<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended September 27, 1996 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: 1-8827
ARAMARK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-2319139
(State of incorporation) (I.R.S. Employer Identification No.)
ARAMARK Tower
1101 Market Street
Philadelphia, Pennsylvania 19107
(Address of principal executive offices)
Telephone Number: 215-238-3000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Class B Common
Stock, $.01 par
value
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the voting stock held by nonaffiliates: $626 million
<TABLE>
<S> <C> <C>
Common stock outstanding at October 25, 1996 Class A Common stock 1,981,169 shares
Class B Common stock 21,742,472 shares
</TABLE>
Documents incorporated by reference: Portions of the registrant's Proxy
Statement for the 1996 annual meeting of stockholders are incorporated by
reference in Part III of this Report.
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<PAGE>
As used herein, references to the "Company" shall mean ARAMARK Corporation
and its subsidiaries (including ARAMARK Services, Inc.) unless the context
otherwise requires. References to "ARAMARK" shall mean ARAMARK Services, Inc.
and its subsidiaries unless the context otherwise requires.
PART I
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Item 1. Business
- ------ --------
Description of Business Segments
The Company is engaged in providing or managing services, including food
and support services, uniform services, health and education services and
distributive services. ARAMARK was organized in 1959 in Delaware. The Company
was formed in September 1984 by the management of ARAMARK and acquired ARAMARK
in December 1984 through a merger.
The Company provides most of its services in the United States. The
Company also conducts operations, primarily the management of food services, in
Belgium, Canada, the Czech Republic, Germany, Hungary, Japan, Korea, Mexico,
Spain and the United Kingdom.
Financial information by business segment and geographic area appears in
note 11 to the consolidated financial statements. The businesses of the Company
have been grouped into the segments described below.
Food and Support Services
The Company provides food, refreshment, specialized dietary and support
services (including maintenance and housekeeping) to businesses, and to
educational, governmental and medical institutions. Food, lodging and
merchandise services are also provided at leisure facilities such as convention
centers, stadiums, parks, arenas, race tracks and other recreational facilities.
Food, refreshment, specialized dietary and support services are operated
at customer locations generally under contracts of indefinite duration which may
be subject to termination by either party. However, food and related services at
leisure facilities generally are for fixed contract terms well in excess of one
year. The Company's food and support services are performed under various
financial arrangements including a management-fee basis and a profit-and-loss
basis.
At most customer food service locations, the equipment and facilities used
in providing these services are owned by the customer. Vending machines and
related equipment, however, are generally owned by the Company. At most leisure
facilities, the equipment is owned by the Company.
<PAGE>
There is a high level of competition in the food and support services
business from local, regional and national companies as well as from businesses
and institutions which operate their own services. This competition takes a
number of different forms, including pricing, maintaining high food and service
standards, and innovative approaches to marketing with a strong emphasis on
securing and retaining customer accounts. The Company believes that it is a
significant provider of food and support services in the United States, Spain,
Germany, Belgium and Canada, but that its volume of such business is small in
relation to the total market. See note 10 to the consolidated financial
statements for information relating to the seasonal aspects of this business
segment.
Uniform Services
The Company rents, sells, cleans, maintains and delivers personalized work
apparel and other textile items for customers throughout the United States on a
contract basis. Also provided are walk-off mats, cleaning cloths, disposable
towels, and other environmental control items.
The Company operates one of the largest direct marketers of personalized
work clothing, uniforms and related accessories, primarily in the United States.
The Company also operates one of the largest direct marketers of public safety
equipment and public employee uniforms in the United States.
Service contracts for the rental and laundering of work apparel and other
textile items are for well in excess of one year and typically for an initial
term of five years. Generally, the direct marketing business is conducted under
an invoice arrangement with customers.
The uniform rental services business is highly competitive in the areas in
which the Company operates, with numerous competitors in each major operating
area. Although no one uniform rental services company is predominant in this
industry, the Company believes that it is a significant competitor.
Competition in the direct marketing of work clothing, public safety
equipment and related items is from numerous retailers and other direct
marketers at local, regional and national levels. In this market, while the
Company is a significant competitor, the Company's volume of sales is small in
relation to the total market.
The significant competitive factors in the uniform services business are
the quality of services provided to customers and the prices charged for such
services.
At the beginning of fiscal 1996, the Company sold a division of its
uniform services business. See note 2 to the consolidated financial statements.
At fiscal yearend 1996, the Company acquired a leading provider of uniform
apparel to the hospitality and healthcare markets. See note 2 to the
consolidated financial statements.
2
<PAGE>
Health and Education Services
The Company provides contract management services (including physician
staffing and other specialized services) to hospital emergency and other
departments and to military healthcare facilities and clinics, as well as
contract medical services to correctional institutions and to beneficiaries of
the Civilian Health and Medical Program of the Uniformed Services ("CHAMPUS").
The Company also provides educational and child care services primarily at
Company-operated facilities, and to a lesser extent on customer sites and in
before and after school programs.
Revenues from emergency and primary care management services are received
generally from the hospitals and clinics at which the care is provided under
contracts generally with a term of one or more years and from third party
payors. Revenues from medical services to correctional institutions are received
directly from governmental authorities under contracts with terms of one or more
years.
Educational and child care services are provided to and are primarily paid
for on a weekly or semester basis directly by individual families under
short-term agreements. The Company leases a significant number of its facilities
under long-term arrangements.
The Company believes it is a significant provider of emergency care
management services, medical services to correctional institutions and CHAMPUS
beneficiaries, and educational and child care services in the United States.
Competition in all phases of this business segment is from both national
and local providers of health and education services as well as from private and
public institutions which provide for their own health and education services.
Significant competitive factors in the Company's health and education services
businesses are the quality of care, reputation, physical appearance of
facilities, the types of programs offered to the users of these services and the
prices charged for such services.
Distributive Services
The Company provides wholesale distribution of magazines, books and other
printed matter. These materials are purchased from national distributors and
publishers and are delivered to retail locations patronized by the general
public.
Distribution services are generally rendered under short-term agreements
and for larger accounts under multi-year agreements, which ordinarily permit the
return of unsold magazines and books with full credit being given to the
retailer and with the Company in turn receiving full credit from its suppliers.
Competition in the distribution of books and periodicals exists primarily
from magazine and book subscriptions, direct distribution by publishers to
retailers and from other wholesale distributors. While the Company's volume of
business in the distribution of books and periodicals is small in relation to
the total market, the Company believes the volume of its wholesale periodical
and book distribution makes it a significant wholesale distributor.
3
<PAGE>
Employees
The Company employs approximately 150,000 persons, both full and part
time, including approximately 40,000 employees outside the United States.
Approximately 16,000 employees in the United States are represented by various
labor unions.
Item 2. Properties
- ------- ----------
The principal property and equipment of the Company are its service
equipment and fixtures (including vehicles) and real estate.
The service equipment and fixtures include vending, commissary, warehouse
and janitorial and maintenance equipment used primarily by the Food and Support
Services segment, and laundry equipment used by the Uniform Services segment.
The vehicles include automobiles and delivery trucks used in the Food and
Support Services segment and in the Distributive Services and Uniform Services
segments. The service equipment and fixtures represent 63% of the net book value
of all fixed assets as of September 27, 1996.
The Company's real estate is comprised of educational and child care
facilities, of which a significant number are held under long-term operating
leases. The Company also maintains other real estate and leasehold improvements
which it uses in its Distributive Services, Uniform Services and Food and
Support Services segments. Additional information concerning property and
equipment (including leases and noncancelable lease commitments) is included in
notes 1 and 8 to the consolidated financial statements. No individual parcel of
real estate owned or leased is of material significance to the Company's total
assets.
See note 11 to the consolidated financial statements for information
concerning the identifiable assets of the Company's business segments.
Item 3. Legal Proceedings
- ------- -----------------
The Company and its subsidiaries are not parties to any lawsuits (other
than ordinary routine litigation incidental to its business) which are material
to the Company's business or financial condition. See note 8 to the consolidated
financial statements for additional information concerning legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
Not Applicable.
4
<PAGE>
Item 4A. Directors and Executive Officers of the Registrant
- -------- --------------------------------------------------
Directors:
<TABLE>
<CAPTION>
Name Principal Occupation
- ---- --------------------
<S> <C>
Joseph Neubauer.......................... Chairman and Chief Executive Officer
ARAMARK Corporation
Robert J.Callander....................... Executive-in-Residence, Columbia University
Retired Vice Chairman
Chemical Banking Corporation
Alan K. Campbell......................... Retired Executive Vice President and
Vice Chairman, ARAMARK Corporation
Ronald R. Davenport...................... Chairman, Sheridan Broadcasting Corporation
Philip L. Defliese ...................... Professor Emeritus, Columbia University
Retired Chairman, Coopers & Lybrand
Lee F. Driscoll, Jr...................... Corporate Director
Mitchell S. Fromstein.................... Chairman, President and Chief Executive Officer Manpower Inc.
Edward G. Jordan......................... Former Chairman and Chief Executive Officer
Consolidated Rail Corporation
Thomas H. Kean........................... President, Drew University
Former Governor of New Jersey
Reynold C. MacDonald..................... Retired Chairman, Acme Metals Incorporated
James E.Preston.......................... Chairman, President and Chief Executive Officer
Avon Products, Inc.
</TABLE>
Officers:
<TABLE>
<CAPTION>
Name (Age as of November 1, 1996) Office Held Officer Since
- ---------------------------------- ------------ -------------
<S> <C> <C>
Joseph Neubauer (55)..................... President and Director............................... 1979
Julian L. Carr, Jr. (50)................. Executive Vice President............................. 1988
James E. Ksansnak (56)................... Executive Vice President,
Chief Financial Officer.............................. 1986
William Leonard (48)..................... Executive Vice President............................. 1992
Brian G. Mulvaney (40)................... Executive Vice President............................. 1993
Martin W. Spector (58)................... Executive Vice President,
General Counsel and Secretary........................ 1976
L. Frederick Sutherland (44)............. Executive Vice President............................. 1983
Barbara A. Austell (43).................. Senior Vice President
and Treasurer........................................ 1996
Brian J. Gail (49)....................... Senior Vice President................................ 1994
Alan J. Griffith (42).................... Vice President, Controller and
Chief Accounting Officer............................. 1994
Dean E. Hill (45)........................ Vice President....................................... 1993
John P. Kallelis (58).................... Vice President....................................... 1982
Michael R. Murphy (39)................... Director of Audit and Controls....................... 1995
Joan C. Mazzotti (46).................... Assistant Secretary and
Associate General Counsel............................ 1994
Donald S. Morton (48).................... Assistant Secretary and
Associate General Counsel............................ 1985
Richard M. Thon (41)..................... Assistant Treasurer.................................. 1994
</TABLE>
5
<PAGE>
Except as set forth below, the principal occupation of each executive
officer throughout the past five years has been the performance of the functions
of the corporate offices shown above.
Mr. Leonard was president of ARAMARK Uniform Services from 1984 until
March 1992 when he was elected to his current position.
Mr. Mulvaney was vice president of ARAMARK Uniform Services from 1988
until 1993 when he was elected vice president of the Company. He was elected
Senior Vice President in 1995 and to his current position in August 1996.
Mr. Sutherland was vice president and treasurer of the Company from 1983
until February 1991 when he was elected senior vice president. In May 1993 he
was elected to his current position.
Ms. Austell was elected senior vice president and treasurer of the Company
in August 1996. Prior to joining the Company in July 1996, she was a managing
director of J. P. Morgan & Co.
Mr. Gail was elected senior vice president of the Company in August 1994.
Prior to joining the Company in May 1994, he was president and chief executive
officer and prior thereto senior vice president of FCB - Philadelphia.
Mr. Griffith was elected vice president of the Company in February 1995.
He was assistant controller of the Company from May 1985 until November 1991
when he became the director of corporate planning. In December 1993 he became
controller and chief accounting officer.
Mr. Hill was elected vice president of the Company in January 1993. Prior
to joining the Company in 1993, he was vice president of Farley Industries, Inc.
and Fruit of the Loom, Inc.
Mr. Murphy became director of audit and controls in September 1995. He
joined the Company as senior audit manager in January 1993. Prior to that time
he was a senior audit manager with Arthur Andersen LLP.
Ms. Mazzotti was elected assistant secretary in 1994. She has been with
the Company since 1977 as assistant and then associate general counsel.
Mr. Thon was elected assistant treasurer of the Company in August 1994.
Previously he held various treasury analyst positions since joining the Company
in 1987.
6
<PAGE>
PART II
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Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
- ------- ---------------------------------------------------------------------
There are currently approximately 1,450 record holders of Class B common
stock of the Company, all of whom are employees or directors of the Company (or
members of their families or trusts created by them). There are currently 124
record holders of the Class A common stock of the Company, all of whom are
institutional investors, Company benefit plans or individuals not employed by
the Company.
There is no established public trading market for the common stock of the
Company. However, employees of the Company are able to sell shares of common
stock through various programs maintained by the Company. See note 7 to the
consolidated financial statements for information regarding the Company's
shareholders' agreement.
7
<PAGE>
Item 6. Selected Financial Data
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The following table presents summary consolidated financial data for the
Company. The following data should be read in conjunction with the consolidated
financial statements and the related notes thereto and Management's Discussion
and Analysis of Results of Operations and Financial Condition, each included
elsewhere herein.
<TABLE>
<CAPTION>
ARAMARK Corporation and Subsidiaries
Fiscal Year Ended on or near
September 30
-----------------------------------------------------------------------
1996 1995 1994 1993 1992 (1)
-------- -------- -------- -------- --------
(in millions, except per share amounts and ratios)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues........................................... $6,122.5 $5,600.6 $5,161.6 $4,890.7 $4,865.3
Earnings before depreciation and
amortization, interest, and income taxes........ 478.0 433.9 415.7 399.4 387.4
Earnings before interest
and income taxes (2)............................ 295.2 277.0 272.0 268.9 261.6
Interest expense, net.............................. 116.0 109.4 108.5 125.7 137.9
Income before extraordinary item
and cumulative effect of
change in accounting for
income taxes (3)................................ 112.2 100.2 95.0 84.3 70.7
Net income......................................... 109.5 93.5 86.1 77.1 67.4
Earnings per share: (4)
Income before extraordinary item
and cumulative effect
of change in accounting for
income taxes (3).............................. $2.37 $2.01 $1.87 $1.64 $1.40
Net income......................................... $2.31 $1.88 $1.69 $1.49 $1.33
Ratio of earnings to fixed charges (5)............. 2.1x 2.1x 2.1x 1.9x 1.7x
Balance Sheet Data (at period end):
Total assets....................................... $2,830.8 $2,643.3 $2,122.0 $2,040.6 $2,005.0
Long-term borrowings: (6)
Senior.......................................... 1,160.7 1,109.4 691.5 533.8 629.5
Subordinated.................................... 161.2 165.4 290.4 474.9 413.5
Common stock subject to potential
repurchase (7).................................. 18.6 19.1 20.8 21.7 20.4
Shareholders' equity............................... 296.2 252.3 182.6 124.1 103.8
</TABLE>
- ----------------------------
(1) Fiscal 1992 is a fifty-three week period. See note 1 to the
consolidated financial statements.
(2) See note 2 to the consolidated financial statements.
(3) See notes 3 and 6 to the consolidated financial statements.
(4) Based on weighted average shares of common stock outstanding for
all periods. See note 1 to the consolidated financial statements.
(5) For the purpose of determining the ratio of earnings to fixed
charges, earnings include pre-tax income plus fixed charges
(excluding capitalized interest). Fixed charges consist of
interest on all indebtedness (including capitalized interest) plus
that portion of operating lease rentals representative of the
interest factor (deemed to be one-third of operating lease
rentals).
(6) See note 4 to the consolidated financial statements.
(7) See note 7 to the consolidated financial statements.
8
<PAGE>
Item 7. Management's Discussion and Analysis of Results of Operations and
- ------- -----------------------------------------------------------------
Financial Condition
-------------------
RESULTS OF OPERATIONS
Fiscal 1996 Compared to Fiscal 1995
Overview. Revenues for the fiscal year ended September 27, 1996 were $6.1
billion, a 9% increase over fiscal 1995, with increases being recorded by all
business segments. Operating income of $295.2 million increased 7% compared to
the prior year. Earnings increased substantially in both the Food and Support
Services segment, including the positive impact in fiscal 1996 from the return
of hockey and baseball, and the Uniform Services segment. Earnings were equal to
last year for the Health and Education segment and declined dramatically in the
Distributive segment. Total Company operating income includes other income of
$2.9 million described in note 2 to the consolidated financial statements. The
Company's operating income margin decreased to 4.8% from 4.9%, primarily due to
the decreased earnings of the Distributive segment. Excluding the Distributive
segment, the fiscal 1996 margin was 5.3% and operating income increased 20%
compared to the prior year period.
Interest expense increased $6.6 million or 6% over the prior year due to
increased debt levels to finance acquisitions, partially offset by the favorable
impact of refinancing certain of the Company's subordinated debt and lower
interest rates. The effective income tax rate decreased to 37% in fiscal 1996
from 40% in fiscal 1995 due to the favorable impact resulting from the June 1996
settlement of certain prior years' tax returns. Fiscal 1996 and 1995 net income
reflect extraordinary items for early extinguishment of debt of $2.8 million and
$6.7 million, respectively, as described in note 3 to the consolidated financial
statements.
Segment Results. Food and Support Services segment revenues were 8% higher
than the prior year due to new accounts and increased volume at both U.S. and
international food businesses, acquisitions and the return of hockey and
baseball (see notes 2 and 11 to the consolidated financial statements). Uniform
Services segment revenues increased 17% as a result of yearend 1995 acquisitions
and increased volume in the uniform rental business, partially offset by
decreased volume from direct marketing of work clothing and the divestiture
described in note 2 to the consolidated financial statements. Health and
Education segment revenues increased 5% as a result of enrollment growth and
pricing at Children's World and new contracts at correctional institutions in
the healthcare business. Revenue for the Distributive segment increased 7% due
to acquisitions completed during fiscal 1995 and the impact of the change in
customer mix in 1996.
Operating income for the Food and Support Services segment increased 19%
due to increased revenues, including those resulting from the return of hockey
and baseball, although the baseball labor contract negotiations have not yet
been concluded. Fiscal 1996 operating income for the Uniform Services segment
includes the $37 million gain on the sale of a division and charges of $5
million related to changes in estimates regarding asset realization and
environmental matters described in note 11 to the consolidated financial
statements; excluding the impact of these items, as well as the operating
results of the 1996 divestiture,
9
<PAGE>
the increase in segment operating income was approximately 16% as compared to
fiscal 1995. Health and Education segment operating income was equal to the
prior year with revenue related increases being offset by higher operating costs
and increased reserves for real estate values (see note 11 to the consolidated
financial statements). The Distributive segment incurred an operating loss of
$5.6 million in fiscal 1996 versus operating income of $27.4 million in fiscal
1995. Results continue to be severely impacted by higher operating expenses due
to costs of servicing new customers and reduced margins resulting from the
increased competition and consolidation in the magazine wholesale distribution
industry. The Company believes it is well positioned to take advantage of the
current competitive conditions in this industry, however, the future impact of
these changes is uncertain at this time. The Company currently projects that
fiscal 1997 operating income in the Distributive segment will continue to be
significantly below historical levels prior to fiscal 1996. The increase in
fiscal 1996 General Corporate and Other Expenses is due primarily to reserves
established for asset realization, legal and other matters described in note 11
to the consolidated financial statements.
Fiscal 1995 Compared to Fiscal 1994
Overview. Revenues for the fiscal year ended September 29, 1995 were $5.6
billion, a 9% increase over fiscal 1994. Operating income of $277 million
increased 4% compared to the prior year. Revenues increased over the prior year
in all business segments and, with the exception of Health and Education, all
business segments posted year-over-year improvements in operating earnings.
Fiscal 1995 consolidated results were adversely impacted by the National Hockey
League strike and Major League Baseball situation in the United States and
Canada. The hockey strike, which ended in January 1995, resulted in a season
that was approximately half the normal schedule. The baseball strike, which
began in August 1994 and also adversely impacted fiscal 1994 results, ended in
April 1995 resulting in a shortened 1995 season. A decline in average attendance
from prior year was experienced after the resumption of the season. The baseball
situation is still unsettled and may impact fiscal 1996. Had the hockey strike
and baseball situation not occurred, management estimates that consolidated
operating income and income before extraordinary items would have been
approximately 5% and 8% higher in fiscal 1995, and 3% and 5% higher in fiscal
1994, respectively.
The Company's operating income margin, excluding "other income" of $5.8
million in 1994, decreased to 4.9% from 5.1%. The decrease in margin is due
primarily to the impact of the baseball and hockey situation described above.
Interest expense increased approximately $1.0 million or 1%, due primarily
to increased debt levels to finance acquisitions and increased interest rates,
largely offset by the impact of refinancing certain of the Company's
indebtedness. See notes 2 and 3 to the consolidated financial statements. Fiscal
1995 and 1994 net income include an extraordinary item for early extinguishment
of debt of $6.7 million and $7.7 million, respectively, as described in note 3
to the consolidated financial statements. Fiscal 1994 net income also included a
charge of $1.3 million related to the cumulative effect of adopting Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes. See note 6
to the consolidated financial statements.
10
<PAGE>
Segment Results. Food and Support Services segment revenues were 8%
higher than the prior year due to new accounts and increased volume at both U.S.
and international food businesses plus the impact of the current year
acquisition, partially offset by the effects of the hockey and baseball
situation (see notes 2 and 11 to the consolidated financial statements). Uniform
Services segment revenues increased 10% as a result of increased volume at both
the uniform rental and direct marketing businesses. Health and Education segment
revenues increased 10% as a result of new contracts at correctional institutions
and enrollment growth and pricing at Children's World. Revenue for the
Distributive segment increased 10% due primarily to the current year
acquisitions. See notes 2 and 11 to the consolidated financial statements.
Operating income for the Food and Support Services segment increased 6%.
Increased earnings were due to revenue growth and improved margins in the
U.S. food business plus the current year acquisition. However, earnings were
adversely impacted by the hockey and baseball situation described above (see
note 11 to the consolidated financial statements). Fiscal 1994 operating income
for the Food and Support Services segment also included the $5.8 million gain on
the sale of stock of an affiliate. Uniform Services segment operating income
increased 7% as a result of revenue growth, reduced by higher merchandise and
other operating costs. Operating income for the Health and Education segment
decreased 23% from the prior year due primarily to higher operating costs and an
increase in insurance reserves in the healthcare services business (see note 11
to the consolidated financial statements), partially offset by revenue related
increases at Children's World. Distributive segment operating income increased
3%, with revenue related increases being partially offset by increased operating
expenses.
FINANCIAL CONDITION AND LIQUIDITY
Cash flows generated from operating activities were $239 million. Debt
increased by $65 million from the prior year due primarily to the yearend 1996
acquisition, partially offset by the sale of a division (see note 2 to the
consolidated financial statements). The Company expects to continue to fund
capital expenditures, acquisitions and other liquidity needs from cash provided
by operating activities, normal disposals of property and equipment and
borrowings available under its credit facilities. As of September 27, 1996, the
Company has capital commitments of approximately $34 million related to several
long-term concession contracts at stadiums and arenas.
During fiscal 1996 the Company amended its U.S. and Canadian credit
facilities and established a $125 million credit facility for its childcare
business (see note 4 to the consolidated financial statements). Currently, the
Company has approximately $430 million of unused committed credit availability
under the above credit facilities. Also, during fiscal 1996, the Company issued
a $125 million, 6.79% note which was used primarily to refinance the redemption
of its $80 million, 8.25% senior note (see note 3 to the consolidated financial
statements).
During fiscal 1996, the Company redeemed its remaining outstanding
Series C Preferred Stock for $6.4 million in cash and the issuance of $8.6
million of its Class B Common Stock. The Company also repurchased $28 million of
its Class A Common Stock and $55 million of its Class B Common Stock, with $27
million of subordinated installment notes issued as partial consideration.
Additionally, the Company issued $14 million of Class B Common Stock to eligible
employees, primarily through the exercise of installment stock purchase
opportunities (see note 7 to the consolidated financial statements).
11
<PAGE>
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
See Index to Financial Statements and Schedules at page S-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------- ---------------------------------------------------------------
Financial Disclosure
--------------------
Not Applicable.
PART III
--------
Items 10, 11, 12, and 13 of Part III are incorporated by reference to the
registrant's Proxy Statement for its 1996 Annual Stockholders' Meeting to be
filed with the Commission pursuant to Regulation 14A (except for the stock price
performance graph and the committee report on executive compensation in the
Company's Proxy Statement).
PART IV
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Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- -------- ---------------------------------------------------------------
(a) Index to Financial Statements
See Index to Financial Statements and Schedules at page S-1.
(b) Reports on Form 8-K
None.
(c) Exhibits Required by Item 601 of Regulation S-K
See Index to Exhibits.
(d) Financial Statement Schedules
See Index to Financial Statements and Schedules at page S-1.
12
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ARAMARK CORPORATION
By: Alan J. Griffith
----------------------------
Alan J. Griffith
Vice President, Controller
and Chief Accounting Officer
November 19, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on November 19, 1996.
Signature Title
- --------- -----
Joseph Neubauer Chairman and President and Director
- -------------------------------- (Principal Executive Officer)
Joseph Neubauer
James E. Ksansnak Executive Vice President
- -------------------------------- (Principal Financial Officer)
James E. Ksansnak
Alan J. Griffith Vice President, Controller
- -------------------------------- and Chief Accounting Officer
Alan J. Griffith (Principal Accounting Officer)
Robert J. Callander
Alan K. Campbell
Ronald R. Davenport
Philip L. Defliese
Lee F. Driscoll, Jr. Directors
Mitchell S. Fromstein
Edward G. Jordan
Thomas H. Kean
Reynold C. MacDonald
James E. Preston
Martin W. Spector
- --------------------------------
Martin W. Spector
Attorney-in-Fact
13
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page
----
Report of Independent Public Accountants S-2
Report of Chartered Accountants S-3
Consolidated Balance Sheets:
As of September 27, 1996 and September 29, 1995 S-4
Consolidated Statements of Income:
Fiscal Years 1996, 1995 and 1994 S-6
Consolidated Statements of Cash Flows:
Fiscal Years 1996, 1995 and 1994 S-7
Consolidated Statements of Shareholders' Equity:
Fiscal Years 1996, 1995 and 1994 S-8
Notes to Consolidated Financial Statements S-11
Consolidated Supporting Schedules Filed:
Schedule
Number
------
I Condensed Financial Information of Registrant S-25
II Valuation and Qualifying Accounts and Reserves S-29
All other schedules are omitted because they are not applicable, not
required, or the information required to be set forth therein is included in the
consolidated financial statements or in the notes thereto.
S-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ARAMARK Corporation:
We have audited the accompanying consolidated balance sheets of ARAMARK
Corporation (a Delaware corporation) and subsidiaries as of September 27, 1996
and September 29, 1995, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended September 27, 1996. These consolidated financial statements and the
schedules referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedules based on our audits. We did not audit the financial
statements of Versa Services Ltd., the Company's Canadian subsidiary, prior to
fiscal 1995, which statements reflect revenues representing 5.6% of consolidated
revenues for fiscal year 1994. Those statements were audited by other auditors
whose report has been furnished to us and our opinion, insofar as it relates to
the amounts included for Versa Services Ltd. for fiscal year 1994, is based
solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors for fiscal
1994, the financial statements referred to above present fairly, in all material
respects, the financial position of ARAMARK Corporation and subsidiaries as of
September 27, 1996 and September 29, 1995, and the results of their operations
and their cash flows for each of the three fiscal years in the period ended
September 27, 1996, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
financial statements are presented for purposes of complying with the Securities
and Exchange Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
As discussed in Note 6 to the consolidated financial statements, ARAMARK
Corporation changed its method of accounting for income taxes in fiscal 1994.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
November 11, 1996
S-2
<PAGE>
REPORT OF CHARTERED ACCOUNTANTS
To The Directors of Versa Services Ltd.:
We have audited the consolidated balance sheet of Versa Services Ltd. as at
September 28, 1994 and the consolidated statements of income and retained
earnings and cash flows for the fifty-two week period then ended (not presented
separately herein). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at September 28, 1994, and
the results of its operations and the changes in its financial position for the
fifty-two week period then ended in accordance with accounting principles
generally accepted in Canada.
