,706 6
---------------------- ----------------------
Total 53,705,135 26,852 53,507,952 26,754
---------------------- ----------------------
Treasury shares at beginning of year 4,561,963 2,281 3,135,123 1,568
Purchase of treasury shares 102,000 51 2,121,100 1,060
Exercise of stock options (177,360) (89) (694,260) (347)
---------------------- ----------------------
Treasury shares at end of period 4,486,603 2,243 4,561,963 2,281
---------------------- ----------------------
Balance at end of period 49,218,532 24,609 48,945,989 24,473
---------------------- ----------------------
Capital Surplus:
Balance at beginning of period 173,413 212,383
Exercise of stock options 3,323 16,355
Shares issued for acquisition 4,904
Purchase of treasury shares (2,458) (55,321)
Conversion of preferred shares (1) (4)
--------- ---------
Balance at end of period 179,181 173,413
--------- ---------
Earned Surplus:
Balance at beginning of period 367,984 343,237
Net income 31,693 86,970
--------- ---------
Total 399,677 430,207
--------- ---------
Preferred dividends-per share 1999,
$1.6752, 1998, $3.35 70 144
Common dividends-per share 1999, $.625
1998, $1.25 30,704 62,079
--------- ---------
Total dividends 30,774 62,223
--------- ---------
Balance at end of period 368,903 367,984
--------- ---------
Cumulative Translation Adjustment-Net (23,389) (16,032)
--------- ---------
Minimum Pension Liability Adjustment (716) (716)
--------- ---------
Net Unrealized Loss on Securities
Available For Sale (614) (65)
--------- ---------
CONSOLIDATED SHAREHOLDERS' EQUITY $ 548,015 $ 549,100
========= =========
</TABLE>
<PAGE>
OGDEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30
----------------------
1999 1998
--------- ---------
(In Thousands of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 31,693 $ 38,760
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and amortization 62,361 54,609
Deferred income taxes 14,632 9,416
Cumulative effect of change in accounting principle 3,820
Other (37,784) (44,694)
Management of Operating Assets and Liabilities:
Decrease (Increase) in Assets:
Receivables (5,225) 17,931
Inventories 808 (2,879)
Other assets (22,329) (20,097)
Increase (Decrease) in Liabilities:
Accounts payable 30,808 (10,359)
Accrued expenses (9,954) (22,216)
Deferred income (143) 202,504
Other liabilities (33,365) 9,667
--------- ---------
Net cash provided by operating activities 35,322 232,642
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of business 19,827 79,857
Proceeds from sale of property, plant and equipment 3,283 1,074
Proceeds from sale of marketable securities
available for sale 44,685
Entities purchased, net of cash acquired (133,733)
Investments in Energy facilities (21,480) (12,095)
Other capital expenditures (50,544) (53,629)
Decrease (increase) in other receivables (7,573) 3,399
Distribution from investees and joint ventures 10,500 3,949
Increases in investments in and advances to
investees and joint ventures (32,187) (38,438)
Other investing activities (10,000)
--------- ---------
Net cash used in investing activities (177,222) (15,883)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings for Energy facilities 3,816 118,063
Other new debt 96,402 68,192
Increase in funds held in trust (27,674) (205,769)
Payment of debt (58,384) (107,200)
Dividends paid (30,762) (31,477)
Purchase of treasury shares (2,509) (22,167)
Proceeds from exercise of stock options 3,412 9,698
Other financing activities (3,324) (2,858)
--------- ---------
Net cash used in financing activities (19,023) (173,518)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (160,923) 43,241
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 261,119 185,671
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 100,196 $ 228,912
========= =========
<PAGE>
OGDEN CORPORATION AND SUBSIDIARIES
JUNE 30, 1999
ITEM 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and, therefore, do not include
all information and footnotes necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. However, in the opinion of Management, all
adjustments consisting of normal recurring accruals necessary for a fair
presentation of the operating results have been included in the statements.
On January 1, 1999 the Company adopted the American Institute of Certified
Public Accountants (AICPA) Statement of Position (SOP) 98-5 "Reporting on the
Costs of Start-Up Activities". This SOP establishes accounting standards for
these costs and requires they generally be expensed as incurred. The effect of
the adoption of this SOP was a charge of $3,820,000 net of income taxes of
$1,313,000 recorded as a cumulative effect of change in accounting principle in
the accompanying financial statements.
The accompanying financial statements for prior periods have been reclassified
as to certain amounts to conform with the 1999 presentation.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
Operations:
Revenues and income from operations (expressed in thousands of dollars) by
segment for the six months and three months ended June 30, 1999 and 1998 were as
follows:
<TABLE>
<CAPTION>
Information Concerning Six Months Ended Three Months Ended
Business Segments June 30, June 30,
---------------------------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues:
Entertainment $ 255,642 $ 218,032 $ 150,059 $ 124,701
Aviation 114,828 198,503 58,689 118,217
Energy 449,453 389,453 232,385 206,245
Other 37,441 51,342 19,685 23,292
--------- --------- --------- ---------
Total Revenues 857,364 857,330 460,818 472,455
--------- --------- --------- ---------
Income (Loss) from Operations:
Entertainment 10,469 14,816 8,446 9,145
Aviation 18,108 37,493 9,147 29,883
Energy 48,057 38,597 31,243 23,020
Other (2,627) (706) (1,352) (694)
--------- --------- --------- ---------
Total Income from Operations 74,007 90,200 47,484 61,354
Equity in net income (loss) of investees
and joint ventures:
Entertainment (2,623) (2,436) (1,256) (1,348)
Aviation 2,910 (2,264) 1,235 (3,292)
Energy 5,944 8,747 2,474 7,834
Other -- -- -- --
--------- --------- --------- ---------
Total 80,238 94,247 49,937 64,548
Corporate unallocated expenses - net (3,803) (20,409) (39) (15,121)
Corporate interest - net (14,710) (9,849) (8,293) (4,793)
--------- --------- --------- ---------
Income Before Income Taxes and
Minority Interests $ 61,725 $ 63,989 $ 41,605 $ 44,634
========= ========= ========= =========
</TABLE>
<PAGE>
Revenues for the first six months of 1999 were $34,000 higher than the
comparable period of 1998. This was primarily due to an increase of $60,000,000
in the Energy segment chiefly associated with an increase of $59,900,000 in
construction revenues primarily reflecting increased activity in the
Environmental group and in Waste-to-Energy retrofits, increased revenues in the
Independent Power group overseas operations primarily reflecting operations
acquired in 1999 and a gain on the sale of a joint venture interest. These
increases were partially offset by lower revenue in Waste-to-Energy chiefly
associated with the closing of the Lawrence, Massachusetts facility and the
amortization of the prepayment of a power sales agreement, and in the
Environmental group reflecting lower activity in domestic and Spanish
operations. The Entertainment segment's revenues were $37,600,000 higher
primarily due to the acquisition of Casino Iguazu in late 1998, five Water Park
attractions in 1999, increased activity in amphitheater concert operations, the
gain on the sale of certain contracts as well as a gain associated with the
renegotiation of a management contract at Arrowhead Pond, partially offset by
lower activity in food and beverage operations at several shopping mall
locations. These increases in Energy and Entertainment revenues were offset by a
decrease of $83,700,000 in the Aviation segments' revenues chiefly associated
with the sale of inflight catering operations in June 1998 which had revenues of
$68,300,000 in 1998 and an adjusted gain on the sale of $36,400,000 in the first
six months of 1998, partially offset by the acquisition of the Flight Services
Group in March 1999, Hong Kong operations which commenced in the third quarter
of 1998, and increased activity in European and Domestic ground services and
fueling operations. The Other segments' revenues decreased $13,900,000 chiefly
associated with lower activity at Datacom (formerly Atlantic Design) and on
government contracts.
Consolidated operating income for the first six months of 1999 was $4,700,000
lower than the comparable period of 1998 primarily due to lower income from
operations in the Aviation segment of $19,400,000 primarily reflecting the
adjusted gain on the sale of the inflight catering operations in the second
quarter of 1998 reduced by provisions for restructuring European operations,
certain legal claims and other charges in 1998 which were partially offset by
increased activity in domestic ground handling and fueling operations and in
international operations as well as the acquisition of the Flight Services Group
in March 1999. The Entertainment segment's income from operations was $4,400,000
lower chiefly associated with losses incurred at several site based locations
(Tinseltown, Casino Iguazu and American Wilderness), start up losses at several
shopping malls and certain fees received in 1998, partially offset by gain on
the renegotiation of the management contract at Arrowhead Pond of $6,025,000,
and the gain on the sale of certain amphitheater contracts of $7,200,000. The
Other segments' income from operations was $1,900,000 lower primarily reflecting
additional income recognized in 1998 on the sale of Facility Services operations
which were sold in 1997, partially offset by lower operating losses in 1999 at
Datacom. These reductions in income from operations for the Aviation,
Entertainment and Other segments were partially offset by an increase of
$9,500,000 in the Energy segment income from operations primarily due to an
increase of $17,700,000 in Independent Power operations chiefly associated with
a gain of $4,800,000 on the sale of a joint venture interest, adjustments of
$9,000,000 associated with the acquisition of the remaining 50% interest
<PAGE>
in a joint venture and increased income in certain operations of $3,500,000.
These increases were partially offset by lower income of $5,100,000 in
Waste-to-Energy chiefly associated with the closing of the Lawrence facility,
reduced activity at several other facilities, the amortization of the prepayment
of a power sales agreement and a gain in 1998 of $9,000,000 on the sale of a
power sales agreement partially offset by a gain of $9,300,000 on the
renegotiation of a facility contract in 1999. Environmental operations had lower
income of $3,100,000 reflecting decreased foreign and domestic activity.
Debt service charges decreased $3,700,000 primarily due to lower debt
outstanding on various facilities caused by redemption, refinancing and
maturities of bonds. The Energy segment had interest rate swap agreements
entered into as hedges against interest rate exposure on adjustable rate project
debt that resulted in additional debt service expense of $1,141,000 and $355,000
for the six months ended June 30, 1999 and 1998, respectively. Two of these
interest rate swap agreements were terminated in the third and fourth quarters
of 1998.
Corporate unallocated expenses - net for the six months ended June 30, 1999 were
$16,600,000 lower than the comparable period of 1998. This decrease primarily
reflects restructuring costs, certain litigation and proxy related charges
provided for in the second quarter of 1998 and other income reflecting a gain of
$5,100,000 on the sale of an investment in June 1999.
Interest income for the six months ended June 30, 1999 was $2,100,000 lower than
the comparable period of 1999 primarily reflecting the repayment of loans to
customers and joint ventures, notes received from the sale of various
operations, and interest received in 1998 on state tax refunds. Interest expense
was $2,800,000 higher chiefly associated with increased borrowings relating to
overseas and domestic acquisition and expansion activities. Ogden has one
interest rate swap agreement covering a notional amount of $2,400,000 which
expires November 30, 2000 and was entered into to convert Ogden's variable rate
debt to a fixed rate. Another swap agreement expired December 16, 1998 and was
entered into to convert Ogden's fixed rate $100,000,000 9.25% debentures to a
variable rate. Additional interest expense relating to these swap agreements was
not significant in the first six months of 1998 and 1999, respectively.
Equity in income of investees and joint ventures for the six months ended June
30, 1999 was $2,200,000 higher than the comparable period of 1998 primarily
reflecting increased earnings in Aviation joint ventures which were affected by
the write off of start-up costs at Argentina and Colombia joint ventures in 1998
partially offset by decreased earnings of Pacific Energy Inc. joint ventures,
which included the buy out of an energy sales agreement with respect to a 50%
joint venture in 1998.
The effective income tax rate for the first six months of 1999 and 1998 was 38%
for both periods.
<PAGE>
Revenues for the three months ended June 30, 1999 were $11,600,000 lower than
the comparable period of 1998. This decrease was primarily due to a decrease of
$59,500,000 in the Aviation segment chiefly associated with the sale of the
inflight catering business in June 1998 which had revenues of $35,100,000 in
1998 and an adjusted gain on the sale of $36,400,000 partially offset by the
acquisition of Flight Services Group in March 1999, the start up of Hong Kong
operations in late 1998 and increased activity in ground services operations.
The Other segment's revenues were $3,600,000 lower primarily reflecting reduced
activity at Datacom. These decreases in the Aviation and Other segments'
revenues were partially offset by an increase of $26,100,000 in the Energy
segment chiefly associated with an increase of $29,200,000 in construction
revenues primarily reflecting increased activity in the Environmental Group and
in Waste-to-Energy retrofits and an increase of $7,400,000 in Independent Power
operations chiefly associated with operations acquired in 1999. These increases
were partially offset by reduced operating activity in Waste-to-Energy
operations chiefly associated with the closing of the Lawrence facility and the
amortization of the prepayment of a power sales agreement and in the
Environmental group reflecting lower activity in domestic and foreign
operations. The Entertainment segment's revenues were $25,400,000 higher
primarily reflecting increased concert activity, the acquisition of several new
contracts, Casino Iguazu, four Water Parks and the gain on the sale of certain
Amphitheater contracts.
Consolidated operating income for the three months ending June 30, 1999 was
$4,000,000 lower than the comparable period of 1998. The Aviation segment's
income from operations was $20,700,000 lower primarily reflecting the adjusted
gain on the sale of inflight catering operations in June 1998 reduced by
provisions for restructuring European operations, certain legal claims and other
charges partially offset by increased activity in domestic and international
fueling and ground services operations and the acquisition of Flight Services
Group. The Entertainment segment's income from operations was $700,000 lower
chiefly associated with losses incurred at several site based locations
(Tinseltown, Casino Iguazu, American Wilderness) and certain fees and bad debt
recovery in 1998 partially offset by the gain on the sale of certain
Amphitheater contracts. The Other segment's income from operations was $700,000
lower primarily reflecting charges relating to the sale of Facility Services,
partially offset by increased margins at Datacom. These reductions in the
Entertainment, Aviation and Other segments were partially offset by an increase
in income from operations of $8,200,000 in the Energy segment chiefly associated
with an increase of $13,300,000 in Independent Power group's income from
operations reflecting adjustments of $9,000,000 associated with the acquisition
of the remaining 50% of a joint venture, and increased operating income in
certain subsidiaries, partially offset by decreased operating income of
$5,300,000 in the Waste-to-Energy group primarily reflecting the closing of the
Lawrence facility, the amortization of the prepayment of a power sales agreement
and a gain of $9,300,000 on the renegotiation of a facility contract in 1999
partially offset by a gain in 1998 of $9,000,000 on the sale of a power sales
agreement and lower income of $1,500,000 in Environmental operations reflecting
lower domestic activity and a loss in Spanish operations.
<PAGE>
Debt service charges decreased $1,400,000 due primarily to lower debt
outstanding on various facilities caused by redemption, refinancing and
maturities of bonds. The Energy segment had interest rate swap agreements
entered into as hedges against interest rate exposure on adjustable rate project
debt that resulted in additional debt service expense of $413,000 and $108,000
for the three months ended June 30, 1999 and 1998, respectively. Two of these
interest rate swap agreements were terminated in the third and fourth quarters
of 1998.
Corporate unallocated expenses - net for the three months ended June 30, 1999
were $15,100,000 lower than the comparable period of 1998. This decrease
primarily reflects restructuring costs, certain litigation and proxy related
charges provided for in the second quarter of 1998 and other income reflecting a
gain of $5,100,000 on the sale of an investment in June 1999.
Interest income for the three months ended June 30, 1999 was $1,700,000 lower
than the comparable period of 1998 primarily reflecting the repayment of loans
by customers and joint ventures, notes received from the sale of various
operations and interest received in 1998 on state tax refunds. Interest expense
was $1,800,000 higher primarily reflecting increased borrowings relating to
overseas and domestic acquisitions and expansion activity. Ogden had one
interest rate swap agreement covering a notional amount of $2,400,000 which
expires November 30, 2000 and was entered into to convert Ogden's variable rate
debt to a fixed rate. Another swap agreement expired December 16, 1998.
Additional interest expense relating to these swap agreements was not
significant for the three months ended June 30, 1999 and 1998, respectively.
Equity in net income of investees and joint ventures for the three months ended
June 30, 1999 was $700,000 lower than the comparable period of 1998 chiefly
associated with the operations of Pacific Energy joint ventures which included
the buy out of an energy sales agreement with respect to a 50% joint venture in
1998, partially offset by increased income in Aviation overseas joint ventures
which were affected by the write off of start-up costs at Argentina and Colombia
joint ventures in 1998.
The effective income tax rate for the three months ended June 30, 1999 was 38%
compared with 38.4% for the comparable period of 1998. This decrease of .4% was
chiefly associated with an increase in non-deductible permanent items for U.S.
purposes.
Capital Investment and Commitments: For the six months ended June 30, 1999,
capital investments amounted to $72,000,000, of which $21,400,000, inclusive of
restricted funds transferred from funds held in trust, was for Energy facilities
and $50,600,000 was for normal replacement and growth in Entertainment
($37,100,000), Aviation ($5,600,000), Energy ($6,900,000), and Other
($1,000,000) operations.
At June 30, 1999, capital commitments amounted to $164,600,000, which included
$107,100,000 for normal replacement, modernization, and growth in Entertainment
($93,000,000), Aviation ($3,400,000), and Energy ($10,700,000) operations.
<PAGE>
Energy also has a commitment to pay, in 2008, $10,600,000 for a service contract
extension at a waste-to-energy facility. Also included was $46,900,000 for
Energy's coal-fired power project in the Philippines, a natural gas-fired power
plant in Bangladesh, and an investment in a joint venture, reflecting
$25,200,000 for the remaining mandatory equity contributions, $5,700,000 for
contingent equity contributions, and $16,000,000 for standby letters of credit
in support of debt service reserve requirements. Funding for the remaining
mandatory equity contributions is being provided through bank credit facilities,
which must be repaid in June 2000 through December 2001. The Corporation also
has a $7,300,000 contingent equity contribution in Entertainment ($2,500,000)
and Aviation ($4,800,000) joint ventures. The Corporation has entered into an
agreement to acquire Volume Services of America, Inc. for a purchase price of
$127,000,000 plus approximately $215,000,000 in assumed debt subject to all
regulatory approvals and certain other conditions. A non-refundable payment of
$10,000,000 was made on the signing of this agreement. In addition, compliance
with the standards and guidelines under the Clean Air Act Amendments of 1990 may
require further Energy capital expenditures of approximately $40,000,000 through
December 2000 subject to the final time schedules determined by the individual
states in which the Corporation's waste-to-energy facilities are located.
Ogden and certain of its subsidiaries have issued or are party to performance
bonds and guarantees and related contractual obligations undertaken mainly
pursuant to agreements to construct and operate certain waste-to-energy,
entertainment, and other facilities. In the normal course of business, they are
involved in legal proceedings in which damages and other remedies are sought. In
connection with certain contractual arrangements, Ogden has agreed to provide a
vendor with a specified amount of business over a two-year period. If this
amount is not provided the Corporation may be liable for prorated damages of up
to approximately $3,000,000. Management does not expect that these contractual
obligations, legal proceedings, or any other contingent obligations incurred in
the normal course of business will have a material adverse effect on Ogden's
Consolidated Financial Statements.
During 1994, a subsidiary of Ogden entered into a 30-year facility management
contract, pursuant to which it agreed to advance funds to a customer, and if
necessary, to assist the customer's refinancing of senior secured debt incurred
in connection with the construction of the facility. Ogden is obligated to
purchase such senior secured debt in the amount of $97,050,000 on December 23,
2002, if the debt is not refinanced prior to that time. Ogden is also required
to repurchase the outstanding amount of certain subordinated secured debt of
such customer on December 23, 2002. At June 30, 1999, the amount outstanding was
$51,625,000. In addition, on June 30, 1999, the Corporation has guaranteed
$3,400,000 of senior secured term debt of an affiliate and principal tenant of
this customer and has guaranteed up to $3,400,000 of the tenant's secured
revolving debt. In addition, Ogden is obligated to purchase $20,381,000 of the
tenant's secured subordinated indebtedness on January 29, 2004, if such
indebtedness has not been repaid or refinanced prior to that time. Ogden has
guaranteed approximately $4,000,000 of borrowings of a joint venture in which
<PAGE>
Ogden has an equity interest. Management does not expect that these arrangements
will have a material adverse effect on Ogden's Consolidated Financial
Statements.
Liquidity/Cash Flow: Net cash provided from operating activities was
$197,300,000 lower than the comparable period of 1998 primarily reflecting a
decrease in deferred income of $202,600,000 chiefly associated with the
prepayment of a power sales agreement for the Haverhill waste-to-energy plant in
1998. Net cash used in investing activities increased $161,300,000 primarily
reflecting the purchase of Energy operations in the Philippines and Thailand and
the remaining 50% interest in a joint venture as well as the Flight Services
group and five Water Parks in the United States and Brazil amounting to
$133,700,000, a decrease in proceeds from sale of businesses of $57,800,000, an
increase in capital expenditures of $6,300,000, an increase of $10,000,000 in
other investments, partially offset by the proceeds from the sale of marketable
securities of $44,700,000. Net cash used in financing activities was
$154,500,000 lower primarily reflecting a reduction of funds held in trust of
$178,100,000 chiefly associated with the prepayment of a power sales agreement
in 1998, and a decrease of $19,700,000 for the purchase of treasury shares
partially offset by a net decrease of $37,200,000 in debt chiefly associated
with acquisitions and $6,300,000 lower proceeds from the exercise of stock
options.
Exclusive of changes in Energy facility construction activities and the
contracts discussed herein, the Corporation's other types of contracts are not
expected to have a material effect on liquidity. Cash required for investing and
financing activities is expected to be satisfied from operating activities;
available funds, including short-term investments; proceeds from the sale of
noncore businesses; proceeds from the sale of debt or equity securities; and the
Corporation's unused credit facilities to the extent needed. Debt service
associated with project debt of waste-to-energy facilities, which is an explicit
component of a client community's obligation under its service agreement, is
paid as it is billed and collected.
At June 30, 1999, the Corporation had $100,200,000 in cash and cash equivalents
and unused revolving credit lines of $160,000,000.
In 1998, Ogden's Board of Directors authorized the purchase of shares of the
Corporation's common stock in an amount up to $200,000,000. Through June 30,
1999, 2,223,000 shares of common stock were purchased for $58,891,000.
Year 2000 Issues:
Background - The term `Year 2000 issue' generally refers to the problems that
may occur from the improper processing of date sensitive calculations, date
comparisons, and leap year determination by computers and other machinery
containing computer chips (i.e., "embedded systems"). In an effort to save
expensive memory and processing time, historically most of the world's computer
hardware and software used only two digits to identify the year in a date. If
<PAGE>
not corrected or replaced, many systems will fail to distinguish between the
years `2000' and `1900' and will incorrectly process related date information.
State of Readiness - Ogden has established a Year 2000 Project that is actively
addressing its Year 2000 issues. The project is comprised of four phases:
awareness, assessment, action, and anticipation. The awareness phase included
the education of the Corporation's Board of Directors, management, and staff
regarding the Year 2000 issue and the Corporation's strategy to address the
problem. The awareness phase of the project is completed. The objective of the
project's assessment phase is to inventory and assess the Year 2000 compliance
of Ogden's internal information technology and embedded systems, as well as to
ascertain the compliance of the products and services provided to the
Corporation by third parties. Ogden's internal assessment is complete. The
assessment of third parties on which the Corporation relies for key products and
services is now considered an iterative process that will continue through the
end of 1999. Ogden's action phase includes the prioritization, remediation, and
testing of Year 2000 solutions. The Corporation is performing the remediation of
all its mission critical systems, through a series of projects with completion
dates between January 1997 and November 1999. This phase is winding down. The
fourth phase of Ogden's Year 2000 Project, the anticipation phase, includes the
development and implementation of contingency plans for mission critical
business functions. The anticipation phase of the project has begun and is
expected to continue throughout 1999.
Ogden has made considerable progress towards Year 2000 compliance, as a result
of it's initiative to improve access to business information through the
implementation of common, integrated computing systems across the operations of
the Corporation. Early in the process, Ogden adopted the strategy of
implementing industry standard compliant packages, rather than remediate the
code of its legacy systems. This initiative commenced in 1996, with the
replacement of Ogden's domestic administrative systems with the PeopleSoft
systems and the upgrade of associated infrastructure. The implementations of
these Year 2000 compliant systems are completed. Additional efforts to replace
or upgrade the international administrative systems and a variety of key
operating systems are on schedule for completion. Ogden has not deferred any
specific information technology project as a result of the implementation of the
Year 2000 Project.
Costs - The total cost associated with resolving the Corporation's Year 2000
issues is not expected to be material to the Company's financial condition.
Based on the assessments and remediation plans, the estimated costs of the
Company's Year 2000 Project are $11,200,000. Ogden has spent $4,500,000 to date,
and anticipates the majority of the cost being incurred during the summer
months. Because of Ogden's strategy to implement or upgrade a number of systems
(e.g., PeopleSoft) as part of its initiative to improve access to key business
information, those costs of implementation are not included in these estimates.
<PAGE>
Risks - The Securities and Exchange Commission requires that public companies
forecast the most reasonably likely worst case Year 2000 scenario. Based on the
assessment efforts to date, the Company does not believe that the Year 2000
issue will have a material adverse effect on its financial condition or results
of operations. The Company operates a large number of geographically dispersed
sites and has a large supplier base and believes that these factors will
mitigate any adverse impact. The Company's beliefs and expectations, however,
are based on certain assumptions and expectations that ultimately may prove to
be inaccurate.
The Company has identified that a significant disruption in the supply chain
represents the most reasonably likely worst case Year 2000 scenario. Potential
sources of risk include (a) the inability of principal suppliers and providers,
to be Year 2000 ready, which could result in delays in deliveries from such
suppliers and (b) disruption of the Company's ability to provide products and
services as a result of a general failure of systems and necessary
infrastructure such as electricity supply. The Company is preparing contingency
plans around an assumed period of disruption to the supply chain, to reduce the
impact of significant failure.
Contingency Plans - Ogden's Year 2000 project strategy includes the development
of contingency plans for any mission critical business functions determined to
be at risk. While Ogden is not presently aware of any significant exposure,
there can be no assurances that all Year 2000 remediation processes will be
completed and properly tested before the Year 2000, or that contingency plans
will sufficiently mitigate the risk of a Year 2000 compliance problem. Ogden has
begun the development of its contingency plan. The contingency planning process
is an ongoing one which will continue through 1999 as Ogden obtains relevant
Year 2000 compliance information resulting from its internal remediation and
testing efforts, as well as from third parties.
Any statements in this communication, including but not limited to the "Year
2000 Issue" discussion, which may be considered to be "forward-looking
statements," as that term is defined in the Private Securities Litigation Reform
Act of 1995, are subject to certain risk and uncertainties. The factors that
could cause actual results to differ materially from those suggested by any such
statements include, but are not limited to, those discussed or identified from
time to time in the Corporation's public filings with the Securities and
Exchange Commission and more generally, general economic conditions, including
changes in interest rates and the performance of the financial markets; changes
in domestic and foreign laws, regulations, and taxes; changes in competition and
pricing environments; and regional or general changes in asset valuations.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Ogden Corporation and its subsidiaries (the "Company") are parties
to various legal proceedings involving matters arising in the ordinary course of
business. The Company does not believe that there are any pending legal
proceedings for damages against the Company, other than ordinary routine
litigation incidental to its business, the outcome of which would have a
material adverse effect on the Company on a consolidated basis.
(a) Environmental Matters
The Company conducts regular inquiries of its subsidiaries regarding
litigation and environmental violations which include determining the nature,
amount and likelihood of liability for any such claims, potential claims or
threatened litigation.
In the ordinary course of its business, the Company may become
involved in Federal, state, and local proceedings relating to the laws
regulating the discharge of materials into the environment and the protection of
the environment. These include proceedings for the issuance, amendment, or
renewal of the licenses and permits pursuant to which a Company subsidiary
operates. Such proceedings also include actions brought by individuals or local
governmental authorities seeking to overrule governmental decisions on matters
relating to the subsidiaries' operations in which the subsidiary may be, but is
not necessarily, a party. Most proceedings brought against the Company by
governmental authorities or private parties under these laws relate to alleged
technical violations of regulations, licenses, or permits pursuant to which a
subsidiary operates. The Company believes that such proceedings will not have a
material adverse effect on the Company's consolidated financial statements.
The Company's operations are subject to various Federal, state and
local environmental laws and regulations, including the Clean Air Act, the Clean
Water Act, the Comprehensive Environmental Response Compensation and Liability
Act (CERCLA) and Resource Conservation and Recovery Act (RCRA). Although the
Company operations are occasionally subject to proceedings and orders pertaining
to emissions into the environment and other environmental violations, the
Company believes that it is in substantial compliance with existing
environmental laws and regulations.
In connection with certain previously divested operations, the
Company may be identified, along with other entities, as being among potentially
responsible parties responsible for contribution for costs associated with the
correction and remediation of environmental conditions at various hazardous
waste disposal sites subject to CERCLA. In certain instances the Company may be
exposed to joint and several liability for remedial action or damages. The
Company's ultimate liability in connection with such environmental claims will
depend on many factors, including its volumetric share of waste, the total cost
of remediation, the financial viability of other companies that also sent waste
to a given site and its contractual arrangement with the purchaser of such
operations.
II-1
<PAGE>
The potential costs related to such matters and the possible impact
on future operations are uncertain due in part to the complexity of government
laws and regulations and their interpretations, the varying costs and
effectiveness of cleanup technologies, the uncertain level of insurance or other
types of recovery, and the questionable level of the Company's responsibility.
Although the ultimate outcome and expense of environmental remediation is
uncertain, the Company believes that required remediation and continuing
compliance with environmental laws will not have a material adverse effect on
the Company's consolidated financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders of Ogden Corporation was
held on May 20, 1999.
(b) Name of Each Director Elected Name of Each other
----------------------------- Director whose Term of
Office Continued
------------------
George L. Farr David M. Abshire (2000)
Jeffrey F. Friedman Norman G. Einspruch (2000)
Helmut Volcker Attallah Kappas (2000)
Homer A. Neal (2000)
R. Richard Ablon (2001)
Judith D. Moyers (2001)
Robert E. Smith (2001)
Anthony J. Bolland (2001)
(c)(i) Proposal 1: Election of three directors for a three year
term.
Name Votes For Votes Withheld
---- --------- --------------
George L. Farr 37,078,380 5,981,507
Jeffrey F. Friedman 37,076,743 5,983,144
Helmut Volcker 37,071,842 5,988,045
(ii) Proposal 2: Proposal to amend Section 6. of Ogden's
Restated Certificate of Incorporation to eliminate the
provisions for the classification of Ogden's Board of
Directors.
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
34,831,709 2,387,468 208,576 5,644,110
(iii) Proposal 3: Approval of the Ogden 1999 Stock Option Plan.
II-2
<PAGE>
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
32,167,824 5,003,586 256,343 5,644,110
(iv) Proposal 4: Approval of the CEO Formula Bonus Plan.
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
39,072,044 3,689,019 310,800 -0-
(v) Proposal 5: Ratification of the selection of Deloitte &
Touche LLP as independent public accountants of the
corporation and its subsidiaries for the year 1999:
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
42,670,661 283,357 117,845 -0-
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
2 Plans of Acquisition, Reorganization, Arrangement,
Liquidation or Succession.
2.1 Agreement and Plan of Merger, dated as of October 31,
1989, among Ogden, ERCI Acquisition Corporation and ERC
International, Inc.*
2.2 Agreement and Plan of Merger among Ogden Corporation,
ERC International Inc., ERC Acquisition Corporation and
ERC Environmental and Energy Services Co., Inc. dated as
of January 17, 1991.*
2.3 Amended and Restated Agreement and Plan of Merger among
Ogden Corporation, OPI Acquisition Corporation sub. and
Ogden Projects, Inc., dated as of September 27, 1994.*
3 Articles of Incorporation and By-Laws.
3.1 Ogden's Restated Certificate of Incorporation as
amended.*
3.2 Ogden's By-Laws, as amended through April 8, 1998.*
4 Instruments Defining Rights of Security Holders.
II-3
<PAGE>
4.1 Fiscal Agency Agreement between Ogden and Bankers Trust
Company, dated as of June 1, 1987 and Offering
Memorandum dated June 12, 1987, relating to U.S. $85
million Ogden 6% Convertible Subordinated Debentures,
Due 2002.*
4.2 Fiscal Agency Agreement between Ogden and Bankers Trust
Company, dated as of October 15, 1987, and Offering
Memorandum, dated October 15, 1987, relating to U.S. $75
million Ogden 5-3/4% Convertible Subordinated
Debentures, Due 2002.*
4.3 Indenture dated as of March 1, 1992 from Ogden
Corporation to The Bank of New York, Trustee, relating
to Ogden's $100 million debt offering.*
10 Material Contracts
10.1 (a) U.S. $95 million Term Loan and Letter of Credit
and Reimbursement Agreement among Ogden, the
Deutsche Bank AG, New York Branch and the
signatory Banks thereto, dated March 26, 1997.*
(b) Ogden $200 million Credit Agreement by and among
Ogden, The Bank of New York, as Agent and the
signatory Lenders thereto dated as of June 30,
1997.*
10.2 Rights Agreement between Ogden Corporation and
Manufacturers Hanover Trust Company, dated as of
September 20, 1990.*.
10.3 Executive Compensation Plans and Agreements.
(a) Ogden Corporation 1990 Stock Option Plan.*
(i) Ogden Corporation 1990 Stock Option Plan as
Amended and Restated as of January 19,
1994.*
(ii) Amendment adopted and effective as of
September 18, 1997.*
(a) (a) Ogden Corporation 1999 Stock Option Plan, as
amended.
(b) Ogden Services Corporation Executive Pension
Plan.*
(c) Ogden Services Corporation Select Savings Plan
Amendment and Restatement as of January 1, 1995.*
II-4
<PAGE>
(i) Amendment Number One to the Ogden Services
Corporation Select Savings Plan as amended
and restated January 1, 1995, effective
January 1, 1998.*
(d) Ogden Services Corporation Select Savings Plan
Trust Amendment and Restatement as of January 1,
1995.*
(e) Ogden Services Corporation Executive Pension Plan
Trust.*
(i) Ogden Services Corporation Executive Pension
Plan Trust Amendment Number One.
(f) Changes effected to the Ogden Profit Sharing Plan
effective January 1, 1990.*
(g) Ogden Profit Sharing Plan as amended and restated
effective as of January 1, 1995.*
(h) Ogden Corporation Core Executive Benefit Program.*
(i) Ogden Projects Pension Plan.*
(j) Ogden Projects Profit Sharing Plan.*
(k) Ogden Projects Supplemental Pension and Profit
Sharing Plans.*
(l) Ogden Projects Core Executive Benefit Program.*
(m) Form of amendments to the Ogden Projects, Inc.
Pension Plan and Profit Sharing Plans effective as
of January 1, 1994.*
(i) Form of amended Ogden Projects Profit
Sharing Plan effective as of January 1,
1994.*
(ii) Form of amended Ogden Projects Pension Plan,
effective as of January 1, 1994.*
(n) Ogden Corporation Amended and Restated CEO Formula
Bonus Plan.*
(o) Ogden Key Management Incentive Plan.*
II-5
<PAGE>
10.4 Employment Agreements
(a) Employment Letter Agreement between Ogden
Corporation and Lynde H. Coit, Senior Vice
President and General Counsel, dated March 1,
1999.*
(b) Employment Agreement between R. Richard Ablon,
President, Chairman and C.E.O., and Ogden dated as
of January 1, 1998.*
(c) Separation Agreement between Ogden and Philip G.
Husby, Senior Vice President and C.F.O., dated as
of September 17, 1998.*
(d) Employment Agreement between Scott G. Mackin,
Executive Vice President and Ogden Corporation
dated as of October 1, 1998.*
(e) Employment Agreement between Ogden Corporation and
David L. Hahn, Senior Vice President - Aviation,
dated December 1, 1995.*
(i) Letter Amendment to Employment Agreement
between Ogden Corporation and David L. Hahn,
Senior Vice President - Aviation effective
as of October 1, 1998.*
(f) Employment Agreement between Ogden Corporation and
Rodrigo Arboleda, Senior Vice President dated
January 1, 1997.*
(i) Letter Amendment to Employment Agreement
between Ogden Corporation and Rodrigo
Arboleda, Senior Vice President, effective
as of October 1, 1998.*
(g) Employment Agreement between Ogden Projects, Inc.
and Bruce W. Stone, dated June 1, 1990.*
(h) Employment Agreement between Ogden Corporation and
Quintin G. Marshall, Senior Vice President -
Corporate Development, dated October 30, 1996.*
(i) Letter Amendment to Employment Agreement
between Ogden Corporation and Quintin G.
II-6
<PAGE>
Marshall, Senior Vice President - Corporate
Development, effective as of October 1,
1998.*
(i) Employment Agreements between Ogden and Jesus
Sainz, Executive Vice President, effective as of
January 1, 1998.*
(i) Letter Amendment to Employment Agreement
between Ogden Corporation and Jesus Sainz,
Executive Vice President, effective as of
October 1, 1998.*
(j) Employment Agreement between Alane Baranello, Vice
President - Human Resources, and Ogden Services
Corporation dated October 28, 1996.*
(i) Letter Amendment to Employment Agreement
between Ogden Corporation and Alane
Baranello, Vice President - Human Resources,
dated as of October 13, 1998.*
(k) Employment Agreement between Peter Allen, Senior
Vice President, and Ogden Corporation dated July
1, 1998.*
(l) Employment Agreement between Ogden Corporation and
Raymond E. Dombrowski, Jr., Senior Vice President
and C.F.O., dated as of September 21, 1998.*
10.5 Stock Purchase Agreement among Volume Services America
Holdings, Inc.; BCP Volume L.P.; BCP Offshore Volume
L.P.; Recreational Services L.L.C.; VSI Management
Direct L.P.; General Electric Capital Corporation; and
Ogden Entertainment, Inc., dated June 24, 1999.
11 Detail of Computation of Earnings applicable to Common
Stock.
27 Financial Data Schedule (EDGAR Filing Only).
Incorporated by reference as set forth in the Exhibit Index of this Form
10-Q.
(b) Reports on Form 8-K
A Form 8-K Current Report was filed on June 28, 1999 and is
incorporated herein by reference.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
OGDEN CORPORATION
(Registrant)
Date: August 16, 1999 By /s/ Raymond E. Dombrowski, Jr.
-------------------------------
Raymond E. Dombrowski, Jr.
Senior Vice President
and Chief Financial
Officer
Date: August 16, 1999 By: /s/ William J. Metzger
-------------------------------
William J. Metzger
Vice President and
Chief Accounting Officer
II-8
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION OF DOCUMENT FILING INFORMATION
--- ----------------------- ------------------
2 Plan of Acquisition, Reorganization Arrangement, Liquidation or
Succession.
2.1 Agreement and Plan of Filed as Exhibit 2 to
Merger, dated as of October Ogden's Form S-4
31, 1989, among Ogden, ERCI Registration Statement File
Acquisition Corporation and No. 33-32155, and
ERC International Inc. incorporated herein by
reference.
2.2 Agreement and Plan of Merger Filed as Exhibit (10)(x) to
among Ogden Corporation, ERC Ogden's Form 10-K for the
International Inc., ERC fiscal year ended December
Acquisition Corporation and 31, 1990 and incorporated
ERC Environmental and Energy herein by reference.
Services Co., Inc. dated as
of January 17, 1991.
2.3 Amended and Restated Filed as Exhibit 2 to
Agreement and Plan of Merger Ogden's Form S-4
among Ogden Corporation, OPI Registration Statement File
Acquisition Corporation sub. No. 33-56181 and
and Ogden Projects, Inc. incorporated herein by
dated as of September 27, reference.
1994.
3 Articles of Incorporation
and By-Laws.
3.1 Ogden's Restated Certificate Filed as Exhibit (3)(a) to
of Incorporation as amended. Ogden's Form 10-K for the
fiscal year ended December
31, 1988 and incorporated
herein by reference.
3.2 Ogden By-Laws as amended. Filed as Exhibit 3.2 to
Ogden's Form 10-Q for the
quarterly period ended March
31, 1998 and incorporated
herein by reference.
4 Instruments Defining Rights
of Security Holders.
1
<PAGE>
EXHIBIT
NO. DESCRIPTION OF DOCUMENT FILING INFORMATION
--- ----------------------- ------------------
4.1 Fiscal Agency Agreement Filed as Exhibits (C)(3) and
between Ogden and Bankers (C)(4) to Ogden's Form 8-K
Trust Company, dated as of filed with the Securities
June 1, 1987 and Offering and Exchange Commission on
Memorandum dated June 12, July 7, 1987 and
1987, relating to U.S. $85 incorporated herein by
million Ogden 6% Convertible reference.
Subordinated Debentures, Due
2002.
4.2 Fiscal Agency Agreement Filed as Exhibit (4)to
between Ogden and Bankers Ogden's Form S-3
Trust Company, dated as of Registration Statement filed
October 15, 1987, and with the Securities and
Offering Memorandum, dated Exchange Commission on
October 15, 1987, relating December 4, 1987,
to U.S. $75 million Ogden Registration No. 33-18875,
5-3/4% Convertible and incorporated herein by
Subordinated Debentures, Due reference.
2002.
4.3 Indenture dated as of March Filed as Exhibit (4)(C) to
1, 1992 from Ogden Ogden's Form 10-K for fiscal
Corporation to The Bank of year ended December 31,
New York, Trustee, relating 1991, and incorporated
to Ogden's $100 million debt herein by reference.
offering.
10 Material Contracts
10.1(a) U.S. $95 million Term Loan Filed as Exhibit 10.6 to
and Letter of Credit and Ogden's Form 10-Q for the
Reimbursement Agreement quarterly period ended March
among Ogden, the Deutsche 31, 1997 and incorporated
Bank AG, New York Branch and herein by reference.
the signatory Banks thereto,
dated March 26, 1997.
10.1(b) $200 million Credit Filed as Exhibit 10.1(i) to
Agreement among Ogden, The Ogden's Form 10-Q for the
Bank of New York as Agent quarterly period ended June
and the signatory Lenders 30, 1997 and incorporated
thereto, dated as of June herein by reference.
30, 1997.
10.2 Rights Agreement between Filed as Exhibit (10)(h) to
Ogden Corporation and Ogden's Form 10-K for the
Manufacturers Hanover Trust fiscal year ended December
Company, dated as of 31, 1990 and incorporated
September 20, 1990 and herein by reference.
amended August 15, 1995 to
provide The Bank of New York
as successor agent.
2
<PAGE>
10.3 Executive Compensation Plan and Agreements.
(a) Ogden Corporation 1990 Filed as Exhibit (10)(j) to
Stock Option Plan. Ogden Form 10-K for the
fiscal year ended December
31, 1990 and incorporated
herein by reference.
(i) Ogden Filed as Exhibit 10.6(b)(i)
Corporation 1990 to Ogden's Form 10-Q for the
Stock Option quarterly period ended
Plan as Amended September 30, 1994 and
and Restated as incorporated herein by
of January 19, reference.
1994.
(ii) Amendment Filed as Exhibit 10.7(a)(ii)
adopted and to Ogden's Form 10-K for
effective as of fiscal period ended December
September 18, 31, 1997 and incorporated
1997. herein by reference.
(a) (a) Ogden Corporation Transmitted herewith as
1999 Stock Option Exhibit 10.3(a)(a).
Plan, as amended.
(b) Ogden Services Filed as Exhibit (10)(k) to
Corporation Executive Ogden's Form 10-K for the
Pension Plan. fiscal year ended December
31, 1990 and incorporated
herein by reference.
(c) Ogden Services Filed as Exhibit 10.7(d)(I)
Corporation Select to Ogden's Form 10-K for the
Savings Plan Amendment fiscal year ended December
and Restatement as of 31, 1994 and incorporated
January 1, 1995. herein by reference.
(i) Amendment Number Filed as Exhibit 10.7(c)(ii)
One to the Ogden to Ogden's Form 10-K for the
Services fiscal year ended December
Corporation 31, 1997 and incorporated
Select Savings herein by reference.
Plan as Amended
and Restated
January 1, 1995,
effective
January 1, 1998.
(d) Ogden Services Filed as Exhibit 10.7(e)(i)
Corporation Select to Ogden's Form 10-K for the
Savings Plan Trust fiscal year ended December
Amendment and 31, 1994 and incorporated
Restatement as of herein by reference.
January 1, 1995.
3
<PAGE>
(e) Ogden Services Filed as Exhibit (10)(n) to
Corporation Executive Ogden's Form 10-K for the
Pension Plan Trust. fiscal year ended December
31, 1990 and incorporated
herein by reference.
(i) Ogden Services Transmitted herewith as
Corporation Exhibit 10.3(e)(i).
Executive
Pension Plan
Trust Amendment
Number One.
(f) Changes effected to Filed as Exhibit (10)(o) to
the Ogden Profit Ogden's Form 10-K for the
Sharing Plan effective fiscal year ended December
January 1, 1990. 31, 1990 and incorporated
herein by reference.
(g) Ogden Profit Sharing Filed as Exhibit 10.7(p)(ii)
Plan as amended and to Ogden's Form 10-K for
restated effective as fiscal year ended December
of January 1, 1995. 31, 1994 and incorporated
herein by reference.
(h) Ogden Corporation Core Filed as Exhibit 10.8(q) to
Executive Benefit Ogden's Form 10-K for fiscal
Program. year ended December 31, 1992
and incorporated herein by
reference.
(i) Ogden Projects Pension Filed as Exhibit 10.8(r) to
Plan. Ogden's Form 10-K for fiscal
year ended December 31, 1992
and incorporated herein by
reference.
(j) Ogden Projects Profit Filed as Exhibit 10.8(s) to
Sharing Plan. Ogden's Form 10-K for fiscal
year ended December 31, 1992
and incorporated herein by
reference.
(k) Ogden Projects Filed as Exhibit 10.8(t) to
Supplemental Pension Ogden's Form 10-K for fiscal
and Profit Sharing year ended December 31, 1992
Plans. and incorporated herein by
reference.
(l) Ogden Projects Core Filed as Exhibit 10.8(v) to
Executive Benefit Ogden's Form 10-K for fiscal
Program. year ended December 31, 1992
and incorporated
4
<PAGE>
herein by reference.
(m) Form of amendments to Filed as Exhibit 10.8(w) to
the Ogden Projects, Ogden's Form 10-K for fiscal
Inc. Pension Plan and year ended December 31, 1993
Profit Sharing Plans and incorporated herein by
effective as of reference.
January 1, 1994.
(i) Form of amended Filed as Exhibit 10.7(w)(i)
Ogden Projects to Ogden's Form 10-K for
Profit Sharing fiscal year ended December
Plan effective 31, 1994 and incorporated
as of January 1, herein by reference.
1994.