Mississauga, Canada ERNST & YOUNG
November 16, 1994 Chartered Accountants
S-3
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 27, 1996 and September 29, 1995
(dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 25,283 $ 23,082
Receivables (less allowances: 1996, $16,351;
1995, $15,996) 576,447 503,835
Inventories 316,043 312,818
Prepayments and other current assets 67,977 70,675
- ------------------------------------------------------------------------------------------------------------------
Total current assets 985,750 910,410
- ------------------------------------------------------------------------------------------------------------------
Property and Equipment, at Cost:
Land, buildings and improvements 445,086 419,522
Service equipment and fixtures 1,137,387 1,047,559
Leased property under capital leases 12,489 10,213
- ------------------------------------------------------------------------------------------------------------------
1,594,962 1,477,294
Less-Accumulated depreciation 770,327 705,082
- ------------------------------------------------------------------------------------------------------------------
824,635 772,212
- ------------------------------------------------------------------------------------------------------------------
Goodwill 643,880 657,707
- ------------------------------------------------------------------------------------------------------------------
Other Assets (including $95 million invested
in an acquisition made at yearend 1996) 376,505 302,987
- ------------------------------------------------------------------------------------------------------------------
$2,830,770 $2,643,316
==================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-4
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term borrowings $ 26,041 $ 8,384
Accounts payable 496,040 448,518
Accrued payroll and related expenses 163,151 157,106
Other accrued expenses and current liabilities 278,609 257,752
- ----------------------------------------------------------------------------------------------------------------
Total current liabilities 963,841 871,760
- ----------------------------------------------------------------------------------------------------------------
Long-Term Borrowings:
Senior 1,183,047 1,115,371
Subordinated 161,189 165,414
Obligations under capital leases 3,670 2,370
- ----------------------------------------------------------------------------------------------------------------
1,347,906 1,283,155
Less-current portion 26,041 8,384
- ----------------------------------------------------------------------------------------------------------------
Total long-term borrowings 1,321,865 1,274,771
- ----------------------------------------------------------------------------------------------------------------
Deferred Income Taxes and Other Noncurrent Liabilities 230,249 225,441
Common Stock Subject to Potential Repurchase Under
Provisions of Shareholders' Agreement 18,614 19,060
Shareholders' Equity Excluding Common Stock
Subject to Repurchase:
Series C preferred stock, redemption value $1,000;
authorized: 40,000 shares; issued: 1996 - 0 shares;
1995 - 14,965 shares -- 14,965
Class A common stock, par value $.01; authorized:
25,000,000 shares; issued: 1996 - 1,978,326 shares;
1995 - 2,148,069 shares 20 21
Class B common stock, par value $.01; authorized:
150,000,000 shares; issued: 1996 - 22,732,673 shares;
1995 - 23,499,782 shares 227 235
Earnings retained for use in the business 309,437 247,805
Cumulative translation adjustment 5,131 8,318
Impact of potential repurchase feature of common stock (18,614) (19,060)
- -----------------------------------------------------------------------------------------------------------------
Total 296,201 252,284
- ----------------------------------------------------------------------------------------------------------------
$2,830,770 $2,643,316
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-5
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Fiscal Years Ended September 27, 1996, September 29, 1995
and September 30, 1994
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $6,122,500 $5,600,645 $5,161,578
- ----------------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of services provided 5,565,038 5,094,179 4,686,086
Depreciation and amortization 182,785 156,869 143,763
Selling and general corporate expense 82,354 72,602 70,196
Other expense (income), net (2,850) -- (5,792)
- -----------------------------------------------------------------------------------------------------------------
5,827,327 5,323,650 4,894,253
- ----------------------------------------------------------------------------------------------------------------
Operating income 295,173 276,995 267,325
Gain on Issuance of Stock by an Affiliate -- -- 4,658
- ----------------------------------------------------------------------------------------------------------------
Earnings before interest and income taxes 295,173 276,995 271,983
Interest Expense, net 116,014 109,418 108,499
- ----------------------------------------------------------------------------------------------------------------
Income before income taxes 179,159 167,577 163,484
Provision For Income Taxes 66,931 67,388 67,119
Minority Interest -- -- 1,332
- ----------------------------------------------------------------------------------------------------------------
Income Before Extraordinary Item and Cumulative
Effect of Change in Accounting for Income Taxes 112,228 100,189 95,033
Extraordinary Item Due to Early Extinguishments
of Debt (net of income taxes of $1,839 in 1996,
$4,458 in 1995 and $5,118 in 1994) 2,758 6,686 7,677
Cumulative Effect of Change in Accounting for
Income Taxes -- -- 1,277
- ----------------------------------------------------------------------------------------------------------------
Net Income $ 109,470 $ 93,503 $ 86,079
================================================================================================================
Earnings Per Share:
Income before extraordinary item and
cumulative effect of change in
accounting for income taxes $2.37 $2.01 $1.87
Net income $2.31 $1.88 $1.69
================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-6
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended September 27, 1996, September 29,1995
and September 30, 1994 (in thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 109,470 $ 93,503 $ 86,079
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 182,785 156,869 143,763
Income taxes deferred (27,604) 4,920 (2,174)
Minority interest -- -- 1,332
Cumulative effect of accounting change -- -- 1,277
Gain on issuance of stock by affiliate -- -- (4,658)
Extraordinary item 2,758 6,686 7,677
Changes in noncash working capital:
Receivables (62,239) (25,162) (40,557)
Inventories (9,734) (13,992) (6,915)
Prepayments (209) 13,244 (15,675)
Accounts payable 28,973 25,186 36,956
Accrued expenses 27,245 22,737 36,926
Changes in other noncurrent liabilities (461) (6,525) (1,368)
Changes in other assets (9,217) 4,020 (6,445)
Other (2,494) (2,232) (9,186)
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 239,273 279,254 227,032
- -----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property and equipment (190,896) (193,470) (145,935)
Disposals of property and equipment 13,099 16,063 11,525
Sale of investments -- 16,203 13,543
Divestiture of certain businesses 51,285 1,719 7,297
Increase in short-term investments -- -- (16,203)
Purchase of subsidiary stock -- (20,491) (17,623)
Acquisition of certain businesses:
Working capital other than cash acquired (8) (12,227) (3,066)
Property and equipment (8,076) (36,261) (573)
Additions to intangibles and other assets (104,679) (306,067) (6,734)
Other (8,362) (2,268) 7,758
- ----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (247,637) (536,799) (150,011)
- -----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from additional long-term borrowings 155,510 486,844 167,329
Payment of long-term borrowings including premiums (95,510) (209,742) (210,511)
Redemption of preferred stock (6,359) (1,984) (17,647)
Proceeds from issuance of common stock 13,949 9,718 12,416
Repurchase of common stock (54,849) (26,435) (25,729)
Payment of preferred stock dividend (1,067) (1,049) (1,917)
Other (1,109) (4,151) (1,337)
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by/(used in) financing activities 10,565 253,201 (77,396)
- -----------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 2,201 (4,344) (375)
Cash and cash equivalents, beginning of year 23,082 27,426 27,801
- -----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 25,283 $ 23,082 $ 27,426
=================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-7
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED SEPTEMBER 27, 1996
(in thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Impact of
Potential
Series C Class A Class B Cumulative Repurchase
Preferred Common Common Capital Retained Translation Feature of
Stock Stock Stock Surplus Earnings Adjustment Common Stock
---------- ----------- --------- ------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, September 29, 1995 $14,965 $21 $235 $ -- $247,805 $8,318 $(19,060)
Net income 109,470
Dividends on preferred stock (769)
Issuance of Class A common stock to
employee benefit plans 5,728
Issuance of Class B common stock 25 30,519
Retirement of common and preferred stock (14,965) (1) (33) (36,247) (47,069)
Change during the period (3,187) 446
----------- ----- ------- --------- --------- ------- ----------
Balance, September 27, 1996 $ -- $20 $227 $ -- $309,437 $ 5,131 $(18,614)
=========== ===== ======= ========= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-8
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED SEPTEMBER 29, 1995
(in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Impact of
Potential
Series C Class A Class B Cumulative Repurchase
Preferred Common Common Capital Retained Translation Feature of
Stock Stock Stock Surplus Earnings Adjustment Common Stock
----------- --------- --------- ------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1994 $16,949 $21 $243 $ - $178,587 $7,550 $(20,791)
Net income 93,503
Dividends on preferred stock (1,046)
Issuance of Class A common stock to
employee benefit plans 6,576
Issuance of Class B common stock 31 20,637
Retirement of common and preferred stock (1,984) (39) (27,213) (23,239)
Change during the period 768 1,731
------- ----- ----- --------- --------- ------- ---------
Balance, September 29, 1995 $14,965 $ 21 $235 $ - $247,805 $8,318 $(19,060)
======= ===== ===== ========= ========= ======= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-9
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994
(in thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Impact of
Potential
Series C Class A Class B Cumulative Repurchase
Preferred Common Common Capital Retained Translation Feature of
Stock Stock Stock Surplus Earnings Adjustment Common Stock
--------- ---------- --------- ------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, October 1, 1993 $34,596 $21 $243 $ -- $104,827 $6,037 $(21,651)
Net income 86,079
Dividends on preferred stock (1,337)
Issuance of Class A common stock to
employee benefit plans 1 8,881
Issuance of Class B common stock 25 18,910
Retirement of common and preferred stock (17,647) (1) (25) (27,791) (10,982)
Change during the period 1,513 860
------- --- ---- --------- -------- ------ -------
Balance, September 30, 1994 $16,949 $21 $243 $ -- $178,587 $7,550 $(20,791)
======= === ==== ========= ======== ====== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-10
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
FISCAL YEAR
The Company's fiscal year is the fifty-two or fifty-three week period which ends
on the Friday nearest September 30th. The fiscal years ended September 27, 1996,
September 29, 1995 and September 30, 1994 are fifty-two week periods.
PRINCIPLES OF CONSOLIDATION, ETC.
The consolidated financial statements include the accounts of the Company and
all its subsidiaries. All significant intercompany balances and transactions
have been eliminated. Certain reclassifications were made to the prior year
financial statements to conform to the fiscal 1996 presentation.
In fiscal 1997, the Company is required to adopt the provisions of Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The adoption
will not have a material impact on the consolidated financial statements.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CURRENCY TRANSLATION
Gains and losses resulting from the translation of financial statements of
non-U.S. subsidiaries are reflected as a currency translation adjustment in
shareholders' equity. Currency transaction gains and losses included in
operating results for fiscal 1996, 1995 and 1994 were not significant.
CURRENT ASSETS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Inventories are valued at the lower of cost (principally the first-in, first-out
method) or market. The LIFO (last-in, first-out) method of determining cost is
used to value directly marketed work clothing and public safety clothing and
equipment. The stated value of inventories determined using the LIFO method is
not significantly different from replacement or current cost. Personalized work
apparel and linens in service are recorded at cost and are amortized over their
estimated useful lives, approximately two years. In accordance with industry
practice, magazines and books are sold to retailers with the right to return
unsold items for ultimate credit from the publishers.
The components of inventories are as follows:
1996 1995
- --------------------------------------------------------------------------------
Food 24.2% 23.4%
Work clothing, safety equipment and linens 59.4% 61.0%
Magazines and books 7.5% 8.0%
Parts, supplies and novelties 8.9% 7.6%
- --------------------------------------------------------------------------------
100.0% 100.0%
- --------------------------------------------------------------------------------
S-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and are depreciated over their
estimated useful lives on a straight-line basis. Gains and losses on
dispositions are included in operating results. Maintenance and repairs are
charged to operations currently, and replacements and significant improvements
are capitalized. The estimated useful lives for the major categories of property
and equipment are 10 to 40 years for buildings and improvements and 3 to 10
years for service equipment and fixtures. Depreciation expense in fiscal 1996,
1995 and 1994 was $129.1 million, $116.4 million and $107.5 million,
respectively.
GOODWILL
Goodwill, which represents the excess of cost over fair value of the net assets
of acquired businesses, is being amortized on a straight-line basis principally
over 40 years. The Company develops operating income projections for each of its
lines of business and evaluates the recoverability and amortization period of
goodwill using these projections. Based upon management's current assessment,
the estimated remaining amortization period of goodwill is appropriate and the
remaining balance is fully recoverable. Accumulated amortization at September
27, 1996 and September 29, 1995 is $150.5 million and $130.2 million,
respectively.
OTHER ASSETS
Other assets consist primarily of investments in less than 50% owned entities,
contract rights, customer lists, and long-term receivables. Investments in which
the Company owns more than 20% but less than a majority are accounted for using
the equity method. Contract rights and customer lists are being amortized on a
straight-line basis over the expected period of benefit, 3 to 20 years. As
discussed in Note 2, at September 27, 1996, other assets includes approximately
$95 million related to the purchase price of an acquisition consummated at
yearend.
OTHER LIABILITIES
Other noncurrent liabilities consist primarily of deferred compensation,
insurance accruals, deferred gains arising from sale and leaseback transactions
and subordinated installment notes arising from repurchases of common stock.
The Company is self-insured for a limited portion of the risk retained under its
general liability and workers' compensation and malpractice insurance
arrangements. Self-insurance reserves are determined based on actuarial
analyses. The self-insurance reserves for workers' compensation insurance are
accrued on a present value basis using a discount rate which approximates a
risk-free rate.
EARNINGS PER SHARE
Earnings per share is reported on a fully diluted Common Stock, Class B
equivalent basis (which reflects Common Stock, Class A shares converted to a
Class B basis, ten for one) and is based upon the weighted average number of
common shares outstanding during the respective periods, plus the common
equivalent shares, if dilutive, that would result from the exercise of stock
options. Fully diluted earnings per share approximates primary earnings per
share and is equivalent to fully diluted earnings per share under the
"two-class" method.
S-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
SUPPLEMENTAL CASH FLOW INFORMATION
1996 1995 1994
---- ---- ----
(in millions)
Interest Paid $108.1 $107.4 $108.2
Income Taxes Paid $91.4 $53.5 $54.0
Significant noncash investing and financing activities are as follows:
o During fiscal 1996, 1995 and 1994, the Company contributed $5.7 million,
$6.6 million and $8.9 million, respectively, of Class A Common Stock to
its employee benefit plans to fund previously accrued obligations. In
addition, during fiscal 1996, 1995 and 1994, the Company contributed $1.7
million, $1.8 million and $1.8 million, respectively, of stock units to its
stock unit retirement plan in satisfaction of its accrued obligations. See
Note 5.
o During fiscal 1996, 1995 and 1994, the Company received $7.2 million, $9.4
million and $4.0 million, respectively, of employee notes under its
Deferred Payment program as partial consideration for the issuance of
Common Stock Class B. Also, during fiscal 1996, 1995, and 1994, the Company
issued subordinated installment notes of $26.8 million, $22.5 million and
$13.2 million, respectively, as partial consideration for repurchases of
Common Stock. See Note 7.
NOTE 2. ACQUISITIONS AND DIVESTITURES, ETC.:
In the first quarter of fiscal 1996, the Company sold a division of its Uniform
Services business. The net selling price was approximately $51 million in cash
and resulted in a pre-tax gain of $37 million, which was offset by other charges
related to asset realization ($20 million) and insurance, legal and other
matters ($14 million) and is reflected as "Other expense (income)" in the
accompanying consolidated statements of income. The divested operations were not
material to the Company's consolidated revenues or operating income.
At fiscal 1996 yearend, the Company acquired a provider of uniform apparel
to the hospitality and healthcare markets for cash of approximately $95
million. The acquisition will be accounted for under the purchase method of
accounting. Due to the timing of the closing of the transaction, the cost of the
acquisition has been included in "Other Assets" until appraisals and other
valuations have been completed. The Company's pro forma results of operations
for fiscal 1996 and 1995 would not have been materially different assuming the
acquisition had occurred as of the beginning of the respective periods.
During fiscal 1995, the Company acquired a number of businesses: a provider of
food and support services to stadiums and arenas late in the first quarter; two
magazine and book distribution companies, one in the first quarter and one late
in the third quarter; a uniform rental business late in the fourth quarter; and
a direct marketer of public safety clothing and equipment late in the fourth
quarter; all for aggregate consideration of approximately $360 million in cash.
The acquisitions were accounted for under the purchase method of accounting and
the fiscal 1995 financial statements reflect the results of operations and cash
flows of the acquired companies from the dates of the acquisitions. Had these
acquisitions occurred as of the beginning of the fiscal period, pro forma
consolidated revenues and earnings before interest, taxes, depreciation and
amortization would have been approximately 4% and 6%, and 6% and 7% greater in
fiscal 1995 and 1994, respectively. Additionally, net income and earnings per
share would have been approximately 9% and 18% lower in fiscal 1995 and 1994,
respectively.
S-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. ACQUISITIONS AND DIVESTITURES, ETC.: (Continued)
Pro forma results are unaudited and are based on historical results, adjusted
for the impact of certain acquisition related adjustments, such as: increased
amortization of intangibles, increased interest expense on acquisition debt, and
the related income tax effects. Pro forma results do not reflect any synergies
that might be achieved from combined operations and therefore, in management's
opinion, are not indicative of what actual results would have been if the
acquisitions had occurred at the beginning of the respective periods. In
addition, they are not intended to be a projection of future results.
In the fourth quarter of fiscal 1994, the Company initiated a tender offer for
the 30% minority interest of its Canadian subsidiary. The transaction was
completed in fiscal 1995 for total cash consideration of approximately $38
million, of which $20.5 million was paid in fiscal 1995.
During the fourth quarter of fiscal 1994, an affiliate, 33% owned by the
Company, sold common stock through a public offering. The Company sold
approximately 9% of its equity investment in connection with the public
offering, received net proceeds of $6.9 million and recorded a gain of $5.8
million, which is included in "Other expense (income)." At the time a
subsidiary/affiliate sells its stock to third parties, the Company recognizes
the resultant change in its net investment in the subsidiary/affiliate through
the income statement in accordance with the Securities and Exchange Commission
Staff Accounting Bulletin No. 51 (SAB No. 51). In accordance with SAB No. 51,
the Company recognized a pre-tax gain of $4.7 million, and recorded a related
tax provision of $1.9 million, representing the increase in book value of the
Company's remaining investment created by the sale of the incremental new shares
in the public offering. The Company's percentage ownership of the affiliate
after the transaction is 28%.
NOTE 3. EXTRAORDINARY ITEM:
The following have been reflected as extraordinary items in the consolidated
financial statements:
During fiscal 1996, the Company redeemed its $80 million 8-1/4% senior notes for
a premium. The debt extinguishment was financed through the issuance of a $125
million 6.79% senior note. Additionally, the Company replaced its credit
facility with a new $1 billion credit facility (see Note 4), writing off the
unamoritized balance of financing costs related to the old credit facility. The
resultant extraordinary charge on these transactions was $2.8 million or $0.06
per share.
During fiscal 1995, the Company redeemed its $125 million 12% subordinated
debentures and its $50 million 10.25% senior note for a premium. The debt
extinguishment was financed through the issuance of 8.15% and 8% senior notes
(see Note 4). The resultant extraordinary charge was $6.7 million or $0.13 per
share.
During fiscal 1994, the Company redeemed the remaining $182.3 million of its
12-1/2% subordinated debentures for a premium. The debt extinguishment was
financed through borrowings under the Company's revolving credit facility. The
resultant extraordinary charge was $7.7 million or $0.15 per share.
S-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. BORROWINGS:
Long-term borrowings at September 27, 1996 and September 29, 1995 are summarized
in the following table:
<TABLE>
<CAPTION>
1996 1995
---- ----
(in thousands)
<S> <C> <C>
SENIOR:
Credit facility borrowings $ 596,400 $ 592,900
Canadian credit facility 45,123 50,674
6.79% note, payable in installments through 2003 125,000 -
8% notes, due April 2002 100,000 100,000
8.15% notes, due May 2005 150,000 150,000
10-5/8% notes, due August 2000 100,000 100,000
8-1/4% notes, redeemed in 1996 - 80,000
Other 66,524 41,797
- -----------------------------------------------------------------------------------------------------
1,183,047 1,115,371
- -----------------------------------------------------------------------------------------------------
SUBORDINATED:
8-1/2% subordinated notes, due June 2003 100,000 100,000
10% exchangeable debentures and notes, due August 2000 58,849 59,299
Other 2,340 6,115
- -----------------------------------------------------------------------------------------------------
161,189 165,414
- -----------------------------------------------------------------------------------------------------
OBLIGATIONS UNDER CAPITAL LEASES 3,670 2,370
- -----------------------------------------------------------------------------------------------------
1,347,906 1,283,155
Less-current portion 26,041 8,384
- -----------------------------------------------------------------------------------------------------
$1,321,865 $1,274,771
=====================================================================================================
</TABLE>
The non-amortizing $1.0 billion revolving credit facility ("Credit Agreement")
is provided by a group of banks and matures in June 2001. Interest under the
Credit Agreement is based on the Prime Rate, LIBOR plus a spread of .15% to
.625% (as of September 27, 1996 - .33%) or the Certificate of Deposit Rate plus
a spread of .25% to .725% (as of September 27, 1996 - .43%), at the option of
the Company. The Company pays a fee of .10% to .375% (as of September 27, 1996 -
.17%) on the entire credit facility. The spread and fee margins are based on
certain financial ratios as defined.
The non-amortizing C$80 million Canadian revolving credit facility provides for
either U.S. dollar or Canadian dollar borrowings and matures in June 2001.
Interest on this facility is based on the Canadian Bankers Acceptance Rate, U.S.
Prime Rate, Canadian Prime Rate or LIBOR plus a spread of up to 5/8%, as
defined. As of September 27, 1996, all borrowings under this facility are
payable in Canadian dollars, with a weighted average interest rate of 4.6%. The
Company pays a fee of .17% on the entire credit facility.
The Company's Children's World Learning Centers, Inc. (CWLC) subsidiary also has
a $125 million revolving credit facility with a group of banks. The credit
facility matures in August 2003, with quarterly commitment reductions of $5
million starting in September 2001, which increase to $6.25 million starting
September 2002. Interest under the credit facility is based on the Prime Rate
plus a spread of 0% to 1/4% or LIBOR plus a spread of 1/2% to 1%, at the option
of CWLC. CWLC pays a fee of .2% to .375% (as of September 27, 1996 - 1/4%) on
the unborrowed portion of the credit facility. The spread and fee margins are
based on certain financial ratios as defined. As of September 27, 1996 there
were no borrowings outstanding under this credit facility.
S-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4: BORROWINGS: (Continued)
The 6.79% note is payable in $25 million annual installments beginning January
1999, with a final maturity of January 2003.
The 10-5/8% senior notes require a sinking fund payment of $50 million in August
1999 with a final maturity in August 2000.
The 8-1/2% subordinated notes may be redeemed at the Company's option, in whole
or in part, beginning June 1998 at a price equal to 104.25% of their principal
amount and thereafter at prices declining to par in 2002, together with accrued
interest.
The 10% subordinated exchangeable debentures and notes may be exchanged at any
time in whole or part, at the option of the holder, for 10-5/8% senior notes due
August 2000 at an exchange ratio of .93.
Accrued interest on borrowings totaling $24.3 million at September 27, 1996 and
$22.0 million at September 29, 1995 is included in current liabilities as "Other
accrued expenses."
The Company utilizes derivative financial instruments, such as interest rate
swap and forward exchange agreements to manage changes in market conditions
related to debt obligations and foreign currency exposures. At September 27,
1996 and September 29, 1995, the Company has $250 million and $175 million of
interest rate exchange agreements fixing the rate on a like amount of borrowings
under the Credit Agreement at an average effective rate of 6.2% and 6.3%,
respectively. As of September 27, 1996, interest rate exchange agreements remain
in effect for periods ranging from 9 to 34 months. All interest rate agreements
are accounted for as hedges and the related gains or losses are recognized in
income as a component of interest expense over the period being hedged. During
fiscal 1996, the Company entered into a $24 million foreign currency swap
agreement maturing in August 1998, which hedges the currency exposure of its net
investment in Spain. The counterparties to the above derivative agreements are
major international banks. The Company continually monitors its positions and
credit ratings of its counterparties, and does not anticipate nonperformance by
the counterparties.
The following summarizes the fair value of the Company's financial instruments
as of September 27, 1996 and September 29, 1995. The fair values were computed
using market quotes, if available, or based on discounted cash flows using
market interest rates as of the end of the respective periods.
<TABLE>
<CAPTION>
1996 1995
------------------------------ -------------------------
Carrying Fair Carrying Fair
Asset/(Liability) in millions Amount Value Amount Value
- ----------------------------- ------ ----- ------ -----
<S> <C> <C> <C> <C>
Long-term debt $(1,347.9) $(1,364.6) $(1,283.2) $(1,313.3)
Interest rate swap agreements - 0.1 - 0.7
Foreign currency swap agreement 0.4 0.1 (2.6) (2.5)
</TABLE>
The Credit Agreement contains restrictive covenants which provide, among other
things, limitations on liens, dispositions of material assets and repurchases of
capital stock. The terms of the Credit Agreement also require that the Company
maintain certain specified minimum ratios of cash flow to fixed charges and to
total borrowings and certain minimum levels of net worth (as defined). At
September 27, 1996, the Company was in compliance with all of these covenants.
S-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. BORROWINGS: (Continued)
Long-term borrowings maturing in the next five years, excluding capital lease
obligations, are as follows:
Amount
--------------
(in thousands)
1997 $ 26,041
1998 4,061
1999 79,719
2000 142,487
2001 686,941
NOTE 5: EMPLOYEE PENSION AND PROFIT SHARING PLANS:
In the United States, the Company maintains qualified contributory and
non-contributory retirement plans for eligible employees, with Company
contributions to the plans based on earnings performance or salary level.
Qualified non-contributory profit sharing plans are maintained by certain
businesses, with annual contributions determined by management. The Company has
a non-qualified stock unit retirement plan for certain employees. The total
expense of the above plans for fiscal 1996, 1995 and 1994 was $15.7 million,
$15.3 million and $14.5 million, respectively. During fiscal 1996, 1995 and
1994, the Company contributed 32,475 shares, 41,114 shares and 59,919 shares,
respectively, of Common Stock, Class A to these plans to partially fund
previously accrued obligations. In addition, during fiscal 1996, 1995 and 1994,
the Company contributed to the stock unit retirement plan 104,938 stock units,
120,700 stock units and 143,125 stock units, respectively, which are convertible
into Common Stock, Class B, in satisfaction of its accrued obligations. The
value of the stock units was credited to capital surplus. The Company
participates in various multi-employer union administered pension plans.
Contributions to these plans, which are primarily defined benefit plans, result
from contractual provisions of labor contracts and were $13.6 million, $13.1
million and $11.9 million for fiscal 1996, 1995 and 1994, respectively.
Additionally, the Company maintains several contributory and noncontributory
defined benefit pension plans, primarily in Canada and the United Kingdom. The
projected benefit obligation of these plans as of September 27, 1996, which is
fully funded, is $44.7 million. Pension expense related to these plans is not
material to the consolidated financial statements.
NOTE 6. INCOME TAXES:
Effective October 2, 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes." SFAS No. 109 requires deferred tax assets or liabilities to be
recognized for the estimated future tax effects of temporary differences between
the financial reporting and tax bases of the Company's assets and liabilities
based on the enacted tax law and statutory tax rates applicable to the periods
in which the temporary differences are expected to affect taxable income. The
cumulative effect of this change in accounting principle was a charge of $1.3
million, or $0.03 per share, in the first quarter of fiscal 1994. In June 1996
the Company settled certain prior years' tax returns.
S-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. INCOME TAXES: (Continued)
The components of income before income taxes by source of income are as follows:
1996 1995 1994
- ------------------------------------------------------------------------------
(in thousands)
United States $172,572 $159,851 $143,052
Non-U.S. 6,587 7,726 20,432
- -----------------------------------------------------------------------------
$179,159 $167,577 $163,484
=============================================================================
Non-U.S. income before income taxes includes the gain on the sale of an
affiliate's stock in fiscal 1994 (see Note 2), and increased interest expense
subsequent to fiscal 1994 due to increased borrowing levels.
The provision for income taxes consists of:
1996 1995 1994
- --------------------------------------------------------------------------------
(in thousands)
Current:
Federal $73,919 $46,579 $51,935
State and local 17,335 12,064 11,827
Non-U.S. 3,281 3,825 5,531
- --------------------------------------------------------------------------------
94,535 62,468 69,293
- --------------------------------------------------------------------------------
Deferred:
Federal (23,210) 3,189 (1,516)
State and local (5,379) 739 (351)
Non-U.S. 985 992 (307)
- --------------------------------------------------------------------------------
(27,604) 4,920 (2,174)
- --------------------------------------------------------------------------------
$66,931 $67,388 $67,119
================================================================================
The provision for income taxes varies from the amount determined by applying the
United States Federal statutory rate to pre-tax income as a result of the
following:
1996 1995 1994
- --------------------------------------------------------------------------------
(% of pre-tax income)
United States statutory income tax rate 35.0% 35.0% 35.0%
Increase (decrease) in taxes, resulting from:
State income taxes, net of Federal tax
benefit 4.3 4.7 4.6
Permanent book/tax differences, primarily
resulting from purchase accounting 2.1 1.7 3.0
Favorable impact of June 1996 tax settlement (2.8) - -
Tax credits and other (1.2) (1.2) (1.6)
- --------------------------------------------------------------------------------
Effective income tax rate 37.4% 40.2% 41.0%
================================================================================
As of September 27, 1996 and September 29, 1995, the components of deferred
taxes are as follows (in thousands):
1996 1995
-------- --------
Deferred tax liabilities:
Property and equipment $ 61,095 $ 65,901
Inventory 5,549 10,451
Investments 12,813 12,406
Other 10,837 14,053
-------- --------
Gross deferred tax liability 90,294 102,811
-------- --------
S-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. INCOME TAXES: (Continued)
1996 1995
--------- --------
Deferred tax assets:
Insurance $ 26,455 $23,579
Employee compensation and benefits 34,889 34,693
Accruals and allowances 30,638 27,530
Intangibles 3,415 6,534
Other 8,709 3,223
Valuation allowance (815) (1,240)
-------- -------
Net deferred tax asset 103,291 94,319
-------- -------
Net deferred tax liability/(asset) $(12,997) $ 8,492
======== =======
NOTE 7. CAPITAL STOCK:
There are two classes of common stock authorized and outstanding, Common Stock,
Class A and Common Stock, Class B. Each Class A and Class B Share is entitled to
one vote on all matters submitted to shareholders, voting together as a single
class except where otherwise required by law. Each Class A Share is entitled to
ten times the dividends and other distributions payable on each Class B Share.