(ii) Form of amended Filed as Exhibit 10.7(w)(ii)
Ogden Projects to Ogden's Form 10-K for
Pension Plan, fiscal year ended December
effective as of 31, 1994 and incorporated
January 1, 1994. herein by reference.
(n) Ogden Corporation Filed as Exhibit 10.3(n) to
Amended and Restated Ogden's Form 10-K for the
CEO Formula Bonus fiscal year ended December
Plan. 31, 1998 and incorporated
herein by reference.
(o) Ogden Key Management Filed as Exhibit 10.7(p) to
Incentive Plan. Ogden's Form 10-K for the
fiscal year ended December
31, 1997 and incorporated
herein by reference.
10.4 Employment Agreements
(a) Employment Letter Filed as Exhibit 10.4(a) to
Agreement between Ogden's Form 10-K for the
Ogden Corporation and fiscal year ended December
Lynde H. Coit, Senior 31, 1998 and incorporated
Vice President and herein by reference.
General Counsel dated
March 1, 1999.
(b) Employment Agreement Filed as Exhibit 10.3(h) to
between R. Richard Ogden's Form 10-Q for the
Ablon and Ogden dated quarterly period ended June
as of January 1, 1998. 30, 1998 and incorporated
herein by reference.
(c) Separation Agreement Filed as Exhibit 10.8(c) to
between Ogden Ogden's Form 10-Q for the
Corporation and Philip quarterly period ended
G. Husby, Senior Vice September 30, 1998 and
President and C.F.O., incorporated herein by
dated as of reference.
5
<PAGE>
September 17, 1998.
(d) Employment Agreement Filed as Exhibit 10.2(q) to
between Ogden Ogden's Form 10-K for fiscal
Corporation and year ended December 31, 1991
Ogden's Chief and incorporated herein by
Accounting Officer reference.
dated as of December
18, 1991.
(e) Employment Agreement Filed as Exhibit 10.8(e) to
between Scott G. Ogden's Form 10-Q for the
Mackin, Executive Vice quarter ended September 30,
President, and Ogden 1998 and incorporated herein
Corporation dated as by reference.
of October 1, 1998.
(f) Employment Agreement Filed as Exhibit 10.8(i) to
between Ogden Ogden's Form 10-K for fiscal
Corporation and David year ended December 31, 1995
L. Hahn, Senior Vice and incorporated herein by
President - Aviation, reference.
dated December 1,
1995.
(i) Letter Amendment Filed as Exhibit 10.8(f)(i)
to Employment to Ogden's Form 10-Q for the
Agreement quarterly period ended
between Ogden September 30, 1998 and
Corporation and incorporated herein by
David L. Hahn, reference.
effective as of
October 1, 1998.
(g) Employment Agreement Filed as Exhibit 10.8(j) to
between Ogden Ogden's Form 10-K for fiscal
Corporation and year ended December 31, 1996
Rodrigo Arboleda, and incorporated herein by
Senior Vice President reference.
dated January 1, 1997.
(i) Letter Amendment Filed as Exhibit 10.8(g)(i)
to Employment to Ogden's Form 10-Q for the
Agreement quarterly period ended
between Ogden September 30, 1998 and
Corporation and incorporated herein by
Rodrigo reference.
Arboleda, Senior
Vice President,
effective as of
October 1, 1998.
(h) Employment Agreement Filed as Exhibit 10.8(k) to
between Ogden Ogden's Form 10-K for fiscal
Projects, Inc. and year ended December 31, 1996
Bruce W. Stone, dated and incorporated herein by
June 1, 1990. reference.
6
<PAGE>
(i) Employment Agreement Filed as Exhibit 10.8(l) to
between Ogden Ogden's Form 10-K for fiscal
Corporation and year ended December 31, 1996
Quintin G. Marshall, and incorporated herein by
Senior Vice President reference.
dated October 30,
1996.
(i) Letter Amendment Filed as Exhibit 10.8(i)(i)
to Employment to Ogden's Form 10-Q for the
Agreement quarter ended September 30,
between Ogden 1998 and incorporated herein
Corporation and by reference.
Quintin G.
Marshall, Senior
Vice President -
Corporate
Development
effective as of
October 1, 1998.
(j) Employment Agreements Filed as Exhibit 10.8(m) to
between Ogden and Ogden's Form 10-K for the
Jesus Sainz, Executive fiscal year ended December
Vice President, 31, 1997 and incorporated
effective as of herein by reference.
January 1, 1998.
(i) Letter Amendment Filed as Exhibit 10.8(j)(i)
to Employment to Ogden's Form 10-Q for the
Agreement quarter ended September 30,
between Ogden 1998 and incorporated herein
Corporation and by reference.
Jesus Sainz,
Executive Vice
President,
effective as of
October 1, 1998.
(k) Employment Agreement Filed as Exhibit 10.3(m) to
between Alane Ogden's Form 10-Q for the
Baranello, Vice quarterly period ended June
President - Human 30, 1998 and incorporated
Resources and Ogden herein by reference.
Services Corporation
dated October 28,
1996.
(i) Letter Amendment Filed as Exhibit 10.8(k)(i)
to Employment to Ogden's From 10-Q for the
Agreement quarter ended September 30,
between Ogden 1998 and incorporated herein
Corporation and by reference.
Alane Baranello,
Vice President -
Human Resources,
dated as of
October 13,
1998.
(l) Employment Agreement Filed herewith as Exhibit
between Peter Allen, 10.3(M)(1) to Ogden's Form
Senior 10-Q for the
7
<PAGE>
Vice President, and quarterly ended June 30,
Ogden Corporation 1998 incorporated herein
dated July 1, 1998. by reference.
(m) Employment Agreement Filed as Exhibit 10.4(m) to
between Ogden Ogden's Form 10-Q for the
Corporation and quarter ended September 30,
Raymond E. Dombrowski, 1998 and incorporated herein
Jr., Senior Vice by reference.
President and C.F.O.,
dated as of September
21, 1998.
10.5 Stock Purchase Agreement Transmitted herewith as
among Volume Services Exhibit 10.5.
America Holdings, Inc.; BCP
Volume L.P.; BCP Offshore
Volume L.P.; Recreational
Services L.L.C.; VSI
Management Direct L.P.;
General Electric Capital
Corporation; and Ogden
Entertainment, Inc., dated
as of June 24, 1999.
11 Ogden Corporation and Transmitted herewith as
Subsidiaries Detail of Exhibit 11.
Computation of Earnings
Applicable to Common Stock.
27 Financial Data Schedule. Transmitted herewith as
Exhibit 27.
8
Exhibit 10.3(a)(a)
OGDEN CORPORATION
1999 STOCK OPTION PLAN
(Effective May 20, 1999)
1. Purpose.
The purposes of this Ogden Corporation 1999 Stock Option Plan (the "Plan")
are to induce certain individuals to remain in the employ of, or to continue to
serve as directors of, Ogden Corporation (the "Company"), its present and future
subsidiary corporations (each a "Subsidiary"), as defined in section 424(f) of
the Internal Revenue Code of 1986, as amended (the "Code") and its future parent
corporations, if any (each, a "Parent"), as defined in section 424(e) of the
Code, to attract new individuals to enter into such employment and service and
to encourage such individuals to secure or increase on reasonable terms their
stock ownership in the Company. The Board of Directors of the Company (the
"Board") believes that the granting of stock options and other awards (the
"Awards") under the Plan will promote continuity of management and increased
incentive and personal interest in the welfare of the Company and aid in
securing its continued growth and financial success.
2. Shares Subject to Plan.
The maximum number of shares of the common stock, par value $.50 per share
(the "Common Stock"), of the Company with respect to which Awards may be granted
under the Plan or that may be delivered to participants ("Participants") and
their beneficiaries under the Plan shall be 4,000,000 (subject to adjustment as
provided in Section 9 of the Plan). For purposes of this Section 2 other than
with regard to incentive stock options described in Section 4(A) of the Plan,
the number of shares that may be delivered under the Plan shall be determined
after giving effect to the use by a Participant of the right, if granted, to
cause the Company to withhold from the shares of Common Stock otherwise
deliverable to him or her upon the exercise of an Award, shares of Common Stock
in payment of all or a portion of his or her withholding obligation arising from
such exercise (i.e., only the number of shares issued net of the shares tendered
shall be deemed delivered for purposes of determining the maximum number of
shares available for delivery under the Plan). If any Awards expire or terminate
for any reason without having been exercised in full, new Awards may thereafter
be granted with respect to the unpurchased shares subject to such expired or
terminated Awards. If a limited stock appreciation right ("LSAR") is granted in
tandem with a stock option, such grant shall only apply once against the maximum
number of shares of Common Stock which may be delivered to Participants or
granted under the Plan. The shares of Common Stock available under the Plan may
be either authorized and unissued shares of Common Stock or shares of Common
Stock held in or acquired for the treasury of the Company.
3. Administration.
(A) The Plan shall be administered by a committee or subcommittee of the
Board (the "Committee") which shall consist of two or more members of the Board,
each of whom is intended to be, to the extent required by Rule 16b-3 promulgated
under section 16(b) of the Securities Exchange Act of 1934, as amended ("Rule
16b-3"), a "non-employee director" as defined in Rule 16b-3 and, to the extent
required by section 162(m) of the Code, an "outside director" as defined under
section 162(m) of the Code; provided, however, that with respect to the
application of the Plan to non-employee directors, the Board shall be deemed the
Committee. If for any reason the Committee does not meet the requirements of
Rule 16b-3 or section 162(m) of the Code, such non-compliance with the
requirements of Rule 16b-3 or section 162(m) of the Code shall not affect the
validity of Awards, interpretations or other actions of the Committee. The
Committee shall be appointed annually by the Board, which may at any time and
from time to time remove any members of the Committee, with or without cause,
appoint additional members to the Committee and fill vacancies, however caused,
in the Committee. In the event that no Committee shall have been appointed, the
Plan shall be administered by the Board. A majority of the members of the
Committee shall constitute a quorum. All determinations of the Committee shall
be made by a majority of its members present at a meeting duly called and held
except that the Committee may delegate to any one of its members the authority
of the Committee with respect to the grant of Awards to an employee who: (i) is
not an officer and/or director of the Company; (ii) is not, and may not
reasonably be expected to become, a "covered employee" within the meaning of
section 162(m)(3) of the Code; and (iii) who is not subject to the reporting
requirements under section 16(a) of the Securities Exchange Act of 1934, as
amended. Any decision or determination of the Committee
<PAGE>
reduced to writing and signed by all of the members of the Committee (or by a
member of the Committee to whom authority has been delegated) shall be fully as
effective as if it had been made at a meeting duly called and held.
(B) The Committee's powers and authority shall include, but not be limited
to (i) selecting individuals for participation who are employees of the Company,
any Subsidiary or any Parent and who are members of the Board; (ii) determining
the types and terms and conditions of all Awards granted, including performance
and other earnout and/or vesting contingencies; (iii) permitting transferability
of Awards to third parties; (iv) interpreting the Plan's provisions; and (v)
administering the Plan in a manner that is consistent with its purpose. The
Committee's determination on the matters referred to in this Section 3(B) shall
be conclusive. Any dispute or disagreement which may arise under or as a result
of or with respect to any Award shall be determined by the Committee, in its
sole discretion, and any interpretations by the Committee of the terms of any
Award shall be final, binding and conclusive.
(C) Subject to Section 12 of the Plan, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan and perform all acts, including the delegation of
its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of the Plan and
any Award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or in
any agreement relating thereto in the manner and to the extent it shall deem
necessary to effectuate the purpose and intent of the Plan. The Committee may
adopt special guidelines and provisions for persons who are residing in, or
subject to, the taxes of, non-U.S. jurisdictions to comply with applicable tax,
securities and other laws and may impose any limitations and restrictions that
it deems necessary to comply with the applicable tax, securities and other laws
of such non-U.S. jurisdictions. To the extent applicable, the Plan is intended
to comply with section 162(m) of the Code (with regard to "covered employees" as
defined in section 162(m) of the Code) and the applicable requirements of Rule
16b-3 and shall be limited, construed and interpreted in a manner so as to
comply therewith.
4. Types of Awards.
An Award may be granted singularly, in combination with another Award(s)
or in tandem whereby exercise or vesting of one Award held by a Participant
cancels another award held by the Participant. Subject to Section 6 hereof, an
Award may be granted as an alternative to or replacement of an existing Award
under the Plan or under any other compensation plans or arrangements of the
Company, including the plan of any entity acquired by the Company. The types of
Awards that may be granted under the Plan include:
(A) A stock option, which represents a right to purchase a specified
number of shares of Common Stock during a specified period at a price per share
which is no less than that required by Section 6 hereof. Options will be either
(a) "incentive stock options" (which term, when used herein, shall have the
meaning ascribed thereto by the provisions of section 422(b) of the Code, or (b)
options which are not incentive stock options ("non-qualified stock options"),
as determined at the time of the grant thereof by the Committee.
(B) An LSAR, which is a right granted in tandem with a related stock
option, to receive a payment in cash equal to the excess of the aggregate price
(as described herein) at the time specified below of a specified number of
shares of Common Stock over the aggregate exercise price of the related stock
option being exercised; provided, however, that such right shall be exercisable
only upon the occurrence of a Change in Control and only in the alternative to
exercise of its related stock option. The Committee may grant in connection with
any stock option granted hereunder one or more LSARs relating to a number of
shares of Common Stock less than or equal to the number of shares of Common
Stock subject to the related stock option. An LSAR may be granted at the same
time as, or subsequent to the time that, its related stock option is granted.
The exercise of an LSAR relating to a non-qualified stock option with
respect to any number of shares of Common Stock shall entitle the Participant to
a cash payment, for each share, equal to the excess of (i) the greatest of (A)
the highest price per share of Common Stock paid in the Change in Control in
connection with which such LSAR became exercisable, (B) the fair market value of
a share of Common Stock on the date of such Change of Control and (C) the fair
market value of a share of Common Stock on the effective date of such exercise
over (iii) the exercise price of the related stock option. Such payment shall be
paid as soon as practical, but in no event later than the expiration of five
business days, after the effective date of such exercise. The exercise of an
LSAR relating to an incentive stock option with respect to any number of shares
of Common Stock shall entitle the Participant to a cash payment, for each such
share,
<PAGE>
equal to the excess of (i) the fair market value of a share of Common Stock on
the effective date of such exercise over (ii) the exercise price of the related
stock option. Such payment shall be paid as soon as practical, but in no event
later than the expiration of five business days, after the effective date of
such exercise.
An LSAR shall be exercisable only during the period commencing on the
first day following the occurrence of a Change in Control and terminating on the
expiration of ninety days after such date. Notwithstanding anything else herein,
an LSAR relating to an incentive stock option may be exercised with respect to a
share of Common Stock only if the fair market value of such share on the
effective date of such exercise exceeds the exercise price relating to such
share. Notwithstanding anything else herein, an LSAR may be exercised only if
and to the extent that the stock option to which it relates is exercisable. The
exercise of an LSAR with respect to a number of shares of Common Stock shall
cause the immediate and automatic cancellation of the stock option to which it
relates with respect to an equal number of shares. The exercise of a related
stock option, or the cancellation, termination or expiration of a related stock
option (other than pursuant to this paragraph), with respect to a number of
shares of Common Stock, shall cause the cancellation of the LSAR related to it
with respect to an equal number of shares. Each LSAR shall be exercisable in
whole or in part; provided, that no partial exercise of an LSAR shall be for an
aggregate exercise price of less than $1,000. The partial exercise of an LSAR
shall not cause the expiration, termination or cancellation of the remaining
portion thereof.
(C) A cash award, which is a right denominated in cash or cash units to
receive a cash payment, based on the attainment of pre-established performance
goals and such other conditions, restrictions and contingencies as the Committee
shall determine; provided, however, that if the cash award is made to a "covered
employee," under section 162(m)(3) of the Code, the Award is intended to satisfy
section 162(m) of the Code.
For each Participant for each calendar year, the Committee may specify a
targeted performance award. The individual target award may be expressed, at the
Committee's discretion, as a fixed dollar amount, a percentage of base pay or
total pay (excluding payments made under the Plan), or an amount determined
pursuant to an objective formula or standard. Establishment of an individual
target award for an employee for a calendar year shall not imply or require that
the same level individual target award (if any such award is established by the
Committee for the relevant employee) be set for any subsequent calendar year. At
the time the performance goals are established, the Committee shall prescribe a
formula to determine the percentages (which may be greater than one-hundred
percent (100%)) of the individual target award which may be payable based upon
the degree of attainment of the performance goals during the calendar year.
Notwithstanding anything else herein, the Committee may, in its sole discretion,
elect to pay a Participant an amount that is less than the Participant's
individual target award (or attained percentage thereof) regardless of the
degree of attainment of the performance goals; provided that no such discretion
to reduce an Award earned based on achievement of the applicable performance
goals shall be permitted for the calendar year in which a Change in Control of
the Company occurs, or during such calendar year with regard to the prior
calendar year if the Awards for the prior calendar year have not been made by
the time of the Change in Control of the Company, with regard to individuals who
were Participants at the time of the Change in Control of the Company.
For "covered employees" under section 162(m) of the Code, the Committee
shall establish the objective performance goals, formulae or standards and the
individual target award (if any) applicable to each Participant or class of
Participants for a calendar year in writing prior to the beginning of such
calendar year or at such later date as permitted under section 162(m) of the
Code and while the outcome of the performance goals are substantially uncertain.
Such performance goals may incorporate, if and only to the extent permitted
under section 162(m) of the Code, provisions for disregarding (or adjusting for)
changes in accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar type events or
circumstances. The performance goals that may be used by the Committee for such
Awards shall be based on the goals described in Exhibit A, attached hereto. The
Committee may designate a single goal criterion or multiple goal criteria for
performance measure purposes with the measurement based on absolute Company,
Subsidiaries, Parent, division or business unit performance and/or on
performance as compared with that of other publicly traded companies. With
respect to "covered employees" under section 162(m) of the Code, the Committee
shall satisfy the certification requirements in the manner set forth under
section 162(m) of the Code.
(D) The Committee may provide a loan to any Participant in an amount
determined by the Committee to enable the Participant to pay (i) any federal,
state or local income taxes arising out of the exercise of an Award or (ii) the
exercise price with respect to any Award or (iii) to purchase shares of Common
Stock on the open market. Any such loan (i) shall be for such term and at such
rate of interest as the Committee may determine, (ii) shall be evidenced by a
promissory note
<PAGE>
in a form determined by the Committee and executed by the Participant and (iii)
shall be subject to such other terms and conditions as the Committee may
determine.
5. Eligibility.
An Award may be granted only to (i) employees of the Company, a Subsidiary
or a Parent, (ii) directors of the Company who are not employees of the Company,
a Subsidiary or a Parent and (iii) employees of a corporation which has been
acquired by the Company, a Subsidiary or a Parent, whether by way of exchange or
purchase of stock, purchase of assets, merger or reverse merger, or otherwise,
who hold options with respect to the stock of such corporation which the Company
has agreed to assume. Eligibility for the grant of an Award and actual
participation in the Plan shall be determined by the Committee in its sole
direction.
6. Stock Option Prices and Fair Market Value.
(A) Except as otherwise provided in Section 14 hereof, the initial per
share option price of any stock option shall not be less than the fair market
value of a share of Common Stock on the date of grant; provided, however, that,
in the case of a Participant who owns (within the meaning of section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of
stock of the Company, each Subsidiary and Parent at the time a stock option
which is an incentive stock option is granted to him or her, the initial per
share option price shall not be less than 110% of the fair market value of a
share of Common Stock on the date of grant.
(B) For all purposes of this Plan, the fair market value of a share of
Common Stock on any date shall be (i) the average of the high and low sales
prices on such day of a share of Common Stock as reported on the principal
securities exchange on which shares of Common Stock are then listed or admitted
to trading or (ii) if not so reported, the average of the closing bid and ask
prices on such date as reported on the NASDAQ Stock Market, Inc. or (iii) if not
so reported, as furnished by any member of the National Association of
Securities Dealers, Inc. selected by the Committee. In the event that the price
of a share of Common Stock shall not be so reported, the Fair Market Value of a
share of Common Stock shall be determined by a qualified appraiser selected by
the Committee. Notwithstanding anything herein to the contrary, the fair market
value of a share of Common Stock on any date means the price for Common Stock
set by the Committee in good faith based on reasonable methods set forth under
section 422 of the Code and the regulations thereunder including, without
limitation, a method utilizing the average of prices of the Common Stock
reported on the principal national securities exchange on which it is then
traded on the NASDAQ Stock Market, Inc. during a reasonable period designated by
the Committee.
7. Option Term.
Options shall be granted for such term as the Committee shall determine,
not in excess of ten years from the date of the granting thereof; provided,
however, that, except as otherwise provided in Section 14 hereof, in the case of
a Participant who owns (within the meaning of section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company, each Subsidiary and Parent that the time an option which is an
incentive stock option is granted to him or her, the term with respect to such
option shall not be in excess of five years from the date of the granting
thereof.
8. Limitation on Amount of Awards Granted.
(A) Except as otherwise provided in Section 14 hereof, the aggregate fair
market value of the shares of Common Stock for which any Participant may be
granted incentive stock options which are exercisable for the first time in any
calendar year (whether under the terms of the Plan or any other stock option
plan of the Company) shall not exceed $100,000.
(B) No Participant shall be granted stock options and/or LSARs during any
calendar year to purchase more than an aggregate of 500,000 shares of Common
Stock (subject to adjustment as provided in Section 9 of the Plan). LSARs
granted in tandem with a stock option shall only apply once against a
Participant's maximum individual number of shares of Common Stock subject to an
award of options and/or LSARs hereunder.
<PAGE>
(C) Subject to Section 8(D), the following additional maximums are imposed
under the Plan. The maximum number of shares of Common Stock that may be covered
by stock options intended to be incentive stock options shall be 4,000,000
(subject to adjustment as provided in Section 9 of the Plan). The maximum
payment that may be made for awards granted to any one individual pursuant to
Section 4(C) hereof shall be $3,000,000 for any single or combined performance
goals established for a specified performance period. A specified performance
period for purposes of this performance goal payment limit shall not exceed a
sixty (60) consecutive month period.
(D) Subject to the overall limitation on the number of shares of Common
Stock that may be delivered under the Plan, the Committee may use available
shares of Common Stock as the form of payment for compensation, grants or rights
earned or due under any other compensation plans or arrangements of the Company,
including the plan of any entity acquired by the Company.
9. Adjustment of Number of Shares.
(A) In the event that a dividend shall be declared upon the Common Stock
payable in shares of Common Stock, the number of shares of Common Stock then
subject to any Award and the number of shares of Common Stock available for
purchase or delivery under the Plan but not yet covered by an Award shall be
adjusted by adding to each share the number of shares which would be
distributable thereon if such shares had been outstanding on the date fixed for
determining the stockholders entitled to receive such stock dividend. In the
event that the outstanding shares of Common Stock are exchanged for a different
number or kind of shares of stock or other securities of the Company or of
another corporation, whether through reorganization, recapitalization, stock
split-up, reverse stock split, reclassification, combination of shares, sale of
assets or merger or consolidation in which the Company is the surviving
corporation, then, if the Committee shall determine, in its sole discretion, to
be appropriate, there shall be substituted for each share of Common Stock then
subject to any outstanding Award and for each share of Common Stock which may be
issued under the Plan but not yet covered by an outstanding Award, the number
and kind of shares of stock or other securities for which each outstanding share
of Common Stock shall be so exchanged and, if determined by the Committee in its
sole discretion to be appropriate, the exercise or option price applicable under
any then outstanding Award shall be adjusted proportionately to reflect such
corporate transaction.