Class B Shares may be held only by employees, directors and their family
members, and upon termination of employment each Class B Share is automatically
converted into 1/10 of a Class A Share.
During fiscal 1996, the Company redeemed, at par, all its outstanding Series C
Preferred Stock for $6.4 million in cash and the issuance of $8.6 million of
Common Stock, Class B. During fiscal 1995 and 1994 the Company repurchased 1,984
and 17,647 preferred shares for $2.0 million and $17.6 million, respectively.
As of September 27, 1996, the Company's stock option plans provided for the
issuance of up to 44,861,642 options to purchase shares of Common Stock, Class
B. The Company granted installment stock purchase opportunities under its stock
ownership program in fiscal 1996, 1995 and 1994 which provide for the purchase
of shares of Common Stock, Class B. Installment stock purchase opportunities are
exercisable in six annual installments with the exercise price of each purchase
opportunity equal to the current fair market value at the time the purchase
opportunity is granted. The Company has a program to grant non-qualified stock
options to additional qualified employees on an annual basis. Under the program,
options vest after three years and may be exercised for a period of three years
after vesting. The exercise price of each option is equal to the current fair
market value at the date of grant. In fiscal 1995 and 1996, the Company granted
cumulative installment stock purchase opportunities under its existing stock
ownership program which are similar to the installment stock purchase
opportunities discussed above, however, any purchase opportunities not exercised
during an installment period may be carried forward to subsequent installment
periods. The Company has a Deferred Payment Program which enables holders of
non-qualified stock options and installment purchase opportunities to defer a
portion of the total amount required to exercise the options. Interest currently
accrues on deferred payments at 8.25% compounded annually and is payable when
the deferred payments are due. At September 27, 1996 and September 29, 1995 the
receivables from individuals under the Deferred Payment Program were $19.0
million and $17.5 million, respectively, which are reflected as a reduction of
Shareholders' Equity. The Company holds as collateral all shares purchased in
which any portion of the purchase price is financed under the Deferred Payment
Program until the deferred payment is received from the individual by the
Company. Status of the options, including installment stock purchase
opportunities, under the various ownership programs follows:
<TABLE>
<CAPTION>
Number of Shares Average Option Price
---------------------------------------- -----------------------------
1996 1995 1994 1996 1995 1994
---------- ------------- ------------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Options granted 4,133,100 4,409,920 4,314,635 $14.75 $13.11 $11.19
Options exercised 1,938,142 3,084,830 2,588,030 $8.83 $6.17 $6.33
Options outstanding 10,367,984 10,107,199 10,383,764 $12.17 $10.47 $8.05
</TABLE>
S-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. CAPITAL STOCK: (Continued)
At September 27, 1996, 539,720 of the outstanding option shares were exercisable
at an average option price of $3.72. The Company has reserved 11,117,149 shares
of Common Stock, Class B at September 27, 1996 for issuance of stock pursuant to
its employee ownership and benefit programs.
The Company and its shareholders are parties to an Amended and Restated
Shareholders' Agreement. Pursuant to this agreement, holders of common stock who
are individuals, upon their death, complete disability or normal retirement, may
cause the Company to repurchase up to 30% of their shares for cash at the then
appraised value, but only to the extent such repurchase by the Company is
permitted under the Credit Agreement. Under this Credit Agreement restriction,
repurchases of capital stock cannot exceed an aggregate limit, which amount was
$18.6 million at September 27, 1996 and $19.1 million at September 29, 1995.
Pursuant to interpretations of its rules related to "Redeemable Preferred
Stock," the Securities and Exchange Commission has requested that these amounts
representing the Company's potential repurchase of its Common Stock be presented
as a separate item and accordingly, the Company's Shareholders' Equity reflects
this reclassification in the consolidated financial statements. Also, the
Shareholders' Agreement provides that the Company may, at its option, repurchase
shares from individuals who are no longer employees. Such repurchased shares may
be resold to others including replacement personnel at prices equal to or
greater than the repurchase price. Generally, payment for shares repurchased can
be, at the Company's option, in cash or subordinated installment notes, which
are subordinated to all other indebtedness of the Company. Interest on these
notes is payable semi-annually and principal payments are made annually over
varying periods not to exceed ten years. The noncurrent portion of these notes
($49.2 million as of September 27, 1996 and $36.8 million as of September 29,
1995) is included in the consolidated balance sheets as "Other Noncurrent
Liabilities" and the current portion of these notes ($13.4 million as of
September 27, 1996 and $11.3 million as of September 29, 1995) is included in
the consolidated balance sheets as "Accounts Payable."
NOTE 8. COMMITMENTS AND CONTINGENCIES:
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
(in thousands)
Facilities under capital leases $12,489 $10,213
Less-accumulated amortization 9,269 8,211
- --------------------------------------------------------------------------------
$ 3,220 $ 2,002
================================================================================
Rental expense for all operating leases was $128.6 million, $124.2 million and
$121.2 million for fiscal 1996, 1995 and 1994, respectively.
Following is a schedule of the future minimum rental commitments under all
noncancelable leases as of September 27, 1996:
Fiscal Year Operating Capital
- --------------------------------------------------------------------------------
(in thousands)
1997 $128,812 $1,220
1998 73,228 1,088
1999 66,948 837
2000 60,500 691
2001 54,393 255
Subsequent years 151,346 244
- ---------------------------------------------------------------------------
Total minimum rental obligations $535,227 4,335
=====================================================
Less-amount representing interest 665
- ---------------------------------------------------------------------------
Present value of capital leases 3,670
Less-current portion 796
- ---------------------------------------------------------------------------
Noncurrent obligations under capital leases $2,874
===========================================================================
S-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. COMMITMENTS AND CONTINGENCIES: (Continued)
The Company has capital commitments of approximately $34 million at September
27, 1996 in connection with several long-term concession contracts at stadiums
and arenas. The Company is party to certain claims and litigation arising in the
ordinary course of business. The Company believes it has meritorious defenses to
these claims and is of the opinion that adequate reserves have been provided for
the ultimate resolution of these matters.
NOTE 9. ARAMARK SERVICES, INC. AND SUBSIDIARIES:
The following financial information has been summarized from the separate
consolidated financial statements of ARAMARK Services, Inc. (a wholly owned
subsidiary of ARAMARK Corporation) and the subsidiaries which it currently owns.
ARAMARK Services, Inc. is the borrower under the Credit Agreement and certain
other senior debt described in Note 4 and incurs the interest expense
thereunder. This interest expense is only partially allocated to all of the
other subsidiaries of ARAMARK Corporation.
1996 1995 1994
------------- ------------ ----------
(in thousands)
Revenues $3,200,388 $2,975,397 $2,763,098
Cost of services provided 3,024,136 2,808,554 2,594,291
Net income 15,503 14,749 18,677
1996 1995
------------ -------------
(in thousands)
Current assets $ 395,243 $ 366,370
Noncurrent assets 1,630,023 1,545,474
Current liabilities 495,147 435,289
Noncurrent liabilities 1,419,648 1,377,799
S-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. QUARTERLY RESULTS (Unaudited):
The following table summarizes quarterly financial data for
fiscal 1996 and 1995:
<TABLE>
<CAPTION>
Fiscal Quarter
-------------------------------------------------------
1996 First Second Third Fourth Year
- ----------------------------------------------------------------------------------------------------------------
(in thousands, except earnings per share)
<S> <C> <C> <C> <C> <C>
Revenues $1,549,374 $1,464,626 $1,546,296 $1,562,204 $6,122,500
Cost of services provided 1,413,632 1,343,275 1,407,732 1,400,399 5,565,038
Income before extraordinary item 24,989 15,299 29,805 42,135 112,228
Extraordinary item (1) -- 1,589 1,169 -- 2,758
Net income 24,989 13,710 28,636 42,135 109,470
Earnings per share:
Income before extraordinary item $.52 $.32 $.64 $.92 $2.37
Net income $.52 $.28 $.61 $.92 $2.31
Fiscal Quarter
-------------------------------------------------------
1995 First(2) Second Third(3) Fourth Year
- ----------------------------------------------------------------------------------------------------------------
(in thousands, except earnings per share)
Revenues $1,380,516 $1,364,518 $1,423,824 $1,431,787 $5,600,645
Cost of services provided 1,264,665 1,255,607 1,290,258 1,283,649 5,094,179
Income before extraordinary item 20,753 13,350 28,057 38,029 100,189
Extraordinary item (1) -- -- 6,686 -- 6,686
Net income 20,753 13,350 21,371 38,029 93,503
Earnings per share:
Income before extraordinary item $.42 $.26 $.56 $.77 $2.01
Net income $.42 $.26 $.43 $.77 $1.88
</TABLE>
(1) See Note 3.
(2) Fiscal 1995 first quarter results were adversely impacted by the National
Hockey League strike (see Note 11).
(3) Fiscal 1995 third quarter results were adversely impacted by the Major
League Baseball strike (see Note 11).
In the first and second fiscal quarters, within the Food and Support Services
segment there is a lower level of activity at the higher margin leisure and
recreational food service operations which is partly offset by increased
activity in the educational market. In addition, there is a seasonal increase in
volume of directly marketed work clothing during the first quarter. Whereas in
the third and fourth fiscal quarters, there is a significant increase at leisure
and recreational accounts which is partially offset by the effect of summer
closings in the educational market.
S-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. BUSINESS SEGMENTS:
The Company provides or manages services in the following business segments:
Food and Support Services - Food, refreshment, specialized dietary and support
services, including maintenance and housekeeping, provided to business,
educational, governmental and medical institutions and in recreational and other
facilities serving the general public. Fiscal 1994 operating income includes a
$5.8 million gain on the sale of stock of an affiliate as described in Note 2.
The 1995 and 1994 segment operating results were adversely impacted by the Major
League Baseball strike in the U.S. and Canada. Additionally, the fiscal 1995
segment operating results were adversely impacted by the National Hockey League
strike in the U.S. and Canada and a decrease in average attendance at Major
League Baseball games subsequent to the resumption of the season in April 1995.
Had the hockey strike and baseball situation not occurred, it is estimated that
segment reported results for revenues and operating income would have been
approximately 2% and 10% greater in fiscal 1995, and 2% and 6% greater in fiscal
1994, respectively. Also, total Company operating income and income before
extraordinary items would have been approximately 5% and 8% higher in fiscal
1995, and 3% and 5% higher in fiscal 1994, respectively.
Uniform Services - Rental of personalized work apparel and linens for business
and institutions on a contract basis and the direct marketing of work clothing,
safety equipment and accessories. Fiscal 1996 operating income includes the $37
million gain on the sale of a division and charges of $5 million related to
changes in estimates regarding asset realization and environmental matters (see
Note 2); excluding the impact of these items as well as the impact of the
operating results of the 1996 divestiture the increase in segment operating
income was approximately 16%. The impact on revenues was not material. The
acquisition for $95 million consummated in the fourth quarter of fiscal 1996
discussed in Note 2 is included in the identifiable asset disclosure in fiscal
1996.
Health and Education - General management of child care centers, and specialized
services to emergency rooms, and other hospital specialties, and medical
services to correctional institutions. Fiscal 1996 operating income includes
additional charges of approximately $13 million for insurance claims and real
estate exposures (see Note 2). Fiscal 1995 segment operating income is lower
than 1994 primarily due to an increase in insurance reserves, reflecting a
refinement in the claims estimation methodology.
Distributive - Wholesale distribution of magazines and other published materials
to retail locations patronized by the general public. In fiscal 1996, the
Distributive Segment operating results were severely impacted by higher
operating costs related to servicing new customers and reduced margins resulting
from increased competition and consolidation in the magazine wholesale
distribution industry.
Revenues by segment are substantially comprised of services to unaffiliated
customers and clients. Operating income reflects expenses directly related to
individual segments plus an allocation of expenses applicable to more than one
segment. General corporate expenses include expenses not specifically
identifiable with an individual segment. The increase in fiscal 1996 General
Corporate expenses is due primarily to reserves established for asset
realization, legal and other matters (see Note 2). Direct selling expenses are
approximately 1% of revenues for fiscal 1996, 1995 and 1994. Corporate assets
consist principally of goodwill not allocable to any individual segment and
other noncurrent assets.
S-23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. BUSINESS SEGMENTS: (Continued)
<TABLE>
<CAPTION>
Revenues Operating Income
--------------------------------------- --------------------------------------
1996 1995 1994 1996 1995 1994
---------- ---------- ---------- ---------- ---------- -------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Food and Support
Services $3,816.0 $3,521.2 $3,274.3 $174.2 $146.4 $138.4
Uniform Services 1,049.2 893.4 810.5 144.2 102.6 96.0
Health and Education 781.0 742.9 673.3 28.1 28.5 37.2
Distributive 476.3 443.1 403.5 (5.6) 27.4 26.5
--------- -------- -------- ----- ----- -----
Total $6,122.5 $5,600.6 $5,161.6 340.9 304.9 298.1
========= ======== ========
General Corporate and Other Expenses (45.7) (27.9) (30.8)
----- ----- ----
Operating Income 295.2 277.0 267.3
Gain on Issuance of Stock by an Affiliate - - 4.7
Interest Expense, net (116.0) (109.4) (108.5)
------- -------- -------
Income Before Income Taxes, Minority Interest,
Extraordinary Item, and Accounting Change $179.2 $167.6 $163.5
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Depreciation Capital
and Amortization Expenditures
--------------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994
------ ------ ------ ------ ------ -----
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Food and Support
Services $ 96.5 $ 89.7 $ 85.5 $ 99.5 $128.2 $ 83.2
Uniform Services 52.2 40.7 36.3 54.7 66.7 39.9
Health and Education 19.6 18.2 16.5 39.2 26.6 18.4
Distributive 8.3 3.5 2.3 4.6 3.9 2.0
------ ------- ------- ------ ------ -------
176.6 152.1 140.6 198.0 225.4 143.5
Corporate 6.2 4.8 3.2 1.0 4.3 3.0
------ ------- ------- ------ ------ -------
$182.8 $156.9 $ 143.8 $199.0 $229.7 $ 146.5
====== ======= ======= ====== ====== =======
Identifiable Assets
-----------------------------------------
1996 1995 1994
--------- ---------- --------
(in millions)
Food and Support
Services $1,286.4 $1,264.5 $1,085.7
Uniform Services 986.8 891.2 608.7
Health and Education 308.3 272.0 280.2
Distributive 174.1 131.5 74.2
-------- -------- --------
2,755.6 2,559.2 2,048.8
Corporate 75.2 84.1 73.2
-------- -------- --------
$2,830.8 $2,643.3 $2,122.0
======== ======== ========
</TABLE>
Most services are provided in the United States, with operations also being
conducted in Belgium, Canada, the Czech Republic, Germany, Hungary, Japan,
Korea, Mexico, Spain and the United Kingdom. The Company's non-U.S. operations
for each year contributed approximately 15% of total revenues and 8% of total
operating income, and identifiable assets for these operations were
approximately 10% of the total.
S-24
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ARAMARK CORPORATION
BALANCE SHEETS
SEPTEMBER 27, 1996 AND SEPTEMBER 29, 1995
(in thousands)
ASSETS
<TABLE>
<CAPTION>
1996 1995
---------- ---------
<S> <C>
Current Assets:
Receivables $ 1,946 $ 1,261
Inventories 289 292
Prepayments 1,817 1,560
--------- --------
Total current assets 4,052 3,113
--------- --------
Property & Equipment, net 10,819 11,924
Investment in Subsidiaries 838,439 732,156
Notes Receivable from ARAMARK Services, Inc. 100,000 100,000
Other Assets 2,126 10,245
--------- --------
$ 955,436 $857,438
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 17,013 $ 12,546
Accrued expenses 17,289 13,901
--------- --------
Total current liabilities 34,302 26,447
--------- --------
Long-Term Borrowings 161,189 165,414
Other Noncurrent Liabilities 63,172 54,936
Payable to Subsidiaries 381,958 339,297
Common Stock Subject to Potential Repurchase Under
Provisions of Shareholders' Agreement 18,614 19,060
Shareholders' Equity Excluding Common Stock
Subject to Repurchase:
Series C preferred stock, redemption value $1,000 -- 14,965
Class A common stock, par value $.01 20 21
Class B common stock, par value $.01 227 235
Earnings retained for use in the business 309,437 247,805
Cumulative translation adjustment 5,131 8,318
Impact of potential repurchase feature of
common stock (18,614) (19,060)
--------- --------
Total 296,201 252,284
--------- --------
$ 955,436 $857,438
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-25
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)
ARAMARK CORPORATION
STATEMENTS OF INCOME
FOR THE FISCAL YEARS ENDED SEPTEMBER 27, 1996,
SEPTEMBER 29, 1995 AND SEPTEMBER 30, 1994
(in thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- --------
<S> <C> <C> <C>
Equity in Net Income of Subsidiaries $109,470 $ 93,503 $86,079
-------- -------- -------
Management Fee Income 49,677 56,360 67,571
-------- -------- -------
General and Administrative Expenses 39,425 39,322 45,808
-------- -------- -------
Interest (Income) Expense -
Intercompany interest income (8,477) (16,532) (38,778)
Interest expense 18,729 25,916 47,746
-------- -------- -------
Interest Expense, net 10,252 9,384 8,968
-------- -------- -------
Income before income taxes 109,470 101,157 98,874
Provision for Income Taxes -- 3,062 5,118
-------- -------- -------
Income Before Extraordinary Item 109,470 98,095 93,756
Extraordinary Item Due to Early Extinguishments
of Debt (net of income taxes $3,062 in 1995 and
$5,118 in 1994) -- 4,592 7,677
-------- -------- -------
Net income $109,470 $ 93,503 $86,079
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-26
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)
ARAMARK CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED SEPTEMBER 27, 1996,
SEPTEMBER 29, 1995 AND SEPTEMBER 30, 1994
(in thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 109,470 $ 93,503 $ 86,079
Equity in net income of subsidiaries (109,470) (93,503) (86,079)
Extraordinary item -- 4,592 7,677
Other, primarily noncash working capital 445 (22,264) (8,408)
--------- --------- --------
Net cash provided by (used in) operating activities 445 (17,672) (731)
--------- --------- --------
Cash flows from investing activities:
Purchases of property and equipment (968) (4,258) (3,023)
Other 3,474 119 2,072
--------- --------- --------
Net cash provided by (used in) investing activities 2,506 (4,139) (951)
--------- --------- --------
Cash flows from financing activities:
Payment of long-term borrowings including
premiums (4,225) (131,250) (194,694)
Change in notes receivable from
ARAMARK Services, Inc. -- 125,000 175,000
Change in intercompany payable to
subsidiaries 49,600 47,811 54,253
Redemption of preferred stock (6,359) (1,984) (17,647)
Proceeds from issuance of common stock 13,949 9,718 12,416
Repurchase of common stock (54,849) (26,435) (25,729)
Payment of preferred stock dividend (1,067) (1,049) (1,917)
--------- ---------- --------
Net cash provided by (used in) financing activities (2,951) 21,811 1,682
--------- ---------- --------
Change in cash $ -- $ -- $ --
========= ========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-27
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)
ARAMARK CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1.
These statements should be read in conjunction with the Company's
consolidated financial statements and notes thereto beginning on page S-4.
Property and equipment are stated at cost and are depreciated over
their estimated useful lives on a straight-line basis.
Other noncurrent liabilities consist primarily of deferred
compensation and subordinated installment notes arising from repurchases of
common stock.
Note 2.
The Company has guaranteed certain obligations of ARAMARK Services,
Inc., its wholly-owned subsidiary, primarily those incurred pursuant to the
Credit Agreement borrowings. See Note 4 to the Company's consolidated financial
statements. Total guarantees were $1.2 billion on September 27, 1996.
S-28
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS ENDED SEPTEMBER 27, 1996,
SEPTEMBER 29, 1995 AND SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Additions Reductions
-------------------------- ------------------------------
Balance, Acquisition Divestiture Deductions Balance,
Beginning of of Charged to of from End of
Description Fiscal Year Businesses Income Businesses Reserves (1) Fiscal Year
- ----------- ------------ ----------- ---------- ---------- ---------- -----------
- - - - - - - - - - - - - - - - - - (in thousands) - - - - - - - - - - - - - - - - - - -
<S> <C> <C> <C> <C> <C> <C>
Fiscal Year 1996
Reserve for doubtful accounts,
advances & current notes receivable $15,996 $209 $6,875 $ - $6,729 $16,351
======= ==== ====== ========== ====== =======
Fiscal Year 1995
Reserve for doubtful accounts,
advances & current notes receivable $12,423 $3,828 $6,357 $ - $6,612 $15,996
======= ====== ====== ========== ====== =======
Fiscal Year 1994
Reserve for doubtful accounts,
advances & current notes receivable $10,242 $1,288 $6,141 $ - $5,248 $12,423
======= ====== ====== ========= ====== =======
</TABLE>
(1) Allowances granted and amounts determined not to be collectible.
S-29
<PAGE>
INDEX TO EXHIBITS
3.1 Restated Certificate of Incorporation is incorporated by reference
to the Company's quarterly report on Form 10-Q for the fiscal
quarter ended December 29, 1995.
3.2 Corporate By-laws, as amended, are incorporated by reference to the
Company's Registration Statement on Form S-8 (No. 33-14365).
4.1 Amended and Restated Stockholders' Agreement.*
4.2 Amended and Restated Registration Rights Agreement is
incorporated by reference to the Company's quarterly
report on Form 10-Q for the fiscal quarter ended April 1,
1988.
Long-term debt instruments authorizing debt which does not
exceed 10% of the total consolidated assets of the Company
are not filed herewithin but will be furnished on request
of the Commission.
10.1 Restated Employment Agreement dated November 13, 1991 with
Joseph Neubauer is incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year
ended September 27, 1991.
10.2 Agreement relating to employment and post-employment competition
dated October 1, 1991 with Julian L. Carr, Jr., *
10.3 Agreement relating to employment and post-employment
competition dated May 6, 1986 with James E. Ksansnak is
incorporated by reference to the Company's Annual Report
on Form 10-K for the fiscal year ended September 29, 1989.
10.4 Agreement relating to employment and post-employment
competition dated October 4, 1991 with William Leonard is
incorporated by reference to the Company's Annual Report
on Form 10-K for the fiscal year ended October 1, 1993.
10.5 Agreement relating to employment and post-employment
competition dated December 19, 1983 with Martin W. Spector
is incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended September
29, 1989.
10.6 Agreement relating to employment and post-employment competition
dated June 7, 1993 with L. Frederick Sutherland.
10.7 Agreement relating to employment and post-employment competition
dated July 1, 1996 with Barbara A. Austell.
10.8 Credit and Guaranty Agreement dated as of May 29, 1996.
11 Computation of Earnings Per Share.
12 Ratio of Earnings to Fixed Charges.
21 Subsidiaries of Registrant.
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Ernst & Young, Chartered Accountants.
24 Powers of Attorney.
27 Financial Data Schedule.
*Incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994.
<PAGE>
EXHIBIT 10.6
AGREEMENT RELATING TO EMPLOYMENT AND
POST-EMPLOYMENT COMPETITION*
This Agreement is between the undersigned individual ("Employee") and ARA
Services, Inc. ("ARA").
RECITALS:
---------
A. ARA is a service management company which provides a variety of
services to business and industry, private and public institutions, and the
general public primarily in the following markets: food and refreshment
services; health care; child care, periodical distribution, uniform rental and
maintenance.
B. ARA has a proprietary interest in its business methods and systems
("Systems") which include, but are not limited to, policy and procedure manuals,
computer programs, financial forms and information, supplier information,
recipes, accounting forms and procedures, personnel policies and information on
the needs of clients, all of which information is not publicly disclosed and is
considered by ARA to be confidential trade secrets; and
C. ARA intends to employ Employee in a position where Employee will
have access to information relating to ARA's Systems and ARA will encourage
Employee to develop personal relationships with ARA's clients and prospective
clients; and
D. ARA will be vulnerable to unfair post-employment competition by
Employee since Employee will have access to ARA Systems and will have a personal
relationship with ARA's clients and prospective clients; and
E. In consideration of the severance and other employment benefits
provided for herein, Employee was willing to enter into this Agreement with ARA
as a condition of employment, pursuant to which Employee will limit his right to
compete against ARA following termination of employment for any reason to the
limited extent set forth in this Agreement.
* This Agreement covers individuals in Grade N or Higher.
<PAGE>
NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:
Article 1. NON-DISCLOSURE AGREEMENT: ARA may, pursuant to Employee's employment
hereunder provide and confide to Employee ARA's Systems, techniques and methods
of operation developed at great expense by ARA and which Employee recognizes to
be unique assets of ARA's business. Employee shall not, during or after the term
of employment, directly or indirectly, in any manner utilize or disclose to any
person, firm, corporation, association or other entity, except where required by
law: (a) any such Systems, techniques and methods of operation; (b) any sales
prospects, customer lists, products, research or data of any kind; or (c) any
information relating to strategic plans, sales costs, profits or the financial
condition of ARA or any of its customers or prospective customers, which is not
generally known to the public or recognized as standard practice in the
industries in which ARA shall be engaged.
Article 2. NONCOMPETITION AGREEMENT:
A. Subject to the provisions of Paragraphs B and E, below, Employee,
for a period of two (2) years following termination of his employment, shall
not, without ARA's written permission, directly or indirectly, on Employee's
behalf or on behalf of any other person, firm, corporation, association or other
entity, engage in, or in any way be concerned with or negotiate for, or acquire
or maintain any ownership interest in any business or activity which is the
same, similar to or competitive with that conducted by, engaged in or developed
for later implementation by ARA at any time during the term of Employee's
employment.
B. The provisions set forth in Paragraph A, above, shall apply to (i)
all fifty states and (ii) each foreign country, possession or territory in which
ARA may be engaged in business at the termination of Employee's employment or at
any time within twelve ( 12) months prior thereto; but only if Employee was
directly or indirectly involved or exposed to plans for such business at any
time within twelve (12) months prior to termination.
C. Employee further agrees that Employee shall not for a period of two
years, directly or indirectly, at any time in any manner, induce or attempt to
influence any employees of ARA to terminate their employment with ARA.
D. Employee acknowledges that in the event of any violation by Employee
of the provisions set forth in Article I above or this Article 2, ARA will
sustain serious, irreparable and substantial harm to its business, the extent of
which will be difficult to determine and impossible to remedy by an action at
<PAGE>
law for money damages. Accordingly, Employee agrees that, in the event of such
violation or threatened violation by Employee, ARA shall be entitled to an
injunction before trial from any court of competent jurisdiction as a matter of
course upon the posting of not more than a nominal bond, in addition to all such
other legal and equitable remedies as may be available to ARA. Employee further
agrees that, in the event any of the provisions of this Agreement are determined
by a court of competent jurisdiction to be contrary to any applicable statute,
law or rule, or for any reason unenforceable as written, such court may modify
any of such provisions so as to permit enforcement therefore as thus modified.
E. Notwithstanding anything to the contrary in this Agreement, if ARA
elects to terminate Employee's employment for any reason other than good and
sufficient cause, then, in such event the term of the non-competition provision
set forth in Paragraph A above shall be reduced to the number of months that
Employee is entitled to severance pursuant to the Following Article 4A, below.
Article 3. EXECUTIVE CORPS PROGRAMS: Employee shall be eligible to participate
in the following Executive Corps programs while a member of the Executive Corps
to the extent ARA continues to make such programs available to Executive Corps
members:
o Executive Corps Health Care Plan
o Executive Corps Long Term Disability Insurance
o Survivor Income Protection Plan
o Executive Corps Automobile Program
Such Executive Corps programs may be amended or revoked at any time,
without notice to Employee, in the sole discretion of ARA.
Article 4. SEVERANCE BENEFITS: If Employee is terminated by ARA for any reason
other than good and sufficient cause, Employee shall be entitled to the
following severance benefits:
<PAGE>
A. Severance Pay: Employee shall receive severance payments equivalent
to Employee's base salary rate for the number of months set forth below:
Years of ARA Continuous Service
Completed from Last Hire Date
10 or
2 3 4 5 6 7 8 9 more
- - - - - - - - - ----
9 9 10 11 12 13 14 16 18
Severance payments shall be made in installments in accordance with ARA's normal
payroll cycle.
B. Other Severance Benefits:
(1) Group medical and life insurance coverages shall continue
under then prevailing terms as long as severance payments are being made to
Employee. Deductions for Employee's share of the premiums will be made from
Employee's severance payments. Group medical coverage provided during such
period shall be applied against ARA's obligation to continue group medical
coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"). Upon termination of group medical and life insurance coverages,
Employee may convert, this cost, to individual policies.
(2) Employee's eligibility to receive or participate in all
other benefit and compensation plans, including, but not limited to Management
lncentive Bonus, Long Term Disability, Retirement Savings, and Stock Option
Plans, shall terminate as of the effective date of Employee's termination unless
provided otherwise under the terms of a particular benefit or compensation plan,
provided, however, participation in programs made available solely to Executive
Corps members shall cease as of the effective date of Employee's termination or
the date Employee's Executive Corps membership ceases, whichever should occur
first.
C. Termination for "good and sufficient cause: shall include
termination for such things as fraud or dishonesty, willful failure to perform
assigned duties, willful violation of ARA's Business Conduct Policy, or
intentionally working against the best interest of ARA.
<PAGE>
D. If Employee is terminated by ARA, for reasons other than good and
sufficient cause, Employee will receive severance payments and benefits for the
number of months set forth above in Paragraph A, whether or not Employee
commences other non-competitive employment while he is receiving such payments
and benefits, provided, however, ARA reserves the right to terminate all
severance payments and benefits if Employee violates the covenants set forth in
Article 2, above.
E. ARA expressly reserves the right to revoke or amend, in whole or in
part, the severance provisions set forth in this agreement at any time, for any
reason, provided, however, in the event Employee is terminated for reasons other
than good and sufficient cause subsequent to such revocation or amendment,
Employee shall be entitled to no less than the monthly severance payments which
Employee would have received under this Agreement had he been terminated by ARA
on the date ARA elected to revoke or amend the severance provisions.
F. During any period of disability following termination of Employment,
Employee agrees that disability payments received by him pursuant to health and
accident or disability policies, whether on account of total or partial
disability, shall be credited against the severance payments due him hereunder.
Article 5. TERM OF EMPLOYMENT: Employee acknowledges that ARA has the right to
terminate Employee's employment at any time for any reason whatsoever, provided,
however, that any termination by ARA for reasons other than good and sufficient
cause shall result in the severance benefits described in Article 4, above, to
become due in accordance with the terms of this Agreement. Employee further
acknowledges that the severance payments made and other benefits provided by ARA
are in full satisfaction of any claims that Employee may have against ARA
resulting from ARA's exercise of its right to terminate Employee's employment,
except for those fringe benefits which are intended to survive termination such
as the right to receive payments pursuant to retirement plans and ,similar
rights.
Article 6. MISCELLANEOUS:
A. As used throughout this Agreement, ARA shall include The ARA Group,
Inc., a Delaware corporation, and its subsidiaries and affiliates, or any
corporation, joint venture, or other entity in which The ARA Group Inc. or its
subsidiaries or affiliates has an equity interest in excess of ten percent
(10%).
<PAGE>
B. Reference to the masculine gender shall include the feminine gender.
C. This Agreement shall supersede and substitute for any previous
employment agreement between employee and ARA, and is entered into in
consideration of the mutual undertakings of the parties, the cancellation of all
previous agreements, and the release of the parties of their respective rights
and obligations under any previous employment agreement, excepting only such
rights and obligations which by their nature are intended to survive termination
or cancellation of such employment agreement. In the event Employee's previous
employment agreement provided for a longer severance period than set forth in
this Agreement, then the Employee's right to severance set forth in the previous
employment agreement shall survive, but any payments made shall be credited
against the severance payments otherwise due under the provisions of Article 4A,
hereof.
D. Employee and ARA acknowledge that for purpose of Article 4
Employee's last hire date with ARA is August 27,1980.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed.
/s/ L. Frederick Sutherland
--------------------------------
L. Frederick Sutherland
ARA Services, Inc. ("ARA")
By: /s/ James E. Ksansnak
---------------------------------
James E. Ksansnak
Date: June 7, 1993
<PAGE>
EXHIBIT 10.7
ARAMARK CORPORATION
AGREEMENT RELATING TO EMPLOYMENT AND
POST-EMPLOYMENT COMPETITION
This Agreement is between the undersigned individual, Barbara A. Austell,
("Employee") and ARAMARK CORPORATION ("ARAMARK").
RECITALS
--------
A. ARAMARK is the leading provider of managed services to business and
industry, private and public institutions, and the general public, in the
following business segments: food, leisure and support services; health
and education services; magazine and book services; and uniform services.
B. ARAMARK has a proprietary interest in its business and financial plans and
systems, methods of operation and other secret and confidential
information, knowledge and data ("Proprietary Information") which
includes, but is not limited to, annual and strategic business plans;
financial plans, reports and systems including, profit and loss statements
and other information regarding costs, profits, sales and the financial
condition of ARAMARK and its business units; management development
reviews, including information regarding the capabilities and experience
of ARAMARK employees; information regarding ARAMARK*s relationships with
its clients, customers, and suppliers and prospective clients, customers
and suppliers; and technical data and know-how, including policy and
procedure manuals, computer programs, recipes, accounting forms and
procedures and human resource policies and procedures, all of which
information is not publicly disclosed and is considered by ARAMARK to be
confidential trade secrets.
C. Employee shall be employed as Senior Vice President, Finance and Treasurer
and shall have access to ARAMARK*s Proprietary Information, directly in
the course of Employee*s employment, and indirectly through interaction
with and presentations by other senior managers at the Executive
Leadership Institute, Executive Corps meetings, President*s Council
meetings, Chairman*s Council meetings and the like, and ARAMARK will
encourage Employee to develop personal relationships with ARAMARK*s
clients, prospective clients and suppliers.
-1-
<PAGE>
D. ARAMARK will be vulnerable to unfair post-employment competition by
Employee since Employee will have access to and knowledge of ARAMARK*s
Proprietary Information and will have a personal relationship with
ARAMARK*s clients, prospective clients and suppliers.
E. In consideration of employment, the severance and other post-employment
benefits provided for herein, Employee is willing to enter into this
Agreement with ARAMARK as a condition of employment pursuant to which
Employee will limit Employee*s right to compete against ARAMARK following
termination of employment on the terms set forth in this Agreement.
NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:
ARTICLE 1. TITLE; REPORTING RELATIONSHIP; BASE SALARY; BONUS (including sign-up
bonus); STOCK; AUTOMOBILE; RELOCATION; TERM OF EMPLOYMENT: The terms of the
"Offer Details, Barbara A. Austell" previously sent to Employee which is
attached as EXHIBIT A are incorporated by reference to the same extent as if
those terms were restated in this document in their entirety. However, the Title
and Reporting Relationship may change during the term, provided the Title and
the person to whom Employee reports are comparable to the initial Title and
Reporting Relationship and there is a bona fide reason for such change.
ARTICLE 2. NON-DISCLOSURE AGREEMENT: ARAMARK shall, in the course of employment,
provide and confide to Employee ARAMARK*s Proprietary Information developed at
great expense by ARAMARK and which Employee recognizes to be unique assets of
ARAMARK*s business. Employee shall not, during or after the term of employment,
directly or indirectly, in any manner utilize or disclose to any person, firm,
corporation, association or other entity, except where required by law, any such
Proprietary Information which is not generally known to the public or recognized
as standard practice in the industries in which ARAMARK is engaged.
-2-
<PAGE>
ARTICLE 3. NON-COMPETITION AGREEMENT:
A. Subject to Article 3.B. below, Employee, for a period of two years
following the voluntary or involuntary termination of employment, shall
not, without ARAMARK*s written permission, directly or indirectly, become
employed by (as an employee, consultant or otherwise), or acquire or
maintain any ownership interest in any Business which is similar to or
competitive with that conducted by or developed for later implementation
by ARAMARK at any time during the term of Employee*s employment, provided,
however, if Employee*s employment is involuntarily terminated by ARAMARK
for any reason other than good and sufficient cause, the term of the
non-competition provision set forth herein, will be modified to the longer
of (i) one year, (ii) the number of months Employee receives severance
payments or (iii) the number of months Employee is entitled to receive
severance payments pursuant to Article 6.A. below. For purposes of this
Agreement, "Business" shall be defined as a person, corporation, firm,
partnership, joint venture or other entity.
B. The provision set forth in Article 3.A. above, shall apply to (i) all
fifty states, and (ii) each foreign country, possession or territory in
which ARAMARK may be engaged in business as of the effective date of
termination or at any time during the twelve month period prior thereto.
Further, notwithstanding anything in this Agreement to the contrary,
Article 3.A. above shall not limit Employee*s right to engage in any
business or activity if such business or activity is unrelated to the type
of business or activity conducted by the business segment or segments for
which Employee directly or indirectly provided services during the
twenty-four month period preceding Employee*s effective date of
termination unless Employee otherwise directly or indirectly acquired
knowledge of Proprietary Information for such business segment or segments
at any time during the twenty-four month period preceding Employee*s
-3-
<PAGE>
effective date of termination. By way of example, but not limitation, if
Employee provided services to one of the business units of The ARAMARK
Food and Support Services Group or The ARAMARK Leisure Services Group,
Employee would be precluded during the applicable time period from being
employed by any Business providing food, leisure and support services
(irrespective of the particular ARAMARK business unit that employed
Employee) but Employee would not be precluded from working for a
competitor in the magazine and book distribution business or uniform
rental business, unless Employee had acquired knowledge of Proprietary
Information for ARAMARK*s Magazine and Book Distribution business or
Uniform Rental businesses within twenty-four months prior to termination,
as a result of task force assignments, special projects, attendance at the
Executive Leadership Institute, Executive Corps meetings, President's
Council meetings, Chairman*s Council meetings, and the like.
Further, notwithstanding anything in this Agreement to the contrary,
ARAMARK agrees that if Employee resigns as a result of a material breach
of the obligation that ARAMARK has assumed under this Agreement, (after
being given a reasonable opportunity to cure such breach then (i) the
non-competition provisions set forth in Article 3.A. above shall not apply
and shall be deemed void and (ii) Employee will be entitled to the
severance and post-employment benefits set forth in Article 6.A. below to
the same extent as if Employee were terminated by ARAMARK without cause).
C. Employee acknowledges that enforcement of the provisions set forth in this
Article 3 (will apply only if there is a violation of Article 3.A.) will
not unduly impair Employee*s ability to obtain other employment following
the termination (voluntary or involuntary) of Employee*s employment with
ARAMARK.
ARTICLE 4. NON-SOLICITATION OF EMPLOYEES: Following Termination of Employment
for any reason, Employee shall not for a period of two years, directly or
indirectly, at any time, in any manner, induce or attempt to influence any
-4-
<PAGE>
employees of ARAMARK to terminate their employment with ARAMARK. During the term
of employment, Employee shall not induce or attempt to influence any employee of
ARAMARK to terminate employment with ARAMARK unless Employee, in good faith,
determines that it is in the interest of ARAMARK to do so.
ARTICLE 5. REMEDIES: Employee acknowledges that in the event of any violation by
Employee of the provisions set forth in Articles 1, 2, 3 or 4 above, ARAMARK
could sustain serious, irreparable and substantial harm to its business, the
extent of which could be difficult to determine and impossible to fully remedy
by an action at law for money damages. Accordingly, Employee agrees that, in the
event of such violation or threatened violation by Employee, ARAMARK shall be
entitled to seek an injunction before trial before any court of competent
jurisdiction as a matter of course upon the posting of not more than a nominal
bond, in addition to all such other legal and equitable remedies as may be
available to ARAMARK. If ARAMARK is required to enforce the provisions set forth
in Articles 3 and 3 above by seeking an injunction, Employee agrees that the
relevant time periods set forth in Articles 3 and 4 shall commence with the
entry of the injunction. Employee further agrees that, in the event any of the
provisions of this Agreement are determined by a court of competent jurisdiction
to be contrary to any applicable statute, law or rule, or for any reason
unenforceable as written, such court may modify any such provisions so as to
permit enforcement thereof as modified.
ARTICLE 6. POST-EMPLOYMENT BENEFITS:
A. If Employee is terminated by ARAMARK for any reason other than good and
sufficient cause, Employee shall be entitled to the following
post-employment benefits:
1. Severance Pay: Employee shall receive severance payments equivalent
to Employee*s monthly base salary as of the effective date of
termination for twelve (12) months.
Severance payments shall commence with the Employee*s effective date
of termination and shall be made in accordance with ARAMARK*s normal
payroll cycle. The period during which employee receives severance
payments shall be referred to as the "Severance Pay Period".
-5-
<PAGE>
2. Other Post Employment Benefits:
a. Basic Group medical and life insurance coverages shall continue
under then prevailing terms during the Severance Pay Period.
Employee*s share of the premiums will be deducted from
Employee*s severance payments. Basic Group medical coverage
provided during such period shall be applied against ARAMARK*s
obligation to continue group medical coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"). Upon termination of basic group medical and life
coverages, Employee may convert such coverages to individual
policies to the extent allowable under plan provisions.
b. Employee*s leased vehicle shall be made available to Employee
through the Severance Pay Period at which time Employee has the
option to either purchase the vehicle in accordance with the
Executive Corps plan then in effect or return it to ARAMARK.
c. Employee*s eligibility to receive or participate in all other
benefit and compensation plans, including, but not limited to
the Management Incentive Bonus, Long Term Disability, Stock
Unit Retirement and any stock option or ownership plans, shall
terminate as of the effective date of Employee*s termination
unless provided otherwise under the terms of a particular plan,
provided, however, participation in plans and programs made
available solely to Executive Corps members, including, but not
limited to the Executive Corps Medical Plan, shall cease as of
the effective date of termination or the date Employee*s
Executive Corps membership ceases, whichever occurs first.
Employee, however, shall have certain rights to continue the
Executive Corps Medical Plan under COBRA.
B. Termination for "Good and Sufficient Cause" shall be defined as
termination for such things as material fraud or illegal activity,
repeated willful failure to perform assigned duties, willful violation of
a material provision of ARAMARK*s Business Conduct Policy, or
intentionally working against the best interest of ARAMARK in a manner
which could result in significant economic harm to ARAMARK.
-6-
<PAGE>
C. If Employee is terminated by ARAMARK for reasons other than Good and
Sufficient cause, Employee will receive the severance payments and other
post-employment benefits during the Severance Pay Period even if Employee
commences other employment during such period provided such employment
does not violate the terms of Articles 3 or 4. Employee shall not be under
any obligation to seek any employment.
D. ARAMARK reserves the right to terminate all severance payments and other
post-employment benefits if Employee violates the covenants set forth in
Articles 2, 3 and 4 above.
E. ARAMARK expressly reserves the rights to revoke or amend, in whole or in
part, the severance provisions set forth in this agreement at any time,
for any reason, provided, however, in the event Employee is terminated for
reasons other than Good and Sufficient cause subsequent to such revocation
or amendment, Employee shall be entitled to no less than the monthly
severance payments which Employee would have received under this Agreement
had he been terminated by ARAMARK on the date ARAMARK elected to revoke or
amend the severance provisions.
ARTICLE 7. TERM OF EMPLOYMENT: ARAMARK agrees to employ Employee for an initial
term of two years as set forth in EXHIBIT A hereof after which Employee
acknowledges that ARAMARK shall have the right to terminate Employee*s
employment at any time for any reason whatsoever, provided, however, that any
termination by ARAMARK after the initial two year term of employment, for
reasons other than good and sufficient cause, shall result in the severance and
the post-employment benefits described in Article 6 above, to become due in
accordance with the terms of this Agreement subject to the conditions set forth
in this Agreement. Employee further acknowledges that the severance payments
made and other benefits provided by ARAMARK are in full satisfaction of any
obligations ARAMARK may have resulting from ARAMARK*s exercise of its right to
terminate Employee*s employment, except for those obligations which are intended
to survive termination such as the payments to be made pursuant to retirement
plans and conversion of insurance.
-7-
<PAGE>
ARTICLE 8. MISCELLANEOUS:
A. As used throughout this Agreement, ARAMARK includes ARAMARK CORPORATION
and its subsidiaries and affiliates or any corporation, joint venture, or
other entity in which ARAMARK CORPORATION or its subsidiaries or
affiliates has an equity interest in excess of ten percent (10%).
B. This Agreement shall supersede and substitute for any previous
post-employment or severance agreement between Employee and ARAMARK, and
is entered into in consideration of the mutual undertakings of the parties
and the cancellation of all previous agreements.
C. The terms of this Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
D. Any dispute hereunder (except for disputes relating to alleged breaches of
Articles 3 and 4) shall be exclusively resolved by arbitration in
Philadelphia, Pennsylvania in accordance with the rules of the American
Arbitration Association, the award of the Arbitrator shall be final and
binding on both parties and a judgment for the award may be entered in any
court having jurisdiction thereof.
E. Employee shall be entitled to coverage under ARAMARK's then existing
Director and Officers policies in effect from time to tome to the extent
such policies cover other officers of ARAMARK and Employee shall be
entitled to be indemnified and held harmless to the maximum extent set
forth in the then existing ARAMARK Corporate Governance documents
applicable to its officers and employees.
-8-
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound, the parties
hereto have caused this Agreement to be signed.
Date: July 1, 1996 ARAMARK CORPORATION
By: /s/ Brian G. Mulvaney
----------------------------
Brian G. Mulvaney
By: /s/ Barbara A. Austell
----------------------------
Barbara A. Austell
-9-
<PAGE>
EXHIBIT "A"
OFFER DETAILS
BARBARA A. AUSTELL
===============================================================================
Title: Senior Vice President, Finance and Treasurer
Corporate Officer
Executive Corps Member
Reports To: James E. Ksansnak, Executive Vice President, CFO
Base Salary: $250,000
Bonus: $ 95,300 Guideline
$100,000 Guarantee First Year
One-time $300,000 with Option to Defer
Sign On Bonus:
Stock: 50,000 Shares - Installment Stock Purchase Opportunity
125,000 Shares - Cumulative Stock Purchase Opportunity
Car: Per Policy
Relocation: Full relocation, third party assistance if necessary
Employment
Agreement We will provide you with an Employment Agreement for a
two year period.
<PAGE>
[CONFORMED COPY]
$1,000,000,000
CREDIT AND GUARANTY AGREEMENT
dated as of
May 29, 1996
among
ARAMARK SERVICES, INC.,
as Borrower
ARAMARK CORPORATION
as Parent Guarantor
THE BANKS LISTED HEREIN
and
CHEMICAL BANK
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agents
<PAGE>
TABLE OF CONTENTS*
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.......................................... 1
SECTION 1.02. Accounting Terms and Determinations.................. 16
SECTION 1.03. Types of Borrowings.................................. 17
ARTICLE II
THE LOANS
SECTION 2.01. Commitments to Lend.................................. 17
SECTION 2.02. Notice of Committed Borrowings....................... 18
SECTION 2.03. Money Market Borrowings.............................. 19
SECTION 2.04. Swingline Advances................................... 21
SECTION 2.05. Notice to Banks; Funding of Loans.................... 22
SECTION 2.06. Maturity of Loans.................................... 23
SECTION 2.07. Notes................................................ 23
SECTION 2.08. Interest............................................. 24
SECTION 2.09. Facility Fees........................................ 30
SECTION 2.10. Reduction of Commitments............................. 30
SECTION 2.11. Mandatory Termination of Commitments................. 32
SECTION 2.12. Optional Prepayments................................. 32
SECTION 2.13. Payments............................................. 32
SECTION 2.14. Funding Losses....................................... 33
SECTION 2.15. Withholding Tax Exemption............................ 34
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness........................................ 34
SECTION 3.02. Conditions to Borrowing.............................. 36
SECTION 3.03. Representation by Borrower........................... 37
SECTION 3.04. Transitional Provisions.............................. 37
- --------
*The Table of Contents is not a part of this Agreement.
i
<PAGE>
Page
----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power........................ 38
SECTION 4.02. Corporate and Governmental Authori-
zation; No Contravention........................... 38
SECTION 4.03. Binding Effect....................................... 39
SECTION 4.04. Financial Information................................ 39
SECTION 4.05. Litigation........................................... 39
SECTION 4.06. Compliance with ERISA................................ 40
SECTION 4.07. Environmental Matters................................ 40
SECTION 4.08. Taxes................................................ 40
SECTION 4.09. Compliance with Laws................................. 41
SECTION 4.10. Not an Investment Company............................ 41
SECTION 4.11. Full Disclosure...................................... 41
ARTICLE V
COVENANTS
SECTION 5.01. Information.......................................... 41
SECTION 5.02. Payment of Obligations............................... 44
SECTION 5.03. Maintenance of Property; Insurance................... 44
SECTION 5.04. Conduct of Business and Maintenance
of Existence....................................... 45
SECTION 5.05. Inspection of Property, Books and
Records............................................ 45
SECTION 5.06. Maintenance of Stock of Borrower..................... 46
SECTION 5.07. Negative Pledge...................................... 46
SECTION 5.08. Consolidations, Mergers and Sales of
Assets............................................. 47
SECTION 5.09. Fixed Charge Coverage................................ 47
SECTION 5.10. Debt Coverage........................................ 47
SECTION 5.11. Minimum Consolidated Net Worth....................... 48
SECTION 5.12. Transactions with Affiliates......................... 48
SECTION 5.13. Use of Proceeds...................................... 48
SECTION 5.14. Restricted Payments.................................. 48
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default.................................... 49
SECTION 6.02. Notice of Default.................................... 52
ii
<PAGE>
Page
----
ARTICLE VII
THE AGENTS
SECTION 7.01. Appointment and Authorization........................ 52
SECTION 7.02. Agents and Affiliates................................ 52
SECTION 7.03. Action by Agents..................................... 53
SECTION 7.04. Consultation with Experts............................ 53
SECTION 7.05. Liability of Agents.................................. 53
SECTION 7.06. Indemnification...................................... 53
SECTION 7.07. Credit Decision...................................... 54
SECTION 7.08. Agency Fees.......................................... 54
SECTION 7.09. Successor Agents..................................... 54
ARTICLE VIII
CHANGES IN CIRCUMSTANCES
AFFECTING FIXED RATE LOANS
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair............................... 54
SECTION 8.02. Illegality........................................... 55
SECTION 8.03. Increased Cost....................................... 56
SECTION 8.04. Base Rate Loans Substituted for
Affected Fixed Rate Loans.......................... 58
ARTICLE IX
GUARANTEE
SECTION 9.01. The Guarantee........................................ 59
SECTION 9.02. Guarantee Unconditional.............................. 59
SECTION 9.03. Discharge Only Upon Payment in Full;
Reinstatement in Certain
Circumstances...................................... 60
SECTION 9.04. Waiver............................................... 60
SECTION 9.05. Subrogation and Contribution......................... 61
SECTION 9.06. Stay of Acceleration................................. 61
ARTICLE X
JUDICIAL PROCEEDINGS
SECTION 10.01. Consent to Jurisdiction............................. 61
SECTION 10.02. Enforcement of Judgments............................ 61
SECTION 10.03. Service of Process.................................. 62
SECTION 10.04. No Limitation on Service or Suit.................... 62
iii
<PAGE>
Page
----
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices............................................. 62
SECTION 11.02. No Waiver........................................... 63
SECTION 11.03. Expenses; Documentary Taxes;
Indemnification for Litigation.................... 63
SECTION 11.04. Amendments and Waivers.............................. 63
SECTION 11.05. Sharing of Set-Offs................................. 64
SECTION 11.06. New York Law........................................ 65
SECTION 11.07. Successors and Assigns.............................. 65
SECTION 11.08. Collateral.......................................... 66
SECTION 11.09. Counterparts........................................ 66
SECTION 11.10. WAIVER OF JURY TRIAL................................ 67
iv
<PAGE>
Exhibit A - Note
Exhibit B - Opinion of Counsel of the
Borrower and the Parent Guarantor
Exhibit C - Opinion of Special Counsel for the Agents
Exhibit D - Subsidiary Guaranty Agreement
Exhibit E - Management Equity Note
Exhibit F - Invitation for Money Market Quotes
Exhibit G - Money Market Quote
v
<PAGE>
CREDIT AND GUARANTY AGREEMENT
AGREEMENT dated as of May 29, 1996 (the "Agreement") among
ARAMARK SERVICES, INC., a Delaware corporation (the "Borrower"), ARAMARK
CORPORATION, a Delaware corporation (the "Parent Guarantor"), the BANKS party
hereto and CHEMICAL BANK and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agents.
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Adjusted CD Rate" has the meaning set forth in Section
2.08(c).
"Administrative Agent" means Chemical Bank, in its capacity as
administrative agent for the Banks hereunder, and its successors in such
capacity.
"Administrative Questionnaire" means, with respect to each
Bank, an administrative questionnaire in the form requested by the
Administrative Agent that is submitted to the Administrative Agent (with a copy
to the other Agent and the Borrower) duly completed by such Bank.
"Affiliate" means any Person (other than the Parent Guarantor
or a Subsidiary) which controls, is controlled by or is under common control
with the Parent Guarantor. As used herein, the term "control" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agents" means Chemical Bank and Morgan Guaranty Trust Company
of New York, in their respective capacities as agents for the Banks hereunder,
including, in the case of the Administrative Agent, its administrative
capacities hereunder.
"Assessment Rate" has the meaning set forth in Section
2.08(c).
<PAGE>
"Bank" means each bank listed on the signature pages hereof as
having a Commitment, and (subject to Section 11.07) its successors and assigns,
and "Banks" means all of the foregoing.
"Base Overdue Interest Rate" has the meaning set
forth in Section 2.08(b).
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means a Committed Loan made or to be made by
a Bank as a Base Rate Loan in accordance with the applicable Notice of Committed
Borrowing or pursuant to Article VIII.
"Benefit Arrangement" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrowing" has the meaning set forth in Section 1.03.
"Capital Lease" means a lease that would be capitalized on a
balance sheet of the lessee prepared in accordance with generally accepted
accounting principles.
"CD Base Rate" has the meaning set forth in Section 2.08(c).
"CD Loan" means a Committed Loan made or to be made by a Bank
as a CD Loan in accordance with the applicable Notice of Committed Borrowing.
"CD Reference Banks" means Morgan Guaranty Trust
Company of New York, Chemical Bank and CoreStates Bank, N.A.
"Chemical Bank" means Chemical Bank and its successors.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute.
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages hereof (or, in the
case of an Assignee, the portion of the transferor Bank's Commitment assigned to
such Assignee pursuant to Section 11.07), in each case, as such amount may be
reduced from time to time pursuant to Section
2
<PAGE>
2.10 or changed as a result of an assignment pursuant to Section 11.07.
"Committed Loan" means a loan made or to be made by a Bank
pursuant to Section 2.01.
"Common Stock" means the Common Stock, par value $.01 per
share, of the Parent Guarantor.
"Consolidated Cash Flow Available for Fixed Charges" means for
any period EBITDA for such period, plus the excess (if any) of (x) the aggregate
amounts deducted in determining Consolidated Net Income for such period in
respect of rental expense over (y) the aggregate amounts included in determining
such Consolidated Net Income in respect of rental income (excluding any portion
of such rental expense or rental income in respect of leases having a term of
one year or less or in respect of Capital Leases).
"Consolidated Fixed Charges" means for any period (the
"Applicable Period") the sum of, without duplication, (i) the Consolidated
Interest Charges accrued in the Applicable Period, (ii) the excess (if any) of
(x) the aggregate amounts deducted in determining Consolidated Net Income for
the Applicable Period in respect of rental expense over (y) the aggregate
amounts included in determining such Consolidated Net Income in respect of
rental income (excluding any portion of such rental expense or rental income in
respect of leases having a term of one year or less or in respect of Capital
Leases) and (iii) the aggregate amount of dividends accrued in the Applicable
Period in respect of Series Preferred Stock.
"Consolidated Interest Charges" means for any period the
aggregate interest expense (net of interest income) of the Parent Guarantor and
its Consolidated Subsidiaries for such period including, without limitation, (i)
the portion of any obligation under Capital Leases allocable to interest expense
in accordance with generally accepted accounting principles, and (ii) the
portion of any debt discount or premium arising at issuance of such debt that
shall be amortized in such period.
"Consolidated Net Income" means for any period the
consolidated net income of the Parent Guarantor and its Consolidated
Subsidiaries for such period.
"Consolidated Net Worth" means at any date (the "Date of
Determination") without duplication (i) the consolidated shareholders' equity
(exclusive of the cumulative foreign currency translation adjustment as
determined in accordance with generally accepted accounting principles) of the
Parent Guarantor and its Consolidated Subsidiaries as of
3
<PAGE>
the Date of Determination plus (ii) the principal amount of all Management
Equity Notes outstanding on the Date of Determination. For purposes of this
definition, consolidated shareholders' equity includes Common Stock subject to
potential repurchase pursuant to the Stockholders' Agreement, as reflected in
the consolidated financial statements of the Parent Guarantor and its
Consolidated Subsidiaries.
"Consolidated Subsidiary" means, at any date with respect to
any Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in the consolidated financial statements
of such Person as of such date.
"Consolidated Tangible Assets" means at any date the
consolidated assets of the Parent Guarantor and its Consolidated Subsidiaries
determined as of such date less their consolidated goodwill, all determined as
of such date.
"Contingent Liability" means any quantifiable obligation or
liability which is of a type required to be disclosed as a contingent liability
in the consolidated financial statements of the Parent Guarantor and its
Consolidated Subsidiaries in accordance with generally accepted accounting
principles; provided that Guarantees constitute Debt and not Contingent
Liabilities.
"Credit" means any Loan or Swingline Advance.
"Debt" of any Person means, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under Capital Leases,
(v) all obligations of such Person to purchase securities which arise out of or
in connection with the sale of the same or substantially similar securities,
(vi) all noncontingent obligations (and, for purposes of Section 5.07, all
contingent obligations) of such Person to reimburse any other Person for amounts
which have been drawn under a letter of credit or similar instrument, (vii) all
Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person (such Debt to have a principal amount, for
purposes of determinations under this Agreement, not exceeding the net
unencumbered carrying value of such asset under generally accepted accounting
principles), and (viii) all Debt of others Guaranteed by such Person (such Debt
to have a principal amount, for purposes of determinations under this Agreement,
4
<PAGE>
not exceeding the portion of such Debt Guaranteed by such Person).
"Default" means any condition or event that constitutes an
Event of Default or that with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations
of such Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"Disposition" means the sale, assignment, transfer or other
disposition by any Person of any asset or assets in a transaction or series of
related transactions.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City (or, when used
with reference to any Swingline Advance, in the city in which the lending Bank
is located) are authorized or required by law to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Borrower and the Administrative Agent; provided
that any Bank may so designate separate Domestic Lending Offices for its Base
Rate Loans, on the one hand, and its CD Loans, on the other hand, in which case
all references herein to the Domestic Lending Office of such Bank shall be
deemed to refer to either or both of such offices, as the context may require.