(B) In the event that there shall be any change in the capitalization of
the Company or other corporate change affecting the outstanding Common Stock,
including by way of an extraordinary or stock dividend, spin-off or other
corporate change, other than any change specified in Section 9(A) hereof, then,
if the Committee shall, in its sole discretion, determine it to be appropriate,
the number or kind of shares then subject to any outstanding Award, the number
or kind of shares then available for issuance in accordance with the provisions
of the Plan but not yet covered by an outstanding Award, and/or the exercise or
option price applicable under any then outstanding Award shall be adjusted
proportionately to reflect such corporate event and, if and to the to extent the
Committee shall, in its sole discretion, determine it to be appropriate, all or
any portion of the Plan may be assumed by any corporate successor to all or a
portion of the Company's business and shares of such corporate successor (or the
Parent or a Subsidiary thereof) shall be substituted for the shares of Common
Stock covered by the portion of the Plan so assumed.
(C) Notwithstanding the foregoing provisions of this Section 9, in the
case of any then outstanding incentive stock options, the Committee shall make
commercially reasonable efforts to effect any substitution or adjustment
authorized by the Committee pursuant to this Section 9 in a manner consistent
with the applicable requirements of Treasury Regulation section 1.425-1.
(D) Any substitution or adjustment determined under this Section 9 by the
Committee in good faith shall be final, binding and conclusive on the Company
and all Participants, directors and employees and their respective heirs,
executors, administrators, successors and assigns.
(E) No adjustment or substitution provided for in this Section 9 shall
require the Company to issue a fractional share under any Award or to sell a
fractional share under any stock option. Fractional shares of Common Stock
resulting from any adjustment in Awards pursuant to this Section 9 shall be
aggregated until, and eliminated at, the time of exercise by rounding-down for
fractions less than one-half and rounding-up for fractions equal to or greater
than one-half. No cash settlements shall be made with respect to fractional
shares eliminated by rounding.
<PAGE>
(F) (i) Notwithstanding the foregoing provisions of this Section 9, in the
event of a Change in Control, each Award shall become fully vested and
exercisable.
(ii) As used herein, "Change in Control" shall mean:
(I) any Person (as such term is defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing
20% or more of the combined voting power of the Company's then outstanding
securities, other than beneficial ownership by a Participant, the Company, any
subsidiary of the Company, any employee benefit plan of the Company or a
subsidiary thereof or any person or entity organized, appointed or established,
pursuant to the terms of any such benefit plan;
(II) the Company's stockholders approve an agreement to merge or
consolidate the Company with another corporation, or an agreement providing for
the sale of substantially all of the assets of the Company to one or more
corporations, in any case other than with or to a corporation 50% or more of
which is controlled by, or is under common control with, the Company; or
(III) during any two-year period, individuals who at the date on which the
period commences constitute a majority of the Board cease to constitute a
majority of thereof for any reason; provided, however, that a director who was
not a director at the beginning of such period shall be deemed to have satisfied
the two-year requirement if such director was elected by, or on the
recommendation of, at least two-thirds of the directors who were directors at
the beginning of such period (either actually or by prior operation of this
provision), other than any director who is so approved in connection with any
actual or threatened contest for election to positions on the Board.
(G) In the event of the occurrence of any corporate transaction or event
described in Section 9(A) or 9(B) hereof or the occurrence of a Change in
Control, the Committee may reasonably determine in good faith that all or a
portion of the Awards hereunder shall be honored, assumed or converted or new
rights substituted therefor (each such honored, assumed, converted or
substituted Award shall hereinafter be called an "Alternative Award") by a
Participant's employer (or the parent or a subsidiary of such employer)
immediately following such corporate transaction or event or Change in Control,
provided that any such Alternative Award must meet the following criteria:
(i) the Alternative Award must be based on stock which is traded on an
established securities market, or which will be so traded within 30 days of the
transaction, event or Change in Control;
(ii) the Alternative Award must provide such Participant with rights and
entitlements substantially equivalent to the rights and entitlements applicable
under such Award immediately prior to such transaction, event or Change in
Control, including, but not limited to, an identical or better exercise
schedule; and
(iii) the Alternative Award must have economic value substantially
equivalent to the value of such Award (as determined by the Committee at the
time of the transaction, event or Change in Control).
For purposes of incentive stock options, any assumed or substituted stock
option shall comply with the requirements of Treasury Regulation ss. 1.425-1
(and any amendments thereto). The Committee may, in its sole discretion, apply
the same methodology to non-qualified stock options.
<PAGE>
10. Purchase for Investment, Waivers and Withholding.
(A) Unless the delivery of shares under any Award shall be registered
under the Securities Act of 1933, such Participant shall, as a condition of the
Company's obligation to deliver such shares, be required to represent to the
Company in writing that he or she is acquiring such shares for his or her own
account as an investment and not with a view to, or for sale in connection with,
the distribution of any thereof. All certificates for shares of Common Stock
delivered under the Plan shall be subject to such stock transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Common Stock is then listed or any national
securities association system upon whose system the Common Stock is then quoted,
any applicable federal or state securities law, and any applicable corporate
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(B) In the event of the death of a Participant, an additional condition of
exercising any Award shall be the delivery to the Company of such tax waivers
and other documents as the Committee shall determine.
(C) An additional condition of exercising any non-qualified stock option
or an LSAR shall be the entry by the Participant into such arrangements with the
Company with respect to withholding as the Committee shall determine. The
Company shall have the right to deduct from any payment to be made to a
Participant, or to otherwise require, prior to the issuance or delivery of any
shares of Common Stock or the payment of any cash hereunder, payment by the
Participant of, any federal, state or local taxes required by law to be
withheld. Any such withholding obligation with regard to any Participant may be
satisfied, subject to the consent of the Committee, by reducing the number of
shares of Common Stock otherwise deliverable. Any fraction of a share of Common
Stock required to satisfy such tax obligations shall be disregarded and the
amount due shall be paid instead in cash by the Participant.
11. No Stockholder Status; No Restrictions on Corporate Acts; No Employment
Right.
(A) Neither any Participant nor his or her legal representatives, legatees
or distributees shall be or be deemed to be the holder of any share of Common
Stock covered by an Award unless and until a certificate for such share has been
issued. Upon payment of the purchase price therefor, a share issued upon
exercise of an Award shall be fully paid and non-assessable.
(B) Neither the existence of the Plan nor any Award shall in any way
affect the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof, or dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other corporate act or
proceeding whether of a similar character or otherwise.
(C) Neither the existence of the Plan nor the grant of any Award shall
require the Company, any Subsidiary or Parent to continue any Participant in the
employ or service of the Company, such Subsidiary or such Parent.
<PAGE>
12. Termination and Amendment of the Plan.
The Board may at any time terminate the Plan or make such modifications of
the Plan as it shall deem advisable; provided, however, that the Board may not,
without further approval of the holders of the shares of Common Stock in
accordance with the laws of the State of Delaware, solely to the extent required
by the applicable provisions of Rule 16b-3, section 162(m) or 422 of the Code or
the rules of any applicable exchange: (i) increase the aggregate number of
shares of Common Stock as to which Awards may be granted under the Plan (as
adjusted in accordance with the provisions of Section 9 hereof); (ii) increase
the minimum individual Participant share limitations under Section 8(B) of the
Plan; (iii) increase the maximum payment under Section 8(C) of the Plan; (iv)
materially alter the performance criteria described in Section 4(C) and Exhibit
A of the Plan; (v) extend the maximum option period under Section 7 of the Plan;
(vi) change the class of persons eligible to participate in the Plan; or (vii)
change the manner of determining stock option prices under Section 6 of the
Plan. Except as otherwise provided in Section 14 hereof, no termination or
amendment of the Plan may, without the consent of the Participant to whom any
Award shall theretofore have been granted, adversely affect the rights of such
Participant under such Award.
13. Expiration and Termination of the Plan.
The Plan shall terminate on May 19, 2009 or at such earlier time as the
Board may determine; provided, however, that the Plan shall terminate as of its
effective date in the event that it shall not be approved by the stockholders of
the Company at its 1999 Annual Meeting of Stockholders. Awards may be granted
under the Plan at any time and from time to time prior to its termination. Any
Award outstanding under the Plan at the time of the termination of the Plan
shall remain in effect until such Award shall have been exercised or shall have
expired in accordance with its terms.
14. Stock Options Granted in Connection With Acquisitions.
In the event that the Committee determines that, in connection with the
acquisition by the Company or a Subsidiary of another corporation which will
become a Subsidiary or division of the Company (such corporation being hereafter
referred to as an "Acquired Subsidiary"), stock options may be granted hereunder
to employees and other personnel of an Acquired Subsidiary in exchange for then
outstanding stock options to purchase securities of the Acquired Subsidiary.
Such stock options may be granted at such option prices, may be exercisable
immediately or at any time or times either in whole or in part, and may contain
such other provisions not inconsistent with the Plan, or the requirements set
forth in Section 12 hereof that certain amendments to the Plan be approved by
the stockholders of the Company, as the Committee, in its discretion, shall deem
appropriate at the time of the granting of such stock options.
Exhibit 10.3(e)(i)
AMENDMENT NUMBER ONE
TO THE
TRUST AGREEMENT BETWEEN
OGDEN MANAGEMENT SERVICES, INC. AND
AMERICAN EXPRESS TRUST COMPANY
FOR THE
EXECUTIVE PENSION PLAN
OF OGDEN MANAGEMENT SERVICES, INC.
WHEREAS, Ogden Management Services, Inc. (the "Company") maintains the
Ogden Management Services, Inc. Executive Pension Plan (the "Plan") to provide
retirement benefits to a select group of highly compensated employees of the
Company and certain related entities;
WHEREAS, the Company entered into a trust agreement (the "Trust") with
American Express Trust Company (the "Trustee") dated October 30, 1998;
WHEREAS, pursuant to Section 11 of the Trust, the Trust may be amended by
a written instrument executed by the Trustee and the Company; and
WHEREAS, the Company and the Trustee desire to amend the Trust, effective
as of July 1, 1999.
NOW, THEREFORE, pursuant to Section 11 of the Trust, the Trust is hereby
amended, effective as of July 1, 1999, as follows:
1. Section 5 of the Trust is amended in its entirety to read as follows:
"During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested. Provided,
however, the Company shall have the right at any time and from time to
time, in its discretion, to direct the Trustee, in writing, to return to
the Company all or any part of the income received by the Trust, net of
expenses and taxes."
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed this ____ day of July, 1999.
Ogden Management Services, Inc.
By: __________________________
Title: ______________________
Date: _______________________
American Express Trust Company
By: __________________________
Title: ______________________
Date: _______________________
Exhibit 10.5
Execution Copy
STOCK PURCHASE AGREEMENT
Among
VOLUME SERVICES AMERICA HOLDINGS, INC.
BCP VOLUME L.P.
BCP OFFSHORE VOLUME L.P.
RECREATIONAL SERVICES L.L.C.
VSI MANAGEMENT DIRECT L.P.
GENERAL ELECTRIC CAPITAL CORPORATION
and
OGDEN ENTERTAINMENT, INC.
dated as of
June 24, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I PURCHASE AND SALE OF STOCK 1
1.1 Transfer of Stock 1
1.2 Consideration 1
1.3 Escrow Deposit 3
1.4 The Closing 6
1.5 Further Assurances 8
ARTICLE II REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY 8
2.1 Corporate Organization 8
2.2 Capital Stock 8
2.3 Subsidiaries of the Company 9
2.4 Authorization, Etc. 10
2.5 Balance Sheets and Income Statements 10
2.6 No Undisclosed Liabilities 11
2.7 No Approvals or Conflicts 11
2.8 Compliance with Law; Governmental Authorizations 11
2.9 Litigation 11
2.10 Title to Assets; Inventories 12
2.11 Absence of Certain Changes 12
2.12 Taxes and Reports 13
2.13 Employee Benefits 14
2.14 Labor Relations 15
2.15 Intellectual Property 15
2.16 Contracts 16
2.17 Environmental Matters 17
2.18 Insurance 18
2.19 Licenses and Permits 19
2.20 No Brokers' or Other Fees 19
2.21 Volume Services America, Inc. Integration/Transition Plan 20
2.22 1998 Contract EBITDA 20
2.23 Ethical Standards 20
2.24 Directors; Officers; Compensation 20
2.25 Bank Accounts 20
2.26 Material Untruths or Omissions 20
2.27 Receivables and Payables 21
2.28 Year 2000 21
2.29 1999 Budget 21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS 21
3.1 Ownership of Shares 21
3.2 Title to Shares 21
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<PAGE>
3.3 Authority 22
3.4 No Approvals or Conflicts 22
3.5 Brokers and Advisors 22
3.6 Claims on the Company 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER 23
4.1 Organization 23
4.2 Authorization, Etc. 23
4.3 No Approvals or Conflicts 23
4.4 Acquisition for Investment 24
4.5 No Knowledge of Breach 24
4.6 No Brokers' or Other Fees 24
ARTICLE V CONDITIONS TO OBLIGATIONS OF THE COMPANY AND SELLERS 24
5.1 Representations and Warranties 25
5.2 Performance 25
5.3 Officer's Certificate 25
5.4 HSR Act 25
5.5 Injunctions 25
ARTICLE VI CONDITIONS TO PURCHASER'S OBLIGATIONS 25
6.1 Representations and Warranties 25
6.2 Performance 25
6.3 Sellers' and Officer's Certificates 26
6.4 Resignation of Directors 26
6.5 HSR Act 26
6.6 Injunctions 26
6.7 Spinoff Condition 26
ARTICLE VII COVENANTS AND AGREEMENTS 27
7.1 Conduct of Business by Company 27
7.2 Access to Books and Records; Cooperation 28
7.3 Filings and Consents 28
7.4 Publicity 29
7.5 Notice of Breaches 29
7.6 Covenant to Satisfy Conditions 29
7.7 Director and Officer Liability Insurance 29
7.8 Employee Benefits 29
7.9 Contact with Customers and Suppliers 30
7.10 No Solicitation of Other Offers 30
7.11 Termination of Stockholders' Agreement, Higgins
Employment Agreement, Share Exchange Agreement and
Monitoring Agreements 31
7.12 Fee to Blackstone 31
7.13 Disposition of Hatch Interest 31
ARTICLE VIII TERMINATION 32
8.1 Termination 32
8.2 Procedure and Effect of Termination 33
ii
<PAGE>
Page
----
ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES 33
9.1 Representations and Warranties Relating to the Company 33
9.2 Representations and Warranties of Sellers 33
9.3 Representations and Warranties of the Purchaser 34
9.4 Limitation of Recourse 34
9.5 Acknowledgment by the Parties 34
ARTICLE X MISCELLANEOUS 35
10.1 Fees and Expenses 35
10.2 Governing Law 35
10.3 Amendment 35
10.4 Assignment 35
10.5 Waiver 35
10.6 Notices 35
10.7 Complete Agreement. 37
10.8 Counterparts 38
10.9 Headings 38
10.10 Knowledge and Fraud 38
10.11 Construction 38
10.12 Severability 38
10.13 Third Parties 38
10.14 CONSENT TO JURISDICTION AND SERVICE OF PROCESS 38
10.15 WAIVER OF JURY TRIAL 39
Annex A -- Ownership of Shares
Disclosure Schedule
Exhibit A -- Documents Purchaser Has Read
Exhibit B-1 -- Compliance Notice
Exhibit B-2 -- Non-Compliance Notice
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of June
24, 1999, is entered into by and among Volume Services America Holdings, Inc., a
Delaware corporation (the "Company"), BCP Volume L.P., a Delaware limited
partnership ("Volume"), BCP Offshore Volume L.P., a Cayman Islands exempted
limited partnership ("Offshore"), Recreational Services L.L.C., a Delaware
limited liability company ("Services"), VSI Management Direct L.P., a Delaware
limited partnership ("Management Direct" and, together with Volume, Offshore and
Services, the "Sellers"), General Electric Capital Corporation, a Delaware
corporation ("GECC"), and Ogden Entertainment, Inc., a Delaware corporation
("Purchaser").
WHEREAS, Sellers as of the date hereof own, beneficially and of
record, an aggregate of 332.67315 shares (the "Shares") of common stock, par
value $.01 per share (the "Common Stock"), of the Company in the respective
amounts set forth in Annex A hereto;
WHEREAS, the Shares constitute all of the issued and outstanding
shares of capital stock of the Company; and
WHEREAS, Purchaser desires to purchase and Sellers desire to sell
the Shares upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Transfer of Stock. On the Closing Date (as hereinafter defined) and subject
to the terms and conditions set forth in this Agreement, Sellers shall sell,
assign, transfer and deliver to Purchaser and the Company (in the proportions
described in Section 1.2(a)) the Shares, free and clear of all options, pledges,
security interests, liens, mortgages, charges, hypothecations, claims or other
encumbrances or restrictions on voting or transfer or other restrictions or
encumbrances of any kind or nature whatsoever ("Encumbrances"), except that the
transfer of such shares may trigger change of control provisions in the
Indenture and the Credit Agreement referred to in Section 2.2 of the Disclosure
Schedule (attached hereto, the "Disclosure Schedule"), and contracts referred to
in Section 2.7 of the Disclosure Schedule (the restrictions imposed by such
change of control provisions, "Permitted Encumbrances").
1.2 Consideration. (a) On the Closing Date and subject to the terms and
conditions set forth in this Agreement, in reliance on the representations,
warranties, covenants and agreements of the parties contained herein and in
consideration of the sale, assignment, transfer and delivery of the Shares, (i)
Purchaser shall pay to Sellers, for 98.531% of the Shares, by wire transfer of
immediately available funds, an amount equal to $127,000,000 ($127,000,000
subject to the last sentence of this paragraph, the "Purchase Price") less the
Net Escrow Amount (as defined below), subject to any adjustments made pursuant
to Section 7.7 and
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<PAGE>
(ii) the Company shall pay to Sellers, for 1.469% of the Shares, by wire
transfer of immediately available funds, an amount equal to $1,865,616, such
amount to be paid from, and only to the extent of, the proceeds from the
repayment at Closing of the Company Notes (as defined in Section 7.13 of the
Disclosure Schedule) and the $673,801 received by the Company pursuant to the
Refinancing Distribution (as defined in Section 7.13 of the Disclosure
Schedule). In the event the Closing Date occurs after September 30, 1999, the
Purchase Price will increase by an amount recalculated at a rate of 10% per
annum, compounded quarterly, from and including September 30, 1999 to but
excluding the date on which the Closing occurs, provided, such increase will be
reduced by the interest earned during such period on the Net Escrow Amount.
(b) In the event that the Closing occurs on or prior to August 24, 1999,
then, immediately prior to such Closing, Services may distribute to GECC that
number of Shares having a value (based on the Purchase Price) equal to the
amount to which GECC would otherwise be entitled at the Closing, provided, that
GECC will remain the sole manager of Services, and provided further, that as a
condition precedent to such distribution:
(i) GECC enters into an agreement, in form and substance reasonably
satisfactory to Purchaser, to be bound by this Agreement with respect to
Services and the Shares distributed to it as fully and with the same
effect as if originally a Seller hereunder and to transfer such Shares to
Purchaser at the Closing pursuant to the terms and conditions of this
Agreement; and
(ii) Services enters into agreements guaranteed by each of the
members of Services, in form and substance reasonably satisfactory to
Purchaser, (A) granting to Purchaser and the Company the option to
purchase all of the Shares owned by Services (on a 98.531 to 1.469 basis
as described above) at any time during the period commencing and including
August 26, 1999 and ending and including September 7, 1999 at a price per
Share equal to the price per Share paid to the other Sellers at the
Closing (the "Per Share Price"), and providing Services the right to
require Purchaser and the Company to purchase (on a 98.531 to 1.469 basis
as described above) all of the Shares owned by Services at any time during
the period commencing September 27, 1999 and ending October 4, 1999, at a
price per Share equal to the Per Share Price increased or decreased, as
the case may be, by an amount equal to the Per Share Price multiplied by
the percentage change in the Dow Jones Industrial Average from September
8, 1999 to September 27, 1999 (up to a maximum percentage increase or
decrease of five percent), and (B) providing for the immediate deposit
upon such distribution by Services of all of the remaining Shares owned by
it, duly endorsed or accompanied by duly executed stock powers for the
transfer of such Shares to Purchaser or the Company, as the case may be,
into escrow with an escrow agent selected by Purchaser, such Shares to be
delivered by such escrow agent to Purchaser and the Company upon deposit
by Purchaser and the Company with such escrow agent of the purchase price
for such Shares under the option/put agreement described in clause (A)
above. The payment made to Services will be subject to Section 7.7 and
10.1 to the same extent applicable to the other Sellers. There will be no
conditions to the consummation of such option/put other than the accuracy
of Sections 3.2, 3.3, 3.4, 3.5 and 3.6.
2
<PAGE>
(c) If Section 1.2(b) applies, the payments and contribution required to
be made by Purchaser and the Company pursuant to Sections 1.2(a) and 1.4(b) will
be proportionally allocated between the Closing Date and the closing date for
the exercise of the option/put under Section 1.2(b).
(d) Notwithstanding anything herein to the contrary, if Purchaser, GECC
and the Company cannot agree upon the terms and conditions of the agreements
referred to in clauses (A) and (B) of clause (b)(ii) above prior to the day that
the Closing would otherwise occur pursuant to Section 1.4 hereof (without regard
to the parenthetical in such section referencing Section 1.2(b)), Services may
not distribute to its members any Shares owned by it, the Closing shall occur
without regard to the provisions contained in Section 1.2(b) above and at the
Closing all of the Shares will be transferred to Purchaser and the Company.
1.3 Escrow Deposit.
(a) Concurrent with the execution and delivery of this Agreement,
Purchaser is depositing with Norwest Bank Minnesota, National Association, as
escrow agent (the "Escrow Agent"), $10,000,000 in immediately available funds
(the "Escrow"). Upon the Closing, such amount (together with interest earned
thereon), net of fees, expenses and other charges of the Escrow Agent (the "Net
Escrow Amount"), will be applied toward the Purchase Price.
(b) If the Closing has not occurred by the 42nd day after the date of this
Agreement or such later date, no later than the 57th day after the date of this
Agreement, selected by Sellers (the "Closing Target Date"), then the Escrow will
remain in effect and on the Closing Target Date the Company and Sellers will
deliver to Purchaser duly executed certificates either (x) of the type described
in Section 6.3 dated as of the Closing Target Date or (y) identifying the
specific facts and circumstances alleged to breach either the representations
and warranties of Article II or III or the covenants to be performed by the
Company or Sellers on or prior to the Closing Target Date (the certificates
referred to in clauses (x) or (y) collectively the "Company Certificates") and
within 15 days thereafter Purchaser will deliver to the Company, Sellers and the
Escrow Agent either:
(i) a duly executed certificate, in the form attached as Exhibit
B-1, to the effect that Purchaser irrevocably waives (subject to Section
1.3(i)) any claim that the conditions to Closing set forth in Sections
6.1, based on Article II (other than Section 2.20), and 6.2 to the extent
relating to the performance of covenants on or prior to the Closing Target
Date were not satisfied as of the Closing Target Date (the "Compliance
Notice"); or
(ii) a duly executed certificate, in the form attached as Exhibit
B-2, identifying the specific facts and circumstances alleged to breach
(as of the Closing Target Date) either the representations and warranties
of Article II or Article III or the covenants to be performed by the
Company or Sellers on or prior to the Closing Target Date, which breaches
in good faith are reasonably alleged by the Purchaser to give rise to a
failure of the conditions to Closing set forth in Sections 6.1 or 6.2 (the
"NonCompliance Notice").