"Domestic Loan" means a CD Loan or a Base Rate Loan.
"Domestic Reserve Percentage" has the meaning set forth in
Section 2.08(c).
"EBITDA" means for any period Consolidated Net Income for such
period, excluding therefrom any extraordinary items of gain or loss, plus the
aggregate amounts deducted in determining Consolidated Net Income for such
period in respect
5
<PAGE>
of (i) income taxes, (ii) Consolidated Interest Charges and (iii) depreciation,
amortization and other similar non-cash charges. If the period for which EBITDA
is calculated includes a date on which the Parent Guarantor or any of its
Consolidated Subsidiaries made a Major Asset Acquisition or Major Asset Sale,
then EBITDA for such period shall be calculated on a pro forma basis as if such
acquisition or sale had occurred on the first day thereof.
"Effective Date" means the date this Agreement becomes
effective in accordance with Section 3.01.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, the Parent Guarantor and any
other Subsidiary and all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under common control which,
together with the Borrower, the Parent Guarantor or any other Subsidiary, are
treated as a single employer under Section 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative Questionnaire
as its Euro-Dollar Lending Office) or such other office, branch or affiliate of
such Bank as it may hereafter designate as its Euro-Dollar Lending Office by
notice to the Borrower and the Administrative Agent.
6
<PAGE>
"Euro-Dollar Loan" means a Committed Loan made or to be made
as a Euro-Dollar Loan pursuant to the applicable Notice of Committed Borrowing.
"Euro-Dollar Overdue Interest Rate" means a rate of interest
determined pursuant to Section 2.08(f).
"Euro-Dollar Reference Banks" means the principal
London offices of Morgan Guaranty Trust Company of New York,
Chemical Bank and CoreStates Bank, N.A.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor), for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Bank to United States residents).
"Events of Default" has the meaning set forth in Section 6.01.
"Excess Contingent Liabilities" means at any time all
Contingent Liabilities of the Parent Guarantor and its Subsidiaries other than:
(a) surety or fidelity bonds or letters of credit issued on
behalf of the Parent Guarantor or any of its Subsidiaries issued in the
normal course of business of the Parent Guarantor or such Subsidiary,
as the case may be; and
(b) other Contingent Liabilities in an aggregate amount not
exceeding $100,000,000.
"Excess Secured Debt" means secured Debt other than Debt
secured by Liens permitted pursuant to clauses (a) through (g) of Section 5.07.
"Existing Credit Agreement" means the Amended and Restated
Credit and Guaranty Agreement dated as of March 12, 1993 among the Borrower
(formerly named ARA Services, Inc.), the Parent Guarantor (formerly named The
ARA Group, Inc.), the banks party thereto and Chemical Bank and Morgan Guaranty
Trust Company of New York, as agents, as in effect immediately prior to the
effectiveness of this Agreement.
7
<PAGE>
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Domestic Business Day as so published on
the next succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to Chemical Bank on such day on
such transactions as determined by the Administrative Agent.
"Financing Documents" means this Agreement, the Notes and the
Subsidiary Guaranty Agreement.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or
Money Market Loans or any combination of the foregoing.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic
or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Interest Period" means:
(1) with respect to each Euro-Dollar Borrowing, the
period commencing on the date of such Euro-Dollar
8
<PAGE>
Borrowing and ending one, two, three or six months thereafter, or
(subject to paragraph (e) of Section 2.08) 12 months thereafter, as the
Borrower may elect in the applicable Notice of Borrowing; provided
that:
(a) any Interest Period that would otherwise end on a
day that is not a Euro-Dollar Business Day shall be extended
to the next succeeding Euro-Dollar Business Day unless such
day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period that begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall,
subject to clause (c) below, end on the last day of a calendar
month; and
(c) any Interest Period which would otherwise
end after the Termination Date shall end on the
Termination Date;
(2) with respect to each CD Borrowing, the period commencing
on the date of such Borrowing and ending 30, 60, 90 or 180 days
thereafter, as the Borrower may elect in the applicable Notice of
Borrowing; provided that:
(a) any Interest Period (other than an Interest
Period determined pursuant to clause (b) below) which would
otherwise end on a day which is not a Euro-Dollar Business Day
shall be extended to the next succeeding Euro-Dollar Business
Day; and
(b) any Interest Period which would otherwise
end after the Termination Date shall end on the
Termination Date;
(3) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending on the next
succeeding Quarterly Date; provided that:
(a) any Interest Period (other than an Interest
Period determined pursuant to clause (b) below) which would
otherwise end on a day which is not a Euro-Dollar Business Day
shall be extended to the next succeeding Euro-Dollar Business
Day; and
9
<PAGE>
(b) any Interest Period which would otherwise
end after the Termination Date shall end on the
Termination Date;
(4) with respect to each Money Market Borrowing, the period
commencing on the date of such Borrowing and ending such number of days
thereafter (but not less than 7 nor more than 270 days) as the Borrower
may elect in accordance with Section 2.03; provided that:
(a) any Interest Period (other than an Interest
Period determined pursuant to clause (b) below) which would
otherwise end on a day which is not a Euro-Dollar Business Day
shall be extended to the next succeeding Euro-Dollar Business
Day; and
(b) any Interest Period which would otherwise
end after the Termination Date shall end on the
Termination Date; and
(5) with respect to each Swingline Advance, the period
commencing on the date of such Swingline Advance and ending on the
applicable Swingline Maturity Date.
"Interest Rate Agreement" means an agreement under the
International Swap and Derivatives Association, Inc. Master Agreement (or any
predecessor or successor agreement), or any other interest rate swap agreement
or similar agreement between the Borrower and one or more of the Banks or any
affiliates of the Banks.
"Interest Rate Indebtedness" means the obligations of the
Borrower to the Banks or any of them in respect of the Interest Rate Agreements.
"Lending Office" means, as to any Bank, its Domestic Lending
Office, its Euro-Dollar Lending Office or its Money Market Lending Office, as
the context may require.
"Leverage Ratio" means on any date (the "Date of
Determination") the ratio of (A) EBITDA for the four most recent fiscal quarters
of the Parent Guarantor ended on or prior to the Date of Determination to (B)
Total Borrowed Funds as of the last day of the most recent fiscal quarter of the
Parent Guarantor ended on or prior to the Date of Determination.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For the purpose of this Agreement, the Parent Guarantor or any of its
Subsidiaries shall be deemed to own subject to a Lien any
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asset that it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement or other title retention agreement
relating to such asset or any Capital Lease.
"Loan" means a Domestic Loan or a Euro-Dollar or a Money
Market Loan, and "Loans" means Domestic Loans or Euro-Dollar Loans or Money
Market Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set
forth in Section 2.08(d).
"Major Asset Acquisition" means any acquisition for cash or
other consideration by the Parent Guarantor or any of its Subsidiaries, or any
series of such acquisitions of (a) any asset, (b) any group of related assets or
(c) any shares of capital stock or any other ownership interest in any Person;
provided that in the case of any such acquisition, or such series of
acquisitions, the aggregate of all consideration (including cash and the fair
market value (as certified by a Principal Officer of the Parent Guarantor) of
all other consideration paid by the Parent Guarantor or any of its Subsidiaries)
for or in respect of such acquisition, or such series of acquisitions, exceeds
$25,000,000; and provided further that no such acquisition or series of
acquisitions from the Parent Guarantor or any Subsidiary of the Parent Guarantor
shall constitute a Major Asset Acquisition.
"Major Asset Sale" means any Disposition by the Parent
Guarantor or any of its Subsidiaries of a Single Asset; provided that in the
case of any such Disposition the aggregate of all cash and the fair market value
(as certified by a Principal Officer of the Parent Guarantor) of all property
received by the Parent Guarantor or any of its Subsidiaries from or in respect
of such Disposition exceeds $25,000,000; and provided further that (i) no such
Disposition by any Wholly Owned Subsidiary of the Parent Guarantor to any other
Wholly Owned Subsidiary of the Parent Guarantor shall constitute a Major Asset
Sale and (ii) no Sale and Leaseback Transaction shall constitute a Major Asset
Sale.
"Management Equity Note" means a subordinated promissory note
of the Parent Guarantor carrying an interest rate no higher than the market
interest rate payable in respect of debt with comparable terms issued by
comparable issuers, substantially in the form of Exhibit E hereto, issued to
management or former management (including directors) of the Parent Guarantor in
exchange for shares of Common Stock pursuant to the Stockholders' Agreement or
in exchange for Series Preferred Stock.
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"Margin Stock" means "margin stock" as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System, as the
same may be amended, supplemented or modified from time to time.
"Material Financial Obligations" means a principal or face
amount of Debt and/or payment or collateralization obligations in respect of
Derivatives Obligations of the Borrower and/or one or more of its Subsidiaries,
arising in one or more related or unrelated transactions, exceeding in the
aggregate $25,000,000.
"Money Market Auction" means a solicitation of Money
Market Quotes setting forth Money Market Rates pursuant to
Section 2.03.
"Money Market Lending Office" means, as to each Bank, its
Domestic Lending Office or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Money Market Lending Office by notice to
the Borrower and the Administrative Agent.
"Money Market Loan" means a loan made or to be made by a Bank
pursuant to a Money Market Auction.
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.03.
"Money Market Rate" has the meaning set forth in
Section 2.03(c).
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five-year period.
"Notes" means promissory notes of the Borrower, substantially
in the form of Exhibit A hereto, evidencing the obligation of the Borrower to
repay the Loans and the Swingline Advances, and "Note" means any one of such
promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed
Borrowing or a Notice of Money Market Borrowing.
"Notice of Committed Borrowing" has the meaning set
forth in Section 2.02(a).
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"Notice of Money Market Borrowing" has the meaning
set forth in Section 2.03(d).
"Obligors" means the Borrower, the Parent Guarantor and each
Subsidiary from time to time party to the Subsidiary Guaranty Agreement.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title I or IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means the rate of interest publicly announced
from time to time by Chemical Bank at its main offices in New York City as its
prime rate.
"Principal Officer" means the chief executive officer, chief
operating officer, chief financial officer, chief accounting officer, any
executive vice president, treasurer or general counsel of the Parent Guarantor
or the Borrower.
"Qualification" means, with respect to any report of
independent public accountants covering financial statements of a Person, (a) an
explanatory paragraph with respect to the continued existence of such Person, as
contemplated by Statement on Auditing Standards No. 59, or (b) a qualification
to such report (such as an "except for" statement therein) (i) resulting from a
limitation on the scope of audit of such financial statements or the underlying
data, (ii) resulting from a change in accounting principles to which such
independent public accountants take exception or (iii) which could be eliminated
by changes in financial statements or
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notes thereto covered by such report (such as, by the creation of or increase in
a reserve or a decrease in the carrying value of assets) and which if so
eliminated by the making of any such change and after giving effect thereto
would occasion a Default, provided that neither of the following shall
constitute a Qualification: (x) an explanatory paragraph relating to a change in
accounting principles to which such independent public accountants take no
exception or (y) an explanatory paragraph relating to the outcome or disposition
of any uncertainty, including but not limited to threatened litigation, pending
litigation being contested in good faith, pending or threatened claims or other
contingencies, the impact of which litigation, claims, contingencies or
uncertainties cannot be determined with sufficient certainty to permit
quantification in such financial statements.
"Quarterly Date" means each March 31, June 30, September 30
and December 31.
"Reference Banks" means the CD Reference Banks or the
Euro-Dollar Reference Banks, as the context may require, and "Reference Bank"
means any one of such Reference Banks.
"Refunding Borrowing" means a Borrowing which, after
application of the proceeds thereof, results in no net increase in the
outstanding principal amount of Committed Loans made by any Bank.
"Regulation U" has the meaning set forth in Section 5.13.
"Required Banks" means at any time Banks having at least 51%
of the aggregate amount of the Commitments or, if the Commitments shall have
been terminated, holding Notes evidencing at least 51% of the aggregate unpaid
principal amount of the Loans.
"Revolving Credit Period" means the period from the Effective
Date to but not including the Termination Date.
"Sale and Leaseback Transaction" means any arrangement with
any Person providing for the leasing by the Parent Guarantor or any Subsidiary
of any property that, or of any property similar to and used for substantially
the same purposes as any other property that, has been or is to be sold,
assigned, transferred or otherwise disposed of by the Parent Guarantor or any of
its Subsidiaries to such Person with the intention of entering into such a
lease.
"Series Preferred Stock" means any series of Series Preferred
Stock issued by the Parent Guarantor from time to time.
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"Single Asset" means, in the case of any Disposition by the
Parent Guarantor or any of its Subsidiaries, (a) any asset, (b) any group of
assets used in connection with the same line of business of the Parent Guarantor
or such Subsidiary prior to such sale, assignment, transfer or other disposition
or (c) any shares of capital stock or any other ownership interest in any
Person.
"Stockholders' Agreement" means the Amended and Restated
Stockholders' Agreement dated as of December 14, 1994 among the Parent Guarantor
and the investors listed therein, as the same may be amended from time to time.
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person. As used herein, the term "Subsidiary" shall be
deemed to refer to a Subsidiary of the Parent Guarantor unless otherwise
specified.
"Subsidiary Guaranty Agreement" means the Subsidiary Guaranty
Agreement dated as of the date hereof among the Borrower, the Parent Guarantor
and certain Subsidiaries, in the form of Exhibit D hereto.
"Swingline Advance" means an advance made by a Bank to the
Borrower pursuant to a solicitation of offers therefor in accordance with
Section 2.04.
"Swingline Maturity Date" has the meaning set forth
in Section 2.06.
"Termination Date" means June 30, 2001, or if such date is not
a Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day unless
such succeeding Euro-Dollar Business Day falls in another calendar month, in
which case the Termination Date shall be the next preceding Euro-Dollar
Business Day.
"Total Borrowed Funds" means at any date the sum of (i) all
Debt of the Parent Guarantor and its Consolidated Subsidiaries that would be
required to be reflected on or referred to in a consolidated balance sheet of
the Parent Guarantor and its Consolidated Subsidiaries at such date (including
without limitation all Capital Leases of and, except as set forth below, all
Debt Guaranteed by the Parent Guarantor and its Consolidated Subsidiaries but
excluding (x) Debt Guaranteed by the Parent Guarantor and its Consolidated
Subsidiaries outstanding on May 29, 1996 in an aggregate principal amount not
exceeding $10,000,000 and (y) the
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Management Equity Notes) and (ii) Excess Contingent Liabilities.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.
"Wholly Owned Domestic Material Subsidiary" means, with
respect to any Person, a Wholly Owned Subsidiary that (i) is organized under the
laws of the United States, any state thereof or any political subdivision
thereof or therein and (ii) whose total assets (or in the case of any Subsidiary
which itself has Subsidiaries, the consolidated total assets of such Subsidiary
and its Consolidated Subsidiaries) are at least 5% of the consolidated total
assets of the Parent Guarantor and its Consolidated Subsidiaries, as shown by
the financial statements then most recently delivered pursuant to Section 5.01
provided that if the Parent Guarantor determines in good faith that a Subsidiary
does not have consolidated assets of at least 5% of the consolidated total
assets of the Parent Guarantor and its Consolidated Subsidiaries as at any
fiscal year-end, such determination shall be conclusive for purposes of this
Agreement and the Subsidiary Guaranty Agreement for a period of 270 days
following such fiscal year-end.
"Wholly Owned Subsidiary" means, with respect to any Person,
any Subsidiary all of the shares of capital stock or other ownership interests
of which (except directors' qualifying shares) are at the time directly or
indirectly owned by such Person.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with the audited consolidated financial statements of the Parent
Guarantor and its Consolidated Subsidiaries for the fiscal year ended September
29, 1995 referred to in paragraph (a) of Section 4.04 (except for changes to
which independent public accountants for the Parent Guarantor take
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no exception) provided that, if the Borrower notifies the Agents that the
Borrower wishes to amend any covenant in Article V to eliminate the effect of
any change in generally accepted accounting principles on the operation of such
covenant (or if the Agents notify the Borrower that the Required Banks wish to
amend Article V for such purpose), then the Borrower's compliance with such
covenant shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted accounting principles became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Parent
Guarantor, the Borrower and the Required Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing"
denotes the aggregation of Loans of one or more Banks to be made to the Borrower
pursuant to Article II on a single date and for a single Interest Period.
Borrowings are classified for purposes of this Agreement either by reference to
the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing"
is a Borrowing comprised of EuroDollar Loans) or by reference to the provisions
of Article II under which participation therein is determined (i.e., a
"Committed Borrowing" is a Borrowing under Section 2.01 in which all Banks
participate in proportion to their Commitments, while a "Money Market Borrowing"
is a Borrowing under Section 2.03 in which the Bank participants are determined
on the basis of their bids in accordance therewith).
ARTICLE II
THE LOANS
SECTION 2.01. Commitments to Lend. During the Revolving Credit
Period each Bank severally agrees, on the terms and conditions set forth in this
Agreement, to make loans to the Borrower pursuant to this Section from time to
time in amounts such that the aggregate principal amount of Committed Loans by
such Bank at any one time outstanding shall not exceed the amount of such Bank's
Commitment. Each Borrowing under this Section shall be in an aggregate principal
amount of $5,000,000 or any larger multiple of $5,000,000 (except that any such
Borrowing may be in the aggregate amount available in accordance with Section
3.02(b)) and shall be made from the several Banks ratably in proportion to their
respective Commitments. Within the foregoing limits, the Borrower may borrow
under this Section, repay or, to the extent permitted by Section 2.12, prepay
Loans and reborrow at any time during the Revolving Credit Period pursuant to
this Section.
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SECTION 2.02. Notice of Committed Borrowings. (a) The Borrower
shall give the Administrative Agent at least two Domestic Business Days' notice
(or, in the case of a Base Rate Borrowing on a date for which the Borrower has
requested quotes pursuant to a Money Market Auction but not accepted quotes in
the full amount for which requested, notice not later than 11:00 A.M. (New York
City time) on the date of such Borrowing) (a "Notice of Committed Borrowing") of
its intention to make a Domestic Borrowing and at least three Euro-Dollar
Business Days' notice (five Euro-Dollar Business Days' notice, in the case of a
Euro-Dollar Borrowing with respect to which a 12-month Interest Period is
requested) of its intention to make a Euro-Dollar Borrowing, in each case in
writing (or by telephone confirmed in writing not later than the close of
business on the next succeeding Domestic Business Day or Euro-Dollar Business
Day, as applicable) specifying:
(i) the proposed date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic Borrowing or a
Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are
to be CD Loans, Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Fixed Rate Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
(b) The provisions of subsection (a) above notwithstanding, if
the Borrower shall not have given a Notice of Committed Borrowing not later than
two Domestic Business Days prior to the last day of the Interest Period
applicable to an outstanding Committed Borrowing consisting of Base Rate Loans,
then, unless the Borrower shall have notified the Administrative Agent not later
than two Domestic Business Days prior to the last day of such Interest Period
that it elects not to borrow on such date, the Administrative Agent shall be
deemed to have received a Notice of Committed Borrowing specifying (i) that the
date of the proposed Borrowing shall be the last day of the Interest Period
applicable to such outstanding Borrowing, (ii) that the aggregate amount of the
proposed Borrowing shall be the amount of such outstanding Borrowing (reduced to
the extent necessary to reflect any reduction of the Commitments on or prior to
the date of the proposed Borrowing), and (iii) that the Loans comprising the
proposed Borrowing are to be Base Rate Loans.
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(c) No more than eight Euro-Dollar Borrowings and eight CD
Borrowings shall be outstanding at any one time and no more than four
Euro-Dollar Borrowings or CD Borrowings at any one time outstanding shall have
one-month or 30-day Interest Periods.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed
Borrowings pursuant to Section 2.01, the Borrower may, as set forth in this
Section, request the Banks during the Revolving Credit Period to make offers to
make Money Market Loans to the Borrower. The Banks may, but shall have no
obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in this Section
2.03.
(b) Money Market Quote Request. When the Borrower wishes to
request offers to make Money Market Loans under this Section 2.03, it shall
transmit an Invitation for Money Market Quotes substantially in the form of
Exhibit F hereto to each of the Banks by telex or facsimile transmission so as
to be received no later than 10:00 A.M. (New York City time) on the Domestic
Business Day next preceding the date of Borrowing proposed therein specifying:
(i) the proposed date of Borrowing, which shall be
a Domestic Business Day,
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000, and
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period.
The Borrower may request offers to make Money Market Loans for up to six
different Interest Periods in a single Invitation for Money Market Quotes. No
Invitation for Money Market Quotes shall be given within three Domestic Business
Days of any other Invitation for Money Market Quotes.
(c) Submission and Contents of Money Market Quotes. (i) Each
Bank may submit a Money Market Quote containing an offer or offers to make Money
Market Loans in response to any Invitation for Money Market Quotes. Each Money
Market Quote must comply with the requirements of this subsection (c) and must
be submitted to the Borrower by telex or facsimile transmission at its offices
specified in or pursuant to Section 11.01 not later than 10:00 A.M. (New York
City time) on the proposed date of Borrowing. Subject to Articles III
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and VI, any Money Market Quote so made shall be irrevocable except with the
written consent of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit G hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for which
each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x) must
be $5,000,000 or a larger multiple of $1,000,000, (y) may not exceed
the principal amount of Money Market Loans for which offers were
requested and (z) may be subject to an aggregate limitation as to the
principal amount of Money Market Loans for which offers being made by
such quoting Bank may be accepted,
(C) the rate of interest per annum (specified to the nearest
1/10,000th of 1%) (the "Money Market Rate") offered for each such Money
Market Loan, and
(D) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit G hereto
or does not specify all of the information required by subsection
(c)(ii);
(B) except as provided in subsection (c)(ii)(B)(z),
contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (c)(i).
(d) Acceptance and Notice by Borrower. Not later than 11:00
A.M. (New York City time) on the proposed date of Borrowing, the Borrower shall
notify the Administrative Agent of its acceptance or non-acceptance of the
offers so notified to it pursuant to subsection (c). In the case of acceptance,
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such notice (a "Notice of Money Market Borrowing") shall specify the aggregate
principal amount of offers for each Interest Period that are accepted. The
Borrower may accept any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Invitation for Money Market Quotes,
(ii) the principal amount of each Money Market Borrowing must
be $5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Rates and without regard to any Money Market
Quote submitted by a Bank that amends, modifies or is otherwise
inconsistent with a previous Money Market Quote submitted by such Bank
in response to the same Invitation for Money Market Quotes, unless such
subsequent Money Market Quote is submitted solely to correct a manifest
error in such former Money Market Quote,
(iv) the Borrower may not accept any offer that is described
in subsection (c)(iii) or that otherwise fails to comply with the
requirements of this Agreement, and
(v) the absence of timely acceptance by the Borrower in
accordance with this subsection (d) shall constitute rejection of all
related Money Market Quotes.
(e) Allocation Among Banks. If offers are made by two or more
Banks with the same Money Market Rates, for a greater aggregate principal amount
than the amount in respect of which such offers are accepted for the related
Interest Period, the principal amount of Money Market Loans in respect of which
such offers are accepted shall be allocated by the Borrower among such Banks as
nearly as possible (in multiples of $1,000,000) in proportion to the aggregate
principal amounts of such offers. Such determinations of the amounts of Money
Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Swingline Advances.
(a) The Borrower may at any time during the Revolving Credit
Period request any or all of the Banks to offer to make Swingline Advances under
this Section. No such Bank shall have any obligation to make such an offer, and
the Borrower shall have no obligation to request or accept any such offer.
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(b) The Borrower may not request or accept any
offer to make a Swingline Advance:
(i) the final maturity date of which is more than
270 days after the date of such Swingline Advance; or
(ii) the principal amount of which, when added to the
aggregate principal amount of all Credits then outstanding, exceeds the
aggregate Commitments at such time.
(c) The Borrower shall promptly notify the Administrative
Agent, upon receipt of a request therefor from the Administrative Agent during
normal business hours, of the aggregate principal amount of Swingline Advances
then outstanding.
SECTION 2.05. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Administrative
Agent shall promptly notify (by telex, cable, facsimile transmission, telephone
or other means of telecommunications) each Bank participating therein of the
contents thereof and of such Bank's share of such Borrowing, and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date
of each Borrowing, each Bank participating therein shall, except as provided in
subsection (c) of this Section 2.05, make available its share of such Borrowing,
in Federal or other funds immediately available in New York City, to the
Administrative Agent at its address specified in or pursuant to Section 11.01.
Unless the Administrative Agent determines that any applicable condition
specified in Article III has not been satisfied, the Administrative Agent will
make the funds so received from the Banks available to the Borrower on such date
at the Administrative Agent's aforesaid address.
(c) If pursuant to any provision of this Agreement any Bank
makes a new Committed Loan hereunder to the Borrower on a day on which the
Borrower is to repay all or any part of an outstanding Committed Loan from such
Bank, such Bank shall apply the proceeds of such new Committed Loan to make such
repayment and only an amount equal to the difference (if any) between the amount
being borrowed and the amount being repaid shall be made available by such Bank
to the Administrative Agent, or remitted by the Borrower to the Administrative
Agent, as the case may be.
(d) Unless the Administrative Agent shall have received notice
from a Bank prior to the date of any Borrowing
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that such Bank will not make available to the Administrative Agent such Bank's
share of such Borrowing, the Administrative Agent may assume that such Bank has
made such share available to the Administrative Agent on the date of such
Borrowing in accordance with subsections (b) and (c) of this Section 2.05 and
the Administrative Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent that
such Bank shall not have so made such share available to the Administrative
Agent, such Bank and the Borrower severally agree to repay to the Administrative
Agent forthwith on demand (or within one Domestic Business Day, in the case of
the Borrower) such corresponding amount together with interest thereon, for each
day from the date such amount is made available to the Borrower until the date
such amount is repaid to the Administrative Agent, at (i) in the case of the
Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the
interest rate applicable thereto pursuant to Section 2.08 and (ii) in the case
of such Bank, the Federal Funds Rate. If such Bank shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
SECTION 2.06. Maturity of Loans. Each Committed Loan and each
Money Market Loan shall mature, and the principal amount thereof shall be due
and payable, on the last day of the Interest Period applicable thereto. Each
Swingline Advance made by a Bank shall mature, and the principal amount thereof
shall be due and payable, on the maturity date specified in the applicable offer
made pursuant to Section 2.04 (the "Swingline Maturity Date").
SECTION 2.07. Notes. (a) The Credits of each Bank shall be
evidenced by a single Note payable to the order of such Bank for the account of
its Lending Office in an amount equal to the aggregate unpaid principal amount
of such Bank's Credits.
(b) Each Bank may, by notice to the Borrower and the
Administrative Agent, request that its Credits of a particular type be evidenced
by a separate Note in an amount equal to the aggregate unpaid principal amount
of such Credits. Each such Note shall be in substantially the form of Exhibit A
hereto with appropriate modifications to reflect the fact that it evidences
solely Credits of the relevant type. Each reference in this Agreement to the
"Note" of such Bank shall be deemed to refer to and include any or all of such
Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01, the Administrative Agent shall deliver, by hand
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or overnight courier, such Note to such Bank. Each Bank shall record the date,
amount, type and maturity of each Credit to be evidenced by its Note and the
date and amount of each payment of principal made by the Borrower with respect
thereto and may, if a Bank so elects in connection with any transfer or
enforcement of its Note, and is hereby irrevocably authorized by the Borrower
to, endorse on the schedules forming a part thereof appropriate notations to
evidence such information and attach to and make a part of any Note a
continuation of any such schedule as and when required. Notwithstanding the
foregoing provisions of this paragraph (c), neither the obligations of the
Borrower and the Parent Guarantor hereunder nor the rights of any Bank shall be
affected by the failure of any Bank to appropriately record such information on
any Note.
SECTION 2.08. Interest. (a) Subject to paragraph (b) of this
Section 2.08, each Base Rate Loan shall bear interest on the unpaid principal
amount thereof from time to time outstanding at a rate per annum equal to the
Base Rate. Such interest rate shall be adjusted automatically on and as of the
effective date of any change in the Base Rate. Such interest shall be payable
with respect to each Base Rate Loan on the last day of the related Interest
Period.
(b) Any overdue principal of or interest on any Base Rate Loan
shall bear interest, payable on demand, for each day from the date payment
thereof was due to but excluding the date of actual payment, at a rate per annum
equal to the sum of 1-1/2% plus the Base Rate for such day (the "Base Overdue
Interest Rate").
(c) Each CD Loan shall bear interest on the outstanding
principal amount thereof, for each day during the Interest Period applicable
thereto, at a rate per annum equal to the sum of the CD Margin for such day plus
the Adjusted CD Rate applicable to such Interest Period; provided that (i) such
interest rates shall be adjusted automatically on and as of the effective date
of any change in the Domestic Reserve Percentage, the Assessment Rate or the CD
Margin and (ii) if any CD Loan shall, as a result of clause (2)(b) of the
definition of Interest Period, have an Interest Period of less than 30 days,
such CD Loan shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such interest shall be payable
for each Interest Period on the last day thereof and, if such Interest Period is
longer than 90 days, 90 days after the first day thereof. Any overdue principal
of or interest on any CD Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the higher of (i) the sum of 1-1/2%
plus the sum of the Adjusted CD Rate applicable to the
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<PAGE>
Interest Period for such Loan plus the CD Margin for such day and (ii) the Base
Overdue Interest Rate for such day.
"CD Margin" means a rate per annum determined in accordance
with the table set forth below paragraph (g) of this Section 2.08.
The "Adjusted CD Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
----------
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Administrative Agent to be the average
(rounded upward, if necessary, to the next higher 1/100 of 1%) of the prevailing
rates per annum bid at 10:00 A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two or more New York
certificate of deposit dealers of recognized standing for the purchase at face
value from each CD Reference Bank of its certificates of deposit in an amount
comparable to the principal amount of the CD Loan of such CD Reference Bank to
which such Interest Period applies and having a maturity comparable to such
Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of new non-personal time deposits in dollars in New York City
having a maturity comparable to the related Interest Period and in an amount of
$100,000 or more.
"Assessment Rate" means for any day the annual assessment rate
in effect on such day which is payable by a
25
<PAGE>
member of the Bank Insurance Fund classified as adequately capitalized and
within supervisory subgroup "A" (or a comparable successor assessment risk
classification) within the meaning of 12 C.F.R. Section 327.4(a) (or any
successor provision) to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's) insuring time deposits
at offices of such institution in the United States.
(d) Subject to paragraph (f) of this Section 2.08, each
Euro-Dollar Loan shall bear interest on the unpaid principal amount thereof, for
each day during the Interest Period applicable thereto, at an interest rate per
annum equal to the sum of the Euro-Dollar Margin for such day plus the Adjusted
Euro-Dollar Rate applicable to such Interest Period. Such interest rate shall be
adjusted automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage or the Euro-Dollar Margin. Interest on each
Euro-Dollar Loan shall be payable on the last day of the related Interest Period
and, if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
"Euro-Dollar Margin" means a rate per annum determined in
accordance with the table set forth below paragraph (g) of this Section 2.08.
The "Adjusted Euro-Dollar Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next higher 1/16
of 1%) of the respective rates per annum at which deposits in dollars are
offered to each of the Euro-Dollar Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days
before the first day of such Interest Period in an amount approximately equal to
the principal amount of the largest Euro-Dollar Loan to which such Interest
Period is to apply and for a period of time comparable to such Interest Period.
(e) If requested to do so by the Borrower through the
Administrative Agent at least five Euro-Dollar Business Days before the
beginning of any Interest Period applicable to a Euro-Dollar Borrowing, each
Bank participating therein will advise the Administrative Agent before noon (New
York City time) on the third Euro-Dollar Business Day preceding the
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<PAGE>
beginning of such Interest Period as to whether, if the Borrower selects a
duration of 12 months for such Interest Period, such Bank expects that deposits
in dollars with a term corresponding to such Interest Period will be available
to it on the first day of such Interest Period in the amount required to fund
its Euro-Dollar Loan to which such Interest Period would apply. Unless Banks
having more than 34% of the aggregate principal amount of the Commitments
respond by such time to the effect that they expect such deposits not to be
available to them, the Borrower shall be entitled to select a duration of 12
months for such Interest Period.
(f) Any overdue principal of or interest on any Euro-Dollar
Loan shall bear interest, payable on demand, for each day from and including the
date payment thereof was due to but excluding the date of actual payment, at a
rate per annum equal to the sum of 1-1/2% plus the Euro-Dollar Margin for such
day plus the quotient obtained (rounded upward, if necessary to the next higher
1/100 of 1%) by dividing (i) the average (rounded upward, if necessary, to the
next higher 1/16 of 1%) of the respective rates per annum at which one-day (or,
if such amount due remains unpaid more than three Euro-Dollar Business Days,
then for such other period of time not longer than six months as the
Administrative Agent may elect) deposits in dollars in an amount approximately
equal to the largest such overdue payment due to any Bank are offered to each
Euro-Dollar Reference Bank in the London interbank market for the applicable
period determined as provided above by (ii) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause (a) or (b) of Section
8.01 shall exist, at a rate per annum equal to the Base Overdue Interest Rate
for such day).
(g) The "Euro-Dollar Margin", "CD Margin" and "Facility Fee
Rate" shall be for any day the respective percentages indicated in the table set
forth below in the applicable row under the column corresponding to the Status
that applies on such day.
<TABLE>
<CAPTION>
===================================================================================================================================
Level Level Level Level Level Level Level
Status I II III IV V VI VII
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Euro-Dollar 0.15% 0.20% 0.25% 0.33% 0.40% 0.50% 0.625%
Margin
- -----------------------------------------------------------------------------------------------------------------------------------
CD Margin 0.25% 0.30% 0.35% 0.43% 0.50% 0.60% 0.725%
- -----------------------------------------------------------------------------------------------------------------------------------
Facility Fee 0.10% 0.10% 0.12% 0.17% 0.225% 0.25% 0.375%
Rate
===================================================================================================================================
</TABLE>
For purposes of this Section 2.08(g), the following terms have
the following meanings (in addition to terms defined in Section 1.01):
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<PAGE>
"Level I Status" applies at any date if, at such date, either
(x) the Borrower's long-term debt is rated A- or higher by S&P or A3 or higher
by Moody's or (y) the Reference Ratio is equal to or greater than .55 to 1.0.
"Level II Status" applies at any date if, at such date, (i)
either (x) the Borrower's long-term debt is rated BBB+ or higher by S&P or Baa1
or higher by Moody's or (y) the Reference Ratio is equal to or greater than .50
to 1.0 and (ii) Level I Status does not apply.
"Level III Status" applies at any date if, at such date, (i)
either (x) the Borrower's long-term debt is rated BBB or higher by S&P or Baa2
or higher by Moody's or (y) the Reference Ratio is equal to or greater than .45
to 1.0 and (ii) neither Level I Status nor Level II Status applies.
"Level IV Status" applies at any date if, at such date, (i)
either (x) the Borrower's long-term debt is rated BBB- or higher by S&P or Baa3
or higher by Moody's or (y) the Reference Ratio is equal to or greater than .40
to 1.0 and (ii) none of Level I Status, Level II Status and Level III Status
applies.
"Level V Status" applies at any date if, at such date, (i)
either (x) the Borrower's long-term debt is rated BB+ or higher by S&P or Ba1 or
higher by Moody's or (y) the Reference Ratio is equal to or greater than .35 to
1.0 and (ii) none of Level I Status, Level II Status, Level III Status and Level
IV Status applies.
"Level VI Status" applies at any date if, at such date, (i)
either (x) the Borrower's long-term debt is rated BB or higher by S&P or Ba2 or
higher by Moody's or (y) the Reference Ratio is equal to or greater than .32 to
1.0 and (ii) none of Level I Status, Level II Status, Level III Status, Level IV
Status and Level V Status applies.
"Level VII Status" applies at any date if, at such date, no
other Status applies.
"Moody's" means Moody's Investors Service, Inc.
"Reference Ratio" means for any day during any fiscal quarter
of the Parent Guarantor (the "Current Quarter"), the Leverage Ratio as of the
last day of the most recent fiscal quarter of the Parent Guarantor ended 80 days
or more before the first day of the Current Quarter. The Parent Guarantor shall,
prior to the first day of each fiscal quarter of the Parent Guarantor during
which Status (if determined solely on the basis of the Reference Ratio) would
differ from the Status (if so determined) during the next preceding fiscal
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<PAGE>
quarter of the Parent Guarantor, deliver to the Administrative Agent a
certificate of the Parent Guarantor signed by its chief financial officer, its
Treasurer or its chief accounting officer setting forth in reasonable detail the
calculation of the Reference Ratio.
"S&P" means Standard & Poor's Ratings Services.
"Status" refers to the determination of which of Level I
Status through Level VII Status applies at any date.
The credit ratings to be utilized for purposes of the above
schedule are those assigned to the senior unsecured long-term debt securities of
the Borrower without third-party credit enhancement, and any rating assigned to
any other debt security of the Borrower shall be disregarded. The rating in
effect at any date is that in effect at the close of business on such date.
(h) Each Money Market Loan and each Swingline Advance made by
a Bank shall bear interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to the Money
Market Rate quoted by the Bank making such Loan in accordance with Section 2.03
or the fixed interest rate quoted by the Bank making such Swingline Advance in
accordance with Section 2.04, as the case may be. Such interest shall be payable
for each Interest Period on the last day thereof. Any overdue principal of or
interest on any Money Market Loan or Swingline Advance shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 2% plus the Prime Rate for such day.
(i) The Administrative Agent shall determine each rate of
interest applicable to the Loans. The Administrative Agent shall give prompt
notice thereof to the Borrower and the affected Banks by telephone, facsimile
transmission, telex or cable. The Administrative Agent's good faith
determination of each such rate of interest shall be conclusive in the absence
of manifest error.
(j) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Administrative Agent as contemplated hereby. If any
Reference Bank does not furnish a timely quotation, the Administrative Agent
shall determine the relevant interest rate on the basis of the quotation or
quotations furnished by the remaining Reference Bank or Banks or, if none of
such quotations is available on a timely basis, the provisions of Section 8.01
shall apply.
(k) Interest based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a
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<PAGE>
leap year) and paid for the actual number of days elapsed (including the first
day but excluding the last day). All other interest shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed,
calculated as to each Interest Period or period fixed pursuant to paragraph (f)
of this Section 2.08 from and including the first day thereof to but excluding
the last day thereof.
SECTION 2.09. Facility Fees. (a) The Borrower shall pay to the
Administrative Agent for the account of the Banks a facility fee at the Facility
Fee Rate (determined daily in accordance with the schedule set forth below
paragraph (g) of Section 2.08) accrued (i) from and including the Effective Date
to but excluding the Termination Date (or earlier date of termination of the
Commitments in their entirety) on the daily average aggregate amount of the
Commitments (whether used or unused) and (ii) from and including the Termination
Date or such earlier date of termination to but excluding the date the Loans
shall be repaid in their entirety, on the daily aggregate outstanding principal
amount of the Loans; provided that no such fee shall accrue with respect to the
portion, if any, of the aggregate Commitments utilized in the form of Base Rate
Loans during any fiscal quarter of the Parent Guarantor if the Reference Ratio
is more than 0.45 to 1 for such fiscal quarter.
(b) Accrued facility fees under this Section shall be computed
on the basis of a year of 360 days and paid for the actual number of days
elapsed. Such facility fees shall be paid quarterly in arrears on each March 31,
June 30, September 30 and December 31 and on the Termination Date (and, if
later, such later date of repayment).
(c) Upon receipt of any amount representing fees paid pursuant
to this Section 2.09, the Administrative Agent shall pay such amount to the
Banks in proportion to their respective Commitments.
SECTION 2.10. Reduction of Commitments. (a) The Borrower at
its option may at any time and from time to time upon at least three Domestic
Business Days' notice to the Administrative Agent terminate in their entirety or
reduce, in an aggregate amount of $10,000,000 or any larger multiple of
$5,000,000, the unused Commitments (any such reduction to be applied ratably to
the respective Commitments of all Banks). For this purpose, the Commitments
shall be deemed unused at any time to the extent (and only to the extent) that
the Borrower could at such time borrow Committed Loans without causing the
Credits to exceed the aggregate Commitments at such time. Upon any termination
or reduction of the Commitments pursuant to this subsection (a) or subsection
(b) below, the Administrative Agent shall promptly notify each Bank of
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<PAGE>
such termination or reduction. Each reduction of the Commitments pursuant to
this subsection (a) shall be permanent.
(b) In addition, the Commitments shall be reduced upon the
incurrence by the Parent Guarantor or any of its Subsidiaries of Excess Secured
Debt (other than Excess Secured Debt arising out of the refinancing, extension,
renewal or refunding of other Excess Secured Debt, except to the extent, and
only to the extent, that the outstanding principal amount of such other Excess
Secured Debt is increased), in an amount equal to the cash proceeds of such
Excess Secured Debt, net of the reasonable expenses of the Parent Guarantor or
such Subsidiary in connection with such incurrence.
(c) The reduction required by subsection (b) of this Section
2.10 shall be effective on the date of receipt by the Parent Guarantor or any of
its Subsidiaries of the amounts described therein; provided that, in the event
such amounts shall aggregate less than $10,000,000, such reduction shall be
effective forthwith upon receipt by the Parent Guarantor or any of its
Subsidiaries of proceeds which, together with all other amounts described in
subsection (b) above not previously applied pursuant to subsection (b) of this
Section 2.10, aggregate $10,000,000 or more. The Borrower shall give the
Administrative Agent at least four Euro-Dollar Business Days' notice of each
reduction in the Commitments pursuant to subsection (b) of this Section 2.10 and
a certificate of a Principal Officer of the Parent Guarantor, setting forth the
information, in form and substance satisfactory to the Administrative Agent,
necessary to determine the amount of each such reduction.
(d) Each reduction of the Commitments pursuant to subsection
(b) of this Section 2.10 shall be applied ratably to the respective Commitments
of the Banks. In addition, each reduction of the Commitments pursuant to
subsection (b) of this Section 2.10 shall be permanent.
(e) On each date on which a reduction required by subsection
(b) becomes effective, the Borrower shall repay or prepay such principal amount
of the outstanding Credits, if any, as may be necessary so that after such
payment or prepayment, (i) the unpaid principal amount of the Credits does not
exceed the aggregate Commitments after giving effect to such reduction of the
Commitments and (ii) the unpaid principal amount of the Committed Loans of each
Bank does not exceed the amount of the Commitment of such Bank as then reduced.
The particular Borrowings to be repaid shall be as designated by the Borrower in
the related Notice or Notices of Borrowing; provided that if there shall have
been a mandatory reduction of the Commitments pursuant to subsection (b) of
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<PAGE>
this Section 2.10 at a time such that, and with the result that, this subsection
(e) would otherwise require payment of principal of Fixed Rate Loans or portions
thereof prior to the last day of the related Interest Period, such payment shall
be deferred to such last day unless the Required Banks otherwise elect by notice
to the Borrower through the Administrative Agent (and the facility fee provided
for in Section 2.09(a) shall continue to accrue on the amount of such deferred
payment until such payment is made). Each repayment or prepayment pursuant to
this subsection (e) shall be made together with accrued interest to the date of
payment or prepayment, and shall be applied ratably to payment of the Credits of
the several Banks in the related Borrowing.
SECTION 2.11. Mandatory Termination of Commitments. The
Commitments shall terminate on the Termination Date, and any Loans then
outstanding (together with accrued interest thereon) shall be due and payable on
such date.
SECTION 2.12. Optional Prepayments. (a) The Borrower may (i)
upon at least one Domestic Business Day's notice to the Administrative Agent,
prepay any Base Rate Borrowing without premium or penalty, (ii) upon three
Domestic Business Days' notice to the Administrative Agent, subject to Section
2.14, prepay any CD Borrowing and (iii) upon at least three Euro-Dollar Business
Days' notice to the Administrative Agent subject to Section 2.14, prepay any
Euro-Dollar Borrowing, in each case in whole at any time or from time to time in
part in an aggregate amount equal to $5,000,000 or any larger multiple of
$5,000,000, by paying the principal amount being prepaid together with interest
accrued thereon to the date of prepayment. Each such prepayment shall be applied
ratably to the Loans of the Banks included in the applicable Borrowing.
(b) Subject to Section 2.14, Money Market Loans and Swingline
Advances shall be prepayable as may be mutually agreed by the Borrower and the
Bank making any such Money Market Loan or Swingline Advance.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Administrative Agent shall promptly notify each affected Bank of
the contents thereof and of such Bank's ratable share of such prepayment and
such notice shall not thereafter be revocable by the Borrower.
SECTION 2.13. Payments. (a) All payments of principal of, and
interest on, the Loans and of fees and other amounts payable hereunder shall be
made not later than 12:00 Noon (New York City time) on the date when due, in
Federal or other funds immediately available in New York City to the
Administrative Agent at its office at 52 Broadway, New York,
32
<PAGE>
New York. The Administrative Agent will promptly distribute to each Bank in like
funds its ratable share of each such payment received by the Administrative
Agent for the account of the Banks.
(b) Whenever any payment of principal of, or interest on, any
Domestic Loans or any Swingline Advances or of facility fees hereunder shall be
due on a day which is not a Domestic Business Day, the date for payment thereof
shall be extended to the next succeeding Domestic Business Day. Whenever any
payment of principal of, or interest on, any Euro-Dollar Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day, unless such day
falls in another calendar month, in which case such payment shall be due on the
next preceding Euro-Dollar Business Day. Whenever any payment of principal of,
or interest on, any Money Market Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon shall
be payable for such extended time.
(c) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Banks
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.14. Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan or Swingline Advance
(pursuant to Article II, VI, VIII or otherwise) on any day other than the last
day of the Interest Period applicable thereto, or the last day of an applicable
period fixed pursuant to Section 2.08(f), or if the Borrower fails to borrow or
prepay any Fixed Rate Loan after notice has been given to any Bank in accordance
with Section 2.05(a) or 2.12(c), the Borrower shall reimburse each Bank on
demand for any resulting loss or expense incurred by such Bank (or by any
existing or prospective participant in the related Credit), including (without
limitation) any loss incurred in obtaining,
33
<PAGE>
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or failure to borrow or prepay,
provided that such Bank shall have delivered to the Borrower a certificate as to
the amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
SECTION 2.15. Withholding Tax Exemption. At least five
Domestic Business Days prior to the first date on which interest or facility
fees are payable hereunder for the account of any Bank, each Bank that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to each of the Borrower and the Administrative Agent
two duly completed copies of United States Internal Revenue Service Form 1001 or
4224, certifying in either case that such Bank is entitled to receive payments
under the Financing Documents without deduction or withholding of any United
States federal income taxes. Each Bank which so delivers a Form 1001 or 4224
further undertakes to deliver to each of the Borrower and the Administrative
Agent two additional copies of such form (or a successor form) on or before the
date that such form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Administrative Agent, in each case certifying
that such Bank is entitled to receive payments under the Financing Documents
without deduction or withholding of any United States federal income taxes,
unless an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with respect
to it and such Bank advises the Borrower and the Administrative Agent that it is
not capable of receiving payments without any deduction or withholding of United
States federal income tax.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become
effective on the date that each of the following conditions shall have been
satisfied (or waived in accordance with Section 11.04):
(a) receipt by the Administrative Agent of counterparts hereof
signed by each of the parties hereto (or, in the case of any party as
to which an executed
34
<PAGE>
counterpart shall not have been received, receipt by the Administrative
Agent in form satisfactory to it of telegraphic, telex or other written
confirmation from such party of execution of a counterpart hereof by
such party);
(b) receipt by the Administrative Agent for the account of
each Bank of a duly executed Note dated on or before the Effective Date
complying with the provisions of Section 2.07;
(c) receipt by the Administrative Agent of counterparts of all
other Financing Documents signed by each of the parties thereto (or, in
the case of any party as to which an executed counterpart shall not
have been received, receipt by the Administrative Agent in form
satisfactory to it of telegraphic, telex or other written confirmation
from such party of execution of a counterpart thereof by such party);
(d) receipt by the Agents of evidence satisfactory to them of
the payment of all principal and interest on any "Loans" (as therein
defined) outstanding under, and of all other amounts payable under, the
Existing Credit Agreement (excluding amounts payable with respect to
the Money Market Loans and Swingline Advances specified in Section
3.04(b));
(e) receipt by the Agents of a certificate of a Principal
Officer of each of the Parent Guarantor and the Borrower that, upon the
Effective Date, no Default shall have occurred and be continuing and
that each of the representations and warranties made by the Obligors in
or pursuant to the Financing Documents are true and correct in all
material respects;
(f) receipt by the Agents of an opinion of the General Counsel
or Associate General Counsel of the Borrower and the Parent Guarantor,
substantially in the form of Exhibit B hereto and covering such
additional matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request;
(g) receipt by the Agents of an opinion of Davis Polk &
Wardwell, special counsel for the Agents, substantially in the form of
Exhibit C hereto and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably
request; and
(h) receipt by the Agents of all documents they may
reasonably request relating to the existence of the
35
<PAGE>
Borrower and the Parent Guarantor, the corporate authority for and the
validity and enforceability of the Financing Documents, and any other
matters relevant hereto, all in form and substance satisfactory to the
Agents;
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
June 28, 1996. The Administrative Agent shall promptly notify the Borrower and
the Banks of the Effective Date, and such notice shall be conclusive and binding
on all parties hereto. The Banks that are parties to the Existing Credit
Agreement, comprising the "Required Banks" as defined therein, and the Borrower
and the Parent Guarantor agree to eliminate the requirement under Section
2.10(a) of the Existing Credit Agreement that notice of optional termination of
the commitments thereunder be given three Domestic Business Days in advance, and
further agree that the commitments under the Existing Credit Agreement shall
terminate in their entirety simultaneously with and subject to the effectiveness
of this Agreement and that the Borrower shall be obligated to pay the accrued
facility fees thereunder to but excluding the date of such effectiveness.
SECTION 3.02. Conditions to Borrowing. The obligation of each
Bank to make a Loan on the occasion of each Borrowing is subject to the
satisfaction of such of the following conditions as shall not have been
expressly waived in writing by Banks having 51% or more in aggregate principal
amount of the Loans to be included in such Borrowing:
(a) receipt (or deemed receipt) by the Administrative Agent
of a Notice of Borrowing as required by Section 2.02 or 2.03, as the
case may be;
(b) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of Loans will not exceed an
amount equal to (A) the aggregate amount of the Commitments at such
time less (B) the aggregate outstanding principal amount of Swingline
Advances at such time;
(c) the fact that, immediately after such Borrowing: (i) in
the case of a Refunding Borrowing, no Event of Default and no Default
under Section 6.01(a) or (b) shall have occurred and be continuing and
(ii) in the case of any other Borrowing, no Default shall have occurred
and be continuing;
(d) the fact that each of the representations and warranties
made by the Obligors in or pursuant to the Financing Documents (other
than, in the case of a
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Refunding Borrowing, the representations and warranties set forth in
Sections 4.04(c), 4.05, 4.06, 4.07 and 4.08 of this Agreement), shall
be true and correct in all material respects on and as of the date of
such Borrowing; and
(e) the fact that such Borrowing will not violate any
provision of law or regulation applicable to any Bank (including,
without limiting the generality of the foregoing, Regulations U and X
of the Board of Governors of the Federal Reserve System) as then in
effect.
SECTION 3.03. Representation by Borrower. Each Borrowing under
this Agreement shall be deemed to be a representation and warranty by the
Borrower on the date of such Borrowing as to the facts specified in subsections
(b), (c) and (d) of Section 3.02.
SECTION 3.04. Transitional Provisions. (a) Upon the Effective
Date, any outstanding Money Market Loans or Swingline Advances of any bank party
to the Existing Credit Agreement that is not a Bank hereunder (a "Non-Continuing
Bank") shall become due, and the Borrower shall on the Effective Date repay any
such outstanding Money Market Loans or Swingline Advances made by such
Non-Continuing Banks. If any repayment of Money Market Loans or Swingline
Advances under the Existing Credit Agreement is made pursuant to this subsection
(a), the Borrower agrees that it will reimburse each Non-Continuing Bank for any
funding losses incurred in connection therewith pursuant to Section 2.13 of the
Existing Credit Agreement.
(b) Each Money Market Loan or Swingline Advance outstanding
under the Existing Credit Agreement and made on or prior to the Effective Date
by any bank that is both a party to the Existing Credit Agreement and a Bank
hereunder shall (i) mature on the last day of the then current Interest Period
applicable thereto under the Existing Credit Agreement, (ii) bear interest at
the interest rate applicable thereto under the Existing Credit Agreement, (iii)
be deemed made pursuant to this Agreement and (iv) be deemed no longer
outstanding under the Existing Credit Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Parent Guarantor and the Borrower jointly and severally
represent and warrant to each Agent and each Bank that:
SECTION 4.01. Corporate Existence and Power. Each of the
Parent Guarantor, the Borrower and each Subsidiary of either is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted (except, in the case of such Subsidiaries, to
the extent that failure to comply with the foregoing statements could not, in
the aggregate, affect the business, financial position, results of operations or
prospects of the Parent Guarantor and its Consolidated Subsidiaries in a manner
material and adverse to the creditworthiness of the Borrower and the other
Obligors, considered as a whole), and each of the Parent Guarantor, the Borrower
and each Subsidiary of either is duly qualified as a foreign corporation,
licensed and in good standing in each jurisdiction where qualification or
licensing is required by the nature of its business or the character and
location of its property, business or customers and in which the failure so to
qualify or be licensed, as the case may be, in the aggregate, could affect the
business, financial position, results of operations or prospects of the Parent
Guarantor and its Consolidated Subsidiaries in a manner material and adverse to
the creditworthiness of the Borrower and the other Obligors, considered as a
whole.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution and delivery by each Obligor of each of the
Financing Documents to which it is a party and the performance by such Obligor
of its obligations thereunder are within the corporate power of such Obligor,
have been duly authorized by all necessary corporate action, require no action
by or in respect of, or filing with, any governmental body, agency or official
and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the charter or by-laws of such Obligor or of
any agreement or instrument relating to Debt of the Parent Guarantor or any
Subsidiary or any other agreement, judgment, injunction, order, decree or other
instrument binding upon such Obligor material to the business of the Parent
Guarantor and its Consolidated Subsidiaries, considered as a whole, or result in
the creation or imposition of any Lien on any asset of the Parent Guarantor or
any Subsidiary.
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SECTION 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of each of the Parent Guarantor and the Borrower and
the other Financing Documents, when executed and delivered in accordance with
this Agreement, will constitute valid and binding obligations of each Obligor
that is a party thereto, in each case enforceable in accordance with its terms.
SECTION 4.04. Financial Information. (a) The consolidated
balance sheet of the Parent Guarantor and its Consolidated Subsidiaries as of
September 29, 1995 and the related consolidated statements of income and cash
flows for the fiscal year then ended, reported on by Arthur Andersen LLP, a copy
of which has been delivered to each of the Banks, fairly present, in conformity
with generally accepted accounting principles, the consolidated financial
position of the Parent Guarantor and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and cash flows for such fiscal
year.
(b) The unaudited consolidated balance sheet of the Parent
Guarantor and its Consolidated Subsidiaries as of March 29, 1996 and the related
unaudited consolidated statements of income and cash flows for the six months
then ended, set forth in the Parent Guarantor's quarterly report for the fiscal
quarter ended March 29, 1996 as filed with the Securities and Exchange
Commission on Form 10-Q, a copy of which has been delivered to each of the
Banks, fairly present, in conformity with generally accepted accounting
principles applied on a basis consistent with the financial statements referred
to in subsection (a) of this Section, the consolidated financial position of the
Parent Guarantor and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such six-month period
(subject to normal year-end adjustments).
(c) Since March 29, 1996, there has been no change in the
business, financial position or results of operations of the Parent Guarantor
and its Consolidated Subsidiaries which materially and adversely affects the
credit-worthiness of the Borrower and the other Obligors, considered as a whole.
SECTION 4.05. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of a Principal Officer
threatened against, the Parent Guarantor, the Borrower or any Subsidiary of
either before any court or arbitrator or any governmental body, agency or
official in which there is a reasonable likelihood of an adverse decision which
would affect the business, financial position or results of operations of the
Parent Guarantor and its Consolidated Subsidiaries in a manner material and
adverse to the credit-worthiness of the Borrower and the other Obligors,
considered
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as a whole, or which in any manner questions the validity or enforceability of
any Financing Document.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of ERISA
and the Code with respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the Code with
respect to each Plan. No member of the ERISA Group has (i) sought a waiver of
the minimum funding standard under Section 412 of the Code in respect of any
Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security under
ERISA or the Code or (iii) incurred any liability under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. The Parent Guarantor has
reasonably concluded that the liabilities and costs associated with the effect
of Environmental Laws on the business, operations and properties of the Parent
Guarantor and its Subsidiaries, including the costs of compliance with
Environmental Laws, are unlikely to affect the business, financial condition,
results of operations or prospects of the Parent Guarantor and its Consolidated
Subsidiaries in a manner material and adverse to the creditworthiness of the
Borrower and the other Obligors, considered as a whole.
SECTION 4.08. Taxes. United States Federal income tax returns
of the Borrower and its Subsidiaries have been examined and closed through the
fiscal year ended on September 29, 1989. The Parent Guarantor, the Borrower and
each Subsidiary of either have filed all United States Federal income tax
returns and all other material tax returns that are required to be filed by them
and have paid all taxes due pursuant to such returns or pursuant to any
assessment received by any of them, except for any such taxes being diligently
contested in good faith and by appropriate proceedings. Adequate reserves have
been provided on the books of the Parent Guarantor and its Subsidiaries in
respect of all taxes or other governmental charges in accordance with generally
accepted accounting principles, and no tax liabilities in excess of the amount
so provided are, in the good faith determination of the Parent Guarantor,
anticipated that could affect the business, financial position, results of
operations or prospects of the Parent Guarantor and its Consolidated
Subsidiaries in a manner material and adverse to the creditworthiness of the
Borrower and the other Obligors, considered as a whole.
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SECTION 4.09. Compliance with Laws. The Parent Guarantor, the
Borrower and each Subsidiary of either are, in the good faith determination of
the Parent Guarantor, in compliance with all applicable laws, rules and
regulations (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder), other than such laws, rules or regulations
(i) the validity or applicability of which the Parent Guarantor, the Borrower or
such Subsidiary is contesting in good faith or (ii) the failure to comply with
which cannot reasonably be expected to affect the business, financial position,
results of operations or prospects of the Parent Guarantor and its Consolidated
Subsidiaries in a manner material and adverse to the creditworthiness of the
Borrower and the other Obligors, considered as a whole.