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<PAGE>
(c) Subject to Section 1.3(i), upon receipt of the Compliance Notice, or
if no NonCompliance Notice is received, by the Company, Sellers and Escrow Agent
on or before the 15th day after the Closing Target Date, (i) the condition of
Section 6.1 will thereafter not be deemed to relate back to any representation
or warranty in Article II (other than Section 2.20), (ii) the condition of
Section 6.2 will thereafter not be deemed to relate back to the performance or
alleged non-performance of any covenant to be performed by the Company or
Sellers on or prior to the Closing Target Date and (iii) if the Agreement
subsequently terminates without a Closing, the Net Escrow Amount will be applied
as follows:
(A) If, as of the date of such termination, the then applicable
conditions in Article VI (other than Section 6.7) are satisfied (the
conditions in Sections 6.3 and 6.4 being deemed satisfied as of such
termination date), the Net Escrow Amount will be paid to Sellers.
(B) If, as of the date of such termination, any one or more of the
then applicable conditions in Article VI (other than Section 6.7) is or
are not satisfied (the conditions in Sections 6.3 and 6.4 being deemed
satisfied as of such termination date), the Net Escrow Amount will be paid
to the Purchaser. However, if the preceding sentence would not have
applied but for the Purchaser's failure to comply in all material respects
with the agreements and covenants contained in this Agreement to be
performed by it on or before the date of such termination, the Net Escrow
Amount will instead be paid to Sellers.
(d) Upon receipt of the Non-Compliance Notice by the Company, Sellers and
the Escrow Agent on or before the 15th day after the Closing Target Date, (A)(i)
the condition of Section 6.1 will thereafter not be deemed to relate back to any
representation or warranty in Article II (other than Section 2.20) and (ii) the
condition of Section 6.2 will thereafter not be deemed to relate back to the
performance or alleged non-performance of any covenant to be performed by the
Company or Sellers on or prior to the Closing Target Date, except that, in each
case, those elements of the representations, warranties or covenants relating to
the alleged breaches specifically identified in the Non-Compliance Notice based
on identified facts and circumstances (the "Alleged Breaches") will survive,
provided, if such Alleged Breaches do not in fact give rise to a failure of the
Section 6.1 or 6.2 condition as of the Closing Target Date or prior to
termination of this Agreement such failure resulting from such Alleged Breaches
is otherwise cured, Purchaser will be deemed to have waived any claim that the
condition of Section 6.1 or 6.2 was not satisfied as of the Closing Target Date
as a result of such Alleged Breaches, (B) subject to paragraph (k) below, in the
event that the parties have not agreed upon a resolution for such Alleged
Breaches in accordance with their obligations set forth in Section 1.3(h) below,
effective two weeks after delivery of the NonCompliance Notice Section 7.10 will
no longer apply and the Company will be entitled to terminate this Agreement at
any time, and (C) if this Agreement subsequently terminates without a Closing,
the Net Escrow Amount will be applied as follows:
(i) If, as of the date of such termination, the then applicable
conditions in Article VI (other than Section 6.7) are satisfied (the
conditions in Section 6.3 and 6.4 being deemed satisfied as of such
termination date), the Net Escrow Amount will be paid to Sellers.
4
<PAGE>
(ii) If, as of the date of such termination, any one or more of the
then applicable conditions in Article VI (other than Section 6.7) is or
are not satisfied (the conditions in Section 6.3 or 6.4 being deemed
satisfied as of such termination date), the Net Escrow Amount will be paid
to Purchaser. However, if the preceding sentence would not have applied
but for the Purchaser's failure to comply in all material respects with
the agreements and covenants contained in this Agreement to be performed
by it on or before the date of such termination, the Net Escrow Amount
will instead be paid to Sellers.
(e) The payment of the Net Escrow Amount to the party or parties entitled
thereto will be made as promptly as practicable after the date of termination of
this Agreement.
(f) In connection with the delivery of the Purchaser's Compliance Notice
or Non-Compliance Notice described in Section 1.3(b), reference is made to
Section 7.2(c) of this Agreement, it being understood that Purchaser will have
the specific opportunity during the fifteen day period referred to in Section
1.3(b) to ascertain whether it deems the applicable conditions of Sections 6.1
and 6.2 to be satisfied as of the Closing Target Date.
(g) If the Agreement terminates before the Closing Target Date, the
parties will use Sections 1.3(c) and 1.3(d) to determine how the Escrow Amount
is distributed unless (i) the Agreement is terminated under Section 8.1(a)(vi),
in which case the Escrow Amount will be paid to Sellers or (ii) the Agreement is
terminated by the Purchaser pursuant to Section 8.1(a)(vii), in which case the
Escrow Amount will be paid to Purchaser.
(h) In the event Section 1.3(d) applies, should any Alleged Breaches
survive, the parties will cooperate in good faith to resolve such Alleged
Breaches for a period of two weeks after delivery of the Non-Compliance Notice
in order to permit their cure, provided that the Company and Sellers will not be
required to expend funds in order to effect any such cure, unless Purchaser
provides such funds.
(i) If, prior to Closing, it is established that any Seller or the Company
had knowledge (as such term is defined in Section 10.10 hereof) as of the
Closing Target Date of items that should have been identified on the Company
Certificate delivered on the Closing Target Date but such items were not so
identified, they will be deemed to have been identified in the Non-Compliance
Notice (or, if a Compliance Notice was previously given, it will be deemed to
convert into a Non-Compliance Notice that refers to such items). In such case,
the provisions of Section 1.3(d) and 1.3(h) will apply ab initio to such revised
Non-Compliance Notice, provided, if a Non-Compliance Notice was previously given
and the parties were unable to resolve such Alleged Breaches so that Section
7.10 no longer applies, the two week waiting period in paragraph (d)(B) of this
Section need not apply a second time.
(j) All disputes arising under this Section 1.3 will be resolved by
binding arbitration in accordance with the applicable rules of the American
Arbitration Association. The arbitration shall be held in New York City, New
York before a panel of three arbitrators selected in accordance with Section
R-13 of the American Arbitration Association Commercial Arbitration Rules, and
shall otherwise be conducted in accordance with the American Arbitration
Association Commercial Arbitration Rules, provided, that each of Purchaser and
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Sellers will have the opportunity to reject within five business days any
arbitrator proffered and in no event will the American Arbitration Association
have the power to make the appointments of an arbitrator unless the procedures
in R-13(a) and (b) (but for the last sentence of R-13(b)) have failed to yield a
panel of three arbitrators after submissions of three lists. The parties
covenant that they will participate in the arbitration in good faith and that
they will share equally its costs except as otherwise provided herein. The
provisions of this paragraph (j) will be enforceable in any court of competent
jurisdiction, and the parties will bear their own costs in the event of any
proceeding to enforce this Agreement except as otherwise provided herein. The
arbitrators may in their discretion assess costs and expenses (including the
reasonable legal fees and expenses of the prevailing party) against any party to
a proceeding. Any party unsuccessfully refusing to comply with an order of the
arbitrators will be liable for costs and expenses, including attorneys' fees,
incurred by the other party in enforcing the award.
(k) At any time prior to termination of this Agreement, Purchaser may by
written notice to the Company and Sellers irrevocably convert a NonCompliance
Notice into a Compliance Notice, whereupon Section 7.10 will apply from the date
of such conversion forward, Section 1.3(d), including, without limitation, the
Company's termination right set forth therein, will no longer apply, and Section
1.3(c) will apply.
1.4 The Closing. The closing (the "Closing") of the transactions contemplated in
this Agreement (other than the closing of the option/put under Section 1.2(b),
which will take place as provided therein) shall take place at the offices of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, at
10:00 a.m., local time, on the fifth business day after satisfaction of the
conditions set forth in Articles V (other than delivery of the certificate
referred to in Section 5.3 which shall be delivered at the Closing) and VI
(other than delivery of the certificates and resignations referred to in
Sections 6.3 and 6.4 which shall be delivered at the Closing and the delivery of
the certificate referred to in Section 6.7 which if the Closing takes place on
or prior to September 30, 1999, shall be delivered at the Closing (to avoid
confusion, it is understood that the Closing will not occur on or prior to
September 30, 1999 unless Purchaser has made the determination referred to in
Section 6.7)) (the "Closing Date"), or at such other place, date and time as may
be agreed upon by Sellers and Purchaser.
(a) Deliveries by Sellers. At or prior to the Closing, Sellers shall
deliver or cause to be delivered to Purchaser or the Company, as the case may
be, the following:
(i) subject to Section 1.2(b), certificates evidencing the Shares,
which certificates shall be properly endorsed for transfer or accompanied
by duly executed stock powers, in either case executed in blank or in
favor of Purchaser or the Company, as the case may be, and otherwise in a
form acceptable for transfer on the books of the Company;
(ii) resignations of those officers and directors of the Company and
each of the Company Subsidiaries (as hereinafter defined) other than the
Excluded Entities (as hereinafter defined) whose resignations are
requested by Purchaser no later than five business days prior to the
Closing, as contemplated by Section 6.4 hereof, such resignations to be
effective as of the Closing; provided that Sellers shall have no
obligation to deliver resignations of officers who do not agree to resign
and provided further that Purchaser shall be responsible for all
liabilities and obligations resulting from such resignations;
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(iii) all other previously undelivered documents required by this
Agreement to be delivered by the Company or Sellers to Purchaser at or
prior to the Closing Date in connection with the transactions contemplated
hereby;
(iv) certificate of good standing of the Company and each of the
Company Subsidiaries (other than the three joint ventures identified on
Section 2.3 of the Disclosure Schedule) in their respective jurisdictions
of incorporation and qualification; and
(v) the minute books, seals and stock records of the Company and
each of the Company Subsidiaries, to the extent available.
(b) Deliveries by Purchaser. At or prior to the Closing, Purchaser shall
deliver or cause to be delivered to Sellers the following:
(i) subject to Section 1.2(b), the Purchase Price, less the Net
Escrow Amount delivered to Sellers on the Closing Date, by wire transfer
of immediately available funds to the account or accounts designated by
Sellers by notice to Purchaser at least two business days prior to the
Closing Date; and
(ii) all other previously undelivered documents required by this
Agreement to be delivered by Purchaser to the Company or Sellers at or
prior to the Closing Date in connection with the transactions contemplated
hereby.
(c) All instruments and documents executed and delivered to Purchaser
pursuant hereto shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to Purchaser. All instruments and documents
executed and delivered to the Company or Sellers pursuant hereto shall be in
form and substance, and shall be executed in a manner, reasonably satisfactory
to Sellers.
1.5 Further Assurances. After the Closing, each party hereto shall from time to
time, at the request of another party and without further cost or expense to the
party to whom such request is made, execute and deliver such other instruments
of conveyance and transfer and take such other actions as such other party may
reasonably request in order to more effectively consummate the transactions
contemplated hereby and to vest in Purchaser good and valid title to the Shares,
free and clear of all Encumbrances other than Permitted Encumbrances.
ARTICLE II
REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY
The Company hereby represents and warrants to Purchaser, and (i)
Volume, Offshore and Management Direct jointly and severally, on the basis of
their aggregate percentage ownership of the Shares, represent and warrant to
Purchaser and (ii) Services on the basis of its percentage ownership of Shares
represents and warrants to Purchaser, as follows (for the absence of doubt, it
is agreed that Services makes no representation as to the other Sellers or their
Shares):
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2.1 Corporate Organization. The Company is a corporation validly existing and in
good standing under the laws of the State of Delaware. The Company has full
corporate power and authority to own its properties and assets and to carry on
its business as now being conducted and is duly qualified or licensed to do
business as a foreign corporation in good standing in the jurisdictions in which
the ownership of its property or the conduct of its business requires such
qualification. The Company has delivered or made available to Purchaser complete
and correct copies of the Certificate of Incorporation and all amendments
thereto to the date hereof, and the Bylaws (or comparable organizational
documents) as presently in effect of the Company and each Company Subsidiary (as
hereinafter defined). Except as set forth in Section 2.1 of the Disclosure
Schedule, the Company does not own, directly or indirectly, any capital stock or
other equity securities of any corporation or have any direct or indirect equity
or ownership interest in any partnership, limited liability company, joint
venture or other business.
2.2 Capital Stock. The authorized capital stock of the Company consists of 1,000
shares of Common Stock, of which only the Shares as of the date hereof are and
as of the Closing will be issued and outstanding and no other shares of any
other class or series of capital stock of the Company are issued and
outstanding. The Shares have been issued in full compliance with applicable
federal and state securities laws. Except as set forth in Section 2.2 of the
Disclosure Schedule or as expressly provided in this Agreement, there are no
subscriptions, options, warrants, calls, rights, contracts, commitments,
understandings, restrictions or arrangements relating to the issuance, sale,
transfer or voting of any shares of capital stock of the Company, including any
rights of conversion or exchange under any outstanding securities or other
instruments, other than restrictions imposed by Federal and state securities
laws. All of the Shares have been validly issued and are fully paid,
nonassessable and, as of the date hereof, are free and clear of preemptive
rights and other Encumbrances except as set forth in Section 2.2 of the
Disclosure Schedule and, as of the Closing Date, will be free and clear of all
Encumbrances other than Permitted Encumbrances.
2.3 Subsidiaries of the Company. The Company owns and except with respect to the
joint venture with the Baltimore Convention Center (which is expected to
terminate when the related account terminates in July 1999 and from such point
such joint venture would no longer be considered a Company Subsidiary, as
defined below), as of the Closing Date the Company will own, directly or through
one or more wholly-owned subsidiaries, the number of shares of each class of
outstanding capital stock and the percentage of outstanding ownership interests
listed as being owned by the Company or its subsidiaries of each of the entities
listed in Section 2.3 of the Disclosure Schedule (hereinafter referred to
collectively as the "Company Subsidiaries"). Section 2.3 of the Disclosure
Schedule sets forth an organizational chart for the Company Subsidiaries and the
legal name and state of incorporation or formation, as the case may be, of each
Company Subsidiary. Each Company Subsidiary is duly organized, validly existing
and (except for the joint ventures and the limited liability company listed
under the heading "Joint Venture Interests" in Section 2.1 of the Disclosure
Schedule (the "Excluded Entities")) in good standing under the laws of the state
of incorporation or formation, as the case may be, indicated for each Company
Subsidiary in Section 2.3 of the Disclosure Schedule. Each Company Subsidiary
(except for the Excluded Entities) is duly qualified and in good standing as a
foreign entity in each jurisdiction in which it is required so to qualify and
each Company Subsidiary has full power and authority to carry on the business in
which it is now engaged. Except as set forth
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in Section 2.3 of the Disclosure Schedule, the Company and the Company
Subsidiaries do not own, directly or indirectly, any interest in the capital
stock of any other corporation, association, trust or similar entity, any
interest in the equity of any partnership or similar entity, any share in any
joint venture, or any other equity or proprietary interest in any entity or
enterprise, however organized and however such interest may be denominated or
evidenced. Section 2.3 of the Disclosure Schedule accurately sets forth the
capitalization and ownership, and/or the issued and outstanding capital stock,
as applicable, of each of the Company Subsidiaries. All of the outstanding
capital stock or other ownership interests of the Company Subsidiaries owned by
the Company or any of the Company Subsidiaries are duly authorized and validly
issued, fully paid and nonassessable and free and clear of all Encumbrances
(except as set forth in Section 2.3 of the Disclosure Schedule). None of the
shares of capital stock of the Company Subsidiaries and, to the knowledge of the
Company with respect to the minority owned Excluded Entities were issued in
violation of any preemptive rights binding on the Company Subsidiaries. There
are no issued or outstanding shares of any class of capital stock of, or
ownership interests in, as applicable, any of the Company Subsidiaries other
than those set forth in Section 2.3 of the Disclosure Schedule. Except as
disclosed in Section 2.3 of the Disclosure Schedule, none of the Company
Subsidiaries has outstanding, or has agreed to issue or sell, any options,
rights, warrants, calls or other commitments (either in the form of convertible
securities or otherwise) pursuant to which the holder thereof has or will or may
have the right to purchase or otherwise acquire any shares of stock or any other
security of any of the Company Subsidiaries.
2.4 Authorization, Etc. The Company has full power and authority to execute and
deliver this Agreement and to carry out the transactions contemplated hereby.
The execution and delivery by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby have been duly approved
and authorized, and no other corporate proceedings on the part of the Company
are necessary to approve and authorize the execution and delivery by the Company
of this Agreement and the consummation by the Company of the transactions
contemplated hereby. This Agreement has been duly and validly executed by the
Company and, assuming this Agreement constitutes the valid and binding agreement
of Purchaser and Sellers, constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable laws of bankruptcy, insolvency and similar laws affecting
creditors' rights generally and the application of general rules of equity.
2.5 Balance Sheets and Income Statements. The Company has previously delivered
to Purchaser the following financial statements, including the related notes and
Schedules thereto (collectively, the "Financial Statements"):
(a) the audited consolidated balance sheets of the Company and its
subsidiaries as at December 31, 1996, December 30, 1997, and December 30, 1998
and the related statements of operations for each of the years then ended;
(b) the audited consolidated balance sheets of Service America Corporation
and its subsidiaries (collectively, "SAC") as at December 28, 1996, December 27,
1997, and the consolidated statements of operations of SAC for the fifty three
(53) week period ended March 30, 1996, the thirty-nine (39) week period ended
December 28, 1996, and the fifty-two (52) week period ended December 27, 1997;
and
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(c) the unaudited consolidated balance sheet (the "Balance Sheet") of the
Company and the Company Subsidiaries as at March 30, 1999 and the related
unaudited statement of operations for the three (3) month period then ended.
The Financial Statements present fairly the consolidated assets, liabilities,
stockholders' equity and results of operations and financial position of the
Company and its consolidated subsidiaries or of SAC, as the case may be, as at
the dates and for the periods indicated, and (including the related notes and
schedules thereto) have been prepared in accordance with United States generally
accepted accounting principles as consistently applied ("GAAP").
2.6 No Undisclosed Liabilities. At March 30, 1999, neither the Company nor any
Company Subsidiary had any liabilities or obligations, whether accrued, absolute
or contingent, that were required to be reflected on a balance sheet of the
Company and the Company Subsidiaries prepared in accordance with GAAP (including
appropriate footnote disclosure), other than liabilities and obligations that
are reflected, accrued or reserved for in the Balance Sheet. Except as disclosed
in Section 2.6 of the Disclosure Schedule, since March 30, 1999, neither the
Company nor any Company Subsidiary has incurred any liabilities or obligations
other than those incurred in the ordinary course of business or pursuant to its
Budget (as defined below) or as expressly permitted by Section 7.1(b)(vi) or any
other Section of this Agreement.
2.7 No Approvals or Conflicts. Except as set forth in Section 2.7 of the
Disclosure Schedule, neither the execution and delivery by the Company of this
Agreement nor the consummation by the Company of the transactions contemplated
hereby will (i) violate, conflict with or result in a breach of any provision of
the Certificate of Incorporation or Bylaws (or comparable organizational
documents) of the Company or any Company Subsidiary, (ii) violate, conflict with
or result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties of the Company or any Company Subsidiary, any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit, lease,
contract, agreement or other instrument to which the Company, the Company
Subsidiaries or any of their respective properties may be bound, (iii) violate
any order, injunction, judgment, ruling, law or regulation of any court or
governmental authority applicable to the Company, the Company Subsidiaries or
any of their respective properties or (iv) except for applicable requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), require any consent, approval or authorization of, or notice to, or
declaration, filing or registration with, any governmental or regulatory
authority, or any other third party.
2.8 Compliance with Law; Governmental Authorizations. Except as set forth in
Section 2.8 of the Disclosure Schedule or as reflected, accrued or reserved for
in the Balance Sheet, the Company is not now, and has not been, during any
period for which the applicable statute of limitations has not yet expired, in
violation of any license, permit, order, injunction, judgment, ruling, law or
regulation of any court or governmental authority applicable to the property or
business of the Company. Except as set forth in Section 2.8 of the Disclosure
Schedule, the licenses, permits and other governmental authorizations held by
the Company and
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the Company Subsidiaries are valid and sufficient to lawfully conduct the
businesses of the Company and the Company Subsidiaries as currently conducted.
2.9 Litigation. Except as set forth in Section 2.9 of the Disclosure Schedule or
as reflected, accrued or reserved for in the Balance Sheet, (i) there are no
actions, proceedings or investigations pending or, to the knowledge of the
Company, threatened against the Company or any Company Subsidiary or the
transactions contemplated by this Agreement, before any court or governmental or
regulatory authority or body and (ii) the Company has no knowledge of any facts
or circumstances that would reasonably be expected to result in any such action,
proceeding or investigation.
2.10 Title to Assets; Inventories. Except as set forth in Section 2.10 of the
Disclosure Schedule, on March 30, 1999, the Company and each Company Subsidiary
had and, except with respect to assets disposed of in the ordinary course of
business since March 30, 1999, the Company and each Company Subsidiary now has,
good and valid title to all the properties and assets owned by it and reflected
on the Balance Sheet or which would have been reflected on the Balance Sheet if
acquired prior to March 30, 1999, free and clear of all encumbrances of any
nature except for (i) exceptions to title as set forth in Section 2.10 of the
Disclosure Schedule; (ii) mortgages and encumbrances which secure indebtedness
or obligations which are properly reflected on the Balance Sheet; (iii) liens
for Taxes (as defined in Section 2.12) not yet payable or any Taxes being
contested in good faith; (iv) liens arising as a matter of law in the ordinary
course of business, provided that the obligations secured by such liens are not
delinquent or are being contested in good faith; and (v) such minor
imperfections of title and encumbrances, if any, as do not impair the ability of
the Company to realize the practical benefits of ownership of such property.
Except as set forth in Section 2.10 of the Disclosure Schedule, the Company and
each Company Subsidiary owns, or has valid leasehold interests in, all tangible
properties and assets used in the conduct of its business purported to be owned
by it. The Company does not own any real property.
(a) The assets currently owned or leased by the Company or any Company
Subsidiary, or to which the Company or any Company Subsidiary is ordinarily
given access in providing its services, are adequate and in satisfactory
operating condition, subject to ordinary maintenance requirements from time to
time, for the uses to which they are being put, and constitute all of the assets
necessary for the continued conduct of the business of the Company and the
Company Subsidiaries after the Closing Date in substantially the same manner as
conducted prior to the Closing Date.
(b) All inventories of the Company and the Company Subsidiaries are of
good, usable and merchantable quality (subject to normal and customary
allowances for spoilage, damage and outdated items in the case of food
inventory) and, except as set forth in Section 2.10 of the Disclosure Schedule,
do not include any obsolete or discontinued items. Except as set forth in
Section 2.10 of the Disclosure Schedule, (i) all inventories are of such quality
as to meet any applicable governmental quality control standards, (ii) all
inventories that are finished goods are saleable as current inventories at the
current prices thereof and (iii) all inventories are recorded on the books of
the Company or the Company Subsidiaries, as applicable, at the lower of average
cost, determined on the FIFO basis, or market.
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2.11 Absence of Certain Changes. Except as disclosed in Section 2.11 of the
Disclosure Schedule and as otherwise provided herein, since March 30, 1999, (i)
the business of the Company and each Company Subsidiary has been conducted only
in the ordinary course and consistent with past practice; and (ii) there has not
been any event or circumstances that would have a material adverse effect on the
business, results of operations or financial condition or prospects of the
Company and the Company Subsidiaries taken as a whole (hereinafter referred to
as a "Material Adverse Effect").