SECTION 4.10. Not an Investment Company. None of the Obligors
is an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
SECTION 4.11. Full Disclosure. All information heretofore
furnished by the Parent Guarantor or the Borrower to the Agents or any Bank for
purposes of this Agreement or any transaction contemplated hereby was, in the
good faith opinion of the Parent Guarantor at the time such information was
furnished, true and accurate in all material respects on the date as of which
such information was furnished, and such information as may have been modified
or superseded by any subsequently furnished information is true and accurate in
all material respects.
ARTICLE V
COVENANTS
The Parent Guarantor and the Borrower jointly and severally
agree that, so long as any Bank has any Commitment hereunder or any amount
payable under any Note remains unpaid:
SECTION 5.01. Information. The Parent Guarantor
will deliver to each of the Banks:
(a) within 90 days after the end of each fiscal year of the
Parent Guarantor, consolidated balance sheets of the Borrower and its
Consolidated Subsidiaries and of the Parent Guarantor and its
Consolidated Subsidiaries as of the end of such fiscal year, and the
related consolidated statements of income and cash flows for such
fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail and, in the case
of such balance sheet
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and related consolidated statements of income and cash flows of the
Parent Guarantor and its Consolidated Subsidiaries, accompanied by an
opinion thereon by Arthur Andersen LLP or other independent public
accountants of nationally recognized standing, which opinion (x) shall
state that such financial statements present fairly the consolidated
financial position of the companies being reported upon as of the date
of such financial statements and the consolidated results of their
operations and cash flows for the period covered by such financial
statements in conformity with generally accepted accounting principles
and that the audit of such accountants in connection with such
financial statements has been conducted in accordance with generally
accepted auditing standards and (y) shall not contain any
Qualification;
(b) within 60 days after the end of each of the first three
quarters of each fiscal year of the Parent Guarantor, consolidated
balance sheets of the Borrower and its Consolidated Subsidiaries and of
the Parent Guarantor and its Consolidated Subsidiaries, and the related
consolidated statements of income for such quarter and for the portion
of the fiscal year ended at the end of such quarter and cash flows for
the portion of the fiscal year ended at the end of such quarter,
setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the previous
fiscal year, if any, all prepared in accordance with Rule 10-01 of
Regulation S-X of the General Rules and Regulations under the
Securities Act of 1933, or any successor rule that sets forth the
manner in which interim financial statements shall be prepared, and
certified (subject to normal year-end audit adjustments) as to fairness
of presentation and consistency by the chief financial officer or the
chief accounting officer of the Borrower and the Parent Guarantor,
respectively;
(c) simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) of this Section 5.01,
a certificate of the chief financial officer, Treasurer or chief
accounting officer of the Parent Guarantor (i) setting forth in
reasonable detail such calculations as are required to establish
whether the Parent Guarantor was in compliance with the requirements of
Sections 5.07 through 5.14, inclusive, on the date of such financial
statements, (ii) stating whether there exists on the date of such
certificate any Default and, if any Default then exists, setting forth
the details thereof and the action that the Parent Guarantor is taking
or proposes to take with respect thereto and (iii) stating whether,
since the date of the most recent financial statements previously
delivered
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pursuant to paragraph (a) or (b) of this Section 5.01, there has been a
change in the generally accepted accounting principles applied in
preparing the financial statements then being delivered from those
applied in preparing the most recent financial statements and, in the
case of the Parent Guarantor, audited financial statements so delivered
which is material to the financial statements then being delivered;
(d) within five days after any officer of the Parent Guarantor
obtains knowledge of any Default, if such Default is then continuing, a
certificate of the chief financial officer, Treasurer or chief
accounting officer of the Parent Guarantor setting forth the details
thereof and the action that the Parent Guarantor is taking or proposes
to take with respect thereto;
(e) promptly upon the receipt of a request therefor from the
Administrative Agent at the request of any Bank, copies of all
financial statements, reports and proxy statements that the Parent
Guarantor shall have mailed to its shareholders;
(f) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and annual,
quarterly or monthly reports that the Parent Guarantor or any of its
Consolidated Subsidiaries shall have filed with the Securities and
Exchange Commission;
(g) excluding any event which has not resulted and will not
result in a potential liability of a member of the ERISA Group under
Title IV of ERISA in an amount in excess of $10,000,000, if and when
any member of the ERISA Group (i) gives or is required to give notice
to the PBGC of any "reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which could reasonably lead to a
termination of such Plan under Title IV of ERISA, or knows that the
plan administrator of any Plan has given or is required to give notice
of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice
of complete or partial withdrawal liability under Title IV of ERISA in
an amount greater than $10,000,000 or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy
of such notice; (iii) receives notice from the PBGC under Title IV of
ERISA of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer, any Plan, a copy of such notice; (iv) applies
for a
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waiver of the minimum funding standard under Section 412 of the Code, a
copy of such application; (v) gives notice of intent to terminate any
Plan under Section 4041(c) of ERISA, a copy of such notice and other
information filed with the PBGC; (vi) gives notice of withdrawal from
any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
(vii) fails to make any required payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes
any amendment to any Plan or Benefit Arrangement which has resulted or
could result in the imposition of a Lien or the posting of a bond or
other security, a certificate of the chief financial officer or the
chief accounting officer of the Borrower setting forth details as to
such occurrence and action, if any, which the Borrower or applicable
member of the ERISA Group is required or proposes to take; and
(h) from time to time such additional information regarding
the financial position, results of operations, business or prospects of
the Parent Guarantor or any of its Subsidiaries as the Administrative
Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The Parent Guarantor
will, and will cause each of its Subsidiaries to, pay and discharge, as the same
shall become due and payable, (i) all material claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons which, in
any such case, if unpaid, might by law give rise to a Lien upon any of its
property or assets, and (ii) all material taxes, assessments and governmental
charges or levies upon it or its property or assets, except where any of the
items in clause (i) or (ii) above may be contested in good faith by appropriate
proceedings, and the Parent Guarantor or such Subsidiary, as the case may be,
shall have set aside on its books, in accordance with generally accepted
accounting principles, appropriate reserves for the accrual of any such items.
SECTION 5.03. Maintenance of Property; Insurance. The Parent
Guarantor will keep, and will cause each of its Subsidiaries to keep, all
material property useful and necessary in its business in good working order and
condition in accordance with generally accepted industry standards applicable to
the line of business in which such property is used; will maintain and will
cause each of its Subsidiaries to maintain (either in the name of the Parent
Guarantor or in such Subsidiary's own name) with insurance companies which the
Parent Guarantor reasonably believes, at the time the relevant coverage is
placed or renewed, are financially sound and responsible, insurance on all their
respective properties in at least such amounts and against at least such risks
(and
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with such risk retentions) as are usually insured against in the same general
area by companies of established repute engaged in the same or a similar
business; and will furnish to the Banks, upon written request from the
Administrative Agent, information presented in reasonable detail as to the
insurance so carried. Notwithstanding the foregoing, the Parent Guarantor may,
in lieu of maintaining the insurance required by the preceding sentence,
self-insure, or cause any of its Subsidiaries to self-insure, with respect to
the properties and risks referred to in the preceding sentence to the extent
that such self-insurance is customary among companies of established repute
engaged in the line of business in which such properties are used or to which
such risks pertain.
SECTION 5.04. Conduct of Business and Maintenance of
Existence. Subject to Section 5.08, the Parent Guarantor will continue, and will
cause each of its Subsidiaries to continue, to engage in business of the same
general type as now conducted by the Parent Guarantor and its Subsidiaries, and
will preserve, renew and keep in full force and effect, and will cause each of
its Subsidiaries to preserve, renew and keep in full force and effect, their
respective corporate existences and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business; provided
that, subject to Section 5.08, nothing in this Section 5.04 shall prohibit the
termination of the corporate existence of any Subsidiary (other than the
Borrower) if the Parent Guarantor in good faith determines that such termination
is in the best interest of the Parent Guarantor and is not adverse to the
interests of the Banks; provided further that nothing in this Section 5.04 shall
prohibit the termination of the corporate existence of the Borrower or the
Parent Guarantor, if such termination is the result of the merger of the
Borrower with the Parent Guarantor pursuant to Section 5.08 hereof.
SECTION 5.05. Inspection of Property, Books and Records. The
Parent Guarantor will keep, and will cause each of its Subsidiaries to keep,
proper books of record and account in which full, true and correct entries in
conformity with generally accepted accounting principles shall be made of all
dealings and transactions in relation to its business and activities. The Parent
Guarantor, upon reasonable request by any Bank to the Treasurer of the Parent
Guarantor, will permit, and will cause each of its Subsidiaries to permit,
representatives of any Bank to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.
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SECTION 5.06. Maintenance of Stock of Borrower. The Parent
Guarantor will at all times maintain ownership of 100% of the outstanding shares
of each class of capital stock of the Borrower, unless the Borrower and the
Parent Guarantor shall have merged in accordance with Section 5.08.
SECTION 5.07. Negative Pledge. The Parent Guarantor will not,
and will not permit any of its Subsidiaries to, create, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired by the Parent
Guarantor or any such Subsidiary, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal
amount not exceeding $10,000,000;
(b) any Lien existing on any asset prior to the acquisition
thereof by the Parent Guarantor or such Subsidiary and not created in
contemplation of such acquisition;
(c) any Lien existing on any asset of any Person at
the time such Person becomes a Subsidiary and not created
in contemplation of such event;
(d) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any
of the foregoing subsections of this Section 5.07, provided that the
outstanding principal amount of such Debt is not increased and is not
secured by any additional assets;
(e) any Liens arising in the ordinary course of business of
the Parent Guarantor or any of its Subsidiaries which (i) do not secure
Debt or Derivatives Obligations and (ii) do not in the aggregate
materially detract from the value of the assets of the Parent Guarantor
and its Consolidated Subsidiaries, considered as a whole, or impair the
use thereof in the operation of the business of the Parent Guarantor
and its Consolidated Subsidiaries, considered as a whole; provided that
any Lien on any asset of the Parent Guarantor or any of its
Subsidiaries arising in connection with a judgment in excess of
$25,000,000 (reduced, for purposes of this proviso, by any amount in
respect thereof that is acknowledged by a reputable insurer as being
payable under any valid and enforceable insurance policy issued by such
insurer), whether or not such judgment is being contested or execution
thereof has been stayed, shall be deemed not arising in the ordinary
course of business of the Parent Guarantor or such Subsidiary;
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(f) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed $25,000,000;
(g) any Lien not otherwise permitted by the foregoing
provisions of this Section 5.07 securing Debt (or Derivative
Obligations, as measured by the amount of the pledged collateral in
excess of that permitted under (f)) in an aggregate principal amount
not to exceed an amount equal to 10% of Consolidated Tangible Assets
(excluding any such Lien securing any individual obligation in an
amount not in excess of $5,000,000); and
(h) subject to Section 2.10(b), any Lien on any asset or
assets of the Parent Guarantor or any of its Subsidiaries securing
Excess Secured Debt.
SECTION 5.08. Consolidations, Mergers and Sales of Assets. (a)
Neither the Parent Guarantor nor the Borrower shall consolidate or merge with or
into any Person, except that (i) the Parent Guarantor and the Borrower may merge
with any Person (other than each other) if the Parent Guarantor or the Borrower
is the surviving corporation and if, immediately after such merger (and giving
effect thereto), no Default shall have occurred and be continuing, and (ii) the
Parent Guarantor and the Borrower may merge with each other, if (x) immediately
after such merger (and giving effect thereto), no Default shall have occurred
and be continuing and (y) the surviving corporation, whether it be the Parent
Guarantor or the Borrower, shall have signed an instrument of assumption in form
and substance satisfactory to the Required Banks immediately prior to such
merger.
(b) The Parent Guarantor will not, and will not permit any of
its Subsidiaries to, sell, lease or otherwise transfer or dispose of to any
Person all or any substantial part of the assets of the Parent Guarantor and its
Subsidiaries, taken as a whole.
SECTION 5.09. Fixed Charge Coverage. As of the last day of
each fiscal quarter of the Parent Guarantor, the ratio of Consolidated Cash Flow
Available for Fixed Charges to Consolidated Fixed Charges, in each case for the
four fiscal quarters ending on such day, shall not be less than 2.0 to 1.0.
SECTION 5.10. Debt Coverage. As of the last day of each fiscal
quarter of the Parent Guarantor, the Leverage Ratio at such day shall not be
less than 0.3 to 1.0.
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SECTION 5.11. Minimum Consolidated Net Worth. Consolidated Net
Worth shall (i) at no date before September 27, 1996 be less than $165,000,000
and (ii) at no date on or after September 27, 1996 be less than $200,000,000
plus an amount equal to 50% of Consolidated Net Income for each fiscal year of
the Parent Guarantor ending after September 27, 1996 but prior to the date of
determination for which Consolidated Net Income is positive (but with no
deduction on account of negative Consolidated Net Income for any fiscal year of
the Parent Guarantor).
SECTION 5.12. Transactions with Affiliates. The Parent
Guarantor will not, and will not permit any of its Subsidiaries to, directly or
indirectly, engage in any material transaction with an Affiliate unless the
terms of such transaction are determined on an arm's-length basis and are
substantially as favorable to the Parent Guarantor or such Subsidiary as the
terms which could have been obtained from a Person which was not an Affiliate.
SECTION 5.13. Use of Proceeds. The proceeds of Credits
hereunder will be used for general corporate purposes. None of such proceeds
will be used in violation of any applicable law or regulation, including without
limitation Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System, as each is in effect from time to time. After giving effect to
the making of each Loan and application of the proceeds thereof, Margin Stock
that was Margin Stock at the time it was acquired by the Parent Guarantor or any
Subsidiary will not exceed 10% of the value of the total assets (as determined
in good faith by the board of directors of the Parent Guarantor) of the Parent
Guarantor and its Consolidated Subsidiaries, taken as a whole.
SECTION 5.14. Restricted Payments. The Parent Guarantor will
not repurchase shares of its capital stock pursuant to Section 5 of the
Stockholders' Agreement (Put of Shares upon Death, Complete Disability or Normal
Retirement) unless the aggregate cash amount paid with respect to such
repurchase of shares, together with the aggregate cash amount paid in respect of
all prior repurchases of shares pursuant to Section 5 of the Stockholders'
Agreement made after May 29, 1996, shall not exceed an amount equal to 5% of
Consolidated Net Worth, as reflected in the most recent balance sheet of the
Parent Guarantor and its Consolidated Subsidiaries referred to in Section
4.04(a) or delivered prior to such repurchase pursuant to Section 5.01.
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ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of
any Note; or
(b) the Borrower shall fail to pay any interest on any Note or
any fees or any other amount payable hereunder for a period of three
Domestic Business Days after the same shall become due; or
(c) any Obligor shall fail to observe or perform any covenant
contained in Sections 5.06 to 5.14, inclu- sive; or
(d) any Obligor shall fail to observe or perform any of its
covenants or agreements contained in the Financing Documents (other
than those covered by paragraph (a), (b) or (c) above) for 30 days
after notice thereof has been given to the Parent Guarantor or the
Borrower by the Administrative Agent at the request of any Bank; or
(e) any representation, warranty, certification or statement
made or deemed made by any Obligor in any Financing Document or in any
certificate, financial statement or other document delivered pursuant
thereto shall prove to have been incorrect in any material respect when
made or deemed made; or
(f) the Parent Guarantor or any of its Subsidiaries shall fail
to make any payment in respect of any Material Financial Obligations
when due or within any applicable grace period; or
(g) any event or condition shall occur that results in the
acceleration of the maturity of Debt of the Parent Guarantor or any of
its Subsidiaries aggregating in excess of $25,000,000, or enables (or,
with the giving of notice or lapse of time or both, would enable) the
holder or holders of such Debt or any Person acting on behalf of such
holder or holders to accelerate the maturity thereof (it being
understood that the prepayment by the Borrower of (x) its Senior Note
(the "Senior Note") payable to Metropolitan Life Insurance Company (the
"Holder") or (y) any successor note (a "Successor Note") issued by the
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Borrower to the Holder in connection with the refinancing of the Debt
evidenced by the Senior Note (provided that the principal amount of any
Successor Note is not more than $150,000,000 and that such Successor
Note is substantially in the form of the Senior Note in all material
respects other than principal amount, amortization, maturity and
interest rate), by reason of the refusal by the Holder to consent to a
proposed written waiver or amendment of this Agreement insofar as the
provisions hereof are incorporated by reference in the Senior Note or
the Successor Note, as the case may be, shall not constitute an event
or condition subject to this paragraph (g)); or
(h) the Parent Guarantor or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally or
admit in writing its inability to pay its debts as they become due, or
shall take any corporate action to authorize any of the foregoing; or
(i) an involuntary case or other proceeding shall be commenced
against the Parent Guarantor or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order
for relief shall be entered against the Parent Guarantor or any
Subsidiary under the Federal bankruptcy laws as now or hereafter in
effect; or
(j) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $25,000,000 which it
shall have become liable to pay under Title IV of ERISA (other than any
such liability which is being contested in good faith by appropriate
proceedings and is not secured by any Lien); or notice of intent to
terminate a Plan or Plans having aggregate Unfunded Liabilities in
excess of $25,000,000 (a
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"Material Plan") shall be filed under Title IV of ERISA by any member
of the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer, any Material Plan; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current annual payment obligation in excess of
$25,000,000 or an aggregate payment obligation in excess of
$25,000,000; or
(k) a judgment or order for the payment of money in excess of
$15,000,000 (reduced, for purposes of this paragraph (k), by any amount
in respect thereof that is acknowledged by a reputable insurer as being
payable under any valid and enforceable insurance policy issued by such
insurer) shall be rendered against the Parent Guarantor or any of its
Subsidiaries and such judgment or order shall continue unsatisfied and
unstayed for a period of 30 days; or
(l) any Wholly Owned Domestic Material Subsidiary shall not
have entered into the Subsidiary Guaranty Agreement within 30 days
after the later of the date hereof or the date on which such Wholly
Owned Domestic Material Subsidiary shall have become a Wholly Owned
Domestic Material Subsidiary; provided that the foregoing provision of
this paragraph (l) shall not apply to any Wholly Owned Domestic
Material Subsidiary if such Wholly Owned Domestic Material Subsidiary
is a Subsidiary of an Obligor (other than the Parent Guarantor or the
Borrower); or
(m) more than 30 percent (40 percent, in the case of voting
securities held by a Plan) in voting power of the voting securities of
the Parent Guarantor shall be held (i) by any Person or (ii) by any two
or more Persons (other than parties to the Stockholders' Agreement) who
"act as a partnership, limited partnership, syndicate or other group
for the purpose of acquiring, holding, or disposing of securities" of
the Parent Guarantor, as the case may be, within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934;
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then, and in every such event, the Administrative Agent shall (i) if requested
by Banks having more than 50 percent in aggregate amount of the Commitments, by
notice to the Borrower terminate the Commitments, and the Commitments shall
thereupon terminate, and (ii) if requested by the Banks holding Notes evidencing
more than 50 percent in aggregate principal amount of the Loans, by notice to
the Borrower declare the Notes (together with accrued interest thereon) and all
other amounts payable by the Borrower hereunder to be, and such Notes (together
with accrued interest thereon) and amounts shall thereupon become, immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower, provided that in the case
of any of the Events of Default specified in paragraph (h) or (i) of this
Section 6.01 with respect to the Parent Guarantor or the Borrower, without any
notice to any Obligor or any other act by any Agent or any Bank, the Commitments
shall thereupon terminate and the Notes (together with accrued interest thereon)
and all other amounts payable by the Borrower hereunder shall become immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Administrative Agent
shall give notice to the Parent Guarantor and the Borrower under Section 6.01(d)
promptly upon being requested to do so by any Bank and shall thereupon notify
all the Banks thereof.
ARTICLE VII
THE AGENTS
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes each Agent to take such action as agent on
such Bank's behalf and to exercise such powers under the Financing Documents as
are delegated to such Agent by the terms thereof, together with all such powers
as are reasonably incidental thereto.
SECTION 7.02. Agents and Affiliates. Each of Chemical Bank and
Morgan Guaranty Trust Company of New York shall have the same rights and powers
under this Agreement as any other Bank and may exercise or refrain from
exercising the same as though it were not an Agent, and each of Chemical Bank
and Morgan Guaranty Trust Company of New York and its affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
the Parent Guarantor or any Subsidiary or Affiliate of the Parent Guarantor as
if it were not an Agent.
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SECTION 7.03. Action by Agents. The obligations of each Agent
under the Financing Documents are only those expressly set forth therein with
respect to it. Without limiting the generality of the foregoing, neither Agent
shall be required to take any action with respect to any Default, except as
expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. Either Agent may
consult with legal counsel (who may be counsel for the Parent Guarantor or the
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agents. Neither any Agent nor any
of its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by such Agent or
affiliate or any such director, officer, agent or employee in connection
herewith (i) with the consent or at the request of the Required Banks or (ii) in
the absence of the gross negligence or willful misconduct of such Agent,
affiliate, director, officer, agent or employee. Neither any Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with any Financing Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any Obligor under any Financing Document; (iii) the satisfaction
of any condition specified in Article III except, in the case of the
Administrative Agent, receipt of items required to be delivered to the
Administrative Agent; or (iv) the validity, effectiveness or genuineness of any
Financing Document or any other instrument or writing furnished in connection
therewith. Neither Agent shall incur any liability by acting in reliance upon
any notice, consent, certificate, statement, or other writing (which may be a
bank wire, telex, facsimile or similar writing) believed by it to be genuine or
to be signed by the proper party or parties.
SECTION 7.06. Indemnification. The Banks shall, ratably in
accordance with their respective Commitments, indemnify each Agent (to the
extent not reimbursed by any Obligor) against any cost, expense (including
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from such Agent's gross negligence or willful misconduct)
that such Agent may suffer or incur in connection with the Financing Documents
or any action taken or omitted by such Agent thereunder.
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SECTION 7.07. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon either Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and any other
Financing Document to which it is a party. Each Bank also acknowledges that it
will, independently and without reliance upon either Agent or any other Bank,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking any
action under the Financing Documents.
SECTION 7.08. Agency Fees. The Borrower shall pay fees to the
Agents in the amounts and on the dates agreed to prior to the date hereof by the
Borrower and the Agents.
SECTION 7.09. Successor Agents. Either Agent may resign at any
time by giving notice thereof to the Banks and the Obligors. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required Banks,
and shall have accepted such appointment, within 30 days after the retiring
Agent gives notice of resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
ARTICLE VIII
CHANGES IN CIRCUMSTANCES
AFFECTING FIXED RATE LOANS
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period for any Fixed Rate Borrowing:
(a) the Administrative Agent is advised by the Reference Banks
that deposits in dollars (in the appli-
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cable amounts) are not being offered to the Reference Banks in the
relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks having at
least a majority of the aggregate amount of the related Commitments
advise the Administrative Agent that the Adjusted CD Rate or the
Adjusted Euro-Dollar Rate, as the case may be, as determined by the
Administrative Agent will not adequately and fairly reflect the cost to
such Banks of maintaining or funding their respective CD Loans or
Euro-Dollar Loans, as the case may be, for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to the Borrower
(specifying in reasonable detail, in the case of an event referred to in clause
(b) above, the information relating thereto received by the Administrative Agent
from the Banks) and the Banks, whereupon until the Administrative Agent notifies
the Borrower that the circumstances giving rise to such suspension no longer
exist (which it shall promptly do when it determines that such circumstances
have ceased to exist or, in the case of clause (b) of this Section 8.01, when
the Administrative Agent is so notified by Banks having at least a majority of
the related Commitments, as specified above), the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended.
Unless the Borrower notifies the Administrative Agent at least two Domestic
Business Days before the date of any Fixed Rate Borrowing for which a Notice of
Borrowing has previously been given that it elects not to borrow on such date,
if such Fixed Rate Borrowing is a Committed Borrowing, such Borrowing shall
instead be made as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, on or after the date hereof, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund any of its Euro-Dollar
Loans and such Bank shall so notify the Administrative Agent, the Administrative
Agent shall forthwith give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the Administrative Agent
that the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans shall be suspended. Before
giving any notice to the Administrative Agent pursuant to this
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Section 8.02, such Bank shall designate a different Euro-Dollar Lending Office
if such designation will avoid the need for giving such notice and will not, in
the judgment of such Bank, be otherwise disadvantageous to such Bank. If such
Bank shall determine that it may not lawfully continue to maintain and fund any
of its outstanding Euro-Dollar Loans to maturity and shall so specify in such
notice, the Borrower shall immediately prepay in full the then outstanding
principal amount of each such Euro-Dollar Loan, together with accrued interest
thereon. Concurrently with prepaying each such Euro-Dollar Loan, the Borrower
shall borrow a Base Rate Loan in equal principal amount from such Bank (on which
interest and principal shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Banks), and such Bank shall make such a Base Rate
Loan.
SECTION 8.03. Increased Cost. (a) If on or after (x) the date
hereof, in the case of any Committed Loan or any obligation to make Committed
Loans, or (y) the date of the related Money Market Quote, in the case of any
Money Market Loan, the adoption of any applicable law, rule or regulation, or
any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:
(A) shall subject any Bank (or its Lending Office) to any
tax, duty or other charge with respect to its Fixed Rate Loans, its
Notes or its obligation to make Fixed Rate Loans, or shall change the
basis of taxation of payments to any Bank (or its Lending Office) of
the principal of or interest on its Fixed Rate Loans or any other
amounts due under this Agreement in respect of its Fixed Rate Loans or
its obligation to make Fixed Rate Loans (except for changes in the rate
of tax on the overall net income of such Bank or its Lending Office
imposed by the jurisdiction in which such Bank's principal executive
office or Lending Office is located); or
(B) shall impose, modify or deem applicable any reserve,
special deposit, insurance assessment or similar requirement
(including, without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, but excluding (A)
with respect to any CD Loan any such requirement included in an
applicable Domestic Reserve Percentage or Assessment Rate and (B) with
respect to any Euro-Dollar Loan any such requirement included in an
applicable Euro-Dollar Reserve
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Percentage) against assets of, deposits with or for the account of, or
credit extended by, any Bank's Lending Office or shall impose on any
Bank (or its Lending Office) or on the United States market for
certificates of deposit or the London interbank market any other
condition affecting its Fixed Rate Loans, its Note or its obligation to
make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Note with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Administrative Agent), the Borrower shall pay to
or for the account of such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction with respect to its
Fixed Rate Loans.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding capital
adequacy of general applicability, or any change in any such law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Lending Office) with any request or directive regarding capital adequacy of
general applicability (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the capital of such Bank (or its Parent) as a
consequence of an undrawn Commitment hereunder to a level below that which such
Bank (or its Parent) could have achieved but for such adoption, change or
compliance (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then from time to
time, within 15 days after demand by such Bank (with a copy to the
Administrative Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank (or its Parent) for such
reduction. The Borrower shall not be obligated to compensate any Bank pursuant
to this subsection (b) for reduced return accruing prior to the date which is 30
days before such Bank requests compensation; provided that if any law, rule or
regulation, or interpretation or administration thereof, or any request or
directive giving rise to reduced returns has retroactive effect, such Bank shall
be entitled to claim compensation hereunder for the period commencing on such
date of retroactive effect through the date of adoption or change or
promulgation thereof without regard to the foregoing limitation. If any Bank has
demanded
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compensation under this subsection (b), the Borrower shall have the right, with
the assistance of the Administrative Agent, to seek a mutually satisfactory
substitute bank or banks (which may be one or more of the Banks) to purchase the
Note and assume the Commitment of such Bank.
(c) Each Bank will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, that will entitle such Bank to compensation pursuant to this
Section 8.03 and will designate a different Lending Office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section 8.03 and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.
SECTION 8.04. Base Rate Loans Substituted for Affected Fixed
Rate Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation
under Section 8.03(a) and the Borrower shall by at least five Euro-Dollar
Business Days' prior notice to such Bank through the Administrative Agent have
elected that the provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as CD
Loans or Euro-Dollar Loans, as the case may be, shall be made instead
as Base Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of the other
Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the
case may be, has been repaid, all payments of principal that would
otherwise be applied to repay such Fixed Rate Loans shall be applied to
repay its Base Rate Loans instead.
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ARTICLE IX
GUARANTEE
SECTION 9.01. The Guarantee. The Parent Guarantor hereby
unconditionally and irrevocably guarantees to the Banks, and to each of them,
the due and punctual payment of all present and future indebtedness evidenced by
or arising out of this Agreement, the Notes and any Interest Rate Agreements,
including, but not limited to, the due and punctual payment of principal of and
interest on the Notes and the due and punctual payment of all other sums now or
hereafter owed by the Borrower under this Agreement and the Notes as and when
the same shall become due and payable, whether at maturity, by declaration or
otherwise, according to the terms hereof and thereof and the due and punctual
payment of any Interest Rate Indebtedness. In case of failure by the Borrower
punctually to pay the indebtedness guaranteed hereby, the Parent Guarantor
hereby unconditionally agrees to cause such payment to be made punctually as and
when the same shall become due and payable, whether at maturity or by
declaration or otherwise, and as if such payment were made by the Borrower.
SECTION 9.02. Guarantee Unconditional. The obligations of the
Parent Guarantor under this Article IX shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any other Obligor under any
Financing Document or any Interest Rate Agreement by operation of law
or otherwise;
(b) any modification or amendment of or supplement to any
Financing Document or any Interest Rate Agreement;
(c) any modification, amendment, waiver, release,
non-perfection or invalidity of any direct or indirect security, or of
any guarantee or other liability of any third party, for any obligation
of any other Obligor under any Financing Document or any Interest Rate
Agreement;
(d) any change in the corporate existence, structure or
ownership of any other Obligor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any other Obligor
or its assets or any resulting release or discharge of any obligation
of
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any other Obligor contained in any Financing Document or
any Interest Rate Agreement;
(e) the existence of any claim, set-off or other rights which
the Parent Guarantor may have at any time against any other Obligor,
any Agent, any Bank or any other Person, whether or not arising in
connection with any Financing Document or any Interest Rate Agreement,
provided that nothing herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against
any other Obligor for any reason of any Financing Document or any
Interest Rate Agreement, or any provision of applicable law or
regulation purporting to prohibit the payment by any other Obligor of
the principal of or interest on any Note or any other amount payable by
it under any Financing Document or any Interest Rate Agreement; or
(g) any other act or omission to act or delay of any kind by
any other Obligor, any Agent, any Bank or any other Person or any other
circumstance whatsoever that might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of the obligations
of the Parent Guarantor under this Article IX.
SECTION 9.03. Discharge Only Upon Payment in Full;
Reinstatement in Certain Circumstances. The Parent Guarantor's obligations under
this Article IX shall remain in full force and effect until the Commitments are
terminated and the principal of and interest on the Notes and all other amounts
payable by the Borrower under this Agreement shall have been paid in full. If at
any time any payment of the principal of or interest on any Note or any other
amount payable by the Borrower under this Agreement is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of the Borrower or any Subsidiary Guarantor or otherwise, the Parent Guarantor's
obligations under this Article IX with respect to such payment shall be
reinstated at such time as though such payment had become due but had not been
made at such time.
SECTION 9.04. Waiver. The Parent Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against any other Obligor or any other Person.
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SECTION 9.05. Subrogation and Contribution. The Parent
Guarantor irrevocably waives any and all rights to which it may be entitled, by
operation of law or otherwise, upon making any payment hereunder (i) to be
subrogated to the rights of the payee against the Borrower with respect to such
payment or otherwise to be reimbursed, indemnified or exonerated by the Borrower
in respect thereof or (ii) to receive any payment, in the nature of contribution
or for any other reason, from any other Obligor with respect to such payment.
SECTION 9.06. Stay of Acceleration. If acceleration of the
time for payment of any amount payable by the Borrower under this Agreement or
the Notes is stayed upon the insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by the Parent Guarantor hereunder
forthwith on demand by the Administrative Agent made at the request of the
requisite number of Banks specified in Section 6.01.
ARTICLE X
JUDICIAL PROCEEDINGS
SECTION 10.01. Consent to Jurisdiction. Each Obligor hereby
irrevocably submits to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
court sitting in the City of New York over any suit, action or proceeding
arising out of or relating to any Financing Document. To the fullest extent it
may effectively do so under applicable law, each Obligor irrevocably waives and
agrees not to assert, by way of motion, as a defense or otherwise, any claim
that it is not subject to the jurisdiction of any such court, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding brought in any such court and any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.
SECTION 10.02. Enforcement of Judgments. Each Obligor agrees,
to the fullest extent it may effectively do so under applicable law, that a
judgment in any suit, action or proceeding of the nature referred to in Section
10.01 brought in any such court shall be conclusive and binding upon such
Obligor and may be enforced in the courts of the United States of America or the
State of New York (or any other courts to the jurisdiction of which such Obligor
is or may be subject) by a suit upon such judgment.
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SECTION 10.03. Service of Process. Each Obligor consents to
process being served in any suit, action or proceeding of the nature referred to
in Section 10.01 by mailing a copy thereof by registered or certified air mail,
postage prepaid, return receipt requested, to the address of such Obligor
specified in or designated pursuant to Section 11.01. Each Obligor agrees that
such service (i) shall be deemed in every respect effective service of process
upon such Obligor in any such suit, action or proceeding and (ii) shall, to the
fullest extent permitted by law, be taken and held to be valid personal service
upon and personal delivery to such Obligor.
SECTION 10.04. No Limitation on Service or Suit. Nothing in
this Article X shall affect the right of the Administrative Agent or any Bank to
serve process in any manner permitted by law, or limit any right that the
Administrative Agent or any Bank may have to bring proceedings against any
Obligor in the courts of any jurisdiction or to enforce in any lawful manner a
judgment obtained in one jurisdiction in any other jurisdiction.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices. Unless otherwise specified herein, all
notices, requests and other communications to any party hereunder shall be in
writing (including bank wire, telex, facsimile transmission or similar writing)
and shall be given to such party (x) in the case of the Parent Guarantor, the
Borrower or either Agent, at its address or telex or facsimile number set forth
on the signature pages hereof, (y) in the case of any Bank, at its address or
telex or facsimile number set forth in its Administrative Questionnaire, or (z)
in the case of any party hereto, at such other address or telex or facsimile
number as such party may hereafter specify for the purpose by notice to the
Agents and the Parent Guarantor. Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section 11.01 and the
appropriate answerback is received, (ii) if given by facsimile transmission,
when transmitted to the facsimile number specified in this Section and
confirmation of receipt is received, (iii) if given by mail, five days after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or (iv) if given by any other means, when delivered at
the address specified in this Section 11.01, provided that notices to the
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Administrative Agent under Article II or VIII shall not be effective until
received.
SECTION 11.02. No Waiver. No failure or delay by any Agent or
any Bank in exercising any right, power or privilege under any Financing
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided in the
Financing Documents shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 11.03. Expenses; Documentary Taxes; Indemnification
for Litigation. (a) The Borrower shall pay (i) all out-of-pocket expenses of
each Agent, including fees and disbursements of the law firm acting as special
counsel for the Banks and the Agents and such local counsel as may be retained
by the Administrative Agent on behalf of the Banks and the Agents, in connection
with the preparation and administration of the Financing Documents, any waiver
or amendment of any provision thereof, or any Default or alleged Default
hereunder, and (ii) if any Event of Default occurs, all out-of-pocket expenses
incurred by any Agent or any Bank, including fees and disbursements of counsel,
in connection with such Event of Default and collection, bankruptcy, insolvency
and other enforcement proceedings resulting therefrom. The Borrower agrees to
indemnify each Bank from and hold it harmless against any transfer taxes,
documentary taxes, or other similar assessments or charges made by any
governmental authority by reason of the execution and delivery of the Financing
Documents.
(b) The Parent Guarantor and the Borrower agree jointly and
severally to indemnify each Bank and hold each Bank harmless from and against
any and all liabilities, losses, damages, costs and expenses of any kind
(including, without limitation, the reasonable fees and disbursements of counsel
for any Bank in connection with any investigative, administrative or judicial
proceeding, whether or not such Bank shall be designated a party thereto) which
may be incurred by any Bank (or by any Agent in connection with its actions as
Agent hereunder), relating to or arising out of the Financing Documents or any
actual or proposed use of the proceeds of the Credits hereunder, provided that
no Bank shall have the right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
SECTION 11.04. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, and only if, such amendment
or waiver is in writing and is
63
<PAGE>
signed by the Parent Guarantor, the Borrower and the Required Banks (and, if the
rights or duties of either Agent are affected thereby, by such Agent), provided
that no such amendment or waiver shall, unless signed by all the Banks, (i)
increase or decrease the amount of any Commitment (except for a ratable decrease
in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees payable hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees payable hereunder, or (iv)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes, or the number of Banks, which shall be required for the
Banks or any of them to take any action under this Section 11.04 or any other
provision of this Agreement or any other Financing Document; and provided
further that an amendment or waiver of the payment obligations of the Borrower
with respect to any Swingline Advance shall be effective if, and only if, signed
by the Borrower and the Bank making such Swingline Advance.
In the event that (i) a Bank shall have granted a
participation pursuant to Section 11.07(b); (ii) by virtue of the participation
arrangement, such Bank is required to obtain the consent of its participant to a
proposed amendment to this Agreement or its Note; (iii) such participant's
consent is not forthcoming; (iv) such Bank and the other Banks are otherwise
prepared to agree to such proposed amendment; and (v) such Bank shall have so
certified to the Administrative Agent, then, in order to effect and in
conjunction with such amendment, the Borrower may terminate the Commitment of
such Bank and, on a date otherwise permitted hereunder, prepay the outstanding
Credits of such Bank in their entirety, provided that the Borrower shall have
procured a substitute Bank (which may be such Bank) contemporaneously to assume
the Commitment of such Bank and to fund, for the balance of the respective
Interest Periods applicable thereto, the Loans prepaid pursuant to this
paragraph.
SECTION 11.05. Sharing of Set-Offs. Each Bank agrees that if
it shall, by exercising any right of set-off or counterclaim or otherwise,
receive payment of a proportion of the aggregate amount of principal and
interest due with respect to its Credits which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to the Credits of such other Bank, the Bank receiving
such proportionately greater payment shall purchase such participations in the
Credits of the other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Credits of the Banks shall be shared by the Banks pro rata. The Borrower and
64
<PAGE>
the Parent Guarantor agree, to the fullest extent they may effectively do so
under applicable law, that any holder of a participation in a Note, whether or
not acquired pursuant to the foregoing arrangements, may exercise rights of
set-off or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of the
Borrower or the Parent Guarantor, as the case may be, in the amount of such
participation. Each Bank further agrees that if it shall, by exercising any
right of set-off or counterclaim or otherwise, receive payment of a proportion
of the aggregate amount of facility fees due with respect to its Commitments
which is greater than the proportion received by any other Bank in respect of
the aggregate amount of facility fees due with respect to the Commitments of
such other Bank, adjustments shall be made as may be required so that all such
payments of facility fees with respect to the Commitments of the Banks shall be
shared by the Banks pro rata.
SECTION 11.06. New York Law. This Agreement and each Note
shall be construed in accordance with and governed by the law of the State of
New York.
SECTION 11.07. Successors and Assigns. (a) All of the
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that
neither the Parent Guarantor nor the Borrower may assign or transfer any of its
rights or obligations under this Agreement without the consent of all Banks.
(b) No Bank may assign (other than (x) to Persons affiliated
with such Bank or (y) by granting participations) such Bank's rights or
obligations hereunder without the Borrower's consent, which shall not be
unreasonably withheld, and no Bank may grant participations (other than to
Persons affiliated with such Bank) with respect to amounts exceeding 80% of such
Bank's Commitment; provided that nothing herein shall be deemed to prohibit (i)
the granting of participations by any Bank in its rights with respect to any
particular Credit or Credits or (ii) the assignment or pledge by any Bank of its
Notes and its rights hereunder with respect thereto to any Federal Reserve Bank.
Any agreement pursuant to which any Bank may grant a participation shall provide
that such Bank shall retain the sole right and responsibility to enforce the
obligations of the Borrower relating to any Credit or Credits including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement; provided that (i) any such participation agreement
with respect to any or all of a Bank's Credit or Credits may provide that such
Bank will not agree to any proposed modification, amendment or waiver of this
Agreement without
65
<PAGE>
the consent of the participant which would reduce the principal of or rate of
interest on such Credit or Credits or postpone the date fixed for any payment of
principal of or interest on such Credit or Credits and (ii) any such
participation agreement with respect to a portion of a Bank's Commitment may
provide that such Bank will not agree to any modification, amendment or waiver
described in clause (i), (ii) or (iii) of the first sentence of Section 11.04
without the consent of the participant; provided further that any such
participation agreement described in the preceding clause (ii) shall further
provide that such Bank may agree to any proposed modification, amendment or
waiver referred to in such clause (ii) without the consent of such participant
if such participant fails to provide such Bank voting instructions with respect
to such proposal within 30 days after such participant's receipt of such
proposal and such Bank's request for such voting instructions. Any Bank that has
granted or grants a participation with respect to a portion of its Commitment
shall notify the Borrower as to the amount of its Commitment subject to such
participation and the identity of the participant. Each of the Agents and the
Borrower may, for all purposes of this Agreement, treat any Bank as the holder
of any Note drawn to its order until written notice of an assignment in
accordance with this Section 11.07(b) is received by it.
(c) No assignee of any Bank's rights or obligations shall be
entitled to receive any greater payment under Section 8.03 than such Bank would
have been entitled to receive with respect to the rights assigned, unless such
assignment (or change in Lending Office) is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.02 or 8.03 requiring
such Bank to designate a different Lending Office under certain circumstances or
at a time when the circumstances giving rise to such greater payment did not
exist.
SECTION 11.08. Collateral. Each Bank (the "Representing Bank")
represents to each Agent and each other Bank that the Representing Bank in good
faith is not relying upon any Margin Stock as collateral in the extension or
maintenance of the credit provided for in the Financing Documents.
SECTION 11.09. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, and all of which
taken together shall constitute a single agreement, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
66
<PAGE>
SECTION 11.10. WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, THE
AGENTS AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
67
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
date first above written.
ARAMARK SERVICES, INC.
By /s/ Melvin M. Mahoney
-----------------------------
Title: Treasurer
ARAMARK Tower
1101 Market Street
Philadelphia, Pennsylvania 19107
Facsimile number: (215) 238-3284
(215) 238-3282
ARAMARK CORPORATION
By /s/ Melvin M. Mahoney
-----------------------------
Title: Treasurer
ARAMARK Tower
1101 Market Street
Philadelphia, Pennsylvania 19107
Facsimile number: (215) 238-3284
(215) 238-3282
68
<PAGE>
Commitments
$75,000,000 CHEMICAL BANK
By /s/ Karen M. Sharf
--------------------------
Title: Vice President
$75,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Penelope J.B. Cox
--------------------------
Title: Vice President
$60,000,000 BANK OF AMERICA ILLINOIS
By /s/ Sandra S. Ober
--------------------------
Title: Vice President
$60,000,000 THE BANK OF NEW YORK
By /s/ Peter H. Abdill
--------------------------
Title: Vice President
69
<PAGE>
$60,000,000 NATIONSBANK, N.A.
By /s/ Rajesh Sood
--------------------------
Title: Vice President
$50,000,000 CORESTATES BANK, N.A.
By /s/ Donna J. Emhart
--------------------------
Title: Assistant Vice President
$50,000,000 CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Mary E. Collier
--------------------------
Title: Vice President
$50,000,000 FIRST UNION NATIONAL BANK
By /s/ Patrrick A. McGovern
--------------------------
Title: Senior Vice President
$50,000,000 PNC BANK, NATIONAL ASSOCIATION
By /s/ Daniel K. Fitzpatrick
--------------------------
Title: Vice President
70
<PAGE>
$35,000,000 LTCB TRUST COMPANY
By /s/ Noboru Kubota
--------------------------
Title: Senior Vice President
$35,000,000 THE NIPPON CREDIT BANK, LTD.,
NEW YORK BRANCH
By /s/ Nancy Acevedo
--------------------------
Title: Assistant Vice President
$35,000,000 THE SAKURA BANK, LIMITED
NEW YORK BRANCH
By /s/ Masahiro Nakajo
--------------------------
Title: Senior Vice President
& Manager
$30,000,000 COMERICA BANK
By /s/ John M. Costa
--------------------------
Title: Vice President
$30,000,000 MELLON BANK, N.A.
By /s/ Martin J. Randal
--------------------------
Title: Banking Officer
71
<PAGE>
$30,000,000 WACHOVIA BANK OF GEORGIA, N.A.
By /s/ Adam J. Ogburn
--------------------------
Title: Vice President
$25,000,000 BANK OF HAWAII
By /s/ Alison Sierens
--------------------------
Title: Assistant Vice President
$25,000,000 BHF BANK AG
NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH
By /s/ Perry Forman
--------------------------
Title: Vice President
By /s/ Linda Pace
--------------------------
Title: Assistant Vice President
$25,000,000 CIBC INC.
By /s/ Christopher P. Kleczkowski
--------------------------
Title: Agent for CIBC, Inc.
72
<PAGE>
$25,000,000 DEUTSCHE BANK AG
NEW YORK AND/OR
CAYMAN ISLANDS BRANCH
By /s/ Hans-Josef Thiele
--------------------------
Title: Vice President
By /s/ Belinda J. Wheeler
--------------------------
Title: Assistant Vice President
$25,000,000 THE FIRST NATIONAL BANK OF BOSTON
By /s/ Maura C. Wadlinger
--------------------------
Title: Vice President
$25,000,000 FLEET NATIONAL BANK
By /s/ Richard W. Billings, Jr.
--------------------------
Title: Senior Vice President
$25,000,000 THE FUJI BANK, LIMITED
NEW YORK BRANCH
By /s/ Teiji Teramoto
--------------------------
Title: Vice President & Manager
73
<PAGE>
$25,000,000 KREDIETBANK N.V.
By /s/ Armen Karozichian
--------------------------
Title: Vice President
By /s/ Robert Snauffer
--------------------------
Title: Vice President
$ 25,000,000 NATIONAL WESTMINSTER BANK Plc
NEW YORK BRANCH
By /s/ Jordan R. Fragiacomo
--------------------------
Title: Vice President
NATIONAL WESTMINSTER BANK Plc
NASSAU BRANCH
By /s/ Jordan R. Fragiacomo
--------------------------
Title: Vice President
$25,000,000 COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By /s/ Joanna M. Solowski
--------------------------
Title: Vice President
By /s/ W. Jeffrey Vollack
--------------------------
Title: Vice President, Manager
74
<PAGE>
$25,000,000 THE SUMITOMO BANK, LIMITED
By /s/ Y. Kawamura
--------------------------
Title: Joint General Manager
- -----------------
Total Commitments
$1,000,000,000
==============
75
<PAGE>
CHEMICAL BANK, as Agent
By /s/ Karen M. Sharf
--------------------------
Title: Vice President
270 Park Avenue
New York, New York 10017
Telex: 129100
Facsimile: (212) 270-7138
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Penelope J.B. Cox
--------------------------
Title: Vice President
60 Wall Street
New York, New York 10260
Telex: 177615
Facsimile: (212) 648-5018
76
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE (1)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------------------------------------------------------------
September 27, September 29, September 30, October 1, October 2,
1996 1995 1994 1993 1992
------------- ------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Earnings:
Net income $109,470 $93,503 $86,079 $77,132 $67,381
Preferred stock dividends (769) (1,046) (1,337) (883) -
-------- ------- ------- ------- -------
Net income available to common stock $108,701 $92,457 $84,742 $76,249 $67,381
======== ======= ======= ======= =======
Shares:
Weighted average number of common
shares outstanding (2) 44,318 46,381 46,616 46,133 44,746
Impact of potential exercise opportunities
under the ARAMARK Ownership Program 2,670 2,928 3,512 4,873 5,898
-------- ------- ------- ------- -------
Total common and common
equivalent shares 46,988 49,309 50,128 51,006 50,644
======== ======= ======= ======= =======
Fully diluted earnings per common and
common equivalent share $2.31 $1.88 $1.69 $1.49 $1.33
===== ===== ===== ===== =====
</TABLE>
(1) Primary and fully diluted earnings per share are approximately the same.
Weighted average shares outstanding and earnings per share amounts for the
period ending October 1, 1993 and prior have been retroactively adjusted to
reflect the November 1993 four-for-one stock split.
(2) Includes Class B plus Class A Common Shares stated on a Class B Common
Share Equivalent Basis.
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (A)
(In thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------------------------------------------------------------
September 27, September 29, September 30, October 1, October 2,
1996 1995 1994 1993 1992
------------- ------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Income before income taxes
and minority interest $ 179,159 $ 167,577 $ 163,484 $ 143,265 $ 123,723
Fixed charges, excluding
capitalized interest 160,740 152,991 150,432 168,158 180,913
Other, net (371) 1,502 (477) 1,222 1,231
--------- --------- --------- --------- ---------
Earnings, as adjusted $ 339,528 $ 322,070 $ 313,439 $ 312,645 $ 305,867
========= ========= ========= ========= =========
Interest expense $ 117,856 $ 111,605 $ 110,040 $ 128,367 $ 141,180
Capitalized interest 414 79 27 47 47
Portion of operating lease
rentals representative
of interest factor 42,884 41,386 40,392 39,791 39,733
--------- --------- --------- --------- ---------
Fixed charges $ 161,154 $ 153,070 $ 150,459 $ 168,205 $ 180,960
========= ========= ========= ========= =========
Ratio of earnings to
fixed charges 2.1x 2.1x 2.1x 1.9x 1.7x
========= ========= ========= ========= =========
</TABLE>
(A) For the purpose of determining the ratio of earnings to fixed charges,
earnings include pre-tax income plus fixed charges (excluding capitalized
interest). Fixed charges consist of interest on all indebtedness (including
capitalized interest) plus that portion of operating lease rentals
representative of the interest factor (deemed to be one-third of operating
lease rentals).
<PAGE>
EXHIBIT 21
DIRECT AND INDIRECT SUBSIDIARIES OF
ARAMARK CORPORATION
(Companies are incorporated in Delaware unless otherwise indicated)
Advertising & Display Services, Inc.
ARA RBI, Inc.
ARAMARK Advertising Services, Ltd. (PA)
ARAMARK Business Dining Services of Texas, Inc. (TX)
ARAMARK Cleanroom Services, Inc.
ARAMARK Consumer Discount Company (PA)
ARAMARK Correctional Services, Inc.
ARAMARK Delaware, Inc.
ARAMARK Correctional Facility Services, Inc.
ARAMARK Educational Group, Inc.
ARAMARK Educational Services, Inc.
ARAMARK Educational Services of Texas, Inc. (TX)
ARAMARK Educational Services of Vermont Inc. (VT)
ARAMARK Enterprises, Inc. (DC)
ARAMARK Facilities Management, Inc.
ARAMARK Facility Services, Inc. (MD)
ARAMARK Global Food and Support Services Group, Inc.
ARAMARK/Gall's Group. Inc.
ARAMARK Health & Education Services, Inc.
ARAMARK Healthcare Support Services, Inc.
ARAMARK Healthcare Support Services of Puerto Rico, Inc.
ARAMARK Healthcare Support Services of Texas, Inc. (TX)
ARAMARK Healthcare Support Services of the Virgin Islands, Inc.
ARAMARK/HMS Company
ARAMARK Industrial Services, Inc.
ARAMARK Kitty Hawk, Inc. (ID)
ARAMARK Convention Services, Inc. (PA)
ARAMARK SES Group, Inc.
ARAMARK Sports and Entertainment Group, Inc.
ARAMARK Sports and Entertainment Services, Inc.
ARAMARK Sports and Entertainment Services of Texas, Inc. (TX)
ARAMARK Sports and Entertainment Services of Wisconsin, Inc. (WI)
ARAMARK Magazine & Book Services, Inc.
ARAMARK Marketing Services Group, Inc.
ARAMARK Mile High Enterprises, Inc. (CO)
ARAMARK Pittsburgh Limited
ARAMARK Pittsburgh Stadium Concessions, Inc. (PA)
ARAMARK Refreshment Services, Inc.
ARAMARK Senior Notes Company
ARAMARK Services of Puerto Rico, Inc.
<PAGE>
Direct and Indirect Domestic Subsidiaries
of ARAMARK Corporation (continued)
ARAMARK Services, Inc.
ARAMARK Services of Kansas, Inc. (KS)
ARAMARK Summer Games 1996, Inc.
ARAMARK SWV Corporation (WV)
ARAMARK Uniform Services Group, Inc.
ARAMARK Uniform Services, Inc.
ARAMARK Uniform Services II, Inc. (MO)
ARAMARK Uniform Services III, inc. (MO)
ARAMARK Uniform Manufacturing Company
ARAMARK Virginia Sky-Line Co., Inc. (VA)
Children's World Learning Centers, Inc.
CHS Primary Care, Inc.
Coordinated Health Services, Inc. (PA)
Correctional Medical Services, Inc. (MO)
Correctional Medical Services of Delaware, Inc.
Correctional Medical Services of Illinois, Inc. (IL)
Crest Uniform Co., Inc.
CWLC Brokerage, Inc. (CO)
Davre's, Inc.
Delsac VI, Inc.
Delsac VII, Inc.
Delsac VIII, Inc.
Delsac X, Inc. (OH)
Dragon Wagon, Inc.
Fashion-Tex Services, Inc. (CA)
Gall's, Inc.
H. M. S. Delaware, Inc.
H. M. S. Inc. (MA)
Harry M. Stevens Holding Corp. (NY)
Harry M. Stevens, Inc. (NY)
Harry M. Stevens Maintenance Services, Inc. (MD)
Harry M. Stevens of New Jersey (NJ)
Harry M. Stevens, Inc. of Penn. (PA)
Harry M. Stevens Services, Inc. (TX)
Landy Textile Rental Services, Inc. (PA)
Linen Supply Service, Inc. (IL)
Main, Inc. (FL)
Meader Distributing Co., Inc. (MN)
Medical Claims Management Group, Inc.
Mesa Verde Company (CO)
Professional Anesthesia Services, Inc.
Ranier News, Inc. (WA)
Restin, Inc. (CA)
2
<PAGE>
Direct and Indirect Domestic Subsidiaries
of ARAMARK Corporation (continued)
Smithsub, Inc.(VA)
Spectrum Cruise Care, Inc.
Spectrum Emergency Care, Inc. (MO)
Spectrum Emergency Care of Delaware, Inc.
Spectrum Emergency Care of New Mexico, Inc. (MO)
Spectrum Healthcare of Delaware, Inc.
Spectrum Healthcare Resources, Inc.
Spectrum Healthcare Resources of Delaware, Inc.
Spectrum Healthcare Services, Inc.
Spectrum Pharmacy Services, Inc.
Spectrum Primary Care, Inc.
Spectrum Primary Care of Delaware, Inc.
Stevens California Enterprises (CA)
Stevens Venture Corp.
Texas Stevens, Inc. (TX)
WearGuard Corporation
Woodhaven Foods, Inc. (PA)
For certain subsidiaries, individuals are the record owners of director's
qualifying shares and/or other shares held for regulatory purposes.
3
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated November 11, 1996 included in this Form 10-K for the fiscal year
ended September 27, 1996 into the Company's previously filed Registration
Statements on Form S-8, Registration Nos. 33-11818, 33-30879, 33-33329,
33-44002, and 33-57825, and on Form S-3, Registration Nos. 33-47564, 33-52587
and 33-64259.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
November 19, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF CHARTERED ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
ARAMARK Corporation and, where applicable, ARAMARK Services, Inc., on Form S-8,
registration numbers 33-11818, 33-30879, 33-33329, 33-44002, and 33-57825 and on
Form S-3, registration numbers 33-47564, 33-52587, and 33-64259, and in the
related Prospectuses, our report dated November 16, 1994, with respect to the
consolidated financial statements of Versa Services Ltd. for the fifty-two week
period ended September 28, 1994, such report included in the Annual Report on
Form 10-K of ARAMARK Corporation for the year ended September 27, 1996 filed
with the Securities and Exchange Commission.
Mississauga, Canada ERNST & YOUNG
November 18, 1996 Chartered Accountants
<PAGE>
EXHIBIT 24
JOSEPH NEUBAUER
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
September 27, 1996, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the Securities
Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such reports
or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 12, 1996 /s/ Joseph Neubauer
-------------------------------
Joseph Neubauer
<PAGE>
EXHIBIT 24
ROBERT J. CALLANDER
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
September 27, 1996, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the Securities
Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such reports
or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 12, 1996 /s/ Robert J. Callander
-----------------------
Robert J. Callander
<PAGE>
EXHIBIT 24
ALAN K. CAMPBELL
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
September 27, 1996, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the Securities
Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such reports
or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 12, 1996 /s/ Alan K. Campbell
----------------------
Alan K. Campbell
<PAGE>
EXHIBIT 24
RONALD R. DAVENPORT
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
September 27, 1996, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the Securities
Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such reports
or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 12, 1996 /s/ Ronald R. Davenport
--------------------------
Ronald R. Davenport
<PAGE>
EXHIBIT 24
PHILIP L. DEFLIESE
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
September 27, 1996, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the Securities
Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such reports
or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 11, 1996 /s/ Philip L. Defliese
-----------------------------
Philip L. Defliese
<PAGE>
EXHIBIT 24
LEE F. DRISCOLL, JR.
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
September 27, 1996, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the Securities
Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such reports
or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 11, 1996 /s/ Lee F. Driscoll, Jr.
------------------------
Lee F. Driscoll, Jr.
<PAGE>
EXHIBIT 24
MITCHELL S. FROMSTEIN
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
September 27, 1996, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the Securities
Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such reports
or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 12, 1996 /s/ Mitchell S. Fromstein
------------------------------
Mitchell S. Fromstein
<PAGE>
EXHIBIT 24
EDWARD G. JORDAN
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
September 27, 1996, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the Securities
Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such reports
or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 11, 1996 /s/ Edward G. Jordan
--------------------
Edward G. Jordan
<PAGE>
EXHIBIT 24
THOMAS H. KEAN
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
September 27, 1996, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the Securities
Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such reports
or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November12, 1996 /s/ Thomas H. Kean
------------------
Thomas H. Kean
<PAGE>
EXHIBIT 24
REYNOLD C. MACDONALD
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
September 27, 1996, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the Securities
Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such reports
or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 12, 1996 /s/ Reynold C. MacDonald
------------------------
Reynold C. MacDonald
<PAGE>
EXHIBIT 24
JAMES E. PRESTON
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
September 27, 1996, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the Securities
Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such reports
or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 12, 1996 /s/ James E. Preston
---------------------
James E. Preston
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