(a) Since March 30, 1999, the Company and each Company Subsidiary has not,
except as set forth in Section 2.11 of the Disclosure Schedule, (i) purchased,
agreed to purchase, redeemed or called for redemption of any outstanding shares,
issued any options, warrants, shares, bonds or other securities, interests or
rights to acquire securities or interests or declared or paid any dividend or
distribution on or authorized or effected any split up or recapitalization of
any shares; (ii) authorized any changes in its charter or by-laws; (iii) made or
contracted for any capital expenditures or incurred or paid any liabilities or
obligations, other than in the ordinary course of business or pursuant to its
Budget (as defined below) or as expressly permitted by Section 7.1(b)(vi) or any
other Section of this Agreement; (iv) sold, leased, or otherwise transferred, or
contracted to sell, lease or otherwise transfer, any of its assets, other than
in the ordinary course of business, or mortgaged, pledged or subjected to any
lien, charge or other encumbrance any of its assets, other than in the ordinary
course of business; (v) made any loan or advance to any person or entity, other
than in the ordinary course of business; (vi) made any changes in directors or
officers or made any change in the compensation payable to, or made any
arrangement for the payment of or paid any bonus to, any director or officer;
(vii) failed to keep in force any insurance coverage then in force; (viii)
suffered any uninsured damage to or destruction of any of its properties or
assets of any premises owned or leased by it, whether by fire, accident, labor
disturbance or otherwise; (ix) transferred or granted any right under any lease,
license, agreement, patent, trade name, copyright or other valuable asset, other
than in the ordinary course of business; (x) failed to pay any payable or
collect any receivable other than in accordance with past practice or in
connection with any matter disclosed as in dispute under Section 2.9 of the
Disclosure Schedule, or (xi) agreed to do any of the things set forth in
Sections 2.11(b)(i), (ii), (iii), (iv), (v), (vi), (ix), or (x) above.
2.12 Taxes and Reports.
(a) Filing of Tax Returns. Except as set forth in Section 2.12(a) of the
Disclosure Schedule, there have been properly completed and filed on a timely
basis (taking into account extensions of time to file granted therefor) all tax
returns required to be filed with respect to the Company and the Company
Subsidiaries on or prior to the date hereof.
(b) Payment of Taxes. All Taxes of the Company or any of the Company
Subsidiaries that are due and owing with respect to taxable periods ending on or
before the Closing Date hereof have been paid, except to the extent that such
Taxes are being contested in good faith by appropriate proceedings and disclosed
in Section 2.12(b) of the Disclosure Schedule hereto or are reserved as and to
the extent required by GAAP on the Financial Statements.
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(c) Audit History. Except as disclosed in Section 2.12(c) of the
Disclosure Schedule, no issues have been raised in writing by any taxing
authority in connection with any tax return of the Company and the Company
Subsidiaries with respect to the Company and the Company Subsidiaries. Except as
disclosed in Section 2.12(c) of the Disclosure Schedule, no waivers of statutes
of limitation with respect to any such tax returns have been given by the
Company or the Company Subsidiaries. Except to the extent shown in Section
2.12(c) of the Disclosure Schedule, all deficiencies asserted or assessments
made as a result of any examinations have been paid, or are reflected as a
liability in the Financial Statements, or are being contested and are reserved
as and to the extent required by GAAP on the Financial Statements.
(d) Liens. Except as disclosed in Section 2.12(d) of the Disclosure
Schedule, there are no liens for Taxes on the assets of the Company or any
Company Subsidiary other than for current Taxes not yet due and payable or if
due, (i) not delinquent or (ii) being contested in good faith by appropriate
proceedings.
(e) Prior Affiliated Groups. Except as disclosed in Section 2.12(e) of the
Disclosure Schedule and except for the group of which the Company and the
Company Subsidiaries are presently members, neither the Company nor any of the
Company Subsidiaries has ever been a member of an affiliated group of
corporations, within the meaning of Section 1504 of the Code.
(f) Tax-Exempt Use Property. Except as disclosed in Section 2.12(f) of the
Disclosure Schedule, as of Closing, none of the assets of the Company or any of
the Company Subsidiaries is "tax exempt use property" within the meaning of
Section 168(h) of the Code.
(g) Definitions. For purposes of this Agreement, (i) "Taxes" shall mean
all taxes, charges, fees, levies, penalties or other assessments imposed by any
United States Federal, state, local or foreign taxing authority, including, but
not limited to, income, excise, property, sales and use, transfer, franchise,
payroll, withholding, social security or other taxes, including any interest,
penalties or additions attributable thereto and (ii) "Tax Return" shall mean any
return, report, information return or other document (including any related or
supporting information) filed or required to be filed with any taxing authority
with respect to Taxes.
2.13 Employee Benefits. Section 2.13 of the Disclosure Schedule sets forth a
true 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"), that is maintained or to which the Company or Company Subsidiary, as
applicable, is a party or obligated to contribute for or on behalf of, current
or former employees or directors of the Company or any Company Subsidiary (the
"Plans"). With respect to each of the Plans, and except as set forth in Section
2.13 of the Disclosure Schedule, other than multi-employer plans, the Seller has
heretofore delivered or made available to Purchaser true and complete copies of
(i) the text of the Plan and of any trust or insurance contract maintained in
connection therewith, (ii) the most recent summary plan descriptions and all
modifications thereto (including any written summaries of any unwritten Plan),
any employee handbook and other communications and all modifications thereto, if
any, (iii) the most recent three annual reports (Form 5500 series) together with
required schedules filed with the Internal Revenue Service (the "IRS") and any
financial statements or
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opinions required under ERISA, if any, (iv) the most recent determination letter
issued by the IRS with respect to 401(k) plans and the related submission and
communications with the IRS, and (v) the most recent actuarial report, if any.
Except as set forth in Section 2.13 of the Disclosure Schedule, each Plan has
been maintained in substantial compliance with all applicable laws and
regulations and has been operated in substantial compliance with its terms.
Except as set forth in Section 2.13 of the Disclosure Schedule, (a) no Plan has
an accumulated or waived funding deficiency within the meaning of Section 412 of
the Internal Revenue Code of 1986, as amended (the "Code"), (b) no proceedings
have been instituted to terminate (i) any Plan that is subject to Title IV of
ERISA or (ii) any "employee pension benefit plan" (as defined in Section (3)(2)
of ERISA) sponsored by a member of the Company's "Controlled Group" (defined as
any organization which is a member of the same controlled group of organizations
within the meaning of Code Sections 414(b) or (c) that is subject to Title IV of
ERISA), and (c) the current value of the assets of each of the Plans that are
subject to Title IV of ERISA, based upon the actuarial assumptions currently
used by the Plans, exceeds the present value of the accrued benefits under each
such Plan. Any Plan intended to be "qualified" (within the meaning of Section
401 (a) of the Code) either (x) has received a favorable Determination Letter
from the Internal Revenue Service and, to the knowledge of the Company, no event
has occurred nor condition exists which could reasonably be expected to result
in the revocation of such Determination Letter, or (y) is the subject of an
application for such a Determination Letter. Except as set forth on Section 2.13
of the Disclosure Schedule, no Plan provides health, dental, medical,
hospitalization or life insurance (whether on an insured or self-insured basis)
to current employees or former employees after their retirement or other
termination of employment from the Company and Company Subsidiaries (other than
continuation coverage required under COBRA which may be purchased at such
employees' sole expense).
2.14 Labor Relations. Except as set forth in Section 2.14 of the Disclosure
Schedule, neither the Company nor any Company Subsidiary is a party to any
collective bargaining agreement applicable to employees of the Company or
Company Subsidiary, as applicable. Except as set forth in Section 2.14 of the
Disclosure Schedule, the Company and the Company Subsidiaries are in compliance
with all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours and is not engaged in any
unfair labor practice, and, there is no labor strike, dispute, slowdown or
stoppage actually pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Company Subsidiary.
2.15 Intellectual Property. Section 2.15 of the Disclosure Schedule contains an
accurate and complete list of all registered patents, trademarks, trade names,
service marks and copyrights (collectively, "Intellectual Property") owned by
the Company or any Company Subsidiary and an accurate and complete list of all
licenses and other agreements relating to Intellectual Property (collectively,
"License Agreements"). Except as set forth in Section 2.15 of the Disclosure
Schedule, (i) the consummation of the transactions contemplated by this
Agreement will not impair Purchaser's right to use any Intellectual Property or
the enforceability of the License Agreements, (ii) neither the Company nor any
Company Subsidiary has received, during any period for which the applicable
statute of limitations has not yet expired, a written notice of any claims by
any person relating to the Company's or Company Subsidiary's, as applicable, use
of any Intellectual Property, or challenging or questioning the validity or
enforceability of any such License Agreement, except for such claims that have
been resolved with
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no further obligations by the Company or the Company Subsidiaries, and (iii)
neither the Company nor any Company Subsidiary has given any notice of
infringement to any third party with respect to any such Intellectual Property
or has knowledge of facts relating to the infringement by any third party of any
Intellectual Property.
2.16 Contracts. With respect to the Company and the Company Subsidiaries, the
Company has delivered or made available to Purchaser true and complete copies of
(i) each contract for the purchase of inventory in excess of $500,000 per
calendar year, (ii) each contract with a customer involving revenues to the
Company or any Company Subsidiary reasonably anticipated to be in excess of
$100,000 per calendar year, (iii) each contract pertaining to employment,
consulting or severance arrangements with any officer, director, employee or
independent contractor, (iv) each indenture, mortgage, note, letter of credit or
other instrument relating to the borrowing of money (or the guarantee thereof)
involving an amount in excess of $10,000, (v) each franchise contract, (vi) each
contract that was not entered into in the ordinary course of business and that
involves expenditures in excess of $25,000 over its term, (vii) each lease,
rental or occupancy agreement, license, installment and conditional sale
agreement, software maintenance agreement, and other contract affecting the
ownership of, leasing of, title to, use of, or any leasehold or other interest
in, any real or personal property (except personal property leases and
installment and conditional sales agreements having a value per item or
aggregate payments of less than $100,000 and with terms of less than one year)
(with respect to those agreements in this clause (vii) pertaining to personal
property, the "Personal Property Leases"), (viii) each collective bargaining
agreement and other contract to or with any labor union or other employee
representative of a group of employees, (ix) each joint venture, partnership and
other contract involving a sharing of profits, losses, costs or liabilities by
the Company or any Company Subsidiary with any other Person, (x) each License
Agreement, (xi) each contract limiting the freedom to engage in any line of
business or compete with any person or entity or operate at any location and
(xii) each contract, agreement, commitment or other understanding not otherwise
disclosed pursuant to the foregoing clauses which, to the knowledge of the
Company, would reasonably be expected to be material to the Company and the
Company Subsidiaries (the items described in clauses (i) through (xii),
collectively, the "Material Contracts"). Section 2.16 of the Disclosure Schedule
sets forth a true and correct list of all Material Contracts as of the date
hereof.
(a) Except as set forth in Section 2.16 of the Disclosure Schedule, (i)
each of the Material Contracts is in full force and effect, and (ii) there are
no existing defaults by the Company or, to the Company's knowledge, the other
party thereunder, which defaults are likely to result in a termination of any
Material Contract.
2.17 Environmental Matters. As used herein, "Material Environmental Amount"
shall mean an amount payable by the Company or any Company Subsidiary, in the
aggregate, for investigative and remedial costs, compliance costs, damages,
fines or penalties pursuant to Environmental Laws (as hereinafter defined) that
in the aggregate exceeds $250,000. Except as set forth in Section 2.17 of the
Disclosure Schedule and except as would not reasonably be expected, individually
and in the aggregate, to result in the payment of a Material Environmental
Amount:
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(i) neither the Company nor any Company subsidiary has as of the
date hereof received any written notice and otherwise has no knowledge of
any alleged violation of any applicable Federal, state or local laws,
regulations, ordinances, orders or principles of common law related to
Hazardous Materials, pollution or the protection of the environment and/or
occupational health and safety ("Environmental Laws"). To the Company's
knowledge, there are no facts or circumstances that would reasonably be
expected to result in any such allegation.
As used herein, "Hazardous Material" means any hazardous or toxic
material pollutant, contaminant, substance or waste defined in or governed
by any Environmental Law, including but not limited to any material listed
under the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. 9601, et seq.; the Hazardous Materials Transportation Act,
49 U.S.C. 1801, et seq.; the Resource Conservation and Recovery Act, 42
U.S.C. 6901, et seq.; the Federal Water Pollution Control Act, 33 U.S.C.
1251, et seq.; the Clean Air Act, 42 U.S.C. 7401, et seq.; the Toxic
Substances Control Act, 15 U.S.C. 2601; asbestos and asbestos containing
material; petroleum, petroleum products and waste oil; or any other waste,
material, substance, pollutant or contaminant that might reasonably be
expected to result in liability under any applicable Environmental Law.
(ii) The Company and the Company Subsidiaries are in compliance
with, and at all times prior to the date hereof complied with, all
Environmental Laws.
(iii) The Company and the Company Subsidiaries have obtained and are
in compliance with all permits and authorizations required under any
Environmental Law ("Environmental Permits") to lawfully conduct the
business of the Company and the Company Subsidiaries as currently
conducted. All such Environmental Permits are in full force and effect.
There is no proceeding pending or, to the Company's knowledge, threatened,
seeking the revocation, cancellation, suspension or adverse modification
of any Environmental Permit.
(iv) No Hazardous Material has been used, stored, treated or
disposed of by the Company or Company Subsidiaries except in compliance
with Environmental Laws. To the best of the Company's knowledge, no
Hazardous Materials generated by the Company or any Company Subsidiary has
ever been sent directly or indirectly to any site listed or formally
proposed for listing on the National Priorities List promulgated pursuant
to CERCLA or to any site listed on any state list of hazardous substance
sites requiring cleanup.
(v) To the best of the Company's knowledge, no Hazardous Material is
present on, at, under or migrating from any property where the Company and
the Company Subsidiaries have conducted their business.
(vi) The Company and Company Subsidiaries have maintained all
records in the manner and the time periods required by all Environmental
Laws and Environmental Permits.
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(vii) There are no liens, encumbrances or restrictions of any nature
whatsoever against the Company or the Company Subsidiaries arising under
any Environmental Law.
(viii) The Company has made available to Purchaser complete copies
of all reports, analyses or other documentation prepared by or on behalf
of the Company or otherwise in the Company's possession relating to (i)
the Company's and the Company Subsidiaries' compliance with Environmental
Laws, and (ii) the presence or absence of Hazardous Materials on, at,
under or migrating from any property where the Company and the Company
Subsidiaries have conducted their business (collectively referred to as
"Environmental Reports"). Each Environmental Report delivered or made
available to Purchaser has been listed on Section 2.17 of the Disclosure
Schedule. By way of example only and not by way of limitation,
Environmental Reports include Phase I and Phase II audits, compliance
audits, tank closure reports, remedial investigation reports, remedial
action reports or other documentation relating to investigation and
remediation activities.
(ix) To the extent required under Environmental Laws: all existing
underground and above ground storage tanks currently operated by the
Company or Company Subsidiaries are properly registered with the
appropriate local, state and federal governmental authorities; all
underground storage tanks currently operated by the Company or the Company
Subsidiaries meet the federal and all applicable state and local upgrade
requirements effective December 22, 1998; and no underground or above
ground storage tank operated by the Company or the Company Subsidiaries
has been closed, abandoned or removed during the Company's or the Company
Subsidiaries' operations, except in compliance with all applicable
Environmental Laws. Section 2.17 of the Disclosure Schedule lists all
underground and above ground storage tanks now operated by the Company or
any Company Subsidiary, together with applicable registration forms,
filings and permits.
2.18 Insurance. Section 2.18 of the Disclosure Schedule lists all insurance
policies, including, without limitation, workers compensation insurance
policies, covering the assets, employees and operations of the Company and the
Company Subsidiaries as of the date hereof. Such insurance policies are in full
force and effect, all premiums due thereon have been paid (except as described
in Section 2.18 of the Disclosure Schedule) and such policies are adequate to
insure the business of the Company and the Company Subsidiaries in such amounts
and against such risks as are customary for companies engaged in businesses
similar to that of the Company and the Company Subsidiaries.
(a) There are no unpaid deductibles or retentions or self-insured
retention ("SIR") for reported insurance claims other than those that are listed
in Section 2.18 of the Disclosure Schedule, where the aggregate of all such
deductibles, retentions and SIR's could exceed $50,000.
(b) There are no deductibles, retentions or SIR's for claims that are
incurred but not yet reported other than those that are listed in Section 2.18
of the Disclosure Schedule.
(c) There have been no "portfolio risk transfers" or "buyouts of claim
tail" other than those that are attached as Section 2.18 of the Disclosure
Schedule.
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(d) There is no liability for retrospectively rated insurance premiums
other than those listed in Section 2.18 of the Disclosure Schedule.
(e) There is no liability to insurers for future audit premiums other than
those listed in Section 2.18 of the Disclosure Schedule.
(f) A current list of all surety bonds, with obligee, obligor, face
amount, and description, is attached as Section 2.18 of the Disclosure Schedule.
2.19 Licenses and Permits. Set forth on Section 2.19 of the Disclosure Schedule
is a list of each liquor license held by the Company or any of the Company
Subsidiaries as of the date hereof. Subject to any filings required to be made
or governmental approvals required to be obtained in connection with the
Closing, which the Company, Sellers and Purchaser will cooperate in making or
obtaining but which shall in any event be the obligation of Purchaser to make or
obtain, the Company and each Company Subsidiary has all local, state and federal
licenses, including liquor licenses, permits, registrations, certificates,
consents, accreditations and approvals (collectively, the "Licenses and
Permits") necessary to conduct its business in the manner currently conducted.
Except as set forth in Section 2.19 of the Disclosure Schedule, there is no
default under any of the Licenses and Permits, no notices have been received by
the Company or any Company Subsidiary with respect to threatened, pending, or
possible revocation, termination, suspension or limitation of any such License
or Permit, and there exists no grounds for revocation, termination, suspension
or limitation of any such License or Permit.
2.20 No Brokers' or Other Fees. Except as set forth on Section 2.20 of the
Disclosure Schedule, no broker, finder or investment banker is entitled to any
fee or commission in connection with the transactions contemplated hereby based
upon arrangements made by or on behalf of the Company.
2.21 Volume Services America, Inc. Integration/Transition Plan. The Company has
heretofore delivered or made available to Purchaser a true, correct and complete
copy of the Volume Services America Integration/Transition Plan (the "Plan")
pursuant to which Volume Services, Inc. and SAC were combined. Except as
disclosed in Section 2.21 of the Disclosure Schedule attached hereto:
(a) all cost saving measures included in the Plan have been fully
implemented;
(b) all one-time expenses incurred in connection with implementation of
the Plan that are allowed to be reserved for under GAAP have been reserved by
the Company for accounting purposes in 1998, which reserve is reflected in the
Company's 1998 income statement delivered or made available pursuant to Section
2.5; and
(c) all cash payments required to implement the Plan have been paid in
full prior to the date hereof.
2.22 1998 Contract EBITDA. The Company has heretofore delivered to Purchaser as
Section 2.22 of the Disclosure Schedule a true, correct and complete list of the
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approximate earnings before interest, taxes, depreciation, and amortization
("EBITDA") contributed by each of the Company's customer locations in 1998
(other than customers individually accounting for less than $100,000 of EBITDA),
which list fairly represents the EBITDA results of such customer locations,
taken as a whole.
2.23 Ethical Standards. SAC and Volume Services Inc. have adopted written
policies regarding ethical standards, copies of which have been delivered or
made available to Purchaser. To the Company's knowledge, such policies are being
complied with.
2.24 Directors; Officers; Compensation. Section 2.24 of the Disclosure Schedule
contains a true and complete list, as of the date of this Agreement, of all of
the Company's directors and officers, and all salaried employees who receive
annual compensation in excess of $50,000 and the salaries of such directors,
officers and salaried employees.
2.25 Bank Accounts. Section 2.25 of the Disclosure Schedule contains a complete
list showing the name of each bank in which the Company has an account or safety
deposit box and a complete list of each such account or safety box and the name
of each person authorized to draw thereon or have access thereto.
2.26 Material Untruths or Omissions. This Agreement, including any disclosure
contained or referred to in any Section (including Section 2.26) of the
Disclosure Schedule, does not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements herein and
therein, in the light of the circumstances in which they were made, not
misleading.
2.27 Receivables and Payables. Except as set forth in Section 2.27 of the
Disclosure Schedule, all receivables of the Company as of March 30, 1999: (i)
were incurred in the ordinary course of the Company's business and (ii) are not,
to the Company's or any Seller's knowledge, subject to any defense,
counter-claim or set off, other than those arising in the ordinary course of
business, provided that certain receivables are subject to claims and
counterclaims as disclosed in Section 2.9 of the Disclosure Schedule. All
payables of the Company as of March 30, 1999 were incurred in the ordinary
course of business.
2.28 Year 2000. The Company's primary information system, and all accounting
systems at its headquarters location, are ready for "Y2K" transactions. The
Company has developed a plan outline to assess, remediate and test secondary
information technology systems, such as communication, security, and point of
sale systems. In the second quarter of 1999, the Company plans on conducting a
survey of secondary information systems to assess additional "Y2K" exposure. An
independent consultant has been retained to assist the Company in performing the
survey and assessment. The Company has, through normal operating requirements,
been upgrading secondary information systems on an as required basis.
2.29 1999 Budget. The 1999 Budget heretofore delivered by the Company to
Purchaser (the "Budget"), including the estimated capital expenditures reflected
therein, has been prepared in good faith, giving effect to assumptions made on a
reasonable basis and reflects the best available estimates and judgments of the
Company's management as to the future financial performance of the Company.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Volume, Offshore and Management Direct hereby jointly and severally
represent and warrant to Purchaser as to themselves and their Shares, and
Services hereby represents and warrants to Purchaser severally and not jointly,
as to itself and its Shares, as follows (for the absence of doubt, it is agreed
that Services makes no representation as to the other Sellers or their Shares):
3.1 Ownership of Shares. The Shares constitute all the issued and outstanding
shares of capital stock of the Company.
3.2 Title to Shares. As of the date hereof, except as set forth in Section 3.2
of the Disclosure Schedule, each of the Sellers has good and valid title to the
Shares indicated as being owned by it in Annex A, free and clear of all
Encumbrances. As of the Closing Date, each of the Sellers will have good and
valid title to the Shares indicated as being owned by it in Annex A. Except as
set forth in Section 3.2 of the Disclosure Schedule, each Seller represents and
warrants that, as of the date hereof there are no restrictions against the
transfer of its Shares to Purchaser or the Company, as the case may be. Each
Seller represents and warrants that as of the Closing Date, there will be no
restrictions against the transfer of its Shares to Purchaser or the Company, as
the case may be. Delivery of the Shares by Sellers to Purchaser or the Company,
as the case may be, in accordance with Sections 1.2 and 1.4(a) will convey to
Purchaser or the Company, as the case may be, good and valid title to such
Shares.
3.3 Authority. Each Seller has full power and authority to execute and deliver
this Agreement and to carry out the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby by each of the Sellers have been duly and validly authorized
by all requisite action on the part of such Seller. This Agreement has been duly
and validly executed by each Seller and assuming this Agreement constitutes the
valid and binding agreement of Purchaser and the Company, constitutes the legal,
valid and binding obligation of each Seller enforceable in accordance with its
terms, subject to applicable laws of bankruptcy, insolvency and similar laws
affecting creditors' rights generally and the application of general rules of
equity.
3.4 No Approvals or Conflicts. Except as set forth in Section 3.4 of the
Disclosure Schedule, neither the execution and delivery of this Agreement, nor
the consummation by each Seller of the transactions contemplated hereby will:
(a) violate, conflict with or result in a breach of any provision of the
certificate of incorporation or charter papers or bylaws or other organizational
documents of such Seller; (b) violate any order, injunction, judgment, ruling,
law or regulation of any court or governmental authority to which such Seller or
its subsidiaries or any of their respective properties is subject; (c) violate,
conflict with or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the creation of any lien, security interest, charge
or encumbrance upon any of Seller's properties under any note, bond, mortgage,
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indenture, deed of trust, license, franchise, permit, lease, contract, agreement
or other instrument to which Sellers or their subsidiaries or any of their
respective properties may be bound, or (d) except for applicable requirements of
the HSR Act and the Exchange Act, require any consent, approval or authorization
of, or notice to, or declaration, filing or registration with, any governmental
or regulatory authority or other third party. Except as set forth on Section 3.4
of the Disclosure Schedule, no consent or approval of or notification to any
governmental authority is required in connection with the execution and delivery
by such Seller of this Agreement or the consummation of the transactions
contemplated hereby.
3.5 Brokers and Advisors. Except as set forth in Section 2.20 of the Disclosure
Schedule, no action taken by any Seller in connection with or in furtherance of
the transactions contemplated hereby has or shall cause any of the Company, any
Company Subsidiary or Purchaser to be subject to any claim against it for a
brokerage commission, finder's fee, investment banker's fee or other like
payment.
3.6 Claims on the Company. No Seller and no director, officer, partner or other
affiliate of such Seller (other than the Company and the Company Subsidiaries)
has any claim against the Company or any Company Subsidiary in respect of
borrowed money or funded indebtedness or obligations or liabilities for fees,
expenses and advances (other than amounts payable in the ordinary course of
business as compensation to any person who is also an employee of the Company or
any Company Subsidiary), nor is any Seller or director, officer, partner or any
of its other affiliates (other than the Company and the Company Subsidiaries)
party to any agreement, transaction or other business arrangement with the
Company or any Company Subsidiary, except (other than those in connection with
such person's acting as an employee of the Company or any Company Subsidiary),
with respect to both of the foregoing clauses, (i) as described in Section 3.6
of the Disclosure Schedule or (ii) reimbursements and advances in accordance
with the policies of the Company and the Company Subsidiaries to directors and
officers for expenses incurred in connection with the Company's business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company and Sellers
as follows:
4.1 Organization. Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
4.2 Authorization, Etc. Purchaser has full corporate power and authority to
execute and deliver this Agreement, and to carry out the transactions
contemplated hereby. The execution and delivery by Purchaser of this Agreement
and the consummation by Purchaser of the transactions contemplated hereby have
been duly approved and authorized, and no other corporate proceedings on the
part of Purchaser are necessary to approve and authorize the execution and
delivery by Purchaser of this Agreement and the consummation by Purchaser of the
transactions contemplated hereby. This Agreement has been duly and validly
executed by Purchaser and, assuming this Agreement constitutes the valid and
binding agreement of the
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Company and Sellers, constitutes a valid and binding agreement of Purchaser,
enforceable against Purchaser in accordance with its terms, subject to
applicable laws of bankruptcy, insolvency and similar laws affecting creditors'
rights generally and the application of general rules of equity.
4.3 No Approvals or Conflicts. Neither the execution and delivery by Purchaser
of this Agreement nor, as of the Closing, the consummation by Purchaser of the
transactions contemplated hereby will (i) violate, conflict with or result in a
breach of any provision of the Certificate of Incorporation or By-laws of
Purchaser, (ii) violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of Purchaser's properties
under, any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, lease, contract, agreement or other instrument to which Purchaser or its
subsidiaries or any of their respective properties may be bound, (iii) violate
any order, injunction, judgment, ruling, law or regulation of any court or
governmental authority applicable to Purchaser or its subsidiaries or any of
their respective properties, or (iv) except for applicable requirements of the
Exchange Act and the HSR Act require any consent, approval or authorization of,
or notice to, or declaration, filing or registration with, any governmental or
regulatory authority or other third party.
(a) Purchaser understands that the procurement of any required consents
from, or giving of notices to, customers and other parties with contractual
arrangements with the Company and the Company Subsidiaries or, subject to
Sections 6.5 and 6.6, governmental authorities (other than the Department of
Justice and the Federal Trade Commission) who may require such consents or
notices (regardless of whether such consents or notices are included in Section
2.7 of the Disclosure Schedule) will not be a condition to any party's
obligation to effect the Closing. Purchaser also understands that consummation
of this transaction requires the prior consent of the lenders under the bank
credit facility pertaining to the Company and the Company Subsidiaries, and in
the absence of such consent, Purchaser would have to cause the Company and/or
the Company Subsidiaries to refinance such facility at Closing and, subject to
Section 7.3, no Seller will be responsible for the failure to obtain such
consent or to effect such refinancing. Finally, Purchaser understands that
consummation of this transaction will constitute a "change of control" under the
indenture for the 11-1/4% Notes due 2009 (the "Company Notes") and as a result,
a repurchase offer must be made following the Closing in accordance with the
requirements of such indenture.
4.4 Acquisition for Investment. Purchaser acknowledges that neither the offer
nor the sale of the Shares has been registered under the Securities Act.
Purchaser is acquiring the Shares solely for its own account and not with a view
to any distribution or other disposition of such Shares, and the Shares will not
be transferred except in a transaction registered or exempt from registration
under the Securities Act.
4.5 No Knowledge of Breach. As of the date hereof, Purchaser has no knowledge of
any breaches of any representations or warranties set forth in Article II or III
above. Purchaser acknowledges that it has read the copies of the documents
included in Exhibit A to this Agreement, which Exhibit A has been initialed by
Sellers, the Company, and Purchaser.
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4.6 No Brokers' or Other Fees. No broker, finder or investment banker is
entitled to any fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Purchaser.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF THE COMPANY AND SELLERS
The obligation of the Company and Sellers to effect the Closing
under this Agreement is subject to the satisfaction, at or prior to the Closing,
of each of the following conditions, unless waived in writing by Sellers.
5.1 Representations and Warranties. The representations and warranties made by
Purchaser in this Agreement shall be true and correct in all material respects
on the Closing Date as though such representations and warranties were made at
such date, except for changes expressly permitted or contemplated by this
Agreement.
5.2 Performance. Purchaser shall have performed and complied in all material
respects with all agreements, obligations and conditions required by this
Agreement to be so performed or complied with by Purchaser prior to the Closing.
5.3 Officer's Certificate. Purchaser shall have delivered to Sellers a
certificate, dated as of the Closing Date and executed by the President or a
Vice President of Purchaser, certifying to the best of such person's knowledge
(as the term knowledge is defined in Section 10.10) to the fulfillment of the
conditions specified in Sections 5.1 and 5.2 hereof.
5.4 HSR Act. All applicable waiting periods under the HSR Act with respect to
the transactions contemplated hereby shall have expired or been terminated.
5.5 Injunctions. On the Closing Date there shall be no (i) injunction, writ,
preliminary restraining order or other order in effect of any nature issued by a
court or governmental agency of competent jurisdiction directing that the
transactions provided for herein not be consummated as provided herein or (ii)
statute, law, ordinance, rule or regulation enacted, entered or promulgated by
any governmental authority ("Law") prohibiting or restraining the consummation
of the transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to effect the Closing under this
Agreement is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions, unless waived in writing by Purchaser.
6.1 Representations and Warranties. The representations and warranties made by
the Company and Sellers in this Agreement shall be true and correct in all
respects on the Closing Date as though such representations and warranties were
made at such date, except for (i)
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changes expressly permitted or contemplated by the terms of this Agreement and
(ii) any breaches of such representations and warranties that, individually and
in the aggregate, do not constitute a Material Adverse Effect.
6.2 Performance. The Company and Sellers shall have performed and complied in
all respects with all agreements, obligations and conditions required by this
Agreement to be so performed or complied with by the Company and Sellers prior
to the Closing, except where the failure to so perform or comply does not,
individually and in the aggregate, result in a Material Adverse Effect.
6.3 Sellers' and Officer's Certificates. (a) Each Seller shall have delivered to
Purchaser a certificate, dated as of the Closing Date, and executed by a
principal, a general partner or a managing member, as the case may be, of such
Seller, certifying, to the best of the certifying person's knowledge (as the
term knowledge is defined in Section 10.10), to the fulfillment of the
conditions specified in Sections 6.1 and 6.2 hereof insofar as such conditions
relate to such Seller's representations and warranties and such Seller's
covenants and (b) the Company shall have delivered to Purchaser a certificate,
dated as of the Closing Date and executed by the President or a Vice President
of the Company, certifying, to the best of such person's knowledge (as the term
knowledge is defined in Section 10.10), to the fulfillment of the conditions
specified in Sections 6.1 and 6.2 hereof insofar as such conditions relate to
the Company's representations and warranties and the Company's covenants.
6.4 Resignation of Directors. Sellers shall have delivered to Purchaser the
written resignations of those directors and officers of the Company and each of
the Company Subsidiaries (other than the Excluded Entities) whose resignations
are requested by Purchaser no later than five business days prior to the
Closing, such resignations to be effective as of the Closing Date; provided,
however, that Sellers shall have no obligation to deliver resignations of
officers who do not agree to resign and provided further that Purchaser shall be
responsible for all liabilities and obligations resulting from such
resignations.
6.5 HSR Act. All applicable waiting periods under the HSR Act with respect to
the transactions contemplated hereby shall have expired or been terminated.
6.6 Injunctions. On the Closing Date there shall be no (i) injunction, writ,
preliminary restraining order or other order in effect of any nature issued by a
court or governmental agency of competent jurisdiction directing that the
transactions provided for herein not be consummated as provided herein or (ii)
Law prohibiting or restraining the consummation of the transactions contemplated
hereby.
6.7 Spinoff Condition. Either (a) September 30, 1999 shall have passed, or (b)
Purchaser shall have delivered to Sellers and the Company on or prior to
September 30, 1999, a certificate executed by the President or any Vice
President of Purchaser certifying that Purchaser shall have determined, in its
sole judgment, that consummation of the transactions contemplated by this
Agreement (including, without limitation, any financing or refinancing
transaction to be undertaken in connection therewith) is not reasonably likely
to have a material adverse effect on (a) the business, results of operations,
condition (financial or otherwise), prospects or capital structure of Ogden
Corporation or any of its subsidiaries or business
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segments, individually or in the aggregate, or (b) the ability of Ogden
Corporation to consummate all or any material part of the recapitalization
transaction publicly announced by it on March 11, 1999.
ARTICLE VII
COVENANTS AND AGREEMENTS
7.1 Conduct of Business by Company. Except (i) for actions taken to implement
this Agreement and the transactions contemplated hereby, (ii) as disclosed in
Section 7.1 of the Disclosure Schedule or any other section of the Disclosure
Schedule or (iii) with the prior written consent of Purchaser, from and after
the date of this Agreement and until the Closing Date Sellers will not take any
actions that will impair the ability of the Company to comply with these
covenants, and the Company shall and shall cause the Company Subsidiaries to:
(a) use reasonable efforts consistent with good business judgment to:
preserve intact the present business organization of the Company and each
Company Subsidiary, preserve the goodwill of and maintain satisfactory
relationships with customers, suppliers and other persons and entities having
business relationships with the Company or any Company Subsidiary and generally
operate the Company and each Company Subsidiary in the ordinary and regular
course of business consistent with prior practices in all material respects; and
(b) not (i) cause to be issued or sold any shares of capital stock or
other securities of the Company or any Company Subsidiary or any options,
warrants or commitments of any kind with respect thereto, (ii) directly or
indirectly cause to be purchased, redeemed or otherwise acquired or disposed of
any shares of capital stock of the Company or any Company Subsidiary, (iii)
declare, set aside or pay any dividend or other distribution out of the Company,
(iv) permit or allow the Company or any Company Subsidiary to borrow or agree to
borrow any funds or incur, whether directly or by way of guarantee, any
obligation for borrowed money, other than short-term accounts payable and
borrowings under any existing credit facility incurred in the ordinary course of
business and consistent with past practice, (v) subject any of the property or
assets of the Company or any Company Subsidiary (real, personal or mixed,
tangible or intangible) to any mortgage, pledge, lien or encumbrance or
otherwise permit or allow the disposition of any property or assets of the
Company or any Company Subsidiary (real, personal or mixed, tangible or
intangible), other than in each case the ordinary course of business and
consistent with past practice, (vi) enter into any new contract, which contract
requires the Company or any Company Subsidiary to make capital expenditures in
excess of $1,000,000, without Purchaser's consent, (vii) permit the Company or
any Company Subsidiary to, except as set forth in Section 7.1 of the Disclosure
Schedule, make or grant any increase in payments, wages, salaries or benefits to
any director, officer or employee of the Company or any Company Subsidiary whose
salary as of the date hereof is above $100,000, or hire any person at an annual
salary above $100,000; (viii) make any acquisitions in excess of $100,000, (ix)
change any accounting policies, (x) make a payment in excess of $25,000 for any
one action, proceeding or investigation to settle or otherwise dispose of any
such action, proceeding or investigation, provided that settlements of all such
actions, proceedings or investigations under this Section 7.1 shall not exceed
$100,000, (xi) enter into any contract, arrangement, understanding or
transaction with any Seller or any of the Seller's
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affiliates, directors, officers, partners or employees, in each case, who are
not also employees of the Company (it being acknowledged that dealings with such
Company employees are governed by Section 7.1(vii)), (xii) take any action
prohibited by 2.11(b)(i), (ii), (iii), (iv) or (v); or (xiii) agree to do any of
the foregoing.
7.2 Access to Books and Records; Cooperation.
(a) Purchaser agrees that from the date of the Closing and until the
second anniversary of the Closing (or such longer period as shall be necessary
with respect to any tax period prior to the Closing Date for which the statute
of limitations has not expired at the end of such two-year period), during
normal business hours, it shall permit, at no charge, cost or expense to
Purchaser and without disruption of Purchaser's business, Sellers and their
respective auditors and other representatives to have reasonable access to the
properties, auditors and officers of the Company and to all books and records
relating to the Company and to examine and take at Seller's expense copies
thereof to the extent such access is reasonably necessary in connection with
such Seller's tax returns or otherwise to enable such Seller to fulfill
applicable legal, regulatory or contractual requirements. In connection with any
dispute under Section 1.3, Purchaser will make available to Sellers due
diligence memoranda and like materials prepared in contemplation of the
acquisition of the Company.
(b) Purchaser agrees not to destroy at any time any files or records which
are subject to Section 7.2(a) without giving reasonable notice to Sellers and,
within 30 days of Sellers' receipt of such notice, to deliver to Sellers (at
Sellers' expense) the records intended to be destroyed.
(c) Between the date of this Agreement and the Closing Date, each of the
Company and the Company Subsidiaries shall afford Purchaser and its
representatives, upon reasonable prior notice by Purchaser and during normal
business hours, access to the personnel, properties, contracts, files, book,
records, documents and other information of the Company and the Company
Subsidiaries and shall make available for inspection and copying by Purchaser
true and complete copies of any documents relating to the foregoing. The Company
shall authorize its accountants to make work papers relating to the Company and
the Company Subsidiaries during any period prior to the Closing Date available
to Purchaser, and the Company shall not take any action to preclude such
accountants from making such work papers available. No investigation by
Purchaser pursuant to this Section 7.2(c) shall affect any representations or
warranties of the parties hereto or their respective rights and obligations
hereunder, subject to the provisions of Sections 1.3, 4.5 and 7.5.
7.3 Filings and Consents. The Company, Sellers and Purchaser shall use all
reasonable efforts to obtain and to cooperate in obtaining any consent,
approval, authorization or order of, and in making any registration or filing
with, any governmental agency or body or other third party required in
connection with the execution, delivery or performance of this Agreement. The
parties agree to cause to be made all appropriate filings under the HSR Act as
soon as reasonably practicable after the date of this Agreement (but in no event
later than five business days after the date hereof) and to diligently pursue
early termination of the waiting period under such act.
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7.4 Publicity. The parties hereto will not issue any press release or otherwise
make any public statement with respect to the transactions contemplated hereby
without the consent of the other party or parties (which consent shall not be
unreasonably withheld), except as may be required by law, in which event such
press release or public statements shall be made only after consultation with
the other party or parties.
7.5 Notice of Breaches. If either Purchaser or the Company or the Sellers learns
of any facts or circumstances that could reasonably be expected to result in a
failure of the conditions set forth in Section 5.1 or 5.2, 6.1 or 6.2 to be
satisfied, such party shall notify the other parties as promptly as practicable
thereafter of such facts or circumstances; provided, however, that the delivery
of any notice pursuant to this Section 7.5 shall not limit or otherwise affect
the remedies available hereunder of any party receiving such notice or otherwise
constitute an admission of breach. If the Company or Sellers breach any of their
respective representations and warranties, and with respect to the elements of
such breaches Purchaser has knowledge thereof as of the date hereof but did not
disclose such knowledge under Section 4.5, such breaches by the Company or
Sellers will be disregarded for purposes of Section 6.1.
7.6 Covenant to Satisfy Conditions. Each party agrees to use all reasonable
efforts to insure that the conditions set forth in Article V and Article VI
hereof are satisfied, insofar as such matters are within the control of such
party; provided, however, that in no event shall Sellers and the Company, on the
one hand, and Purchaser, on the other hand, be required to expend in excess of
$25,000 in the aggregate in performing under Section 7.3 above and this Section
7.6 (other than HSR Act filing fees which Purchaser and Sellers will bear 50%
each).
7.7 Director and Officer Liability Insurance. The parties agree that the Company
shall be permitted to purchase directors and officers liability insurance
coverage for purposes of indemnifying and insuring persons covered by such
insurance of the Company or Company Subsidiaries, as the case may be,
immediately prior to the Closing Date, which coverage shall be on terms and in
amounts at least as favorable to such persons as they were on the Closing Date;
provided, that the Purchase Price shall be reduced by the amount of the premiums
paid or required to be paid in the future by the Company to obtain such
coverage.
7.8 Employee Benefits.
(a) Continuation of Benefits. During the period from the Closing Date
until the end of the twelve months following the Closing Date, Purchaser shall
maintain or cause to be maintained wages, compensation levels, employee pension
and welfare plans for the benefit of employees and former employees of the
Company or Company Subsidiaries, which are equal, in the aggregate, or greater
than those wages, compensation levels and other benefits provided under the
Plans that are in effect on the date hereof.
(b) Credit for Deductibles. Purchaser will, or will cause the Company and
Company Subsidiaries to, (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the employees of the Company or Company Subsidiaries
under any welfare plan that such employees may be eligible to participate in
after the Closing Date, (ii) provide each employee of the
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Company or any Company Subsidiary with credit for any co-payments and
deductibles paid prior to the Closing Date in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
employees are eligible to participate in after the Closing Date, and (iii)
provide each employee of the Company or any Company Subsidiary with credit for
all service with the Company or Company Subsidiary, as applicable, under each
employee benefit plan, program, or arrangement of Purchaser or its affiliates in
which such employees are eligible to participate; provided, however, that in no
event shall the employees be entitled to any credit to the extent that it would
result in a duplication of benefits with respect to the same period of service.
(c) Severance Policy and Other Agreements. With respect to any salaried
officer or employee (other than hourly employees or employees covered by
collective bargaining agreements) who is covered by a severance policy or plan
separate from the standard severance policy for employees of the Company or any
Company Subsidiary, Purchaser shall maintain or cause to be maintained such
separate policy or plan as in effect as of the date hereof, and as to all other
officers and employees (other than hourly employees or employees covered by
collective bargaining agreements), Purchaser shall maintain or cause to be
maintained the Company's or Company Subsidiary's, as applicable, standard
severance policy as in effect as of the date hereof for a period of at least
twelve months from the Closing Date.
(d) 1999 Bonus. Purchaser will maintain, or cause to be maintained, the
Company's and each Company Subsidiary's bonus plans, as in effect on the date
hereof, through the end of 1999.
7.9 Contact with Customers and Suppliers. Purchaser and its representatives
shall contact and communicate with the employees, customers, suppliers and
licensers of the Company and the Company Subsidiaries in connection with the
transactions contemplated hereby only with the prior written consent of Sellers,
and which consent may be conditioned upon a designee of Sellers being present at
any such meeting or conference.
7.10 No Solicitation of Other Offers. Subject to the provisions of Section 1.3,
from the date hereof until the earlier of the Closing or a termination of this
Agreement, none of the Sellers, the Company or any of their representatives
will, directly or indirectly, solicit, encourage, assist, initiate discussions
or engage in negotiations with, provide any nonpublic information to, or enter
into any agreement or transaction with, any person, other than Purchaser,
relating to the possible merger, consolidation, business combination or direct
or indirect sale of assets or capital stock of the Company or the Company
Subsidiaries, except for the sale of assets by the Company or the Company
Subsidiaries in the ordinary course of business consistent with past practices
or the terms of this Agreement.
7.11 Termination of Stockholders' Agreement, Higgins Employment Agreement, Share
Exchange Agreement and Monitoring Agreements. No later than the Closing, Sellers
and the Company shall cause (i) the Amended and Restated Stockholders'
Agreement, dated as of August 24, 1998, among the Company and Sellers to
terminate with no further liability to any party thereto, and Sellers and the
Company
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shall deliver to Purchaser prior to the Closing evidence satisfactory to
Purchaser of such termination with no further liability, (ii) the Share Exchange
Agreement, dated as of July 27, 1998, among the Company and the other parties
thereto, to terminate without further liability to any party thereto, and
Sellers and the Company shall deliver to Purchaser prior to the Closing evidence
satisfactory to Purchaser of such termination with no further liability,
provided, that Sections 7.13(a) (the second sentence only) and 7.13(b)
(together, the "Surviving Sections") shall survive and Sections 9.1, 9.2, 9.3
(other than paragraph (d) of Section 9.3) and 9.4 shall survive insofar as they
relate to the Surviving Sections, and provided further, any claims otherwise
arising under such Share Exchange Agreement (other than with respect to the
Surviving Sections) and including claims arising after the date hereof are
irrevocably waived as of Closing, and (iii) the Monitoring Agreements listed as
items (2) and (3) of Section 2.20 of the Disclosure Schedule to terminate.
Purchaser and the Company hereby irrevocably waive any claim against Blackstone
Management Partners L.P. and GECC, and the Company and Sellers will cause
Blackstone Management Partners L.P. and GECC irrevocably to waive any claim
against Purchaser and the Company, in connection with the provision of
monitoring services under the Monitoring Agreements. Notwithstanding anything in
this Agreement to the contrary, the Employment Agreement between Higgins and the
Company dated August 24, 1998 may be terminated by the Company upon notice from
GECC. GECC will be obligated to make the payments for which it agreed to be
responsible pursuant to a Letter Agreement dated July 27, 1998 between GECC and
Service America Corporation and a Reimbursement Agreement dated as of August 24,
1998 between GECC and Service America Corporation. In addition, GECC will be
responsible for all severance payments and benefits to be paid or accruing to
Mr. Higgins pursuant to the terms of his Employment Agreement in the event Mr.
Higgins is terminated prior to August 24, 1999.
7.12 Fee to Blackstone. Prior to the Closing Date, the Company will enter into
an investment advisory agreement and pay a one-time investment banking fee plus
expenses not to exceed a maximum amount of $3 million in the aggregate to an
affiliate of The Blackstone Group L.P. as described in Section 2.20 of the
Disclosure Schedule.
7.13 Disposition of Hatch Interest. Prior to or concurrent with the Closing (i)
the transaction in respect of the Hatch interests will occur as described in
Section 7.13 of the Disclosure Schedule and (ii) each of the "selected
employees" referred to in Section 7.13 of the Disclosure Schedule shall have
executed releases, in form and substance reasonably satisfactory to Purchaser,
releasing the Company and Purchaser (and their respective affiliates, employees,
officers, directors, agents and representatives) of all liability and waiving
any claims against the Company and Purchaser in respect of the transactions
described in Section 7.13 of the Disclosure Schedule.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated and abandoned at any time
prior to the Closing:
(a) by the mutual consent of the Company and Purchaser;
(b) as provided in Section 1.3;
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(c) by either the Company or Purchaser in the event the Closing has not
occurred on or before the Termination Date (as defined below), unless the
absence of such consummation is due to the failure of the party seeking to
terminate this Agreement to comply in all material respects with the agreements
and covenants contained herein to be performed by such party on or before the
Termination Date;
(d) by either the Company or Purchaser in the event any court or
governmental agency of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, decree or
ruling or other action shall have become final and nonappealable;
(e) by the Company if any conditions in Article V are not reasonably
capable of being satisfied or by Purchaser if any then applicable conditions in
Article VI (other than Section 6.7) are not reasonably capable of being
satisfied; provided that the party seeking to terminate the Agreement must
deliver to the other parties written notice of such termination at least ten
business days prior to the intended date of such termination (provided that the
parties will cooperate in good faith to satisfy such conditions for a period of
two weeks in order to permit their cure, provided that the Company and Sellers
will not be required to expend funds in order to effect any such cure, unless
Purchaser provides such funds);
(f) by Purchaser on or prior to September 30, 1999, if Purchaser delivers
to Sellers and the Company a certificate executed by the President of Ogden
Corporation, certifying as to such person's belief that the determination
referred to in Section 6.7(b) cannot in Purchaser's sole judgment be made and,
specifying the reasons therefor, and terminating the Agreement under this clause
as of the date such certificate is delivered; or
(g) by Purchaser if the Company and/or any Seller fails to deliver to
Purchaser the Company Certificates in accordance with Section 1.3. (b)
"Termination Date" shall mean September 30, 1999. Purchaser may by at least five
business days prior written notice to the Company and Sellers extend the
Termination Date for up to two (2) one month periods, such that the Termination
Date may be extended to no later than November 30, 1999; provided, however, that
upon any such extension, Section 6.7 shall, as of October 1, 1999, no longer
apply.
8.2 Procedure and Effect of Termination. If the transactions contemplated by
this Agreement are terminated as provided herein:
(a) each party will redeliver all documents, work papers and other
material of the other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same;
(b) All confidential information received by Purchaser with respect to the
business of the Company and the Company Subsidiaries shall be treated in
accordance with the provisions of the Confidentiality Agreement, dated as of
February 24, 1999, between Purchaser and Sellers (the "Confidentiality
Agreement"), which shall survive the termination of this Agreement in accordance
with its terms; and
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(c) No party to this Agreement will have any liability under this
Agreement to the other except (i) with respect to the obligations set forth in
the last sentence of Section 7.2(a) and Sections 7.4, 8.2(a), 8.2(b) and 10.1,
(ii) in accordance with Section 1.3, (iii) for any failure to perform or satisfy
in all material respects all of the agreements and covenants to be performed
hereunder at or prior to the Closing, (iv) as provided in the Confidentiality
Agreement and (v) in respect of fraud in connection with any representation or
warranty under this Agreement.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
9.1 Representations and Warranties Relating to the Company. Subject to Sections
1.3 and 9.4, the representations and warranties of the Company and Sellers
contained in Article II of this Agreement shall expire as of the Closing Date
and shall not survive the Closing, except for the representations set forth in
Section 2.20, which shall survive the Closing until the expiration of the
applicable statute of limitations.
9.2 Representations and Warranties of Sellers. The representations and
warranties of Sellers contained in Article III of this Agreement shall survive
the Closing until the expiration of the applicable statute of limitations.
9.3 Representations and Warranties of the Purchaser. The representations and
warranties of Purchaser contained in Article IV of this Agreement shall survive
the Closing until the expiration of the applicable statute of limitations.
9.4 Limitation of Recourse. Following the Closing, no party shall have any
liability or obligation to indemnify or otherwise hold harmless any other party
(or any of their successors or permitted assigns) for any claim or any loss or
liability arising from or in any way relating to this Agreement or any of the
transactions contemplated hereby or any other transaction or event occurring on
or prior to the Closing (including, without limitation, any misrepresentation or
inaccuracy in, or breach of, any representations or warranties (other than the
representations or warranties contained in Section 2.20, Article III and Article
IV) or any breach or failure in performance prior to the Closing of any
covenants or agreements contained in this Agreement to be performed prior to the
Closing or in any exhibit or the Disclosure Schedule hereto or any certificate
or instrument delivered hereunder), and no party (nor any of their successors or
permitted assigns) shall be entitled to bring any claim based on, relating to or
arising out of any of the foregoing against any other party (or any of such
other party's employees, officers, directors, agents or representatives), except
that Sellers agree jointly but not severally to indemnify and hold harmless the
Company and Purchaser (and their respective affiliates, employees, officers,
directors, agents and representatives) from and against any loss, damage, claim,
liability, judgment or settlement, including expenses relating thereto, arising
out of, resulting from or relating to any claims or proceedings brought against
the Company or Purchaser (or any of their respective affiliates, employees,
officers, directors, agents and representatives) in respect of the transactions
described in Section 7.13 of the Disclosure Schedule. Nothing in this Article IX
(including, without limitation, the expiration of the representations and
warranties referred to in Sections 9.1, 9.2 and 9.3) shall limit any party's
right to bring an action for fraud. Without limiting the generality of the
foregoing, in the absence of fraud in connection with a party's representations
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and warranties, neither Purchaser nor its respective successors or permitted
assigns shall be entitled to seek any recission of the transactions consummated
under this Agreement or other remedy at law or in equity based on the
representations and warranties of the Company and Sellers in this Agreement
(other than the representations and warranties contained in Section 2.20 and
Article III).
9.5 Acknowledgment by the Parties. Each party understands that the
representations and warranties of the other parties will not survive the Closing
(except as expressly set forth in Sections 9.1, 9.2, 9.3 and 9.4) and constitute
the sole and exclusive representations and warranties of such other parties in
connection with the transactions contemplated hereby, and each party
understands, acknowledges and agrees that all other representations and
warranties of any kind or nature expressed or implied (including, without
limitation, any relating to the future or historical financial condition,
results of operations, assets or liabilities of the Company or the Company
Subsidiaries) are specifically disclaimed by the other parties.
ARTICLE X
MISCELLANEOUS
10.1 Fees and Expenses. Except as otherwise provided in this Agreement, the
parties hereto shall bear their own respective expenses in connection with the
negotiation and consummation of the transactions contemplated by this Agreement.
The fees and expenses of outside advisors, including without limitation outside
legal counsel to the Company and Sellers, incurred in connection with the
transactions contemplated by this Agreement shall be paid by Sellers in
proportion to their relative share ownership. Other than the fees described in
Section 2.20 of the Disclosure Schedule (which shall be paid by the Company at
the Closing), each party shall bear the fees and expenses of any broker or
finder retained by such party or parties in connection with the transactions
contemplated herein.
10.2 Governing Law. This Agreement shall be construed under and governed by the
laws of the State of New York without regard to the conflicts of laws provisions
thereof.
10.3 Amendment. This Agreement may not be amended, modified or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
10.4 Assignment. Except as otherwise expressly permitted under this Agreement,
no party hereunder shall have the right to assign its rights hereunder or any
interest herein without the prior written consent of the other parties hereto.
Notwithstanding the preceding sentence, Purchaser may, upon five business days
prior written notice to the other parties, assign its rights hereunder to Ogden
Corporation, or any wholly-owned direct or indirect U.S. subsidiary of Ogden
Corporation, prior to the date of the Closing; provided, however, Purchaser
shall remain liable for all of its obligations under this Agreement. Nothing in
this Agreement is intended or shall be construed to confer upon any person other
than the parties
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hereto and their respective permitted assigns any right, remedy or claim under
or by reason of this Agreement or any part hereof.
10.5 Waiver. Any of the terms or conditions of this Agreement that may be
lawfully waived may be waived in writing at any time by the party that is
entitled to the benefits thereof. Any waiver of any of the provisions of this
Agreement by any party hereto shall be binding only if set forth in an
instrument in writing signed on behalf of such party. No failure to enforce any
provision of this Agreement shall be deemed to or shall constitute a waiver of
such provision and no waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
10.6 Notices. Any notice, demand, or communication required or permitted to be
given by any provision of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if (a) personally delivered, (b)
mailed by registered or certified first-class mail, prepaid with return receipt
requested, (c) sent by a nationally recognized overnight courier service, to the
recipient at the address below indicated or (d) delivered by facsimile which is
confirmed in writing by sending a copy of such facsimile to the recipient
thereof pursuant to clause (a) or (c) above:
If to Purchaser:
Ogden Services Corp.
Two Pennsylvania Plaza
New York, NY 10121
Attn: President, with copy to
General Counsel
(212) 868-5714 (telecopier)
(212) 868-6056 (telephone)
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Attention: Stephen H. Shalen
(212) 225-3999 (telecopier)
(212) 225-2420 (telephone)
If to Sellers or the Company:
The Blackstone Group, L.P.
345 Park Avenue, 31st Fl.
New York, NY 10154
Attention: Howard A. Lipson
(212) 754-8703 (telecopier)
(212) 836-9844 (telephone)
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With copies to:
Volume Services America Holdings, Inc.
300 First Stamford Place
Stamford, CT 06904-2203
Attention: Chief Executive Officer and General Counsel
(203) 975-5949 (telecopier)
(203) 975-5901 (telephone)
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3954
Attention: Wilson S. Neely, Esq.
(212) 455-2502 (telecopier)
(212) 455-2000 (telephone)
Recreational Services L.L.C.
c/o General Electric Capital Corporation
201 High Ridge Road
Stamford, CT 06927
Attention: Counsel - Commercial Finance
(203) 316-7895 (telecopier)
(203) 316-7555 (telephone)
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, NY 10022
Attention: Joseph D. Hansen, Esq.
(212) 836-8689 (telecopier)
(212) 836-8495 (telephone)
or to such other address as any party hereto may, from time to time, designate
in a written notice given in like manner.
Except as otherwise provided herein, any notice under this Agreement will be
deemed to have been given (x) on the date such notice is personally delivered or
delivered by facsimile, (y) four days after the date of mailing if sent by
certified or registered mail or (z) the next succeeding business day after the
date such notice is delivered to the overnight courier service if sent by
overnight courier; provided that in each case notices received after 4:00 p.m.
(local time of the recipient) shall be deemed to have been duly given on the
next business day.
10.7 Complete Agreement. This Agreement, the Confidentiality Agreement and the
other documents and writings referred to herein or delivered pursuant hereto
contain the entire understanding of the parties with respect to the subject
matter hereof and thereof and supersede all prior agreements and understandings,
both written and oral, between the
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parties with respect to the subject matter hereof and thereof. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
10.8 Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and each of which
shall be deemed an original.
10.9 Headings. The headings contained in this Agreement are for reference only
and shall not affect in any way the meaning or interpretation of this Agreement.
10.10 Knowledge and Fraud. For purposes of this Agreement, (a) the term
"knowledge" means the actual knowledge of, or the willful failure to obtain
knowledge by (A) with respect to Company or any Sellers, any executive officer,
general partner, managing member or regional vice president, of such Seller or
the Company, as applicable, and (B) with respect to Purchaser, any of the
persons named in Section 10.10 of the Disclosure Schedule, and (b) the term
"fraud" shall require knowledge (as defined in (a) above) of Purchaser, such
Seller or the Company, as applicable. Whenever this Agreement calls for a
certificate to be given to the best of a person's knowledge, (i) such
certificate shall not alter or qualify the representations and warranties of the
party on whose behalf the certificate is given contained in this Agreement (as
such certificate shall so state) and (ii) the person executing such certificate
shall have no personal liability in connection with rendering such certificate.
10.11 Construction. This Agreement has been negotiated by Sellers, the Company
and Purchaser and their respective legal counsel, and legal and equitable
principles that might require the construction of this Agreement against the
party drafting this Agreement shall not apply in any construction or
interpretation of this Agreement.
10.12 Severability. Any provision of this Agreement which is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions hereof in such jurisdiction or
rendering that or any other provision of this Agreement invalid, illegal or
unenforceable in any other jurisdiction.
10.13 Third Parties. Except as specifically set forth or referred to herein,
nothing herein expressed or implied is intended or shall be construed to confer
upon or give to any person or corporation, other than the parties hereto and
their permitted successors or assigns, any rights or remedies under or by reason
of this Agreement.
10.14 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. THE PARTIES HERETO HEREBY
CONSENT TO THE JURISDICTION OF ANY PANEL OF THREE ARBITRATORS PURSUANT TO
SECTION 1.3(J) HERETO WITH RESPECT TO THE MATTERS IN SECTION 1.3 AND OTHERWISE
TO ANY STATE OR FEDERAL COURT LOCATED WITHIN THE AREA ENCOMPASSED BY THE STATE
OF NEW YORK AND IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS OR BY SUCH
ARBITRATORS. THE PARTIES HERETO EACH ACCEPT FOR
35
<PAGE>
ITSELF AND IN CONNECTION WITH ITS RESPECTIVE PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION AND VENUE OF THE AFORESAID COURTS OR
ARBITRATORS AND WAIVE ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREE
TO BE BOUND BY ANY NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH
THIS AGREEMENT. THE PARTIES HERETO EACH DESIGNATE CT CORPORATION SYSTEM, INC.
AND SUCH OTHER PERSONS AS MAY HEREINAFTER BE SELECTED BY SELLERS WHO IRREVOCABLY
AGREE IN WRITING TO SO SERVE AS AGENT TO RECEIVE ALL PROCESS IN ANY SUCH
PROCEEDINGS IN ANY COURT PROCEEDING, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY
THE PARTIES HERETO TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY
OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE PARTIES
HERETO, AS PROVIDED HEREIN, EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE
LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF
PROCESS.
10.15 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES
HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE PARTIES
HERETO ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT
FOR THIS WAIVER, BE REQUIRED OF ANY OF THE OTHER PARTIES. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PARTIES HERETO
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. THE PARTIES HERETO FURTHER WARRANT AND REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTION CONTEMPLATED HEREBY. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have consent this Agreement
to be executed as of the date first written by their respective duly authorized
officers.
OGDEN ENTERTAINMENT, INC.
By:
Name:
Title:
37
<PAGE>
VOLUME SERVICES AMERICA HOLDINGS, INC.
By:
Name:
Title:
BCP VOLUME L.P.,
By: Blackstone Capital Partners II
Merchant Banking Fund L.P.
By: Blackstone Management Associates
II L.L.C., as General Partner
By:
Name:
Title:
BCP OFFSHORE VOLUME L.P.
By: Blackstone Offshore Capital Partners II L.P.
By: Blackstone Management Associates
II L.L.C., as General Partner
By: ____________________________________ Name:
Title:
By: Blackstone Service (Cayman) LDC
as Administrative General Partner
By:
Name:
Title:
38
<PAGE>
VSI MANAGEMENT DIRECT L.P.
By: VSI Management I L.L.C.
By: ________________________________
Title:
By: Blackstone Management
Associates II L.L.C., as
Managing Member
By: ____________________________
Title:
39
<PAGE>
RECREATIONAL SERVICES L.L.C.
By: General Electric Capital Corporation
Managing Member
By:
Name: Michael Gaudino
Title: Attorney-In-Fact
As to Sections 1.2(b), 1.2(c), 1.2(d) and 7.11 of this
Agreement:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
Name:
Title:
40
<PAGE>
Annex A
BCP Volume L.P. 157.01965 shares
BCP Offshore Volume L.P. 40.73462 shares
VSI Management Direct L.P. 14.12904 shares
Recreational Services L.L.C. 120.78984 shares
Total 332.67315 shares
41
<PAGE>
Exhibit B-1
COMPLIANCE NOTICE
The undersigned hereby certifies as follows:
Ogden Entertainment, Inc., a Delaware corporation ("Purchaser"),
irrevocably waives (subject to Section 1.3(i) of the Stock Purchase Agreement
dated as of June 24, 1999 (the "Agreement") among Volume Services America
Holdings, Inc., a Delaware corporation (the "Company"), BCP Volume L.P., a
Delaware limited partnership ("Volume"), BCP Offshore Volume L.P., a Cayman
Islands exempted limited partnership ("Offshore"), Recreational Services L.L.C.,
a Delaware limited liability company ("Services") and VSI Management Direct
L.P., a Delaware limited partnership ("Management Direct" and, together with
Volume, Offshore and Services, the "Sellers") and Purchaser) any claim that the
conditions to Closing set forth in Sections 6.1 of the Agreement, based on
Article II of the Agreement (other than Section 2.20), and 6.2 of the Agreement
to the extent relating to the performance of covenants by any Seller and/or the
Company on or prior to the Closing Target Date, were not satisfied as of the
Closing Target Date.
Capitalized terms not defined herein shall have the meaning assigned
thereto in the Agreement.
Date: ______ __, 1999
OGDEN ENTERTAINMENT, INC.
By: ____________________________
Name:
Title:
<PAGE>
Exhibit B-2
NON-COMPLIANCE NOTICE
The undersigned hereby certifies as follows:
Ogden Entertainment, Inc., a Delaware corporation ("Purchaser"), hereby
alleges that the specific facts and circumstances identified in the attached
description result in a breach as of the Closing Target Date of the indicated
representations and warranties of Article II or Article III of the Stock
Purchase Agreement, dated as of June 24, 1999 (the "Agreement"), among Volume
Services America Holdings, Inc., a Delaware corporation (the "Company"), BCP
Volume L.P., a Delaware limited partnership ("Volume"), BCP Offshore Volume
L.P., a Cayman Islands exempted limited partnership ("Offshore"), Recreational
Services L.L.C., a Delaware limited liability company ("Services") and VSI
Management Direct L.P., a Delaware limited partnership ("Management Direct" and,
together with Volume, Offshore and Services, the "Sellers") and Purchaser,
and/or the indicated covenants to be performed by the Company and/or any Seller
on or prior to the Closing Target Date, which in good faith are reasonably
alleged by the Purchaser to give rise to a failure of the conditions to Closing
set forth in Sections 6.1 or 6.2 of the Agreement.
Capitalized terms not defined herein shall have the meaning assigned
thereto in the Agreement.
Date: ________, 1999
OGDEN ENTERTAINMENT, INC.
By: ____________________________
Name:
Title:
EXHIBIT 11
OGDEN CORPORATION AND SUBSIDIARIES
DETAIL OF COMPUTATION OF EARNINGS APPLICABLE TO COMMON STOCK
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30,
------------------------------------------------------------------------------------
1999 1998
------------------------------------------------------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
(In Thousands, Except for Share Amounts)
<S> <C> <C> <C> <C> <C> <C>
Income before cumulative
effect of change in accounting
principle $ 35,513 $ 38,760
Less: preferred stock dividend 70 73
-------- --------
Basic Earnings Per Share 35,443 49,043 $ 0.72 38,687 50,283 $ 0.77
-------- --------
Effect of Dilutive Securities:
Stock options 498 1,042
Convertible preferred stock 70 250 73 260
6% convertible debentures 807 1,088 775 1,088
5 3/4% convertible debentures 590 762 566 762
-------- -------- -------- --------
Diluted Earnings per Share $ 36,910 51,641 $ 0.71 $ 40,101 53,435 $ 0.75
-------- -------- -------- -------- -------- --------
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30,
------------------------------------------------------------------------------------
1999 1998
------------------------------------------------------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
(In Thousands, Except for Share Amounts)
<S> <C> <C> <C> <C> <C> <C>
Net income $ 31,693 $ 38,760
Less: preferred stock 70 73
-------- --------
Basic Earnings Per Share 31,623 49,043 $ 0.65 38,687 50,283 $ 0.77
-------- --------
Effect of Dilutive Securities:
Stock options 498 1,042
Convertible preferred stock 70 250 73 260
6% convertible debentures (A) 775 1,088
5 3/4% convertible debentures (A) 566 762
-------- -------- -------- --------
Diluted Earnings per Share $ 31,693 49,791 $ 0.64 $ 40,101 53,435 $ 0.75
-------- -------- -------- -------- -------- --------
</TABLE>
(A) Antidilutive
Note:
Earnings per common share was computed by dividing net income,
reduced by preferred stock dividend requirements, by the weighted
average of the number of shares of common stock outstanding during
each period. Diluted earnings per common share was computed on the
assumption that all convertible debentures, convertible preferred
stock, and stock options converted or exercised during each period,
or outstanding at the end of each period were converted at the
beginning of each period or the date of issuance or grant, if
dilutive. This computation provides for the elimination of related
convertible debenture interest and preferred dividends.
<PAGE>
EXHIBIT 11
OGDEN CORPORATION AND SUBSIDIARIES
DETAIL OF COMPUTATION OF EARNINGS APPLICABLE TO COMMON STOCK
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JUNE 30,
------------------------------------------------------------------------------------
1999 1998
------------------------------------------------------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
(In Thousands, Except for Share Amounts)
<S> <C> <C> <C> <C> <C> <C>
Net income $ 24,992 $ 27,060
Less: preferred stock dividend 35 36
-------- --------
Basic Earnings Per Share 24,957 49,126 $ 0.51 27,024 50,206 $ 0.54
-------- --------
Effect of Dilutive Securities:
Stock options 503 863
Convertible preferred stock 35 249 36 258
6% convertible debentures 807 2,175 775 2,175
5 3/4% convertible debentures 590 1,524 566 1,524
-------- -------- -------- --------
Diluted Earnings per Share $ 26,389 53,577 $ 0.49 $ 28,401 55,026 $ 0.52
-------- -------- -------- -------- -------- --------
</TABLE>
Note:
Earnings per common share was computed by dividing net income,
reduced by preferred stock dividend requirements, by the weighted
average of the number of shares of common stock outstanding during
each period. Diluted earnings per common share was computed on the
assumption that all convertible debentures, convertible preferred
stock, and stock options converted or exercised during each period,
or outstanding at the end of each period were converted at the
beginning of each period or the date of issuance or grant, if
dilutive. This computation provides for the elimination of related
convertible debenture interest and preferred dividends.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 100,196
<SECURITIES> 0
<RECEIVABLES> 427,598
<ALLOWANCES> 21,889
<INVENTORY> 30,985
<CURRENT-ASSETS> 809,964
<PP&E> 2,848,751
<DEPRECIATION> 691,940
<TOTAL-ASSETS> 4,090,493
<CURRENT-LIABILITIES> 621,848
<BONDS> 2,083,852
0
41
<COMMON> 24,609
<OTHER-SE> 523,365
<TOTAL-LIABILITY-AND-EQUITY> 4,090,493
<SALES> 214,005
<TOTAL-REVENUES> 857,364
<CGS> 194,390
<TOTAL-COSTS> 732,325
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 610
<INTEREST-EXPENSE> 19,690
<INCOME-PRETAX> 61,725
<INCOME-TAX> 23,457
<INCOME-CONTINUING> 35,513
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (3,820)
<NET-INCOME> 31,693
<EPS-BASIC> 0.65
<EPS-DILUTED> 0.64
</TABLE>
